<PAGE>
[MERCHANTS BANCORP, INC. LETTERHEAD]
March 13, 1996
Dear Stockholder:
You are cordially invited to attend the 1996 Annual Meeting of Stockholders
of Merchants Bancorp, Inc. to be held at the Copley Theatre, North Island
Center, 8 East Galena Boulevard, Aurora, Illinois on Tuesday, April 16, 1996 at
9:30 a.m.
As more fully described in the attached Notice of Annual Meeting of
Stockholders and the accompanying Proxy Statement, the principal business to be
addressed at the meeting is the election of directors and the ratification of
the appointment of Crowe, Chizek and Company LLP as independent public
accountants for the current fiscal year. In addition, we will review with you
the affairs and progress of the Company during the past fiscal year.
Your participation at this meeting is very important, regardless of the
number of shares you hold. Whether or not you contemplate attending the meeting,
we would appreciate your dating, signing and mailing the enclosed proxy as
promptly as possible in the accompanying envelope. If you attend the meeting,
you may revoke your proxy and vote your shares in person.
We look forward with pleasure to seeing and visiting with you at the
meeting.
Sincerely,
CALVIN R. MYERS
CHAIRMAN AND PRESIDENT
34 South Broadway - Aurora, Illinois 60507 - (708) 896-9000
<PAGE>
[MERCHANTS BANCORP, INC. LETTERHEAD]
34 SOUTH BROADWAY
AURORA, ILLINOIS 60507-0289
(708) 896-9000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 16, 1996
TO THE STOCKHOLDERS OF MERCHANTS BANCORP, INC., AURORA, ILLINOIS:
The Annual Meeting of Stockholders of Merchants Bancorp, Inc. (the
"Company") will be held at the Copley Theatre, North Island Center, 8 East
Galena Boulevard, Aurora, Illinois 60506, on Tuesday, April 16, 1996, at
9:30 a.m., for the following purposes:
1. To elect three individuals to serve in Class C for a term of three
years.
2. To elect one individual to serve in Class A for a term of one year.
3. To ratify the appointment of Crowe, Chizek and Company LLP as
independent public accountants for the Company for the year ending
December 31, 1996.
4. To act upon such other business as may properly come before the
meeting or any adjournments or postponements thereof.
Stockholders of record on the books of the Company at the close of business
on March 1, 1996, will be entitled to vote at the meeting. STOCKHOLDERS ARE
REQUESTED TO DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT THEY PLAN TO ATTEND THE MEETING. Stockholders giving
proxies retain the right to revoke them at any time before they are voted by
written notice of revocation to the Secretary of the Company, and stockholders
present at the meeting may revoke their proxies and vote in person.
For further information concerning individuals nominated as directors, use
of the proxy, and other related matters, you are respectfully urged to read the
Proxy Statement on the following pages. Enclosed is a copy of the Company's
1995 Annual Report to Stockholders.
By order of the Board of Directors,
DANA K. HOPP
ADMINISTRATIVE ASSISTANT
AND SECRETARY-TREASURER
Aurora, Illinois
March 13, 1996
<PAGE>
MERCHANTS BANCORP, INC.
34 SOUTH BROADWAY, AURORA, ILLINOIS 60507-0289
(708) 896-9000
PROXY STATEMENT
This Proxy Statement is furnished to stockholders of record on March 1,
1996, of Merchants Bancorp, Inc. (the "Company") in connection with the
solicitation on behalf of the Board of Directors of proxies to be used at the
Annual Meeting of Stockholders, or any adjournments or postponements thereof.
The meeting will be held at the Copley Theatre, North Island Center, 8 East
Galena Boulevard, Aurora, Illinois 60506, on Tuesday, April 16, 1996, at
9:30 a.m. The Company is a bank holding company which has been the parent of The
Merchants National Bank of Aurora, Aurora, Illinois ("Merchants Bank") since
1982. On January 3, 1996, the Company purchased Valley Banc Services Corp., a
bank holding company with banks located in St. Charles, Hinckley, Osco and
Grayslake, Illinois.
