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
[ X ] Filed by the registrant
[ ] 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):
[ ] $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>
September 25, 1998
Dear Shareholders:
It is our pleasure to bring you Chester Valley's Annual Report for the fiscal
year ended June 30, 1998 - this was the most successful year in the history of
our Company. We urge you to read the report in order that you will understand
why it was such an outstanding year.
This year the Annual Report recognizes my 50 year career with the same financial
institution. For me personally, it has been 50 years which were challenging,
exciting and very rewarding. The growth of the institution has exceeded all my
early dreams. I am very proud to have been associated with the many past and
present employees who have contributed to our growth and success with emphasis
on personal service.
Accompanying the Annual Report is your 1998 Proxy Statement, which will provide
the details of two items to be voted upon at our Annual Meeting: the election of
four of our Directors and the appointment of our independent auditors for fiscal
1999. Our Board of Directors recommends that you vote for each of these items.
Please remember that all votes are very important, regardless of how many shares
of stock you own; we ask that you complete, sign, and return your proxy card(s)
as soon as possible so your vote can be counted.
You are invited and encouraged to attend our Annual Meeting of Shareholders,
which will be held at 10 AM on Thursday, October 22, 1998, at the Chester Valley
Country Club, 430 Swedesford Road in Malvern, Pennsylvania. Presentations will
be made, you will have the opportunity to meet the directors and officers of
Chester Valley, and refreshments will be served.
Our Chief Financial Officer, Christine N. Dullinger, will be glad to answer your
questions concerning your proxy statement and the voting process. Once again,
please be sure to vote and return your card(s) just as soon as possible.
Thank you for investing in Chester Valley Bancorp, and we look forward to seeing
you on October 22nd.
Very truly yours,
/s/Ellen Ann Roberts
- --------------------
Ellen Ann Roberts,
Chairman and Chief Executive Officer
Enclosures
<PAGE>
CHESTER VALLEY BANCORP INC.
100 East Lancaster Avenue
Downingtown, Pennsylvania 19335
(610) 269-9700
NOTICE OF ANNUAL MEETING
To Be Held on October 22, 1998
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 Thursday, October
22, 1998, 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 four 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, 1999; and
(3) To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on August 28, 1998, 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
James E. McErlane, Secretary
Downingtown, Pennsylvania
September 25, 1998
<PAGE>
CHESTER VALLEY BANCORP INC.
100 East Lancaster Avenue
Downingtown, Pennsylvania 19335
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 22, 1998
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") and Philadelphia Corporation for Investment Services ("PCIS"), 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 22, 1998, 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 25, 1998.
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 28, 1998 (the "Record Date"), are
entitled to notice of and to vote at the Annual Meeting. On the Record Date, the
Company had 2,328,342 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.
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
<PAGE>
entitled to vote thereon is necessary to approve the ratification of the
appointment of the Company's independent auditors.
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, 1998, 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 the other most highly compensated executive officer, and all
directors and executive officers as a group.
Name and Address of Number of Shares Percent of
Beneficial Owner Beneficially Owned (1) Common Stock (2)
---------------- ---------------------- ----------------
Anthony J. Biondi 26,838 1% (3)(6)
Edward T. Borer 11,711 *
Robert J. Bradbury 113,388 5% (3)
Suite 1140
1617 John F. Kennedy Boulevard
Philadelphia PA 19103
John J. Cunningham, III 9,654 * (3)
Gerard F. Griesser 15,904 * (3)(5)
James E. McErlane 162,241 7% (3)(4)
24 E. Market Street
West Chester PA 19381
2
<PAGE>
Name and Address of Number of Shares Percent of
Beneficial Owner Beneficially Owned (1) Common Stock (2)
---------------- ---------------------- ----------------
Richard L. Radcliff 19,886 * (3)(5)
Ellen Ann Roberts 72,005 3% (6)
Emory S. Todd, Jr. 13,015 * (3)
William M. Wright 16,724 * (3)
Chester Valley Bancorp Inc. 245,123 11% (7)
Employee Stock Ownership Plan
(the "ESOP")
100 E. Lancaster Avenue
Downingtown PA 19335
Directors and Executive Officers as a Group 479,038 21% (8)
(12 persons)
- --------------
(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, 1998, which equaled 2,328,178.
