<PAGE>
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
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Keystone Financial Incorporated
------------------------------------------------------------------------
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] 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:
Notes:
<PAGE>
[LOGO OF KEYSTONE FINANCIAL]
April 3, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Keystone Financial, Inc., to be held on Wednesday, May 15, 1996 at 10:00 a.m.,
local time, at the Harrisburg Hilton Hotel, Market Square, Harrisburg,
Pennsylvania. A Notice and Proxy Statement for the meeting follow, and a proxy
card and return envelope are enclosed. Your Corporation's 1995 Annual Report
is also enclosed.
At this meeting the Executive Management of Keystone will review the results
of your Corporation for 1995 and comment on plans and strategies for the
current year and the future. The agenda for the annual meeting includes
election of directors and ratification of the appointment of independent
auditors.
YOUR BOARD OF DIRECTORS BELIEVES THAT THE PROPOSALS INCLUDED IN THE PROXY
STATEMENT ARE IN THE BEST INTEREST OF ALL SHAREHOLDERS AND RECOMMENDS A VOTE
"FOR" THESE PROPOSALS.
Your participation as a shareholder in the affairs of the Corporation is
encouraged. It is important that your stock be represented at the Meeting,
whether or not you are personally able to be present. Accordingly, PLEASE
PROMPTLY SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE PAID
ENVELOPE PROVIDED FOR YOUR CONVENIENCE. You are urged to do so even if you
plan to attend the meeting. Your prompt cooperation and support will be
greatly appreciated.
The business and presentation portions of the meeting should last
approximately 40 minutes. I, as well as the other Executive Officers of the
Corporation, will be available both before and after the meeting to answer any
questions you may wish to ask. I hope that you will be able to attend this
year's meeting and look forward to seeing you there.
Sincerely,
/s/ Carl L. Campbell
Carl L. Campbell
President and Chief
Executive Officer
Enclosures
<PAGE>
[LOGO OF KEYSTONE FINANCIAL]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders of Keystone
Financial, Inc. will be held on Wednesday, May 15, 1996 at 10:00 a.m., local
time, at the Harrisburg Hilton Hotel, Market Square, Harrisburg, Pennsylvania,
for the purpose of considering and acting upon the following:
1. The election of six directors to serve for terms expiring in 1999 and
one director for a term expiring in 1997;
2. The ratification of the appointment of Ernst & Young LLP as the
independent auditors for the Corporation for 1996; and
3. Such other matters as may properly come before the meeting or any
adjournment thereof.
Only shareholders of record at the close of business on March 27, 1996 are
entitled to notice of and to vote at the Annual Meeting.
ALL SHAREHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY CARD PROMPTLY, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. If you
attend the meeting, you may, if you wish, withdraw your proxy and vote your
shares in person.
By Order of the Board of Directors
/s/ Ben G. Rooke, Secretary
Ben G. Rooke, Secretary
April 3, 1996
<PAGE>
[LOGO OF KEYSTONE FINANCIAL]
ONE KEYSTONE PLAZA
FRONT AND MARKET STREETS
POST OFFICE BOX 3660
HARRISBURG, PA 17105-3660
------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS--MAY 15, 1996
------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Keystone Financial, Inc. (the "Corporation") of proxies
to be voted at the 1996 Annual Meeting of Shareholders of the Corporation
which will be held at 10:00 a.m., local time, on Wednesday, May 15, 1996, at
the Harrisburg Hilton Hotel, Market Square, Harrisburg, Pennsylvania, and at
any adjournment thereof. The approximate date on which this Proxy Statement
will first be mailed to the shareholders is April 3, 1996.
All properly executed proxies not previously revoked will be voted at the
Annual Meeting as specified thereon. If no specification is made, proxies will
be voted in favor of the election as directors of the nominees named below and
in favor of the ratification of the appointment of Ernst & Young LLP as
independent auditors for the Corporation for 1996. A proxy may be revoked at
any time before it is voted by written notice to the Secretary of the
Corporation, or by attending the meeting and voting in person.
The Board of Directors has fixed the close of business on March 27, 1996 as
the record date for determining the shareholders entitled to notice of and to
vote at the Annual Meeting. At that date, approximately 25,337,447 shares of
Common Stock, par value $2.00 per share, were issued and outstanding. On March
27, 1996, there were approximately 11,862 shareholders of record. Each share
entitles its holder of record at the close of business on the record date to
one vote on each matter properly submitted to the shareholders for action at
the Annual Meeting. The Restated Articles do not permit cumulative voting.
As of March 25, 1996, the trust departments of the Corporation's bank
subsidiaries and the Corporation's trust company subsidiary, acting in a
fiduciary capacity for various trusts and estates, held an aggregate of
1,845,930 shares of Common Stock (approximately 7.36% of the outstanding
shares). Of these shares, the banks have sole voting power over 49,453 shares,
share voting power with other persons over 65,748 shares, have sole investment
power over 1,305,755 shares and share investment power with other persons over
117,081 shares. The Corporation does not know of any other person who has or
shares voting and/or investment power over more than 5% of the outstanding
Common Stock of the Corporation.
PROPOSALS FOR SHAREHOLDERS
PROPOSAL NO. 1 ELECTION OF DIRECTORS
Seven directors will be elected at the Annual Meeting. In order to equalize
classes on the Board, six directors will be elected for terms expiring at the
Annual Meeting in 1999, and one director will be elected for a term expiring
at the Annual Meeting in 1997. By a vote of the Board of Directors, the size
of the Board was fixed at 17 members./1/ Each director elected will continue
in office until a successor has been elected. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" THE ELECTION OF THE SEVEN NOMINEES LISTED BELOW, EACH
OF WHOM HAS CONSENTED TO BE NAMED AS A NOMINEE AND TO SERVE IF ELECTED. If for
any reason any nominee named is not
- --------
/1/This includes Mr. William A. Gettig who will be retiring as a member of
the Board of Directors on the day of the Annual Meeting.
<PAGE>
a candidate (which is not expected) when the election occurs, proxies will be
voted for a substitute nominee determined by the Board of Directors (the
"Board").
The following table sets forth certain information about the nominees, each
of whom, other than Ms. Barry, is presently a member of the Board, and about
the other directors whose terms of office will continue after the Annual
Meeting.
