[NCF Financial Corporation Letterhead]
October 2, 1997
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of NCF Financial
Corporation, (the "Company"), I cordially invite you to attend the Annual
Meeting of Stockholders to be held at the Hampton Inn, 985 Chambers Boulevard,
Bardstown, Kentucky, on October 30, 1997, at 10:00 a.m. The attached Notice of
Annual Meeting and Proxy Statement describe the formal business to be transacted
at the Annual Meeting. During the Annual Meeting, I will also report on the
operations of the Company. Directors and officers of the Company, as well as
representatives of Whelan, Doerr, Pike and Pawley, PSC, certified public
accountants, will be present to respond to any questions stockholders may have.
The matters to be considered by stockholders at the Annual Meeting are
described in the accompanying Notice of Annual Meeting and Proxy Statement. The
Board of Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interests of the Company and
its stockholders. For the reasons set forth in the Proxy Statement, the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID
RETURN ENVELOPE AS PROMPTLY AS POSSIBLE. This will not prevent you from voting
in person at the Annual Meeting, but will assure that your vote is counted if
you are unable to attend the Annual Meeting. YOUR VOTE IS VERY IMPORTANT.
Sincerely,
/s/A. E. Bowling
A. E. Bowling
President and Chairman of the Board
NCF Financial Corporation
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NCF FINANCIAL CORPORATION
106A JOHN ROWAN BOULEVARD
BARDSTOWN, KENTUCKY 40004
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 30, 1997
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of NCF Financial Corporation ("the Company"), will be held at the Hampton Inn,
985 Chambers Boulevard, Bardstown, Kentucky on October 30, 1997, at 10:00 a.m.
The Meeting is for the purpose of considering and acting upon the following
matters:
1. The election of two directors of the Company; and
2. The ratification of the appointment of Whelan, Doerr, Pike and Pawley,
PSC, as independent auditors of the Company for the fiscal year ending
June 30, 1998.
The Board of Directors is not aware of any other business to come before the
Meeting.
Any action may be taken on 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 19, 1997 are the stockholders entitled to vote at the
Meeting and any adjournments thereof.
EACH STOCKHOLDER, WHETHER OR NOT HE PLANS TO ATTEND THE MEETING, IS REQUESTED TO
SIGN, DATE AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED BY
FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED
PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE MEETING MAY REVOKE
HIS PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE MEETING.
HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN
NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO VOTE
PERSONALLY AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Patricia H. Thomas
Patricia H. Thomas
Secretary
Bardstown, Kentucky
October 2, 1997
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
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PROXY STATEMENT
OF
NCF FINANCIAL CORPORATION
106A JOHN ROWAN BOULEVARD
BARDSTOWN, KENTUCKY 40004
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ANNUAL MEETING OF STOCKHOLDERS
October 30, 1997
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General
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This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of NCF Financial Corporation (the
"Company") to be used at the Annual Meeting of Stockholders of the Company which
will be held at the Hampton Inn, 985 Chambers Boulevard, Bardstown, Kentucky, on
October 30, 1997, 10:00 a.m. local time (the "Meeting"). The accompanying Notice
of Meeting and this Proxy Statement are being first mailed to stockholders on or
about October 2, 1997.
At the Meeting, stockholders will consider and vote upon (i) the
election of two directors, and (ii) the ratification of the appointment of
Whelan, Doerr, Pike and Pawley, PSC, as independent auditors of the Company for
the fiscal year ending June 30, 1998. The Board of Directors of the Company (the
"Board" or the "Board of Directors") knows of no additional matters that will be
presented for consideration at the Meeting. Execution of a proxy, however,
confers on the designated proxy holder discretionary authority to vote the
shares represented by such proxy in accordance with their best judgment on such
other business, if any, that may properly come before the Meeting or any
adjournment thereof.
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Voting and Revocability of Proxies
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Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Company at the address above or by the filing of
a later dated proxy prior to a vote being taken on a particular proposal at the
Meeting. A proxy will not be voted if a stockholder attends the Meeting and
votes in person. Proxies solicited by the Board of Directors will be voted in
accordance with the directions given therein. Where no instructions are
indicated, signed proxies will be voted "FOR" the nominees for directors set
forth below and "FOR" the other listed proposals. 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 matters incident to the conduct of the
Meeting.