(3) Includes shares purchasable under stock options that are exercisable or
will become exercisable within 60 days of August 1, 1998, to purchase
shares of common stock as follows: Mr. Biondi - 1,520 shares; Mr.
Bradbury - 4,520 shares; Mr. Cunningham - 3,000 shares; Mr. Griesser -
4,520 shares; Mr. McErlane - 4,520 shares; Mr. Radcliff - 4,520 shares;
Mr. Todd - 3,000 shares; and Mr. Wright - 4,520 shares.
(4) Includes 59,516 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.
(5) Includes shares registered as follows: Mr. Radcliff's spouse - 2,136
and Mr. Griesser's spouse - 110.
3
<PAGE>
(6) Includes 13,968 shares of common stock held in Ms. Roberts' ESOP
account and 9,723 shares held in Mr. Biondi's ESOP account.
(7) As of August 1, 1998, the ESOP held 245,123 shares of the Company's
common stock, of which 193,401 shares were allocated to participants'
accounts. Under the terms of the Plan and the trust agreement for the
ESOP, the trustee of the ESOP, First Union National Bank, has voting
power over shares that have not been allocated to participants'
accounts, or 51,722 shares as of August 1, 1998, and the trustee has
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 trustee in accordance with
instructions from the participants. The trustee is empowered to vote
any unallocated shares, as well as any shares for which instructions
from participants are not received in a timely manner, at its 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 Chairman and Chief Executive Officer of the Company;
Richard L. Radcliff, a Director of the Company; and William M. Wright,
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 34,353 shares of common stock purchasable pursuant to stock
options that are presently exercisable, and 34,237 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.
4
<PAGE>
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 four of the present directors will expire at the 1998 Annual Meeting. At
this Annual Meeting, four directors will be elected for a three-year term
expiring in the year 2001 or until their successors are elected and have
qualified.
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, 1998, 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.
5
<PAGE>
<TABLE>
<CAPTION>
NOMINEES FOR THE THREE-YEAR TERM EXPIRING IN 2001
Position with the Company and Principal Occupation
Name and Age During the Past Five 5 Years Year Elected(1)
- ------------ ---------------------------- ---------------
<S> <C> <C>
Anthony J. Biondi Director; President of the Company and First Financial 1995
(Age 44) since 1996; elected Treasurer in 1986 and Secretary in
1987; served in various management positions since
joining First Financial in 1981
John J. Cunningham, III Director; Attorney and Partner of Schnader Harrison 1998
(Age 56) Segal & Lewis LLP, Philadelphia, Pennsylvania, since
1969
Ellen Ann Roberts Director, Chairman and Chief Executive Officer ("CEO") 1958
(Age 72) of the Company and First Financial; served in various
management positions since joining First Financial in
1948, including CEO since 1958, Executive Vice
President from 1973 to February 1987, and President
from 1987 to 1996
William M. Wright Director; General Manager of Malcolm Wright Buick 1980
(Age 58) Olds, Inc., in Coatesville, Pennsylvania, since 1961
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT
THE NOMINEES BE ELECTED AS DIRECTORS
6
<PAGE>
<TABLE>
<CAPTION>
OTHER DIRECTORS
Position with the Company and Principal Occupation
Name and Age During the Past Five Years Term (1)
- ------------ -------------------------- --------
<S> <C> <C>
Edward T. Borer Director; Chairman of Philadelphia Corporation for 1998 - 2000
(Age 59) Investment Services since 1995, President
and CEO 1989-1995; Chairman and Director of
EnergyNorth, Inc. (exempt public utility holding
company) since 1982
Robert J. Bradbury Director; Executive Vice President of Dolphin & 1992 - 2000
(Age 51) Bradbury (investment bankers), Philadelphia,
Pennsylvania, from 1986 to 1994, and Co-Chairman since
1995
Gerard F. Griesser Director; President of Trident Financial Group, Inc. 1988 - 1999
(Age 49) (mortgage bankers), Devon, Pennsylvania, since before
1987
James E. McErlane Director and Secretary; Attorney and Principal of 1991 - 2000
(Age 55) Lamb, Windle & McErlane, P.C., West Chester,
Pennsylvania, since 1971
Richard L. Radcliff Director; Retired as President and co-owner of 1975 - 1999
(Age 67) Radcliff & Sipe (architects), West Chester,
Pennsylvania
Emory S. Todd, Jr. Director; self-employed as a Certified Public 1987 - 1999
(Age 57) Accountant in Chester Springs, Pennsylvania, since
before 1987
</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.
