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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 Rule 14a-11(c) or Rule 14a-12
Southern Michigan Bancorp, Inc
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] 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> 2
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held
Monday, April 19, 1999
The Annual Meeting of Shareholders of Southern Michigan Bancorp, Inc. will be
held on Monday, April 19, 1999 at Southern Michigan Bank & Trust, 51 West Pearl
Street, Coldwater, Michigan at 4:00 p.m. for the purpose of considering and
voting on the following matters:
(1) Election of three (3) directors to serve for a three year period
ending with the annual meeting of shareholders following the year
ended December 31, 2001.
(2) Ratification of the selection of Crowe, Chizek and Company LLP as
Independent Auditors for 1999.
Shareholders of record at the close of business on March 1, 1999 are entitled to
notice of and to vote at the Annual Meeting.
It is important that your shares be represented at the meeting. We urge you to
sign and return the enclosed proxy as promptly as possible, whether or not you
plan to attend the meeting in person. If you do attend the meeting, you may
revoke your proxy and vote in person.
By Order of the Board of Directors
James T. Grohalski
Secretary to the Board
March 15, 1999
<PAGE> 3
SOUTHERN MICHIGAN BANCORP, INC.
51 West Pearl Street
Coldwater, Michigan 49036
PROXY STATEMENT
General Information
- -------------------
This Proxy Statement is furnished in connection with the solicitation of proxies
on behalf of the Board of Directors of Southern Michigan Bancorp, Inc. (the
"Corporation"), a Michigan corporation, to be voted at the Annual Meeting of
Shareholders of the Corporation to be held Monday, April 19, 1999 at 4:00 p.m.
at Southern Michigan Bank & Trust, 51 West Pearl Street, Coldwater, Michigan
(the "Annual Meeting"), or any adjournment thereof, for the purposes set forth
in the accompanying Notice of the Annual Meeting.
The costs of soliciting proxies will be paid by the Corporation. Proxies may be
solicited by mail, in person or by telephone by directors, officers and regular
employees of the Corporation. These persons will not be specially compensated
for soliciting proxies.
As of March 1, 1999, the record date for the Annual Meeting, there were
1,857,130 shares of Common Stock of the Corporation, par value $2.50 per share,
("Common Stock") issued and outstanding. Each outstanding share is entitled to
one (1) vote on each matter submitted to a vote at the Annual Meeting. The
transaction of business at the Annual Meeting requires the presence of a quorum,
which will be established by the presence or representation at the Annual
Meeting of shares of the Corporation entitled to cast a majority of the votes at
the meeting. Directors will be elected by a plurality of the votes cast, whether
in person or by proxy, by holders of the Common Stock entitled to vote at the
Annual Meeting (see "Proposal (1) Election of Directors"). The affirmative vote
of a majority of the outstanding Shares entitled to vote at the Annual Meeting
is necessary to approve Proposal (2). Shares as to which authority is withheld
in the election of directors, abstentions and broker non-votes will be counted
for purposes of determining the presence of a quorum. Since they are not votes
cast, shares as to which authority is withheld will have no effect on the
election of directors. Abstentions and broker non-votes will have the same
effect as votes against Proposal (2).
Proxies are revocable by the delivery of written notice of revocation to the
Secretary of the Corporation at any time before the proxy is exercised. The
signing of a proxy does not preclude a shareholder from attending the Annual
Meeting and voting in person. All proxies returned before the Annual Meeting
will be voted in accordance with the instructions contained therein. If the
proxy is not marked with the shareholder's instructions as to voting, the shares
to which the proxy relates will be voted for the nominees for director named in
this Proxy Statement and in the discretion of the proxies on any other business
as may properly come before the Annual Meeting. All shareholders are encouraged
to mark, date and sign the enclosed proxy card and return it to Registrar and
Transfer, the transfer agent for the Corporation's stock. This Proxy Statement
and accompanying proxy card were first sent or given to shareholders on
approximately March 15, 1999.
