COLUMBIA FINANCIAL OF KENTUCKY INC, DEF 14A, 2000-12-22

COLUMBIA FINANCIAL OF KENTUCKY INC
DEF 14A, 2000-12-22
SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED

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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 Pursuant to [SECTION]240.14a-11(c) or
[SECTION]240.14a-12

Columbia Financial of Kentucky, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)

Columbia Financial of Kentucky, Inc.
-----------------------------------------------------------------------
(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:

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:

COLUMBIA FINANCIAL OF KENTUCKY, INC.
2497 Dixie Highway
Ft. Mitchell, Kentucky 41017
(859) 331-2419

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Notice is hereby given that the 2001 Annual Meeting of Shareholders of
Columbia Financial of Kentucky, Inc. ("CFKY"), will be held at the Holiday
Inn, 2100 Dixie Highway, Ft. Mitchell, Kentucky, on January 25, 2001, at
11:00 a.m., Eastern Standard Time (the "Annual Meeting"), for the following
purposes, all of which are more completely set forth in the accompanying
Proxy Statement:

1. To elect three directors of CFKY for terms expiring in 2003;

2. To ratify the selection of VonLehman & Company Inc. as the
auditors of CFKY for the current fiscal year; and

3. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.

Only shareholders of CFKY of record at the close of business on
December 4, 2000, will be entitled to receive notice of and to vote at the
Annual Meeting and at any adjournments thereof. Whether or not you expect to
attend the Annual Meeting, we urge you to consider the accompanying Proxy
Statement carefully and to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY
SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND THE
PRESENCE OF A QUORUM MAY BE ASSURED AT THE ANNUAL MEETING. The giving of a
proxy does not affect your right to vote in person in the event you attend
the Annual Meeting.

By Order of the Board of Directors

Robert V. Lynch, President

Ft. Mitchell, Kentucky
December 22, 2000

COLUMBIA FINANCIAL OF KENTUCKY, INC.
2497 Dixie Highway
Ft. Mitchell, Kentucky 41017
(859) 331-2419

PROXY STATEMENT

PROXIES

The enclosed proxy (the "Proxy") is being solicited by the Board of
Directors of Columbia Financial of Kentucky, Inc., an Ohio corporation
("CFKY"), for use at the Annual Meeting of Shareholders of CFKY to be held
at the Holiday Inn, 2100 Dixie Highway, Ft. Mitchell, Kentucky, on January
25, 2001, at 11:00 a.m., Eastern Standard Time (the "Annual Meeting").
Without affecting any vote previously taken, the Proxy may be revoked by a
shareholder by execution of a later dated proxy received by CFKY before the
Proxy is exercised or by giving notice of revocation to CFKY in writing or
in open meeting before the Proxy is exercised. Attendance at the Annual
Meeting will not, of itself, revoke a Proxy.

Each properly executed Proxy received prior to the Annual Meeting and
not revoked will be voted as specified thereon or, in the absence of
specific instructions to the contrary, will be voted:

FOR the re-election of Daniel T. Mistler, Fred A. Tobergte, Sr. and
Geraldine Zembrodt as directors of CFKY for terms expiring in 2003,
and

FOR the ratification of the selection of VonLehman & Company Inc.
("VonLehman") as the auditors of CFKY for the current fiscal year.

Proxies may be solicited by the directors, officers and other
employees of CFKY and Columbia Federal Savings Bank, the wholly owned
subsidiary of CFKY ("Columbia Federal"), in person or by telephone,
telecopy, telegraph or mail only for use at the Annual Meeting. The cost of
soliciting Proxies will be borne by CFKY.

Only shareholders of record as of the close of business on December 4,
2000 (the "Voting Record Date"), are entitled to vote at the Annual Meeting.
Each such shareholder will be entitled to cast one vote for each share
owned. CFKY's records disclose that, as of the Voting Record Date, there
were 2,625,950 votes entitled to be cast at the Annual Meeting.

This Proxy Statement is first being mailed to shareholders of CFKY on
or about December 22, 2000.

VOTE REQUIRED

A majority of the votes eligible to be cast at the Annual Meeting must
be present in person or by proxy to establish a quorum. Abstentions will be
counted as present for purposes of establishing a quorum.

Under Ohio law and CFKY's Code of Regulations (the "Regulations"), the
three nominees receiving the greatest number of votes will be elected as
directors. Each shareholder will be entitled to cast one vote for each share
owned. Shares as to which the authority to vote is withheld are not counted
toward the election of directors or toward the election of the individual
nominees specified in the enclosed Proxy. If the enclosed Proxy is signed,
dated and returned by the shareholder but no vote is specified thereon, the
shares held by such shareholder will be voted FOR the re-election of the
three nominees.

The affirmative vote of the holders of a majority of the shares of
CFKY represented in person or by proxy at the Annual Meeting is necessary to
ratify the selection of VonLehman as the auditors of CFKY for the current
fiscal year. Abstentions will have the same effect as a vote against the
approval of such ratification. If a shareholder has signed, dated and
returned a proxy in the form of the enclosed Proxy, but has not voted on the
ratification of the selection of VonLehman by checking the appropriate block
on the proxy, such person's shares will be voted FOR the ratification of the
selection of VonLehman.

