RELIANCE BANCORP, INC.
585 STEWART AVENUE
GARDEN CITY, NEW YORK 11530
(516) 222-9300
October 9, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of Reliance Bancorp, Inc. (the "Company"), the holding company
for Reliance Federal Savings Bank (the "Bank"), to be held on November 10, 1998,
at the Long Island Marriott Hotel and Conference Center, 101 James Doolittle
Boulevard, Uniondale, New York, 11553, at 9:00 a.m.
Eastern time.
The attached Notice of Annual Meeting of Stockholders and the Proxy Statement
describes the formal business to be transacted at the Annual Meeting. Directors
and officers of the Company, as well as a representative of KPMG Peat Marwick
LLP, the Company's independent auditors, will be present at the Annual Meeting
to respond to any questions which stockholders may have.
There are two matters to be considered at the Annual Meeting. The Board of
Directors of the Company has determined that approval of the matters to be
considered at the Annual Meeting is in the best interests of the Company and its
stockholders. For the reasons set forth in the Proxy Statement, the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.
Please sign and return the enclosed proxy card promptly in the postage-paid
envelope provided. Your cooperation is appreciated since a majority of the
common stock must be represented either in person or by proxy, to constitute a
quorum for the conduct of business.
On behalf of the Board of Directors and all of the employees of the Company and
the Bank, I wish to thank you for your support and interest. We look forward to
seeing you at the Annual Meeting.
Sincerely,
/s/ Raymond A. Nielsen
- ----------------------
Raymond A. Nielsen
President and
Chief Executive Officer
<PAGE>
RELIANCE BANCORP, INC.
585 STEWART AVENUE
GARDEN CITY, NEW YORK 11530
---------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On November 10, 1998
---------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Reliance Bancorp, Inc. will be held on November 10, 1998, at 9:00 a.m. Eastern
time, at the Long Island Marriott Hotel and Conference Center, 101 James
Doolittle Boulevard, Uniondale, New York 11553.
The Annual Meeting is for the purpose of considering and voting upon
the following matters:
1. The election of three directors for terms of three years each;
2. The ratification of the appointment of KPMG Peat Marwick LLP as independent
auditors of the Company for the fiscal year ending June 30, 1999; and
3. Such other matters as may properly come before the meeting or any
adjournments thereof.
The Board of Directors has established October 2, 1998 as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting and at any adjournments thereof. Only record holders of the
common stock of the Company as of the close of business on that date will be
entitled to vote at the Annual Meeting or any adjournments thereof. In the event
there are not sufficient votes for a quorum or to approve or ratify any of the
foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit further solicitation of proxies by the Company. A
list of stockholders entitled to vote at the Annual Meeting will be available at
Reliance Bancorp, Inc., 585 Stewart Avenue, Garden City, New York 11530, for a
period of ten days prior to the Annual Meeting and will also be available at the
meeting itself.
By Order of the Board of Directors
/s/ Joseph F. Lavelle
---------------------
Joseph F. Lavelle
Secretary
Garden City, New York
October 9, 1998
<PAGE>
RELIANCE BANCORP, INC.
----------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
November 10, 1998
----------------------------------------
General Information
This proxy statement and the accompanying proxy card are being
furnished to stockholders of Reliance Bancorp, Inc. (the "Company") in
connection with the solicitation by the Board of Directors of the Company
("Board of Directors" or the "Board") of proxies to be used at the annual
meeting of stockholders to be held on November 10, 1998 (the "Annual Meeting"),
and at any adjournments thereof. The 1998 Annual Report to Stockholders,
including the consolidated financial statements for the fiscal year ended June
30, 1998, accompanies this proxy statement and proxy card, which are first being
mailed to record holders on or about October 9, 1998.
Regardless of the number of shares of common stock owned, it is
important that record holders of a majority of the shares be represented by
proxy or present in person at the Annual Meeting. Stockholders are requested to
vote by completing the enclosed proxy card and returning it signed and dated in
the enclosed postage-paid envelope. Stockholders are urged to indicate their
vote in the spaces provided on the proxy card. Proxies solicited by the Board of
Directors of the Company will be voted in accordance with the directions given
therein. Where no instructions are indicated, signed proxy cards will be voted
"FOR" the election of the nominees for director named in this proxy statement,
and "FOR" the ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors of the Company for the year ending June 30, 1999.
Other than the matters listed on the attached Notice of Annual Meeting
of Stockholders, the Board of Directors knows of no matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxy holders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if
any, that may properly come before the Annual Meeting or any adjournments
thereof.
A proxy may be revoked at any time prior to its exercise by the filing
of a written notice of revocation with the Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. However, if you are a
stockholder whose shares are not registered in your own name, you will need
appropriate documentation from your record holder to vote personally at the
Annual Meeting.
1
<PAGE>
The cost of solicitation of proxies on behalf of management will be
borne by the Company. In addition to the solicitation of proxies by mail,
Kissel-Blake Inc., a proxy solicitation firm, will assist the Company in
soliciting proxies for the Annual Meeting and will be paid a fee of $3,000, plus
out-of-pocket expenses. Proxies may also be solicited personally or by telephone
by directors, officers and regular employees of the Company and its subsidiary,
Reliance Federal Savings Bank (the "Bank"), without additional compensation
therefore. The Company will also request persons, firms and corporations holding
shares in their names, or in the name of their nominees, which are beneficially
owned by others, to send proxy material to and obtain proxies from such
beneficial owners, and will reimburse such holders for their reasonable expenses
in doing so.
Voting Securities
The securities which may be voted at the Annual Meeting consist of
shares of common stock of the Company ("Common Stock"), with each share
entitling its owner to one vote on all matters to be voted on at the Annual
Meeting except as described below. There is no cumulative voting for the
election of directors.
The close of business on October 2, 1998, has been fixed by the Board
of Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Annual Meeting
and any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 8,783,938 shares.
As provided in the Company's Certificate of Incorporation, record
holders of Common Stock who beneficially own in excess of 10% of the outstanding
shares of Common Stock (the "Limit") are not entitled to any vote with respect
to the shares held in excess of the Limit. A person or entity is deemed to
beneficially own shares owned by an affiliate of, as well as persons acting in
concert with, such person or entity. The Company's Certificate of Incorporation
authorizes the Board of Directors to: (i) make all determinations necessary to
implement and apply the Limit, including determining whether persons or entities
are acting in concert, and (ii) demand that any person who is reasonably
believed to beneficially own stock in excess of the Limit to supply information
to the Company to enable the Board to implement and apply the Limit.