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Voting Securities and Principal Holders Thereof
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Stockholders of record as of the close of business on September 19,
1997 (the "Record Date"), are entitled to one vote for each share of common
stock of the Company (the "Common Stock") then held. As of the Record Date, the
Company had 792,609 shares of Common Stock issued and outstanding.
The certificate of incorporation of the Company ("Certificate of
Incorporation") provides that in no event shall any record owner of any
outstanding Common Stock which is beneficially owned, directly
or indirectly, by a person who beneficially owns in excess of 10% of the then
outstanding shares of Common Stock (the "Limit") be entitled or permitted to any
vote with respect to the shares held in excess of the Limit. Beneficial
ownership is determined pursuant to the definition in the Certificate of
Incorporation and includes shares beneficially owned by such person or any of
his or her affiliates (as such terms are defined in the Certificate of
Incorporation), or which such person or any of his or her affiliates has the
right to acquire upon the exercise of conversion rights or options and shares as
to which such person or any of his or her affiliates or associates have or share
investment or voting power, but neither any employee stock ownership or similar
plan of the Company or any subsidiary, nor any trustee with respect thereto or
any affiliate of such trustee (solely by reason of such capacity of such
trustee), shall be deemed, for purposes of the Certificate of Incorporation, to
beneficially own any Common Stock held under any such plan.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) is necessary to constitute a quorum at the
Meeting. With respect to any matter, any shares for which a broker indicates on
the proxy that it does not have discretionary authority as to such shares to
vote on such matter (the "Broker Non-Votes") will be considered present for
purposes of determining whether a quorum is present. In the event there are not
sufficient votes for a quorum or to ratify any proposals at the time of the
Meeting, the Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of directors, the proxy being provided by the Board
enables a stockholder to vote for the election of the nominees proposed by the
Board, or to withhold authority to vote for the nominees being proposed.
Directors are elected by a plurality of votes of the shares present in person or
represented by proxy at a meeting and entitled to vote in the election of
directors.
As to the ratification of independent auditors as set forth in Proposal
II, by checking the appropriate box, a stockholder may: (i) vote "FOR" the item,
(ii) vote "AGAINST" the item, or (iii) vote to "ABSTAIN" on such item. Unless
otherwise required by law, all other matters shall be determined by a majority
of votes cast affirmatively or negatively without regard to (a) Broker Non-Votes
or (b) proxies marked "ABSTAIN" as to that matter.
Persons and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The following
table sets forth, as of the Record Date, persons or groups who own more than 5%
of the Common Stock. The ownership of all executive officers and directors of
the Company as a group is set forth in the chart under Proposal 1, Election of
Directors. Other than as noted below, management knows of no person or group
that owns more than 5% of the outstanding shares of Common Stock at the Record
Date.
Percent of Shares of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
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NCF Bank & Trust Co. Employee Stock
Ownership Plan 50,000 (1) 6.3%
106A John Rowan Boulevard
Bardstown, Kentucky 40004
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(1) The Bank's Employee Stock Ownership Plan ("ESOP") purchased such shares
for the exclusive benefit of ESOP participants with funds borrowed from
the Company. These shares are held in a suspense account and are
allocated among ESOP participants annually on the basis of compensation
as the ESOP debt is
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repaid. Directors Thomas Paul Barnes, Robert C. Hurst, John S. Tharp
and Guthrie M. Wilson III serve as the ESOP administrative committee
("ESOP Committee") and serve as the trustees to the ESOP ("ESOP
Trustees"). The ESOP Committee or the Board instructs the ESOP Trustees
regarding investment of ESOP plan assets. The ESOP Trustees must vote
all shares allocated to participant accounts under the ESOP as directed
by participants. Unallocated shares and shares for which no timely
voting direction is received will be voted by the ESOP Trustees as
directed by the ESOP Committee. As of the Voting Record Date, 8,737
shares have been allocated under the ESOP to participant's accounts.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the 1934 Act requires the Company's officers and
directors, and persons who own more than ten percent of the Common Stock, to
file reports of ownership and changes in ownership of the Common Stock, on Forms
3, 4 and 5, with the Securities and Exchange Commission ("SEC") and to provide
copies of those Forms 3, 4 and 5 to the Company. The Company is not aware of any
beneficial owner of more than ten percent of its Common Stock.
