SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240-14a-11(c) or Section 240-14a-12
First Keystone Financial, Inc.
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(Name of Registrant as Specified in its Charter)
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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)(4) and 0-11
1) Title of each class of securities to which transaction applies:
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computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
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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.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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[FIRST KEYSTONE LOGO]
December 30, 2004
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
First Keystone Financial, Inc. The meeting will be held at the Towne House
Restaurant located at 117 Veterans Square, Media, Pennsylvania, on Wednesday,
January 26, 2005 at 2:00 p.m., Eastern Time. The matters to be considered by
stockholders at the Annual Meeting are described in the accompanying materials.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend the
meeting in person. We urge you to mark, sign and date your proxy card today and
return it in the envelope provided, even if you plan to attend the Annual
Meeting. This will not prevent you from voting in person, but will ensure that
your vote is counted if you are for any reason unable to attend.
Your continued support of and interest in First Keystone Financial, Inc.
are sincerely appreciated.
Sincerely,
/s/ Donald S. Guthrie
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Donald S. Guthrie
Chairman and Chief Executive Officer
FIRST KEYSTONE FINANCIAL, INC.
22 WEST STATE STREET
MEDIA, PENNSYLVANIA 19063
(610) 565-6210
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 26, 2005
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of First Keystone Financial, Inc. (the "Company") will be held at the
Towne House Restaurant located at 117 Veterans Square, Media, Pennsylvania, on
Wednesday, January 26, 2005 at 2:00 p.m., Eastern Time, for the following
purposes, all of which are more completely set forth in the accompanying Proxy
Statement:
(1) To elect two (2) directors for four-year terms or until their
successors are elected and qualified;
(2) To ratify the appointment by the Audit Committee of the Board of
Directors of Deloitte & Touche LLP as the Company's independent
auditors for the fiscal year ending September 30, 2005; and
(3) To transact such other business as properly may come before the
meeting or any adjournment thereof. As of the date hereof,
management is not aware of any other such business.
The Board of Directors has fixed December 6, 2004 as the voting record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting. Only those stockholders of record as of the close of
business on that date will be entitled to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Carol Walsh
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Carol Walsh
Corporate Secretary
Media, Pennsylvania
December 30, 2004
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF. HOWEVER, IF YOU ARE A
STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED
ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN ORDER TO VOTE IN PERSON AT
THE ANNUAL MEETING.
FIRST KEYSTONE FINANCIAL INC.
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 26, 2005
This Proxy Statement is furnished to holders of common stock, $.01 par
value per share (the "Common Stock"), of First Keystone Financial, Inc. (the
"Company"), the holding company of First Keystone Bank (the "Bank"). Proxies are
being solicited on behalf of the Board of Directors of the Company to be used at
the Annual Meeting of Stockholders ("Annual Meeting") to be held at the Towne
House Restaurant located at 117 Veterans Square, Media, Pennsylvania, on
Wednesday, January 26, 2005 at 2:00 p.m., Eastern Time, for the purposes set
forth in the Notice of Annual Meeting of Stockholders. This Proxy Statement is
first being mailed to stockholders on or about December 30, 2004.
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the Annual Meeting, stockholders will act upon the matters outlined in
the Notice of Annual Meeting on the cover page of this proxy statement,
including the election of directors and ratification of the Company's
independent auditors. In addition, management will report on the performance of
the Company and respond to questions from stockholders.
WHO IS ENTITLED TO VOTE?
Only stockholders of record as of the close of business on the record date
for the meeting, December 6, 2004 (the "Voting Record Date") are entitled to
vote at the Annual Meeting. On the Voting Record Date, there were 1,928,604
shares of Common Stock issued and outstanding and no other class of equity
securities outstanding. Each issued and outstanding share of Common Stock is
entitled to one vote on each matter to be voted on at the meeting, in person or
by proxy.
HOW DO I SUBMIT MY PROXY?
After you have carefully read this proxy statement, indicate on your proxy
form how you want your shares to be voted. Then sign, date and mail your proxy
form in the enclosed prepaid return envelope as soon as possible. This will
enable your shares to be represented and voted at the Annual Meeting.
IF MY SHARES ARE HELD IN STREET NAME BY MY BROKER, COULD MY BROKER AUTOMATICALLY
VOTE MY SHARES FOR ME?
Yes. Your broker may vote in his or her discretion on the election of
directors and ratification of the auditors if you do not furnish instructions.
CAN I ATTEND THE MEETING AND VOTE MY SHARES IN PERSON?
Yes. All stockholders are invited to attend the Annual Meeting.
Stockholders of record can vote in person at the Annual Meeting. If your shares
are held in street name, then you are not the stockholder of record and you must
ask your broker or other nominee how you can vote at the Annual Meeting.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. If you have not voted through your broker or other nominee, there are
three ways you can change your vote or revoke your proxy after you have sent in
your proxy form.
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- First, you may send a written notice to the Secretary of First
Keystone Financial, Inc., Ms. Carol Walsh, Secretary, First Keystone
Financial, Inc., 22 West State Street, Media, Pennsylvania 19063,
stating that you would like to revoke your proxy.
- Second, you may complete and submit a new proxy form. Any earlier
proxies will be revoked automatically.
- Third, you may attend the Annual Meeting and vote in person. Any
earlier proxy will be revoked. However, attending the Annual Meeting
without voting in person will not revoke your proxy.
If you have instructed a broker or other nominee to vote your shares, you
must follow directions you receive from your broker or other nominee to change
your vote.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of Common Stock outstanding on the record date will
constitute a quorum. Proxies received but marked as abstentions and broker
non-votes will be included in the calculation of the number of votes considered
to be present at the meeting.
WHAT ARE THE BOARD OF DIRECTORS' RECOMMENDATIONS?
The recommendations of the Board of Directors are set forth under the
description of each proposal in this proxy statement. In summary, the Board of
Directors recommends that you vote FOR the nominees for director described
herein and FOR ratification of the appointment of Deloitte & Touche LLP as the
Company's independent auditors for fiscal 2005.
The proxy solicited hereby, if properly signed and returned to us and not
revoked prior to its use, will be voted in accordance with your instructions
contained in the proxy. If no contrary instructions are given, each proxy signed
and received will be voted in the manner recommended by the Board of Directors
and, upon the transaction of such other business as may properly come before the
meeting, in accordance with the best judgment of the persons appointed as
proxies. Proxies solicited hereby may be exercised only at the annual meeting
and any adjournment of the annual meeting and will not be used for any other
meeting.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
Directors are elected by a plurality of the votes cast with a quorum
present. The two persons who receive the greatest number of votes of the holders
of Common Stock represented in person or by proxy at the Annual Meeting will be
elected directors. The affirmative vote of the holders of a majority of the
total votes present in person or by proxy is required for approval of the
proposal to ratify the appointment of the independent auditors. Abstentions are
considered in determining the presence of a quorum, but will not affect the
plurality vote required for the election of directors. Abstentions will have the
effect of a vote against the proposal to ratify the appointment of the
independent auditors. Under rules of the New York Stock Exchange, the proposals
to elect directors and ratify the appointment of the independent auditors are
considered "discretionary" items upon which brokerage firms may vote in their
discretion on behalf of their clients if such clients have not furnished voting
instructions and for which there will not be "broker non-votes."
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INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
DIRECTORS WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Restated Articles of Incorporation of the Company provide that the
Board of Directors of the Company shall be divided into four classes that are as
equal in number as possible, and that members of each class of directors are to
be elected for a term of four years. One class is to be elected annually.
Stockholders of the Company are not permitted to cumulate their votes for the
election of directors. A majority of the members of the Company's Board of
Directors are independent based on an assessment of each member's qualifications
by the Board, taking into consideration the Nasdaq National Market's
requirements for independence. The Board of Directors has determined that
Messrs. Calderoni, Hendrixson, Naessens, O'Donnell and Soss do not have any
material relationships with the Company that would impair their independence.
The Nominating Committee has recommended the re-election of Mr. Hosier and
Mr. Soss as directors. No directors or executive officers of the Company are
related to any other director or executive officer of the Company by blood,
marriage or adoption except for Donald G. Hosier, Jr. and Robert R. Hosier (who
serves as a Senior Vice President of the Bank) who are brothers. Each nominee
for director currently serves as director of the Company.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominees for director listed
below. If the person or persons named as nominee should be unable or unwilling
to stand for election at the time of the Annual Meeting, then the proxies will
nominate and vote for one or more replacement nominees recommended by the Board
of Directors. At this time, the Board of Directors knows of no reason why the
nominees listed below may not be able to serve as directors if elected.
The following tables present information concerning the nominees for
director of the Company and each director of the Company whose term continues,
including such person's tenure as a director of the Bank (if applicable). Ages
are reflected as of September 30, 2004.
