FARNSWORTH BANCORP INC
DEF 14A, 2001-01-19
SAVINGS INSTITUTION, FEDERALLY CHARTERED
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                                  SCHEDULE 14A
                                 (Rule 14a-101)

                     INFORMATION REQUIRED IN PROXY STATEMENT

                            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 ss.240.14a-11(c) or ss.240.14a-12

                            FARNSWORTH BANCORP, INC.
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                (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)(1) and 0-11.

          (1)   Title of each class of securities to which transaction applies:
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          (2)   Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------

          (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:
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          (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>




January 19, 2001

Dear Fellow Stockholder:

         On  behalf of the  Board of  Directors  and  management  of  Farnsworth
Bancorp,  Inc.(the  "Company"),  I  cordially  invite  you to attend  the annual
meeting of stockholders to be held at the Days Inn, Route 206,  Bordentown,  New
Jersey on February 20, 2001, at 10:00 a.m. The attached Notice of Annual Meeting
of  Stockholders  and  Proxy  Statement  describe  the  formal  business  to  be
transacted  at the  meeting.  During  the  meeting,  I will  also  report on the
operations of the company. Directors and officers of the company will be present
to respond to your questions.

         You will be asked to vote on the election of two directors,  both for a
three-year term. The Board of Directors unanimously  recommends a vote "FOR" the
election of the nominees for director  described in the  accompanying  notice of
annual meeting and proxy statement.

         WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED  PROXY  CARD AND  RETURN  IT IN THE  ACCOMPANYING  POSTAGE-PAID  RETURN
ENVELOPE  AS  PROMPTLY  AS  POSSIBLE.  This will not  prevent you from voting in
person at the  Meeting,  but will  assure  that your vote is  counted if you are
unable to attend. YOUR VOTE IS VERY IMPORTANT.

                                       Sincerely,


                                       /s/Gary N. Pelehaty
                                       -----------------------------------------
                                       Gary N. Pelehaty
                                       President and Chief Executive Officer



--------------------------------------------------------------------------------
 789 Farnsworth Avenue o Bordentown, NJ 08505 o 609-298-0723 o Fax 609-298-5321


<PAGE>


--------------------------------------------------------------------------------
                             FARNSWORTH BANCORP, INC
                              789 FARNSWORTH AVENUE
                          BORDENTOWN, NEW JERSEY 08505
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                         TO BE HELD ON FEBRUARY 20, 2001
--------------------------------------------------------------------------------

NOTICE IS  HEREBY  GIVEN  that the 2001  Annual  Meeting  of  Stockholders  (the
"Meeting") of Farnsworth Bancorp,  Inc. (the "Company") will be held at the Days
Inn, Route 206, Bordentown,  New Jersey, on Tuesday, February 20, 2001, at 10:00
a.m.

         At the Meeting, stockholders will be asked to:

          1.   elect two directors of the Company; and

          2.   consider  any other  matters  as may  properly  come  before  the
               Meeting.

         The  Board of  Directors  is not aware of any  other  business  to come
before the Meeting. Pursuant to the Company's Bylaws, the Board of Directors has
fixed  the  close of  business  on  January  5,  2001,  as the  record  date for
determination  of the  stockholders  entitled  to  vote at the  Meeting  and any
adjournments thereof.

YOUR VOTE IS VERY IMPORTANT,  REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
SIGN,  DATE  AND  RETURN  THE  ENCLOSED  PROXY  WITHOUT  DELAY  IN THE  ENCLOSED
POSTAGE-PAID  ENVELOPE.  ANY SIGNED  PROXY GIVEN BY YOU MAY BE REVOKED BY FILING
WITH THE SECRETARY OF THE COMPANY A WRITTEN  REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER  DATE.  IF YOU ARE PRESENT AT THE  MEETING,  YOU MAY REVOKE YOUR
PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT BEFORE THE MEETING.  HOWEVER, IF
YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL
NEED ADDITIONAL  DOCUMENTATION  FROM YOUR RECORD HOLDER TO VOTE IN PERSON AT THE
MEETING.

