<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
Northway Financial, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid:
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[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 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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<PAGE>
[GRAPHIC OMITTED] NORTHWAY FINANCIAL, INC.
April 17, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Northway Financial, Inc., to be held on Tuesday, May 19, 1998 at 2:00 p.m. at
The Town and Country Motor Inn, Route 2, Shelburne, New Hampshire.
At the Annual Meeting, you will be asked to consider and act upon the
election of four nominees to the Board of Directors of Northway Financial, Inc.
I, along with the other members of the Board of Directors, look forward
to greeting you personally at the Annual Meeting. However, whether or not you
plan to attend personally and regardless of the number of shares you own, it is
important that your shares be represented.
You are urged to promptly sign, date and mail the enclosed proxy in the
postage-paid envelope provided for your convenience.
Very truly yours,
/s/ William J. Woodward
William J. Woodward
Chairman of the Board
9 Main Street, Berlin, New Hampshire 03570/Telephone 603-752-1171
<PAGE>
NORTHWAY FINANCIAL, INC.
9 MAIN STREET
BERLIN, NEW HAMPSHIRE 03570
TELEPHONE 603-752-1171
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MAY 19, 1998
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Stockholders of
Northway Financial, Inc. will be held on Tuesday, May 19, 1998 at 2:00 p.m. at
The Town and Country Motor Inn, Route 2, Shelburne, New Hampshire for the
following purposes:
(1) To elect four (4) directors to serve until the 2001 Annual
Meeting of Stockholders and until their successors are elected
and qualified.
(2) To transact such other business as may properly come before the
meeting and any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 31, 1998
as the record date for determining stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournments or postponements thereof. Only
holders of Common Stock of record at the close of business on that date will be
entitled to notice of and to vote at the Annual Meeting and any adjournments or
postponements thereof.
By Order of the Board of Directors
Paul G. Campagna
Clerk
Berlin, New Hampshire
April 17, 1998
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE>
NORTHWAY FINANCIAL, INC.
9 MAIN STREET
BERLIN, NEW HAMPSHIRE 03570
TELEPHONE 603-752-1171
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MAY 19, 1998
This Proxy Statement and accompanying form of proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of
Northway Financial, Inc. (the "Company") for use at the Annual Meeting of
Stockholders (the "Meeting") to be held at 2:00 p.m. on May 19, 1998, at The
Town and Country Motor Inn, Route 2, Shelburne, New Hampshire. This proxy
statement and accompanying form of proxy are being mailed to stockholders of the
Company on or about April 17, 1998 in connection with the solicitation.
At the close of business on March 31, 1998, there were outstanding and
entitled to vote 1,731,969 shares of Northway Financial, Inc. common stock, with
a par value of $1.00 per share.
Each share will be entitled to one vote upon each matter submitted at
the Meeting. Only stockholders of record at the close of business on March 31,
1998 shall be entitled to vote at the meeting.
The proxies of holders of common stock are being solicited by the Board
of Directors. Stockholders are requested to complete, date, sign, and promptly
return the accompanying proxy card in the enclosed envelope. Shares represented
by a properly executed proxy received prior to the vote at the Meeting and not
revoked will be voted at the Meeting as directed in the proxy. IF A PROXY IS
SUBMITTED AND NO DIRECTIONS ARE GIVEN, THE PROXY WILL BE VOTED "FOR" THE
APPROVAL OF THE PROPOSALS TO BE CONSIDERED AT THE MEETING.
A holder of record of Common Stock may revoke a proxy by filing an
instrument of revocation with Paul G. Campagna, Clerk, Northway Financial, Inc.,
9 Main Street, Berlin, New Hampshire 03570. Any such holder may also revoke a
proxy by filing a duly executed proxy bearing a later date, or by appearing at
the Meeting in person, notifying the Clerk, and voting by ballot at the Meeting.
Any stockholder of record attending the Meeting may vote in person whether or
not a proxy has been previously given, but the mere presence (without notifying
the Clerk) of a stockholder at the Meeting will not constitute revocation of a
previously given proxy.
