<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
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/x/ Definitive proxy statement
/x/ Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Chester Valley Bancorp Inc.
-----------------------------------------------------------
(Name of Registrant as Specified in Its Charter
Chester Valley Bancorp Inc.
-----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to
Exchange Act Rule 14-a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules
14-a-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:
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
/ / 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
CHESTER VALLEY BANCORP INC.
100 EAST LANCASTER AVENUE
DOWNINGTOWN, PENNSYLVANIA 19335
(610) 269-9700
NOTICE OF ANNUAL MEETING
TO BE HELD ON OCTOBER 23, 1996
TO THE SHAREHOLDERS OF CHESTER VALLEY BANCORP INC:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Chester Valley Bancorp Inc. (the "Company") will be held on Wednesday, October
23, 1996, at 10:00 AM Eastern Time, at the Chester Valley Golf and Country
Club, 430 Swedesford Road in Malvern, Pennsylvania, for the following purposes:
(1) To elect three directors for a term of three years or until
their successors have been elected and qualified;
(2) To ratify the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for the fiscal year ending June
30, 1997; and
(3) To transact such other business as may properly come before
the meeting.
Shareholders of record at the close of business on August 29, 1996,
are entitled to notice of and to vote at the Annual Meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED, REGARDLESS OF THE NUMBER YOU OWN.
ACCORDINGLY, EVEN IF YOU PLAN TO BE PRESENT AT THE MEETING YOU ARE URGED TO
PROMPTLY COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE
ACCOMPANYING THIS NOTICE. NO POSTAGE NEED BE AFFIXED TO THE RETURN ENVELOPE IF
MAILED IN THE UNITED STATES. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN
PERSON. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING AT ANY TIME PRIOR TO
THE EXERCISE THEREOF.
BY ORDER OF THE BOARD OF DIRECTORS
Anthony J. Biondi, Secretary
Downingtown, Pennsylvania
September 20, 1996
<PAGE> 3
CHESTER VALLEY BANCORP INC.
100 EAST LANCASTER AVENUE
DOWNINGTOWN, PENNSYLVANIA 19335
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 23, 1996
This Proxy Statement is furnished to the holders of common stock of
Chester Valley Bancorp Inc. (the "Company"), a holding company which owns all
of the outstanding shares of stock of First Financial Savings Association
("First Financial"), in connection with the solicitation of proxies by the
Company's Board of Directors for use at the Annual Meeting of Shareholders to
be held on October 23, 1996, at 10:00 AM Eastern Time at the Chester Valley
Golf and Country Club, 430 Swedesford Road in Malvern, Pennsylvania, and at any
adjournment thereof.
This Proxy Statement and the enclosed form of proxy are first being
mailed to shareholders on or about September 20, 1996.
VOTING AND PROXY INFORMATION
Only holders of record of the Company's common stock, par value $1.00
per share, at the close of business on August 29, 1996 (the "Record Date"), are
entitled to notice of and to vote at the Annual Meeting. On the Record Date,
the Company had 1,564,663 outstanding shares of common stock. Each outstanding
share of the Company's common stock entitles the record holder thereof to one
vote.
Shareholders may vote at the Annual Meeting in person or by proxy.
The proxy solicited hereby, if properly signed and returned to the Company
before the Annual Meeting and not subsequently revoked, will be voted in
accordance with the instructions specified therein. If no instructions
otherwise are given, the proxy will be voted FOR the nominees for director
listed below and FOR the ratification of the appointment of the Company's
independent auditors.
Any additional business that may properly come before the Annual
Meeting will be voted upon by the proxies in accordance with their best
judgment. Management of the Company is not aware of any additional matters
that may come before the meeting.
A shareholder who has submitted a proxy may revoke it at any time
before it is exercised by providing written notice of its revocation to the
Secretary of the Company.
The Company's Bylaws provide that a quorum at an annual meeting
consists of shareholders representing, either in person or by proxy, a majority
of the votes that all shareholders are entitled to cast on the matters to come
before the meeting, and that a majority of the votes cast by all shareholders
present in person or by proxy and entitled to vote will decide any question
brought before the meeting unless otherwise provided by statute or the
Company's Bylaws or Articles of Incorporation.
