Edgar Filing: LOCAL FINANCIAL CORP /NV

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant [X]

Filed by a party other than the registrant [ ]

Check the appropriate box:

[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).

[X] Definitive proxy statement.

[ ] Definitive additional materials.

[ ] Soliciting material pursuant to Section 240.14a-12

LOCAL 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.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.

(1) Title of each class of securities to which transaction applies:

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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 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.
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[ ] 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:

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(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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LOCAL FINANCIAL CORPORATION
3601 N.W. 63rd Street
Oklahoma City, Oklahoma 73116
Telephone: 405-841-2100
Fax: 405-841-2289

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

MAY 28, 2003

To the Stockholders:

Local Financial Corporation will hold an Annual Meeting of Stockholders
(the "Annual Meeting") on Wednesday, May 28, 2003, at 10:00 a.m., Central Time,
Waterford Marriott Hotel located at 6300 Waterford Blvd., Oklahoma City,
Oklahoma. The stockholders will meet to consider:

(1) Electing two directors, each to serve for a term of three years;

(2) Ratifying the selection of KPMG LLP as independent auditors of Local
Financial Corporation for the year ending December 31, 2003; and

(3) Transacting other business incident to the Annual Meeting.

The record date for the Annual Meeting is March 31, 2003. Only stockholders
of record at the close of business on that date can vote at the Annual Meeting.

We hope you will attend the Annual Meeting. IF YOU DO NOT PLAN TO ATTEND,
PLEASE SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED OR USE THE
INTERNET ADDRESS OR THE TOLL-FREE TELEPHONE NUMBER INDICATED ON THE ENCLOSED
CARD. TO ENCOURAGE THE USE OF PROXIES, WE HAVE ENCLOSED A SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE FOR YOUR USE.

Sincerely,

Alan L. Pollock
Secretary

April 11, 2003

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 2003

Local Financial Corporation ("Local Financial", "We"or the "Company")
furnishes this Proxy Statement to inform its stockholders about the upcoming
Annual Meeting of stockholders ("Annual Meeting"). To encourage stockholder
participation, we are soliciting proxies to be used at the Annual Meeting.

We are mailing this Proxy Statement and the accompanying proxy card to
stockholders on or about April 11, 2003.

GENERAL INFORMATION

Who Votes. If you hold shares as of March 31, 2003 (the "Record Date"), you
may vote at the Annual Meeting. On March 5, 2003, the Company had 17,802,923
shares of common stock outstanding. Each share is entitled to one vote.

HOW TO VOTE. YOU CAN VOTE IN ONE OF FOUR WAYS. YOU CAN VOTE BY MAIL, IN
PERSON AT THE MEETING, AT THE INTERNET ADDRESS OR BY USING THE TOLL-FREE
TELEPHONE NUMBER INDICATED ON THE PROXY CARD.

You may vote by mail by completing and signing the proxy card that
accompanies this Proxy Statement and promptly mailing it in the enclosed
envelope. We will vote your shares according to your instructions. You can tell
us to vote for all, either or none of the nominees for director. You can tell us
to approve, disapprove, or abstain from voting on the independent auditors. We
have provided information about the director nominees and the independent
auditors in the following pages of this Proxy Statement. If you return a signed
proxy card, but do not give any instructions, we will vote your shares as
recommended by our Board of Directors.

You may vote in person. If you attend the Annual Meeting, you may vote by
delivering your completed proxy card in person or you may vote by completing a
ballot. Ballots will be available at the meeting.

You may vote by logging on to the Internet address indicated on your proxy
card and following the instructions at that site.

You may vote using the toll free telephone number indicated on your proxy
card and following the instructions provided.

Voting Shares In "Street Name." If your shares are held in "street name",
your bank or brokerage firm is the record holder of your shares. We will send
proxy materials to the record holder and it will forward those materials to you.
To vote your shares, you must instruct your bank or brokerage firm according to
the directions it provides you. If you do not instruct your bank or brokerage
firm, it can vote your shares with respect to certain "discretionary" items
(such as the election of directors and the ratification of the independent
auditors), but cannot vote your shares with respect to certain
"non-discretionary" items. In the case of non-discretionary items, the shares
will be treated as "broker non-votes".

If your shares are held in street name and you wish to vote in person at
the Annual Meeting, you will need to obtain a proxy from your bank or brokerage
firm.

Changing Your Proxy. You can change or cancel your proxy at any time before
we vote your shares in any of three ways:

(1) By giving the Secretary a written cancellation;

(2) By giving a later signed proxy; or

(3) By voting in person at the Annual Meeting.

Counting the Necessary Votes. Directors are elected by a plurality of
votes, which means that the two director nominees (the number of positions to be
filled) receiving the highest number of votes will be elected. To ratify the
independent auditors, this item must receive a majority of the votes cast at the
Annual Meeting. If any incidental business is transacted at the Annual Meeting,
the incidental business must receive a majority of the votes cast at the Annual
Meeting.

The presence in person or by proxy of at least a majority of the issued and
outstanding shares of common stock entitled to vote is necessary to constitute a
quorum at the Annual Meeting. Abstentions are counted as "shares present" at the
Annual Meeting for purposes of determining whether a quorum exists. Under rules
applicable to broker-dealers, the proposals for the election of directors and
the ratification of the independent auditors are considered to be
"discretionary" items upon which brokerage firms may vote in their discretion on
behalf of their clients if such clients have not furnished instructions.
Accordingly, there will be no "broker non-votes" on the proposals presented at
the Annual Meeting.

Confidentiality of Voting. We will keep your vote confidential. Your vote
will be known only to the inspector of election and others involved in the
tabulation. The inspector will not disclose your vote to the directors or the
executive officers. We will not disclose your vote unless (i) we are required to
do so by law (including in connection with the pursuit or defense of a legal or
administrative action or proceeding), or (ii) there is a contested election for
the Board of Directors. The inspector of elections will forward any written
comments that you make on the proxy card to management without providing your
name, unless you expressly request disclosure on your proxy.

Incidental Business. Proxies customarily ask for authority to transact
other business that may come before the Annual Meeting. Much of this business is
procedural, such as a vote on adjournment. Except for the election of directors
and ratification of the independent auditors, we do not know of any substantive
business to be presented or acted upon at the Annual Meeting. Under our Bylaws,
no substantive business besides that stated in the meeting notice may be
transacted at any meeting of stockholders. If any matter is presented at the
Annual Meeting on which a vote may properly be taken, the designated proxies
will vote your shares as they think best unless you otherwise direct.

ITEM 1
ELECTION OF DIRECTORS

Two directors will be elected at this year's Annual Meeting. Each director
will serve for a three-year term ending at the 2006 Annual Meeting or until he
is succeeded by another qualified director who has been elected.

We will vote your shares as instructed by you on the enclosed proxy form.
If you sign, date and return the proxy form, but do not specify how you want
your shares voted, we will vote your shares for the election of the nominees
listed below. If unforeseen circumstances (such as death or disability) make it
necessary for the Board of Directors to substitute another person for

any of the nominees, we will vote your shares for that other person. At this
time, the Board of Directors knows of no reason why the nominees listed below
may not be able to serve as directors if elected.

No director, executive officer or nominee for director of the Company is
related to any other director or executive officer of the Company by blood,
marriage or adoption. The two nominees for director are presently members of the
Board of Directors.

THE COMPANY RECOMMENDS VOTING "FOR" THE NOMINEES.

