SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission 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
Provident Financial Group, Inc.
-------------------------------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
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:
[ ] 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 identity the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
PROVIDENT FINANCIAL GROUP, INC.
ONE EAST FOURTH STREET
CINCINNATI, OHIO
--------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
--------------------------------
To our Shareholders:
The Annual Meeting of Shareholders of Provident Financial Group, Inc., will
be held on May 28, 1998, at 9:00 a.m., on the 3rd floor of the Provident Tower,
One East Fourth Street, Cincinnati, Ohio. The meeting will be held for the
following purposes:
1. To elect Eight Directors; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 31, 1998, are
entitled to receive notice of and to vote at the meeting or any adjournment
thereof.
You are cordially invited to be present at the meeting so that you can vote
in person. Whether or not you plan to attend the meeting, please date, sign and
return the accompanying proxy card in the enclosed, postage-paid envelope. If
you do attend the meeting, you may either vote by proxy or revoke your proxy and
vote in person. You may also revoke your proxy at any time before the voting by
written revocation or by submitting a later-dated proxy.
Sincerely,
Mark E. Magee
Secretary
Cincinnati, Ohio
April 28, 1998
<PAGE>
PROVIDENT FINANCIAL GROUP, INC.
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Provident Financial Group, Inc., to be
voted at the Annual Meeting of Shareholders to be held at 9:00 a.m. on May 28,
1998, on the 3rd floor of the Provident Tower, One East Fourth Street,
Cincinnati, Ohio, and at any adjournment thereof.
Provident will pay the cost of soliciting proxies, including reimbursement
of brokerage firms, banks and other nominees for their actual out-of-pocket
expenses in forwarding proxy materials to beneficial owners of Provident Common
Stock.
Any shareholder who executes the accompanying proxy may revoke it at any
time before it is exercised by submitting either written notice to the Secretary
of Provident or a duly executed proxy bearing a later date or by voting in
person at the meeting. Properly executed proxies not revoked will be voted as
specified thereon.
The approximate date on which this Proxy Statement and the accompanying
proxy card were first mailed to shareholders is April 28, 1998.
VOTING AT THE MEETING
Record Date; Voting
- -------------------
Only shareholders of record at the close of business on March 31, 1998 are
entitled to notice of and to vote at the meeting. On that date there were
43,084,407 shares of Common Stock (the only class of voting securities of
Provident) outstanding. Each share is entitled to one vote on each matter to be
voted at the meeting. Abstentions and shares otherwise not voted for any reason,
including broker non-votes will have no effect on the outcome of any vote taken
at the meeting.
Principal Shareholders
- ----------------------
The following shareholders are the only persons known by Provident to own
beneficially 5% or more of its outstanding Common Stock as of March 31, 1998:
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent of Class (a)
=============================== ===================== ====================
American Financial Group, Inc. 6,428,874 (b) 14.6%
Carl H. Lindner 3,260,162 (c) (d) 7.6%
Carl H. Lindner III 1,801,377 (c) (e) 4.2%
S. Craig Lindner 2,026,458 (c) (f) 4.7%
Keith E. Lindner 2,042,493 (c) (g) 4.7%
One East Fourth Street
Cincinnati, Ohio 45202
Robert D. Lindner 2,354,330 (h) 5.5%
3955 Montgomery Road
Cincinnati, Ohio 45212
Lou Ann Flint 2,339,702 (i) 5.4%
49 East Fourth Street
Cincinnati, Ohio 45202
<PAGE>
(a) The percentages of outstanding shares of Common Stock beneficially owned
(within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934) by Carl H. Lindner III, S. Craig Lindner and Keith E. Lindner are
3.5%, 4.6% and 5.6%, respectively, after attributing the shares held in
various trusts for the benefit of the minor children of Carl H. Lindner III
and S. Craig Lindner (for which Keith E. Lindner acts as trustee with
voting and dispositive power) to Keith E. Lindner.
