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
[X] Definitive Proxy Statement Only (as permitted by Rule 14a 6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Section 240.14a-11(c) or Section 240.14a-12
Advance Financial Bancorp
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(Name of Registrant as Specified in Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
ADVANCE FINANCIAL BANCORP
September 28, 1999
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 bank's Wintersville office, 805 Main Street,
Wintersville, Ohio, on Tuesday, October 19, 1999, at 9:30 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.
In addition to the election of directors, the stockholders will be asked to
ratify the appointment of S.R. Snodgrass, A.C., as the Company's auditors for
2000. The Board of Directors has unanimously approved each of these proposals
and recommends that you vote "FOR" them.
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
<PAGE>
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ADVANCE FINANCIAL BANCORP
1015 COMMERCE STREET
WELLSBURG, WEST VIRGINIA 26070
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 19, 1999
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of Advance Financial Bancorp ("the Company"), will be held at the bank's
Wintersville office, 805 Main Street, Wintersville, Ohio on Tuesday, October 19,
1999, at 9:30 a.m., for the following purposes:
1. To elect two directors; and
2. To ratify the appointment of S.R. Snodgrass, A.C. as independent
auditors of the Company for the fiscal year ending June 30, 2000;
all as set forth in the proxy statement accompanying this notice, and to
transact such other business as may properly come before the Meeting and any
adjournments. The Board of Directors has fixed the close of business on August
31, 1999 as the record date for the determination of stockholders who are
entitled to notice of, and to vote at, the Meeting.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU
OWN. WE ENCOURAGE YOU TO VOTE BY PROXY SO THAT YOUR SHARES WILL BE REPRESENTED
AND VOTED AT THE MEETING EVEN IF YOU CANNOT ATTEND. ALL STOCKHOLDERS OF RECORD
CAN VOTE BY WRITTEN PROXY CARD. AND, OF COURSE, YOU MAY VOTE IN PERSON AT THE
MEETING IF YOU SO CHOOSE.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Florence K. McAlpine
--------------------------------------
Florence K. McAlpine
Corporate Secretary
Wellsburg, West Virginia
September 28, 1999
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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.
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<PAGE>
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PROXY STATEMENT
OF
ADVANCE FINANCIAL BANCORP
1015 COMMERCE STREET
WELLSBURG, WEST VIRGINIA 26070
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ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 19, 1999
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This proxy statement and the accompanying proxy card are being mailed
to stockholders of Advance Financial Bancorp (the "Company") on or about
September 28, 1999 in connection with the solicitation by the Company's Board of
Directors of proxies to be used at the annual meeting of stockholders (the
"Meeting") to be held at the bank's Wintersville branch, 805 Main Street,
Wintersville, Ohio on Tuesday, October 19, 1999 at 9:30 a.m.
All properly executed written proxies that are delivered pursuant to
this proxy statement will be voted on all matters that properly come before the
Meeting for a vote. If your signed proxy specifies instructions with respect to
matters being voted upon, your shares will be voted in accordance with your
instructions. If no instructions are specified, your shares will be voted (a)
FOR the election of directors named in Proposal 1, (b) FOR Proposal 2
(ratification of independent public accountants); and (c) in the discretion of
the proxy holders, as to any other matters that may properly come before the
Meeting. Your proxy may be revoked at any time prior to being voted by: (i)
filing with the Corporate Secretary of the Company (Florence K. McAlpine, at
1015 Commerce Street, Wellsburg, West Virginia 26070) written notice of such
revocation, (ii) submitting a duly executed proxy bearing a later date, or (iii)
attending the Meeting and giving the Secretary notice of your intention to vote
in person.
WHETHER OR NOT YOU ATTEND THE MEETING, YOUR VOTE IS IMPORTANT.
