<PAGE>
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
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
CRUSADER
-----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
CRUSADER HOLDING CORPORATION
1230 Walnut Street
Philadelphia, Pennsylvania 19107
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, NOVEMBER 28, 2000
To the Shareholders of Crusader Holding Corporation:
The 2000 Annual Meeting of Shareholders (the "Annual Meeting") of Crusader
Holding Corporation, a Pennsylvania corporation (the "Company"), will be held
on Tuesday, November 28, 2000, at 3:30 p.m. at the Union League of
Philadelphia, 140 S. Broad Street, Philadelphia, Pennsylvania 19102, for the
following purposes:
1. To elect seven members of the Board of Directors of the Company, each to
serve for a one year term expiring at the annual meeting of shareholders in
2001; and
2. To transact such other business as may properly come before the Annual
Meeting.
The Board of Directors has fixed the close of business on Tuesday, October
3, 2000, as the record date for determining the shareholders entitled to notice
of, and to vote at, the Annual Meeting. Only shareholders of record at that
time are entitled to notice of, and to vote at, the Annual Meeting and any
adjournments or postponements thereof. A complete list of shareholders entitled
to vote at the Annual Meeting will be available at least ten days before the
Annual Meeting, upon written request, for inspection during normal business
hours by any shareholder of the Company prior to the Annual Meeting, for a
proper purpose, at the Company's executive office.
Shareholders are cordially invited to attend the Annual Meeting in person.
To assure your representation at the Annual Meeting, please complete, sign and
date the enclosed proxy and return it promptly. If you choose, you may still
vote in person at the Annual Meeting even though you previously submitted a
proxy.
/s/ Joseph M. Matisoff
----------------------------
Joseph M. Matisoff Secretary
October 27, 2000
<PAGE>
CRUSADER HOLDING CORPORATION
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors (the
"Board") of Crusader Holding Corporation (the "Company") in connection with its
2000 Annual Meeting of Shareholders to be held on Tuesday, November 28, 2000,
at 3:30 p.m., at the Union League of Philadelphia, 140 S. Broad Street,
Philadelphia, Pennsylvania 19102, and at any adjournment(s) or postponement(s)
thereof (the "Annual Meeting"). This Proxy Statement and the accompanying proxy
are being mailed to shareholders on or about October 27, 2000.
PURPOSE OF ANNUAL MEETING
At the Annual Meeting, shareholders will be asked to elect seven directors
of the Company (constituting the entire Board), each to serve for a one year
term expiring at the annual meeting of shareholders in 2001 and to transact
such other business as may properly be brought before the Annual Meeting. The
Board recommends a vote in favor of (i.e., "FOR") the election of the seven
nominees for director of the Company listed below.
QUORUM AND VOTING RIGHTS
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Annual Meeting. Only shareholders of record at the close of business on
Tuesday, October 3, 2000 (the "Record Date") will be entitled to notice of, and
to vote at, the Annual Meeting. As of the Record Date, there were 3,858,837
shares of Common Stock outstanding and entitled to vote. Holders of Common
Stock as of the Record Date are entitled to one vote for each share held.
All shares of Common Stock represented by properly executed proxies will,
unless the proxies have previously been revoked, be voted in accordance with
the instructions indicated in the proxies. If no instructions are indicated,
the shares will be voted in favor of (i.e., "FOR") the election of the seven
nominees for director of the Company listed below. With respect to all other
matters, the persons named in the accompanying proxy will vote as stated
therein. Any shareholder executing a proxy has the power to revoke the proxy at
any time prior to its exercise. A proxy may be revoked prior to exercise by (a)
filing with the Company a written revocation of the proxy, (b) appearing at the
Annual Meeting and casting a vote contrary to that indicated on the proxy or
(c) submitting a duly executed proxy bearing a later date.
The seven nominees for director each receiving the majority of the votes
cast by shareholders entitled to vote thereon will be elected to serve on the
Board. Votes withheld with respect to the election of directors will be counted
for the purpose of determining whether a quorum is present at the Annual
Meeting but will not be considered as votes cast and will have no effect on the
result of the vote. Broker non-votes will not be counted in determining the
presence of a quorum and will not be considered as votes cast, and thus will
have no effect on the result of the vote.
The cost of preparing, printing, assembling and mailing this Proxy
Statement and other material furnished to shareholders in connection with the
solicitation of proxies will be borne by the Company. In addition to the
solicitation of proxies by use of the mails, officers, directors and regular
employees of the Company may solicit proxies by written communication or
telephone. These persons are to receive no special compensation for any
solicitation activities.