<PAGE> 4
The nominees for election as directors at the Annual Meeting who
receive the greatest number of votes cast will be elected as directors. The
affirmative vote of a majority of the votes cast by all shareholders present in
person or represented by proxy at the Annual Meeting and entitled to vote
thereon is necessary to approve the ratification of the appointment of the
Company's independent auditor.
Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business
but will have no effect on the outcome of voting with respect to the proposals.
SOLICITATION OF PROXIES
The expenses of the solicitation of proxies will be borne by the
Company. Certain officers, directors and employees of the Company may solicit
proxies personally, by mail, telephone, telegraph, or otherwise. Such persons
will not receive any fees or other compensation for such solicitation. The
Company will reimburse brokers, custodians, nominees and fiduciaries for all
reasonable expenses which they have incurred in sending proxy materials to the
beneficial owners of the Company's common stock held by them.
CERTAIN BENEFICIAL OWNERS AND SECURITY OWNERSHIP OF MANAGEMENT
Set forth below is certain information as of August 1, 1996,
concerning the beneficial ownership of the Company's common stock by each
person known by the Company to be the beneficial owner of more than five
percent (5%) of the outstanding common stock of the Company, each nominee for
election as director, each other member of the Company's Board of Directors,
the Chief Executive Officer, and all directors and executive officers as a
group.
<TABLE>
<CAPTION>
=============================================================================================================
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED (1) COMMON STOCK (2)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Anthony J. Biondi 15,910 1% (3)(6)
207 Shoreline Drive
Honey Brook PA 19344
- -------------------------------------------------------------------------------------------------------------
Robert J. Bradbury 79,211 5% (3)
208 Pond View
Kennett Square PA 19348
- -------------------------------------------------------------------------------------------------------------
Gerard F. Griesser 8,194 * (3)(5)
1885 Rose Cottage Lane
Malvern PA 19355
- -------------------------------------------------------------------------------------------------------------
James E. McErlane 91,142 6% (3)(4)
Lamb, Windle & McErlane, P.C.
24 E. Market Street
West Chester PA 19381
- -------------------------------------------------------------------------------------------------------------
Edward H. Plank 21,958 1%
RD #2, Box 209
Glenmoore Pa 19343
=============================================================================================================
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
=============================================================================================================
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED (1) COMMON STOCK (2)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Richard L. Radcliff 10,706 * (3)(5)
300 Hadfield Road
Downingtown PA 19355
- -------------------------------------------------------------------------------------------------------------
Ellen Ann Roberts 51,878 3% (6)
11 Park Lane
Downingtown PA 19355
- -------------------------------------------------------------------------------------------------------------
Emory S. Todd, Jr. 6,936 * (3)
1048 Seven Oaks Road
Chester Springs PA 19425
- -------------------------------------------------------------------------------------------------------------
Edward L. Towson 12,341 *
105 Buckley Court
Chester Springs PA 19425
- -------------------------------------------------------------------------------------------------------------
William M. Wright 9,960 * (3)
45 Gunning Lane
Downingtown PA 19335
- -------------------------------------------------------------------------------------------------------------
Chester Valley Bancorp Inc. 177,997 12% (7)
Employee Stock Ownership Plan
(the "ESOP")
100 E. Lancaster Avenue
Downingtown PA 19335
- -------------------------------------------------------------------------------------------------------------
Directors and Executive Officers as a 298,103 19% (8)
Group (11 persons)
=============================================================================================================
</TABLE>
- ----------------------------------
(1) Pursuant to rules promulgated under the Securities Exchange Act of
1934 (The "Exchange Act"), an individual is considered to beneficially
own any shares of common stock if he or she has or shares: (1) voting
power, which includes the power to vote, or to direct the voting of,
the shares; or (2) investment power, which includes the power to
dispose of, or to direct the disposition of, the shares. Except as
otherwise indicated, the individuals named exercise sole voting and
investment power over the indicated shares.
(2) The percentages were calculated based upon the shares of common stock
outstanding on August 1, 1996, which equaled 1,565,400.
(3) Includes shares purchasable under stock options that are presently
exercisable to purchase shares of common stock as follows: Mr. Biondi
- 552 shares; Mr. Bradbury - 3,147 shares; Mr. Griesser - 1,103
shares; Mr. McErlane - 3,147 shares; Mr. Radcliff - 3,148 shares; Mr.
