<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FIRST KEYSTONE FINANCIAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
First Keystone Financial, Inc.
- --------------------------------------------------------------------------------
(4) Date filed:
12/31/96
- --------------------------------------------------------------------------------
<PAGE> 2
[LETTERHEAD]
December 31, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of First Keystone Financial, Inc. The meeting will be held at the Towne House
Restaurant located at 117 Veterans Square, Media, Pennsylvania, on Wednesday,
January 29, 1997 at 2:00 P.M., Eastern Time. The matters to be considered by
stockholders at the Annual Meeting are described in the accompanying materials.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend
the meeting in person. We urge you to mark, sign, and date your proxy card
today and return it in the envelope provided, even if you plan to attend the
Annual Meeting. This will not prevent you from voting in person, but will
ensure that your vote is counted if you are unable to attend.
Your continued support of and interest in First Keystone Financial,
Inc. are sincerely appreciated.
Sincerely,
Donald S. Guthrie
President and Chief Executive Officer
<PAGE> 3
FIRST KEYSTONE FINANCIAL, INC.
22 WEST STATE STREET
MEDIA, PENNSYLVANIA 19063
(610) 565-6210
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 29, 1997
----------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
("Annual Meeting") of First Keystone Financial, Inc. (the "Company") will be
held at the Towne House Restaurant located at 117 Veterans Square, Media,
Pennsylvania, on Wednesday, January 29, 1997 at 2:00 P.M., Eastern Time, for
the following purposes, all of which are more completely set forth in the
accompanying Proxy Statement:
(1) To elect two (2) directors for a four-year term or until their
successors are elected and qualified;
(2) To ratify the appointment by the Board of Directors of
Deloitte & Touche LLP as the Company's independent auditors for the fiscal year
ending September 30, 1997; and
(3) To transact such other business as may properly come before
the meeting or any adjournment thereof. As of the date hereof, management is
not aware of any other such business.
The Board of Directors has fixed December 16, 1996 as the voting
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting. Only those stockholders of record as of the close
of business on that date will be entitled to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Carol Walsh
Corporate Secretary
Media, Pennsylvania
December 31, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU
PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE
MEETING, YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY
BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE
THEREOF. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT
REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER IN ORDER TO VOTE IN PERSON AT THE ANNUAL MEETING.
<PAGE> 4
FIRST KEYSTONE FINANCIAL INC.
---------------------------
PROXY STATEMENT
---------------------------
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 29, 1997
This Proxy Statement is furnished to holders of common stock, $.01 par
value per share ("Common Stock"), of First Keystone Financial, Inc. (the
"Company"), the holding company of First Keystone Federal Savings Bank (the
"Bank"). The Company acquired all of the Bank's common stock issued in January
1995 in connection with the conversion of the Bank from mutual to stock form.
Proxies are being solicited on behalf of the Board of Directors of the Company
to be used at the Annual Meeting of Stockholders ("Annual Meeting") to be held
at the Towne House Restaurant, located at 117 Veterans Square, Media,
Pennsylvania, on Wednesday, January 29, 1997 at 2:00 P.M., Eastern Time, for
the purposes set forth in the Notice of Annual Meeting of Stockholders. This
Proxy Statement is first being mailed to stockholders on or about December 31,
1996.
The proxy solicited hereby, if properly signed and returned to the
Company and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted FOR the nominees for director described herein,
FOR ratification of the appointment of Deloitte & Touche LLP for fiscal 1997
and, upon the transaction of such other business as may properly come before
the meeting, in accordance with the best judgment of the persons appointed as
proxies. Any stockholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Secretary of the Company written
notice thereof (Carol Walsh, Secretary, First Keystone Financial, Inc.); (ii)
submitting a duly-executed proxy bearing a later date; or (iii) appearing at
the Annual Meeting and giving the Secretary notice of his or her intention to
vote in person. Proxies solicited hereby may be exercised only at the Annual
Meeting and any adjournment thereof and will not be used for any other meeting.
VOTING
Only stockholders of record at the close of business on December 16,
1996 ("Voting Record Date") will be entitled to vote at the Annual Meeting. On
the Voting Record Date, there were 1,292,500 shares of Common Stock outstanding
and the Company had no other class of equity securities outstanding. Each
share of Common Stock is entitled to one vote at the Annual Meeting on all
matters properly presented at the meeting. Directors are elected by a
plurality of the votes cast with a quorum present. The two persons who receive
the greatest number of votes of the holders of Common Stock represented in
person or by proxy at the Annual Meeting will be elected directors of the
Company. Abstentions are considered in determining the presence of a quorum
and will not affect the plurality vote required for the election of directors.
The affirmative vote of the holders of a majority of the total votes present
in person or by proxy is required to ratify the appointment of the independent
auditors. Under rules of the New York Stock Exchange, the proposal for
ratification of the auditors is considered a "discretionary" item upon which
brokerage firms may vote in their discretion on behalf of their clients if such
clients have not furnished voting instructions and for which there will not be
"broker non-votes."
1
<PAGE> 5
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR
AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Articles of Incorporation of the Company provide that the Board of
Directors of the Company shall be divided into four classes which are as equal
in number as possible, and that members of each class of directors are to be
elected for a term of four years. One class is to be elected annually.