The Board of Directors would like to have all stockholders represented at
the meeting. Whether or not you plan to attend, please complete, sign and date
the enclosed proxy and return it in the accompanying postpaid return envelope as
promptly as possible. Stockholders giving proxies retain the right to revoke
them at any time before they are voted by written notice of revocation to the
Secretary of the Company, and stockholders present at the meeting may revoke
their proxy and vote in person. A proxy, when properly executed and not so
revoked, will be voted in accordance therewith. A majority of the shares of the
Common Stock, present in person or represented by proxy, shall constitute a
quorum for purposes of the meeting. Abstentions and broker non-votes will be
counted for purposes of determining a quorum.
Stockholders of record on the books of the Company, at the close of
business on March 1, 1996, will be entitled to vote at the meeting. As of
March 1, 1996, the Company had outstanding 2,574,091 shares of Common Stock, par
value $1.00 per share, with each share entitling its owner to one vote on each
matter submitted to a vote at the Annual Meeting. In all matters other than the
election of directors, the affirmative vote of the majority of shares present in
person or represented by proxy at the meeting and entitled to vote on the
subject matter shall be required to constitute stockholder approval. Directors
shall be elected by a plurality of the votes present in person or represented by
proxy at the meeting and entitled to vote. Abstentions will be treated as votes
against a proposal and broker non-votes will have no effect on the vote.
The cost of soliciting proxies will be borne by the Company. In addition to
use of the mails, proxies may be solicited personally or by telephone, courier
or facsimile transmission by officers, directors and certain employees of the
Company who will not be specially compensated for such solicitation. This Proxy
Statement and the accompanying proxy card were mailed or given to stockholders
commencing on or about March 13, 1996.
ELECTION OF DIRECTORS
At the Annual Meeting of the Stockholders to be held on April 16, 1996, the
stockholders will be entitled to elect three (3) Class C directors for a term
expiring in 1999 and one (1) Class A director for a term expiring in 1997. The
directors of the Company are divided into three classes having staggered terms
of three years. All of the nominees for election as Class C directors are
incumbent directors. The nominee for election as a Class A director is newly
nominated to serve on the Company's Board of Directors. The Company has no
knowledge that any of the nominees will refuse or be unable to serve, but if any
of the nominees becomes unavailable for election, the holders of the proxies
reserve the right to substitute another person of their choice as a nominee when
voting at the meeting.
Set forth below is information concerning the nominees for election and for
the other persons whose terms of office will continue after the meeting,
including age, year first elected a director and business experience during the
previous five years of each, as of March 1, 1996. Each of the three nominees
for Class C director, if elected
<PAGE>
at the Annual Meeting of Stockholders, will serve as a Class C director for a
three year term expiring in 1999. The nominee for Class A director, if elected
at the Annual Meeting, will serve as a Class A director for a one year term
expiring in 1997. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE YOUR SHARES
FOR EACH OF THE NOMINEES.
NOMINEES
PRINCIPAL OCCUPATION FOR THE PAST YEAR ELECTED
NAME AND AGE FIVE YEARS AND OTHER DIRECTORSHIPS TO THE BOARD
- ------------ ---------------------------------- ------------
CLASS C
(TERM EXPIRES 1999)
C. Tell Coffey . . . . . Self employed, construction 1981(1)
(Age 67) business (1985-present)
Calvin R. Myers . . . . Chairman of the Board, 1986
(Age 53) President and CEO of Merchants
Bancorp, Inc. and of The
Merchants National Bank of
Aurora
John J. Swalec . . . . . President, Waubonsee Community 1988
(Age 61) College (1981-present)
CLASS A
(TERM EXPIRES 1997)
William F. Hejna, M.D. . Senior Attending Surgeon, Rush- Nominee
(Age 63) Presbyterian-St. Luke's Medical
Center, Chicago, Illinois;
Professor, Rush Medical College
and Rush College of Health
Sciences; Managing Partner,
Pain & Rehabilitation Clinic of
Chicago; Director, MacNeal
Memorial Hospital Association
CONTINUING DIRECTORS
CLASS A
(TERM EXPIRES 1997)
James D. Pearson . . . . President and Director, Aurora 1982(1)
(Age 58) Metals Division, LLC
(non-ferrous foundry)
(1981-present)
Frank A. Sarnecki . . . Director General, Moose 1994
(Age 60) International, Inc. (fraternal
organization)(1994-present);
Real Estate Appraiser, Joy
Appraisal Co. (1969-1994)
William S. Wake . . . . Chairman, Eby-Brown Company 1974(1)
(Age 69) (wholesale distributor)
(1957-present)
CLASS B
(TERM EXPIRES 1998)
William C. Glenn . . . . President and Director, Olsson 1977(1)
(Age 57) Roofing Company, Inc. (roofing
and sheet metal contractor)
John M. Lies . . . . . . Vice President and Treasurer, 1995
(Age 49) Arnold Lies Co. (real estate
investment and management
company)(1969-present)
2
<PAGE>
PRINCIPAL OCCUPATION FOR THE PAST YEAR ELECTED
NAME AND AGE FIVE YEARS AND OTHER DIRECTORSHIPS TO THE BOARD
- ------------ ---------------------------------- ------------
Norman L. Titiner . . . President, Carpetville, Inc. 1989
(Age 62) (retail floor coverings)
(1966-present)
___________
(1) The date shown is the year originally elected to the Board of Directors of
Merchants Bank, which pursuant to a reorganization in 1982 became a wholly-owned
subsidiary of the Company. Each director has served continuously since the date
indicated.