Principal Shareholders
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The following table sets forth, as of February 28, 1999, the names and addresses
of all beneficial owners of 5% or more of Registrant's common stock (its only
authorized class of stock), showing the amount and nature of such beneficial
ownership:
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<TABLE>
<CAPTION>
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NAME & ADDRESS OF BENEFICIAL OWNER AMOUNT & NATURE OF PERCENT
TITLE OF CLASS BENEFICIAL OWNERSHIP(1) OF CLASS
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<S> <C> <C> <C>
Common Stock Southern Michigan Bank & Trust
51 West Pearl Street 323,463 (a) 17.42
Coldwater, Michigan 49036
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Common Stock Southern Michigan Bank & Trust 133,609 (b) 7.19
Employee Stock Ownership Plan
51 West Pearl Street
Coldwater, Michigan 49036
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Common Stock Harvey B. Randall 132,839 (c) 7.15
8391 Old U.S. 27 South
Marshall, Michigan 49068
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</TABLE>
(1) Based upon information furnished to the Corporation by the
beneficial owners named above. The nature of beneficial
ownership for shares shown is sole voting and investment
power, except as set forth below. Shares have been rounded to
the nearest whole share.
(a) Shares are held by Bank's Trust Department
in various fiduciary capacities which
include power to vote the shares.
(b) Shares are voted in accordance with
instructions from plan participants.
(c) Sole voting and investment power.
Proposal (1) Election of Directors
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Three directors are proposed to be elected at the Annual Meeting to serve for a
three year period ending with the annual meeting of shareholders following the
year ended December 31, 2001. All three of the proposed directors are currently
serving directors.
The following table lists the names of the nominees, their ages as of February
28, 1999, principal occupations and year in which each became a director.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION(S) YEAR FIRST BECAME
NAME OF DIRECTOR AGE FOR PAST 5 YEARS (1) DIRECTOR OF CORPORATION
- ---------------- --- --------------------- -----------------------
<S> <C> <C>
James P. Briskey 65 Owner - Briskey Elevator 1982
(grain elevator operator)
Nolan E. Hooker 47 Owner - Hooker Oil Co. 1991
(distributor of heating oil)
Jane L. Randall 77 Owner - Dally Tire Co. 1982
(tire distributor)
</TABLE>
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Notes:
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(1) The business experience of each director during the past five years
was that typical of a person engaged in the principal occupation
listed for each.
The following table sets forth, as of February 28, 1999, the total number of
shares of the Corporation's common stock beneficially owned, and the percent of
such shares so owned, by each director and by all directors and executive
officers of the Corporation as a group.
<TABLE>
<CAPTION>
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NAME OF INDIVIDUALS OR
NUMBER OF PERSONS IN AMOUNT AND NATURE OF PERCENT OF
GROUP BENEFICIAL OWNERSHIP (1) TOTAL CLASS
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<S> <C> <C> <C>
James Briskey 9,680 19,360 (1.04)
9,680(a)
H. Kenneth Cole 150 150 (2)
William E. Galliers 1,517 (a) 1,517 (2)
James T. Grohalski 19,667(b) 19,667 (1.06)
Nolan E. Hooker 750 (a) 750 (2)
Gregory J. Hull 789 (a) 789 (2)
Thomas E. Kolassa 1,356 1,356 (2)
James J. Morrison 2,272 (a) 2,272 (2)
Jane L. Randall 5,129 5,129 (2)
Freeman E. Riddle 4,120 6,344 (2)
2,224(a)
Jerry L. Towns 212(a) 11,930 (2)
11,718(c)
All directors and executive officers
as a group (11 persons) 69,264 69,264 3.72
</TABLE>
3
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(1) Based upon information furnished to the Registrant by the
individual named and the members of the designated group. The
nature of beneficial ownership for shares shown is sole voting
and investment power except as set forth below. Shares have
been rounded to the nearest whole share.
(a) Shared voting and investment power
(b) Includes 16,662 shares held by the
Corporation's Employee Stock Ownership Plan
as to which Mr. Grohalski has voting power.
(c) Includes 11,718 shares held by the
Corporation's Employee Stock Ownership Plan
as to which Mr. Towns has voting power.
