<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 Rule 14a-11(c) or Rule 14a-12
Security Financial Corp.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Security Financial Corp.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
================================================================================
SECURITY FINANCIAL CORP.
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
ANNUAL SHAREHOLDERS MEETING
April 20, 1999
================================================================================
1
<PAGE> 3
SECURITY FINANCIAL CORP.
1 South Main Street
Niles, Ohio 44446
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD
April 20, 1999
TO THE HOLDERS OF SHARES OF COMMON STOCK:
Notice is hereby given that the Annual Meeting of the Shareholders of
Security Financial Corp. (the "Corporation") will be held at the main office of
the Corporation, 1 South Main Street, Niles, Ohio, on April 20, 1999, at 3:30
p.m. (local time), for the purpose of considering and voting upon the following
matters:
1. The election of two Directors (to be elected to Class II of the
Corporation's staggered Board of Directors) to serve a three-year term
or until their successors shall have been elected and qualified.
2. To transact such other business as may properly come before the meeting
or any adjournment thereof. The Board of Directors at present knows of
no other business to be presented by or on behalf of the Corporation.
Shareholders of record at the close of business on February 28, 1999,
are the only shareholders entitled to notice of and to vote at the Annual
Shareholders Meeting.
By order of the Board of Directors
Glenn E. Griffiths, President and Chief
Executive Officer
March 12, 1999
IMPORTANT
WHETHER YOU EXPECT TO ATTEND THE MEETING OR NOT, PLEASE MARK, SIGN,
DATE, AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED SELF-ADDRESSED
ENVELOPE AS PROMPTLY AS POSSIBLE. NO POSTAGE IS REQUIRED.
2
<PAGE> 4
SECURITY FINANCIAL CORP.
NILES, OHIO
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Security Financial Corp. (the "Corporation") of
proxies to be voted at the Annual Meeting of Shareholders to be held on Tuesday,
April 20, 1999, in accordance with the foregoing notice.
Security Financial Corp. is a registered bank holding company of the
Security Dollar Bank (hereinafter referred to as the "Bank" or, sometimes
collectively with Security Financial Corp., as the "Corporation"), its principal
subsidiary.
The solicitation of proxies on the enclosed form is made on behalf of
the Board of Directors of the Corporation. All costs associated with the
solicitation will be borne by the Corporation. The Corporation does not intend
to solicit proxies other than by use of the mails, but certain officers and
regular employees of the Corporation or its subsidiaries, without additional
compensation, may use their personal efforts, by telephone or otherwise, to
obtain proxies. The proxy materials are first being mailed to shareholders on or
about March 12, 1999.
Any shareholder executing a proxy has the right to revoke it by the
execution of a subsequently dated proxy, by written notice delivered to the
Secretary of the Corporation prior to the exercise of the proxy or in person by
voting at the meeting. The shares will be voted in accordance with the direction
of the shareholder as specified on the proxy. In the absence of instructions,
the proxy will be voted "FOR" the election of the two persons listed in this
Proxy Statement.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only shareholders of record at the close of business on February 28,
1999, will be eligible to vote at the Annual Meeting or any adjournment thereof.
As of February 28, 1999, the Corporation had outstanding 346,978 shares of no
par value common stock.
All Directors and Executive Officers of the Corporation as a group
(comprised of 10 individuals), beneficially held 31,195 shares of the
Corporation's common stock as of February 28, 1999, representing 8.99 percent of
the outstanding common stock of the Corporation.
To the Corporation's knowledge, no person or entity owns beneficially,
directly or indirectly, 5 percent or more of the Corporation's common stock as
of February 28, 1999.
3
<PAGE> 5
PROPOSAL FOR THE ELECTION OF DIRECTORS AND INFORMATION
WITH RESPECT TO DIRECTORS AND OFFICERS
CLASSIFICATION SYSTEM FOR THE ELECTION OF DIRECTORS
The Corporation has a staggered system for the election of Directors.
Directors are divided into three classes as nearly equal in number as possible.
The Corporation has seven Directors, and they are elected to serve a three-year
term.