BIOGRAPHICAL INFORMATION

The following table sets forth the name and age of each director and
director nominee, the year he became a director, and the year his term of
service will end.

DIRECTOR TERM
NAME AGE SINCE EXPIRES POSITION
---------------------- -------- ------------- ----------- ------------------------

Edward A. Townsend 60 1997 2004 Chairman of the Board
William D. Breedlove 63 2001 2005 Director
Andrew M. Coats 67 1999 2005 Director
Robert A. Kotecki 38 1997 2004 Director
Joseph A. Leone 69 1973 2003 Director
George P. Nigh 75 1997 2005 Director
Jan A. Norton 56 1997 2003 Director
J. David Rosenberg 53 1998 2004 Director

The Director Nominees. The Board of Directors has nominated two candidates
for election. If elected, these nominees will serve three-year terms expiring in
2006. A brief summary of each director nominee's principal occupation, business
affiliations and other information follows:

Joseph A. Leone. Mr. Leone has served as a director of the Company and
Local Oklahoma Bank, National Association, a wholly-owned subsidiary of the
Company (the "Bank") since 1973. Since 1987, Mr. Leone has served as
managing partner with MBI, Inc., a limited partnership, which owns several
commercial real estate properties located within Oklahoma. From 1978
through 1987, Mr. Leone served as Executive Vice Chancellor and Chancellor
of the Oklahoma State System of Higher Education.

Jan A. Norton. Mr. Norton was elected as a director and President of the
Company and the Bank in 1997.

The Continuing Directors. Since the Company's directors serve staggered,
three-year terms, a majority of the directors continue their service each year.
The continuing directors and their respective principal occupations, business
affiliations and other information are as follows:

Edward A. Townsend. Mr. Townsend was elected as a director of the Company
and the Bank 1997. At the same time, Mr. Townsend became Chairman and Chief
Executive Officer of the Company and the Bank. From April 1994 to February
1998, Mr. Townsend served as Chairman and Chief Executive Officer of Green
Country Bank, FSB, and Chief Executive Officer of its parent corporation,
Green Country Banking Corporation. From January 1993 through March 1994,
Mr. Townsend served as Senior

Vice President of Stifel, Nicolaus & Company, an investment banking firm
located in St. Louis, Missouri. From October 1988 through September 1992,
Mr. Townsend served as Chairman and President of Local Federal Bank, FSB
(the predecessor of the Bank). From 1967 to 1987, Mr. Townsend was employed
in various positions at First National Bank and later InterFirst
Corporation, both in Dallas, Texas.

William D. Breedlove. Mr. Breedlove was elected as a director of the
Company and the Bank in August 2001. Mr. Breedlove is Vice Chairman of HBW
Holdings, Inc. and President of HBW Investments, Inc., an investment
banking firm based in Dallas, Texas. Prior to the firm's formation as a
result of a merger with Hoak Securities Corporation, Mr. Breedlove was
chairman, managing director and co-founder of Breedlove Wesneski & Co., a
private merchant banking firm. From 1984 to 1989, Mr. Breedlove also served
as president and director of Equus Capital Corporation, the corporate
general partner of three public and private limited partnerships operating
primarily as private equity funds. Mr. Breedlove received his B.B.A. degree
in finance and banking from the University of Texas in 1962. Mr. Breedlove
also serves as a director of NCI Building Systems, Inc. and Integrated
Security Systems, Inc.

Andrew M. Coats. Mr. Coats was elected as a director of the Company in 1999
and a director of the Bank 1997. On July 1, 1996, Mr. Coats became the Dean
of the University of Oklahoma College of Law. Mr. Coats served as President
of the Oklahoma Bar Association in 1992 and served as President of the law
firm of Crowe & Dunlevy in 1987 and 1988. In 1983, Mr. Coats was elected
Mayor of Oklahoma City where he served until April 1987. Mr. Coats won the
Democratic nomination for U.S. Senate from Oklahoma in 1980. Mr. Coats
served as the District Attorney of Oklahoma County from 1976 to 1980. Mr.
Coats is a past President of the American College of Trial Lawyers.

Robert A. Kotecki. Mr. Kotecki was elected as a director of the Company in
1997. From 1997 until May 1999, Mr. Kotecki also served as a director of
the Bank. Since October 2001, Mr. Kotecki has served as a Managing Director
with the investment banking firm of Sandler O'Neill & Partners, L.P., in
Chicago, Illinois. From March 1993 to September 2001, Mr. Kotecki served in
various capacities with Friedman, Billings, Ramsey & Co., Inc., an
investment banking firm based in Arlington, Virginia. From November 1988
through March 1993, Mr. Kotecki served as an Associate with Trident
Financial Corp., an investment banking firm located in Raleigh, North
Carolina. Mr. Kotecki is a Chartered Financial Analyst.

George P. Nigh. Governor Nigh was elected as a director of the Company and
the Bank in 1997. From July 1992 through June 1997, Governor Nigh served as
President of the University of Central Oklahoma, where he had served as
Distinguished Statesman in Residence for the previous five years. From
January 1979 through 1987, Governor Nigh served as Governor of the state of
Oklahoma. Prior to 1979, Governor Nigh served 16 years as Lt. Governor and
eight years in the House of Representatives of the state of Oklahoma.
Governor Nigh currently serves as a consultant for the Bank in the area of
community relations.

J. David Rosenberg. Mr. Rosenberg was elected as a director of the Company
in February 1998. Mr. Rosenberg is a senior partner of Keating, Muething &
Klekamp, P.L.L., a Cincinnati, Ohio law firm, of which he has been a member
since 1974. Mr. Rosenberg is a director of PFGI Capital Corporation, Hinkle
Construction Co. and Greycourt and Co., Inc.

SERVICE ON THE BOARD

Board Meetings and Committees. The Board of Directors held six meetings in
2002. Management also periodically conferred with directors between meetings
regarding Company affairs. The Company's non-employee directors meet
periodically without the Chief Executive Officer present. During 2002, all
directors attended 75% or more of the total aggregate number of meetings of the
Board of Directors and meetings of the committees of the Board on which they
served.

The Audit and Compliance Committee is currently composed of Mr. William D.
Breedlove (Chairman), Mr. Andrew M. Coats and Mr. Joseph A. Leone. The Audit and
Compliance Committee met seven times in 2002 with all members attending 75% or
more of these meetings. The Audit and Compliance Committee is primarily
concerned with the effectiveness of the Company's financial audits by its
internal audit staff and by the independent auditors. Its duties include: (i)
being directly responsible for the appointment and approval, compensation and
oversight of the audit work of the independent auditors and such independent
auditors report directly to the Audit and Compliance Committee; (ii) reviewing
the scope of the audit to be conducted by the independent auditors, as well as
the results of such audit; (iii) reviewing the organization and scope of the
Company's internal system of audit and financial controls; (iv) reviewing the
Company's financial reporting and the accounting standards and principles
followed; and (v) examining other reports relating to the Company's compliance
with financial institution laws and regulations. The Audit and Compliance
Committee's report is set forth below under "Item 2: Ratification of Auditors".

The Compensation and Retirement Committee (the "Committee") is currently
composed of Mr. Joseph A. Leone (Chairman), Mr. Andrew M. Coats and Mr. Gene C.
Howard, a director of the Company's subsidiary bank. The Committee met four
times in 2002 with all members participating. The Committee sets the
compensation level of the Chief Executive Officer and evaluates and reviews the
reasonableness of all other executive officer compensation, establishes a
general framework for the short-term incentive program and oversees the
long-term incentive programs. The Committee's report is set forth below.

