<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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 Section 240.14a-11(c) or
Section 240.14a-12
PSB BANCORP, INC.
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(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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
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):
----------------------------------------------------------------------
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:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
[PSB BANCORP, INC. LOGO]
-----------------------------
November 7, 2000
ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
PSB Bancorp, Inc., the holding company for First Penn Bank. The meeting will be
held Wednesday, December 6, 2000 at 10:00 A.M. The Annual Meeting will be held
at the Crowne Plaza Hotel, 1800 Market Street, Philadelphia PA 19103.
At the Annual Meeting, you will be asked to vote for the election of
directors.
PSB Bancorp, Inc.'s Board of Directors recommends that you vote "FOR" each
nominee of the Board of Directors at the Annual Meeting. The Board of Directors
of the company solicits the accompanying form of PROXY.
Neither the Securities and Exchange Commission nor any state securities
commission has determined if this proxy statement is truthful or complete. Any
representation to the contrary is a criminal offense.
Your vote is very important, please vote, sign, date and return promptly
the accompanying proxy.
The date of this proxy statement is November 7, 2000 and was mailed on or
about November 7, 2000.
Sincerely,
/s/ Anthony DiSandro
-----------------------
Anthony DiSandro
President and
Chief Operating Officer
<PAGE>
[PSB BANCORP, INC. LOGO]
---------------------
NOTICE
OF
ANNUAL MEETING OF SHAREHOLDERS
to be held December 6, 2000
---------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of PSB Bancorp, Inc. ("PSB") will be held on Wednesday, December 6,
2000, at 10:00 a.m. (Eastern Time) at the Crowne Plaza Hotel, Philadelphia
Center City, 1800 Market St., Philadelphia, Pa. 19103 for the following
purposes:
(1) To elect two (2) Class II directors of PSB to serve for a term of
three years and until their successors shall have been elected and
qualified;
(2) To transact such other business as may properly be presented
at the Meeting.
Shareholders of record at the close of business on October 23, 2000, are
entitled to notice of, and to vote at the Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE SIGN, DATE,
AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
BY ORDER OF THE BOARD OF DIRECTORS
Rosanne Pauciello
Treasurer
Philadelphia, Pennsylvania
November 7, 2000
<PAGE>
PSB BANCORP, INC.
11 Penn Center, Suite 2601
1835 Market Street
Philadelphia, Pennsylvania 19103
(215) 979-7900
-------------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
December 6, 2000
-------------------------------
GENERAL INFORMATION
Solicitation of Proxies. The Board of Directors of PSB Bancorp, Inc.
("PSB"), parent company of First Penn Bank, is providing this proxy statement to
solicit proxies for use at PSB's annual meeting of shareholders to be held
December 6, 2000, or any adjournment thereof (the "Meeting"). PSB is first
mailing this proxy statement and the accompanying proxy on or about November 7,
2000. PSB will pay the expense of soliciting proxies. PSB expects to solicit
proxies primarily by mail. PSB's directors, officers and employees may also
solicit proxies personally, by telephone and by facsimile or similar means.
Voting and Revocation of Proxies. The execution and return of the enclosed
proxy will not affect a shareholder's right to attend the Meeting and vote in
person. Any shareholder giving a proxy may revoke it at any time before it is
exercised by submitting written notice of its revocation, or by submitting a
subsequently executed proxy bearing a later date to the Secretary of PSB, or by
attending the Meeting and electing to vote in person. Shareholders of record at
the close of business on October 23, 2000 (the "Record Date"), are entitled to
notice of, and to vote at, the Meeting. On the Record Date, there were 4,455,007
shares of PSB common stock outstanding, each of which will be entitled to one
vote at the Meeting. Shareholders are not entitled to cumulate votes in the
election of directors.
If the enclosed proxy is appropriately marked, signed and returned in time
to be voted at the Meeting, the shares represented by the proxy will be voted in
accordance with the instructions marked thereon. Signed proxies not marked to
the contrary will be voted "FOR" the election, as directors, of the nominees of
the Board of Directors. Signed proxies will be voted "FOR" or "AGAINST" any
other matter that properly comes before the Meeting or any adjournment thereof,
in the discretion of the persons named as proxyholders, including with respect
to any matters not complying with the advance notice provisions set forth in
PSB's bylaws.