Stockholders of the Company are not permitted to cumulate their votes for the
election of directors.
No other directors or executive officers of the Company are related to
any other director or executive officer of the Company by blood, marriage or
adoption, except for Edmund Jones and Donald A. Purdy, who are brothers-in-law.
All of the nominees currently serve as directors of the Company.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominees for director listed
below. If the person or persons named as nominee should be unable or unwilling
to stand for election at the time of the Annual Meeting, the proxies will
nominate and vote for one or more replacement nominees recommended by the Board
of Directors. At this time, the Board of Directors knows of no reason why the
nominees listed below may not be able to serve as directors if elected.
The following tables present information concerning the nominees for
director of the Company and each director whose term continues, including
tenure as a director of the Bank.
NOMINEES FOR DIRECTOR FOR FOUR-YEAR TERM EXPIRING IN 2001
<TABLE>
<CAPTION>
Principal Occupation During Director
Name Age(1) the Past Five Years Since
------------------------ ------- ---------------------------- ---------
<S> <C> <C> <C>
William K. Betts 74 Director; retired; former Senior Vice 1982
President of Human Resources of the
Bank from 1982 until 1986; served as
President of Linwood Keystone Savings
and Loan Association prior to its
merger with the Bank in 1982.
Walter J. Lewicki 79 Director; retired; formerly associated 1982
with the firm of Looker, Lees and
Melcher, Inc., a commercial real
estate management firm located in
Media, Pennsylvania.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF
THE ABOVE NOMINEES FOR DIRECTOR.
2
<PAGE> 6
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
DIRECTORS WHOSE TERMS EXPIRE IN 1998
<TABLE>
<CAPTION>
Principal Occupation During Director
Name Age(1) the Past Five Years Since
----------------------- ------- -------------------------------------- ---------
<S> <C> <C> <C>
Edward Calderoni 74 Director; President of Century-21 1982
Calderon Brothers, Inc., a real estate
firm located in Media, Pennsylvania,
since 1968.
Silvio F. D'Ignazio 77 Director; owner of the Towne House 1976
Restaurant in Media, Pennsylvania, and
the Nottingham Inn in Chester County,
Pennsylvania.
Joan G. Taylor 67 Director; retired; former Executive 1976
Director of the Young Woman's
Christian Association in Chester,
Pennsylvania, until her retirement in
1991.
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 1999
<TABLE>
<CAPTION>
Principal Occupation During Director
Name Age(1) the Past Five Years Since
------------------------ ------ --------------------------------------- ---------
<S> <C> <C> <C>
Donald S. Guthrie 61 President and Chief Executive Officer 1994
of the Bank since 1993; previously a
member of the law firm of Jones,
Guthrie & Strohm, P.C., Media,
Pennsylvania.
Edmund Jones 78 Director; former Chairman of the Board 1947
from 1979 until 1993; member of the
law firm of Jones, Guthrie & Strohm,
P.C.; former member of the board of
directors of the Southeastern
Pennsylvania Transportation Authority
(SEPTA) representing Delaware County.
Willard F. Letts 75 Director; President and principal 1982
shareholder of Eastern Flame Hardening
Co., a ferrous metals heat treating
business; owner of Rollets Company, a
business engaged in the leasing of
real estate, automotive equipment and
processing machinery.
</TABLE>
3
<PAGE> 7
DIRECTORS WHOSE TERMS EXPIRE IN 2000
<TABLE>
<CAPTION>
Principal Occupation During Director
Name Age(1) the Past Five Years Since
------------------------- ------- --------------------------------------- -----------
<S> <C> <C> <C>
Olive J. Faulkner 74 Director; retired; formerly served in 1970
various positions with the Bank,
including Vice President and Corporate
Secretary of the Bank from 1970 to
1988.
Donald A. Purdy 73 Chairman of the Board since 1993; 1970
served as President and Chief
Executive Officer of the Bank from
1981 to 1993.
Charles E. Rankin 78 Vice Chairman of the Board since 1982; 1982
self-employed; former member of the
law firm of Rankin, Brennan &
Donaldson, Media, Pennsylvania, until
1993.
</TABLE>
- -------------------------
(1) As of September 30, 1996.
STOCKHOLDER NOMINATIONS
Article 6.F of the Company's Articles of Incorporation governs
nominations for election to the Board of Directors and requires all such
nominations, other than those made by the Board, to be made at a meeting of
stockholders called for the election of directors, and only by a stockholder
who has complied with the notice provisions in that section. Stockholder
nominations must be made pursuant to timely notice in writing to the Secretary
of the Company. To be timely, a stockholder's notice must be delivered to, or
mailed and received at, the principal executive offices of the Company not
later than 60 days prior to the anniversary date of the immediately preceding
annual meeting.