The Company will bear the cost of soliciting proxies from the
stockholders, including mailing costs, and will pay all printing costs in
connection with this Proxy Statement. In addition to the use of the mails,
proxies may be solicited by the directors, officers, and certain employees of
the Company, and by personal interview, telephone and facsimile. Such directors,
officers and employees will not receive additional compensation for such
solicitation but may be reimbursed for reasonable out-of-pocket expenses
incurred in connection therewith. The Company may also make arrangements with
brokerage houses and other custodians, nominees, and fiduciaries for the
forwarding of solicitation material to the beneficial owners of its common
stock. The Company may reimburse such custodians, nominees, and fiduciaries for
reasonable out-of-pocket expenses incurred in connection therewith.
<PAGE>
The presence in person or by proxy of the holders of a majority of the
issued and outstanding shares entitled to vote at the Meeting is required to
constitute a quorum. Abstentions and "broker non-votes" (as defined below) will
be counted as present for purposes of determining the presence or absence of a
quorum for the transaction of business at the Meeting. A "broker non-vote" is a
proxy from a broker or other nominee indicating that such person has not
received instructions from the beneficial owner or other person entitled to vote
the shares which are the subject of the proxy on a particular matter with
respect to which the broker or other nominee does not have discretionary voting
power.
The affirmative vote of a plurality of the votes cast is required for
the election of directors. Abstentions and broker non-votes will not be counted
as "votes cast" for purposes of electing directors and, therefore, will not
affect the election of the directors.
The Company is a New Hampshire corporation formed in 1997 for the
purpose of effecting the reorganization of The Berlin City Bank, a New
Hampshire-chartered bank based in Berlin, New Hampshire ("BCB"), into a holding
company structure and to effect a merger with Pemi Bancorp, Inc., a New
Hampshire bank holding company ("PEMI"), with and into the Company
(collectively, the "Merger"). The Merger became effective on September 30, 1997.
On that date, each of BCB and Pemigewasset National Bank, a wholly owned
national bank subsidiary of PEMI based in Plymouth, New Hampshire ("PNB"),
became a wholly owned subsidiary of the Company.
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES AND DIRECTORS CONTINUING IN OFFICE
The Company's Board of Directors is currently composed of ten members.
The Company's Amended and Restated Articles of Incorporation provide that
directors are to be divided into three classes, all nearly equal as possible,
with one class to be elected annually for a term of three years.
At the Meeting, four directors will be elected to serve until the 2001
Annual Meeting and until their successors are duly elected and qualified. The
Board of Directors has nominated William J. Woodward, Fletcher W. Adams, Arnold
P. Hanson, Jr., and John H. Noyes, each of whom is a current member of the Board
of Directors. It is the intention of the persons named in the accompanying form
of proxy or their substitutes to vote for the election of the nominees listed
below unless instructed to the contrary. The Board of Directors believes that
all of the nominees will be available and able to serve as directors, but if for
any reason any of the nominees named above should not be available or able to
serve, the proxies may exercise discretionary authority to vote for one or more
substitutes as the Board of Directors may recommend, or in the alternative, the
Board of Directors may, if permitted by law and the Amended and Restated
Articles of Incorporation and Bylaws, amend the Bylaws if necessary and reduce
the size of the Board to eliminate the resulting vacancy.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL OF THE
NOMINEES FOR DIRECTOR OF THE COMPANY.
<PAGE>
INFORMATION CONCERNING DIRECTORS AND NOMINEES
The following table sets forth the name and ages, standing committee
memberships and other positions held with the Company, term of office and period
served, business experience, and certain other information, as of March 31,
1998, with respect to each nominee and for each director continuing in office.
The information was provided by the persons named.
Shares of
Year Common Stock Percent
First Term Beneficially of Common
Elected To Owned at Stock
Name Age Director Expire Mar. 31, 1998 Ownership
- --------------------------------------------------------------------------------
NOMINEES OF THE BOARD
Woodward, William J. 52 1997 1998 65,718 3.79%
President, Chief Executive
Officer, Chairman of the
Board, Northway Financial,
Inc.; President, Chief
Executive Officer, Chairman
of the Board,
The Berlin City Bank
Adams, Fletcher W. 61 1997 1998 60,354(1) 3.48%
Vice-Chairman of the Board,
Northway Financial, Inc.;
President and Chief
Executive Officer,
Pemigewasset National Bank
Noyes, John H. 51 1997 1998 11,825 ****
President and Treasurer,
Noyes Insurance Agency, Inc.;
President, Central Square
Insurance, Inc.