(b) Includes 5,440,674 shares held by subsidiaries of American Financial Group,
Inc. ("AFG") and 988,200 shares issuable upon conversion of Provident's
Series D Convertible Preferred stock held by an AFG subsidiary. Carl H.
Lindner, Carl H. Lindner III, S. Craig Lindner, Keith E. Lindner and trusts
for their benefit (collectively the "Lindner Family"), are the beneficial
owners of approximately 44% of AFG's common stock, and share with AFG
voting and dispositive power with respect to the shares of Provident Common
Stock beneficially owned by AFG. The Lindner Family and AFG may be deemed
to be controlling persons of Provident.
(c) Excludes 6,428,874 shares of Common Stock beneficially owned by AFG.
(d) Includes 2,742,447 shares held by his spouse and 45,535 shares held by a
foundation over which he has voting and dispositive power.
(e) Includes 5,135 shares held by his spouse individually and as trustee.
Includes 305,776 shares which are held in various trusts for the benefit of
his minor children for which Keith E. Lindner acts as trustee with voting
and dispositive power.
(f) Includes 5,135 shares held by his spouse individually and as trustee,
331,016 shares held by his spouse as custodian for their minor children and
76,801 shares held by a foundation over which he has voting and dispositive
power. Includes 45,000 shares which are held in various trusts for the
benefit of his minor children for which Keith E. Lindner acts as trustee
with voting and dispositive power.
(g) Includes 964 shares held by his spouse, 6,818 shares he holds as custodian
for his minor children and 340,381 shares held in two trusts for the
benefit of his minor children, over which he or his spouse have shared
voting and dispositive power. This number excludes 350,776 shares
(described in footnotes (e) and (f) above), which are held in trusts for
the benefit of the minor children of his brothers, Carl H. Lindner III and
S. Craig Lindner over which Keith E. Lindner has voting and dispositive
power but no financial interest.
(h) Includes 366,585 shares held by his spouse and 14,032 shares held by a
foundation over which he has voting and dispositive power.
(i) Includes 2,339,147 shares which are held in a trust for the benefit of the
family of Carl H. Lindner over which Lou Ann Flint has sole voting and
dispositive power but no pecuniary interest. Also includes 450 shares held
by Ms. Flint as custodian for her minor children.
3
<PAGE>
Election of Directors
- ---------------------
The nominees for election to the Board of Directors are JACK M. COOK, ALLEN
L. DAVIS, THOMAS D. GROTE, JR., ROBERT L. HOVERSON, PHILIP R. MYERS, JOSEPH A.
PEDOTO, SIDNEY A. PEERLESS, and JOSEPH A. STEGER. The eight nominees receiving
the highest number of votes cast at the meeting will be elected as directors of
Provident. All of the nominees are presently directors of Provident. See
"Information Concerning Management" for information relating to the nominees.
Each holder of shares of Provident Common Stock is entitled to one vote for
each share held in the holder's name on the record date. Shareholders entitled
to vote have the right, in voting to elect directors, to cumulate their votes
and give one nominee the number of votes equal to the number of directors to be
elected multiplied by the number of votes to which their shares are entitled, or
to distribute their votes on the same principal among as many nominees as they
see fit, provided that notice of cumulative voting is given in writing by a
shareholder to the Secretary of Provident not less than 48 hours before the
meeting.
A properly signed proxy card will be voted "FOR" the election of the eight
nominees proposed by the Board of Directors unless authority is withheld to vote
for any of the nominees. If any nominee should be unavailable for election,
proxies may be voted for a substitute. Provident has no reason to believe that
any of the nominees will be unable to serve. The authority solicited by this
Proxy Statement includes discretionary authority to cumulate votes in the
election of directors. If any other matters properly come before the meeting or
any adjournment thereof, each proxy will be voted in the discretion of the
proxies named therein.
Adjournment and Other Matters
- -----------------------------
A motion for adjournment or other matters properly brought before the
Meeting requires the affirmative vote of a majority of the votes cast at the
Meeting in person or by proxy for approval.