Each written notice of a stockholder nomination shall set forth (a) as
to each person whom the stockholder proposes to nominate for election or
re-election as a director and as to the stockholder giving the notice (i) the
name, age, business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the class and number
of shares of Company stock which are beneficially owned by such person on the
date of such stockholder notice, and (iv) any other information relating to
such person that is required to be disclosed in solicitations of proxies with
respect to nominees for election as directors, pursuant to the proxy rules
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"); and
(b) as to the stockholder giving the notice (i) the name and address, as they
appear on the Company's books, of such stockholder and any other stockholders
known by such stockholder to be supporting such nominees and (ii) the class and
number of shares of Company stock which are beneficially owned by such
stockholder on the date of such stockholder notice and, to the extent known, by
any other stockholders known by such stockholder to be supporting such nominees
on the date of such stockholder notice. The presiding officer of the meeting
may refuse to acknowledge the nomination of any person not made in compliance
with the foregoing procedures.
4
<PAGE> 8
COMMITTEES AND MEETINGS OF THE BOARD OF THE COMPANY AND BANK
The Board of Directors of the Company meets on a monthly basis and may
have additional special meetings upon the request of the President or a
majority of the directors. During the fiscal year ended September 30, 1996,
the Board of Directors of the Company met 14 times. No director attended fewer
than 75% of the total number of Board meetings or committee meetings on which
he or she served that were held during this period. The Board of Directors of
the Company has established the following committees:
Internal Review Committee. The Internal Review Committee consists of
Messrs. Calderoni, D'Ignazio, Lewicki and Rankin and Ms. Taylor. The Internal
Review Committee reviews the records and affairs of the Company, meets with the
Company's outsourced internal auditor, engages the Company's external auditors
and reviews their reports. The Internal Review Committee met four times during
fiscal 1996.
Nominating Committee. The Nominating Committee consists of Messrs.
Calderoni and D'Ignazio and Ms. Taylor. The Nominating Committee, which is
responsible for reviewing and nominating candidates to the Board, met once
during fiscal 1996.
The Board of Directors of the Bank met 14 times during fiscal 1996.
In addition, the Board of Directors of the Bank has established the following
committees:
Executive Committee. The Executive Committee consists of Messrs.
Calderoni, D'Ignazio, Faulkner, Guthrie, Jones, Letts and Purdy. The Executive
Committee has authority to act on general Bank matters between Board meetings.
The Executive Committee met 20 times during fiscal 1996.
Compensation Committee. The Compensation Committee consists of
Messrs. Calderoni, D'Ignazio and Letts. The Compensation Committee, which
reviews overall compensation and benefits for the Bank's employees and
recommends compensation and benefits for senior officers, met one time during
fiscal 1996.
Internal Review Committee. The Internal Review Committee consists of
Messrs. Calderoni, D'Ignazio, Lewicki and Rankin and Ms. Taylor. The Internal
Review Committee reviews the records and affairs of the Bank, meets with the
Bank's outsourced internal auditor, engages the Bank's external auditors and
reviews their reports. The Internal Review Committee met four times during
fiscal 1996.
In addition to the committees described above, the Bank has also
established other committees which include members of the Board and senior
management and which meet as required. These committees include, among others,
an Asset/Liability Committee, a Loan Committee, a Community Investment
Committee and an Asset Quality Review Committee.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Set forth below is information with respect to the principal
occupations during the last five years for the five executive officers of the
Company and the Bank who do not serve as directors.
STEPHEN J. HENDERSON. Mr. Henderson has been Senior Vice President
and Chief Lending Officer since May 1991 and has been employed in various
capacities at the Bank since 1971.
THOMAS M. KELLY. Mr. Kelly has served as Executive Vice President and
Chief Financial Officer since joining the Bank in June 1991. From 1980 to June
1991, he was employed by Deloitte & Touche LLP, a national accounting firm.
ELIZABETH M. MULCAHY. Ms. Mulcahy has served as Senior Vice President
of Human Resources since 1991 and has been employed in various capacities at
the Bank since 1964.
CAROL WALSH. Ms. Walsh has served as Corporate Secretary since August
1991 and has been employed in various capacities at the Bank since 1970.
5
<PAGE> 9
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common
Stock as of December 16, 1996, and certain other information with respect to
(i) the only persons or entities, including any "group" as that term is used in
Section 13(d)(3) of the Exchange Act, who or which were known to the Company to
be the beneficial owner of more than 5% of the issued and outstanding Common
Stock, (ii) each director of the Company, and (iii) all directors and executive
officers of the Company and the Bank as a group.
<TABLE>
<CAPTION>
Amount and Nature
Name of Beneficial of Beneficial
Owner or Number of Ownership as of Percent of
Persons in Group December 16, 1996(1) Common Stock
------------------------------------- -------------------- ------------
<S> <C> <C>
First Keystone Financial, Inc.