Hanson, Jr., Arnold P. 48 1997 1998 30,112(2) 1.74%
President, Isaacson
Structural Steel, Inc.
DIRECTORS CONTINUING IN OFFICE
Kelley, Barry J. 48 1997 1999 33,216(3) 1.92%
President and Owner, White
Mountain Lumber, Co.
Labnon, Randall G. 44 1997 1999 3,072 ****
General Manager and Director;
Town & Country Motor Inn
Morse, Andrew L. 55 1997 1999 1,041 ****
Owner, Wayne's Market;
Owner, Woodstock Cheese
Shoppe
<PAGE>
Shares of
Year Common Stock Percent
First Term Beneficially of Common
Elected To Owned at Stock
Name Age Director Expire Mar. 31, 1998 Ownership
- --------------------------------------------------------------------------------
DIRECTORS CONTINUING IN OFFICE
Bornstein, Peter H. 52 1997 2000 3,632(4) ****
Attorney, Partner and
President, Bergeron
Hanson, Bornstein & Carlson
Clifford, Jr., Charles, H. 62 1997 2000 2,500 ****
President, Clifford-Nicol
Printing
Morris, John D. 67 1997 2000 9,856 ****
Formerly, President, Morris
Building Center
- ----------
****Owns less than 1% of the Company's outstanding common stock.
(1) Includes 4,169 shares owned jointly with spouse, 1,771 shares owned by his
daughter, 1,771 shares owned by his son, and 6,540 shares owned by an estate
for which Mr. Adams serves as trustee.
(2) Includes 30,000 shares held in a trust for which Mr. Hanson serves as
trustee.
(3) Includes 27,648 shares owned jointly with spouse.
(4) Stock is owned jointly with spouse.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Following the Merger, the Board of Directors of the Company held three (3)
meetings during the calendar year ended December 31, 1997.
Directors of the Company are paid an annual fee of $8,000.00, and directors
who also serve on the Executive Committee receive an additional annual fee of
$12,000.00. Directors who are officers of the Company do not receive any of
these fees.
The following sets forth the members of each of the standing committees of
the Board of Directors together with a brief description of the function of each
such committee.
1997 EXECUTIVE COMMITTEE
MEMBERS: William J. Woodward, Chairman; Fletcher W. Adams; John D. Morris;
and John H. Noyes
FUNCTION: The Executive Committee generally has the power to exercise the
power of the full Board during intervals between meetings of the
Board.
NUMBER OF
MEETINGS: This Committee meets on a weekly basis.
<PAGE>
1997 AUDIT AND COMPLIANCE COMMITTEE
MEMBERS: Arnold Hanson, Jr., Chairman; Peter Bornstein; Charles Clifford,
Jr.; Barry Kelley; and Andrew Morse
FUNCTION: This Committee oversees the activities of the Company's Internal
Auditor, its Independent Certified Public Accounting Firm, and
activities of other accounting firms used on a project basis. This
Committee also reviews the results of each regulatory examination.
The Committee also provides oversight for all compliance activities
of the Company, including those of the compliance officers
functioning at subsidiary banks.
NUMBER OF
MEETINGS: This Committee met one (1) time during the 1997 fiscal year.
1997 HUMAN RESOURCES AND COMPENSATION COMMITTEE
MEMBERS: John Morris, Chairman; Peter Bornstein; Charles Clifford, Jr.;
Randall Labnon; and John Noyes
FUNCTION: This Committee conducts annual and periodic reviews of director,
officer, and employee compensation in order to ensure that the
Company has the programs necessary to attract and retain competent
professionals at all levels. The Committee's recommendations must be
approved by the full Board of Directors.
NUMBER OF
MEETINGS: This Committee met one (1) time during the 1997 fiscal year.
1997 NOMINATING COMMITTEE
MEMBERS: The Executive Committee serves as the Nominating Committee of the
Company.
FUNCTION: This Committee selects nominees for election as directors of the
Company. This Committee nominated the persons standing for election
at the 1998 Annual Meeting.
