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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MECH Financial, Inc
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MECH Financial, Inc
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
MECH FINANCIAL, INC.
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held
APRIL 28, 1999
----------------
To our Shareholders:
The 1999 Annual Meeting of Shareholders of MECH Financial, Inc. will be held
at 10:00 AM Wednesday, April 28, 1999 at the Hartford Club, 46 Prospect
Street, Hartford, Connecticut, for the following purposes:
1. To elect three directors to serve during the ensuing three years and
until their successors are elected and have been qualified.
2. To ratify the appointment of KPMG LLP as the Company's independent
auditors for the year ending December 31, 1999.
3. To transact such other business as may properly come before the meeting.
Only shareholders of record as of the close of business on March 3, 1999 are
entitled to notice of and to vote at the annual meeting.
MECH Financial, Inc. cordially invites all shareholders to attend the
meeting in person. Whether or not you expect to attend the meeting, please
complete, sign and date the enclosed proxy and return it in the envelope
provided.
BY ORDER OF THE BOARD OF DIRECTORS
Lael K. Noel, Secretary
Hartford, Connecticut
March 24, 1999
<PAGE>
MECH FINANCIAL, INC.
100 PEARL STREET
HARTFORD, CONNECTICUT 06103
(860) 293-4000
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
April 28, 1999
Introduction
This Proxy Statement and the enclosed form of proxy is being furnished to
shareholders on or about March 24, 1999 in connection with the solicitation of
proxies by the Board of Directors of MECH Financial, Inc. ("MECH Financial" or
the "Company"), whose subsidiary is Mechanics Savings Bank (the "Bank" or
"MSB").
At the 1999 Annual Meeting, shareholders will be asked to consider and vote
upon two proposals: (1) the election of three directors to serve for a three-
year term and until their successors are elected and have been qualified; and
(2) the ratification of the appointment of KPMG LLP as the Company's
independent auditors for the year ending December 31, 1999. THE BOARD OF
DIRECTORS OF MECH FINANCIAL RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF EACH
OF THE PROPOSALS, AND EACH DIRECTOR INTENDS TO VOTE HIS/HER SHARES IN
ACCORDANCE WITH THAT RECOMMENDATION.
Unless the shareholder gives contrary instructions, the shares represented
by the proxies received will be voted FOR each of the proposals as set forth
herein, and in the discretion of the proxy holders on any other matter that
may properly be brought before the Annual Meeting. To vote using the enclosed
proxy, you should mark the proxy to indicate your vote on each item presented,
sign and date the proxy, and return it in the envelope provided. If the proxy,
properly executed, is returned to MECH Financial in time to be voted at the
Annual Meeting, the shares represented thereby will be voted in accordance
with the instructions given thereon.
MECH Financial will bear the cost of soliciting proxies. In addition to
soliciting proxies by mail, officers and regular employees of MECH Financial
may also solicit proxies personally, by telephone and by telegram. MECH
Financial will reimburse banks, brokerage firms and others holding shares in
their names or in the names of their nominees for their reasonable out-of-
pocket expenses in forwarding proxies and proxy materials to the beneficial
owners of such shares.
Record Date, Outstanding Securities and Vote Required
Only holders of record of MECH Financial common stock, $0.01 par value per
share ("Common Stock"), at the close of business on March 3, 1999 will be
entitled to notice of and to vote at the 1999 Annual Meeting. At the close of
business on February 19, 1999, there were 5,301,065 shares of Common Stock
issued, each of which is entitled to one vote on each proposal. The holders of
a majority of the shares must be present, in person or by proxy, at the Annual
Meeting to constitute a quorum. In certain circumstances, a shareholder will
be considered to be present at the Annual Meeting for quorum purposes, but
will not be deemed to have voted in the election of directors or in connection
with other matters presented for approval at the Annual Meeting. Such
circumstances will exist where a shareholder is present but specifically
abstains from voting, or where shares are represented at a meeting by a proxy
conferring authority to vote on certain matters but not for the election of
directors or on other matters. Under Connecticut law, such abstentions and
non-votes have a neutral effect on the election of management's nominees for
directors and on the approval or disapproval of the ratification of the
appointment of independent auditors. No other class of MECH Financial capital
stock is outstanding or entitled to vote at the Annual Meeting.
2
<PAGE>
A plurality of the votes cast by shares of Common Stock entitled to vote, in
person or by proxy, at the Annual Meeting shall be required to elect directors
if a quorum is present. In the case of shareholder ratification of the
employment of the independent auditors, the action will be approved if votes
cast, in person or by proxy, favoring the action exceed votes cast by
shareholders opposing the action.
Those present at the Annual Meeting may vote by ballot if such persons have
not already voted by proxy or if such persons wish to revoke a proxy. The
Inspectors of Election of the Annual Meeting will collect and count the votes
of those present at the meeting and the votes represented by the proxies
presented.
Revocability of Proxy
You may revoke your proxy at any time prior to its exercise at the Annual
Meeting by executing and delivering to Lael K. Noel, the Secretary of MECH
Financial at 100 Pearl Street, Hartford, Connecticut 06103 either: (i) a
written instrument revoking the proxy; or (ii) a duly executed proxy bearing a
later date. If you are a shareholder of record on March 3, 1999 and attend the
Annual Meeting, you may withdraw your proxy and vote in person at the Annual
Meeting.
Security Ownership of Certain Principal Beneficial Owners
A person is deemed to be the beneficial owner of a security if he or she has
or shares voting power or investment power with respect to the Common Stock or
has the right to acquire such ownership within sixty days. As of the Record
Date, there were no persons or groups (as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934) known to MECH Financial who
beneficially own or may be deemed to beneficially own more than five percent
of the outstanding shares of Common Stock. The Company's Certificate of
Incorporation (the "Certificate") prohibits such more than five percent
ownership until June 25, 1999, except under certain conditions.