Employee Stock Ownership Plan
Trust(2)
22 West State Street 147,575 11.4%
Media, Pennsylvania 19063
Jerome H. Davis
11 Baldwin Farms North
Greenwich, Connecticut 06831 129,200 9.9
John Hancock Advisors(3)
101 Huntington Avenue
Boston, Massachusetts 02199 98,000 7.6
Dorset Management Corporation
David M. Knott
485 Underhill Boulevard, Suite 205
Syosset, New York 11791 84,000 6.5
Directors:
William K. Betts 6,512(4)(5)(6) *
Edward Calderoni 11,462(5)(6)(7) *
Silvio F. D'Ignazio 33,962(5)(6)(7) 2.6
Olive J. Faulkner 11,462(5)(6)(8) *
Donald S. Guthrie 28,537(9) 2.2
Edmund Jones 8,024(10) *
Willard F. Letts 6,462(5)(6)(11) *
Walter J. Lewicki 6,462(5)(6)(11) *
Donald A. Purdy 25,165(12) 1.9
Charles E. Rankin 11,462(5)(6) *
Joan G. Taylor 2,462(5)(6) *
All directors and
executive officers as
a group (15 persons) 209,462(13) 16.2%
</TABLE>
(Footnotes on next page)
6
<PAGE> 10
- ---------------------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. Under regulations
promulgated pursuant to the Exchange Act, shares of Common Stock are
deemed to be beneficially owned by a person if he or she directly or
indirectly has or shares (i) voting power, which includes the power
to vote or to direct the voting of the shares, or (ii) investment
power, which includes the power to dispose or to direct the
disposition of the shares. Unless otherwise indicated, the named
beneficial owner has sole voting and dispositive power with respect
to the shares.
(2) The First Keystone Financial, Inc. Employee Stock Ownership Plan
Trust ("Trust") was established pursuant to the First Keystone
Financial, Inc. Employee Stock Ownership Plan ("ESOP") by an
agreement between the Company and Messrs. Calderoni, Jones and Purdy,
who act as trustees of the plan ("Trustees"). Under the terms of the
ESOP, the Trustees must vote all allocated shares held in the ESOP in
accordance with the instructions of the participating employees, and
allocated shares for which employees do not give instructions and
unallocated shares will be voted in the same ratio on any matter as
to those shares for which instructions are given. Unallocated shares
held in the ESOP will be voted by the Trustees. Allocated shares for
which participants do not provide the Trustees' instructions and
allocated shares will be voted in the same ratio on any matter as
those allocated shares for which instructions are given. As
of the Voting Record Date, 10,880 shares held in the Trust had been
allocated to the accounts of participating employees. The amount of
Common Stock beneficially owned by each individual trustee or all
directors and executive officers as a group does not include the
shares held by the Trust.
(3) John Hancock Advisors, Inc. is a wholly owned subsidiary of The
Berkeley Financial Group, which is a wholly owned subsidiary of John
Hancock Asset Management, which is a wholly owned subsidiary of John
Hancock Subsidiaries, Inc., which is a wholly owned subsidiary of
John Hancock Mutual Life Insurance Company.
(4) Includes 50 shares held jointly with spouse and 5,000 shares
held by Mr. Betts in his individual retirement account ("IRA").
(5) Includes 918 shares granted pursuant to the 1995 Recognition
and Retention Plan and Trust ("Recognition Plan") which may be voted
by the director pending vesting and distribution.
(6) Includes 544 shares pursuant to the 1995 Stock Option Plan
("Option Plan") which may be acquired within 60 days of the Voting
Record Date.
(7) Includes 10,000 shares held jointly with spouse.
(8) Includes 9,065 shares held in IRA.
(9) Includes 3,176 shares held in the Bank's 401(k)/Profit-Sharing
Plan ("401(k)/Profit Sharing Plan"), 14,940 shares held in
Mr. Guthrie's IRA, 559 shares allocated to Mr. Guthrie as a
participant in the Company's ESOP and 6,120 shares granted pursuant
to the Recognition Plan which may be voted by Mr. Guthrie pending
vesting and distribution; also includes 3,672 shares which may
be acquired within 60 days of the Voting Record Date pursuant to the
Option Plan.
(10) Includes 2,500 shares owned by Mr. Jones' spouse and 1,836 shares
granted pursuant to the Recognition Plan which may be voted by
Mr. Jones pending vesting and distribution; also includes 1,088
shares which may be acquired within 60 days of the Voting Record Date
pursuant to the Option Plan.
(11) Includes 5,000 shares held jointly with spouse.
(Footnotes continued on following page)
7
<PAGE> 11
- -----------------------------
(12) Includes 2,765 shares held in Mr. Purdy's spouse's IRA and
18,000 shares held in Mr. Purdy's IRA; also includes 2,040 shares
granted pursuant to the Recognition Plan which may be voted by Mr.
Purdy; also includes 1,360 shares which may be acquired within 60 days
of the Voting Record Date pursuant to the Option Plan.
(13) Includes 1,789 shares allocated to executive officers pursuant
to the ESOP, 20,400 shares granted pursuant to the Recognition Plan and
12,240 shares which may be acquired within 60 days of the Voting Record
Date pursuant to the Option Plan.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of certain information
concerning the compensation paid by the Bank for services rendered in all
capacities during the three years ended September 30, 1996 to the current
President and Chief Executive Officer of the Bank and the only other officer of
the Bank whose total annual compensation exceeded $100,000 during fiscal 1996.
Said officers, who also serve as executive officers of the Company do not
receive any compensation from the Company.
