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:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
Kenwood 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>
December 29, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Kenwood Bancorp, Inc. (the "Company"). The meeting will be held at the
Company's headquarters located at 7711 Montgomery Road, Cincinnati, Ohio, on
Thursday, January 28, 1999 at 4:00 p.m., Eastern Standard Time. The matters to
be considered by stockholders at the Annual Meeting are described in the
accompanying materials.
The Board of Directors of the Company has determined that the matters
to be considered at the Annual Meeting are in the best interests of the Company
and its shareholders. For the reasons set forth in the Proxy Statement, the
Board unanimously recommends that you vote "FOR" each matter to be considered.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend the
meeting in person. We urge you to mark, sign, and date your proxy card today and
return it in the envelope provided, even if you plan to attend the Annual
Meeting. This will not prevent you from voting in person, but will ensure that
your vote is counted if you are unable to attend.
Your continued support of and interest in the Company are sincerely
appreciated.
Sincerely,
/s/ Thomas W. Burns
-------------------
Thomas W. Burns
Executive Vice President and
Chief Executive Officer
<PAGE>
KENWOOD BANCORP, INC.
7711 Montgomery Road
Cincinnati, Ohio 45236
(513) 791-2834
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 28, 1999
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders of
Kenwood Bancorp, Inc. (the "Company") will be held at the Company's headquarters
located at 7711 Montgomery Road, Cincinnati, Ohio, on Thursday, January 28,
1999, at 4:00 p.m., Eastern Standard Time, for the following purposes, all of
which are set forth more completely in the accompanying Proxy Statement:
1. To elect one (1) director of the Company for a three-year term and
until his successor is elected and qualified;
2. To ratify the appointment of Clark, Schaefer, Hackett & Co. as the
Company's independent auditors for the year ending September 30, 1999; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof. Except with respect to procedural matters
incident to the conduct of the Annual Meeting, management is not aware of any
other matters that could come before the Annual Meeting.
The Board of Directors of the Company has fixed December 22, 1998 as
the voting record date for the determination of stockholders entitled to notice
of and to vote at the Annual Meeting. Only those stockholders of record as of
the close of business on that date will be entitled to vote at the Annual
Meeting or at any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ P. Lincoln Mitchell
-----------------------
P. Lincoln Mitchell, Secretary
December 29, 1998
Cincinnati, Ohio
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 THIS MEETING,
YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN MAY BE REVOKED
BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
<PAGE>
KENWOOD BANCORP, INC.
----------------------------
PROXY STATEMENT
----------------------------
ANNUAL MEETING OF STOCKHOLDERS
January 28, 1999
General
This Proxy Statement is being furnished to the stockholders of Kenwood
Bancorp, Inc. (the "Company"), a Delaware corporation. Proxies are being
solicited on behalf of the Board of Directors of the Company for use at the
Annual Meeting of Stockholders (the "Annual Meeting") to be held at the
Company's headquarters located at 7711 Montgomery Road, Cincinnati, Ohio, on
Thursday, January 28, 1999, at 4:00 p.m., Eastern Standard 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 December 29, 1998.
Voting Rights
Only the holders of record of the outstanding shares of the Company's
common stock, $0.01 par value per share (the "Common Stock"), at the close of
business on December 22, 1998 (the "Voting Record Date") will be entitled to
notice of and to vote at the Annual Meeting. At such date, there were 295,133
shares of Common Stock issued and outstanding.
Holders of record of Common Stock at the close of business on December
22, 1998 will be entitled to one vote per share on all matters that may properly
come before the Annual Meeting. Stockholders of the Company are not permitted to
cumulate their votes for the election of directors.
The presence, either in person or by proxy, of at least a majority of
the outstanding shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. Directors shall be elected by a
plurality of the votes cast with a quorum present. Abstentions are considered in
determining the presence of a quorum but will not affect the plurality vote
required for the election of directors. A majority of the total votes present in
person and by proxy will be required to ratify the appointment of the
independent auditors. Under rules of the New York Stock Exchange, the proposals
for the election of directors and the ratification of auditors 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
and for which there will not be "broker non-votes."