1
<PAGE>
ELECTION OF DIRECTORS
Nominees for Election as Director
The Board currently consists of seven (7) members: Thomas J. Knox, Bruce
A. Levy, Joseph M. Matisoff, D. Walter Cohen, D.D.S., Linda R. Knox, Brian
McAdams and Robert L. Macaulay. All of the directors are to be elected at the
Annual Meeting. At the Annual Meeting, the Board proposes that each of the
current directors be elected as a director of the Company to hold office until
the 2001 annual meeting of shareholders and until their successors are duly
elected and qualified. The nominees have consented to serve if elected to the
Board. If the nominees are unable to serve as directors at the time of the
Annual Meeting, an event which the Board does not anticipate, the persons named
in the proxy will vote for such substitute nominees as may be designated by the
Board, unless the Board reduces the number of directors accordingly.
Set forth below is information about the nominees. For information
concerning the number of shares of Common Stock owned by each director and all
directors and executive officers as a group as of October 3, 2000, see
"Principal Shareholders."
<TABLE>
<CAPTION>
Name Age Position(s) with Company Director Since
---- ----- ------------------------------- ---------------
<S> <C> <C> <C>
Nominees to be elected for terms expiring in 2001:
Thomas J. Knox 59 Chairman of the Board, Chief 1988
Executive Officer and Director
Bruce A. Levy 45 President and Director 1996
Joseph M. Matisoff 55 Secretary and Director 2000
D. Walter Cohen, D.D.S. 74 Director 1997
Linda R. Knox 55 Director 1997
Brian McAdams 58 Director 1997
Robert L. Macaulay 61 Director 2000
</TABLE>
Thomas J. Knox. Mr. Knox has served as Chairman and Chief Executive
Officer of the Company since 1988 and Chairman of Crusader Savings Bank, FSB, a
wholly owned subsidiary of the Company (the "Bank"), since 1993. From 1989 to
1993, Mr. Knox was President of the Board of Directors of the Bank. Mr. Knox is
also Chairman and Chief Executive Officer of Fidelity Insurance Group. From
1993 to 1995, Mr. Knox served as Special Deputy Rehabilitator and Chief
Executive Officer of Fidelity Mutual Life Insurance Company, a $7.5 billion
life insurance company placed in rehabilitation by the Pennsylvania Insurance
Department. From 1992 to 1993, he served as Deputy Mayor of the City of
Philadelphia overseeing the Office of Management and Productivity. He serves as
a director of the City of Philadelphia Productivity Bank, which he chaired from
1992 to 1993, Chairman of the Philadelphia Airport Advisory Board, Chairman of
the Concerto Soloist Orchestra and Chairman of the Sunday Serenade.
Bruce A. Levy. Mr. Levy has served as President and a director of the
Company and a director of the Bank since 1996. From 1994 to 1996, Mr. Levy was
a private investor and an independent consultant. From 1992 until its sale in
1994, he was the sole shareholder of Philadelphia Benefits Corporation, a
health benefits consulting and marketing firm. From 1981 to 1992, Mr. Levy
served as President and was a shareholder of Preferred Benefits Corporation, a
401(k) consulting and administration firm he co-founded. From 1975 to 1981, he
served in various capacities with Ernst & Young. Mr. Levy is a graduate of the
Wharton School of the University of Pennsylvania.
Joseph M. Matisoff. Mr. Matisoff has served as Secretary and a director of
the Company and President and Chief Executive Officer of the Bank since August
2000. From 1998 to 2000, Mr. Matisoff was Senior Vice President of Cross
Country Bank. From 1988 to 1998, he served in senior level lending officer
positions with Constellation Bancorp, Covenant Bank, First Bank of Philadelphia
and First Republic Bank. From 1972 to 1988, Mr. Matisoff served in various
capacities with First Pennsylvania Bank. He is a graduate of Pennsylvania State
University and received Master's Degrees in Finance and Economics form
Northwestern University.
2
<PAGE>
D. Walter Cohen, D.D.S. Dr. Cohen became a director of the Company in 1997
and has served as a director of the Bank since 1994. From 1993 to 1998, Dr.
Cohen was Chancellor of the Allegheny University of the Health Sciences. From
1986 to 1993, Dr. Cohen was President of the Medical College of Pennsylvania.
Dr. Cohen is also a partner in a periodontal practice in Philadelphia and is a
director of Atrix Laboratories, Inc. Dr. Cohen is a graduate of the University
of Pennsylvania and earned his D.D.S. from its School of Dental Medicine. On
July 21, 1998, the Allegheny University of the Health Sciences filed for
voluntary bankruptcy protection in the United States Bankruptcy Court for the
Western District of Pennsylvania.
Linda R. Knox. Ms. Knox became a director of the Company in 1997, and has
served as President of the Board of Directors of the Bank since 1993 and a
director of the Bank since 1989. Prior to 1993, Ms. Knox was a realtor
specializing in the sale of historical and architecturally significant
properties in the Philadelphia area. Ms. Knox attended Rider University and is
a graduate of the Temple University Real Estate Institute. Ms. Knox is the wife
of Mr. Knox.
