HANOVER BANCORP, INC.
33 Carlisle Street
Hanover, Pennsylvania 17331
March 8, 1996
To Our Shareholders:
On behalf of the Board of Directors and Management, I cordially invite you
to attend the 1996 Annual Meeting of Shareholders of Hanover Bancorp, Inc.
to be held at the Hanover Country Club, Lincolnway East, R.D. 1,
Abbottstown, Pennsylvania, on Tuesday, April 9, 1996 at 9:30 a.m.,
prevailing time. Notice of the Annual Meeting, a Proxy Statement, a Proxy,
an Annual Meeting Reservation Form and the 1995 Annual Report of Hanover
Bancorp, Inc. are enclosed herewith. We hope you will take the opportunity
to carefully review these materials.
At the Annual Meeting of Shareholders, you will be asked to elect four (4)
directors to hold office for a three-year term; and to transact such other
business that may properly come before the meeting. There will also be a
report to the shareholders as to the affairs of the Corporation and its
banking subsidiary, and during the meeting a discussion period will take
place at which time shareholders will have an opportunity to bring up
matters of interest concerning the Corporation and its banking subsidiary.
We strongly encourage you to vote your shares whether or not you plan to
attend the meeting. It is very important that you mark, sign, date and
return the enclosed Proxy card promptly. If you plan to attend the
meeting, please return the Reservation Form along with your Proxy. A
postage paid business reply envelope is provided herein for your
convenience. If you do attend the meeting and wish to vote in person, you
must give written notice thereof to the Secretary of the Corporation so
that your Proxy will be superseded by any ballot that you submit at the
meeting.
Very truly yours,
/S/Terrence L. Hormel
Terrence L. Hormel
Chairman of the Board
<PAGE>
HANOVER BANCORP, INC.
33 Carlisle Street
Hanover, Pennsylvania 17331
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 9, 1996
TO THE SHAREHOLDERS OF HANOVER BANCORP, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of
HANOVER BANCORP, INC. (the "Corporation") will be held at the Hanover Country
Club, Lincolnway East, R.D. 1, Abbottstown, Pennsylvania 17301, on Tuesday,
April 9, 1996, at 9:30 a.m., prevailing time, for the following purposes:
(1) to elect four (4) persons to the Board of Directors of the
Corporation to hold office for a three-year term and until
their successors are duly elected and qualified;
(2) to transact such other business as may properly come before
the Annual Meeting and any adjournment or postponement
thereof.
The Board of Directors has established the close of business on February
15, 1996, as the record date for the determination of those shareholders who
are entitled to notice of, and to vote at, the Annual Meeting and any
adjournment or postponement thereof.
A copy of the Corporation's Annual Report and Form 10-K for the fiscal
year ended December 31, 1995, is being mailed with this Notice. Copies of
the Corporation's Annual Report and Form 10-K for the 1994 fiscal year may be
obtained at no cost by contacting Gerald M. Warner, Secretary, 33 Carlisle
Street, Hanover, Pennsylvania 17331, telephone (717) 637-2201.
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THIS MEETING
REGARDLESS OF THE NUMBER OF SHARES THAT YOU HOLD. PLEASE MARK, SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED POSTAGE PAID ENVELOPE, IN
ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED. THE GIVING OF SUCH PROXY
DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING AND
GIVE WRITTEN NOTICE TO THE SECRETARY OF THE CORPORATION.
By Order of the Board of Directors
/S/ Gerald M. Warner
Gerald M. Warner
Secretary
March 8, 1996
YOUR ATTENTION IS DIRECTED TO THE PROXY STATEMENT ACCOMPANYING THIS NOTICE OF
MEETING OF SHAREHOLDERS.
<PAGE>
HANOVER BANCORP, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 9, 1996
DATE, TIME and PLACE OF ANNUAL MEETING
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors of HANOVER BANCORP, INC. (the
"Corporation" or "Company") of Proxies to be voted at the Annual Meeting of
Shareholders of the Corporation to be held on Tuesday, April 9, 1996, at 9:30
a.m., prevailing time, at the Hanover Country Club, Lincolnway East, R.D. 1,
Abbottstown, Pennsylvania 17301, and at any adjournment or postponement of
the Annual Meeting. This Proxy Statement and the enclosed form of Proxy (the
"Proxy") are first being sent to shareholders of the Corporation on or about
March 8, 1996, to shareholders of record of the Corporation as of February
15, 1996. HANOVER BANCORP, INC. is a Pennsylvania business corporation. The
principal executive office of the Corporation is in the Administration Center
located at 33 Carlisle Street, Hanover, Pennsylvania 17331. The telephone
number for the Corporation is (717) 637-2201. All inquiries should be
directed to the Secretary, Hanover Bancorp, Inc. at the above address. The
Bank of Hanover and Trust Company (the "Bank") is the wholly-owned subsidiary
of the Corporation.
SOLICITATION AND VOTING OF PROXIES
Shares of common stock of the Corporation may be voted by shareholders
in person or by proxy. Holders of common stock are entitled to one vote per
share and do not have cumulative voting rights in the election of directors.