<PAGE>
Proxies
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 nominee for director described herein, for
the ratification of the appointment of the independent auditors 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 who has given a proxy may revoke it at any time prior to its
exercise at the Annual Meeting by (i) giving written notice of revocation to the
Secretary of the Company, (ii) properly submitting to the Company a duly
executed proxy bearing a later date, or (iii) attending the Annual Meeting and
voting in person. All written notices of revocation and other communications
with respect to the revocation of proxies should be addressed as follows:
Kenwood Bancorp, Inc., 7711 Montgomery Road, Cincinnati, Ohio 45236, Attention:
Secretary.
Beneficial Ownership
The following table sets forth information as to the Common Stock
beneficially owned, as of December 22, 1998, by (i) the only persons or
entities, including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "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, and
(iii) all directors and executive officers of the Company as a group.
2
<PAGE>
Amount and Nature
of Beneficial
Name of Beneficial Owner or Ownership as of Percent of
Number of Persons in Group December 22, 1998(1) Common Stock
- --------------------------- -------------------- ------------
Kenwood Bancorp, Inc. 12,612(2) 4.3%
Employee Stock Ownership Plan
Trust
7711 Montgomery Road
Cincinnati, Ohio 45236
Sanford E. Lockspeiser 16,983(3) 5.8%
2324 Madison Road, Apt. 1609
Cincinnati, Ohio 45208
Directors:
P. Lincoln Mitchell 5,985(4)(5) 2.0%
James N. Murphy 8,197(6) 2.8%
Robert P. Isler 16,823(5)(7) 5.7%
Donald G. Ashcraft 8,196(8) 2.8%
Richard C. Kent 10,315(9) 3.5%
All directors and executive officers
of the Company as a
group (7 persons) 64,550(10) 21.3%
(1) Pursuant to rules promulgated by the Securities and Exchange Commission
("SEC") under the Exchange Act, a person or entity is considered to
beneficially own shares of Common Stock if the person or entity 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 direct the disposition of the shares. Unless
otherwise indicated, a person or entity has sole voting and sole
investment power with respect to the indicated shares. Shares that are
subject to stock options and that may be exercised within 60 days of
the Voting Record Date are deemed to be outstanding for the purpose of
computing the percentage of Common Stock beneficially owned by such
person.
(Footnotes continued on following page)
3
<PAGE>
- ------------------
(2) The Kenwood Bancorp, Inc. Employee Stock Ownership Plan Trust (the
"Trust") was established pursuant to the Kenwood Bancorp, Inc. Employee
Stock Ownership Plan ("ESOP") by an agreement between the Company and
Messrs. Isler and Mitchell, who act as trustees of the ESOP (the
"Trustees"). As of the Voting Record Date, 2,838 shares held in the
Trust had been allocated to the accounts of participating employees.
Under the terms of the ESOP, the Trustees will generally vote the
allocated shares held in the ESOP in accordance with the instructions
of the participating employees. Unallocated shares held in the ESOP
will generally be voted in the same ratio on any matter as those
allocated shares for which instructions are given, subject in each case
to the fiduciary duties of the ESOP trustees and applicable law. Any
allocated shares that either abstain on the proposal or are not voted
will be disregarded in determining the percentage of stock voted for
and against each proposal by the participants and beneficiaries. The
amount of Common Stock beneficially owned by directors who serve as
Trustees of the ESOP and by all directors and executive officers as a
group does not include the unallocated shares held by the Trust.
(3) Based on a Schedule 13D filed pursuant to the Exchange Act on July 13,
1998.
(4) Includes options to purchase 805 shares pursuant to the Company's 1992
Directors' Stock Option Plan and options to purchase 315 shares
pursuant to the Company's 1996 Stock Option Plan.
(5) Excludes the shares held by the ESOP, of which the named director is
one of two trustees.
