<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
BANK OF KENTUCKY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
THE BANK OF KENTUCKY FINANCIAL CORPORATION
1065 BURLINGTON PIKE
FLORENCE, KENTUCKY 41042
(606) 371-2340
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of The
Bank of Kentucky Financial Corporation ("BKFC") will be held at the Triple Crown
Country Club, One Triple Crown Boulevard, Union, Boone County, Kentucky 41091,
on April 17, 1998, at 5:00 p.m. (the "Annual Meeting"), for the following
purposes, all of which are more completely set forth in the accompanying Proxy
Statement:
(i) To reelect three directors of BKFC for terms expiring in 2001;
(ii) To ratify the selection of Crowe, Chizek and Company as the
auditors of BKFC for the current fiscal year; and
(iii) To transact such other business as may properly come
before the Annual Meeting or any adjournments thereof.
Only stockholders of BKFC of record at the close of business on March 9, 1998,
will be entitled to receive notice of and to vote at the Annual Meeting and at
any adjournments thereof. Whether or not you expect to attend the Annual
Meeting, we urge you to consider the accompanying Proxy Statement carefully and
to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY SO THAT YOUR SHARES MAY BE
VOTED IN ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF A QUORUM MAY BE
ASSURED. The giving of a Proxy does not affect your right to vote in person in
the event you attend the Annual Meeting.
By Order of the Board of Directors
Rodney S. Cain, Secretary
Florence, Kentucky
March 31, 1998
<PAGE> 3
THE BANK OF KENTUCKY FINANCIAL CORPORATION
1065 BURLINGTON PIKE
FLORENCE, KENTUCKY 41042
(606) 371-2340
PROXY STATEMENT
PROXIES
The enclosed Proxy is being solicited by the Board of Directors of The
Bank of Kentucky Financial Corporation, a Kentucky corporation ("BKFC"), for use
at the 1998 Annual Meeting of Stockholders of BKFC to be held at the Triple
Crown Country Club, One Triple Crown Boulevard, Union, Boone County, Kentucky
41091, on April 17, 1998, at 5:00 p.m., Eastern Time, and at any adjournments
thereof (the "Annual Meeting"). Without affecting any vote previously taken, the
Proxy may be revoked by a stockholder before exercise by executing a later-dated
Proxy or by giving notice of revocation to BKFC in writing or in open meeting.
Attendance at the Annual Meeting will not, of itself, revoke a Proxy.
Each properly executed Proxy received prior to the Annual Meeting and
not revoked will be voted as specified thereon or, in the absence of specific
instructions to the contrary, will be voted:
FOR the reelection of Rodney S. Cain, Ruth Seligman-Doering and R. C.
Durr as directors of BKFC for terms expiring in 2001; and
FOR the ratification of the selection of Crowe, Chizek and Company
("Crowe Chizek") as the auditors of BKFC for the current fiscal year.
Proxies may be solicited by the directors, officers and other employees
of BKFC in person or by telephone, telecopy, telegraph or mail. The cost of
soliciting proxies will be borne by BKFC.
Only stockholders of record as of the close of business on March 9,
1998 (the "Voting Record Date"), are eligible to vote at the Annual Meeting and
will be entitled to cast one vote for each common share of BKFC ("Share") owned.
BKFC's records disclose that, as of the Voting Record Date, there were 1,753,967
votes entitled to be cast at the Annual Meeting.
This Proxy Statement is first being mailed to stockholders of BKFC on
or about March 31, 1998.
VOTE REQUIRED
ELECTION OF DIRECTORS
At the Annual Meeting, three directors are to be elected for terms
expiring in 2001. Stockholders may cumulate votes in the election of directors.
Such cumulative voting enables a stockholder to cast the number of votes such
stockholder is entitled to cast times the number of directors to be elected for
any one nominee or to distribute such votes among two or more nominees.
The three nominees receiving the greatest number of votes will be
elected as directors. Shares as to which the authority to vote is withheld are
not counted toward the election of directors or toward the election of the
individual nominees specified on the Proxy.
