SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
COMMUNITY FINANCIAL CORP.
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(Name of Registrant as Specified In Its Charter)
BARRETT R. ROCHMAN
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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.
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<PAGE>
PROXY STATEMENT
OF
BARRETT R. ROCHMAN
1345 EAST PARK STREET
CARBONDALE, ILLINOIS 62901
(800) 529-3513
Solicitation of Proxies in Opposition to Proxies to be Solicited
by the Board of Directors of Community Financial Corp.
INTRODUCTION
My name is Barrett R. Rochman, and I am a significant stockholder of
Community Financial Corp. ("Community Financial"). I am the fourth largest
stockholder of Community Financial and own more shares of stock than any member
of its Board of Directors. I beneficially own 128,740 shares, which represents
approximately 5.8% of the outstanding shares of stock of Community Financial. I
am sending this Proxy Statement and the enclosed BLUE PROXY card to the holders
of common stock of Community Financial in connection with my solicitation of
proxies to be voted at the 2000 Annual Meeting of Stockholders of Community
Financial or, if directors are not elected at the next Annual Meeting, then at
the next meeting of stockholders at which directors are elected, and at any and
all adjournments of those meetings (the "Stockholders Meeting"). Although I do
not know the time and location of the next Stockholders Meeting, notice of such
meeting will be sent to you by Community Financial. I am soliciting proxies for
use at the Stockholders Meeting (i) to vote in favor of the election of Michael
B. Nadler and me to the Board of Directors of Community Financial, (ii) to vote
in favor of my stockholder proposal included in this Proxy Statement, and (iii)
to vote in my discretion on such other matters as may properly be presented at
the Stockholders Meeting.
I am sending this Proxy Statement to you directly or through your
broker or bank or through Community Financial on or about March 1, 2000.
You should receive two different proxy statements, each with its own
accompanying form of proxy, in connection with the Stockholders Meeting this
year. You are receiving this Proxy Statement and the enclosed BLUE PROXY card
from me. You also should receive a separate proxy statement and proxy card from
the Board of Directors of Community Financial (which probably will be white),
similar to the way you received these materials in prior years. These two proxy
statements will be very different because both the Board of Directors of
Community Financial and I will be attempting to obtain authority from you to
vote your shares at the Stockholders Meeting in accordance with our respective
recommendations. Even if you plan to attend the Stockholders Meeting, I
encourage you to sign and return only the enclosed BLUE PROXY card and not the
proxy card which you may receive from Community Financial. Any BLUE PROXY card
that you sign and return to me will be voted only in accordance with your
instructions.
Only one proxy of yours will be counted and used at the Stockholders
Meeting. If you sign, date and mail a BLUE PROXY card to me and if you later
sign and return a proxy card to Community Financial, the BLUE PROXY card will
not be counted when the votes are tabulated. I strongly urge you not to return
any proxy card sent to you by the Board of Directors of Community Financial.
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<PAGE>
REASONS WHY I AM SOLICITING PROXIES
I decided to seek a position on the Board of Directors in an effort to
encourage the Board to take the following actions:
o to improve the financial performance of Community
Financial;
o to enhance stockholder value at Community Financial;
and
o to reduce directors fees at Community Financial.
I have experience in serving as a director of a publicly-held company,
as I served on the Board of Directors of Heartland Bancshares, Inc., a bank
holding company located in Herrin, Illinois, from December, 1998 to June, 1999,
at which time it was sold to Banterra Corp. Mr. Nadler, my other nominee, has 10
years of banking experience, with his most recent banking position being First
Vice President of Exchange National Bank in Chicago, Illinois from 1979 to 1981,
during which time he was responsible for a $100 million loan portfolio. Exchange
National was a bank with assets of approximately $1 billion before it was sold
and was a subsidiary of a holding company that was a publicly-held company.
As one of the significant stockholders of Community Financial, I am
very interested in the success of our company and in doing what is best for all
Community Financial stockholders. I believe that the current directors are not
operating Community Financial in a manner that is maximizing Community
Financial's financial performance or enhancing the value of Community
Financial's common stock. My belief is supported by the facts: in comparison to
the national averages for bank holding companies, consider for yourself
Community Financial's unfavorable return on stockholder equity, its unfavorable
return on total assets and its weak stock price. The Board of Directors must be
held accountable for Community Financial's weak performance.
COMMUNITY FINANCIAL'S PERFORMANCE - LOOK AT THE FACTS
The first fact that I would like to discuss comes straight out of
Community Financial's news release of February 17, 2000. In that release,
Community Financial reported earnings of 53 cents per share for the year ended
December 31, 1999, as compared to earnings of 57 cents per share for 1998. Last
year, our company's earnings decreased instead of increased. Wayne Benson, the
President and Chief Executive Officer of Community Financial, publicly said this
about our company's 1999 financial results, "While I was heartened to see
vigorous loan growth during the year, I am disappointed in our financial
results." I agree with Mr. Benson in that I too am disappointed with Community
Financial's 1999 financial results.
For many stockholders of companies, the price at which their stock is
trading is very important. I, for one, am happy when the price of my stock goes
up and am unhappy when the stock price remains relatively flat or goes down.