1
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Quorum. The presence, in person or by proxy, of shareholders entitled to
cast at least a majority of the votes that all shareholders are entitled to cast
will constitute a quorum at the Meeting. Abstentions with respect to one or more
proposals voted upon at the Meeting will be included for purposes of determining
the presence of a quorum at the Meeting.
ELECTION OF DIRECTORS
---------------------
PSB's Bylaws provide that the PSB's business shall be managed
by a Board of Directors of not less than six and not more than twenty-five
persons. At least one-third of the directors must be persons who are not
officers or employees of PSB or of any entity controlling, controlled by or
under common control with PSB and who are not beneficial owners of a controlling
interest in the voting stock of PSB or of any such entity. The Board of
Directors of PSB, as provided in the Bylaws, is divided into three classes:
Class I, Class II and Class III, with each class being as nearly equal in number
as possible. As of September 30, 2000, the Board of Directors consisted of six
members, with two members in Class I, two members in Class II, and two members
in Class III.
Two directors have been nominated for election as Class II
directors at the meeting. The two nominees receiving the highest number of votes
at the meeting will be elected to serve as directors. There is no cumulative
voting in the election of PSB's directors. The term of office for those nominees
elected as Class II directors will expire in 2003.
The Bylaws permit nominations for election to the Board of
Directors to be made by the Board of Directors or by any shareholder entitled to
vote for the election of directors. Nominations for directors made by
shareholders must be made by notice in writing, delivered by First Class U.S.
Mail, postage prepaid, to the Secretary of PSB no less than ninety (90) days
prior to the meeting (unless less than 21 days prior notice of the meeting is
given, in which case the nomination must be delivered within seven (7) days of
the mailing of the meeting notice). The notification should contain the
following information: (1) the name, age and business and residence addresses of
each proposed nominee; (2) the principal occupation of each proposed nominee;
and (3) the number of shares of capital stock of PSB owned by the nominee.
Nominations not made in accordance with the foregoing procedure may be
disregarded by the presiding officer at the meeting.
2
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As of the date of this proxy statement, PSB has not received a
notice of nomination for election as a director from any shareholder.
Any shareholder who wishes to withhold authority from the
proxyholders to vote for the election of directors or to withhold authority to
vote for any individual nominee may do so by marking his or her proxy to that
effect in accordance with the instructions on the proxy card. No proxy may be
voted for a greater number of persons than the number of members of the Class
standing for election. If any nominee should become unable to serve, the persons
named in the proxy may vote for another nominee. PSB's management presently has
no reason to believe that any nominee listed below will be unable to serve as a
director, if elected.
Under the Bylaws, a vacancy in the Board of Directors is
filled by the remaining members of the Board. If the vacancy is other than from
an increase in the size of the Board, the director elected to fill the vacancy
will become a member of the same class of directors in which the vacancy
existed. By comparison, persons elected by the Board of Directors in connection
with an increase in the size of the Board would be designated by the Board of
Directors as belonging to either Class I, Class II, or Class III. In either
case, the Bylaws further provide that each director so elected remains a member
of the Board of Directors until his or her successor is elected by the
shareholders at either the next annual meeting of shareholders or at any special
meeting duly called for that purpose.
The following table sets forth information, as of the record
date, with respect to the nominees for director of PSB and all continuing
directors of PSB.
3
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Nominees for Class II Director (Term expiring 2003)
---------------------------------------------------
Year
First
Elected Principal Occupation
Name/Position Age Director During Past Five Years
------------- --- -------- ----------------------
James W. Eastwood, 52 1997 President of Granary
Director Associates, Inc.
(hospital development
and consulting firm)
Stephen Marcus 68 ____ Founder, CEO of MARS
Graphic Services, Inc.
Chairman, Emerging
Growth Equities, Inc.
Continuing Directors
--------------------
Class I directors (Term expiring 2002)
Anthony DiSandro, 49 1997 President and Chief
Director, President Operating Officer of
and Chief Operating PSB Bancorp, Inc.