<PAGE>
INFORMATION CONCERNING MANAGEMENT
The following table presents information as of March 31, 1998 concerning
the directors, nominees and executive officers. Except as set forth, no director
or officer owns beneficially as of such date more than 1% of Provident's
outstanding Common Stock.
Directors and Nominees
Amount and
Nature of
Beneficial
Ownership Principal Occupation
Name and Year Nominee and Percent For Last Five Years
First Became a Director of Class and Other Information
- --------------------------- ----------- ----------------------------------
Jack M. Cook (1992) 15,062(a) President and Chief Executive
Officer of Health Alliance of
Greater Cincinnati which includes
Christ, University, Jewish and
St. Luke Hospitals. Age 53
Allen L. Davis (1984) 544,212(a) Until his retirement effective May
(1.3%) 1, 1998, President and Chief
Executive Officer of Provident
and The Provident Bank("Provident
Bank"). Director, LSI Industries,
Inc. Age 56
Thomas D. Grote, Jr. (1991) 17,601(a) President, Thomas J. Dyer Company.
Age 43
Robert L. Hoverson (1998) 329,184(a) President and Chief Executive
Officer of Provident and Provident
Bank effective May 1, 1998. Prior
to that time, Senior Vice Presi-
dent of Provident and Executive
Vice President of Provident Bank.
Age 56.
Philip R. Myers (1982) 706,428(a) Senior Vice President of Provident
(1.6%) and Senior Executive Vice
President of Provident Bank.
Age 55
Joseph A. Pedoto (1980)(b) 1,230,327(a)(c) President, JLM Financial, Inc., a
(2.9%) financial consulting firm. Age 56
Sidney A. Peerless (1980) 62,478(a) President of E.N.T. Associates.
Staff member at several Cincinnati
hospitals. Age 76
Joseph A. Steger (1992) 15,049(a) President of the University of
Cincinnati. Director, Cincinnati
Milacron, Inc. Age 61
<PAGE>
Executive Officers Who Are Not Also Directors
Amount and
Nature of
Beneficial
Ownership Principal Occupation
and Percent For Last Five Years
Name of Class and Other Information
- -------------------------- ------------ ----------------------------------
John R. Farrenkopf 134,159 (a) Vice President and Chief Financial
Officer of Provident and Senior
Vice President and Chief Financial
Officer of Provident Bank. Age 49
Jerry L. Grace 42,744 (a) Vice President and Treasurer of
Provident. Senior Vice President
and Treasurer of Provident Bank.
Age 56
Mark E. Magee 107,621 (a) Vice President, Secretary and General
Counsel of Provident and Senior
Vice President, Secretary and
General Counsel of Provident Bank.
Age 50
All Directors & 3,204,807 (a)
Executive Officers as (7.3%)
a Group
(a) Including options to purchase common stock currently exercisable or
exercisable within 60 days from March 31, 1998 for Mr. Davis, 64,000
shares; Mr. Myers, 139,025 shares; Mr. Farrenkopf, 74,876 shares; Mr.
Grace, 9,250 shares; Mr. Hoverson, 210,025 shares; Mr. Magee, 52,000
shares; 13,375 shares each for Messrs. Cook, Grote, Peerless and Steger;
and 10,000 shares for Mr. Pedoto. Includes shares held in Provident's
Employee Stock Ownership Plan, 401(k) Plan and Deferred Compensation Plan,
collectively, as follows: Mr. Davis, 117,283 shares; Mr. Myers, 88,034
shares; Mr. Farrenkopf, 41,358 shares; Mr. Grace, 33,424 shares; Mr.
Hoverson, 61,606 shares, and Mr. Magee, 34,763 shares.
(b) Mr. Pedoto did not serve as a Director from September 27, 1991 to August
19, 1993.
(C) Includes 1,181,250 shares held in Trust under which Mr. Pedoto serves as
co-trustee with shared voting and dispositive powers.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
- --------------------------
The following table presents the compensation paid to the Chief Executive
Officer and each of the other four most highly compensated executive officers in
1997, during the last three years in which they served as an executive officer.