RATIFICATION OF SELECTION OF AUDITORS
The affirmative vote of the holders of a majority of the votes cast in
person or by proxy at the Annual Meeting is necessary to ratify the selection of
Crowe Chizek as the auditors of BKFC for the current fiscal year. The effect of
an abstention is the same as an "against" vote. If a shareholder has signed and
dated a proxy in the form of the enclosed Proxy, but has not voted on the
ratification of the selection of Crowe Chizek as the auditors by marking the
appropriate box on the Proxy, such person's Shares will be voted FOR the
ratification of the selection of Crowe Chizek as the auditors.
-1-
<PAGE> 4
VOTING SECURITIES AND OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
only persons known to BKFC to own beneficially more than five percent of the
Shares as of March 1, 1998:
<TABLE>
<CAPTION>
Amount and Nature Percentage of
Name and Address(1) of Beneficial Ownership(2) Shares Outstanding
- ------------------- -------------------------- ------------------
<S> <C> <C>
Rodney S. Cain and
Jacqueline M. Cain 312,071 (3) 17.79%
R. C. Durr and
R. C. Durr Company, Inc. 313,258 (4) 17.85
- -------------
</TABLE>
(1) Mr. and Mrs. Cain, Mr. Durr and R. C. Durr Company, Inc., through Mr.
Durr, its sole stockholder, may be contacted in care of BKFC at 1065
Burlington Pike, Florence, Kentucky 41042.
(2) A person is the beneficial owner of Shares if such person, directly or
indirectly, has sole or shared voting or investment power over such
Shares or has the right to acquire such voting or investment power
within 60 days. All Shares are owned with sole voting and investment
power by each person listed, unless otherwise indicated by footnote.
(3) Includes 310,899 Shares held jointly by Mr. and Mrs. Cain.
(4) Includes 210,558 Shares owned by R. C. Durr Company, Inc. and 500
Shares subject to an option. Mr. Durr is the sole stockholder of R. C.
Durr Company, Inc.
-2-
<PAGE> 5
The following table sets forth certain information with respect to the
number of Shares beneficially owned by each director of BKFC and by all
directors and executive officers of BKFC as a group as of March 1, 1998:
<TABLE>
<CAPTION>
Amount and Nature of Percent of Common
Name and Address(1) Beneficial Ownership(2) Shares Outstanding
- ------------------- ----------------------- ------------------
<S> <C> <C>
Rodney S. Cain 312,071(3) 17.79%
Ruth Seligman-Doering 34,220 1.95
R. C. Durr 313,258(4) 17.85
John J. Flesch 13,385 0.76
Thomas L. Franxman 13,367(5) 0.76
Harry J. Humpert 12,806(6) 0.73
David E. Meyer 21,914 1.25
Dr. John E. Miracle 23,732(7) 1.35
Mary Sue Rudicill 21,866(8) 1.25
Robert B. Sathe 34,220 1.95
William E. Snyder 13,373 0.76
Herbert H. Works 6,862 0.39
Robert W. Zapp 53,042(9) 3.02
All directors and executive officers of 874,116 49.77
BKFC as a group (13 persons)
- ------------
</TABLE>
(1) Each of the persons listed in this table may be contacted at the
address of BKFC, 1065 Burlington Pike, Florence, Kentucky 41042.
(2) A person is the beneficial owner of Shares if such person, directly or
indirectly, has sole or shared voting or investment power over such
Shares or has the right to acquire such voting or investment power
within 60 days. All Shares are owned with sole voting or investment
power by each person listed, unless otherwise indicated by footnote.
For directors Seligman-Doering, Durr, Franxman, Rudicill and Snyder,
the number includes 500 Shares that may be acquired upon the exercise
of an option.
(3) Includes 310,899 Shares owned jointly by Mr. Cain and his wife.
(4) Includes 210,558 Shares owned by R. C. Durr Company, Inc., of which Mr.
Durr is the sole stockholder.
(5) Includes 4,596 shares owned by Mr. Franxman's wife.
(6) Includes 4,596 Shares owned by Mr. Humpert's wife and 1,143 shares
owned by his daughter.