Based upon a review of the copies of the forms furnished to the
Company, or written representations from certain reporting persons that no Forms
5 were required, the Company believes that all Section 16(a) filing requirements
applicable to its officers and directors were complied with during the 1997
fiscal year, other than as stated below. Mr. Danny Biggs, an executive officer
and director, and Messrs. Barnes, Tharp, Hurst and Wilson, directors, each filed
Forms 5 that did not reflect the return of shares to the Company as a tax
payment for Management Stock Bonus Plan shares. Amended Forms 5 were later filed
by these individuals to include the transaction.
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I - INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR, DIRECTORS
CONTINUING IN OFFICE, AND EXECUTIVE OFFICERS
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Election of Directors
The Certificate of Incorporation requires that the Board of Directors
be divided into three classes, each of which contains approximately one-third of
the members of the Board. The directors are elected by the stockholders of the
Company for staggered three-year terms, or until their successors are elected
and qualified. The Board of Directors currently consists of six members. Two
directors will be elected at the Meeting to serve for a three-year term or until
their successors have been elected and qualified.
Earlier this year, Ben T. Guthrie, a director who had served on the
board of directors since 1949, retired. In order to maintain the director
classification mandated by the Certificate of Incorporation, Paul Barnes and
Danny R. Biggs have been nominated by the Board of Directors to serve as
directors. Messrs. Barnes and Biggs are currently members of the Board and have
been nominated for a three-year term to expire in 2000. It is intended that the
persons named in the proxies solicited by the Board will vote for the election
of the named nominees. If any of the nominees are unable to serve, the shares
represented by all valid proxies 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 the nominees might be unavailable to serve.
The following table sets forth information with respect to the nominees
and the directors continuing in office, their name, age, the year they first
became a director of the Company or the Bank, the expiration date of their
current term as a director, and the number and percentage of shares of the
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Common Stock beneficially owned. Each director of the Company is also a member
of the Board of Directors of the Bank.
Shares of
Common Stock
Beneficially
Year First Current Owned as of
Elected or Term to September 19, Percent
Age(1) Appointed(2) Expire 1997 (3) Owned
------ ------------ ------- --------- ------
Name and Title
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BOARD NOMINEES FOR TERM TO EXPIRE IN 2000
Paul Barnes 60 1977 1997 11,092 (4)(7) 1.4
Director
Danny R. Biggs 50 1996 1999 8,162 (5) 1.0
Director and Vice President
DIRECTORS CONTINUING IN OFFICE
A. E. Bowling 66 1972 1998 33,376 (5) 4.2
President and Chairman of the Board
John S. Tharp 68 1959 1998 12,492 (4)(7) 1.6
Director
Robert C. Hurst 67 1977 1999 17,692 (4)(7) 2.2
Director
Guthrie M. Wilson III 49 1978 1999 15,942 (4)(7) 2.0
Director
All directors and executive officers of 98,756 (6)(8) 12.3
the Company as a group (6 persons)
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(1) At June 30, 1997.
(2) Refers to the year the individual first became a director of the Company or
the Bank.
(3) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust, and other indirect ownership, over which shares
the individuals effectively exercise sole or shared voting and investment
power, unless otherwise indicated.
(4) Includes 770 shares that may be obtained within 60 days of the Record Date
through the exercise of options.
(5) Includes 3,852 shares that may be obtained within 60 days of the Record
Date through the exercise of options.
(6) Includes 10,784 shares that may be obtained within 60 days of the Record
Date through the exercise of options.
(7) Excludes 41,263 unallocated shares of Common Stock held under the ESOP for
which such individual serves as either a member of the ESOP Committee or as
an ESOP Trustee. Such individual disclaims beneficial ownership with
respect to shares held in a fiduciary capacity. The ESOP purchased such
shares for the exclusive benefit of ESOP participants with funds borrowed
from the Company. These shares are held in a suspense account and will be
allocated among ESOP participants annually on the basis of compensation as
the ESOP debt is repaid. Messrs. Barnes, Hurst, Tharp and Wilson serve on
the ESOP Committee and serve as ESOP Trustees. The ESOP Committee or the
Board instructs the ESOP Trustee regarding investment of ESOP plan assets.
The ESOP Trustees must vote all shares allocated to participant accounts
under the ESOP as directed by ESOP participants. Unallocated shares and
shares for which no timely voting direction is received will be voted by
the ESOP Trustees as directed by the ESOP Committee. As of the Voting
Record Date, 8,737 shares have been allocated under the ESOP to participant
accounts.
