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 to ss.240.14a-12
PEOPLES OHIO FINANCIAL CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules 0-11(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:
------------------------------------------------------------------------
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:
------------------------------------------------------------------------
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:_______________________
PEOPLES OHIO FINANCIAL CORPORATION
635 SOUTH MARKET STREET
TROY, OHIO 45373
(937) 339-5000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 22, 2002
The Annual Meeting of Shareholders of Peoples Ohio Financial
Corporation (the "Company") will be held at Edison Community College located at
1973 Edison Drive, Piqua, Ohio on Wednesday, October 22, 2002, at 3:00 p.m. to
consider and act on the following matters:
1. Election of three Directors for two-year terms expiring in 2004.
2. Ratify the selection of BKD, LLP as independent auditors of the
Company for the year ending June 30, 2003.
3. Conduct such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on September 13,
2002, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting and at any adjournments thereof.
A copy of the Company's Annual Report which includes financial
statements for the fiscal year ended June 30, 2002, is enclosed.
By Order of the Board of Directors
Linda A. Daniel
Secretary
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED POSTPAID ENVELOPE.
Troy, Ohio September 30, 2002
PEOPLES OHIO FINANCIAL CORPORATION
635 SOUTH MARKET STREET
TROY, OHIO 45373
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
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GENERAL
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We are sending you this Proxy Statement and the enclosed proxy card
because the Board of Directors of Peoples Ohio Financial Corporation (the
"Company" "we" or "us") is soliciting your proxy to vote at the 2002 Annual
Meeting of Shareholders (the "Annual Meeting"). This Proxy Statement summarizes
the information you need to know to vote at the Annual Meeting.
You are invited to attend our Annual Meeting on October 22, 2002
beginning at 3:00 p.m., local time. The Annual Meeting will be held at Edison
Community College, 1973 Edison Drive, Piqua, Ohio.
This Proxy Statement and the enclosed form of proxy is expected to be
mailed to shareholders on or about September 30, 2002.
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SOLICITATION AND VOTING
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SHAREHOLDERS ENTITLED TO VOTE
Holders of record of common stock of the Company at the close of
business on September 13, 2002 (the "Record Date") are entitled to vote at the
Annual Meeting. Each share of common stock of the Company is entitled to one
vote.
Pursuant to the Company's Amended and Restated Code of Regulations,
shareholders are not entitled to cumulate their votes for the election of
directors.
As of the Record Date, the Company had 7,508,354 common shares issued
and outstanding.
VOTING PROCEDURES
You can vote on matters to come before the Annual Meeting in one of
two ways:
- you can come to the Annual Meeting and cast your vote there; or
- you can vote by signing and returning the enclosed proxy card.
If you do so, the individuals named as proxies on the card
will vote your shares in the manner you indicate.
You may also choose to vote for all of the nominees for Director and
each proposal by simply signing, dating and returning the enclosed proxy card
without further direction. All signed and returned proxies that contain no
direction as to vote will be voted FOR each of the nominees for Director and FOR
each of the proposals.
If you plan to attend the Annual Meeting and vote in person, you
should request a ballot when you arrive. HOWEVER, IF YOUR SHARES ARE HELD IN THE
NAME OF YOUR BROKER, BANK OR OTHER NOMINEE, THE INSPECTOR OF ELECTION WILL
REQUIRE YOU TO PRESENT A POWER OF
ATTORNEY OR PROXY IN YOUR NAME FROM SUCH BROKER, BANK OR OTHER NOMINEE FOR YOU
TO VOTE SUCH SHARES AT THE ANNUAL MEETING. Please contact your broker, bank or
nominee.
REQUIRED VOTE
The presence, in person or by proxy, of the holders of a majority of
the votes entitled to be cast by the shareholders at the Annual Meeting is
necessary to constitute a quorum. Abstentions and broker "non votes" are counted
as present and entitled to vote for purposes of determining a quorum. A broker
"non vote" occurs when a broker, bank or other nominee holding shares for a
beneficial owner does not vote on a particular proposal because such broker,
bank or nominee does not have discretionary authority to vote and has not
received instructions from the beneficial owner.
Once a quorum is achieved, a plurality of votes cast is all that is
necessary for the election of Directors. Abstentions and broker "non votes" will
not be counted as votes either "for" or "against" any director. As to
ratification of BKD, LLP and all other matters that may come before the Annual
Meeting, the affirmative vote of a majority of votes cast is necessary for the
approval of such matters. Abstentions and broker "non votes" are again not
counted for purposes of approving the matter or any other matters coming before
the Annual Meeting.
REVOKING A PROXY
If you give a proxy, you may revoke it at any time before it is
exercised. You may revoke your proxy at any time prior to its exercise by:
- sending in another proxy with a later
date;
- providing written notification of the revocation to the
Company's Secretary in writing at Peoples Ohio Financial
Corporation, 635 South Market Street, Troy, Ohio, 45373; or
- appearing in person at the Annual Meeting and revoking the
proxy.
If you choose to revoke your proxy by attending the Annual Meeting,
you must vote in accordance with the rules for voting at the Annual Meeting.
Attending the Annual Meeting alone will not constitute revocation of a proxy.
COST OF PROXY SOLICITATION
We will pay the expenses of soliciting proxies. Proxies may be
solicited on our behalf by Directors, officers or employees in person or by
telephone, mail or telegram. We do not intend to engage a proxy solicitation
firm to assist us in the distribution and solicitation of proxies. The Company
will also request persons, firms and corporations holding shares in their names
for other beneficial owners to send proxy materials to such beneficial owners.