ITEM 1. Election Of Directors
The Certificate provides that the Company's Board of Directors shall consist
of not less than seven (7) and not more than fifteen (15) directors as fixed
from time to time by the Board. The number of persons who will serve as
members of the Company's Board of Directors following the Annual Meeting is
eight (8). The Certificate divides the Board into three classes of Directors,
as nearly equal in number as possible, with overlapping terms of three years.
One class is elected annually. These provisions may be amended only by the
affirmative vote of holders of at least 60% of the outstanding voting stock of
the Company. The Bylaws of the Company provide that no Director may be elected
or reelected after attaining the age of 70.
The Company's Board of Directors has nominated Edgar C. Gerwig, John J.
Meehan, and Donald K. Wilson, Jr. for election at the Annual Meeting on April
28, 1999. Messrs. Gerwig, Meehan and Wilson have been nominated to serve for a
three-year term expiring in the year 2002. All nominees are current Directors
and have expressed a willingness to serve in such capacity.
Unless the shareholder gives contrary instructions, shares represented by
proxies will be voted in favor of the election of the nominees listed below to
serve as Directors for the terms specified above following the Annual Meeting
and until their successors are elected and qualified. In the event any one or
more of the nominees should unexpectedly become unavailable for election,
proxies will be voted for the election of a replacement nominee or nominees
recommended by the Board. The following table sets forth certain information,
as of January 31, 1999, with respect to the nominees for Director and the
continuing Directors of MECH Financial.
<TABLE>
<CAPTION>
Director Term
Director Nominee Age Since (1) Expires (2)
---------------- --- --------- -----------
<S> <C> <C> <C>
Edgar C. Gerwig................................. 57 1985 2002
John J. Meehan.................................. 53 1993 2002
Donald K. Wilson, Jr............................ 63 1991 2002
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Director Term
Continuing Director Age Since (1) Expires
------------------- --- --------- -------
<S> <C> <C> <C>
David Freeman....................................... 54 1992 2001
Kevin A. North...................................... 46 1995 2001
Robert G. Rayve..................................... 61 1995 2001
Alfred R. Rogers.................................... 67 1979 2000
Barbara Brown Zikmund............................... 59 1995 2000
</TABLE>
- --------
(1) The years of service as a Director in this column include the years of
service by such person as a member of the Bank's Board of Directors.
(2) Assumes reelection at the Annual Meeting.
Presented below is certain additional information concerning the nominees
and continuing directors of MECH Financial.
David Freeman is the Chairman and Chief Executive Officer of Loctite
Corporation (a specialty chemical company). From 1991 to 1993, he was the
President and Chief Operating Officer and from 1990 to 1991 he served as
Executive Vice President and Chief Operating Officer, of Loctite. He is a
Director of Loctite, Lydall, Inc. and of Sealed Air Corporation.
Edgar C. Gerwig joined the Bank in 1985 as President, Chief Executive
Officer and Director. He was named to the additional post of Chairman in 1988.
From 1975 to 1985 he was with The Norwich Savings Society, serving as
President from 1981 to 1985. He began his banking career in 1962 at The
Connecticut Bank and Trust Company, being elected a Vice President in 1975.
John J. Meehan is the President and Chief Executive Officer of Hartford
Hospital, the largest hospital located in the Hartford area. He has been
employed in various capacities at Hartford Hospital since 1979.
Kevin A. North has served as the President of Talcott Corporation, a
privately held real estate advisory and property management company located in
Hartford since July, 1995. Previously, until June 30, 1995, he served as Vice
President and Director of Real Estate for the ITT Hartford Insurance Group.
Robert G. Rayve is the Chairman, President and Chief Executive Officer and a
Director of The Spencer Turbine Company (a manufacturer of air moving
equipment). He has been employed by Spencer Turbine Company in various
capacities since 1986. He is a member of the Board of Directors of Kingsbury,
Inc.
Alfred R. Rogers is currently an independent management consultant. On
November 30, 1998 he retired as the President and Chief Executive Officer of
the Urban League of Greater Hartford, which position he had held since July of
1995. He began with the Urban League as a management consultant in July 1994.
Prior to that, he was a Regional Vice President of Connecticut Light and Power
Company (the largest electric utility in Connecticut).
Donald K. Wilson, Jr., is currently a partner of Green, Wilson & Associates,
management consultants, Hartford. From 1994 until December 31, 1998, Mr.
Wilson was a consultant with American Phoenix Corporation of Connecticut (an
insurance brokerage company). In 1994 he retired as Executive Vice President
from The Hartford Steam Boiler Insurance and Inspection Company which he had
served in various capacities since 1962. He is a Director of Spencer Turbine
Company and Salient 3 Communications, Inc.
Barbara Brown Zikmund is President of the Hartford Seminary (a graduate
school for religious leadership education and research). She has held this
post since 1990. Before that she was Dean of the Faculty at Pacific School of
Religion, Berkeley, California.
4
<PAGE>
The Board of Directors and Committees
Since the incorporation of MECH Financial in November 1997, the Company's
Board of Directors has been comprised of the same individuals who serve as the
members of the Bank's Board of Directors. In 1998, the Company's Board of
Directors held thirteen meetings. No incumbent Director who served during 1998
attended less than 75% of the aggregate number of meetings of the Company's
Board of Directors and Committees on which he or she served.
The Company's Board of Directors has appointed several committees, including
those described below.
The Company's Audit Committee met four times during 1998. Members of the
Audit Committee for 1998 were Messrs. Rogers (Chairman), Meehan and North, and
Ms. Zikmund. The Audit Committee reviews the reports of the Company's and
Bank's independent external auditors and recommends the independent auditors
for appointment by the Board of Directors. The Audit Committee also supervises
the Bank's internal audit function.
The Nominating Committee consisted of Messrs. Meehan (Chairman), Freeman,
and Rayve, together with Ms. Zikmund during 1998. The Nominating Committee
recommends to the Board of Directors candidates to be elected at the Annual
Meetings of shareholders or to be appointed from time to time for the purpose
of filling any vacancy on the Board of Directors. The Nominating Committee
held no formal meetings during 1998 as recommendations for Director nominees
were determined by the entire Board of Directors.