                                              BY ORDER OF THE BOARD OF DIRECTORS

                                              /s/Charles Alessi
                                              ----------------------------------
                                              Charles Alessi
                                              Secretary

Bordentown, New Jersey
January 19, 2001

--------------------------------------------------------------------------------
IMPORTANT:  THE PROMPT  RETURN OF PROXIES  WILL SAVE THE  COMPANY THE EXPENSE OF
FURTHER  REQUESTS  FOR  PROXIES  IN ORDER TO INSURE A QUORUM AT THE  MEETING.  A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
--------------------------------------------------------------------------------
<PAGE>

                               PROXY STATEMENT OF
                            FARNSWORTH BANCORP, INC.
                              789 FARNSWORTH AVENUE
                          BORDENTOWN, NEW JERSEY 08505
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                         ANNUAL MEETING OF STOCKHOLDERS
                                FEBRUARY 20, 2001
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
                                     GENERAL
--------------------------------------------------------------------------------

         This Proxy Statement is furnished in connection  with the  solicitation
of proxies by the Board of Directors of Farnsworth Bancorp, Inc. (the "Company")
to be used at the Annual  Meeting of  Stockholders  of the Company which will be
held at the Days Inn, Route 206, Bordentown, New Jersey on Tuesday, February 20,
2001,  at 10:00 a.m.  local time (the  "Meeting").  The  accompanying  Notice of
Annual Meeting of  Stockholders  and this Proxy Statement are being first mailed
to  stockholders on or about January 19, 2001. The Company is the parent company
of Peoples Savings Bank (the "Bank").

         At the Meeting,  stockholders  will consider and vote upon the election
of two  directors.  The Board of Directors  knows of no additional  matters that
will be  presented  for  consideration  at the  Meeting.  Execution  of a proxy,
however,  confers on the designated  proxyholder the discretionary  authority to
vote the shares represented by such proxy in accordance with their best judgment
on such other business, if any, that may properly come before the Meeting or any
adjournment thereof.

--------------------------------------------------------------------------------
                       VOTING AND REVOCABILITY OF PROXIES
--------------------------------------------------------------------------------

         Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the  Meeting  and all  adjournments  thereof.  Proxies may be revoked by written
notice to the  Secretary of the Company at the address above or by the filing of
a later dated proxy prior to a vote being taken on a particular  proposal at the
Meeting.  A proxy will not be voted if a  stockholder  attends  the  Meeting and
votes in person.  Proxies  solicited by the Board of Directors  will be voted in
accordance  with  the  directions  given  therein.  Where  no  instructions  are
indicated, signed proxies will be voted "FOR" the election of the nominees named
below. The proxy confers discretionary authority on the persons named therein to
vote with  respect to the  election of any person where the nominee is unable to
serve, or for good cause will not serve,  matters incident to the conduct of the
Meeting,  and as to any other  matters that may properly come before the Meeting
or any adjournment thereof.

--------------------------------------------------------------------------------
                 VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
--------------------------------------------------------------------------------

         Stockholders  of record as of the close of  business on January 5, 2001
(the "Record Date"),  are entitled to one vote for each share of common stock of
the Company (the "Common  Stock") then held. As of the Record Date,  the Company
had 360,866 shares of Common Stock outstanding.

         The  articles  of  incorporation  of  the  Company  (the  "Articles  of
Incorporation")  provide  that  in no  event  shall  any  record  owner  of  any
outstanding Common Stock which is beneficially owned, directly or indirectly, by
a person who beneficially  owns in excess of 10% of the then outstanding  shares
of Common Stock (the  "Limit") be entitled or permitted to any vote with respect
to the shares held in excess of the Limit.  Beneficial  ownership is  determined
pursuant to the definition in the Articles of Incorporation and

                                       -1-
<PAGE>

includes  shares  beneficially  owned  by  such  person  or  any  of  his or her
affiliates  (as such terms are  defined in the  Articles of  Incorporation),  or
which such person or any of his or her  affiliates has the right to acquire upon
the exercise of conversion  rights or options and shares as to which such person
or any of his or her affiliates or associates have or share investment or voting
power,  but neither any employee stock  ownership or similar plan of the Company
or any subsidiary, nor any trustee with respect thereto or any affiliate of such
trustee  (solely by reason of such capacity of such  trustee),  shall be deemed,
for purposes of the Articles of  Incorporation,  to beneficially  own any Common
Stock held under any such plan.