NOMINEES FOR DIRECTOR FOR FOUR-YEAR TERMS EXPIRING IN 2009
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AGE THE PAST FIVE YEARS SINCE
- --------------------- --- -------------------------------------------------- --------
Donald G. Hosier, Jr. 49 Director; President of First Keystone 2001
Insurance Services, LLC, a subsidiary of
the Bank, and a principal with Montgomery
Insurance Services, Inc., Media, Pennsylvania,
an insurance brokerage firm.
Marshall J. Soss 58 Director; President and Chief Executive Officer 2001
of KarMar Realty Group, Inc., Chadds Ford,
Pennsylvania, a commercial and investment real
estate service company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE ABOVE
NOMINEES FOR DIRECTOR.
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MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
DIRECTORS WHOSE TERMS EXPIRE IN 2006
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AGE THE PAST FIVE YEARS SINCE
- --------------------- --- -------------------------------------------------- --------
Edward Calderoni 82 Director; Associate-broker of Century 21-Alliance, 1982
a real estate firm located in Aston and Media,
Pennsylvania.
William J. O'Donnell, CPA 37 Director; Corporate Solutions Manager/IT Group 2002
with Wawa, Inc., Wawa, Pennsylvania since 2000;
served as Information Technology Manager with
Vlasic Foods International, Cherry Hill, New Jersey
from 1998 to 2000; former Information Technology
Project Leader with ARCO Chemical Co., Newtown
Square, Pennsylvania.
DIRECTORS WHOSE TERMS EXPIRE IN 2007
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AGE THE PAST FIVE YEARS SINCE
- --------------------- --- -------------------------------------------------- --------
Donald S. Guthrie 69 Chairman of the Board and Chief Executive Officer 1994
of the Company; served as President of the Company
from 1994 until 2002; President and Chief Executive
Officer of the Bank; previously a member of the law
firm of Jones, Strohm & Guthrie, P.C., Media,
Pennsylvania.
Edmund Jones 86 Director; former Chairman of the Board of the Bank 1947
from 1979 until 1993; member of the law firm of
Jones, Strohm & Guthrie, P.C., Media, Pennsylvania.
Jerry A. Naessens 68 Director; retired former Chief Financial Officer of 2004
Thistle Group Holding Co., Philadelphia,
Pennsylvania from 1996 to 2002 and President of
Roxborough-Manayunk Bank, Philadelphia,
Pennsylvania from 2001 to 2002; previously Chief
Financial Officer of Roxborough-Manayunk Bank from
1991 to 2001.
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DIRECTORS WHOSE TERMS EXPIRE IN 2008
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AGE THE PAST FIVE YEARS SINCE
- --------------------- --- -------------------------------------------------- --------
Bruce C. Hendrixson 60 Director, Owner of Garnet Ford and Garnet Volkswagen, 2003
Chester County, Pennsylvania.
Thomas M. Kelly 48 Director; President of the Company since 2002 and 1997
Chief Operating Officer since 2004; previously
served as Chief Financial Officer of the Company
from 1994 to 2004; has served as Executive Vice
President and Chief Operating Officer of the Bank
since 2004 and previously Chief Financial Officer
of the Bank since 1991 and Executive Vice President
since 1995; former Senior Manager at Deloitte &
Touche LLP.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Set forth below is information with respect to the principal occupations
during at least the last five years for the six executive officers of the
Company and/or the Bank who do not serve as directors. There are no arrangements
or understandings between a director of the Company and any other person
pursuant to which such person was elected an executive officer of the Company.
ROSE M. DIMARCO. Age 42. Ms. DiMarco has served as Senior Vice President
and Chief Financial Officer of the Company and the Bank since January 2004 and
previously as Senior Vice President of Finance since July 2002 and has been
employed in various capacities at the Bank since 1984.
ROBERT R. DWYER. Age 38. Mr. Dwyer has served as Senior Vice President and
Director of Lending at the Bank since May 2004; previously Vice President of
Lending with First Penn, Feasterville, Pennsylvania from April 2003 to May 2004;
Vice President and Business Advisor, PNC Bank, Abington, Pennsylvania from
January 2002 to April 2003; and prior thereto, Assistant Vice President of
Lending at Commerce Bank, Philadelphia, Pennsylvania.
ROBERT R. HOSIER. Age 43. Mr. Hosier has served as Senior Vice President
of Information Technology since July 2002 and has been employed in various
capacities at the Bank since 1983.
ELIZABETH M. MULCAHY. Age 67. Ms. Mulcahy has served as Senior Vice
President of Human Resources, Branch Operations and Security since 1991 and has
been employed in various capacities at the Bank since 1964.
ROBIN G. OTTO. Age 46. Ms. Otto has served as Senior Vice President of
Marketing and Business Development of the Bank since December 2002; previously
marketing consultant with Palindrome Consulting, Glen Mills, Pennsylvania from
August 1996 to December 2002; and prior thereto, Ms. Otto served as an officer
of the Bank.
CAROL WALSH. Age 56. Ms. Walsh has served as Corporate Secretary since
August 1991 and has been employed in various capacities at the Bank since 1970.
COMMITTEES AND MEETINGS OF THE BOARD OF THE COMPANY AND BANK
The Board of Directors of the Company meets no less than quarterly and may
have additional special meetings upon the request of the President or a majority
of the directors. During the fiscal year ended September 30, 2004, the Board of
Directors of the Company met eight times. No director attended fewer than 75% of
the total number of Board meetings or committee meetings on which he or she
served that were held during fiscal 2004 other
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than Mr. Hendrixson. The Board of Directors of the Company has established the
following committees, among others:
AUDIT COMMITTEE. The Audit Committee consists of Messrs. Calderoni,
Hendrixson, Naessens and O'Donnell. The Audit Committee reviews the records and
affairs of the Company, engages the Company's external auditors, meets with the
Company's outsourced internal auditor, and reviews their reports. All of the
members of the Audit Committee are independent as such term is currently defined
in the Nasdaq Stock Market's listing standards ("Nasdaq Independence Rules") and
the regulations of the Securities and Exchange Commission. The Audit Committee
meets on a quarterly and on an as needed basis and met four times in fiscal
2004. On September 29, 2004, the Board of Directors of the Company adopted an
amended and restated Audit Committee Charter, a copy of which is attached as
Appendix A to this proxy statement.
The Board of Directors has determined that Mr. O'Donnell, a member of the
Audit Committee, meets the requirements recently adopted by the Securities and
Exchange Commission for qualification as an audit committee financial expert. An
audit committee financial expert is defined as a person who has the following
attributes: (i) an understanding of generally accepted accounting principles and
financial statements; (ii) the ability to assess the general application of such
principles in connection with the accounting for estimates, accruals and
reserves; (iii) experience preparing, auditing, analyzing or evaluating
financial statements that present a breadth and level of complexity or
accounting issues that are generally comparable to the breadth and complexity of
issues that can reasonably be expected to be raised by the registrant's
financial statements, or experience actively supervising one or more persons
engaged in such activities; (iv) an understanding of internal controls and
procedures for financial reporting; and (v) an understanding of audit committee
functions.
The identification of a person as an audit committee financial expert does
not impose on such person any duties, obligations or liability that are greater
than those that are imposed on such person as a member of the Audit Committee
and the Board of Directors in the absence of such identification. Moreover, the
identification of a person as an audit committee financial expert for purposes
of the regulations of the Securities and Exchange Commission does not affect the
duties, obligations or liability of any other member of the Audit Committee or
the Board of Directors. Finally, a person who is determined to be an audit
committee financial expert will not be deemed an "expert" for purposes of
Section 11 of the Securities Act of 1933.
NOMINATING COMMITTEE. The Nominating Committee consists of Messrs. Soss,
O'Donnell and Calderoni, who is Chairman of the Committee. The Nominating
Committee, which is responsible for reviewing and nominating candidates to the
Board, met twice during fiscal 2004. The Committee met once in November 2003 in
connection with the nominations for the annual meeting of stockholders in
January 2004 and one time in February 2004 with respect to the election of Mr.
Naessens to the Board. All of the members of the Nominating Committee are
independent as such term is defined in the Nasdaq Independence Rules. On
September 29, 2004, the Board of Directors adopted a Nominating Committee
Charter, a copy of which is attached as Appendix B to this proxy statement.
The Nominating Committee considers candidates for director suggested by
its members and other directors, as well as management and stockholders. The
Nominating Committee also may solicit prospective nominees identified by it. A
stockholder who desires to recommend a prospective nominee for the Board should
notify the Company's Secretary or any member of the Nominating Committee in
writing with whatever supporting material the stockholder considers appropriate.
The Nominating Committee also considers whether to nominate any person nominated
pursuant to the provision of the Company's Restated Articles of Incorporation
relating to stockholder nominations, which is described under "Stockholder
Proposals, Nominations and Communications with the Board of Directors." The
Nominating Committee has the authority and ability to retain a search firm to
identify or evaluate potential nominees if it so desires.