If the proxy enclosed herewith (the "Proxy") is properly executed and
returned, the shares represented by it will be voted in accordance with the
directions thereon; or if no directions are indicated, the Proxy will be
voted "FOR" the election to the Board of Directors of the four (4) nominees
listed in this Proxy Statement. If any other matters should be presented at
the Annual Meeting on which a vote may properly be taken, it is intended that
the shares represented by Proxies at such meeting will be voted with respect
thereto in accordance with the sole discretion of the proxyholders.
Proxies are being solicited by and on behalf of the Board of Directors
of the Corporation (the "Board"). All expenses of this solicitation,
including the cost of preparing, assembling, printing, mailing and soliciting
Proxies, and any additional material which the Corporation may furnish
shareholders in connection with the Annual Meeting will be borne by the
Corporation. Directors, officers and employees of the Corporation or the
Bank may, with no additional compensation, use telephone and other means of
communication to request the holders of common stock to return their Proxies.
The Corporation will not pay any compensation for the solicitation of
Proxies, but may reimburse to nominees, fiduciaries and other custodians
their reasonable expenses in sending Proxy materials to their principals and
obtaining their instructions.
<PAGE>
REVOCABILITY OF PROXY
If the enclosed Proxy is executed and returned, it nevertheless may be
revoked at any time prior to its exercise, only (1) by giving written notice
of revocation to Gerald M. Warner, Secretary, Hanover Bancorp, Inc., 33
Carlisle Street, Hanover, Pennsylvania 17331, (2) by executing a later-dated
Proxy and giving written notice thereof to the Secretary of the Corporation,
or (3) by voting in person after giving written notice to the Secretary of
the Corporation.
VOTING SECURITIES AND RECORD DATE
The close of business on February 15, 1996, has been fixed as the record
date for determination of shareholders entitled to notice of and to vote at
the Annual Meeting. At the close of business on February 15, 1996, the
Corporation currently is authorized to issue 6,750,000 shares of Common
Stock, par value $1.11 per share (the "Common Stock") and 2,000,000 shares of
Preferred Stock, par value $2.50 per share (the "Preferred Stock"). At the
close of business on February 15, 1996, the Corporation had outstanding
3,108,118 shares of Common Stock and no shares of Preferred Stock. Common
Stock is entitled to one vote.
QUORUM AND REQUIRED VOTE
Pursuant to Article III, Section 6 of the By-laws of the Corporation,
the presence, in person or by Proxy, of the shareholders entitled to cast at
least a majority of the votes which all shareholders are entitled to cast
shall constitute a quorum for the transaction of business at the Annual
Meeting. Under Pennsylvania law and the Corporation's By-laws, the presence
of a quorum is required for each matter to be acted upon at the Annual
Meeting. Votes withheld and abstentions will be counted in determining the
presence of a quorum for the particular matter. Broker non-votes will not be
counted in determining the presence of a quorum for the particular matter as
to which the broker withheld authority. Shareholders will not be entitled to
cumulate their votes in the election of directors.
The four (4) nominees receiving the highest number of votes will be
elected.
PRINCIPAL OWNERS OF THE CORPORATIONS'S SHARES
As of February 15, 1996, there is no shareholder of record who is known
by the Board to be the beneficial owner of more than five percent of the
Corporation's outstanding Common Stock.
<PAGE>
OWNERSHIP OF SECURITIES BY THE CORPORATION'S
DIRECTORS, NOMINEES AND PRINCIPAL OFFICERS
<TABLE>
The following table sets forth information as of February 15, 1996,
regarding the amount and nature of ownership of Common Stock of the
Corporation by each director, each nominee and by all of the directors,
nominees and principal officers of the Corporation as a group. Each such
individual has sole voting and investment power with respect to the shares
listed except as otherwise indicated in the footnotes to the table.
<CAPTION>
Amount and Nature of
Name of Individual of Beneficial Percent
or Identity of Group Ownership(1)(2)(3)(4) of Class(2)
<S> <C> <C>
Thomas M. Bross, Jr. 120,183 3.87%
Michael D. Bross 6,011 (5) .19%
S. Forry Eisenhart, Jr. 2,365 .08%
Bertram F. Elsner 5,824 (6) .19%
J. Daniel Frock 16,448 (7) .53%
John S. Hollinger, Jr. 7,676 .25%
Terrence L. Hormel 15,843 (8) .51%
Earl F. Noel, Jr. 6,683 .22%
Vincent P. Pisula, MD 51,871 (9) 1.67%
J. Bradley Scovill 5,370 (10) .17%
Charles W. Test 10,800 (11) .35%
All directors and principal officers
of the Corporation as a group (18 persons) 268,459 (12) 8.63%
<FN>
(1) No Common Stock owned by the individuals included in the table is held
in fiduciary accounts under control of the Bank's Trust Department.
(2) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in
the General Rules and Regulations of the Securities and Exchange
Commission and may include securities owned by or for the individual's
spouse and minor children and any other relative who has the same home,
as well as securities to which the individual has or shares voting or
investment power or has the right to acquire beneficial ownership within
60 days after February 15, 1996.
(3) Information furnished by the directors and the Corporation.
(4) In all cases, shared voting power results from joint ownership with the
referenced persons.
(5) Includes 3,673 shares in respect of which Mr. Bross shares voting power
with his wife, Nancy J. Bross.
(6) Includes 322 shares and 695 shares in respect of which Mr. Elsner shares
voting power with his wife, Joyce C. Elsner, and son, Bertram F. Elsner
II, respectively.
