SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ___)
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement Confidential, for Use of the
/X/ Definitive Proxy Statement Commission Only (as permitted
/ / Definitive Additional Materials by Rule 14a-6(e)(2))
/ / Soliciting Material Pursuant to Rule 14a-12
PVF CAPITAL CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
[LETTERHEAD OF PVF CAPITAL CORP.]
September 17, 2004
Dear Stockholder:
We invite you to attend the Annual Meeting of Stockholders of PVF Capital
Corp. (the "Company") to be held at the Company's Corporate Center, 30000 Aurora
Road, Solon, Ohio on Monday, October 18, 2004 at 10:00 a.m., local time.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the meeting. During the meeting, we will
also report on the operations of the Company. Directors and officers of the
Company as well as representatives of Crowe, Chizek and Company LLP, the
Company's independent auditors, will be present to respond to any questions the
stockholders may have.
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE EVEN IF YOU CURRENTLY PLAN TO ATTEND
THE ANNUAL MEETING. Your vote is important, regardless of the number of shares
you own. This will not prevent you from voting in person but will assure that
your vote is counted if you are unable to attend the meeting.
Sincerely,
/s/ C. Keith Swaney
C. Keith Swaney
President
- -------------------------------------------------------------------------------
PVF CAPITAL CORP.
30000 AURORA ROAD
SOLON, OHIO 44139
(440) 248-7171
- -------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on October 18, 2004
- -------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of PVF Capital Corp. (the "Company") will be held at the Company's
Corporate Center, 30000 Aurora Road, Solon, Ohio at 10:00 a.m., local time, on
Monday, October 18, 2004.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of four (4) directors of the Company for two-year terms;
2. The ratification of the appointment of Crowe, Chizek and Company LLP
as independent certified public accountants of the Company for the
fiscal year ending June 30, 2005; and
3. The transaction of such other matters as may properly come before the
Meeting or any adjournments thereof.
The Board of Directors is not aware of any other business to come before
the Meeting.
Any action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. Stockholders of
record at the close of business on September 7, 2004, are the stockholders
entitled to vote at the Meeting and any adjournments thereof.
You are requested to fill in and sign the enclosed form of proxy which is
solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the Meeting in
person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Jeffrey N. Male
Jeffrey N. Male
Secretary
Solon, Ohio
September 17, 2004
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROXY STATEMENT
OF
PVF CAPITAL CORP.
30000 AURORA ROAD
SOLON, OHIO 44139
ANNUAL MEETING OF STOCKHOLDERS
October 18, 2004
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GENERAL
- --------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of PVF Capital Corp. (the "Company") to be
used at the Annual Meeting of Stockholders of the Company (the "Meeting") which
will be held at the Company's Corporate Center, 30000 Aurora Road, Solon, Ohio
on Monday, October 18, 2004 at 10:00 a.m., local time. The accompanying notice
of meeting and this Proxy Statement are being first mailed to stockholders on or
about September 17, 2004.
- --------------------------------------------------------------------------------
VOTING AND REVOCABILITY OF PROXIES
- --------------------------------------------------------------------------------
Proxies solicited by the Board of Directors of the Company will be voted in
accordance with the directions given therein. WHERE NO INSTRUCTIONS ARE GIVEN,
PROPERLY EXECUTED PROXIES WHICH HAVE NOT BEEN REVOKED WILL BE VOTED "FOR" THE
NOMINEES FOR DIRECTOR SET FORTH BELOW AND IN FAVOR OF THE OTHER PROPOSAL SET
FORTH IN THIS PROXY STATEMENT FOR CONSIDERATION AT THE MEETING. The proxy
confers discretionary authority on the persons named therein to vote with
respect to the election of any person as a director where the nominee is unable
to serve or for good cause will not serve, and with respect to matters incident
to the conduct of the Meeting. If any other business is presented at the
Meeting, proxies will be voted by those named therein in accordance with the
determination of a majority of the Board of Directors. Proxies marked as
abstentions will not be counted as votes cast. In addition, shares held in
street name which have been designated by brokers on proxy cards as not voted
("broker no votes") will not be counted as votes cast. Proxies marked as
abstentions or as broker no votes, however, will be treated as shares present
for purposes of determining whether a quorum is present.
Stockholders who execute the form of proxy enclosed herewith retain the
right to revoke such proxies at any time prior to exercise. Unless so revoked,
the shares represented by properly executed proxies will be voted at the Meeting
and all adjournments thereof. Proxies may be revoked at any time prior to
exercise by written notice to the Secretary of the Company at the address above
or by filing of a properly executed, later dated proxy. A proxy will not be
voted if a stockholder attends the Meeting and votes in person. The presence of
a stockholder at the Meeting in itself will not revoke such stockholder's proxy.
- --------------------------------------------------------------------------------
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
- --------------------------------------------------------------------------------
The securities which can be voted at the Meeting consist of shares of the
Company's common stock, $.01 par value per share (the "Common Stock").
Stockholders of record as of the close of business on September 7, 2004 (the
"Record Date") are entitled to one vote for each share of Common Stock then held
on all matters. As of the Record Date, 7,044,365 shares of the Common Stock were
issued and outstanding. The presence, in person or by proxy, of at least a
majority of the total number of shares of Common Stock outstanding and entitled
to vote will be necessary to constitute a quorum at the Meeting.
Persons and groups beneficially owning in excess of 5% of the Common Stock
are required to file certain reports with respect to such ownership pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
following table sets forth, as of the Record Date, certain information as to the
Common Stock beneficially owned by the only persons known to the Company to
beneficially own more than 5% of the Common Stock, by each of the Company's
directors, by the non-director executive officer of the Company named in the
1
Summary Compensation Table set forth under the caption "Proposal I -- Election
of Directors -- Executive Compensation -- Summary Compensation Table," and by
all executive officers and directors of the Company as a group. All executive
officers and directors of the Company have the Company's address.
PERCENT OF SHARES
NAME AND ADDRESS AMOUNT AND NATURE OF OF COMMON STOCK
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OUTSTANDING
- -------------------- ------------------------ ------------------
PERSONS OWNING GREATER THAN 5%:
- -------------------------------
Jeffrey L. Gendell 449,544 (3) 6.38%
Tontine Financial Partners, L.P.
Tontine Management, L.L.C.
Tontine Overseas Associates, L.L.C.
55 Railroad Avenue, 3rd Floor
Greenwich, Connecticut 06830
Umberto Fedeli 352,000 (4) 5.00
P.O. Box 318003
Independence, Ohio 44131
NAME OF DIRECTORS
AND EXECUTIVE OFFICERS:
- -----------------------
DIRECTORS:
- ----------
John R. Male 306,871 (2) 4.34
Robert K. Healey 36,915 (5) *
Gerald A. Fallon 8,360 *
Raymond J. Negrelli 18,524 *
Stuart D. Neidus 47,317 (6) *
Stanley T. Jaros 23,832 *
C. Keith Swaney 229,843 3.24
Ronald D. Holman, II 6,600 *
EXECUTIVE OFFICER:
- ------------------
Jeffrey N. Male 243,258(7) 3.45
All Executive Officers and Directors
as a Group (9 persons) 921,520 12.82
- ---------------------
* Less than 1%.
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to
be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he has or shares voting or investment power with respect to
such Common Stock or has a right to acquire beneficial ownership at any
time within 60 days from the Record Date. As used herein, "voting power" is
the power to vote or direct the voting of shares and "investment power" is
the power to dispose or direct the disposition of shares. Unless otherwise
indicated, the beneficial owner has sole voting and investment power with
respect to the listed shares. The amounts shown include 22,280, 10,082,
8,360, 8,360, 14,108, 14,108, 45,559, 6,600, 14,849 and 144,306 shares that
Directors John R. Male, Robert K. Healey, Gerald A. Fallon, Raymond J.
Negrelli, Stuart D. Neidus, Stanley T. Jaros, C. Keith Swaney and Ronald D.
Holman, II, Mr. Jeffrey N. Male, and all executive officers and directors
as a group, respectively, have the right to acquire pursuant to options
exercisable within 60 days of the Record Date.
(2) Includes 10,216 shares as to which Mr. John R. Male's wife has voting and
investment power and 24,941 shares held by the Bank's 401(k) Plan, as to
which shares Mr. John R. Male has sole voting and shared investment power.