There are no arrangements or understandings between any of the directors,
executive officers or any other person pursuant to which any of the directors or
executive officers have been selected for their respective positions.
BOARD COMMITTEES AND MEETINGS
The Board of Directors of the Company has established an Executive
Committee. The directors of the Company who are members of the Executive
Committee are William C. Glenn, C. Tell Coffey, John M. Lies, James D. Pearson,
John J. Swalec and William S. Wake. This committee has the responsibility for
nominating persons for vacancies on the board and for reviewing and approving
the compensation of executive officers. The Executive Committee also handles
such other matters as are delegated to it by the Board of Directors, including,
without limitation, reviewing and recommending the dividend program and
personnel policies. The Executive Committee met 14 times in 1995. The Executive
Committee will consider suggestions for nominations of possible candidates for
directors submitted by stockholders. Stockholders who wish to suggest qualified
candidates should write to the Secretary of the Company at 34 South Broadway,
Aurora, Illinois 60507-0289, stating in detail the qualifications of such person
for consideration by the committee. In addition, such nominations must comply
with the other provisions of Article II, Section 10 of the Company's Bylaws.
The Board of Directors of the Company also has established an Examining
Committee. The directors of the Company who are members of the Examining
Committee are James D. Pearson, C. Tell Coffey and Frank A. Sarnecki. The
Examining Committee confers with the independent auditors of the Company and
otherwise reviews the standards of internal controls, reviews the scope and
results of the audits, assesses the accounting principles followed by the
Company and recommends the selection of independent auditors. The Examining
Committee met three times in 1995.
The Board of Directors of the Company had 13 meetings during 1995. All of
the directors during their terms of office in 1995 attended at least 75% of the
Board of Directors meetings and committee meetings on which they served.
COMPENSATION OF DIRECTORS
During 1995, directors' fees paid by the Company included $100 for each
meeting of the Board of Directors and $100 for each committee meeting attended,
except that Calvin R. Myers receives no fees for his services as a director of
the Company. Each of the Bank's directors is paid an annual retainer of $1,500
and fees of $200 and $100, respectively, for each board and committee meeting
attended, except that Messrs. Myers and Voris receive no fees for their
attendance at committee meetings. Directors' remuneration is paid monthly.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock at March 12, 1996, by each
person known by the Company to be the beneficial owner of more than
3
<PAGE>
5% of the outstanding Common Stock, by each director or nominee, by each
executive officer named in the Summary Compensation Table and by all directors
and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL OR AMOUNT AND NATURE OF PERCENT
NUMBER OF INDIVIDUALS IN GROUP BENEFICIAL OWNERSHIP(1) OF CLASS
- ------------------------------ ----------------------- --------
<S> <C> <C>
DIRECTORS AND NOMINEES
C. Tell Coffey . . . . . . . . . . 10,000(2) *
William C. Glenn . . . . . . . . . 34,953(3) 1.36%
William F. Hejna, M.D. . . . . . . 1,000 *
John M. Lies . . . . . . . . . . . 3,017 *
Calvin R. Myers . . . . . . . . . . 24,426(4) *
James D. Pearson . . . . . . . . . 11,854 *
Frank A. Sarnecki . . . . . . . . . 310 *
John J. Swalec . . . . . . . . . . 1,355 *
Norman L. Titiner . . . . . . . . . 2,824 *
William S. Wake . . . . . . . . . . 11,316(5) *
OTHER EXECUTIVE OFFICERS
Frank K. Voris . . . . . . . . . . 27,317(6) 1.06%
Terence L. Kothe . . . . . . . . . 9,619(7) *
Randal A. Wright . . . . . . . . . 9,042(8) *
All directors and executive officers
as a group (16 persons) . . . . . 172,408(9) 6.65%
</TABLE>
_______________________
* Less than 1%
(1) The information contained in this column is based upon information
furnished to the Company by the individuals named above. The nature of
beneficial ownership for shares shown in this column is sole voting and
investment power, except as set forth in the footnotes below.
