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SCHEDULE 14A INFORMATION
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))
|_| Definitive proxy statement
|X| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-12
Lenox Bancorp, 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)(1) and 0-11.
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(2) Aggregate number of securities to which transactions 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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(4) Date Filed:
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May 2, 2001
Dear Fellow Shareholder:
By now you likely received a letter from Lame alleging we are leveling a
personal attack against him. DO NOT BE FOOLED BY LAME! The question before you
in this proxy battle is who you should choose as directors of the Company and
what affect your choice will have on the financial performance and stock price
of the Company. We gave you information regarding Lame's conduct affecting your
company that was pertinent to that question. Lame did not dispute the facts.
We acknowledge the Company has had problems, and we are working hard to
address those problems. Remember, Lame joined the Board in 1998 and has overseen
the problems experienced by the Company since 1998. Also, Lame presented you
with specific numbers about the Company's financial condition without
identifying reasons for those numbers. We believe Lame's actions have
significantly contributed to the problems experienced by the Company since he
joined the Board in 1998.
1. As a Board member, Lame urged Lenox Savings Bank to buy approximately
$15.0 million in loans from his brother-in-law's mortgage company, Mortgage
House of America. Remember, when Lame was soliciting support for being appointed
to the Board in 1998, his written presentation to the Board stated he thought he
could refer up to $9.0 million in loans directly to Lenox Savings Bank and
thought he could help raise deposits as well. Instead, Lame not only urged us to
to buy loans from Mortgage House of America, but to do so based on interest
rates that other Board members questioned.
o LAME STONGLY ADVOCATED PROJECTIONS THAT INTEREST RATES WOULD
FALL FURTHER AS A REASON TO BUY LOANS FROM MORTGAGE HOUSE. IN
FACT, INTEREST RATES ROSE RAPIDLY. THE ULTIMATE EFFECT OF LAME
URGING US TO DO BUSINESS WITH MORTGAGE HOUSE, AND BEING WRONG
ABOUT THE DIRECTION INTEREST RATES WOULD TAKE, WAS A
SIGNIFICANT DECREASE IN THE BANK'S NET INTEREST MARGIN, WHICH
NEGATIVELY IMPACTED EARNINGS.
2. The significant decrease in stockholders' equity, and in the liquidity
of the Company's stock cited by Lame primarily was due to the substantial stock
repurchase program that Lame promoted and approved. The stock repurchase program
also had the effect of reducing the Company's return on equity because
interest-earning assets were used to fund the stock repurchases.
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Moreover, Lame also sought to have some of his shares purchased by the Company
following the completion of our repurchase program, which would have made Lame's
asserted negative aspects of the program even worse.
3. Lame identifies the Supervisory Agreement as a negative factor. In
fact, the Office of Thrift Supervision cited the uncertainty of who controlled
the Company caused by Lame's actions as the reason the Supervisory Agreement was
required, and specifically demanded Lame be a signatory to that Agreement.
4. Lame cites poor earnings, but fails to acknowledge his role in the
Company's failure to be profitable since he joined the Board. It has cost the
Company a significant amount to fend off Lame's attacks and proposals, which we
firmly believe would be harmful to the Company and stockholders. Had the
Company's expenses remained at 1998 levels, we believe the Company could have
reported a profit in 1999 and 2000. Most recently, Lame has promised to sue
because we chose to hire a proxy solicitor because of the proxy fight initiated
by Lame. However, Lame has hired a proxy solicitor, and has stated that if he
wins, he will have the Company reimburse his expenses. This will take money away
from the Company and further impair the ability of the Company to report net
income.
5. Lame cites the failure of the Company to pay dividends to shareholders
as a negative issue. As a Board member, Lame insisted that we stop paying
dividends, and has informed the Board that he is opposed to paying dividends in
the future, regardless of the Company's performance.
