<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No. )
Filed by the Registrant [X ]
File 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 Section 240.14a-11(c) or Section 240.14a-12
TOWNE FINANCIAL CORPORATION
(Name of Registrant as Specified In Its Charter)
Not Applicable
(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
<PAGE> 2
on which the filing fee is calculated and state how it was determined):
___________________________________________________________
4) Proposed maximum aggregate value of transaction:
___________________________________________________________
5) Total fee paid:
___________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________
3) Filing Party:
___________________________________________________________
4) Date Filed:
___________________________________________________________
<PAGE> 3
TOWNE FINANCIAL CORPORATION
4811 Cooper Road
Blue Ash, Ohio 45242
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 28, 1998
To the Shareholders of TOWNE FINANCIAL CORPORATION:
Notice is hereby given that the Annual Meeting of Shareholders of Towne
Financial Corporation (the "Corporation"), an Ohio corporation, will be held at
the Corporation's main office at 4811 Cooper Road, Blue Ash, Ohio, on October
28, 1998, at 10:00 a.m., Eastern Standard Time, for the purpose of considering
and acting upon the following:
1. A proposal to elect two directors for three year terms ending
in 2001.
2. A proposal to ratify the appointment of Grant Thornton LLP as
the Corporation's independent public accountants for the year ending
June 30, 1999.
3. Such other business as may properly be brought before the
Annual Meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on September 9,
1998 as the record date for the determination of the shareholders entitled to
receive notice of, and to vote at, the meeting and any adjournment(s) thereof,
notwithstanding any subsequent transfers of stock.
Your attention is called to the accompanying Proxy and Proxy Statement
submitted with this Notice.
A copy of the Corporation's 1998 Annual Report is being forwarded to you
herewith, but it is not deemed to be part of the official proxy soliciting
material. If any shareholder fails to receive a copy of the Annual Report, one
may be obtained by writing to the Chief Financial Officer of the Corporation.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Mildred Martin
Mildred Martin, Secretary
Blue Ash, Ohio
September 25, 1998
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. WHETHER
YOU EXPECT TO ATTEND OR NOT, PLEASE DATE AND SIGN THE ENCLOSED PROXY AND MAIL
IT PROMPTLY IN THE STAMPED ENVELOPE PROVIDED. IN THE EVENT YOU ATTEND THE
MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE> 4
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by Towne Financial Corporation (hereinafter referred to as the
"Corporation"), the holding company for The Blue Ash Building and Loan Company
("Blue Ash"), for the Annual Meeting of Shareholders of the Corporation, to be
held at the Corporation's main office at 4811 Cooper Road, Blue Ash, Ohio, on
October 28, 1998. Such solicitation is being made by mail, although the
Corporation may also use its officers and regular employees to solicit proxies
from shareholders personally, or by telephone, telegraph or letter. The costs
of this solicitation will be borne by the Corporation. The Corporation may
request nominees and brokers to solicit their principals and customers for
their proxies, and in such event the Corporation may reimburse such nominees
and brokers for their reasonable out-of-pocket expenses.
All shares represented by valid proxies received pursuant to this
solicitation, and not revoked, will be voted at the Annual Meeting, and where a
specification is made on the proxy, such shares will be voted in accordance
with such specification. In the absence of any indication to the contrary,
shares will be voted in favor of the proposals set forth in the accompanying
Notice of Meeting and for the nominees for Directors set forth herein and, in
the discretion of the appointed proxies, upon such other matters as may
properly come before the meeting. Any proxy may be revoked by the shareholder
at any time prior to the voting thereof, by giving written notice to the
Corporation prior to the Annual Meeting or by giving oral notice to the
Corporation at the Annual Meeting.
The Board of Directors has fixed the close of business on September 9,
1998 as the record date for the determination of the shareholders entitled to
receive notice of, and to vote at, the Annual Meeting and at any adjournment(s)
thereof, notwithstanding any subsequent transfers of stock.
VOTING SECURITIES
On September 9, 1998, the record date for the meeting, there were 208,500
shares outstanding of common stock, $1.00 par value (the "Common Stock"), all
of one class and each entitled to one vote, owned by approximately 125
shareholders of record. A list of shareholders of the Corporation may be
examined at the offices of the Corporation at the address given previously.
