SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant : [X}
Filed by a party other than the registrant [ ]
Check the appropriate box: [ ] Confidential, For Use of
[ ] Preliminary proxy statement the Commission Only (as
[X] Definitive proxy statement permitted by Rule 14a-6(e)(2))
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SKIBO FINANCIAL CORP.
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(Name of Registrant as Specified in Its Charter)
SKIBO FINANCIAL CORP.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X} No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
SKIBO FINANCIAL CORP.
242 East Main Street
Carnegie, Pennsylvania 15106
June 22, 1999
To Our Stockholders:
We are pleased to invite you to attend the Annual Meeting of
Stockholders ("Meeting") of Skibo Financial Corp. (the "Company") to be held at
Southpointe Golf Club, 360 Southpointe Boulevard, Canonsburg, Pennsylvania, on
Thursday, July 22, 1999, at 9:00 a.m.
The enclosed Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Meeting. During the Meeting we will also
report on the operations of the Company. Directors and officers of the Company,
as well as a representative of our independent auditors, KPMG LLP, are expected
to be present to respond to any questions that stockholders may have.
At the Meeting, stockholders will be requested (i) to elect two
directors of the Company, and (ii) to ratify the appointment of KPMG LLP as
auditors for the Company's 2000 fiscal year.
Additional information concerning these items is included in the
accompanying Notice of Annual Meeting and Proxy Statement. The Board of
Directors of the Company has determined that the matters to be considered at the
Annual Meeting are in the best interest of the Company and its stockholders. For
the reasons set forth in the Proxy Statement, the Board of Directors unanimously
recommends a vote "FOR" each matter to be considered.
Also enclosed for your reference is the 1999 Annual Report to
Stockholders, which contains detailed information concerning the activities and
operating performance of the Company.
Your vote as a stockholder is important, regardless of the number of
shares you own. ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN, DATE
AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE, EVEN IF YOU CURRENTLY
PLAN TO ATTEND THE MEETING. This will not prevent you from voting in person but
will assure that your vote is counted if you are unable to attend the Meeting.
Sincerely,
/s/Walter G. Kelly
--------------------------------
Walter G. Kelly
President
<PAGE>
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SKIBO FINANCIAL CORP.
242 EAST MAIN STREET
CARNEGIE, PENNSYLVANIA 15106
(412) 276-2424
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 22, 1999
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
("Meeting") of Skibo Financial Corp. (the "Company"), will be held at
Southpointe Golf Club, 360 Southpointe Boulevard, Canonsburg, Pennsylvania, on
Thursday, July 22, 1999, at 9:00 a.m. The Meeting is for the purpose of
considering and acting upon the following:
1. The election of two directors of the Company;
2. The ratification of the appointment of KPMG LLP as auditor for
the Company for the fiscal year ending March 31, 2000; and
3. The transaction of such other business as may properly come
before the Meeting or any adjournments thereof.
Any action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. The Board of
Directors is not aware of any other business to come before the Meeting.
Pursuant to the Bylaws, the Board of Directors has fixed the close of business
on June 14, 1999, as the record date for determination of the stockholders
entitled to vote at the Meeting and any adjournments thereof.
You are requested to complete and sign the enclosed form of Proxy which
is solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the Meeting in
person.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE
REVOKED BY FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A
DULY EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE MEETING
MAY REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE
THE MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED
IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER
TO VOTE PERSONALLY AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ALEXENDER J. SENULES
----------------------------------
ALEXANDER J. SENULES
SECRETARY
Carnegie, Pennsylvania
June 22, 1999
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IMPORTANT: PLEASE FILL IN, DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY. AN
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES.
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<PAGE>
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PROXY STATEMENT
SKIBO FINANCIAL CORP.
242 EAST MAIN STREET
CARNEGIE, PENNSYLVANIA 15106
(412) 276-2424
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ANNUAL MEETING OF STOCKHOLDERS
JULY 22, 1999
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GENERAL
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This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of the Company to be used at the Annual
Meeting of Stockholders of the Company (the "Meeting") which will be held at
Southpointe Golf Club, 360 Southpointe Boulevard, Canonsburg, Pennsylvania, on
Thursday, July 22, 1999, at 9:00 a.m. The accompanying Notice of Meeting and
this Proxy Statement are being first mailed to stockholders on or about June 22,
1999. The Company is a majority-owned subsidiary of Skibo Bancshares, M.H.C.
(the "Mutual Holding Company"), which was formed in connection with the mutual
holding company reorganization of First Carnegie Deposit on April 4, 1997 and
subsequently acquired a majority interest in the Company when the Company was
formed pursuant to the two-tier holding company reorganization on October 29,
1998. Because the Mutual Holding Company owns 55% of the Company Common Stock,
the votes cast by the Mutual Holding Company will be determinative of the
outcome of Proposal I (election of directors) and Proposal II (ratification of
auditors).