(7) Includes 15,514 shares of which Mr. Frock shares voting power with his
wife Joanne K. Frock.
(8) Includes 2,697 shares held by Mr. Hormel's wife, Monna B. Hormel.
<PAGE>
(9) Includes 22,237 shares held by Dr. Pisula's wife, Amy R. Pisula.
(10) Includes 1,564 shares in respect of which Mr. Scovill shares voting
power with his wife Joanne M. Scovill.
(11) Includes 205 shares held by Mr. Test's wife, Ingsborg G. Test.
(12) Includes 23,999 shares in which seven officers share beneficial
ownership with their spouses.
</TABLE>
<PAGE>
ELECTION OF DIRECTORS
The By-laws of the Corporation provide that the Corporation's business
shall be managed by its Board. Article III, Section 1 of the By-laws
provides that the number of directors shall not be less than five nor more
than twenty-five and that the members of the Board shall hold office for
three years or until their successors are duly elected and qualified. The
shareholders shall, at each meeting, determine how many directors shall be
elected at that meeting to serve during the ensuing year. The Board may,
within the limitations prescribed in paragraph "a" of Section 1 increase the
number of directors by not more than two in any one year, provided that they
serve for a term to expire at a time designated by the Board. Every director
shall be a shareholder of the Corporation and he shall own, in his own right,
as tenant by the entirety with his spouse, or beneficially, one hundred
shares of the common stock of the Corporation. No person, except those who
were serving as directors as of June 2, 1982, shall be eligible for election
after he or she shall have obtained the age of 70. Pursuant to Article III,
Section 3 of the By-laws, vacancies on the Board may be filled by the
remaining members of the Board, though less than a quorum, and any director
or directors so elected shall hold office for the unexpired term of the
director or directors who he, she or they replace, and until, his, her or
their successor or successors are elected by the shareholders and qualify.
On the date of the Annual Meeting, the Board will consist of eleven
members. Four (4) nominees are to be elected to hold office for a three-year
term and until their successors are duly elected and qualified. The names of
the nominees for election and the names of the other directors whose terms
continue following the Annual Meeting are shown below. Following the Annual
Meeting, the Board will consist of eleven members. It is the intention of
persons designated in the Proxy to vote "FOR" the nominees listed. If any
nominee or nominees should become unavailable for election (which is not
expected), the Proxies will vote "FOR" such other individuals as the Board
may recommend. All business experience shown for each director is for a
period of at least five years.
Management and the Board recommend the four (4) nominees for election to
the Board and intend to vote their shares "FOR" the nominees.
NOMINEES FOR DIRECTOR WHOSE TERM EXPIRES IN 1999
AND CURRENT DIRECTORS WHOSE TERM EXPIRES IN 1996
MICHAEL D. BROSS, age 42, is President of Berwick Enterprises, Inc.
which is the operating company for The Bridges Golf Club. He is also owner
of Stonewood Farms which operates turkey farms and raises cutting horses.
Prior to the establishment of Stonewood Farms and Berwick Enterprises, Mr.
Bross was employed by Round Hill Foods, Inc., most recently as President. He
is the son of Director Thomas M. Bross, Jr. Mr. Bross has served as a
Director of the Bank since 1987 and of the Corporation since May 1987. He is
a member of the Bank's Trust Committee and Audit and Compliance Committee.
He is serving or has served on the Bank's Loan Committee during the past
year.
THOMAS M. BROSS, JR., age 74, is the former President and Chairman of
the Board of Round Hill Foods, Inc., New Oxford, Pennsylvania, a food
<PAGE>
processor. He is the father of Director Michael D. Bross. He is Vice
Chairman of the Board of Directors of the Corporation and the Bank. Mr.
Bross has served as a Director of the Bank since 1973 and of the Corporation
since August 1983. He is a member of the Bank's Executive, Finance and
Strategic Planning Committees. He is serving or has served on the Bank's
Loan Committee during the past year.
EARL F. NOEL, JR., age 50, is President of Yazoo Mills, Inc., a
manufacturer of paper tubes and cores, located in New Oxford, Pennsylvania.
Mr. Noel was named as a Director of the Bank and the Corporation in September
1995. He is a member of the Bank's Finance Committee, and Trust Committee.
J. BRADLEY SCOVILL, age 36, is Director, President and Chief Executive
Officer of the Corporation since January 1996 and of the Bank since December
1994. He is an ex officio member of all committees of the Bank's Board of
Directors, with the exception of the Audit and Compliance Committee. Mr.
Scovill previously served as the Treasurer of the Corporation and Chief
Financial Officer of the Bank since 1991. Prior to joining the Corporation,
Mr. Scovill was employed by L. R. Webber Associates, Hollidaysburg,
Pennsylvania since 1981, most recently as Vice President of Community Banking
Services.
DIRECTORS TO CONTINUE IN OFFICE UNTIL 1997
TERRENCE L. HORMEL, age 47, is President of KeyMan Distribution
Resources, a contract logistical services company; Secretary/Treasurer of
Keystone Distribution Center, a public warehousing and distribution company;
and Treasurer of Midlantic Transfer, Ltd. He is also Managing Partner of
Penntown Properties and Partner of Hormel Associates which are commercial
real estate development and management companies. All of these companies are
located in Hanover, Pennsylvania. He is the Treasurer of Hanover Hospital
and Hanover Healthcorp, Inc. and is Vice Chairman of the York County
Industrial Development Corporation. Mr. Hormel is Chairman of the Board of
Directors of the Corporation and the Bank. Mr. Hormel has served as a
Director of the Bank since 1981 and of the Corporation since August 1983. He
is Chairman of the Bank's Executive Committee and Strategic Planning
Committee. He is serving or has served on the Bank's Loan Committee during
the past year. He is an ex officio member of all committees of the Bank's
Board of Directors.