Well, I am very unhappy with the current stock price of Community Financial. On
February 25, 2000, the last trade was at $9-7/8.
If you look back a little farther, Community Financial's stock reached
a 4-year high of $23.50 per share on May 1, 1998. The price of $9-7/8 on
February 25, 2000 represents a decrease in value of almost 60% when compared to
the 4-year high of $23.50. To put it another way, if you had invested $1,000 in
the common stock of Community Financial at $23.50 a share, your investment would
now be worth about $420 (not including dividends). Something must be done to
increase the stock price of our company.
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<PAGE>
Let me summarize for you below the high and low stock prices at which
the common stock of Community Financial has traded in the past 5 years. And
remember, when the stock of Community Financial was first sold to the public in
1995, the initial subscription price was $10 per share.
High Low
---- ---
1995 $14.00 $11.25
1996 $13.75 $11.75
1997 $20.25 $12.75
1998 $23.50 $11.00
1999 $11.50 $ 7.75
Many observers believe that one test of a company's performance is how
it compares to industry averages. Based upon its most recent reports on Form
10-Q and Form 10-K filed with the Securities and Exchange Commission (the
"SEC"), Community Financial had a return on average stockholders equity of 2.41%
for the quarterly period ended September 30, 1999 and a 3.43% return on average
stockholders equity for the year ended December 31, 1998. Based on statistics
included in the Bank Holding Company Performance Report provided by the Federal
Reserve Bank of St. Louis, the average return on equity for bank holding
companies nationwide with assets greater than $300 million, but less than $500
million, was 12.32% for the quarterly period ended September 30, 1999 and 13.21%
for 1998. So, you can easily see that Community Financial's recent returns on
average stockholders equity have been about 20% to 25% of the national averages.
In addition, based again upon its most recent reports on Form 10-Q and
10-K filed with the SEC, Community Financial had a return on average assets of
0.26% for the quarterly period ended September 30, 1999 and 0.40% for the year
ended December 31, 1998. Again, based on statistics included in the Bank Holding
Company Performance Report, the average return on assets for bank holding
companies nationwide with assets greater than $300 million, but less than $500
million, was 1.09% for the quarterly period ended September 30,1999 and 1.14%
for 1998. So, you can see that Community Financial's recent returns on assets
have been about 25% to 35% of the national averages.
I have summarized these facts in the table below.
<TABLE>
<CAPTION>
Bank holding companies
with greater than $300 but
Community Financial less than $500 million in assets
------------------- --------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Return on Equity 2.41% 3.43% 12.32% 13.21%
Return on Assets 0.26% 0.40% 1.09% 1.14%
</TABLE>
Let's face reality and "cut to the chase." In my opinion, Community
Financial's recent financial performance has been relatively poor. To look at it
another way, those of you who bought stock of Community Financial in its initial
public offering in 1995 and who still hold the stock today probably would have
been better off financially investing your money in a 5% bank account five years
ago instead of
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investing in Community Financial stock.(1) All the while, Community Financial
has operated and continues to operate, in my opinion, at a sub-par level.
Now, consider the directors fees that Community Financial paid its
Board members in 1998. Each non-employee member of Community Financial's Board
who is also a director of Community Bank & Trust, N.A. ("CB&T"), Community
Financial's largest subsidiary, received an annual fee of $5,000, except for the
Chairman of the Board of CB&T, who received an annual fee of $15,000. If that is
not enough, the outside directors (other than the Chairman of the Board) also
received a fee of $350 for each Board meeting attended and $100 for each
committee meeting attended (that means an additional $4,200 in fees based on 12
Board meetings per year). Furthermore, certain directors were provided the
opportunity to make as much as $500 per board meeting attended with respect to
the various other subsidiaries of Community Financial.
Here is a summary of these fees based on information from last year's
annual meeting proxy statement.
Person Amount of Fees
------ --------------
Chairman of the Board $15,000 per year.
Other Directors (who are not also $9,200 per year, plus $100
employees of Community Financial) for each committee
meeting of Community
Financial attended.
Wayne H. Benson $16,200 in 1998.
Shirley B. Kessler $5,000 in 1998.
If I am elected, I will immediately recommend that the Board of
Directors reduce or eliminate all directors fees. While I believe people should
be paid for serving on Community Financial's Board of Directors, the directors
fees should be tied to Community Financial's performance. Thus, I would like to
see all directors fees eliminated or reduced until Community Financial's stock
price trades above $14 for six consecutive months and until reasonable earnings
goals are met.
To top it all off, directors are eligible to participate in Community
Financial's Management Recognition Plan (the "MRP"). Almost 60,000 shares have
been issued to directors of Community Financial under the MRP. The question we
stockholders should ask is, "what is our company recognizing?" It appears to me
that Community Financial has recognized and applauded poor company performance
resulting from the Board's actions and decisions. Let's face it, in order to
reflect the true performance of these individuals, the MRP should, at best, be
renamed the "Mediocre Results Plan."