(6) A total of 7,882 shares are owned jointly with Mr. Murphy's wife.
Includes options to purchase 315 shares pursuant to the Company's 1996
Stock Option Plan.
(7) A total of 16,508 shares are held by the Isler Homes, Inc. Profit
Sharing Plan as to which Mr. Isler is the sole administrator and
beneficiary. Includes options to purchase 315 shares pursuant to the
Company's 1996 Stock Option Plan.
(8) Includes 7,076 shares held jointly with Mr. Ashcraft's spouse and
options to purchase 315 shares pursuant to the Company's 1996 Stock
Option Plan.
(9) A total of 10,000 shares are owned jointly with Mr. Kent's spouse.
Includes options to purchase 315 shares pursuant to the Company's 1996
Stock Option Plan.
(10) Includes in the case of all directors and executive officers of the
Company as a group, options to purchase 5,170 shares that are held by
Mr. Burns pursuant to the Company's 1992 Stock Incentive Plan, options
to purchase 805 shares that are held by Mr. Mitchell pursuant to the
Company's 1992 Directors' Stock Option Plan, and options to purchase
1,890 shares that are
4
<PAGE>
held by directors and executive officers pursuant to the Company's 1996
Stock Option Plan. See "Executive Compensation - Stock Options" and
"Directors' Compensation." Also includes 472 shares which are held by
the Company's ESOP which have been allocated to
Mr. Burns' account.
INFORMATION WITH RESPECT TO NOMINEE FOR DIRECTOR,
DIRECTORS WHOSE TERM CONTINUES AND EXECUTIVE OFFICERS
Election of Directors
The Company's Board of Directors is currently composed of five members.
The Certificate of Incorporation of the Company provides that the Board of
Directors shall be divided into three classes as nearly equal in number as
possible, and that the members of each class shall be elected to serve for terms
of three years and when their successors are elected and qualified, with one of
the three classes of directors to be elected each year.
At the Annual Meeting, stockholders of the Company will be asked to
elect one (1) director of the Company to serve for a three-year term and until
his successor is elected and qualified. The nominee for election as director was
selected by the Nominating Committee of the Board of Directors of the Company
and the nominee currently serves as a director of the Company. There are no
arrangements or understandings between the person named and any other person
pursuant to which such person was selected as a nominee for election as a
director at the Annual Meeting. No director or nominee for director is related
to any other director or executive officer of the Company by blood, marriage or
adoption.
If the person named as a nominee should be unable or unwilling to stand
for election at the time of the Annual Meeting, the proxies will nominate and
vote for a replacement nominee recommended by the Board of Directors of the
Company. At this time, the Board of Directors knows of no reason why the nominee
may not be able to serve as a director if elected.
The Bylaws of the Company provide that stockholders of the Company may
nominate persons for director in addition to nominees selected by the Board of
Directors, provided that such nominations are in writing and delivered to the
Secretary of the Company, 7711 Montgomery Road, Cincinnati, Ohio 45236, ninety
(90) days prior to the anniversary date of the mailing of proxy materials by the
Company in connection with the immediately preceding annual meeting of
stockholders of the Company. Each written notice of a stockholder nomination
must set forth certain information specified in the Company's Bylaws. No
nominations from stockholders were received in connection with this Annual
Meeting.
5
<PAGE>
Information with Respect to the Nominee for Director and Continuing Directors
The following tables present information concerning the nominee for
director of the Company and each director whose term continues, including his
tenure as a director of the Company and its wholly owned subsidiary, Kenwood
Savings Bank (the "Savings Bank"), and his principal occupation during the past
five years. The nominee also is a director of the Savings Bank.