<TABLE>
<CAPTION>
===================================================================================================================================
Annual Compensation Long Term Compensation
-----------------------------------------------------------------------------
Awards Payouts
---------------------------------------
Name and Fiscal Other Annual Stock Number of LTIP All Other
Principal Position Year Salary Bonus Compensation(1) Grants(2) Options(3) Payouts Compensation
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Donald S. Guthrie 1996 $124,768 $ -- $ -- $ -- -- -- $15,660(5)
President and Chief 1995 $125,000 $20,000 -- $ 97,920 18,360 -- $13,229(5)
Executive Officer(4) 1994 $113,115 $10,000 -- $ -- -- -- $17,863(5)
- -----------------------------------------------------------------------------------------------------------------------------------
Thomas M. Kelly 1996 $ 93,346 $ -- $ -- $ -- -- -- $21,138(6)
Executive Vice 1995 $ 92,558 $20,000 -- $ 97,920 18,360 -- $ 5,768(6)
President and Chief 1994 $ 79,712 $ 5,000 -- $ -- -- -- $ 6,775(6)
Financial Officer
===================================================================================================================================
</TABLE>
- -------------------------
(1) Does not include amounts attributable to miscellaneous benefits
received by the named executive officers. In the opinion of
management of the Company, the costs to the Bank of providing such
benefits to the named executive officer during the year ended
September 30, 1996 did not exceed the lesser of $50,000 or 10% of the
total of annual salary and bonus reported for the individual.
(2) Represents the grant during fiscal 1995 of 6,120 shares of restricted
Common Stock to each of Messrs. Guthrie and Kelly, pursuant to the
Company's Recognition Plan, which were deemed to have had the
indicated value at the date of grant. The restricted Common Stock
awarded to Messrs. Guthrie and Kelly had a fair market value of
$97,920 and $97,920 at September 30, 1995, respectively, based on the
$16.00 per share closing market price on such date. The awards vest
20% each year beginning July 26, 1996 and dividends are paid on the
restricted shares.
(3) Consists of stock options granted pursuant to the Company's Option
Plan which are exercisable at the rate of 20% each year beginning July
26, 1996.
(4) Mr. Guthrie became President on July 1, 1993 and President and Chief
Executive Officer effective October 1, 1993.
(5) Reflects contributions made by the Bank on Mr. Guthrie's behalf to the
Bank's 401(k)/Profit-sharing Plan; also reflects in fiscal 1996,
allocation of shares of Common Stock to ESOP with a fair market value
as of the date of allocation of $11,669; also reflects in fiscal 1995
and 1994 the net expense $6,875 and $8,250, respectively, in premiums
paid on a life insurance policy. See "- Benefits."
(Footnotes continued on next page)
8
<PAGE> 12
- -----------
(6) Reflects contributions made by the Bank on Mr. Kelly's behalf to the
Bank's 401(k)/Profit-sharing Plan; also reflects in fiscal 1996,
allocation of shares of Common Stock to ESOP with a fair market value
as of the date of allocation of $9,102.
The following table discloses certain information regarding the
options held at September 30, 1996 by the Chief Executive Officer and the other
named executive officer. No options were exercised or acquired thereby during
the year ended September 30, 1996.
<TABLE>
<CAPTION>
Number of Options at Value of Options at
September 30, 1996 September 30, 1996
-------------------- --------------------
Name Exercisable Unexercisable Exercisable Unexercisable(1)
------------------------- ----------- -------------- ----------- ----------------
<S> <C> <C> <C> <C>
Donald S. Guthrie 3,672 14,688 $11,934 $47,736
Thomas M. Kelly 3,672 14,688 $11,934 $47,736
</TABLE>
- ---------------------------
(1) Based on a per share market price of $18.25 at September 30, 1996.
DIRECTORS' COMPENSATION
BOARD FEES. Directors of the Company received no compensation during
fiscal 1996. During fiscal 1996, members of the Board of Directors of the Bank
received $600 per meeting attended. Full-time officers who serve on the Board
do not receive any fees for attending meetings of the Board or committees
thereof. During fiscal 1996, the Chairman of the Board received an annual fee
of $5,000 per annum. During fiscal 1996, members of the Board serving on the
Executive Committee and the Internal Review Committee received $150 per meeting
attended while members of the Board serving on other committees received $125
per meeting attended.
STOCK OPTIONS. Pursuant to the Option Plan each non-employee director
of the Company was granted in July 1995 a compensatory stock options to
purchase 2,720 shares of Common Stock (except that each non-employee director
who had served as a director of the Bank for more than 30 years was granted a
compensatory option to purchase 5,440 shares of Common Stock). In addition, a
compensatory option to purchase 340 shares of Common Stock is granted to each
non-employee director (except that each non-employee director who has served as
a director of the Bank for more than 30 years is granted a compensatory option
to purchase 680 shares of Common Stock) on each of the next two succeeding
anniversary dates thereafter. Options granted to non-employee directors vest
at the rate of 20% per year from the date of grant.
RESTRICTED STOCK AWARDS. Pursuant to the Recognition Plan, each
non-employee director of the Company was granted in July 1995 816 shares of
restricted Common Stock (except that each non-employee director who had served
as a director of the Bank for more than 30 years was granted 1,632 shares of
restricted Common Stock). In addition, 102 shares of restricted stock are
granted to each non-employee director (except that each non-employee director
who has served as a director of the Bank for more than 30 years shall be
granted 204 shares of restricted stock) on each of the next two succeeding
anniversary dates thereafter. The restricted stock granted pursuant to the
Recognition Plan vests at the rate of 20% per year from the date of grant.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company and the Bank (collectively the "Employers") entered into
employment agreements with each of Messrs. Guthrie, Henderson and Kelly
effective January 25, 1995. The Employers have agreed to employ Messrs.