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of Common Stock entitled to vote (after
subtracting any shares in excess of the Limit pursuant to the Company's
Certificate of Incorporation) is necessary to constitute a quorum at the Annual
Meeting. In the event there are not sufficient votes for a quorum or to approve
or ratify any proposal at the time of the Annual Meeting, the Annual Meeting may
be adjourned in order to permit the further solicitation of proxies.
As to the election of directors, the proxy card being provided by the Board
of Directors enables a shareholder to vote "FOR" the election of the nominees
proposed by the Board, or to "WITHHOLD AUTHORITY" to vote for one or more of the
nominees being proposed. Under
2
<PAGE>
Delaware law and the Company's Certificate of Incorporation and Bylaws,
directors are elected by a plurality of votes cast, without regard to either (i)
broker non-votes, or (ii) proxies as to which authority to vote for one or more
of the nominees being proposed is withheld.
As to the approval of KPMG Peat Marwick LLP as independent auditors of
the Company and all other matters that may properly come before the Annual
Meeting, by checking the appropriate box, you may: (i) vote "FOR" the item; (ii)
vote "AGAINST" the item; or (iii) "ABSTAIN" with respect to the item. Under the
Company's Certificate of Incorporation and Bylaws, unless otherwise required by
law, all such matters shall be determined by a majority of the votes cast,
without regard to either (a) broker non-votes, or (b) proxies marked "ABSTAIN"
as to that matter.
Proxies solicited hereby will be returned to the Company's transfer
agent, Registrar and Transfer Company, and will be tabulated by inspectors of
election designated by the Board, who will not be employed by, or a director of,
the Company or any of its affiliates. After the final adjournment of the Annual
Meeting, the proxies will be returned to the Company for safekeeping.
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information as to those persons
who are beneficial owners of more than 5% of the Company's outstanding shares of
Common Stock on the Record Date based solely upon disclosure in certain reports
received by the Company regarding such ownership filed with the Company and with
the Securities and Exchange Commission, in accordance with Sections 13(d) or
13(g) of the Securities Exchange Act of 1934, as amended, ("Exchange Act") by
such persons and groups. Other than those persons listed below, the Company is
not aware of any person or group, as such term is defined in the Exchange Act,
that owns more than 5% of the Company's Common Stock as of the Record Date.
<TABLE>
<CAPTION>
Number of Shares Percent
Name and Address and Nature of of
Title of Class of Beneficial Owner Beneficial Ownership Class(1)
- -------------- ------------------- -------------------- --------
<S> <C> <C> <C>
Common Stock Marine Midland Bank as Trustee for the 785,194 8.94%
Reliance Federal Savings Bank Employee
Stock Ownership Plan ("ESOP") (2)
585 Stewart Avenue
Garden City, NY 11530
</TABLE>
(1) As of the record date there were 8,783,938 shares of common stock
outstanding.
(2) A Committee of the Board of Directors has been appointed to administer the
ESOP (the "ESOP Committee"). An unrelated third party has been appointed
as the corporate trustee for the ESOP ("ESOP Trustee"). The ESOP Committee
may instruct the ESOP Trustee regarding investment of funds contributed to
the ESOP. The ESOP Trustee must vote all allocated shares held in the ESOP
in accordance with the instructions of the participants. As of the Record
Date, 288,394 shares of Common Stock in the ESOP have been allocated to
participants. Under the ESOP, unallocated shares held in the suspense
account will be voted by the ESOP Trustee in a manner calculated to most
accurately reflect the instructions received from participants regarding
the allocated stock so long as such vote is in accordance with the
provisions of Employee Retirement Income Security Act of 1974, as amended
("ERISA").
3
<PAGE>
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors of the Company consists of eight (8) directors
unless otherwise designated by the Board of Directors. All the members of the
Board of Directors of the Company also presently serve as directors of the Bank.
Directors are elected for staggered terms of three years each, with a term of
office of only one of the three classes of directors expiring each year.
Directors serve until their successors are elected and qualified.
The nominees proposed for election at the Annual Meeting are Messrs.
Raymond L. Nielsen, Conrad J. Gunther, Jr. and J. William Newby. All nominees
named are presently directors of the Company and the Bank. No person being
nominated as a director is being proposed for election pursuant to any agreement
or understanding between any such person and the Company.
In the event that either Messrs. R. L. Nielsen, Gunther and Newby are
unable to serve or declines to serve for any reason, it is intended the proxies
will be voted for the election of such other person as may be designated by the
present Board of Directors. The Board of Directors has no reason to believe that
Messrs. R.L. Nielsen, Gunther and Newby will be unable or unwilling to serve.
Unless authority to vote for the nominees is withheld, it is intended that the
shares represented by the enclosed proxy card if executed and returned will be
voted FOR the election of the nominees proposed by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THE ELECTION OF THE
NOMINEES NAMED IN THIS PROXY STATEMENT.
Information with respect to the Nominees, Continuing Directors, and Named
Executive Officers
The following table sets forth, as of the Record Date, the names of the
nominees and the continuing directors and certain executive officers, their
ages, a brief description of their recent business experience, including present
occupations and employment, certain directorships held by each, the year in
which each became a director and the year in which their terms (or in the case
of the nominees, their proposed terms) as director of the Company expire. The
table also sets forth the amount of Common Stock and the percent thereof
beneficially owned by each director and each executive officer of the Company
appearing on the Summary Compensation Table (each referred to as a "Named
Executive Officer") (see "Summary Compensation Table") and all directors and
executive officers as a group as of the Record Date.
4
<PAGE>
<TABLE>
<CAPTION>
Shares of
Name and Principal Expiration Common Stock Ownership
Occupation at Present and Director of Term as Beneficially As a Percent
for the Past Five Years Age Since(1) Director Owned(2) of Class(3)
----------------------- --- -------- -------- -------- -----------
Nominees
<S> <C> <C> <C> <C> <C> <C>
Raymond L. Nielsen 72 1961 2001 176,516 (6)(7) 1.82%
Chairman of the Board and former
Chief Executive Officer of the
Company and the Bank.
Conrad J. Gunther, Jr. 52 1996 2001 21,415 (4)(5) *
Vice President of Allied Coverage Corp.,
an independent insurance brokerage
J. William Newby 70 1979 2001 75,196 (4)(5) *
Owner/President of Beacon
Mortgage Company, a national
mortgage brokerage and servicing firm.
Continuing Directors
Raymond A. Nielsen (8) 47 1983 2000 208,799 (6)(7) 2.15%
President and Chief Executive (9)(10)
Officer of the Company and the Bank.
Douglas G. LaPasta (11) 52 1983 2000 67,875 (4)(5) *
Principal of Stonehill Management
Consultants, a management
consulting firm.