(7) Includes 16,158 Shares owned jointly by Dr. Miracle and his wife.
(8) Includes 4,500 Shares owned by Belleview Sand and Gravel, Inc., of
which Ms. Rudicill is Chairman and which is owned by Ms. Rudicill and
her husband.
(9) Includes 5,030 Shares owned jointly by Mr. Zapp and his wife, 1,800
Shares held by Mr. Zapp's wife as custodian for Mr. Zapp's three
children and 4,212 shares owned by his wife.
BOARD OF DIRECTORS
ELECTION OF DIRECTORS
The Amended Articles of Incorporation and By-Laws of BKFC provide for a
Board of Directors consisting of not less than nine directors and not more than
fifteen directors, divided into three classes. The Board of Directors of BKFC
currently consists of thirteen directors, all of whom were elected at the 1996
Annual Meeting of BKFC Stockholders. Only three of the five directors whose
terms expire in 1998 have been nominated for reelection as directors of BKFC.
Each of such three directors
-3-
<PAGE> 6
will be elected for a three-year term. In accordance with BKFC's By-Laws, any
vacancy on the Board of Directors may be filled by the Board of Directors for
the remainder of the full term of the directorship. The Board of Directors
currently has no plans with respect to filling the two vacancies that will
remain in the class of directors whose terms expire in 2001. Each of the
directors of BKFC is also a director of The Bank of Kentucky, Inc. (the "Bank"),
BKFC's only subsidiary.
The entire Board of Directors of BKFC acts as a Nominating Committee
for selecting nominees for election as directors. In accordance with Section 3.3
of the By-Laws of BKFC, nominees for election as directors may be proposed only
by the directors or by a stockholder entitled to vote for directors if such
stockholder has submitted a written nomination to the Secretary of BKFC by the
later of the November 30th immediately preceding the annual meeting of
stockholders or the sixtieth day before the first anniversary of the most recent
annual meeting of stockholders held for the election of directors (unless the
annual meeting is not held on or before the thirty-first day following such
anniversary, in which case such written notice must be submitted no later than
the close of business on the seventh day following the day on which the notice
of the annual meeting is mailed to stockholders). Each such written nomination
must state the name, age, business or residence address of the nominee, the
principal occupation or employment of the nominee, the number of Shares owned
either beneficially or of record by each such nominee and the length of time
such Shares have been so owned.
If any nominee is unable to stand for election, the Proxies will be
voted for such substitute as the Board of Directors recommends. At this time,
the Board of Directors knows of no reason why any nominee would be unable to
serve if elected. Stockholders may cumulate votes in the election of directors.
The Board of Directors proposes the reelection of the following
directors for terms expiring in 2001:
<TABLE>
<CAPTION>
Term Director of Director of the
Name Age(1) Position(s) Held Expires BKFC Since Bank Since (2)
---- --- ---------------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Rodney S. Cain 59 Secretary and Director 2001 1994 1990
Ruth Seligman-Doering 57 Director 2001 1994 1990
R. C. Durr 78 Chairman and Director 2001 1994 1990
</TABLE>
- -----------
(1) As of March 1, 1998.
(2) BKFC acquired the Bank in 1995.
The following directors will continue to serve after the Annual Meeting
for the terms indicated:
<TABLE>
<CAPTION>
Term Director of Director of the Became Director
Name Age(1) Position(s) Held Expires BKFC Since Bank Since (2) of Burnett (3)
---- --- ---------------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
David E. Meyer 63 Director 1999 1994 1991 -
Dr. John E. Miracle 55 Director 1999 1994 1991 -
Mary Sue Rudicill 54 Director 1999 1994 1991 -
William E. Snyder 51 Director 1999 1995 1995 1990
Harry J. Humpert 72 Director 2000 1995 1995 1946
Robert B. Sathe 51 Director 2000 1994 1990 -
Herbert H. Works 69 Director 2000 1994 1992 -
Robert W. Zapp 46 Director 2000 1994 1990 1995
</TABLE>
- --------
(1) As of March 1, 1997.