At the Meeting, stockholders will consider and vote upon (i) the
election of two directors, and (ii) the ratification of the Company's
independent auditor.
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REVOCABILITY OF PROXIES
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Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice delivered in person or mailed to the Secretary of the Company at the
address of the Company shown above or by the filing of a later-dated proxy prior
to a vote being taken on a particular proposal at the Meeting. A proxy will not
be voted if a stockholder attends the Meeting and votes in person. Proxies
solicited by the Board of Directors of the Company will be voted in accordance
with the directions given therein. Where no instructions are indicated, proxies
will be voted for the nominees for director set forth below, and in favor of
each of the other proposals set forth in this Proxy Statement/Offering Circular
for consideration at the Meeting or any adjournment thereof.
The proxy confers discretionary authority on the persons named therein
to vote with respect to the election of any person as a director where the
nominee is unable to serve, or for good cause will not serve, and matters
incident to the conduct of the meeting, including matters of which the Company
receives proper notice before July 17, 1999.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on June 14, 1999,
are entitled to one vote for each share then held ("Voting Record Date"). As of
June 14, 1999, the Company had 3,442,111 shares of Company Common Stock
outstanding.
1
<PAGE>
As provided in the Charter of the Company, for a period of five years
from the effective date of the MHC Reorganization, no person, except for the
Mutual Holding Company, is permitted to beneficially own in excess of 10% of the
outstanding shares of Company Common Stock (the "Limit"), and any shares of
Company Common Stock acquired in violation of this Limit, are not entitled to
any vote. A person or entity is deemed to beneficially own shares owned by an
affiliate of, as well as persons acting in concert with, such person or entity.
The presence in person or by proxy of at least a majority of the
outstanding shares of Company Common Stock entitled to vote (after subtracting
any shares held in excess of the Limit) is necessary to constitute a quorum at
the Meeting.
As to the election of directors (Proposal I), the proxy card being
provided by the Board enables a stockholder to vote for the election of the
nominees proposed by the Board, or to withhold authority to vote for one or more
of the nominees being proposed. Under federal law and the Company's Federal
Stock Charter ("Charter") and Bylaws, directors are elected by a plurality of
votes cast, without respect to either (i) Broker Non-votes or (ii) proxies as to
which authority to vote for one or more of the nominees being proposed is
withheld.
As to the ratification of auditors (Proposal II) and all other matters
that may properly come before the Meeting, by checking the appropriate box, a
stockholder may; (i) vote "FOR" the item, (ii) vote "AGAINST" the item, or (iii)
"ABSTAIN" with respect to the item. Under the Company's Charter and Bylaws,
unless otherwise required by law, Proposal II and all other matters shall be
determined by a majority of votes cast affirmatively or negatively without
regard to (a) Broker Non-votes, or (b) proxies marked "ABSTAIN" as to that
matter.
Persons and groups owning in excess of five percent of the Company
Common Stock are required to file certain reports with the Securities and
Exchange Commission (the "SEC") regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended ("Exchange Act"). The following
table sets forth, as of June 14, 1999, the shares of Company Common Stock
beneficially owned by all executive officers and directors as a group and by
each person who was the beneficial owner of more than five percent of the
outstanding shares of Company Common Stock, based solely upon information
supplied to the Company by the Company's stock transfer agent and the filings
required pursuant to the Exchange Act.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Beneficial Percent of Shares of
of Beneficial Owner Ownership (1) Common Stock Outstanding
- ------------------- ------------- ---------------------------------
<S> <C> <C>
Skibo Bancshares, M.H.C.
242 East Main Street
Carnegie, Pennsylvania 15106 1,897,500 55.0%
All Executive Officers and Directors
as a Group (6 persons) (2) 271,410 7.87%
</TABLE>
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(1) Includes all shares of Company Common Stock held directly as well as by
spouses and minor children, in trust and other indirect ownership, over
which shares the named individuals effectively exercise sole or shared
voting and investment power, unless otherwise indicated.