Todd - 1,103 shares; and Mr. Wright - 1,103 shares.
(4) Includes 40,757 shares held in a trust, of which Mr. McErlane is a
co-trustee. Mr. McErlane has shared voting and investment power over
the shares held in the trust.
3
<PAGE> 6
(5) Includes shares registered as follows: Mr. Radcliff's spouse - 1,551
and Mr. Griesser's spouse - 79.
(6) Includes 7,011 shares of common stock held in Ms. Roberts' ESOP
account and 4,767 shares held in Mr. Biondi's ESOP account.
(7) As of August 1, 1996, the ESOP held 177,997 shares of the Company's
common stock, of which 89,400 shares were allocated to participants'
accounts. Under the terms of the Plan and the trust agreement for the
ESOP, the trustees of the ESOP, Meridian Bank and Fulton Bank, share
voting power over shares that have not been allocated to participants'
accounts, or 88,597 shares as of August 1, 1996, and the trustees have
the authority to dispose of allocated and unallocated shares only
pursuant to the directions of participants with respect to a response
to a tender or exchange offer. Shares which are allocated to
participants' accounts are voted by the trustees in accordance with
instructions from the participants. The trustees are empowered to
vote any unallocated shares, as well as any shares for which
instructions from participants are not received in a timely manner, at
their sole discretion. The ESOP Committee which administers the Plan
is composed of three individuals appointed by the Company's Board of
Directors and has dispositive power with respect to all shares, except
with respect to a response to a tender or exchange offer. Ellen Ann
Roberts, a Director and President and Chief Executive Officer of the
Company; Edward H. Plank, a Director and Chairman of the Board of the
Company; and Edward L. Towson, a Director of the Company, serve as
members of the ESOP Committee. The individual members of the ESOP
Committee disclaim beneficial ownership of the shares held by the
ESOP, except that Ms. Roberts does not disclaim beneficial ownership
of those shares which are allocated to her account as a participant in
the ESOP.
(8) Includes 13,875 shares of common stock purchasable pursuant to stock
options that are presently exercisable, and 16,575 shares allocated to
executive officers' accounts in the ESOP. Excludes all other shares
in the ESOP with respect to which three directors, in their capacity
as Plan Administrators, have dispositive power and do not have voting
power.
* Indicates beneficial ownership of less than 1% of the issued and outstanding
common stock.
ELECTION OF DIRECTORS OF THE COMPANY
(PROXY ITEM 1)
ELECTION OF DIRECTORS; CONTINUING DIRECTORS
The Company's Bylaws provide that the Board of Directors shall consist
of not less than three directors, with the exact number of directors at any
time to be determined by the Board. The Board of Directors has fixed the
number of directors at ten.
The Company's Bylaws and charter also provide for the division of the
Board of Directors into three classes as nearly equal in number as possible,
with members of each class having a term of office of three years. The term of
office of one class of directors expires each year in rotation so that one
class is elected at each annual meeting of shareholders for a three-year term.
The term of three of the present directors will expire at the 1996 Annual
Meeting. At this Annual Meeting, three directors will be elected for a
three-year term expiring in 1999 or until their successors are elected and have
qualified.
4
<PAGE> 7
Unless contrary instructions are given, the shares represented by
proxies solicited hereby will be voted for the nominees named below. Any
shareholder who wishes to withhold authority from the proxy holders to vote for
the election of directors or to withhold authority to vote for any individual
nominee may do so by marking his or her proxy to that effect. Shareholders
cannot cumulate their votes for the election of directors. No proxy may be
voted for a greater number of persons than the number of nominees named.
Each of the nominees named below has consented to being named as a
nominee and has agreed to serve, if elected. If any nominee should become
unable to serve, the persons named in the proxy may vote for another nominee.
The Company's Board of Directors has no reason to believe that any nominee
listed below will be unable to serve as a director.
Set forth below is certain information as of August 1, 1996,
concerning each nominee for election as director and each other continuing
member of the Company's Board of Directors. No nominee or director of the
Company is related to any other director or executive officer of the Company.