NUMBER OF
MEETINGS: The Executive Committee meets weekly; and, as appropriate, discusses
nominations.
<PAGE>
EXECUTIVE OFFICERS
The following sets forth information regarding the executive officers of the
Company, the position or office held by each of them, and the date from which
they have continually served as executive officers.
Executive
Officer
Name Age Since
- --------------------------------------------------------------------------------
William J. Woodward 52 1997
Chairman, President, and Chief Executive Officer
Fletcher W. Adams 61 1997
Vice Chairman
Donald R. Hatt 49 1997
Senior Executive Vice President and Chief Operating Officer
David J. O'Connor 51 1997
Executive Vice President and Chief Financial Officer
Paul G. Campagna 58 1997
Clerk
William J. Woodward has served as Chairman, President and Chief Executive
Officer of the Company since 1997. In addition, he has served as President and
Chief Executive Officer of BCB since 1994; and has served as Chairman of the
Board of Directors of BCB since 1989. He became a Director of BCB in 1975.
Fletcher W. Adams has served as Vice Chairman of the Board of Directors of
the Company since 1997. Prior to the Merger, Mr. Adams served as President and
Chief Executive Officer of PEMI beginning in 1990.
Also, since 1990, he has served as President and Chief Executive Officer of PNB.
He joined PNB as Executive Vice President in June 1984, and has served as a
director of PNB since 1973.
Donald R. Hatt has served as Senior Executive Vice President and Chief
Operating Officer of the Company since November 1997. Prior to joining the
Company he served as a financial consultant for Smith Barney, Greensboro, North
Carolina from January 1996 to October 1997. From January 1990 to March 1995, he
served as President and Chief Executive Officer of Great Bay Bankshares, Dover,
New Hampshire.
David J. O'Connor has served as Executive Vice President of the Company
since 1997. He has served as Executive Vice President of BCB since 1992 and
Chief Financial Officer since 1989 and is responsible for the Company's
financial operations.
Paul G. Campagna has served as the Clerk of the Company since 1997. He has
served as the Clerk of BCB since 1970 and Senior Vice President of BCB since
1982. He is responsible for community reinvestment policies and the Company's
loan review process. He has been with BCB since 1968.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 31, 1998, the beneficial
ownership of common stock by (i) each of the executive officers named under
"Executive Compensation" below (other than Messrs. Woodward and Adams), and (ii)
all directors and executive officers as a group. See "Information Concerning
Directors and Nominees" above for the beneficial ownership of common stock by
Mr. Woodward, Mr. Adams, and other directors of the Company. As of March 31,
1998, no person owned beneficially more than 5% of the Company's outstanding
common stock.
Shares of Common Percent of Shares
Stock Beneficially of Common Stock
Name Owned Ownership
- --------------------------------------------------------------------------------
David J. O'Connor 576 ****
Directors and executive officers
as a group (13 persons) 225,450 13.02%
****Owns less than 1% of the Company's outstanding common stock.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for services rendered in all capacities to the Company
during the fiscal years ended December 31, 1997, 1996 and 1995, of those persons
who were, at December 31, 1997: (i) the chief executive officer of the Company
and (ii) the other executive officers of the Company whose total annual salary
and bonus exceeded $100,000 (collectively, the "Named Executive Officers").
Other Annual
Name and Principal Position Year Salary Bonus Compensation
- --------------------------------------------------------------------------------
William J. Woodward(1) 1997 $ 43,343 $23,996 $112,500
Chairman, President and Chief 1996 -- -- 156,000
Executive Officer 1995 -- -- 160,000
Fletcher W. Adams(2) 1997 105,021 17,525 --
Vice Chairman 1996 97,000 1,965 --
1995 93,600 1,830 --
David J. O'Connor 1997 106,540 5,408 --
Executive Vice President and 1996 107,667 4,278 --
Chief Financial Officer 1995 101,430 8,320 --
(1)In June 1994, Mr. Woodward assumed executive management responsibility
with respect to BCB upon the resignation of BCB's President and Chief Executive
Officer pending possible selection of a successor. Through the date of the
Merger, Mr. Woodward was not a salaried employee of BCB and did not receive any
pension, insurance or other benefits. Mr. Woodward received the fees set forth
above in lieu of salary and benefits through the date of the Merger.