(footnotes continued on next page)
2
<PAGE>
(2) Includes options to purchase 102,740 shares of Company Common Stock that
may be exercised within 60 days of the Voting Record Date to purchase
shares of Company Common Stock under the 1998 Stock Option plan (the "Stock
Option Plan"). Includes 18,339 shares of Company Common Stock awarded under
the 1998 restricted stock plan (the "RSP"). Excludes 75,135 shares held by
the Company's employee stock ownership plan (the "ESOP") which have not
been allocated to participating employees over which certain directors, as
trustees to the ESOP, exercise shared voting and investment power. Includes
15,946 shares of Company Common Stock held by the ESOP and allocated to
executive officers (2 persons) of the Company. Such individuals disclaim
beneficial ownership with respect to such shares held by the ESOP. See
"Proposal I - Election of Directors."
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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The Company Common Stock is registered pursuant to Section 12(g) of the
Exchange Act. The executive officers and directors of the Company and beneficial
owners of greater than 10% of Company Common Stock ("10% beneficial owners") are
required to file reports on Forms 3, 4 and 5 with the OTS disclosing changes in
beneficial ownership of the Company Common Stock. The Company's Proxy Statement
and Annual Report on Form 10-KSB must disclose the failure of an executive
officer, director or 10% beneficial owner of the Company's Common Stock to file
a Form 3, 4, or 5 on a timely basis. Based on the Company's review of such
ownership reports, none of the executive officers and/or directors of the
Company failed to file such ownership reports on a timely basis during the
fiscal year ended March 31, 1999.
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PROPOSAL I - ELECTION OF DIRECTORS
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The Company currently has five directors serving on its Board. The
Company's Bylaws provide that Directors are to be elected for terms of three
years, approximately one-third of whom are to be elected annually. Two directors
will be elected at the Meeting to serve for a three-year period.
Walter G. Kelly and Alexander J. Senules, who are current members of
the Board, have been nominated by the Board of Directors to serve as directors,
each for a term of three years. It is intended that the persons named in the
proxies solicited by the Board will vote for the election of the named nominees.
Election of the nominees as directors requires the affirmative vote of a
majority of the votes actually cast at the Meeting.
If any nominee is unable to serve, the shares represented by all valid
proxies will be voted for the election of such substitute as the Board of
Directors may recommend. At this time, the Board knows of no reason why any
nominee might be unavailable to serve.
The following table sets forth for each nominee and each director
continuing in office his or her name, age, the year he first became a director,
the year in which his current term will expire and the number of shares and
percentage of Company Common Stock beneficially owned.
3
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
YEAR FIRST CURRENT COMMON STOCK PERCENT
AGE ELECTED OR TERM BENEFICIALLY OF CLASS
NAME (1) APPOINTED EXPIRES OWNED(2)(3) %
- ---- --- --------- ------- ----------- ----------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2002
<S> <C> <C> <C> <C> <C>
Walter G. Kelly 53 1998 1999 78,870 (4) 2.29
Alexander J. Senules 66 1998 1999 48,964 (5)(6) 1.42
DIRECTORS CONTINUING IN OFFICE
John C. Burne 72 1998 2000 38,975 (5)(6) 1.13
Layne W. Craig 85 1998 2001 22,714 (5)(6) 0.66
John T. Mendenhall, Jr. 50 1998 2001 24,675 (5)(6) 0.72
</TABLE>
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(1) At March 31, 1999.
(2) Unless otherwise noted, all shares are owned directly by the named
individual or by their spouses and minor children, over which shares the
named individuals effectively exercise sole voting and investment power.
(3) As of the Voting Record Date.
(4) Includes 38,812 shares of Company Common Stock that may be acquired through
options that are exercisable within 60 days of the Voting Record Date and
10,130 shares of Company Common Stock allocated to the account of Mr. Kelly
under the ESOP. Includes 5,175 shares of common stock awarded under the
RSP.
(5) Includes 10,687 shares of Company Common Stock that may be acquired through
options that are exercisable within 60 days of the Voting Record Date.
Includes 2,609 shares of Company Common Stock awarded under the RSP.