The Board of Directors has not delegated its functions to any other
standing committees, and thus has not created executive, nominating or other
similar committees.

Director Compensation. The Company pays its non-employee directors a
quarterly retainer of $5,000. Those directors who are also a director of the
Bank receive a per meeting fee of $500 (which includes telephonic board
meetings) and a $2,500 quarterly retainer for service as a Bank director. The
Company reimburses all ordinary and necessary expenses incurred in the conduct
of its business. Committee members receive $500 per Audit and Compliance
Committee and $500 per Compensation and Retirement Committee meeting, whereas
the Chairman of the Audit and Compliance Committee receives $1,000 per meeting.
Governor George P. Nigh also serves as community relation consultant to the
Bank, for which he receives $72,000 per year and an automobile.

OTHER INFORMATION ABOUT DIRECTORS, OFFICERS
AND CERTAIN STOCKHOLDERS

BENEFICIAL OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock as of March 5, 2003 by (i) each director
of the Company, (ii) each named executive officer in the Summary Compensation
Table, (iii) each person known or believed by the Company to own beneficially
five percent or more of the common stock and (iv) all directors and executive
officers as a group. Unless indicated otherwise, each person has sole voting and
dispositive power with respect to such shares.

BENEFICIAL OWNERSHIP(1)
NAME OF DIRECTOR, EXECUTIVE OFFICER --------------------------------
OR STOCKHOLDERS HOLDING 5% OR MORE NUMBER OF SHARES PERCENT(2)
-------------------------------------------- ---------------- ----------

FMR Corporation 1,778,045 9.9
82 Devonshire Street
Boston, MA 02109
Dalton, Greiner, Hartman, Maher & Company 1,409,678 7.9
565 Fifth Avenue, Suite 2101
New York, NY 10017-2413
Eubel Brady & Suttman Asset Management, Inc. 1,040,306 5.8
7777 Washington Village Drive
Dayton, OH 45459
Wellington Management Company, LLP 978,100 5.5
75 State Street
Boston, MA 02109
Edward A. Townsend(3)(4)(5) 659,323 3.6
Jan A. Norton(3)(4)(5) 301,049 1.7
J. David Rosenberg(3) 181,447 1.0
Robert A. Kotecki(3) 66,200 *
Richard L. Park(3) (4)(5) 57,996 *
Robert L. Vanden(3)(4)(5) 41,769 *
James N. Young(3)(4)(5) 38,117 *
Harold A. Bowers(3)(4)(5) 36,112 *
Joseph A. Leone(3) 18,334 *
Andrew M. Coats(3) 16,114 *
George P. Nigh(3) 15,834 *
William D. Breedlove(3) 5,100 *
All directors and named executive
officers as a group (12 persons) 1,437,395 7.6

------------------

* Less than one percent.

(1) Shares of common stock that are not outstanding but that can be acquired by
a person upon exercise of an option or warrant within 60 days are included
in computing the percentage for such person, but not included in computing
the percentage for any other person.

(2) Percentage of beneficial ownership is based on 17,802,923 shares of common
stock outstanding as of March 5, 2003.

(3) The number of shares for the following persons includes presently
exercisable stock options in the amounts shown below.

NAME OPTION SHARES
--------------------- -------------

Edward A. Townsend 606,640
Jan A. Norton 288,000
Richard L. Park 43,334
Robert L. Vanden 37,000
James N. Young 35,000
Harold A. Bowers 31,000
Joseph A. Leone 13,334
George P. Nigh 13,334
J. David Rosenberg 13,334
Andrew M. Coats 13,334
Robert A. Kotecki 10,000
William D. Breedlove 5,000

(4) The amount shown for the named executive officers as a group includes
14,460 shares allocated to the accounts of the named executive officers
under the Bank's Employee Stock Ownership Plan ("ESOP"). These shares are
allocated among the following named executive officers in the amounts shown
below.

NAME ALLOCATED ESOP SHARES
------------------- ---------------------

Edward A. Townsend 2,410
Jan A. Norton 2,410
Richard L. Park 2,410
Robert L. Vanden 2,410
James N. Young 2,410
Harold A. Bowers 2,410

(5) The amount shown for the named executive officers as a group includes 2,105
shares allocated to the accounts of the named executive officers under the
Bank's 401(k) Matching Contribution Plan. These shares are allocated among
the following named executive officers in the amounts shown below.

NAME ALLOCATED 401(k) SHARES
------------------ -----------------------

Edward A. Townsend 273
Jan A. Norton 639
Richard L. Park 252
Robert L. Vanden 359
James N. Young 380
Harold A. Bowers 202

EXECUTIVE COMPENSATION

The following table sets forth the compensation paid or accrued to the Chief
Executive Officer and each of the five other most highly compensated executive
officers of the Company, including officers of Local Oklahoma (the six are
sometimes called the "named executive officers") for services performed in 2002,
2001 and 2000. The Company provides various perquisites to certain employees
including the named executive officers. In each case, the aggregate value of the
perquisites provided to the named executive officers did not exceed the lesser
of $50,000 or 10% of such named executive officers' annual salary and bonus.

Summary Compensation Table

LONG TERM
COMPENSA-
ANNUAL COMPENSATION TION AWARDS
------------------------- -----------
ALL OTHER
COMPENSA-
NAME AND OPTIONS TION
PRINCIPAL POSITION YEAR SALARY ($) BONUS($) (#) ($)(1)
--------------------------- ---- ---------- ---------- ----------- ----------

Edward A. Townsend 2002 320,000 500,000 -- 618,623
Chief Executive Officer 2001 320,000 500,000 -- 5,100
2000 320,000 500,000 -- 123,978

Jan A. Norton 2002 240,000 200,000 -- 84,920
President 2001 240,000 200,000 -- 10,669
2000 240,000 175,000 -- 49,476

Robert L. Vanden 2002 225,000 150,000 10,000 10,623
Executive Vice President 2001 225,000 150,000 -- 6,412
2000 225,000 125,000 15,000 148,486

James N. Young 2002 175,000 100,000 -- 10,623
Executive Vice President 2001 175,000 100,000 -- 6,732
2000 175,000 110,000 15,000 41,771

Harold A. Bowers 2002 150,000 110,000 -- 9,577
Executive Vice President 2001 150,000 100,000 -- 5,100
2000 150,000 110,000 15,000 43,444

Richard L. Park 2002 150,000 150,000 -- 9,470
Executive Vice President 2001 150,000 75,000 -- 5,977
2000 150,000 100,000 20,000 74,775

----------

(1) The year 2002 amounts under this column represent (i) the amount of tax
gross-up bonus on stock option exercises, as applicable, in the amount of
$608,000 for Mr. Townsend and $74,297 for Mr. Norton, (ii) the market value
of shares allocated to the named executive officers' accounts under the
ESOP as of the allocation dates, which total $6,623 for each named
executive officer and (iii) the 401(k) matching contribution for the year
in the amount of $4,000 each for Messrs. Townsend, Norton, Vanden and
Young, $2,954 for Mr. Bowers and $2,847 for Mr. Park.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth required information with respect to equity
compensation plans of the Company as of December 31, 2002:

NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE FURTHER ISSUANCE UNDER
BE ISSUED UPON EXERCISE EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN FIRST COLUMN)
------------------------------- ----------------------- -------------------- --------------------------