If I am elected, I also will immediately recommend that the Board of
Directors hire a consultant or other advisor which specializes in financial
institutions to make recommendations to the Board regarding specific measures
designed to improve earnings at Community Financial and enhance stockholder
value. I plan to evaluate and recommend specific alternatives for enhancing
stockholder value after I have been
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(1) Assumes a stock price of $9-7/8 as of February 25, 2000. Assuming you
bought stock in Community Financial's initial public offering in 1995 and
received dividends for 5 years at 25 cents per share, your investment would be
worth approximately $11-1/8 as of February 25, 2000. If you had instead invested
$10 in a bank account earning a 5% annual interest rate rather than in Community
Financial's stock in its initial public offering, your investment would have
been worth $12.50 after five years. Neither value has been compounded.
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<PAGE>
elected to the Board of Directors of Community Financial and have had an
opportunity to review the operations of Community Financial as well as the
recommendations of the consultant. These measures and alternatives, if
implemented, hopefully would result in enhanced stockholder value and an
increase in Community Financial's stock price. Additionally, although I have no
plans to recommend or pursue an immediate sale of Community Financial, I am open
to considering a sale of Community Financial as part of a strategy for enhancing
stockholder value.
I believe I can serve the best interests of the stockholders of
Community Financial, but I need your support to elect Michael Nadler and me to
the Board of Directors.
ELECTION OF DIRECTORS OF COMMUNITY FINANCIAL
The Articles of Incorporation of Community Financial that are on file
with the SEC provide that the Board of Directors of Community Financial will
consist of not less than six nor more than eleven directors divided into three
classes as nearly equal in number as possible. The directors of each class are
elected to serve for a term of three years and until their successors have been
elected and qualified. One class is to be elected annually by the stockholders
of Community Financial. A class of two directors should be elected at the
Stockholders Meeting for a three-year term and until their successors have been
elected and qualified. I am soliciting proxies to elect Michael Nadler and me to
fill this class of directors.
The Articles of Incorporation of Community Financial provide that each
share of common stock is entitled to one vote. Directors will be elected by a
majority of the votes cast at a meeting at which a quorum is present. I intend
to vote for Michael Nadler and myself for election as directors whose terms will
expire in 2003.
Only your latest dated proxy will be counted at the Stockholders
Meeting. If you choose to vote by proxy for Michael Nadler and me by using the
enclosed BLUE PROXY, you may not also use the proxy card provided by Community
Financial to vote for any other nominees or any other matters. In addition, you
CANNOT use the proxy card provided by the Board of Directors of Community
Financial to vote for Michael Nadler or me.
I have agreed to serve as a director of Community Financial if elected.
Michael Nadler has informed me that he has agreed to serve as a director of
Community Financial if elected. This is the only agreement or understanding
between Michael Nadler and me. Michael Nadler and I have no agreements or
understandings as to how we will vote or what actions we will propose if elected
as directors. Michael Nadler and I, if elected, will each act in a manner that
we respectively believe will be in the best interests of Community Financial's
stockholders. I believe that immediate action must be taken to improve Community
Financial's financial performance and stock price.
Unless you instruct me otherwise, I will vote the BLUE PROXIES received
by me FOR the election of Michael Nadler and me as directors of Community
Financial.
APPROVAL OF MY PROPOSAL
I also intend to submit the proposal set forth below for consideration
by the stockholders of Community Financial at the upcoming Stockholders Meeting.
Additionally, I intend to submit the following statement in support of my
proposal. Absent instructions to the contrary, the BLUE PROXIES received by me
will be voted FOR my stockholder proposal. The affirmative vote of a majority of
the shares represented at the Stockholders Meeting is required to approve my
proposal.
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<PAGE>
My Stockholder Proposal
-----------------------
RESOLVED, that the stockholders of Community Financial Corp.,
present in person or by proxy, recommend that the Board of Directors
(a) engage the services of a consultant or other advisor which has
experience in advising financial institutions to make recommendations
to the Board of Directors as to specific actions designed to improve
earnings of Community Financial Corp. and enhance stockholder value,
and (b) prepare a report regarding the advisor's or consultant's
recommendations, at reasonable expense, for distribution to
stockholders within six months of this meeting of stockholders.
My Statement in Support of My Proposal
--------------------------------------
I believe that the Board of Directors should hire a consultant
or other advisor which has experience in advising in financial
institutions to assist the Board in taking action designed to improve
earnings and enhance stockholder value at Community Financial and to
increase the stock price of Community Financial. Accordingly, I
respectfully ask you to vote in favor of my proposed resolution. Please
note, however, that if my resolution is approved by stockholders, it
would recommend that the Board of Directors take certain action but not
mandate any action.