7
<PAGE>
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 quarterly fee of $1,800. Directors do not receive a
fee for service on the Company's board or attendance at the Company's board
meetings. During the fiscal year ended June 30, 1998, the Boards of Directors of
both the Company and First Financial met 12 times.
In addition to receiving fees described above, directors (including
non-employee directors) also were eligible to receive options under the
Company's Stock Option Plans (the "Stock Option Plans"). In the fiscal year
ended June 30, 1998, however, no options were granted to them.
The Board of Directors of the Company has an Audit Committee with
members receiving a fee of $100 per Audit Committee meeting attended. The Audit
Committee reviews the records and affairs of the Company and its subsidiaries 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, and Griesser. The Audit Committee met one time
during the fiscal year ended June 30, 1998.
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. Biondi, Bradbury, and McErlane. Executive
Committee members, with the exception of Ms. Roberts and Mr. Biondi, receive
$100 for each Executive Committee meeting attended. The Executive Committee did
not meet during fiscal 1998.
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), Biondi, Griesser, McErlane, and Ms. Roberts. Personnel Committee
members, with the exception of Ms. Roberts and Mr. Biondi, receive $100 per
meeting attended. The Personnel Committee met one time during fiscal year 1998.
8
<PAGE>
In fiscal 1998 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. The
Company believes that, during fiscal 1998, all Section 16(a) filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were timely met.
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 and Mr. Biondi). 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 46) - Executive Vice President of the Company and
First Financial
Mr. Maropis joined First Financial in 1977. He served in
various capacities until 1983, at which time he was elected as
Assistant Vice President of Lending. In September 1986 he was
appointed Vice President of Lending, a position he held until
his appointment to Senior Vice President in May 1989. Mr.
Maropis was appointed Executive Vice President in November
1997.
Christine N. Dullinger (age 32) - Chief Financial Officer and Treasurer
of the Company and First Financial
Mrs. Dullinger joined First Financial in 1993 as the Bank's
Financial Officer. She was elected Treasurer in 1994 and Chief
Financial Officer in October 1996. Mrs. Dullinger is a
Certified Public Accountant and, prior to joining First
Financial, she served as a Manager of Accounting and Auditing
Services at KPMG Peat Marwick LLP.
Compensation of Executive Officers
The following table sets forth the cash compensation paid or accrued by
the Company as well as certain other compensation paid or accrued, during each
of the last three fiscal years, to the Chief Executive Officer ("CEO") and each
other executive officer whose salary and bonus exceeded $100,000 during any such
fiscal year.
9
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation
Name and Principal Position Year Salary(1) Bonus All Other Compensation(2)
--------------------------- ---- --------- ----- -------------------------
<S> <C> <C> <C> <C>
Ellen Ann Roberts 1998 $143,000 $12,870 $93,478
Chairman and CEO 1997 $133,000 $10,640 $28,044
1996 $128,000 $ 3,080 $30,187
Anthony J. Biondi 1998 $110,000 $9,900 $69,723
President and COO 1997 $100,000 $8,000 $19,288
1996 $ 85,000 $2,046 $19,643
</TABLE>
(1) The CEO and President are also salaried officers of First Financial
and received all of their salaries and bonuses in fiscal 1998 from First
Financial. The Company has no employees.