(6) Excludes 124,200 shares of Company Common Stock held under the ESOP for
which such individual serves as either a member of the ESOP Committee or as
an ESOP Trustee. Such individual disclaims beneficial ownership with
respect to shares held in a fiduciary capacity. The ESOP purchased such
shares for the exclusive benefit of ESOP participants with funds borrowed
from an unrelated third party. The loan was subsequently refinanced by the
Company. These shares are held in a suspense account and will be allocated
among ESOP participants annually on the basis of compensation as the ESOP
debt is repaid. The Board of Directors has appointed Messrs. Craig,
Mendenhall, Senules and Burne to serve on the ESOP Committee and to serve
as ESOP Trustees. The ESOP Committee or the Board instructs the ESOP
Trustee regarding investment of ESOP plan assets. The ESOP Trustees must
vote all shares allocated to participant accounts under the ESOP as
directed by ESOP participants. Unallocated shares and shares for which no
timely voting direction is received will be voted by the ESOP Trustees as
directed by the Board or the ESOP Committee. As of the Voting Record Date,
49,065 shares had been allocated under the ESOP to participant accounts.
The principal occupation during the past five years of each director
and nominee of the Company is set forth below. All directors and nominees have
held their present positions for five years unless otherwise stated.
John C. Burne has served as a director of the Company since 1998, as a
director of the Bank since 1971, as Chairman of the Board of Directors since
1993, and as Vice President of the Bank from 1992 to 1993. Mr. Burne is a
retired general insurance agent and currently is the sole proprietor of a log
home dealership in Canonsburg, Pennsylvania. Mr. Burne serves as a member,
elder, choir member, and president of the First Presbyterian Church, a member
and past president of the Carnegie Rotary Club and the Allegheny Chapter of the
CPCU Society, a member of the VFW, a member and past presiding officer of
several masonic lodges, the former president of the Board of Trustees of
Woodville State Hospital, and a current director and Vice President of the
Pittsburgh Phoenix Youth Orchestra.
4
<PAGE>
Layne W. Craig has served as a director of the Company since 1998 and
as a director of the Bank since 1964. Mr. Craig is a former plumbing contractor,
and former owner of Craig Plumbing and Heating, Carnegie, Pennsylvania.
Walter G. Kelly has served as a director of the Company since 1998, as
a director of the Bank since 1983, as the President of the Bank since 1993 and
Chief Executive Officer of the Bank since 1981, and has been employed by the
Bank since 1976. Mr. Kelly also serves as the Chairman of the Chartiers Valley
Industrial Development Authority.
John T. Mendenhall, Jr. has served as a director of the Company since
1998 and as a director of the Bank since 1994. Dr. Mendenhall has practiced
general dentistry in Carnegie, Pennsylvania since 1978. Dr. Mendenhall currently
serves as a board member of the Carnegie Rotary Club.
Alexander J. Senules has served as a director of the Company since
1998, as a director of the Bank since 1976, secretary of the Bank since 1993,
and Vice President of the Bank since 1994. Mr. Senules is not a salaried
employee of the Bank. Mr. Senules is the president and the majority stockholder
of Blasting Products, Inc., an equipment rental and bag manufacturer located in
Republic, Pennsylvania, president of Senex Explosives, Inc., a drilling and
blasting company located in Cuddy, Pennsylvania, and secretary and treasurer of
Florex Explosives, Inc., an explosives manufacturer and drilling and blasting
contractor located in Naples, Florida. Mr. Senules is also a major sponsor of
the Family House, the Boy Scouts of America, the Civic Light Opera, the Make a
Wish Foundation, and the Carnegie Museum.
Executive Officer Not Serving As A Director
Carol A. Gilbert has been employed by the Company since 1998 and by the
Bank since 1970, serving as an officer of the Bank since 1978. Ms. Gilbert is
currently the Chief Financial and Operating Officer and Treasurer of the Bank.
Ms. Gilbert is a member of the board of directors of the Carnegie Area
Revitalization Effort, a nonprofit organization.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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During the fiscal year ended March 31, 1999, the Board of Directors of
the Company held three regular meetings and one special meeting. During the
fiscal year ended March 31, 1999, no director attended fewer than 75% of the
total meetings of the Board of Directors of the Company and committees on which
such director served.
The Pension and Salary Committee of the Bank, a standing committee,
meets semi-annually to review the performance of employees and to determine
compensation to be recommended to the Board. The Pension and Salary Committee is
comprised of Directors Senules (chairman), Burne, and Craig. The Pension and
Salary Committee of the Bank met twice during the fiscal year ended March 31,
1999.
