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SCHEDULE 14A
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant under Section 240.14a-12
PARKVALE FINANCIAL CORPORATION
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
---------------
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule O-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.:
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(3) Filing Party:
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(4) Date Filed:
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PARKVALE FINANCIAL CORPORATION LOGO
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4220 WILLIAM PENN HIGHWAY, MONROEVILLE, PA 15146
September 17, 2001
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Parkvale Financial Corporation. The meeting will be held at the Pittsburgh
Athletic Association, 4215 Fifth Avenue, Pittsburgh, Pennsylvania, on Thursday,
October 25, 2001, at 10:00 a.m.
At the meeting, stockholders will act on the matters set forth in the
accompanying Notice of Annual Meeting and Proxy Statement and on any other
business matters properly brought before the meeting.
FOR THE REASONS SET FORTH IN THE PROXY STATEMENT, THE BOARD UNANIMOUSLY
RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES AS DIRECTORS AND "FOR" THE
RATIFICATION OF AUDITORS.
It is important that your shares be represented and voted at the Annual
Meeting regardless of whether you plan to attend. Please complete, sign, date
and return the enclosed proxy card promptly in the envelope provided.
Sincerely,
/s/ ROBERT J. McMARTHY, JR.
Robert J. McCarthy, Jr.
President and
Chief Executive Officer
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PARKVALE FINANCIAL CORPORATION
4220 WILLIAM PENN HIGHWAY
MONROEVILLE, PENNSYLVANIA 15146
(412) 373-7200
------------------------------
NOTICE OF ANNUAL MEETING
TO BE HELD ON OCTOBER 25, 2001
------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Parkvale
Financial Corporation, Monroeville, Pennsylvania (the "Corporation") will be
held at the Pittsburgh Athletic Association, 4215 Fifth Avenue, Pittsburgh,
Pennsylvania, on Thursday, October 25, 2001, at 10:00 a.m., Eastern Time, for
the following purposes, all of which are more completely set forth in the
accompanying Proxy Statement:
(1) To elect two directors for a term of three years or until their
successors have been elected and qualified;
(2) To ratify the appointment of Ernst & Young LLP as the Corporation's
independent auditors for the fiscal year ending June 30, 2002; and
(3) To transact such other business as may properly come before the
meeting.
Stockholders of the Corporation of record at the close of business on
August 27, 2001 are entitled to notice of and to vote at the Annual Meeting.
By Order of the Board of Directors
/s/ ERNA A GOLOTA
Erna A. Golota
Secretary
Monroeville, Pennsylvania
September 17, 2001
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU
PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED. IF YOU ATTEND THE
MEETING, YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE
REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE
THEREOF.
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PARKVALE FINANCIAL CORPORATION
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is being furnished to holders of Common Stock, par
value $1.00 per share ("Common Stock"), of Parkvale Financial Corporation (the
"Corporation" or "PFC"), the holding company of Parkvale Savings Bank (the
"Bank"), in connection with the solicitation of proxies on behalf of the Board
of Directors, for use at the Annual Meeting of Stockholders to be held at the
Pittsburgh Athletic Association, 4215 Fifth Avenue, Pittsburgh, Pennsylvania, on
Thursday, October 25, 2001, at 10:00 a.m., Eastern Time, and at any adjournment
thereof for the purposes set forth in the Notice of Annual Meeting. This Proxy
Statement is being first sent to stockholders on or about September 17, 2001.
The proxies solicited hereby, if properly signed and returned to the
Corporation, will be voted in accordance with the instructions contained therein
if they are not revoked prior to their use. IF NO CONTRARY INSTRUCTIONS ARE
GIVEN, EACH PROXY RECEIVED WILL BE VOTED FOR THE SLATE OF DIRECTORS DESCRIBED
HEREIN, FOR RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE
CORPORATION'S INDEPENDENT AUDITORS AND UPON THE TRANSACTION OF SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING IN ACCORDANCE WITH THE BEST
JUDGMENT OF THE PERSONS APPOINTED AS PROXIES.
Any stockholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Secretary of the Corporation
written notice thereof (Erna A. Golota, Secretary, Parkvale Financial
Corporation, 4220 William Penn Highway, Monroeville, Pennsylvania 15146), (ii)
submitting a duly executed proxy bearing a later date, or (iii) appearing at the
Annual Meeting and giving the Secretary notice of his or her intention to vote
in person. Proxies solicited hereby may be exercised only at the Annual Meeting
and any adjournment thereof and will not be used for any other meeting.
VOTING SECURITIES AND BENEFICIAL OWNERSHIP THEREOF
Only stockholders of record at the close of business on August 27, 2001
(the "Voting Record Date") will be entitled to vote at the Annual Meeting. On
the Voting Record Date, there were 5,667,277 shares of Common Stock of the
Corporation issued and outstanding and the Corporation had no other class of
equity securities outstanding. Each share of Common Stock is entitled to one
vote on each proposal at the Annual Meeting, with no cumulative voting for the
election of directors permitted.
The following table sets forth, as of the Voting Record Date, certain
information as to the Common Stock beneficially owned by (i) persons or entities
known to the Corporation to be the beneficial owners of 5% or more of the
Corporation's Common Stock, (ii) directors of the Corporation, (iii) executive
officers of the Corporation who are not directors, and (iv) all directors and
executive officers as a group. The information shown is based upon filings
pursuant to the Securities Exchange Act of 1934, as amended ("Exchange Act"),
and/or information furnished by the individuals or entities.
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<Table>
<Caption>
NUMBER OF SHARES
BENEFICIALLY OWNED AS PERCENT OF
NAME OF BENEFICIAL OWNER OF AUGUST 27, 2001(1) COMMON STOCK
- ------------------------ --------------------- ------------
Parkvale Financial Corporation 556,866(2) 9.83%
Employee Stock Ownership Plan
4220 William Penn Highway
Monroeville, PA 15146
Beck, Mack & Oliver LLC 417,907(3) 7.37
330 Madison Avenue
New York, NY 10017
Dimensional Fund Advisors Inc. 338,929(4) 5.98
1299 Ocean Avenue
Santa Monica, CA 90401
DIRECTORS:
Fred P. Burger, Jr. 152,086(5)(6) 2.67
Andrea F. Fitting 11,749(5)(7) 0.21
Robert J. McCarthy, Jr. 418,398(5)(8)(9) 7.28
Patrick J. Minnock 27,502(5)(10) 0.48
Robert D. Pfischner 118,052(5)(11) 2.07
EXECUTIVE OFFICERS
WHO ARE NOT DIRECTORS:
Bruce C. Gilleylen 71,530(5)(8)(12) 1.26
Timothy G. Rubritz 113,740(5)(8)(13) 2.00
Gail B. Anwyll 25,728(5)(8) 0.45
DIRECTORS AND EXECUTIVE
OFFICERS AS A GROUP
(8 persons) 938,785(5)(8) 15.98
</Table>
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(1) Under applicable regulations, shares are deemed to be beneficially owned by
a person if he or she directly or indirectly has or shares the power to
vote or dispose of the shares, whether or not he or she has any economic
interest in the shares. Unless otherwise indicated, the named beneficial
owner has sole voting and dispositive power with respect to the shares.