The Company will reimburse these persons for their expenses.
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GOVERNANCE OF THE COMPANY
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ROLE AND COMPOSITION OF THE BOARD OF DIRECTORS
During the fiscal year ended June 30, 2002, the Directors of Peoples
Savings Bank of Troy (the "Bank"), authorized the formation of the Company. Upon
the Company's formation, each outstanding share of the Bank's stock was
exchanged for one share of the Company's stock. Simultaneous with this exchange,
the Bank became the wholly owned subsidiary of the Company. Certain members of
the Board of Directors also serve as Directors of the Bank. You will find a
discussion of the Bank's activities in your Annual Report. The Company commenced
operations on January 31, 2002. Accordingly, certain duties of the Company's
Board were conducted on its behalf by members of the Bank's Board of Directors
after formation of the Company.
During fiscal 2002, the Company's Board of Directors met four times.
Prior to formation of the Company, the Bank's Board of Directors met eight
times. In addition, the Board of Directors has authorized three Committees
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to manage distinct matters of the Company. These Committees are the Audit
Committee, the Compensation/Benefits Committee and the Corporate Governance
Committee. The entire Board acts as the Nominating Committee.
Membership on each of the Committees for the year ended June 30, 2002
is set forth in the table below. All of our Directors attended 75 percent or
more of the meetings of the Board and the Board Committees on which they served
in 2002.
NAME BOARD AUDIT COMPENSATION
- -------------------------------------- ----- ------ ------------
Cooper- Chairman of the Board X X
Klockner X
McGraw (1) X X X
Robinson (1) X
Scott (1) X
Wilcox (1) X X X
Reardon (2) X X
Haines (2) X
Lukens (2) X
Meetings in 2002 4 3 4
(1) Also serves on Board of Directors of the Bank
(2) Serves on Board of Directors of the Bank only
Membership on each of the Committees for the year ending June 30, 2003
is set forth in the table below:
CORPORATE
NAME BOARD AUDIT COMPENSATION GOVERNANCE
- -------------------------------------- ----- ----- ------------ ----------
Cooper- Chairman of the Board X X X
Klockner X X X
McGraw X X
Robinson X X
Scott X X
Wilcox X X X
THE AUDIT COMMITTEE
The Audit Committee is responsible for recommending the annual
appointment of the public accounting firm to be our outside auditors, subject to
approval of the Board of Directors and shareholders. The Audit Committee of the
Bank met three times during fiscal 2002. The Company's Audit Committee is
responsible for the following tasks:
- maintaining a liaison with the outside
auditors;
- reviewing the adequacy of internal
controls;
- reviewing with management and outside auditors financial
disclosures of the Company; and
- reviewing any material changes in accounting principles or
practices used in preparing statements.
THE COMPENSATION/BENEFITS COMMITTEE
The Compensation/Benefits Committee is responsible for establishing
annual and long-term performance goals for the Chief Executive Officer (Mr.
Scott) and also approves the Chief Executive Officer's salary and other
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incentive compensation. The Compensation/Benefits Committee of the Bank met four
times during fiscal 2002. The functions of the Company's Compensation/Benefits
Committee include:
- awarding shares or options under the Company's stock option
plan;
- determining compensation to be paid pursuant to the
Company's incentive plan; and
- publishing an annual Executive Compensation Committee
Report for the shareholders.
The Committee is aided in performing these functions by the counsel of
members of the Company's Compensation Committee.
DIRECTORS' COMPENSATION
The Directors of the Company received $1,500 for serving on the
Company's Board of Directors in fiscal 2002. In addition, the Directors of the
Bank received an annual retainer of $10,000 for serving on the Board of the
Bank. Directors who are not also employees of the Company ("Outside Directors")
receive $300 per committee meeting or Board meeting attended.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and executive officers to file with the SEC initial reports
of ownership and reports of changes in ownership of the common stock of the
Company. The Company assists its Directors and executive officers in completing
and filing of such reports. To the Company's knowledge, based solely on a review
of such reports, during the past fiscal year all Section 16(a) filing
requirements applicable to the Company's Directors and executive officers were
complied with in a timely fashion.
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PRINCIPAL HOLDERS OF COMMON STOCK
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The following table sets forth information with respect to ownership of
the common stock of the Company by any person (including any "group" as that
term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) who is
known to the Company to be the beneficial owner of more than 5% of the
outstanding common stock. The information in the following chart comes from the
stock ledger of the Company and any required ownership reports received by the
Company as of the Record Date and is believed to be accurate.
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Amount and
Name and Address Nature of Beneficial Percent
of Beneficial Owner Ownership (1) of Class
- ------------------- ------------- --------
E. Joseph Lowe 698,052 9.30%
901 N. Miami Avenue
Miami, Fl. 33136
Ronald B. Scott 516,265(2) 6.88%
194 Littlejohn Road
Troy, Ohio 45373
G. Joseph Reardon 419,226 (3) 5.58%
10 Colony Park Drive
Troy, Ohio 45373
(1) Except as otherwise noted, all beneficial ownership is direct and each
beneficial owner exercised sole voting and investment power over the
shares.
(2) Rule 13d-3(d)(1) under the Securities Exchange Act of 1934 requires the
inclusion in "beneficial ownership" of shares of common stock which may
be acquired by the exercise of options, within 60 days. President Scott
has immediately exercisable options to acquire 443,948 shares, which
amount is included in his holdings.