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(8) Excludes 17,260 shares of Common Stock held by the Management Stock Bonus
Plan of the Bank ("Management Stock Bonus Plan") as of the Record Date.
Non-employee directors serve as trustees to the Management Stock Bonus Plan
trust, and such individuals disclaim beneficial ownership with respect to
such shares held in a fiduciary capacity.
(9) Less than 1.0%.
The two executive officers of the Company are A. E. Bowling and Danny
R. Biggs, both are directors. Since the formation of the Company, none of the
executive officers, directors, or other personnel have received cash
remuneration from the Company.
Biographical Information
Set forth below is certain information with respect to the directors,
including director nominees, of the Company. All directors and executive
officers have held their present positions for five years unless otherwise
stated.
Paul Barnes, DMD has been a director of the Bank since 1977. He retired
in February 1996. Prior to that time, he had been self-employed as a dentist
since 1965. Mr. Barnes is a director of the Chamber of Commerce and is on the
City of Bardstown Lighting Committee.
A. E. Bowling has been the managing officer and director of the Bank
since 1972, and has been President and Chairman of the Board of directors since
1995. Mr. Bowling is a member of the Chamber of Commerce and a member of the
City and County Air Board.
John S. Tharp has been a director of the Bank since 1959. He also
serves as the Assistant Secretary of the Bank. Mr. Tharp retired in 1993 and was
the former partner in insurance and real estate businesses called Eugene Wilson
& Co. and Demaree & Hubbard.
Robert C. Hurst has been a director of the Bank since 1977. Since 1966,
he has been the manager and chief pharmacist of Hurst Discount Drug, Inc. of
which Mr. Hurst is sole stockholder.
Guthrie M. Wilson III has been a director of the Bank since 1978. Mr.
Wilson is part owner of Wilson Bros. Inc., a Chevrolet-Buick auto dealership.
Mr. Wilson is president of Bardstown-Nelson County Chamber of Commerce,
Bethlehem High School Board chairperson, St. Joseph Parish Council chairperson
and director of the Kentucky Auto Dealers Association.
Danny R. Biggs has been a Vice President of the Bank and the Company
since November 29, 1995 and a director of the Bank and the Company since
February 29, 1996. Between 1991 and 1995, Mr. Biggs was Vice President and head
of the Commercial Lending Department for Community Savings Bank of New Albany,
Indiana.
Nominations for Director
Pursuant to Article II, Section 15 of the Company's Bylaws,
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Company as set forth in that Section. To be timely, a stockholder's
notice shall be delivered to, or mailed and received at, the principal executive
offices of the Company not less than 60
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days prior to the anniversary date of the immediately preceding annual meeting
of stockholders of the Company.
Such stockholder's notice shall set forth (a) as to each person whom
the stockholder proposes to nominate for election or re-election as a director
and as to the stockholder giving the notice (i) the name, age, business address,
and residence address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of Common Stock
which are beneficially owned by such person on the date of such stockholder
notice, and (iv) any other information relating to such person that is required
to be disclosed in solicitations of proxies with respect to nominees for
election as directors; and (b) as to the stockholder giving the notice (i) the
name and address, as they appear on the Company's books, of such stockholder and
any other stockholders known by such stockholder to be supporting such nominees
and (ii) the class and number of shares of Common Stock which are beneficially
owned by such stockholder on the date of such stockholder notice and, to the
extent known, by any other stockholders known by such stockholder to be
supporting such nominees on the date of such stockholder notice. At the request
of the Board of Directors, any person nominated by, or at the direction of, the
Board for election as a director at an annual meeting shall furnish to the
Secretary of the Company that information required to be set forth in a
stockholder's notice of nomination which pertains to the nominee.
The Board of Directors may reject any nomination by a stockholder not
timely made in accordance with the requirements of the Bylaws. If the presiding
officer at the meeting determines that a nomination was not made in accordance
with the terms of the Bylaws, he shall so declare at the annual meeting and the
defective nomination shall be disregarded.
Meetings and Committees of the Board of Directors
The Board of Directors of the Company conducts its business through
meetings of the Board. The Board of Directors of the Company did not have
committees during the fiscal year ended June 30, 1997, but the committees of the
Bank's Board of Directors acted as committees for both the Company and the Bank.