Peter F. Neumann 64 1982 2000 88,875 (4)(5) *
Retired - President of Bradley Parker,
Flynn-Neumann, Inc., an insurance agency
and director of Vicon Industries, Inc.
Thomas G. Davis, Jr. 64 1991 1999 76,542 (4)(5) *
Retired President and Director of
Institutional Mortgage Investors
Management Corporation, a national
investment firm involved in the
purchase of mortgages for pension
and other types of funds.
Donald LaPasta 80 1958 1999 78,619 (4)(5) *
Retired Chairman of the Board and
Chief Executive Officer of the Bank.
5
<PAGE>
Shares of
Name and Principal Expiration Common Stock Ownership
Occupation at Present and Director of Term as Beneficially As a Percent
for the Past Five Years Age Since(1) Director Owned(2) of Class(3)
- ----------------------- --- -------- -------- -------- -----------
Named Executive Officers Who Are Not Directors
<S> <C> <C> <C> <C>
Gerald M. Sauvigne 45 -- -- 114,662 (6)(7) 1.18%
Executive Vice President and (9)(10)
Treasurer of the Company
and the Bank.
Joseph F. Lavelle 47 -- -- 47,955 (6)(7) *
Senior Vice President Retail (9)
Banking and Secretary of the
Company and the Bank.
Paul D. Hagan 36 -- -- 56,671 (7)(9) *
Senior Vice President and
Chief Financial Officer of the
Company and the Bank.
John F. Traxler 50 -- -- 70,003 (6)(7) *
Vice President and Investment (9)
Officer of the Company
and the Bank.
All directors and executive officers -- -- -- 1,083,128 (12) 11.17%
as a group (12 persons)
- ------------------------
</TABLE>
* Does not exceed 1.0% of the Company's voting securities.
(1) Includes years of service as a director of the Company's wholly-owned
subsidiary, the Bank. (2) Each person effectively exercises sole (or shares with
spouse or other immediate family member) voting or
dispositive power as to shares reported.
(3) For purposes of calculating the aggregate ownership percentage, all
options exercisable within 60 days have been added to the amount of
outstanding common stock as of the Record Date.
(4) Includes 3,933 unvested shares awarded to Messrs. Davis, Donald LaPasta,
Douglas G. LaPasta, Neumann, and Newby each and 931 unvested shares
awarded to Mr. Gunther under the Amended and Restated Reliance Federal
Savings Bank 1994 Recognition and Retention Plan for Outside Directors
(the "DRP"). Unvested shares will vest on March 31, 1999, with the
exception of the award to Mr. Gunther which vests in installments of 310
shares on June 19, 1999, 310 shares on June 19, 2000, and 311 shares on
June 19, 2001. Each participant presently has voting power as to the
shares awarded.
(Footnotes continued on next page)
6
<PAGE>
(5) Includes 40,451; 5,605; 40,452; 32,951; 40,451 and 40,452 shares subject
to options held by Messrs. Davis, Gunther, Donald LaPasta, Douglas G.
LaPasta, Neumann, and Newby, respectively, under the Amended and
Restated Reliance Bancorp, Inc. 1994 Stock Option Plan for Outside
Directors (the "1994 Directors' Option Plan") which are currently
exercisable. Excludes 2,243 shares subject to options held by Mr.
Gunther which become exercisable June 19, 1999. Also includes 13,500
options held by Messrs. Davis, Gunther, Donald LaPasta, Douglas G.
LaPasta, Neumann, and Newby each under the Reliance Bancorp, Inc. 1996
Incentive Stock Option Plan Amended and Restated as of February 19, 1997
(the "1996 Stock Option Plan") which are currently exercisable. Excludes
9,000 shares subject to options held by Messrs. Davis, Gunther, Donald
LaPasta, Douglas G. LaPasta, Neumann, and Newby each which become
exercisable January 1, 1999.
(6) Includes 23,636; 23,636; 4,968; 2,484 and 3,105 of unvested shares
awarded to Messrs. R.L. Nielsen, R.A. Nielsen, Sauvigne, Lavelle and
Traxler, respectively, under the Reliance Federal Savings Bank
Recognition and Retention Plan for Officers and Employees (the "MRP").
Such unvested shares vest on March 31, 1999, with the exception of
16,636 shares held by Messrs. R.L. Nielsen and R.A. Nielsen each which
vest in installments of 8,318 shares on November 9, 1998 and 8,318
shares on November 9, 1999. Each participant presently has voting power
as to the shares awarded.
(7) Includes 21,050; 79,200; 44,712; 13,044; 19,044 and 28,980 shares
subject to options held by Messrs. R.L. Nielsen, R.A. Nielsen, Sauvigne,
Lavelle, Hagan and Traxler, respectively, under the Reliance Bancorp,
Inc. 1994 Incentive Stock Option Plan (the "1994 Stock Option Plan")
which are currently exercisable. Excludes 31,050; 31,050; 11,178; 4,761;
4,761 and 7,245, respectively, of shares subject to option which become
exercisable March 31, 1999. Also includes 31,600; 31,600; 31,600;
20,250; 20,250 and 14,100 shares subject to options held by Messrs. R.L.
Nielsen, R.A. Nielsen, Sauvigne, Lavelle, Hagan and Traxler,
respectively, under the 1996 Stock Option Plan which are currently
exercisable. Excludes 1,598; 1,598; 1,598; 1,032; 1,032 and 1,032,
respectively, of shares subject to option which become exercisable
January 1, 1999.
(8) Raymond A. Nielsen is the son of Raymond L. Nielsen.
(9) Includes 9,576; 9,575; 6,775; 5,063 and 7,398 shares beneficially owned
by Messrs. R.A. Nielsen, Sauvigne, Lavelle, Hagan and Traxler,
respectively, under the ESOP.
(10) Includes 14,006 and 1,448 shares beneficially owned by Messrs. R.A.
Nielsen and Sauvigne, respectively, under the Reliance Federal Savings
Bank Supplemental Executive Retirement Plan (the "SERP").
(11) Douglas G. LaPasta is the nephew of Donald LaPasta.
(12) Excludes a total of 92,288 and 61,890 shares, respectively, subject to
unvested options awarded under the 1994 Stock Option Plan and 1996 Stock
Option Plan. Includes a total of 78,425 unvested shares awarded under
the MRP and DRP, as to which voting may be directed.