NOMINEES FOR THE THREE-YEAR TERM EXPIRING IN 1999
<TABLE>
<CAPTION>
=========================================================================================================
POSITION WITH THE COMPANY AND PRINCIPAL OCCUPATION
NAME AND AGE DURING THE PAST FIVE 5 YEARS DIRECTOR SINCE (1)
=========================================================================================================
<S> <C> <C>
Gerard F. Griesser Director; President of Trident Financial Group, 1988
(Age 47) Inc. in Devon, Pennsylvania, since before 1987
- ---------------------------------------------------------------------------------------------------------
Richard L. Radcliff Director; President and co-owner of Radcliff & Sipe 1975
(Age 65) - Architects, Inc. in West Chester, Pennsylvania,
since before 1987
- ---------------------------------------------------------------------------------------------------------
Emory S. Todd, Jr. Director; self-employed as a Certified Public 1987
(Age 55) Accountant in Chester Springs, Pennsylvania, since
before 1987
=========================================================================================================
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT
THE NOMINEES BE ELECTED AS DIRECTORS
5
<PAGE> 8
OTHER DIRECTORS
<TABLE>
<CAPTION>
=========================================================================================================
POSITION WITH THE COMPANY AND PRINCIPAL OCCUPATION DIRECTOR SINCE (1)/
NAME AND AGE DURING THE PAST FIVE YEARS TERM EXPIRING
=========================================================================================================
<S> <C> <C>
Anthony J. Biondi Director; Executive Vice President of the Company 1995/1998
(Age 42) and First Financial since 1993; Treasurer since
1986; Secretary since 1987; served in various
management positions since joining First Financial
in 1981.
- ---------------------------------------------------------------------------------------------------------
Robert J. Bradbury Director; Executive Vice President of Dolphin & 1992/1997
(Age 49) Bradbury Investment Bankers, Philadelphia,
Pennsylvania, from 1986 to 1994, and Co-Chairman
since 1995
- ---------------------------------------------------------------------------------------------------------
James E. McErlane Director; Attorney and Principal of Lamb, Windle & 1991/1997
(Age 53) McErlane, P.C., West Chester, Pennsylvania, since
1971
- ---------------------------------------------------------------------------------------------------------
Edward H. Plank Director and Chairman of the Board; President of 1969/1998
(Age 75) First Financial from 1984 until February 1987, and
its Chairman of the Board since February 1987;
owner of the building firm of Edward H. Plank in
Glenmoore, Pennsylvania, since 1952.
- ---------------------------------------------------------------------------------------------------------
Ellen Ann Roberts Director, President and Chief Executive Officer 1958/1998
(Age 70) ("CEO") of the Company; CEO of First Financial
since 1958 and its President since February 1987;
served in various management positions since
joining First Financial in 1948, including
Executive Vice President from 1973 to February
1987.
- ---------------------------------------------------------------------------------------------------------
Edward L. Towson Director; retired former owner of the Towson 1987/1997
(Age 83) Funeral Home in Downingtown, Pennsylvania
- ---------------------------------------------------------------------------------------------------------
William M. Wright Director; General Manager of Malcolm Wright Buick 1980/1998
(Age 56) Olds, Inc., in Coatesville, Pennsylvania, since
1961.
=========================================================================================================
</TABLE>
- ------------------------
(1) Includes service as a director of First Financial prior to the
formation of the Company, as a savings and loan holding company, in
1990.
6
<PAGE> 9
SHAREHOLDER NOMINATIONS
The Company's Bylaws provide procedures which shareholders must follow
in order to make nominations for election to the Company's Board of Directors.
Under these provisions, shareholders may make nominations for election to the
Board of Directors by submitting such nominations in writing to the Secretary
of the Company at least 30 days prior to the date of an annual meeting,
together with information about the person(s) proposed to be nominated that is
required to be disclosed in a proxy statement for solicitation of proxies with
respect to nominees for election as directors pursuant to regulations under the
Exchange Act. Only those persons nominated by the Board of Directors and by
shareholders as described above shall be voted upon at the Annual Meeting,
unless the Board fails to make its nominations at least 30 days before the
Annual Meeting, in which case nominations for directors may be made at the
Annual Meeting by any shareholder entitled to vote at such meeting.
MEETINGS AND FEE ARRANGEMENTS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company and First Financial meet
regularly once each month and may have additional special meetings. Directors
of First Financial, with the exception of those who are full-time employees of
First Financial, receive a fee of $600 per meeting for each First Financial
board meeting attended. Directors do not receive a fee for attendance at the
Company's board meetings. In addition, the Chairman of the Board receives an
annual fee of $32,100 for his services as Chairman. During the fiscal year
ended June 30, 1996, the Boards of Directors of both the Company and First
Financial met 11 times.