Brian McAdams. Mr. McAdams became a director of the Company in 1997 and
has served as a director of the Bank since 1989. Mr. McAdams is CEO of
MyHelpdesk.com. Prior to joining Myhelpdesk.com in 1999, he served as Chairman
and CEO of STRATVIS Advisement, Chairman and a partner of McAdams, Richman &
Ong, an advertising and design firm, and Chairman of Back Health Centers, Inc.
Mr. McAdams served as Chairman and CEO of National Media Corporation from 1994
to 1996.
Robert L. Macaulay. Mr. Macaulay became a director of the Company in June
2000 and of the Bank in August 2000. Since 1987, he has served as Principal of
Equity Appraisal Services, which prepares business valuations and fairness
opinions and provides consulting services with respect to mergers and
acquisitions. Mr. Macaulay has significant prior experience in the financial
services industry, including serving in an officer capacity with General
Electric Capital Corporation, Oxford Financial Group, Girard Bank and Walter
Heller Company. From 1970 to 1985, he served as a member of the adjunct faculty
of LaSalle University, and was Chairman of the Finance Department for the
Evening Division. Mr. Macaulay is a graduate of LaSalle University and received
his MBA from Drexel University.
Committees and Meetings of the Board of Directors
In accordance with the Company's Bylaws, all directors hold office for one
year. The term of each of the current directors expires at the Annual Meeting
(in all cases subject to the election and qualification of their successors or
to their earlier death, resignation, or removal). At each annual meeting of
shareholders, the successors to the directors whose terms expire are to be
elected to serve from the time of their election and qualification until the
next annual meeting of shareholders following their election or until their
respective successors have been duly elected and qualified.
The Board held six meetings during the last fiscal year. Each of the
Company's directors attended at least 75% of the aggregate of all meetings of
the Board and of all committees of which he or she was a member held during
that portion of the year that he or she was a Board or committee member. The
standing committees of the Board are the Executive Committee, the Audit
Committee, the Nominating Committee and the Compensation Committee. The
Executive Committee, consisting of Messrs. Knox and Levy, held no formal
meetings during the last fiscal year. The Executive Committee is generally
responsible to act on behalf of the Board of Directors on all matters between
regular and special meetings of the Board. The Audit Committee, consisting of
Messrs. Macaualy, McAdams and Dr. Cohen, met three times during the last fiscal
year. All members of the Audit Committee are independent, as defined in Rule
4200(a)(15) of the National Association of Securities Dealers' listing
standards. The Audit Committee reviews, acts on, and reports to the Board with
respect to various auditing and accounting matters, including the selection of
the Company's independent auditors, the scope of the annual audits, fees to be
paid to the auditors, the performance of the Company's auditors, and the
accounting practices of the Company. The Company's Board of Directors adopted a
written charter for the Audit Committee on March 22, 2000, a copy of which is
included as an appendix to this Proxy Statement. The Nominating Committee,
consisting of Messrs. Knox and Levy and Ms. Knox, did not meet during the last
fiscal year. While the Nominating Committee is responsible for considering
potential nominees to the Board of Directors, the directors elected during the
last fiscal year and the nominees for the Board of Directors listed herein for
the next fiscal year were considered by the entire Board of Directors. As set
forth in the Company's By-laws, a
3
<PAGE>
shareholder nomination for a director to be proposed for election at next
year's annual meeting will be considered if it is made within 95 days of this
year's annual meeting. The Compensation Committee, consisting of Mr. McAdams
and Dr. Cohen did not meet during the last fiscal year. The Compensation
Committee handles personnel matters and establishes compensation policy for the
executive officers of the Company.
Director Compensation
Directors are reimbursed for expenses incurred in connection with
performing their respective duties as directors of the Company. In November
1999, each non-employee director who served on one or more committees of the
Board or the Board of Directors of the Bank (the "Bank Board") received stock
options to purchase 1,579 shares of Common Stock and each non-employee director
who did not serve on any such committee received stock options to purchase 789
shares, all at an exercise price of $9.50 per share. Effective July 1, 2000,
stock options will be granted on the last day of each calendar quarter. The
number of shares of Common Stock subject to the quarterly stock option grant
will be determined by dividing $9,000 (or $6,000 in the case of a non-employee
director who does not serve on any committee of the Board) by the fair market
value of a share of Common Stock on the date of grant, and rounding up to the
next higher whole number. The exercise price for all grants will be 100% of the
fair market value of a share of Common Stock on the date of grant. All stock
options expire five years after the date of grant.