VOTING SECURITIES AND OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the
only persons known to CFKY to own beneficially more than five percent of the
outstanding common shares of CFKY as of December 4, 2000:

Amount and Nature of Percent of
Name and Address Beneficial Ownership Shares Outstanding
---------------- -------------------- ------------------

<S> <C> <C>
First Bankers Trust Company, N.A., Trustee 265,698(1) 10.1%
Columbia Financial of Kentucky, Inc.
Employee Stock Ownership Plan
1201 Broadway
Quincy, IL 62301

<FN>
--------------------
<F1> First Bankers Trust Company, N.A. (the "Trustee"), holds such shares
as the Trustee for the Columbia Financial of Kentucky, Inc., Employee
Stock Ownership Plan (the "ESOP"). The Trustee has voting power with
respect to the 169,333 shares not yet allocated to participant's
accounts and limited dispositive power with respect to all of the
shares held in the ESOP.
</FN>
</TABLE>

The following table sets forth certain information with respect to the
number of common shares of CFKY beneficially owned by each director and
executive officer of CFKY and by all directors and executive officers of
CFKY as a group at December 4, 2000:

Amount and Nature of
Beneficial Ownership
--------------------- Percent of
Name and Address (1) Sole Shared Shares Outstanding
-------------------- ---- ------ ------------------

<S> <C> <C> <C>
Kenneth R. Kelly 44,200(2) 3,600(3) 1.8%
John C. Layne 11,800(4) 85,578(5) 3.7
Robert V. Lynch 48,087(6) 38,948(7) 3.3
Daniel T. Mistler 11,660(4) 87,975(8) 3.8
Fred A. Tobergte, Sr. 24,100(2) 3,200(9) 1.0
Geraldine Zembrodt 18,000(10) 7,180(11) 1.0
All directors and executive officers
as a group (9 persons) 240,734(12) 184,689(13) 15.4%

<FN>
--------------------
<F1> Each of the persons listed on this table may be contacted at the
address of CFKY.
<F2> Includes 13,300 shares that may be acquired upon the exercise of
options.
<F3> Consists of 3,600 shares held in the Columbia Financial of Kentucky,
Inc., Recognition and Retention Plan (the "RRP") Trust, with respect
to which Mr. Kelly has voting power only.
<F4> Includes 11,000 shares that may be acquired upon the exercise of
options.
<F5> Includes 85,151 shares held in the RRP Trust with respect to which Mr.
Layne shares dispositive power as a Trustee, and 2,000 shares held in
the RRP Trust with respect to which Mr. Layne has voting power only.
<F6> Includes 30,000 shares that may be acquired upon the exercise of
options.
<F7> Includes 10,597 shares allocated to Mr. Lynch's ESOP account, with
respect to which Mr. Lynch has voting power only, and 12,351 shares
held in the RRP Trust, with respect to which Mr. Lynch has voting
power only.
<F8> Includes 85,151 shares held in the RRP Trust with respect to which Mr.
Mistler shares dispositive power as a Trustee, and 1,600 shares held
in the RRP Trust with respect to which Mr. Mistler has voting power
only.
<F9> Consists of shares held in the RRP Trust with respect to which Mr.
Tobergte has voting power only.
<F10> Includes 12,000 shares that may be acquired upon the exercise of
options.
<F11> Includes 2,400 shares held in the RRP Trust, with respect to which Ms.
Zembrodt has voting power only.
<F12> Includes 144,600 shares that may be acquired upon the exercise of
options.
<F13> Includes 24,712 shares allocated to the ESOP accounts of all executive
officers as a group, with respect to which such persons have voting
power only, and 33,951 shares held in the RRP Trust, on behalf of all
executive officers as a group, with respect to which such persons have
voting power only.
</FN>
</TABLE>

PROPOSAL ONE - ELECTION OF DIRECTORS

In accordance with Section 2.03 of the Regulations, nominees for
election as directors may be proposed only by the directors or by any
shareholder entitled to vote for the election of directors if such
shareholder has submitted a written notice of a proposed nominee to the
Secretary of CFKY by the sixtieth day before the first anniversary of the
most recent annual meeting of shareholders held for the election of
directors. Each such written notice of a proposed nominee shall set forth
the name, age, business or residence address of the nominee, the principal
occupation or employment of the nominee, the numbers of shares of CFKY owned
beneficially and/or of record by the nominee and the length of time such
shares have been so owned. The Board of Directors chose, as permitted by the
Code of Regulations of CFKY, to reduce the size of the Board of Directors
from seven members to six members.