(2) All shares have been allocated to the participants of the Employee Stock
Ownership Plan ("ESOP").
(3) Beck, Mack & Oliver LLC is an investment adviser registered under the
Investment Advisers Act of 1940 and the 417,907* shares are owned by
investment advisory clients of the firm. No one of these clients owns more
than 5% of said shares.
* Based on a Schedule 13F as of June 30, 2001 filed with the SEC.
(4) Dimensional Fund Advisors Inc. is an investment adviser registered under
the Investment Advisers Act of 1940 and the 338,929* shares are held in
portfolios of certain affiliated entities. Dimensional disclaims beneficial
ownership of all such shares.
* Based on a Schedule 13F as of June 30, 2001 filed with the SEC.
(5) Includes shares that may be acquired within 60 days through exercise of
stock options as follows: Mr. Burger, 29,069 shares; Dr. Fitting, 10,000
shares; Mr. McCarthy, 80,539 shares; Mr. Minnock, 10,000 shares; Mr.
Pfischner, 31,069 shares; Mr. Gilleylen, 6,000 shares; Mr. Rubritz, 27,582
shares; Ms. Anwyll, 12,316 shares; and all directors and executive officers
as a group, 206,575 shares. Shares of Common Stock which are subject to
stock options are deemed to be outstanding for the purpose of computing the
percentage of outstanding Common Stock owned by the individual or
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group but are not deemed outstanding for the purpose of computing the
percentage of Common Stock owned by any other person or group. Exclusive of
shares which may be acquired upon the exercise of stock options, directors
and executive officers of the Corporation as a group beneficially owned
732,210 shares or 12.82% of the issued and outstanding Common Stock.
(6) Includes 35,000 shares held under Mr. Burger's deferred fee agreement with
the Bank.
(7) Includes 1,140 shares held by Dr. Fitting's spouse.
(8) Includes shares allocated to such person or group under the ESOP as
follows: Mr. McCarthy, 51,063 shares; Mr. Gilleylen, 32,598 shares; Mr.
Rubritz, 32,577 shares; Ms. Anwyll, 10,122 shares; and all executive
officers as a group, 126,360 shares. Also includes shares allocated under
(a) the Supplemental Executive Benefit Plan ("SEBP") as follows: Mr.
McCarthy, 15,129 shares; Mr. Gilleylen, 543 shares; Mr. Rubritz, 429
shares, and all executive officers as a group, 16,101 shares; and (b)
Executive Deferred Compensation Plan ("EDCP"): Mr. McCarthy, 21,000 shares;
Mr. Gilleylen, 4,650 shares; Mr. Rubritz, 2,507 shares; and all executive
officers as a group 28,157 shares. (See Audit-Finance Committee Report On
Executive Compensation.) Shares are deemed to be beneficially owned by such
individuals or group as a result of their ability to direct the ESOP, SEBP
and EDCP trustees' voting of such shares allocated to their respective
accounts.
(9) Includes 148,884 shares held jointly by Mr. McCarthy and his wife, 22,881
shares held by Mr. McCarthy as custodian for his children, and 78,902
shares held under deferred fee and compensation agreements with the Bank.
(10) Includes 3,163 shares held by Mr. Minnock's wife and 9,900 shares held by
the Minnock Family Limited Partnership.
(11) Includes 26,816 shares held jointly by Mr. Pfischner and his wife, 1,525
shares held by his wife and 5,707 shares held under a deferred fee
agreement with the Bank.
(12) Includes 27,739 shares held jointly by Mr. Gilleylen and his wife.
(13) Includes 36,889 shares held jointly by Mr. Rubritz and his wife and 6,006
shares held by Mr. Rubritz as custodian for his children.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires that directors and officers of
the Corporation and the Bank file reports of ownership and changes in ownership
of the Common Stock with the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc. Directors and officers are required to
furnish the Corporation with copies of all Section 16(a) forms they file. Based
solely upon review of copies of Forms 3, 4 and 5 received by the Corporation's
compliance administrator, the Corporation believes that all filing requirements
applicable to its directors and officers were complied with during fiscal 2001
except that one transaction by a family partnership was not reported on a timely
basis on Form 4 by Patrick Minnock. The transaction was subsequently reported.
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INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
DIRECTORS WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
Pursuant to the Bylaws of the Corporation and by resolution of the
Corporation's Board of Directors, the Board of Directors currently consists of
five members. The Board of Directors is divided into three classes, and members
of each class are elected for a term of three years and until their successors
are elected and qualified. One class of directors is to be elected annually.
There are no arrangements or understandings between the Corporation and any
person pursuant to which such person has been nominated as a director. No
director or executive officer is related to any other director or executive
officer of either the Corporation or the Bank.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of all the nominees listed below. If
any person named as nominee should be unable or unwilling to stand for election
at the time of the Annual Meeting, the proxies will nominate and vote for the
replacement nominee or nominees recommended by the Board of Directors. At this
time, the Board of Directors knows of no reason why any of the persons listed
below may not be able to serve as a director if elected. A majority of the
shares of Common Stock entitled to vote, present in person or by proxy at the
meeting, will constitute a quorum. The election of directors requires the
affirmative vote of the holders of a plurality of the shares of Common Stock by
all stockholders entitled to vote thereon, whether in person or by proxy.
Abstentions are considered in determining the presence of a quorum but will not
be counted as votes cast. Accordingly, abstentions will have no effect on the
plurality vote required for the election of directors. There will not be any
"broker non-votes" on this proposal.
NOMINEES FOR TERMS EXPIRING IN 2004
<Table>
<Caption>
PRINCIPAL OCCUPATION DIRECTOR
NAME AGE DURING THE PAST FIVE YEARS SINCE
- ---- --- -------------------------- -----
Robert J. McCarthy, Jr. 58 Director; President and Chief Executive 1985(1)(2)
Officer of the Bank since December 1, 1984
and of the Corporation since organization
in August 1987; previously President and
Chief Executive Officer of Metropolitan
Federal Savings Bank, Bethesda, Maryland
Patrick J. Minnock 44 Director; President of Minnock Construction 1998(2)
Company, a leading builder and land
developer in the western Pennsylvania area,
since 1988; licensed real estate broker
since 1987
</Table>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE ABOVE NOMINEES
BE ELECTED AS DIRECTORS.