4
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
The following table sets forth information with respect to all
compensation awarded to, earned by, or paid for services rendered to the
Company by the Company's Chairman and Chief Executive Officer, President and
Vice President in the fiscal years ended June 30, 2000, 1999 and 1998
(collectively, the "Named Executive Officers"). Except as set forth below, no
executive officer of the Company was paid salary and bonus during the fiscal
year that exceeded $100,000 for services rendered in all capacities to the
Company.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual
Compensation
----------------------------------
Fiscal All Other
Name and Principal Position Year Salary Bonus Compensation
--------------------------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C>
Thomas J. Knox 2000 $ 61,800 -- --
Chairman and Chief Executive Officer 1999 $ 61,800 -- --
1998 $ 61,800 -- --
Bruce A. Levy 2000 $150,000 -- --
President 1999 $150,000 -- --
1998 $150,000 -- --
Joseph T. Crowley(2) 2000 $108,000 $30,000 $ 6,000(1)
Vice President, Secretary and Treasurer, 1999 $100,000 $30,000 $ 6,000(1)
President of the Bank 1998 $100,000 $30,000 $ 6,000(1)
</TABLE>
------------
(1) Represents an automobile allowance of $6,000.
(2) Mr. Crowley resigned in September 2000. In August 2000, the Company hired
Joseph M. Matisoff to serve as Secretary and the Bank hired Mr. Matisoff
to serve as President and Chief Executive Officer.
Stock Option Information
The following table sets forth, for each of the Named Executive Officers,
certain information concerning the grant of options in fiscal 2000.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation
Individual Grants for Option Term
---------------------------------------------------------- -----------------------
Number % of
of Total Exercise
Securities Options or
Underlying Granted to Base
Options Employees in Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date 5%($) 10%($)
---- --------------- -------------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Thomas J. Knox -- -- -- -- -- --
Bruce A. Levy -- -- -- -- -- --
Joseph T. Crowley 10,000(1) 56% $ 7.75 2/13/05 $21,400 $47,300
</TABLE>
------------
(1) Non-Qualified Stock Options.
5
<PAGE>
The following table sets forth certain information concerning stock
options exercised during fiscal 2000 and the number of unexercised options held
by the Named Executive Officers at June 30, 2000 and the value thereof.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End(#) at Fiscal Year-End (1)
Shares Acquired ------------------------------ -----------------------------
Name on Exercise (#) Value Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------------- -------------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Thomas J. Knox -0- -0- -0- -0- -0- -0-
Bruce A. Levy -0- -0- -0- -0- -0- -0-
Joseph T. Crowley -0- -0- 22,470 28,900 -0- $2,500
</TABLE>
------------
(1) These values represent the difference between the closing price per share
on the Nasdaq National Market on June 30, 2000 ($8.00) and the per share
exercise price of the option.
Employment Contracts
The Company has a five-year employment agreement, dated March 1, 1996,
with Bruce A. Levy. Under the terms of the agreement, Mr. Levy devotes
substantially all of his time and effort to conducting the business activities
of the Company as President and is entitled to receive an annual salary of
$150,000. Mr. Levy's employment is terminable by the Company for cause as
defined in the agreement, and is terminable by Mr. Levy upon written notice to
the Company. Upon termination, Mr. Levy is not permitted to compete with the
Company or any subsidiary or affiliate of the Company by soliciting its
employees or soliciting business from its customers or suppliers for a period
of one year following such termination.
The Bank had a three-year employment agreement, dated December 11, 1997
with Joseph T. Crowley. Under the terms of the agreement, Mr. Crowley was
required to devote substantially all of his time and effort to conducting the
business activities of the Bank as its President and received an annual salary
of $100,000 with an eight percent increase as of July 1, 1999. In addition, Mr.
Crowley was eligible for an annual bonus as determined by the Bank's Board of
Directors. Upon termination, Mr. Crowley is not permitted to compete with the
Bank in any of its businesses in the relevant market areas for such businesses
for varying periods following termination depending upon the reason therefor.
If Mr. Crowley's employment was prematurely terminated by the Bank without
cause, Mr. Crowley was eligible to receive a severance payment equal to his
annual salary. Mr. Crowley resigned from the Bank in September 2000 without any
entitlement to a severance benefit.
The Bank hired Joseph M. Matisoff in August 2000 as President and Chief
Executive Officer. Under the terms of his arrangement, Mr. Matisoff receives an
annual salary of $150,000. In addition, Mr. Matisoff is eligible for a
specified bonus in the event of a sale of the Bank to a third party during the
term of his employment. Upon termination, Mr. Matisoff is not permitted to
compete with the Bank in any of its businesses in the relevant market areas for
such businesses for varying periods following termination, depending upon the
date of such termination. If Mr. Matisoff's employment is terminated by the
Bank without cause, he is eligible to receive a severance payment equal to two
times his annual salary if such termination occurs in the initial year of his
employment, or a payment equal to his annual salary if such termination occurs
during his second or third year of employment.