(2) Represents shares held by Merchants Bank as agent and over which Mr. Coffey
has no voting and sole investment power.
(3) Includes 12,500 shares held by Merchants Bank as agent and over which Mr.
Glenn has no voting and sole investment power. Excludes 1,326 shares
beneficially owned by Mr. Glenn's adult children. Mr. Glenn disclaims
beneficial ownership of all such excluded shares.
(4) Includes 9,141 shares held in joint tenancy with Mr. Myers' spouse and over
which voting and investment power is shared and 7,928 shares subject to options
awarded pursuant to the Merchants Bancorp, Inc. 1993 Stock Incentive Plan (the
"Stock Option Plan") which are presently exercisable and over which Mr. Myers
has no voting and sole investment power.
(5) Includes 10,914 shares held in joint tenancy with Mr. Wake's spouse and
over which voting and investment power is shared. Excludes 16,124 shares
beneficially owned by Mr. Wake's adult children, the beneficial ownership of
which shares is disclaimed by Mr. Wake.
(6) Includes 12,501 shares held in trust as part of the Estate of Frank Voris
over which Mr. Voris shares investment power but has no voting power and 3,596
shares subject to options awarded pursuant to the Stock Option Plan which are
presently exercisable and over which Mr. Voris has no voting and sole investment
power. Excludes 2,970 shares held by Mr. Voris' spouse and 1,129 shares
beneficially owned by Mr. Voris' adult children, the beneficial ownership of
which shares is disclaimed by Mr. Voris.
(7) Includes 2,266 shares subject to options awarded pursuant to the Stock
Option Plan which are presently exercisable and over which Mr. Kothe has no
voting and sole investment power.
4
<PAGE>
(8) Includes 1,663 shares held in joint tenancy with Mr. Wright's spouse and
over which voting and investment power is shared and 2,588 shares subject to
options awarded pursuant to the Company's Stock Option Plan which are presently
exercisable and over which Mr. Wright has no voting and sole investment power.
(9) Includes an aggregate of 18,446 shares subject to options awarded to
certain directors and officers pursuant to the Stock Option Plan which are
presently exercisable and over which the respective directors and/or officers
have no voting and sole investment power.
As of March 1, 1996, Merchants Bank held in its Trust Department in various
fiduciary capacities 425,762 shares of the Company's Common Stock (16.5% of the
total outstanding). Merchants Bank had full voting responsibility with respect
to 235,869 of such shares (9.2% of the total outstanding). Merchants Bank shared
voting responsibility with respect to 31,392 of such shares (1.2% of the total
outstanding). If Merchants Bank and the person or entity with which it shares
voting power do not agree on how these shares should be voted, these shares
would not be voted. It is the general policy of Merchants Bank to vote shares of
stock of the Company in accordance with the recommendations of the Board of
Directors. Merchants Bank had full investment power with respect to 155,796
shares (6.1% of the total outstanding) and shared investment power with respect
to 47,292 shares (1.8% of the total outstanding).
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's executive officers, directors and persons who own more than 10% of the
Company's Common Stock file reports of ownership and changes in ownership with
the Securities and Exchange Commission. Such persons are also required to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on the Company's review of the copies of such forms, and, if appropriate,
representations made to the Company by any such reporting person concerning
whether a Form 5 was required to be filed for 1995, the Company is not aware
that any of its directors, executive officers or 10% stockholders failed to
comply with the filing requirements of Section 16(a) during the period
commencing January 1, 1995 through December 31, 1995.
EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table shows the compensation earned for the last three fiscal
years by the Chief Executive Officer and those executive officers of the Company
(including those employed by the Company's subsidiaries) whose 1995 salary and
bonus exceeded $100,000:
5
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------- -------------------
(a) (b) (c) (d) (g) (i)
SECURITIES ALL OTHER
NAME AND UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(2) OPTIONS/SARS (#)(3) ($)(4)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Calvin R. Myers 1995 $ 216,231 $24,099 7,872 $ 6,920
Chairman of the Board, 1994 198,308 38,849 7,954 7,106
President and Chief 1993 179,127 29,047 --- 8,954
Executive Officer of the
Company and Merchants
Bank
Frank K. Voris 1995 $ 123,381 $10,608 3,540 $ 6,498
Vice President of the 1994 116,154 17,473 3,624 6,180
Company and Executive 1993 105,385 14,346 --- 5,269
Vice President and Chief
Operating Officer of
Merchants Bank
Terence L. Kothe 1995 $ 113,112 $ 6,646 2,218 $ 24,065
Executive Vice President, 1994 108,077 10,948 2,288 24,996
Trust and Financial 1993 105,000 12,085 --- 21,847
Services Division of
Merchants Bank
Randal A. Wright 1995 $ 115,559 $ 7,449 2,652 $ 5,935
Executive Vice President, 1994 109,715 13,088 2,555 5,794
Commercial Banking 1993 100,415 12,647 --- 5,019
Division of Merchants
Bank
</TABLE>
_______________
(1) Includes amounts deferred under the Merchants Bancorp, Inc. Thrift Plan.
(2) These amounts primarily include cash awards under the Management Incentive
Plan. The Management Incentive Plan provides for the payment of cash awards
based upon the executive's salary and the Company's return on equity for the
year. Management Incentive Plan awards are paid in the year following the year
earned.
(3) Represents options to buy Common Stock of the Company granted under the
Stock Option Plan.
(4) The total amounts in this column reflect the Company's contributions under
the Merchants Bancorp, Inc. Thrift Plan and, with respect to Mr. Kothe, such
amount also reflects compensation received under an incentive compensation
program relating to new accounts he is directly responsible for bringing to the
organization.
6
<PAGE>
STOCK OPTION INFORMATION
The following table sets forth certain information concerning the number
and value of stock options granted in the last fiscal year to the individuals
named in the Summary Compensation Table:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
- -------------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
FOR OPTION TERM
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% OF TOTAL
OPTIONS OPTIONS GRANTED
GRANTED TO EMPLOYEES IN EXERCISE OR BASE PRICE EXPIRATION
NAME (#)(1) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Calvin R. Myers 7,872 42% $24.75 5/16/05 $122,567 $310,472
Frank K. Voris 3,540 19% 24.75 5/16/05 55,118 139,618
Terence L. Kothe 2,218 12% 24.75 5/16/05 24,534 87,478
Randal A. Wright 2,652 14% 24.75 5/16/05 41,292 104,595
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Options become exercisable in equal portions (rounded to nearest share) on
November 16, 1995, May 16, 1996 and May 16, 1997.
The following table sets forth certain information concerning the
exercisable and nonexercisable stock options at December 31, 1995 held by the
individuals named in the Summary Compensation Table:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION VALUES
- -------------------------------------------------------------------------------------------------------------------------------
SHARES NUMBER OF SECURITIES
ACQUIRED UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
ON VALUE OPTIONS AT FY-END THE-MONEY OPTIONS
NAME EXERCISE REALIZED (#)(D) AT FY-END ($)(E)
(#)(A) (#)(B) ($)(C) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Calvin R. Myers --- $ --- 7,928 7,899 $30,393 $ 29,949
Frank K. Voris --- --- 3,596 3,568 13,787 13,531
Terence L. Kothe --- --- 2,266 2,240 8,688 8,503
Randal A. Wright --- --- 2,588 2,619 9,918 9,821
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
EMPLOYMENT AGREEMENTS
The Company entered into a three-year employment agreement with Mr. Myers
on August 30, 1993. In the absence of a notice from either party to the
contrary, the employment term under the agreement extends for an additional year
on each anniversary of the agreement. Under this agreement, Mr. Myers received
an annual salary of $216,231 in 1995. The agreement includes provisions for
periodic increases of Mr. Myers' salary, incentive compensation and
participation in the Company's benefit plans.