ACCORDINGLY, REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOU ARE ASKED TO VOTE
PROMPTLY BY SIGNING AND RETURNING THE ACCOMPANYING PROXY CARD. SHARES CAN BE
VOTED AT THE MEETING ONLY IF YOU ARE REPRESENTED BY PROXY OR ARE PRESENT IN
PERSON.
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VOTING STOCK AND VOTE REQUIRED
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The Board of Directors has fixed the close of business on August 31,
1999 as the record date for the determination of stockholders who are entitled
to notice of, and to vote at, the Meeting. On the record date, there were
971,285 shares of the Company common stock outstanding (the "Common Stock").
Each stockholder of record on the record date is entitled to one vote for each
share held.
The Certificate of Incorporation of the Company ("Certificate of
Incorporation") provides 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
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<PAGE>
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 not 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, as set forth in Proposal I, 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
nominee 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
2, by checking the appropriate box, a stockholder may: (i) vote "FOR" the item,
(ii) vote "AGAINST" the item, or (iii) vote to "ABSTAIN" on such item. Unless
otherwise required by law, Proposal 2 and any 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.
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PRINCIPAL HOLDERS
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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.
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<PAGE>
<TABLE>
<CAPTION>
Percent of Shares of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding (%)
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<S> <C> <C>
Advance Financial Savings Bank
Employee Stock Ownership Plan ("ESOP")
1015 Commerce Street
Wellsburg, West Virginia 26070 (1) 86,756 8.9
Jeffrey L. Gendell
Tontine Partners, L.P.
31 West 52nd Street, 17th Floor
New York, New York 10019 (2) 108,200 11.1
SOAM Holdings LLC
Sandler O'Neill Asset Management LLC
Malta Partners L.P.
Malta Partners II, L.P.
Malta Hedge Fund L.P.
Malta Hedge Fund II, L.P.
Mr. Terry Maltese
712 Fifth Avenue, 22nd Floor
New York, New York 10019 (3) 93,000 9.6
All directors and officers of the Company
as a group (11 persons) (4) 139,535 13.9
</TABLE>
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(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 Chesson, Johnson, Murphy, Sperlazza, Watson, and
Young 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 record date, 22,632 shares have been allocated
under the ESOP to participant accounts.
(2) The information as to Jeffrey L. Gendell, and Tontine Partners, L.P.,
(collectively, the "Reporting Persons"), is derived from a Schedule
13D, dated January 14, 1997, which states that the Reporting Persons,
through certain of its affiliates, had shared voting power and shared
dispositive power with regard to 108,200 shares.
(3) The information as to SOAM Holdings LLC ("SOAM"), Sandler O'Neill Asset
Management ("Sandler"), Malta Partners, L.P. ("MPLP"), Malta Partners
II, L.P. ("MPIILP"), Malta Hedge Fund, L.P. ("MHFLP"), Malta Hedge Fund
II, L.P. ("MHFIILP"), and Terry Maltese ("Maltese") is derived from an
amended schedule 13D dated December 22, 1998, which states that as of
December 11, 1998, SOAM, Sandler, MPLP, MPIILP, MHFLP, MHFIILP, and
Maltese had shared voting and shared dispositive power with respect to
93,000 shares, 93,000 shares, 39,700 shares, 13,800 shares, 22,900
shares, 16,600 shares and 93,000 shares, respectively. The amended 13D
also states that Holdings by reason of its position as general partner
of MPLP, MPIILP, MHFLP, and MHFIILP, may be deemed to own the shares
beneficially owned by the respective partnerships.
(footnotes continued on next page)
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<PAGE>
(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. Includes options to acquire 32,534
shares of Common Stock under the 1998 stock option plan within 60 days
of the record date. Excludes 79,506 shares held by the ESOP (86,756
shares minus 7,250 shares allocated to executive officers) and excludes
28,100 shares previously awarded but presently subject to forfeiture
under the Restricted Stock Plan ("RSP"), over which certain directors
by their position as either a member of the ESOP Committee, ESOP trust
or RSP trust, exercise shared voting and investment power. Such
individuals serving as a member of the ESOP Committee, ESOP trust or
RSP trust disclaim beneficial ownership with respect to the ESOP and
RSP shares. See "Proposal I - Election of Directors."