<TABLE>
<CAPTION>
SHARES PERCENT OF
YEAR FIRST BENEFICIALLY COMMON
NAME, PRINCIPAL OCCUPATIONS BECAME OWNED AS OF STOCK
DURING THE PAST FIVE YEARS, AGE DIRECTOR MARCH 25, 1996(1) OUTSTANDING
-------------------------------- ---------- ----------------- -----------
<S> <C> <C> <C>
Nominees for terms expiring in 1999:
A. Joseph Antanavage; Partner, Bear, Antanavage & Moyer
(attorneys-at-law); Partner, North Berks Abstract (title insurance
agency); Age 49............................................................... 1986 14,046(3) .06
Donald Devorris; President of Blair Electric Service Co.
(electrical construction); President of Blair Sign Co., Inc.
(sign manufacturing); President of Blair Design & Construction Co.
(general construction); President of Electrical Construction
Service, Inc. (electrical construction); Age 61............................... 1984 65,818(3) .26
Uzal H. Martz, Jr.; President, Publisher and Treasurer of J. H.
Zerbey Newspapers, Inc. and President of its subsidiary
corporations, WMBT Broadcasting, Inc., WQIN Broadcasting, Inc.,
and Shenandoah Evening Herald Publishing Company, Inc.; Age 61................ 1986 19,665(3) .08
Max A. Messenger; President of Wood Products, Inc. (hardwood
lumber & dry kilns), President of Royal Development, Inc.
(residential construction), General Partner of Messenger Limited
Partnership Land Holdings; Age 60............................................. 1994 9,229 .04
Don A. Rosini; President of Shamokin Filler Co., Inc.
(manufacturer of carbon additives and specialty cements and
grouts); Age 57............................................................... 1986 26,469(5) .10
F. Dale Schoeneman; President of Schoeneman Beauty Supply, Inc.
(wholesale distributor); Age 54............................................... 1986 12,381 .05
Nominee for Term Expiring in 1997:
June B. Barry; Vice President, Human Resources and
Administration, of Betz Laboratories, Inc. (chemical products);
Age 44........................................................................ 100 .0004
Continuing Directors with Terms Expiring in 1998:
Carl L. Campbell; President and Chief Executive Officer of the
Corporation; Age 52........................................................... 1986 112,477(3)(5)(6) .44
Paul I. Detwiler, Jr.; Chairman of the Board of New Enterprise
Stone and Lime Co., Inc. (construction aggregates); Age 62.................... 1988 10,603(3)(5) .04
Walter W. Grant; Partner and Director of Cooke and Bieler
(investment advisory firm); Age 51(7) ........................................ 1992 67,464 .27
Ronald C. Unterberger; Partner, Harper & Driver
(attorneys-at-law); Age 60.................................................... 1994 9,227 .04
G. William Ward; Chairman of the Board of Ward Trucking
Corp.; Age 64................................................................. 1984 29,082(3)(4) .11
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENT OF
YEAR FIRST BENEFICIALLY COMMON
NAME, PRINCIPAL OCCUPATIONS BECAME OWNED AS OF STOCK
DURING THE PAST FIVE YEARS, AGE DIRECTOR MARCH 25, 1996(1) OUTSTANDING
------------------------------- ---------- ----------------- -----------
<S> <C> <C> <C>
Continuing Directors with Terms Expiring in 1997:
J. Glenn Beall, Jr.; Chairman of the Compensation Committee of
The BGS&G Companies (insurance and consulting services);
Age 68............................................................................ 1994 17,067(2) .07
Richard W. DeWald; Chairman of the Board of Montgomery
Plumbing & Supply Company; Age 62................................................. 1990 9,758(3) .04
Gerald E. Field; President of Weiner
Iron and Metal Corp.;
Age 61............................................................................ 1986 56,921 .22
Philip C. Herr, II; Partner, Herr,
Potts & Herr (attorneys-at-law);
Age 59............................................................................ 1994 69,196(3) .27
William L. Miller; President of Ebinger Iron Works, Inc.
(steel fabricator); Age 47....................................................... 1986 13,188(3) .05
All nominees, directors and executive officers as a group
(20 persons)...................................................................... 775,610(8) 3.09
</TABLE>
- --------
(1) Unless otherwise indicated in the other footnotes below, each director has
sole voting power and sole investment power over the shares indicated
opposite his or her name in the table, and a member of the group has sole
voting power and sole investment power over the shares indicated for the
group. The number of shares includes the following shares which each
director, except for Ms. Barry and Messrs. Beall, Campbell, Herr,
Messenger, and Unterberger, has the right to acquire through currently
exercisable stock options under the Corporation's 1990 Non-Employee
Directors' Stock Option Plan: Mr. Antanavage, 6,525 shares; Mr. Detwiler,
5,625 shares; Mr. Grant, 3,750 shares; Mr. Schoeneman, 5,625 shares; and
each remaining Director, 7,500 shares. Mr. Unterberger's number of shares
includes stock options granted by Elmwood Bancorp, Inc. As a result of the
merger of Elmwood and the Corporation, Mr. Unterberger's Elmwood stock
options were converted to stock options for 3,885 shares of the
Corporation's Common Stock.
(2) Includes 248 shares owned by The BGS&G Companies over which the Board of
Directors of that company exercises voting and investment powers, and of
which Mr. Beall serves as Chairman of the Compensation Committee.
(3) Includes the following shares as to which voting and investment power is
shared with the spouse; Mr. Antanavage, 4,397 shares; Mr. Campbell, 14,862
shares; Mr. Detwiler, 3,750 shares; Mr. Devorris, 4,852 shares; Mr.
DeWald, 2,231 shares; Mr. Herr, 2,010 shares; Mr. Martz, 7,190 shares; Mr.
Miller, 1,147 shares; Mr. Ward, 281 shares; and all directors and
executive officers as a group, 51,965 shares.
(4) Includes 7,931 shares held in a fiduciary capacity, as to which voting and
investment power is shared by Mr. Ward with co-fiduciaries.
(5) Includes the following shares held by spouses and/or children as to which
beneficial ownership is disclaimed: Mr. Campbell, 9,102 shares; Mr.
Detwiler, 150 shares; and Mr. Rosini, 2,993 shares.
(6) Includes 57,829 shares which Mr. Campbell currently has the right to
acquire through stock options. Also includes 2,216 shares in Mr.
Campbell's 401(k) plan account for which he has the power to direct the
voting.
(7) Mr. Grant is also a director of Cooke & Bieler, Inc.
(8) Includes 169,159 shares which the executive officers, except for Mr.
Campbell, as a group currently have the right to acquire through stock
options. Also includes 5,648 shares which the executive officers, except
Mr. Campbell, as a group have in their 401(k) plan accounts and for which
they have the power to direct the voting.