The Board of Directors proposes the re-election of the following
persons to serve until the Annual Meeting of Shareholders in 2003 and until
their successors are duly elected and qualified or until their earlier
resignation, removal from office or death:

Director of Columbia Director of
Name Age Positions(s) Held Federal Since CFKY Since
---- --- ----------------- -------------------- -----------

<S> <C> <C> <C> <C>
Daniel T. Mistler 58 Director 1997 1997
Fred A. Tobergte, Sr. 82 Director 1981 1997
Geraldine Zembrodt 56 Director 1993 1997
</TABLE>

If any nominee is unable to stand for election, any proxies granting
authority to vote for such nominee will be voted for such substitute as the
Board of Directors recommends.

Mr. Mistler is an attorney who joined Deters, Benzinger & LaVelle,
PSC, a law firm located in Covington, Kentucky, in 1984 and now serves on
its Board of Directors and manages its residential real estate department.

Mr. Tobergte served the Kentucky Department of Transportation for
twenty years, where he held various positions, including that of Enforcement
Officer, prior to his retirement in 1981.

Ms. Zembrodt has co-owned and operated The Village Gallerie, an art
and framing gallery located in Ft. Wright, Kentucky, since May 1995. Ms.
Zembrodt previously co-owned and operated The Sample Shop, a women's apparel
shop then located in Ft. Wright, Kentucky, from 1982 to May 1994.

The following directors will continue to serve after the Annual
Meeting for the terms indicated.

<TABLE>
<CAPTION>
Director of Columbia Director of Term
Name Age Positions(s) Held Federal Since CFKY Since Expires
---- --- ----------------- -------------------- ----------- -------

<S> <C> <C> <C> <C> <C>
Kenneth R. Kelly 79 Director, Chairman
of the Board 1965 1997 2002
John C. Layne 51 Director 1995 1997 2002
Robert V. Lynch 55 Director,
President, CEO 1978 1997 2002
</TABLE>

Mr. Kelly has been Chairman of the Board of Columbia Federal since
1983. He has served as President and co-owner of Kelly Brothers Lumber Co.,
a lumber and building supply store in Covington, Kentucky, since its
founding in 1947.

Mr. Layne has been a partner in Rafalske & Layne, LLP, Certified
Public Accountants, which has its offices in Cincinnati, Ohio, since 1982.

Mr. Lynch has been employed by Columbia Federal since 1971, served as
Treasurer from 1974 to 1977, has served as President and Chief Executive
Officer since 1977 and has been a director since 1978.

Meetings of Directors

The Board of Directors of CFKY met six times for regularly scheduled
and special meetings during the fiscal year ended September 30, 2000. No
director attended fewer than 75% of the aggregate of such meetings and all
meetings of the committees of which such director was a member.

Each director of CFKY is also a director of Columbia Federal. The
Board of Directors of Columbia Federal met twelve times during the fiscal
year ended September 30, 2000. No director attended fewer than 75% of the
aggregate of such meetings and all meetings of the committees of which such
director was a member.

Committees of Directors

The Board of Directors of CFKY has an Audit Committee. The members of
the Audit Committee are Messrs. Kelly, Tobergte and Ms. Zembrodt. The Audit
Committee met one time during fiscal year 2000. For a description of the
duties of the Audit Committee, see "AUDIT COMMITTEE REPORT."

The Board of Directors of CFKY does not have a nominating committee or
a compensation committee. The full Board of Directors of Columbia Federal,
except Mr. Lynch, periodically serves as a compensation committee to
determine compensation for executive officers. The Board of Directors of
Columbia Federal met once in such a capacity in fiscal year 2000.

Executive Officers

In addition to Mr. Lynch, the President and CEO of CFKY and Columbia
Federal, the following persons are executive officers of CFKY and hold the
designated positions:

Name Age Position(s) Held
---- --- ----------------

<S> <C> <C>
Abijah Adams 55 Treasurer of CFKY and Controller of
Columbia Federal
Carol S. Margrave 45 Secretary of CFKY and Treasurer and
Secretary of Columbia Federal
Edward J. Schwartz 51 Vice President of CFKY and Columbia Federal
</TABLE>

Mr. Adams joined Columbia Federal as Accountant in 1978 and became
Controller in 1987.

Ms. Margrave has been employed by Columbia Federal since 1979, serving
as Branch Manager from 1983 to 1992 and Assistant Secretary from 1992 to
1993, when she became Secretary and Treasurer.

Mr. Schwartz has been employed by Columbia Federal since 1972, serving
as Assistant Vice President until 1994, when he became Vice President. Mr.
Schwartz is responsible for IRAs and mortgage servicing.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

Directors' Compensation

Each director of Columbia Federal, except for the Chairman of the
Board, receives a retainer fee of $1,100 per month for service as a director
of Columbia Federal. The Chairman of the Board of Directors receives a
monthly fee of $1,353. Directors are also eligible for awards pursuant to
the RRP and the Columbia Financial of Kentucky, Inc., 1998 Stock Option and
Incentive Plan (the "Stock Option Plan"). No fees are paid for service as a
director of CFKY.