In connection with the Merger, Mr. Woodward entered into an employment
agreement with the Company and BCB. See "Employment Contracts" below. For 1997,
$43,343 and $23,996 represent the amounts paid to Mr. Woodward in salary and
bonus, respectively, pursuant to such agreement.
(2)The totals for Mr. Adams include his base salary together with monthly
fees received for attendance at meetings of the Board of Directors of PEMI and
PNB. In connection with the Merger, Mr. Adams entered into an employment
agreement with the Company and PNB. See "Employment Contracts" below. For 1997,
$31,500 and $17,525 represent the amounts paid to Mr. Adams in salary and bonus,
respectively, pursuant to such agreement.
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock (assuming $100 was invested on October 1, 1997, the date of the
Merger, and all dividends were reinvested) against (i) the cumulative total
return of the S&P Composite 500 Stock Index, and (ii) the SNL New England Bank
Index ("SNL").
[STOCK PRICE PERFORMANCE GRAPH]
10/31/97 12/31/97
-------- --------
S&P 500 $100.00 $101.99
SNL 100.00 108.21
NWFI 100.00 105.83
EMPLOYMENT CONTRACTS
In connection with the Merger, Messrs. Woodward and Adams entered into
employment agreements with the Company.
Pursuant to the employment agreements, Messrs. Woodward and Adams will
provide ongoing services to the Company on a full-time basis through the third
anniversary of the date of the Merger (the "Effective Time"). The employment
agreements will provide for base salaries for Messrs. Woodward and Adams of
$179,000 and $126,000, respectively, subject to increase from time to time in
the discretion of the Company Board. The employment agreements also provide that
each of Messrs. Woodward and Adams will be entitled to participate in any
incentive or bonus program established by the Company Board, as well as other
employee benefit plans which the Company may from time to time have in effect
for all or most of its senior executives.
The employment agreements contain confidentiality and non-compete
provisions. If either Mr. Woodward or Mr. Adams is terminated from full-time
employment with the Company without cause prior to the third anniversary of the
Effective Time, then he will be entitled to receive group health benefits;
provided, that in the event such executive commences any employment or
self-employment during the period during which he is entitled to receive the
termination payments, the remainder of such payments, for the period from the
commencement of such employment or self-employment to the end of the termination
period, will be reduced by one-half of the salary such executive receives from
such employment or self-employment. In addition, if such executive receives
benefits from such employment or self-employment comparable to those benefits
provided by the Company, the continuation of group health benefits shall cease.
The employment agreements also provide for termination benefits if the
executives' employment with the Company is terminated under certain
circumstances following a "change of control." If within 18 months following a
change of control, Mr. Woodward's or Mr. Adams' employment is terminated by the
Company or by such executive following the occurrence of certain adverse actions
taken with respect to such executive's employment, or if such executive's
employment is terminated without cause, the Company must, in lieu of any other
termination payments described above, pay to such executive (or such executive's
estate, if applicable) a lump-sum payment equal to 2.99 times such executive's
base salary preceding the change of control.
<PAGE>
CERTAIN BENEFITS
The Company does not provide benefits apart from those provided by its
subsidiaries. BCB provides no personal benefits to its principal officers and
directors other than medical, life, accidental death, disability, salary
continuation insurance plans and a pension plan which are provided to all of
BCB's officers and employees. The pension plan is a non-contributory defined
benefit plan administered by the Retirement Committee, consisting of Executive
Vice President David J. O'Connor and Senior Vice President, Paul G. Campagna,
who have been designated as Trustees, and The Pentad Corporation, as the
consulting actuaries. All employees join BCB's pension plan upon reaching age
twenty-one and the completion of at least 1,000 hours of service in a
consecutive twelve-month period. 100% vesting normally occurs after 5 years, and
age 65 is the normal retirement age. Early retirement may be taken, however,
after age 55.
The following table illustrates estimated annual pension benefits for
retirement at age 65 under the most advantageous plan provisions available for
the various levels of compensation and years of service. The figures in this
table are calculated on the basis of a straight-life annuity and upon certain
other assumptions regarding social security benefits and compensation trends.