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the Securities and Exchange Act of 1934 , as amended,
requires the Company's directors and executive officers to file reports of
ownership and changes in ownership of their equity securities of the Company
with the Securities and Exchange Commission and to furnish the Company with
copies of such reports. To the best of the Company's knowledge, all of the
filings by the Company's directors and executive officers were made on a timely
basis during the 1999 fiscal year. With the exception of Jeffrey L. Gendell and
Tontine Partners, L.P., the Company is not aware of any beneficial owners of
more than ten percent of its Common Stock. The Company did not receive any Forms
3, 4, or 5 from the Reporting Persons.
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Board of Directors currently consists of six members, each of whom also
serves as a director of Advance Financial Savings Bank (the "Bank"). The
Company's Certificate of Incorporation provides that the Board of Directors must
be divided into three classes as nearly equal in number as possible. The class
to which each director has been assigned is designated as Class I, Class II, or
Class III. The term of office of the directors in Class III expires at the
Meeting; the term of office of the directors in Class I expires at the annual
meeting of stockholders scheduled to be held in 2000, and the term of office of
the directors in Class II expires at the annual meeting of stockholders
scheduled to be held in 2001. At each annual meeting of stockholders, each of
the successors of the directors whose terms expire at the meeting will be
elected to serve for a term of three years expiring at the third annual meeting
of stockholders following the annual meeting of stockholders at which the
successor director was elected.
George H. Johnson and John R. Sperlazza have been nominated by the Board of
Directors for a term of three years. Messrs. Johnson and Sperlazza currently
serve as directors of the Company.
The persons named as proxies in the enclosed proxy card intend to vote for
the election of the person listed below, unless the proxy card is marked to
indicate that such authorization is expressly withheld. Should Messrs. Johnson
and Sperlazza withdraw or be unable to serve (which the Board of Directors does
not expect) or should any other vacancy occur in the Board of Directors, it is
the intention of the persons named in the enclosed proxy card to vote for the
election of such person as may be recommended to the Board of Directors by the
Nominating Committee. If there is no substitute nominee, the size of the Board
of Directors may be reduced.
The following table sets forth the names, ages, terms of, and length of
board service for the persons nominated for election as directors of the Company
at the Meeting and each other director of the Company who will continue to serve
as director after the Meeting. Beneficial ownership of executive officers and
directors of the Company, as a group, is set forth under the caption "Principal
Holders."
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<PAGE>
<TABLE>
<CAPTION>
Shares of
Common Stock
Current Beneficially
Year First Term Owned as of Percent
Elected or to August 31, Owned
Name and Title Age(1) Appointed(2) Expire 1999(3) (%)
- -------------- ------ ------------ ------- ------------------- --------
<S> <C> <C> <C> <C> <C> <C>
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2002
George H. Johnson 77 1977 1999 11,175(4)(5) 1.1
Director
John R. Sperlazza 61 1973 1999 19,275(4)(5) 2.0
Director
DIRECTORS CONTINUING IN OFFICE
William B. Chesson 63 1997 2000 7,675(4)(5) --(6)
Director
Stephen M. Gagliardi 51 1983 2000 28,894 2.9
President, Chief Executive Officer
and Director
James R. Murphy 76 1962 2000 21,375(4)(5) 2.2
Director
William E. Watson 63 1991 2001 19,175(4)(5) 2.0
Director
Frank Gary Young 61 1975 2001 11,673(4)(5) 1.2
Director
</TABLE>
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(1) At June 30, 1999.
(2) Refers to the year the individual first became a director of the Company or
the Bank.
(3) The share amounts include shares of Common Stock that the following persons
may acquire through the exercise of stock options within 60 days of the
record date: George H. Johnson 3,163, John R. Sperlazza 3,163, William B.