         The  presence  in  person  or by proxy of at  least a  majority  of the
outstanding  shares of Common  Stock  entitled  to vote (after  subtracting  any
shares held in excess of the Limit) is necessary  to  constitute a quorum at the
Meeting.  With respect to any matter, any shares for which a broker indicates on
the proxy that it does not have  discretionary  authority  as to such  shares to
vote on such matter (the "Broker Non-  Votes")  will be  considered  present for
purposes of determining  whether a quorum is present. In the event there are not
sufficient  votes for a quorum at the time of the  Meeting,  the  Meeting may be
adjourned in order to permit the further solicitation of proxies.

         As to the election of directors,  the proxy card being  provided by the
Board  of  Directors  enables  a  stockholder  to vote for the  election  of the
nominees  proposed by the Board of Directors,  or to withhold  authority to vote
for one or both of the nominees  being  proposed.  Under the  Company's  bylaws,
directors  are elected by a plurality of votes cast,  without  respect to either
(i)  Broker  Non-Votes  or (ii)  proxies as to which  authority  to vote for the
nominee being proposed is withheld.

         Any other  matters that may properly  come before the Meeting  shall be
determined  by a majority  of votes cast  affirmatively  or  negatively  without
regard to, unless otherwise required by law.

Security Ownership of Certain Beneficial Owners

         Persons  and  groups  owning in excess  of 5% of the  Common  Stock are
required  to file  certain  reports  regarding  such  ownership  pursuant to the
Securities Exchange Act of 1934, as amended.  The following table sets forth, as
of the Record  Date,  persons or groups who own more than 5% of the Common Stock
and the  ownership of all  executive  officers and Directors of the Company as a
group.  Other than as noted below,  management  knows of no person or group that
owns more than 5% of the outstanding shares of Common Stock at the Record Date.

<TABLE>
<CAPTION>
                                                                                       Percent of Shares of Common
                                                          Amount and Nature of                    Stock
Name and Address of Beneficial Owner                      Beneficial Ownership                 Outstanding
------------------------------------                      --------------------                 -----------
<S>                                                             <C>                            <C>
Craig W. Yates
227 Cliff Avenue
Edgewater Park, New Jersey (1)                                     37,000                          10.25%

Jeffrey E. Slemrod
1385 Colony Way
Yardley, Pennsylvania (2)                                          19,650                           5.44%

Peoples Savings Bank
Employee Stock Ownership Plan (the "ESOP")
789 Farnsworth Avenue,
Bordentown, New Jersey (3)                                         30,388                           8.42%

All directors and officers of the Company
as a group (8 persons) (4)                                         91,906                          25.10%
</TABLE>


                                       -2-

<PAGE>

 -------------------------------------
(1)  Number of shares is based upon an amended  Schedule  13D filed on  December
     21, 1999 showing sole voting and  dispositive  power with respect to 37,000
     shares.
(2)  Number  of  shares  in based  upon a  Schedule  13D filed on August 1, 2000
     showing sole voting and dispositive power with respect to 19,650 shares.
(3)  The  ESOP  purchased  such  shares  for  the  exclusive   benefit  of  plan
     participants with funds borrowed from the Company. These shares are held in
     a suspense account and will be allocated among ESOP  participants  annually
     on the basis of compensation as the ESOP debt is repaid. The ESOP Committee
     instructs the ESOP trustees  regarding  investment of ESOP plan assets. The
     ESOP trustee must vote all shares  allocated to participant  accounts under
     the ESOP as directed by participants.  Unallocated  shares,  and shares for
     which no timely  voting  direction is  received,  will be voted by the ESOP
     trustee as directed by the ESOP  Committee.  As of the Record  Date,  6,076
     shares have been allocated to ESOP participants.
(4)  Includes  shares of Common  Stock  held  directly  as well as by spouses or
     minor children,  in trust and other indirect  ownership,  over which shares
     the  individuals  effectively  exercise sole voting and  investment  power,
     unless otherwise indicated.  Includes 13,074 shares of Common Stock held by
     the  Restricted  Stock Plan (the "RSP") over which  certain  directors,  as
     members of the RSP Committee and as RSP  trustees,  exercise  voting power.
     Also includes  24,312 shares held by the ESOP over which certain  directors
     as members of the ESOP Committee and ESOP trustees,  exercise shared voting
     power. Such individuals  disclaim beneficial  ownership with respect to RSP
     and ESOP  shares.  Includes  5,317 shares  subject to options  excercisable
     within 60 days of January 5, 2001.