3
<PAGE>
Additional information concerning the nominees and the other members of the
Board of Directors is set forth below under the caption "Other Information
Concerning the Corporation's Directors and Executive Officers."
VOTE REQUIRED
There will be separate elections at the Annual Meeting for the election of
six directors for terms expiring in 1999 and for the election of one director
for a term expiring in 1997. In the election for terms expiring in 1999, the
six candidates receiving the highest numbers of votes cast by the holders of
Common Stock voting in person or by proxy will be elected. In the election for
a term expiring in 1997, the candidate who receives the highest number of
votes cast by the holders of Common Stock voting in person or by proxy will be
elected. A proxy vote indicated as withheld from a nominee will not be cast
for such nominee but will be counted in determining whether a quorum exists
for the meeting. The Corporation's Restated Articles do not permit cumulative
voting in the election of directors.
PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF AUDITORS
Pursuant to the recommendation of the Audit Committee, the Board of
Directors has appointed the firm of Ernst & Young LLP as independent auditors
for the Corporation for 1996.
Although the appointment of independent auditors is not required to be
approved by the shareholders, the Board of Directors believes the shareholders
should participate in the selection of independent auditors through the
ratification process. THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP. A vote of the
shareholders not to ratify the appointment of Ernst & Young LLP will be
considered as a direction to the Audit Committee to recommend other
independent auditors for appointment for the following year.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and to be available to respond to appropriate questions.
Approval of this proposal requires the affirmative vote of a majority of the
votes cast on the proposal at the Annual Meeting by the holders of Common
Stock voting in person or by proxy. Under the Pennsylvania Business
Corporation Law, an abstention is not a vote cast and will not be counted in
determining the number of votes required for approval, though it will be
counted in determining the presence of a quorum.
4
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table is a summary of the compensation for the years 1995,
1994 and 1993 awarded or paid to, or earned by, the Corporation's Chief
Executive Officer and each of the Corporation's other executive officers (the
"named officers") in 1995/2/:
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------- --------------------- -------
RESTRICTED SHARES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) ($)(1) ($) ($)(2) (#)(3) ($)(4) ($)(5)
------------------- ---- ---------- -------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Carl L. Campbell 1995 $330,000 $129,262 $14,933 $0 10,965 $0 $38,129
President and Chief 1994 330,000 140,000 -- 0 0 0 38,218
Executive Officer 1993 330,000 119,014 -- 0 116,191 0 8,121
George H. Groves 1995 $260,000 $66,508 $3,606 $0 4,177 $0 $29,202
Senior Executive 1994 208,000 47,023 -- 0 30,000 0 28,531
Vice President 1993 208,000 53,056 -- 0 8,041 0 5,640
Mark L. Pulaski 1995 $260,000 $66,508 $7,709 $0 4,822 $0 $20,359
Senior Executive 1994 188,000 42,502 -- 0 30,000 0 16,381
Vice President 1993 188,000 47,954 -- 0 7,267 0 5,975
Ben G. Rooke 1995 $190,000 $48,602 $3,072 $0 3,314 $0 $20,752
Executive Vice 1994 165,000 37,302 -- 0 30,000 0 17,810
President 1993 154,000 39,282 -- 0 7,365 0 5,009
</TABLE>
- --------
(1) Bonus information is reported by year in which earned.
(2) The Corporation has made no restricted stock awards.
(3) Options are reported in the year in which granted. Other than the premium
stock options discussed below, no stock options were granted in 1994 to
the named officers. This was because the Corporation granted two stock
options in 1993, including one on December 31, 1993 in anticipation of
proposed Financial Accounting Standards Board requirements. In 1994, the
named executive vice presidents received an option for 30,000 shares of
Common Stock each with an option price at a premium of 10% ($33.41) over
the fair market value ($30.375) of the Common Stock on the date of grant
(January 27, 1994). Mr. Campbell received no premium stock option grant in
1994 because in 1993 he was granted an option for 100,000 shares of Common
Stock, with the option price at a premium of 20% ($36.00) over the fair
market value ($30.00) of the Common Stock on the date of the grant
(January 28, 1993). In conjunction with this option grant, there was no
adjustment to Mr. Campbell's base salary for 1993, 1994 and 1995.
(4) The Corporation has made no long-term incentive plan ("LTIP") payouts.
(5) The 1995 amounts reported in this column consist of the loan value of the
actual premium paid by the Corporation for a split-dollar insurance policy
for the named officer as follows: Mr. Campbell, $21,315; Mr. Groves,
$19,395; Mr. Pulaski, $8,474; and Mr. Rooke, $11,624; employer matching
contributions to the Corporation's retirement savings plans as follows:
Mr. Campbell, $16,561; Mr. Groves, $9,769; Mr. Pulaski, $11,734; and Mr.
Rooke, $9,039; and the above market portions of interest accrued for 1995
under one retirement savings plan as follows: Mr. Campbell, $253; Mr.
Groves, $38; Mr. Pulaski, $151; and Mr. Rooke, $89.
- --------
/2/In 1995, the Corporation reviewed its corporate organization in view of
the evolution of the Corporation in recent years and its strategic focus.
As a result of this review, the Corporation determined that the only
executive officers that perform policymaking functions for the Corporation
are the named officers.
5
<PAGE>
STOCK OPTION GRANTS IN 1995
The following table sets forth information concerning the individual grants
of options to purchase the Corporation's Common Stock made to the named
officers in 1995:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
NUMBER PERCENT OF
OF SHARES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE MARKET GRANT DATE
OPTIONS EMPLOYEES PRICE PRICE EXPIRATION PRESENT
NAME GRANTED (#) IN 1995(1) ($/SH)(2) ($/SH) DATE(3) VALUE ($)(4)
---- ----------- ------------- --------- ------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Carl L. Campbell 8,285 12.04% $29.88 $29.88 01/3/2005 $35,185
2,680 $29.88 $29.88 12/27/2005 $ 5,928
George H. Groves 4,177 6.07% $29.88 $29.88 01/3/2005 $17,739
Mark L. Pulaski 3,776 7.00% $29.88 $29.88 01/3/2005 $16,036
1,046 $30.00 $30.00 12/18/2005 $ 2,323
Ben G. Rooke 3,314 4.82% $29.88 $29.88 01/3/2005 $14,074
</TABLE>
- --------
(1) Total options granted to employees in 1995 were 68,830.
(2) The exercise price of options granted to employees in 1995 ranged from
$29.88 to $32.25.
(3) All options become exercisable approximately two years after the date of
grant. All options are subject to possible acceleration in certain events
involving an actual or potential change in control of the Corporation. The
January 3 options have revocable reload rights. The December 27 options
granted to Mr. Campbell and the December 18 options granted to Mr. Pulaski
are reload options.