Officer
Rosanne Pauciello, 54 1997 Corporate Secretary
Director and of PSB Bancorp, Inc;
Corporate Secretary Philadelphia School
District Home and
School Visitor.
Class III directors (Term expiring 2001):
Vincent J. Fumo, 55 1997 Chairman and Chief
Chairman and Chief Executive Officer of
Executive Officer PSB Bancorp, Inc. and
Pennsylvania State
Senator.
Thomas J. Finley, 77 1997 Retired.
Jr., Director
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4
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Executive Officers Who Are Not Directors
----------------------------------------
Principal Occupation
Name/Position Age During Past Five Years
------------- --- ----------------------
Gary Polimeno, Vice 48 Vice President and
Treasurer President Treasurer of PSB
Bancorp, Inc.
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information furnished
to the Bank as of the record date of the PSB annual meeting, with respect to the
beneficial ownership of common stock by (i) each shareholder known to PSB to be
the beneficial owner of five percent (5%) or more of the outstanding shares of
common stock; (ii) each director of PSB; (iii) the executive officer named in
the Summary Compensation Table on page 7 herein, and (iv) all current
executive officers and directors as a group. Except as indicated in the
footnotes to the table, the persons and entities named have sole voting and
investment power with respect to all shares of common stock of which they are
the respective beneficial owners.
Amount and Percent of
Nature of Outstanding
Beneficial Shares of
Name of Beneficial Owner Ownership common stock
------------------------ ---------- ------------
5% Shareholders
---------------
First Penn Bank 238,900 5.36%
Employee Stock Ownership Plan
11 Penn Center, Suite 2601
1835 Market Street
Philadelphia, PA 19103
Directors
---------
Anthony DiSandro 490,362(1) 10.72%
James W. Eastwood 33,806(3) *
Thomas J. Finley, Jr. 21,372(3) *
Jane Scaccetti Fumo 2,057(2) *
Vincent J. Fumo 637,400(2) 14.30%
Rosanne Pauciello 15,270(3) *
Named Executive Officers
------------------------
Gary Polimeno 41,927 *
All executive officers and
directors as a group (7 persons) 1,242,194 27.88%
5
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* Ownership percentage is less than 1%.
(1) Amount includes 50,510 shares held indirectly through the 401(k) Plan,
25,723 shares held through the Profit Sharing Plan, 26,135 shares held
by the 1995 Management Recognition Plan and 30,000 shares held by the
1999 Management Recognition Plan that have been awarded to Mr.
DiSandro, 13,960 shares held in the ESOP, 15,726 shares held by Mr.
DiSandro directly and 117,688 shares subject to immediately exercisable
options. Also includes 238,900 shares held by the ESOP of which Mr.
DiSandro is a trustee.
(2) Vincent Fumo and Jane Scaccetti Fumo are husband and wife. Amount
includes 46,302 shares held through the 401(k) Plan, 13,504 shares held
through the Profit Sharing Plan, 162,412 shares held directly, 26,137
shares held by the 1995 MRP and 30,000 shares held by the 1999
Management Recognition Plan that have been awarded to Mr. Fumo, 13,578
shares held in the ESOP, 2,457 shares held on behalf of the daughter of
Vincent and Jane Scaccetti Fumo and 117,688 shares subject to
immediately exercisable options. Also includes 238,900 shares held by
the ESOP of which Mr. Fumo is a trustee.
(3) James W. Eastwood, Thomas J. Finley, Jr. and Rosanne Pauciello hold
2,857, 2,857 and 4,999 shares, respectively, subject to immediately
exercisable options granted pursuant to the 1998 Director Stock Option
Plan.
Meetings and Committees of the Board of Directors/Trustees
PSB as the holding company for First Penn Bank, does not
appoint standing committees; however, the business of First Penn Bank is
conducted at regular and special meetings of the full Board of Directors of
First Penn Bank and its standing committees in concert with the Board of
Directors of PSB. The standing committees of First Penn Bank consist of the
Executive, Asset/Liability Management, Budget, Compensation, Loan, Investment,
Strategic Planning, Audit and Nominating Committees. During 1999, the Board of
Directors of PSB met at twelve regular meetings. No member of the Board thereof
attended less than 75% of said meetings.