(2) This represents the value of the common stock allocated to the
accounts of the CEO and President in the ESOP during such fiscal year, valued as
of the date of such allocation, and the amount of net income of the Employee
Stock Ownership Trust (which holds the assets of the ESOP) credited to the CEO's
and President's ESOP accounts during the fiscal year.
No options were granted to Miss Roberts or Mr. Biondi in fiscal 1998
under the Stock Option Plan. The following table summarizes the stock option
exercises during the fiscal year and the value of options held at fiscal
year-end of the two (2) named executive officers:
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
Number of Securities
Underlying Unexercised Value of Unexercised In-The-Money
Options/SARs at Fiscal Options/SARs at
Year-End (#) Fiscal Year-End ($)(2)
------------ ---------------- ------------- ---------------------
Shares Acquired Value
Name on Exercise (#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ellen Ann Roberts 0 0 0 0 0 0
Anthony J. Biondi 0 0 1,140 380 $21,250 $7,083
</TABLE>
- -----------------
(1) Value is based on the average of the last bid and asked prices of a share
of the Company's common stock on the NASDAQ National Market System on the
date of exercise. No options were exercised by the named executive officers
in fiscal 1998.
(2) Value is based on the average of the last bid and asked prices of a share
of the Company's common stock on the NASDAQ National Market System on June
30, 1998, minus the exercise price.
10
<PAGE>
Pension Plan
The Company does not have a retirement or pension plan. The Bank,
however, maintains a noncontributory defined benefit pension plan (the "Plan")
covering all salaried employees of the Bank who have been employed by the Bank
for one year and have attained 21 years of age. The Plan provides pension
benefits to eligible retired employees at 65 years of age equal to 1.5% of their
average annual salary during the highest five consecutive years multiplied by
their years of accredited service.
The following table shows the estimated annual retirement benefit
payable pursuant to the Plan upon retirement at age 65, based on average annual
salary during the five highest consecutive years before retirement, to persons
having the average salary levels and years of service specified in the table.
The Bank annually makes such contributions as are actuarily necessary
to provide the retirement benefits established under such plan. The benefits
listed in the table are not subject to any deduction for Social Security or
other offset. Annual retirement benefits are paid monthly to an employee during
his lifetime. An employee may elect to receive lower monthly payments, in order
for his or her surviving spouse to receive monthly payments under the Plan for
the remainder of their life.
<TABLE>
<CAPTION>
Amount of Annual Retirement Benefit
With Credited Service Of: (1)
------------------------------------------------------------------------------------------------
Average
Annual
Earnings 10 Years 20 Years 30 Years 40 Years 50 Years
--------- --------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
$ 25,000 $ 3,750 $ 7,500 $ 11,250 $ 15,000 $ 18,750
50,000 7,500 15,000 22,500 30,000 37,500
75,000 11,250 22,500 33,750 45,000 56,250
100,000 15,000 30,000 45,000 60,000 75,000
125,000 18,750 37,500 56,250 75,000 93,750
150,000 22,500 45,000 67,500 90,000 112,500
175,000 22,500 45,000 67,500 90,000 112,500
200,000 22,500 45,000 67,500 90,000 112,500
</TABLE>
(1) Ms. Roberts and Mr. Biondi have 49 years and 16 years, respectively, of
credited service under the Plan. Earnings in excess of $150,000 are not
considered in determining the pension benefit.
11
<PAGE>
Employment Agreements
The Company and First Financial have entered into employment agreements
with Ellen Ann Roberts, their Chief Executive Officer, and Anthony J. Biondi,
their President, having three-year terms. The terms of the CEO's and President's
employment agreements are automatically extended for one year upon each
anniversary of the commencement date of the agreements 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 agreements provide for minimum annual
base salaries which may be increased from time to time by agreement of the
parties, presently of $158,000 and $125,000, respectively.