The members of the Company's Organization and Compensation Committee are
Messrs. Wilson, (Chairman), Freeman, and Rayve. During 1998, the Organization
and Compensation Committee held three meetings. Additional information
regarding the function of the Organization and Compensation Committee is
contained below. See "Organization and Compensation Committee Report on
Executive Compensation."
The Committees described above generally met simultaneously as Committees of
the Company and the Bank. The Company also has an Executive Committee which
did not meet in 1998. The Bank has additional Committees responsible for
various operational oversight at the Bank.
Stock Ownership of Directors and Officers
The following table shows the beneficial ownership of shares of the Common
Stock by individual directors and nominees, those executive officers named in
the Summary Compensation Table on page 10, and by all directors and executive
officers as a group as of the most recent practicable date (January 1, 1999).
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership (1) of Class (2)
- ------------------------ ------------------------ -----------
<S> <C> <C>
Directors
David Freeman........................... 6,000(3) *
Edgar C. Gerwig......................... 103,721(4)(5) 1.9%
John J. Meehan.......................... 5,500(3) *
Kevin A. North.......................... 9,000(3) *
Robert G. Rayve......................... 6,600(3) *
Alfred R. Rogers........................ 6,605(6) *
Donald K. Wilson, Jr.................... 8,499(7) *
Barbara Brown Zikmund................... 4,500(3) *
Named Officers
Thomas M. Wood.......................... 65,440(8) 1.2%
Richard W. Stout, Jr.................... 48,218(9) *
Eugene B. Marinelli..................... 33,536(10) *
Brian A. Orenstein...................... 28,728(11) *
All Directors and Executive Officers as
a group (15)........................... 406,836(12) 7.4%
</TABLE>
5
<PAGE>
- --------
(1) Beneficial ownership is direct except as otherwise indicated by footnote.
All persons shown in the table have sole voting and investment power
except as otherwise indicated.
(2) Based upon 5,524,226 shares issued and outstanding and subject to options
exercisable within 60 days. No individual director or nominee, or
executive officer beneficially owns more than one percent of the total
number of outstanding shares, other than as shown above.
(3) Includes 4,000 stock options exercisable within 60 days.
(4) Mr. Gerwig is both a director and an executive officer.
(5) Includes 60,000 stock options exercisable within 60 days and 1,697 shares
received pursuant to the Employee Stock Ownership Plan (the "ESOP"), and
37,733 shares held in the 401(K) Plan.
(6) Includes 2,000 stock options exercisable within 60 days.
(7) Includes 1,333 stock options exercisable within 60 days.
(8) Includes 45,000 options exercisable within 60 days, 1,697 shares received
pursuant to the ESOP and 15,642 shares held in the 401(K) Plan.
(9) Includes 40,000 options exercisable within 60 days, 1,547 shares received
pursuant to the ESOP and 6,030 shares held in the 401(K) Plan.
(10) Includes 20,000 options exercisable within 60 days, 1,287 shares received
pursuant to the ESOP, and 12,248 shares held in the 401(K) Plan.
(11) Includes 20,000 options exercisable within 60 days, 1,235 shares received
pursuant to the ESOP, and 4,312 shares held in the 401(K) Plan.
(12) Includes 274,334 stock options exercisable within 60 days.
Compensation of Directors
All Directors of the Company presently serve as Directors of the Bank, and
are not separately compensated for that dual service. Each Director receives
$500 for each Board meeting attended and $400 for each Committee meeting
attended. Directors also receive an annual retainer of $6,000. The Chairman of
the Audit Committee and the Chairman of the Organization and Compensation
Committee each receives a fee of $1,000 as Chairman.
Mechanics Savings Bank 1996 Director Stock Option Plan
Effective with the Bank's conversion from mutual to stock form on June 25,
1996, the Bank's Board of Directors adopted the Mechanics Savings Bank 1996
Director Stock Option Plan (the "Director Plan"). The Director Plan was
approved by the Bank's shareholders on April 23, 1997. In connection with the
Reorganization of the Bank into a bank holding company structure, MECH
Financial assumed certain obligations of the Bank under the Director Plan,
including the substitution of the Company's common stock as the stock for
which Options may be granted under the Director Plan. The Directors Plan is
administered by the Organization and Compensation Committee. Under the
Director Plan, each non-employee director who was a member of the Bank's Board
of Directors on June 25, 1996, was granted options to purchase 6,666 shares of
common stock of the Company over a 10-year period at an exercise price of
$17.50 per share. The options are exercisable ratably (unless accelerated
under certain conditions) over a five year period beginning on December 31,
1996. Non-employee Directors who are elected to the Board subsequent to June
25, 1996, receive similar stock options at an exercise price equal to the fair
market value of the Company's common stock on the date of grant. Non-employee
Directors receive annual grants of 1,000 stock options exercisable at the fair
market value of the stock on the date of grant commencing in the fifth year
after his or her receipt of initial options, with all such options exercisable
six months after grant. An aggregate of 105,800 stock options were originally
available for grant under the Director Plan, of which 44,473 presently remain
available for future grants.
6
<PAGE>
Executive Compensation
All of the executive officers listed below are currently executive officers
of the Bank. The Company has no existing plan or arrangement to pay any
remuneration to executive officers of the Company in addition to the
compensation that they receive as executive officers of the Bank.