(2) Less than one percent (1%).
Meetings, Committees and Compensation of the Board of Directors
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The Board of Directors of the Corporation held twelve (12) meetings during 1998.
All directors attended at least 75 percent (75%) of the aggregate of the total
number of meetings of the Board of Directors and the total number of meetings
held by all standing committees of the Board on which they serve.
The Corporation's Board of Directors has an Audit Committee. The Committee is
comprised of Messrs. Galliers, Hull, Kolassa and Cole. The Audit Committee
determines whether adequate internal controls are being maintained. It meets
with the Corporation's independent auditors to review internal controls,
procedures of the Corporation and the Bank, the scope of internal audits, the
financial position of the Corporation and external audits of the Corporation.
The Bank's Board of Directors has a Compensation Committee. The Committee is
comprised of Messrs. Morrison, Kolassa, Cole and Briskey. The Compensation
Committee is responsible for setting and administering the policies which govern
annual compensation and incentive programs. In addition, from time to time, it
reviews all executive compensation and benefit programs available to executive
officers of the Corporation and to all officers and staff of the Bank. In this
respect, the Committee makes recommendations to the Board of Directors with
respect to the Compensation of the President and Chief Executive Officer, as
well as reviewing and approving the President and Chief Executive Officer's
recommendations for other officers of the Corporation.
The Corporation's Board of Directors has an Executive Committee. The Committee
is comprised of Messrs. Towns, Grohalski, Hull, Riddle, Briskey and Mrs.
Randall. The Executive Committee reviews major policy changes, evaluates the
performance of the President and Chief Executive Officer and reviews any merger
or expansion plans. The Executive Committee also acts as the nominating
committee for future members of the Board of Directors. The Committee also
reviews any promotions to Executive Officer status.
Currently, each director of the Corporation whose principal occupation is not
with the Corporation or the Bank receives an annual fee of $6,108 which will be
indexed for inflation in 1999. In addition, outside directors are compensated
$150 for each committee meeting attended and participate in a bonus program
based upon the achievement of growth and profitability goals. The 1998 bonus
paid to each outside director was $1,595.
Executive Compensation
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The following table sets forth compensation paid by the Registrant and the Bank
with respect to the fiscal year ended December 31, 1998 to the Corporation's
Chief Executive Officer and the only other executive officer whose combined
salary and bonus exceeded $100,000.
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<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
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ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($)(1) COMPENSATION ($)(2)
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<S> <C> <C> <C>
Jerry L. Towns
President and Chief Executive 1998 $151,844 $5,878
Officer of the Registrant and 1997 $146,059 $5,978
Chairman of the Bank 1996 $149,201 $5,978
James T. Grohalski
Executive Vice President and 1998 $133,813 $7,400
Chief Financial Officer of the 1997 $135,225 $7,202
Registrant and President of the 1996 $123,968 $7,191
Bank
</TABLE>
(1) The amounts shown include amounts deferred under the 401(k)
provisions of the Bank's Employee Stock Ownership Plan
("ESOP") and the Bank's Executives' Deferred Compensation Plan
("Deferred Compensation Plan").
(2) The amounts shown include the following for 1998: (i)
employer contributions to accounts in the ESOP and the
Deferred Compensation Plan of $2,500 and $3,000, respectively
for Mr. Towns; and $3,994 and $3,000 respectively for Mr.
Grohalski; (ii) $378 and $406 constituting the value of
insurance premiums paid by the Bank for term life insurance
for Mr. Towns' and Mr. Grohalski's benefit, respectively.
Mr. Towns retired as President and Chief Executive Officer of the Corporation
and Chairman of the Bank effective December 31, 1998. He will continue to serve
as Chairman of the Board of Directors. Mr. Grohalski became President and Chief
Executive Officer of both the Corporation and the Bank upon Mr. Towns'
retirement.