Non-employee directors also were eligible to receive options under the
Company's 1993 Stock Option Plan (the "Stock Option Plan"). In the fiscal year
ended June 30, 1996, however, no options were granted to them.
The Board of Directors of the Company has an Audit Committee, the
members of which are also members of the Audit Committee of First Financial and
customarily hold joint meetings of both committees. Members of the Audit
Committee receive a fee of $100 per Audit Committee meeting attended. The
Audit Committee reviews the records and affairs of the Company and First
Financial to determine their financial condition and monitor their adherence in
accounting and financial reporting matters to generally accepted accounting
principles. The Committee also reviews the system of internal controls with
management and separately with the independent auditors. The Audit Committee
is composed of Messrs. Todd (Chairman), Wright, Griesser, and Towson. The
Audit Committee met one time during the fiscal year ended June 30, 1996.
The Boards of the Company and First Financial have Executive
Committees which are authorized to exercise the powers of the Boards of
Directors between regular meetings of the Boards. Both Executive Committees
are composed of Ms. Roberts (Chairman) and Messrs. Bradbury, McErlane, Plank
and Radcliff. Executive Committee members, with the exception of Ms. Roberts,
receive $100 for each Executive Committee meeting attended. The Executive
Committee did not meet during fiscal 1996.
First Financial's Board of Directors has a Personnel Committee which
reviews and approves recommendations for salary increases consistent with First
Financial's compensation plans. The Committee is composed of Messrs. Wright
(Chairman), Griesser, McErlane, Plank, and Ms. Roberts. Personnel Committee
members, with the exception of Ms. Roberts, receive $100 per meeting attended.
The Personnel Committee met one time during fiscal year 1996.
7
<PAGE> 10
In fiscal 1996 each director of the Company attended at least 75% of
the aggregate of the number of meetings of the Company's Board and the number
of meetings held by committees of the Company's Board on which he or she
served.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership, in a timely fashion, with the Securities and Exchange Commission.
Five of the Company's directors, Messrs. Biondi, Bradbury, McErlane, Plank and
Wright, each filed one late report during the Company's most recent fiscal
year. In Mr. Plank's case, the report disclosed two transactions that were not
reported on a timely basis. In the case of each other such person, the report
disclosed one transaction that was not reported on a timely basis.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following information is provided with respect to executive
officers of the Company who do not serve on its Board of Directors (i.e.,
executive officers in addition to Ms. Roberts). There are no arrangements or
understanding between the Company and any person pursuant to which any such
officers were selected. No executive officer is related to any other executive
officer or director of the Company.
Colin N. Maropis (age 44) - Senior Vice President of the Company and
First Financial
Mr. Maropis joined First Financial in 1977 and held a variety of
positions, including that of Assistant Vice President of Lending from
1983 to 1986. In September 1986 he was appointed Vice President of
Lending, a position he held until his appointment to Senior Vice
President in May 1989.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the cash compensation paid or accrued
by the Company or First Financial, as well as certain other compensation paid
or accrued, during each of the last three fiscal years, to the Chief Executive
Officer ("CEO"). No other executive officer's salary and bonus exceeded
$100,000 during any such fiscal year.
<TABLE>
<CAPTION>
===============================================================================================================
ANNUAL COMPENSATION
- ---------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL POSITION YEAR SALARY(1) ALL OTHER COMPENSATION(2) (3)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ellen Ann Roberts 1996 $128,000 $22,298
President and CEO 1995 $123,000 $21,329
1994 $115,000 $31,433
===============================================================================================================
</TABLE>
(1) The CEO is also a salaried officer of First Financial and
received all of her salary in fiscal 1996 from First Financial. The Company
has no employees.
(2) This represents the value of the common stock allocated to the
account of the CEO in the ESOP during such fiscal year, valued as of the date
of such allocation, and the amount of net
8
<PAGE> 11
income of the Employee Stock Ownership Trust (which holds the assets of the
ESOP) credited to the CEO's ESOP account during each such fiscal year.
(3) No options were granted to or exercised by the CEO in fiscal 1996
under the Stock Option Plan.