Meetings of the Board and Committees of the Board
The Board of Directors of the Company conducts its business through
meetings of the Board and through activities of its committees. The Board of
Directors of the Company meets quarterly and may have additional meetings as
needed. During fiscal 1998, the Board of Directors of the Company held fifteen
meetings. All of the directors of the Company attended at least 75% in the
aggregate of the total number of the Company's board meetings held and committee
meetings on which such director served during fiscal 1998. The Board of
Directors of the Company maintains committees, the nature and composition of
which are described below:
Audit Committee. The Audit Committee of the Company consists of Messrs.
Newby, Donald LaPasta and Davis all of whom are outside directors. This
committee meets on a quarterly basis and may have additional meetings as
necessary. The committee meets with the internal and independent auditors to
review the plans and reports of such auditors. The Audit
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<PAGE>
Committee met six times during fiscal 1998.
Nominating Committee. The Company's Nominating Committee for the 1998
Annual Meeting consisted of Messrs. R. A. Nielsen, Donald LaPasta, Davis, Neuman
and Douglas LaPasta. The Committee considers and recommends the nominees for
Director to stand for election at the Company's annual meeting of stockholders.
The Company's Certificate of Incorporation and Bylaws provide for stockholder
nominations of Directors. These provisions require such nominations to be made
pursuant to timely notice in writing to the Secretary of the Company. The
stockholder's notice of nomination must contain all information relating to the
nominee which is required to be disclosed by the Company's Bylaws and by the
Exchange Act. See "Additional Information - Notice of Business to Be Conducted
at an Annual Meeting." The Nominating Committee met on June 17, 1998.
Compensation/Benefits Committee. The Joint Compensation Committee of the
Company and the Bank (the "Compensation Committee") consists of Messrs. Neumann,
Newby, Donald LaPasta, Douglas G. LaPasta, Davis and Gunther. The Compensation
Committee establishes guidelines for the level of compensation and reviews
incentive compensation programs for executive officers. The Compensation
Committee met three times during fiscal 1998.
Proxy Committee. The Proxy Committee of the Company consists of Messrs.
R.L. Nielsen, Neumann and Newby. The Proxy Committee serves as proxy for
stockholders solicited by the Board of Directors for voting at annual meetings
or other meetings of stockholders. The Proxy Committee met once during fiscal
1998.
Directors' Compensation
Directors' Fees. Each outside director of the Company receives an
annual retainer fee of $10,000, except for the Chairman of the Board who is a
salaried officer and receives an annual salary of $20,000. No additional fees
are paid for attending meetings. Each outside director of the Bank receives an
annual retainer fee of $20,000, except for the Chairman of the Board who
receives an annual retainer of $40,000. In addition, each outside director of
the Bank receives $1,000 for each meeting attended. Neither the Company nor the
Bank pays fees for committee meetings.
Directors' Consultation and Retirement Plan. The Bank has established
the Reliance Federal Savings Bank Outside Directors' Consultation and Retirement
Plan (the "Directors' Retirement Plan"). Outside directors of the Bank, who have
served the Bank for at least ten years and who have attained the age of at least
70, will be eligible to receive benefits under the Directors' Retirement Plan.
Pursuant to such plan, if, within thirty days of retirement, an outside director
agrees to provide consulting services to the Bank, such outside director shall
be paid an annual retirement benefit, in equal monthly installments, equal to
the lesser of the number of months such outside director agrees to provide
consulting services or ten years. The annual benefit will be based on the
outside director's annual retainer fee determined as of the outside
8
<PAGE>
director's termination date.
Stock Option Plans. Under the 1994 Directors' Option Plan, 203,377
options were granted to outside directors which vested in equal annual
installments of 33% per year. In addition, 6,728 options were granted to outside
directors on July 1, 1998, which were immediately vested and exercisable.
Pursuant to the 1996 Stock Option Plan, 40,500 options were granted to
outside directors on July 17, 1996, July 1, 1997 and July 1, 1998. Additionally,
13,500 options were granted to outside directors on July 1, 1998. All options
granted pursuant to the 1996 Stock Option Plan become exercisable six months
from the date of grant.
All options granted to Directors have exercise prices equal to the fair
market value of the Company's common stock on the date of grant and expire upon
the earlier of 10 years following the date of grant or one year following the
date the optionee ceases to be a director for any reason other than removal for
cause, in which case the options terminate immediately. Upon death or disability
of the participant, retirement from the Board upon reaching retirement as
specified in the Bylaws of the Company or the Bank or in the event of a change
of control, all options previously granted automatically become exercisable. To
satisfy the exercise of an option under the Directors' Option Plans, either
authorized but unissued shares or treasury shares may be used.
Recognition and Retention Plan for Outside Directors. The Bank
maintains the Amended and Restated Reliance Federal Savings Bank 1994
Recognition and Retention Plan for Outside Directors ("DRP"). Awards of 99,877
shares of Common Stock were granted to directors which vest in equal annual
installments at a rate of 20% per year commencing one year from the date of
grant. In addition, on July 1, 1998, 1,553 shares of Common Stock were awarded
to directors which were immediately vested and exercisable. Awards will be 100%
vested upon termination of employment or service as a director due to death or
disability of the director or following a change in the control of the Bank or
the Company. In the event a director otherwise discontinues service on the Board
prior to earning all plan shares subject to an award, the director's nonvested
awards will be forfeited. When shares become vested and are actually distributed
in accordance with the DRP, the recipients will also receive amounts equal to
any accrued dividends with respect thereto. Prior to vesting, recipients of
awards may direct voting of the shares allocated to them.
9
<PAGE>
Executive Compensation
The following report of the Compensation Committee and the stock
performance graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 (the "Securities Act") or the Exchange Act, except as
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
Compensation Committee Report on Executive Compensation.
Under rules established by the Securities and Exchange Commission (the
"SEC"), the Company is required to provide certain data and information in
regard to the compensation and benefits provided to the Company's Chief
Executive Officer and other executive officers. The disclosure requirements for
the Chief Executive Officer and other executive officers include the use of
tables and a report explaining the rationale and considerations that led to the
fundamental compensation decisions affecting those individuals. The Company and
the Bank have a Joint Compensation/Benefits Committee consisting of only
disinterested outside directors (the "Compensation Committee"). In the past,
given the limited nature of the operations of the Company, no annual
compensation was paid to executive officers of the Company for their services as
officers of the Company. For fiscal 1999, the Chairman of the Board will receive
annual compensation of $20,000 for services performed for the Company.
Accordingly, the following discussion addresses compensation paid by the Bank to
executive officers of the Bank. In fulfillment of the SEC requirement, the
Compensation Committee has prepared the following report for inclusion in this
proxy statement.