There is no other class of securities of the Corporation outstanding which has
voting rights. The presence either in person or by proxy of the persons
entitled to vote a majority of the Corporation's outstanding common shares is
necessary for a quorum for the transaction of business at the Annual Meeting of
Shareholders.
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock (the Corporation's only outstanding
voting securities on September 9, 1998) (i) by each person who is known by the
Corporation to own beneficially more than 5% of the Common Stock, (ii) by each
Director or Director Emeritus who owns Common Stock, (iii) by
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the executive officers named in the Summary Compensation Table in the Proxy
Statement and (iv) by all Directors and Officers of the Corporation as a group.
<TABLE>
<CAPTION>
Name of Beneficial Amount & Nature
Owner or Identity of Beneficial Percent
of Group Ownership of Class (1)
------------------- --------------- ------------
<S> <C> <C>
Neil S. Strawser 11,850 (2) 5.4% (2)
Ralph E. Heitmeyer 11,850 (3) 5.4% (3)
William S. Siders 14,666 (4) 6.7% (4)
Herb L. Krombholz 11,850 (5) 5.4% (5)
William T. Thornell 3,810 (6) 1.7% (6)
John M. Kuhnell 7,850 (7) 3.6% (7)
Joseph L. Michel 2,306 (8) 1.1% (8)
Daniel H. Hosbrook 20,700 9.5%
Linda L. Lovitt 12,609 (9) 5.8% (9)
All Directors and 74,501 (10) 34.1% (10)
Officers as a Group
(8 in number)
</TABLE>
____________
(1) Percentages are based on the aggregate of 208,500 shares of Common Stock
outstanding and 10,000 shares subject to presently exercisable options.
(2) Includes 6,000 shares owned by his IRA account, for which he has power to
dispose or direct the disposition and to vote or direct the voting and 1,500
shares subject to presently exercisable options.
(3) Includes 1,500 shares subject to presently exercisable options.
(4) Includes 1,760 shares owned by his IRA account and 532 shares in his SEP
account, for which he has power to dispose or direct the disposition and to
vote or direct the voting, 1,500 shares subject to presently exercisable
options and 2,816 allocated Employee Stock Ownership Plan ("ESOP") shares which
are 100% vested.
(Footnotes continued on page 4)
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(5) Includes 6,275 shares owned by his IRA account, for which he has power to
dispose or direct the disposition and to vote or direct the voting and 1,500
shares subject to presently exercisable options.
(6) Includes 1,000 shares subject to presently exercisable options and 2,010
allocated ESOP shares which are 100% vested.
(7) Includes 500 shares subject to presently exercisable options.
(8) Includes 1,000 shares subject to presently exercisable options and 981
allocated ESOP shares which are 80% vested.
(9) Includes 3,757 shares owned by her IRA account, 2,157 in IRA account of
husband for which they have the power to dispose or direct the disposition and
to vote or direct the voting and 584 allocated ESOP shares which are 100%
vested.
(10) Includes 10,000 presently exercisable options held by eight officers and
directors and 6,825 allocated ESOP shares held by four officers. Percentages
are based on presently outstanding shares of 208,500 plus 10,000 shares subject
to options.
None of the above persons have shared voting or investment powers with
regard to their shares of Common Stock.
ELECTION OF DIRECTORS
The Board of Directors of the Corporation presently consists of five
members. The Corporation's Articles of Incorporation and Code of Regulations
provide for the classification of the Board of Directors into three classes.
At each annual meeting of shareholders, directors constituting a class are
elected for a three year term. At the meeting, the directors in Class I are to
be elected to terms which will expire at the 2001 Annual Meeting and until
their successors are elected and qualified. The nominees are currently
directors. The shares represented by the enclosed Proxy will be voted for the
election as directors of the nominees named below unless otherwise indicated on
the Proxy in accordance with the foregoing. If the nominees become unavailable
for any reason or if a vacancy should occur before the election (which events
are not anticipated), the shares represented by the enclosed Proxy may be voted
for such other persons as may be determined by the holders of such proxies.