--------------------------------------------------------------------------------
             SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
--------------------------------------------------------------------------------

         Section 16(a) of the  Securities  and Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent  of the  Common  Stock,  to file  reports of  ownership  and  changes in
ownership of the Common Stock with the Securities and Exchange Commission and to
provide  copies of those  reports to the Company.  To the best of the  Company's
knowledge,  all section 16(a) filing requirements applicable to its officers and
directors  were complied  with during the 2000 fiscal year.  The Company has not
been  provided  with any reports of  ownership  by persons who own more than ten
percent of the Common Stock.

--------------------------------------------------------------------------------
                       PROPOSAL I - ELECTION OF DIRECTORS
--------------------------------------------------------------------------------

         The  Articles of  Incorporation  require that the Board of Directors be
divided into three classes, as nearly equal in number as possible, each class to
serve for a three-year  period,  with  approximately one- third of the directors
elected each year. The Board of Directors  currently  consists of seven members.
Thus, two directors will be elected at the Meeting to serve for three-year terms
or until their successors have been elected and qualified.

         Charles  E.  Adams  and  William  H.  Wainwright,  Jr.  have  both been
nominated  by the  Board of  Directors  to serve  for a  three-year  term.  Both
nominees are currently  members of the Board of  Directors.  It is intended that
proxies solicited by the Board of Directors will, unless otherwise specified, be
voted for the  election  of the named  nominees.  If either of the  nominees  is
unable to serve,  the shares  represented by all valid proxies will be voted for
the election of such  substitutes  as the Board of Directors may  recommend.  At
this time, the Board of Directors  knows of no reason why either of the nominees
might be unavailable to serve.

         The following  table sets forth the names,  ages,  terms of, lengths of
board service and the amounts and percentages of Common Stock beneficially owned
for both nominees and for each other director of

                                       -3-
<PAGE>

the Company who will  continue to serve as a director  after the  Meeting.  Both
nominees are also directors of the Bank.

<TABLE>
<CAPTION>
                                                                                           Shares of
                                        Age at           Year First        Current        Common Stock       Percent
                                    September 30,        Elected or        Term to        Beneficially          of
Name                                     2000           Appointed(1)       Expire          Owned (2)           Class
----                                    ------          ------------       ------          ---------           -----
<S>                                     <C>               <C>             <C>              <C>               <C>
                                         BOARD NOMINEES FOR TERM TO EXPIRE IN 2004

Charles E. Adams                          85                1985            2001             6,930(3)(4)       1.92%
William H. Wainwright, Jr.                70                1986            2001             9,500(4)          2.63%

                                              DIRECTORS CONTINUING IN OFFICE
George G. Aaronson, Jr.                   68                1970            2002             6,630(3)(4)       1.84%
Herman Gutstein                           87                1965            2002             6,530(4)          1.81%
G. Edward Koenig, Jr.                     59                1981            2002             4,530(3)(4)       1.25%
Edgar N. Peppler                          64                1970            2003             7,530(4)          2.08%
Gary N. Pelehaty                          47                1992            2003             9,468(5)          2.61%
</TABLE>

----------------
(1)  Refers to the year the individual first became a director of the Bank.
(2)  Beneficial ownership as of January 5, 2001. Includes shares of Common Stock
     held directly as well as by spouses or minor children,  in trust, and other
     indirect ownership,  over which shares the individuals effectively exercise
     sole or shared voting and investment power, unless otherwise indicated.
(3)  Excludes  24,312 shares of Common Stock held under the ESOP over which such
     individual,  as a member  of the  ESOP  Committee  and as an ESOP  Trustee,
     exercises shared voting power.  Also excludes 13,074 shares of Common Stock
     held  by the  RSP  over  which  such  individual,  as a  member  of the RSP
     Committee and as an RSP trustee,  exercises  voting power.  Such individual
     disclaims beneficial ownership with respect to ESOP and RSP shares.
(4)  Includes  379  shares  subject to  options  excercisable  within 60 days of
     January 5, 2001. (5) Includes 1,899 shares subject to options  excercisable
     within 60 days of January 5, 2001.