DIRECTOR WITH TERM EXPIRING IN 2002
<Table>
<Caption>
PRINCIPAL OCCUPATION DIRECTOR
NAME AGE DURING THE PAST FIVE YEARS SINCE
- ---- --- -------------------------- -----
Fred P. Burger, Jr. 74 Director; President of Burger Agency, Inc., 1981(1)(2)
a real estate brokerage firm and insurance
agency, since 1948
</Table>
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DIRECTORS FOR TERMS EXPIRING IN 2003
<Table>
<Caption>
PRINCIPAL OCCUPATION DIRECTOR
NAME AGE DURING THE PAST FIVE YEARS SINCE
- ---- --- -------------------------- -----
Robert D. Pfischner 79 Chairman of the Board; President of E.T. 1968(1)(2)
Lippert Saw Co., a manufacturer of saw
blades for industry and fabricator of armor
plate, since 1973
Andrea F. Fitting, Ph.D. 47 Director; Chief Executive Officer of 1998(2)
Fitting Creative, Inc. since 1995 and
President of Fitting Communications, Inc.
from 1986 to 1995, marketing communications
firms
</Table>
- ---------
(1) Includes terms as director of the Bank prior to organization of the
Corporation in 1987.
(2) Currently serves as a director of the Bank.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Corporation holds regular meetings at least
quarterly. Each member of the Board of Directors of the Corporation also serves
as a director of the Bank. During the year ended June 30, 2001, the Board of
Directors of the Corporation met nine times. No directors failed to attend fewer
than 90% of such meetings and the meetings of the committees of the Board on
which they served. All members of the Board serve on the Nominating Committee,
which met one time during fiscal 2001. The Nominating Committee will consider
nominations made by stockholders if such nominations are made in accordance with
Article IV, Section 3 of the Corporation's Bylaws. The Board also has other
standing committees, each served by the same members of the Board and in the
same capacities as those described below for similar committees of the Bank's
Board. The Executive Committee, which did not meet in fiscal 2001, has the
authority to exercise all of the powers of the Board between Board meetings. The
joint Audit-Finance Committee of the Corporation and the Bank met four times in
fiscal 2001. Directors of the Corporation do not receive any fees directly from
the Corporation for serving as Board and Committee members. The Board does not
have a separate compensation committee as determination of compensation is a
function of the Audit-Finance Committee.
The Board of Directors of the Bank meets regularly each month and may have
additional special meetings. The Board met thirteen times during fiscal 2001.
The Bank has standing Executive, Audit-Finance and Site-Building Committees as
described below, in addition to other committees. During fiscal 2001, no
directors failed to attend fewer than 90% of the meetings held during the year
by the Board of Directors and by all committees of the Board on which they
served.
The Executive Committee has the authority to exercise all the powers of the
Board of Directors between Board meetings. The members of the Executive
Committee are appointed annually and consisted of Dr. Fitting and Messrs. Burger
and Minnock during fiscal 2001. Mr. Pfischner currently serves as Chairman of
this committee. Mr. McCarthy attends but does not vote at the meetings. The
Executive Committee met one time during fiscal 2001.
The Site-Building Committee inspects, evaluates and recommends to the Board
proposed sites for branch offices and recommends any major repairs and/or
additions to such proposed sites that may be necessary. The members of the
Site-Building Committee are appointed annually and consisted of Dr. Fitting and
Messrs. Burger and Minnock during fiscal 2001. Messrs. Pfischner and McCarthy,
as ex-officio members, attend the meetings but do not vote. Mr. Minnock
currently serves as Chairman of this committee. The Site-Building Committee met
one time during fiscal 2001.
The joint Audit-Finance Committee is comprised of three outside directors.
The Committee reviews the Bank's budget; the scope and results of the audit
performed by the Corporation's and the Bank's independent auditors; the scope
and results of the examinations performed by the Office of Thrift
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Supervision, the Pennsylvania Department of Banking and the Federal Deposit
Insurance Corporation; the Bank's system of internal control; and monitors
compliance with the Bank's established investment, interest rate risk, financial
futures and options policies. The members of such committee must consider and
act upon (1) all transactions with respect to the investment portfolio, with the
exception of Federal Funds sold, in excess of $25 million, and (2) all hedging
activities over $10 million and up to $25 million. In addition, the
Audit-Finance Committee reviews and makes recommendations to the Board
concerning compensation of officers and employees. The members of the
Audit-Finance Committee are appointed annually and consisted of Dr. Fitting and
Messrs. Burger and Minnock during fiscal 2001. Messrs. Pfischner and McCarthy,
as ex-officio members, attend the meetings but do not vote. Mr. Burger currently
serves as Chairman of this committee. The Audit-Finance Committee met four times
during fiscal 2001.
AUDIT REPORT
The three persons who are members of the Audit-Finance Committee are
financially literate and act under the Audit Committee Charter approved by the
Board of Directors. A copy of the Charter is attached to this Proxy Statement as
Appendix A.
The Committee oversees the Corporation's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the systems of
internal controls. In fulfilling the oversight responsibilities, the Committee
reviewed the audited financial statements in the Annual Report with management
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosure in the financial statements.
The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgment as to
the quality, not just the acceptability, of the Corporation's accounting
principles and such other matters as are required to be discussed with the
Committee under generally accepted auditing standards, including Statement of
Auditing Standards No. 61. In addition, the Committee has discussed with the
independent auditors the auditors' independence from management and the
Corporation, including the matters in the written disclosures required by the
Independence Standards Board and the Independent Standards Board Standard No. 1,
and considered the compatibility of non-audit services with the auditors'
independence.
The Committee discussed with the Corporation's internal and independent
auditors the overall scope and plans for their respective audits. The Committee
meets with the internal and independent auditors, with and without management
present, to discuss the results of their examinations, their evaluations of the
Corporation's internal controls, and the overall quality of the Corporation's
financial reporting.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors, and the Board has approved, that the
audited financial statements be included in the Annual Report on Form 10-K for
the fiscal year ended June 30, 2001 for filing with the Securities and Exchange
Commission. The Committee and the Board have also recommended, subject to
shareholder approval, selection of Ernst & Young LLP as the Corporation's
independent auditors for the fiscal year ending June 30, 2002.
Fred P. Burger, Jr., Chairman
Andrea F. Fitting
Patrick J. Minnock
September 13, 2001
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COMPENSATION OF DIRECTORS
Board members receive an annual retainer, payable monthly, and a fee for
each meeting attended. For the first six months of fiscal year 2001, the
annualized retainer was $14,400 ($1,200 paid monthly) and the per meeting fee
attended was $500. Effective January 1, 2001, the directors received a retainer
of $1,375 monthly, based on an annualized retainer of $16,500, and $500 for each
meeting attended. Mr. McCarthy does not receive the annual retainer and meeting
fees. Directors, excluding Messrs. Pfischner and McCarthy, received $200 for
each committee meeting attended during fiscal 2001, except for the chairmen of
the Audit-Finance and Site-Building committees, who received $225 per meeting
attended. In addition to the normal $225 per meeting fee for fulfilling his
duties as Chairman of the Site-Building Committee, Mr. Minnock may receive $100
for inspecting and evaluating a proposed branch site and any major repairs to a
branch office or site. Mr. Minnock did not receive compensation for performing
such services in fiscal 2001.