Under the agreements, the CEO's and President'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 and President
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 officer's duties under
the agreements, persistent negligence or misconduct in the performance of such
duties or a material breach of any of the terms of the agreements. The
agreements provide for payment of death benefits, if the CEO or President should
die with heirs during the term of the agreements, in an amount equal to one-half
of the officer's total yearly compensation at the date of death. The agreements
also contain provisions which provide the CEO and President with specified
severance benefits in the event that employment is voluntarily terminated for
good reason, as defined. The agreements do not contain any provision restricting
the CEO's and President's right to compete against the Company or First
Financial upon termination of employment.
If the CEO's or President's employment is terminated by the Company and
First Financial for other than just cause, or if the officer terminates
employment for good reason consisting of (i) a failure by the Company and First
Financial to comply with any material provisions of the agreements (unless cured
within 10 days after notice of noncompliance has been given by the officer to
the Company and First Financial) or (ii) any purported termination of the
officer's employment which is effected by the Company and First Financial
without proper notice specifying the basis for termination, then the employment
agreements require the Company and First Financial to pay as severance to the
officer an amount equal to the sum of the officer's annual base compensation at
the time of termination plus the compensation the officer would have received
during the remaining term of the agreements based upon his or 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 officer's employment was
terminated by reason of these provisions on the date of this Proxy Statement,
the CEO and President would be entitled to receive approximately $592,500 and
$468,750. respectively, under the employment agreements. In addition, if the
officer'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 officer from office or prohibiting the officer from participating
in the conduct of the Company's or First Financial's affairs, or if the officer
voluntarily terminates employment for good reason (as defined), the Company and
First Financial shall maintain in effect for the continued benefit of the
officer, for three years, all employee benefit plans and programs in which the
officer 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.
12
<PAGE>
The employment agreements further provide for severance payments if the
CEO or President voluntarily terminate 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 officer of any duties inconsistent with the officer's
positions, duties, responsibilities and status with the Company and First
Financial immediately prior to the change in control, (2) a change in the
officer's reporting responsibilities, titles or offices as in effect immediately
prior to the change in control, or (3) any removal of the officer from, or any
failure to re-elect the officer to, any such positions (unless in connection
with a termination of the officer'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 officer from office or prohibiting
the officer 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 or President will consist of a severance payment of
an amount equal to the product of (i) the average aggregate annual compensation
paid to the officer and includable in the officer'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 and President were
terminated by reason of these provisions on the date of this Proxy Statement,
the CEO and President would be entitled to receive $385,978 and $266,000,
respectively, under the employment agreements. 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 agreements
provide that if the severance payment to the CEO or President 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 agreements generally define "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 an employment agreement with one other
executive officer. This agreement essentially provides the same terms as those
described above.
13
<PAGE>
Report of the Personnel Committee
The Personnel Committee of the Board of Directors of the Bank has the
responsibility for establishing an appropriate compensation policy for
employees, including executive officers of the Bank, and for overseeing the
administration of that policy.
The Committee believes that the overall enhancement of the Company's
performance and, in turn shareholder value, depends to a significant extent on
the establishment of a close relationship between the financial interests of
shareholders and those of the Bank's employees, especially its senior
management. In addition to a desired pay-for-performance relationship, the
Committee also believes that the Bank must maintain an attractive compensation
package that will attract, motivate and retain executive officers who are
capable of making significant contributions towards the success of the Bank.