During the fiscal year ended June 30, 1997, the Boards of Directors held 12
regular meetings and no special meetings. No continuing director attended fewer
than 75% of the total meetings of the Boards of Directors and committees during
the time such director served during the fiscal year ended June 30, 1997.
The Bank's full Board of Directors acts as a nominating committee
("Nominating Committee") for selecting the management nominees for election of
directors in accordance with the Company's Bylaws. In its deliberations, the
Nominating Committee considers the candidate's knowledge of the banking business
and involvement in community, business, and civic affairs. While the Board of
Directors will consider nominees recommended by stockholders, it has not
actively solicited recommendations from the Company's stockholders for nominees
nor, subject to the procedural requirements set forth in the Company's Bylaws,
established any procedures for this purpose. During the fiscal year ended June
30, 1997, the Board of Directors met one time as the Nominating Committee.
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The Executive Committee of the Bank, which is comprised of all six
members of the Board of Directors, acts as the Compensation Committee. In its
capacity as the Compensation Committee, the Executive Committee reviews the
performance and compensation of the officers of the Company. The Executive
Committee did not meet in its capacity as the Compensation Committee during the
1997 fiscal year. Neither the Nominating Committee nor the Compensation
Committee are standing committees.
The Audit Committee of the Bank is comprised of the entire Board of
Directors of the Company. The Audit Committee annually selects the independent
auditors and meets with the accountants to discuss and review the annual audit.
The Audit Committee is further responsible for reviewing and approving internal
controls for financial reporting. The Committee meets annually.
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
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Director Compensation
Directors of the Company do not receive any compensation for attendance
at Board meetings of the Company. Each member of the Board of Directors of the
Bank receives a monthly fee of $700, regardless of attendance.
Directors received awards of stock options and restricted stock under
the 1995 Stock Option Plan and the MSBP. See "- Other Benefits - 1995 Stock
Option Plan" and "- Management Stock Bonus Plan," herein.
Directors' Consultation and Retirement Plan. The Bank's Board has
adopted a Directors' Consultation and Retirement Plan (the "Consultation Plan").
Such Consultation Plan provides retirement benefits to directors. A director who
has served as a director for at least fifteen years shall be a participant in
the Consultation Plan. A consulting director is paid a monthly retirement
benefit under the Consultation Plan equal to the director fee in effect at the
time of such retirement for a period of up to 120 months.
Executive Officer Compensation
The Company has no full time employees, but relies on the employees of
the Bank for the limited services required by the Company. All compensation paid
to officers and employees is paid by the Bank.
The Company has agreed to reimburse the Bank for use of Bank employees.
Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by the chief executive officer of the
Bank who holds the same position with the Company. No other executive officer of
either the Bank or the Company had a salary and bonus during the years ended
June 30, 1997, 1996, and 1995 that exceeded $100,000 for services rendered in
all capacities to the Bank or the Company.
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Annual Compensation Long Term Compensation
------------------- ----------------------
Awards
Securities
Restricted Underlying All
Name and Fiscal Other Annual Stock Options/SARs Other
Principal Position Year Salary Bonus(1) Compensation(2) Award($)(3) (#) Compensation (4)
- ------------------- ---- ------ ----- --------------- ----------- ----- ----------------
A. E. Bowling 1997 $80,292 $ -- $8,400 -- -- $40,790
President and 1996 $80,292 $ -- $8,400 $104,018 19,262 $13,037
Chairman of the 1995 $80,292 $7,299 $8,400 -- -- $ 6,405
Board
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(1) Payment under the Incentive Bonus Plan.
(2) Consists of director fees. There were no (a) perquisites over the lesser of
$50,000 or 10% of the named executive officer's total salary and bonuses
for the year; (b) payments of above-market preferential earnings on
deferred compensation; (c) payments of earnings with respect to long term
incentive plans prior to settlement or maturity; (d) tax payment
reimbursements; or (e) preferential discounts on stock.
(3) Consists of 7,705 shares of restricted stock awarded under the MSBP. The
restricted stock had a value of $13.50 per share on the date of grant. Mr.
Bowling held 6,164 shares of restricted stock that had an aggregate value
of $88,608 (based on an estimated value of $14.375 per share) at June 30,
1997.