Also includes 188,181 shares held by trusts of which Mr. John R. Male
serves as trustee and as such has sole voting and investment power over
such shares. The amount shown does not include 26,574 shares in which Mr.
John R. Male has a pecuniary interest through this ownership of a limited
partnership interest in a family limited partnership; he does not have or
share voting or dispositive power over such shares.
2
(3) According to their statement on Schedule 13D, as amended filed on February
21, 2003, Jeffrey L. Gendell shares voting and dispositive power over the
listed shares, Tontine Financial Partners, L.P. and Tontine Management,
L.L.C. share voting and dispositive power with respect to 400,902 shares
and Tontine Overseas Associates, L.L.C. shares voting and dispositive power
with respect to 48,642 shares. Amounts are adjusted for 10% stock dividends
paid on the Common Stock on August 29, 2003 and August 31, 2004.
(4) According to his statement on Schedule 13D filed on June 10, 2004. Amounts
are adjusted for a 10% stock dividend paid on the Common Stock on August
31, 2004.
(5) Includes 26,833 shares held by a revocable trust for the benefit of Mr.
Healey; Mr. Healey does not have or share voting or investment power over
such shares. Does not include 88,467 shares held by an irrevocable trust
for the benefit of Mr. Healey's wife, as to which shares Mr. Healey does
not have or share voting or investment power.
(6) Includes 136 shares as to which Mr. Neidus' wife has voting and investment
power.
(7) Includes 130,473 shares held by a revocable trust for the benefit of Mr.
Jeffrey N. Male and 30,385 shares held by a revocable trust for the benefit
of Mr. Jeffrey N. Male's wife; Mr. Jeffrey N. Male is co-trustee of such
trusts and shares voting and investment power over such shares. Also
includes 12,263 shares as to which Mr. Jeffrey N. Male's wife has voting
and investment power. Does not include 23,897 shares owned by Mr. Jeffrey
N. Male's son who resides in his household. The amount shown also does not
include 26,574 shares in which Jeffrey N. Male has a pecuniary interest
through this ownership of a limited partnership interest in a family
limited partnership; he does not have or share voting or dispositive power
over such shares.
- --------------------------------------------------------------------------------
PROPOSAL I -- ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
The Company's Board of Directors is composed of eight members. The
Company's Articles of Incorporation require that, if the Board of Directors
consists of seven or eight members, directors be divided into two classes, as
nearly equal in number as possible, each class to serve for a two-year period
and until their successors are elected and qualified, with approximately
one-half of the directors elected each year. The Board of Directors has
nominated Robert K. Healey, Stuart D. Neidus, C. Keith Swaney and Gerald A.
Fallon, all of whom are currently members of the Board, to serve as directors
for a two-year period and until their successors are elected and qualified.
Under Ohio law, directors are elected by a plurality of the votes cast at the
Meeting, i.e., the nominees receiving the highest number of votes will be
elected regardless of whether such votes constitute a majority of the shares
represented at the Meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF
ROBERT K. HEALEY, STUART D. NEIDUS, C. KEITH SWANEY AND GERALD A. FALLON AS
DIRECTORS OF THE COMPANY.
It is intended that the persons named in the proxies solicited by the Board
of Directors will vote for the election of the named nominees. If any nominee is
unable to serve, the shares represented by all valid proxies which have not been
revoked will be voted for the election of such substitute as the Board of
Directors may recommend or the size of the Board may be reduced to eliminate the
vacancy. At this time, the Board knows of no reason why any nominee might be
unavailable to serve.
The following table sets forth the names of the Board's nominees for
election as directors of the Company and of those directors who will continue to
serve as such after the Meeting. Also set forth is certain other information
with respect to each person's age, the year he first became a director of the
Company or the Bank, and the expiration of his term as a director. Messrs.
Robert K. Healey and John R. Male were initially appointed as directors of the
Company in 1994 in connection with the Company's incorporation. All other
directors were appointed directors of the Company and the Bank in the years
indicated on the following table. There are no arrangements or understandings
between the Company and any director pursuant to which such person has been
elected a director of the Company, and no director is related to any other
director or executive officer by blood, marriage or adoption, except that John
R. Male, the Chairman of the Board and Chief Executive Officer of the Company
and the Bank, is the brother of Jeffrey N. Male, the Vice President and
Secretary of the Company and the Executive Vice President in charge of
residential lending operations of the Bank. The following directors are
"independent directors" as defined under Nasdaq Rule 4200(a)(15): Gerald A.
Fallon, Robert K. Healey, Ronald D. Holman, II, Stanley T. Jaros, Raymond J.
Negrelli and Stuart D. Neidus.
3
AGE YEAR FIRST ELECTED CURRENT
AS OF THE AS DIRECTOR OF THE TERM
NAME RECORD DATE COMPANY OR THE BANK TO EXPIRE
- ---- ----------- ------------------- ---------
BOARD NOMINEES FOR TERMS TO EXPIRE AT THE 2006 ANNUAL MEETING
Robert K. Healey 79 1973 2004
Stuart D. Neidus 53 1996 2004
C. Keith Swaney 61 2000 2004
Gerald A. Fallon 55 2002 2004
DIRECTORS CONTINUING IN OFFICE
John R. Male 56 1981 2005
Stanley T. Jaros 59 1997 2005
Raymond J. Negrelli 52 2002 2005
Ronald D. Holman, II 44 2003 2005
Presented below is certain information concerning the directors of the
Company. Unless otherwise stated, all directors have held the positions
indicated for at least the past five years.
ROBERT K. HEALEY. Mr. Healey currently is retired. He had been employed
from 1961 to 1987 by Leaseway Transportation Corp. and most recently served as
Executive Vice President -- Managed Controlled Transportation. He formerly
served on the Boards of Trustees of St. Vincent Charity Hospital, New Direction,
Western Reserve Historical Society, the Woodruff Foundation and Glen Oak School.
STUART D. NEIDUS. Mr. Neidus currently holds the position of Chairman and
Chief Executive Officer of Anthony & Sylvan Pools Corporation, a company that
operates in the leisure industry and is one of the nation's largest in-ground
residential concrete swimming pool installers. Prior to this position, he served
as Executive Vice President and Chief Financial Officer of Essef Corporation
from September 1996 until Anthony & Sylvan's split-off from Essef in August
1999. At Premier Industrial Corporation he held various positions from 1992
until 1996, most recently as Executive Vice President until the company was
acquired by Farnell Electronics plc. Prior to that, Mr. Neidus spent 19 years
with the international accounting firm of KPMG LLP, serving as an audit partner
from 1984 until 1992. He has served as a board member and on advisory committees
of many nonprofit and civic organizations over the years.
C. KEITH SWANEY. Mr. Swaney joined the Bank in 1962 and was named Executive
Vice President and Chief Financial Officer in 1986. He was named Vice President
and Treasurer of the Company upon its organization in 1994. Mr. Swaney was named
President and Chief Operating Officer of the Company and the Bank in October
2000. He continues to serve as Treasurer of the Company and as Chief Financial
Officer of the Bank. He is responsible for all internal operations of the
Company and the Bank. Over the years, he has participated in various charitable
organizations and currently serves on the Hiram House Board of Trustees. Mr.
Swaney attended Youngstown State University and California University in
Pennsylvania.
GERALD A. FALLON. Mr. Fallon was Executive Vice President and Manager of
Capital Markets for KeyBank, NA, Cleveland, Ohio, from December 1994 through
March 2001, and Senior Managing Director of Capital Markets for McDonald
Investment Inc., Cleveland, Ohio, from November 1998 through March 2001. He
currently serves as a director of Digital Lightwave, Inc., a corporation with a
class of securities registered under
4
Section 12 of the Securities Exchange Act of 1934, and as an advisory director
of Winfield Associates -- Burning River Hedge Fund and Logos Communications,
Inc., both privately held companies. He serves as a director of the Bratenahl
Land Conservancy and as a director of the Bratenahl Village Audit Committee.
JOHN R. MALE. Mr. Male has been with the Bank since 1971, where he has held
various positions including branch manager, mortgage loan officer, manager of
construction lending, savings department administrator and chief lending
officer. Mr. Male was named President and Chief Executive Officer of the Bank in
1986 and was named President of the Company upon its organization in 1994. Mr.