VINCENT P. PISULA, M.D., age 72, is a surgeon who has practiced general
surgery in the Hanover area since 1959. He has business experience in
farming, land sales and development. He is also a Director of Quadco, Inc.,
apartment and office building, which has a class of securities registered
under the Securities Exchange Act of 1934. Dr. Pisula has served as a
Director of the Bank since 1969 and of the Corporation since August 1983. He
is a member of the Bank's Audit and Compliance Committee, Finance Committee,
and Strategic Planning Committee. He is serving or has served on the Bank's
Loan Committee during the past year.
CHARLES W. TEST, age 69, is Chairman of the Board of C.W. Test Builder,
Inc., general contractors, since 1958 and owner of C.W. Test Orchards, land
development. He is the President and a Director of Quadco, Inc., apartment
and office building, which has a class of securities registered under the
Securities and Exchange Act of 1934. Mr. Test has served as a Director of
<PAGE>
the Bank since 1973 and of the Corporation since August 1983. He is a member
of the Bank's Trust Committee and Building Committee. He is serving or has
served on the Bank's Loan Committee during the past year.
S. FORRY EISENHART, JR., age 46, is President and Chief Executive
Officer of Eisenhart Wallcoverings Company and Eisenhart Corporation, a
wallcovering manufacturer headquartered in Hanover, Pennsylvania. Mr.
Eisenhart was named as a Director of the Bank and the Corporation in August
1993. He is Chairman of the Bank's Trust Committee, and a member of the
Bank's Executive Committee, and Finance Committee. Mr. Eisenhart is serving
or has served on the Bank's Loan Committee during the past year.
DIRECTORS TO CONTINUE IN OFFICE UNTIL 1998
BERTRAM F. ELSNER, age 59, is President and Chief Executive Officer of
Elsner Engineering Works, Inc., which designs and manufactures automatic
rewinding machines and specialty machinery. He has served as Director of the
Bank since 1985 and of the Corporation since December 1985. Mr. Elsner is
Chairman of the Bank's Audit and Compliance Committee, and a member of the
Bank's Executive Committee, and the Building Committee. He is serving or has
served on the Bank's Loan Committee during the past year.
J. DANIEL FROCK, age 55, is co-owner and President of Frock Bros.
Trucking, Inc., which provides 48-state truck service to manufacturers and
shippers of industrial goods, food products and consumer wares. Prior to
joining Frock Bros. Trucking, Inc., Mr. Frock was employed by Hanover Wire
Cloth Division of CCX, Inc., most recently as Vice President of Operations.
He has served as a Director of the Bank since 1985 and of the Corporation
since December 1985. Mr. Frock is a member of the Bank's Audit and
Compliance Committee, Finance Committee, and the Strategic Planning
Committee. He is serving or has served on the Bank's Loan Committee during
the past year.
JOHN S. HOLLINGER, JR., age 53, is a Real Estate Broker and owner of the
Hollinger Group, Real Estate Co. He is active in real estate sales, rentals,
management, appraisals and land subdivision and development. Mr. Hollinger
has served as a Director of the Bank since 1978 and of the Corporation since
August 1983. He is Chairman of the Bank's Building Committee, and a member
of the Bank's Executive Committee and the Trust Committee. He is serving or
has served on the Bank's Loan Committee during the past year.
BOARD OF DIRECTORS AND COMMITTEES
The Corporation's Board met eight times during 1995. The Board of
Directors of the Bank met thirteen times during the year ended December 31,
1995. All incumbent directors attended at least 75 percent of the aggregate
number of meetings held by the Board of Directors of the Corporation and the
Bank, and its committees, during the time each such director was a member of
the Board of the Corporation or the Bank or any committee thereof.
The Board has not provided for separate Audit, Nominating and
Compensation Committees. However, the normal functions of such committees
are carried out by the Board as a whole. Any shareholder who desires to
propose an individual for consideration by the Board as a nominee for
<PAGE>
Director should submit a written proposal to the Secretary of the Corporation
in accordance with Pennsylvania Corporation Law of 1988, as amended.
The Board of Directors of the Bank has standing Executive, Audit and
Compliance, Trust, Finance, Strategic Planning and Building Committees. The
Bank also has a standing Loan Committee which rotates all of its directors to
serve for a period of at least three months each year. Terrence L. Hormel,
Chairman of the Board, is an ex officio member of all Board committees for
the Bank.
The Audit and Compliance Committee of the Bank met four times during
1995 to review reports presented by the internal auditor and by the loan
review and compliance officer. The Committee also reviews the annual audit
performed by the external auditors. The Committee makes suggestions to
management to improve internal control and to protect against improper
security for all assets and records. This Committee is comprised of
Directors B.F. Elsner, Chairman; M.D. Bross, J.D. Frock and V.P. Pisula, M.D.
