HANOVER BANCORP, INC.
33 Carlisle Street
Hanover, Pennsylvania 17331
March 21, 1997
To Our Shareholders:
On behalf of the Board of Directors and Management, I cordially invite
you to attend the 1997 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 22, 1997 at 9:30 a.m.,
prevailing time. Notice of the Annual Meeting, a Proxy Statement, a
Proxy, an Annual Meeting Reservation Form and the 1996 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so that your Proxy will be superseded by any ballot that you submit at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 22, 1997
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 22, 1997, 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 28, 1997, 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, 1996, is being mailed with this Notice.
Copies of the Corporation's Annual Report and Form 10-K for the 1995
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 21, 1997
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 22, 1997
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 22, 1997,
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 21, 1997, to shareholders of record
of the Corporation as of February 28, 1997. 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. 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 28, 1997, has been fixed as the
record date for determination of shareholders entitled to notice of and
to vote at the Annual Meeting. 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
28, 1997, the Corporation had outstanding 2,969,099 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 Corporation's Shares
As of February 28, 1997, no shareholder of record 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 28,
1997, 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 Beneficial Percent
or Identity of Group Ownership(1)(2)(3)(4) of Class(2)
<S> <C> <C>
Thomas M. Bross, Jr. 120,522 4.06%
Michael D. Bross 6,694 (5) .23%
S. Forry Eisenhart, Jr. 2,702 .09%
Bertram F. Elsner 5,589 (6) .19%
J. Daniel Frock 16,819 (7) .57%
John S. Hollinger, Jr. 8,198 .28%
Terrence L. Hormel 16,415 (8) .55%
Earl F. Noel, Jr. 7,017 (9) .24%
Vincent P. Pisula, MD 52,531 (10) 1.77%
J. Bradley Scovill 5,698 (11) .19%
Charles W. Test 11,389 (12) .38%
All directors and principal officers
of the Corporation as a group (16 persons) 256,277 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 28, 1997.
(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 3,765 shares of which Mr. Bross shares voting power
with his wife, Nancy J. Bross.
(6) Includes 330 shares of which Mr. Elsner shares voting power with
his wife, Joyce C. Elsner.
(7) Includes 15,862 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.
(9) Includes 6,496 shares of which Mr. Noel shares voting power with
his wife, Charmian E. Noel.
(10) Includes 22,502 shares held by Dr. Pisula's wife, Amy R. Pisula.
(11) Includes 1,833 shares of which Mr. Scovill shares voting power
with his wife, Joanne M. Scovill.
(12) Includes 265 shares held by Mr. Test's wife, Ingsborg G.
Test.
</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 described above, 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 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 2000
And Current Directors Whose Term Expires in 1997
TERRENCE L. HORMEL, age 48, 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
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 73, is a surgeon who has practiced
general surgery in the Hanover area since 1959. He has business
experience in farming, land sales and development. 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 70, is Chairman of the Board of C.W. Test
Builder, Inc., general contractors, since 1958 and owner of C.W. Test
Orchards, land development. Mr. Test 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 Trust Committee and Building Committee. He is serving or
has served on the Bank's Loan Committee during the past year.
<PAGE>
S. FORRY EISENHART, JR., age 47, is President and Chief Executive
Officer of Eisenhart Wallcoverings Company and Eisenhart Corp., 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 60, 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 57, 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 54, 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.
Directors to Continue in Office Until 1999
MICHAEL D. BROSS, age 43, 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 75, is the former President and
Chairman of the Board of Round Hill Foods, Inc., New Oxford,
Pennsylvania, a food 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 51, 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.
<PAGE>
J. BRADLEY SCOVILL, age 37, 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.
Board of Directors and Committees
The Corporation's Board met six times during 1996. The Board of
Directors of the Bank met thirteen times during 1996. 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 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 1996 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 $24,750 during 1996. Aggregate fees paid to
all directors in 1996 were $148,650.
The Bank offers a Deferred Compensation Plan, and nine current
or former directors participated in the program during 1996. 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 1996 costs
associated with the deferred compensation program and Split Dollar
Agreements were $68,720.