Male was named Chairman of the Board of Directors and Chief Executive Officer of
the Company and the Bank in October 2000. Mr. Male serves in various public
service and charitable organizations. He currently serves on the Board of
Trustees for Heather Hill, a long-term care hospital in Chardon, Ohio. He has an
undergraduate degree from Tufts University and an MBA from Case Western Reserve
University.
STANLEY T. JAROS. Mr. Jaros is a partner in the law firm of Moriarty &
Jaros, P.L.L. He has served as a trustee of a number of Cleveland area nonprofit
organizations, and was a member of the Cleveland Landmarks Commission. Mr. Jaros
is a graduate of Brown University and Case Western Reserve Law School and
received an MBA from the University of Pennsylvania.
RAYMOND J. NEGRELLI. Mr. Negrelli is an investor in and developer of real
estate, primarily retail and office properties, in northeast Ohio. He is the
President of Raymond J. Negrelli, Inc., a General Partner in Bay Properties Co.
and a General Partner of Landerbrook Co., all of which are based in Euclid,
Ohio. He is a member of the Community Leadership Council of Hillcrest Hospital,
Mayfield Heights, Ohio and a member of the Executive Committee of the Cuyahoga
County Republican Organization.
RONALD D. HOLMAN, II. Mr. Holman is a partner in the law firm of Cavitch,
Familo, Durkin & Frutkin in Cleveland, Ohio. In addition, from 1989 to 2000 he
served as a legal analyst on various news shows for WEWS TV in Cleveland, Ohio.
Mr. Holman serves on the Boards of Directors for the following nonprofit
institutions: Florence Crittenton Services Fund of the Cleveland Foundation
(President from 1996 to 1998), 100 Black Men of Greater Cleveland, Inc. (member
of the Executive Committee and General Counsel since 1998), and Shaker Heights
Alumni Association. He has also served as Chair of the Center for Families and
Children, and Treasurer of the Dartmouth Club of Northern Ohio. Mr. Holman is a
graduate of Dartmouth College and Columbia University School of Law.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Boards of Directors of the Company and the Bank conduct their business
through meetings of the respective Boards and their committees. During the year
ended June 30, 2004, the Company's Board of Directors held 12 meetings and the
Bank's Board of Directors held 14 meetings. No current director attended fewer
than 75% of the total aggregate meetings of the Company's Board of Directors and
committees on which such Board member served during the year ended June 30,
2004.
AUDIT COMMITTEE. The Company has a separately designated Audit Committee
established in accordance with Section 3(a)(58)(A) of the Exchange Act. The
Audit Committee met periodically to examine and approve the audit report
prepared by the independent auditors of the Company and its subsidiaries, to
review and appoint the independent auditors to be engaged by the Company, to
review the internal audit function and internal accounting controls and to
review and approve the conflict of interest policy. The members of the Audit
Committee are Directors Stuart D. Neidus, Robert K. Healey and Ronald D. Holman,
II. All of the members of the Audit Committee are independent within the meaning
of the National Association of Securities Dealers, Inc.'s listing standards. The
Company's Board of Directors has determined that one member of the Audit
Committee, Stuart D. Neidus, qualifies as an "audit committee financial expert"
as defined in Section 401(h) of Regulation S-K promulgated by the U.S.
Securities and Exchange Commission. Director Neidus is "independent," as such
term is defined in Item 7(d)(3)(iv)(A) of Schedule 14A under the Exchange Act.
The Company's Board of Directors has adopted a written charter for the Audit
Committee, a copy of which is attached hereto as Appendix A. The Audit Committee
met nine times during the year ended June 30, 2004.
5
NOMINATING COMMITTEE. The Board of Directors' Nominating Committee
nominates directors to be voted on at the Annual Meeting and recommends nominees
to fill any vacancies on the Board of Directors. The Nominating Committee
consists of Directors Ronald D. Holman, II, Gerald A. Fallon and Raymond J.
Negrelli. The members of the Nominating Committee are "independent directors" as
defined in Nasdaq listing standards. The Board of Directors has adopted a
Charter for the Nominating Committee, a copy of which is attached hereto as
Appendix B. The Nominating Committee met once during the year ended June 30,
2004.
It is the policy of the Nominating Committee to consider director
candidates recommended by security holders who appear to be qualified to serve
on the Company's Board of Directors. Any stockholder wishing to recommend a
candidate for consideration by the Nominating Committee as a possible director
nominee for election at an upcoming annual meeting of stockholders must provide
written notice to the Nominating Committee of such stockholder's recommendation
of a director nominee no later than July 1 preceding the annual meeting of
stockholders. Notice should be provided to: Jeffrey N. Male, Secretary, PVF
Capital Corp., 30000 Aurora Road, Solon, Ohio 44139. Such notice must contain
the following information:
o The name of the person recommended as a director candidate;
o All information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors
pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended;
o The written consent of the person being recommended as a director
candidate to being named in the proxy statement as a nominee and to
serving as a director if elected;
o As to the shareholder making the recommendation, the name and address,
as he or she appears on the Company's books, of such shareholder;
provided, however, that if the shareholder is not a registered holder
of the Company's common stock, the shareholder should submit his or
her name and address, along with a current written statement from the
record holder of the shares that reflects ownership of the Company's
common stock; and
o A statement disclosing whether such shareholder is acting with or on
behalf of any other person and, if applicable, the identity of such
person.
In its deliberations, the Nominating Committee considers a candidate's
personal and professional integrity, knowledge of the banking business and
involvement in community, business and civic affairs, and also considers whether
the candidate would provide for adequate representation of the Bank's market
area. Any nominee for director made by the Nominating Committee must be highly
qualified with regard to some or all the attributes listed in the preceding
sentence. In searching for qualified director candidates to fill vacancies in
the Board, the Nominating Committee solicits the Company's then current
directors for the names of potential qualified candidates. Moreover, the
Nominating Committee may ask its directors to pursue their own business contacts
for the names of potentially qualified candidates. The Nominating Committee
would then consider the potential pool of director candidates, select a
candidate based on the candidate's qualifications and the Board's needs, and
conduct a thorough investigation of the proposed candidate's background to
ensure there is no past history that would cause the candidate not to be
qualified to serve as a director of the Company. In the event a stockholder has
submitted a proposed nominee, the Nominating Committee would consider the
proposed nominee in the same manner in which the Nominating Committee would
evaluate nominees for director recommended by directors.
With respect to nominating an existing director for re-election to the
Board of Directors, the Nominating Committee will consider and review an
existing director's Board and committee attendance and performance; length of
Board service; experience, skills and contributions that the existing director
brings to the Board; and independence.
COMPENSATION COMMITTEE. The Compensation Committee consists of directors
Gerald A. Fallon, Stuart D. Neidus and Robert K. Healey. The Committee evaluates
the compensation and fringe benefits of the directors,
6
officers and employees, recommends changes and monitors and evaluates employee
morale. The Compensation Committee met five times during the year ended June 30,
2004.
BOARD POLICIES REGARDING COMMUNICATIONS WITH THE BOARD OF DIRECTORS AND
ATTENDANCE AT ANNUAL MEETINGS. The Board of Directors maintains a process for
stockholders to communicate with the Board of Directors. Stockholders wishing to
communicate with the Board of Directors should send any communication to Jeffrey
N. Male, Secretary, PVF Capital Corp., 30000 Aurora Road, Solon, Ohio 44139. All
communications that relate to matters that are within the scope of the
responsibilities of the Board and its Committees are to be presented to the
Board no later than its next regularly scheduled meeting. Communications that
relate to matters that are within the responsibility of one of the Board
Committees are also to be forwarded to the Chair of the appropriate Committee.
Communications that relate to ordinary business matters that are not within the
scope of the Board's responsibilities, such as customer complaints, are to be
sent to the appropriate officer. Solicitations, junk mail and obviously
frivolous or inappropriate communications are not to be forwarded, but will be
made available to any director who wishes to review them.