         The principal occupation of, and other information about, each director
and  executive  officer of the  Company is set forth below as of  September  30,
2000. All directors and executive officers have held their present positions for
five years unless otherwise stated.

         Charles E. Adams has been a director of the Bank since 1985.  Mr. Adams
is now retired, but was the Administrator of Florence Township for 20 years. Mr.
Adams is on the administrative board of Florence United Methodist Church, and is
treasurer of the Florence Historical Society.

         William H. Wainwright,  Jr. has been a director of the Bank since 1968.
Before  retiring in 1995,  he was employed for 20 years as a loan officer at the
Farmers  Home  Administration  and  the  Small  Business   Administration.   Mr.
Wainwright is a member of the Surf City Yacht Club and served as their Commodore
in 1996.

         George G. Aaronson,  Jr. has been a director of the Bank since 1970. He
is employed by Falconer & Bell as a real estate sales agent.

         Herman Gutstein has been a director of the Bank since 1965. He has also
served as chairman of the board since 1992. Mr. Gutstein is retired. He formerly
owned a convenience store.

                                       -4-
<PAGE>

         G. Edward  Koenig,  Jr. has,  except for a three year hiatus  ending in
1993,  been a director since 1981. Mr. Koenig is President of E. J. Koenig Inc.,
a fuel service  petroleum  products  company and a heating and air  conditioning
equipment  sales,  installation  and service  business.  Mr.  Koenig sits on the
Burlington County Military Affairs  Committee  Executive Board and served as its
chairman from 1996 to 1997.

         Edgar N.  Peppler has been a director  of the Bank since  1970.  He has
served as  vice-chairman  of the board since 1992. Mr. Peppler is part owner and
President of Peppler  Funeral Home, a business he has been associated with since
1957.  Mr.  Peppler is a member of the  Bordentown  Chamber of Commerce,  a past
president  of the  Bordentown  Kiwanis  Club,  and a past  master of the Masonic
Lodge.

         Gary N. Pelehaty has served the Bank as a director  since October 1992.
He has also  been  President  and  Chief  Executive  Officer  of the Bank  since
February of the same year. Mr. Pelehaty is a director of First Nations Financial
Services Company. Active in the local community, Mr. Pelehaty is a member of the
Bordentown Rotary, a director of the Burlington County Burn Foundation,  and the
finance  chairman of  Bordentown  Veterans'  Memorial  Foundation.  He is also a
former  director  of  Bordentown's  Chamber of  Commerce  and  President  of the
Burlington/Camden Savings League.

         Charles Alessi, age 38, has been employed by the Bank since 1992 and is
Vice-President  and  the  Chief  Financial  Officer.  He is also  Secretary  and
Treasurer of the Bank. Mr. Alessi is a member of the Financial Managers Society.

Meetings and Committees of the Board of Directors

         The Board of Directors  conducts  its business  through the meetings of
the Board and through activities of its committees.  All committees act for both
the Company and the Bank.  During the fiscal year ended  September 30, 2000, the
Board of Directors held 24 regular meetings and 1 special  meeting.  No director
attended  fewer than 75% of the total  meetings of the Boards of  Directors  and
committees during the period of his service.

         The  Company  does  not  have  a  standing  nominating  committee.  The
Company's full Board of Directors  acts as a nominating  committee for selecting
the  management's  nominees for election of  directors  in  accordance  with the
Company's Bylaws. The Board of Directors met once during the 2000 fiscal year in
this capacity. Nomination to the Board of Directors made by stockholders must be
made in writing to the  Secretary  of the Company and  received not less than 60
days prior to the anniversary  date of the immediately  preceding annual meeting
of stockholders of the Company.  Notice to the Company of such  nominations must
include certain information required pursuant to the Company's Bylaws.