The charter of the Nominating Committee sets forth certain criteria the
Committee may consider when recommending individuals for nomination as director
including: (a) ensuring that the Board of Directors, as a whole, is diverse and
consists of individuals with various and relevant career experience, relevant
technical skills, industry knowledge and experience, financial expertise
(including expertise that could qualify a director as an "audit committee
financial expert," as that term is defined by the rules of the Securities and
Exchange Commission), local or community ties and (b) minimum individual
qualifications, including strength of character, mature judgment,
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familiarity with our business and industry, independence of thought and an
ability to work collegially. The Committee also may consider the extent to which
the candidate would fill a present need on the Board of Directors.
In addition to the committees of the Company described above, the Bank
also has established other committees which include members of the Board of
Directors of the Bank as well as senior management and which meet as required.
These committees include, among others, the Executive Committee, Compensation
Committee, Audit Committee, Asset/Liability Committee, Loan Committee, Community
Investment Committee and Asset Quality Review Committee.
COMPENSATION COMMITTEE. The Compensation Committee of the Bank consists of
Messrs. Calderoni, Naessens and O'Donnell. All of the members of the
Compensation Committee are independent as such term is defined in the Nasdaq
Independence Rules. The Compensation Committee reviews overall compensation and
benefits for the Bank's employees and senior officers and recommends
compensation and benefits for the President. The Company does not pay separate
compensation to its officers. The Compensation Committee of the Bank met twice
in fiscal 2004 and its report is included below under "Executive Compensation."
DIRECTORS ATTENDANCE AT ANNUAL MEETINGS
Although we do not have a formal policy regarding attendance by members of
the Board of Directors at Annual Meetings of Stockholders, we expect that our
directors will attend, absent a valid reason for not doing so. In fiscal 2004,
all of our directors attended our Annual Meeting of Stockholders.
REPORT OF THE AUDIT COMMITTEE OF THE COMPANY
The Audit Committee of the Company is responsible for providing
independent, objective oversight of the Company's accounting function and
internal controls. Management is responsible for the preparation, presentation
and integrity of the Company's financial statements, the Company's accounting
and financial reporting principles and the Company's internal controls and
financial reporting procedures designed to assure compliance with accounting
standards and applicable laws and regulations. The Company's independent
auditors are responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with generally accepted auditing
standards and issuing an opinion as to their conformity with generally accepted
accounting principles.
The Audit Committee is composed of directors all of whom are independent
as defined by the Nasdaq Independence Rules. The Audit Committee is governed by
the Audit Committee Charter which specifies, among other things, the scope of
the Committee's responsibilities and how those responsibilities are to be
performed. The responsibilities of the Audit Committee include being the primary
liaison with the external independent auditors and meeting and reviewing reports
prepared by the Company's outsourced internal auditor.
The Audit Committee has reviewed and discussed the audited financial
statements with management. In addition, in compliance with applicable
provisions of the Audit Committee Charter, the Audit Committee has considered
whether the provision of any non-audit services by the independent auditors is
compatible with maintaining the auditor's independence and has discussed with
the Company's independent auditors the matters required to be discussed by
Statement on Auditing Standards No. 61 "Communication with Audit Committees," as
may be modified or supplemented. The Audit Committee has received the written
disclosures and the letter from the independent accountants required by
Independence Standards Board Standard No. 1, as may be modified or supplemented,
and has discussed with the independent accountant, the independent accountant's
independence. Based on the review and discussions referred to above in this
report, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 2004 for filing with the
Commission. The Audit Committee also has recommended the reappointment of
Deloitte & Touche LLP as the Company's independent auditors for the fiscal year
ended September 30, 2005.
AUDIT COMMITTEE
Edward Calderoni Bruce C. Hendrixson
William J. O'Donnell, CPA Jerry A. Naessens
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BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common
Stock as of the Voting Record Date, and certain other information with respect
to (i) the only persons or entities, including any "group" as that term is used
in Section 13(d)(3) of the Exchange Act, who or which were known to the Company
to be the beneficial owner of more than 5% of the issued and outstanding shares
of Common Stock, (ii) each director and executive officer of the Company, and
(iii) all directors and executive officers of the Company as a group.
AMOUNT AND NATURE
NAME OF BENEFICIAL OF BENEFICIAL
OWNER OR NUMBER OF OWNERSHIP AS OF PERCENT OF
PERSONS IN GROUP DECEMBER 6, 2004(1) COMMON STOCK
- ---------------------------------------- ------------------- ------------
First Keystone Financial, Inc. 407,198 21.1%
Employee Stock Ownership Plan Trust(2)
22 West State Street
Media, Pennsylvania 19063
Dimensional Fund Advisors Inc. 123,600(3) 6.4
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Jeffrey L. Gendell 170,800(4) 8.9
Tontine Financial Partners, L.P.
55 Railroad Avenue, Third Floor
Greenwich, Connecticut 06830
Directors:
Edward Calderoni 34,234(5)(6) 1.8(11)
Donald S. Guthrie 96,964(5) 4.9(11)
Bruce C. Hendrixson 554 *
Donald G. Hosier, Jr 5,387(5)(7) *(11)
Edmund Jones 34,730(8) 1.8
Thomas M. Kelly 65,412(5) 3.3(11)
Jerry A. Naessens 6,000 *
William J. O'Donnell 500(9) *
Marshall J. Soss 3,434(5) *(11)
Other Named Executive Officers:
Rose M. DiMarco 14,110(5) *(11)
Stephen J. Henderson 23,750(5) 1.2(11)
Elizabeth M. Mulcahy 79,214(5)(10) 4.1(11)
Robin G. Otto 5,135(5) *(11)
Directors of the Bank who do not serve as
directors of the Company (2 persons) 70,350 3.6(11)
Directors and executive officers of the
Company and the Bank as a group (18 persons) 484,531(5)(11) 23.3(11)
- --------------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. Under regulations promulgated
pursuant to the Exchange Act, shares of Common Stock are deemed to be
beneficially owned by a person if he or she directly or indirectly has or
shares (i) voting power, which includes the power to vote or to direct the
voting of the shares, or (ii) investment power, which includes the power
to dispose or to direct the disposition of the shares. Unless otherwise
indicated, the named beneficial owner has sole voting and dispositive
power with respect to the shares.
(Footnotes continued on following page)
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- ----------------
(2) The First Keystone Financial, Inc. Employee Stock Ownership Plan Trust
(the "Trust") was established pursuant to the First Keystone Financial,
Inc. Employee Stock Ownership Plan (the "ESOP") by an agreement between
the Company and Messrs. Calderoni, Naessens and Hendrixson, who act as
trustees of the plan (the "Trustees"). Under the terms of the ESOP, the
Trustees generally will vote all allocated shares held in the ESOP in
accordance with the instructions of the participating employees.
Unallocated shares will generally be voted by the Trustees in the same
ratio on any matter as to those shares for which instructions are given,
subject in each case to the fiduciary duties of the Trustees and
applicable law. Any allocated shares which either abstain or are not voted
on a proposal will be disregarded in determining the percentage of stock
voted for and against such proposal by the participants. As of the Voting
Record Date, 249,844 shares held in the Trust had been allocated to the
accounts of participating employees including 62,497 shares beneficially
owned by seven executive officers.
(3) Information obtained from a Schedule 13G/A, dated February 6, 2004, filed
with the SEC with respect to shares of Common Stock beneficially owned by
Dimensional Fund Advisors Inc. ("Dimensional"). The Schedule 13G/A states
that Dimensional has sole voting and dispositive power as to all of these
shares. Dimensional disclaims beneficial ownership of these shares.
(4) Information obtained from Schedule 13D/A, filed November 21, 2001 with the
SEC with respect to shares of Common Stock beneficially owned by Tontine
Financial Partners, L.P. ("TFP") which reports shared voting and
dispositive power with respect to all the shares. Tontine Management,
L.L.C. is the general partner to TFP. Mr. Gendell serves as the managing
member of Tontine Management.
(5) Includes shares over which an officer has voting power under the Bank's
401(k)/Profit Sharing Plan ("401(k) Plan") and the ESOP and options to
purchase shares of Common Stock granted pursuant to the 1998 Stock Option
Plan ("1998 Option Plan") and the 1995 Stock Option Plan ("1995 Option
Plan") (collectively, the "Option Plans") which are exercisable within 60
days of December 6, 2004, as follows:
CURRENTLY
401(k) PLAN ESOP EXERCISABLE OPTIONS
----------- ---- -------------------
Edward Calderoni -- -- 8,950
Donald S. Guthrie 16,061 17,073 31,750
Donald G. Hosier, Jr. -- -- 1,434
Thomas M. Kelly 9,739 15,807 25,750
Marshall J. Soss -- -- 1,434
Rose M. DiMarco 2,930 6,280 4,100
Stephen J. Henderson -- -- 19,750
Elizabeth M. Mulcahy 10,517 10,328 26,750
Robin G. Otto 3,341 594 1,200
Directors and executive officers of the
Company and the Bank as a group 59,778 62,497 147,704
(6) Includes 22,999 shares held jointly with Mr. Calderoni's spouse.