Annual Long Term
Compensation (a) Compensation
--------------------- ------------
Securities All
Underlying Other
Name and Options Compensation
Principal Position Year Salary ($) Bonus ($) Granted (#) ($) (b)
====================== ==== ========== ========= ============ ============
Allen L. Davis 1997 624,454 675,000 100,000 604,370
President and CEO 1996 593,685 600,000 225,000 480,879
1995 567,242 525,000 45,000 326,392
Robert L. Hoverson(c) 1997 435,192 447,120 67,000 304,290
Senior Vice President 1996 414,038 414,000 84,375 229,642
1995 391,731 365,000 28,125 173,269
Philip R. Myers 1997 437,740 289,440 44,000 246,199
Senior Vice President 1996 416,586 268,000 45,000 213,920
1995 396,586 240,000 16,875 188,651
Jerry L. Grace 1997 197,212 203,688 37,500 125,929
Vice President and 1996 186,635 188,600 22,500 90,910
Treasurer 1995 176,058 155,000 11,250 94,562
John R. Farrenkopf 1997 161,539 89,424 27,500 146,364
Vice President and 1996 150,962 82,600 22,500 115,341
Chief Financial 1995 140,962 75,000 11,250 74,139
Officer
(a) No named executives received any other annual compensation in excess of the
lesser of 10% of his compensation or $50,000.
(b) For 1997, Messrs. Davis, Hoverson and Grace each received contributions of
$18,125, Mr. Myers received $20,161, and Mr. Farrenkopf received $19,606
pursuant to the Employee Stock Ownership Plan. Employer contributions made
pursuant to other benefit plans were as follows: 401(k) Plan: Messrs.
Davis, Hoverson and Grace, $2,375 each and Mr. Farrenkopf, $1,569; the
Employee Stock Purchase Plan: Mr. Grace, $518 and Mr. Farrenkopf, $1,209;
the Excess Benefit Plan: Mr. Davis, $83,585, Mr. Myers, $51,881, Mr.
Hoverson, $72,827 and Mr. Grace, $23,701; the net premiums paid on
Provident's Split Dollar Life Insurance Plan: Mr. Davis, $40,156, Mr.
Myers, $5,472, Mr. Hoverson, $27,135, Mr. Grace, $13,809, and Mr.
Farrenkopf, $1,828; the Deferred Compensation Plan: Mr. Davis, $460,129,
Mr. Myers, $168,685, Mr. Hoverson, $183,827, Mr. Grace, $67,400, and Mr.
Farrenkopf, $122,151.
(c) Upon retirement of Mr. Davis, effective May 1, 1998, Mr. Hoverson will
become President and CEO of Provident.
<PAGE>
Stock Options
- -------------
The following tables present information concerning option grants and
exercises with respect to the named executives in 1997.
OPTIONS GRANTED IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
Percent of
Total
Options Exercise Potential Realizable Value at
Number of Granted or Base Assumed Annual Rates of
Shares to Price Stock Appreciation for Option
Underlying Employees Per Term
Options in Fiscal Share Expiration ----------------------------------
Name Granted Year ($) Date 0% ($) 5% ($) 10% ($)
=================== ========== ========= ======== ========== ==================================
<S> <C> <C> <C> <C> <C> <C> <C>
Allen L. Davis 50,000 5.99 33.63 4/6/2007 -- 1,057,486 2,679,878
50,000 5.99 42.13 6/5/2007 1,324,767 3,357,218
John R. Farrenkopf 12,500 1.50 33.63 4/6/2007 -- 264,372 669,969
15,000 1.80 42.13 6/5/2007 397,430 1,007,166
Jerry L. Grace 12,500 1.50 33.63 4/6/2007 -- 264,372 669,969
25,000 2.99 42.13 6/5/2007 662,383 1,678,609
Robert L. Hoverson 32,000 3.83 33.63 4/6/2007 -- 676,791 1,715,122
35,000 4.19 42.13 6/5/2007 927,337 2,350,053
Philip R. Myers 19,000 2.28 33.63 4/6/2007 -- 401,845 1,018,354
25,000 2.99 42.13 6/5/2007 662,383 1,678,609
</TABLE>
AGGREGATED OPTION EXERCISES IN 1997/OPTION VALUES AT 12/31/97
<TABLE>
<CAPTION>
Number of Shares
Underlying Dollar Value of
Number of Unexercised Options Unexercised in-the-Money
Shares at 12/31/97. Options at 12/31/97.