Compensation Committee Interlocks and Insider Participation
Determinations regarding compensation of the Company's executive officers
are made by the Company's Compensation Committee. Mr. McAdams and Dr. Cohen
currently serve on the Compensation Committee. The Bank extended Mr. McAdams a
$60,000 personal line of credit in September 1997, which line has been reduced
to $30,000 in April 1999. Amounts outstanding under the line of credit accrue
interest at the prime rate as reported in the Wall Street Journal ("Prime")
minus 0.5% and outstanding amounts are secured by certain marketable
securities. The Bank has also extended a term loan in the amount of $280,000 to
Bastille Associates, L.P., a partnership of which Mr. McAdams is a general
partner. Amounts outstanding under the term loan accrue interest at a rate of
Prime plus 1.5% (adjusted annually) and outstanding amounts are secured by
certain assets
6
<PAGE>
of the partnership. Mr. McAdams personally guaranteed 50% of the loan. In March
1996, the Bank extended a $125,000 business line of credit to a partnership of
which Dr. Cohen is a general partner. The loan was repaid on June 8, 1998
through the issuance of a $500,000 commercial loan at a rate of 9.00%. The
current balance outstanding under such loan is $220,000. The loan is secured by
certain assets of Dr. Cohen's dental practice as well as personal assets of the
partners, including Dr. Cohen. Each of the partners and their spouses have
personally guaranteed the loan. Dr. Cohen is also a limited partner in Bastille
Associates, L.P. Each of these loans has been current throughout its term and
was made on substantially the same terms, including interest rates and
collateral requirements, as those prevailing at the time for comparable
transactions with unrelated persons.
7
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
Introduction
The Compensation Committee has responsibility for matters related to
compensation, including compensation policy, approval of salaries, bonuses, and
other compensation for the Company's executive officers. During the last fiscal
year, the Compensation Committee did not meet and its responsibilities were
carried out by the Board. The Company's various stock option plans are also
administered by the Board.
Executive Compensation Components
The Company's executive compensation policy is designed to enable the
Company to attract, motivate and retain highly qualified executive officers.
The key components of the Company's compensation program are base salary,
annual incentive bonus awards, and equity participation in the form of stock
options. In arriving at specific levels of compensation for executive officers,
the Board has relied on the recommendations of management, benchmarks provided
by generally available compensation surveys, and the experience of Board
members and their knowledge of compensation paid by other companies in the
banking industry and/or in the same geographic area as the Company. The Board
also seeks to ensure that an appropriate relationship exists between executive
pay and corporate performance. Executive officers are also entitled to
customary benefits generally available to all employees of the Company,
including group medical, dental, and life insurance and the Company's 401(k)
plan. The Company has long-term employment agreements with certain of its
executive officers to provide them with the employment security and severance
deemed necessary by the Board to retain them.
Cash
Base Salary. Subject to the above policy and to the requirements of
applicable employment agreements, compensation for each of the executive
officers for fiscal 2000 was based on the executive's duties and
responsibilities, the performance of the Company, both financial and otherwise,
and the success of the executive in developing and executing the Company's
business and strategic plans.
Bonus. Mr. Crowley was the only executive officer to receive a cash bonus
for fiscal 2000. Mr. Crowley's bonus of $30,000 represented 28% of his base
salary. The decision to award Mr. Crowley such a bonus was based on the degree
of the Company's achievement of its financial and other objectives and the
degree of achievement by Mr. Crowley of his individual objectives as approved
by the Board. Because of Mr. Knox's and Mr. Levy's significant ownership of
shares of the Company's Common Stock, each has requested that the Board not
consider him for a cash bonus for fiscal 2000.
Stock Options. Equity participation is a key component of the Company's
executive compensation program. Stock options are granted to executive officers
primarily based on the officer's actual and expected contribution to the
Company's development. Options are designed to retain executive officers and
motivate them to enhance shareholder value by aligning their financial
interests with those of the Company's shareholders. Stock options provide an
effective incentive for management to create shareholder value over the long
term since the option value depends on appreciation in the price of the Common
Stock over a number of years.
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits
the deductibility of annual compensation over $1 million to the Chief Executive
Officer and the other executive officers unless certain conditions are met. The
Company's Chief Executive Officer and the other executive officers have not
received annual compensation over $1 million, and the Company has not yet
determined what measures, if any, it should take to comply with Section 162(m).
Chief Executive Officer and President Compensation
Mr. Knox is paid annual compensation of $61,800. The Company and Mr. Levy
are parties to an employment agreement, with a term ending on March 1, 2001.