INFORMATION WITH RESPECT TO NOMINEES
The following information is provided with respect to each Class II
(term to expire in 2002) nominee for Director and each present and continuing
Director whose term of office extends beyond the Annual Meeting of the
Corporation's Shareholders. Those nominees receiving the greatest number of
votes will be elected as Directors. There is no minimum number of votes required
to elect a Director.
<TABLE>
<CAPTION>
PRINCIPAL
NAME & AGE OCCUPATION AND BUSINESS EXPERIENCE DIRECTOR SINCE
---------- ---------------------------------- --------------
<S> <C> <C>
Douglas J. Neuman Attorney 1980
(age 46) (Mr. Neuman is an attorney engaged
in private law practice in Niles,
Ohio)
Peter P. Rossi, Jr. President, Rossi & Son Memorial 1990
(age 58) Chapel
</TABLE>
THE DIRECTORS UNANIMOUSLY RECOMMEND A VOTE IN FAVOR OF THIS PROPOSAL
4
<PAGE> 6
INFORMATION WITH RESPECT TO DIRECTORS NOT STANDING FOR REELECTION
<TABLE>
<S> <C> <C>
Glenn E. Griffiths President Security 1988
(age 59) Financial Corp. &
Term Expires 2001 Security Dollar Bank
Robert I. Griffith, Jr. President, Griffith 1992
(age 49) Insurance Agency
Term Expires 2000 and Griffith, Stein & Vennitti
Insurance Agency
Robert J. McClurkin President, McClurkin Funeral 1995
(age 34) Home
Term Expires 2001
Gary A. Clayman Vice President, Niles Iron & Metal 1995
(age 44) Co.
Term Expires 2001
Christopher J. Shaker Attorney (Mr. Shaker is an attorney 1987
(age 40) engaged in private law practice in
Term Expires 2000 Niles, Ohio)
</TABLE>
The business experience of each of the above-listed nominees and
Directors during the past five years was that typical to a person engaged in the
principal occupation listed. Unless otherwise indicated, each of the nominees
and Directors has had the same position or another executive position with the
same employer during the past five years.
Shareholders desiring to nominate individuals to serve as Directors may
do so by following the procedure outlined in the Corporation's Bylaws requiring
advance notice to the Corporation of such nomination and certain information
regarding the proposed nominee.
SECURITY OWNERSHIP OF MANAGEMENT
The table below sets forth the number and percentage of shares of
common stock owned by the Directors and named Executive Officers the
Corporation. As of the date of this Proxy Statement, management is not aware of
any person who beneficially owns five percent or more of the Corporation's
common stock.
5
<PAGE> 7
<TABLE>
<CAPTION>
Shares of Corporation
Common Stock Owned Percentage of
Beneficially Beneficial Ownership
as of as of
Name & Age February 28, 1999 February 28, 1999
---------- ----------------- -----------------
<S> <C> <C>
Directors:
Gary A. Clayman 6,537(1) 1.67%
Robert I. Griffith, Jr. 2,453(2) .71%
Glenn E. Griffiths 1,260(3) .30%
Robert J. McClurkin 3,007(4) .63%
Douglas J. Neuman 875 .25%
Peter P. Rossi, Jr. 8,844(5) 2.53%
Christopher J. Shaker 6,883 1.83%
Non-Director Executive
Managers:
Fremont Camerino 697 .20%
Donald L. Stacy 425(6) .12%
Phillip M. Suarez 214(7) .06%
All Directors and Executive
Officers as a Group (10
persons) 31,195 8.99%
</TABLE>
(1) Includes 3,412 shares held jointly with spouse, 1,064 shares
are held for the benefit of children, 412 shares held in
spouse's IRA and 412 shares held in the named person's IRA
accounts.
(2) Includes 106 in the name of The Griffith Agency, 53 shares
held for the benefit of children, 584 shares held by spouse
and spouse's IRA and 678 held by an IRA for the benefit of the
named person.
(3) Includes 39 shares held for the benefit of children and 173
shares held by spouse.
(4) Includes 1,154 held jointly with spouse, 816 held jointly with
children, and 811 held by spouse.