The following table sets forth for the fiscal years ended December 31, 1996,
1997, and 1998 the cash and non-cash compensation paid or awarded by both the
Company or the Bank to the most highly compensated executive officers whose
total annual salary and bonus for 1998 exceeded $100,000 (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
Amounts in dollars All Other Compensation
------------------------------------------ --------------------------
Name and Other
Principal Annual Insurance Pension
Position Year Salary Bonus(1) Compensation(2)(3) Premiums(4) Contribution(5)
--------- ---- -------- -------- ------------------ ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Edgar C. Gerwig......... 1998 $274,610 $108,750 $2,000 $10,586 $136,821
Chairman, President and 1997 248,102 56,616 1,382 9,977 128,992
Chief Executive Officer 1996 233,379 -0- -0- 8,571 40,746
Thomas M. Wood.......... 1998 $152,423 $ 53,106 $1,580 $ 2,754 $ 20,470
Executive Vice
President 1997 145,504 27,820 1,993 2,668 14,992
and Treasurer 1996 137,602 -0- -0- 1,777 4,746
Richard W. Stout, Jr.... 1998 $135,350 $ 46,944 $1,350 $ 5,442 $ 18,066
Executive Vice 1997 128,739 24,620 1,763 5,277 13,392
President 1996 121,785 -0- -0- 4,121 3,778
Eugene B. Marinelli..... 1998 $110,231 $ 30,740 $ -0- $ 2,498 $ 12,887
Senior Vice 1997 105,327 16,160 -0- 2,347 9,815
President 1996 99,904 -0- -0- 2,194 2,830
Brian A. Orenstein...... 1998 $107,230 $ 29,870 $1,713 $ 1,059 $ 12,266
Senior Vice 1997 102,314 15,664 1,377 1,030 9,280
President 1996 96,841 -0- -0- 738 2,649
</TABLE>
- --------
(1) Represents amounts awarded to such officers as a cash bonus and a bonus in
accordance with the Bank's Long Term Incentive Compensation Plan (the
"Bonus Plan"). Additional information on the Bonus Plan can be found under
the caption "Long Term Incentive Plan" below.
(2) Includes contributions by the Bank matching the named officers'
contributions to their 401(k) Plan accounts in accordance with the terms
of that plan.
(3) No named executive officer received other perquisites, or any other
personal benefits, securities or property exceeding $50,000 or 10% of the
named officer's salary and bonus.
(4) Represents premiums paid by the Bank for Individual Ordinary Life
Insurance Policies for each of the named executive officers.
(5) Represents the contributions by the Bank allocated to such officers'
accounts in connection with the Bank's Defined Contribution Pension Plan,
amounts accrued to the SERP accounts of Mr. Wood and Mr. Stout and, in Mr.
Gerwig's case only, amounts accrued by the Bank in connection with the
Benefit Equalization Agreement.
7
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of
Securities
Underlying Value of
Unexercised Unexercised
Options/SARs In-The-Money
At Fiscal Options/SARs
Year-End At Fiscal Year-
Shares Value (#) End($)
Acquired On Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable(1)
(a) (b) (c) (d) (e)
---- ------------ -------- ------------- ----------------
<S> <C> <C> <C> <C>
Edgar C. Gerwig........... -0- -0- 60,000/24,000 395,880/246,000
Thomas M. Wood............ -0- -0- 45,000/18,000 296,910/184,500
Richard W. Stout, Jr...... -0- -0- 40,000/16,000 263,920/164,000
Eugene B. Marinelli....... -0- -0- 20,000 /8,000 131,960/ 82,000
Brian A. Orenstein........ -0- -0- 20,000 /8,000 131,960/ 82,000
</TABLE>
- --------
(1) Based on a fair market value of $27.75 on December 31, 1998 and Option
Prices of $17.50 and $26.63 for various options.
Information Concerning Compensation Committee Interlocks
The Bank's Organization and Compensation Committee approves base salaries
for executive officers of the Bank, and administers and grants awards under
the Bank's stock option plans. None of the members of that Committee is or has
previously been an officer or employee of the Company or the Bank, nor have
any of the Company's or the Bank's executive officers served on the Board of
Directors or compensation committee of a company employing any of the
Company's or the Bank's directors. Additional information regarding the Bank's
Organization and Compensation Committee can be found below. See "Organization
and Compensation Committee Report on Executive Compensation".
Executive Compensation Pursuant to Plans
Defined Contribution Money Purchase Pension Plan
The Bank has a Defined Contribution Money Purchase Pension Plan (the
"Pension Plan") established in 1990. Employees become eligible for
participation in the Pension Plan on attainment of age 21 and completion of
one year of service with the Bank. The Pension Plan is subject to the
requirements of the Employee Retirement Income Security Act of 1974 ("ERISA").
Each year the Bank makes a contribution to the Pension Plan in an aggregate
amount sufficient to allocate to each eligible participant's account an amount
equal to such participant's compensation percentage and his or her excess
compensation percentage. For plan years prior to 1996, the compensation
percentage was 6% of an eligible employee's compensation (which was $160,000
in 1998 and varies from year to year due to changes in the cost of living). In
1995, the Bank amended the Pension Plan effective January 1, 1996 to reduce
the compensation percentage to 2% of an eligible employee's compensation. For
plan years prior to 1996, the pension plan provided that the excess
compensation was 5.7% of an eligible employee's compensation (limited as set
forth above) in excess of the applicable annual social security wage base. The
1995 amendment also reduced the excess compensation percentage to 2% of an
eligible employee's excess compensation. In 1996, the pension plan was
amended, effective January 1, 1997, to restore the 6% level of compensation
(which would include for such calculation earnings up to $160,000) and 5.7% of
excess compensation.
Participants become 100% vested in their Pension Plan accounts after five
years employment with the Bank. Termination of employment prior to vesting
results in a forfeiture by the employee of his or her account.
8
<PAGE>
Amounts in forfeited accounts are used to fund the Bank's aggregate Pension
Plan contribution in the year of forfeiture.
The Bank's contributions to the Pension Plan are held and invested as a
Trust Fund by the Bank as the Pension Plan's Trustee.
401(k) Plan
The Bank also has a 401(k) defined contribution plan (the "401(k) Plan")
which was established in 1987. Employees become eligible for participation on
attainment of age 21 and completion of one year of service with the Bank. The
401(k) Plan is subject to the requirements of the Employee Retirement Income
Security Act of 1974 ("ERISA").
