[LOGO]
[Advance Financial Bancorp Letterhead]
September 30, 1997
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Advance Financial
Bancorp (the "Company"), I cordially invite you to attend the Annual Meeting of
Stockholders to be held at the Steubenville Country Club, 413 Lovers Lane,
Steubenville, Ohio, on Tuesday, October 28, 1997, at 9:00 a.m. The attached
Notice of Annual Meeting and Proxy Statement describe the formal business to be
transacted at the Annual Meeting. During the Annual Meeting, I will report on
the operations of the Company. Directors and officers of the Company, as well as
a representative of S.R. Snodgrass, A.C., certified public accountants, will be
present to respond to any questions stockholders may have.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID
RETURN ENVELOPE AS PROMPTLY AS POSSIBLE.
This will not prevent you from voting in person at the Annual Meeting, but will
assure that your vote is counted if you are unable to attend the Annual Meeting.
YOUR VOTE IS VERY IMPORTANT.
Sincerely,
/s/ Stephen M. Gagliardi
Stephen M. Gagliardi
President and Chief Executive Officer
1015 Commerce Street
Wellsburg, WV 26070-0391
(304) 737-3531
<PAGE>
- --------------------------------------------------------------------------------
ADVANCE FINANCIAL BANCORP
1015 COMMERCE STREET
WELLSBURG, WEST VIRGINIA 26070
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 28, 1997
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of Advance Financial Bancorp ("the Company"), will be held at the Steubenville
Country Club, 413 Lovers Lane, Steubenville, Ohio, on Tuesday, October 28, 1997,
at 9:00 a.m.
The Meeting is for the purpose of considering and acting upon the following
matters:
1. The election of three directors of the Company.
2. The ratification of the appointment of S.R. Snodgrass, A.C., as
independent auditors of the Company for the fiscal year ending June 30,
1998; and
3. Such other matters as may properly come before the Meeting or any
adjournments thereof.
The Board of Directors is not aware of any other business to come
before the Meeting. Any action may be taken on the foregoing proposals at the
Meeting on the date specified above or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. Stockholders of
record at the close of business on September 15, 1997 are the stockholders
entitled to vote at the Meeting and any adjournments thereof.
EACH STOCKHOLDER, WHETHER OR NOT HE PLANS TO ATTEND THE MEETING, IS REQUESTED TO
SIGN, DATE AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. ANY SIGNED PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED
BY FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY
EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE MEETING MAY
REVOKE HIS PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE MEETING.
HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN
NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO VOTE
PERSONALLY AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Florence K. McAlpine
Florence K. McAlpine
Corporate Secretary
Wellsburg, West Virginia
September 30, 1997
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
PROXY STATEMENT
OF
ADVANCE FINANCIAL BANCORP
1015 COMMERCE STREET
WELLSBURG, WEST VIRGINIA 26070
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
October 28, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GENERAL
- --------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Advance Financial Bancorp (the
"Company") to be used at the Annual Meeting of Stockholders of the Company which
will be held at the Steubenville Country Club, 413 Lovers Lane, Steubenville,
Ohio, on October 28, 1997, 9:00 a.m. local time (the "Meeting"). The
accompanying Notice of Annual Meeting of Stockholders and this Proxy Statement
are being first mailed to stockholders on or about September 30, 1997. The
Company acquired all of the outstanding stock of Advance Financial Savings Bank
(the "Bank") issued in connection with the completion of the Bank's
mutual-to-stock conversion on December 31, 1996 (the "Conversion").
At the Meeting, stockholders will consider and vote upon (i) the
election of three directors, (ii) the ratification of the appointment of S.R.
Snodgrass, A.C., as independent auditors of the Company for the fiscal year
ending June 30, 1998, and (iii) such other matters as may properly come before
the Meeting or any adjournments thereof. The Board of Directors of the Company
(the "Board" or the "Board of Directors") knows of no additional matters that
will be presented for consideration at the Meeting. Execution of a proxy,
however, confers on the designated proxy holder discretionary authority to vote
the shares represented by such proxy in accordance with their best judgment on
such other business, if any, that may properly come before the Meeting or any
adjournment thereof.