(3) 139,516 of these shares are held by Mr. Reardon's Spouse. Mr. Reardon
disclaims beneficial ownership of these shares. Rule 13d - 3(d)(1)
under the Securities Exchange Act of 1934 requires the inclusion in
"beneficial ownership" of shares of common stock which may be acquired
by the exercise of options, within 60 days. Mr. Reardon has immediately
exercisable options to acquire 30,844 shares, which amount is included
in his holdings.
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ITEM 1. ELECTION OF DIRECTORS
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The Company's Amended and Restated Code of Regulations ("Code of
Regulations") provides that the Board of Directors shall be composed of six
members and shall be divided into two classes. The members of each class are
elected for a term of two years. One class is elected annually.
Three Directors will be elected at the Annual Meeting to serve two-year
terms and until their successors are elected and qualified. The Board of
Directors serving as the Nominating Committee has nominated the following
current Directors:
William J. McGraw, III
Ronald B. Scott
James S. Wilcox
There are no arrangements known to management between the persons named
and any other person pursuant to which such nominees were selected. The Board of
Directors will not consider nominees recommended by shareholders unless such
nomination is made directly by the shareholders in accordance with the
procedures provided in the Company's Code of Regulations. The Company's Code of
Regulations provides that candidates for Directors at an annual meeting may be
nominated by any shareholder by filing the names of such candidates with the
Secretary of the Company at least sixty days prior to the first anniversary of
the most recent annual meeting held for election of directors; provided,
however, that if the annual meeting for the election of directors in any year is
not
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held on or before the thirty first day following such anniversary, then
written notice must be received within a reasonable time prior to the date of
such annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
THE ABOVE NOMINEES FOR DIRECTOR UNDER ITEM 1.
The persons named in the enclosed proxy intend to vote for the election
of named nominees, unless the proxy is marked by the shareholder to the
contrary. If any nominee is unable to serve, all valid proxies will be voted for
the election of such substitutes as the Board of Directors may recommend. The
Board knows of no reason why any nominee might be unavailable to serve.
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NOMINEES WHOSE TERMS WILL EXPIRE IN 2004
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NAME AND AGE AS OF POSITION, PRINCIPAL OCCUPATION,
THE ANNUAL MEETING BUSINESS EXPERIENCE AND DIRECTORSHIP
------------------ ------------------------------------
William J. McGraw, III 54 WILLIAM J. McGRAW, III has been a director of the Bank since
1977. He is an attorney and president of Dungan & LeFevre Co.,
L.P.A., the Troy Ohio Law firm which represents the Company as
general counsel. Mr. McGraw was past president of the Troy Area
Chamber of Commerce and the Troy Noon Optimist Club, and founding
Chairman of Leadership Troy. He is a past chairman of the board
of trustees of Upper Valley Medical Centers, and currently serves
as a trustee of the Troy Development Council. Mr. McGraw also
serves as Secretary and Director of the Company's service
corporation.
Ronald B. Scott 55 RONALD B. SCOTT has been a director of the Bank since 1991. He
has served as President and Chief Executive Officer of the
Company since December, 1990. He also serves as President and as
a Director of its service corporation. Mr. Scott has been
employed with the Company since 1987 and previously served as a
Senior Vice President and Chief Financial Officer of the
Company. Mr. Scott is a past Chairman of the Troy Area Chamber
of Commerce. He currently serves as a Trustee of the Troy
Foundation and Vice President of the Paul Duke Foundation. He is
a member of the Troy Development Council and is Vice Chairman of
the Tax-Incentive Review Council of Miami County.
James S. Wilcox 55 JAMES S. WILCOX has been a director of the Bank since 1996. He is
the retired vice president of finance and chief financial officer
for PMI Food Equipment Group headquartered in Troy. Mr. Wilcox
is a Trustee of the Miami County YMCA and also serves on the
boards of the Edison Foundation, MVPS, and Tropitone
Corporation. He served as an Advisory Board member from 1989
until 1996 when he was appointed to the full board.
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CONTINUING DIRECTORS WITH TERMS EXPIRING 2003
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NAME AND AGE AS OF POSITION, PRINCIPAL OCCUPATION,
THE ANNUAL MEETING BUSINESS EXPERIENCE AND DIRECTORSHIP
------------------ ------------------------------------
Thomas E. Robinson 71 THOMAS E. ROBINSON has been a director of the Bank since 1996.
He is a retired executive. Mr. Robinson is active in a number of
charitable boards and foundations including the Ruth Lyons
Children's Fund, and is a past member of the Troy Foundation. He
is also an Ambassador for Upper Valley Medical Center. He served
as an Advisory Board member from 1995 until 1996 when he was
appointed to the full board.
Donald Cooper 75 DONALD COOPER has been a director of the Bank since 1989. He is
the president of Captor Corporation, Tipp City, Ohio, a
manufacturer of specialized electronic components. Mr. Cooper is
also a member of the Tipp City Rotary Club and supports Tipp City
Community projects.
Richard W. Klockner 73 RICHARD W. KLOCKNER has been a director of the Bank since 1996.
He is owner and president of Klockner & Associates, a civil
engineering company located in Troy. Mr. Klockner is a member of
the Miami County Home Builders Association, Professional Land
Surveyors of Ohio, and the Ohio Society of Professional
Engineers. He served as an advisory board member from 1985 until
1996 when he was appointed to the full board.