Executive Officers' Compensation

The following table presents certain information regarding the cash
compensation received by Robert V. Lynch, the President and Chief Executive
Officer of CFKY and Columbia Federal. No other executive officer of Columbia
Federal or CFKY received salary and bonus compensation exceeding $100,000
during fiscal year 2000.

Summary Compensation Table

Annual Compensation Long-Term Compensation
------------------------ --------------------------
Awards
--------------------------
Fiscal Year Restricted Securities
Name and Principal Ended Stock Underlying All Other
Position September 30 Salary($)(1) Bonus($) Award(s) Options/SARs (#)Compensation
-------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C>
Robert V. Lynch 2000 $143,439(2) $ - - - $35,386(6)
President and Chief 1999 142,379(3) - $169,818(5) 30,000 57,374(7)
Executive Officer 1998 136,222(4) 2,307 - - 33,770(8)

<FN>
--------------------
<F1> Does not include amounts attributable to other miscellaneous benefits
received by executive officers. The cost to Columbia Federal of
providing such benefits to Mr. Lynch was less than 10% of his cash
compensation.
<F2> Includes a salary of $130,239 and directors' fees of $13,200.
<F3> Includes a salary of $129,281 and directors' fees of $13,098.
<F4> Includes a salary of $123,430 and directors' fees of $12,792.
<F5> On July 15, 1999, Mr. Lynch was awarded 15,438 common shares of CFKY
pursuant to the RRP. Mr. Lynch paid no consideration for such shares.
Such shares will be earned and non-forfeitable at the rate of one-
fifth per year on the anniversary of the date of the award, beginning
July 15, 2000, assuming continued employment with, or service on the
Board of Directors of, CFKY. On July 15, 1999, the market price of the
shares awarded to Mr. Lynch, determined by reference to the closing
bid and asked price for CFKY's shares on the Nasdaq National Market
("Nasdaq") on such date, was $11.00 per share, and the aggregate
market value of such shares was $169,818. At September 30, 2000, the
market price of a CFKY share was $8.50, based on the last trade price
reported by Nasdaq, and the aggregate market value of the shares
awarded to Mr. Lynch was $131,223. In addition, dividends and other
distributions on such shares and earnings thereon and distributions
will be distributed to Mr. Lynch according to the vesting schedule.
<F6> Consists of Columbia Federal's $3,834 contribution to Mr. Lynch's
401(k) defined contribution plan account and the September 30, 2000,
$31,552 fair market value of Columbia Federal's Contribution to Mr.
Lynch's ESOP account.
<F7> Consists of Columbia Federal's $3,950 contribution to Mr. Lynch's
401(k) defined contribution plan account and the September 30, 1999,
$53,424 fair market value of Columbia Federal's contribution to Mr.
Lynch's ESOP account.
<F8> Consists of Columbia Federal's $3,691 contribution to Mr. Lynch's
401(k) defined contribution plan account and the September 30, 1998,
$30,079 fair market value of Columbia Federal's contribution to Mr.
Lynch's ESOP account.
</FN>
</TABLE>

Stock Option Plan

At the July 15, 1999, Special Meeting of shareholders of CFKY, the
shareholders approved the Stock Option Plan. The Board of Directors reserved
266,095 common shares of CFKY for issuance by CFKY upon the exercise of
options to be granted as determined by the Stock Option Committee to certain
directors, officers and employees of CFKY and Columbia Federal from time to
time under the Stock Option Plan. Options to purchase 252,600 shares have
been awarded. All of such options are immediately exercisable in full.

The following table sets forth information regarding the number and
value of unexercised options held at September 30, 2000, by Mr. Lynch:

Aggregated Option/SAR Exercises In Last Fiscal
Year and 9/30/00 Option/SAR Values
----------------------------------------------

Number of Securities Underlying Value of Unexercised In-the-
Unexercised Options/SARs at Money Options/SARs at
Shares Acquired Value 9/30/00(#) 9/30/00(1)
Name on Exercise (#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ---------------- ----------- ------------------------------- ----------------------------

<S> <C> <C> <C> <C>
Robert V. Lynch - 0 - - 0 - 30,000 / - 0 - N/A

<FN>
--------------------
<F1> On September 30, 2000, the fair market value of the unexercised
options did not exceed the $11.00 exercise price of the options.
</FN>
</TABLE>

Recognition and Retention Plan and Trust

At the July 15, 1999, Special Meeting of the Shareholders of CFKY, the
shareholders of CFKY approved the RRP. Awards entitling recipients to
106,438 shares were made to directors, executive officers and employees of
CFKY and Columbia Federal in July 1999. One-fifth of the number of shares
awarded to an individual becomes earned and non-forfeitable on each of the
first five anniversaries of the date of such award. Until shares awarded are
earned by the participant, such shares will be forfeited in the event that
the participant ceases to be either a director or an employee of CFKY or
Columbia Federal, except that in the event of the death or disability of a
participant, the participant's shares will be deemed to be earned and non-
forfeitable.