(2) BKFC acquired the Bank in 1995.
(3) BKFC acquired Burnett Federal Savings Bank ("Burnett") and caused it to
be merged into the Bank in 1995.
-4-
<PAGE> 7
Rodney S. Cain was a director of Fifth Third Bank of Boone County,
formerly Boone State Bank, from 1977 until January 1990. Mr. Cain has served as
the Secretary of the Bank since 1990 and of BKFC since 1994. Mr. Cain is also
the Chairman and CEO of Wiseway Supply and has served in that capacity since
1972. Since 1996, Mr. Cain has been Secretary of the Workforce Development
Cabinet for the State of Kentucky.
Ruth M. Seligman-Doering has been the President and the CEO of Charles
Seligman Distributing Company, Inc., for the past fourteen years.
R. C. Durr was one of the founders of Boone State Bank. From the time
Boone State Bank was organized in 1971 until Boone State Bank was acquired by
Fifth Third Bank in 1985, Mr. Durr was active in the day-to-day management of
the activities of the institution. After such acquisition, Mr. Durr served as
the Chairman of the Board of Fifth Third Bank of Boone County, the successor to
Boone State Bank, until he resigned in order to participate in the organization
of the Bank. Mr. Durr has served as the Chairman of the Board of Directors of
the Bank since 1990 and of BKFC since 1994.
David E. Meyer is the President of Wolfpen Associates, a commercial
real estate firm; the managing partner of two commercial real estate investment
firms, Meyer Realty and Florence Commercial; the President of Fuller Square
Corporation, which owns the property on which Florence Commercial's building is
located; and the retired President of H. Meyer Dairy Company. Mr. Meyer served
as a director of Fifth Third Bank, Northern Kentucky, from 1981 through January
1991.
John E. Miracle, D.M.D., is a dentist and has been associated with
General Family Dentistry in Northern Kentucky for 22 years.
Mary Sue Rudicill has been the Chairman of Belleview Sand and Gravel,
Inc., and Gravelview Trucking Company for fifteen years. Ms. Rudicill is a
director of Farmer's Mutual Life Insurance Company and was formerly a director
of Fifth Third Bank of Boone County.
William E. Snyder has been the Vice President and General Manager of
Freightliner Trucks of Cincinnati Incorporated since July 1997. From December
1996 to July 1997, Mr. Snyder was the Manager of Wholesale Operations of Bob
Sumerel Tire Co. Prior to such time, Mr. Snyder was the Vice President of
Freightliner of Cincinnati, Inc., a company which operates a truck dealership
located in Northern Kentucky, for ten years. Mr. Snyder also served as the
Treasurer of Burnett from 1990 to 1995.
Harry J. Humpert is the President of Humpert Enterprises, Inc., a
company which operates Klingenberg's Hardware and Paint in Covington, Kentucky.
Mr. Humpert became Chairman of the Board of Directors of Burnett in 1990.
Robert B. Sathe has been a Regional Vice-President of CIGNA Financial
Advisors, Inc., for the last seventeen years.
Herbert H. Works has been the President of Boone-Kenton Lumber for 34
years. Mr. Works served on the Board of Directors of Fifth Third Bank of Boone
County from 1980 until 1991, when he resigned in order to serve as a director of
the Bank.
Robert W. Zapp is the President and the Chief Executive Officer of the
Bank and BKFC. From June 1988 until January 1990, Mr. Zapp was the President of
Fifth Third Bank of Kenton County, formerly Security Bank. Mr. Zapp resigned as
President of such institution in order to participate in the organization of the
Bank. From January 1982 until June 1988, Mr. Zapp was the Executive Vice
President and the Senior Loan Officer of Fifth Third Bank of Boone County. Mr.
Zapp is also a member of the Board of Directors of Woodspoint Nursing Home.
MEETINGS OF DIRECTORS
The Board of Directors of BKFC met nine times for regularly scheduled
and special meetings during the fiscal year ended December 31, 1997. Each
director attended at least 75% of the aggregate of such meetings held during his
or her service as a director, except Dr. Miracle.