Dr. Fitting and Messrs. Burger, Minnock and Pfischner served as
trustees/administrators of the Corporation's following benefit plans during
fiscal 2001: 401(k) Plan, Employee Stock Ownership Plan and Stock Option Plans.
To date, the directors serving as trustees/administrators of these plans have
not received any additional compensation for such services.
On December 16, 1993, the Bank entered into a consulting agreement with Mr.
Pfischner to serve as a consultant to the President-Chief Executive Officer,
Board of Directors and executive staff of the Bank for a term of one year
commencing on January 1, 1994 and continuing from year to year by written
agreement. The agreement has been extended by written agreement each calendar
year through 2001 under the same terms and conditions for a term of one year.
The agreement provides for a minimum base annual fee of $20,400 payable monthly,
which may be increased in the future. Either party may terminate the agreement
by providing the other party with at least thirty days written notice before the
expiration date of the agreement. Mr. Pfischner had performed consulting
services to the Bank for many years without a written agreement. For services
performed during fiscal 2001, in addition to the regular Board fees, Mr.
Pfischner received $37,400 which included a bonus of $17,000 for outstanding
services to the Bank.
Under the 1993 Directors' Stock Option Plan, each person who serves as a
non-employee director immediately following the last adjournment of each Annual
Meeting shall be granted as of such date a compensatory stock option to purchase
shares of the Corporation's Common Stock at a price equal to the fair market
value of a share of the Common Stock on that date. On the 2000 Annual Meeting
date, each non-employee director received an option to purchase 2,000 shares.
The fair market value on the October 26, 2000 Annual Meeting date was $19.125
per share.
Directors may make an irrevocable election prior to the beginning of each
calendar year to defer all or a portion of the annual retainer and meeting fees
into a cash account and/or a PFC stock account. The cash account earns interest
each year at a rate equal to the rate paid on the Bank's highest rated
certificate of deposit on the first business day of each calendar year. The
stock account is credited with the dividends paid on PFC stock during the year.
Prior to the beginning of the year, each participant may elect to purchase PFC
Common Stock with the cash in either account. A third deemed investment option
earns the performance rate of any of the selected mutual funds offered by CIGNA
to participants of the Bank's 401(k) Plan. At the end of each quarter, the
account is credited with gains (or debited for losses) in accordance with the
mutual fund experience reports provided by CIGNA. Participants may receive
payments from their accounts on the attainment of an age after 65 or at
termination of Board service in cash, in either a lump sum or annual
installments, or receive the Common Stock.
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EXECUTIVE MANAGEMENT
The following table sets forth certain information with respect to
executive officers of the Corporation and the Bank who are not directors of the
Corporation. There are no arrangements or understandings between the Corporation
or the Bank and any person pursuant to which such person has been appointed an
executive officer. No executive officer is related to any other executive
officer or director of the Corporation or the Bank by blood, marriage or
adoption. Officers of the Corporation and the Bank are appointed annually by the
respective Boards of Directors for one-year terms.
<Table>
<Caption>
PRINCIPAL OCCUPATION DURING
NAME AGE THE PAST FIVE YEARS
---- --- -------------------
Bruce C. Gilleylen 55 Vice President of the Corporation since October 1995;
Executive Vice President and Chief Lending Officer of the
Bank since June 2000; Senior Vice President and Chief
Lending Officer from December 1989 to June 2000; Vice
President from March 1986 to December 1989; joined the Bank
in January 1986; with Equibank from 1982 to 1985, including
a Senior Vice President thereof from 1984 to 1985.
Timothy G. Rubritz 47 Vice President-Treasurer of the Corporation since its
organization in August 1987; Senior Vice President-Treasurer
of the Bank since December 1989; Vice President-Treasurer
from January 1986 to December 1989; joined the Bank in June
1985 as audit director; with Coopers & Lybrand from 1976 to
1985, including a general practice manager at such firm from
1982 to 1985.
Gail B. Anwyll 49 Senior Vice President of the Bank since June 2000; Vice
President from December 1992 to June 2000; in charge of
Human Resources Department and Marketing; Assistant
Corporate Secretary since July 1990; Senior Assistant Vice
President from December 1991 to December 1992; Assistant
Vice President from December 1989 to December 1991; joined
the Bank in August 1989 as Director of Human Resources; with
Lyman Savings & Loan Association from 1976 to August 1989,
serving as Executive Vice President from 1987 to August
1989.
</Table>
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OTHER OFFICERS
<Table>
<Caption>
PRINCIPAL OCCUPATION DURING
NAME AGE THE PAST FIVE YEARS
---- --- -------------------
Joseph C. DeFazio 40 Vice President of the Bank since December 2000 and Assistant
Treasurer since December 1995; Assistant Controller from
December 1986 to December 1995; joined the Bank in October
1984 as Accounting Supervisor.
Nancy E. Kelly 52 Vice President of the Bank since December 1996; in charge of
branch operations since May 1997; Senior Assistant Vice
President from December 1991 to December 1996; Assistant
Vice President from December 1990 to December 1991; joined
the Bank in December 1989.
Thomas R. Ondek 42 Vice President of the Bank since December 1989; in charge of
Savings/Checking Department; Assistant Vice President from
December 1986 to December 1989; branch manager from April to
December 1985; joined the Bank in May 1984.
Gilbert A. Riazzi 37 Vice President and Audit-Compliance Director of the
Corporation and the Bank since December 1999; Senior
Assistant Vice President from December 1996 to December
1999; Assistant Vice President from December 1993 to
December 1996; joined the Bank as Internal Auditor in May
1992; with Landmark Savings from 1989 to 1992 as Audit
Supervisor.
Robert A. Stephens 46 Senior Vice President of the Bank since December 2000 and
Assistant Chief Lending Officer since December 1998; Vice
President from December 1989 to December 2000; Assistant
Vice President from November 1984 to December 1989; joined
the Bank in August 1981 as a loan officer.
</Table>
AUDIT-FINANCE COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
PFC's business consists primarily of the business of the Bank and its
subsidiaries. The financial results of PFC are a direct function of the Bank's
achievement of its goals as set forth in its long-term strategic plan.
Executives are compensated for their contribution to the achievement of these
goals, which benefits the stockholders, customers, employees and communities in
which the Bank operates.