Directors are expected to prepare themselves for and to attend all Board
meetings, the Annual Meeting of Stockholders and the meetings of the Committees
on which they serve, with the understanding that on occasion a director may be
unable to attend a meeting. All of the Company's directors attended the
Company's 2003 Annual Meeting of Stockholders.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY. The Company's executive compensation policies are
established by the Compensation Committee of the Board of Directors (the
"Committee") composed of three outside directors. The Committee is responsible
for developing the Company's executive compensation policies. The Company's
President, under the direction of the Committee, implements the Company's
executive compensation policies. The Committee's objectives in designing and
administering the specific elements of the Company's executive compensation
program are as follows:
o To link executive compensation rewards to increases in shareholder
value, as measured by favorable long-term operating results and
continued strengthening of the Company's financial condition.
o To provide incentives for executive officers to work towards achieving
successful annual results as a step in achieving the Company's
long-term operating results and strategic objectives.
o To correlate, as closely as possible, executive officers' receipt of
compensation with the attainment of specified performance objectives.
o To maintain a competitive mix of total executive compensation, with
particular emphasis on awards related to increases in long-term
shareholder value.
o To attract and retain top performing executive officers for the
long-term success of the Company.
o To facilitate stock ownership through the granting of stock options.
In furtherance of these objectives, the Committee has determined that there
should be three specific components of executive compensation: base salary, a
cash bonus plan and a stock option plan designed to provide long-term incentives
through the facilitation of stock ownership in the Company.
BASE SALARY. The Committee makes recommendations to the Board concerning
executive compensation on the basis of surveys of salaries paid to executive
officers of other savings bank holding companies, non-diversified
7
banks and other financial institutions similar in size, market capitalization
and other characteristics. The Committee's objective is to provide for base
salaries that are competitive with those paid by the Company's peers.
MANAGEMENT INCENTIVE COMPENSATION PLAN. The Company maintains a
formula-based bonus plan (the "Management Incentive Compensation Plan"), which
provides for annual cash incentive compensation based on achievement of a
combination of individual and Company and Bank performance objectives. Under the
Management Incentive Compensation Plan, at the beginning of the fiscal year, the
Committee establishes target performance measures for the Company and the Bank.
The relevant performance measures for the Company are return on equity ("ROE"),
earnings per share and appreciation in the market price for the Common Stock.
The relevant performance measures for the Bank are ROE and return on assets
("ROA") for the Bank and appreciation in the market price for the Common Stock.
In addition, the Committee establishes individual performance goals for each
employee. Bonuses are determined at the end of the fiscal year based on actual
Company or Bank performance relative to previously established performance goals
and a rating given to each employee reflecting the employee's success in
achieving his or her specific individual performance goals established at the
beginning of the year. The bonuses that would be paid to each of the three
highest ranking executive officers are based on actual Company performance,
while the bonuses paid to other officers are based on actual Bank performance.
The Company's three most senior executive officers can receive a maximum bonus
equal to 150% of base salary. The Company's other officers can receive a maximum
bonus equal to 40% of base salary.
STOCK OPTIONS. The Committee believes that stock options are an important
element of compensation because they provide executives with incentives linked
to the performance of the Common Stock. The Company awards stock options as a
means of providing employees the opportunity to acquire a proprietary interest
in the Company and to link their interests with those of the Company's
stockholders. Options are granted with an exercise price equal to the market
value of the Common Stock on the date of grant, and thus acquire value only if
the Company's stock price increases. Although there is no specific formula, in
determining the level of option awards, the Committee takes into consideration
the same Company, Bank and stock price performance criteria considered under the
Management Incentive Compensation Plan, as well as individual performance.
In addition to the three primary components of executive compensation
described above, the Committee believed it fair and appropriate to provide for a
reasonable level of financial security for its long-standing senior executive
officer team consisting of John R. Male, Chairman of the Board and Chief
Executive Officer of the Company and the Bank, C. Keith Swaney, President, Chief
Operating Officer and Treasurer of the Company and President, Chief Operating
Officer and Chief Financial Officer of the Bank, and Jeffrey N. Male, the Vice
President and Secretary of the Company and the Executive Vice President of the
Bank. In consultation with an outside consultant, the Compensation Committee
determined to implement a supplemental executive retirement plan, the only
current participants in which are John R. Male, C. Keith Swaney and Jeffrey N.
Male, and to enter into severance agreements with each of those three executive
officers. A description of the supplemental executive retirement plan and the
severance agreements is set forth below under "-- Executive Compensation --
Severance Agreements" and "-- Supplemental Executive Retirement Plan." The
severance agreements are intended to provide the three executive officers with a
reasonable level of financial security in the event of a change in control of
the Company or the Bank, and the supplemental executive retirement plan is
intended to provide the three executive officers with retirement income that
increases with each year of service to the Bank with full vesting occurring upon
the attainment of age 65.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The Committee determines the
Chief Executive Officer's compensation on the basis of several factors. In
determining Mr. John R. Male's base salary, the Committee conducted surveys of
compensation paid to chief executive officers of similarly situated savings
banks and non-diversified banks and other financial institutions of similar
size. The Committee believes that Mr. Male's base salary is generally
competitive with or below the average salary paid to executives of similar rank
and expertise at banking institutions which the Committee considered to be
comparable.
Mr. Male received bonus compensation under the Management Incentive
Compensation Plan in fiscal year 2004 based on the Company's ROE and earnings
per share and increases in the market price of the Common Stock and Mr. Male's
achievement of individual performance goals based on the formula set forth
above.
8
The Committee believes that the Company's executive compensation program
serves the Company and its shareholders by providing a direct link between the
interests of executive officers and those of shareholders generally and by
helping to attract and retain qualified executive officers who are dedicated to
the long-term success of the Company.
MEMBERS OF THE COMPENSATION COMMITTEE
Gerald A. Fallon
Robert K. Healey
Stuart D. Neidus
COMPARATIVE STOCK PERFORMANCE GRAPH
The graph and table which follow show the cumulative total return on the
Common Stock during the period from June 30, 1999 through June 30, 2004 with (1)
the total cumulative return of all companies whose equity securities are traded
on the Nasdaq Stock Market and (2) the total cumulative return of banking
companies traded on the Nasdaq Stock Market. The comparison assumes $100 was
invested on June 30, 1999 in the Common Stock and in each of the foregoing
indices and assumes reinvestment of dividends. The stockholder returns shown on
the performance graph are not necessarily indicative of the future performance
of the Common Stock or of any particular index.
CUMULATIVE TOTAL STOCKHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDEXES
June 30, 1999 through June 30, 2004
[Line graph appears here depicting the cumulative total stockholder return of
$100 invested in the Common Stock as compared to $100 invested in all companies
whose equity securities are traded on the Nasdaq stock market and banking
companies whose equity securities are traded on the Nasdaq stock market. Line
graph begins at June 30, 1999 and plots the cumulative total stockholder return
at June 30, 1999, 2000, 2001, 2002, 2003 and 2004. Plot points are provided
below.]
- ------------------------------------------------------------------------------------------------
06/30/99 06/30/00 06/30/01 06/30/02 6/30/03 6/30/04
- ------------------------------------------------------------------------------------------------
PVF CAPITAL CORP. $100.00 $ 78.18 $ 92.45 $115.78 $146.12 $185.02
- ------------------------------------------------------------------------------------------------
NASDAQ 100.00 147.83 80.27 54.68 60.71 76.53
- ------------------------------------------------------------------------------------------------
NASDAQ BANKS 100.00 82.03 113.91 127.80 129.75 155.51
- ------------------------------------------------------------------------------------------------
9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth the cash and
noncash compensation for fiscal 2004 awarded to or earned by the Company's Chief
Executive Officer and other executive officers whose total salary and bonus for
fiscal 2004 exceeded $100,000. No other executive officer of the Company or the
Bank earned salary and bonus in fiscal 2004 exceeding $100,000 for services
rendered in all capacities to the Company and its subsidiaries.
LONG-TERM
COMPENSATION
----------------
ANNUAL COMPENSATION(1) AWARDS
------------------------- ----------------
SECURITIES ALL
NAME AND FISCAL UNDERLYING OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (2) COMPENSATION
- ------------------ ---- ------ ----- ------------ ------------
John R. Male 2004 $226,021 $ 246,962 $4,200 $207,616 (3)
Chairman of the Board 2003 221,590 154,686 4,620 190,691
Chief Executive Officer of 2002 213,000 137,981 5,082 112,248
the Company and the Bank
C. Keith Swaney 2004 $172,379 $ 156,959 $3,600 $245,918 (3)
President and Chief Operating 2003 168,999 98,313 3,960 226,484
Officer of the Company and 2002 164,112 87,696 4,356 162,964
the Bank, Treasurer of the
Company and Chief Financial
Officer of the Bank
Jeffrey N. Male 2004 $139,229 $ 126,775 $2,800 $100,302 (3)
Vice President and Secretary 2003 136,499 79,406 3,080 90,767
of the Company and Executive 2002 131,253 70,831 3,388 51,491
Vice President of the Bank
- -------------------------------
(1) Executive officers of the Company receive indirect compensation in the form
of certain perquisites and other personal benefits. The amount of such
benefits received by each named executive officer in fiscal 2004 did not
exceed 10% of the executive officer's salary and bonus.