The Board of Directors of the Bank met 12 times for regularly scheduled
and special meetings during the fiscal year ended December 31, 1997.
-5-
<PAGE> 8
COMMITTEES OF DIRECTORS
The Board of Directors of BKFC has no standing committees. Nominations
for election to the Board of Directors are determined by the entire Board of
Directors. See "Election of Directors."
The Board of Directors of the Bank has several committees, including an
Audit Committee.
The Audit Committee's functions are to develop and ensure compliance
with an audit policy and to ensure that an independent audit is performed
annually. The members of the Audit Committee are Messrs. Flesh, Humpert and
Meyer and Ms. Rudicill, and the Committee met twice in 1997.
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of BKFC:
Name Position(s) Held
- ---- ----------------
R. C. Durr Chairman of the Board
Robert W. Zapp President and Chief Executive Officer
Rodney S. Cain Secretary
John J. Flesch Treasurer
For ages of and biographical information regarding each of these
executive officers, except Mr. Flesch, see "BOARD OF DIRECTORS - Election of
Directors."
John J. Flesch is a retired insurance claims superintendent, having
served State Farm Insurance Company in such capacity from 1962 through 1990. Mr.
Flesch served as Vice President of Burnett from 1990 until 1995 and has served
as Treasurer of BKFC since 1995. He is also a director of the Mother of God
Cemetery Association, Inc.
-6-
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
BKFC does not pay any compensation to its executive officers. Executive
officers of the Bank are compensated by the Bank for services rendered to the
Bank. Except for the President of the Bank, directors and executive officers
receive compensation as set forth below under "director compensation". The
following table sets forth certain information with respect to compensation paid
to the President of the Bank.
Summary Compensation Table
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Annual Compensation (1) All Other
Compensation
Name and Principal Position Year Salary($) Bonus($) ($)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert W. Zapp, President 1997 $132,211 $70,000 $16,449(2)
1996 $125,000 $50,000 $17,711(3)
1995 $118,000 $21,200 $14,124(3)
</TABLE>
- ------------------
(1) Does not include amounts attributable to other miscellaneous benefits.
The cost to BKFC of providing such benefits to Mr. Zapp was less than
10% of his cash compensation.
(2) Consists of a contribution of $14,461 to the Bank's Profit Sharing Plan
for Mr. Zapp's account and a matching contribution to Mr. Zapp's 401(k)
plan account of $1,988.
(3) Consists of contributions to the Bank's Profit Sharing Plan for
Mr. Zapp's account.
DIRECTOR COMPENSATION
BKFC and the Bank do not pay directors fees. Each director of the Bank,
except Mr. Zapp, received a $500 payment in December 1997 and an option to
purchase 500 Shares in June 1997.
STOCK OPTION PLAN
At the 1997 Annual Meeting of Stockholders of BKFC, the stockholders
approved The Bank of Kentucky Financial Corporation 1997 Stock Option and
Incentive Plan (the "Stock Option Plan"). The Board of Directors of BKFC
reserved 360,000 Shares for issuance by BKFC upon the exercise of options
granted to certain directors, officers and employees of BKFC and the Bank from
time to time under the Stock Option Plan. Options to purchase 500 Shares were
awarded in 1997 pursuant to the Stock Option Plan to each of the non-employee
directors.
The committee that administers the Stock Option Plan (the "Stock Option
Committee") may grant options under the Stock Option Plan at such times as they
deem most beneficial to BKFC on the basis of the individual participant's
position, duties and responsibilities, the value of the individual's services to
BKFC and any other factor the Stock Option Committee deems relevant. Options
granted under the Stock Option Plan to employees may be "incentive stock
options" ("ISOs") within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), which, if certain conditions are met, permit
the optionees to delay the recognition of federal taxable income on the shares
received upon the exercise of the options. Options granted under the Stock
Option Plan to directors and officers who are not employees of BKFC or the Bank
will not qualify under the Code and thus will not be ISOs ("Non-qualified Stock
Options").