Information concerning the nominees and continuing Directors is set forth
below:
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CLASS I DIRECTORS
(Nominees for Terms Expiring in 2001)
<TABLE>
<CAPTION>
Director Positions Currently Held with
Name Age Since (1) the Corporation and Blue Ash
------------------- --- --------- -------------------------------------
<S> <C> <C> <C>
Neil S. Strawser 55 1976 Chairman of the Board and Director of
the Corporation and Blue Ash
William T. Thornell 55 1996 Vice President and Director of the
Corporation and Blue Ash and Chief
Lending Officer of Blue Ash
</TABLE>
CLASS II DIRECTORS
(Terms Expire in 1999)
<TABLE>
<CAPTION>
Director Positions Currently Held with
Name Age Since (1) the Corporation and Blue Ash
------------------- --- --------- ----------------------------------------
<S> <C> <C> <C>
William S. Siders 51 1987 Executive Vice President and Director of
the Corporation and Blue Ash and
Managing Officer of Blue Ash
Herb L. Krombholz 67 1972 Vice President and Director of the
Corporation and Blue Ash
</TABLE>
CLASS III DIRECTOR
(Term Expires in 2000)
<TABLE>
<CAPTION>
Director Positions Currently Held with
Name Age Since (1) the Corporation and Blue Ash
------------------- --- --------- -----------------------------
<S> <C> <C> <C>
Ralph E. Heitmeyer 75 1960 President and Director of the
Corporation and Blue Ash
</TABLE>
DIRECTOR EMERITUS
<TABLE>
<CAPTION>
Director Positions Currently Held with
Name Age Since (1) the Corporation and Blue Ash
------------------- --- --------- ------------------------------------
<S> <C> <C> <C>
John M. Kuhnell 82 1958 Director Emeritus of the Corporation
and Blue Ash
</TABLE>
____________
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(1) The Corporation was organized in August, 1991 and each of the current
directors of the Corporation has served in such capacity since that date,
except for Mr. Thornell, who began his term in 1996. The years listed in
the table are the years in which each director became a director of Blue
Ash.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS ELECTION
OF THE ABOVE CLASS I NOMINEES FOR DIRECTORS
The business experience of each of the directors for the past five years
is as follows:
Nominees:
NEIL S. STRAWSER. Mr. Strawser has served as Chairman of the Boards of
the Corporation and Blue Ash since August, 1995. Prior to this Mr. Strawser
served as Vice-Chairman of the Board of the Corporation since June, 1993 and
also served as Vice-Chairman of the Board of Blue Ash, having held this
position since June, 1993. Mr. Strawser is a part owner and actively involved
in the management of Parrott & Strawser Properties, Inc., a land development
and home building company located in Cincinnati, Ohio.
WILLIAM T. THORNELL. Mr. Thornell has served as Vice President of the
Corporation and Vice President and Chief Loan Officer of Blue Ash since August,
1992. Mr. Thornell is responsible for the overall management of the lending
operation of Blue Ash.
Continuing Directors:
WILLIAM S. SIDERS. Mr. Siders has served as Executive Vice President of
the Corporation since August, 1991. Mr. Siders has also been Blue Ash's
Executive Vice President and Managing Officer since 1982. Mr. Siders is
responsible for the daily operations of Blue Ash.
HERB L. KROMBHOLZ. Mr. Krombholz has served as Vice President of the
Corporation since August, 1991 and Vice President of Blue Ash since 1980. Mr.
Krombholz is the Chairman of the Board of a family-owned jewelry store in
Montgomery, Ohio.
RALPH E. HEITMEYER. Mr. Heitmeyer has been the President of the
Corporation since August, 1991 and the President of Blue Ash since 1982.
Director Emeritus:
JOHN M. KUHNELL. Mr. Kuhnell has been Director Emeritus of the
Corporation and Blue Ash since his retirement from the Boards of the
Corporation and Blue Ash in June, 1996. Mr. Kuhnell served as Chairman of the
Board of the Corporation since its organization in August, 1991 to August,
1995. Mr. Kuhnell also served as Chairman of Blue Ash from 1978 to August,
1995.