(2) Adjusted for 10% stock dividends on the Company's Common Stock paid on
August 30, 2002, August 29, 2003 and August 31, 2004.
(3) Consists of $25,200 and $25,200 in directors' fees paid to John R. Male and
C. Keith Swaney, respectively, $2,979, $4,273 and $2,763 of premiums on
disability insurance policies paid for the benefit of John R. Male, C.
Keith Swaney and Jeffrey N. Male, respectively, $6,900, $11,340 and $5,470
of premiums on life insurance policies paid for the benefit of John R.
Male, C. Keith Swaney and Jeffrey N. Male, respectively, $4,044, $4,945 and
$4,940 of matching contributions paid by the Company pursuant to the
Company's 401(k) plan for the benefit of John R. Male, C. Keith Swaney and
Jeffrey N. Male, respectively, $164,396, $196,910 and $84,452 accrued for
the benefit of John R. Male, C. Keith Swaney and Jeffrey N. Male,
respectively, pursuant to the Bank's Supplemental Executive Retirement
Plan, and $4,097, $3,250 and $2,677 in payments made to John R. Male, C.
Keith Swaney and Jeffrey N. Male, respectively, pursuant to a plan under
which all employees receive annual compensation equal to one week's salary
for each year of service above 20 years of service.
10
OPTION GRANTS IN LAST FISCAL YEAR. The following table contains information
concerning the grant of stock options during the year ended June 30, 2004 to the
executive officers named in the Summary Compensation Table set forth above.
POTENTIAL REALIZABLE
NUMBER OF PERCENT OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS GRANTED ANNUAL RATES OF STOCK
UNDERLYING TO EMPLOYEES EXERCISE EXPIRATION PRICE APPRECIATION
NAME OPTIONS GRANTED (1) IN FISCAL YEAR PRICE (1) DATE FOR OPTION TERM (2)
- ---- ------------------- -------------- --------- ---------- ---------------------
5% 10%
--------- ---------
John R. Male 4,620 11.7% $16.39 11/01/2008 $12,474 $35,574
C. Keith Swaney 3,960 10.0% 14.90 11/01/2013 37,422 94,565
Jeffrey N. Male 3,080 7.8% 16.39 11/01/2008 8,316 23,716
- -----------------------
(1) Amounts are adjusted to reflect the 10% stock dividend paid on the Common
Stock on August 31, 2004. All options become exercisable at the rate of 20%
per year, with the first 20% having become exercisable on November 1, 2003,
the date of grant, and an additional 20% becoming exercisable on each
anniversary thereafter.
(2) Represents the difference between the aggregate exercise price of the
options and the aggregate value of the underlying Common Stock at the
expiration date of the options assuming the indicated annual rate of
appreciation in the value of the Common Stock as of the date of grant,
November 1, 2003, based on the closing sale price of the Common Stock as
quoted on the Nasdaq SmallCap Market on October 31, 2003 (the last
practicable trading date prior to November 1, 2003) adjusted for the 10%
dividend paid on the Common Stock on August 31, 2004.
During the past ten full fiscal years, the Company has not adjusted or
amended the exercise price of stock options previously awarded to a named
executive officer, whether through amendment, cancellation or replacement
grants, except as necessary to adjust the exercise price upon the Company's
payment of stock dividends so as not to change the economic benefit of
previously granted options.
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES. The
following table sets forth information concerning option exercises during fiscal
year 2004 and the value of options held at the end of fiscal year 2004 by the
Company's Chief Executive Officer and other officers named in the Summary
Compensation Table set forth above.
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END (3) AT FISCAL YEAR-END (4)
ACQUIRED ON VALUE ---------------------- ----------------------
NAME EXERCISE (1) REALIZED (2) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ ------------ ------------------------- -------------------------
John R. Male 6,764 $38,825 17,989/10,215 $134,971/51,296
C. Keith Swaney - - 41,884/8,753 $382,284/52,801
Jeffrey N. Male 4,509 $24,980 11,989/6,811 $ 89,950/34,203
- -------------------
(1) Not adjusted for the subsequent 10% stock dividend paid on August 31, 2004.
(2) Calculated based on the product of: (a) the number of shares acquired on
exercise, and (b) the difference between the fair market value of the
underlying Common Stock on the exercise date, determined based on the last
closing bid price prior to the exercise date, and the exercise price of the
options.
(3) Adjusted for a 10% stock dividend paid on the Common Stock on September 1,
1997, a 50% stock dividend paid on the Common Stock on August 17, 1998, a
10% stock dividend paid on the Common Stock on September 7, 1999, a 10%
stock dividend paid on the Company's Common Stock on September 1, 2000, a
10% stock dividend paid on the Common Stock on August 31, 2001, a 10% stock
dividend paid on the Common Stock on August 30, 2002, a 10% stock dividend
paid on the Common Stock on August 29, 2003, and a 10% stock dividend paid
on the Common Stock on August 31, 2004.
(4) Calculated based on the product of: (a) the number of shares subject to
options, and (b) the difference between the fair market value of the
underlying Common Stock at June 30, 2004, determined based on $16.18, the
last closing bid price on June 30, 2004 of the Common Stock on the Nasdaq
SmallCap Market adjusted to $14.56 to reflect the effect of the 10% stock
dividend paid on the Common Stock on August 31, 2004, and the exercise
price of the options.
11
Severance Agreements. The Company and the Bank have entered into severance
agreements (the "Severance Agreements") with John R. Male, C. Keith Swaney and
Jeffrey N. Male (each of whom is referred to as an "Executive"). The Severance
Agreements are for terms of three years. On each anniversary date from the date
of commencement of the Severance Agreements, the term of the Agreements will be
extended for an additional one-year period beyond the then effective expiration
date upon a determination by the Board of Directors that the performance of each
Employee has met the required performance standards.
The Severance Agreements provide that in the event of an Executive's
involuntary termination of employment, or voluntary termination for "good
reason," within one year following a "change in control" of the Bank or the
Company other than for "cause," the Executive will receive the following
benefits: (i) a payment equal to two times the Executive's annual compensation
(base salary plus annual incentive compensation) for the year preceding the year
in which termination occurred, payable in a lump sum within 30 days following
termination; (ii) the Bank or the Company shall cause the Executive to become
fully vested in any benefit plans, programs or arrangements in which the
Executive participated, and the Bank will contribute to the Executive's 401(k)
plan account the Bank's matching and/or profit sharing which would have been
paid had the Executive remained in the employ of the Bank throughout the
remainder of the 401(k) plan year; and (iii) the Executive will receive
continued life, health and disability insurance coverage substantially identical
to the coverage maintained by the Bank or the Company for the Executive prior to
termination until the earlier of the Executive's employment with another
employer or 12 months following termination. "Change in control" is defined
generally in the Severance Agreements as: (i) the acquisition, by any person or
persons acting in concert of the power to vote more than 25% of the Company's
voting securities or the acquisition by a person of the power to direct the
Company's management or policies; (ii) the merger of the Company with another
corporation on a basis whereby less than 50% of the total voting power of the
surviving corporation is represented by shares held by former shareholders of
the Company prior to the merger; or (iii) the sale by the Company of the Bank or
substantially all its assets to another person or entity. In addition, a change
in control occurs when, during any consecutive two-year period, directors of the
Company or the Bank at the beginning of such period cease to constitute a
majority of the Board of Directors of the Company or the Bank, unless the
election of replacement directors was approved by a two-thirds vote of the
initial directors then in office. "Good reason" is defined in the Severance
Agreements as any of the following events: (i) a change in the Executive's
status, title, position or responsibilities which, in the Executive's reasonable
judgment, does not represent a promotion, the assignment to the executive of any
duties or responsibilities which, in the Executive's reasonable judgment, are
inconsistent with his status, title, position or responsibilities, or the
removal of the Executive from or failure to reappoint him to any of such
positions other than for cause; (ii) materially reducing the Executive's base
compensation as then in effect; (iii) the relocation of the Executive's
principal place of employment to a location that is more than 35 miles from the
location where the Executive previously was principally employed; (iv) the
failure to provide the Executive with benefits substantially similar to those
provided to him under existing employee benefit plans, or materially reducing
any benefits or depriving the Executive of any material fringe benefit; (v)
death; or (vi) disability prior to retirement. In the event that an Executive
prevails over the Company or the Bank in a legal dispute as to the Severance
Agreement, he will be reimbursed for his legal and other expenses.