Equity compensation plans
approved by security holders 1,901,640 $ 10.08 2,365

Equity compensation plans not
approved by security holders -- N/A --
----------------------- -------------------- --------------------------

Total 1,901,640 $ 10.08 2,365
======================= ==================== ==========================

STOCK OPTIONS GRANTED IN 2002

The following table sets forth information concerning the grant of stock
options during 2002 to the named executive officer:

INDIVIDUAL GRANTS
-------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL RATES OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED OPTION TERMS(1)
OPTIONS EMPLOYEES EXERCISE EXPIRATION ------------------------------------
NAME GRANTED IN 2002 PRICE (SH) DATE 5% 10%
---------------- ---------- --------------- ---------- ---------- --------------- --------------

Robert L. Vanden 5,000 14.285% $ 15.37 04/09/12 $ 48,331 $ 122,479
Robert L. Vanden 5,000 14.285 $ 13.31 09/25/12 41,853 106,064

----------

(1) The potential realizable value is based on the difference between the
exercise price and the annually compounded increase of the market
price at date of grant through the option term multiplied by the
number of shares.

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

The following table provides information on option exercises in fiscal 2002
by the named executive officers and the value of such officers' unexercised
options at December 31, 2002.

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE MONEY OPTIONS AT
SHARES OPTIONS FISCAL YEAR-END(1)
ACQUIRED ON VALUE ------------------------------- -------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------ ------------- --------- ------------ -------------- ------------ --------------

Edward A. Townsend 145,000 $ 608,000 666,640 -- $ 3,099,876 $ --

Jan A. Norton 16,365 74,297 288,000 -- 1,339,200 --

Richard L. Park -- -- 43,334 6,666 201,503 30,997

Robert L. Vanden -- -- 37,000 23,000 172,050 67,150

James N. Young -- -- 35,000 15,000 162,750 69,750

Harold A. Bowers -- -- 31,000 19,000 144,150 88,350

(1) Based on a per share market price of $14.65 at December 31, 2002.

COMPENSATION AND RETIREMENT COMMITTEE REPORT

Composition. The Committee is composed of two directors of the Company, Mr.
Joseph A. Leone (Chairman) and Mr. Andrew M. Coats, and one director of the
Company's subsidiary Bank, Mr. Gene C. Howard. Each of these Committee members
is independent, defined as a person who is not an officer of the Company and who
does not have a relationship with the Company that would interfere with the
Committee member's exercise of independent judgment.

Compensation Approach. The Committee sets the compensation level of the
Chief Executive Officer (the "ceo") (subject to the terms of the CEO's existing
employment agreement), reviews compensation and performance of all other
executive officers, makes recommendations to the Board of Directors relating to
the compensation of the Directors, establishes a general framework for the
short-term incentive program and oversees the long-term incentive programs. The
Committee uses a set of guiding principles, which are designed to align
executive compensation with management's execution of business strategies and
initiatives as well as the achievement of long-term financial performance and
growth in stockholder value. The principles are as follows:

o The Company's salaries must be competitive with comparable banking
institutions with which the Company competes for highly qualified and
experienced executive and senior officers. The Committee relies on its
members' knowledge of other comparable banking institutions and
independent surveys of executive compensation in such institutions,
and may retain outside consultants for advice, to ensure executive
salaries are competitive.

o The Company maintains annual incentive programs sufficient to provide
motivation to achieve specific operating goals and to generate rewards
that bring total compensation to competitive levels.

o The Company provides equity-based incentives for executive and senior
officers and other key employees to ensure that they are motivated
over the long term to respond to the Company's business challenges and
opportunities as stockholders as well as employees.

Future compensation will be closely tied to performance and its impact on
the growth in stockholder value. The primary components of executive
compensation are base salary, short-term cash incentives and long-term equity
incentives.

Base Salary. The Company understands that base salaries must remain in a
competitive range to retain capable management. The minimum base salary for the
CEO is fixed by an employment agreement between the Company, the Bank and the
CEO. The Committee reviews the salary level annually based on a subjective mix
of the Company's performance, the CEO's experience and contributions, and the
levels of compensation received by similarly situated chief executive officers
at comparable companies, and may increase (but not decrease) the base salary if
the Committee deems an increase is warranted. The salaries of the other
executive and senior officers are established by the CEO, who evaluates these
salaries in relationship to the base salary of the CEO and to their respective
levels of responsibility and contributions to the Company and based on the other
criteria described by the Committee in this report. The Committee reviews the
reasonableness of all executive and senior officers salaries as determined by
the CEO. Annual adjustments are made to maintain base salaries at levels
competitive with comparable companies and to maintain an equitable relationship
between the base salaries of executive and senior officers and overall merit
increases for the Company's other employees. In the case of an executive or
senior officer joining the Company, base salaries are also determined as one
component of a total compensation package that is competitive with compensation
granted by that officer's prior employer and/or other opportunities available to
that officer.

Annual Incentive Compensation. The Company provides annual incentive
compensation in the form of bonuses. For bonuses paid to the CEO, the Committee
assesses incentives accorded comparable positions in other companies, the
reporting of pre-tax profits for the year, a comparison of return on equity,
return on assets and nonperforming asset levels at comparable banking
institutions and the size of the bonus in relationship to the executive's base
salary. The Committee analyzes the bonus amount in relationship to the Company's
broader corporate performance, its targeted growth objectives and its results of
operations. The Committee also analyzes the bonus amount for the CEO in
relationship to his responsibilities and his importance to the Company's
operating strategy. For bonuses other than those paid to the CEO, the CEO
applies similar criteria to establish bonus amounts, which are ratified by the
Committee, for the other executive and senior officers. Consistent with the
Company's inclination toward incentive compensation, the bonus portion of the
cash compensation package tends to be weighted more than the base salary
portion.

Long-Term Incentive Compensation. The Company provides long-term incentive
compensation primarily in the form of incentive and non-qualified stock options
under its 1998 Stock Option Plan (the "1998 Plan"). In July 2000, the Company
amended the 1998 Plan to increase the number of shares available for awards from
1,720,370 shares to 2,100,370 shares of the Company's common stock. As of
December 31, 2002, options covering 1,901,640 remain outstanding with 1,532,578
exercisable at an average exercise price of $10.08 per share. Initial stock
option awards for executive and senior officers are individually determined at
or prior to employment at levels that are designed to attract qualified
executive and senior officers and in certain cases to be competitive with
options granted by their prior employers. The Company's inclination toward
incentive compensation has resulted in a gradual expansion of participation in

the 1998 Plan and the making of option grants has become a more significant
component of the Company's compensation plan.

Management receives value from option grants only if the common stock
appreciates over the long term. The amount of individual option grants is
determined based in part on competitive practices at comparable companies and on
the Company's philosophy of significantly linking executive compensation with
stockholder interests. In determining the size of individual grants, the
Committee also considers the number of shares subject to options previously
granted to each executive or senior officer or key employee, including the
number of shares that have vested and that remain unvested. The Committee
believes that option grants by the Company to its management are comparable to
the average range for similarly situated companies.