An eligible employee becomes a participant in the 401(k) Plan by authorizing
the Bank to reduce the participant's base pay and to make a corresponding pre-
tax contribution to the 401(k) Plan on the participant's behalf ranging from
2% to 15% of base pay. The Bank may also elect, on an annual basis, to match a
portion of the employee's elective contributions for a plan year in an amount
not to exceed 50% of an employee's elective contributions not exceeding 5% of
such employee's compensation during the plan year. Matching contributions by
the Bank are not required and are made at the sole discretion of the Bank. In
1998, the Bank made matching contributions to the 401(k) Plan equal to 25% of
an employee's elective contribution up to 5% of compensation.
In addition, the Bank may choose to make supplemental contributions for a
plan year in an amount to be determined by the Board of Directors. Any such
supplemental contributions would not depend on whether an employee elected to
defer any of his or her pay for the plan year. The Bank has not made any
supplemental contributions to the 401(k) Plan.
Participants in the 401(k) Plan are 100% vested in their elective
contributions account at all times. Participants are vested in Bank matching
contributions made on their behalf at 20% of such contributions after one year
(1,000 hours) of employment increasing by 20% for each subsequent year of
employment with full vesting after five years. Forfeiture of Bank
contributions are used to reduce future Bank contributions. The Bank is the
401(k) Plan's Trustee.
Long Term Incentive Compensation Plan
The Bank has a Long Term Incentive Plan (the "Bonus Plan") for senior
officers, including the Named Executive Officers. The Board of Directors,
based on Organization and Compensation Committee recommendations, determines
awards under the Bonus Plan, which are paid each year following the end of the
Bank's fiscal year based on the achievement of certain performance targets.
Awards are made based only upon the level of performance as to articulated
performance targets. Performance targets are established in the early part of
each year. All awards are money awards, payable in cash, provided however that
a senior officer may elect in advance to accept a certain percentage of the
award in the form of a deferred payment. An executive officer electing
deferral will have his award deemed to be placed in a nominal account
(unsecured and unsegregated) at the Bank earning a return that is either based
on the prime rate or the appreciation in fair market value of the Company's
Common Stock during the period of deferral. The amounts by which deferral
accounts constituted "above-market" or "preferential" earnings in 1998 (i.e.,
exceeded 120% of the applicable federal long-term rate as prescribed by
Internal Revenue Code Section 1274(d)) for each Named Officer are included in
the "Other Annual Compensation" column of the Summary Compensation Table
above.
The performance targets for the Bonus Plan vary each year as determined by
the Board of Directors. In recent years, the targets have focused on
improvements in the Bank's earnings performance and as measured against the
performance of identified peer groups and Community Reinvestment Act
performance.
9
<PAGE>
Employee Stock Ownership Plan
The Bank has a leveraged Employee Stock Ownership Plan (the "ESOP"). The
ESOP is subject to the eligibility, funding, participation, fiduciary,
reporting and disclosure requirements of ERISA. Under existing circumstances,
all Bank employees are eligible to participate in the ESOP once they have
attained age 21 and completed one year of service with the Bank. The Bank may
make contributions to the ESOP in cash or in Common Stock. The contributions
are allocated to the accounts of the ESOP participants in the same proportion
that their compensation for a Plan Year bears to the compensation of all ESOP
participants for that year. The percentage of a participant's account that is
non-forfeitable upon termination of employment before normal retirement at age
65 (the "vesting percentage") remains at zero in years one through five of the
participant's employment with the Bank. All ESOP participants with more than
five years of service with the Bank will be 100% vested in their ESOP
accounts.
The Bank purchased 120,000 shares of the Bank's Common Stock (the "ESOP
Stock") for the ESOP Plan on June 25, 1996 in connection with the Bank's
conversion from mutual to capital stock form (the "Conversion"). The Bank
borrowed $1,200,000 from another financial institution to fund that purchase,
the repayment of which is guaranteed by the Bank and secured by the Trustee's
pledge of the Bank's Common Stock purchased with the ESOP. Upon the
reorganization of the Bank into a holding company structure, the Bank's Common
Stock that comprised the stock subject to the ESOP was exchanged for an equal
number of shares of MECH Financial Common Stock ("ESOP Stock") which is
awardable pursuant to the terms of the ESOP. The ESOP Stock will be allocated
to the accounts of Bank employees participating in the ESOP over time, as the
Bank's annual contributions are used to pay down the loan, freeing the ESOP
Stock from the pledge. Contributions made to the ESOP by the Bank, as well as
dividends on or proceeds from the sale of unallocated shares of ESOP Stock,
may be applied to the payment of principal and interest on the loan. The ESOP
is intended to comply with Sections 401(a), and (m), 409, 501(a) and 4975(e)
of the Internal Revenue Code of 1986, as amended.
Mechanics Savings Bank 1996 Officer Stock Option Plan
The Mechanics Savings Bank 1996 Officer Stock Option Plan permits the Bank's
Organization and Compensation Committee to grant to officers of the Bank
options to purchase Company common stock as part of the officer's long term
compensation.
The following table provides detailed information concerning stock options
granted in 1998 to the Named Executive Officers pursuant to the 1996 Officer
Stock Option Plan. In addition, in accordance with rules of the Securities
Exchange Commission, this table shows potential realizable gains from the
options for the Named Executives. These potential gains are based on assumed
annualized rates of stock price appreciation of 5% and 10% from the date the
options were granted over the full ten year option term, and do not represent
the results of actual stock performance or serve as a projection of future
performance.
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciations
Individual Grants For 10 Year Option Term
------------------------------------------------ ----------------------------
Number of Percent of
Securities Total Options
underlying Granted to Exercise or
Options Employees Base Price Expiration
Name Granted in Fiscal Year ($/Sh) (1) Date 5% ($) (2) 10% ($) (2)
---- ---------- -------------- ----------- ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Edgar C. Gerwig......... 24,000 16.5% 26.63 1/19/08 402,000 1,018,560
Thomas M. Wood.......... 18,000 12.4% 26.63 1/19/08 301,500 763,920
Richard W. Stout, Jr.... 16,000 11.0% 26.63 1/19/08 268,000 679,040
Eugene B. Marinelli..... 8,000 5.5% 26.63 1/19/08 134,000 339,520
Brian A. Orenstein...... 8,000 5.5% 26.63 1/19/08 134,000 339,520
</TABLE>
- --------
(1) Prices based on Fair Market Values of Company Common Stock as of close of
business January 20, 1998.