- --------------------------------------------------------------------------------
VOTING AND REVOCABILITY OF PROXIES
- --------------------------------------------------------------------------------
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Company at the address above or by the filing of
a later dated proxy prior to a vote being taken on a particular proposal at the
Meeting. A proxy will not be voted if a stockholder attends the Meeting and
votes in person. Proxies solicited by the Board of Directors will be voted in
accordance with the directions given therein. Where no instructions are
indicated, signed proxies will be voted "FOR" the nominees for directors set
forth below. The proxy confers discretionary authority on the persons named
therein to vote with respect to the election of any person as a director where
the nominee is unable to serve, or for good cause will not serve, and matters
incident to the conduct of the Meeting.
<PAGE>
- --------------------------------------------------------------------------------
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
- --------------------------------------------------------------------------------
Stockholders of record as of the close of business on September 15,
1997 (the "Record Date"), are entitled to one vote for each share of common
stock of the Company (the "Common Stock") then held. As of the Record Date, the
Company had 1,084,450 shares of Common Stock issued and outstanding.
The certificate of incorporation of the Company ("Certificate of
Incorporation") provide that in no event shall any record owner of any
outstanding Common Stock which is beneficially owned, directly or indirectly, by
a person who beneficially owns in excess of 10% of the then outstanding shares
of Common Stock (the "Limit") be entitled or permitted to any vote with respect
to the shares held in excess of the Limit. Beneficial ownership is determined
pursuant to the definition in the Certificate of Incorporation and includes
shares beneficially owned by such person or any of his or her affiliates (as
such terms are defined in the Certificate of Incorporation), or which such
person or any of his or her affiliates has the right to acquire upon the
exercise of conversion rights or options and shares as to which such person or
any of his or her affiliates or associates have or share investment or voting
power, but neither any employee stock ownership or similar plan of the Company
or any subsidiary, nor any trustee with respect thereto or any affiliate of such
trustee (solely by reason of such capacity of such trustee), shall be deemed,
for purposes of the Certificate of Incorporation, to beneficially own any Common
Stock held under any such plan.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) is necessary to constitute a quorum at the
Meeting. With respect to any matter, any shares for which a broker indicates on
the proxy that it does not have discretionary authority as to such shares to
vote on such matter (the "Broker Non-Votes") will be considered present for
purposes of determining whether a quorum is present. In the event there are not
sufficient votes for a quorum or to ratify any proposals at the time of the
Meeting, the Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of directors, the proxy being provided by the Board
enables a stockholder to vote for the election of the nominees proposed by the
Board, or to withhold authority to vote for the nominees being proposed.
Directors are elected by a plurality of votes of the shares present in person or
represented by proxy at a meeting and entitled to vote in the election of
directors.
As to the ratification of independent auditors as set forth in Proposal
II, by checking the appropriate box, a stockholder may: vote "FOR" the item,
(ii) vote "AGAINST" the item, or (iii) vote to "ABSTAIN" on such item. Unless
otherwise required by law, all other matters shall be determined by a majority
of votes cast affirmatively or negatively without regard to (a) Broker
Non-Votes, or (b) proxies marked "ABSTAIN" as to that matter.
Persons and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The following
table sets forth, as of the Record Date, persons or groups who own more than 5%
of the Common Stock and the ownership of all executive officers and directors of
the Company as a group. Other than as noted below, management knows of no person
or group that owns more than 5% of the outstanding shares of Common Stock at the
Record Date.
-2-
<PAGE>
<TABLE>
<CAPTION>
Percent of Shares
Amount and Nature of of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
- ------------------------------------ -------------------- -----------
<S> <C> <C>
Advance Financial Savings Bank
Employee Stock Ownership Plan ("ESOP")
1015 Commerce Street
Wellsburg, West Virginia 26070 (1) 86,756 8.0%
Jeffrey L. Gendell
Tontine Partners, L.P.