(7) Includes 2,411 shares held by the Montgomery Insurance Services, Inc.
Employee Profit Sharing Plan of which Mr. Hosier is a trustee.
(8) Includes 5,000 shares owned by Mr. Jones's spouse.
(9) The 500 shares are held by Mr. O'Donnell's spouse.
(10) Includes 2,182 shares held by Ms. Mulcahy's spouse.
(11) Each beneficial owner's percentage ownership is determined by assuming
that options held by such person (but not those held by any other person)
and that are exercisable within 60 days of the voting record date have
been exercised.
9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of certain information concerning
the compensation paid by the Bank for services rendered in all capacities during
the three years ended September 30, 2004, 2003 and 2002 to the Chief Executive
Officer of the Bank and the four other officers of the Bank whose total salary
and bonus exceeded $100,000 during fiscal 2004 and one additional officer who
was not serving as an executive officer as of the end of fiscal 2004. None of
such officers, three of whom also serve as executive officers of the Company
(Messrs. Guthrie and Kelly and Ms. DiMarco), receive any compensation from the
Company.
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------- --------------------
NAME AND FISCAL OTHER ANNUAL STOCK NUMBER OF ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) GRANTS OPTIONS(2) COMPENSATION(3)
- -------------------------- -------- --------- --------- --------------- ------- ---------- ---------------
Donald S. Guthrie 2004 $ 282,885 $ 30,000 $ 24,273 $ -- -- $ 40,932
Chairman of the Board 2003 268,000 30,000 23,378 -- -- 47,237
and Chief Executive 2002 253,000 25,000 -- -- -- 56,234
Officer
Thomas M. Kelly 2004 $ 203,450 $ 20,000 $ 35,584 $ -- -- $ 38,179
President and Chief 2003 197,000 25,000 32,683 -- -- 27,722
Operating Officer 2002 186,000 15,000 -- -- -- 26,069
Stephen J. Henderson 2004(4) $ 96,011 $ 7,000 $ -- $ -- -- $ 23,863
Senior Vice 2003 110,000 5,000 -- -- -- 16,771
President/Lending (until 2002 105,000 6,000 -- -- -- 16,955
July 2004)
Elizabeth M. Mulcahy 2004 $ 109,492 $ 6,000 $ -- $ -- -- $ 23,128
Senior Vice President/ 2003 104,000 8,000 -- -- -- 21,556
Human Resources 2002 99,000 6,000 -- -- -- 22,889
Rose M. DiMarco 2004 $ 95,019 $ 6,000 $ -- $ -- -- $ 17,861
Senior Vice President/ 2003 80,000 5,000 -- -- -- --
Chief Financial Officer 2002 71,250 2,500 -- -- 3,000 --
Robin G. Otto 2004 $ 107,769 $ 7,000 $ -- $ -- -- $ 1,300
Senior Vice President/ 2003 80,646 -- -- 3,000 --
Marketing and Business 2002 -- -- -- -- -- --
Development --
- --------------------
(1) Includes health and long-term care costs of $15,752 and $15,586 for Mr.
Guthrie in fiscal years 2004 and 2003, respectively. Includes health care
costs of $13,359 and $11,012 for Mr. Kelly in fiscal years 2004 and 2003,
respectively. Does not include certain amounts attributable to
miscellaneous personal benefits received by the named executive officers
other than Messrs. Guthrie and Kelly which in the opinion of management of
the Company, the costs to the Bank of providing such benefits to such
persons during the fiscal year did not exceed the lesser of $50,000 or 10%
of the total of annual salary and bonus reported for each such individual.
(2) Consists of stock options granted pursuant to the 1998 Option Plan. The
options vest at the rate of 20% per year from the date of grant.
(3) In fiscal 2004, represents $38,247, $38,179, $22,575, $21,673 and $16,598
contributed by the Bank to the ESOP accounts of Messrs. Guthrie, Kelly and
Henderson and Mesdames Mulcahy and DiMarco also reflects in fiscal 2004,
$2,685, $0, $1,288, $1,455, $1,263 and $1,300 contributed by the Bank to
the 401(k) Plan accounts of Messrs. Guthrie, Kelly and Henderson and
Mesdames Mulcahy, DiMarco and Otto, respectively.
(4) Does not include any amount paid to Mr. Henderson during fiscal 2004
pursuant to the terms of a separation agreement. See "- Employment and
Severance Agreements."
10
STOCK OPTIONS
The following table discloses certain information regarding the options
held at September 30, 2004 by the Chief Executive Officer and the other
executive officers named in the Summary Compensation Table. No options were
granted thereto during the fiscal year ended September 30, 2004.
NUMBER OF OPTIONS AT VALUE OF OPTIONS AT
SHARES SEPTEMBER 30, 2004 SEPTEMBER 30, 2004
ACQUIRED ON VALUE --------------------------------- ---------------------------------
NAME EXERCISE REALIZED EXERCISABLE(1) UNEXERCISABLE EXERCISABLE(1)(2) UNEXERCISABLE
- --------------------- ----------- -------- -------------- ------------- ----------------- -------------
Donald S. Guthrie -- $ -- 31,750 -- $413,969 $ --
Thomas M. Kelly 22,720 445,539 25,750 -- 325,469 --
Stephen J. Henderson 4,000 58,500 19,750 -- 255,469 --
Elizabeth M. Mulcahy 15,446 330,390 26,750 -- 340,219 --
Rose M. DiMarco -- -- 4,100 1,900 34,983 12,193
Robin G. Otto -- -- 1,200 1,800 7,320 10,980
- ------------------
(1) Number of options has been adjusted to reflect effect of two-for-one stock
split effected in fiscal 1998 with respect to options granted prior to the
split.
(2) Based on a per share market price of $22.25 at September 30, 2004. The
exercise prices for the options reflected in the table range from $7.50 to
$16.15.
DIRECTORS' COMPENSATION
BOARD FEES. Directors of the Company received no compensation during
fiscal 2004 except for Messrs. Hendrixson, Hosier and Soss who are paid $1,750
per quarter as directors of the Company and $1,000 in fiscal 2004 to Messrs.
Hosier and Soss for a special meeting of the Board. During fiscal 2004, members
of the Board of Directors of the Bank received $1,000 per meeting attended.
Full-time officers who serve on the Board do not receive any fees for attending
meetings of the Board or committees thereof. During fiscal 2004, the Chairman of
the Board of the Bank received an annual fee of $5,000. During fiscal 2004,
members of the Board serving on the Bank's Audit Committee, Executive Committee,
Community Investment Committee, Compensation Committee and Loan Committee
received $250 per meeting attended, while members of the Board serving on the
Company's Audit Committee received $250 per meeting attended.
STOCK OPTIONS. During fiscal 2002, Messrs. Hosier and Soss, appointed as
directors in fiscal 2001, were each granted options to purchase 2,150 shares at
$14.84 per share, which options vest over a three year period.
OTHER. In February 2004, the Bank entered into a one-year consulting
agreement with Mr. Jones. The agreement terminates on March 1, 2005, however,
upon notice, the term of the agreement may be extended for a one year term
beginning on March 1st, of each year thereafter. Under the terms of the
agreement, Mr. Jones receives $24,000 per year.
EMPLOYMENT AND SEVERANCE AGREEMENTS
On December 1, 2004, the Company and the Bank (collectively the
"Employers"), each entered into amended and restated employment agreements with
Messrs. Donald S. Guthrie and Thomas M. Kelly. The amended and restated
employment agreements are substantially identical to the agreements they
supercede.
Under the terms of the amended and restated agreements, the Employers
agreed to employ Messrs. Guthrie and Kelly each for a term of three years in
their current respective positions. The term of each employment agreement is
extended each year on its anniversary date for a successive additional one-year
period unless the Employers or the officer, not less than 30 days prior to the
annual anniversary date, elect not to extend the employment term.
11
The employment agreements are terminable with or without cause by the
Employers. The officers have no right to compensation or other benefits pursuant
to the employment agreement for any period after voluntary termination or
termination by the Employers for cause, disability, retirement or death,
provided, however, that (i) in the event that the officer terminates his
employment because of failure of the Employers to comply with any material
provision of the employment agreement or (ii) the employment agreement is
terminated by the Employers other than for cause, disability, retirement or
death, Messrs. Guthrie and Kelly will be entitled to a cash severance amount
equal to two times their base salary. In addition, Messrs. Guthrie and Kelly
will be entitled to a continuation of benefits similar to those they are
receiving at the time of such termination for the remaining term of the
agreement or until the officer obtains full-time employment with another
employer, whichever occurs first. If their employment is terminated by the
Employers subsequent to a Change in Control of the Company (as defined in the
agreements) or by the Executive subsequent to a Change in Control of the Company
as a result of certain adverse actions, Messrs. Guthrie and Kelly will be
entitled to a cash severance amount equal to three time their base salary as
well as continuation of benefits under the same terms as described above.