Acquired on Dollar Value Exercisable/ Exercisable/Unexercisable
Name Exercise Realized ($) Unexercisable ($)
=================== =========== ============ =================== ========================
<S> <C> <C> <C> <C>
Allen L. Davis 354,375 13,461,694 140,625/ 4,690,350/
313,750 6,811,425
John R. Farrenkopf None None 68,626/ 2,587,091/
54,500 1,072,075
Jerry L. Grace None None 150,750/ 5,992,335/
66,750 1,212,365
Robert L. Hoverson None None 316,125/ 12,361,016/
155,875 3,159,649
Philip R. Myers None None 252,450/ 9,942,791/
98,675 2,021,543
</TABLE>
<PAGE>
Supplemental Executive Retirement Plan
- --------------------------------------
In November, 1993, the Board of Directors adopted a Supplemental Executive
Retirement Plan ("SERP") to provide a supplemental retirement benefit to key
management or highly compensated employees of Provident who may be designated
from time to time by the Compensation Committee. Payments under the SERP are
paid from the general revenues of Provident and have no effect on the existing
retirement plans. Company owned life insurance contracts will be used to fund
Provident's SERP obligations.
The purpose of the SERP is to assure that each participant receives an
annual retirement benefit starting at age 65, based on years of service, of up
to 50% of the average of his or her highest consecutive five years' annual
compensation during the ten years preceding the participant's retirement,
disability, termination of employment or removal from the SERP. When a
participant retires, the SERP benefit is calculated, and then funds from the
following sources are deducted to determine the payment due from Provident under
the SERP: (i) one half of the participant's monthly social security insurance
benefit and (ii) the participant's accrued benefits attributable to employer
contributions to Provident's Employee Stock Ownership Plan, 401(k) Plan, Excess
Benefit Plan, Deferred Compensation Plan and any other qualified or
non-qualified pension or deferred compensation plans maintained by Provident. If
the sum of these payments exceeds the participant's benefit computed under the
SERP, then no payment will be due from Provident under the SERP.
The table below shows the assumed actuarial value of the retirement plan
benefits plus the SERP payment which, when taken together, will result in a
total retirement payment based on average compensation and years of service.
Assuming retirement at age 65, with the exception of Mr. Davis, who will retire
in 1998, the number of years of service for the five individuals named in the
summary compensation table would be Allen L. Davis, 14 years; Philip R. Myers,
42 years; Robert L. Hoverson, 24 years; Jerry L. Grace, 24 years; and John R.
Farrenkopf, 42 years.
Supplemental Executive Retirement Plan
Average Compensation Years of Service
- -------------------- ----------------------------------------------------------
10 15 20 25 30 35
-------- -------- -------- -------- -------- --------
$150,000.............$ 45,000 $ 52,500 $ 60,000 $ 67,500 $ 75,000 $ 75,000
$250,000...............75,000 87,500 100,000 112,500 125,000 125,000
$400,000..............120,000 140,000 160,000 180,000 200,000 200,000
$500,000..............150,000 175,000 200,000 225,000 250,000 250,000
$600,000..............180,000 210,000 240,000 270,000 300,000 300,000
$800,000..............240,000 280,000 320,000 360,000 400,000 400,000
$1,000,000............300,000 350,000 400,000 450,000 500,000 500,000
$1,200,000............360,000 420,000 480,000 540,000 600,000 600,000
$1,400,000............420,000 490,000 560,000 630,000 700,000 700,000
$1,600,000............480,000 560,000 640,000 720,000 800,000 800,000
<PAGE>
DIRECTORS' FEES, RETIREMENT BENEFITS AND OPTIONS
Each director who is not also an officer of Provident or its subsidiaries
receives an annual fee of $15,000 plus $1,000 for each Board meeting attended. A
$1,000 fee is paid for each Committee meeting attended in person, or $600 if
attendance is by telephone or on a date on which a Board meeting is held.