The Audit Committee, a standing committee, consists of Directors Craig
(chairman), Senules, and Mendenhall. The Audit Committee reviews the adequacy of
internal controls and management reports and meets with the accountants to
discuss the scope and to review the results of the annual audit. This committee
met once during the fiscal year ended March 31, 1999.
5
<PAGE>
The Nominating Committee, a standing committee, consists of members of
the Board of Directors appointed annually by the Chairman of the Board. The
Nominating Committee met once during the fiscal year ended March 31, 1999.
Pursuant to Article II, Section 14 of the Company's Bylaws,
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Company. To be timely, a stockholder's notice shall be delivered to the
Secretary of the Company not less than five days prior to the annual meeting of
the stockholders of the Company.
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COMPENSATION OF DIRECTORS
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General. During the fiscal year ended March 31, 1999, the directors of
the Company received an annual compensation of $20,000 with $500 being deducted
for every Board meeting missed. The Chairman and Vice Chairman receive
additional fees of $500 and $300 a month, respectively. Directors do not receive
additional fees for attendance at committee meetings. The Company paid a total
of $89,600 in fees to directors for their service on the Board of Directors and
its committees during the fiscal year ended March 31, 1999.
Directors Retirement Plan. The Company sponsors a Directors Retirement
Plan ("DRP") to provide retirement benefits to directors of the Company who are
not officers or employees ("Outside Directors"). Any director who has served as
an Outside Director shall be a participant in the DRP and payments under the DRP
commence once the Outside Director ceases being a director of the Company. The
DRP provides a retirement benefit based on the number of years of service to the
Company. Generally, Outside Directors receive 2% of the final average Board
compensation (as defined in the DRP) for each year of service prior to age 80 up
to a maximum annual benefit equal to 60% of the Outside Director's final average
Board compensation. Benefits under the DRP will commence upon the Outside
Director's retirement and his reaching the age of 65 or service for five years,
whichever is later, or in the event of a change in control of the Company. See
also "Executive Compensation Supplemental Executive Retirement Plan."
Stock Awards. On April 16, 1998, the Company's stockholders approved
the Stock Option Plan and the RSP. Pursuant to the terms of the Stock Option
Plan, each non-employee director received on the date of stockholder approval
options to purchase 10,867 shares of Company Common Stock and under the RSP, the
same non-employee directors received 4,347 shares of restricted Company Common
Stock. The options granted to these directors are exercisable at a rate of 50%
on the date of grant and 50% annually thereafter. Restricted stock granted to
these directors vest 20% on the date of grant and 20% annually, thereafter. See
"Executive Compensation" for awards to employee directors.
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EXECUTIVE COMPENSATION
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Summary Compensation Table. The following table sets forth certain
information as to the total remuneration received by the chief executive
officer. No other executive officer received cash compensation in excess of
$100,000 during the fiscal years ended March 31, 1999 and 1998.
6
<PAGE>
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards
---------------------------------------- ---------------------------
Securities
Fiscal Restricted Underlying
Name and Year Other Annual Stock Options/ All Other
Principal Position Ending Salary Bonus Compensation(1) Awards SARs(#) Compensation
- ------------------ ------ ------ ----- --------------- ------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Walter G. Kelly 1999 $ 149,913 $ 30,000 -- $64,170(2) 38,812(3) $47,368(4)
President and CEO 1998 $ 146,276 $ 30,000 -- -- -- $59,985(5)
</TABLE>
- ------------------------
(1) Does not include the value of certain benefits which do not exceed the
lesser of $50,000 or 10% of Mr. Kelly's total salary and bonus.
(2) Represents awards of 15,525 shares of Common Stock under the RSP based upon
the value of such stock of $12.40 per share as of the date of such award.
As of March 31, 1999, value of unvested restricted stock (10,350 shares)
was $8.00 per share or $82,800 in the aggregate. Such stock awards become
non-forfeitable at the rate of one-third per year commencing on April 16,
1998. Dividends are paid for all shares awarded.
(3) Represents award of options exercisable at the rate of 50% per year
commencing on April 16, 1998. The exercise price equals the market value of
common stock on the date of repricing of $6.83. See "Stock Compensation
Programs."
(4) Consists of $2,328 in cash dividends on unvested restricted shares.