7
<PAGE>
The agreement is terminable at any time by either the Company's Board of
Directors or Mr. Myers. The Company may terminate the agreement at any time for
cause without incurring any post-termination obligation to Mr. Myers. The
agreement provides severance benefits in the event Mr. Myers is terminated
without cause. The severance benefits are equal to two times his annual salary
and continued benefit plan participation for two years. The Company also must
pay Mr. Myers all accrued salary, vested deferred compensation and other
benefits due to him on the termination date. If Mr. Myers is terminated in
connection with a change in control, he is to be paid severance compensation
equal to three times his annual salary and other compensation at the rates then
in effect at the time of termination, and he will be entitled to continue
participating in other benefit plans for three years. Mr. Myers is prohibited
from competing with the Company or its subsidiaries within a 25-mile radius of
the Company's main office for a period of one year following the termination of
his employment.
PENSION PLAN
The Company maintains the Merchants Bancorp, Inc. Pension Plan (the "Plan")
for its employees. The Plan is a non-contributory, trusteed pension plan
originally was known as "The Merchants National Bank of Aurora Pension Plan,"
and integrates benefits with anticipated Social Security payments. The Plan, as
amended and restated effective January 1, 1986, is intended to meet the
requirements of Section 401(a) of the Internal Revenue Code of 1986 (the "Code")
and the Employee Retirement Income Security Act of 1974 ("ERISA").
The following table provides estimated annual benefits payable upon
retirement at specified compensation and service levels:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL AVERAGE ----------------
ANNUAL SALARY 15 20 25 30 35
- ------------- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$ 30,000 . . . . . . . $4,190 $5,586 $6,983 $8,379 $ 9,776
40,000 . . . . . . . 6,440 8,586 10,733 12,879 15,026
50,000 . . . . . . . 8,690 11,586 14,483 17,379 20,276
70,000 . . . . . . . 13,190 17,586 21,983 26,379 30,776
90,000 . . . . . . . 17,690 23,586 29,483 35,379 41,276
110,000 . . . . . . . 22,190 29,586 36,983 44,379 51,776
130,000 . . . . . . . 26,690 35,586 44,483 53,379 62,276
150,000 . . . . . . . 31,190 41,586 51,983 62,379 72,776
170,000 . . . . . . . 32,054 42,783 53,512 64,241 74,970
190,000 . . . . . . . 35,591 47,681 59,770 71,860 83,949
205,000 . . . . . . . 38,244 51,354 64,464 77,574 90,684
225,000 . . . . . . . 41,782 56,252 70,723 85,193 99,664
250,000 . . . . . . . 45,358 61,204 77,050 92,895 108,741
270,000 . . . . . . . 45,358 61,204 77,050 92,895 108,741
</TABLE>
The definition of compensation for the Pension Plan Table is base salary.
As of December 31, 1995, the credited years of service for the individuals named
in the Summary Compensation Table were as follows: Calvin R. Myers -- 18, Frank
K. Voris -- 10, Terence L. Kothe -- 3 and Randal A. Wright -- 6.
Benefits are payable upon retirement at age 65 (subject to an early
retirement option) and are based upon the number of years of a participant's
service and his or her final average monthly compensation. Final average monthly
compensation is defined as the participant's average monthly remuneration for
the three successive calendar years for which his or her remuneration was the
highest out of the ten calendar years immediately preceding the date of
termination of service for the participant. Remuneration for purposes of this
Plan is gross earnings received by a participant exclusive of overtime pay,
bonuses, commissions, expense allowances and all other forms of extraordinary
compensation. A monthly income payable at retirement is the product of 1.5% of
final average monthly compensation and the participant's years of credited
service, less 21.665% of the participant's monthly "Covered Compensation"
(reduced proportionately for less than 35 years of credited service at
retirement). Covered
8
<PAGE>
Compensation is the average of the Social Security taxable wage bases for the 35
year period ending with the year in which the participant attains his or her
Social Security retirement age. Covered Compensation for a participant retiring
at age 65 in 1996 is $27,576.
The amounts set aside or accrued in the last fiscal year for the Plan are
computed on an actuarial basis using an aggregate funding method, and cost
cannot satisfactorily be allocated to individual employees. Because of the
funded status of the Plan, contributions were not required for the 1995 fiscal
year.