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ITEM 2 RATIFICATION OF AUDITORS
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The Board of Directors, upon the recommendation of its Audit
Committee, has appointed BKD, LLP to serve as our independent auditors for the
fiscal year ending June 30, 2003 and is seeking the ratification of the
appointment of BKD, LLP by our shareholders.
Representatives of BKD, LLP will be present at the Annual Meeting to
answer questions. They will also have the opportunity to make a statement if
they desire to do so.
AUDIT FEES
The aggregate fees billed for professional services rendered by BKD,
LLP for the audit of the Company's annual financial statements for the year
ended June 30, 2002 and for BKD, LLP's review of the financial statements
included in the Company's Forms 10-Q and 10-K filed with the Securities and
Exchange Commission during fiscal 2002 were $64,040.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
BKD, LLP performed no services and therefore billed no fees relating
to operating or supervising the operation of the Company's information systems
or local area network or for designing or implementing the Company's financial
information management systems during fiscal 2002.
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ALL OTHER FEES
The aggregate fees billed for other services rendered to the Company
by BKD, LLP in fiscal 2002 were $75,755, including tax-related and other
professional services.
AUDITOR INDEPENDENCE
The Audit Committee of the Board has considered whether the non-audit
services provided by BKD, LLP are compatible with maintaining the auditor's
independence.
The affirmative vote of a majority of votes cast on this proposal,
without regard to abstentions or broker "non votes," is required for the
ratification of the appointment of BKD, LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF
THE ABOVE NAMED AUDITORS UNDER ITEM 2.
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SECURITY OWNERSHIP OF DIRECTORS, NOMINEES FOR DIRECTORS
MOST HIGHLY COMPENSATED EXECUTIVE OFFICERS AND
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
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The following table indicates, as of the Record Date the number and
percentage of outstanding common shares beneficially owned by each Director with
the Company, by each nominee for election to the Board of Directors, and by all
Directors and executive officers of the Company as a group.
Common Stock
Beneficially Owned(1)
---------------------
Name Amount Percent
---- ------ -------
William J. McGraw 300,184 (2) 4.00%
Ronald B. Scott 516,265 (2) 6.88%
James S. Wilcox 106,848 (2) 1.42%
Donald Cooper 258,756 (2) 3.45%
Richard W. Klockner 241,756 (2) 3.22%
Thomas E. Robinson 357,068 (2) 4.76%
All directors and executive officers as
a group 2,836,165 37.8%
(1) Except as otherwise noted, all beneficial ownership is direct and each
beneficial owner exercised sole voting and investment power over the
shares.
(2) Rule 13d-3(d)(1) under the Securities Exchange Act of 1934 requires the
inclusion in "beneficial ownership" of shares of common stock which may
be acquired by the exercise of options within 60 days. Mr. Klockner and
Mr. Wilcox have immediately exercisable options to acquire 31,500
shares; Messrs. Cooper and McGraw have immediately exercisable options
to acquire 30,820 shares; Mr. Robinson has immediately exercisable
options to acquire 7,500 shares, and President Scott has immediately
exercisable options to acquire 443,948 shares, all of which amounts are
included in their respective holdings. See also "Principal Holders of
Common Stock," above.
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EXECUTIVE COMPENSATION
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Except for the Chief Executive Officer, no Director or executive
officer of The Company received more than $100,000 in salary and bonus payments
from the Company during the year ended June 30, 2002. The following table sets
forth information about the compensation paid to the Chief Executive Officer:
SUMMARY COMPENSATION TABLE
Long Term
Compensation All Other
Annual Compensation Awards Compensation
------------------- ------ ------------
Name and Principal Position
---------------------------
Year Salary($) Bonus($) Options ($)(1)
---- --------- -------- ------- ------
Ronald B. Scott 2002 $181,113 $60,522 19,295 $3,350
President, Chief 2001 149,872 60,530 29,355 3,979
Executive Officer 2000 130,276 62,000 40,000 4,715
and Director
- --------------------------
(1) Represents the value of the allocation at the allocation date to the
Employee Stock Ownership Plan account of Mr. Scott.
- --------------------------
STOCK OPTIONS GRANTED IN FISCAL YEAR 2002
The following table sets forth information regarding stock options
awarded during fiscal year 2002 to Mr. Scott. This grant is also reflected in
the summary compensation table. The hypothetical realizable values for the
option grants are shown based on compound annual rates of stock price
appreciation of 5% and 10% from the grant date to the expiration date. The
assumed rates of appreciation are prescribed by the proxy rules administered by
the SEC, are for illustration purposes only and they are not intended to predict
future stock prices, which will depend upon market conditions and the Company's
future performance and prospects.
Potential realizable value
% of total at assumed annual rate of
options stock price appreciation
granted to Exercise for option term
Options employees in price Expiration
granted fiscal 2002 ($/Share) date 5% ($) 10% ($)
------- ----------- --------- ---- ------ -------
Ronald B. Scott 19,295 29.91% $3.33 8/27/2011 $40,408 $102,402
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AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning stock
option exercises during fiscal year 2002 by Mr. Scott and information concerning
option values.
Number of securities Value of unexercised
underlying unexercised in-the-money options
options at 6/30/02(#) at 6/30/02($)(1)
Shares acquired Value Exercisable/ Exercisable/
Name on exercise(#) realized ($) unexercisable unexercisable
- ---- -------------- ------------ ------------- -------------
Ronald B. Scott -0- -0- 443,948/-0- $570,855/-0-
- --------------------------
(1) An option is "in-the-money" if the fair value of the underlying shares
exceed the market price of the option. The figure represents the value
of the unexercised options, determined by multiplying the number of
unexercised options by the difference between the exercise price of the
option and the $3.35 market price for the common shares on June 30,
2002.