At the Bank, salary levels are based on an evaluation of the
individuals performance and competitive pay practices. The salary levels are
then reviewed and ratified by the Committee. The Committee reviews the
evaluations of senior management and the performance of the Chairman and
President. (The Chairman and President do not participate in deliberations of
their own compensation.) While the Committee does not use strict numerical
formulas to determine changes in the compensation of the Chairman and President
and the other executive officers of the Bank and while it weighs a variety of
different factors in its deliberations, it emphasizes earnings, profitability,
capital position and income levels as factors in setting the compensation of the
Bank's executive officers, in particular the Chairman and President. It also
takes into account non-quantitative factors, including such factors as the level
of responsibility and general management oversight. While the various
quantitative factors approved by the Committee were considered in evaluating
individual officer performance, such factors were not assigned a specific weight
in evaluating the performance of the Chairman and President or the other
executive officers.
Periodically, independent compensation consultants are engaged to
review the compensation and benefits programs of the Bank in relation to similar
programs and practices of other companies who are direct competitors for
employees' services, including executive talent. Salary levels for all employees
are compared to peers who have similar job responsibilities in other companies.
Results of the study, along with recommendations for any changes, are reported
to the Personnel Committee.
An important component of the Company's and the Bank's executive
compensation package is an incentive compensation plan which provides for cash
payments to executive officers based on the performance of the Bank in relation
to a set of performance goals and targets. The institutional goals are
recommended by management each year and approved by the Committee and the Board
of Directors. All officers of the Bank are eligible to participate in the
program. The incentive compensation of executives officers is more closely
linked to Bank performance, while the incentive compensation of junior officers
is more closely linked to personal performance.
Personnel Committee
William M. Wright, Chairman Ellen Ann Roberts
James E. McErlane Anthony J. Biondi
Gerard F. Griesser
14
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Personnel Committee of the Board of Directors of the Bank consists
of Messrs. William M. Wright (Chairman), Anthony J. Biondi, Gerard F. Griesser,
James E. McErlane, and Ms. Ellen Ann Roberts. Ms. Roberts and Mr. Biondi serve
as the Chairman and President, respectively, of both the Company and the Bank
and are full-time employees of the Bank. During the fiscal year ended June 30,
1998, none of these individuals had any transactions or relationships with the
Company requiring specific disclosure under applicable rules of the Securities
and Exchange Commission, and there were no "interlocking" or cross-board
memberships that are required to be disclosed under the Commission's rules,
except as follows:
Mr. Griesser is a director and president of a mortgage banking
firm from which the Bank purchased single-family residential
mortgage loans during the last fiscal year. Purchases of loans
from the mortgage banking firm during fiscal 1998 amounted to
$7.28 million, with fees of $93,314 having been paid to the firm.
The Bank intends to continue to make such purchases during the
current fiscal year.
Mr. McErlane is a principal in a law firm which the Company and
the Bank retained during the last fiscal year and which the
Company and its subsidiaries intend to retain during the current
fiscal year.
For a general description of credit transactions and relationships
which directors and executive officers of the Company and their associates may
have had with the Bank during fiscal 1998, see "Certain Transactions of
Management and Others with the Company and Subsidiaries."
15
<PAGE>
Performance Graph
The following graph presents the five year cumulative total return on
Chester Valley Bancorp's common stock, compared to the S&P 500 Index and the SNL
$250M-$500M Thrift Index for the five year period ended June 30, 1998. The
comparison assumes that $100 was invested in the Company's common stock and each
of the foregoing indices and that all dividends have been reinvested. The stock
price performance for the Company's common stock is not necessarily indicative
of future performance.