Directors who are also officers of Provident serve on the Board without
additional compensation. Outside Directors may postpone the receipt of from 5 -
100% of their Board compensation. Amounts deferred may be invested in a
Provident Common Stock Account, in which case the Account is credited annually
with a percentage of Provident's pre-tax earnings per share for each share of
Provident Common Stock in the Account, with the percentage to be credited
depending upon Provident's return on equity.
Each Outside Director is granted an option to purchase 1,000 shares of
Common Stock upon appointment and upon each annual election as Director. All
options are granted at an exercise price equal to the average of the closing bid
and ask prices on the last trading day prior to the date of grant. Options vest
six months after the date of grant and have a term of 10 years.
Outside Directors with ten years of service as a Director receive annual
retirement benefits equal to the fees paid during the 12 months immediately
preceding the retirement date, with payments to commence at retirement or 65th
birthday, whichever is later. Retirement benefits will be paid for a period of
years equal to the number of the participant's years of service, divided by
three.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes salaries,
bonuses and stock option awards for executive officers on an annual basis. The
Committee's policy is to encourage and motivate Provident's executive officers
to achieve both short-term and long-term business, financial and community
goals, and thereby build shareholder value on a steady but aggressive basis. The
Committee believes it important to provide competitive levels of compensation
that will enable Provident to attract and retain the most qualified executives
and to provide incentive plans that emphasize stock ownership, thus aligning
more closely the interests of management with those of shareholders.
The Committee has established three primary components which it utilizes in
setting annual compensation levels, namely:
o Base Compensation
o Annual Bonuses
o Stock Option Grants
In establishing compensation levels for 1997, the Committee utilized
executive compensation surveys published by SNL Securities, Inc. and Cole
Banking Survey, which the Committee believes are appropriate. In addition the
Committee reviewed compensation levels paid by Midwest based bank holding
companies of similar asset size. The Committee sets the levels of executive
compensation at the high end of the ranges described in the surveys.
Compensation in excess of $1,000,000 per year paid to the Chief Executive
Officer of a company as well as the other executive officers listed in the
compensation table is not deductible for Federal income tax purposes unless it
is "performance-based" and approved by shareholders. The Committee does not
believe these limitations should interfere with the application of policies
which guide its compensation decisions.
<PAGE>
Base Compensation
- -----------------
In establishing base salaries for 1997 Provident took into account and gave
equal weight to the particular executive officer's level of responsibility and
potential for future responsibilities, salary levels of competitors for similar
functions and Provident's results of operations in 1996. The Committee also took
into account the recommendations of the President for executive officers other
than himself in establishing base salaries.
Bonuses
- -------
Bonuses for 1997, other than for the President, were based primarily on
recommendations made by the President and the Committee's review of bonus awards
paid by the banking institutions included in the surveys. The bonus awards were
not tied to any specific or quantifiable performance objectives, but rather were
based on the Committee's subjective judgment of Provident's performance and the
relative contributions to that performance by the executive officers to whom
bonuses were awarded.
Awards of stock options are made by the Committee to motivate long-term
future performance and as a reward for past performance, consistent with the
purposes set forth in Provident's 1997 Stock Option Plan.
Chief Executive Officer
- -----------------------
In determining the compensation paid to Provident's President and Chief
Executive Officer, Allen L. Davis, the Committee first determined to utilize
each of the components described above for executive officers for his
compensation. In this regard, the Committee established his salary level based
on its subjective evaluation of not only Provident's financial results, but also
on the Committee's evaluation of Mr. Davis' creative abilities in planning for
and leading Provident during 1996, and setting Provident on a course of
aggressive, sustained and soundly managed growth and profitability. The
Committee similarly made its own evaluation of Mr. Davis' contributions to
Provident on a subjective basis, rather than against any quantifiable plan in
establishing the amount of his bonus payment and stock option awards.