<TABLE>
<CAPTION>
NOMINEE FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2002
Position with the
Company and Principal Occupation Director
Name Age During the Past Five Years Since(1)
---- --- -------------------------- --------
<S> <C> <C> <C>
Richard C. Kent 52 Director; Owner of Kent Insurance Agency, Inc., 1993
Cincinnati, Ohio, since 1988.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE ABOVE NOMINEE
BE ELECTED AS DIRECTOR
<TABLE>
<CAPTION>
DIRECTORS WITH TERMS EXPIRING IN 2000
Position with the
Company and Principal Occupation Director
Name Age During the Past Five Years Since(1)
---- --- -------------------------- --------
<S> <C> <C> <C>
P. Lincoln Mitchell 74 Director; Secretary of the Company since June 1996; 1985
Secretary of the Savings Bank since June 1992; self-
employed as a real estate appraiser since 1961.
James N. Murphy 58 Director; pharmacist at Home Care Pharmacy, 1992
Cincinnati, Ohio, since April 1997; sole
stockholder of Kenwood Pharmacy,
Cincinnati, Ohio, from May 1992 to April
1997; a 50% stockholder of Kunkel
Pharmacy, Cincinnati, Ohio, from October
1987 to September 1991.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
DIRECTORS WITH TERMS EXPIRING IN 2001
Position with the
Company and Principal Occupation Director
Name Age During the Past Five Years Since(1)
---- --- -------------------------- --------
<S> <C> <C> <C>
Robert P. Isler 63 Director; President and Chairman of the Board of 1986
the Company since June 1996; President of the
Savings Bank since June 1992 and Chairman of the
Board of the Savings Bank since January 1993;
Vice President of the Savings Bank from January
1991 to June 1992; President of Isler Homes, Inc.,
Okeana, Ohio, since 1964.
Donald G. Ashcraft 63 Director; Owner of Vintage Title Agency, Inc. since 1991
September 1995; President and co-owner of Blue
Chip Title Agency, Inc. from 1988 to August 1995.
</TABLE>
(1) Includes service with the Savings Bank.
Executive Officers Who Are Not Directors
The following table sets forth certain information with respect to the
only persons who currently serve as executive officers of the Company and the
Savings Bank and who are not also directors of the Company and the Savings Bank.
There are no arrangements or understandings between the Company or the Savings
Bank and such persons pursuant to which such persons were elected executive
officers of the Company and the Savings Bank and such officers are not related
to any director or other officer of the Company and the Savings Bank by blood,
marriage or adoption.
7
<PAGE>
<TABLE>
<CAPTION>
Position with the Company and the Savings Bank and
Principal Occupation
Name Age During the Past Five Years
- ---- --- --------------------------
<S> <C> <C>
Thomas W. Burns 43 Executive Vice President and Chief Executive Officer of the
Company since June 1996. Executive Vice President and
Chief Executive Officer of the Savings Bank since December
1991. Prior to December 1991, served as Controller,
Cardinal State Bank, Maineville, Ohio.
Michael W. Kelley 56 Chief Financial Officer of the Company and the Savings
Bank since May 1998. Served as Assistant Vice President,
Dearborn Savings Association, Lawrenceburg, Indiana, from
March 1998 to May 1998; President of North Cincinnati
Savings Bank, Cincinnati, Ohio, from November 1996 to
March 1998, and Vice President and Chief Financial Officer
from October 1994 to November 1996; and Vice President
and Chief Financial Officer, Brentwood Savings Association,
Cincinnati, Ohio, from March 1984 to October 1994.
</TABLE>
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires the Company's officers and
directors and persons who own more than 10% of the Company's Common Stock, to
file reports of ownership and changes in ownership with the SEC. 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 Company's Common Stock.
Based solely on review of the copies of such forms furnished to the
Company, the Company believes that during fiscal 1998, its officers and
directors complied with all applicable Section 16(a) filing requirements.
The Board of Directors and Its Committees
The Board of Directors of the Company meets monthly and the Board of
Directors of the Savings Bank meets twice a month. Both companies may have
special meetings from time-to-time as needed. During the year ended September
30, 1998, the Board of Directors of the Company met 15 times. No director
attended fewer than 75% of Board meetings during fiscal 1998 and the total
number of meetings of committees on which he served during the year.