(2) The resulting stock price for the grant expiring on January 19, 2008 would
be $43.38 at 5% and $69.07 at 10% compounded annually for ten years.
Employment Agreement
The Bank has entered into an employment agreement (the "Employment
Agreement") with Mr. Gerwig, the Chairman, President and Chief Executive
Officer of the Company and the Bank. The Employment Agreement, which became
effective upon the completion of the Conversion in 1996, replaced an
employment agreement between Mr. Gerwig and the Bank executed in June of 1985.
The Company and the Bank are jointly and severally liable for certain
obligations under the Employment Agreement.
The term of employment under the Employment Agreement currently extends
until June 30, 1999 (the "Employment Period"). On July 1, 1999, and on the
first day of July each year thereafter, the Employment Period will
automatically be extended by successive one year terms unless either Mr.
Gerwig or the Bank gives notice to the other of his or its intention to
terminate prior to April 1 of that year. The Employment Agreement provides for
an annual base salary of $229,000, and also provides for increases in
subsequent years and for certain insurance, disability and other benefits as
the Bank may make available to its employees. The Board of Directors may grant
to Mr. Gerwig additional annual and long-term incentive compensation at its
discretion.
The Bank may terminate Mr. Gerwig for cause (as defined in the Employment
Agreement) at any time. In such event, Mr. Gerwig is entitled to receive
compensation and benefits only up to the termination date. If the Bank
terminates Mr. Gerwig without cause (which it may do at any time), or he
leaves for good reason, Mr. Gerwig is entitled to severance of one year of
base salary plus employee benefits for a one year period.
The Employment Agreement also provides a covenant not to compete with the
business of the Bank for a period of one year after termination of employment
and contains non-disclosure and non-interference covenants.
Benefit Equalization Agreement
At the time Mr. Gerwig became employed by the Bank, the Bank agreed that it
would provide Mr. Gerwig with retirement benefits such that he would not
suffer a reduction in benefits from those he would have received had he
remained with his previous employer through normal retirement age and received
benefits under that employer's defined benefit pension plan.
Mr. Gerwig and the Bank agreed in 1991, which agreement was amended as set
forth in a Benefit Equalization Agreement dated December 19, 1995, that the
Bank will provide Mr. Gerwig with a lump sum payment at the time of his
retirement or separation from service with the Bank. The amount of the payment
will be an amount equal to the actuarial equivalent of an annual pension
benefit, payable for ten years certain and life
11
<PAGE>
thereafter, of 60% of his average annual compensation (as defined below) less
(i) the lump sum payment payable to him as a result of the termination in 1990
of the Bank's defined benefit pension plan, (ii) the lump sum benefit payable
to him under the Bank's existing Pension Plan, and (iii) the lump sum
actuarial equivalent of the benefit payable to him under his previous
employer's defined benefit pension plan. The payment will be reduced if Mr.
Gerwig terminates his employment with the Bank prior to his reaching age 62.
Average annual compensation is defined to mean the monthly average of Mr.
Gerwig's compensation during the highest consecutive 36 months within 10 years
from the date of separation, times 12.
The Benefit Equalization Agreement with Mr. Gerwig provides generally that
the Bank's obligations thereunder shall not be funded and shall be paid out of
the Bank's general funds as to any other of the Bank's general, unsecured
creditors. In the event of a change in control of the Bank, however, the Bank
shall fund the annual amounts necessary to make the required payment through
the use of a non-qualified irrevocable trust, provided that (a) the assets of
the trust shall be subject to the claim of the Bank's general creditors, and
(b) the assets and income of the trust are not includable in Mr. Gerwig's
gross taxable income under Section 83 or 402(b) of the Internal Revenue Code
of 1986, as amended.
Supplemental Employee Retirement Plan
The Bank adopted a Supplemental Employee Retirement Plan ("SERP") in 1998,
effective January 1, 1998. The SERP is intended to supplement the retirement
benefits payable to executives under the Bank's Pension Plan. At the present
time, only Messrs. Wood and Stout have been included in the SERP.
The amount of annual compensation that the Pension Plan can take into
account for any one year is limited by Internal Revenue Code Section
401(a)(17); the limit, which varies each year with increases in the cost of
living, was $160,000 for 1998. The difference between that limit and the
executive's total compensation for the year (assuming a positive difference)
is multiplied by a percentage determined by the Board of Directors based on
the percentage of compensation that would have been contributed to the
executive but for the Internal Revenue Code limit (11.7% in 1998). The amount
so determined is credited to a book account and deemed invested in an interest
bearing account at a variable rate equal to the "Prime Rate" as published in
the "Money Rates" column of the Wall Street Journal. Although any payment
under the SERP is an unsecured, general obligation of the Bank, contractual
payments are determined based on that formula.
If either executive terminates employment for reasons other than death or
disability prior to the earlier of completion of five years of service (as
determined under the Pension Plan) or the executive's normal retirement date,
no benefits under the SERP are payable. Both Mr. Wood and Mr. Stout have
completed five years of service.
Change in Control Agreements
The Bank has entered into change in control agreements (the "Change in
Control Agreements") with the Named Executive Officers, and other officers
("the executives"). The Change in Control Agreements became effective in June
1996. Upon the reorganization of the Bank into a holding company structure,
the Company became a party to, and obligated under, the Change in Control
Agreements. If a change in control of the Company or the Bank takes place
while the executive is a full-time officer of the Company or the Bank, the
executive generally is entitled to receive a lump sum severance payment equal
to three times the higher of the executive's compensation (including long term
compensation) for the most recently completed full calendar year or the
average of the executive's latest three years of annual compensation. The
executive is not entitled to receive, however, any payment under the Change in
Control Agreements that would be considered an "excess parachute payment"
under the Internal Revenue Code or which would be prohibited by order or
regulation of the Federal Deposit Insurance Corporation.