(4) The grant date present value of the options has been determined utilizing
the Black-Scholes option pricing model. The assumptions used to arrive at
the present values were: four-year stock price volatility of .2500;
expected dividend yield of 4%; expected eight-year option term; and a 5.5%
risk-free rate of return.
AGGREGATED OPTION EXERCISES IN 1995 AND OPTION VALUES AS OF DECEMBER 31, 1995
The following table sets forth information concerning stock options
exercised by the Corporation's named officers in 1995 and unexercised stock
options held by the named officers as of December 31, 1995:
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES VALUE OPTIONS AT 12/31/95(#) AT 12/31/95($)(2)
ACQUIRED ON REALIZED ------------------------- -------------------------
NAME EXERCISE (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Carl L. Campbell 9,550 $117,043 57,829 118,730 $483,403 $1,371
George H. Groves 13,550 $179,405 22,343 34,177 $152,377 $522
Mark L. Pulaski 9,188 $144,252 26,518 33,776 $207,337 $472
Ben G. Rooke 0 $0 30,298 33,314 $280,547 $414
</TABLE>
- --------
(1) Represents the difference between the market value on the date of exercise
of the shares acquired and the option price of those shares.
(2) Represents the difference between the aggregate market value at December
31, 1995 of the shares subject to the options and the aggregate option
price of those shares.
6
<PAGE>
HUMAN RESOURCES COMMITTEE 1995 REPORT ON EXECUTIVE COMPENSATION
In compliance with Securities and Exchange Commission guidelines on
disclosure of executive compensation levels and practices, the Human Resources
Committee (the "Committee") of the Corporation's Board of Directors has
prepared the following report for its shareholders and other interested
parties.
ROLE AND COMPOSITION OF THE HUMAN RESOURCES COMMITTEE
The role of the Committee with respect to employee compensation is to
establish the compensation philosophy of the organization and to monitor
compensation plans and related practices for conformity with that philosophy.
Specifically in the area of executive compensation, the Committee's role
includes establishing appropriate compensation and benefit plans, reviewing
the Chief Executive Officer's recommendations on compensation for executive
officers, and determining compensation for executive officers and for the
Chief Executive Officer. An essential component of this role is the
establishment of performance standards for the Corporation's salary
administration and incentive programs and monitoring actual performance
against those standards.
During 1995, the Committee was composed of eight non-employee directors:
Messrs. Beall, Detwiler, DeWald, Field, Gettig, Herr, Unterberger and
Devorris, who served as Chairperson. Except for discussions and decisions
concerning his own compensation, Mr. Campbell attends Committee meetings for
discussions about executive compensation and does offer recommendations on
specific plans and individual actions for consideration by the Committee.
The Committee met five times during 1995. This report discusses actions
initiated and approved by the Committee over the course of the year.
EXECUTIVE COMPENSATION PROGRAM OBJECTIVES AND OPERATING PHILOSOPHY
The Corporation's executive compensation program is designed to (1) foster
continuous improvement in corporate performance, (2) maximize shareholder
value, (3) attract and retain qualified executives and (4) recognize and
reward executives' collective and individual contributions to the business. To
these ends, the Corporation is pursuing a compensation strategy and specific
compensation plans to tie a significant portion of executive compensation to
the Corporation's success in meeting predetermined performance goals and to
appreciation in the Corporation's stock price.
In setting performance standards for executive officers during 1995, the
Committee compared the Corporation's recent performance to industry indices/3/
and also considered the Corporation's stock price performance over the last
several years. (See the performance graph on page 15 of this Proxy Statement.)
The target level of total compensation for Corporation executives, including
those listed in the accompanying tables, when expected performance is
achieved, is the median level of market practice among financial services
institutions of similar asset size. The compensation program will provide
better than median level pay when the Corporation's performance exceeds the
expected level of performance.
The primary performance measure used by the Committee is net income. Other
measures that are also considered by the Committee are asset quality, capital
adequacy and prudent risk management. In addition, the Committee considers
such subjective measures as the officers' leadership and management
performance and the current economic environment.
- --------
/3/The Committee and management review reports from securities and
investment banking firms, e.g., SNL Securities and Keefe, Bruyette & Woods,
which monitor performances of commercial banks and other financial services
institutions. Most of the banks included in these reports are also included
in the NASDAQ Bank Stock Index. Further, the Corporation's Finance
Department annually prepares in-depth analyses of financial data on ten
commercial banks of similar or larger asset size operating in the
Pennsylvania, Maryland and New Jersey banking markets.
7
<PAGE>
The remainder of this report discusses specific plans, policies and 1995
actions for each component of the executive compensation program.
BASE SALARIES
Base salary ranges for the executive officers are determined by evaluating
the responsibilities of the positions, required skills and experiences and
prevailing practices among financial services institutions of similar type and
asset size for comparable positions. Initial salary levels are a function of
the incumbent's specific capabilities at the time of hire.
Typically, annual salary adjustments are determined through an evaluation of
the Corporation's performance against its goals for the prior year,
performance of functions and business units under the executive's management
and the executive's performance against individual goals assigned for the
prior year. The relative importance of each of the three criteria in making a
salary adjustment decision for a given executive will vary among the
executives and from year to year based on corporate priorities for that
covered time period.
Corporate goals are expressed in terms of net income; the same goal basis
established for the Corporation's Management Incentive Compensation Plan
("MICP"), the annual incentive plan. An example of a business unit performance
measure would be improved financial performance achieved through increased
business and/or expense reduction. An example of an individual performance
measure would be implementation of a new business product.
Additionally, the executive's professional development, readiness for other
and broader responsibilities in the organization and overall contribution to
the management and the success of the business are considered. The
Corporation's overall success, coupled with achievements against
functional/business unit and individual business goals, primarily determines
the Committee's salary adjustment decision. The other factors noted may
influence the Committee's decision.
The Chief Executive Officer reviews the performance of each executive,
except himself, with the Committee using a specific checklist of performance
goals and performance characteristics, and he offers a specific pay increase
recommendation for the Committee's consideration. The Chairperson of the
Committee likewise constructs and discusses with the Committee a similar
checklist of performance goals and performance characteristics for the Chief
Executive Officer, and he offers a recommendation to the Committee on an
appropriate salary action for the CEO. These performance factors include: net
income, asset growth, asset quality, risk management, customer service,
leadership, community involvement, personal development, and the influence of
the economy and regulatory factors on the performance of the Corporation. Once
approved by the Committee, all salary actions for executive positions are
presented to the Board of Directors for ratification.