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None of the Directors are related.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
Meetings of the Corporation's Board of Directors are held regularly on a
quarterly basis. Additional Special Meetings may be held by the Board of
Directors of the Corporation during the course of a year in order to discuss
and vote upon important matters that give rise to immediate attention and
action. During the year ended June 30, 1998, the Board of Directors of the
Corporation held a total of 4 regular and special meetings. Meetings of Blue
Ash's Board of Directors were generally held twice a month. In March 1998, the
Board of Directors of Blue Ash approved reducing the number of Board meetings
per month from two meetings to one meeting. If the need for additional
meetings were to arise between regularly scheduled Board meetings, either the
Executive Committee could meet or an additional Board meeting could be called.
During the year ended June 30, 1998, the Board of Directors of Blue Ash held a
total of 21 meetings. No incumbent director attended fewer than 90% of the
total number of meetings of the Board of Directors of the Corporation and Blue
Ash.
In addition, the Executive Committee of Blue Ash, which consists of any
three directors, generally meets, if necessary, during weeks between regularly
scheduled Board of Directors meetings. The Executive Committee exercises the
power of the full Board of Directors and all actions are reviewed and ratified
by the full Board of Directors. This committee met 17 times during the year
ended June 30, 1998.
The Board of Directors does not have standing audit, nominating or
compensation committees or committees performing similar functions.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Mildred Martin, age 64, currently serves as Secretary of the Corporation,
having served in such capacity since its organization in August, 1991. Ms.
Martin also serves as Secretary of Blue Ash and has held that office for over
seventeen years.
Joseph L. Michel, age 33, currently serves as Vice President, Chief
Financial Officer and Treasurer of the Corporation and Blue Ash, having served
as such since March, 1994. Mr. Michel is responsible for all aspects of
accounting, financial and regulatory reporting, loan servicing, investing,
budgeting, asset/liability management and employee benefits for Blue Ash.
Prior to March 1994, Mr. Michel worked for over six years with the accounting
firm of Grant Thornton LLP specializing in financial institution audit and tax
work.
EXECUTIVE COMPENSATION
The following table is a summary of certain information with respect to
the compensation paid by Blue Ash to certain executive officers of the
Corporation during each of the last three fiscal years. No other executive
officer of the Corporation received compensation in the aggregate exceeding
$100,000 during the last fiscal year.
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-------------------------
All Other
Name and Salary Bonus Compensation
Principal Position Year $(1) $ $(2)
-------------------- ---- ------------------------- ------ ------------
<S> <C> <C> <C> <C>
William S. Siders, 1998 109,610 30,000 28,668
Executive Vice 1997 105,240 23,700 14,921
President and 1996 99,185 19,000 11,969
Managing Officer
William T. Thornell, 1998 87,650 25,000 22,378
Vice President 1997 84,150 20,000 10,815
and Chief 1996 61,244 16,800 8,933
Lending Officer
Joseph L. Michel, 1998 61,123 25,000 21,955
Vice President, 1997 56,623 20,000 11,709
Chief Financial 1996 52,000 14,600 9,104
Officer and
Treasurer
</TABLE>
_____________
(1) For Mr. Siders, includes additional compensation received for directors
fees of $20,000 and automobile allowance of $4,800 for each of the years 1998,
1997 and 1996. For Mr. Thornell, includes additional compensation received for
directors fees of $20,000, $20,000 and $1,444 for the years 1998, 1997 and
1996, respectively.
(2) For Mr. Siders, includes the Corporation's contribution to his ESOP valued
at $24,051, $11,496 and $9,237 for 1998, 1997 and 1996, respectively, and the
Corporation's payment of $4,617, $3,425 and $2,732 for his health, life and
disability insurance premiums for 1998, 1997 and 1996, respectively. For Mr.
Thornell, includes the Corporation's contribution to his ESOP valued at
$19,373, $9,307 and $7,636 for 1998, 1997 and 1996, respectively, and the
Corporation's payment of $3,005, $1,508 and $1,297 for his health, life and
disability insurance premiums for 1998, 1997 and 1996, respectively. For Mr.