31 West 52nd Street, 17th Floor
New York, New York 10019 (2) 108,200 9.9%
Mr. Terry Maltese
Sandler O'Neill Asset Management LLC
712 Fifth Avenue, 22nd Floor
New York, New York 10019 (3) 59,500 5.5%
All directors and officers of the Company as a group (9
persons) (4) 83,204 7.7%
</TABLE>
-------------------------------------
(1) The ESOP purchased such shares for the exclusive benefit of plan
participants with funds borrowed from the Company. These shares are
held in a suspense account and will be allocated among ESOP
participants annually on the basis of compensation as the ESOP debt is
repaid. The Board of Directors has appointed a committee consisting of
the Compensation and Benefits Committee of the Bank comprised of
non-employee directors Murphy, Sperlazza, Chesson, Johnson, and Watson
to serve as the ESOP administrative committee ("ESOP Committee") and to
serve as the ESOP trustees ("ESOP Trustee"). The ESOP Committee or the
Board instructs the ESOP Trustee regarding investment of ESOP plan
assets. The ESOP Trustee must vote all shares allocated to participant
accounts under the ESOP as directed by participants. Unallocated shares
and shares for which no timely voting direction is received, will be
voted by the ESOP Trustee as directed by the ESOP Committee. As of the
Voting Record Date, 2,226 shares have been allocated under the ESOP to
participant accounts.
(2) Based upon an amended Schedule 13D filed with the Securities and
Exchange Commission, dated January 24, 1997, for which shared voting
and dispositive power is shown with respect to 108,200 shares.
(3) Based upon a Schedule 13D filed with the Securities and Exchange
Commission, dated August 14, 1997, for which shared voting and
dispositive power is shown with respect to 59,500 shares.
(4) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust and other indirect ownership, over which
shares the individuals effectively exercise sole voting and investment
power, unless otherwise indicated. Excludes 86,069 shares (86,756
shares minus 687 shares allocated to executive officers) held by the
ESOP over which certain directors, as trustees to the ESOP, exercise
shared voting and investment power. Such individuals disclaim
beneficial ownership with respect to such shares held by the ESOP.
-3-
<PAGE>
- --------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
Section 16(a) of the 1934 Act requires the Company's officers and
directors, and persons who own more than ten percent of the Common Stock, to
file reports of ownership and changes in ownership of the Common Stock, on Forms
3, 4 and 5, with the Securities and Exchange Commission ("SEC") and to provide
copies of those Forms 3, 4 and 5 to the Company. The Company is not aware of any
beneficial owner of more than ten percent of its Common Stock. Based upon a
review of the copies of the forms furnished to the Company, or written
representations from certain reporting persons that no Forms 5 were required,
the Company believes that all Section 16(a) filing requirements applicable to
its officers and directors were complied with during the 1997 fiscal year.
- --------------------------------------------------------------------------------
I - INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR, DIRECTORS
CONTINUING IN OFFICE, AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
Election of Directors
The Certificate of Incorporation require that the Board of Directors be
divided into three classes, each of which contains approximately one-third of
the members of the Board. The directors are elected by the stockholders of the
Company for staggered three-year terms, or until their successors are elected
and qualified. The Board of Directors currently consist of eight members. Three
directors will be elected at the Meeting to serve for a three-year term or until
their successors have been elected and qualified.
Stephen M. Gagliardi, James R. Murphy and William B. Chesson have been
nominated by the Board of Directors to serve as directors. Messrs. Gagliardi,
Murphy, and Chesson are currently members of the Board and have been nominated
for a three-year term to expire in 2000. It is intended that the persons named
in the proxies solicited by the Board will vote for the election of the named
nominees. If any of the nominees are unable to serve, the shares represented by
all valid proxies will be voted for the election of such substitute as the Board
of Directors may recommend or the size of the Board may be reduced to eliminate
the vacancy. At this time, the Board knows of no reason why the nominees might
be unavailable to serve.
The following table sets forth information with respect to the
nominees, their name, age, the year they first became a director of the Company
or the Bank, the expiration date of their current term as a director, and the
number and percentage of shares of the Common Stock beneficially owned. Each
director of the Company is also a member of the Board of Directors of the Bank.
Beneficial ownership of executive officers and directors of the Company, as a
group, is shown under "Voting Securities and Principal Holders Thereof."