Messrs. Guthrie's and Kelly's agreements provide that they will be
entitled to the use of an automobile. In addition, in the event of Messrs.
Guthrie's or Kelly's death during the term of their respective agreements, their
estates will receive payments equal to the amount of compensation due for the
remainder of the term of their agreements at their respective current salary at
the time of their deaths. Mr. Guthrie's employment agreement also provides for
medical insurance coverage for him and his spouse until he reaches age 72 and
that in the event of his death, his spouse shall be covered under the Bank's
health insurance plan until age 72. Mr. Kelly's employment agreement also
provides medical insurance coverage under such plan during the term of his
agreement for him and the members of his immediate family and provides for
continued coverage for a period of five years following the termination of his
agreement except if he is terminated for cause.
The Employers also entered into two-year amended and restated severance
agreements with Mesdames Elizabeth M. Mulcahy and Carol Walsh effective December
1, 2004. The severance agreements are substantially identical to the agreements
they supercede. Under the terms of such severance agreements, the Employers have
agreed that in the event that such officer's employment is terminated as a
result of certain adverse actions that are taken with respect to the officer's
employment following a Change in Control of the Company, as defined, such
officer will be entitled to a cash severance amount equal to two times her base
salary. The term of each severance agreement shall be extended each year for a
successive additional one-year period unless the Employers or the officer, not
less than 30 days prior to the anniversary date, elect not to extend the term of
the severance agreement.
Each of the employment and severance agreements with the Employers
provides that if the payments and benefits to be provided thereunder, or
otherwise upon termination of employment, are deemed to constitute a "parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), then the officer would be reimbursed for any
excise tax liability pursuant to Sections 280G and 4999 of the Code and for any
additional income taxes imposed as a result of such reimbursement. Because the
amount of the payments and benefits that could constitute a parachute payment is
dependent upon the timing, price and structure of any change in control that may
occur in the future, it is not possible at this time to quantify the severance
benefits payable to the officers under the employment or severance agreements.
A "Change in Control" generally is defined in the employment and severance
agreements to include, among other things, (i) the acquisition by any person of
20% or more of the Company's outstanding voting securities, (ii) a change in a
majority of the directors of the Company during any two-year period without the
approval of at least two-thirds of the persons who were directors of the Company
at the beginning of such period and (iii) approval by the stockholders of the
Company of a transaction which results in the reorganization, merger or
consolidation of the Company other than one in which at least 51% of the equity
ownership interests of the resulting entity are beneficially owned by persons
who immediately prior to such transaction beneficially owned at least 51% of
equity interests of the Company.
In fiscal 2004, the Bank entered into a separation agreement with Mr.
Henderson. Under the terms of such agreement, the Bank agreed, among other
things, to provide Mr. Henderson a retirement benefit equal to approximately
$285,000. In consideration of such benefit, Mr. Henderson agreed to a three-year
non-compete as well as to not disparage the Bank or its affiliates.
12
BENEFITS
DEFERRED COMPENSATION ARRANGEMENTS. The Bank provides supplemental
retirement benefits to Mr. Jones (a director of the Bank and Company) and Mr.
Purdy (a director of the Bank) in recognition of their long service as officers
of the Bank. Under the terms of the Bank's amended arrangements with such
persons, each person receives monthly payments, which payments commenced the
first month subsequent to each such person's retirement. Such payments will
continue as long as such persons continue to serve on the Board of Directors of
the Bank or the Company or in an advisory capacity. In accordance with such
arrangements, such persons received an aggregate of $94,000 during fiscal 2004.
SUPPLEMENTAL RETIREMENT BENEFITS. During fiscal 2004, the Bank implemented
a defined contribution supplemental executive retirement plan (the "SERP")
covering certain executive officers of the Bank. Currently, Messrs. Guthrie,
Kelly and Henderson and Mesdames Mulcahy and Walsh are participants in the SERP.
Under the terms of the SERP, the Bank may choose to make contributions to some
or all of the participants in the SERP. The amount and frequency of
contributions is solely within the discretion of the Bank and the committee
administering the SERP. To the extent the Bank makes contributions to the SERP
on the participants' behalf, the amounts so credited will earn interest at a
rate determined by the Compensation Committee annually. For the initial year of
the SERP, the interest rate was established at 5.0%. Such rate will remain in
effect until such time that the Compensation Committee (which administers the
SERP) chooses to change it. Upon retirement of a participant, he or she will
receive his or her account balance paid out in equal annual payments for a
period not to exceed 15 years provided that a participant can make a prior
election to receive his or her distribution in a lump sum. The SERP also
provides for benefits in the event of the death of the participant or the
termination of the employment of the participant subsequent to a change in
control of the Company. For the fiscal year ended September 30, 2004, the Bank
expensed approximately $837,000 with regard to the SERP for the benefit of the
participants.
REPORT OF THE COMPENSATION COMMITTEE
Under rules established by the Securities and Exchange Commission, the
Company is required to provide certain data and information regarding the
compensation and benefits provided to its Chief Executive Officer and certain
other executive officers of the Bank (since such persons do not receive separate
compensation for service as officers of the Company). The disclosure
requirements for the Chief Executive Officer and such other executive officers
include the use of various tables as well as a report explaining the rationale
and considerations that led to fundamental executive compensation decisions
affecting those individuals. In fulfillment of this requirement, the
Compensation Committee of the Board of Directors of the Bank has prepared the
following report for inclusion in this proxy statement.
The Compensation Committee annually reviews the performance of the Chief
Executive Officer and other executive officers and approves changes to base
compensation as well as the level of bonus, if any, to be awarded. With respect
to all positions within the organization with the exception of the Chief
Executive Officer, the Bank uses a formal quantitative system of job evaluation.
In determining whether the base salary of the Chief Executive Officer should be
increased, the Board of Directors takes into account individual performance,
performance of the Bank, the size of the Bank and the complexity of its
operations, and information regarding compensation paid to executives performing
similar duties for financial institutions in the Bank's market area.
While the Compensation Committee does not use strict numerical formulas to
determine changes in compensation for the Chief Executive Officer and while it
weighs a variety of different factors in its deliberations, it has emphasized
and will continue to emphasize earnings, profitability, capital position and
income level, and return on tangible equity as factors in setting the
compensation of the Chief Executive Officer. Other non-quantitative factors
considered by the Compensation Committee in fiscal 2004 included general
management oversight of the Bank, the quality of communication with the Board of
Directors, and the productivity of employees. Finally, the Compensation
Committee considers the Bank's standing with customers and the community, as
evidenced by the level of customer/community complaints and compliments. While
each of the quantitative and non-quantitative factors described above was
considered by the Compensation Committee, such factors were not assigned a
specific weight in evaluating the performance of the Chief Executive Officer.
Rather, all factors were considered, and based upon the effectiveness of such
officer in addressing each of the factors, and the range of compensation paid to
13
officers of peer institutions, the Board of Directors approved the Compensation
Committee's recommendation to increase the base salary of the Chief Executive
Officer to $283,000 for fiscal 2005.
COMPENSATION COMMITTEE OF THE BANK
Edward Calderoni Jerry A. Naessens William J. O'Donnell
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers,
directors and persons who beneficially own more than 10% of the Common Stock to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("Commission"). Officers, directors and more than 10%
stockholders are required by regulation to furnish the Company with copies of
all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by it, the
Company believes that during the year ended September 30, 2004 and with respect
thereto, all filing requirements applicable to its officers and directors and
more than 10% stockholders have been satisfied, with the exception of one report
covering one transaction by Mr. O'Donnell which was filed late.
14
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Common
Stock since September 30, 1999 with (i) the yearly cumulative total return on
the stocks included in the Russell 2000 Index; (ii) the yearly cumulative total
return on the stocks included in the Nasdaq Bank Index; and (iii) the yearly
cumulative total return on the stocks indexed in the S&P Bank Index. All of
these cumulative returns are computed assuming the reinvestment of dividends at
the frequency with which dividends were paid during the applicable years. The
graph represents $100 invested in the Company's Common Stock at $12.56 per share
on September 30, 1999.
[PERFORMANCE GRAPH]
INDEX 9/30/99 9/30/00 9/30/01 9/30/02 9/30/03 9/30/04
----- ------- ------- ------- ------- ------- -------
First Keystone Financial, Inc. (FKFS) $100.00 $ 84.44 $109.89 $129.89 $217.24 $188.05
Russell 2000 Index (RTY) 100.00 122.01 94.75 84.78 114.13 134.08
Nasdaq Bank Index (BANK) 100.00 105.70 122.38 130.68 154.00 176.79
S&P Bank Index (BIX) 100.00 105.03 105.62 101.19 112.96 132.03
15
TRANSACTIONS WITH CERTAIN RELATED PERSONS
Until November 1996, the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 required that all loans or extensions of credit to
executive officers and directors 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 not involve more than the
normal risk of repayment or present other unfavorable features. In addition,
loans made to a director or executive officer in excess of the greater of
$25,000 or 5% of the Bank's capital and surplus (up to a maximum of $500,000)
must be approved in advance by a majority of the disinterested members of the
Board of Directors.