Defined Benefit Plan

Columbia Federal sponsors a defined benefit pension plan (the "Pension
Plan") covering all employees age 21 or older who have completed at least
one year of service to Columbia Federal.

The normal Pension Plan retirement benefit payable upon retirement at
or after age 65 is the product of (a) 1%, multiplied by (b) years of benefit
service, multiplied by (c) average annual taxable compensation for the five
years of highest taxable compensation. Employees become 100% vested in the
Pension Plan after five years of employment. Participants are automatically
100% vested at 65 years of age regardless of years of service. The Pension
Plan also includes provisions for early retirement, disability retirement
and a death benefit. The compensation covered by the Pension Plan includes
the employee's total annual taxable compensation.

Pension Plan Table

High-5 15 Years 20 Years 25 Years 30 Years 35 Years
Average Benefit Benefit Benefit Benefit Benefit
Compensation Service Service Service Service Service
------------ -------- -------- -------- -------- --------

Mr. Lynch has 16 years of credited service under the Pension Plan. The
taxable compensation of Mr. Lynch for 2000 is set forth in the Summary
Compensation Table under the "Salary" heading. Benefits under the Pension
Plan are computed based on the straight life annuity method and are not
subject to deduction for social security or any other offset amount.

Employment Agreement

Columbia Federal has entered into an employment agreement with Robert
V. Lynch effective April 15, 1998 (the "Employment Agreement"). CFKY and
Columbia Federal currently have no employment agreements with any other
officers. The Employment Agreement provides for a term of three years and a
salary and performance review by the Board of Directors not less often than
annually, as well as inclusion of the employee in any formally established
employee benefit, bonus, pension and profit-sharing plans for which senior
management personnel are eligible. The Employment Agreement also provides
for vacation and sick leave.

The Employment Agreement is terminable by Columbia Federal at any
time. In the event of termination by Columbia Federal for "just cause," as
defined in the Employment Agreement, Mr. Lynch will have no right to receive
any compensation or other benefits for any period after such termination. In
the event of termination by Columbia Federal other than for just cause, at
the end of the term of the Employment Agreement or in connection with a
"change of control," as defined in the Employment Agreement, Mr. Lynch will
be entitled to a continuation of salary payments for a period of time equal
to the term of the Employment Agreement and a continuation of benefits
substantially equal to those being provided at the date of termination of
employment until the earliest to occur of the end of the term of the
Employment Agreement or the date the employee becomes employed full-time by
another employer.

The Employment Agreement also contains provisions with respect to the
occurrence of a "change of control" within six months after or within one
year before (1) the termination of employment of Mr. Lynch for any reason
other than just cause, retirement or termination at the end of the term of
the agreement, (2) a change in the capacity or circumstances in which he is
employed or (3) a material reduction in his responsibilities, authority,
compensation or other benefits provided under the Employment Agreement
without his written consent. In the event of any such occurrence, Mr. Lynch
will be entitled to payment of an amount equal to three times the greater of
his annual salary set forth in the Employment Agreement or the annual salary
payable to Mr. Lynch as a result of any annual salary review. In addition,
Mr. Lynch would be entitled to continued coverage under all benefit plans
until the earliest of the end of the term of the Employment Agreement or the
date on which he is included in another employer's benefit plans as a full-
time employee. The maximum he may receive, however, is limited to an amount
which will not result in the imposition of a penalty tax pursuant to Section
280G(b)(3) of the Code or exceed limitations imposed by the OTS. "Control,"
as defined in the Employment Agreement, generally refers to the acquisition
by any person or entity of the ownership or power to vote 25% or more of the
voting stock of Columbia Federal or CFKY, the control of the election of a
majority of Columbia Federal's or CFKY's directors or the exercise of a
controlling influence over the management or policies of Columbia Federal or
CFKY.

Compensation Committee Report

It is the responsibility of the Compensation Committee to make
recommendations to the Board of Directors of Columbia Federal concerning
base salaries, incentive compensation, employee benefits, promotions and
other related items when necessary. The Compensation Committee consists of
all members of the Board of Directors who are not full-time employees of
Columbia Federal.

The objective of the Compensation Committee is to make recommendations
that will motivate personnel to perform and succeed according to Columbia
Federal's business plan, attract and retain key personnel critical to the
long-term success of Columbia Federal and reward executives for Columbia
Federal's success.

In establishing compensation levels for 2000, the Committee utilized
employee compensation surveys published by national and regional thrift and
banking trade groups. Salary levels are generally set near the average of
the ranges found in the surveys. Some of the other factors considered for
each individual are job responsibility and performance, skills and
experience required for the position and the individual's contribution to
Columbia Federal's success. The Committee may also consider other economic
data.

The base salary of the Chief Executive Officer, Robert V. Lynch, who
has been President and Chief Executive Officer of Columbia Federal since
1977, was based on the above criteria, but was limited by Mr. Lynch's
decision to decline an increase in salary. The Committee made an assessment
of Mr. Lynch's operation of Columbia Federal during the past year, and he
was determined to have contributed substantially to Columbia Federal's
performance. His salary was not tied to specific performance objectives. No
bonus compensation was awarded to any of Columbia Federal's officers this
year.