Chesson 3,163, Stephen M. Gagliardi 13,556, James R. Murphy 3,163, William
E. Watson 3,163, and Frank Gary Young 3,163. See "Director and Executive
Officer Compensation - Director Compensation."
(4) Excludes 79,506 shares of Common Stock under the ESOP for which such
individual serves as a member of the ESOP Committee and ESOP trust. Such
individuals disclaim beneficial ownership with respect to such shares.
(5) Excludes 28,100 RSP shares for which such individual serves as a member of
the RSP trust committee. Such individuals disclaim beneficial ownership
with respect to such shares.
(6) Less than 1.0% of Common Stock outstanding.
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<PAGE>
Executive Officers of the Company
The following individuals hold the executive offices in the Company set
forth below opposite their names.
<TABLE>
<CAPTION>
Age as of
Name June 30, 1999 Positions Held With the Company
- ---- ------------- -------------------------------
<S> <C> <C>
Stephen M. Gagliardi 51 President, Chief Executive Officer and Director
Steven D. Martino 44 Vice President
Stephen M. Magnone 37 Treasurer
Marc A. DeSantis 37 Vice President of Investor Relations
Florence K. McAlpine 52 Corporate Secretary
</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 (except Mr. Chesson) 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.
Nominees:
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.
John R. Sperlazza has been a director of the Bank since 1973 and a director
of the Company since its formation. Mr. Sperlazza is retired and was a co-owner
of trucking, mining and coal companies.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
ABOVE NOMINEES FOR DIRECTORS.
Continuing Directors:
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.
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<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.
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.
Frank 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 and is also a member of the board of
directors of Healthways Inc. He is the former Sheriff of Brooke County and prior
to 1980, was the owner of Young's Market.
Executive Officers Who Are Not Directors:
Steven D. Martino has been an employee of the Bank since 1982 and has
served as Senior Vice President and Chief Operating Officer since July 1996. Mr.
Martino has served as Vice President of the Company since its formation in 1996.
He is the past President of the Wellsburg Chamber of Commerce, a member of the
board of directors of the Brooke County United Way, and a member of the advisory
board of the West Liberty State College School of Business. Mr. Martino is also
a real estate appraiser licensed by the State of West Virginia.
Stephen M. Magnone has been Treasurer of the Company and Vice President and
Chief Financial Officer of the Bank since September 1998. Prior to his arrival,
he was employed by S.R. Snodgrass, A.C., CPA's for 12 years and prior to his
departure from the firm he held the position of Vice President. Mr. Magnone
currently serves on the corporate board of the Weirton Medical Center, Inc. and
also as a member of the medical center's finance committee. He is a past
president of the Weirton Rotary Club and has served on numerous committees of
the Weirton Area Chamber of Commerce. Mr. Magnone has been a CPA since 1986 and
holds active memberships in the American Institute of Certified Public
Accountants and the West Virginia Society of CPAs.
Marc A. DeSantis has been an employee of the Bank since 1990 and Vice
President of Branch Administration since 1996. Mr. DeSantis has served as Vice
President of Investor Relations since the formation of the Company in 1996. Mr.
DeSantis is on the board of directors of the Family Service Association of
Steubenville and is also a member of the Jefferson County Chamber of Commerce,
where he serves as an ambassador.
Florence K. McAlpine has been an employee of the Bank since 1982 and has
served as Assistant Vice President of Operations since 1998 and Corporate
Secretary of the Company since its formation in 1996.
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, 1999, the Board of Directors held a total
of 20 meetings. No director attended fewer than 75% of the total meetings of the
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<PAGE>
Board of Directors and committees during the period of his service. In addition
to other committees, as of June 30, 1999, the Board had a Nominating Committee,
a Compensation and Benefits Committee, and an Audit Committee.
The Nominating Committee consists of the Board of Directors of the Company.