6
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Director/Trustee Compensation
For the year ended December 31, 1999, directors of PSB were
paid $700 per Board meeting attended and the directors of First Penn Bank were
paid $700 per Board meeting attended. In addition, directors were paid $350 per
committee meeting attended. Directors of the bank's subsidiaries and affiliates
PSA Financial Corp., PSA Service Corp., PSA Consumer Discount Company and
Transnational Mortgage Corp. were paid $250, $150, $150, and $250, respectively,
per board meeting attended.
Executive Compensation.
The following table sets forth for the years ended December
31, 1999, 1998 and 1997 certain information as to the total remuneration paid by
the Bank to executive officers who received salary and bonuses in excess of
$100,000 during such fiscal year.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
---------------------------------- -------------------------------------
Other All
Annual Security Other
Fiscal Compensation Restricted Underlying Compensation
Name and Principal Position Year Salary(1) Bonuses (2) Stock(3) Option (4)
--------------------------- ------ --------- ------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Vincent J. Fumo 1999 $159,500 $159,702 $ 44,515 30,000 $ 22,050
Chairman and Chief Executive Officer 1998 $147,788 $150,000 $ 67,876 0 0 $ 22,750
1997 $139,987 $117,500 $ 60,671 0 $ 23,800
Anthony DiSandro 1999 $178,200 $158,180 $ 46,439 30,000 $ 28,350
President and Chief Operating 1998 $165,115 $150,000 $ 61,104 0 0 $ 27,650
Officer 1997 $147,456 $125,000 $ 56,540 0 $ 27,650
Gary Polimeno 1999 $106,050 $ 35,000 $ 3,435 0 $ 8,400
President and Treasurer 1998 $102,942 $ 35,000 $ 5,671 0 0 $ 8,400
1997 $ 87,282 $ 35,000 $ 2,966 0 0 $ 8,400
</TABLE>
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(1) Includes the portion of salary deferred by the executive
pursuant to the 401(k) Plan.
(2) Consists of lease payments paid by the Bank with respect to vehicles
provided by the Bank for the executive's use and compensation income
related to restricted stock awards. For the year ended December 31,1999,
Mr. Fumo, Mr. DiSandro and Mr. Polimeno recognized compensation expense of
$28,958, $28,963 and $3,435 for those shares which were vested as of
December 31, 1999.
(3) Mr. Fumo, Mr. DiSandro and Mr. Polimeno hold 56,138 shares, 56,135 shares
and 2,750 shares of restricted stock, respectively, which as of December
31, 1999, has a fair market value of $245,604, $245,590 and $12,031. Of
such shares, 13,754, 13,754 and 2,750 shares of each of Messrs. Fumo,
DiSandro and Polimeno, respectively, were awarded at April 30, 1996, 12,383
and 12,381 shares of Messrs. Fumo and DiSandro, respectively, were granted
on December 31, 1996, 30,000 and 30,000 shares of Messrs. Fumo and
DiSandro, respectively, were granted on October 31, 1999. All shares
awarded vest at a rate of 20% per year over a five (5) year period.
7
<PAGE>
(4) Includes directors fees of $13,650 and $19,950 paid to Mr. Fumo and Mr.
DiSandro, respectively, for the year ended December 31, 1999, and directors
fees paid by the Bank's subsidiaries to Mr. Fumo, Mr. DiSandro and Mr.
Polimeno of $8,400, $8,400 and $8,400, respectively, for the year ended
December 31, 1999. Includes directors fees of $14,350 and $19,250 paid to
Mr. Fumo and Mr. DiSandro, respectively, for the year ended December 31,
1998, and directors fees paid by the Bank's subsidiaries to Mr. Fumo, Mr.
DiSandro and Mr. Polimeno of $8,400, $8,400, and $8,400, respectively, for
the year ended December 31, 1998. Includes directors fees of $15,400 and
$19,250 paid to Mr. Fumo and Mr. DiSandro, respectively, for the year ended
December 31, 1997, and directors fees paid by the Bank's subsidiaries to
Mr. Fumo, Mr. DiSandro and Mr. Polimeno of $8,400, $8,400 and $8,400,
respectively, for the year ended December 31, 1997.