Supplemental Executive Retirement Plan. Effective July 1, 1998, the Bank
adopted a Supplemental Executive Retirement Plan (the "SERP"), which is designed
to pay retirement benefits from the general assets of the Bank to eligible
employees of the Bank. Eligibility to participate in the SERP is limited to
employees of the Bank who are designated by the Compensation Committee of the
Bank's Board of Directors. Currently, the employees designated to participate in
the SERP are John R. Male, C. Keith Swaney and Jeffrey N. Male (the
"Participants").
Under the SERP, commencing upon a Participant's retirement after reaching
age 65, or earlier if approved by the Compensation Committee, he will receive a
benefit equal to 60% of "final pay" reduced by any benefits payable under the
Bank's qualified retirement plans. "Final pay" is defined as the Participant's
highest year's combined salary and target bonus (under the Management Incentive
Compensation Plan) during the Participant's last five years of employment with
the Bank. The Participant will vest in the SERP plan benefits each year, on a
pro rata basis, beginning with the one year anniversary date of the effective
date that the Participant becomes eligible to participate in the SERP and
continuing with each succeeding annual anniversary date until attainment of age
65. Upon attainment of age 65 and provided that he has remained continuously in
the employ of the Bank, the Participant will be fully vested. A Participant
becomes fully vested prior to age 65 upon death or disability or upon
12
a "change in control," as defined above under "-- Severance Agreements."
Payments under the SERP continue for the lifetime of the Participant or for the
joint lives of the Participant and his spouse if actuarially converted to the
"actuarial equivalent" joint and survivor annuity. In addition, benefits are
paid in the form of a single life annuity or, upon the request of the
Participant and approval of the Compensation Committee, converted to the
"actuarial equivalent" single lump sum distribution. "Actuarial equivalent" is
defined as a payment or payments equal in the aggregate to the value at the
applicable date of the benefit determined actuarially on the basis of the
current Pension Benefit Guarantee Corporation ("PBGC") interest rate and the
mortality table then in use by the PBGC. The Participant loses all benefits
under the SERP in the event his employment with the Bank is terminated for
cause.
DIRECTORS' COMPENSATION
The Bank pays each member of the Board of Directors an annual retainer of
$25,200. In addition, directors may receive a fee of $2,500 per day for
attendance at day-long special Board events such as Board retreats. No
additional fees are paid by the Company for attendance at Board of Directors
meetings.
In addition, nonemployee directors are eligible to participate in the PVF
Capital Corp. 2000 Incentive Stock Option and Deferred Compensation Plan, and
the Board of Directors has adopted a schedule for option grants such that
shortly following each annual meeting of stockholders, each nonemployee director
who served as such at the closing of the annual meeting will be granted
nonqualified options to acquire 1,000 shares of Common Stock. Pursuant to this
schedule, options to acquire 1,100 shares of Common Stock were granted on
November 1, 2003 to nonemployee Directors Jaros, Neidus, Healey, Fallon,
Negrelli and Holman. In addition, as a new director, nonemployee director Holman
was granted additional options to acquire 5,500 shares of Common Stock on
November 1, 2003. The numbers of options granted set forth above are adjusted
for a 10% stock dividend paid on the Common Stock on August 31, 2004. All the
options have a term of 10 years, became exercisable immediately upon grant and
have an exercise price equal to the fair market value of the Common Stock on the
date of grant.
INDEBTEDNESS OF MANAGEMENT
Under applicable law, the Bank's loans to directors and executive officers
must be made on substantially the same terms, including interest rates, as those
prevailing for comparable transactions with non-affiliated persons, and must not
involve more than the normal risk of repayment or present other unfavorable
features. Furthermore, loans above the greater of $25,000 or 5% of the Bank's
capital and surplus (i.e, up to $3.0 million at June 30, 2004) to such persons
must be approved in advance by a disinterested majority of the Bank's Board of
Directors.
The Bank has a policy of offering loans to officers and directors and
employees in the ordinary course of business, on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons. These loans do not involve more than
the normal risk of collectibility or present other unfavorable features.
CERTAIN BUSINESS RELATIONSHIPS
Mr. Stanley T. Jaros, a director of the Company, is a partner with the law
firm of Moriarty & Jaros, P.L.L., which performed services for the Company and
the Bank during the fiscal year ended June 30, 2004 and proposes to perform
services during the fiscal year ending June 30, 2005. Fees paid by the Company
and the Bank to Moriarty & Jaros, P.L.L. during the fiscal year ended June 30,
2004 totaled approximately $105,992.
Mr. Raymond J. Negrelli, a director of the Company, is a 50% owner of Bay
Properties Co., an Ohio general partnership. Bay Properties Co. is a 50% owner
and general partner of Park View Plaza, Ltd. ("PVP"), an Ohio limited
partnership formed to develop and operate a 10,000 square foot retail plaza
located in Cleveland, Ohio. PVF Service Corporation, a wholly owned subsidiary
of the Company, is a 25% owner and limited partner of PVP. The Bank maintains a
branch office in the retail plaza owned and operated by PVP, and during the year
ended June 30, 2004, the Bank paid a total of $59,067 in rent and operating cost
reimbursements to PVP. For the fiscal year ending June 30, 2005, the Company
estimates that it will pay a total of $133,327 in rent and operating cost
reimbursements to PVP. Bay Properties Co. is also a 50% owner of Park View
Center, LLC ("PVC"), an Ohio limited liability company formed to develop and
operate an 8,200 square foot office building located in Mayfield
13
Heights, Ohio. The Bank is a tenant of the office building and leases a 3,000
square foot unit with an automated teller machine in the office building owned
and operated by PVC, and during the year ended June 30, 2004, the Bank made
capital investments totaling $325,000 in PVC.
- --------------------------------------------------------------------------------
AUDIT COMMITTEE REPORT
- --------------------------------------------------------------------------------
The Audit Committee has reviewed and discussed the audited financial
statements of the Company with management and has discussed with Crowe, Chizek
and Company LLP ("Crowe, Chizek"), the Company's independent auditors, the
matters required to be discussed under Statements on Auditing Standards No. 61
("SAS 61"). In addition, the Audit Committee has received from Crowe, Chizek the
written disclosures and the letter required to be delivered by Crowe, Chizek
under Independence Standards Board Standard No. 1 ("ISB Standard No. 1") and has
met with representatives of Crowe, Chizek to discuss the independence of the
auditing firm.
The Audit Committee has reviewed the non-audit services currently provided
by the Company's independent auditor and has considered whether the provision of
such services is compatible with maintaining the independence of the Company's
independent auditors.
Based on the Audit Committee's review of the financial statements, its
discussion with Crowe, Chizek regarding SAS 61, and the written materials
provided by Crowe, Chizek under ISB Standard No. 1 and the related discussion
with Crowe, Chizek of their independence, the Audit Committee has recommended to
the Board of Directors that the audited financial statements of the Company be
included in its Annual Report on Form 10-K for the year ended June 30, 2004 for
filing with the Securities and Exchange Commission.
THE AUDIT COMMITTEE
Stuart D. Neidus
Robert K. Healey
Ronald D. Holman, II
- --------------------------------------------------------------------------------
PROPOSAL II -- RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
The Audit Committee of the Board of Directors has renewed the Company's
arrangements with Crowe, Chizek and Company LLP, independent public accountants,
to be its auditors for the 2005 fiscal year, subject to ratification by the
Company's stockholders. A representative of Crowe, Chizek and Company LLP will
be present at the Meeting to respond to stockholders' questions and will have
the opportunity to make a statement if he or she so desires.