The Company's Audit Committee examines and reviews the affairs and
reports of the Company, including its system of internal control, as well as the
reports of the independent auditors. The Audit Committee also monitors the
Company's adherence in accounting and financial reporting
8
<PAGE>
to generally accepted accounting principles. The Audit Committee met once during
fiscal 1998 and consists of Messrs. Isler, Ashcraft and Mitchell.
The Nominating Committee is appointed each year prior to the Annual
Meeting and nominates individuals for election as directors of the Company. The
Nominating Committee met once during fiscal 1998 and consists of Messrs.
Mitchell, Kent and Murphy.
The Personnel Committee reviews existing compensation, investigates new
and different forms of compensation and makes recommendations with respect
thereto to the Board of Directors of the Company. The Personnel Committee
consists of Messrs. Ashcraft, Burns, Murphy and Isler and met twice during
fiscal 1998.
EXECUTIVE COMPENSATION
Summary
The following table sets forth a summary of certain information
concerning the compensation awarded to or paid by the Company for services
rendered in all capacities during the last fiscal year to the Executive Vice
President and Chief Executive Officer of the Company. There were no executive
officers of the Company whose total compensation during the last fiscal year
exceeded $100,000.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards Payouts All Other
Other ---------------------------------- Compensation(3)
Name and Annual Restricted Securities
Principal Position Year Salary Bonus Compensation Stock Underlying LTIP
(1) Awards Options(2) Payouts
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas W. Burns 1998 $67,608 $2,000 -- -- -- -- $4,613
Executive Vice President and
Chief Executive Officer 1997 $64,625 $ -- -- -- 788 -- $5,344
1996 $63,125 $ -- -- -- -- -- $2,367
</TABLE>
(1) Does not include amounts attributable to miscellaneous benefits
received by executive officers. The costs to the Company of providing
such benefits to the named executive officer during the year ended
September 30, 1998 did not exceed the lesser of $50,000 or 10% of the
total of annual salary and bonus reported for such individual.
(Footnotes continued on following page)
9
<PAGE>
(2) Consists of stock options granted pursuant to the Company's 1996 Stock
Option Plan.
(3) Consists of $2,417, $2,433 and $2,367 in contributions pursuant to the
Savings Bank's 401(k) Profit Sharing Plan for fiscal 1998, 1997 and
1996, respectively, and $2,196 and $2,911, the allocations on behalf of
Mr. Burns under the Company's ESOP, for fiscal 1998 and 1997,
respectively.
Stock Option Plans
The Company has adopted the Savings Bank's 1992 Stock Incentive Plan.
The 1992 Stock Incentive Plan provides for the grant of options to purchase the
Company's Common Stock to officers and employees of the Savings Bank. The
maximum number of shares of the Company's Common Stock that may be issued under
the 1992 Stock Incentive Plan is 7,833 shares. Options for all such shares were
outstanding under such plan, none of which had been exercised as of September
30, 1998.
In connection with the formation of the Company, the Company adopted
the 1996 Stock Option Plan, which provides for the grant of options to purchase
the Company's Common Stock to directors, officers and employees of the Company.
The maximum number of shares of the Company's Common Stock that may be issued
under the 1996 Stock Option Plan is 15,765 shares. Options for 4,728 shares were
outstanding under the 1996 Stock Option Plan, none of which had been exercised
as of September 30, 1998.
No options were granted to the named executive officer during the year
ended September 30, 1998.
The following table sets forth certain information concerning exercises
of stock options granted pursuant to the Company's 1992 Stock Incentive Plan and
1996 Stock Option Plan by the named executive officer during the year ended
September 30, 1998 and options held at September 30, 1998.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
Number of Securities Underlying Value of Unexercised In-The-
Options at Money Options at Fiscal
Fiscal-Year End(1) Year-End(2)
Shares Acquired Value ----------------------------- ----------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Thomas W. Burns -- -- 4,465 4,156(3) $34,252 $29,284
</TABLE>
(Footnotes on following page)
10
<PAGE>
- --------------
(1) As adjusted to take into consideration the exchange of common stock of
the Savings Bank for Company Common Stock in connection with the
formation of the Company.