The Audit-Finance Committees of the Bank and PFC ("Committee") jointly
administer executive compensation, with all compensation currently paid by the
Bank. The Committee reviews all issues pertaining to executive compensation and
submits its recommendations to the full Board of Directors for approval. Mr.
Robert J. McCarthy, Jr., in his capacity as a member of the Board of Directors
of PFC and the Bank, abstains from any Board of Directors' vote concerning
compensation affecting himself. The Committee's compensation program for
executive officers currently consists of annual payments of salary and bonuses
and periodic grants of options to purchase Common Stock under PFC's Stock Option
Plans. Each element of the program has a different purpose. Salary and bonus
payments are mainly designed to reward current and past performance. Stock
option awards are designed to help attract and retain superior personnel for
positions of substantial responsibility as well as to provide additional
incentive to contribute to the long-term success of PFC.
10
13
In determining the amount and form of executive compensation to be paid or
awarded in fiscal 2001, the Committee considered PFC's overall performance over
a period of years--and its future objectives and challenges--rather than a
guideline or formula based on any particular performance measure in a single
year. Within this framework, the Committee considered, among other things, the
following performance factors in making its compensation decisions in fiscal
2001: return on equity; earnings per share; fair market value of the Common
Stock; and the Bank's achievement of its annual goals relating to earnings,
growth, net worth, asset quality, efficiency ratio and evaluation by regulators
as to safety and soundness. The Committee's decisions concerning the
compensation of individual executive officers during fiscal 2001 were made in
the context of historical practice and competitive environment, including
comparisons with compensation practices of companies of similar size and
function in the financial services industry. The Committee has not addressed the
adoption of a policy with respect to the issue of the deductibility of
qualifying executive compensation under Section 162(m) of the Internal Revenue
Code of 1986, as amended ("Code") because no executive has compensation subject
to Section 162(m) that exceeds the $1,000,000 threshold.
Supplemental non-qualified benefit plans are provided to executive officers
as follows:
Supplemental Executive Benefit Plan
Effective December 31, 1994, PFC and the Bank adopted the Supplemental
Benefit Plan ("SEBP") for the benefit of certain officers who are subject to the
limitations imposed by Sections 401(a)(17) and 415 of the Code on the maximum
amount of compensation which may be taken into consideration for the purposes of
the Parkvale Financial Corporation Employee Stock Ownership Plan ("ESOP") and
the maximum amount of benefits which may be allocated to an individual
participant thereunder. In calendar year 1994, the maximum amount of base pay
for qualified benefit plan purposes was reduced to $150,000 from $235,840
previously. From 1997 through 1999, the base amount was $160,000. Effective
January 1, 2000, this limit was increased to $170,000. Persons earning more than
$170,000 in 2000 were deprived of retirement funds otherwise available to them.
The officers affected by the Code limitation in calendar year 2000 were Messrs.
McCarthy, Gilleylen and Rubritz. Treasury shares of PFC Common Stock applicable
to the 2000 distribution were allocated to the Trust administered by Heritage
Trust Company for their benefit as follows: 1,842 shares for Mr. McCarthy, 97
shares for Mr. Gilleylen and 60 shares for Mr. Rubritz. The value of those
shares, based upon the closing price of $20.63 per share on the last trading day
of calendar 2000 (December 29, 2000), is included in the Summary Compensation
Table.
Executive Deferred Compensation Plan
Due to benefit limits imposed by the Code and/or discrimination tests of
highly compensated employees, the Bank adopted, effective July 1, 1994, the
Parkvale Savings Bank Executive Deferred Compensation Plan ("EDCP") for certain
senior officers of the Bank to compensate such individuals who participate in
the 401(k) Plan for benefits lost under the Plan. The EDCP is an unfunded, non-
qualified plan which provides for the accrual of matching contributions and
investment returns that may not be accrued under the 401(k) Plan. Under the
401(k) Plan, participating employees may voluntarily make pre-tax contributions
to their accounts up to 10% of covered plan compensation. The Bank matches 50%
of the employee's pre-tax contributions up to a maximum of 6% of the employee's
covered compensation. In addition, the Bank may make a profit sharing
contribution equal to a percentage of each eligible employee's covered
compensation during a plan year, subject to the Bank's profitability and the
discretionary approval of the Board of Directors. The historical discretionary
contribution has been 2%. Contributions to the 401(k) Plan and EDCP for the
above named executive officers are included in the Summary Compensation Table.
11
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BASES FOR CHIEF EXECUTIVE OFFICER AND NAMED EXECUTIVE OFFICERS COMPENSATION
In fiscal 2001, PFC's President and Chief Executive Officer received total
cash payments of $590,000 in salary and bonus (as shown in the Summary
Compensation Table). The Committee notes that Mr. McCarthy's salary in fiscal
2001 was 8.6% higher than his salary in fiscal 2000, and that the bonus paid to
Mr. McCarthy in fiscal 2001 exceeded 87% of his salary for the year, as PFC
achieved record levels of operating income. The bonuses paid to Messrs.
Gilleylen and Rubritz in fiscal 2001 exceeded 43% and 42%, respectively, of
their salaries for the year.
The Committee considered these 2001 payments appropriate in light of PFC's
earnings. In addition, the Committee determined Mr. McCarthy's fiscal 2001
compensation based on its assessment of his ability and dedication to enhance
the long-term value and financial strength of PFC by continuing to provide the
leadership and vision that he has provided throughout his tenure as Chief
Executive Officer. PFC's net interest income and net income have increased in
each of the last four fiscal years, reaching record levels in fiscal 2001. In
addition, PFC's 16.20% return on average equity in fiscal 2001 was among the
highest amounts for the last five fiscal years, and PFC's returns on average
assets and average equity compare favorably to PFC's peer group.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2001, no member of the Audit-Finance Committee was a former
or is presently a full-time officer or employee of the Corporation or any of its
subsidiaries.
AUDIT-FINANCE COMMITTEE
Fred P. Burger, Chairman
Andrea F. Fitting
Patrick J. Minnock
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PERFORMANCE GRAPH
The following table and graph compares the yearly cumulative total return
of the Common Stock over a five-year measurement period with (i) the yearly
cumulative total return on the stocks included in the Nasdaq Market Index and
(ii) the yearly cumulative total return on the stocks included in the Nasdaq
Financial Stock Market Index as reported by the Center for Research in
Securities Prices at the University of Chicago. All of these cumulative returns
are computed assuming the reinvestment of dividends at the frequency with which
dividends were paid during the applicable years. The per share amounts have been
adjusted to reflect the 5 for 4 stock splits in October 1996, 1997 and 1998.