(4) Consisted of health, term life and disability insurance premiums paid on
behalf of the executive in the amounts of $6,300, $6,300 and $6,405 for the
fiscal years 1997, 1996 and 1995, respectively. Also consisted of ESOP
allocations in the amounts of 2,399.27 shares and 484.081 shares that were
received during the fiscal years 1997 and 1996, respectively. The
allocations had a value of $34,490 and $6,737 at June 30, 1997 and 1996,
respectively, based on a per share value of $14.375 and $13.92,
respectively.
Employment Agreement. The Bank has entered into an employment agreement
with A. E. Bowling, President of the Bank. The employment agreement is for a
term of three years. The agreement shall be terminable by the Bank for "just
cause" as defined in the agreement. If the Bank terminates the employee without
just cause, the employee will be entitled to a continuation of his salary from
the date of termination through the remaining term of the agreement. Such
employment agreement contains a provision stating that in the event of the
termination of employment in connection with any change in control of the Bank,
the employee will be paid in a lump sum an amount equal to 2.99 times the
employee's five year annual taxable compensation. If such payments were to be
made under the agreement as of June 30, 1997, such payments would equal
approximately $240,000. The aggregate payments that would be made to such
individual would be an expense to the Bank, thereby reducing net income and the
Bank's capital by that amount. The agreement may be renewed annually by the
Board of Directors in its sole discretion upon a determination of satisfactory
performance rendered by the employee. If the employee shall become disabled
during the term of such agreement, the employee shall nevertheless continue to
receive 100% payment of the base salary for a period of 12 months and 60% of
such base salary for the remaining term of such agreement. Such payments shall
be reduced by any other benefit payments made under other disability programs in
effect for Bank employees.
Supplemental Executive Retirement Plan. The Bank has adopted a
supplemental executive retirement plan ("SERP") for the benefit of A. E.
Bowling, President. The purpose of the SERP is to furnish the participant with
supplemental post-retirement benefits in addition to those which will be
provided under the Bank's pension plan and other retirement benefits. Under the
Bank's pension plan,
-8-
retirement benefits are calculated as 1.5% times years of service times final
average earnings (as defined in the pension plan). The SERP will provide a
supplemental benefit equal to 0.5% times years of service times final average
earnings. Payments under the SERP will be accrued for financial reporting
purposes based upon the vesting of such benefits. The SERP shall be unfunded.
All benefits payable under the SERP will be paid from current assets of the
Bank. There are no tax consequences to either the participant or the Bank
related to the SERP prior to payment of benefits. Upon receipt of payment of
benefits, the participant will recognize taxable ordinary income in the amount
of such payments received and the Bank will be entitled to recognize a
tax-deductible compensation expense at that time. Benefits under the SERP shall
be immediately payable upon death or disability of the participant, or upon
termination of participant within one year of a change in control of the Bank.
Incentive Bonus Plan. The Bank maintains a discretionary cash incentive
bonus plan for the benefit of all employees. Under the employee incentive plan,
a cash bonus may be paid to all employees as a percentage of the employee's base
salary. Awards under this plan in the aggregate for the 1997, 1996 and 1995
fiscal years were approximately $0, $0, and $18,249, respectively.
Employee Stock Ownership Plan. The Bank established the ESOP for the
exclusive benefit of participating employees. Participating employees are
employees who have completed at least one year of service with the Bank or its
subsidiary and have attained the age of 21. The ESOP borrowed funds with which
to acquire 50,000 shares of Common Stock which represents 6.3% of the issued and
outstanding shares of Common Stock. This loan is secured by the Common Stock
purchased and earnings of ESOP assets. The shares of Common Stock purchased with
the loan proceeds are held in a suspense account for allocation among
participants as the loan is repaid. The Bank anticipates contributing
approximately $50,000 annually to the ESOP to meet principal obligations under
the ESOP loan. It is anticipated that all such contributions shall be
tax-deductible. This loan is expected to be fully repaid in approximately 10
years.
The Board of Directors has appointed Paul Barnes, Robert C. Hurst, John
S. Tharp and Guthrie M. Wilson III to the ESOP Committee to administer the ESOP.
Directors Barnes, Hurst, Tharp and Wilson have also been appointed to serve as
the ESOP Trustees. The Board of Directors or the ESOP Committee may instruct the
ESOP Trustees regarding the investment of funds contributed to the ESOP. The
ESOP Trustees must vote all allocated shares held in the ESOP in accordance with
the instructions of the participating employees. Unallocated shares and
allocated shares for which no timely direction is received will be voted by the
ESOP Trustees as directed by the Board of Directors or the ESOP Committee,
subject to the ESOP Trustees' fiduciary duties.