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EXECUTIVE OFFICERS
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In addition to the President and Chief Executive Officer, Ronald B.
Scott, the Company has the following executive officers:
RICH J. DUTTON, 39, is Vice President and Treasurer of the Company. Mr. Dutton
joined the Bank as Vice President and Chief Financial Officer in July 2002.
Prior to joining the Company, Mr. Dutton was employed by BKD, LLP (and
predecessor firms) for 17 years most recently as the partner in charge of the
Firm's Kentucky/Southern Indiana Financial Institution Practice. He was
appointed by the Board of Directors as Vice President and Treasurer of the
Company in September 2002.
LINDA A. DANIEL, 54, is Secretary of the Company. Ms. Daniel has served the Bank
as Vice President of Marketing since March 1999. Prior to joining the Bank, Ms.
Daniel was employed by Upper Valley Medical Center for 11 years and served as
Vice-President of Communications from 1995 to 1999.
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REPORT OF THE COMPENSATION COMMITTEE
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The Compensation Committee reviews the compensation levels of the
executive officers, including the Chief Executive Officer, each year. The
Compensation Committee utilizes independent surveys of compensation of officers
in the thrift industry, taking into account comparable asset bases and
geographic locations. Based on the foregoing factors, the Compensation Committee
establishes the compensation of the Chief Executive Officer and the overall
budget for compensation of all other executive officers.
COMPENSATION POLICIES TOWARD EXECUTIVE OFFICERS GENERALLY
The Compensation Committee's executive compensation policies are
designed to provide competitive levels of compensation that will attract and
retain qualified executives and will reward individual performance,
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initiative and achievement, while enhancing overall corporate performance and
shareholder value. The compensation program for executive officers consists of
three elements - a base salary component, a performance cash bonus and a grant
of stock options.
The objectives of the performance bonuses are to motivate and reward
the executive officers in connection with the accomplishment of annual
objectives of the Company, to reinforce a strong performance orientation with
differentiation and variability in individual awards based on contribution to
annual and long-range business results and to provide a competitive compensation
package that will attract, reward and retain individuals of the highest quality.
Performance bonuses are granted based upon objectives set by management.
The objectives of the stock options are to motivate and reward the
executive officers based on each individual's contribution to the total
performance of the Company and to reinforce a strong performance orientation.
DETERMINATION OF CEO'S COMPENSATION
Mr. Scott's compensation was based upon an evaluation of his
performance by the Bank's Compensation Committee, as well as the Company's
long-term performance measured by earnings, capital growth, return on assets,
return on equity, asset quality and total shareholder return. The Board of
Directors also evaluated past stated objectives developed by the Compensation
Committee and Mr. Scott and his success in achieving these objectives. These
objectives included measuring The Company's performance against its peer group
in total shareholder return, return on assets, return on equity, earnings and
asset quality of the Company. The Compensation Committee believes that the level
of compensation paid to Mr. Scott in fiscal 2002 was fair and reasonable when
compared with compensation levels in the thrift industry reported in various
independent surveys. The compensation earned by Mr. Scott in fiscal 2002
reflects the significant management and leadership responsibilities required of
him and the effective manner in which those responsibilities were fulfilled.
COMPENSATION COMMITTEE
Thomas E. Robinson
James S. Wilcox
Donald Cooper
COMPENSATION COMMITTEE INTERLOCKS
During the last fiscal year, no member of the Compensation Committee
was a current or former executive officer or employee of the Company or had a
reportable business relationship with the Company.
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PERFORMANCE GRAPH
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The following graph and table show the cumulative total return on the
Company's (prior to 2002 the Bank's) common shares for the last five fiscal
years ended June 30, 2002, compared to the cumulative total return of (i) the
SNL Securities All Publicly Traded Thrifts Index and (ii) the Russell 2000
Index. Cumulative total return on the shares or the indices equals the total
increase in value since June 30, 1996, assuming reinvestment of all dividends
paid on the shares or the index, respectively. The graph and table were prepared
assuming that $100 was invested at the closing price on June 30, 1996 in the
Banks shares and in each of the indices. The shareholder returns shown on the
performance graph are not necessarily indicative of the future performance of
the Company's shares or of any particular index.
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STOCK PERFORMANCE
[GRAPHIC OMITTED]
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Peoples Ohio Financial
Corporation* SNL Russell 2000
- ------------------------------------------------------------------------------------------------------
June 30, 1996 100.0 100.0 100.0
- ------------------------------------------------------------------------------------------------------
June 30, 1997 150.7 161.3 116.1
- ------------------------------------------------------------------------------------------------------
June 30, 1998 346.4 215.3 135.3
- ------------------------------------------------------------------------------------------------------
June 30, 1999 443.2 179.7 137.1
- ------------------------------------------------------------------------------------------------------
June 30, 2000 215.0 146.6 156.2
- ------------------------------------------------------------------------------------------------------
June 30, 2001 159.2 249.1 157.1
- ------------------------------------------------------------------------------------------------------
June 30, 2002 171.9 289.7 110.8
- ------------------------------------------------------------------------------------------------------
*Prior to June 30, 2002 financial results are those of the Bank.