-4-
<PAGE>
<TABLE>
<CAPTION>
Shares of
Common Stock
Current Beneficially
Year First Term Owned as of
Name and Title Elected or to September 15, Percent
- -------------- Age(1) Appointed(2) Expire 1997 (3) Owned
------ ------------ ------- --------- ------
BOARD NOMINEES FOR TERM TO EXPIRE IN 2000
<S> <C> <C> <C> <C> <C>
Stephen M. Gagliardi 49 1983 1997 10,325 -- (5)
President, Chief Executive Officer
and Director
James R. Murphy 74 1962 1997 15,000(4) 1.4%
Director
William B. Chesson 61 1997 1997 2,500(4) -- (5)
Director
DIRECTORS CONTINUING IN OFFICE
George H. Johnson 75 1977 1998 7,000(4) -- (5)
Director
William E. Watson 61 1991 1998 15,000(4) 1.4%
Director
Gary Young 59 1975 1998 7,500 -- (5)
Director
Noreen Mechling 64 1994 1999 5,176 -- (5)
Director, Senior Vice President
and Chief Financial Officer
John R. Sperlazza 59 1973 1999 15,100(4) 1.4%
Director
</TABLE>
- ----------------
(1) At June 30, 1997.
(2) Refers to the year the individual first became a director of the Company or
the Bank.
(3) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust, and other indirect ownership, over which shares
the individuals effectively exercise sole or shared voting and investment
power, unless otherwise indicated.
(4) Excludes 86,756 shares of Common Stock held under the ESOP for which such
individual serves as either a member of the ESOP Committee or as an ESOP
Trustee. Such individual disclaims beneficial ownership with respect to
shares held in a fiduciary capacity. The ESOP purchased such shares for the
exclusive benefit of ESOP participants with funds borrowed from the
Company. These shares are held in a suspense account and will be allocated
among ESOP participants annually on the basis of compensation as the ESOP
debt is repaid. The Board of Directors has appointed Messrs. Murphy,
Sperlazza, Chesson, Johnson and Watson to serve on the ESOP Committee and
to serve as ESOP Trustees. The ESOP Committee or the Board instructs the
ESOP Trustee regarding investment of ESOP plan assets. The ESOP Trustees
must vote all shares allocated to participant accounts under the ESOP as
directed by ESOP participants. Unallocated shares and shares for which no
timely voting direction is received will be voted by the ESOP Trustees as
directed by the ESOP Committee. As of the Voting Record Date, 2,226 shares
have been allocated under the ESOP to participant accounts.
(5) Less than 1.0%.
-5-
<PAGE>
Executive Officers of the Company
The following individuals hold the executive offices in the Company set
forth below opposite their names.
<TABLE>
<CAPTION>
Name Age as of
- ---- June 30, 1997 Positions Held With the Company
------------- -------------------------------
<S> <C> <C>
Stephen M. Gagliardi 49 President, Chief Executive Officer and Director
Noreen Mechling 63 Treasurer, Chief Financial Officer and Director
Steven D. Martino 42 Vice President
</TABLE>
Biographical Information
Set forth below is certain information with respect to the directors,
including director nominees and executive officers of the Company. All directors
of the Bank in December 1996 became directors of the Company at that time.
Executive Officers receive compensation from the Bank. See "-- Executive
Compensation." All directors and executive officers have held their present
positions for five years unless otherwise stated.
William B. Chesson has been a director of the Bank and the Company
since March 1997. Since 1995, Mr. Chesson has been the President of the
Jefferson County Chamber of Commerce in Steubenville, Ohio and is currently a
member of the Board of Trustees of Jefferson Community College and the Board of
Advisors of Franciscan University also in Steubenville. Prior to 1995, Mr.
Chesson was the general manager of the radio station WSTV-WRKY in Steubenville.
Stephen M. Gagliardi is the President and Chief Executive Officer of
the Bank and has served in these capacities with the Company since its
formation. Mr. Gagliardi has been a director of the Bank since 1983. He is the
past Director of the West Virginia Appraiser Licensing and Certification Board
and past President of the Brooke County Rotary and the Brooke County United Way.
Mr. Gagliardi is Trustee and Treasurer of the Christ Episcopal Church of
Wellsburg.
George H. Johnson has been a director of the Bank since 1977 and a
director of the Company since its formation. Mr. Johnson is a retired employee
of Koppers Co., Inc., a coal, tar and chemicals company. Mr. Johnson is also a
director of Municipal Mutual of West Virginia.