Michel, includes the Corporation's contribution to his ESOP valued at $17,594,
$8,482 and $6,554 for 1998, 1997 and 1996, respectively, and the Corporation's
payment of $4,361, $3,227 and $2,550 for his health, life and disability
insurance premiums for 1998, 1997 and 1996, respectively.
STOCK OPTION GRANTS IN FISCAL 1998
The following table sets forth information regarding options granted to
the named executive officers in the Summary Compensation Table during the year
ended June 30, 1998 pursuant to the Corporation's 1997 Stock Option Plan.
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<TABLE>
<CAPTION>
Number of
Securities Percentage of
Underlying Total Options Exercise
Options Granted in Price
Name Granted Fiscal 1998 ($/Share) Expiration Date
- -------------------- ---------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
William S. Siders 3,000 15% $27.50 01/28/2008
William T. Thornell 3,000 15% $27.50 01/28/2008
Joseph L. Michel 3,000 15% $27.50 01/28/2008
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL 1998
AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information concerning the number
of options exercised by the named executive officers in the Summary
Compensation Table during the year ended June 30, 1998 and the number and value
of stock options at June 30, 1998, held by said named executive officers.
<TABLE>
<CAPTION>
Shares Acquired Value Number of Options at Value of Options at
Name on Exercise Realized June 30, 1998 June 30, 1998(1)
- ----------------------------------------------- ----------------------------- ------------------------------
Exercisable Unexercisable Exercisable Unexercisable
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
William S. Siders -- -- 1,000 4,500 $16,000 $24,000
William T. Thornell -- -- 500 4,500 8,000 24,000
Joseph L. Michel -- -- 1,000 4,500 15,500 23,250
</TABLE>
__________________
(1) Value at June 30, 1998 is based on the latest trade of the Corporation's
Common Stock of $27.50.
COMPENSATION OF THE BOARD OF DIRECTORS
AND OTHER COMPENSATION
The directors of the Corporation currently do not receive any remuneration
in their capacity as such. The directors of Blue Ash receive an annual fee for
service on the Board. Messrs. Strawser and Heitmeyer each receive $22,600 and
Messrs. Siders, Krombholz and Thornell each receive $20,000. In his capacity as
Director Emeritus of Blue Ash, Mr. Kuhnell receives an annual fee of $6,000.
In addition, Messrs. Heitmeyer and Siders each receive a yearly automobile
allowance of $4,800 for the use of their automobile in the course of business.
EMPLOYMENT AGREEMENTS
Blue Ash has entered into employment agreements with Mr. Siders, Mr.
Thornell and Mr. Michel, which establish their respective duties and
compensation. Blue Ash has agreed to employ
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such individuals for terms of three years in their current respective positions.
The terms of the employment agreements may be extended for an additional year
after a review of the officers' performances by the Board of Directors of Blue
Ash. The Board of Directors of Blue Ash will annually review the officers'
performances and may extend the terms of the agreements and make such other
changes to the agreements as they deem appropriate. The agreements provide for
annual salaries of $111,675 for Mr. Siders, $89,300 for Mr. Thornell and $64,000
for Mr. Michel, exclusive of bonuses. The current terms of employment under
these agreements are for periods of three years, which commenced on January 1,
1998. Unless the terms of employment are annually extended by one additional
year by the Board of Directors of Blue Ash, the current employment agreements
are set to expire on December 31, 2000.