- -------------------------------------------------------------------------------
REPORT OF THE AUDIT COMMITTEE
- -------------------------------------------------------------------------------
The Audit Committee of the Bank for the year ended June 30, 2002 was
comprised of five Directors: Messrs. Cooper, Wilcox, McGraw, Reardon and Haines.
After formation of the Company on January 31, 2002, the Audit Committee of the
Bank carried out the duties of the Company's Audit Committee until the Company's
Audit Committee was formed in September, 2002. Members of both the Company's
Audit Committee and the Bank's Audit Committee are considered "independent"
under Rule 4200(a)(14) of the National Association of Securities Dealers'
listing standards. The Audit Committee is responsible for overseeing the
Company's accounting functions and controls, as well as recommending to the
Board of Directors an accounting firm to audit the Company's financial
statements. The Audit Committee of the Company has adopted a charter to set
forth its responsibilities (the "Charter"). A copy of the Charter is attached to
this document as Appendix A.
As required by the Charter, the Audit Committee received and reviewed
the report of BKD, LLP regarding the results of their audit, as well as the
written disclosures and the letter from BKD required by Independence Standards
Board Standard No. 1. The Audit Committee reviewed the audited financial
statements with the management of the Company. A representative of BKD also
discussed with the Audit Committee the independence
-12-
of BKD from the Company, as well as the matters required to be discussed by
Statement of Auditing Standards 61. Discussions between the Audit Committee and
the representative of BKD included the following:
- - BKD's responsibilities in accordance with accepted auditing standards
generally accepted in the United States;
- - The initial selection of, and whether there were any changes in,
significant accounting policies or their application;
- - Management's judgments and accounting estimates;
- - Whether there were any significant audit adjustments;
- - Whether there were any disagreements with management;
- - Whether there was any consultation with other accountants;
- - Whether there were any major issues discussed with management prior to
BKD's retention;
- - Whether BKD encountered any difficulties in performing the audit;
- - BKD's judgments about the quality of the Company's accounting
principles; and
- - BKD's responsibilities for information prepared by management that is
included in documents containing audited financial statements.
Based on its review of the financial statements and its discussions
with management and the representative of BKD, the Audit Committee recommended
to the Board of Directors that the audited financial statements be included in
the Annual Report on Form 10-K for the year ended June 30, 2002, to be filed
with the Securities and Exchange Commission.
Audit Committee
Donald Cooper
James S. Wilcox
Richard W. Klockner
- -------------------------------------------------------------------------------
INDEPENDENT PUBLIC ACCOUNTANTS
- -------------------------------------------------------------------------------
BKD, LLP conducted the independent audit of the Company for the year
ended June 30, 2002, and the Board of Directors has selected BKD as the
independent accountant of the Company for the fiscal year ending June 30, 2003.
Management of the Company expects that a representative of BKD will be present
at the Annual Meeting and will have the opportunity to make a statement and
respond to appropriate questions.
Prior to August 28, 2000, KPMG LLP served as the Bank's independent
public accountant. As part of management's continuing review of operations, the
Bank reviewed the selection of the Bank's independent public accountants in
2000.
After completing its review, the Bank's Board of Directors approved
the change in accountants from KPMG to BKD, LLP, effective August 28, 2000. In
connection with its audit for the fiscal year ended June 30, 2000, and the
subsequent interim period through August 28, 2000, KPMG did not have any
disagreement with the Bank on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of KPMG, would have caused
them to make reference in connection with their report on the Bank's financial
statements to the subject matter of the disagreement. The decision to terminate
KPMG as the Bank's independent public accountants was approved by the Bank's
Board of Directors.
-13-
The report of KPMG on the Bank's financial statements for the year
ended June 30, 2000 did not contain an adverse opinion or disclaimer of opinion,
and was not qualified or modified as to uncertainty, audit scope or accounting
principles. During that period, there were no "reportable events" within the
meaning of Item 304(a)(l)(v) of Regulation S-K, promulgated under the Securities
Act of 1933.
The Bank requested that KPMG furnish a letter addressed to the Office
of Thrift Supervision stating whether KPMG agreed with the above statements.
KPMG furnished the Bank with such a letter dated August 28, 2000, a copy of
which was filed as Exhibit 16 to a current report on Form 8-K with the Office of
Thrift Supervision filed by the Bank on August 29, 2000.
- -------------------------------------------------------------------------------
TRANSACTIONS WITH DIRECTORS AND OFFICERS
- -------------------------------------------------------------------------------
Currently, the Bank makes loans to directors who are not full-time
employees of the Bank and or Company in the ordinary course of business and on
the same terms and conditions, including interest rates and collateral, as those
of comparable loans to other persons. The Bank also has a policy whereby it will
make loans to its full-time employees, including directors and employees who are
full-time employees, at an interest rate that is 1% less than the interest rate
charged for comparable loans to other persons. This 1% reduction in interest
rate is subject to the condition that the employees sign an agreement that the
interest rate will be increased by 1% should the employee's employment with the
Bank terminate for any reason.