INFORMATION ABOUT
BARRETT R. ROCHMAN AND MICHAEL B. NADLER
The following table shows the number and percentage of the outstanding
shares of common stock of Community Financial beneficially owned by my nominees
for election as directors:
Name Number Percentage *
---- ------ ----------
Barrett R. Rochman 128,740 5.8%
Michael B. Nadler 8,000 0.4%
* Based upon 2,213,645 outstanding shares of common stock of
Community Financial, as disclosed in Community Financial's Form 10-Q for the
quarter ended September 30, 1999.
o Barrett R. Rochman
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My principal occupation is the real estate investment business. My
principal real estate investment activities include owning and renting
commercial and residential real estate, purchasing tax certificates in Illinois
and managing real property acquired through tax certificates. I have over 30
years of experience as a real estate investor. I am 56 years old and both my
office and home are located in Carbondale, Illinois, where I have lived for the
past 35 years. My business address is 1345 East Park Street, Carbondale,
Illinois 62901. I engage in my principal occupation through the following
entities:
Rochman Rentals - 1345 East Park Street, Carbondale, Illinois 62901
(rental property company)
S.I. Securities - 1345 East Park Street, Carbondale, Illinois 62901
(real estate investment company)
S.I. Securities, Inc. - 1345 East Park Street, Carbondale,
Illinois 62901 (real estate investment company)
S.I.-P.I. - 1345 East Park Street, Carbondale, Illinois 62901
(real estate investment company)
Boo Noz Corp. - 1345 East Park Street, Carbondale, Illinois 62901
(real estate investment company)
S.I. Boo, LLC - 1345 East Park Street, Carbondale, Illinois 62901
(real estate investment company)
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<PAGE>
The SEC instituted proceedings against me in 1998 alleging that I
violated Section 13(d) of the Securities Exchange Act of 1934 and certain rules
thereunder (collectively the "Laws"). These proceedings were settled on February
17, 1999 without me having to admit or deny any of the alleged violations. As
part of the settlement, the SEC ordered me to cease and desist from committing
or causing any violation or any future violation of the Laws. The proceedings of
the SEC related to certain reports that I was required to file with the SEC
because I owned more than 5% of the outstanding shares of common stock of
Heartland Bancshares, Inc. I was not required to pay any fine or penalty in
connection with the settlement.
o Michael B. Nadler
- --------------------
Mr. Nadler's principal occupation is real estate investment and
consulting. He has 10 years of experience in the banking industry, with his most
recent banking position being First Vice President of Exchange National Bank in
Chicago, Illinois from 1979 to 1981. Exchange National was bank with
approximately $1 billion in assets before it was sold. While at Exchange
National, Mr. Nadler was responsible for the management of a $100 million loan
portfolio. The holding company for Exchange National was a publicly-held
company. Mr. Nadler also has served as president and a senior level manager at
CNA Tax Investors, Ltd. (tax certificate purchasing) from 1982 to 1994 and
national risk manager at Capital Asset Research Corp. (tax certificate and
municipal lien purchasing) from 1994 to 1999. Mr. Nadler is 51 years old and he
resides in Riverwoods, Illinois, which is a suburb of Chicago. He has lived in
Riverwoods, Illinois for the past six years.
Mr. Nadler engages in his real estate investment and consulting
activities through KLN Real Estate Investors, Ltd. (tax purchasing and real
estate investments), 5225 West Touhy Avenue, Suite 213, Skokie, Illinois 60077
and Thornwood Partners, Ltd. (consultants on tax certificate purchasing), 1919
Thornwood Lane, Riverwoods, Illinois 60015.
-----------------------------------
Neither Michael Nadler or I nor any of our associates (i) are, or
within the past year have been, a party to any contract, arrangement or
understanding with any person with respect to any securities of Community
Financial, (ii) have, or during the past two years had, a direct or indirect
interest in any transaction or series of similar transactions or in any
currently proposed transaction or series of proposed transactions to which
Community Financial, or any of its subsidiaries, was or is to be a party, (iii)
have any arrangement or understanding with any person or among ourselves with
respect to any future transactions to which Community Financial or any of its
affiliates will or may be a party, (iv) have any arrangement or understanding
with any person or among ourselves with respect to future employment by
Community Financial or its affiliates, or (v) own any common stock of Community
Financial of record but not beneficially. Neither Michael Nadler or I nor any
companies that we control have had loans outstanding with Community Financial
since the beginning of its last fiscal year.
Michael Nadler and I do not have any arrangement or understanding
with any other person or among ourselves according to which any of us will be
nominated as a director of Community Financial. Neither Michael Nadler or I nor
any of our associates have any interest in the matters to be voted upon at the
Stockholders Meeting other than the respective interests of Michael Nadler and
me as stockholders of Community Financial.
I estimate that my total expenditures relating to my solicitation of
proxies will be approximately $75,000 (including, but not limited to, costs
related to attorneys, printing, transportation and other costs incidental to the
solicitation). My expenditures to date relating to this solicitation have been
approximately $1,700. If elected as a director, I intend to seek reimbursement
of these expenses from Community Financial.
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<PAGE>
I do not know if the Board of Directors will submit my reimbursement request to
a vote of stockholders of Community Financial.