Guthrie, Henderson and Kelly for a term of three years in their current
respective positions at an initial
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salary of $123,025, $69,350 and $95,000, respectively. The term of each
employment agreement shall be extended each year for a successive additional
one-year period unless the Employers or the officer, not less than 30 days
prior to the annual anniversary date, elect not to extend the employment term.
The employment agreements are terminable with or without cause by the
Employers. The officers have no right to compensation or other benefits
pursuant to the employment agreement for any period after voluntary termination
or termination by the Employers for cause, disability, retirement or death,
provided, however, that (i) in the event that the officer terminates his
employment because of failure of the Employers to comply with any material
provision of the employment agreement or (ii) the employment agreement is
terminated by the Employers other than for cause, disability, retirement or
death or by the officer as a result of certain adverse actions which are taken
with respect to the officer's employment following a Change in Control of the
Company, as defined, Messrs. Guthrie, Henderson and Kelly will be entitled to a
cash severance amount equal to 2.99 times their base salary. In addition,
Messrs. Guthrie, Henderson and Kelly will be entitled to a continuation of
benefits similar to those they are receiving at the time of such termination
for the remaining term of the agreement or until the officer obtains full-time
employment with another employer, whichever occurs first.
The Employers also entered into severance agreements with Mesdames
Mulcahy and Walsh effective January 25, 1995. Under the terms of such
severance agreements, the Employers have agreed that in the event that such
officer's employment is terminated as a result of certain adverse actions which
are taken with respect to the officer's employment following a Change in
Control of the Company, as defined, such officer will be entitled to a cash
severance amount equal to two times her base salary.
Each employment and severance agreement provides that in the event
that any of the payments to be made thereunder or otherwise upon termination of
employment are deemed to constitute "excess parachute payments" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended, then
such payments and benefits received thereunder shall be reduced, in the manner
determined by the employee, by the amount, if any, which is the minimum
necessary to result in no portion of the payments and benefits being
non-deductible by the Employers for federal income tax purposes. Excess
parachute payments generally are payments in excess of three times the base
amount, which is defined to mean the recipient's average annual compensation
from the employer includable in the recipient's gross income during the most
recent five taxable years ending before the date on which a change in control
of the employer occurred. Recipients of excess parachute payments are subject
to a 20% excise tax on the amount by which such payments exceed the base
amount, in addition to regular income taxes, and payments in excess of the base
amount are not deductible by the employer as compensation expense for federal
income tax purposes.
Messrs. Guthrie's and Kelly's agreements provide that they will be
entitled to the use of an automobile. In addition, in the event of Mr.
Guthrie's death during the term of the agreement, his estate will receive
payments equal to the amount of compensation due for the remainder of the term
of the agreement at his current salary at the time of his death and his spouse
shall be covered under the Bank's health insurance plan until age 65. With
respect to Messrs. Henderson and Kelly, in the event of their death, their
estates will receive payments equal to the amount of compensation due for the
remainder of the term of the agreement at their respective current salaries at
the time of their respective deaths.
BENEFITS
401(k)/Profit Sharing Plan. As of December 31, 1993, the Bank
established the 401(k)/Profit Sharing Plan, which is a tax-qualified defined
contribution plan. Full-time employees (those with at least 1000 hours service
during the Plan years) who have been credited with at least 12 consecutive
months of service and who have attained age 21 are eligible to participate in
the 401(k)/Profit Sharing Plan. Under the 401(k)/Profit Sharing Plan, a
separate account is established for each participating employee and the Bank
may make discretionary contributions to the 401(k)/Profit Sharing Plan which
are allocated to the participants' accounts. In addition, participants are
permitted to make contributions to their accounts within the 401(k)/Profit
Sharing Plan. Such contributions cannot exceed $9,500 during calendar 1996,
which amount is increased annually to reflect increases in the cost of living.
Participants are fully vested in both the Bank's contribution as well as the
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amount they defer and contribute to the 401(k)/Profit Sharing Plan.
Distributions from the 401(k)/Profit Sharing Plan are made upon termination of
service, death or disability in a lump sum. The normal retirement age under
the plan is 62.
During fiscal 1996, the Bank contributed $63,082 to the 401(k)/Profit
Sharing Plan, including $3,991 and $3,036 for the accounts of Messrs. Guthrie
and Kelly, respectively.
Deferred Compensation Arrangements. The Bank provides supplemental
retirement benefits to Messrs. Betts, Jones and Purdy and Ms. Faulkner in
recognition of their long service to the Bank. Under the terms of the Bank's
arrangements with such persons, each person receives monthly payments, which
payments commenced the first month subsequent to each such person's retirement.
Such payments will continue with respect to Messrs. Betts and Purdy and Ms.
Faulkner until such persons reach age 80. Mr. Jones' payments will continue
until January 2000. In accordance with such arrangements, Mr. Betts and Ms.
Faulkner each received $12,500 during fiscal 1996 while Mr. Jones received
$36,000 and Mr. Purdy received $58,000 during such period.