COMPENSATION OF DIRECTORS
Directors of the Bank, including the Chairman of the Board, who are not
also employees are entitled to fees at the rate of $1,500 per quarter and
$350 per regular Board Meeting and $150 for special Board Meetings and
Committee Meetings.
Terrence L. Hormel, as Chairman of the Board, receives an annual
retainer of $14,400. He receives no fees for Committee Meetings. Mr. Hormel
earned total fees of $24,900 during 1995. Aggregate fees paid to all
directors in 1995 were $146,450.
The Bank offers a Deferred Compensation Plan and nine current or former
directors participated in the program during 1995. Under this program,
participating directors elected to forego receipt of director's fees for a
period of five years in return for a defined benefit over a ten year period.
In order to account for this benefit, the Bank is required to fund a
liability which recognizes the Bank's future contractual obligation to the
participants. The Bank is providing for cost recovery through the purchase
of life insurance policies covering the participants on which it is the owner
and beneficiary. The Bank has entered into Split Dollar Agreements with four
current directors who had previously participated in the Deferred
Compensation Plan. Under the Split Dollar Agreements, the Bank agrees to
purchase a life insurance policy for the participant until age 65. This life
insurance policy is then split to provide the participant with an undefined
amount of compensation over a ten year period while the Bank maintains the
policy in force to provide cost recovery. Since there is no contractual
obligation to provide a defined future benefit, the Bank is not required to
fund a liability on behalf of the participant. The 1995 costs associated
with the deferred compensation program and Split Dollar Agreements was
$86,939.
<PAGE>
COMPENSATION COMMITTEE REPORT
The Board has primary and ultimate responsibility for the governance of
the Corporation. The Board's fundamental task in discharging this
responsibility, which includes serving as steward for the shareholders'
investment and fiduciary for the customers' deposits, is to provide a capable
staff of executive officers, including the Chief Executive Officer. The
authority required to operate and manage the resources of the Corporation is
delegated to these officers in order to achieve the stewardship and fiduciary
goals established by the Board.
Compensation of executive officers, including the Chief Executive
Officer, is an essential aspect of the Board's governance responsibilities.
The Executive Committee of the Board is responsible for implementing the
Corporation's Executive Compensation Policy. This Policy is to provide and
maintain a salary and benefit program that rewards executive officers,
including the Chief Executive Officer, for service to the Corporation at a
level sufficient to attract and retain the appropriate quality individual in
each position.
The compensation range for each position is determined through
evaluation of internal and external equity, labor market conditions, specific
responsibilities set forth in the position description and legal and
regulatory requirements. Specific compensation for each officer, including
the Chief Executive Officer, is based primarily on the performance of the
incumbent, as measured in the annual performance review, with the goal of
matching the officer's compensation to his/her "value added" to the
Corporation.
This "value added" has two components (1) the dollar value of adequately
discharging the duties of the office as measured by the pay scale for the
position, and (2) the extra value added by the incumbent's extraordinary
effort and results. Thus, the compensation for executive officers, including
the Chief Executive Officer, consists of base salary plus performance-based
incentive payments in cash, stock, stock options and/or benefits. During
1994, the Corporation implemented an Incentive Compensation Program which
utilized Net Income, Return on Average Equity and Asset Growth as general
indices of Corporate performance. These factors are evaluated subjectively
based on reported 1995 financial results and the compensation of executive
officers, including the Chief Executive Officer, is generally related to
these indices. Based on 1995 performance, the Committee determined that a
cash bonus pool equal to 7.5% of base salaries and stock options with current
market value equal to 75% of base salaries would be awarded to the executive
officers as a group. Total cash bonuses paid to executive officers including
the chief executive officer amounted to $48,350 and a total of 23,180 options
were granted to this group. Mr. Scovill, the Chief Executive Officer of the
Corporation and the Bank, received a cash bonus of $12,000 and 6,080 stock
options based on the Board of Directors subjective assessment of the
Corporation's and his 1995 performance.
The Compensation Committee does not deem Section 162(m) of the Internal
Revenue Code (the "IRC") to be applicable to the Corporation at this time.
The Compensation Committee intends to monitor the future application of
Section 162(m) of the IRC to the compensation paid to its executive officers
<PAGE>
and in the event that this section becomes applicable, it is the intent of
the Compensation Committee to amend the Corporation's compensation plans to
preserve the deductibility of the compensation payable under such plans.
The following served as members of the Executive Committee: Terrence L.
Hormel, Chairman, Thomas M. Bross, Jr., S. Forry Eisenhart, Jr., Bertram F.
Elsner, John S. Hollinger, Jr., and J. Bradley Scowl.
Compensation Committee Interlocks and Insider Participation
Mr. J. Bradley Scovill, President and Chief Executive Officer of the
Corporation and the Bank, is a member of the Executive Committee. As a
member of the Executive Committee, Mr. Scovill participated in discussions
relating to compensation of executive officers of the Bank but he did not
participate in discussions relating to his compensation.
<PAGE>
Executive Compensation
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
AWARDS PAYOUTS
OTHER
NAME AND ANNUAL RESTRICTED ALL OTHER
PRINCIPAL COMPEN- STOCK OPTIONS/ LTIP COMPEN-
POSITION YEAR SALARY($) BONUS($) SATION($)(1) AWARDS($) SAR'S(#) PAYOUTS($) SATION($)(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Bradley Scovill, 1995 120,000 12,000 6,865 --- 5,121 --- 3,375
President and 1994 88,538 7,000 920 --- 3,400 --- 2,656
Chief Executive 1993(3)
Officer
<FN>
(1) Of this amount, $4,688 was the cost of country club initiation fees;
$1,665 was the cost of country club membership dues and $512 was the
cost of company provided automobile. The figure for 1994 represents the
cost of company provided automobile.