         The Company does not have a standing audit committee.  The entire Board
of Directors  regularly  reviews the  financial  statements  of the Company.  In
addition,  the Board of Directors of the Bank meets  annually with the Company's
independent  accountants to review audit matters.  The Board of Directors of the
Bank met once during the 2000 fiscal year with the  independent  accountants for
this purpose.

         The Company has a  Compensation  and  Benefits  Committee  comprised of
non-employee  Directors  Adams,  Aaronson and Koenig.  This  standing  committee
establishes  the Bank's salary budget,  director and committee  member fees, and
employee  benefits  provided by the Bank for approval by the Board of Directors.
The Committee met once during the 2000 fiscal year.

                                       -5-
<PAGE>

--------------------------------------------------------------------------------
                   DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
--------------------------------------------------------------------------------

Director Compensation

         Directors of the Company are also directors of the Bank.  Each director
(including  the  chairman  of the board) is paid a monthly fee of $500 plus $100
per meeting  attended.  Total  aggregate fees paid to the directors for the year
ended September 30, 2000 were $35,000.

         Stock Awards.  Each director has been awarded 1,899 options to purchase
shares of Common Stock at $10.625 per shares under the Stock Option Plan and 759
shares of Common Stock under the Restricted Stock Plan.

Executive Compensation

         Summary Compensation Table. The following table sets forth the cash and
non-cash  compensation  awarded to or earned by the chief executive officer.  No
other  executive  officer  had a salary and bonus  that  exceeded  $100,000  for
services rendered for the three fiscal years ended September 30, 2000.

<TABLE>
<CAPTION>
                                              Annual Compensation                 Long Term Compensation
                                 -----------------------------------------     -----------------------------
                                                                                Restricted      Securities
Name and                Fiscal                             Other Annual            Stock        Underlying       All Other
Principal Position       Year       Salary       Bonus     Compensation(1)       Award(2)      Options (#)      Compensation
-------------------      ----       ------       -----     ---------------       --------      -----------      ------------
<S>                    <C>      <C>          <C>             <C>                <C>             <C>             <C>
Gary N. Pelehaty,        2000     $118,909     $10,000         $7,300             $     -             -           $11,208(3)
 President, CEO          1999     $ 96,611      10,000          6,000              40,354          9,496           12,784(4)
   and Director          1998     $ 98,912           -          6,000                   -              -            2,946(5)
</TABLE>

-------------------
(1)  Consists of Board fees. Mr. Pelehaty also receives an automobile allowance.
(2)  At September 30, 2000, Mr. Pelehaty held 3,036 shares of restricted  stock,
     valued at  $29,222  based on the  closing  price of  $9.625  on that  date.
     Dividend right associated with the restricted stock are accrued and held in
     arrears to be paid at the time the shares vest.
(3)  Represents the award of 805 shares under the ESOP as of June 30, 2000 based
     upon the last  reported  sales price of the Common Stock on the date of the
     award, plus $3,565 for a 401(k) plan matching contribution.
(4)  Represents the award of 953 shares under the ESOP as of June 30, 1999 based
     upon the last  reported  sales price of the Common Stock on the date of the
     award, plus $2,896 for a 401(k) plan matching contribution.
(5)  Consists of 401(k) plan matching contributions.

         Stock Awards.  The following  table sets forth  information  concerning
options granted to Mr. Pelehaty.

<TABLE>
<CAPTION>
                          Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
                          ------------------------------------------------------------------------
                                                                                                       Value of
                             Shares                               Number of Options              In-the-Money Options
                            Acquired            Value           at Fiscal Year-End (#)          at Fiscal Year-End ($)
Name                     on Exercise(#)      Realized ($)     Exercisable/Unexercisable    Exercisable/Unexercisable(1)
----                     -------------      -------------     -------------------------    ----------------------------
<S>                         <C>              <C>                 <C>                              <C>
Gary N. Pelehaty               --               $ --                1,899 / 7,597                    $0 / $0
</TABLE>

----------------
(1)      Based upon the difference  between the option exercise price of $10.625
         and the last  reported  sales  price of the Common  Stock of $9.625 per
         share as of September 30, 2000, as reported on the OTC Bulletin Board.