[GRAPHIC GRAPH PLOTTED TO POINTS LISTED BELOW]
<TABLE>
<CAPTION>
Period Ending
--------------------------------------------------------------
Index 6/30/93 6/30/94 6/30/95 6/30/96 6/30/97 6/30/98
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Chester Valley Bancorp Inc. 100.00 163.57 165.97 168.56 251.08 420.74
S&P 500 100.00 101.41 127.84 161.07 216.80 282.21
SNL $250M-$500M Thrift Index 100.00 140.21 161.96 193.72 276.25 387.14
</TABLE>
16
<PAGE>
Certain Transactions of Management and Others with the Company and Subsidiaries
Robert J. Bradbury, a director of the Company, is an executive officer,
director and principal of an investment banking firm from which the Company
purchased and sold investment securities during the last fiscal year. The
Company intends to continue the business relationship during the current fiscal
year. The purchases of investment securities from the investment banking firm
amounted to $321.78 million and the sales amounted to $272.34 million during
fiscal year 1998. These securities were purchased and sold at market rates and
on terms no more favorable to the investment banking firm than those obtainable
on an arm's-length basis. During the year ended December 31, 1997, the amount of
income earned by the investment banking firm related to the investment activity
with the Company did not exceed 5% of that firm's gross revenues for such fiscal
year.
John J. Cunningham, III, a director of the Company, is a partner in a
law firm which the Company and First Financial have retained during the last
fiscal year and which the Company and its subsidiaries intend to retain during
the current fiscal year. During the year ended December 31, 1997, the amount of
legal fees paid to Mr. Cunningham's law firm did not exceed 5% of that 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 First
Financial intends to continue to make such purchases during the current fiscal
year. During fiscal 1998 the purchases of loans from the mortgage banking firm
amounted to $7.28 million, with fees of $93,314 paid to the firm. The loans were
purchased at market rates and terms no more favorable to the mortgage banking
firm than those obtainable on an arm's-length basis.
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 its subsidiaries intend to retain during the
current fiscal year. During the year ended December 31, 1997, 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.
Some current directors, nominees for director and executive officers of
the Company and their associates were customers of and had transactions with or
involving the Bank and/or PCIS in the ordinary course of business during the
fiscal year ended June 30, 1998. Additional transactions may be expected to take
place in the ordinary course of business in the future. Some of the Company's
current directors and nominees for director are directors, officers, trustees or
principal security holders of corporations or other organizations that were
customers of, or had transactions with, the Bank or PCIS in the ordinary course
of business during the last fiscal year.
The outstanding loans and commitments to, and other financial
transactions with, any current director, nominee for director or executive
officer of the Company or to or with persons or business entities affiliated
with any current director, nominee for director or executive officer of the
Company were made in the ordinary course of business on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons and did not involve more than the
normal risk of collection or present other unfavorable features. It is expected
that the Bank will continue to have similar transactions with such organizations
in the future.
17
<PAGE>
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, 1999, 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.
18
<PAGE>
SHAREHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Any shareholder proposal for consideration at the Annual Meeting of
shareholders of the Company to be held in 1999 must be received by the Company
at its principal offices not later than May 23, 1999, in order for it to be
considered for inclusion in the Company's proxy materials relating to its 1999
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, 1998, 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-K FOR THE YEAR ENDED JUNE 30, 1998, MAY BE OBTAINED
WITHOUT CHARGE BY ANY SHAREHOLDER OF THE COMPANY UPON WRITTEN REQUEST TO MS.
PATRICIA A. FERRETTI, SHAREHOLDER RELATIONS ADMINISTRATOR, 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
JAMES E. McERLANE, SECRETARY
Downingtown, Pennsylvania
September 25, 1998
19
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
CHESTER VALLEY BANCORP INC.
October 22, 1998
Please Detach and Mail in the Envelope Provided
<PAGE>
[ X ] Please mark your
votes as in this
example.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed at right
[ ] WITHHOLD AUTHORITY to vote for all nominees listed at right
Withhold authority to vote for the following only.
(Print name of nominee(s) in the space provided below)
Nominees: Anthony J. Biondi
John J. Cunningham III
Ellen Ann Roberts
William M. Wright
Directors recommend a vote FOR all such nominees.
2. Ratification of appointment of KPMG Peat Marwick LLP.
Directors recommend a vote FOR this proposal.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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.
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.
<PAGE>
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 22, 1998
The undersigned, hereby revoking any proxy previously given, hereby
appoints Colin N. Maropis and Christine N. Dullinger, 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 Thursday, October 22, 1998, 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)