Except as hereinafter indicated, all loans made by the Bank to its
executive officers and directors are made in the ordinary course of business,
are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and do not involve more than the normal risk of collectibility or
present other unfavorable features.
In accordance with applicable regulations, the Bank extends residential
first mortgage loans to its directors and executive officers secured by their
primary residence pursuant to a benefit program that is widely available to
employees of the Bank and does not give preference to any executive officer or
director over other employees of the Bank. Under the terms of such loans, the
interest rate is 1% below that charged on similar loans to non-employees and
certain fees and charges are waived. Set forth in the following table is certain
information relating to such preferential loans to executive officers and
directors whose loans aggregated in excess of $60,000 which were outstanding at
September 30, 2004.
LARGEST AMOUNT OF
INDEBTEDNESS BETWEEN
OCTOBER 1, 2003 AND BALANCE AS OF
NAME YEAR LOAN MADE SEPTEMBER 30, 2004 SEPTEMBER 30, 2004 INTEREST RATE
---- -------------- -------------------- ------------------ -------------
Thomas M. Kelly 2003 $321,505 $316,576 4.875%
Donald G. Hosier Jr. 2004 333,700 328,138 3.750
Robert R. Hosier 2003 224,000 213,917 4.125
William J. O'Donnell 2002 126,562 119,002 5.000
Robin Otto 2003 165,259 156,846 4.375
Carol Walsh 2003 110,000 105,144 4.375
Bruce C. Hendrixson 2004 333,700 333,335 5.500
Mr. Edmund Jones, a director of the Company and the Bank, is a member of
the law firm, Jones, Strohm & Guthrie, P.C., which serves as general counsel to
the Bank.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Audit Committee of the Company has appointed Deloitte & Touche LLP,
independent registered public accounting firm, to perform the audit of the
Company's financial statements for the fiscal year ending September 30, 2005,
and further directed that the selection of auditors be submitted for
ratification by the stockholders at the Annual Meeting.
The Company has been advised by Deloitte & Touche LLP that neither that
firm nor any of its associates has any relationship with the Company or its
subsidiaries other than the usual relationship that exists between independent
registered public accountants and clients. Deloitte & Touche LLP will have one
or more representatives at the Annual Meeting who will have an opportunity to
make a statement, if they so desire, and who will be available to respond to
appropriate questions.
The Audit Committee considered, in determining whether to appoint Deloitte
& Touche LLP as the Company's auditors, whether the provision of services, other
than auditing services, by Deloitte & Touche LLP is compatible with maintaining
the auditor's independence. In addition to performing auditing services, the
Company's auditors performed other audit- and tax-related services for the
Company in fiscal 2004. These other services
16
included tax services and tax consulting services. The Audit Committee believes
that Deloitte & Touche LLP's performance of these other services is compatible
with maintaining the auditor's independence.
The following table sets forth the aggregate fees paid by us to Deloitte &
Touche LLP for professional services rendered by Deloitte & Touche LLP in
connection with the audit of the Company's consolidated financial statements for
2004 and 2003, as well as the fees paid by us to Deloitte & Touche LLP for
audit-related services, tax services and all other services rendered by Deloitte
& Touche LLP to us during 2004 and 2003.
YEAR ENDED SEPTEMBER 30,
------------------------
2004 2003
---- ----
Audit fees (1) ............................................. $239,000 $164,200
Audit-related fees (2)...................................... 3,500 11,000
Tax fees (3) ............................................... 21,500 20,176
All other fees ............................................. -- --
-------- --------
Total .................................................. $264,000 $195,376
======== ========
- --------------
(1) Audit fees consist of fees incurred in connection with the audit of our
annual financial statements and the review of the interim financial
statements included in our quarterly reports filed with the SEC.
(2) Primarily consist of fees for consultation with regard to accounting
pronouncements for 2004 and 2003.
(3) Tax fees consist of fees incurred in connection with tax planning, tax
compliance and tax consulting services.
The Audit Committee selects the Company's independent auditors and
pre-approves all audit services to be provided by it to the Company. The Audit
Committee also reviews and pre-approves all audit-related, tax and all other
services rendered by our independent auditors in accordance with the Audit
Committee's charter and policy on pre-approval of audit-related, tax and other
services. In its review of these services and related fees and terms, the Audit
Committee considers, among other things, the possible effect of the performance
of such services on the independence of our independent auditors. Pursuant to
its policy, the Audit Committee pre-approves certain audit-related services and
certain tax services which are specifically described by the Audit Committee on
an annual basis and separately approves other individual engagements as
necessary. The pre-approval requirements do not apply to certain services if:
(i) the aggregate amount of such services provided to the Company constitutes
not more than five percent of the total amount of revenues paid by the Company
to its independent auditor during the year in which the services are provided;
(ii) such services were not recognized by the Company at the time of the
engagement to be other services; and (iii) such services are promptly brought to
the attention of the committee and approved by the committee or by one or more
members of the committee to whom authority to grant such approvals has been
delegated by the committee prior to the completion of the audit. The committee
may delegate to one or more designated members of the committee the authority to
grant required pre-approvals. The decisions of any member to whom authority is
delegated to pre-approve an activity shall be presented to the full committee at
its next scheduled meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING SEPTEMBER 30, 2005.
STOCKHOLDER PROPOSALS, NOMINATIONS AND COMMUNICATIONS
WITH THE BOARD OF DIRECTORS
STOCKHOLDER PROPOSALS. Any proposal that a stockholder wishes to have
included in the proxy materials of the Company relating to the next annual
meeting of stockholders of the Company, which is anticipated to be held in
January 2006, must be received at the principal executive offices of the
Company, 22 West State Street, Media, Pennsylvania 19063, Attention: Carol
Walsh, Corporate Secretary, no later than September 1, 2005. If such proposal
complies with all of the requirements of Rule 14a-8 under the Exchange Act, it
will be included in the proxy statement and set forth on the form of proxy
issued for such annual meeting of stockholders. It is urged that any such
proposals be sent by certified mail, return receipt requested.
17
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the Exchange Act may be
brought before an annual meeting pursuant to Article 9.D of the Company's
Amended and Restated Articles of Incorporation, which provides that business at
an annual meeting of stockholders must be (a) properly brought before the
meeting by or at the direction of the Board of Directors, or (b) otherwise
properly brought before the meeting by a stockholder. For business to be
properly brought before an annual meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the Secretary of the Company. To
be timely, a stockholder's notice must be delivered to, or mailed and received
at, the principal executive offices of the Company not later than 60 days prior
to the anniversary date of the immediately preceding annual meeting of
stockholders of the Company. Proposals to be presented at this Annual Meeting
had to be submitted to the Company by November 29, 2004. No such proposals were
received by such date. Proposals to be submitted for consideration at the
Company's next annual meeting of stockholders must be received by November 27,
2005. Such stockholder's notice is required to set forth as to each matter the
stockholder proposes to bring before an annual meeting certain information
specified in the Company's Amended and Restated Articles of Incorporation.
STOCKHOLDER NOMINATIONS. Article 6.F of the Company's Restated Articles of
Incorporation governs nominations for election to the Board of Directors and
requires all such nominations, other than those made by the Board, to be made at
a meeting of stockholders called for the election of directors, and only by a
stockholder who has complied with the notice provisions set forth in such
section. Stockholder nominations must be made pursuant to timely notice
delivered in writing to the Secretary of the Company. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
principal executive offices of the Company not later than 60 days prior to the
anniversary date of the immediately preceding annual meeting. No such notices
were submitted to the Company's Secretary by November 29, 2004 for consideration
at this Annual Meeting.
Each written notice of a stockholder nomination shall set forth (a) as to
each person whom the stockholder proposes to nominate for election or
re-election as a director and as to the person nominated thereby (i) the name,
age, business address and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the class and number of shares of
Company stock that are beneficially owned by such person on the date of such
stockholder notice, and (iv) any other information relating to such person that
is required to be disclosed in solicitations of proxies with respect to nominees
for election as directors, pursuant to the proxy rules under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); and (b) as to the
stockholder giving the notice (i) the name and address, as they appear on the
Company's books, of such stockholder and any other stockholders known by such
stockholder to be supporting such nominees and (ii) the class and number of
shares of Company stock that are beneficially owned by such stockholder on the
date of such stockholder notice and, to the extent known, by any other
stockholders known by such stockholder to be supporting such nominees on the
date of such stockholder notice. The presiding officer of the meeting may refuse
to acknowledge the nomination of any person not made in compliance with the
foregoing procedures.
STOCKHOLDER COMMUNICATIONS. The Board of Directors has adopted a process
by which stockholders may communicate directly with members of the Board.
Stockholders who wish to communicate with the Board may do so by sending written
communications addressed to the Board of Directors, c/o Ms. Carol Walsh, First
Keystone Financial, Inc., 22 West State Street, Media, Pennsylvania, 19063.