Includes 5,630 shares of Common Stock allocated under the ESOP during
fiscal 1999 with a market value as of March 31, 1999 of $8.00 per share.
Does not include payments made pursuant to the SERP. See"-- Supplemental
Executive Retirement Plan."
(5) Includes 4,500 shares of Common Stock allocated under the ESOP during
fiscal 1998 with a market value as of March 31, 1998 of $13.33 per share.
Does not include payments made pursuant to the SERP. See "-Supplemental
Executive Retirement Plan."
Employment Agreements. The Company has entered into an employment
agreement with Walter G. Kelly, its President and Chief Executive Officer. The
employment agreement is for a term of three years (beginning on June 12, 1997)
with a base salary of $144,685. The employment agreement provides that he may be
terminated by the Company for "just cause" as defined in the employment
agreement. If the Company terminates Mr. Kelly without just cause, he will be
entitled to a continuation of salary from the date of termination through the
remaining term of the employment agreement. The employment agreement contains a
provision stating that in the event of involuntary termination of employment in
connection with any change in control of the Company, Mr. Kelly will be paid in
a lump sum generally equal to 2.99 times his prior five-year average taxable
compensation. Had the Company terminated Mr. Kelly in connection with a change
in control as of March 31, 1999, Mr. Kelly would be entitled to a payment of
$551,000. The aggregate payments that would be made would be an expense to the
Company, and would reduce the Company's net income and capital. The employment
agreement may be renewed not less than quarterly by the Board of Directors upon
a determination of satisfactory performance within the Board's sole discretion.
Supplemental Executive Retirement Plan. The Company has adopted an
unfunded supplemental retirement plan ("SERP") for the benefit of Walter G.
Kelly, President. The purpose of the SERP is to attract and retain executives
and key employees by providing additional retirement benefits to supplement the
other retirement benefits provided to all employees. The targeted level of
retirement benefits under the SERP are calculated as 80% of the final average
compensation (as defined in the SERP), as adjusted to take into account certain
other retirement benefits. The SERP provides that the Company will pay the
benefits under the SERP in a single life or joint and survivor annuity. Upon
receipt of payment of benefits, the participant will recognize taxable ordinary
income in the amount of such payments received and the Company will be entitled
to recognize a tax-deductible compensation expense at that time for tax return
purposes. Benefits
7
<PAGE>
under the SERP are immediately payable upon death or disability of the
participant, or upon the termination of the participant (other than for cause),
after obtaining 20 years of credited service. During the years ended March 31,
1999 and 1998, the Company expensed $165,000 and $183,000, respectively, to the
DRP and SERP.
ESOP. The Bank maintains an ESOP for the exclusive benefit of
participating employees. Participating employees are full-time employees who
have completed one year of service with the Company or its subsidiary and
attained age 21. The ESOP is funded by contributions made by the Bank in cash or
the Company Common Stock. The ESOP has borrowed funds from the Company to
purchase stock in the Bank's initial stock offering. During fiscal 1999, the
Company acquired the loan. The Bank contributed approximately $165,000 during
the year ended March 31, 1999 to the ESOP to meet principal obligations under
the ESOP loan. This loan is expected to be fully repaid by the year 2003.
Contributions to the ESOP and shares released from the suspense account will be
allocated among participants on the basis of total compensation, excluding
certain payments. All participants must be employed at least 1,000 hours in a
plan year or shall have terminated employment following death, disability or
retirement in order to receive an allocation for such plan year. The Company's
contributions to the ESOP are discretionary; therefore, benefits payable under
the ESOP cannot be estimated.
Stock Compensation Programs. The following tables set forth information
concerning options granted to the named executive.
The following tables set forth additional information concerning options granted
under the Option Plans.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Percent of Total
Number of Options Granted Exercise
Securities to Employees Price
Underlying Options in Fiscal Price Expiration
Name Granted Year ($/Share) Date
- --------------------------- ------- ---- --------- ----
<S> <C> <C> <C> <C>
Walter G. Kelly 38,812 34.7% $6.83 10/08
</TABLE>
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Acquired Option/SARs In-The-Money Option/SARs
on at FY-End (#) at FY-End (2)($)
Name Exercise Value Realized ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- -------- --------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Walter G. Kelly - - 19,406 / 19,406 $22,705 / $22,705
</TABLE>
- ------------------
(1) Market value of the underlying securities at the date of exercise minus the
exercise price, multiplied by the number of underlying securities.