TABLE OF CUMULATIVE VALUES
<Table>
<Caption>
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
Parkvale........................... $100.00 $139.56 $207.35 $179.37 $148.26 $213.69
Nasdaq............................. 100.00 121.60 160.06 230.22 340.35 184.51
Nasdaq Financial................... 100.00 117.48 153.30 227.00 351.23 178.97
Book Value Per Share............... 11.04 11.87 13.00 13.84 14.75 16.78
Market Value Per Share............. 12.93 17.68 25.80 21.75 17.25 24.00
</Table>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
<Table>
<Caption>
PARKVALE NASDAQ NASDAQ FINANCIAL
-------- ------ ----------------
1996 100.00 100.00 100.00
1997 139.56 121.60 117.48
1998 207.35 160.06 153.30
1999 179.37 230.22 227.00
2000 148.26 340.35 351.23
2001 213.69 184.51 178.97
</Table>
* Assumes the investment of $100 on June 30, 1996 and the reinvestment of all
dividends.
The market value on the record date, August 27, 2001, was $25.25 per share.
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EXECUTIVE COMPENSATION
SUMMARY
The following table sets forth a summary of certain information concerning
the compensation awarded or paid for services rendered in all capacities during
the last three fiscal years to the Chief Executive Officer and other executive
officers of the Corporation and the Bank ("Named Executive Officers") whose
total compensation during the last fiscal year exceeded $100,000.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------ ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY(1) BONUS OPTION AWARDS COMPENSATION(2)(3)
- --------------------------- ----------- --------- ----- ------------- ------------------
Robert J. McCarthy, Jr. 2001 $315,000 $275,000 0 $85,322
President and 2000 290,000 250,000 0 70,049
Chief Executive Officer 1999 280,000 200,000 0 76,256
Bruce C. Gilleylen 2001 138,600 60,000 0 30,480
Vice President of the 2000 130,800 55,000 0 26,503
Corporation, Executive Vice 1999 127,800 50,000 0 28,288
President and Chief Lending
Officer of the Bank
Timothy G. Rubritz 2001 131,400 56,000 0 29,170
Vice President-Treasurer of the 2000 127,900 52,000 0 25,820
Corporation and Senior Vice 1999 125,400 48,000 0 27,589
President-Treasurer of the Bank
</Table>
- ---------
(1) Salary includes amounts deferred at the election of the executive officer
through the Bank's 401(k) Plan and Executive Deferred Compensation Plan
("EDCP").
(2) Includes the Bank's contributions to the 401(k) Plan and EDCP during fiscal
2001 on behalf of Mr. McCarthy ($28,700), Mr. Gilleylen ($9,848) and Mr.
Rubritz ($9,301).
(3) Includes the value of the Common Stock allocated to the ESOP and SEBP Trust
accounts of Messrs. McCarthy ($56,622), Gilleylen ($20,632) and Rubritz
($19,869), based upon the closing price of $20.63 per share on the
allocation date, December 29, 2000.
The column "Other Annual Compensation" has been omitted because there is no
compensation required to be reported in such column. The aggregate amount of
perquisites and other personal benefits provided to each Named Executive Officer
did not exceed the lesser of $50,000 or 10% of the total annual salary and bonus
of such officer.
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17
OPTION GRANTS IN THE LAST FISCAL YEAR
There were no options granted during the fiscal year ended June 30, 2001.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning stock options
exercised during fiscal year 2001 by the Named Executive Officers and the value
of unexercised stock options held by each such officer on the last trading day
of the fiscal year (June 29, 2001). The number of shares have been adjusted to
reflect the 5 for 4 stock splits in October 1994, 1995, 1996, 1997 and 1998.
<Table>
<Caption>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR END AT FISCAL YEAR END
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED(1) UNEXERCISABLE UNEXERCISABLE(2)
- ---- ----------- ----------- ------------- ----------------
Robert J. McCarthy, Jr. -- $ -- 80,539/-0- $654,785/-0-
Bruce C. Gilleylen 21,582 222,853 6,000/-0- 14,430/-0-
Timothy G. Rubritz -- -- 27,582/-0- 251,348/-0-
</Table>
- ---------
(1) The value was determined by subtracting the exercise price from the fair
market value of the Common Stock on the exercise date.
(2) The value was determined by subtracting the exercise prices from the fair
market value of the Common Stock on June 29, 2001 ($23.905 per share) and
multiplying the same by the number of options.
LONG-TERM INCENTIVE PLANS--AWARDS IN THE LAST FISCAL YEAR
A long-term incentive plan has not been instituted for either the
Corporation or the Bank.
EMPLOYMENT AGREEMENTS
The Bank entered into a five-year employment agreement with Mr. McCarthy in
April 1987 and the Corporation became a party to the agreement upon consummation
of the reorganization of the Bank into the holding company form of organization
in January 1989. The initial term of the agreement was extended automatically
for an additional year on each anniversary date of the agreement. Effective
January 1, 1997, a new five-year employment agreement was entered into by the
parties to reflect the holding company formation, the Bank's charter conversion
to a savings bank and change in regulators, and changes in applicable law and
regulatory policies since 1987. The agreement provides for a minimum annual
salary of $262,000, which may be increased from time to time in such amounts as
may be determined by the Boards of Directors of the Corporation and the Bank. In
addition, Mr. McCarthy may receive bonus payments as determined by the Boards of
Directors. Prior to the first anniversary of the effective date and each annual
anniversary thereafter, the Boards of Directors shall consider all relevant
factors, including Mr. McCarthy's performance, and if appropriate approve a
one-year extension of the remaining term of the agreement. The term of Mr.
McCarthy's agreement will be extended each year if the Boards of Directors of
the Bank and the Corporation ("Parkvale") approve the extension, unless Mr.
McCarthy provides at least 30 days written notice not to extend the agreement
beyond its remaining term. The agreement is terminable by Parkvale for cause at
any time and currently expires on January 1, 2006.
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The agreement with Mr. McCarthy provides for severance payments and other
benefits in the event Parkvale terminates his employment for other than cause,
disability, retirement or death or Mr. McCarthy resigns for "good reason," as
defined in the agreement. Good reason includes among other things a "change in
control" of Parkvale, which is defined to include any of the following: (1) any
change in control required to be reported pursuant to Item 6(e) of Schedule 14A
promulgated under the Exchange Act; (2) the acquisition of beneficial ownership
by any person (as defined in Sections 13(d) and 14(d) of the Exchange Act) of
10% or more of the combined voting power of the Corporation's then outstanding
securities; or (3) within any period during the term of the agreement, a change
in the majority of the Board of Directors for any reason without the written
consent of Mr. McCarthy. In such event, Parkvale will give severance payments to
Mr. McCarthy equal to 2.99 times his average annual base salary, bonus and other
incentive compensation for the preceding three years, plus the continuation or
payment of certain fringe benefits other than stock benefit plans. Under Mr.