ANNUAL REPORTS
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 2004 accompanies this Proxy Statement. Such Annual Report is
not part of the proxy solicitation materials.
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR FISCAL 2004 REQUIRED TO BE FILED UNDER THE EXCHANGE ACT. SUCH WRITTEN
REQUESTS SHOULD BE DIRECTED TO CAROL WALSH, CORPORATE SECRETARY, FIRST KEYSTONE
FINANCIAL, INC., 22 WEST STATE STREET, MEDIA, PENNSYLVANIA 19063. THE FORM 10-K
IS NOT PART OF THE PROXY SOLICITATION MATERIALS.
18
OTHER MATTERS
Each proxy solicited hereby also confers discretionary authority on the
Board of Directors of the Company to vote the proxy with respect to the approval
of the minutes of the last meeting of stockholders, the election of any person
as a director if the nominee is unable to serve or for good cause will not
serve, matters incident to the conduct of the meeting, and upon such other
matters as may properly come before the Annual Meeting. As of the date hereof,
management is not aware of any business that may properly come before the Annual
Meeting other than the matters described above in this Proxy Statement. However,
if any other matters should properly come before the meeting, it is intended
that the proxies solicited hereby will be voted with respect to those other
matters in accordance with the judgment of the persons voting the proxies.
The cost of the solicitation of proxies will be borne by the Company. The
Company has retained Regan & Associates, Inc., a professional proxy solicitation
firm, to assist in the solicitation of proxies. Such firm will be paid a fee of
$5,500. The Company will reimburse brokerage firms and other custodians,
nominees and fiduciaries for reasonable expenses incurred by them in sending the
proxy materials to the beneficial owners of the Company's Common Stock. In
addition to solicitations by mail, directors, officers and employees of the
Company may solicit proxies personally or by telephone without additional
compensation.
YOUR VOTE IS IMPORTANT! WE URGE YOU TO COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD AND RETURN IT TODAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
19
APPENDIX A
FIRST KEYSTONE FINANCIAL, INC.
AUDIT COMMITTEE CHARTER
AS OF SEPTEMBER 29, 2004
I. Audit Committee Purpose
The Audit Committee is appointed by the Board of Directors to assist the Board
in fulfilling its oversight responsibilities. The Audit Committee's primary
duties and responsibilities are to:
- Appoint the Company's independent auditors.
- Monitor the integrity of the Company's financial reporting process
and systems of internal controls regarding finance, accounting,
legal, and regulatory compliance.
- Monitor the qualifications, independence, and performance of the
Company's independent auditors and internal auditor.
- Provide an avenue of communication among the independent auditors,
management, the internal auditor, and the Board of Directors.
The Audit Committee has the authority to conduct any investigation appropriate
to fulfilling its responsibilities, and it has direct access to the independent
auditors as well as anyone in the organization. The Audit Committee has the
ability to retain, at the Company's expense, special legal, accounting, or other
consultants or experts it deems necessary within the Audit Committee's scope of
responsibilities. Furthermore, the Company shall provide for appropriate
funding, as determined by the Audit Committee, in its capacity as a committee of
the Board of Directors, for payment of:
(i) Compensation to any registered public accounting firm engaged for
the purpose of preparing or issuing an audit report or performing
other audit, review or attest services for the Company;
(ii) Compensation to any advisers employed by the Audit Committee as
provided by this Charter; and
(iii) Ordinary administrative expenses of the Audit Committee that are
necessary or appropriate in carrying out its duties.
The Audit Committee shall be directly responsible for appointing,
determining funding for and compensation of, overseeing, evaluating and
terminating the independent auditors in accordance with Section 301 of the
Sarbanes-Oxley Act of 2002 (the "Act") and Rule 10A-3(b)(2) promulgated under
the Securities Exchange Act of 1934, as amended ("Exchange Act").
II. Audit Committee Composition and Meetings
Audit Committee members shall meet the requirements of the NASDAQ Stock
Market (the "Nasdaq"). The Audit Committee shall be comprised of three or more
directors, as determined by the Board, each of whom shall be independent, as
such term is defined in the Rules of the Nasdaq, free from any relationship that
would interfere with the exercise of his or her independent judgment. In order
to maintain independent judgment, Audit Committee members are prohibited from
receiving any consulting, advisory, or other compensatory fee from the Company,
other than payment for board or committee service; provided, however, that
compensatory fees do not include the receipt of fixed amounts of compensation
under a retirement plan (including deferred compensation) for prior service with
the Company or First Keystone Bank (provided that such compensation is not
contingent in any way on the continued service of the director). Furthermore,
Audit Committee members are prohibited from owning 20% or more of the Company's
voting securities. All members of the Committee shall have a basic understanding
of finance and accounting and be able to read and understand fundamental
financial
A-1
statements at the time of their appointment, and at least one member of the
Committee shall have accounting or related financial management expertise within
the meaning of Rules of the Nasdaq.
Audit Committee members shall be appointed by the Board. If an audit
committee Chair is not designated, the members of the Committee may designate a
Chair by majority vote of the Committee membership.
The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. In addition, the Committee, or at least its
Chair, should communicate with management and the independent auditors no less
than quarterly to review the Company's financial statements and significant
findings based upon the auditor's limited review procedures.
III. Audit Committee Responsibilities and Duties
Review Procedures
1. Review and reassess the adequacy of this Charter at least annually. Submit
the charter to the Board of Directors for approval. Have the charter published
at least every three years in accordance with SEC regulations.
2. Review the Company's annual audited financial statements and unaudited
interim financial statements prior to filing or distribution. Review should
include discussion with management and independent auditors of significant
issues regarding accounting principles including critical accounting policies,
practices, and judgments (see Item 10).
3. In consultation with the management, the independent auditors, and the
internal auditors, consider the integrity of the Company's financial reporting
processes and controls. Discuss significant financial risk exposures and the
steps management has taken to monitor, control, and report such exposures.
Review significant findings prepared by the independent auditors and the
internal auditing department together with management's responses.
4. Review with management and the independent auditors the Company's quarterly
financial statements prior to filing or distribution of the Quarterly Report on
Form 10-Q. Such review shall include a discussion of any significant changes to
the Company's accounting principles and any items required to be communicated by
the independent auditors in accordance with AICPA SAS 61 (see Item 9). The Chair
of the Committee may represent the entire Audit Committee for purposes of this
review.
Independent Auditors
5. The Audit Committee shall be directly responsible for the appointment,
compensation, oversight of the work, evaluation, and termination of the
independent auditors (subject, if applicable, to shareholder ratification). The
independent auditors report directly to the Audit Committee and the Audit
Committee will be responsible for the resolution of any disagreements between
management and the independent auditor regarding financial reporting. The Audit
Committee shall also review the independence of the auditors.
6. All auditing services and all non-audit services, which are not prohibited by
law, shall be pre-approved by the Audit Committee pursuant to such processes as
are determined to be advisable.
Exception - The pre-approval requirement set forth in the first
sentence above, shall not be applicable with respect to the provision
of non-audit services, if:
(i) the aggregate amount of all such non-audit services
provided to the Company constitutes not more than
five percent of the total amount of revenues paid by
A-2
the Company to its independent auditor during the
calendar year in which the non-audit services are
provided;
(ii) such services were not recognized by the Company at
the time of the engagement to be non-audit services;
and
(iii) such services are promptly brought to the attention
of the Committee and approved prior to the completion
of the audit by the Committee or by one or more
members of the Committee to whom authority to grant
such approvals has been delegated by the Committee.
Delegation - The Committee may delegate to one or more designated
members of the Committee the authority to grant required pre-approvals.
The decisions of any member to whom authority is delegated under this
paragraph to pre-approve an activity under this subsection shall be
presented to the full Committee at its next scheduled meeting.
The pre-approval policies and procedures will be disclosed in the
Company's proxy statements and annual reports in the manner directed by the
regulations of the SEC or the Rules of the Nasdaq, as applicable.
7. On an annual basis, review and discuss with the independent auditors all
significant relationships they have with the Company that could impair the
auditors' independence. Consider whether the provision of any non-audit services
by the independent auditors is compatible with maintaining the auditor's
independence.
8. Review the independent auditors' audit plan including discussions of audit
scope, staffing, locations, reliance upon management, and internal audit and
general audit approach.
9. With respect to the audit of the Company's financial statements, discuss
certain matters required to be communicated to audit committees in accordance
with AICPA SAS 61 and obtain the written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No. 1.
10. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting. No later than the date of delivery of the report of the
independent auditors on the Company's annual financial statements, obtain a
report from the independent auditors containing (a) all critical accounting
policies used by the Company, (b) alternative accounting treatments that have
been discussed with management along with the potential ramifications of using
those alternatives, and (c) other written communications provided by the
independent auditor to management, such as any management letter and schedule of
unadjusted audit differences.