Steven D. Martino has been an employee with the Bank since 1982 and has
served as Senior Vice President and Chief Operating Officer since July 1996. Mr.
Martino is the current President of the Wellsburg Chamber of Commerce and is the
current co-Campaign Chairman of the Brooke County United Way. He is also a real
estate appraiser licensed by the State of West Virginia.
Noreen Mechling has been a director of the Bank since 1994 and a
director of the Company since its formation. Ms. Mechling has been an employee
of the Bank since 1975 and currently serves as Senior Vice President and Chief
Financial Officer.
-6-
<PAGE>
James R. Murphy has been a director of the Bank since 1962 and a
director of the Company since its formation. Mr. Murphy is a majority
stockholder of Murphy Consolidated Industries. Mr. Murphy has been employed with
this building contractor for 50 years.
John R. Sperlazza has been a director of the Bank since 1973 and a
director of the Company since its formation. For the past four years, Mr.
Sperlazza has been a co-owner of J&J Properties, a real estate rental company,
and has been employed with JJ&R Enterprises, a real estate rental company, and
Mark's Carry Out. Prior to that time Mr. Sperlazza retired as a co-owner of
trucking, mining and coal companies.
William E. Watson has been a director of the Bank since 1991 and a
director of the Company since its formation. Mr. Watson is an attorney in
Wellsburg, West Virginia and has practiced law since 1961. Mr. Watson serves as
counsel for the Bank. Mr. Watson is the Chancellor (General Counsel) of the West
Virginia Conference United Methodist Church, Chairman of the Board of Trustees
of West Virginia Wesleyan College and Chairman of the Administrative Board of
Wellsburg United Methodist Church.
Gary Young has been a director of the Bank since 1975 and a director of
the Company since its formation. Mr. Young is the Park Director of the Brooke
Hills Park in Wellsburg, West Virginia. Mr. Young is a member of the Royal Order
of Moose, Brooke County Sportsman Club and Colliers Sportsman Club.
Nominations for Director
Pursuant to Article II, Section 15 of the Company's Bylaws,
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to a notice in writing to the Secretary of the
Company that is delivered to, or mailed and received at, the principal executive
offices of the Company not less than 60 days prior to the anniversary date of
the immediately preceding annual meeting of stockholders of the Company;
provided, however, that with respect to the first scheduled annual meeting,
notice by the stockholder must be so delivered or received no later than the
close of business on the tenth day following the day on which notice of the date
of the scheduled meeting must be delivered or received no later than the close
of business on the fifth day preceding the date of the meeting.
Such stockholder's notice shall set forth (a) as to each person whom
the stockholder proposes to nominate for election or re-election as a director
and as to the stockholder giving the notice (i) the name, age, business address,
and residence address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of Common Stock
which are beneficially owned by such person on the date of such stockholder
notice, and (iv) any other information relating to such person that is required
to be disclosed in solicitations of proxies with respect to nominees for
election as directors; and (b) as to the stockholder giving the notice (i) the
name and address, as they appear on the Company's books, of such stockholder and
any other stockholders known by such stockholder to be supporting such nominees
and (ii) the class and number of shares of Common Stock which are beneficially
owned by such stockholder on the date of such stockholder notice and, to the
extent known, by any other stockholders known by such stockholder to be
supporting such nominees on the date of such stockholder notice. At the request
of the Board of Directors, any person nominated by, or at the direction of, the
Board for election as a director at an annual meeting shall furnish to the
Secretary of
-7-
<PAGE>
the Company that information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee.
The Board of Directors may reject any nomination by a stockholder not
made in accordance with the requirements of the Bylaws. If the presiding officer
at the meeting determines that a nomination was not made in accordance with the
terms of the Bylaws, he shall so declare at the annual meeting and the defective
nomination shall be disregarded.
Meetings and Committees of the Board of Directors
The Board of Directors of the Company conducts its business through
meetings of the Board of the Bank and through activities of its committees.
During the fiscal year ended June 30, 1997, the Board of Directors held 24
regular meetings and 2 special meetings. No director attended fewer than 75% of
the total meetings of the Board of Directors and committees during the time such
director served during the fiscal year ended June 30, 1997.