(2) Consists of Bank of Hanover's contribution to the Hanover Bancorp, Inc.
401-K Plan.
(3) Disclosure not required.
</TABLE>
Option Grants and Fiscal Year End Values
<TABLE>
The following table shows all grants in 1995 of stock options to the
executive officer named in the Summary Compensation Table above. All grants
were made under the Corporation's Omnibus Stock Plan.
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential
Realizable Value at
Assumed Annual
Appreciation
Individual Grants for Option Term
(a) (b) (c) (d) (e) (f) (g)
% of
Number of Total
Securities Options/SARs
Underlying Granted to Exercise
Option/SARs Employees or Base
Granted in Fiscal Price Expiration
Name (#) Year ($/Sh) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
J. Bradley Scovill, 481.5(1) 1.98% 19.17 01-01-05 $ 5,474.65 $ 14,184.99
President and Chief 4,800(2) 19.73% 18.75 12-31-05 $ 56,592.00 $ 143,424.00
Executive Officer
<FN>
(1) Options were issued on January 1, 1995 under the Omnibus Stock Plan and
will become exercisable on January 1, 1998. The number of options are
adjusted for a 3-for-2 stock split on May 15, 1995. There is no partial
vesting prior to January 1, 1998. All options must be exercised within
ten years of the grant date or they expire.
(2) Options were issued on December 31, 1995 and will become exercisable on
December 31, 1998 under the Omnibus Stock Plan with no partial vesting
prior to that time. All options must be exercised within ten years of
the grant date or they expire.
</TABLE>
<TABLE>
The following table provides information concerning the option exercises
during the last fiscal year and the number and value of the unexercised
options to purchase the Corporation's Common Stock granted to the executive
officer named in the Summary Compensation Table above.
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Fiscal Year-End(#) Options at Fiscal Year-End($)
Shares
Acquired Value
Name on Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable(2)
<S> <C> <C> <C> <C> <C> <C>
J. Bradley Scovill --- --- 0 10,381.5(1) $ 0 $ 0
President and Chief
Executive Officer
<FN>
(1) Options are unexercisable because they have not yet vested under the
terms of the Corporation's Omnibus Stock Plan.
(2) Based on the average of the bid and asked prices on December 31, 1995.
</TABLE>
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
In accordance with Rule 304(d) of Regulation S-T, the performance graph
that is to appear in this electronic document (as required by Rule 402(1) of
Regulation S-K) has been filed in paper format under the cover of Form SE.
The required copies were sent for filing via overnight carrier on March 7,
1996.
RETIREMENT BENEFITS
Pension Plan
The Corporation maintains a Retirement Plan (the "Plan") for employees.
Employees of the Corporation and the Bank who have completed one or more
years of service (as defined under the Plan) and reached the age of 21 are
eligible to participate in the Plan. Contributions to the Plan are made by
the Corporation in such amounts as are necessary on an actuarial basis to
fund the cost of benefits provided by the Plan. In general, benefits which
have become vested are payable upon a participant's retirement, disability or
death. The actual pension depends on the employee's base earnings, years of
service and social security integration level. The social security
integration level is defined in the Plan so as to be an estimate of the
average social security maximum taxable wage base during the employee's
working lifetime.
The pension benefit provides a benefit of 1% of the employee's average
pay for each year of service (basic portion) plus 0.65% of his or her average
pay in excess of the social security integration level for each year of
service up to a maximum of 35 years (excess portion). Average pay is defined
as the employee's average pay during his or her last five years of
employment. The covered compensation of Mr. J. Bradley Scovill, President
and Chief Executive Officer of the Corporation and the Bank is $93,263.00,
which represents his average salary over the past four years of his
employment with the Corporation and the Bank. The following table
illustrates this benefit structure.
<TABLE>
<CAPTION>
Annual Pension Upon Retirement
Final Average Pay Last at Age 65 (in 1994)
5 Years of Employment Years of Service Indicated
5 Years 15 Years 25 Years 35 Years
<S> <C> <C> <C> <C> <C>
$ 20,000 $ 1,000 $ 3,000 $ 5,000 $ 7,000
40,000 2,458 7,373 12,288 17,203
60,000 4,108 12,323 20,538 28,753
80,000 5,758 17,273 28,788 40,303
100,000 7,408 22,223 37,038 51,853
120,000 9,058 27,173 45,288 63,403
140,000 10,708 32,123 53,538 74,953
160,000 11,533 34,598 57,663 80,728
</TABLE>
Individual costs to fund projected pension benefits are calculated on an
estimated basis since the Employee Pension Plan's funding method uses
aggregate amounts, which are averaged over all funded participants.
<PAGE>
Mr. Scovill has four years of credited service under the plan as of
December 31, 1995.
401-K Plan
Effective January 1, 1985, Bank of Hanover made available to eligible
employees a 401-K Plan (the "Plan") designed to give employees a source of
financial security and an investment opportunity. The Plan is intended to
comply with the requirements of Section 401(k) of the Internal Revenue Code
and is subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). The Plan is administered by the Bank's Trust Department
which also acts as the Trustee of the Plan.