Nominations to the Board of Directors made by stockholders must be made in
writing to the Secretary and received by the Company not less than 60 days prior
to the anniversary date of the immediately preceding annual meeting of
stockholders of the Company. Notice to the Company of such nominations must
include certain information required pursuant to the Company's Certificate of
Incorporation. The Nominating Committee, which is not a standing committee, met
once during the 1999 fiscal year.
The Compensation and Benefits Committee is comprised of directors Chesson,
Johnson, Murphy, 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 1999 fiscal year.
The Audit Committee is comprised of directors Chesson, Johnson, Young, and
Watson. The Committee 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 1999 fiscal year.
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
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Director Compensation
In the fiscal year ended June 30, 1999, members of the Board of Directors
received a monthly retainer of $700 and a meeting fee of $200, per meeting
attended. Board members receive $75 for attendance at each committee meeting.
For the fiscal year ended June 30, 1999, total fees paid by the Bank to
Directors were $79,185.
Under the 1998 Stock Option Plan, each non-employee director was granted
options to acquire 6,325 shares of Common Stock and Mr. Gagliardi was granted
options to acquire 27,111 shares of Common Stock. The exercise price of the
options is the fair market value of the Company's Common Stock on the date of
grant. The options granted to all directors are exercisable at the rate of 25%
commencing on January 20, 1998.
Under the RSP, each non-employee director was awarded 2,530 shares of
Common Stock and Mr. Gagliardi was awarded 10,844 shares of Common Stock. All
directors will earn shares awarded to them at the rate of 20% per year
commencing on January 20, 1998. In accordance with the RSP, dividends are paid
on shares awarded or held in the RSP.
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.
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 three years ended June 30, 1999 that exceeded $100,000 for services
rendered in all capacities to the Bank or the Company.
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<PAGE>
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
-------------------------------------------------------- --------------------------------
Restricted Securities
Name and Fiscal Other Annual Stock Underlying All Other
Principal Position Year Salary ($) Bonus ($) Compensation ($)(1) Award(s)($)(2) Options/(#)(3) Compensation($)
- ------------------- ------ ---------- --------- ------------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen M. Gagliardi 1999 108,398 7,137 13,890 -- -- 18,705(4)
President and Chief 1998 100,476 8,149 14,839 203,325 27,111 18,075
Executive Officer 1997 87,696 7,500 15,478 -- -- 11,640
</TABLE>
- -------------------------
(1) At June 30, 1999, consisted of $11,500 in directors' fees and $2,390 in
expenses associated with the use of the Company automobile. At June 30,
1998, consisted of $10,800 in directors' fees and $4,039 in expenses
associated with the use of a Company automobile. At June 30, 1997,
consisted of $11,200 in directors' fees and $4,278 in expenses
associated with the use of a Company automobile.
(2) Represents the award of 10,844 shares of Common Stock under the RSP as
of January 20, 1998 on which date the market price of such stock was
$18.75 per share. Such stock awards become non-forfeitable at the rate
of 20% shares per year commencing on January 20, 1998. Dividend rights
associated with such stock are accrued and held in arrears to be paid
at the time that such stock becomes non-forfeitable. As of June 30,
1999, 6,506 shares remained unvested. Based upon a market price of $12
per share, such unvested shares had an aggregate value of $78,072.
(3) Such awards under the 1998 Stock Option Plan are first exercisable at
the rate of 25% per year commencing on January 20, 1998. The exercise
price equals the market value of the Common Stock on the date of grant
of $18.75. See "-- Stock Awards."
(4) At June 30, 1999, consists of a contribution of $288 for term life
insurance, a matching contribution of $2,717 to the 401(k) plan, and
1,570 shares of stock allocated under the ESOP at a cost of $10 per
share.
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. 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,
1999, Mr. Gagliardi would have been entitled to a lump sum payment of
approximately $330,000.