Retirement Benefits
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Officers of the Registrant participate in the Southern Michigan Bank & Trust
Retirement Plan (the "Retirement Plan"), which has been adopted by the
Registrant. Under the terms of the Plan, a normal monthly retirement benefit is
provided to covered employees who attain the age of 65. It provides for a normal
retirement benefit after 30 years of credited service equal to 35% of a
participant's actual monthly compensation based on the participant's highest
consecutive five year average compensation (see column captioned
"Remuneration"). For participants with less than 30 years credited service,
reduced benefits are available in an amount equal to the normal retirement
benefit reduced by 1/30 for each year of service less than 30. Participants are
100% vested after five years of credited service, and are subject to forfeiture
upon termination of employment with credited service less than five years. The
following table represents estimated normal annual benefits payable on a
straight-life annuity basis upon retirement at age 65 and are not subject to
deduction for social security benefits:
5
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<TABLE>
<CAPTION>
PENSION PLAN TABLE
YEARS OF SERVICE
- ----------------------------------------------------------------------------------------------------------------------------------
REMUNERATION 25 30 35
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<S> <C> <C> <C> <C>
110,000 $32,100 $38,500 $38,500
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120,000 35,000 42,000 42,000
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130,000 37,900 45,500 45,500
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140,000 40,800 49,000 49,000
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150,000 43,750 52,500 52,500
- --------------------------------------------- --------------------------- ---------------------------- ---------------------------
</TABLE>
Jerry L. Towns has 26 years of credited service and $139,000 current covered
remuneration. James T. Grohalski has 31 years of credited service and $125,000
current covered remuneration.
The Bank also has in effect supplemental retirement arrangements in the form of
Executive Employee Salary Continuation Agreements with its executive officers
under which a specified annual benefit, in addition to that provided under the
Retirement Plan, is payable to the officer upon retirement at age 65, subject to
reduction for credited service of less than 30 years on the same basis as under
the Retirement Plan. The specified benefit under the salary continuation
agreements is also payable beginning at age 65, if the officer is terminated or
has his title, responsibility or compensation significantly lessened or the
status of his employment is changed without his consent. The specified annual
benefit, when added to the benefit under the Retirement Plan, is intended to be
approximately equal to the benefit the officer would have received under the
Retirement Plan but for a plan amendment which changed the Plan's benefit
formula to comply with changes in pension laws and which substantially reduced
the executive officers' benefits. For Jerry L. Towns, the specified annual
benefits payable upon retirement at age 65 under the supplemental retirement
arrangement is $16,860. For James T. Grohalski, the specified annual benefit
payable upon retirement at age 65 under the supplemental retirement arrangement
is $22,060.
The Bank also has a Deferred Compensation Plan for directors and certain
executive officers. Under the Deferred Compensation Plan, participants elect to
defer a portion of their compensation (in the case of directors, their fees) on
a pretax basis. Upon retirement at or after age 65, the participant or his
designated beneficiary is entitled to a benefit equal to the amount of the
participant's deferrals to the Plan plus earnings on such deferrals at a
specified rate of interest compounded annually, payable in equal monthly amounts
for not less than 180 months. Upon the participant's termination of employment
or retirement before age 65, the benefit payable to the participant at age 65 is
determined by multiplying the amount deferred under the Plan by the ratio of the
number of months for which the participant made deferrals to the number of
months from the time the participant began making deferrals to the participant's
reaching age 65. The amounts shown in the summary compensation table above
include amounts deferred as contributions under the Plan, which amounts are
subject to forfeiture pursuant to the formula described above for determining
the applicable benefit in the event the participant's employment terminates
before retirement at age 65.
Transactions with Directors and Officers
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Directors and officers of the Corporation and their associates were customers
of, and had transactions with the Bank in the ordinary course of business during
1998. All loans and commitments included in such transactions were made in the
ordinary course of business on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more than the normal risk of
collectibility or present other unfavorable features.
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Proposal (2) Selection of Independent Auditors
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The firm of Crowe, Chizek and Company LLP examined and certified the financial
statements of the Corporation for the year ended December 31, 1998. Upon the
recommendation of the Audit Committee, the Board of Directors has selected
Crowe, Chizek and Company LLP to act as the Corporation's independent auditors
for 1999.