Section 162(m) of the Internal Revenue Code of 1986, as amended,
prohibits a publicly-held corporation, such as CFKY, from claiming a
deduction on its federal income tax return for compensation in excess of $1
million paid for a given fiscal year to the chief executive officer and the
four most highly compensated officers of the corporation other than the
chief executive officer at the close of the corporation's fiscal year. The
$1 million compensation deduction limitation does not apply to "performance-
based compensation."

Although none of the officers of CFKY or Columbia Federal currently
receive annual cash compensation near $1 million, the difference between the
fair market value of the shares acquired upon the exercise of a non-
qualified option and the exercise price is considered compensation in the
year of exercise. An option award must meet several requirements to qualify
as "performance-based compensation." CFKY has determined that the options to
purchase CFKY common shares currently outstanding should qualify for
exemption from the $1 million limit, although neither CFKY nor Columbia
Federal has a policy requiring that all compensation to the covered officers
be deductible under Section 162(m). The Board of Directors of both companies
will continue to consider carefully the after-tax cost and value to CFKY and
Columbia Federal of all compensation.

Kenneth R. Kelly Daniel T. Mistler
John C. Layne Fred A. Tobergte, Sr.
Geraldine Zembrodt

Compensation Committee Interlocks and Insider Participation

The Board of Directors of Columbia Federal has a Compensation
Committee whose members are Messrs. Kelly, Layne, Mistler and Tobergte and
Ms. Zembrodt. None of such persons are employees of Columbia Federal or
CFKY.

Performance Graph

The following line graph compares the yearly percentage change in CFKY
cumulative total shareholder return against the cumulative return of a broad
index of The Nasdaq National Market and an index of thrifts with total
assets of less than $250 million. The graph assumes the investment of $100
on April 15, 1998. Cumulative total shareholder return is measured by
dividing (i) the sum of (A) the cumulative amount of dividends for the
measurement period, assuming dividend reinvestment, and (B) the difference
between the price of CFKY common shares at the end and at the beginning of
the measurement period; by (ii) the price of CFKY common shares at the
beginning of the measurement period.

[Performance Chart Represented by the Following Chart]

Period Ending

4/15/98 9/30/98 3/31/99 9/30/99 3/31/00 9/30/00
------- ------- ------- ------- ------- -------

<S> <C> <C> <C> <C> <C> <C>
Columbia Financial of Kentucky, Inc. 100.00 77.02 73.01 101.68 77.61 66.95
NASDAQ - Total US 100.00 91.46 133.29 149.42 247.85 198.38
SNL Less Than $250M Thrift Index 100.00 77.91 73.25 73.82 66.86 73.31
</TABLE>

Certain Transactions With Columbia Federal

Columbia Federal makes loans to directors who are not full-time
employees of Columbia Federal in the ordinary course of business and on the
same terms and conditions, including interest rates and collateral, as those
of comparable loans to other persons. On February 13, 1997, Columbia Federal
adopted a policy whereby Columbia Federal will make first mortgage loans to
its full-time employees, including directors and officers who are full-time
employees, without closing costs and at an interest rate that is one percent
less than the interest rate charged for comparable loans to other persons,
subject to the following conditions: (i) the employee must sign an agreement
that the interest rate will be increased by one percent should the
employee's employment with Columbia Federal terminate for any reason; (ii)
the employee must reimburse Columbia Federal for any related out-of-pocket
expenses that are paid to a third party; (iii) the loan must be for the
employee's personal single-family residence; (iv) the loan must satisfy all
of Columbia Federal's normal underwriting criteria; (v) each employee may
only have one outstanding loan on favorable terms at any one time; and (vi)
Columbia Federal's Board of Directors must approve the loan.

The following table sets forth certain information regarding loans
made on terms more favorable than those offered to the public to executive
officers and directors of CFKY whose indebtedness to Columbia Federal
exceeded $60,000 at any time since October 1, 1999:

Largest balance Balance at
Loan Rate of during year September 30,
Name Position origination date Collateral Interest ended 9/30/00 2000
---- -------- ---------------- ---------- -------- --------------- -------------

<S> <C> <C> <C> <C> <C> <C>
Carol S. Margrave Secretary, Treasurer 5/09/97 Personal Residence 7.00% $88,450 $86,670
Edward J. Schwartz Vice President 9/24/98 Personal Residence 6.25% $97,913 $95,833
John C. Layne Director 5/23/96 Personal Residence 7.25% $62,846 $59,046
</TABLE>

None of the outstanding loans to directors and executive officers involve
more than the normal risk of collectibility or present other unfavorable
features, and all are current in their payments.

PROPOSAL TWO - SELECTION OF AUDITORS

The Board of Directors of CFKY has selected VonLehman to act as CFKY's
independent auditor for the current fiscal year and recommends that the
shareholders ratify the selection. The firm has audited the books of CFKY or
Columbia Federal since 1992. Management expects that a representative of
VonLehman will be present at the Annual Meeting, will have the opportunity
to make a statement if he or she so desires and will be available to respond
to appropriate questions.