The following table sets forth certain information regarding loans made
on terms more favorable than those offered to the public to executive officers
and Directors of Company whose indebtedness to the Company exceeded $60,000 at
any time since July 1, 2001:
Largest
Rate balance Balance at
Date of during year June 30,
Name Position Originated Loan Type Interest ended 2002
- ---- -------- ---------- --------- -------- ----- ----
6/30/02
-------
Ronald B. Scott President, CEO 11/2/93 Mortgage (Residence) 6.000% $ 56,975 $ 51,030
8/3/00 Consumer 12.500% 4,964 2,860
3/29/01 Equity Line of Credit 3.750% 43,775 43,775
1/31/02 Consumer 9.500% 15,000 15,000
Linda A. Daniel Vice-President 3/27/98 Mortgage (Residence) 5.650% $196,463 $196,463
9/28/00 Automobile 7.500% 21,404 17,069
5/30/01 Equity Line of Credit 3.750% 37,359 37,359
None of the outstanding loans to Directors and executive officers
involve more than the normal risk of collectibility or present other unfavorable
features, and all are current in their payments.
- -------------------------------------------------------------------------------
RELATED PARTY TRANSACTIONS
- -------------------------------------------------------------------------------
In fiscal year 2002, Dungan & LeFevre Co., L.P.A., the law firm in
which William J. McGraw, a Director of the Company, is an attorney and
President, performed legal services related to loan transactions, paid by
borrowers of the Company totaling $23,000, and services primarily related to
litigation in which the Company was involved totaling $19,000. In addition,
Dungan & LeFevre received $24,000 for an annual retainer and other
non-litigation related services.
-14-
Title Safe Agency, Inc., is a real estate title insurance agency
wholly-owned by Dungan & LeFevre. In fiscal year 2002, Title Safe Agency
performed services for the Company related to loan transactions, such as title
insurance and commitments, title examinations and post-closing services.
Borrowers of the Company paid Title Safe Agency $275,000 for services related to
their loan transactions.
- -------------------------------------------------------------------------------
OTHER MATTERS
- -------------------------------------------------------------------------------
The Board of Directors 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, or
any adjournment thereof, including matters relating to the conduct of the Annual
Meeting, it is intended that the shares represented by properly-executed proxies
will be voted in respect thereof in accordance with the judgment of the person
or persons voting the proxies.
- -------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
- -------------------------------------------------------------------------------
Any proposal which a shareholder wishes to have included in the
Company's proxy materials for the Company's Annual Meeting of shareholders to be
held in 2003 must be received at the main office of the Company at 635 South
Market Street, Troy, Ohio 45373, no later than June 2, 2003. The Board of
Directors will review each proposal so received to determine if it satisfies the
criteria established by applicable law for inclusion in the Company's 2003 proxy
materials.
On May 21, 1998, the Securities and Exchange Commission adopted an
amendment to Rule 14a-4, as promulgated under the Securities and Exchange Act of
1934. The amendment to 14a-4(c)(1) governs the Company's use of its
discretionary proxy voting authority with respect to a shareholder proposal
which the shareholder has not sought to include in the Company's proxy
statement. The amendment provides that if a proponent of a proposal fails to
notify the Company at least 45 days prior to the month and day of mailing of the
prior year's proxy statement, then the management proxies will be allowed to use
their discretionary voting authority when the proposal is raised at the meeting,
without any discussion of the matter in the proxy statement.
With respect to the Company's 2003 annual meeting of shareholders, if
the Company is not provided notice of a shareholder proposal which the
shareholder has not previously sought to include in the Company's proxy
statement by August 15, 2003, the management proxies will be allowed to use
their discretionary authority as outlined above.
-15-
APPENDIX A
----------
PEOPLES OHIO FINANCIAL CORPORATION
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The Audit Committee is a committee of the Board of Directors. The
primary function of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities by monitoring the following processes:
1. the financial information which will be provided to
shareholders, governmental or regulatory bodies, the public, and others;
2. the Company's auditing, accounting, and financial reporting
process;
3. the systems of internal controls related to finance,
accounting, legal compliance, regulatory compliance and ethics that management
and the Board of Directors have established; and
4. the audit process.
The Audit Committee's primary duties and responsibilities are to:
1. serve as an independent and objective party to monitor the
Company's financial reporting process and internal control system;
2. review and appraise the audit efforts of the Company's
independent accountants and the internal auditors; and
3. provide an open avenue of communication among the independent
accountants, financial and senior management, internal auditors, and the Board
of Directors.
The Audit Committee will primarily fulfill these responsibilities by carrying
out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee should be comprised of three or more directors as
determined by the Board. Each member will be independent of the management of
the Company and free of any relationship that, in the opinion of the Board of
Directors, would interfere with their exercise of independent judgment as a
Committee member.
The members of the Committee shall be elected by the Board at the
annual organizational meeting of the Board or until their successors shall be
duly elected and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
The duties and responsibilities of a member of the Audit Committee are
in addition to those duties set out for a member of the Board of Directors.
A-1
III. MEETINGS
The Committee shall meet at least three times annually, or more
frequently as circumstances dictate. As part of its job to foster open
communication, the Committee may include, as a part of each meeting agenda, an
executive session. This session may be used, as necessary, by management, the
internal auditors, and the independent accountants to discuss any matters that
the Committee or each of these groups believe should be discussed separately.
The Committee may ask members of management or others to attend meetings and
provide pertinent information as necessary.