In January 1995, the Committee approved salary increases for all executive
officers of Keystone, except Mr. Campbell. Although each of the executives had
different performance goals for 1994, each had met his respective performance
plan and warranted a salary increase. In addition, two of the named officers
were promoted in 1994 to Senior Executive Vice President and given increased
corporate responsibilities.
In the case of Mr. Campbell, the Committee made no adjustment in base
salary, in keeping with the 1993 agreement that provided the Chief Executive
Officer with a stock option grant of 100,000 shares of Corporation Common
Stock. The grant carries an exercise price of $36.00 per share, a 20% premium
over the fair market value on date of grant (January 28, 1993), and does not
become exercisable until five years after the date of the grant. The grant
also requires that Mr. Campbell be employed as the Chief Executive Officer of
the Corporation at the time the options become exercisable. Under terms of the
grant, Mr. Campbell was not eligible for a base salary adjustment in 1993,
1994 and 1995.
ANNUAL PERFORMANCE INCENTIVES
Corporation executive officers participate in the Corporation's MICP, an
annual incentive pay plan based primarily on net income achievement against a
specific goal defined at the beginning of the fiscal year. The Committee has
the discretion to modify the cash award for a particular executive if it
determines such action is
8
<PAGE>
appropriate. Such action is based on a subjective evaluation of each
executive's performance in such areas as teamwork, management performance, and
support of integration efforts related to recent acquisitions and
consolidations.
For 1995, the Committee established a range of specific achievement levels
for corporate net income. If threshold performance was not achieved, no payout
would be made. If performance exceeded the threshold level of performance,
actual awards would be proportionally greater in line with actual performance
up to the defined maximum award amount.
The Corporation's net income performance for 1995 exceeded the threshold
established under the MICP. All participating executives qualified for a cash
award. Mr. Campbell, who participates in the MICP, received a cash award of
$129,262. This award was based on the Corporation's net income performance
exceeding the threshold and the discretionary criteria discussed above, in
particular, significant success in the Corporation's franchise expansion and
related integration efforts.
LONG-TERM INCENTIVES
Stock options were granted to the executive officers and selected senior
officers of the Corporation in January under the Corporation's 1992 Stock
Incentive Plan, which was approved by the shareholders. Incentive stock option
grants are made according to the Committee's established guideline of shares
at fair market value equal to a percentage of the recipient's salary; a
declining percentage based on level of position within the organization and
reflecting the desired "mix" of long-term incentive income opportunity for a
given position in the organization. The percentage range of salary for the
executive officers is 60% to 75%, which is divided by the market price of the
Corporation's stock on the date of the grant to determine the number of
options granted. The size of the award can vary from year to year based on
corporate and individual performance. Corporate performance is usually gauged
in terms of net income, although other financial measures and performance
comparisons within a peer group may also be considered. In the event of poor
corporate performance or poor individual performance, the Committee can elect
to make no award. If corporate and/or individual performance exceeds
expectations, the Committee may grant larger than typical awards.
The January 1995 stock option awards were granted in recognition of the
Corporation's net income performance for 1994, and the Corporation's favorable
ranking in the banking peer group after considering special charges that were
taken in 1994 in preparation for the consolidation of loan and deposit
operations and the consolidation of National Bank of the Main Line and
Frankford Bank under the name of Frankford Bank, N.A. Both of these
consolidations were accomplished in 1995.
In deciding on stock option awards to eligible participants, the Committee
does not currently consider the total number of outstanding options held by a
participant nor the number of shares held by the participant. The Committee
has not cancelled or repriced any prior stock option grants.
Stock options are designed to align executives' interests with those of
shareholders. Stock options are granted with an exercise price equal to the
fair market value on the date of grant. Grants carry a 2-year cliff vesting
provision, which means that the option cannot be exercised for two years from
the date of grant except in certain circumstances involving an actual or
threatened change in control. The granting of options at fair market value or
a premium over fair market value with a minimum 2-year vesting requirement
provides an incentive for the executive to increase shareholder value over the
long term since no benefit of the options can be realized unless stock price
appreciation occurs.
Mr. Campbell received stock option grants of 8,285 shares in January 1995.
These grants included incentive stock options and nonstatutory stock options.
These grants were separate from the stock option discussed above under Base
Salaries. Mr. Campbell participates in the Corporation's Stock Incentive Plan
on the same basis as all other participants, and the January stock option
grants were made to Mr. Campbell in accordance with the formula.
The Corporation believes that stock options granted under the 1992 Stock
Incentive Plan qualify as "performance-based compensation" under Section
162(m) of the Internal Revenue Code, and the Corporation
9
<PAGE>
does not anticipate that it will be affected by the cap on deductibility of
executive compensation imposed by that Section.
OTHER EXECUTIVE BENEFITS
Effective in 1994, the Corporation implemented a split-dollar type of
insurance policy which is owned by the covered executive. Under this policy,
the Corporation has a collateral assignment which is intended to reimburse the
Corporation for premiums paid into the policy when the policy is redeemed or
the covered executive dies.
On March 30, 1995, the Board of Directors approved the Management Stock
Ownership Program (the "Program"). The Program is intended, among other
things, to promote alignment of management and shareholder interests and to
encourage management to act like owners with a focus on value creation. To
accomplish these purposes, the Program establishes stock ownership goals for
the executive officers and selected senior officers of the Corporation to be
achieved over a five-year period. At the end of the five-year period, each
officer is expected to achieve a level of ownership of the Corporation's
Common Stock having a value equal to the following percentages of the
officer's current base salary: 300% for the chief executive officer, 200% for
executive vice presidents, 100% for presidents of the Corporation's bank and
trust company subsidiaries and 50% for senior vice presidents.
In order to assist officers in attaining their stock ownership goals, the
Program provides for loans to the officers, in amounts not to exceed 50% of
the officer's stock ownership goal, to be used to purchase shares of Common
Stock from the Corporation at their fair market value on the date of purchase.
Under the terms of the Program, the loans will be made on a nonrecourse basis,
and without interest, but will be secured by collateral having an initial
value of 120% of the loan amount and consisting of the shares of Common Stock
purchased with the loan plus additional shares of Common Stock or other
acceptable collateral owned by the officer. The loans will be payable in full
upon demand of the Corporation at any time but not later than the target date
for achieving the officer's stock ownership goal. The loans will also be
payable in full not later than 90 days after termination of the officer's
employment with the Corporation or a subsidiary for any reason other than
death and one year after termination due to the death of the officer.