The option exercise price for options granted to employees will be
determined by the Stock Option Committee at the time of the grant, but must not
be less than 100% of the fair market value of the Shares on the date of the
grant. The exercise price for options granted to non-employee directors and
non-employee officers shall be the fair market value of the Shares on the date
of the grant. The term of each option will be fixed by the Stock Option
Committee although no ISO will be exercisable after the expiration of ten years
from the date of grant. However, if an ISO is granted to a participant who
-7-
<PAGE> 10
owns more than 10% of BKFC's outstanding Shares at the time the ISO is granted,
the exercise price of the ISO may not be less than 110% of the fair market value
of the Shares on the date of the grant and the ISO shall not be exercisable
after the expiration of five years from the date of the grant.
An option may not be transferred or assigned other than by will or in
accordance with the laws of descent and distribution. If a participant is
"terminated for cause," as defined in the Stock Option Plan, any option which
has not been exercised shall terminate as of the date of such termination for
cause.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank has extended loans to certain of its and BKFC's directors and
executive officers, their affiliates and members of their families. All such
loans were made in the ordinary course of business on substantially the same
terms, including interest rates and collateral requirements, as those prevailing
at the time for comparable transactions with other persons and did not present
more than the normal risk of collectibility or other unfavorable features.
The Bank has a lease agreement for office premises located at 1065
Burlington Pike with Mr. Durr, R. C. Durr Company, Inc., and Mr. Cain's sons,
John S. Cain, Rodney C. Cain and David Alfred Cain, each of whom is a lessor
under the lease agreement. The annual rental expense under this lease was
$178,170, $176,820 and $161,972 for the years ended December 31, 1997, 1996 and
1995, respectively. The lease has an initial term of 15 years expiring in 2006
and may, at the option of the Bank, be renewed for three successive five-year
periods.
The Bank has a lease agreement for office premises located on Weaver
Road in Boone County, Kentucky, with Ms. Seligman-Doering and Mr. Sathe as
lessors under the lease agreement. Total rental expense under this lease was
$64,885 for the year ended December 31, 1997, and $58,987 for each of the years
ended December 31, 1996 and 1995. The lease has an initial term of 15 years
expiring in 2007 and may, at the option of the Bank, be renewed for three
successive five-year periods.
The Bank has a lease agreement for office premises located on Kentucky
Highway 18 in Boone County, Kentucky, with William R. Rudicill, the husband of
Ms. Rudicill. Total rental expense under this lease was $10,051 for each of the
years ended December 31, 1997, 1996 and 1995. The lease has an initial term of
15 years expiring in 2008 and may, at the option of the Bank, be renewed for
three successive five-year periods.
The Bank has a lease agreement for office premises located on Houston
Road in Boone County, Kentucky, with Dr. Miracle, Geraldine G. Miracle, Jennifer
A. Meyer, Maria A. Meyer, Leila L. Meyer, Herbert E. Works, Mark T. Wilson,
Nicolette Wilson, Bryan E. Wilson and Josephina Wilson, each of whom is a lessor
under the lease agreement. Geraldine Miracle is Dr. Miracle's spouse. Jennifer
Meyer, Maria Meyer and Leila Meyer are daughters-in-law of Mr. Meyer. Herbert E.
Works is the son of Mr. Works. Mark Wilson, Nicolette Wilson, Bryson Wilson and
Josephina Wilson are Mr. Works' wife's sons and their wives. The annual rental
expense under this lease was $73,467 for each of the years ended December 31,
1997, 1996 and 1995, respectively. The lease has an initial term of 15 years
expiring in 2009 and may, at the option of the Bank, be renewed for three
successive five-year periods.
The Bank has an oral month-to-month lease agreement for office premises
located at 12020 Madison Pike in Nicholson, Kentucky, with Nicholson Properties
LLC. R. C. Durr owns 50% of Nicholson Properties LLC. The annual rental expense
under this agreement is $24,000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, BKFC's directors and executive
officers and persons holding more than ten percent of the common shares of BKFC
are required to report their ownership of common shares and changes in such
ownership to the Securities and Exchange Commission (the "SEC") and BKFC. The
SEC has established specific due dates for such reports. Based upon a review of
such reports, BKFC must disclose any failures to file such reports timely in
proxy statements used in connection with annual meetings of shareholders. BKFC
is not aware of any failures to file such reports timely in 1997.