Pursuant to this agreement, Mr. Levy is entitled to receive, effective as of
March 1, 1996, a minimum annual base salary of $150,000.
Board of Directors
Thomas J. Knox, Chairman
8
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock as of October 3, 2000 by: (i) each
person known by the Company to be the beneficial owner of more than five
percent of the outstanding shares of Common Stock; (ii) each director and Named
Executive Officer of the Company; and (iii) all executive officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
Number of Shares Percentage
Name of Beneficial Owner(1) Beneficial Owned(2) Ownership
--------------------------- --------------------- -----------
<S> <C> <C>
Thomas J. Knox(3) ......................................... 1,636,110 41.80%
Bruce A. Levy ............................................. 770,725 19.69
Joseph M. Matisoff ........................................ -- *
D. Walter Cohen, D.D.S. ................................... 26,279 *
Joseph T. Crowley(4) ...................................... 22,470 *
Linda R. Knox(5) .......................................... 138,915 3.55
Brian McAdams ............................................. 23,743 *
Robert L. Macaulay ........................................ -- *
All directors and officers as a group (7 persons) ......... 2,618,242 66.89%
</TABLE>
------------
* Constitutes less than 1%.
(1) Unless otherwise indicated, the address of all beneficial owners is in care
of the Company.
(2) Unless otherwise indicated, includes shares held directly by the individual
as well as by such individual's spouse, shares held in trust and in other
forms of indirect ownership over which shares the individual effectively
exercises sole voting and investment power and shares which the named
individual has a right to acquire pursuant to the exercise of stock
options within sixty days of October 3, 2000.
(3) Excludes 138,915 shares of Common Stock held by Linda R. Knox in trust for
the children of Linda R. and Thomas J. Knox, as to which he disclaims
beneficial ownership.
(4) Includes 22,470 shares which Mr. Crowley had a right to acquire as of
October 3, 2000 pursuant to the exercise of stock options. These options
expired in accordance with their terms in October 2000.
(5) Includes all shares of Common Stock held in trust for the children of Linda
R. and Thomas J. Knox. Does not include 1,636,110 shares beneficially
owned by her husband, Thomas J. Knox, as to which shares Ms. Knox
disclaims beneficial ownership.
9
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in cumulative total
shareholder return on the Common Stock since February 13, 1998, the date the
Company's shares began trading on the Nasdaq National Market, with the
cumulative total return over the same period on (i) the Nasdaq Stock Market
Index; (ii) the Nasdaq Bank Index and (iii) the relative change in book value
per share of the Company's shares. The comparison assumes $100 was invested on
February 13, 1998 in the Common Stock and in each of the indices and assumes
reinvestment of dividends, if any, from that date to June 30, 2000. The Company
has not paid cash dividends on the Common Stock. The market value and book
value of the Common Stock have been adjusted to reflect the 5% August 1998 and
October 1999 stock dividends. Historic stock prices are not indicative of
future stock price performance.
[GRAPHIC OMITTED]
CERTAIN TRANSACTIONS
The Company is party to the following transactions with its executive
officers, directors, and principal shareholders.
The Bank's headquarters and Center City Philadelphia branch, located at
1230 Walnut Street, are leased from Walnut Square Partners, a partnership
controlled by Ronald L. Caplan, a former director of the Company and the Bank.
The lease covers approximately 6,000 square feet of space on the first and
second floors of the property. The lease expires in 2014, assuming the Bank
exercises its option to renew the lease for two additional terms of five years
each. The base rent under the lease is $48,000 per annum for the initial ten
year term. The base rent increases to $60,000 and $72,000 per annum for the
first and second optional renewal terms, respectively. The terms of the lease
were reached through arms length negotiations and are comparable to the terms
the Company could have obtained from a third party.
QUEST, a wholly-owned subsidiary of the Bank, and Ronald L. Caplan, a
former director of the Company and the Bank, formed a partnership which
acquired an office building located at 1334-36 Walnut Street for $410,000. The
Company's subsidiaries lease approximately 8,400 square feet in this building
at an annual rent of $84,0000. The terms of these leases were reached through
arms length negotiations and are comparable to the terms the Company could have
obtained from a third party.
The Bank has made loans to or to entities controlled by officers,
directors and employees of the Company and the Bank. All such loans were made in
the ordinary course of the Bank's business, were made on substantially the same
terms, including interest rates and collateral requirements, as those prevailing
at the time for comparable transactions with unrelated persons and, in the
opinion of management, do not involve more than the normal risk of
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collectibility or present other unfavorable features. In September 1999, the
Company made two loans aggregating $2.7 million to Fidelity Insurance Group, a
company controlled by Thomas J. Knox, Chairman of the Company and the Bank.