General. The stated purpose of the Compensation Committee is to review
the respective compensation philosophy and programs and exercise authority with
respect to the payment of direct salaries and incentive compensation to the
directors and officers of the Bank and Company and serve as administrator for
certain benefit plans of the Bank and Company as may be determined by the Board
of Directors. The Compensation Committee periodically reviews and determines the
compensation of the Chief Executive Officer and certain other executive
officers, and authorizes the compensation paid to the remaining officers and
employees.
Base Salary. All officers' salaries are reviewed annually in June for
the upcoming fiscal year. Management prepares its recommendations (for all
employees and officers other than the named Executive Officers) and supplies the
Compensation Committee with reference materials such as various published
compensation surveys and other supporting documentation. Salary levels are
designed to be competitive with cash compensation levels paid by peer group
institutions. The Compensation Committee generally considers the Bank's peer
group to be thrift institutions and banks with assets between $1.0 billion and
$5.0 billion, operating within the Mid- Atlantic region, with specific emphasis
on the metropolitan New York area and generating a comparable Return on Equity.
The peer group used to compare salaries is not necessarily comprised of the same
institutions which make up the peer group used in the Stock Performance
10
<PAGE>
Graph. Among the published compensation surveys used to determine compensation
levels for the Chief Executive Officer/President and other executive officers
for the July 1997 salary adjustment were the "1997 SNL Executive Compensation
Review - Thrift Institutions" (by SNL Securities), "1996 Executive Compensation
Practices in Financial Companies" (by KPMG Peat Marwick), "1996 Compensation for
Savings Institutions" (by the Savings and Community Bankers of America), "1996
Northeast Banking Industry Compensation Survey" (by the Community Bankers
Association of New York State and KPMG Peat Marwick) and "CEO Compensation in
Financial Institutions 1996" (by KPMG Peat Marwick). Evaluations of the
executive officers of the Bank and their specific levels of compensation are
based on discretionary criteria and no specific formula is utilized to fix
annual compensation.
Short-term Incentive Compensation. The Bank maintains a formal
"Incentive Compensation Plan." The Plan is specifically designed to provide a
short-term incentive to executive officers and other officers of the Bank in the
form of cash payments ("Incentive Compensation"). The Compensation Committee
considers the payment of discretionary awards if and when appropriate under the
terms of the Plan. Prior to the start of each fiscal year, the Committee
establishes a "Target Incentive Award" for each Participant, based on that
Participant's "Target Incentive Award Category." Each Award is determined by a
weighted measurement system comprised of two components: the Bank's financial
performance and the individual officer's performance.
The financial performance component consists of a variety of factors
including, but not limited to, earnings per share and return on average equity.
The Committee determines the weight to be assigned to each factor, and in any
given semi-annual Award Period different factors may be emphasized and all
factors may not be addressed. Financial performance targets or goals are judged
against the Bank's own anticipated performance and the actual experience of the
Bank's peers. The Committee makes this performance measure as objective and
quantitative as possible, and the Target Incentive Award has been structured so
that this component makes up the majority of the award.
The Compensation Committee of the Bank, which administers the Incentive
Compensation Plan, has the discretion to make adjustments in Incentive
Compensation awards where circumstances warrant. In addition, the Committee
retains the right to include an "Exceptional Performance Component". This
component, awarded for exceptional Bank financial performance, may not exceed
120% of the Target Incentive Award. For fiscal 1998, the Company's financial
performance and individual officers' performance were within the areas specified
by the Plan and resulted in awards ranging from 50% to 90% of the Target
Incentive Award.
Long-term Incentive Compensation. The long-term incentive compensation
portion of the Company's and Bank's compensation program consists of the ESOP,
the MRP and the 1994 Stock Option Plan, all of which were established in
conjunction with the Bank's conversion and the Company's initial public stock
offering. In addition, during fiscal 1997, the Board of Directors adopted the
1996 Stock Option Plan and granted 283,800 shares of the Company's Common Stock
11
<PAGE>
to Officers and Employees. All options were granted with an exercise price equal
to the fair market value of the Common Stock on the date of grant and become
exercisable either six or twelve months from the date of grant. The ESOP, the
MRP, the 1994 Stock Option Plan and the 1996 Stock Option Plan are designed as
an incentive to the executive officers and employees of the Bank and act to
align the interests of the officers and employees of the Bank with stockholders.
The executive and other officers of the Bank were awarded options/shares under
the 1994 Stock Option Plan, the 1996 Stock Option Plan and the MRP which were
allocated by the Compensation Committee based upon regulatory practices and
policies, the practices of other financial institutions as verified by external
surveys, and the executive officer's level of responsibility and contributions
to the Bank as determined by the Compensation Committee. The outstanding awards
are taken into account in determining annual compensation for the executive
officers.
Chief Executive Officer. Effective July 1, 1997, Mr. Raymond A. Nielsen
was granted a salary increase of 13.0% to bring his annual compensation to
$425,000. This salary adjustment and the Incentive Compensation of $100,000 paid
to Mr. R.A. Nielsen recognized his significant contributions to the Bank's
successful operations and his reputation in the Company's and Bank's
marketplace, as well as to maintain his overall compensation at a level
competitive with industry peers. In comparison to cash compensation paid to
Chief Executive Officers by industry peer groups, Mr. R.A. Nielsen's salary was
similar to the average compensation survey relied upon by the Compensation
Committee. No specific formula is used in connection with the Committee's
decisions regarding the Chief Executive Officer's annual salary nor did the
Committee set specified salary levels based on the achievement of particular
quantifiable objectives or financial goals of the Bank. Rather, the Committee
considered the overall profitability of the Bank and the contributions made to
the Bank by the CEO.
Compensation/Benefits Committee of the Company and Bank
Peter F. Neumann (Chairman) Douglas G. LaPasta
Donald LaPasta J. William Newby
Thomas G. Davis, Jr. Conrad J. Gunther, Jr.
Compensation Committee Interlocks and Insider Participation. All of the
members of the Compensation Committee are outside directors of the Company. The
SEC further requires disclosure of, among other items, any member of the
Compensation Committee who was formerly an officer of the Company or any of its
subsidiaries. Director Donald LaPasta, member of the Compensation Committees of
both the Bank and the Company, was formerly the Chairman of the Board and Chief
Executive Officer of the Bank. Mr. LaPasta retired from the Bank on October 1,
1983.
Stock Performance Graph. The following graph shows a comparison of
cumulative total shareholder return on the Company's Common Stock, based on the
market price of the Common Stock assuming reinvestment of dividends, with the
cumulative total return of companies in the NASDAQ National Market and NASDAQ
Bank Stocks for June 30, 1994 through June 30, 1998.