EMPLOYMENT AGREEMENTS
The Company and First Financial have entered into an employment
agreement with Ellen Ann Roberts, their Chief Executive Officer, having a
three-year term. The term of the CEO's employment agreement is automatically
extended for one year upon each anniversary of the commencement date of the
agreement after review and approval by the Board of Directors unless notice is
given by either party at least 45 days prior to such anniversary date. The
agreement provides for a minimum annual base salary which may be increased from
time to time by agreement of the parties, presently of $133,000.
Under the agreement, the CEO's employment is terminable for any reason
by the Company and First Financial, but any such termination without just
cause, as defined, would entitle the CEO to receive certain severance benefits
described below. Termination for "just cause" is defined in the agreements to
mean termination for personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses),
willful violation of a final cease-and-desist order, willful or intentional
breach or neglect of the CEO's duties under the agreement, persistent
negligence or misconduct in the performance of such duties or a material breach
of any of the terms of the agreement. The agreement provides for payment of a
death benefit, if the CEO should die with heirs during the term of the
agreement, in an amount equal to one-half of the CEO's total yearly
compensation at the date of death. The agreement also contains provisions
which provide the CEO with specified severance benefits in the event that she
voluntarily terminates her employment for good reason, as defined. The
agreement does not contain any provision restricting the CEO's right to compete
against the Company or First Financial upon termination of employment.
If the CEO's employment is terminated by the Company and First
Financial for other than just cause, or if the CEO terminates her employment
for good reason consisting of (i) a failure by the Company and First Financial
to comply with any material provisions of the agreement (unless cured within 10
days after notice of noncompliance has been given by the CEO to the Company and
First Financial) or (ii) any purported termination of the CEO's employment
which is effected by the Company and First Financial without proper notice
specifying the basis for termination, then the employment agreement requires
the Company and First Financial to pay as severance to the CEO an amount equal
to the sum of the CEO's annual base compensation at the time of termination
plus the compensation the CEO would have received during the remaining term of
the Agreement based upon her annual base compensation in effect prior to proper
notice of termination having been given, such payment to be made over a
two-year period. If the CEO's employment were terminated by reason of these
provisions on the date of this Proxy Statement, she would be entitled to
receive approximately $498,750 under the employment agreement. In addition, if
the CEO's employment is terminated for other than just cause or by reason of an
order issued by a federal or state savings association regulatory authority
removing the CEO from office or prohibiting the CEO from participating in the
conduct of the Company's or First Financial's affairs or if the CEO voluntarily
terminates her employment for good reason (as defined), the Company and First
Financial shall maintain in effect for the continued benefit of the CEO, for
three years, all employee benefit plans and programs in which the CEO was
entitled to participate immediately prior to the date of termination, to the
extent permissible under the general terms and provisions of such plans and
programs.
9
<PAGE> 12
The employment agreement further provides for severance payments if
the CEO voluntarily terminates her employment for good reason consisting of (a)
the occurrence of a change in control of the Company or First Financial or (b)
after a change in control of the Company or First Financial, (1) the assignment
to the CEO of any duties inconsistent with the CEO's positions, duties,
responsibilities and status with the Company and First Financial immediately
prior to the change in control, (2) a change in the CEO's reporting
responsibilities, titles or offices as in effect immediately prior to the
change in control, or (3) any removal of the CEO from, or any failure to
re-elect the CEO to, any such positions (unless in connection with a
termination of the CEO's employment for just cause, disability, death or
retirement, or by reason of an order issued by a federal or state savings
association regulatory authority removing the CEO from office or prohibiting
the CEO from participating in the conduct of the Company's or First Financial's
affairs). In such case, the severance payment from the Company and First
Financial to the CEO will consist of a severance payment of an amount equal to
the product of (i) the average aggregate annual compensation paid to the CEO
and includable in the CEO's gross income for federal income tax purposes during
the five calendar years preceding the taxable year in which the date of
termination occurs, multiplied by (ii) 2.99, such payment to be made in a lump
sum on or before the fifth day following the date of termination. Such amount
will be paid within five business days following the termination of employment.