In connection with the adoption of the Program, the Board recommended that
the shareholders approve the 1995 Management Stock Purchase Plan (the "Plan"),
which provides for the purchase of Common Stock from the Corporation by
eligible employees at a price not less than fair market value and for the
financing of such purchases through loans secured by the shares so purchased.
In order to accommodate possible future changes in the Program or other
similar needs for financing of employee stock purchases, the terms of the Plan
are somewhat broader than those contemplated under the Program.
The shareholders approved the Plan at the 1995 Annual Meeting. In 1995, 15
of the 34 eligible officers, including each of the named officers,
participated in the Plan and received loans from the Corporation under the
terms of the Program.
CONCLUSION
The Corporation's executive compensation program continues to evolve in line
with the objectives noted earlier in this report: continuous improvement in
annual corporate performance, maximizing shareholder value, attracting and
retaining qualified executives and recognizing and rewarding executives'
contributions to the business.
10
<PAGE>
Over the coming year, the Committee will continue to explore opportunities
to enhance the variable aspects of executive compensation, strengthening the
link between total pay and corporate performance.
Respectfully Submitted by:
THE HUMAN RESOURCES COMMITTEE: Donald Devorris, Chairperson;
J. Glenn Beall;
Paul I. Detwiler, Jr.;
Richard W. DeWald;
Gerald E. Field;
William A. Gettig;
Philip C. Herr, II; and
Ronald C. Unterberger
OTHER INFORMATION CONCERNING
DIRECTORS AND EXECUTIVE OFFICERS
HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Campbell, the Corporation's President and Chief Executive Officer, is
not a member of the Human Resources Committee but is an invited guest at
Committee meetings concerning corporate compensation matters, including
compensation decisions for all executive officers except himself. Director
DeVorris is a limited partner in a partnership that leases at market rate
office space to the Corporation and a bank subsidiary of the Corporation. Mr.
Devorris' limited partnership interest is 50%. The annual rent paid by the
bank in 1995 was $393,508. There are no interlocking relationships, as defined
in regulations of the Securities and Exchange Commission, involving members of
the Human Resources Committee.
BOARD AND COMMITTEE MEETINGS
The Executive Committee of the Corporation's Board of Directors is composed
of Messrs. Antanavage, Beall, Campbell, Devorris, Gettig, Martz, and Miller.
During 1995 the Executive Committee met four times. The Executive Committee
exercises the powers of the Board of Directors between Board meetings and
makes recommendations to the full Board on various matters. The Executive
Committee reviews the policy and practice of the Corporation and its
subsidiaries in the areas of strategic planning and franchise expansion and
reports its recommendations to the Board for action. The Executive Committee
also functions as a nominating committee and in this capacity establishes
criteria for selection of nominees to stand for election or reelection as
directors at any annual meeting of shareholders and reports its
recommendations to the Board for action. Any shareholder who desires to have
an individual considered for nomination by the Board must submit his
recommendation in writing to the Secretary of the Corporation at least 90 days
prior to the annual meeting at which the election of directors will occur.
The Audit Committee of the Corporation's Board of Directors, which met four
times during 1995, is composed of Messrs. Antanavage, Grant, Messenger,
Miller, Rosini, Schoeneman, and Ward. The Audit Committee recommends the
selection of independent auditors, provides oversight of the internal auditors
of the banks and reviews the reports of those persons.
The Human Resources Committee of the Corporation's Board functions as a
compensation committee. The members of the Human Resources Committee, which
met five times in 1995, are Messrs. Beall, Detwiler, Devorris, DeWald, Field,
Gettig, Herr, and Unterberger. The Human Resources Committee determines the
compensation of the Corporation's executive and senior officers and recommends
policy regarding the salary administration program, health and welfare
benefits and annual human resources budget for all employees. The Human
Resources Committee also administers the 1992 and 1988 Stock Incentive Plans,
the 1995 and 1990 Non-Employee Directors' Stock Option Plan, the 1992 Director
Fee Plan, the 1995 Employee Stock Purchase Plan, and the 1995 Management Stock
Purchase Plan.
11
<PAGE>
During 1995 the Corporation's Board of Directors met seven times. All of the
directors attended at least 80% of the meetings of the Board and committees of
which they were members during the period they served as such.
DIRECTOR COMPENSATION
In 1995, directors of the Corporation who are not salaried officers of the
Corporation or its subsidiaries received an annual retainer of $10,000
(payable in Keystone Common Stock only) and an additional $1,500 (payable in
cash or Keystone Common Stock) if they served as chairman of a Board
committee. Non-officer directors also received $1,250 for each Board meeting
they attended and $1,250 for each committee meeting attended on a day other
than the date of the regular Board meeting or a day that adjoins the date of a
regular Board meeting. For committee meetings attended on the same day as a
regular Board meeting, non-officer directors, received $500; and for committee
meetings attended on an adjoining day of a regular Board meeting date, non-
officer directors received $750. Non-officer directors that participated in
telephone conferences received $500.
The Corporation's 1992 Director Fee Plan, which was approved by the
shareholders at the 1992 Annual Meeting, permits non-officer directors to
elect to receive payment of their compensation as Corporate and bank directors
either in cash or Keystone Common Stock or to defer such compensation for
subsequent payment in cash or Keystone Common Stock. During 1995, the
Corporation accrued an aggregate total of $247,433 in Director compensation.
Of this amount, $118,517 was paid currently in cash or stock. The balance,
$128,916, was deferred compensation, of which $44,283 will be paid in cash and
$84,633 will be paid in stock.
The Corporation's 1995 Non-Employee Directors' Stock Option Plan was
approved by the shareholders at the 1995 Annual Meeting. Its purposes are to
promote the long-term success of the Corporation by creating a long-term
mutuality of interests between the non-employee directors and shareholders of
the Corporation, to provide additional inducement for such directors to remain
with the Corporation and to assist the Corporation in attracting and retaining
able persons to serve as outside directors. This Plan replaced the 1990 Non-
Employee Directors' Stock Option Plan which expired following the January 1995
stock option grants.
Under the 1995 Plan, directors who are not employees of the Corporation or a
subsidiary receive annual stock option grants to purchase up to 1,875 shares
of Keystone Common Stock at an option price equal to the market value on the
date the options are granted. The options are exercisable two years from the
date of grant, subject to acceleration in certain events involving an actual
or potential change in control of the Corporation or retirement by the
director. The options expire 10 years from the date of grant. Reload options
are granted if a director exercises an option by paying the option price in
shares of Keystone Common Stock.