12
<PAGE>
Cumulative Total Return Among Reliance Bancorp, Inc. Common Stock,
CRSP NASDAQ Market Index and CRSP NASDAQ Bank Index
June 30, 1994 - June 30, 1998
[THE FOLLOWING WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED DOCUMENT]
SUMMARY
6/30/94 6/30/95 6/30/96 6/30/97 6/30/98
------- ------- ------- ------- -------
Reliance Bancorp, Inc. 123.684 154.003 174.007 337.364 449.586
CRSP NASDAQ Market Index 95.324 127.243 163.368 198.638 262.191
CRSP NASDAQ Bank Index 107.945 121.913 158.678 248.063 344.293
Notes:
A. The lines represent index levels derived from compounded daily returns that
include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the interval is not a trading day, the preceding trading day is used.
13
<PAGE>
Summary Compensation Table. The following table shows, for the fiscal years
ending June 30, 1998, 1997 and 1996, the cash compensation paid, as well as
certain other compensation paid or accrued for those years, to the Chief
Executive Officer and the other highest paid Executive Officers of the Company
and/or the Bank who received an amount in salary and bonus in excess of $100,000
in fiscal 1998.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------------------- ------------------------------------
Awards Payouts
------------------------ ---------
Other Restricted Securities
Annual Stock Underlying All Other
Name and Bonus Compensation Awards Options/ LTIP Compensation
Principal Office Year Salary ($) ($)(1) ($)(2) ($)(3) SARs (#)(4) Payouts(5) $ (7)
- ---------------------------- -------------------- -------- ---------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Raymond A. Nielsen 1998 425,000 100,000 -- -- -- -- 105,858
President and Chief 1997 375,000 85,000 -- -- 31,600 -- 88,982
Executive Officer 1996 305,000 81,475 -- -- -- -- 95,062
Gerald M. Sauvigne 1998 205,000 47,500 -- -- -- -- 20,718
Executive Vice President 1997 175,000 36,375 -- -- 31,600 -- 11,747
and Treasurer 1996 145,000 30,700 -- -- -- -- 5,694
Joseph F. Lavelle 1998 120,000 22,750 -- -- -- -- --
Senior Vice President 1997 107,500 17,313 -- -- 20,250 -- --
and Secretary 1996 87,500 13,943 -- -- -- -- --
Paul D. Hagan 1998 135,000 22,638 -- -- -- -- --
Senior Vice President and 1997 107,500 15,888 -- -- 20,250 -- --
Chief Financial Officer 1996 90,000 13,550 -- -- -- -- --
John F. Traxler 1998 109,000 14,640 -- -- -- -- --
Vice President and 1997 107,500 14,863 -- -- 20,250 -- --
Investment Officer 1996 105,000 19,125 -- -- -- -- --
</TABLE>
(1) Consists of payments under the Bank's Incentive Compensation Plan. See
Executive Compensation- Compensation Committee Report.
(2) For fiscal years 1998, 1997 and 1996, there were no (a) perquisites over
the lesser of $50,000 or 10% of the individual's total salary and bonus for
the year; (b) payments of above-market preferential earnings on deferred
compensation; (c) payments of earnings with respect to long-term incentive
plans prior to settlement or maturation; (d) tax payment reimbursements; or
(e) preferential discounts on stock.
(3) Pursuant to the MRP, Messrs. R.A. Nielsen, Sauvigne, Lavelle and Traxler
held an aggregate of 23,636; 4,968; 2,484 and 3,105 unvested shares of
Common Stock, respectively, as of June 30, 1998. The market value of all
such shares at June 30, 1998 would have been $905,554; $190,337; $95,168
and $118,960 for Messrs. R.A. Nielsen, Sauvigne, Lavelle and Traxler,
respectively. Unvested shares will vest on March 31, 1999, with the
exception of 16,636 shares held by Mr. R.A. Nielsen which vest in
installments of 8,318 shares on November 9, 1998 and 8,318 shares on
November 9, 1999. See footnote (6) for discussion of 1995 grant. When
shares become vested and are distributed, the recipient will also receive
an amount equal to accumulated dividends and earnings thereon (if any). All
awards vest immediately upon termination of employment due to death,
disability or following a change in control.
(4) Includes stock options granted under the 1996 Stock Option Plan. Each stock
option was granted in tandem with a limited rights, which is exercisable
only in the event of a change in control of the Company.
(5) The Bank did not make any payment of long-term incentive plans in fiscal
1998, 1997 and 1996.
(6) Mr. R.A. Nielsen was granted plan share awards of 41,590 shares of Common
Stock to vest in equal annual installments of 20% per year commencing on
November 9, 1995 pursuant to the MRP. The market price on the date of grant
was $10.25 per share.
(Footnotes continued on next page)
14
<PAGE>
(7) For fiscal year 1998 amount includes SERP contributions for Messrs. R.A.
Nielsen and Sauvigne for the reduction of benefits related to the Bank's
ESOP.
Employment Agreements. The Bank and the Company have entered into
employment agreements with Messrs. R.A. Nielsen, Sauvigne, Lavelle, Hagan and
Traxler. These employment agreements are intended to ensure that the Bank and
the Company will be able to maintain a stable and competent management base. The
continued success of the Bank and the Company depends to a significant degree on
the skills and competence of these individuals.
The Company employment agreements provide for five-year terms for Messrs.
R.A. Nielsen and Sauvigne and two-year terms for Messrs. Lavelle, Hagan and
Traxler, except that the term is three years with respect to the obligation to
make payments based on termination of employment after a change in control as
discussed below. The Bank agreements provide for a three year term for Messrs.