(2) Based on a per share market price of $13.00 as of September 30, 1998.
(3) 3,525 of such options vest over a nine-year period at the rate of 11%
per year, commencing November 13, 1993, and 631 of such options vest
over a five-year period at the rate of 20% per year, commencing January
30, 1998.
Directors' Compensation
During the year ended September 30, 1998, each member of the Board of
Directors of the Company received a monthly fee of $230. During the year ended
September 30, 1998, each member of the Board of Directors of the Savings Bank
received a monthly fee of $812, except Mr. Isler, the President and Chairman of
the Board of the Savings Bank, and Mr. Mitchell, the Secretary of the Savings
Bank, who received monthly fees of $1,275 and $1,050, respectively. Mr. Isler
and Mr. Mitchell are not otherwise compensated as officers of the Savings Bank.
Director fees are paid regardless of attendance or the number of meetings held.
Directors otherwise do not receive any fees for committee meetings.
In the original mutual holding company reorganization of the Savings
Bank in 1992, each non-employee director of the Savings Bank was granted an
option to purchase 805 shares of Common Stock at an exercise price of $10.00 per
share, as adjusted to take into consideration the exchange of common stock of
the Savings Bank for Common Stock of the Company in connection with the
formation of the Company. All of such options have been exercised except for
options held by Mr. Mitchell. As of September 30, 1998, options for an aggregate
of 805 shares were available for grant under such plan.
Management Recognition Plans
The Company has adopted the Savings Bank's Management Recognition Plan,
which provides for the award of restricted Common Stock to directors, officers
and employees of the Savings Bank. The restricted stock awarded pursuant to the
Management Recognition Plan vests over five years, one-fifth per year from the
date of grant. As of September 30, 1998, the maximum number of shares of the
Company's Common Stock available for grant under the Management Recognition Plan
was 4,027 shares, of which 859 shares have been granted.
In connection with the formation of the Company, the Company has
adopted a Management Recognition Plan and Trust ("MRP"), which provides for the
award of restricted Common Stock to directors, officers and employees of the
Company. The restricted stock awarded pursuant to the MRP vests over five years,
one-fifth per year from the date of grant. As of September 30, 1998, the
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<PAGE>
maximum number of shares of the Company's Common Stock available for grant under
the MRP was 6,306 shares, and as of such date the Company had not granted any
shares of restricted stock pursuant to such plan.
Profit Sharing Plan
The Savings Bank maintains a 401(k) Profit Sharing Plan (the "Profit
Sharing Plan"). Employees are eligible to participate on the October 1 of any
year after having completed one-half year of service with the Savings Bank and
after having attained age 20-1/2. The Profit Sharing Plan permits participants,
subject to the limitations imposed by Section 401(k) of the Internal Revenue
Code of 1986, as amended (the "Code"), and satisfaction of the requirements of
the Employee Retirement Income Security Act of 1974, as amended, ("ERISA"), to
make voluntary tax-defined contributions in an amount up to 7.5% of their annual
base compensation. The Savings Bank also may contribute to the Profit Sharing
Plan additional amounts in its discretion. During the year ended September 30,
1998, the Savings Bank contributed $11,584 to the Profit Sharing Plan, exclusive
of amounts deferred by employees.
Discretionary contributions made by the Savings Bank to the Profit
Sharing Plan are allocated to the accounts of plan participants in proportion to
each participant's compensation for the plan year. Benefits from the plan are
payable upon a participant's death, disability, retirement at age 65 or early
retirement (as defined therein), at which time the participant (or his
beneficiary) will become 100% vested in his plan benefits. Any participant who
separates from service prior to one of those events will be entitled to a
portion of his benefits. All amounts deferred by employees are 100% vested.