Employment Agreements. The bank has entered into employment
agreements (the "Employment Agreements") with Vincent J. Fumo, Chairman and
Chief Executive Officer and Anthony DiSandro, President and Chief Operating
Officer. Under the terms of his Employment Agreement, Mr. Fumo serves as
Chairman and Chief Executive Officer of PSB and the bank at a base salary of
$159,500. Under the terms of his Employment Agreement, Mr. DiSandro serves as
President and Chief Operating Officer of PSB and the bank at a base salary of
$178,200. Each Employment Agreement provides for an initial term of three years,
which will thereafter be automatically renewed for an additional year on each
anniversary date unless terminated pursuant to its terms by the respective
parties.
Each Employment Agreement provides for the payment of certain
severance benefits in the event of the executive's resignation for specified
reasons or as a result of his termination by PSB or the bank without "Cause"
(as defined in each Employment Agreement). The executive would be entitled to
severance payments if: (1) he terminates employment during the term of such
agreement following any breach of the Employment Agreement by the bank or PSB,
loss of title, office or significant authority, reduction in annual compensation
or benefits, or relocation of the executive's principal place of employment by
more than 30 miles, or (2) if the bank or PSB terminates his employment, other
than for Cause.
8
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If either executive becomes entitled to receive severance
payments under his Employment Agreement, he would receive, over a period of 36
months, a cash payment equal to three times his average annual compensation
during the five-year period preceding termination of employment. Payments would
be made in equal monthly installments. In addition to the severance payments,
the executive would be entitled to continue to receive life, medical, dental and
other insurance coverages (or a dollar amount equal to the cost of obtaining
each such coverage) for a period of up to 36 months from the date of
termination. Payments under the Employment Agreements are limited, however, to
the extent (i) that they will constitute excess parachute payments under Section
280G of the Internal Revenue Code of 1986, as amended ("Code"), or (ii) not
permitted under the Federal Deposit Insurance Act.
Compensation of Officers and Directors Through Benefit Plans
Defined Benefit Retirement Plan. The bank has maintained a
noncontributory defined benefit retirement plan ("Retirement Plan"). Under the
terms of the Retirement Plan, all employees age 21 or older who have worked at
the bank for a period of one year and have been credited with 1,000 or more
hours of employment with the bank during the year are eligible to accrue
benefits under the Retirement Plan. The bank would annually contribute an amount
to the Retirement Plan necessary to satisfy the actuarially determined minimum
funding requirements in accordance with the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). At December 31, 1998, the Retirement Plan
fully met its funding requirements under Section 412 of the Code. Employee
contributions are not permitted under the Retirement Plan. The Retirement Plan
was "frozen" as of September 30, 1994 and benefits no longer accrue thereunder.
Because the Retirement Plan is fully funded, the bank will generally not be
required to make any additional contributions unless asset depreciation from
investment occurs. Participants will continue to vest in accordance with the
provisions of the Retirement Plan. No new employees will be eligible for
participation. The Retirement Plan, however, remains subject to all other
requirements of the Code.
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Benefits under the Retirement Plan begin to vest after three
years in accordance with the following schedule:
Years of Service Percentage Vested
---------------- -----------------
3 years or less 0%
After 3 years 20%
After 4 years 40%
After 5 years 60%
After 6 years 80%
After 7 years 100%
The following table indicates the annual retirement benefit
that would be payable under the Retirement Plan upon retirement at age 65 in
calendar year 1999, expressed in the form of a single life annuity for the final
average salary and benefit service classifications specified below.
Years of Service and Benefits Payable at Retirement
Final
Average
Compensation 15 20 25 30 35 40
------------ ------- ------- ------- ------- ------- -------
$ 50,000 $13,804 $18,405 $23,006 $27,608 $27,608 $27,608
$ 75,000 $21,950 $29,267 $36,583 $43,900 $43,900 $43,900
$100,000 $30,096 $40,128 $50,160 $60,192 $60,192 $60,192
$125,000 $38,242 $50,990 $63,827 $65,827 $65,827 $65,827
$150,000* $46,388 $61,851 $65,827 $65,827 $65,827 $65,827
--------------
* Represents the limit on plan compensation imposed by the Code effective
January 1, 1994.