A "change in control" is deemed to have occurred, with certain exceptions,
if (i) a person beneficially owns 25% or more of any class of voting
securities of the Bank or the Company, without the approval of at least 75% of
the members of the Company's or the Bank's Board of Directors prior to such
person obtaining such
12
<PAGE>
percentage interest, (ii) a proxy contest to which the Company is a party
takes place, as a consequence of which members of the Company's Board of
Directors in office immediately prior to such event constitute less than 75%
of the Board of Directors after such event, (iii) the Company or the Bank
consummates certain mergers or consolidations or a sale of substantially all
of its assets where the successor entity's voting power is not owned at least
50% by the shareholders of the Company, or (iv) the Board of Directors of the
Company or the Bank determines that a person directly or indirectly exercises
a controlling influence over the management or policies of the Company or the
Bank.
Insurance Plans
The Company provides its full-time officers and employees with medical,
major medical, life, dental, accidental death and dismemberment, and long-term
disability insurance coverage under group plans which are available generally
and on the same basis to all full-time employees. The Named Executive Officers
have the option of obtaining Ordinary Life Insurance Policies in lieu of the
above, the premiums for which are paid by the Bank and are disclosed in the
Summary Compensation Table above.
Organization and Compensation Committee Report on Executive Compensation
The Organization & Compensation ("O&C") Committee of the Board of Directors
makes recommendations on compensation for executive officers. Mr. Gerwig, who
is both an executive officer and a director, participates in Committee
discussions generally but does not participate in the decisions concerning his
compensation. The Committee is currently comprised of three members, Donald K.
Wilson, Jr. (Chairman), David Freeman, and Robert G. Rayve. No member of the
Committee is employed by the Company or the Bank, nor do they participate in
any of the Company's or the Bank's executive compensation plans.
The O&C Committee also makes recommendations to the Board of Directors
concerning the grant of stock options plans pursuant to the 1996 Officer Stock
Option Plan. Based on these recommendations, the Board makes decisions
regarding the grant of any such options (with Mr. Gerwig not participating in
decisions concerning himself). This Committee also makes recommendations to
the Board of Directors on the Bonus Plan and other benefit plans for employees
of the Bank.
The O&C Committee has a compensation policy for executive officers which
takes into account the Company's and the Bank's performance, the
accomplishment of business objectives, and the individual executive officer's
contribution to earnings and shareholder value in setting executive officer
compensation levels. The O&C Committee also considers the compensation paid by
peer group institutions with the goal of being competitive in the attraction
and retention of qualified executives. The three principal components of
executive officer compensation are salary, bonus and stock options. The O&C
Committee considers granting bonuses annually, but only when it determines
that performance is meritorious and exceptional. For 1998, bonuses were
determined pursuant to a formula which took into account consideration of such
factors as the Bank's financial (a comparison of budgeted earning per share
and peer bank earnings per share) and regulatory performance for such year.
For the year 1998, Mr. Gerwig received a salary of $274,610, a 10.7% increase
from the salary of $248,102 for 1997. Mr. Gerwig's salary level is based on a
comparison of compensation paid to chief executive officers of a peer group of
New England and New York financial institutions with a similar asset size and
on the performance of the Bank and of Mr. Gerwig, as judged by the O&C
Committee. Mr. Gerwig also was paid $108,750 in 1998 for 1997 performance
under the Bonus Plan. The Board of Directors did not reject or modify in any
material way the recommendations of the O&C Committee for 1998 compensation.
Board of Directors of the Company and the Bank
<TABLE>
<S> <C>
David Freeman Robert G. Rayve
Edgar C. Gerwig (not as to himself) Alfred R. Rogers
John J. Meehan Donald K. Wilson, Jr.
Kevin A. North Barbara Brown Zikmund
</TABLE>
13
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the percentage change in the
cumulative total shareholder return on the Company's common stock with the
cumulative total return of the companies on the S&P 500 Index and the reported
total return of companies on the Keefe, Bruyette & Woods, Inc. New England
Bank Index for the period commencing June 30, 1996 and ended December 31,
1998. The graph assumes a $100 investment on June 30, 1996.
14
<PAGE>
Transactions with Related Persons
As of December 31, 1998, there were no loans from the Bank or MECH Financial
to directors, executive officers and their associates and affiliated
businesses. There were no reportable transactions with such persons.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires MECH Financial's directors and
executive officers, and persons who own more than ten percent (10%) of the
Common Stock of MECH Financial, to file with the Securities Exchange
Commission initial reports of ownership and reports of changes in ownership of
MECH Financial's Common Stock. Officers, directors and ten percent (10%)
shareholders are required by the Securities Exchange Commission's regulations
to furnish MECH Financial with copies of all Section 16(a) forms they file.
To MECH Financial's knowledge, based solely on a review of the copies of
such reports furnished to MECH Financial and written representations that no
other reports were required, during the fiscal year ended December 31, 1998,
all Section 16(a) filing requirements applicable to its officers and directors
were complied with. The Company is unaware of any ten percent (10%)
shareholder, and the Company's Certificate of Incorporation prohibits
ownership of 10% or more except under limited circumstances.