I have not purchased or sold any shares of common stock of Community
Financial prior to January 7, 1999. Since January 7, 1999, my only transactions
in shares of common stock of Community Financial consist of the following
purchases:
Date Number of Shares
---- ----------------
January 7, 1999 1,000 shares
January 8, 1999 800 shares
January 11, 1999 200 shares
February 1, 1999 200 shares
February 9, 1999 2,000 shares
July 1, 1999 8,500 shares
July 2, 1999 7,500 shares
August 25, 1999 5,000 shares
September 1, 1999 4,700 shares
September 8, 1999 2,000 shares
September 23, 1999 6,000 shares
October 5, 1999 6,000 shares
October 19, 1999 4,000 shares
October 20, 1999 3,000 shares
November 2, 1999 6,000 shares
November 4, 1999 5,000 shares
November 30, 1999 2,000 shares
December 27, 1999 600 shares
January 3, 2000 10,000 shares
January 5, 2000 2,000 shares
January 5, 2000 2,300 shares
January 6, 2000 2,300 shares
January 6, 2000 2,000 shares
January 6, 2000 1,000 shares
January 6, 2000 1,000 shares
January 7, 2000 1,000 shares
January 10, 2000 1,100 shares
February 1, 2000 12,500 shares
My wife, Marilyn Rochman, whose address also is 1345 East Park Street,
Carbondale, Illinois 62901, directly owns 6,340 shares of common stock of
Community Financial. During the past two years, Mrs. Rochman has completed the
following purchases of common stock of Community Financial:
Date Number of Shares
---- ----------------
July 6, 1999 440 shares
November 22, 1999 500 shares
December 22, 1999 2,000 shares
December 30, 1999 3,000 shares
January 4, 2000 400 shares
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The Boo Rochman Charitable Corp. and the Rochman Family Investment,
both of which I am administrator, own 20,300 and 2,400 shares of common stock of
Community Financial, respectively. I share the power to vote and dispose of
these shares with my wife. During the past two years, the Boo Rochman Charitable
Corp. or the Rochman Family Investment completed the following transactions in
the common stock of Community Financial, all of which were purchases except as
indicated:
Date Number of Shares
---- ----------------
January 11, 1999 3,000 shares
February 23, 1999 2,000 shares
April 6, 1999 2,500 shares
April 7, 1999 1,500 shares
December 6, 1999 2,000 shares
December 7, 1999 500 shares
December 8, 1999 1,100 shares
December 16, 1999 2,400 shares
December 21, 1999 8,700 shares
January 7, 2000 1,000 shares (sale)
As of the date of this Proxy Statement, the total amount of funds used
in the purchase of shares of common stock of Community Financial by my wife, the
Boo Rochman Charitable Corp., Rochman Family Investment and me totals
approximately $1,156,000. This amount is based on the total number of shares of
common stock of Community Financial that I have purchased, as well as the total
number of shares purchased by my wife, the Boo Rochman Charitable Corp. and
Rochman Family Investments, multiplied by the price per share paid and does not
include broker fees associated with such purchases. To date, I have obtained
personal loans in the amount of approximately $500,000 from the First National
Bank & Trust Company in Carbondale, Illinois, and my wife, the Boo Rochman
Charitable Corp., Rochman Family Investments and I have used a total of
approximately $656,000 of our respective funds, including funds obtained from
broker margin accounts, for such purchases.
Since January 1, 1999, Michael Nadler's transactions in shares of
Community Financial common stock have been the following purchases, all of which
were completed using his personal funds totaling approximately $77,000:
Date Number of Shares
---- ----------------
December 30, 1999 2,000 shares
January 10, 2000 2,000 shares
January 12, 2000 2,000 shares
February 22, 2000 2,000 shares
Mr. Nadler has not purchased or sold any other shares of common stock
of Community Financial.
CERTAIN INFORMATION ABOUT COMMUNITY FINANCIAL
Based upon Community Financial's report on Form 10-Q filed with the SEC
for the quarter ended September 30, 1999, there were 2,213,645 shares of common
stock, $.01 par value per share, of Community Financial outstanding. Under
Community Financial's Articles of Incorporation, each share of common stock is
entitled to one vote on each matter to be considered at the Stockholders
Meeting. The address of Community Financial's principal office is 240 East
Chestnut, Olney, Illinois 62450.
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DATE, TIME AND PLACE OF THE COMMUNITY FINANCIAL
STOCKHOLDERS MEETING
According to the By-Laws of Community Financial currently on file with
the SEC, the Stockholders Meeting will be held at the main office of Community
Financial at such date and time as Community Financial's Board of Directors may
determine. Notice of the date and time of such meeting will be sent to you by
Community Financial. I do not yet know the record date for stockholders entitled
to notice of and to vote at the Stockholders Meeting and any adjournment
thereof.
OTHER MATTERS
I will vote your shares of Community Financial common stock represented
by properly executed BLUE PROXIES in the manner which you direct. If no specific
direction is given, I will vote pursuant to the BLUE PROXIES FOR the election of
Michael Nadler and me to the Board of Directors of Community Financial and FOR
approval of my stockholder proposal set forth above. I am assuming that the only
matters to be presented at the Stockholders Meeting will be the election of
directors of Community Financial and my stockholder proposal. If other matters
are properly presented at the Stockholders Meeting, the BLUE PROXIES will grant
me authority to vote such proxies in my discretion on such matters. Although I
do not expect any such matters to be presented, if they are presented, I intend
to vote in accordance with my best judgment on such matters. I intend to deliver
this Proxy Statement and accompanying form of BLUE PROXY to holders of at least
the percentage of Community Financial's common stock required under applicable
law to carry my stockholder proposal.