This selection is being submitted to shareholders for ratification. While such
ratification is not required, the Corporation believes it is an important
corporate decision in which shareholders should participate. If the selection is
not ratified, the Board of Directors may, nevertheless, choose to retain Crowe,
Chizek and Company LLP as auditors for 1999.
A representative of Crowe, Chizek and Company LLP is expected to be present at
the Annual Meeting to respond to appropriate questions from shareholders and to
make any comments deemed appropriate.
Other Matters
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The Board of Directors knows of no matters to be presented for consideration at
the Annual Meeting other than the matters described herein. Should any other
matter properly come before the Annual Meeting, the persons named as proxies in
the accompanying proxy card will vote on such matters in their discretion.
Additional Information
- ----------------------
The financial statements of the Corporation, supplementary financial information
and management's discussion and analysis of operations for the fiscal year ended
December 31, 1998 are included in the Corporation's accompanying 1998 Annual
Report to Shareholders.
The Company files an Annual Report on Form 10-K with the Securities and Exchange
Commission. Form 10-K will be available upon request after March 31, 1999. To
request a copy of the Form 10-K address the request to Southern Michigan
Bancorp, Inc., 51 West Pearl Street, Coldwater, Michigan 49036, Attention:
Secretary.
By Order of the Board of Directors
James T. Grohalski
Secretary
7
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REVOCABLE PROXY
SOUTHERN MICHIGAN BANCORP, INC.
<TABLE>
<S><C>
With For All
For hold Except
[X] PLEASE MARK VOTES 1. Election of Directors of all nominees [ ] [ ] [ ]
AS IN THIS EXAMPLE listed below (except as marked to the
contrary below):
PROXY FOR ANNUAL MEETING
SOUTHERN MICHIGAN BANCORP, INC. James P. Briskey Nolan E. Hooker Jane L. Randall
The undersigned does hereby appoint
Stanley E. Tipton and Jaylen T. Johnson, INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
or either one of them, proxy with full NOMINEE, MARK "FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME
power of substitution, in the name, IN THE SPACE PROVIDED BELOW.
place and stead of the undersigned,
to vote all of the Common Shares of --------------------------------------------------------------
Southern Michigan Bancorp, Inc., held
by the undersigned on March 1, 1998 2. Ratification of the
at the Annual Meeting of Shareholders selection of Crowe, Chizek and FOR AGAINST ABSTAIN
to be held at Southern Michigan Bank Company LLP as Independent [ ] [ ] [ ]
& Trust, 51 West Pearl Street, Auditors for 1999.
Coldwater, Michigan, on April 19, 1999
at 4:00 p.m., and at any adjournment or The Board of Directors recommends shareholders vote "FOR" the nominees listed
adjournments thereof with all the in Proposal (1) and "FOR" Proposal (2). IF NO SPECIFIC VOTE IS GIVEN, THE PROXY
powers the undersigned would possess WILL BE VOTED "FOR" ALL NOMINEES AND "FOR" PROPOSAL (2). If any other business
if personally present. The Board of is presented at the meeting, this proxy shall be voted IN THE DISCRETION OF THE
Directors of the Corporation recommends PROXIES. All shares represented by properly executed proxies will be voted as
a vote in favor of the following directed. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and may be
proposals; revoked before its exercise by either written notice or notice in person at the
meeting or by a subsequently dated proxy. The undersigned hereby acknowledges
receipt of a Notice of Annual Meeting and Proxy Statement, each dated March 15,
1999, for the Annual Meeting of Shareholders of the Company called for April 19,
1999.
NOTE: Please sign your name(s) exactly as printed on your stock certificates to
authorize the voting of your shares as indicated above. Persons signing as
Executors, Administrators, Trustees, etc. should so indicate. Corporate, should
be signed by an authorized officer.
PLEASE BE SURE TO SIGN AND DATE Date
THIS PROXY IN THE BOX BELOW
Stockholder sign above Co-holder (if any) sign above
/\ DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED. /\
SOUTHERN MICHIGAN BANCORP, INC.
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PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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</TABLE>