The agreements provide that they may be terminated by Blue Ash at any time
for cause, as defined in the agreements, or upon 90 days prior written notice
without cause. If the agreements are terminated for cause, the officers will
not be entitled to receive any compensation or other benefits after the
termination. If the officers are terminated by Blue Ash for any reason other
than cause, the officers would be entitled to receive for the duration of the
terms of the agreements, monthly severance payments equal to the highest
monthly salary paid to the officers at any time pursuant to the agreements;
provided, however, that such severance payments would be deferred if payment
thereof would cause Blue Ash to fail to meet its minimum regulatory capital
requirements. Additionally, if as a result of regulatory intervention, the
officers are suspended or are prohibited from participating in the business
affairs of Blue Ash, the officers' compensation will likewise be suspended or
terminated. Further, with respect to the officers' employment following a
Change of Control of the Corporation, as defined in the agreements, the
officers would be entitled to severance payments equal to three times the
officers' average compensation, less $1.00.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
The Board of Directors of Blue Ash has adopted an Employee Stock Ownership
Plan ("ESOP") for the exclusive benefit of eligible employees. Employees age
21 or older who have completed at least six months of service with Blue Ash are
eligible to participate in the ESOP. The ESOP may be funded by Blue Ash's
discretionary contributions of cash, which will be invested primarily in the
Common Stock. Benefits under the ESOP may be paid in shares of Common Stock or
in cash.
Contributions to the ESOP and shares released from the suspense accounts
will be allocated among participants on the basis of compensation in the year
of allocation. Participants' benefits generally become vested 20% per year or
100% upon completion of five years of credited service. Forfeitures will be
reallocated among remaining participating employees in the same proportion as
contributions. Benefits may be payable upon death, retirement or separation
from service. Blue Ash's contributions to the ESOP are not fixed, so benefits
payable under the ESOP cannot be estimated.
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<PAGE> 13
The ESOP may also purchase Common Stock in the open market. 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 thereunder.
The Board of Directors has appointed The Fifth Third Bank as the Plan
Administrator. First National Bank, Dayton is the trustee for the ESOP ("ESOP
Trustee"). The ESOP Trustee generally will vote all shares of stock held under
the Plan; however, the ESOP Trustee will be required to vote allocated shares
in accordance with the participants' instructions under circumstances specified
in the ESOP. As of September 9, 1998, the ESOP held 20,048 shares of Common
Stock.
STOCK OPTION PLANS
The Corporation has in place two stock option plans, the 1997 Stock Option
Plan (the "1997 Plan") and the 1992 Stock Option Plan (the "1992 Plan")
(collectively, the "Plans"). Under each Plan, key management personnel and the
Board of Directors of the Corporation and Blue Ash may be granted either
nonqualified or incentive stock options for the purchase of up to 20,000 shares
of Common Stock.
The purchase price of shares of Common Stock which may be purchased under
any stock option granted pursuant to the Plans may be not less than 100% of the
fair market value of the Common Stock on the date that the option is granted
unless the option is granted to a 10% beneficial owner of the outstanding
Common Stock in which case the purchase price shall be not less than 110% of
the fair market value.
Each option granted under the 1997 Plan is exercisable as to not more than
20% of the total number of shares granted under the option each year from the
date of grant. Each option granted under the 1992 Plan is exercisable as to
not more than 20% of the total number of shares granted under the option every
two years from the date of grant. Under both Plans, no option may be exercised
later than 10 years after the date of grant, and in the case of an option
granted to a 10% beneficial owner, the option may not be exercised after 5
years from the date of grant. During fiscal 1998, 20,000 options were granted
under the 1997 Plan and no options were granted under the 1992 Plan.