Proxies marked as abstentions, broker non-votes or as withholding
authority to vote for Michael Nadler or me as directors or my stockholder
proposal will be treated as shares present for purposes of determining whether a
quorum for the Stockholders Meeting is present but will not be counted as votes
cast for Michael Nadler or me or my stockholder proposal.
Please refer to Community Financial's proxy statement relating to the
Stockholders Meeting that may be sent to all stockholders with respect to
information concerning (i) beneficial ownership by management of Community
Financial's securities, (ii) beneficial owners of 5% or more of Community
Financial's securities, (iii) committees of Community Financial's Board of
Directors, (iv) meetings of Community Financial's Board of Directors and all
committees thereof, (v) certain information regarding the existing directors as
well as management's nominees to serve as directors of Community Financial, (vi)
compensation and remuneration paid and payable to Community Financial's
directors and management, (vii) the date by which stockholders must submit
proposals to Community Financial for inclusion in Community Financial's next
annual meeting proxy statement, and (viii) other matters required by law to be
disclosed. I have no independent knowledge as to the accuracy or completeness of
the proxy statement that Community Financial's Board of Directors may send to
you in connection with the Stockholders Meeting.
The expense of preparing and mailing this Proxy Statement and my other
proxy soliciting material, as well as my cost of soliciting proxies, will be
borne by me but, if elected, I will seek reimbursement of such costs and
expenses from Community Financial. In addition to the use of the mails, proxies
may be solicited by me, by my employees or agents or by employees or agents of
S.I. Securities who will not be specially compensated for such soliciting,
through the use of telephone, fax, telegram, mail, overnight delivery services
and personal solicitation. Approximately two employees or agents will be
involved in soliciting proxies for me. I also will request brokerage firms,
banks, nominees, custodians and fiduciaries to forward my solicitation materials
to the beneficial owners of common stock of Community Financial held by such
institutions or persons, and I will reimburse such institutions and persons for
their reasonable costs of forwarding such material.
-10-
<PAGE>
Once the Board of Directors has established the agenda for the
Stockholders Meeting and the record date for stockholders of Community Financial
who are eligible to attend and vote at the meeting, I may send additional
information to you regarding the meeting. If you buy or sell shares of Community
Financial common stock between the date of this Proxy Statement and the record
date for the Stockholders Meeting, then you may have to complete and sign a new
BLUE PROXY.
IMPORTANT -- Please sign and date only the enclosed BLUE PROXY and mail
it as soon as possible in the self-addressed, postage-prepaid envelope provided.
When you receive a proxy card from Community Financial relating to the
Stockholders Meeting, please do not sign or return it to Community Financial. If
you do so, it may revoke any proxy that you return to me. If you want to revoke
any proxy you have given to me, you may do so by signing and returning a new
proxy (dated subsequent to any previous proxy), by attending the Stockholders
Meeting and voting in person or by sending me a written letter of revocation of
your proxy at the address shown on page 1 of this Proxy Statement.
The date of this Proxy Statement is March 1, 2000.
* * *
IMPORTANT
Your vote is important. No matter how many or how few shares you own,
please sign, date and return to me the enclosed BLUE PROXY as soon as possible.
Please sign and mail only the enclosed BLUE PROXY if you wish to vote
in accordance with my recommendations. Do not sign any proxy card that you may
receive from the Board of Directors of Community Financial.
You must sign your BLUE PROXY exactly as your name appears on your
stock certificate of Community Financial. If you own your stock jointly, both
owners should sign the BLUE PROXY.
STREET NAME STOCKHOLDERS: If your shares of common stock are held in
the name of your broker, bank or other nominee, you must to contact your broker,
bank or nominee and give them instructions as to the voting of your stock. Your
broker or bank cannot vote your shares without receiving your instructions.
Please contact the person responsible for your account and instruct them to
execute a BLUE PROXY as soon as possible.
The proxies that I am soliciting will be valid only at the Stockholders
Meeting. The proxies will not be used for any other meeting and may be revoked
at any time before they are exercised.
If you have any questions or need further assistance, please do not
hesitate to contact me at (800) 529-3513.
-11-
<PAGE>
BARRETT R. ROCHMAN
1345 East Park Street
Carbondale, Illinois 62901
(800) 529-3513
March 1, 2000
Dear Fellow Stockholder:
Enclosed are my proxy statement and proxy card relating to the 2000
annual meeting of stockholders of Community Financial Corp. ("Community
Financial") or, if directors are not elected at the annual meeting, the next
meeting of stockholders at which directors are elected. I decided to solicit
your vote in favor of electing Michael B. Nadler and me to the Board of
Directors of Community Financial because I am disappointed, among other reasons,
with the financial performance and stock price of Community Financial. I also am
soliciting proxies in favor of my stockholder proposal recommending that the
Board of Directors of Community Financial hire an advisor or other consultant
which has experience in advising financial institutions to make recommendations
of specific actions designed to improve earnings at Community Financial and
enhance stockholder value.