Sidney A. Peerless, Chairman
Thomas D. Grote, Jr.
Joseph A. Pedoto
<PAGE>
FINANCIAL PERFORMANCE
The graph below summarizes the cumulative return experienced by Provident's
shareholders over the years 1992 through 1997, compared to the NASDAQ Index and
the Keefe, Bruyette & Woods 50 Bank Index which is a market-capitalization
weighted bank stock index that includes all money-center banks and most major
regional bank holding companies, and is a widely available index. The number of
companies comprising the KBW 50 Index allows ready comparisons of Provident's
stock with an industry standard. Provident is not included in the KBW 50 Index.
The table below contains the data points used in the performance graph
which appears in the printed Proxy Statement:
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Provident Bancorp 100 142 148 206 334 476
Nasdaq Market Index 100 115 112 159 195 240
Peer Group 100 106 100 160 227 332
BOARD AND BOARD COMMITTEE ACTIONS
The Board held 11 meetings during 1997. Each Director attended at least 75%
of the meetings of the Board and at least 75% of the Committee meetings of which
they were members. Messrs. Davis, Grote, Myers and Pedoto served as Executive
Committee members in 1997. The Executive Committee is authorized, under Ohio law
and Provident's Code of Regulations, to perform substantially all of the
functions of the Board of Directors. The Executive Committee took written action
on 3 occasions during 1997.
The Audit Committee consists of Messrs. Peerless (Chairman), Cook and
Steger, none of whom is an officer of Provident or its subsidiaries. The Audit
Committee had 7 meetings in 1997. The Committee's functions include reviewing
with the independent auditors the plans and results of the audit engagement of
Provident and reviewing the scope and results of the procedures for internal
auditing. The Committee is authorized generally to superintend the
administration of the Internal Audit Department, which has the responsibility to
perform internal audit functions for Provident and its subsidiaries. Provident
has a Compensation Committee whose functions are described elsewhere in the
Proxy Statement. The Compensation Committee took written action on 21 occasions
during 1997. Provident does not have a Nominating Committee.
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Provident's
executive officers, directors and persons who own more than 10% of a registered
class of Provident's equity securities to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and to furnish
Provident with copies of these reports. Based on a review of the copies of such
reports received by it, or upon written representation from certain reporting
persons that no reports were required, Provident believes that all of its
executive officers, directors and 10% shareholders complied with the Section 16
reporting requirements.
CERTAIN TRANSACTIONS
Provident and its subsidiaries, in their normal course of business have had
and, to the extent permitted by applicable regulations and other regulatory
restrictions expect to continue to have, transactions with Provident's
directors, officers, principal shareholders and affiliates of such persons
including American Financial Group, Inc. ("AFG"), and United Dairy Farmers, Inc.
and their subsidiaries. All such transactions are and will be on terms no less
favorable to Provident than those which could be obtained with non-affiliated
parties.
A subsidiary of AFG provides security guard and surveillance services at
Provident's main office for which Provident was charged $92,000 in 1997.
Provident leases its main banking and corporate office from a trust for the
benefit of a subsidiary of AFG. Provident was charged rent under the leases of
$1,963,000 in 1997. Provident also leases branch locations, ATM locations and
certain equipment from principal shareholders and their affiliates, for which it
was charged rentals of $217,000 in 1997. Provident purchased software used in
connection with Provident's Year 2000 Conversion project from a subsidiary of
AFG, for which it was charged $163,500 in 1997.
Certain of the principal shareholders, directors and executive officers of
Provident maintain investments in Provident commercial paper. The average
month-end commercial paper balances for such persons for 1997 and 1998 through
March 31, 1998 were as follows: Allen L. Davis, $0 and $216,000; Carl H.