THE INCORPORATION BY REFERENCE OF THIS PROXY STATEMENT INTO ANY DOCUMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY THE COMPANY SHALL NOT BE
DEEMED TO INCLUDE THE FOLLOWING REPORT UNLESS SUCH REPORT IS SPECIFICALLY STATED
TO BE INCORPORATED BY REFERENCE INTO SUCH DOCUMENT.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's compensation program is administered by the Executive
Committee of the Board of Directors. The Committee is comprised of six
independent, non-employee directors. The Chief Executive Officer serves on this
committee ex-officio, but not as Chairman. Following review and approval by the
Executive Committee, all matters regarding executive compensation are referred
to the Board of Directors for final approval.
In determining appropriate levels of executive compensation, the Committee
has at its disposal reference information regarding compensation ranges and
levels for executive positions in comparable companies. In determining
compensation to be paid to executive officers, primary consideration is given to
quality long-term earnings growth to be accomplished by achieving both financial
and non-financial goals such as the implementation of the sales program, asset
quality and growth and staff training. The objectives of this philosophy are to
(i) encourage a consistent and competitive return to stockholders, (ii) reward
bank and individual performance, (iii) provide financial rewards for performance
for those having significant impact on corporate profitability and (iv) provide
competitive compensation in order to attract and retain key personnel.
The two basic components to the total compensation of all key executives,
including the Chief Executive Officer, are base salary and an incentive
component. The salary component is reflective of levels of responsibility,
authority and performance relative to similar positions in the banking industry.
These criteria are quantified by an external, nationally-recognized compensation
consulting company and are converted to salary ranges for various positions
within the organization, including that of Chief Executive Officer. The
practice of the Compensation Committee for the expected level of performance by
an executive in that particular job position is to have base salary reflect a
level consistent with the mid-point of the relevant range.
The incentive portion is directly related to overall executive performance
as measured by growth in earnings per share, asset growth, return on equity, new
trust business or other organizational issues such as investigating the
appropriateness of new lines of business, various opportunities for expansion
and other measures reflective of organizational growth and progress. The
incentive portion of the Chief Executive Officer's compensation is a function of
the degree to which the incumbent has successfully met a variety of objectives
set forth in writing by the Board of Directors at the beginning of the year.
His percentage completion of these objectives is then used to determine the
degree to which he participates in the final incentive award.
The stock option portion of compensation closely follows the cash incentive
portion. The mid-point of the executive's salary range is adjusted downward by
a weighting factor and then multiplied by the same percentage of completion as
was used to determine the cash incentive portion. This figure is then divided
by a number provided by an independent, external consulting agency which
reflects the present value of the option, itself.
The 1995 compensation of the Chief Executive Officer was determined by the
Executive Committee based on the policies previously described. The Chief
Executive Officer, while compensated by Merchants Bank, has a range of
responsibility for the management of both the Company and its Subsidiaries which
is considered when establishing levels of compensation.
William C. Glenn, Chairman
C. Tell Coffey
John M. Lies
James D. Pearson
John J. Swalec
William S. Wake
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Myers served in an ex-officio capacity on the Executive Committee of
the Company during the past fiscal year. However, Mr. Myers did not participate
in any decision pertaining to his own compensation.
THE INCORPORATION BY REFERENCE OF THIS PROXY STATEMENT INTO ANY DOCUMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY THE COMPANY SHALL NOT BE
DEEMED TO INCLUDE THE FOLLOWING PERFORMANCE GRAPH AND RELATED INFORMATION UNLESS
SUCH GRAPH AND RELATED INFORMATION ARE SPECIFICALLY STATED TO BE INCORPORATED BY
REFERENCE INTO SUCH DOCUMENT.
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The following graph shows a five year comparison of cumulative total
returns for the Company, the Nasdaq Stock Market (US Companies) and an index of
Nasdaq Bank Stocks. The Common Stock of the Company trades in the
over-the-counter market and was first listed for quotation on the Nasdaq Stock
Market in October, 1993. The graph was prepared at the Company's request by
Research Data Group, San Francisco, California.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
ASSUMES $100 INVESTED ON DECEMBER 31, 1990
[GRAPH]
*TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
10
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Cumulative Total Return
- ---------------------------------------------------------------------------------------------------------------------
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Merchants Bancorp Inc. $100 $127 $227 $329 $338 $456
Nasdaq Stock Market - US $100 $161 $187 $215 $210 $296
Nasdaq Bank Index $100 $164 $239 $272 $271 $404
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
TRANSACTIONS WITH MANAGEMENT
Certain directors and executive officers of the Company (including their
affiliates, families and companies in which they are principal owners, officers
or directors) were loan customers of, and had other transactions with, the
Company and its subsidiaries in the ordinary course of business. Such loans and
lines of credit 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 transactions with other persons and did not involve more than the
normal risk of collectibility or present other unfavorable features.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The appointment of independent public accountants is approved annually by
the Board of Directors. The decision of the Board of Directors is based on the
recommendation of the Examining Committee. In making its recommendation, the
Examining Committee reviews both the audit scope and estimated fees for
professional services for the coming year. The Board of Directors has authorized
the engagement of Crowe, Chizek and Company LLP ("Crowe Chizek") as its
independent public accountants for the fiscal year 1996. Crowe Chizek has had
the responsibility for examining the consolidated financial statements of the
Company and its subsidiaries since 1992. A proposal will be presented at the
meeting to ratify the appointment of Crowe Chizek. If the appointment of Crowe
Chizek is not ratified, the matter of the appointment of independent public
accountants will be considered by the Board of Directors.