All employees of the Corporation and its subsidiary who have completed
at least one year of employment as defined in the Plan and are 21 years of
age are eligible to participate in the Plan. In each pay period a
participant may elect to defer up to 15 percent of base salary/wages and to
have that amount contributed to the Plan by the Bank on the participant's
behalf, up to a maximum 1995 annual contribution of $9,240 (subject to
adjustment by the Secretary of the Treasury). In addition, contributions
made on behalf of "highly compensated" employees may be further restricted as
provided for in the Internal Revenue Code. The total amount of a
participant's contributions for a given month is allocated to the Plan
according to its terms. Except as may be restricted by the Code, a matching
contribution is made by the Bank equal to 50 percent of the participant's
contributions for such month, up to three percent of the participant's base
salary/wages. The funds are held in trust and are invested by the Trustee in
accordance with the participant's directions within the scope of alternative
investments available under the Plan. All elective and matching
contributions are 100 percent vested upon placement into the Plan.
Personal after-tax voluntary contributions made prior to January 1,
1988, may be withdrawn at any time upon the required notice. Participants
may no longer make personal after-tax contributions to the Plan. Amounts
contributed to the Plan on the participant's behalf, as set forth in the
preceding paragraph, may be withdrawn only in the event of financial
hardship; however, any such withdrawal may not include any earnings on pre-
tax contributions credited to the participant's account after December 31,
1988. Upon termination of employment or upon attaining the age of 59 1/2, a
participant's entire interest in the trust fund becomes payable. A
participant may receive a lump sum distribution or may, in certain
circumstances, elect to defer or receive installment payments.
Employer matching contributions made to all employees of the Corporation
and the Bank during 1995 totalled $64,241.82.
Severance Agreement
On March 22, 1995, the Corporation, the Bank and J. Bradley Scovill,
President and Chief Executive Officer of the Corporation and the Bank,
entered into a severance agreement which is triggered upon a change of
control of the Corporation and the Bank (the "Agreement"). The Agreement
provides that in the event that within one year following a change of control
of the Corporation and/or the Bank (as defined in the Agreement), Mr. Scovill
is discharged other than for cause (as defined in the Agreement), or Mr.
Scovill resigns from the successor to the Corporation and/or the Bank for
<PAGE>
good reason (as defined in the Agreement), he will receive monthly an amount
equal to one-twelfth of his base annual salary that is being paid to him on
January 1st of the year in which the change of control shall occur for a
period of 18 months from his discharge (for reasons other than cause) or
resignation (for good reason). This 18 month period is the severance benefit
period. In addition, Mr. Scovill will receive during the severance benefit
period medical, health, accident and disability insurance and a survivor's
income benefit in form, substance and amount which is in each case
substantially equivalent to that provided to him before the commencement of
the severance benefit period.
Under the terms of the Agreement, Mr. Scovill will be required to
mitigate the amount of any payment or benefit provided him as described above
by seeking employment or otherwise in a substantially similar position and
the successor to the Corporation and the Bank will be entitled to setoff
against the amount of any payment or benefit provided to Mr. Scovill pursuant
to the Agreement by any amounts earned by Mr. Scovill in other employment
during the severance benefit period.
OFFICERS OF THE CORPORATION
<TABLE>
<CAPTION>
Number Shares
Employee Employee Beneficially
Name Age Position Since Since Owned
<S> <C> <C> <C> <C> <C>
Terrence L. Hormel 47 Chairman of the Board 1990 1981 15,843
J. Bradley Scovill 36 President and 1995 1991 5,370
Chief Executive Officer
Gerald M. Warner 61 Secretary/Treasurer 1991 1961 2,652
</TABLE>
<PAGE>
PRINCIPAL OFFICERS OF THE BANK
<TABLE>
<CAPTION>
Number Shares
Employee Beneficially
Name Age Position Since Since Owned
<S> <C> <C> <C> <C> <C>
Terrence L. Hormel 47 Chairman of the Board 1991 1981 15,843
J. Bradley Scovill 36 President and Chief 1994 1991 5,370
Executive Officer
Chad M Clabaugh 34 Senior Vice President 1991 1981 274
Consumer Services
Jeffrey K.Dice 47 Senior Vice President 1986 1982 1,217
Credit Services
Wayne P. Kautz 55 Senior Vice President 1992 1992 7,165
Trust/Investment Services
Harold R. Lau 50 Senior Vice President 1989 1973 7,513
Operations
Jacquelyn A. Lebow 38 Senior Vice President 1993 1993 396
Director of Marketing
Gerald M.Warner 61 Vice President
Comptroller 1984 1961 2,652
Cashier/Secretary 1991
Carol M.Wuenschel 42 Senior Vice President 1994 1994 169
Director of Human Resources
</TABLE>
<PAGE>
CERTAIN TRANSACTIONS
It is not within the policies or practices of the Corporation or of the
Bank to provide personal benefits to principal officers or directors (except
as a measure of reasonable compensation for services). There are no "fringe
benefits" paid or payable to any such person that are not available generally
to all other salaried employees. To facilitate the performance of his duties,
the President and CEO of the Bank has been furnished with a company
automobile and membership to a local country club. This officer pays all
charges attributed to his personal use thereof.