Supplemental Retirement Benefits. In July 1994, the Bank purchased a
split dollar variable life insurance policy for the benefit of Mr. Guthrie in
the amount of $1.0 million in order to supplement the retirement benefits to be
received by Mr. Guthrie pursuant to the Bank's SEP and the Profit Sharing Plan.
Under the arrangements with the Bank, upon Mr. Guthrie's retirement from the
Bank after attaining age 68, Mr. Guthrie will receive an aggregate annual
supplemental retirement benefit until his death, which is estimated to amount
to approximately 50% of his salary. Although the expected benefits are to be
paid from the cash value of the policy, there is no guarantee that the cash
value of the policy will in fact produce such level of benefits. The insurance
policy was issued in Mr. Guthrie's name, but the Bank has agreed to pay all
premiums required. However, as a part of such agreement, Mr. Guthrie has
assigned to the Bank his interest in the policy to the extent of the cash
surrender value and death benefit thereof. Upon Mr. Guthrie's death, any
proceeds remaining after reimbursing the Bank for the total amount of premiums
paid will be paid to Mr. Guthrie's beneficiary under the policy. During fiscal
1996, the Bank did not incur any net premium expense. The Bank also has
entered into a similar arrangement with one other executive officer and has
purchased a $500,000 variable life insurance policy in connection therewith.
Employee Stock Ownership Plan and Trust. The Company has established
the ESOP for employees of the Company and the Bank. Full-time employees of the
Company and the Bank who have been credited with at least 1,000 hours of
service during a twelve month period and who have attained age 21 are eligible
to participate in the ESOP.
The ESOP has borrowed funds from the Company to purchase shares of
Common Stock. The loans to the ESOP will be repaid principally from the
Company's and the Bank's contributions to the ESOP with the shares purchased
with the proceeds of the loans being pledged as collateral for the loans. The
Company may, in any plan year, make additional discretionary contributions for
the benefit of plan participants in either cash or shares of Common Stock,
which may be acquired through the purchase of outstanding shares in the market
or from individual stockholders, upon the original issuance of additional
shares by the Company or upon the sale of treasury shares by the Company. Such
purchases, if made, would be funded through additional borrowing by the ESOP or
additional contributions from the Company. The timing, amount and manner of
future contributions to the ESOP will be affected by various factors, including
prevailing regulatory policies, the requirements of applicable laws and
regulations and market conditions.
Shares purchased by the ESOP with the proceeds of the loan are held in
a suspense account and released on a pro rata basis as debt service payments
are made. Discretionary contributions to the ESOP and shares released from the
suspense account will be allocated among participants on the basis of
compensation. Forfeitures will be reallocated among remaining participating
employees and may reduce any amount the Company might otherwise have
contributed to the ESOP. Participants will vest in their right to receive
their account balances within the ESOP upon the completion of five years of
service. In the case of a "change in control," as defined, however,
participants will become immediately fully vested in their account balances.
Benefits
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may be payable upon retirement, early retirement, disability or separation from
service. The Company's contributions to the ESOP are not fixed, so benefits
payable under the ESOP cannot be estimated.
Messrs. Calderoni, Jones and Purdy serve as trustees of the ESOP.
Under the ESOP, the trustee must vote all allocated shares held in the ESOP in
accordance with the instructions of the participating employees, and allocated
shares for which employees do not give instructions, and unallocated shares,
will be voted in the same ratio on any matter as to those shares for which
instructions are given.
Generally accepted accounting principles requires that any third party
borrowing by the ESOP be reflected as a liability on the Company's statement of
financial condition. Since the ESOP borrowed from the Company, such obligation
is not treated as a liability, but is excluded from stockholders' equity. If
the ESOP purchases newly-issued shares from the Company, total stockholders'
equity would neither increase nor decrease, but per share stockholders' equity
and per share net earnings would decrease because of the increase in the number
of outstanding shares.
The ESOP is subject to the requirements of the Employee Retirement
Income Security Act of 1974, as amended, and the regulations of the Internal
Revenue Service and the Department of Labor promulgated thereunder.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Bank's policy provides that all loans made by the Bank to its
directors and executive officers are made in the ordinary course of business,
are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and do not involve more than the normal risk of collectibility or
present other unfavorable features. All such loans were made by the Bank in
the ordinary course of business and were not made with favorable terms nor did
they involve more than the normal risk of collectibility. All such loans were
current as of September 30, 1996.
Mr. Edmund Jones, a director of the Bank, is a member of the law firm,
Jones, Guthrie & Strohm, P.C., which serves as general counsel to the Bank.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers,
directors and persons who beneficially own more than 10% of the Common Stock to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("Commission"). Officers, directors and more than 10%
shareholders are required by regulation to furnish the Company with copies of
all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by it,
the Company believes that during the year ended September 30, 1996 and with
respect thereto, all filing requirements applicable to its officers and
directors and more than 10% shareholders have been satisfied except that one
report, covering one transaction, was filed late by Mr. Purdy.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Deloitte & Touche
LLP, independent certified public accountants, to perform the audit of
the Company's financial statements for the year ending September 30, 1997, and
further directed that the selection of auditors be submitted for ratification
by the stockholders at the Annual Meeting.