Vesting of matching and discretionary contributions is 20% after two years of
service with an additional 20% for each additional year of service up to 6 years
when full vesting occurs. The Profit Sharing Plan also provides for payment of
benefits prior to separation from service to a participant experiencing
financial hardship, as determined under the terms of the plan. The payment of
benefits under the Profit Sharing Plan may be made in a single cash payment, in
installments or by the purchase of an annuity.
Employee Stock Ownership Plan
The Company has established the ESOP for employees of the Company and
the Savings Bank. Full-time employees of the Company and the Savings Bank who
have been credited with at least 1,000 hours of service during a twelve-month
period and who have attained age 21 are eligible to participate in the ESOP.
In connection with the formation of the Company, the ESOP borrowed
funds to purchase 12,612 shares of Common Stock from the Company at a rate of
8.25% per annum. The loan to the ESOP is being repaid principally from the
Company's and the Savings Bank's contributions to the ESOP over a period of 10
years, and the collateral for the loan is the Common Stock purchased by the
ESOP. The Company may, in any plan year, make additional discretionary
contributions for the benefit of plan participants in either cash or shares of
Common Stock, which may be acquired
12
<PAGE>
through the purchase of outstanding shares in the open market or from individual
stockholders, upon the original issuance of additional shares by the Company or
upon the sale of treasury shares by the Company. Such purchases, if made, would
be funded through additional borrowings by the ESOP or additional contributions
from the Company. The timing, amount and manner of future contributions to the
ESOP will be affected by various factors, including prevailing regulatory
policies, the requirements of applicable laws and regulations and market
conditions.
Shares purchased by the ESOP with the proceeds of the loan are held in
a suspense account and released on a pro rata basis as debt service payments are
made. Discretionary contributions to the ESOP and shares released from the
suspense account are allocated among participants on the basis of compensation.
Forfeitures are reallocated among remaining participating employees and may
reduce any amount the Company otherwise might have contributed to the ESOP.
Participants vest in their right to receive their account balances pursuant to
the ESOP after completing five years of service with the Savings Bank (inclusive
of years of service prior to establishment of the ESOP). In the case of a change
in control of the Company, as defined, however, participants will become fully
vested in their account balances. Benefits are payable upon retirement, early
retirement or separation from service. The Company's contributions to the ESOP
are not fixed, so benefits payable under the ESOP cannot be estimated.
The ESOP is subject to the requirements of ERISA and the regulations of
the Internal Revenue Service and the Department of Labor.
Indebtedness of Management
In accordance with applicable federal laws and regulations, any credit
extended by the Savings Bank to its executive officers, directors and, to the
extent otherwise permitted, principal stockholder(s), or any related interest of
the foregoing, must (i) be on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions by the savings institution with non-affiliated parties; (ii) be
pursuant to underwriting standards that are no less stringent than those
applicable to comparable transactions with non-affiliated parties; (iii) not
involve more than the normal risk of repayment or present other unfavorable
features; and (iv) not exceed, in the aggregate, the institution's unimpaired
capital and surplus, as defined. As of September 30, 1998, no director or
executive officer of the Savings Bank was indebted to the Savings Bank.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed Clark, Schaefer,
Hackett & Co. ("Clark, Schaefer"), independent certified public accountants, to
perform the audit of the Company's financial statements for the year ending
September 30, 1999, and further directed that the selection of auditors be
submitted for ratification by the stockholders at the Annual Meeting.
13
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The Company has been advised by Clark, Schaefer that neither that firm
nor any of its associates has any relationship with the Company or its
subsidiaries other than the usual relationship that exists between independent
certified public accountants and clients. Clark, Schaefer will have one or more
representatives at the Annual Meeting who will have an opportunity to make a
statement, if they so desire, and who will be available to respond to
appropriate questions.
The Board of Directors recommends that you vote FOR the ratification of
the appointment of Clark, Schaefer, Hackett & Co. as independent auditors for
the fiscal year ending September 30, 1999.