As of December 31, 1999, Mr. Fumo, Mr. DiSandro, and Mr. Polimeno had
20, 19 and 21 years of credited service (i.e. benefit service), respectively.
First Penn Bank Cash or Deferred Profit Sharing Plan (401(k)).
The bank also maintains the Pennsylvania Savings Cash or Deferred Profit
Sharing Plan, which is a qualified, tax-exempt profit sharing plan with a
cash-or-deferred feature under Section 401(k) of the Code (the "401(k) Plan").
All employees who have attained age 21 and have completed two years of
employment during which they worked at least 1,000 hours are eligible to
participate. Assets of the 401(k) Plan are managed by the 401(k) Plan's
trustees. Mr. Fumo and Mr. DiSandro presently serve as trustees to the 401(k)
Plan.
Under the 401(k) Plan, participants are permitted to make
pre-tax salary reduction contributions to the plan equal to a percentage of up
to 15% of compensation. Additional after-tax contributions of up to 10% of
compensation may be made to the Plan. For these purposes, "compensation"
includes total compensation (including salary reduction contributions made under
the 401(k) Plan sponsored by the savings bank), but does not include
compensation in excess of the Code Section 401(a)(17) limits (presently
$160,000). The savings bank may also annually make a discretionary profit
sharing contribution to the 401(k) Plan. A participant must complete 1,000 hours
of service during the plan year and be employed on the last day of the plan year
to receive an allocation of the profit sharing contribution. For the 1999, 1998,
1997 and 1996 plan years, the savings bank made profit sharing contributions of
$0, $0, $0 and $45,568.
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All employee contributions and profit sharing contributions to
the 401(k) plan and earnings thereon are fully and immediately vested.
Plan benefits will be paid to each participant as a joint and
survivor or single life annuity. In addition, a participant may, under certain
circumstances, elect a lump sum or period certain payment upon normal
retirement, death or disability, or after termination of employment.
First Penn Bank Profit Sharing Plan. The bank also maintains
the First Penn Bank Profit Sharing Plan, which is a qualified plan pursuant to
Section 401(a) of the Code. Employees who have completed at least two years of
service during which they have worked 1,000 hours or more and who have attained
age 21 are eligible to participate in the Profit Sharing Plan. Pursuant to the
Profit Sharing Plan the bank, in its discretion, makes contributions to the
accounts of eligible employees. Employee contributions are neither permitted nor
required. Benefits under the Profit Sharing Plan become 100% vested upon entry
to the Plan.
Employee Stock Ownership Plan. In 1995, the savings bank ESOP
acquired 42,780 shares of the bank common stock with the proceeds of a $427,800
loan from an unaffiliated financial institution ("1995 Loan"). Due to the
conversion and reorganization in 1998, the bank common stock held by the ESOP
was converted into 110,046 shares of PSB Bancorp, Inc. common stock.
In connection with the conversion and reorganization, the ESOP
borrowed $1,288,540 from PSB to purchase an additional 128,854 shares of PSB
Bancorp, Inc. common stock. PSB also lent sufficient funds to the ESOP to enable
the ESOP to repay the 1995 Loan in full. The loan by PSB to the ESOP will be
repaid principally from the bank's contributions to the ESOP and dividends
payable on common stock held by the ESOP over the anticipated 10-year term of
the loan. The interest rate for the ESOP loan is 8.5%.
Shares purchased by the ESOP with the proceeds of the loan
(including shares originally acquired by the ESOP with the proceeds of the 1995
Loan) will be held in a suspense account and released on a pro rata basis as the
loan is repaid. Discretionary contributions to the ESOP and shares released from
the suspense account will be allocated among participants on the basis of each
participant's proportional share of total compensation. Forfeitures will be
reallocated among the remaining plan participants.