One or more representatives of Crowe Chizek are expected to be present at
the annual meeting with the opportunity to make a statement, if they desire to
do so, and to be available to respond to the appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR RATIFICATION OF THIS APPOINTMENT.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
For inclusion in the Company's Proxy Statement and form of proxy relating
to the 1997 Annual Meeting of Stockholders, stockholder proposals must be
received by the Company on or before November 13, 1996. In order to be
presented at such meeting, notice of the proposal must be received by the
Company on or before February 16, 1997, and must otherwise comply with the
Company's bylaws.
OTHER MATTERS
Management does not intend to present any other business at the meeting and
knows of no other matters which will be presented. However, if any other matters
come before the meeting, it is the intention of the persons named in the
accompanying proxy to vote in accordance with their best judgment on those
matters.
11
<PAGE>
VOTING OF PROXIES
Unless a stockholder indicates otherwise, shares represented by proxy will
be voted in favor of the election of the three nominees for Class C director and
the one nominee for Class A director named in this proxy statement (or such
other person designated by the Board of Directors in the event a nominee is
unable or declines to serve), and in favor of the ratification of the
appointment of Crowe Chizek as independent public accountants for the Company
for the year ending December 31, 1996.
By order of the Board of Directors,
DANA K. HOPP
ADMINISTRATIVE ASSISTANT
AND SECRETARY-TREASURER
Aurora, Illinois
March 13, 1996
<PAGE>
PROXY MERCHANTS BANCORP, INC. PROXY
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS - APRIL 16, 1996
The undersigned hereby appoints Walter E. Deuchler, Jr., Edward J. McWethy
and Ralph D. Voris, or any of them acting in the absence of the others, with
power of substitution, attorneys and proxies, for and in the name and place of
the undersigned, to vote the number of shares of Common Stock that the
undersigned would be entitled to vote if then personally present at the Annual
Meeting of Stockholders of Merchants Bancorp, Inc., to be hold at the Copley
Theatre, North Island Center, 8 East Galena Boulevard, Aurora, Illinois 60506,
on Tuesday, April 16, 1996, at 9:30 a.m., local time, or any adjournments or
postponements thereof, upon the matters set forth in the Notice of Annual
Meeting and Proxy Statement (receipt of which is hereby acknowledged) as
designated on the reverse side, and in their discretion, the proxies are
authorized to vote upon such other business as may come before the meeting.
/ / Check here for address change. / / Check here if you plan to attend the
New Address: ____________________ meeting.
_________________________________
_________________________________
(Continued and to be signed on reverse side.)
<PAGE>
MERCHANTS BANCORP, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
1. Election of Directors -- Class C FOR AGAINST ABSTAIN
C. Tell Coffey, Calvin R. Myers / / / / / /
and John J. Swalec
2. Election of Directors -- Class A FOR AGAINST ABSTAIN
William F. Hejna, M.D. / / / / / /
3. To ratify the selection of Crowe, FOR AGAINST ABSTAIN
Chizek & Company LLP as independent / / / / / /
auditors for the Company for 1996.
The Board of Directors recommends a vote FOR all proposals.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATION MADE. IF NO CHOICES
ARE INDICATED, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.
Dated:___________________________, 1996
Signature(s)______________________________
______________________________
NOTE: Please sign exactly as your name(s) appears. For joint accounts, each
owner should sign. When signing as executor, administrator, attorney, trustee
or guardian, etc., please give your full title.