(2) Market value of the underlying securities at year-end minus the exercise
price, multiplied by the number of underlying securities. Based upon the
closing price of the Common Stock as of March 31, 1999 of $8.00 per share.
Stock Option Repricing. On April 16, 1998, the 1998 Stock Option Plan
was approved by shareholders, which provided for the issuance of 155,246 shares
to employees, officers and directors at a strike price of $13.58. However, due
to a significant fluctuation in the general market of the stock of the Company
and similar financial institutions, the original awards were canceled and
reissued on October 8, 1998, with a new strike price of $6.83 (this is
reflective of the three-for-two exchange).
8
<PAGE>
- --------------------------------------------------------------------------------
INDEBTEDNESS OF MANAGEMENT AND
TRANSACTIONS WITH CERTAIN RELATED PARTIES
- --------------------------------------------------------------------------------
The Bank, like many financial institutions, grants loans to its
officers and directors. All loans by the Bank to its directors and executive
officers are subject to OTS regulations restricting loans and other transactions
with affiliated persons of the Company. Savings institutions are permitted to
make loans to executive officers, directors and principal shareholders
("insiders") on preferential terms, provided the extension of credit is made
pursuant to a benefit or compensation program of the Bank that is widely
available to employees of the Bank or its affiliates and does not give
preference to any insider over other employees of the Bank or affiliate. The
Bank maintains a benefit and compensation program whereby mortgage loans are
offered to all employees and directors at a 1.50% discount off the
then-prevailing rate at the time of grant. This rate is only available during
the term of the employee's employment or the director's board membership. Upon
termination, resignation or retirement, the rate reverts to the market rate that
existed at the time the loan is granted. In addition, the Bank will pay the
costs for any credit check and appraisal. Furthermore, pursuant to the benefit
and compensation plan, the Bank will make loans collateralized by (i) savings
deposits at 1% over the annual percentage yield earned on the collateral, and
(ii) new and used automobiles. All other loans to insiders (a) have been made in
the ordinary course of business, (b) were made on substantially the same terms
and conditions, including interest rates and collateral, as those prevailing at
the time for comparable transactions with the Bank's other customers, and (c) do
not involve more than the normal risk of default or present other unfavorable
features. Loans to executive officers and directors of the Company and their
affiliates, amounted to approximately $547,028 or 2.18% of the Company's equity
at March 31, 1999.
The following table sets forth the indebtedness of executive officers,
directors, and members of the immediate family of an executive officer or
director who are or were indebted to the Company at any time since March 31,
1998 in an aggregate amount in excess of $60,000 and whose loans were made
pursuant to the benefit and compensation program.
<TABLE>
<CAPTION>
Largest Amount
Outstanding Since Balance at Interest
Name and Position Date of Loan Type of Loan March 31, 1998 March 31, 1999 Rate
- ----------------- ------------ ------------ ----------------- -------------- -- ----
<S> <C> <C> <C> <C> <C>
Alexander J. Senules First
Director and Secretary 2/10/97 Mortgage $270,781 $263,698 6.25%*
John C. Burne First
Chairman of the Board 2/3/97 Mortgage $156,843 $153,687 6.25%*
Walter G. Kelly First
President and Chief 2/3/97 Mortgage $131,897 $129,643 6.25%*
Executive Officer
</TABLE>
- -------------------
* The prevailing market rate was 1.5% above the rate charged. All other loans
were made at the prevailing market rate when originated.
9
<PAGE>
- --------------------------------------------------------------------------------
PROPOSAL II - RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
At the Meeting, stockholders will consider and vote upon the
appointment of independent auditors for the Company's fiscal year to end March
31, 2000. KPMG LLP was the Company's independent auditor for the fiscal year
ended March 31, 1999. The Board of Directors has approved to renew the Company's
arrangements with KPMG LLP to be its auditor for the fiscal year ending March
31, 2000, subject to ratification by the Company's stockholders. A
representative of KPMG LLP is expected to be present at the Meeting to respond
to stockholders' questions and will have the opportunity to make a statement.