NAMED OFFICER STOCK OWNERSHIP
Information concerning Mr. Campbell's beneficial ownership of Keystone
Common Stock is included in the table above under "Proposal No. 1--Election of
Directors". The following table shows the beneficial ownership of Keystone
Common Stock by the other named officers as of December 31, 1995:
<TABLE>
<CAPTION>
KEYSTONE PERCENT OF
SHARES KEYSTONE
BENEFICIALLY COMMON STOCK
NAME OWNED (1) OUTSTANDING
- ----- ------------ ------------
<S> <C> <C>
George H. Groves...................................... 47,415 .19
Mark L. Pulaski....................................... 50,432 .20
Ben G. Rooke.......................................... 45,072 .18
</TABLE>
- --------
(1) Shares beneficially owned include the following shares of Common Stock
which the named officers have the right to acquire under currently
exercisable stock options granted under the Corporation's Stock Incentive
Plans: Mr. Groves, 22,343 shares; Mr. Pulaski, 26,518 shares; and Mr.
Rooke, 30,298 shares. Also includes the following shares of Keystone
Common Stock in their 401(k) plan accounts for which they have the power
to direct the voting: Mr. Groves, 2,001; Mr. Pulaski, 1,900; and Mr.
Rooke, 1,747.
12
<PAGE>
EXECUTIVE OFFICER EMPLOYMENT AGREEMENTS
The Corporation has entered into employment agreements with its executive
officers, who are the four persons named in the summary compensation table.
The employment agreements for the named officers including the CEO are for
rolling three year terms (five years for the CEO) and provide that the officer
will continue to be employed for the term of the agreement at not less than
his current compensation unless sooner terminated for cause or by reason of
death, disability or retirement. If the named officer's employment is
terminated by the Corporation without cause or by the officer for "good
reason" as defined in the agreement prior to its expiration, the officer is
entitled to a payment of one and one-half times (two times for the CEO) his
highest annual base salary within the last three years and to a continuation
of employee benefits for 18 months (24 months for the CEO). Under this
scenario, currently, each of the named officers would receive a payment as
follows: Mr. Campbell, $660,000; Mr. Groves, $390,000; Mr. Pulaski, $390,000;
and Mr. Rooke, $285,0000.
If the named officer voluntarily terminates his employment in certain
circumstances following a change in control of the Corporation, the officer is
entitled to a payment of two and one-half times the sum of his highest annual
base salary within the last three years and his highest annual incentive award
during the last three years; a continuation of benefits for a period of
twenty-four months; a release of the premium repayment obligation under his
split-dollar life insurance agreement; and certain outplacement services.
Under this scenario, currently, each of the named officers would receive a
payment as follows: Mr. Campbell, $1,175,000; Mr. Groves, $816,270; Mr.
Pulaski, $816,270; and Mr. Rooke, $596,505.
In consideration of the agreements, each named officer agrees not to engage
in any business in competition with the Corporation or its subsidiaries for a
period of one year following any termination of his employment other than a
termination within two years after a change in control.
RETIREMENT PLANS
The Corporation has a noncontributory retirement plan which covers
substantially all employees, as well as supplemental plans to pay on an
unfunded basis to certain management employees, including the named officers,
benefits which would have been payable under the principal retirement plan but
for certain limitations contained in the Internal Revenue Code or the decision
of the officer to defer compensation otherwise subject to the plan. The
following table shows the combined annual retirement benefits payable under
these plans to participants, including the named officers, in selected
compensation and years of service classifications:
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------------------------------
5-YEAR
AVERAGE
COMPENSATION 10 15 20 25 30 35
- ------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$200,000 $ 31,315 $ 46,973 $ 62,630 $ 78,288 $ 93,946 $109,603
300,000 47,815 71,723 95,630 119,538 143,446 167,353
400,000 64,315 96,473 128,630 160,788 192,946 225,103
500,000 80,815 121,223 161,630 202,038 242,446 282,853
600,000 97,315 145,973 194,630 243,288 291,946 340,603
700,000 113,815 170,723 227,630 284,538 341,446 398,353
</TABLE>
The amounts shown in the table are straight-life annuity amounts, assuming
normal retirement at age 65 and no election of any available survivorship
option, and are not subject to offset for social security or other benefits
received by the participant. Benefits under the plans are based on the
participant's average compensation for the five highest years in the ten years
immediately preceding retirement, with compensation including substantially
all taxable and deferred compensation. The 1995 covered compensation for the
named officers and their years of credited service at December 31, 1995 are as
follows: Mr. Campbell, $479,314 (23 years); Mr. Groves, $310,830 (10 years);
Mr. Pulaski, $306,587 (12 years); and Mr. Rooke, $228,930 (14 years).
CERTAIN TRANSACTIONS
As described above in the Human Resources Committee Report under "Other
Executive Benefits," the Corporation has made loans to its executive officers
under the Management Stock Ownership Program. The
13
<PAGE>
named officers received loans in the following aggregate amounts: Mr.
Campbell, $494,984; Mr. Groves, $259,970; Mr. Pulaski, $259,980; and Mr.
Rooke, $189,999. These amounts represent the largest outstanding amounts
during 1995, and are also the current outstanding balances as of March 25,
1996. No interest is charged on loans made under this program, but interest is
imputed to the officer and deductible by the Corporation for federal income
tax purposes. The amounts of interest income imputed to the named officers in
1995 in connection with loans under the program are shown in the Summary
Compensation Table above.
The Corporation's bank subsidiaries have made loans in the ordinary course
of business to certain directors and executive officers of the Corporation,
including members of their immediate families and corporations or other
organizations in which such persons have a beneficial interest of 10% or more
or are associated as officers, partners or trustees. Such loans were made 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 collectability or present
other unfavorable features.
BENEFICIAL OWNERSHIP REPORTS
Section 16(a) of the Exchange Act requires that directors and officers of
the Corporation file reports with the SEC with respect to changes in their
beneficial ownership of Common Stock in the Corporation. Based solely upon a
review of the copies of such reports furnished to the Corporation and written
representations by certain persons that reports on Form 5 were not required,
the Corporation believes that all 1995 Section 16(a) filing requirements
applicable to its directors and officers were complied with.