McCarthy's employment agreement, Mr. McCarthy could receive payments and
benefits that constitute a parachute payment. Parachute payments generally are
payments in excess of three times the base amount, which is defined to mean the
recipient's average annual compensation from the employer includible in the
recipient's gross income during the most recent five taxable years ending before
the date on which a change in control of the employer occurred. Recipients of
parachute payments are subject to a 20% excise tax on the amount by which such
payments exceed the base amount, in addition to regular income taxes, and
payments in excess of the base amount are not deductible by the employer as
compensation expense for federal income tax purposes. In such event, Parkvale
has agreed to pay the 20% excess tax that would otherwise be owed by Mr.
McCarthy and such additional amounts as may be necessary to reimburse Mr.
McCarthy for the federal, state and local income taxes and excise taxes on such
amounts.
The agreement also precludes Mr. McCarthy from owning (excluding the
ownership of 1% or less of the stock of a public corporation), managing,
operating and controlling, being employed by or participating in or being in any
way connected with any other business covered by federal deposit insurance which
is located in the Pennsylvania counties of Allegheny, Armstrong, Butler, Beaver,
Washington and Westmoreland. Such restriction shall continue throughout Mr.
McCarthy's employment with Parkvale.
The employment agreement with Mr. McCarthy and the two change in control
agreements described below, to the extent they increase the cost of any
acquisition of control of the Corporation, could be deemed to have an
anti-takeover effect. As a result, the agreements may discourage takeover
attempts which (1) are deemed by certain stockholders to be in their best
interests, (2) might be at prices in excess of the then market value of the
Corporation's Common Stock, and (3) as a result, may tend to perpetuate existing
management.
CHANGE IN CONTROL AGREEMENTS
The Corporation and the Bank ("Parkvale") entered into three-year change in
control severance agreements with Bruce C. Gilleylen and Timothy G. Rubritz
effective January 1, 2000. Commencing on the first annual anniversary of each
effective date, the term of each agreement will be extended for an additional
year on each annual anniversary of the effective date until such time as the
Boards of Directors of Parkvale or the individual executive gives notice not to
extend the term of the agreement. As a consequence, subsequent to the first
anniversary of the effective date, the remaining term of the agreement will stay
between two and three years unless notice of non-renewal is given not less than
thirty (30) days prior to any anniversary date. If any party gives timely notice
that the term will not be extended as of any annual anniversary date, then the
agreement shall terminate at the conclusion of its remaining term. These
agreements currently expire on January 1, 2004.
16
19
The agreement with each executive provides for severance payments and other
benefits in the event the executive's employment with Parkvale is terminated
subsequent to a change in control of the Corporation by (i) Parkvale for other
than cause, disability, retirement or the executive's death, (ii) by the
executive for any reason within the first sixty (60) days following the one-year
anniversary of the change in control, or (iii) by the executive for good reason,
then Parkvale shall (a) pay to the executive, in either twenty-four (24) equal
monthly installments beginning with the first business day of the month
following the date of termination or in a lump sum within five (5) business days
of the date of termination, a cash severance amount equal to two (2) times the
executive's annual compensation, and (b) maintain and provide for a period
ending at the earlier of (i) the expiration of the remaining term of the
agreement as of the date of termination or (ii) the date of the executive's
full-time employment by another employer, at no cost to the executive, the
executive's continued participation in all group insurance, life insurance,
health and accident insurance, disability insurance and other employee benefit
plans, programs and arrangements offered by Parkvale in which the executive was
entitled to participate immediately prior to the date of termination (excluding
stock benefit plans and cash incentive compensation). If such payments would
constitute a "parachute payment" under Section 280G of the Code, then the
payments and benefits payable shall be reduced by the minimum amount necessary
to avoid constituting a parachute payment.
Parkvale may assign the agreements and its rights and obligations
thereunder in whole, but not in part, to any corporation, bank or other entity
with or into which either the Corporation or the Bank may merge or consolidate
or which either may transfer all or substantially all of its respective assets.
The executives may not assign or transfer the agreement or any rights or
obligations thereunder.
LOANS TO MANAGEMENT
In the ordinary course of business, the Bank makes loans available to its
directors, officers and employees. Such loans are made in the ordinary course of
business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable loans to other
borrowers. It is the belief of management that these loans neither involve more
than the normal risk of collectability nor present other unfavorable features.
At June 30, 2001, the Bank had 16 loans outstanding to directors and officers of
the Bank, or members of their immediate families or related entities. These
loans totaled approximately $4.84 million or 5.1% of our total shareholders'
equity at June 30, 2001.
17
20
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP as independent
auditors for the year ending June 30, 2002, and has further directed that the
selection of such auditors be submitted for ratification by the stockholders at
the Annual Meeting. The Corporation has been advised by Ernst & Young LLP that
neither the firm nor any of its associates has any relationship with the
Corporation or its subsidiaries other than the usual relationship that exists
between independent certified public accountants and clients. Ernst & Young LLP
will have a representative at the Annual Meeting who will have an opportunity to
make a statement, if he or she so desires, and who will be available to respond
to appropriate questions. The affirmative vote of the holders of a majority of
the total votes cast at the Annual Meeting is required for this proposal.
Abstentions will not be counted as votes cast and, accordingly, will have no
effect on this proposal. There will be no "broker non-votes" with respect to
this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
AS INDEPENDENT AUDITORS FOR FISCAL 2002.
The aggregate fees the Corporation paid to Ernst & Young LLP for the annual
audit and for review of the Corporation's Forms 10-Q for fiscal year 2001
totaled $87,850. The aggregate fees paid to Ernst & Young LLP for all other
non-audit services, including fees for tax related services, during fiscal year
2001 totaled $94,000. The Audit Committee believes that the non-audit fees paid
to Ernst & Young LLP are compatible with maintaining Ernst & Young's
independence.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have presented at the next
Annual Meeting of Stockholders to be held in October 2002, must be received at
the main office of the Corporation no later than May 21, 2002. If such proposal
is in compliance with all of the requirements of Rule 14a-8 of the Exchange Act,
it will be included in the Proxy Statement and set forth on the form of proxy
issued for the next Annual Meeting of Stockholders. It is urged that any such
proposals be sent by certified mail, return receipt requested.
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21
ANNUAL REPORTS AND FINANCIAL STATEMENTS
A copy of the Corporation's Annual Report to Stockholders for the year
ended June 30, 2001 accompanies this Proxy Statement. Such annual report is not
part of the proxy solicitation materials.
UPON RECEIPT OF A WRITTEN REQUEST, THE CORPORATION WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED JUNE 30, 2001 AND A LIST OF THE EXHIBITS THERETO
REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
EXCHANGE ACT. SUCH WRITTEN REQUEST SHOULD BE DIRECTED TO TIMOTHY G. RUBRITZ,
TREASURER, PARKVALE FINANCIAL CORPORATION, 4220 WILLIAM PENN HIGHWAY,
MONROEVILLE, PENNSYLVANIA 15146. THE FORM 10-K IS NOT PART OF THE PROXY
SOLICITATION MATERIALS.