The appointment of the Company's auditor must be approved by a majority
of the votes cast by the stockholders of the Company at the Meeting. The Board
of Directors recommends that stockholders vote "FOR" the approval of the
appointment of KPMG LLP as the Company's auditor.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement. If any
other matters, however, should properly come before the Meeting, it is intended
that proxies in the accompanying form will be voted in respect thereof in
accordance with the judgment of the person or persons voting the proxies.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers, and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without payment of additional
compensation.
The Company's 1999 Annual Report to Stockholders, including financial
statements, has been mailed to all persons who were listed as stockholders of
record as of the close of business on June 14, 1999. Any stockholder who has not
received a copy of such Annual Report may obtain a copy by writing the Company.
Such Annual Report is not to be treated as a part of the proxy solicitation
material or as having been incorporated herein by reference.
- --------------------------------------------------------------------------------
FORM 10-KSB
- --------------------------------------------------------------------------------
A COPY OF THE FORM 10-KSB AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON
WRITTEN REQUEST TO THE SECRETARY, SKIBO FINANCIAL CORP., 242 EAST MAIN STREET,
CARNEGIE, PENNSYLVANIA 15106.
10
<PAGE>
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's main office at 242 East
Main Street, Carnegie, Pennsylvania 15106, no later than February 22, 2000. Any
such proposals shall be subject to the requirements of the proxy rules adopted
under the Securities Exchange Act of 1934, as amended.
Any new business to be taken up at the annual meeting shall be stated
in writing and filed with the Secretary of the Company no later than July 16,
1999, and all business so stated, proposed, and filed shall be considered at the
annual meeting, but no other proposal shall be acted upon at the annual meeting.
Any shareholder may make any other proposal at the annual meeting and the same
may be discussed and considered, but unless received in writing by the Secretary
no later than July 16, 1999, such proposal shall be laid over for action at an
adjourned, special, or annual meeting of the shareholders taking place 30 days
or more thereafter.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ALEXENDER J. SENULES
-------------------------------------------
ALEXANDER J. SENULES
SECRETARY
Carnegie, Pennsylvania
June 22, 1999
11
<PAGE>
REVOCABLE PROXY
- --------------------------------------------------------------------------------
SKIBO FINANCIAL CORP.
242 EAST MAIN STREET
CARNEGIE, PENNSYLVANIA 15106
(412) 276-2424
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
JULY 22, 1999
- --------------------------------------------------------------------------------
The undersigned hereby appoints the official proxy committee of the
Board of Directors of the Company with full powers of substitution to act, as
attorneys and proxies for the undersigned and, to vote all shares of Common
Stock of the Company which the undersigned is entitled to vote at the Annual
Meeting of Stockholders, to be held at Southpointe Golf Club, 360 Southpointe
Boulevard, Canonsburg, Pennsylvania, on Thursday, July 22, 1999, at 9:00 a.m.
and at any and all adjournments thereof, as follows:
FOR ALL
FOR EXCEPT
--- ------
1. The election as director of the nominees listed [ ] [ ]
below for terms to expire in 2002 (except as
marked to the contrary below).
Alexander J. Senules
Walter G. Kelly
INSTRUCTIONS: To withhold authority vote for any individual nominee, write
the nominee's name in the space provided below.
FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of the appointment of KPMG LLP [ ] [ ] [ ]
as auditor for the Company for the fiscal year
ending March 31, 2000.
The Board of Directors recommends a vote "FOR" all of the listed
propositions.
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS
IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS
PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING. THIS PROXY ALSO CONFERS
DISCRETIONARY AUTHORITY ON THE OFFICIAL PROXY COMMITTEE TO VOTE WITH RESPECT TO
THE ELECTION OF ANY PERSON AS DIRECTOR WHERE THE NOMINEE IS UNABLE TO SERVE OR
FOR GOOD CAUSE WILL NOT SERVE, AND MATTERS INCIDENT TO THE CONDUCT OF THE 1999
ANNUAL MEETING.
- --------------------------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elects to vote at the Annual
Meeting, or at any adjournment thereof, and after notification to the Secretary
of the Company at the Meeting of the stockholder's decision to terminate this
proxy, the power of said attorneys and proxies shall be deemed terminated and of
no further force and effect.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of notice of the Meeting, a proxy statement dated June
22, 1999, and an Annual Report to Stockholders.
Dated: , 1999 [ ] Please check here if you
----------------------------- plan to attend the Meeting.
- ------------------------------------ ---------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ------------------------------------ ---------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the enclosed card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
- --------------------------------------------------------------------------------