We urge you to take a look at what we have been doing to improve the
performance of the Company's primary asset, the Bank. Notwithstanding the
distractions caused by Lame, we restructured the Bank's portfolio to eliminate
the loans Lame urged us to purchase from Mortgage House, among other things. The
effect has been very positive. For the quarter ended March 31, 2001, the Bank
reported interest income totaling $1.3 million and net income of $93,000. The
Bank's net interest margin is widening, not shrinking. We believe the Bank is
well positioned for the future.
LAME'S PROPOSED INVESTMENT IN THE COMPANY
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Lame is trying to persuade you to vote for him and his nominee by citing
his proposal to make additional investments in Company stock. However, he does
not tell you what he is talking about. Is he proposing to buy stock from the
Company and have the Company sell stock to someone else? On what terms? At what
cost?
The book value of the Company's stock is currently greater than $16.00 per
share. If Lame arranges for his Company stock purchases to be made at the
current market price of roughly $10.00 per share, what does that mean for you?
Last year Lame urged that the Company be sold. If he purchases stock from the
Company before arranging for the sale of the Company, your interest as
shareholders could be substantially diluted.
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We urge you to be cautious when considering Lame's proposals. Remember,
Lame claimed he had an interest in helping the Company when he sought a Board
seat in 1998. Lame now is using precisely the same type of tactics he used to
get on the Board in the first place. We have heard for three years what Lame can
do for us. We have not seen any positive results.
WE URGE YOU NOT TO VOTE FOR LAME. DO NOTHING WITH THE LAME
GROUP WHITE PROXY.
We are committed to enhancing shareholder value in any way possible,
including through a merger or sale of the Company. The Bank, the Company's
primary asset, is currently reporting a profit. We believe that without the
distraction and expense of Lame, the Company can be profitable.
SEND LAME A MESSAGE, VOTE FOR MANAGEMENT'S NOMINEES ON THE
GREEN PROXY CARD.
YOUR BOARD OF DIRECTORS URGES YOU TO COMPLETE, SIGN, DATE AND RETURN
MANAGEMENT'S GREEN PROXY CARD, IN ITS POSTAGE-PAID ENVELOPE, VOTING "FOR" ALL OF
ITS NOMINEES.
PLEASE DO NOT RETURN THE WHITE PROXY CARD TO THE LAME GROUP.
IF ANY OF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER OR OTHER
NOMINEE, PLEASE CONTACT THE PARTY RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT THEM
TO VOTE YOUR SHARES FOR YOUR COMPANY'S NOMINEES ON THE GREEN PROXY CARD.
Sincerely,
/s/ Henry E. Brown
Henry E. Brown
Chairman of the Board
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YOUR VOTE IS IMPORTANT
1. The Board of Directors urges you to DISCARD the WHITE proxy card recently
sent to you by the Lame Group. A "WITHHOLD AUTHORITY" vote on the Lame
Group's White proxy card is not a vote for the Board's nominees. To vote
FOR your Company's nominees you MUST execute a GREEN proxy card.
2. If you voted on a White proxy card BUT WISH TO SUPPORT YOUR COMPANY'S
NOMINEES, please sign, date and mail the enclosed GREEN proxy card in the
postage-paid envelope provided as soon as possible.
3. Remember-only your latest dated proxy will determine how your shares are
to be voted at the meeting.
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4. If any of your shares are held in the name of a bank, broker or other
nominee, please contact the party responsible for you account and direct
them to vote your shares for your Company's nominees on the GREEN proxy
card.
5. For assistance in voting your shares, or for further information, please
contact Ginny Heitzman, Chief Executive Officer of Lenox Bancorp at (513)
531-8655, or our proxy solicitor:
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IF YOU HAVE ANY QUESTIONS, NEED ANOTHER COPY OF OUR APRIL 13, 2001 PROXY
STATEMENT FOR THE ANNUAL MEETING OR NEED FURTHER ASSISTANCE IN VOTING YOUR
SHARES, PLEASE CALL:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
17 STATE STREET, 10TH FLOOR
NEW YORK, NY 10004 CALL TOLL FREE (800) 223-2064
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