11
<PAGE>
In any plan year, the bank may make additional discretionary
contributions to the ESOP for the benefit of plan participants in either cash or
shares of common stock, which may be acquired through the purchase of
outstanding shares in the market or from individual shareholders or which
constitute authorized but unissued shares or shares held in treasury by PSB. The
timing, amount, and manner of such discretionary contributions will be affected
by several factors, including applicable regulatory policies, the requirements
of applicable laws and regulations, and market conditions.
Employees of the bank who have completed 1,000 hours of
service during 12 consecutive months and who have attained age 21 are eligible
to participate in the ESOP.
Benefits under the ESOP generally become 100% vested after the
third year of service or upon normal retirement (as defined in the ESOP),
disability or death of the participant. If a participant terminates employment
for any other reason prior to fully vesting, his nonvested account balance will
be forfeited. Forfeitures will be reallocated among remaining participating
employees in the same proportion as contributions. Benefits may be payable upon
death, retirement, early retirement, disability or separation from service. The
bank's contribution to the ESOP will not be fixed, so benefits payable under the
ESOP cannot be estimated.
A committee consisting of the bank's Chairman and Chief
Executive Officer, President and Vice President and Treasurer, administers the
ESOP (the "ESOP Committee"). Messrs. Fumo and DiSandro serve as trustees of the
ESOP. The ESOP Committee may instruct the trustees regarding investment of funds
contributed to the ESOP. The ESOP trustees must vote all allocated shares held
in the suspense account in a manner calculated to most accurately reflect the
instructions the ESOP trustees have received from participants regarding the
allocated stock, subject to and in accordance with the fiduciary duties under
ERISA owed by the ESOP trustees to the ESOP participants.
Pursuant to SOP 93-6, compensation expense for a leveraged
ESOP is recorded at the fair market value of the ESOP shares when committed to
be released to participants' accounts.
The ESOP is subject to the requirements of ERISA and the
regulations of the IRS and the Department of Labor issued thereunder. The
savings bank has received a favorable determination letter from the IRS
regarding the tax-qualified status of the ESOP.
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<PAGE>
1995 Stock Option and Incentive Plan. In 1995, the bank
adopted the 1995 Stock Option Plan. Options for all shares reserved for issuance
under the 1995 Stock Option Plan have been granted to officers and employees of
the bank. In connection with the conversion and reorganization from a mutual
holding company to a holding company structure, the 1995 Stock Option Plan was
assumed by PSB and appropriate adjustments were made to the exercise price and
the number of shares underlying each option to reflect the exchange ratio.
There was no exercise of options by any of Messrs. Fumo,
DiSandro and Polimeno under the 1995 Stock Option Plan at and for the fiscal
year ended December 31, 1999.
1995 Management Development and Recognition Plans. In 1995,
the bank adopted a Management Development and Recognition Plan (the "1995 MRP")
for officers, employees and nonemployee directors of the bank. All shares under
the 1995 MRP have been awarded. In connection with the conversion and
reorganization, the shares awarded to the 1995 MRP participants were treated in
the same manner as shares held by other minority shareholders and converted into
PSB common stock.
1998 Employee Stock Option Plan. This option plan provides for
the grant of (i) options to purchase common stock intended to qualify as
incentive stock options under Section 422 of the Code, and (ii) options that do
not so qualify. Pursuant to the option plan, up to 161,073 shares of common
stock (subject to adjustment) are reserved for issuance by PSB upon exercise of
stock options to be granted to certain officers and employees of PSB from time
to time under the option plan. The purpose of the option plan is to give certain
officers and employees an opportunity to acquire common stock and to thereby
help PSB attract, retain and motivate key employees and officers.
Under this plan, option grants have been made to Messrs. Fumo and DiSandro
for 75,000 shares each and option grants of 2,857, 2,857 and 4,999 shares to
Mr. Eastwood, Mr. Finley and Ms. Pauciello, respectively.
1998 Management Recognition Plan. The 1998 Management
Recognition Plan (the "MRP") is a method of providing certain senior executive
officers of PSB with a proprietary interest in PSB, to reward such officers for
their service and to encourage such persons to remain in the service of PSB.