As my proxy statement indicates, I am soliciting proxies to elect a
class of two directors of Community Financial who are up for election this year.
I do have past experience with the board of directors of a publicly-held
company, having served on the board of directors of Heartland Bancshares, a bank
holding company in Herrin, Illinois, from December, 1998 to June, 1999, at which
time Heartland was sold to Banterra Corp.
Mr. Nadler, my other nominee, has 10 years of experience in the banking
industry, with his most recent banking position being First Vice President of
Exchange National Bank in Chicago, Illinois from 1979 to 1981. Exchange National
was a bank with approximately $1 billion in assets before it was sold. While at
Exchange National, Mr. Nadler was responsible for the management of a $100
million loan portfolio. The holding company for Exchange National also was a
publicly-held company.
If I am elected, I will encourage the Board of Directors to take
measures designed to improve earnings at Community Financial. These measures, if
implemented, hopefully will result in enhanced stockholder value and an increase
in Community Financial's stock price. Although I have no plans to recommend
pursuing an immediate sale of Community Financial, I remain open to considering
a sale as part of a strategy for enhancing stockholder value.
Among the things that trouble me with Community Financial is its
current stock price. When Community Financial's stock was first offered to the
public in 1995, it sold for $10 a share. On February 25, 2000, some 4 1/2 years
later, the last trade was at $9-7/8. Think about it for a moment, a person who
purchased Community Financial stock in the initial public offering in 1995 and
who still is a stockholder today probably would have been better off financially
investing his or her money in a bank account earning 5% per year rather than
investing in Community Financial stock.
Another thing that frustrates me with Community Financial is the amount
of directors fees paid to our directors. In 1998, each outside director of
Community Financial had the opportunity to receive at least $9,200 per year in
directors and committee fees, with the Chairman of the Board having the
opportunity to receive at least $15,000 per year. If directors fees are going to
be paid, then we should expect better results from
<PAGE>
Stockholders of Community Financial Corp.
March 1, 2000
Page 2
Community Financial. If elected, I will immediately recommend that directors
fees be eliminated or reduced until Community Financial's stock price has traded
above $14 per share for 6 consecutive months and until reasonable earnings goals
are met. I think our directors need an incentive to take appropriate steps to
increase our company's stock price. I would like our directors to establish
earnings and stock price goals each year and not accept directors fees unless
those goals are met.
I also am very disappointed with the Management Recognition Plan of
Community Financial. Under the Management Recognition Plan, approximately 60,000
shares of Community Financial were awarded to directors. That seems to me to be
a lot of stock to be awarded when the stock price of Community Financial is
trading at a price today that is lower than its initial public offering price of
$10 per share and when its returns on equity and assets are significantly below
its peers. The question we stockholders should ask is, "what is our company
recognizing?" It appears to me that the Management Recognition Plan has, at
best, rewarded mediocrity and should instead have been called the "Mediocre
Results Plan."
In addition, I recently read Community Financial's news release of
February 17, 2000. In that release, Community Financial reported earnings of 53
cents per share for the year ended December 31, 1999, as compared to earnings of
57 cents per share for 1998. Last year, our company's earnings decreased instead
of increased. Wayne Benson, the President and Chief Executive Officer of
Community Financial, publicly said this about our company's 1999 financial
results, "While I was heartened to see vigorous loan growth during the year, I
am disappointed in our financial results." I agree with Mr. Benson in that I too
am disappointed with Community Financial's 1999 financial results.
I have two more items to share with you. First, I was unhappy with the
financial performance and stock price of another bank holding company, Heartland
Bancshares, Inc., which was the holding company for Heartland National Bank in
Herrin, Illinois. Heartland was sold to Banterra Corp. last year. I owned almost
8% of the outstanding stock of Heartland Bancshares. I also ran for the board of
directors and solicited proxies in favor of my election. During the two months
before I went on Heartland's board, the stock was trading between about $9 and
$12 per share. Within about a month after I joined the board, the stock was
trading above $14 a share. Now, I'm not suggesting that my going on the board of
Heartland was the sole reason for the increase in the stock price, but I'd like
to think that my appointment to the board did have a positive effect on the
stock price. In addition, shortly after I joined the board at Heartland, it
decided to sell to Banterra Corp. That sale closed in mid-1999 at a sale price
of $15.75 a share. While I am not implying here that similar increases in
Community Financial's stock price or that a sale of Community Financial will
occur if I am elected to the Board, I did want you to know what happened at
another bank holding company on whose board I recently served.
Second, I also was disappointed with the financial performance and
stock price of another holding company, CSB Bancorp, which is the holding
company for Centralia Savings Bank in Centralia, Illinois. I own in excess of 3%
of the outstanding stock of CSB, and I asked the board of directors of CSB to
make another individual and me the management's nominees for election as
directors at the 2000 annual meeting of stockholders of CSB. I wanted to go on
the board with goals of trying to increase earnings and enhance stockholder
value at CSB. When CSB did not respond to my request, I was prepared to mail my
proxy materials to CSB's stockholders and engage in a proxy contest. About 2 or
3 days before I was going to mail my proxy materials, however, CSB announced
that it was going to sell to Midland States Bancorp, with
<PAGE>
Stockholders of Community Financial Corp.