Pension Plan. The Bank is a participating employer in a multiple
employer pension plan sponsored by the Financial Institutions Retirement Fund
(the "Pension Plan"). All full-time employees of the Bank are eligible to
participate after one year of service and attainment of age 21. A qualifying
employee becomes fully vested in the Pension Plan upon the completion of five
years of service or the attainment of the normal retirement age of 65. The
Pension Plan is intended to comply with the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
The Pension Plan provides for monthly payments to each participating
employee at normal retirement age. The annual allowance payable under the
Pension Plan is equal to 1.5% of the average annual salary (excluding overtime
and bonuses) during years of service multiplied by the number of years of
credited service. A participant who is vested in the Pension Plan may take an
early retirement and elect to receive a reduced monthly benefit beginning as
early as age 45. The Pension Plan also provides
-9-
for payments in the event of disability or death. At June 30, 1997, Mr. Bowling,
President, had 25 years of credited service under the Pension Plan. The Bank had
a pension expense for fiscal years 1997, 1996 and 1995 of $0 $2,176, and $1,088,
respectively.
The following table shows the estimated annual benefits payable under
the Pension Plan based on an employee's years of service and applicable average
annual salary, as calculated under the Pension Plan. Benefits under the Pension
Plan are not subject to offset for Social Security benefits.
Final Average Salary Years of Benefit Service
- -------------------- ---------------------------------------------------------------------
15 20 25 30 35
------- ------ ------ ------ ----
$ 20,000............................ $ 4,500 $ 6,000 $ 7,500 $ 9,000 $10,500
40,000............................ 9,000 12,000 15,000 18,000 21,000
60,000............................ 13,500 18,000 22,500 27,000 31,500
80,000............................ 18,000 24,000 30,000 36,000 42,000
100,000............................ 22,500 30,000 37,500 45,000 52,500
120,000............................ 27,000 36,000 45,000 54,000 63,000
1995 Stock Option Plan
The Board of Directors adopted the 1995 Stock Option Plan (the "Option
Plan") which was approved by stockholders on April 18, 1996. Pursuant to the
Option Plan, a number of additional authorized shares equal to up to 10% of the
Common Stock issued in the Conversion are reserved for issuance by the Company
upon exercise of stock options granted to officers, directors and employees of
the Company and Bank from time to time under the Option Plan (i.e., 77,050
shares). Pursuant to the terms of the Option Plan, Non-Incentive Stock Options
to purchase 3,852 shares of Common Stock were granted to each of the
non-employee directors and Incentive Stock Options for 19,262 shares of Common
Stock were granted to each of Mr. Bowling and Mr. Biggs.
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End Option/SAR Value
--------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs In-The-Money Options/SARs
at FY-End (#)(1) at FY-End ($)(1)(2)
---------------- -------------------
Shares Acquired Value
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- --------------- -------------- -------------------------
A. E. Bowling -- $ -- 3,852 / 15,410 $3,371 / $13,484
- -------------
(1) No Stock Appreciation Rights (SARs) have been awarded under the Option
Plan.
(2) Based upon an exercise price of $13.50 per share and estimated price of
$14.375 as of June 30, 1997.
Management Stock Bonus Plan
The Bank contributed sufficient funds to the MSBP to purchase Common
Stock from the Company representing 4% of the aggregate number of shares issued
in the Conversion (i.e., 30,820 shares of Common Stock). Each non-employee
director was awarded 1,541 shares of Common Stock pursuant to the MSBP and each
of Mr. Bowling and Mr. Biggs was awarded 7,705 shares.
-10-
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
Certain Related Transactions
The Bank, like many financial institutions, has followed a policy of
granting various types of loans to officers, directors, and employees. The loans
have been made in the ordinary course of business and on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with the Bank's other customers, and do not involve
more than the normal risk of collectibility, or present other unfavorable
features.
Since the beginning of the fiscal year ended June 30, 1997, no
director, executive officer or immediate family member of such individuals were
engaged in any transaction with the Company or any subsidiary involving more
than $60,000.