Pursuant to the MRP, PSB will award certain senior executive officers of PSB
"plan share awards" representing the right to earn shares of common stock over a
period of five years from the date of the plan share award. PSB will contribute
sufficient funds to the MRP to enable the MRP to purchase common stock
representing up to 124,046 shares of common stock.
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<PAGE>
Under this plan, share awards have been made to Messrs. Fumo and DiSandro
for 30,000 shares each.
Certain Transactions
Certain directors and executive officers of PSB, and associates of such
persons (including corporations of which such persons are officers or 10%
beneficial owners), were customers of and had transactions with PSB and its
subsidiaries in the ordinary course of business during 1999. All loans made to
such persons were made in the ordinary course of business on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and did not involve more
than the normal risks of collectibility or present other unfavorable features.
It is expected that any other transactions with directors and officers and their
associates in the future will be conducted on the same basis.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires PSB's officers and directors, and any persons owning
ten percent or more of PSB common stock, to file in their personal capacities
initial statements of beneficial ownership, statements of changes in beneficial
ownership and annual statements of beneficial ownership with the Securities and
Exchange Commission. Persons filing such beneficial ownership statements are
required by SEC regulation to furnish PSB with copies of all such statements
filed with the SEC. The rules of the SEC regarding the filing of such statements
require that "late filings" of such statements be disclosed in PSB's proxy
statement. Based solely on PSB's review of any copies of such statements
received by it, and on representations from PSB's existing directors and
officers that no annual statements of beneficial ownership were required to be
filed by such persons, PSB believes that all such statements were timely filed
in 1999.
Independent Auditors
The Board of Directors of PSB has appointed the firm of Stockton Bates LLP,
as independent auditors to provide certain accounting services for PSB and its
subsidiaries during fiscal year 2000. Representatives of this firm are expected
to attend the Annual Meeting, will be afforded an opportunity to make a
statement if they desire to do so, and will be available to respond to questions
from shareholders.
Other Matters
Management knows of no business other than as described above that is
planned to be brought before the PSB Annual Meeting.
SHAREHOLDER PROPOSALS
Any shareholder who desires to submit a proposal to be considered for
inclusion in PSB's proxy materials relating to its 2001 Annual Meeting of
Shareholders in accordance with the rules of the Securities and Exchange
Commission must submit such proposal in writing, addressed to PSB at 11 Penn
Center, Suite 2601, 1835 Market Street, Philadelphia, Pennsylvania 19103 (Attn:
Secretary), on or before July 12, 2001.
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[PROXY CARD]
PSB BANCORP, INC.
I/We hereby appoint Rosanne Pauciello and Gary Polimeno as proxyholders,
each with the power to appoint his/her substitute, and hereby authorize them to
represent and to vote, as designated on the reverse side, all the shares of
common stock of PSB Bancorp, Inc. held of record by me/us on October 23, 2000,
at the Annual Meeting of Shareholders to be held on December 6, 2000, or any
adjournment thereof.
This proxy when properly executed will be voted in the manner directed on
the reverse side. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION AS DIRECTORS OF THE NOMINEES OF THE BOARD OF DIRECTORS. This proxy will
be voted, in the discretion of the proxyholders, upon such other business as may
properly come before the Annual Meeting of Shareholders or any adjournment
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Please vote and sign on the other side.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE FOLLOWING MATTER
ELECTION OF CLASS II DIRECTORS
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as to vote for all
marked to the contrary hereon) nominees listed hereon
James W. Eastwood
Stephen Marcus
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE STRIKE A LINE THROUGH THE NAME IN THE
LIST ABOVE.)
The undersigned hereby acknowledges receipt of the
Proxy Statement dated November 7, 2000 and hereby
revokes any proxy or proxies heretofore given to
vote shares at said meeting or any adjournment
thereof.
Dated _____________, 2000 __________________________________
Signature
(PLEASE DATE, SIGN AND
RETURN THIS PROXY IN THE
ENCLOSED ADDRESSED __________________________________
ENVELOPE) Signature if held jointly. Please
sign exactly as name appears
hereon.