The Corporation and the Bank have had, and expect to have in the future,
transactions in the ordinary course of business with many of its directors
and officers and their associates on the same terms, including interest rates
and collateral on loans, as those prevailing at the time for comparable
transactions with others. These transactions do not involve more than the
normal risk of collection, nor do they present other unfavorable features.
The largest aggregate amount of indebtedness outstanding at any time
during fiscal year 1995 to officers and directors of the Corporation and the
Bank was $3,371,438. The aggregate amount of indebtedness outstanding as of
the latest practicable date, January 31, 1996, to the above described group
was $3,259,598 or approximately 9.77 percent of the total equity capital of
the Corporation.
LEGAL PROCEEDINGS
The nature of the Corporation's and the Bank's business generates a
certain amount of litigation involving matters arising in the ordinary course
of business. However, in the opinion of management of the Corporation and
the Bank, there are no proceedings pending to which the Corporation and/or
the Bank are a party or to which its property is subject which, if determined
adversely to the Corporation and the Bank, would be material in relation to
the Corporation's and the Bank's undivided profits or financial condition,
nor are there any proceedings pending other than ordinary routine litigation
incidental to the business of the Corporation and the Bank. In addition, no
material proceedings are pending or are known to be threatened or
contemplated against the Corporation and the Bank by government authorities
or others.
1997 SHAREHOLDERS PROPOSALS
Proposals of security holders intended to be presented at the 1997
Annual Meeting must be received by the Chairman of the Board, 33 Carlisle
Street, Hanover, Pennsylvania 17331, by November 11, 1996, for inclusion in
the Corporation's Proxy Statement and Proxy form related to the Meeting.
ANNUAL REPORT
A copy of the Corporation's Annual Report is enclosed with this Proxy
Statement.
<PAGE>
OTHER MATTERS
The Board knows of no other matters to be presented for consideration at
the Annual Meeting other than those described in the accompanying Notice of
Annual Meeting of Shareholders. If any other matters shall properly come
before the Meeting, it is the intention of the persons named in the
accompanying Proxy to vote on such matters in accordance with their best
judgment.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Ernst & Young LLP, Certified Public Accountants of Harrisburg,
Pennsylvania has been retained as the Corporation's principal accountants for
the year ending December 31, 1996.
A representative of Ernst & Young LLP will be present at the Annual
Shareholders Meeting and will be available to respond to appropriate
questions.
ADDITIONAL INFORMATION
UPON WRITTEN REQUEST OF ANY SHAREHOLDER, A COPY OF THE CORPORATION'S
ANNUAL REPORT AND FORM 10-K FOR ITS FISCAL YEAR ENDED DECEMBER 31, 1995,
INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES ATTACHED THERETO,
REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 13a-1 UNDER THE SECURITIES EXCHANGE ACT OF 1934 AS AMENDED, MAY BE
OBTAINED, WITHOUT CHARGE, FROM GERALD M. WARNER, SECRETARY, HANOVER BANCORP,
INC., 33 CARLISLE STREET, HANOVER, PENNSYLVANIA 17331.
<PAGE>
ANNUAL DISCLOSURE STATEMENT
Notice of availability
Financial information about the Bank is available to our customers,
shareholders and the general public on request.
In accordance with Federal regulations to facilitate more informed decision-
making by depositors and the general public, we will provide an ANNUAL
DISCLOSURE STATEMENT containing financial information for the last two years.
This information will be updated year as of March 31.
TO OBTAIN A COPY
To obtain a copy of the ANNUAL DISCLOSURE STATEMENT, please contact:
Gerald M. Warner
Secretary
HANOVER BANCORP, INC
33 Carlisle Street
Hanover, Pennsylvania 17331
(717) 637-2201
<PAGE>
HANOVER BANCORP, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 9, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Hanover Bancorp, Inc., Hanover,
Pennsylvania, hereby constitutes and appoints Dorothy Crabbs and John Stawski
and each or any of them, Proxies of the undersigned, with full power of
substitution, to vote all the shares of Hanover Bancorp, Inc. (the
"Corporation") that the undersigned may be entitled to vote at the Annual
Meeting of Shareholders of the Corporation to be held at the Hanover Country
Club, Lincolnway East, R.D. 1, Abbottstown, Pennsylvania 17301, on Tuesday,
April 9, 1996, at 9:30 a.m., prevailing time, and at any adjournment or
postponement thereof as follows:
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY
ADJOURNMENT OR POSTPONEMENT THEREOF.
(see other side)
<PAGE>
HANOVER BANCORP, INC.
1. Election of Directors Michael D. Bross, Thomas M. Bross, Jr., Earl F.
Noel, Jr., J. Bradley Scovill to serve for a three (3) year term.
___ FOR all nominees listed above (except as marked to the contrary below)
___ WITHHOLD AUTHORITY to vote for
(Instruction: to withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below)
________________________________________________________________________
Dated:____________________________, 1996
___________________________________(Seal)
___________________________________(Seal)
Signature(s)
Number of Shares Held of Record on February 15, 1996: _________
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED
PROMPTLY TO THE CORPORATION IN THE ENCLOSED ENVELOPE. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL
TITLE. IF MORE THAN ONE TRUSTEE, ALL SHOULD SIGN. IF STOCK IS HELD JOINTLY,
EACH OWNER SHOULD SIGN.