R.A. Nielsen and Sauvigne and two year terms for Messrs. Lavelle, Hagan and
Traxler. The Bank agreements further provide that commencing on July 1, 1998 and
continuing on July 1 of each year thereafter, the Board of Directors of the Bank
may, with the consent of the respective employees, extend the employment
agreements with the Company and the Bank for an additional year, such that the
remaining terms of the respective agreements shall be the amount of the original
term unless written notice of non-renewal is given by the Board of Directors
after conducting a performance evaluation of the executive. The employment
agreements with the Company provide for automatic daily extensions such that the
remaining terms shall be the amount of the original term unless written notice
of non-renewal is given by the Board of Directors or the employee. In such case,
the term shall end on the second anniversary of the date of written notice. The
Company and Bank employment agreements provide that Messrs. R.A. Nielsen,
Sauvigne, Lavelle, Hagan and Traxler will receive annual base salaries of
$475,000, $235,000, $135,000, $150,000, and $114,000, respectively, which will
be reviewed annually by the Board. In addition to the base salary, the Company
and Bank employment agreements provide for, among other things, disability
payments, participation in retirement plans, stock benefit plans and other
compensation plans applicable to executive personnel from time to time. The
Company and Bank employment agreements provide for termination by the Bank or
the Company for "cause", as defined in such agreements, at any time. In the
event the Bank or the Company chooses to terminate the executive's employment
for reasons other than a change in control, retirement or for cause or in the
event of the executive's resignation from the Bank and the Company subsequent
to: (i) the failure to re-elect the executive to his current offices or the
extent this executive serves as a director of the Company, failure to renominate
or reelect the executive as a director; (ii) a material adverse change in the
executive's functions, duties or responsibilities, or relocation of his
principal place of employment, by more than 30 miles, or a material reduction in
benefits or perquisites; (iii) liquidation or dissolution of the Bank or the
Company; or (iv) a breach of the agreement by the Bank or the Company, the
executive or, in the event of death, his beneficiary, would be entitled to
receive an aggregate payment amount equal to the amount of the remaining
payments (or benefits) that the executive would have earned if he had continued
his employment with the Bank or Company during the remaining unexpired term of
the agreement
15
<PAGE>
based on the executive's defined base salary on the date the executive was
terminated. Additionally, the Company employment agreement of Messrs. R.A.
Nielsen and Sauvigne provide that in the event of their termination of
employment, the Company or any of its subsidiaries amend any employee benefit
plan maintained by the Company or any of its subsidiaries such that it reduces
the benefits payable to the executives, the Company will provide the executive
with an economic benefit equal to the amount of any such reduction on an annual
basis.
Under the terms of the Company employment agreements, if termination of
employment, whether voluntary or involuntary, follows a "change in control" of
the Bank or the Company, as defined in the employment agreements, the executive
or, in the event of death, his beneficiary, would be entitled to an aggregate
payment equal to the greater of (1) the payments due under the remaining term of
the agreement, (2) five times the average annual compensation with respect to
Messrs. R.A. Nielsen and Sauvigne or (3) three times the average compensation
with respect to Messrs. Lavelle, Hagan and Traxler. Such average annual
compensation will be determined, in the case of the Bank employment agreements,
over the five most recent taxable years, and, in the case of the Company
employment agreements, for the three or two preceding taxable years, whichever
is applicable to the term of the respective employment agreement. Such average
annual compensation shall include any commissions, bonuses, pension and profit
sharing plan benefits, severance payments, retirement benefits, director or
committee fees and fringe benefits paid or to be paid to the executive in any
such years. The Bank and the Company would also continue the executive's life,
health, and disability coverage and any dependent that is currently covered by
such plans, for the remaining unexpired term of the agreements to the extent
allowed by the plans or policies maintained by the Company or Bank from time to
time. Payments to the executive under the Bank's employment agreements will be
guaranteed by the Company in the event that payments or benefits are not paid by
the Bank. The agreements also provide that the Bank and the Company shall
indemnify the executive to the fullest extent allowable under federal and
Delaware law, respectively.
In addition, upon a change in control, certain awards of Common Stock
and options to purchase Common Stock made to each of the executives under the
Company's and Bank's various non-qualified stock based benefit plans would vest
immediately. If any amounts payable in connection with any change in control are
determined to be "excess parachute payments" under Section 280G of the code
resulting in the imposition of the 20% excise tax on such payments under Section
4999 of the code, each officer will receive from the Company an additional
amount such that the effect of the imposition of that excise tax is effectively
eliminated.
16
<PAGE>
The following table provides certain information with respect to the
number of shares of Common Stock represented by outstanding stock options
granted under the 1994 Stock Option Plan and the 1996 Stock Option Plan held by
the Named Executive Officers as of June 30, 1998. Also reported are the values
for "in-the-money" options which represent the positive spread between the
exercise price of any such existing stock options and the year-end price of the
Common Stock. In fiscal 1998, 10,000 options were exercised by R.A. Nielsen and
6,000 options were exercised by Joseph F. Lavelle. There were no options
exercised by any of the other Named Executive Officers.
FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the- Money Options
Options at June 30, 1998 at June 30, 1998
Name Exercisable/Unexercisable Exercisable/Unexercisable
(#) ($)(1)
------------ ------------------------ ------------------------
Raymond A. Nielsen 110,800 / 31,050 2,873,400 / 879,103
Gerald M. Sauvigne 76,312 / 11,178 1,896,959 / 316,477
Joseph F. Lavelle 33,294 / 4,761 775,086 / 134,796
Paul D. Hagan 39,294 / 4,761 944,961 / 134,796
John F. Traxler 43,080 / 7,245 1,087,515 / 205,124
(1) Market Value of underlying securities at fiscal year-end ($38.3125) minus
the exercise or base prices of $10.00, $15.75 and $19.375 per share.
Pension Plan. The Bank maintains the Reliance Federal Savings Bank
Retirement Plan (the "Pension Plan"), for the benefit of the employees of the
Bank. The Pension is a noncontributory defined benefit pension plan. All
employees over the age of 21 who have worked 1,000 hours at the Bank for a
twelve month period are eligible to participate in the Pension Plan. The Bank
annually contributes an amount to the Pension Plan necessary to satisfy the
actuarially determined minimum funding requirements in accordance with ERISA.
Upon the attainment of normal retirement age (age 65), a participant is
entitled to a retirement benefit in an amount equal to 50.0% of the
participant's average annual base wage (determined by using the participant's
earnings for the highest five complete consecutive plan years out of the last
ten plan years of a participant's employment) multiplied by a ratio, the
numerator of which is the number of months of the participant's service, and the
denominator of which is 240. Under the Pension Plan, benefits are also payable
for termination due to early retirement or death of a married participant.
Benefits become vested after a participant completes five years of service. In
the case of death, or early retirement occurring on or after attainment of age
60, but after the completion of five years of service, benefits are reduced if
they commence prior to age 65.
17
<PAGE>
Based on an evaluation of the pension plan in fiscal 1998, the Bank
concluded that future benefit accruals under the plan would cease, or "freeze"
on May 31, 1998.
401(k) Plan. The Bank maintains the Reliance Federal Savings Bank
401(k) Retirement Savings Plan (the "401(k) Plan"), a tax-qualified defined
contributions plan governed by Section 401(k) of the Internal Revenue Code. The
401(k) Plan allows salaried employees to make pre-tax salary contributions,
limited to 10% of compensation, with a maximum of $10,000 per year. The Bank
contributes 2% per employee and matches seventy-five percent of employee
contributions up to 4%, subject to a maximum total employer contribution of 5%
of employee compensation. Employees are fully vested in their contributions and
become vested in the Bank's contributions after the completion of five years of
service. Employees select the investments made with their account balances from
a fixed menu of options.