March 1, 2000
Page 3
stockholders to receive a cash price of $16 for each share of CSB (incidentally,
I voluntarily determined not to mail my proxy materials after the merger
announcement was made). Before the announcement of its sale, CSB's stock had
traded at a high of about $11 and a low of about $9 during 1999. Again, while I
am not implying here that a sale of Community Financial will occur if I am
elected to the Board or if I solicit proxies in favor of my election and my
stockholder proposal, I did want you to know what happened at another bank
holding company where I was a significant stockholder and where I was actively
considering running a proxy contest in an effort to get elected to the board.
After you have read my proxy statement, please sign the enclosed BLUE
PROXY card and return it to me as soon as possible in the enclosed
self-addressed, postage pre-paid envelope. If you hold your shares through a
broker or a bank, please call the person responsible for your account as soon as
possible and ask him or her to vote the BLUE PROXY card and not to vote the
proxy card you may receive from Community Financial.
You also should receive a separate proxy statement and proxy card from
the Board of Directors of Community Financial similar to the way you received
those materials in the past. I encourage you to sign and return only the
enclosed BLUE PROXY card and not the proxy card you may receive from Community
Financial. If you do sign, date and return a BLUE PROXY card to me and if you
then later sign and return a proxy card to Community Financial, only the later
proxy will be counted and the BLUE PROXY will not be voted.
Thank you in advance for your support. If you have any questions at
all, need further assistance or want to discuss my views regarding Community
Financial, please do not hesitate to call me at (800) 529- 3513.
Sincerely,
Barrett R. Rochman
<PAGE>
PROXY PROXY
PROXY SOLICITED ON BEHALF OF BARRETT R. ROCHMAN
FOR USE AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS
OF COMMUNITY FINANCIAL CORP. OR, IF DIRECTORS ARE NOT ELECTED AT THAT MEETING,
THEN AT THE NEXT MEETING OF STOCKHOLDERS AT WHICH DIRECTORS ARE ELECTED
The undersigned hereby appoints Barrett R. Rochman as proxy, with full
power to appoint his substitute, to represent and to vote, as indicated below,
all shares of common stock of Community Financial Corp. ("Community Financial")
which the undersigned is entitled to vote at the 2000 Annual Meeting of
Stockholders of Community Financial or, if directors are not elected at that
meeting, then at the next meeting of stockholders at which directors are
elected, and at any and all adjournments thereof (the "Stockholders Meeting"),
upon the following matters:
1. Election of Barrett R. Rochman and Michael B. Nadler as
Directors.
-------------------------------------------------------
[ ] FOR the election of both nominees listed above, except as
indicated below.
[ ] WITHHOLD AUTHORITY to vote for the election of both
nominees listed above.
INSTRUCTION: To withhold authority to vote for the election
of any individual nominee, write that nominee's name in the
space provided below.
2. Stockholder Proposal of Mr. Rochman. Approval of Mr.
Rochman's proposal with regard to hiring a consultant or other
advisor to make recommendations to the Board of Directors
regarding actions to be taken to improve earnings at Community
Financial and enhance stockholder value.
[ ] FOR [ ] WITHHOLD [ ] ABSTAIN
3. Other Matters. In his discretion, Mr. Rochman, as proxy, is
authorized to vote on such other matters as may properly be
presented at the Stockholders Meeting.
Please sign on reverse side
<PAGE>
This Proxy will be voted as directed, but if no direction is indicated,
this Proxy will be voted FOR the election of Barrett R. Rochman and Michael B.
Nadler as directors of Community Financial and FOR the proposal of Mr. Rochman
with regard to hiring a consultant or other advisor to make recommendations to
the Board of Directors regarding actions to be taken to improve earnings at
Community Financial and enhance stockholder value. With respect to any other
matters that may properly be presented at the Stockholders Meeting, Mr. Rochman
intends to vote in accordance with his best judgment on such matters.
THE UNDERSIGNED HEREBY REVOKES ANY AND ALL PROXIES RELATING TO THE
STOCKHOLDERS MEETING PREVIOUSLY GIVEN BY THE UNDERSIGNED WITH RESPECT TO ALL
SHARES OF COMMON STOCK OF COMMUNITY FINANCIAL OWNED BY THE UNDERSIGNED.
Dated: , 2000 ----------------------------------
--------------- (Signature)
----------------------------------
(Signature, if held jointly)
----------------------------------
(Title, if applicable)
Please sign exactly as your name
appears on the stock records of
Community Financial. If there are two
or more owners, both should sign this
proxy. When signing as attorney,
executor, administrator, trustee,
guardian or other representative
capacity, please give full title as
such. If owner is a corporation,
please indicate full corporate name
and sign by an authorized officer. If
owner is a partnership or limited
liability company, please indicate
the full partnership or limited
liability company name and sign by an
authorized person.