Nominations of Candidates for Director
Nominations of persons for election to the Board may be made at a meeting of
shareholders by or at the direction of the Board or by any shareholder of the
Company entitled to vote for the election of directors at the meeting who
complies with certain prior notice procedures set forth in the Company's
Bylaws. Such nominations, other than those made by or at the direction of the
Board, must be made in writing to the Secretary of the Company and must be
delivered to or mailed and received at the principal executive offices of the
Company at 100 Pearl Street, Hartford, Connecticut 06103, not less than 20
days nor more than 130 days prior to the meeting. A shareholder's notice must
set forth (a) as to each person whom the shareholder proposes to nominate for
election as a director: (i) the name, age, business address and residence
address of such person, (ii) the principal occupation or employment of such
person, (iii) the class and number of shares of the Company stock which are
beneficially owned by such person, and (iv) any other information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
applicable law and regulations (including, without limitation, such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); and (b) as to the shareholder giving the
notice: (i) the name and address, as they appear on the Company's books, of
such shareholder, (ii) the class and number of shares of Company stock which
are beneficially owned by such shareholder, (iii) a representation that the
shareholder is a holder of record of stock of Company entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice, and (iv) a description of all
arrangements or understandings between the shareholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the shareholder.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE ELECTION OF MESSRS. GERWIG, MEEHAN AND WILSON AS DIRECTORS. UNLESS MARKED
TO THE CONTRARY, PROXIES WILL BE VOTED FOR ALL MANAGEMENT NOMINEES. THE
AFFIRMATIVE VOTE OF A PLURALITY OF THE VOTES CAST BY THE SHARES WHICH ARE
ENTITLED TO VOTE ON THE MATTER, PRESENT AT THE MEETING IN PERSON OR BY PROXY,
IS REQUIRED FOR THEIR ELECTION.
ITEM 2. Ratification of Appointment of Auditors
The Board of Directors has approved the appointment of the independent
auditing firm of KPMG LLP as the Company's independent auditors for the fiscal
year ending December 31, 1999, subject to ratification by MECH Financial's
shareholders. It is expected that a representative of KPMG LLP will be present
at the Annual Meeting and will be given the opportunity to make a statement if
he or she desires to do so and to respond to appropriate questions.
15
<PAGE>
PricewaterhouseCoopers LLP (formerly Coopers & Lybrand L.L.P.) were the
Bank's independent auditors for the year ended December 31, 1997.
PricewaterhouseCoopers LLP declined to stand for re-election in 1998.
PricewaterhouseCoopers LLP's audit reports for the years ended December 31,
1996 and 1997 did not contain an adverse opinion or disclaimer of opinion, nor
were they qualified or modified as to uncertainty, audit scope or accounting
principles. The selection of KPMG LLP as the Company's new auditor in 1998 was
recommended by the Audit Committee and approved by the full Board of
Directors. There were no disagreements between the Company and
PricewaterhouseCoopers LLP during 1996 and 1997 or any subsequent periods on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure which disagreements, if not
resolved to the satisfaction of PricewaterhouseCoopers LLP, would have caused
it to make reference to the subject matter of the disagreement in connection
with their reports.
The decision to appoint KPMG LLP as the Company's auditors was unanimously
approved by the full Board of Directors of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS.
UNLESS MARKED TO THE CONTRARY, PROXIES WILL BE VOTED FOR THE RATIFICATION OF
THE APPOINTMENT OF THE INDEPENDENT AUDITORS. THE APPOINTMENT WILL BE RATIFIED
IF THE VOTES CAST IN FAVOR EXCEED THE VOTES CAST AGAINST.
ITEM 3. Other Matters
Management of MECH Financial does not know of any other matters to be
brought before the meeting. If any matters other than those described in Items
1 and 2 of this proxy statement are properly brought before the meeting, the
proxies will be voted in accordance with the best judgment of the person or
persons acting thereunder.
SHAREHOLDER PROPOSALS
Shareholder proposals for the anticipated Annual Meeting of MECH Financial's
shareholders in April 2000 must be received by the Corporate Secretary of MECH
Financial at 100 Pearl Street, Hartford, Connecticut, 06103, not later than
November 17, 1999 to be considered for inclusion in the proxy materials to be
distributed in connection with the 2000 Annual Meeting.
AVAILABLE MATERIALS
A copy of the Company's Annual Report for the year ended December 31, 1998,
including financial statements, has been mailed with this proxy statement. The
Annual Report is not to be regarded as proxy soliciting material nor as a
communication by means of which any solicitation is to be made. The Annual
Report also constitutes the Bank's annual disclosure document required by FDIC
regulations.
Additional copies of the Annual Report may be obtained by paying a small fee
to cover the cost of reproducing and shipping the statements and requesting
the copy(ies) from Teresa Knox, Investor Relations, MECH Financial, Inc., 100
Pearl Street, Hartford, Connecticut 06103.
Lael K. Noel,
Corporate Secretary
Hartford, Connecticut
March 24, 1999
16
<PAGE>
PROXY
MECH FINANCIAL, INC.
100 PEARL STREET, HARTFORD, CT 06103
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 1999 ANNUAL MEETING
The undersigned hereby appoints Kevin A. North and Robert G. Rayve, and each
of them, with full power of substitution, the ballots of the undersigned to vote
all the shares of the Common Stock of MECH Financial, Inc. held of record by the
undersigned on March 3, 1999 at the Annual Meeting of Shareholders to be held on
April 28, 1999 or any adjournment thereof.
This ballot, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THE SHARES WILL
BE VOTED "FOR" ALL NOMINEES FOR DIRECTORS AND WILL BE VOTED "FOR" PROPOSAL 2.
In their discretion the ballots are authorized to vote upon such other business
as may properly come before the meeting.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the related Proxy Statement.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ITEMS 1 AND 2.
<TABLE>
<CAPTION>
1. ELECTION OF DIRECTORS
<S> <C> <C>
FOR all nominees WITHHOLD Nominees for election by holders of Common Stock: Edgar C. Gerwig,
listed to the right AUTHORITY John J. Meehan and Donald K. Wilson
(except as marked to vote for all INSTRUCTION: To withhold your vote for any nominee(s) write that
to the contrary) nominees listed nominee's name on the line below.
[_] [_]
__________________________________________________________________
</TABLE>
2. RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE BANK'S INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING 1999:
FOR AGAINST ABSTAIN
[_] [_] [_]
Please sign exactly as name appears at left. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership please sign in partnership name by authorized person.
Date:_______________________________________, 1999
__________________________________________________
(Signature)
__________________________________________________
(Signature if held jointly)