IV. RESPONSIBILITIES AND DUTIES
In meeting its responsibilities, the Audit Committee is
expected to:
1. Provide an open avenue of communication between the internal auditors,
the independent accountant, and the Board of Directors;
2. Attempt to confirm and assure the objectivity of the internal auditor;
3. Attempt to confirm and assure the independence of the independent
accountant, including a review of management consulting services
provided by the independent accountant and related fees;
4. Review and update the Committee's charter periodically;
5. Recommend to the Board of Directors the independent accountants to be
nominated, approve the compensation of the independent accountant, and
review and approve, if applicable, the discharge of the independent
accountants;
6. Review and concur in the appointment, replacement, reassignment, or
dismissal of the internal auditor;
7. Review the qualifications of the internal auditor to specific areas
within the audit plan;
8. Review with the independent auditor and internal auditor the
coordination of audit efforts to assure completeness of coverage,
reduction of redundant efforts, and the effective use of audit
resources;
9. Consider, in consultation with the independent accountant and the
internal auditor, the audit scope and plan of the internal auditors and
the independent accountant. Determine if the internal auditor and
independent accountants are utilizing a risk-based approach;
10. Consider and review with the independent accountant and internal
auditor:
a. the adequacy of the Company's internal controls
including computerized information system controls and security;
b. any related significant findings and recommendations
of the independent accountant and internal auditing together with management
responses thereto; and
c. the status of previous audit recommendations and
management's follow up on those recommendations.
11. Review with management and the independent accountant at the completion
of the annual audit:
a. the Company's annual financial statements and related
footnotes;
b. the independent accountant's audit of the financial
statements and his or her report thereon;
A-2
c. any significant changes required in the independent
accountant's audit plan;
d. any serious difficulties or disputes with management
encountered during the course of the audit;
e. other matters related to the conduct of the audit
which are to be communicated to the committee under generally accepted auditing
standards;
f. advise financial management and the independent
auditor that they are expected to provide a timely analysis of significant
current financial reporting issues and practices; and
g. provide that financial management and the independent
auditor discuss with the audit committee their qualitative judgments about the
appropriateness, not just the acceptability, of accounting principles and
financial disclosure practices used or proposed to be adopted by the Corporation
and, particularly, about the degree of aggressiveness or conservatism of its
accounting principles and underlying estimates.
12. Review with management and the internal auditor:
a. regular internal audit reports to management prepared
by the internal auditor, including significant findings and management's
responses to those findings;
b. any difficulties encountered in the course of their
audits, including any restrictions on the scope of their work or access to
required information; and
c. the annual internal audit plan and any changes
required in the scope of that plan.
13. Unless otherwise directed by the Board of Directors the Committee may:
a. review with management, and if necessary, with the
Company's counsel, any legal matter that could have a significant impact on the
Company's financial statements;
b. review legal and regulatory matters that may have a
material impact on the financial statements, related Company compliance
policies, and programs and reports received from regulators;
c. meet with the Company's regulatory bodies to discuss
the results of their examinations; and
d. conduct or authorize, if necessary, investigations
into any matters within the Committee's scope of responsibilities. The Committee
shall be empowered to retain independent counsel, accountants, or others to
assist in the conduct of any investigation.
14. Determine as regards to new transactions or events, the auditor's
reasoning for the appropriateness of the accounting principles and
disclosure practices adopted by the Company.
15. Meet with the internal auditor, the independent accountant, and
management in separate executive sessions to discuss any matters that
the committee or these groups believe should be discussed privately
with the Audit Committee.
16. Report Committee actions to the Board of Directors with such
recommendations as the Committee may deem appropriate.
A-3
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PEOPLES OHIO FINANCIAL CORPORATION
PEOPLES OHIO FINANCIAL CORPORATION ANNUAL MEETING OF SHAREHOLDERS
October 22, 2002
The undersigned shareholder of Peoples Ohio Financial Corporation (the
"Company") hereby constitutes and appoints Ronald B. Scott, Donald Cooper and
William J. McGraw, III, or any one of them, as the proxy or proxies of the
undersigned with full power of substitution and resubstitution, to vote at the
Annual Meeting of Shareholders of the Corporation to be held at Edison Community
College, 1973 Edison Drive, Piqua, Ohio, on October 22, 2002, at 3:00 p.m.
Eastern Time (the "Annual Meeting"), all of the shares of the Company's common
stock which the undersigned is entitled to vote at the Annual Meeting, or at any
adjournment thereof, on each of the following proposals, all of which are
described in the accompanying Prospectus/Proxy Statement:
1. The election of three directors:
[ ] FOR all nominees (except as [ ] WITHHOLD authority to vote for
marked to the contrary below): all nominees listed below:
William J. McGraw, III
Ronald B. Scott
James S. Wilcox
2. The Board of Directors, upon the recommendation of its Audit Committee,
has appointed BKD, LLP to serve as our independent auditors for fiscal
year ending June 30, 2003 and is seeking the ratification of the
appointment of BKD, LLP by our shareholders:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, upon such other business as may properly come
before the Annual Meeting or any adjournments thereof:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote "FOR" the proposals listed above.
UNLESS THIS PROXY IS REVOKED, THE COMMON SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED AS DIRECTED. WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES SOLICITED BY
THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE PROPOSALS STATED ABOVE.
IMPORTANT: PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE.
At the present time, the Board of Directors knows of no other business
to be presented at the Annual Meeting.
All Proxies previously given by the undersigned are hereby revoked.
Receipt of the Notice of the Annual Meeting of Shareholders of the Company and
of the accompanying Proxy Statement is hereby acknowledged.
Please sign exactly as your name appears on your Stock Certificate(s).
Executors, Administrators, Trustees, Guardians, Attorneys and Agents should give
their full titles.
- ---------------------------- ------------------------------
Signature Signature
- ---------------------------- ------------------------------
Print or Type Name Print or Type Name
Dated: --------------------- Dated: -----------------------
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED FOR MAILING IN THE U.S.A.
-2-