The Company's full Board of Directors acts as a nominating committee
("Nominating Committee") for selecting the management's nominees for election of
directors in accordance with the Company's Bylaws. This non-standing committee
met once during the 1997 fiscal year.
The Compensation and Benefits Committee is comprised of non-employee
directors Murphy, Sperlazza, Chesson, Johnson and Watson. This standing
committee establishes the Bank's salary budget, director and committee member
fees, and employee benefits provided by the Bank for approval by the Board of
Directors. The Committee met once during the 1997 fiscal year.
The Audit Committee is comprised of Directors Watson, Johnson and
Murphy. The President also attends these meetings but it is excused during
certain portions. The Audit Committee is responsible for developing and
maintaining the Bank's audit program. The Committee also meets with the Bank's
outside auditors to discuss the results of the annual audit and any related
matters. The Audit Committee met once during the 1997 fiscal year.
- --------------------------------------------------------------------------------
DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
- --------------------------------------------------------------------------------
Director Compensation
In the fiscal year ended 1997, members of the Board Directors received
a monthly fee of $400, with up to four absences, regardless of attendance. Board
members receive $35 for attendance at each committee meeting. For the fiscal
year ended June 30, 1997, total fees paid by the Bank to Directors were $83,245.
Executive Officer Compensation
The Company has no full time employees, but relies on the employees of
the Bank for the limited services required by the Company. All compensation paid
to officers and employees is paid by the Bank.
-8-
<PAGE>
Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by the chief executive officer. No
other executive officer of either the Bank or the Company had a salary and bonus
during the years ended June 30, 1997 and 1996 that exceeded $100,000 for
services rendered in all capacities to the Bank or the Company.
Annual Compensation
-------------------
<TABLE>
<CAPTION>
All
Name and Fiscal Other Annual Other
Principal Position Year Salary Bonus Compensation(1) Compensation(2)
- ------------------ ---- ------ ----- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Stephen M. Gagliardi 1997 $87,696 $7,500 $15,478 $11,640
President and Chief
Executive Officer 1996 81,111 10,000 13,427 8,238
</TABLE>
- -----------------
(1) At June 30, 1997, consists of $11,200 in Directors' fees and $4,278 in
expenses associated with the use of a company automobile. At June 30, 1996,
consists of $9,450 in Directors' fees and $3,977 in expenses associated
with the use of a company automobile.
(2) At June 30, 1997, consists of a contribution of $174 for term life
insurance, a matching contribution of $2,411 to the 401(K) Plan, a profit
sharing contribution of $5,805 and 325 shares of stock allocated under the
ESOP as of December 31, 1996, with a market value at such date of $3,250.
At June 30, 1996, consists of a contribution of $174 for term life
insurance, a matching contribution of $2,526 to the 401(K) Plan and a
profit sharing contribution of $5,538.
Employment Agreement. The Bank entered into an employment agreement
with Stephen M. Gagliardi, President and Chief Executive Officer of the Bank
("Agreement"). The Agreement has a three year term. Mr. Gagliardi's base
compensation under the Agreement is $98,992. Under the Agreement, Mr.
Gagliardi's employment may be terminated by the Bank for "just cause" as defined
in the Agreement. If the Bank terminates Mr. Gagliardi without just cause, Mr.
Gagliardi will be entitled to a continuation of his salary from the date of
termination through the remaining term of the Agreement but not less than one
year's salary. In the event of the termination of employment in connection with
any change in control of the Bank during the term of the Agreement, Mr.
Gagliardi will be paid in a lump sum an amount equal to 2.99 times his five year
average taxable compensation. In the event of a change in control at June 30,
1997, Mr. Gagliardi would have been entitled to a lump sum payment of
approximately $256,835.
- --------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
Certain Related Transactions
The Bank, like many financial institutions, has followed a policy of
granting various types of loans to officers, directors, and employees. The loans
have been made in the ordinary course of business and on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with the Bank's other customers, and do not involve
more than the normal risk of collectibility, or present other unfavorable
features.