The Board of Directors of CFKY recommends that the shareholders of
CFKY ratify the selection of the auditors for the current fiscal year.
Accordingly, the shareholders of CFKY will be asked to approve the following
resolution at the Annual Meeting:

RESOLVED, that the selection of VonLehman & Company Inc. as the
auditors of CFKY for the current fiscal year be, and it hereby is,
ratified.

AUDIT COMMITTEE REPORT

The Audit Committee of the Board of Directors of CFKY is comprised of
three directors, all of whom are considered "independent" under Rule
4200(a)(14) of the National Association of Securities Dealers' listing
standards. The Audit Committee is responsible for overseeing CFKY's
accounting functions and controls, as well as recommending to the Board of
Directors an accounting firm to audit CFKY's financial statements. The Audit
Committee has adopted a charter to set forth its responsibilities (the
"Charter"). A copy of the Charter is attached to this Proxy Statement as
Exhibit A.

As required by the Charter, the Audit Committee received and reviewed
the report of VonLehman regarding the results of their audit, as well as the
written disclosures and the letter from VonLehman required by Independence
Standards Board Standard No. 1. The Audit Committee reviewed the audited
financial statements with the management of CFKY. A representative of
VonLehman also discussed with the Audit Committee the independence of
VonLehman from CFKY, as well as the matters required to be discussed by
Statement of Auditing Standards 61. Discussions between the Audit Committee
and the representative of VonLehman included the following:

* VonLehman's responsibilities in accordance with generally accepted
auditing standards
* The initial selection of, and whether there were any changes in,
significant accounting policies or their application
* Management's judgments and accounting estimates
* Whether there were any significant audit adjustments
* Whether there were any disagreements with management
* Whether there was any consultation with other accountants
* Whether there were any major issues discussed with management prior to
VonLehman's retention
* Whether VonLehman encountered any difficulties in performing the audit
* VonLehman's judgments about the quality of CFKY's accounting
principles
* VonLehman's responsibilities for information prepared by management
that is included in documents containing audited financial statements

Based on its review of the financial statements and its discussions
with management and the representative of VonLehman, the Audit Committee did
not become aware of any material misstatements or omissions in the financial
statements. Accordingly, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Annual
Report on Form 10-K for the year ended September 30, 2000, to be filed with
the SEC.

Kenneth R. Kelly
Fred A. Tobergte
Geraldine Zembrodt

PROPOSALS OF SHAREHOLDERS AND OTHER MATTERS

Any proposals of shareholders intended to be included in the proxy
statement for the 2002 Annual Meeting of Shareholders of CFKY should be sent
to CFKY by certified mail and must be received by CFKY by August 24, 2001.
In addition, if a shareholder intends to present a proposal at the 2002
Annual Meeting without including the proposal in the proxy materials related
to that meeting, and if the proposal is not received by November 7, 2001,
then the proxies designated by the Board of Directors of CFKY for the 2002
Annual Meeting of shareholders of CFKY may vote in their discretion on any
such proposal any shares for which they have been appointed proxies without
mention of such matter in the proxy statement or on the proxy card for such
meeting.

Management knows of no other business that may be brought before the
Annual Meeting. It is the intention of the persons named in the enclosed
Proxy to vote such Proxy in accordance with their best judgment on any other
matters that may be brought before the Annual Meeting.

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN AND
RETURN THE PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.

By Order of the Board of Directors

Robert V. Lynch, President

Ft. Mitchell, Kentucky
December 11, 2000

EXHIBIT A

COLUMBIA FINANCIAL OF KENTUCKY, INC.
AUDIT COMMITTEE CHARTER

I. Purpose
-------

The purpose of the Audit Committee is to assist the Board of Directors
of the Corporation in fulfilling its responsibility to shareholders, the
public, and government bodies relating to corporate accounting, reporting
practices of the Corporation, and the quality and integrity of the financial
reports of the Corporation.

II. Composition
-----------

The Committee shall be comprised of three or more directors, as
determined by the Board, each of whom shall be independent directors and
free from any relationship that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgment as a member
of the Committee. All members of the Committee shall be able to read and
understand the Corporation's basic financial statements. At least one member
of the Committee shall have accounting or related financial management
experience or certification. Satisfaction of these financial literacy and
experience requirements shall be determined in accordance with the
applicable rules of The Nasdaq Stock Market, Inc.

The members of the Committee shall be elected by the Board at the
January meeting of the Board or until their successors shall be duly elected
and qualified. The members of the Committee may designate a chair by
majority vote of the full Committee membership.

III. Meetings
--------

The Committee is to meet at least four times annually and as many
additional times as the Committee deems necessary. Content of the agenda for
each meeting should be set by the Committee chair. The Committee is to meet
in separate executive sessions with the chief financial officer, independent
accounts, and internal auditor at least once each year and at other times
when considered appropriate. Committee members will strive to be present at
all meetings. As necessary or desirable, the Committee may request that
members of management and representatives of the independent accountants be
present at Committee meetings.