                                       -6-
<PAGE>

         Employment Agreement. The Bank has entered into an employment agreement
(the  "Agreement") with Gary Pelehaty for a three year term. Mr. Pelehaty's base
compensation under the Agreement is $90,000. Under the Agreement, Mr. Pelehaty's
employment  may be  terminated  by the Bank for "just  cause" as  defined in the
Agreement.  If the Bank terminates Mr. Gary Pelehaty without just cause, he will
be entitled to a continuation of his salary from the date of termination through
the  remaining  term  of the  Agreement.  In the  event  of the  termination  of
employment in connection  with any change in control of the Bank during the term
of the  Agreement,  Mr.  Pelehaty  will be paid in a lump sum an amount equal to
2.99 times his prior five year's average taxable compensation. In the event of a
change in control at September 30, 2000,  Mr.  Pelehaty would have been entitled
to a lump sum payment of approximately $285,000.

Benefits

         The 1999 Stock Option  Plan.  The Board of Directors of the Company has
adopted the Stock Option Plan for the benefit of its  Directors,  officers,  and
key employees.  The Stock Option Plan was approved by the  stockholders on April
6, 1999.

         The  Restricted  Stock Plan.  The Board of Directors of the Company has
adopted a restricted  stock  program for the benefit of personnel of  experience
and  ability  in key  positions  of  responsibility  with the Bank.  The RSP was
approved by the stockholders on April 6, 1999.

--------------------------------------------------------------------------------
                         INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------

         Kronick Kalada Berdy & Co. ("KKB") was the Company's independent public
accountant for the 2000 fiscal year. The Board of Directors has appointed KKB to
be the  Company's  independent  public  accountant  for the fiscal  year  ending
September  30,  2001. A  representative  of KKB is expected to be present at the
Meeting to respond to  stockholders'  questions and will have the opportunity to
make a statement if the representative so desires.

--------------------------------------------------------------------------------
                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------------------------------

         The Bank,  like many financial  institutions,  has followed a policy of
granting various types of loans to officers, directors, and employees. The loans
have been made in the ordinary course of business and on substantially  the same
terms, including interest rates and collateral,  as those prevailing at the time
for comparable transactions with the Bank's other customers,  and do not involve
more than the  normal  risk of  collectibility,  or  present  other  unfavorable
features.

--------------------------------------------------------------------------------
                              STOCKHOLDER PROPOSALS
--------------------------------------------------------------------------------

         In  order  to be  considered  for  inclusion  in  the  Company's  proxy
materials  for the annual  meeting of  stockholders  for the fiscal  year ending
September 30, 2001, all stockholder  proposals must be received at the Company's
executive office at 789 Farnsworth Avenue, Bordentown, New Jersey 08505 no later
than  September 21, 2001.  In addition,  stockholder  proposals  must meet other
applicable  criteria  as set  forth  in the  Company's  bylaws  in  order  to be
considered for inclusion in the Company's proxy materials.

                                       -7-
<PAGE>

         Under the Company's bylaws, stockholder proposals that are not included
in the Company's proxy statement for the fiscal year ending  September 30, 2001,
will  only  be  considered  at the  annual  meeting  to be  held  in 2001 if the
stockholder  submits  notice of the proposal to the Company at the above address
by  December  21,  2001.  In  addition,  stockholder  proposals  must meet other
applicable  criteria  as set  forth  in the  Company's  bylaws  in  order  to be
considered at the 2001 annual meeting.

--------------------------------------------------------------------------------
                                  OTHER MATTERS
--------------------------------------------------------------------------------

         The Board of Directors is not aware of any other matters to come before
the Meeting.  However,  if any other  matters  should  properly  come before the
Meeting or any  adjournments,  it is intended  that proxies in the  accompanying
form will be voted in respect  thereof in  accordance  with the  judgment of the
persons named in the accompanying proxy.