(5) Includes 4,797 shares held jointly with spouse and 2,044 held
by controlled company.
(6) Includes 290 shares held for the benefit of children.
(7) Includes 214 shares held jointly with spouse.
COMMITTEES AND COMPENSATION OF THE BOARD OF DIRECTORS
Committees
The Board of Directors conducts its business through meetings of the
Board and through its committees. In accordance with the Bylaws of the
Corporation, the Board of Directors has appointed and maintains an Audit
Committee, Compensation Committee, Investment Committee, Securities Committee
and Executive Loan Committee.
The Corporation's nominating function is performed by the Board of
Directors acting as a committee of the whole. In conducting its nominating
function, the Board of Directors of the
6
<PAGE> 8
Corporation is responsible for making annual nominations for Directors to fill
vacancies created by expired terms of Directors and from time to time, making
appointments to fill vacancies created prior to the expiration of a Director's
term. During 1998, the Board met once to consider and act upon the nomination of
Directors.
The Audit Committee reviews with the Corporation's independent
auditors, the audit plan, the scope and results of their audit engagement and
the accompanying management letter, if any; reviews the scope and results of the
Corporation's internal auditing procedures; consults with the independent
auditors and management with regard to the Corporation's accounting methods and
the adequacy of its internal accounting controls; approves professional services
provided by the independent auditors; reviews the independence of the
independent auditors; and reviews the range of the independent auditors' audit
and nonaudit fees. The Audit Committee is composed of all the Corporation's non-
employee directors. Mr. Neuman serves as the Chairman. The Audit Committee met 3
times during 1998.
The Board of Directors acting as a committee of the whole serves as the
Corporation's Compensation Committee and is responsible for administering the
Corporation's employee benefit plans; setting the compensation of the President
& CEO; reviewing the criteria that form the basis for management's officer and
employee compensation recommendations and reviewing management's recommendations
in this regard. Mr. McClurkin serves as the Chairman. The Compensation Committee
met once during 1998.
The Investment Committee is responsible for reviewing the securities
portfolio of the Bank. The Corporation's Securities Committee reviews and makes
recommendations to the full Board on matters affecting the market for the
Corporation's common stock and the Corporation's dividend policy.
The Executive Loan Committee reviews loan policy matters and approves
loan requests as required by internal policy.
The Board of Directors of the Corporation meets monthly for its regular
meetings and upon call for special meetings. During 1998, the Board met 15
times. All Directors of the Corporation attended at least 75 percent of the
Board and Committee Meetings that they were scheduled to attend during 1998.
Director Compensation
Under the terms of the Corporation's 1997 Stock Option Plan, each
non-employee director received options on 1,000 shares of the Corporation's
common stock on January 1, 1998. Thereafter, new non-employee directors who have
not previously been granted options under the terms of the 1997 Stock Option
Plan will receive options for 1,000 shares on the first day of the year
following their election to serve as a director.
Directors receive $400 per regular director meeting attended and $300
for each Executive Committee meeting attended. During 1998 there were 12 regular
meetings of the Board of
7
<PAGE> 9
Directors and 24 Executive Committee meetings.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following remuneration table sets forth all direct remuneration
paid by the Bank in 1998, 1997 and 1996 to the Corporation's President and Chief
Executive Officer. No other Officers' total compensation exceeded $100,000 for
the year ended 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
----------------------------- ------------
Name and Option # All Other
Principal Position Year Salary Bonus Awards(shares) Compensation
- ------------------ ---- ------ ----- -------------- ------------
<S> <C> <C> <C> <C> <C>
Glenn E. Griffiths 1998 $96,723 $6,413 1,000 $11,002(1)
President and Chief 1997 89,750 11,475 -0- 11,903
Executive Officer 1996 86,767 9,933 -0- 13,699
</TABLE>
(1) Other compensation for 1998 included personal use of a company automobile
($1,412), life insurance ($1,485) and the amount contributed to the
Corporation's 401k profit sharing plan" during 1998 ($8,105).