THE APPOINTMENT OF THE AUDITORS MUST BE APPROVED BY A MAJORITY OF THE VOTES
CAST BY THE STOCKHOLDERS OF THE COMPANY AT THE MEETING. THE BOARD OF DIRECTORS
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE APPOINTMENT OF
AUDITORS.
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
Crowe, Chizek and Company LLP, served as the Company's independent auditors
for the 2004 and 2003 fiscal years. For the years ended June 30, 2004 and 2003,
the Company was billed by Crowe, Chizek and Company LLP for fees aggregating
$65,970 and $56,675, respectively. Such fees were comprised of the following:
AUDIT FEES
During the fiscal years ended June 30, 2004 and 2003, the aggregate fees
billed for professional services rendered for the audit of the Company's annual
financial statements and the reviews of the financial statements
14
included in the Company's Quarterly Reports on Form 10-Q filed during the fiscal
years ended June 30, 2004 and 2003 were $34,625 and $33,375, respectively, which
were paid to Crowe, Chizek and Company LLP.
AUDIT-RELATED FEES
The aggregate fees billed by the Company's independent auditors for
audit-related services for the fiscal year ended June 30, 2004 and 2003 were
$14,600 and $15,550, respectively. Such fees were for FDICIA services, review of
the Form 10-K and SAS 71 quarterly review.
TAX FEES
No fees were billed to the Company by the Company's independent auditors
for tax services for the fiscal years ended June 30, 2004 and 2003.
ALL OTHER FEES
The aggregate fees billed by the Company's independent auditors for
services not included above were $16,745 and $7,750, respectively, for the
fiscal years ended June 30, 2004 and 2003. The fee for fiscal year 2004 related
to the 401(k) plan audit and other miscellaneous matters, and the fee for fiscal
year 2003 related to the 401(k) audit and internal audit assessment.
- --------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
Pursuant to regulations promulgated under the Exchange Act, the Company's
officers, directors and persons who own more than 10% of the outstanding Common
Stock ("Reporting Persons") are required to file reports detailing their
ownership and changes of ownership in such Common Stock (collectively,
"Reports"), and to furnish the Company with copies of all such Reports. Based
solely on its review of the copies of such Reports or written representations
that no such Reports were necessary that the Company received during the past
fiscal year or with respect to the last fiscal year, management believes that
during the fiscal year ended June 30, 2004, all of the Reporting Persons
complied with these reporting requirements, except that Mr. Healey failed to
report three (3) transactions on a Form 4 in a timely manner due to an
administrative error and Mr. Swaney failed to report four (4) transactions on a
Form 4 in a timely manner due to an administrative error.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement and
matters incident to the conduct of the Meeting. However, if any other matters
should properly come before the Meeting, it is intended that proxies in the
accompanying form will be voted in respect thereof in accordance with the
determination of a majority of the Board of Directors.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- -------------------------------------------------------------------------------
The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation. The
Company has retained Georgeson Shareholder, a proxy soliciting firm, to assist
in the solicitation of proxies, for which they will receive a fee of $900.
The Company's Annual Report to Stockholders, including financial
statements, is being mailed to all stockholders of record as of the close of
business on the Record Date. Any stockholder who has not received a copy
15
of such Annual Report may obtain a copy by writing to the Secretary of the
Company. Such Annual Report is not to be treated as a part of the proxy
solicitation material or as having been incorporated herein by reference.
- -------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- -------------------------------------------------------------------------------
Under the Company's First Amended and Restated Articles of Incorporation,
stockholder proposals must be submitted in writing to the Secretary of the
Company at the address stated later in this paragraph no less than thirty days
nor more than sixty days prior to the date of such meeting; provided, however,
that if less than forty days' notice of the meeting is given to stockholders,
such written notice shall be delivered or mailed, as prescribed, to the
Secretary of the Company not later than the close of business on the tenth day
following the day on which notice of the meeting was mailed to stockholders. For
consideration at the Annual Meeting, a stockholder proposal must be delivered or
mailed to the Company's Secretary no later than September 27, 2004. In order to
be eligible for inclusion in the Company's proxy materials for next year's
Annual Meeting of Stockholders, any stockholder proposal to take action at such
meeting must be received at the Company's executive office at 30000 Aurora Road,
Solon, Ohio 44139, no later than May 20, 2005. Any such proposal shall be
subject to the requirements of the proxy rules adopted under the Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Jeffrey N. Male
Jeffrey N. Male
Secretary
Solon, Ohio
September 17, 2004
- --------------------------------------------------------------------------------
ANNUAL REPORT ON FORM 10-K
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED JUNE 30, 2004 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE
FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN
REQUEST TO: CORPORATE SECRETARY, PVF CAPITAL CORP., 30000 AURORA ROAD, SOLON,
OHIO 44139.
- --------------------------------------------------------------------------------
16
APPENDIX A
PVF CAPITAL CORP.
AUDIT COMMITTEE CHARTER
PURPOSE
The primary purpose of the Audit Committee (the "Committee") is to assist the
Board of Directors (the "Board") of PVF Capital Corp. (the "Company") in
fulfilling its responsibility to provide oversight and monitoring
responsibilities by reviewing: the financial reports and other financial
information provided by the Company to any governmental body or the public; the
Company's systems of internal controls regarding finance, accounting, legal
compliance and ethics that management and the Board have established and may
establish from time to time; the Company's auditing, accounting and financial
reporting practices generally; and all potential conflict of interest
situations, including those arising from any related-party transactions.
Consistent with this function, the Audit Committee should encourage continuous
improvement of, and should foster adherence to, the Company's policies,
procedures and practices at all levels. The Audit Committee's primary duties and
responsibilities are to:
o Oversee the accounting and financial reporting processes of the
Company and the audits of the Company's financial statements.
o Serve as an independent and objective party to monitor the Company's
financial reporting practices and internal control system.
o Review and appraise the qualifications and performance of the
Company's independent accountants and internal auditing department.
o Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditing
department and the Board of Directors.
AUTHORITY
In discharging its oversight role, the Committee is empowered to investigate any
matter brought to its attention with unrestricted access to all books, records,
facilities and personnel of the Company and the power to retain outside counsel,
auditors or other experts for this purpose.
MEMBERSHIP
The Committee shall be comprised of at least three members of the Board, and the
Committee's composition will meet the requirements of applicable laws, the Audit
Committee Policy of NASDAQ, and all rules and regulations of the Securities and
Exchange Commission.
Accordingly, all members will be Directors:
o Who are independent. The independence standard means that, except in
the capacity as a member of the Board of Directors and a member of the
audit and any other Board committee, the audit committee member may
not be an employee of the Company and may not accept any consulting,
advisory, or other compensatory fee from the Company or be an
affiliated person of the Company or any of its subsidiaries; and
o Who have a basic understanding of finance and accounting and are able
to read and understand fundamental financial statements. At least one
member of the Committee must have accounting or related financial
management expertise.
KEY RESPONSIBILITIES
The Committee's job is one of oversight and it recognizes that the management of
the Company is responsible for preparing the financial statements of the Company
and that the independent audit firm is responsible for auditing those financial
statements. Additionally, the Committee recognizes that financial management, as
well as the independent auditor, have more time, knowledge and more detailed
information on the Company than do Committee members; consequently, in carrying
out its oversight
A-1
PVF CAPITAL CORP.
AUDIT COMMITTEE CHARTER
responsibilities, the Committee is not providing any expert or special assurance
as to the Company's financial statements or any professional certification as to
the outside auditor's work. The members of the Committee shall perform their
responsibilities in good faith; in a manner each of them reasonably believes to
be in the best interest of the Company and in accordance with applicable laws
and regulations.
The following functions shall be common recurring activities of the Committee in
fulfilling its oversight function:
Independent External Auditor
- ----------------------------
o Select, retain or terminate the independent auditors and, in
connection therewith, annually to receive, evaluate and discuss with
the independent auditors a formal written report from them setting
forth all consulting or other relationships with the Company, which
shall include specific representations as to their objectivity and
independence as required by Independence Standards Board Statement No.