Amounts shown would be subject to offset by the primary amount of social
security benefits.
AVERAGE
COMPENSATION YEARS OF SERVICE
- ---------------------------------------------------------------------
10 15 20 25
- ---------------------------------------------------------------------
$40,000 8,000 12,000 16,000 20,000
$55,000 11,000 16,500 22,000 27,500
$70,000 14,000 21,000 28,000 35,000
$85,000 17,000 25,500 34,000 42,500
$100,000 20,000 30,000 40,000 50,000
$115,000 23,000 34,500 46,000 57,500
$130,000 26,000 39,000 52,000 65,000
$145,000 29,000 43,500 58,000 72,500
$160,000 32,000 48,000 64,000 80,000
The compensation covered by the plan is the annual rate of pay as of January
1, 1998. The compensation covered by the plan is the above listed cash
compensation less any bonuses. David J. O'Connor's compensation covered by the
plan is $117,500.00.
The number of credit years of service at December 31, 1997 and the estimated
credited years of service at age 65 for purposes of the Retirement Plan for
David O'Connor are 8 and 23 years, respectively.
PNB has a qualified pension plan covering substantially all of its employees
meeting certain eligibility requirements. Benefits paid under this plan are
based on fifty percent (50%) of monthly compensation reduced by 1/20 for each
year of service less than twenty (20) years.
REPORT OF THE HUMAN RESOURCES AND COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION
GENERAL POLICIES
The Human Resources and Compensation Committee (the "Committee") is composed
of five independent, non-employee members of the Company's Board of Directors.
The Committee's responsibility is to set policy and oversee the administration
of the Company's compensation and benefits. Working with an outside bank
compensation consultant, the Committee recommends the approval of the salary
program for the entire organization. It also oversees the compensation actions
for the Chief Executive Officer ("CEO") and certain other senior officers.
The base salary of these senior executive officers is set at an amount
within an established salary range that reflects the executive's position,
duties and level of responsibility. The salary range consists of minimum and
maximum levels distributed around an average of base salaries paid to executives
who hold substantially similar positions within a selected peer group. Any
bonuses are designed to reward executives for performance and are based
primarily on the Company's financial results.
CEO COMPENSATION
In connection with the Merger and the execution of the employment agreements
described above, the Company engaged a bank compensation consultant to act as
its advisor in the matter of executive compensation. This consultant specializes
in compensation matters for New England financial institutions, and maintains an
extensive data base for banks in various asset size groups.
Using a variety of established surveys concerning bank salaries, the
Company's consultant recommended a set of competitive and current salary grades
and ranges for Messrs. Woodward and Adams. In connection with the Merger,
management recommended the structure, which was subsequently approved by the
Board. See "Employment Contracts."
Submitted by members of the Human Resources and Compensation Committee.
John D. Morris, Chairperson
Peter H. Bornstein
Charles H. Clifford, Jr.
Randall G. Labnon
John H. Noyes
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has, during its ordinary course of business, made loans to
directors and officers. Loans are made on substantially the same terms,
including rates and collateral, as those prevailing at the time for comparable
transactions with other persons and do not involve more than normal risk of
collectibility or present other unfavorable features. The Company has had (and
expects to have in the future) banking transactions with directors, officers,
principal stockholders, and their associates on the same terms (including
interest rates and collateral on loans) as those prevailing at the same time for
comparable transactions with others, and do not involve more than the normal
risk of collectibility or present other unfavorable features.
The largest aggregate amount of such extensions of credit to directors,
officers, principal stockholders, and their associates during the period of
January 1, 1997 through December 31, 1997 was $1,632,000. The aggregate amount
owing to the Company from such individuals on December 31, 1997 was $1,632,000,
or 4.35% of stockholders' equity. As mentioned above, these loans were made on
the same terms for comparable transactions with others.
There were no officers or directors whose direct or indirect liability to
the Company exceeded 10% of Stockholders' equity at any time during the year.
The Company has not been a party to any transaction or proposed transaction
during the past two years in which any director, director nominee, executive
officer, or principal stockholder, or any immediate family
thereof has had a direct or indirect material interest.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Shatswell, MacLeod and Company was the Company's independent auditing firm
for 1997. Representatives of Shatswell, MacLeod and Company are expected to be
present at the meeting to respond to stockholders' questions and will have the
opportunity to make a statement if they so desire. The firm of Shatswell,
MacLeod and Company has served as the Company's independent auditing firm since
September 30, 1997.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting the proxies.