In structuring the CEO's compensation package, the Committee considered the
possible tax implications that the compensation would have on the Company.
Section 162(m) of the Internal Revenue Code (the "Code") limits the Company to a
deduction for federal income tax purposes of no more than $1 million of
compensation paid to certain officers in a taxable year. Compensation above $1
million may be deducted if it is "performance-based compensation" within the
meaning of the Code. Gains recognized upon exercise of non-qualified options are
treated as compensation under the Code, and may be subject to this limitation.
Exercise of the stock options granted to the CEO under the Company's 1998 Plan
could result in compensation of more than $1 million (depending on the market
performance of the common stock). The Company is uncertain whether compensation
resulting from such options will be treated as "performance-based" under the
Treasury regulations promulgated under Section 162(m) of the Code.

For additional information regarding options awards, see the compensation
tables preceding this report.

Corporate Performance and Chief Executive Officer Compensation. Edward A.
Townsend became Chief Executive Officer in September 1997. Under Mr. Townsend's
employment agreement with the Company and the Bank, Mr. Townsend's annual base
salary is $320,000 through September 8, 2003. In addition, Mr. Townsend holds
options granted to him in 1997, which cover 606,640 shares of the Company's
common stock and are exercisable at $10.00 per share as of March 5, 2003. The
Company has granted no additional options to Mr. Townsend since the original
grant in 1997. The employment agreement provides that the Company may increase,
but not decrease, his base salary during the term of the agreement and also
provides for bonuses in amounts to be determined by the Committee. The agreement
was approved by the disinterested members of the Board of Directors. While the
Committee may increase Mr. Townsend's base salary, the Committee chose to
compensate Mr. Townsend through a bonus award of $500,000 and made no increase
in his base salary.

In determining the compensation amounts, the Committee focused largely upon
Mr. Townsend's efforts in executing the Company's operating strategy and the
success of that strategy to date, as reflected in the Company's steadily
increasing financial performance. The Committee also considered Mr. Townsend's
experience as an executive officer in the banking industry and his role in
expanding and motivating executive personnel. In addition, the Committee
compared Mr. Townsend's cash compensation (base salary and bonus) to the cash
compensation of other chief executive officers of comparable banking
institutions, as indicated by an independently prepared compensation survey.
Based on Mr. Townsend's efforts and on this survey and other available
information, the Committee chose to maintain the existing base salary level and
to use the bonus component to bring Mr. Townsend's total cash compensation in

line with the compensation packages of similarly situated chief executive
officers in the banking industry. This somewhat lower base salary level and the
greater emphasis upon the bonus component reflects the Committee's emphasis upon
incentive compensation and its belief that incentive compensation better aligns
executive compensation with Company performance and, ultimately, the interests
of the stockholders.

The Company remains committed to a philosophy of pay for performance.

Dated: March 26, 2003 The Compensation and
Retirement Committee of
Local Financial Corporation

Mr. Joseph A. Leone, Chairman
Mr. Andrew M. Coats
Mr. Gene C. Howard

The preceding "Compensation and Retirement Committee Report" shall not be
deemed incorporated by reference by any general statement incorporating this
Proxy Statement into any filing under the Securities Act of 1934 ("Securities
Act") or under the Exchange Act of 1933 ("Exchange Act"), except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under the Securities Act or the Exchange
Act.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No executive officer or employee of the Company participated in Board of
Directors' decisions about executive compensation. No member of the Board and no
employee of the Company serves or has served on the compensation and retirement
committee (or board of directors of a corporation lacking a compensation
committee) of a corporation employing a member of the Board.

EMPLOYMENT AGREEMENTS

The Company and the Bank have entered into employment agreements with Mr.
Edward A. Townsend, their Chairman of the Board and Chief Executive Officer
("CEO"), and Mr. Jan A. Norton, their President ("President"). In addition, the
Bank has entered into employment agreements with Executive Vice Presidents, Mr.
Robert L. Vanden, Mr. James N. Young, Jr., Mr. Harold A. Bowers and Mr. Richard
L. Park (collectively, the "Executive Vice Presidents"). Under these employment
agreements, the Company and the Bank employ the CEO and the President, and the
Bank employs the Executive Vice Presidents for a term of three years, which term
shall be extended annually beginning on the first anniversary of the effective
date of each employment agreement for successive additional one (1) year
periods, upon express approval by the Board of Directors of the Company and of
the Bank as to the CEO's employment agreement, and by the CEO as to the
employment agreements of the President and the Executive Vice Presidents, unless
either party to the employment agreements elects, not less than 60 days prior to
the annual anniversary date of that agreement, not to so extend the term thereof
for an additional year.

The annual base salaries for the CEO and for the President are $320,000 and
$240,000, respectively, which are paid in monthly installments. The annual base
salaries for

Messrs. Vanden, Young, Bowers and Park are $225,000, $175,000, $150,000 and
$150,000, respectively, which are also paid in monthly installments. These
employment agreements further provide the CEO, the President and the Executive
Vice Presidents with the same employee benefits that are provided by the Bank to
executive employees generally, provide for vacation and participation in the
Bank's benefit plans, membership in a golf and country club in the city where
they work, and for an automobile of the type and kind comparable to that which
the Bank provides to its other executive officers.

The employment agreements of the CEO and of the President are terminable
with or without cause by the Board of Directors of the Company and/or the Board
of Directors of the Bank. The employment agreements of the Executive Vice
Presidents are terminable with or without cause by the CEO and/or by the Board
of Directors of the Bank. In the event the employment of the CEO, the President
or any of the Executive Vice Presidents is terminated without cause, or they
resign from that employment for good reason, then each of them will be entitled
to receive their annual cash compensation and their other fringe benefits under
their employment agreements for the remaining term of that agreement. The annual
cash compensation of the CEO and the President is defined in their employment
agreements as their then annual base salary plus an amount equal to the average
of their respective bonuses for the three (3) immediately prior years. The
annual cash compensation of the Executive Vice Presidents is defined in their
employment agreements as their then annual base salary.

Following a change of control of the Company or of the Bank, if the CEO or
the President resigns for any reason, or their employment is terminated without
cause, they will receive a severance benefit equal to three (3) times their
annual cash compensation. They will also receive their other fringe benefits
under their employment agreements for the remaining term of those agreements.
The employment agreements of the CEO and of the President further provide, in
the event of death, his estate shall be entitled to his annual cash compensation
for the remaining term of his agreement. If any of the Executive Vice Presidents
resigns from his employment for good reason, or is terminated without cause, he
will receive a severance benefit equal to the higher of the amount of annual
cash compensation for the remaining term of his agreement or two times his then
annual cash compensation. Each Executive Vice President will also receive his
other fringe benefits under the employment agreements for the remaining term of
the agreement. The sum of the said severance benefits, which can be paid to the
CEO, the President or any of the Executive Vice Presidents, is limited to
amounts that will not constitute "excess parachute payments" under the Code.

NON-COMPETE/NON-SOLICITATION AGREEMENTS

In January 2001, the Company and the Bank (the "Employers") entered
into change of control non-compete/non-solicitation agreements with Mr. Townsend
and Mr. Norton (the "Executives"). Under the agreements, the Executives agreed
that they will not compete against the Employers following a change of control
in either of the Employers. The scope of the covenant not-to-compete covers
banking activity within the state of Oklahoma. The Executives further agreed not
to solicit the Employers' employees or customers on behalf of a competitor. The
covenant not-to-compete or solicit extends for a five year period following the
change of control. In exchange for such covenants, the Employers agreed to pay
Mr. Townsend a net-of-tax payment of $3.0 million and to pay Mr. Norton a
net-of-tax payment of $650,000. The payments are contingent upon a change of
control in either Employer. The payment obligation is voided if the Executives
voluntarily resign without "good reason" or are terminated "for cause" prior to
a change of control (as those terms are defined in the employment agreements) or
if their
14

employment terminates more than one year from the beginning of negotiations
resulting in the change of control.