IV. Responsibilities
----------------

To fulfill its responsibilities and duties, the Committee shall:

1. Review and update this Charter periodically as conditions
dictate, but at least annually.

2. Review the Corporation's annual financial statements and any
annual financial reports submitted to any governmental body or the
public, including any reports or opinions rendered by the independent
accountants.

3. Recommend to the Board the selection of the independent
accountants, considering independence and effectiveness and in light
of the independent accountants' ultimate accountability to the
Committee and the Board and the ultimate authority and responsibility
of the Committee and the Board to select, evaluate and, where
appropriate, replace the independent accountants (or to nominate the
independent accountants to be proposed for shareholder approval in any
proxy statement). The Committee should ensure that the independent
accountants submit to the Committee periodically a written statement
of all relationships between the independent accountants and the
Corporation, consistent with Independence Standards Board Standard 1
and engage in active dialog with the independent accountants about all
significant relationships the accountants have with the Corporation to
determine the accountants' independence.

4. Review the performance of the independent accountants and
consult with the independent accountants out of the presence of
management about internal controls and the completeness and accuracy
of the Corporation's financial statements. The Committee's review
should include the matters required to be discussed by Statement on
Auditing Standards No. 61 and an explanation from the independent
accountants of the factors considered by the independent accountants
in determining the audit's scope. The accountants should confirm that
no limitations have been placed on the scope or nature of the audit.
The Committee should recommend to the Board whether the audited
financial statements should be contained in the Corporation's Annual
Report on Form 10-K to be filed with the Securities and Exchange
Commission.

5. Review with management, the independent accountants and the
internal auditor any difficulties of disagreements encountered during
the course of the audit, as well as any improvements that could be
made in the audit or internal control procedures.

6. Receive communications, if any, from the independent
accountants with respect to interim financial information before the
filing of the Quarterly Report on Form 10-Q with the Securities and
Exchange Commission and discuss such communications with management of
the Corporation. The chair of the Committee may represent the entire
Committee for purposes of this receipt of communications and
discussion with management.

7. Prepare a report to be included in the Proxy Statement for
the Corporation's annual meeting of shareholders, as required by the
regulations of the Securities and Exchange Commission.

8. Perform any other activities consistent with this Charter,
the Corporation's Code of Regulations and governing law, as the
Committee or the Board deems necessary or appropriate.

While the Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Committee to plan or conduct audits
or to determine that the Corporation's financial statements are complete and
accurate and prepared in accordance with generally accepted accounting
principals. That is the responsibility of management and the Corporation's
independent accountants.

REVOCABLE PROXY

COLUMBIA FINANCIAL OF KENTUCKY, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF COLUMBIA FINANCIAL OF KENTUCKY, INC.

The undersigned shareholder of Columbia Financial of Kentucky, Inc.
("CFKY"), hereby constitutes and appoints John C. Layne and Robert V. Lynch,
or either of them, as the Proxy or Proxies of the undersigned, with full
power of substitution and resubstitution, to vote at the Annual Meeting of
Shareholders of CFKY to be held at the Holiday Inn, 2100 Dixie Highway, Ft.
Mitchell, Kentucky, on January 25, 2001, at 11:00 a.m., Eastern Time (the
"Annual Meeting"), all of the shares of CFKY which the undersigned is
entitled to vote at the Annual Meeting, or at any adjournment thereof, on
each of the following proposals, all of which are described in the
accompanying Proxy Statement:

1. The election of three directors for terms expiring in 2003:

[ ] FOR all nominees [ ] WITHHOLD authority to
listed below vote for all nominees
(except as marked to the listed below:
contrary below):

Daniel T. Mistler
Fred A. Tobergte, Sr.
Geraldine Zembrodt

(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below).

----------------------------------------------------------------------------
2. The ratification of the selection of VonLehman & Company Inc.,
certified public accountants, as the auditors of CFKY for the current
fiscal year.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. In their discretion, upon such other business as may properly come
before the Annual Meeting or any adjournments thereof.

The Board of Directors recommends a vote "FOR" the nominees and the
proposals listed above.

Important: Please sign and date this proxy on the reverse side.

This Proxy, when properly executed and returned to CFKY, will be voted
in the manner directed herein by the undersigned shareholder. If this Proxy
is signed, dated and returned but no boxes are marked, the shares will be
voted FOR proposals 1 and 2.

All Proxies previously given by the undersigned are hereby revoked.
Receipt of the Notice of the Annual Meeting and of the accompanying Proxy
Statement is hereby acknowledged.

Please sign exactly as your name appears on your Stock Certificate(s).
Executors, Administrators, Trustees, Guardians, Attorneys and Agents should
give their full titles.

------------------------ ------------------------
Date Signature

PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED FOR MAILING IN THE U.S.A.