<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. A total of 5,280 stock options were granted to Mr.
Scovill, the Chief Executive Officer of the Corporation and the Bank, in
1996 based on the Board of Directors subjective assessment of the
Corporation's and his 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 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 Scovill.
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>
SUMMARY COMPENSATION TABLE
<CAPTION>
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($) SAR'S(#)(3) PAYOUTS($) SATION($)(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Bradley Scovill, 1996 127,180 --- 2,915 --- 4,800 --- 7,204
President and 1995 20,000 12,000 6,865 --- 5,282 --- 3,375
Chief Executive 1994 88,538 7,000 920 --- 5,100 --- 2,656
Officer
<FN>
(1) For 1996, $1,665 was the cost of country club membership dues
and $1,250 was the cost of company provided automobile. For
1995, $4,688 was the cost of country club initiation fees;
$1,665 was the cost of country club membership dues and $512 was
the cost of company provided automobile. The figure for 1994
represents the cost of company provided automobile.
(2) Consists of Bank of Hanover's contribution to the Hanover
Bancorp, Inc. 401(k) Plan.
(3) The number of options are adjusted for a 3-for-2 stock split on
May 15, 1995.
</TABLE>
<PAGE>
Option Grants and Fiscal Year End Values
<TABLE>
The following table shows all grants in 1996 of stock options to
the executive officer named in the Summary Compensation Table above. All
grants were made under the Corporation's Omnibus Stock Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Appreciation
Individual Grants for Option Term
(a) (b) (c) (d) (e) (f) (g)
% of
Number of Total
Securities Options/SARs
Underlying Granted to Exercise
Option/SARs Employees or Base
Granted in Fiscal Price Expiration
Name (#) Year ($/Sh) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
J. Bradley Scovill, 480(1) 9.09% 18.75 01-01-06 4,776 1,939
President and Chief 4,800(2) 90.91% 18.50 12-31-06 54,646 140,324
Executive Officer
<FN>
(1) Options were issued on January 1, 1996 under the Omnibus Stock
Plan and will become exercisable on January 1, 1999 with no
partial vesting prior to January 1, 1999. All options must be
exercised within ten years of the grant date or they expire.
(2) Options were issued on December 31, 1996 under the Omnibus Stock
Plan and will become exercisable on December 31, 1999 with no
partial vesting prior to December 31, 1999. All options must be
exercised within ten years of the grant date or they expire.
</TABLE>
<PAGE>
<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 15,662(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, 1996.
</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 18, 1997.
Retirement Benefits
Pension Plan
On January 19, 1996, the Board of Directors authorized an
amendment to curtail the Bank's defined benefit pension plan. Under the
curtailment, pension benefits were frozen as of March 31, 1996, as
further explained below. On September 16, 1996, approximately two thirds
of the plan's accumulated benefit obligation was settled via the purchase
of annuity contracts. The remainder of the plan will be administered in
frozen status until such time as management deems termination and final
settlement appropriate.
The plan provides a monthly benefit equal to 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). These
computations were performed as of the March 31, 1996 curtailment date and
the individual vested pension benefits were frozen at that time. As
such, average pay represents the employee's average pay during his or her
five years of employment prior to the curtailment date. 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 following table illustrates this
benefit structure.
<TABLE>
<CAPTION>
Final Average Pay Annual Pension Upon Retirement
5 Years of Employment at Age 65 (in 1996)
Prior to Curtailment 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 2,404 7,211 12,019 16,826
60,000 4,054 12,161 20,269 28,376
80,000 5,704 17,111 28,519 39,926
100,000 7,354 22,061 36,769 51,476
120,000 9,004 27,011 45,019 63,026
140,000 10,654 31,961 53,269 74,576
160,000 11,479 34,436 57,394 80,351
</TABLE>
In general, benefits which were vested as of the curtailment date
are payable upon a participant's retirement, disability or death.