Lindner, Jr., $1,935,000 and $2,806,000; Keith E. Lindner, $817,000 and
$689,000; Robert D. Lindner, $1,383,000 and $1,748,000; siblings of Carl H.
Lindner and Robert D. Lindner, $846,000 and $4,349,000; and Philip R. Myers,
$112,000 and $79,000.
Loans and lines of credits have been extended by Provident Bank in 1997 to
certain of Provident's executive officers, directors, principal shareholders,
affiliates of such persons and to members of their families. Management believes
that such loans and lines of credit were made in the ordinary course of
business, on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and do not involve more than the normal risk of collectibility or
present other unfavorable features. At December 31, 1997, the outstanding
balance of loans to principal shareholders of Provident and their related
interests were as follows: AFG, $3,526,000; Carl H. Lindner, Jr., $899,030;
Robert D. Lindner, $10,913,000; siblings of Carl H. Lindner, Jr. and Robert D.
Lindner, $9,478,000; and S. Craig Lindner, $1,016,000. Carl H. Lindner III and
Keith E. Lindner did not have balances exceeding $60,000 at December 31, 1997.
In addition, Provident Bank and a subsidiary of Provident Bank have entered into
various automobile and equipment leases with AFG from time to time on market
terms and conditions. At December 31, 1997, the aggregate outstanding balance of
these leases was $2,879,000.
<PAGE>
INDEPENDENT AUDITORS
The accounting firm of Ernst & Young LLP served as Provident's independent
auditors for 1997. One or more representatives of that firm will attend the
Annual Meeting and will be given the opportunity to comment, if they so desire,
and to respond to appropriate questions that may be asked by shareholders. No
auditor has yet been selected for the current year, since it is the practice of
Provident not to select independent auditors prior to the Annual Meeting of
Shareholders.
SHAREHOLDER PROPOSALS
If a shareholder desires to have a proposal included in the Proxy Statement
for the 1999 Annual Meeting, such proposal must be received by Provident's
Secretary at the office of Provident before January 1, 1999.
MISCELLANEOUS
Provident will send upon written request, without charge, a copy of
Provident's current annual report on Form 10-K to any Provident shareholder who
writes to Provident Financial Group, Inc., Investor Relations, One East Fourth
Street, MS 855A, Cincinnati, Ohio 45202.
The Management of Provident knows of no other matters to be presented at
the meeting other than those mentioned in the Notice. If any other matter should
be presented at the meeting or any adjournment thereof upon which a vote
properly may be taken, it is intended that shares represented by proxies in the
accompanying form will be voted in accordance with the judgment of the person or
persons voting said shares.
By order of the Board of Directors
Mark E. Magee
Secretary
<PAGE>
PROVIDENT FINANCIAL GROUP, INC.
PROXY The undersigned hereby appoints Robert L. Hoverson and Mark E.
FOR Magee, or either of them, the proxies of the undersigned, each
ANNUAL with the power of substitution, to vote cumulatively or otherwise
MEETING all shares of Common Stock which the undersigned would be
entitled to vote at the Annual Meeting of Shareholders of
Provident Financial Group, Inc., to be held May 28, 1998 at 9:00
a.m. Eastern Time, as specified below on the matters described in
Provident's Proxy Statement and in their discretion with respect
to such other business as may properly come before the meeting or
any adjournment thereof. THE PROXY WILL BE VOTED AS RECOMMENDED
BY THE BOARD OF DIRECTORS UNLESS A CONTRARY CHOICE IS SPECIFIED.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE ELECTION OF DIRECTORS.
1. To elect the 8 nominees listed below:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Jack M. Cook, Allen L. Davis, Thomas D. Grote, Jr., Robert L.
Hoverson, Philip R. Myers, Joseph A. Pedoto, Sidney A. Peerless
and Joseph A. Steger.
(To withhold authority to vote for any individual nominee(s),
write that nominee's name in the space provided below.)
Date:
----------------------------------
(IMPORTANT: Please sign exactly
as name appears hereon indicating,
where proper official position or
representative capacity. In case
of joint holders, all should sign.)
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