CERTAIN TRANSACTIONS

During 1999, Local Securities Corporation, the broker/dealer subsidiary of
the Bank, committed $300,000 to HBW Investments LLP to be used as venture
capital investments. Company director William D. Breedlove is Vice Chairman of
HBW Investments. Unrealized loss on the venture capital investments, amounting
to $103,635, has been included in the Company's 2002 consolidated financial
statements.

During fiscal 2002, Governor George P. Nigh, a director of the Company,
received consulting fees of $72,000 plus the use of an automobile pursuant to a
consulting agreement with the Bank.

The Bank provides loans to its directors and officers in the ordinary
course of business, on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
other persons. Such loans do not involve more than the normal risk of
collectibility or present other unfavorable features. As of December 31, 2002,
and combining all loans to directors and executive officers in excess of
$60,000, the Bank had an amount outstanding of $3,695,304 of loans to directors
and executive officers. This amount represented 2.2% of the Company's
consolidated stockholders' equity as of that date.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the Securities and
Exchange Commission ("SEC") initial reports of ownership and reports of changes
in ownership of common stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.

Based solely on review of the copies of such forms furnished to the
Company, or written representations from its officers and directors, the Company
believes that with respect to the year ended December 31, 2002, the Company's
officers and directors satisfied the reporting requirements promulgated under
Section 16(a) of the Exchange Act, except for Messrs. Roper and Vanden, each of
whom did not file a timely Form 4 in connection with the acquisition of option
shares of common stock and Mr. Young, whom did not file a timely Form 4 in
connection with the disposition of shares of common stock.

ITEM 2
RATIFICATION OF AUDITORS

VOTE ON THE INDEPENDENT AUDITORS

On the recommendation of the Audit and Compliance Committee, the Board of
Directors appointed KPMG LLP, independent certified public accountants ("KPMG"),
to audit the consolidated financial statements of the Company for the year
ending December 31, 2003. The Company is advised that no member of KPMG has any
direct or material indirect financial interest in the Company or, during the
past three years, has had any connection with the Company in the capacity of
promoter, underwriter, voting trustee, director, officer or employee.

KPMG has audited the Company's consolidated financial statements since 1997.
Ratification of the Board's appointment shall be effective upon receiving the
affirmative vote of the holders of a majority of the votes cast at the Annual
Meeting.

AUDIT FEES, FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES, AND
ALL OTHER FEES

The following table presents fees for professional audit services rendered
by KPMG for the audit of the Company's annual consolidated financial statements
for 2002 and fees billed for other services rendered by KPMG.

Audit Fees, excluding audit-related $ 225,700

Financial information systems designs
and implementation --

All other fees:
Audit-related fees(1) $ 85,503
Other non-audit services(2) 33,570
------------------
119,073
Total $ 344,773
==================

----------

(1) Audit-related services included audits of financial statements of the
Company's 401(K) Plan and ESOP and internal audit assistance.

(2) Non-audit services consisted of tax compliance and consulting services,
after consulting services and operational efficiency review.

The Audit and Compliance Committee has considered and determined that
KPMG's non-audit services are compatible with maintaining its independence as an
auditor.

THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THIS PROPOSAL.

If the appointment is not ratified, the Board of Directors will consider
the appointment of other independent auditors. A representative from KPMG is
expected to be present at the Annual Meeting, will be offered the opportunity to
make a statement, and will be available to respond to appropriate questions.

AUDIT AND COMPLIANCE COMMITTEE REPORT

The Audit and Compliance Committee of the Local Financial Corporation's
Board of Directors (the "Committee") is composed of three directors, each of
whom is independent as defined by the National Association of Securities Dealers
listing standards, and operates under a written charter revised by the Board of
Directors in January 2003. A copy of the charter can be found in Addendum A to
the Proxy Statement. The Committee recommends to the Board of Directors, subject
to stockholder ratification, the selection of the Company's independent
auditors.

Management is responsible for the Company's internal controls and the
financial reporting process. The independent auditors are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with auditing standards

generally accepted in the United States of America and to issue a report
thereon. The Committee's responsibility is to monitor and oversee these
processes.

In connection with these responsibilities, the Committee has met and held
discussions with management and the independent auditors. Management represented
to the Committee that the Company's consolidated financial statements were
prepared in accordance with accounting principles generally accepted in the
United States of America and the Committee has reviewed and discussed the
consolidated financial statements with management and the independent auditors.
The Committee discussed with the independent auditors matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees).

The Company's independent auditors also provided to the Committee the
written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Committee discussed
with the independent auditors that firm's independence.

To the extent not already covered above, the Company's independent auditors
discussed with the Committee certain information required by Section 204 of the
Sarbanes-Oxley Act of 2002.

Based on the Committee's discussion with management and the independent
auditors and the Committee's review of the representation of management and the
report of the independent auditors to the Committee, the Committee recommended
that the Board of Directors include the audited consolidated financial
statements in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002, to be filed with the Securities and Exchange Commission.

Dated: February 26, 2003 The Audit and Compliance Committee of
Local Financial Corporation

Mr. William D. Breedlove, Chairman
Mr. Joseph A. Leone
Mr. Andrew M. Coats

The preceding "Audit and Compliance Committee Report" shall not be deemed
incorporated by reference by any general statement incorporating this Proxy
Statement into any filing under the Securities Act or under the Exchange Act,
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under the Securities Act
or the Exchange Act.

PERFORMANCE GRAPH

The following graph compares the market values of the Company's common
stock to the Nasdaq - Total US Index and the SNL $1B-$5B Bank Asset-Size Index.
The graph assumes an investment of $100 on April 22, 1998 (the date the common
stock was listed for trading), and that all dividends were reinvested and are
weighted on a market capitalization basis.

(PERFORMANCE GRAPH)

GRAPH DOLLAR VALUES 4/22/98 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
------------------- ------- -------- -------- -------- -------- --------

Local Financial Corporation 100.00 65.45 75.91 95.45 101.75 106.55
Nasdaq - Total US 100.00 115.43 214.51 129.03 102.38 70.68
SNL $1B-$5B Bank Index 100.00 89.35 82.12 93.18 113.22 130.70

Effective July 15, 1999, the Company delisted its common shares from the
American Stock Exchange and listed them with the Nasdaq National Market System,
trading under the symbol "LFIN."

The Performance Graph shall not be deemed incorporated by reference by any
general statement incorporating this Proxy Statement into any filing under the
Securities Act or under the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under the Securities Act or the Exchange Act.

OTHER INFORMATION ABOUT THE ANNUAL MEETING

OTHER MATTERS COMING BEFORE THE MEETING

As of the date of this Proxy Statement, the Company knows of no business to
come before the Annual Meeting other than that referred to above. Our Bylaws and
rules of conduct for the Annual Meeting prohibit the introduction of substantive
matters not previously presented to the Stockholders in a Proxy Statement. As to
other business, such as procedural matters, that may come before the Annual
Meeting, the person or persons holding proxies will vote those proxies in the
manner they believe to be in the best interests of the Company and its
stockholders.