Supplemental Executives' Retirement Plan. The Bank maintains the
Reliance Federal Savings Bank Supplemental Executives' Retirement Plan (the
"SERP"), which is intended to provide an additional retirement benefit to
designated executives who are participants in the Bank's tax qualified plans,
and whose benefits under such plans are reduced due to the limitations imposed
by Section 415 of the Code on the maximum annual benefits and contributions that
may be made with regard to such plans and the limitations imposed by Section
401(a)(17) of the Code on the maximum amount of compensation that may be taken
into account in determining benefits and contributions with respect to such
plans. The SERP is intended to provide a benefit equal to the benefit the
participant would have received under the applicable tax qualified plans if the
Code's limitations did not apply and the amounts such individuals will actually
receive with the application of the Code's limitations.
The following table sets forth the estimated annual benefits payable
under the Pension Plan and SERP described above upon retirement at age 65 in
calendar year 1997, expressed in the form of a 10-year certain and continuous
annuity, for the average annual earnings and years of service classifications
specified.
Creditable Years of Service at Age 65
-------------------------------------
Average
Annual
Earnings(1)(2) 15 20 25 30 35
-------- -------- ------- -------- -------
$25,000 $ 9,375 $ 12,500 $ 12,500 $ 12,500 $ 12,500
50,000 18,750 25,000 25,000 25,000 25,000
100,000 37,500 50,000 50,000 50,000 50,000
150,000 56,250 75,000 75,000 75,000 75,000
200,000 75,000 100,000 100,000 100,000 100,000
250,000 93,750 125,000 125,000 125,000 125,000
300,000 112,500 150,000 150,000 150,000 150,000
350,000 131,250 175,000 175,000 175,000 175,000
400,000 150,000 200,000 200,000 200,000 200,000
425,000 159,375 212,500 212,500 212,500 212,500
475,000 178,125 237,500 237,500 237,500 237,500
(footnotes on next page)
18
<PAGE>
(1) The covered salary under the Pension Plan is the amounts shown in the
column entitled "Salary" in the Summary Compensation Table and does not
include amounts shown in the column entitled "Bonus" in such table.
(2) The benefits listed in the retirement benefit table are not subject to
Social Security or other offset amounts.
The following table sets forth the years of certified service (i.e.,
benefit service) as of the fiscal year ended June 30, 1998, for each of the
individuals named in the Summary Compensation Table.
Credited Service
------------------------
Years Months
----- ------
Raymond A. Nielsen................. 28 0
Gerald M. Sauvigne................. 20 10
Joseph F. Lavelle.................. 29 5
Paul D. Hagan...................... 4 8
John F. Traxler.................... 25 4
Transactions With Certain Related Persons
Federal law and regulation require that all loans or extensions of
credit to executive officers and directors must be made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with the general public and must not involve
more than the normal risk of repayment or present other unfavorable features;
and such law and regulation places limitations on the amounts of certain
extensions of credit to executive officers and directors. Although the Company
does not currently lend funds to its executive officers and directors, the Bank,
from time to time, lends funds to executive officers. The Bank's policy
regarding loans to directors and executive officers is in accordance with such
requirements. Loans made by the Bank to its directors and executive officers
shall be 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 do not involve more than the
normal risk of collectibility.
Nielsen and Shoemaker Architects P.C., of which the son of Raymond L.
Nielsen is a principal, has been engaged by the Bank on a periodic basis in the
past to provide professional services and is currently so engaged for the
modernization of multiple branch facilities and installation of automated teller
machines. The engagement was approved by the Board of Directors of the Bank and
architectural fees paid by the Bank during fiscal year 1998 totalling
approximately $76,208 were fixed in accordance with professional standards.
19
<PAGE>
PROPOSAL 2. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended June 30,
1998 were KPMG Peat Marwick LLP. The Company's Board of Directors has
reappointed KPMG Peat Marwick LLP to continue as independent auditors for the
Bank and the Company for the year ending June 30, 1999 subject to ratification
of such appointment by the stockholders.
Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting. They will be given an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
stockholders present at the Annual Meeting.
Unless marked to the contrary, the shares represented by the enclosed
proxy card will be voted FOR ratification of the appointment of KPMG Peat
Marwick LLP as the independent auditors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION
OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT
AUDITORS OF THE COMPANY.
ADDITIONAL INFORMATION
Stockholder Proposals
To be considered for inclusion in the Company's proxy statement and
form of proxy relating to the Annual Meeting of Stockholders to be held in 1999,
a stockholder proposal must be received by the Secretary of the Company at the
address set forth on the attached notice of annual meeting of stockholders, not
later than June 10, 1999. Any such proposal will be subject to 17 C.F.R. ss.
240.14a-8 of the Rules and Regulations under the Exchange Act.
Notice of Business to be Conducted at an Annual Meeting
The Bylaws of the Company provide an advance notice procedure for a
stockholder to properly bring business before an annual meeting. The stockholder
must give written advance notice to the Secretary of the Company not less than
ninety (90) days before the date originally fixed for such meeting; provided,
however, that in the event that less than one hundred (100) days notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be received not later than the close
of business on the tenth day following the date on which the Company's notice to
stockholders of the annual meeting date was mailed or such public disclosure was
made. The advance notice by stockholders must include the stockholder's name and
address, as they appear on the Company's record of
20
<PAGE>
stockholders, a brief description of the proposed business, the reason for
conducting such business at the annual meeting, the class and number of shares
of the Company's capital stock that are beneficially owned by such stockholder
and any material interest of such stockholder in the proposed business. In the
case of nominations to the Board, certain information regarding the nominee must
be provided. Nothing in this paragraph shall be deemed to require the Company to
include in its proxy statement and proxy relating to an annual meeting any
stockholder proposal which does not meet all of the requirements for inclusion
established by the SEC in effect at the time such proposal is received.
Other Matters Which May Properly Come Before the Meeting
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are present at the Annual
Meeting and wish to vote your shares in person, your proxy may be revoked by
voting at the Annual Meeting.
A copy of the Annual Report to Stockholders on Form 10-K, including the
consolidated financial statements for the fiscal year ended June 30, 1998, as
filed with the SEC, will be furnished without charge to stockholders of record
upon written request to Reliance Bancorp, Inc., 585 Stewart Avenue, Garden City,
New York 11530.
By Order of the Board of Directors
/s/ Joseph F. Lavelle
-----------------------------
Joseph F. Lavelle
Secretary
Garden City, New York
October 9, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE
REQUESTED TO SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY
CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
21