1.
o Meet with the Company's independent accountants, including private
meetings as necessary, (i) to review the arrangements for and scope of
the annual audit and any special audits; (ii) to discuss any matters
of concern relating to the Company's financial statements, including
any adjustments to such statements recommended by the auditors, or
other results of said audit(s); (iii) to consider the auditors'
comments with respect to the Company's financial policies, procedures
and internal accounting controls and management's responses thereto;
and (iv) to review the form of opinion the independent accountants
propose to render to the Board of Directors and shareholders.
o Approve the independent audit firm's estimated fees for the annual
audit and quarterly review work as outlined in its engagement letter;
and review the independent auditors' performance.
o Review and discuss with the independent auditor all necessary
accounting policies and practices to be used, all alternative
treatments of financial information within generally accepted
accounting principles that have been discussed with management and the
risks of using such alternative treatments, and other material written
communications between the independent auditor and management.
o Review, evaluate and approve any non-audit services the independent
auditor may perform for the Company and disclose such approved
non-auditor services in periodic reports to stockholders.
o Act as a liaison between the Company's independent accountants and the
full Board of Directors.
o As required by law, the Audit Committee shall assure the regular
rotation of the lead and concurring audit partner, and consider
whether there should be a regular rotation of the auditor itself.
Financial Reporting and Disclosures
- -----------------------------------
o Consider the effect upon the Company of any changes in accounting
principles or practices proposed by management or the independent
accountants.
o Review the Company's financial statements, including interim financial
statements, annual financial statements with accompanying auditors'
opinion and management letters, filings of Forms 10-K and 10-Q, the
matters required to be discussed by Statement of Auditing Standards
("SAS") No. 61, and any other financial reports requiring Board
approval before submission to the Securities and Exchange Commission
or other government agency.
o Prepare, review and approve the annual proxy disclosure regarding the
activities and report of the Audit Committee for the year.
o Review and discuss the types of presentation and information to be
included in earnings press releases, and any additional financial
information and earning guidance generally provided to analysts and
rating agencies.
A-2
PVF CAPITAL CORP.
AUDIT COMMITTEE CHARTER
o Review and discuss the form and content of the certification documents
for the quarterly reports on Form 10-Q and the annual report on Form
10-K with the general auditor, the independent auditor, the chief
financial officer and the chief executive officer.
o Satisfy itself that the Company is in reasonable compliance with
pertinent laws and regulations and conducting its affairs ethically.
Internal Controls
- -----------------
o Review and discuss with management, internal audit, and the
independent audit firm the quality and adequacy of the Company's
internal controls.
o Review and, if deemed necessary, investigate concerns and/or
complaints regarding accounting, internal accounting controls, or
other auditing or questionable matters submitted confidentially and
anonymously to the Committee.
o Review all related party transactions (i.e., transactions required to
be disclosed under SEC Regulation S-K, Item 404) for potential
conflict of interest situations on an ongoing basis and determine
whether to approve such transaction.
Internal Audit
- --------------
Oversee the Company's internal audit function to include: approving the
Company's Internal Audit Policy, approving the appointment and termination of
the Internal Auditor, approving the annual audit plan, and reviewing staffing
and results of internal audits.
Communication
- -------------
Report its activities to the full Board of Directors on a regular basis and to
make such recommendations with respect to the above and other matters as the
Committee may deem necessary or appropriate;
APPROVAL
This Charter is subject to annual review by the Committee and the Board of
Directors.
A-3
APPENDIX B
CHARTER
OF THE
NOMINATING COMMITTEE
OF THE
BOARD OF DIRECTORS OF PVF CAPITAL CORP.
I. AUTHORITY AND COMPOSITION
The Committee is established pursuant to Article II of the Bylaws of PVF Capital
Corp. (the "Corporation"). Committee members should be appointed annually by the
Board and may be replaced by the Board. None of the Committee members may be an
officer of the Corporation. The Committee may appoint a Secretary, who need not
be a Director. The Committee Chairman shall be appointed by the Board.
The Committee shall be comprised of at least three (3) members, each of whom
shall meet the independence requirements of the Nasdaq and shall meet any other
standards of independence as may be prescribed for purposes of any federal
securities laws relating to the Committee's duties and responsibilities.
II. PURPOSE OF THE COMMITTEE
The Committee's purpose is to assist the Board in identifying qualified
individuals to become Board members and in determining the composition of the
Board of Directors.
III. RESPONSIBILITIES OF THE COMMITTEE
IN FURTHERANCE OF THIS PURPOSE, THE COMMITTEE SHALL HAVE THE FOLLOWING AUTHORITY
AND RESPONSIBILITIES:
1. To lead the search for individuals qualified to become members
of the Board of Directors and to select director nominees to
be presented for stockholder approval at the annual meeting.
The Committee shall select individuals as director nominees
who shall have the highest personal and professional
integrity, who shall have demonstrated exceptional ability and
judgment and who shall be most effective, in conjunction with
the other nominees to and existing members of the Board, in
collectively serving the long-term interests of the
stockholders.
2. Recommend to the Board persons to be appointed as Directors in
the interval between annual meetings of the Corporation's
shareholders;
3. Review the qualifications and independence of the members of
the Board on a regular periodic basis and make any
recommendations the Committee members may deem appropriate
from time to time concerning any recommended changes in the
composition of the Board; and
B-1
4. Establish a policy, if deemed appropriate by the Committee,
with regard to the consideration of director candidates
recommended by stockholders.
WITH RESPECT TO THE RESPONSIBILITIES LISTED ABOVE, THE COMMITTEE SHALL:
1. Report regularly to the Board on its activities;
2. Maintain minutes of its meetings and records relating to those
meetings and the Committee's activities;
3. Form and delegate authority to subcommittees of one or more
Committee members when appropriate;
4. Review and reassess the adequacy of this Charter annually and
recommend to the Board any proposed changes to this Charter;
and
5. Annually review the Committee's own performance.
IV. GENERAL
IN PERFORMING THEIR RESPONSIBILITIES, COMMITTEE MEMBERS ARE ENTITLED TO RELY IN
GOOD FAITH ON INFORMATION, OPINIONS, REPORTS OR STATEMENTS PREPARED OR PRESENTED
BY:
1. One or more officers and employees of the Corporation whom the
Committee member reasonably believes to be reliable and
competent in the matters presented;
2. Counsel, independent auditors, or other persons as to matters
which the Committee member reasonably believes to be within
the professional or expert competence of such person; or
3. Another committee of the Board as to matters within its
designated authority which committee the Committee member
reasonably believes to merit confidence.
B-2
REVOCABLE PROXY
PVF CAPITAL CORP.
ANNUAL MEETING OF STOCKHOLDERS
October 18, 2004
The undersigned hereby appoints Stanley T. Jaros, Raymond J. Negrelli and
Ronald D. Holman, II with full powers of substitution, to act as attorneys and
proxies for the undersigned, to vote all shares of common stock of PVF Capital
Corp. (the "Company") which the undersigned is entitled to vote at the Annual
Meeting of Stockholders (the "Meeting"), to be held at the Company's Corporate
Center, 30000 Aurora Road, Solon, Ohio, on Monday, October 18, 2004 at 10:00
a.m., local time, and at any and all adjournments thereof, as follows:
FOR VOTE WITHHELD
---- -------------
1. The election as directors for two-year terms of all nominees listed / / / /
below (except as marked to the contrary below).
Robert K. Healey
Stuart D. Neidus
C. Keith Swaney
Gerald A. Fallon
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE,
INSERT THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW.
---------------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. Proposal to ratify the appointment of Crowe, Chizek and Company LLP as / / / / / /
independent certified public accountants of the Company for the fiscal
year ending June 30, 2005.
The Board of Directors recommends a vote "FOR" each of the nominees and
"FOR" the proposition stated.
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE NOMINEES FOR DIRECTOR LISTED ABOVE AND FOR
THE OTHER PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN ACCORDANCE
WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT
TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
ANNUAL MEETING. THIS PROXY CONFERS DISCRETIONARY AUTHORITY ON THE HOLDERS
THEREOF TO VOTE WITH RESPECT TO THE ELECTION OF ANY PERSON AS DIRECTOR WHERE THE
NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE AND MATTERS INCIDENT
TO THE CONDUCT OF THE ANNUAL MEETING.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the Meeting of the stockholder's decision to terminate this proxy, then the
power of said attorneys and proxies shall be deemed terminated and of no further
force and effect.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders, a proxy
statement dated September 17, 2004 and an Annual Report to Stockholders.
Dated: , 2004
------------------------
- ------------------------------------ ---------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ------------------------------------ ---------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.