14
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total returns
(assuming reinvestment of dividends) for the five years ended December 31, 1995
of $100 invested on December 31, 1990 in each of Keystone Common Stock, the
CRSP Total Return Index for the NASDAQ Stock Market (U. S. Companies) and the
CRSP Total Return Index for NASDAQ Bank Stocks.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG KEYSTONE, NASDAQ U.S. STOCK MARKET INDEX AND NASDAQ BANK STOCKS INDEX
<CAPTION>
NASDAQ NASDAQ
U.S. STOCK BANK
Measurement period MARKET STOCKS
(Fiscal year Covered) KEYSTONE INDEX INDEX
- --------------------- -------- ---------- -------
<S> <C> <C> <C>
Measurement PT -
12/31/90 $100 $100 $100
FYE 12/31/91 $160 $161 $164
FYE 12/31/92 $209 $187 $239
FYE 12/31/93 $233 $215 $272
FYE 12/31/94 $230 $210 $271
FYE 12/31/95 $239 $296 $404
</TABLE>
SHAREHOLDER PROPOSALS AND NOMINATIONS
Proposals of shareholders intended to be presented at the Corporation's 1997
Annual Meeting must be received by the Secretary of the Corporation at the
address set forth on page 1 above, not later than December 4, 1996 in order to
be considered for inclusion in the Corporation's proxy statement and form of
proxy for that meeting.
The Corporation's Restated Articles of Incorporation require that any
shareholder who intends to nominate a candidate for election as a director of
the Corporation must furnish a written notice of the nomination, containing the
information specified in the Articles, so that it is received by the Secretary
of the Corporation not later than 120 days in advance of the meeting at which
the election is to be held. A copy of these requirements will be furnished to
any shareholder upon request to the Secretary at the address set forth on page
1.
OTHER MATTERS
As of the date of this Proxy Statement, no matters are expected to be
presented to the shareholders for action at the Annual Meeting other than those
referred to in the Notice of Meeting. However, if any further business should
properly come before the meeting, the persons named in the accompanying proxy
will be authorized to vote on such matters in accordance with their best
judgment.
15
<PAGE>
ANNUAL REPORT ON FORM 10-K
UPON WRITTEN REQUEST TO THE INVESTOR RELATIONS DEPARTMENT OF THE
CORPORATION, AT THE ADDRESS SET FORTH ON PAGE 1, THE CORPORATION WILL FURNISH
WITHOUT CHARGE TO ANY SHAREHOLDER WHOSE PROXY IS SOLICITED HEREBY A COPY OF
THE CORPORATION'S 1995 ANNUAL REPORT ON FORM 10-K WHICH HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO.
EXPENSES OF SOLICITATION
The cost of solicitation of proxies for the Annual Meeting will be paid by
the Corporation. Brokerage houses, nominees, fiduciaries and other custodians
will be requested to forward proxy materials to beneficial owners of shares
held of record by them and will be reimbursed by the Corporation for their
expenses. In addition to solicitation by mail, directors, officers and
employees of the Corporation and its subsidiaries may solicit proxies in
person or by telephone or otherwise. Such persons will receive no additional
compensation for these services.
By the Order of the Board of Directors,
/s/ Ben G. Rooke
Ben G. Rooke, Secretary
April 3, 1996
16
<PAGE>
KEYSTONE FINANCIAL, INC.
PROXY FOR 1996 ANNUAL MEETING
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Walter W. Grant, Philip C. Herr, II
and Ronald C. Unterberger, or any of them, as proxies, with full power of
substitution, to vote all shares of Common Stock of Keystone Financial,
Inc. which the undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held May 15, 1996 and at any adjournment thereof, as
follows:
(To be Completed and Signed on Reverse Side)
<PAGE>
[X] Please mark your
votes as in this
example.
1. Election of FOR all Nominees
Directors (except as stated WITHHOLD AUTHORITY
below) to vote for all nominees
[ ] [ ]
A vote FOR includes discretionary authority to vote for a substitute nominee if
any nominee named becomes unable or unwilling to serve. To withhold authority
to vote FOR any individual nominee, write that nominee's name on the line below:
- -------------------------------------------------------------------------------
Nominees: (for terms expiring in 1999)
A. Joseph Antanavage
Donald Devorris
Uzal H. Martz, Jr.
Max A. Messenger
Don A. Rosini
F. Dale Schoeneman
Nominee: (for a term expiring in 1997)
June B. Barry
2. Ratification of Ernst & Young LLP as FOR AGAINST ABSTAIN
independent auditors for 1996. [ ] [ ] [ ]
3. To vote in their discretion on such other matters as may properly come before
the meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR Items 1 through
3.
PLEASE MARK, DATE, EXECUTE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
SIGNATURE(S) DATE 1996
-------------------------------------------- --------------
Note: Please sign exactly as name appears hereon. For joint accounts, each
joint owner should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title as such. If a corporation,
please sign the full corporate name by President or other authorized officer,
giving your full title as such. If a partnership, please sign in the partnership
name by authorized person, giving your full title as such.
<PAGE>
KEYSTONE FINANCIAL, INC. -- 401(K)
VOTING AUTHORIZATION FOR 1996 ANNUAL MEETING
This Authorization follows the form of the Proxy solicited on behalf of
the Board of Directors
The undersigned hereby authorizes Mid-State Bank and Trust Company,
as Trustee of the Keystone Financial 401(k) Savings Plan, to vote by proxy
all shares of Common Stock of Keystone Financial, Inc. which are allocated
to the account of the undersigned under the Keystone Financial 401(k) Savings
Plan and which the Trustee is entitled to vote at the Annual Meeting of
Shareholders to be held May 15, 1996 and any adjournment thereof, as follows:
(To be Completed and Signed on Reverse Side)
<PAGE>
[X] Please mark your
votes as in this
example.
1. Election of FOR all Nominees
Directors (except as stated WITHHOLD AUTHORITY
below) to vote for all nominees
[ ] [ ]
A vote FOR includes discretionary authority to vote for a substitute nominee if
any nominee named becomes unable or unwilling to serve. To withhold authority to
vote FOR any individual nominee, write that nominee's name on the line below:
- -------------------------------------------------------------------------------
Nominees: (for terms expiring in 1999)
A. Joseph Antanavage
Donald Devorris
Uzal H. Martz, Jr.
Max A. Messenger
Don A. Rosini
F. Dale Schoeneman
Nominee: (for a term expiring in 1997)
June B. Barry
2. Ratification of Ernst & Young LLP as FOR AGAINST ABSTAIN
independent auditors for 1996. [ ] [ ] [ ]
The Trustee will vote as directed in the Authorization if it is properly
executed. If no direction is made, this proxy will be voted FOR items 1
and 2.
PLEASE MARK, DATE, EXECUTE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
SIGNATURE(S) DATE 1996
-------------------------------------------- --------------
Notes: Please sign exactly as name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title
as such.