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II -- RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
The Company discontinued the engagement of Crisp Hughes & Co., LLP
("Crisp Hughes"), its independent auditors, and notified Crisp Hughes of its
action on June 4, 1996. The Company's Board of Directors engaged Whelan, Doerr,
Pike & Pawley as the Company's auditors for the year ended June 30, 1996. The
determination to replace Crisp Hughes was approved by the full Board of
Directors of the Company.
The report of Crisp Hughes for the fiscal year ended June 30, 1995
contained no adverse opinion or disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope or accounting principles. During the
fiscal year ended June 30, 1995 and during the period from June 30, 1995 to June
4, 1996, there were no disagreements between the Company and Crisp Hughes
concerning accounting principles or practices, financial statement disclosure,
or auditing scope or procedure.
The Board of Directors has approved the selection of Whelan, Doerr,
Pike and Pawley, PSC, as its auditors for the fiscal year ending June 30, 1998,
subject to ratification by the Company's stockholders. A representative of
Whelan, Doerr, Pike and Pawley, PSC, is expected to 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.
Ratification of the appointment of the auditors requires the approval
of a majority of the votes cast by the stockholders of the Company at the
Meeting. The Board of Directors recommends that stockholders vote "FOR" the
ratification of the appointment of Whelan, Doerr, Pike and Pawley, PSC, as the
Company's auditors for the fiscal year ending June 30, 1998.
-11-
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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.
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 judgment of the persons named in the accompanying proxy.
- --------------------------------------------------------------------------------
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's Annual Report to Stockholders for the year ended June 30,
1997, including financial statements, will be mailed to all stockholders of
record as of the close of business on September 19, 1997. Any stockholder who
has not received a copy 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
- --------------------------------------------------------------------------------
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 offices at
106A John Rowan Boulevard, Bardstown, Kentucky 40004, no later than June 4,
1997. Any such proposals shall be subject to the requirements of the proxy rules
adopted under the 1934 Act.
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FORM 10-KSB
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
JUNE 30, 1997 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD
DATE UPON WRITTEN REQUEST TO THE SECRETARY, NCF FINANCIAL CORPORATION, 106A JOHN
ROWAN BOULEVARD, BARDSTOWN, KENTUCKY 40004.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Patricia H. Thomas
Patricia H. Thomas
Secretary
Bardstown, Kentucky
October 2, 1997
-12-
Annex A
- --------------------------------------------------------------------------------
NCF FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
October 30, 1997
- --------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors of NCF Financial
Corporation (the "Company"), or its designee, with full powers of substitution,
to act as attorneys and proxies for the undersigned, to vote all shares of
Common Stock of the Company which the undersigned is entitled to vote at the
Annual Meeting of Stockholders (the "Meeting"), to be held at the Hampton Inn,
985 Chambers Boulevard, Bardstown, Kentucky, on October 30, 1997, at 10:00 a.m.
and at any and all adjournments thereof, in the following manner:
FOR WITHHELD
--- --------
1. The election as directors of the nominees
listed below (except as marked to the |_| |_|
contrary below):
Paul Barnes
Danny R. Biggs
(Instruction: To withhold authority to vote
for any nominee, write that nominee's name
on the space provided below)
FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of the appointment of
Whelan, Doerr, Pike and Pawley, PSC as
independent auditors of NCF Financial
Corporation, for the fiscal year ending
June 30, 1998. |_| |_| |_|
Note: Executing this proxy permits such attorneys and proxies to vote, in their
discretion, upon such other business as may properly come before the Meeting or
any adjournments thereof.
The Board of Directors recommends a vote "FOR" the above listed
proposition.
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS
IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS
PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE 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 adjournments thereof, and after notification to the Secretary of the
Company at the Meeting of the stockholder's decision to terminate this proxy,
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned may also revoke this proxy by filing a
subsequently dated proxy or by written notification to the Secretary of the
Company of his or her decision to terminate this proxy.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders, an annual
report, and a proxy statement dated October 2, 1997.
Please check here if you
Dated: , 1997 |_| plan to attend the Meeting.
-----------------------------
- ----------------------------------- ------------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ----------------------------------- ------------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this proxy. 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.
- --------------------------------------------------------------------------------
Annex B 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 [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
NCF Financial Corporation
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------