CERTAIN TRANSACTIONS
Blue Ash, like many financial institutions, has followed a policy of
granting loans to eligible officers, directors and employees for the financing
of their personal residences and for consumer purposes. Blue Ash's policy does
not include the granting of unsecured personal loans. Real estate loans have
been made in the ordinary course of business and remain on substantially the
same terms and conditions as those of comparable transactions prevailing at the
time, and do not involve more than the normal risk of collectibility or present
other unfavorable features. All loans by Blue Ash to its directors and
executive officers are subject to OTS regulations restricting loan and other
transactions with affiliated persons of Blue Ash. Prior to the passage of the
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Financial Institutions Reform, Recovery, and Enforcement Act of 1989
("FIRREA"), Blue Ash made loans to executive officers and directors without
closing costs and at a reduced interest rate of one percent over the cost of
funds. FIRREA prohibits Blue Ash from making loans to its executive officers
and directors at favorable rates or on terms not comparable to those prevailing
to the general public. Blue Ash's policy towards loans to executive officers
and directors currently complies with this limitation. There were no loans
outstanding to related parties at June 30, 1998.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Grant Thornton LLP as independent
public accountants of the Corporation with respect to its operations for the
year ending June 30, 1999, subject to ratification by the holders of Common
Stock. In taking this action, the members of the Board considered carefully
Grant Thornton LLP's performance for the Corporation in that capacity since its
original retention in 1995, its independence with respect to the services to be
performed and its general reputation for adherence to professional auditing
standards. Representatives of the firm are expected to be present at the
Annual Meeting and to be available to respond to appropriate questions from
shareholders. Their representatives will also be provided an opportunity to
make a statement, if they desire to do so.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
RATIFICATION OF GRANT THORNTON LLP AS THE CORPORATION'S
INDEPENDENT PUBLIC ACCOUNTANTS
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and persons who own more than
ten percent of the Common Stock, to file with the Securities and Exchange
Commission initial reports of stock ownership and reports of changes in stock
ownership. Messrs. Strawser, Heitmeyer, Krombholz and Siders each filed one
late Form 5 reporting options granted in fiscal 1998, and Messrs. Thornell and
Michel each filed one late Form 5 reporting small acquisitions of stock and
options granted in fiscal 1998 due to administrative oversight.
OTHER MATTERS
Management does not know of any other matters which may come before the
meeting. However, if any other matters are properly presented to the meeting,
or any adjournment thereof, it is the intention of the persons named in the
accompanying Proxy to vote, or otherwise act, in accordance with their judgment
on such matters.
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<PAGE> 15
SHAREHOLDER PROPOSALS
Stockholders may present proposals for inclusion in the proxy statement
and form of proxy to be used in connection with the 1999 Annual Meeting of
Stockholders of the Corporation, provided that such proposals are received in
writing by the Corporation no later than May 25, 1999, and provided that such
proposals are otherwise in compliance with applicable law and regulations.
Proposals received after August 11, 1999 will be considered untimely.
Management proxies will be voted at the discretion of management if proponents
intending to present proposals at the 1999 Annual Meeting fail to so notify the
Corporation by that date.
BY THE ORDER OF THE BOARD OF DIRECTORS
/s/ Mildred Martin
Mildred Martin, Secretary
Blue Ash, Ohio
September 25, 1998
13
<PAGE> 16
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
TOWNE FINANCIAL CORPORATION
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PROXY FOR The undersigned hereby appoints Mildred Martin
ANNUAL MEETING and William S. Siders as Proxies, each with
OF the power to appoint his or her substitute,
SHAREHOLDERS and hereby authorizes them to represent and to
OCTOBER 28, 1998 vote, as designated below, all the shares of
common stock held of record by the undersigned on
September 9, 1998 at the Annual Meeting of
Shareholders of the Corporation to be held on
October 28, 1998 or any adjournment thereof.
1. ELECTION OF DIRECTORS
FOR all nominees listed below
(except as marked to the contrary) _________
WITHHOLD AUTHORITY
to vote for all nominees listed below _________
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE STRIKE A LINE THROUGH THE
NOMINEE'S NAME IN THE LIST BELOW.
NEIL S. STRAWSER
WILLIAM T. THORNELL
2. RATIFICATION OF GRANT THORNTON LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE YEAR ENDING
JUNE 30, 1999.
FOR ____________
AGAINST ____________
ABSTAIN ____________
3. In their discretion, the Proxies are authorized
to vote upon such other business as may properly
come before the meeting.
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TOWNE FINANCIAL CORPORATION
4811 COOPER ROAD
BLUE ASH, OHIO 45242
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<S> <C>
PROXY FOR This Proxy when properly executed will be voted in the
ANNUAL MEETING manner directed herein by the undersigned shareholder.
OF IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR
SHAREHOLDERS PROPOSALS 1 AND 2.
OCTOBER 28, 1998
________________________________
Signature
________________________________
Signature if held jointly
Dated: _______________, 1998
Please sign exactly as name appears hereon. When shares are
held by joint tenants, both should sign. When signing as
attorney, as executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign
in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by
authorized person.
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PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