MISCELLANEOUS
A copy of the Company's Annual Report to Stockholders, including financial
statements has been mailed to all stockholders of record as of the close of
business on March 31, 1998. Any stockholder who has not received a copy of such
Annual Report or would like to obtain a copy of the Company's Annual Report on
Form 10-K may do so by writing Paul G. Campagna, Clerk c/o Northway Financial,
Inc., 9 Main Street, Berlin, NH 03570. Such Annual Report is not to be treated
as a part of the proxy solicitation material or as having been incorporated
herein by reference.
STOCKHOLDER PROPOSALS
The Company's By-Laws provide that any director nominations and new business
proposals intended to be submitted by stockholders in connection with an Annual
Meeting of Stockholders must be filed, delivered to, or mailed to and received
by, the Company at its principal executive office not less than 75 days nor more
than 120 days prior to the anniversary date of the immediately preceding Annual
Meeting (the "Anniversary Date"); provided, however, that in the event the
Annual Meeting is scheduled to be held on a date more than 30 days before the
Anniversary Date or more than 60 days after the Anniversary Date, a
stockholder's notice shall be timely if delivered to, or mailed to and received
by, the Company at its principal executive office not later than the close of
business on the later of (1) the 75th day prior to the scheduled date of such
Annual Meeting or (2) the 15th day following the day on which public
announcement of the date of such Annual Meeting is first made by the Company. A
copy of the applicable Bylaw provisions may be obtained, without charge, upon
written request to the Clerk of the Company at its principal executive offices
in Berlin, New Hampshire.
In addition to the foregoing, in accordance with the rules of the Securities
and Exchange Commission, any proposal that a stockholder intends to present at
the annual meeting of stockholders in 1999 must be received by the Company by
December 18, 1998 to be eligible for inclusion in the proxy statement and proxy
form relating to such meeting.
By Order of the Board of Directors
Paul G. Campagna
Clerk
Berlin, New Hampshire
April 17, 1998
<PAGE>
PROXY
[Graphic Omitted] NORTHWAY FINANCIAL, INC.
A multi-bank holding company of the Berlin City Bank and
Pemigewasset National Bank
9 Main Street, Berlin, New Hampshire 03570
Proxy for Common Stock
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Paul G. Gampagna and David J. O'Connor,
and each of them, proxies with full power of substitution to vote for and on
behalf of the undersigned at the Annual Meeting of Stockholders of Northway
Financial, Inc. ("Northway"), to be held at the Town & Country Motor Inn, Route
2, Shelburne, New Hampshire, on May 19, 1998, at 2:00 p.m., and at any
adjournment or postponements thereof, hereby granting full power and authority
to act on behalf of the undersigned at said meeting or any adjournment or
postponement therof. The undersigned revokes any proxy previously given in
connection with such meeting and acknowledges receipt of Notice of the Annual
Meeting of Stockholders and Northway's 1997 Annual Report to Stockholders.
- ------------- -------------
SEE REVERSE SEE REVERSE
SIDE CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE SIDE
- ------------- -------------
<PAGE>
Please mark
[X] votes as in
this example.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no instruction is indicated with
respect to Proposal 1 below, the undersigned's votes will be cast "FOR" each
of such matters. PLEASE SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
1. Proposal to elect William J. 2. Such other business as may properly
Woodward, Fletcher W. Adams, Arnold come before the meeting or any
P. Hanson, Jr., and John H. Noyes adjournments or postponements
for three-year terms to continue thereof.
until the 2001 Annual Meeting of
Stockholders, and until the
successor of each is duly elected
and qualified.
FOR WITHHELD
[ ] ALL [ ] FROM ALL
NOMINEES NOMINEES
[ ] _____________________________________
For all nominees except as note above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
For joint accounts, each owner should sign.
Executors, administrators, trustees, corporate
officers, and others acting in a representative
capacity should give full title or authority.
Signature: _____________ Date: ________ Signature: _____________ Date: ________