If the employment of the CEO were terminated by reason of these provisions on
the date of this Proxy Statement, she would be entitled to receive $317,920
under the employment agreement. Section 280G of the Internal Revenue Code of
1986, as amended ("Code"), states that severance payments which exceed the base
compensation (the individual's compensation from the employer) of the
individual are deemed to be "excess parachute payments" if they are contingent
upon a change in control and the aggregate present value of payments in the
nature of compensation equals or exceeds three times the base compensation.
Individuals receiving excess parachute payments are subject to a 20% excise tax
on the amount of such excess payments, and the employer is not entitled to
deduct the amount of such excess payments. The employment agreement provides
that if the severance payment to the CEO constitutes a parachute payment in the
opinion of counsel to the Company and First Financial in consultation with the
Company's independent accountants, then payment shall be reduced to the largest
amount that can be paid without constituting an excess parachute payment.
The employment agreement generally defines "change in control" to mean
(i) a change in control as defined in the regulations of the Office of Thrift
Supervision, (ii) an event that would be reported in response to Item 6(e) of
Schedule 14A of the Exchange Act, (iii) the acquisition by any person (other
than the Company or any person who, at the beginning of the employment
contract, was a director or officer of the Company or First Financial) of
beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of
securities of the Company or First Financial representing 25% or more of the
combined voting power of the Company's or First Financial's then outstanding
securities, (iv) during any period of two consecutive years, there is a change
in a majority of either the Board of Directors of the Company or First
Financial for any reason unless the election of each new director was approved
by at least two-thirds of the directors then in office who were directors at
the beginning of the period or (v) the Company ceases to be a publicly-owned
corporation. The change in control provision included in the employment
agreement would increase the cost to a potential acquirer of the Company or
First Financial and may therefore operate as an anti-takeover device.
The Company also entered into employment agreements with two other
executive officers. These agreements essentially provide the same terms as
that of the CEO.
10
<PAGE> 13
CERTAIN TRANSACTIONS OF MANAGEMENT AND OTHERS WITH THE COMPANY AND SUBSIDIARIES
During the fiscal year ended June 30, 1996, First Financial made
aggregate payments to Mr. Plank's building firm for routine repairs and
maintenance on all of First Financial's offices and for inspection services
performed in connection with loans, in the amount of $54,569. During the
current fiscal year, Mr. Plank's building firm is expected to continue to
perform all such services as needed and receive payments from First Financial
which may approximate the amounts paid in fiscal 1996.
James E. McErlane, a director of the Company, is a principal in a law
firm which the Company and First Financial have retained during the last fiscal
year and which the Company and First Financial intend to retain during the
current fiscal year. During the year ended December 31, 1995, the amount of
legal fees paid to Mr. McErlane's law firm did not exceed 5% of that firm's
gross revenues for such fiscal year.
Robert J. Bradbury, a director of the Company, is an executive
officer, director, and principal of an investment banking firm that performed
services for First Financial during the last fiscal year, and which the Company
and First Financial intend to retain during the current fiscal year.
Approximately 90% of the Company's purchases of investment securities for
fiscal 1996 were from Dolphin & Bradbury. During the investment banking firm's
last fiscal year, the amount of compensation received by Mr. Bradbury's firm
from the Company and First Financial did not exceed 5% of the firm's gross
revenues for such fiscal year.
Gerard F. Griesser, a director of the Company, is a director and the
president of a mortgage banking firm from which First Financial purchased
single-family residential mortgage loans during the last fiscal year, and which
First Financial intends to retain during the current fiscal year. During
fiscal 1996 the purchases of loans from the mortgage banking firm amounted to
approximately 6% of the Company's total loan originations and were purchased at
market rates and on terms no more favorable to the mortgage banking firm than
those obtainable on an arm's-length basis.
APPOINTMENT OF INDEPENDENT AUDITORS
(PROXY ITEM 2)
The Board of Directors of the Company has appointed KPMG Peat Marwick
LLP, Certified Public Accountants, as the Company's independent auditors for
the fiscal year ending June 30, 1997, subject to ratification of such
appointment by shareholders. The submission of the appointment of KPMG Peat
Marwick LLP for ratification by the shareholders is not required by law or by
the Company's Bylaws. The Board of Directors is nevertheless submitting this
appointment to shareholders to ascertain their views. If shareholders do not
ratify the appointment, the selection of other independent public accountants
will be reconsidered by the Board of Directors. Representatives of KPMG Peat
Marwick LLP are expected to be present at the Meeting, will be given an
opportunity to make a statement if they desire to do so, and will be available
to answer appropriate questions from shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE CURRENT FISCAL YEAR.