--------------------------------------------------------------------------------
                                   FORM 10-KSB
--------------------------------------------------------------------------------

         A copy of the  Company's  annual  report on Form  10-KSB for the fiscal
year ended  September 30, 2000 will be furnished  without charge to stockholders
as of the Record Date upon written request to the Secretary, Farnsworth Bancorp,
Inc., 789 Farnsworth Avenue, Bordentown, New Jersey 08505.


                                             BY ORDER OF THE BOARD OF DIRECTORS


                                             /s/Charles Alessi
                                             -----------------------------------
                                             Charles Alessi
                                             Secretary




Bordentown, New Jersey
January 19, 2001



                                       -8-

<PAGE>

--------------------------------------------------------------------------------
                            FARNSWORTH BANCORP, INC.
                              789 FARNSWORTH AVENUE
                          BORDENTOWN, NEW JERSEY 08505
--------------------------------------------------------------------------------
                         ANNUAL MEETING OF STOCKHOLDERS
                                FEBRUARY 20, 2001
--------------------------------------------------------------------------------

         The  undersigned  hereby  appoints the Board of Directors of Farnsworth
Bancorp,   Inc.  (the  "Company"),   or  its  designee,   with  full  powers  of
substitution,  to act as attorneys and proxies for the undersigned,  to vote all
shares of Common Stock of the Company which the  undersigned is entitled to vote
at the Annual Meeting of Stockholders  (the  "Meeting"),  to be held at the Days
Inn, Route 206, Bordentown,  New Jersey on Tuesday,  February 20, 2001, at 10:00
a.m. and at any and all adjournments thereof, in the following manner:


                                                          FOR          WITHHELD
                                                         -----         --------
1.        The election as director of the nominees
          listed with terms to expire in 2004
          (except as marked to the contrary below):        |_|            |_|

          Charles E. Adams
          William H. Wainwright, Jr.


INSTRUCTIONS: To withhold your vote for either nominee, write the nominee's name
------------  on the line provided below.


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

        The Board of Directors recommends a vote "FOR" the above listed nominees
                                                  ---



In their discretion, such attorneys and proxies are authorized to vote upon such
other  business as may  properly  come  before the  Meeting or any  adjournments
thereof.


--------------------------------------------------------------------------------
THIS  SIGNED  PROXY  WILL BE  VOTED  AS  DIRECTED,  BUT IF NO  INSTRUCTIONS  ARE
SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR THE NOMINEES STATED. IF ANY OTHER
BUSINESS IS PRESENTED  AT THE MEETING,  THIS SIGNED PROXY WILL BE VOTED BY THOSE
NAMED IN THIS PROXY IN THEIR BEST  JUDGMENT.  AT THE PRESENT TIME,  THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
--------------------------------------------------------------------------------

<PAGE>



                THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

          Should the undersigned be present and elect to vote at the Meeting, or
at any  adjournments  thereof,  and after  notification  to the Secretary of the
Company at the Meeting of the  stockholder's  decision to terminate  this Proxy,
the power of said  attorneys  and proxies shall be deemed  terminated  and of no
further force and effect. The undersigned may also revoke this Proxy by filing a
subsequently  dated Proxy or by written  notification  to the  Secretary  of the
Company of his or her decision to terminate this Proxy.

          The  undersigned  acknowledges  receipt from the Company  prior to the
execution of this proxy of a Notice of Annual Meeting of  Stockholders,  a Proxy
Statement dated January 19, 2001 and the 2000 Annual Report to Stockholders.



Dated:
       -----------------------------



---------------------------------------         --------------------------------
PRINT NAME OF STOCKHOLDER                       PRINT NAME OF STOCKHOLDER




---------------------------------------         --------------------------------
PRINT NAME OF STOCKHOLDER                       PRINT NAME OF STOCKHOLDER



Please  sign  exactly  as your name  appears  on this  Proxy.  When  signing  as
attorney, executor,  administrator,  trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.





--------------------------------------------------------------------------------
PLEASE  COMPLETE,  DATE,  SIGN,  AND MAIL THIS PROXY  PROMPTLY  IN THE  ENCLOSED
POSTAGE-PREPAID ENVELOPE.
--------------------------------------------------------------------------------




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