These loans were personally guaranteed by Mr. Knox and Linda R. Knox, also a
director of the Company. While the loans were made on substantially the same
terms as those prevailing at the time for comparable transactions with unrelated
persons, the Office of Thrift Supervision has advised the Bank that the loans
may violate a banking regulation and, accordingly, Mr. Knox has advised the Bank
that the loans will be repaid promptly. For information concerning the terms of
certain loans to directors, see "Executive Compensation and Other Information --
Compensation Committee Interlocks and Insider Participation."
For information regarding employment agreements with Named Executive
Officers, see "Executive Compensation and Other Information -- Employment
Contracts." For information regarding compensation of directors and options
granted to Named Executive Officers and directors, see "Election of Directors
-- Director Compensation" and "Executive Compensation and Other Information --
Stock Option Information."
INDEPENDENT AUDITORS
Grant Thornton LLP, independent auditors, audited the financial statements
of the Company for the fiscal year ended June 30, 2000. Representatives of
Grant Thornton LLP are expected to attend the Annual Meeting, will have the
opportunity to make a statement if they desire to do so, and are expected to be
available to respond to appropriate questions. The Audit Committee has not yet
selected the independent auditors to audit the Company's financial statements
for the fiscal year ending June 30, 2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
officers (including persons performing a principal policy-making function), and
persons who own more than 10% of a registered class of the Company's equity
securities ("10% Holders") to file with the Securities and Exchange Commission
(the "SEC") initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Directors, officers,
and 10% Holders are required by the regulations under the Exchange Act to
furnish the Company with copies of all of the Section 16(a) reports which they
file. Based solely upon a review of the copies of the forms furnished to the
Company and the representations made by the reporting persons to the Company,
the Company believes that during fiscal 2000 its directors, officers, and 10%
Holders complied with the filing requirements under Section 16(a) of the
Exchange Act.
SHAREHOLDER PROPOSALS
Shareholders may submit proposals on matters appropriate for shareholder
action at the Company's annual meetings consistent with regulations adopted by
the SEC. For shareholder proposals to be considered by the Board for inclusion
in the Proxy Statement and form of proxy relating to the 2001 annual meeting of
shareholders, they must be received by the Company not later than June 24,
2001. If any shareholder wishes to present a proposal to the 2001 annual
meeting of shareholders that is not included in the Board's Proxy Statement
relating to such meeting and fails to submit such proposal to the President of
the Company on or before September 6, 2001, then the Board will be allowed to
use its discretionary voting authority when the proposal is raised at the
Annual Meeting, without any discussion of the matter in its proxy statement.
All proposals should be addressed to the Company at 1230 Walnut Street,
Philadelphia, Pennsylvania 19107, Attention: President. Nothing in this
paragraph shall be deemed to require the Company to include in its proxy
materials relating to such annual meeting of shareholders any shareholder
proposal which does not meet all of the requirements for inclusion established
by the SEC and the Company's By-laws at that time in effect.
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OTHER MATTERS
The Board does not intend to present any business at the Annual Meeting
other than the election of seven directors. However, if other matters requiring
the vote of the shareholders properly come before the Annual Meeting, which
under applicable proxy regulations need not be included in this Proxy
Statement, or which the Board did not know would be presented at a reasonable
time before this solicitation, the persons named in the enclosed proxy will
have discretionary authority to vote the proxies held by them with respect to
such matters in accordance with their best judgment on such matters.
By Order of the Board of Directors
/s/ Joseph M. Matisoff
----------------------
Joseph M. Matisoff
Secretary
October 27, 2000
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APPENDIX A
AUDIT COMMITTEE CHARTER
AUDIT COMMITTEE MISSION
The Audit Committee is appointed by the Board of Directors to assist the
Board in fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:
Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting and regulatory
compliance.
Monitor the independence and performance of the Company's independent
auditors and internal auditing department.
Provide an avenue of communication among the independent auditors,
management, the internal auditing department, and the Board of Directors.
To effectively perform his or her role, each Committee member will obtain
an understanding of the detailed responsibilities of Committee membership.
AUDIT COMMITTEE ORGANIZATION
Audit Committee members shall meet the requirements of the NASD Exchange.
The Audit Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be independent, non-executive directors, free
from any relationship that would interfere with the exercise of his or her
independent judgment. All members shall have a basic understanding of finance
and accounting and be able to read and understand fundamental financial
statements, including a balance sheet, income statement, and cash flow
statement. At least one member of the Committee shall have accounting or
related financial management expertise. One of the members shall be designated
"Chairman".
The Committee shall meet quarterly, or more frequently as circumstances
dictate.
The Committee believes that the above mission statement sets forth its
primary roles and responsibilities. In that connection, the following is meant
to serve as a guide in achieving that mission.