11
<PAGE> 14
SHAREHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
Any shareholder proposal for consideration at the Annual Meeting of
shareholders of the Company to be held in 1997 must be received by the Company
at its principal offices not later than May 22, 1997, in order for it to be
considered for inclusion in the Company's proxy materials relating to its 1997
Annual Meeting of shareholders. If such proposal is in compliance with all the
requirements of Rule 14a-8 of the Exchange Act, it will be included in the
proxy statement and set forth on the form of proxy issued for the next annual
meeting of shareholders.
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal
year ended June 30, 1996, accompanies this Proxy Statement. Such Annual Report
is not part of the proxy solicitation materials.
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-KSB FOR THE YEAR ENDED JUNE 30, 1996, MAY BE OBTAINED
WITHOUT CHARGE BY ANY SHAREHOLDER OF THE COMPANY UPON WRITTEN REQUEST TO MS.
LINDA SWISHER, DIRECTOR OF SHAREHOLDER RELATIONS, CHESTER VALLEY BANCORP INC.,
100 EAST LANCASTER AVENUE, DOWNINGTOWN, PENNSYLVANIA 19335.
OTHER MATTERS
Management knows of no business other than as described above that is
planned to be brought before the Annual Meeting. Should any other matters
arise, however, the persons named on the enclosed proxy will vote thereon
according to their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
ANTHONY J. BIONDI, SECRETARY
Downingtown, Pennsylvania
September 20, 1996
12
<PAGE> 15
- --------------------------------------------------------------------------------
REVOCABLE PROXY
CHESTER VALLEY BANCORP INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF CHESTER VALLEY
BANCORP INC. FOR THE ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD ON OCTOBER 23, 1996
The undersigned, hereby revoking any proxy previously given, hereby
appoints Colin N. Maropis and Pamela M. Collins, and each of them individually,
as attorneys and proxies, with full power of substitution for each of them, to
attend the Annual Meeting of Shareholders (the "Annual Meeting") of Chester
Valley Bancorp Inc. (the "Company") to be held on Wednesday, October 23, 1996,
at 10:00 A.M. at the Chester Valley Country Club, Malvern, Pennsylvania, and
any adjournments thereof, and to vote the number of shares of the Company's
common stock which the undersigned would be entitled to vote if personally
present in the manner indicated herein and in accordance with the judgment of
said proxies on any other business which may come before the Annual Meeting,
all as set forth in the Notice of Annual Meeting and accompanying proxy
statement, receipt of which the undersigned hereby acknowledges. This proxy
may be revoked at any time prior to its exercise.
(CONTINUED AND TO BE VOTED, SIGNED AND DATED ON REVERSE SIDE)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
--------- Please mark your
A | x | votes as in this
--------- example.
WITHHOLD
AUTHORITY to vote
FOR all nominees for all nominees Nominees:
listed at right listed at right Gerard F. Griesser
1. ELECTION ------------ ------------ Richard L. Radcliff
OF Emory S. Todd, Jr.
DIRECTORS ------------ ------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
FOR: AGAINST: ABSTAIN:
2. Ratification of appointment of ----- ----- -----
KPMG Peat Marwick LLP ----- ----- -----
</TABLE>
<TABLE>
<S> <C> <C>
Directors recommend a vote Directors recommend a vote FOR this proposal.
Withhold Authority to vote for the following only. FOR all such nominees.
(Print name of nominee(s) in the space provided below) This proxy will be voted (1) as directed
hereon or, if no direction is given, for the
nominees for Directors listed in Item 1 and
for Item 2, and (2) as said proxies deem
advisable on such other matters as may
- ------------------------------------------------------ properly come before the meeting.
- ------------------------------------------------------ PLEASE VOTE, SIGN, DATE AND RETURN PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
</TABLE>
SIGNATURE DATE
------------------------------------- ---------
SIGNATURE DATE
------------------------------------- ---------
NOTE: Please date and sign exactly as name appears hereon. When shares are
held by joint tenants both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by President
or Vice President. If a partnership, please sign in partnership name by
authorized person.
- --------------------------------------------------------------------------------