STOCKHOLDER PROPOSALS FOR THE 2004 ANNUAL MEETING

In connection with the Company's next annual meeting, stockholder proposals
which are not submitted for inclusion in the Company's proxy materials pursuant
to Rule 14a-8 under the Exchange Act may be brought before an annual meeting
pursuant to Article II, Section 3 of the Company's Bylaws, which provides that
business at an annual meeting of stockholders must be (a) properly brought
before the meeting by or at the direction of the Board of Directors, or (b)
otherwise properly brought before the meeting by a stockholder. For business to
be properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Company. To be timely, a stockholder's notice must be delivered to, or mailed
and received at, the principal executive offices of the Company not less than 45
days or more than 90 days prior to the annual meeting; provided however, that in
the event that less than 60 days notice of the date of the meeting is given to
stockholders or prior public disclosure of the date of the meeting is made,
notice by the stockholder to be timely must be received not later than the close
of business on the 15th day following the day on which such notice of the date
of the annual meeting was mailed or such public disclosure was made. Such
stockholder's notice is required to set forth as to each matter the stockholder
proposes to bring before an annual meeting certain information specified in the
Bylaws.

Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which currently is scheduled to be held in May 2004, must be
received at the principal executive offices of the Company, 3601 N.W. 63rd
Street, Oklahoma City, Oklahoma 73116, Attention: Richard L. Park, no later than
December 11, 2003.

ADDITIONAL INFORMATION

The Company will bear the cost of soliciting proxies. Officers and regular
employees may solicit proxies by further mailings, personal conversations, or by
telephone, facsimile or other electronic transmission. They will do so without
compensation other than their regular compensation. The Company will, upon
request, reimburse brokerage firms and others for their reasonable expenses in
forwarding solicitation material to the beneficial owners of stock.

The Company will report the voting results of the Annual Meeting in our
quarterly report on Form 10-Q for the period ended June 30, 2003, which we
expect to file with the SEC in August 2003.

A copy of the Company's Annual Report to Stockholders, which includes a
copy of the Company's Annual Report to Stockholders on Form 10-K for the year
ended December 31, 2002,

accompanies this Proxy Statement. Such annual reports are not part of the proxy
solicitation materials.

OUR ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, FOR THE YEAR ENDED DECEMBER 31, 2002, WHEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WILL BE FURNISHED WITHOUT CHARGE TO ANY
STOCKHOLDER UPON REQUEST TO MR. RICHARD L. PARK, CHIEF FINANCIAL OFFICER, LOCAL
FINANCIAL CORPORATION, 3601 N.W. 63RD STREET, OKLAHOMA CITY, OKLAHOMA 73116.
STOCKHOLDERS REQUESTING EXHIBITS TO THE FORM 10-K WILL BE PROVIDED THE SAME UPON
PAYMENT OF REPRODUCTION EXPENSES.

By Order of the Board of Directors

Alan L. Pollock
Secretary
April 11, 2003

ADDENDUM A

LOCAL FINANCIAL CORPORATION
AUDIT AND COMPLIANCE COMMITTEE
CHARTER

The Board of Directors of Local Financial Corporation (the "Company") has
constituted and established an Audit and Compliance Committee (the "Committee")
with authority, responsibility, and specific duties as described in this Audit
and Compliance Committee Charter.

A. COMPOSITION

The Committee shall consist of three or more directors, each of whom is
"independent" as such term is defined in the Sarbanes-Oxley Act of 2002
(the "Act") and regulations promulgated thereunder and under the rules of
the NASDAQ National Market.

Each director shall be free from any relationship that, in the opinion of
the Board of Directors, as evidenced by its annual selection of such
Committee members, would interfere with the exercise of independent
judgment as a Committee member. Each Committee member shall be able to read
and understand financial statements (including the company's balance sheet,
income statement and cash flow statement). At least one Committee member
shall have past employment experience in finance or accounting, requisite
professional certification in accounting, or other comparable experience
resulting in financial sophistication (including having been a chief
executive officer, chief financial officer or other senior officer with
financial oversight responsibilities) such that he or she meets the
definition of a "financial expert" as such term is defined in regulations
issued by the Securities and Exchange Commission (the "SEC").

These requirements are intended to satisfy the Act and the NASDAQ listing
requirements relating to the composition of audit committees, and shall be
construed accordingly.

B. MISSION STATEMENT AND PRINCIPAL FUNCTIONS

The Committee shall have access to all records of the Company and shall
have and may exercise such powers as are appropriate to its purpose. The
Committee shall perform the following functions:

(1) Understand the accounting policies used by the Company for
financial reporting and tax purposes and approve their application; it
shall also consider any significant changes in accounting policies
that are proposed by management or required by regulatory or
professional authorities.

(2) Review the Company's audited financial statements and related
footnotes and the "Management's Discussion and Analysis"
portion of the annual report on Form 10-K prior to the filing
of such report, and recommend to the Board of Directors
whether such financial statements shall be included in the
Company's annual report on Form 10-K, based upon the
Committee's review and discussions with its independent
public accounting firm.

A-1

(3) Review the Company's unaudited financial statements and related
footnotes and the "Management Discussion and Analysis" portion of the
Company's Form 10-Q for each interim quarter and ensure that the
independent public accounting firm also reviews the Company's interim
financial statements before the Company files its quarterly report on
Form 10-Q with the SEC.

(4) Study the format and timeliness of financial reports presented to the
public or used internally and, when indicated, recommend changes for
appropriate consideration by management.

(5) Meet with the Company's legal counsel to review legal matters that may
have a significant impact on the Company or its financial reports.

(6) Ensure that management has been diligent and prudent in establishing
accounting provisions for probable losses or doubtful values and in
making appropriate disclosures of significant financial conditions or
events.

(7) Review press releases submitted by management in connection with the
release of quarterly, annual, or special financial statements. In
respect thereto, recommend to the Chairman of the Board any changes
that appear necessary to conform releases with appropriate
professional practice.

(8) Review and reassess the adequacy of this Charter annually.

INDEPENDENT PUBLIC ACCOUNTANTS:

(9) Be directly responsible for the appointment and approval, compensation
and oversight of the audit work of an independent public accounting
firm employed for the purpose of preparing or issuing an audit report
with respect to the Company; such independent public accounting firm
shall be duly registered with the Public Accounting Oversight Board
following its establishment (all references herein to a registered
public accounting firm shall mean an independent public accounting
firm prior to the establishment of the Public Accounting Oversight
Board and a registered public accounting firm following the
establishment of the Public Accounting Oversight Board); and such
registered public accounting firm shall be instructed to report
directly to the Committee.

(10) Approve in advance any non-audit service permitted by the Act,
including tax services, that its registered public accounting firm
renders to the Company, unless such prior approval may be waived
because of permitted exceptions under the Act.

(11) To the extent required by applicable regulations, disclose in periodic
reports filed by the Company approval by the Committee of allowable
non-audit services to be performed for the Company by the registered
public accounting firm performing the Company's audit.

(12) Delegate to one or more members of the Committee the
authority to grant pre-approvals for auditing and allowable
non-auditing services, which decision shall be presented to
the full Committee at its next scheduled meeting for
ratification.

A-2

(13) Receive a timely report from its registered public accounting firm
performing the audit of the Company, which details: (1) all critical
accounting policies and practices to be used in the audit; (2) all
alternate treatment of financial information within generally accepted
accounting principles that have been discussed with management
officials of the Company, ramifications of the use of such alternative
disclosure and the treatment preferred by the registered public
accounting firm; and (3) other material written communications between
the registered public accounting firm and the management of the
Company, including, but not limited to, any management letter or
scheduled or unadjusted differences.