11. Require independent auditor partner (including both the audit partner having
primary responsibility for the audit and the audit partner responsible for
reviewing the audit) rotation for a period of no less than five years after each
such partner serves in this capacity for five years.
12. Ensure no former upper level employees of the independent auditor who could
influence the independent auditor serve in an accounting role or financial
reporting oversight role of the Company, as such terms are defined by the
regulation.
13. Inquire of the independent auditors whether any member of the audit
engagement team received bonuses or incentive compensation based on the sale of
non-audit products or services to the Company, which is prohibited by the Act
and the provisions of the Exchange Act of 1934 and the regulations promulgated
there under.
14. Ensure that the Company provides the required proxy statement and annual
report disclosure of the fees paid to the independent auditors.
A-3
Internal Audit Function
15. Review the annual internal audit plan and recommend any changes.
16. Review the activities, organizational structure, and qualifications of the
internal audit department, as needed.
17. Review the appointment, performance, and replacement of the internal
auditor.
18. Review significant reports prepared by the internal audit department
together with management's response and follow-up to these reports.
Other Audit Committee Responsibilities
19. Annually prepare a report to shareholders as required by the Securities and
Exchange Commission. The report must be included in the Company's annual proxy
statement. The Audit Committee will also make a specific recommendation,
disclosed in the proxy statement, whether or not the Company's audited financial
statements be included in the Company's annual report to shareholders.
20. Establish procedures for the receipt, retention, and treatment of internal
and external complaints received by the Company regarding accounting, internal
accounting controls, or auditing matters. In establishing such procedures, the
Committee must provide for the ability of the Company's employees to submit by
confidential, anonymous submission any concerns regarding questionable
accounting or auditing matters.
21. Review and approve all related-party transactions (e.g. Company transactions
with any director or executive officer of the Company or any Company security
holder with more than five percent of the voting securities, including immediate
family members or associates or affiliates of any of the above).
22. Perform any other activities consistent with this Charter, the Company's
Amended and Restated Articles of Incorporation and By-laws, and governing law,
as the Committee or the Board deems necessary or appropriate.
23. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
A-4
APPENDIX B
FIRST KEYSTONE FINANCIAL, INC.
CHARTER OF NOMINATING COMMITTEE
OF THE BOARD OF DIRECTORS
I. PURPOSE
The Nominating Committee (the "Committee") is appointed by the Board of
Directors (the "Board") of First Keystone Financial, Inc. (the "Company") to
assist the Board in fulfilling its oversight responsibility. The primary duties
and responsibilities of the Committee are to:
- identify and recommend to the full Board the selection of
qualified individuals to serve as Board members and recommend
to the full Board director nominees for each Annual Meeting of
Shareholders; and
- review nominations for director submitted by shareholders
pursuant to Article 6.F of the Company's Amended and Restated
Articles of Incorporation.
The Committee has the authority to access any consultant of the Company
to aid it in its responsibilities. The Committee has the authority and ability
to retain, compensate and terminate, at the Company's expense, any search firm
used to identify director candidates as is necessary to undertake its
responsibilities.
II. COMPENSATION AND MEETINGS
Members of the Committee, as well as other committees of the Board,
must meet applicable statutory or regulatory requirements relative to director
independence. The Committee must have two or more independent directors as
determined by the Board, each of whom must be independent, non-employee
directors, free from any relationship that would interfere with the exercise of
its members' equitable judgment. Non-independent directors may attend Committee
meetings and assist the Committee in establishing its meeting agendas.
Compensation for service on the Committee will be established by the full Board
based on the recommendations of the Compensation Committee.
Members of the Committee, as well as other committees of the Board, are
appointed by the Board of Directors at its Annual Meeting. (Each committee of
the Board will select the Chair of such committee)
The Committee shall establish its own schedule for meetings throughout
the year. The Committee Chair must approve an agenda in advance of each meeting.
If the Chair is not present, the members of the Committee may designate a Chair
by a majority vote of those present. The Committee shall meet in executive
session annually to review the performance of the Board and/or to discuss any
other matters that it believes should be discussed without management present
and will present a report to the Board.
The Committee shall report to the Board of Directors. The Committee
shall have authority to delegate any of its responsibilities to subcommittees as
it may deem appropriate in its sole discretion and to retain, terminate and
obtain advice, reports or opinions from search firms or other internal or
outside advisors and legal counsel in the performance of its responsibilities,
and shall have the sole authority to approve related fees and retention terms.
III. GOALS, RESPONSIBILITIES AND DUTIES
The Committee shall establish criteria for the selection of new
directors to serve on the Board of Directors.
B-1
A. RECOMMEND QUALIFIED INDIVIDUALS FOR BOARD MEMBERSHIP
- Review individual qualifications for service of
individuals on the full Board;
- Recommend to the Board individuals for Board
membership;
- Review shareholder submitted nominees for election of
directors at the Annual Meeting of Shareholders; and
- Recommend to the Board nominees for election of
directors at the Annual Meeting of Shareholders.
In identifying candidates for membership on the Board of Directors, the
Committee shall take into account all factors it considers appropriate, which
may include (a) ensuring that the Board of Directors, as a whole, is diverse and
consists of individuals with various and relevant career experience, relevant
technical skills, industry knowledge and experience, financial expertise
(including expertise that could qualify a director as an "audit committee
financial expert," as that term is defined by the rules of the Securities and
Exchange Commission), local or community ties and (b) minimum individual
qualifications, including strength of character, mature judgment, familiarity
with the Company's business and industry, independence of thought and an ability
to work collegially. The Committee also may consider the extent to which the
candidate would fill a present need on the Board of Directors.
B. COMMITTEE MEMBERSHIP AND QUALIFICATIONS
- Recommend to the full Board the establishment of
Board committees and subcommittees, as necessary, at
the Annual Meeting of the Board and at other times
during the year, if necessary;
- Recommend to the full Board the membership and
composition of each of the Board committees and
sub-committees and recommend removal of any committee
member, if necessary; and
- Review qualifications of Directors for committee
membership.
C. OTHER
- Maintain minutes of meetings, which are circulated to
the full Board and report to the Board of Directors
on a regular basis.
Date: September 29, 2004
Approved by Board of Directors of the Company
B-2
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE FIRST KEYSTONE FINANCIAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST KEYSTONE
FINANCIAL, INC. ("COMPANY") FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON JANUARY 26, 2005 AND AT ANY ADJOURNMENT THEREOF.
The undersigned, being a stockholder of the Company as of December 6, 2004,
hereby authorizes the Board of Directors of the Company or any successors
thereto as proxies with full powers of substitution, to represent the
undersigned at the Annual Meeting of Stockholders of the Company to be held at
the Towne House Restaurant located at 117 Veterans Square, Media, Pennsylvania,
on January 26, 2005 at 2:00 p.m., Eastern Time, and at any adjournment of said
meeting, and thereat to act with respect to all votes that the undersigned would
be entitled to cast, if then personally present, as set forth herein.
Please be sure to sign and date Date
this Proxy in the box below. ______________________________
______________________ ______________________________
Stockholder sign above Co-holder (if any) sign above
WITH- FOR ALL
FOR HOLD EXCEPT
1. ELECTION OF DIRECTORS [ ] [ ] [ ]
Nominees for four year term:
DONALD G. HOSIER, JR.
MARSHALL J. SOSS
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK "FOR
ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
2. PROPOSAL to ratify the appointment of FOR AGAINST ABSTAIN
Deloitte & Touche LLP as the Company's [ ] [ ] [ ]
independent auditors for the fiscal year
ending September 30, 2005.
PLEASE CHECK BOX IF YOU PLAN TO ATTEND -- [ ]
THE MEETING.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF NOT
OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE BOARD OF
DIRECTORS' NOMINEES TO THE BOARD OF DIRECTORS, FOR PROPOSAL 2 AND OTHERWISE AT
THE DISCRETION OF THE PROXIES. YOU MAY REVOKE THIS PROXY AT ANYTIME PRIOR TO THE
TIME IT IS VOTED AT THE ANNUAL MEETING. THE BOARD OF DIRECTORS RECOMMENDS YOU
VOTE FOR THE BOARD OF DIRECTORS' NOMINEES AND PROPOSAL 2.
The undersigned hereby acknowledges receipt of a Notice of Annual Meeting of
Stockholders of the Company called for January 26, 2005, a Proxy Statement for
the Annual Meeting and the Company's 2004 Annual Report on Form 10-K prior to
the signing of this Proxy.
- DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED. -
FIRST KEYSTONE FINANCIAL, INC.
PLEASE SIGN THIS PROXY EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS PROXY. WHEN
SIGNING IN A REPRESENTATIVE CAPACITY, PLEASE GIVE TITLE. WHEN SHARES ARE HELD
JOINTLY, ONLY ONE HOLDER NEED SIGN.
PLEASE ACT PROMPTLY
SIGN, DATE AND MAIL YOUR PROXY CARD TODAY
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
___________________________________
___________________________________
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