Stock Awards
The following table sets forth information with respect to exercised
options during 1999, as well as the aggregate number of unexercised options to
purchase the Company's Common Stock granted in 1998 to the named executive
officer in the summary compensation table and held by him as of June 30, 1999
and the value of unexercised in-the-money options (i.e., options that had a
positive spread between the exercise price of such option and the fair market
value of the Company's Common Stock) as of June 30, 1999. The Company has not
granted any stock appreciation rights ("SARs") to the named executive officer.
-9-
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End Option/SAR Values
---------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Shares Options/SARs at Options/SARs
Acquired Value FY-End (#) at FY-End ($)
Name on Exercise (#) Realized($)(1) Exercisable/Unexercisable Exercisable/Unexercisable(1)
- ---- --------------- -------------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Stephen M. Gagliardi -- -- 13,555/13,555 $ 0 / $ 0
</TABLE>
- ------------------
(1) Based upon an exercise price of $18.75 per share and estimated price of $12
at June 30, 1999.
- --------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND 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.
- --------------------------------------------------------------------------------
PROPOSAL II -- RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
S.R. Snodgrass, A.C., was the Company's independent public accountant for
the 1999 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, 2000. 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, 2000.
- --------------------------------------------------------------------------------
2000 ANNUAL MEETING STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be considered for inclusion in the Company's proxy statement
for the annual meeting of stockholders to be held in 2000, all stockholder
proposals must be submitted to the Secretary of the Company at its offices at
1015 Commerce Street, Wellsburg, West Virginia 26070, on or before May 31, 2000.
Under the Company's bylaws, stockholder nominations for director and stockholder
proposals not included in the Company's 2000 proxy statement, in order to be
considered for possible action by stockholders at the 2000 annual meeting of
stockholders, must be submitted to the Secretary of the Company, at the address
set forth above, by August 19, 2000. In addition, stockholder nominations and
stockholder proposals must meet other applicable criteria set forth in the
bylaws of the Company in order to be considered at the 2000 annual meeting.
-10-
<PAGE>
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors does not know of any other matters that are likely
to be brought before the annual meeting. If any other matters, not now known,
properly come before the meeting or any adjournments, the persons named in the
enclosed proxy card, or their substitutes, will vote the proxy in accordance
with their judgment on such matters. Under the Company's bylaws, no new business
or proposals submitted by stockholders shall be acted upon at the annual meeting
unless such business or proposal was stated in writing and filed with the
Secretary of the Company by August 20, 1999. No new business or proposals were
submitted within this time period.
- --------------------------------------------------------------------------------
FORM 10-KSB
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
JUNE 30, 1999 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 28, 1999
-11-
<PAGE>
Appendix A
- ----------
- --------------------------------------------------------------------------------
ADVANCE FINANCIAL BANCORP
1015 COMMERCE STREET
WELLSBURG, WEST VIRGINIA 26070
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 19, 1999
- --------------------------------------------------------------------------------
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 our the Bank's
Wintersville office, 805 Main Street, Wintersville, Ohio, on October 19, 1999,
at 9:30 a.m. and at any and all adjournments thereof, in the following manner:
<TABLE>
<CAPTION>
<S> <C> <C>
FOR WITHHELD
--- --------
1. The election of directors as nominees listed
below (except as marked to the contrary): |_| |_|
George H. Johnson
John R. Sperlazza
(Instruction: to withhold authority to vote
for any individual nominee, write that nominee's
name on the space provided below)
</TABLE>
- -------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
--- ------- -------
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, 2000. |_| |_| |_|
</TABLE>
The Board of Directors recommends a vote "FOR" the above listed propositions.
- --------------------------------------------------------------------------------
THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR THE PROPOSITIONS 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 28, 1999 and the 1999 Annual Report.
Dated: , 1999
----------------------------
- ------------------------------------- --------------------------------------
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.
- --------------------------------------------------------------------------------