OTHER MATTERS
Management 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 properly should come before the Annual Meeting, then 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 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 proxy materials
to the beneficial owners of the 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.
STOCKHOLDER PROPOSALS
Any proposal that a stockholder wishes to have included in the proxy
solicitation materials to be used in connection with the next Annual Meeting of
Stockholders of the Company must be received at the main office of the Company
no later than August 31, 1999. If such proposal complies with all of the
requirements of Rule 14a-8 of the Exchange Act, it will be included in the Proxy
Statement and set forth on the form of proxy issued for the next Annual Meeting
of Stockholders. It is urged that any such proposals be sent by certified mail,
return receipt requested.
Stockholder proposals that 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 2.14 of the Company's
Bylaws, which provides that business at an annual meeting of stockholders must
be (a) properly brought before the meeting by or at the direction of the Board
of Directors, or (b) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Company. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive offices of the
Company not
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later than 90 days prior to the anniversary date of the mailing of proxy
materials by the Company in connection with the immediately preceding annual
meeting of stockholders of the Company, or not later than September 30, 1999 in
connection with the 2000 annual meeting of stockholders of the Company. Such
stockholder's notice is required to set forth certain information specified in
the Company's Bylaws. No stockholder proposals were submitted in connection with
this Annual Meeting.
ANNUAL REPORTS AND FINANCIAL STATEMENTS
Stockholders of the Company as of the record date for the Annual
Meeting are being forwarded a copy of the Company's Annual Report to
Stockholders for the year ended September 30, 1998 (the "Annual Report").
Included in the Annual Report are the financial statements of the Company as of
September 30, 1997 and 1998 and for each of the years in the three-year period
ended September 30, 1998, prepared in accordance with generally accepted
accounting principles, and the related report of the Company's independent
public accountants. The Annual Report is not a part of this Proxy Statement.
Upon receipt of a written request, the Company will furnish to any
stockholder without charge a copy of its Annual Report on Form 10-K for the year
ended September 30, 1998 and a list of exhibits thereto, including the financial
statements and financial statement schedules, required to be filed with the SEC
under the Exchange Act. Such written request should be directed to Kenwood
Bancorp, Inc., 7711 Montgomery Road, Cincinnati, Ohio 45236, Attention:
Secretary. The Annual Report on Form 10-K is not a part of this Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ P. Lincoln Mitchell
-----------------------
P. Lincoln Mitchell, Secretary
December 29, 1998
Cincinnati, Ohio
15
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REVOCABLE PROXY
KENWOOD BANCORP, INC.
This Proxy is solicited on behalf of the Board of Directors of Kenwood
Bancorp, Inc. for use at the Annual Meeting of Stockholders to be held on
January 28, 1999 and at any adjournment thereof.
The undersigned hereby appoints the Board of Directors of Kenwood
Bancorp, Inc. (the "Company") as proxies, each with power to appoint his
substitute, and hereby authorizes them to represent and vote, as designated
below, all the shares of Common Stock of the Company held of record by the
undersigned on December 22, 1998 at the Annual Meeting of Stockholders to be
held at the Company's headquarters located at 7711 Montgomery Road, Cincinnati,
Ohio on Thursday, January 28, 1999, at 4:00 p.m., Eastern Time, and any
adjournment thereof.
1. ELECTION OF DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2002
[ ] FOR the nominee listed [ ] WITHHOLD AUTHORITY
below for the nominee listed below
Nominee for a three-year term expiring in 2002:
Richard C. Kent
2. PROPOSAL TO RATIFY THE APPOINTMENT by the Board of Directors of
Clark, Schaefer, Hackett & Co. as the Company's independent
auditors for the year ending September 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>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. THE 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 THE PROPOSAL SPECIFIED IN ITEM 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: __________________________
---------------------------------
---------------------------------
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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 PROMPTLY USING
THE ENCLOSED ENVELOPE.
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