1995 STOCK OPTION GRANTS TABLE
The following table sets forth stock options granted to the
Corporation's President and Chief Executive Officer under the Corporation's 1997
Stock Option Plan. Under Securities and Exchange Commission regulations,
companies are required to project an estimate of appreciation of the underlying
shares of stock during the option term. The Corporation has chosen the "five
percent/ten percent" formula approved by the SEC. However, the ultimate value
will depend on the market value of the Corporation's stock at a future date,
which may not correspond to the projections below.
8
<PAGE> 10
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
Of Stock Price Appreciation
Individual Grants for Option Term
------------------------------- -------------------
% of Total
Options Granted Exercise
Options to Employees Price(2)
Name Granted(1) in 1998 Per Share Expiration Date 5% 10%
---- ---------- --------------- --------- --------------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Glenn E. Griffiths 1,030 50% $66.76 June 25, 2008 $37,911 $93,376
</TABLE>
(1) Options granted in 1998 are incentive stock options which are exercisable
equally over a five year vesting period; however, all options become
immediately exercisable in the event of a change in control of the
Corporation. These options were granted for a term of 10 years, subject to
earlier termination in certain events related to termination of employment.
(2) Exercise price is the fair market value on the date of grant.
1998 STOCK OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth the number and value of all unexercised
stock options held by the Corporation's President and Chief Executive Officer at
year-end. The value of "in-the-money" options refers to options having an
exercise price which is less than the market price of the Corporation's stock on
December 31, 1998. In addition, the table sets forth the number of options
exercised, if any, during the year and indicates the amount of value realized
upon such exercise.
9
<PAGE> 11
<TABLE>
<CAPTION>
Number (#) of Value ($) of
Unexercised Unexercised
Options- Options-
12/31/98 12/31/98(2)
Shares Acquired Net Value($) Exercisable/ Exercisable/
Name on Exercise Realized(1) Unexercisable Unexercisable
---- --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Glenn E. Griffiths 0 0 0/ $0/
1,030 4,900
</TABLE>
(1) Represents estimated market value of the Corporation's common stock at
exercise date, less the exercise price.
(2) Represents estimated market value of the Corporation's common stock at
December 31, 1998, less the exercise price.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors of the Corporation and their associates were customers of,
and have had transactions with, the Corporation in the ordinary course of
business during 1998.
These transactions consisted of extensions of credit by the Corporation
in the ordinary course of business and were made on substantially the same terms
as those prevailing at the time for comparable transactions with other persons.
In the opinion of the management of the Corporation, those transactions do not
involve more than a normal risk of being collectible or present other
unfavorable features. The Corporation expects to have, in the future, banking
transactions in the ordinary course of its business with Directors and their
associates on the same terms, including interest rates and collateral on loans,
as those prevailing at the time of comparable transactions with others.
Director Neuman through his law firm of Westenfield, Neuman & Parry
performed
10
<PAGE> 12
services for the Corporation during 1998, and is expected to continue
to provide services to the Corporation in the future. During 1998 the gross
legal fees paid by the Corporation to Director Neuman's law firm was $37,922.
Mr. Neuman received additional direct compensation of $8,210 as a retainer for
legal services to the Corporation during 1998.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and Directors, and persons who own more than ten percent
of a registered class of the Corporation's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, Directors and greater than ten percent shareholders are required by
SEC regulation to furnish the Corporation with copies of all Section 16(a) forms
they file.
Based solely on review of the copies of such forms furnished to the
Corporation or written representations that no Form 5s were required, the
Corporation believes that during 1998 all Section 16(a) filing requirements
applicable to its officers and Directors were complied with. The Corporation has
no shareholders who are ten percent beneficial owners.
SELECTION OF AUDITORS
Crow Chizek and Company, LLP has been appointed to serve as the
Independent Auditor for the Corporation and its subsidiary for the fiscal year
ended December 31, 1999. S. R. Snodgrass, A.C. acted as independent auditors for
the fiscal year ended December 31, 1998. During the two most recent fiscal years
and the interim period subsequent to September 30, 1998, there have been no
disagreements with S.R. Snodgrass, A.C. on any matter of accounting principles
or practice, financial statement disclosure, or auditing scope or procedure or
any reportable events. S.R. Snodgrass, A.C.'s report on the financial statements
for the past two years contained no adverse opinion or disclaimer of opinion and
was not qualified or modified as to uncertainty, audit scope or accounting
principles. Representatives of S. R. Snodgrass, A.C. are expected to be present
at the Annual Meeting to respond to appropriate questions from shareholders and
to have the opportunity to make any statements they consider appropriate.