-8-
<PAGE> 11
SELECTION OF AUDITORS
The Board of Directors has selected Crowe Chizek as the auditors of
BKFC and its subsidiaries for the current fiscal year and recommends that the
stockholders ratify the selection. Crowe Chizek has been the auditor of BKFC
since 1995. Management expects that a representative of Crowe Chizek will be
present at the Annual Meeting, will have the opportunity to make a statement if
he or she so desires and will be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the votes cast is
necessary to ratify the selection of Crowe Chizek as the auditors of BKFC for
the current fiscal year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION
OF CROWE CHIZEK AS THE AUDITORS FOR THE CURRENT FISCAL YEAR.
PROPOSALS OF SECURITY HOLDERS AND OTHER MATTERS
Except for nominations for directors, as explained herein at "BOARD OF
DIRECTORS - Election of Directors," any proposals of security holders intended
to be included in BKFC's proxy statement for the 1999 annual meeting of
stockholders should be sent to BKFC by certified mail and must be received by
BKFC not later than December 1, 1998.
Management knows of no other business that may be brought before the
Annual Meeting, including matters incident to the conduct of the Annual Meeting.
It is the intention of the persons named in the enclosed Proxy to vote such
Proxy in accordance with their best judgment on any other matters that may be
brought before the Annual Meeting.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN AND
RETURN THE PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
By Order of the Board of Directors
Florence, Kentucky Rodney S. Cain, Secretary
March 31, 1998
-9-
<PAGE> 12
REVOCABLE PROXY
THE BANK OF KENTUCKY FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
APRIL 17,1998
The undersigned hereby appoints R. C. Durr and Rodney Cain, or either
of them, with full powers of substitution and resubstitution, to act as proxy or
proxies for the undersigned to vote all shares of Common Stock of The Bank of
Kentucky Financial Corporation (the "Company") which the undersigned is entitled
to vote at the Annual Meeting of Stockholders (the "Meeting"), to be held April
17, 1998 at Triple Crown Country Club, One Triple Crown Boulevard, Union, Boone
County, Kentucky, 41091, and at any and all adjournments thereof, as follows:
<TABLE>
<CAPTION>
I. The election of the following directors:
<S> <C>
___ FOR nominees listed below (except as otherwise indicated) _____ WITHHOLD authority to vote for nominees listed below
For a term expiring in 2001: Rodney S. Cain, Ruth Seligman-Doering, R.C. Durr
Instructions:
1. To withhold authority to vote for any individual nominee, write the
nominee's name in the space provided below:
-------------------------------------------------------------------------------------------------------
2. If you wish to vote cumulatively, indicate below how you want your
votes allocated among the nominees.
--------------------------------------------------------------------------------------------------------
II. The ratification of the appointment of Crowe, Chizek FOR AGAINST ABSTAIN
and Company as independent auditors of the Company
for the year ended December 31, 1998. [ ] [ ] [ ]
</TABLE>
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE DIRECTORS
NOMINATED AND "FOR" THE PROPOSAL LISTED.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS NOMINATED AND FOR THE
PROPOSAL LISTED. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY
WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGEMENT. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED
AT THE MEETING.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
This proxy shall be deemed terminated and of no further force and effect if the
undersigned attends and votes in person at the Annual Meeting or gives written
notice of revocation or submits a later-dated proxy received by the Company
before the Meeting. The undersigned acknowledges receipt from the Company, prior
to the execution of this Proxy, of Notice of the Meeting, a Proxy Statement
dated March 31, 1998, and a copy of the 1997 Annual Report to Stockholders.
-----------------------------------
SIGNATURE OF STOCKHOLDER Date
-----------------------------------
SIGNATURE OF STOCKHOLDER Date
Please sign exactly as your name appears above on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, only one holder's signature is required.
PLEASE PROMPTLY COMPLETE, DATE, SIGN, AND MAIL THIS PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