OTHER MATTERS
Each proxy solicited hereby also confers discretionary authority on the
Board of Directors of the Corporation to vote the proxy with respect to the
approval of the minutes of the last meeting of stockholders, the election of any
person as director if the nominee is unable to serve or for good cause will not
serve, matters incident to the conduct of the meeting, and upon such other
matters as may properly come before the Annual Meeting. Management is not aware
of any business to come before the Annual Meeting other than those matters
described above in this Proxy Statement. However, if any other matters should
properly come before the Annual Meeting, it is intended that proxies solicited
hereby will be voted with respect to those other matters in accordance with the
judgment of the persons voting the proxies.
The cost of solicitation of proxies will be borne by the Corporation. The
Corporation 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 the Corporation's Common Stock. In addition to
solicitations by mail, directors, officers and employees of Parkvale may solicit
proxies personally or by telephone without additional compensation. The
Corporation may retain a proxy soliciting firm to assist in the solicitation of
proxies. The cost of such a firm would not be expected to exceed $3,500.
By Order of The Board of Directors
/s/ ERNA A. GOLOTA
Erna A. Golota,
Secretary
September 17, 2001
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APPENDIX A
AUDIT COMMITTEE CHARTER
ORGANIZATION
This Charter governs the operations of the Audit Committee. The Committee
shall review and reassess the Charter at least annually and obtain the approval
of the Board of Directors. The Committee shall be appointed by the Board of
Directors and shall comprise at least three directors, each of whom is
independent of management and the Company. Members of the Committee shall be
considered independent if they have no relationship that may interfere with the
exercise of their independence from management and the Company. All Committee
members shall be financially literate, or shall become financially literate
within a reasonable period of time after appointment to the Committee, and at
least one member shall have accounting or related financial management
expertise.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the Board of Directors in
fulfilling its oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the Board. In so
doing, it is the responsibility of the Committee to maintain free and open
communication between the Committee, independent auditors, the internal auditors
and management of the Company. In discharging its oversight role, the Committee
is empowered to investigate any matter brought to its attention with full access
to all books, records, facilities, and personnel of the Company and the power to
retain outside counsel, or other experts for this purpose.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the Audit Committee is to oversee the
Company's financial reporting process on behalf of the Board and report the
results of their activities to the Board. Management is responsible for
preparing the Company's financial statements, and the independent auditors are
responsible for auditing those financial statements. The Committee, in carrying
out its responsibilities, believes its policies and procedures should remain
flexible in order to best react to changing conditions and circumstances. The
Committee should take the appropriate actions to set the overall corporate
"tone" for quality financial reporting, sound business risk practices, and
ethical behavior.
The following shall be the principal recurring processes of the Audit
Committee in carrying out its oversight responsibilities. The processes are set
forth as a guide with the understanding that the Committee may supplement them
as appropriate.
- The Committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the Board and the Audit Committee, as representatives of
the Company's shareholders. The Committee shall have the ultimate
authority and responsibility to evaluate and, where appropriate, replace
the independent auditors. The Committee shall discuss with the auditors
their independence from management and the Company and the matters
included in the written disclosures required by the Independence
Standards Board. The Committee shall discuss with the auditors any
relationships or services identified in the disclosures which may impact
the objectivity and independence of the auditors, and if deemed
necessary, the Committee shall recommend that the Board take action in
response to such disclosures to satisfy itself with respect to the
independence of the auditors. Annually, the Committee shall review and
recommend to the Board the selection of the Company's independent
auditors, subject to shareholders' approval.
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- The Committee shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their respective
audits. Also, the Committee shall discuss with management, the internal
auditors, and the independent auditors the adequacy and effectiveness of
the accounting and financial controls, including the Company's system to
monitor and manage business risk and legal and ethical compliance
programs. Further, the Committee shall meet separately with the internal
auditors and the independent auditors, with and without management
present, to discuss the results of their examinations.
- The Committee shall review the interim financial statements with
management prior to the filing of the Company's Quarterly Report on Form
10-Q. If any matters require reporting by the independent auditors, the
Audit Committee, via the Chairman, shall discuss the results of the
quarterly review and any other matters required to be communicated to the
Committee by the independent auditors under generally accepted auditing
standards.
- The Committee shall review with management and the independent auditors
the financial statements to be included in the Company's Annual Report to
be included in Form 10-K (ie. the annual report to shareholders),
including their judgment about the quality, not just acceptability, of
accounting principles, the reasonableness of significant judgments, and
the clarity of the disclosures in the financial statements. Also, the
Committee shall discuss the results of the annual audit and any other
matters required to be communicated to the Committee by the independent
auditors under generally accepted auditing standards.
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REVOCABLE PROXY
PARKVALE FINANCIAL CORPORATION
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, being a stockholder of the Corporation, hereby
authorizes the Board of Directors of the Corporation as proxies with full
powers of substitution to represent the undersigned at the Annual Meeting of
Stockholders of the Corporation to be held at the Pittsburgh Athletic
Association, 4215 Fifth Avenue, Pittsburgh, Pennsylvania, on October 25, 2001,
at 10:00 a.m. Eastern Time, and at any adjournment of said meeting, and thereat
to act with respect to all votes that the undersigned would be entitled to cast
if then personally present on all proposals coming before the meeting.
This proxy may be revoked at any time before it is exercised.
WITH- FOR ALL
FOR HOLD EXCEPT
1. Election of Directors: [ ] [ ] [ ]
NOMINEES:
ROBERT J. MCCARTHY, JR.
PATRICK J. MINNOCK
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
"FOR ALL EXCEPT" AND WRITE THAT NOMINEES' NAME IN THE SPACE PROVIDED BELOW.
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FOR AGAINST ABSTAIN
2. Appointment of Ernst & Young LLP [ ] [ ] [ ]
as the Corporation's independent
auditors for fiscal 2002.
3. In the proxies' discretion, such other business as may properly come before
the meeting.
SHARES OF COMMON STOCK OF THE CORPORATION WILL BE VOTED AS SPECIFIED. IF
NO SPECIFICATION IS MADE, SHARES WILL BE VOTED "FOR" THE ELECTION OF THE BOARD
OF DIRECTORS' NOMINEES TO THE BOARD OF DIRECTORS AND "FOR" THE APPOINTMENT OF
ERNST & YOUNG LLP.
Please sign exactly as name appears on this proxy card. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Please be sure to sign and date Date
this Proxy in the box below.
Shareholder sign above Co-holder (if any) sign above
o DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED. o
PARKVALE FINANCIAL CORPORATION
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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