11
<PAGE> 13
SHAREHOLDER PROPOSALS
If any stockholder of the Corporation wishes to submit a proposal to be
included in next year's Proxy Statement and acted upon at the annual meeting of
the Corporation to be held in 2000, the proposal must be received by the
Secretary of the Corporation at the principal executive offices of the
Corporation, 1 South Main Street, Niles, Ohio, 44446 prior to the close of
business on November 13, 1999. On any other proposal raised by a stockholder for
next year's annual meeting, the Corporation intends that proxies received by it
will be voted in the interest of the Corporation in accordance with the judgment
of the persons named in the proxy and the proposal will be considered untimely,
unless notice of the proposal is received by the Corporation not later than
January 27, 2000.
The Corporation's Bylaws establish advance notice procedures as to the
nomination, other than by or at the direction of the Board of Directors, of
candidates for election as directors. In order to make a director nomination at
a stockholder meeting, it is necessary that you notify the Corporation not fewer
than 14 days in advance of the meeting unless the Corporation provides
stockholders less than 21 days notice of the meeting, and then notice of the
nominations must be given not later than the seventh day after the notice of the
meeting was mailed. In addition, the notice must meet all other requirements
contained in the Corporation's Bylaws. Any stockholder who wishes to take such
action should obtain a copy of the Bylaws and may do so by written request
addressed to the Secretary of the Corporation at the principal executive offices
of the Corporation.
OTHER MATTERS
The Board of Directors of the Corporation is not aware of any other
matters that may come before the meeting. However, the enclosed Proxy will
confer discretionary authority with respect to matters which are not known to
the Board of Directors at the time of printing hereof and which may properly
come before the meeting. A copy of the Corporation's 1998 report filed with the
Securities and Exchange Commission, on Form 10-KSB, will be available without
charge to shareholders on request. Address all requests, in writing, for this
document to: Mr. Glenn E. Griffiths, President & CEO, Security Financial Corp.,
1 South Main Street, Niles, Ohio 44446.
12
<PAGE> 14
SECURITY FINANCIAL CORP.
NILES, OHIO 44446
PROXY
PLEASE SIGN AND RETURN IMMEDIATELY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS APRIL 20, 1999
The undersigned hereby appoints ROBERT I. GRIFFITH, JR., ROBERT J.
MCCLURKIN AND PETER P. ROSSI, JR., or any one of them (with full power of
substitution for me and in my name, place and stead), to vote all the common
stock of said Corporation, standing in my name on its books on February 28,
1999, at the stockholders meeting, to be held at the SECURITY DOLLAR BANK, ONE
SOUTH MAIN STREET, NILES, OHIO ON APRIL 20, 1999 AT 3:30 P.M. (local time), or
any adjournments thereof, upon all matters as set forth in the Notice of Annual
Meeting and Proxy Statement, receipt of which is hereby acknowledged.
1. ELECTION OF TWO DIRECTORS TO CLASS II
The Board of Directors recommends a vote for the election of directors.
Nominees are:
Nominees: Douglas J. Neuman and Peter P. Rossi, Jr.
For All the Nominees Withholding Authority for All the Nominees
[ ] [ ]
(To withhold authority to vote for any one or more nominees, draw a
line through such nominee's name.)
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
This proxy will be voted as directed above, and if no direction is given, will
be voted FOR PROPOSAL 1.
Dated: ______________, 1999 ________________________________________
________________________________________
Signature(s) of stockholder(s)
This proxy must be signed exactly as the name appears hereon.
(When signing as Attorney, Executor, Administrator, Trustee, Guardian,
please give full title. If more than one Trustee, all should sign. All joint
owners must sign.)