(14) Ensure that the registered public accounting firm submits to the
Committee written disclosures and the letter from the registered
public accounting firm required by Independence Standards Board
Standard No. 1 [Independence Discussions with Audit Committees], and
discuss with the registered public accounting firm's their
independence.

(15) Discuss with the registered public accounting firm the matters
required to be discussed by SAS 61 [Communication with Audit
Committees] and SAS 90 [Audit Committee Communications].

(16) Engage independent counsel and other advisers, as the Committee may
determine in its sole discretion to be necessary, to carry out the
Committee's duties.

(17) Submit to the Chief Financial Officer of the Company both an annual
budget and invoices to fund appropriate compensation to the registered
public accounting firm employed by the Company for the purpose of
rendering or issuing an audit report and for compensation of others
employed by the Committee.

(18) Obtain from the registered public accounting firm, at least annually,
a formal written statement delineating all relationships between the
registered public accounting firm and the Company, and at least
annually discuss with the registered public accounting firm any
relationship or services which may impact the registered public
accounting firm's objectivity or independence, and take appropriate
actions to ensure such independence.

INTERNAL AUDIT DEPARTMENT:

(19) Cause to be maintained an appropriate internal audit program covering
the Company and all its subsidiaries by internal auditors who report
to the Committee and the Board of Directors.

(20) Review and approve the audit plan and budget of the Internal Audit
Department which shall report at least annually to the Committee
regarding the staffing plans, financial budget and audit schedules and
the adequacy thereof.

(21) Act upon management's recommendation in regard to the selection of
and/or the dismissal of the Director of Internal Audit.

(22) Review the scope and coordination efforts of the joint
internal/external audit program with both internal auditors and the
registered public accounting firm.

A-3

(23) Review reports of any material defalcations and other reportable
incidents related to the financial statements or financial reporting
of Local Oklahoma Bank, NA (the "Bank") and supervise and direct any
special projects or investigations considered necessary by the
Committee.

(24) Review reports of internal auditors and examinations made by
regulatory agencies and management's response to them, evaluate the
reports in regard to control and/or compliance implications and
determine whether appropriate corrective action has been implemented.

REGULATORY COMPLIANCE:

(25) Cause to be maintained an appropriate regulatory compliance program
covering the Company and its subsidiaries to aid compliance with the
laws and regulations applicable to financial institutions.

(26) Review reports of the compliance officer covering the scope and
adequacy of the compliance program, the degree of compliance and
cooperation, and the implementation of corrective actions (if
necessary or appropriate).

(27) Receive reports on the Bank's compliance with Section 112 of the
Federal Deposit Insurance Corporation Improvement Act and review the
basis for the reports issued under the rule with management, the
Internal Audit Department and the registered public accounting firm.

INTERNAL CONTROL:

(28) Review periodically the scope and implications of the Bank's internal
financial procedures and consider their adequacy.

(29) Maintain direct access to the senior bank staff. If useful, require
that studies be initiated on subjects of special interest to the
Committee.

(30) Review the comments on internal control submitted by the internal
auditors and the registered public accounting firm to ensure that
appropriate suggestions for improvement are promptly considered for
insertion into the Bank's internal financial procedure.

(31) Establish procedures for the confidential, anonymous submission by
employees of the Company of concerns regarding questionable accounting
or auditing matters.

LOAN REVIEW:

(32) Cause to be maintained an appropriate loan review program for the
Bank.

(33) Review reports of the loan review officer covering the scope and
adequacy of the loan review program, compliance with applicable laws,
regulations and Bank policy, and the implementation of corrective
actions (if necessary or appropriate).

A-4

REGULATORY EXAMINERS

(34) Meet with representatives of the applicable regulatory examiners of
the institution and discuss matters relating to their review and
supervision of the organization.

(35) Ensure management has taken appropriate corrective action regarding
any significant regulatory matters reported by the examiners.

C. MEETINGS

Meetings of the Committee will be held at least quarterly and such other
times as shall be required by the Chairman of the Board, or by a majority of the
members of the Committee. All meetings of the Committee shall be held pursuant
to the Bylaws of the Company with regard to notice and waiver thereof. Written
minutes pertaining to each meeting shall be filed with the Secretary and an oral
report shall be presented by the Committee at each Board meeting.

At the invitation of the Chairman of the Committee, the meetings shall be
attended by the Chief Executive Officer, the Chief Financial Officer, the
representatives of the registered public accounting firm, and such other persons
whose attendance is appropriate to the matters under consideration.

Amended by Committee
as of December 4, 2002

Approved by Board
as of December 4, 2002

A-5

LOCAL FINANCIAL CORPORATION
3601 N.W. 63RD STREET
OKLAHOMA CITY, OKLAHOMA 73116

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Edward A. Townsend and Richard L. Park as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of common
stock of Local Financial Corporation held of record by the undersigned on March
31, 2003, at the Annual Meeting of Shareholders to be held on May 28, 2003, or
any adjournment thereof.

(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE) SEE REVERSE
SIDE

ANNUAL MEETING OF SHAREHOLDERS OF

LOCAL FINANCIAL CORPORATION
MAY 28, 2003

Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.

* Please detach and mail in the envelope provided. *

-----------------------------------------------------------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
-----------------------------------------------------------------------------------------------------------------------------------

FOR AGAINST ABSTAIN
1. Election of Directors: 2.RATIFICATION OF KPMG LLPAS INDEPENDENT [ ] [ ] [ ]
NOMINEES: AUDITORS FOR 2003
[ ] FOR ALL NOMINEES [ ] Joseph A. Leone
[ ] Jan A. Norton
[ ] WITHHOLD AUTHORITY
FOR ALL NOMINEES THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED
IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
[ ] FOR ALL EXCEPT SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
(See instructions below) WILL BE VOTED FOR EACH OF THE DIRECTOR NOMINEES
AND FOR RATIFICATION OF THE INDEPENDENT AUDITORS.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING, OR ANY ADJOURNMENT
THEREOF.

---------------------------------------------------------
INSTRUCTION: To withhold authority to vote for any
individual nominee(s), mark "FOR ALL EXCEPT"
and fill in the circle next to each nominee
you wish to withhold, as shown here:
---------------------------------------------------------

Signature of Shareholder Date: Signature of Shareholder Date:
---------------------- ------------- ---------------------- -------------
NOTE: This proxy must be signed exactly as the name appears hereon. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer
is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.

ANNUAL MEETING OF SHAREHOLDERS OF

LOCAL FINANCIAL CORPORATION
MAY 28, 2003

-------------------------
PROXY VOTING INSTRUCTIONS
-------------------------

MAIL - Date, sign and mail your proxy card in the
envelope provided as soon as possible. ------------------------------------------
- OR - COMPANY NUMBER
TELEPHONE - Call toll-free 1-800-PROXIES from ------------------------------------------
any touch-tone telephone and follow the instruc- ACCOUNT NUMBER
tions. Have your control number and proxy card ------------------------------------------
available when you call. CONTROL NUMBER
- OR - ------------------------------------------
INTERNET - Access "WWW.VOTEPROXY.COM" and
follow the on-screen instructions. Have your control
number available when you access the web page.

* Please detach and mail in the envelope provided. *

---------------------------------------------------------
To change the address on your account, please check [ ]
the box at right and indicate your new address in the
address space above. Please note that changes to the
registered name(s) on the account may not be submitted
via this method.
---------------------------------------------------------