The Company has been advised by Deloitte & Touche LLP that neither
that firm nor any of its associates has any relationship with the Company or its
subsidiaries other than the usual relationship that exists
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<PAGE> 16
between independent certified public accountants and clients. Deloitte &
Touche LLP will have one or more representatives at the Annual Meeting who will
have an opportunity to make a statement, if they so desire, and who will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING SEPTEMBER 30, 1997.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which is anticipated to be held in January 1998, must be received
at the principal executive offices of the Company, 22 West State Street, Media,
Pennsylvania 19063, Attention: Carol Walsh, Corporate Secretary, no later than
August 29, 1997. If such proposal is in compliance with all of the requirements
of Rule 14a-8 under the Exchange Act, it will be included in the proxy statement
and set forth on the form of proxy issued for such annual meeting of
stockholders. It is urged that any such proposals be sent by certified mail,
return receipt requested.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year ended
September 30, 1996 accompanies this Proxy Statement. Such annual report is not
part of the proxy solicitation materials.
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB
FOR FISCAL 1996 REQUIRED TO BE FILED UNDER THE EXCHANGE ACT. SUCH WRITTEN
REQUESTS SHOULD BE DIRECTED TO THOMAS M. KELLY, EXECUTIVE VICE PRESIDENT,
TREASURER AND CHIEF FINANCIAL OFFICER, FIRST KEYSTONE FINANCIAL, INC., 22 WEST
STATE STREET, MEDIA, PENNSYLVANIA 19063. THE FORM 10-KSB IS NOT PART OF THE
PROXY SOLICITATION MATERIALS.
OTHER MATTERS
Each proxy solicited hereby also confers discretionary authority on the
Board of Directors of the Company to vote the proxy with respect to the approval
of the minutes of the last meeting of stockholders, the election of any person
as a director if the nominee is unable to serve or for good cause will not
serve, matters incident to the conduct of the meeting, and upon such other
matters as may properly come before the Annual Meeting. As of the date hereof,
management is not aware of any business that may properly come before the Annual
Meeting other than the matters described above in this Proxy Statement.
However, if any other matters should properly come before the meeting, it is
intended that the proxies solicited hereby will be voted with respect to those
other matters in accordance with the judgment of the persons voting the proxies.
The cost of the solicitation of proxies will be borne by the Company.
The Company has retained Regan & Associates, Inc., a professional proxy
solicitation firm, to assist in the solicitation of proxies. Such firm will be
paid a fee of $4,000, plus reimbursement for out-of-pocket expenses. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending the proxy
materials to the beneficial owners of the Company's Common Stock. In addition
to solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
YOUR VOTE IS IMPORTANT! WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY
CARD AND RETURN IT TODAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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REVOCABLE PROXY
FIRST KEYSTONE FINANCIAL, INC.
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST KEYSTONE
FINANCIAL, INC. ("COMPANY") FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON JANUARY 29, 1997 AND AT ANY ADJOURNMENT THEREOF.
The undersigned, being a stockholder of the Company as of December 16, 1996,
hereby authorizes the Board of Directors of the Company or any successors
thereto as proxies with full powers of substitution, to represent the
undersigned at the Annual Meeting of Stockholers of the Company to be held at
the Town House Restaurant located at 117 Veterans Square, Media, Pennsylvania,
on January 29, 1997 at 2:00 p.m., Eastern Time, at any adjournment of said
meeting, and thereat to act with respect to all votes that the undersigned
would be entitled to cast, if then personally present, as set forth herein.
WITH- FOR ALL
FOR HOLD EXEMPT
1. ELECTION OF DIRECTORS / / / / / /
Nominees for four-year term:
WILLIAM K. BETTS AND WALTER J. LEWICKI
INSTRUCTION: TO WITHHOLD AUTHORITIY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
"FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
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2. PROPOSAL to ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending September 30, 1997.
FOR AGAINST ABSTAIN
/ / / / / /
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE MEETING / /
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF NOT
OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE BOARD OF
DIRECTORS' NOMINEES TO THE BOARD OF DIRECTORS, FOR PROPOSAL 2 AND OTHERWISE AT
THE DISCRETION OF THE PROXIES. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO
THE TIME IT IS VOTED A THE ANNUAL MEETING. THE BOARD OF DIRECTORS RECOMMENDS
YOU VOTE FOR THE BOARD OF DIRECTORS' NOMINEES AND PROPOSAL 2.
The above signed hereby acknowledges receipt of a Notice of Annual Meeting of
Stockholders of the Company called for January 29, 1997, a Proxy Statement for
the Annual Meeting and the Company's 1996 Annual Report to Stockholders prior
to the signing of this Proxy.
PLEASE SIGN THIS PROXY EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS PROXY. WHEN
SIGNING IN A REPRESENTATIVE CAPACITY, PLEASE GIVE TITLE. WHEN SHARES ARE HELD
JOINTLY, ONLY ONE HOLDER NEED SIGN.
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PLEASE BE SURE TO SIGN AND DATE Date
THIS PROXY IN THE BOX BELOW.
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- --Stockholder sign above----------------------Co-holder (if any) sign above-----
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
FIRST KEYSTONE FINANCIAL, INC.
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PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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