While in frozen status, the funding policy of the Bank will be
to make contributions as necessary to meet the minimum funding
requirements set forth in the Employee Retirement Income Security Act of
1974. Individual costs to fund accumulated 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.
The covered compensation of Mr. J. Bradley Scovill, President and
Chief Executive Officer of the Corporation and the Bank is $93,263, which
represents his average salary over the four years of his employment with
the Corporation and the Bank prior to the curtailment date. Mr. Scovill
had four years of credited service under the plan as of the curtailment
date.
<PAGE>
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 the maximum allowable contribution as
established by the Internal Revenue Service. 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 4 percent of the
participant's base salary/wages. Beginning in 1996, the Plan was amended
to provide for discretionary contributions by the Bank to all eligible
employees. All 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, matching
and discretionary 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 Plan
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 and a discretionary contribution
made to all employees of the Corporation and the Bank during 1996
totalled $177,474.
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 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.
<PAGE>
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 48 Chairman of the Board 1990 1981 16,415
Thomas M. Bross, Jr. 75 Vice Chairman 1983 1973 120,522
J. Bradley Scovill 37 President and 1995 1991 5,698
Chief Executive Officer
Thomas J. Paholsky 35 Treasurer 1996 1996 70
Gerald M.Warner 62 Secretary/Assistant Treasurer 1991 1961 2,047
</TABLE>
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 48 Chairman of the Board 1991 1981 16,415
Thomas M. Bross, Jr. 75 Vice Chairman 1983 1973 120,522
J. Bradley Scovill 37 President and Chief 1994 1991 5,698
Executive Officer
Chad M. Clabaugh 35 Executive Vice President 1991 1981 274
Sales Group
William J. Callaghan 37 Senior Vice President 1997 1997 ---
Operations
Jeffrey K. Dice 48 Senior Vice President 1986 1982 ---
Credit Services
Jacquelyn A. Lebow 39 Senior Vice President 1993 1993 108
Director of Marketing
Thomas J. Paholsky 35 Senior Vice President 1996 1996 70
Chief Financial Officer
James A. Smiley 44 Senior Vice President 1997 1997 ---
Trust/Investment Services
Gerald M.Warner 62 Vice President
Comptroller 1984 1961 2,047
Cashier/Secretary 1991
Carol M.Wuenschel 43 Senior Vice President 1994 1994 204
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 1996 to officers and directors of the Corporation
and the Bank was $3,259,598. The aggregate amount of indebtedness
outstanding as of the latest practicable date, January 31, 1997, to the
above described group was $2,816,428 or approximately 8.92 percent of the
total equity capital of the Corporation.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Corporation's officers and directors, and persons who own
more than ten percent (10%) of the registered class of the Corporation's
equity securities, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission ("SEC"). Officers,
directors, and greater than ten percent (10%) shareholders are required
by SEC regulation to furnish the Corporation with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such Forms received
by it, or written representation from reporting persons that no Forms 5
were required for those persons, the Corporation believes that during the
period January 1, 1996 through December 31, 1996, its officers and
directors were in compliance with all filing requirements applicable to
them.
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.
1998 Shareholders Proposals
Proposals of security holders intended to be presented at the
1998 Annual Meeting must be received by the Chairman of the Board, 33
Carlisle Street, Hanover, Pennsylvania 17331, by November 30, 1997, for
inclusion in the Corporation's Proxy Statement and Proxy form related to
the Meeting.
<PAGE>
Annual Report
A copy of the Corporation's Annual Report is enclosed with this
Proxy Statement.
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, 1997.
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, 1996, 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 22, 1997
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 22, 1997, at 9:30 a.m., prevailing time, and at
any adjournment or postponement thereof.
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.
PROXY
1. Election of Directors: Terrence L. Hormel, Vincent P. Pisula, M.D.,
Charles W. Test, S. Forry Eisenhart 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 all nomoniees listed above
(Instructions: to withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below)
______________________________________________________________________
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ABOVE.
Dated:____________________________, 1997
___________________________________(Seal)
___________________________________(Seal)
Signature(s)
Number of Shares Held of Record on February 28, 1997: _________
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.
(see other side)