-9-
<PAGE>
- --------------------------------------------------------------------------------
II -- RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
S.R. Snodgrass, A.C., was the Company's independent public accountant
for the 1997 fiscal year. The Board of Directors of the Company presently
intends to renew the Company's arrangement with S.R. Snodgrass, A.C. to be its
auditors for the fiscal year ended June 30, 1998. A representative of S.R.
Snodgrass, A.C. is expected to be present at the meeting to respond to
stockholders' questions and will have the opportunity to make a statement if the
representative so desires.
Ratification of the appointment of the auditors requires the approval
of a majority of the votes cast by the stockholders of the Company at the
Meeting. The Board of Directors recommends that stockholders vote "FOR" the
ratification of the appointment of S.R. Snodgrass, A.C., as the Company's
auditors for the fiscal year ending June 30, 1998.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described in this Proxy Statement. However, if
any other matters should properly come before the Meeting, it is intended that
proxies in the accompanying form will be voted in respect thereof in accordance
with the judgment of the persons named in the accompanying proxy.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of soliciting 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 Common Stock. In addition to solicitations by mail,
directors, officers, and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
The Company's Annual Report to Stockholders for the year ended June 30,
1997, including financial statements, will be mailed to all stockholders of
record as of the close of business on September 15, 1997. Any stockholder who
has not received a copy of such Annual Report may obtain a copy by writing to
the Secretary of the Company. Such Annual Report is not to be treated as a part
of the proxy solicitation material or as having been incorporated herein by
reference.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's executive offices at
1015 Commerce Street, Wellsburg, West Virginia 26070, no later than June 2,
1998. Any such proposals shall be subject to the requirements of the proxy rules
adopted under the 1934 Act.
-10-
<PAGE>
- --------------------------------------------------------------------------------
FORM 10-KSB
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
JUNE 30, 1997 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD
DATE UPON WRITTEN REQUEST TO THE SECRETARY, ADVANCE FINANCIAL BANCORP, 1015
COMMERCE STREET, WELLSBURG, WEST VIRGINIA 26070.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Florence K. McAlpine
Florence K. McAlpine
Corporate Secretary
Wellsburg, West Virginia
September 30, 1997
-11-
<PAGE>
Annex A
- --------------------------------------------------------------------------------
ADVANCE FINANCIAL BANCORP
1015 COMMERCE STREET
WELLSBURG, WEST VIRGINIA 26070
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
October 28, 1997
- --------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors of Advance
Financial Bancorp (the "Company"), or its designee, with full powers of
substitution, to act as attorneys and proxies for the undersigned, to vote all
shares of Common Stock of the Company which the undersigned is entitled to vote
at the Annual Meeting of Stockholders (the "Meeting"), to be held at the
Steubenville Country Club, 413 Lovers Lane, Steubenville, Ohio, on October 28,
1997, at 9:00 a.m. and at any and all adjournments thereof, in the following
manner:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR WITHHELD
--- --------
1. The election as directors of the nominees
listed below (except as marked to the contrary below): |_| |_|
Stephen M. Gagliardi
James R. Murphy
William B. Chesson
(Instruction: To withhold authority to vote
for any individual nominee, write that nominee's name
on the space provided below)
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of the appointment of S.R.
Snodgrass, A.C., as independent auditors for the
Company for the fiscal year ending June 30, 1998. |_| |_| |_|
</TABLE>
The Board of Directors recommends a vote "FOR" the above listed
proposition.
- --------------------------------------------------------------------------------
THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR THE PROPOSITION STATED. IF ANY
OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS SIGNED PROXY WILL BE VOTED BY
THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD
OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting, or
at any adjournments thereof, and after notification to the Secretary of the
Company at the Meeting of the Stockholder's decision to terminate this Proxy,
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned may also revoke this Proxy by filing a
subsequently dated Proxy or by written notification to the Secretary of the
Company of his or her decision to terminate this Proxy.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders, a Proxy
Statement dated September 30, 1997 and the 1997 Annual Report.
Dated: , 1997
------------------------------
- ---------------------------------------- -----------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ---------------------------------------- -----------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this Proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
- --------------------------------------------------------------------------------
<PAGE>
Annex B 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 [ ] 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 ss. 240.14a-11(c) or ss. 240.14a-12
Advance Financial Bancorp
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------