ROLES AND RESPONSIBILITIES
Review Procedures
1. Review the Company's annual audited financial statements prior to filing
or distribution. Review should include discussion with management and
independent auditors of significant issues regarding accounting
principles, practices, and judgments. Discuss with Independent Auditors
its judgment about the quality, not just acceptability, of the Company's
accounting principles as applied it its financial reporting.
2. In consultation with management, independent auditors, and internal
auditors, consider the integrity of the Company's financial reporting
processes and controls. Discuss significant financial risk exposures and
the steps taken to monitor, control, and report such exposures.
3. Review significant findings prepared by the independent auditors and the
internal auditors together with management's responses. Gain an
understanding of whether internal control recommendations made by internal
and independent auditors have been implemented by management.
Independent Auditors
1. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall review the
independence and performance of the auditors and annually recommend to the
Board of Directors the appointment of the independent auditors or approve
any discharge of auditors when circumstances warrant.
2. Review the independent auditors' timetable, scope and approach of the
quarterly reviews and annual examination of the financial statements.
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3. Obtain from the independent auditors their annual letter to the Audit
Committee in satisfaction of SAS 60 and 61 regarding Reportable Conditions
and Report to the Audit Committee.
4. Review and discuss with the independent auditors all significant
relationships they have with the Company that could impair the auditors'
independence.
Internal Auditors
1. Approve an Annual Risk Assessment and Audit Plan developed by the
Internal Audit Department.
2. Meet quarterly with the Internal Audit Department to gain an
understanding of the effectiveness of the internal audit function in
evaluating their performance.
3. Review significant reports prepared by the internal audit department
together with management's response and follow-up to these reports.
4. The Audit Committee may contract for internal audit services as
necessary to assess the adequacy and effectiveness of internal controls,
the accuracy of management reporting and compliance with laws, regulations
and bank policy. The Audit Committee will set forth the outsourcing
vendor's responsibilities in a written contract the terms of which comply
with the "Interagency Policy Statement on Internal Audit and Internal
Audit Outsourcing."
Compliance with Laws and Regulations
1. Periodically obtain updates from management and compliance auditors
regarding compliance with laws and regulations.
2. Review the findings of any examination by regulatory agencies such as
the Federal Reserve, FDIC, or Office of the Comptroller of the Currency.
3. Be familiar with Management's response to regulatory examinations.
Other Committee Responsibilities
1. Review and update the Audit Charter annually and submit the charter to
the Board of Directors for approval. Ensure that the charter is included
within the Corporation's Form 10-K once every three years.
2. Prepare an annual Audit Committee Report for inclusion in the
Corporation's Annual Proxy Statement that states a formal Audit Charter
has been approved and the Audit Committee has satisfied its responsibility
during the year.
3. Perform other oversight functions as requested by the full Board.
4. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
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PROXY CRUSADER HOLDING CORPORATION
The undersigned shareholder of Crusader Holding Corporation (the
"Company") hereby appoints Bruce A. Levy and Joseph M. Matisoff, and each of
them, attorneys and proxies, with power of substitution in each of them, to
vote and act for and on behalf of the undersigned at the Annual Meeting of the
Shareholders to be held at the Union League of Philadelphia, 140 S. Broad
Street, Philadelphia, Pennsylvania 19102 at 3:30 p.m. on Tuesday, November 28,
2000, and at all postponements and adjournments thereof, according to the
number of shares which the undersigned would be entitled to vote if then
personally present, as indicated hereon and in their discretion upon such other
business as may come before the meeting, all as set forth in the notice of the
meeting and in the proxy statement furnished herewith, copies of which have
been received by the undersigned; and hereby ratifies and confirms all that
said attorneys and proxies may do or cause to be done by virtue hereof.
The proxies are directed to vote as follows:
Election of the following persons as directors of the Company.
Name Vote For Vote Withheld
------------------------- -------- -------------
Thomas J. Knox / / / /
Bruce A. Levy / / / /
Joseph M. Matisoff / / / /
D. Walter Cohen, D.D.S. / / / /
Linda R. Knox / / / /
Brian McAdams / / / /
Robert L. Macaulay / / / /
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS,
WHICH RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE NOMINEES FOR DIRECTOR.
<PAGE>
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED HEREIN.
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR"
EACH OF THE ABOVE NOMINEES FOR DIRECTOR.
IMPORTANT: Please date this proxy and sign exactly as your name or names is
printed below. If shares are registered in more than one name, all owners
should sign. When signing as an executor, administrator, trustee, guardian or
in another representative capacity, please give your full title(s). If this
proxy is submitted by a corporation or partnership, it should be executed in
the full corporate or partnership name by a duly authorized person.
_____________________________________
(Signature)
_____________________________________
(Signature)
Dated__________________________, 2000
PLEASE SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED PRE-ADDRESSED, STAMPED ENVELOPE.
