March 28, 1997
Dear Shareholder:
It is a pleasure to invite you to the 1997 Annual
Shareholders' Meeting of SUN BANCORP, INC. ("SUN") to be
held on April 24, 1997.
The notice of the meeting and the proxy statement
address the formal business of the meeting, which includes
the election of directors and the ratification of the
appointment of SUN's auditors for 1997. At the meeting,
SUN's management will address other corporate matters which
will be of interest to you.
You are cordially invited to the shareholders' luncheon
which will be served promptly after the close of the annual
meeting. Should you desire to stay for lunch, please
complete and return the accompanying RSVP postcard by April
11, 1997 to SUN at 2-16 South Market Street, P.O. Box 57,
Selinsgrove, Pennsylvania 17870. The reverse side of the
RSVP card has been designated for questions you would like
addressed at the annual meeting.
We strongly encourage you to vote your shares, whether
or not you plan to attend the meeting. It is very important
that you sign, date and return the accompanying proxy in the
postage prepaid envelope as soon as possible. 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so that your proxy will be superseded by any ballot that you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.
Sincerely,
Raymond C. Bowen Fred W. Kelly, Jr.
Chairman of the Board President and CEO
Enclosures - Notice of Meeting
Proxy Statement
Proxy
Luncheon Reply Card
Return Envelope for Proxy
<PAGE>
PROXY
FOR
ANNUAL SHAREHOLDERS' MEETING
OF
SUN BANCORP, INC.
2-16 SOUTH MARKET STREET
P.O. BOX 57
SELINSGROVE, PENNSYLVANIA 17870
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SUN BANCORP, INC.
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 24, 1997
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
Shareholder of SUN BANCORP, INC. hereby constitutes and
appoints Arthur F. Bowen and Homer W. Wieder (neither of
whom is a Director, Officer or Employee of SUN BANCORP,
INC.) and each or any of them, proxies, with the powers the
undersigned would possess if personally present, and with
full power of substitution to attend and vote the shares of
common stock of the undersigned of SUN BANCORP, INC. at the
Annual Meeting of Shareholders of SUN BANCORP, INC., to be
held at the Susquehanna Valley Country Club, Mill Road,
Hummels Wharf, Pennsylvania, on Thursday, April 24, 1997, at
10:30 a.m., prevailing time, and at any adjournment or
postponement thereof, upon all subjects that properly come
before the meeting, including the matters described in the
accompanying proxy statement, and especially:
PLEASE MARK ALL VOTES AS FOLLOWS
1. ELECTION OF DIRECTORS.
THE NOMINEES FOR THE BOARD OF DIRECTORS TO SERVE
FOR A THREE YEAR TERM EXPIRING AT THE ANNUAL MEETING IN 2000
ARE:
Jeffrey E. Hoyt
Paul R. John
Fred W. Kelly, Jr.
Jerry A. Soper
and until their successors are duly elected, qualified and take office.
PLEASE CHECK ONLY ONE OF THE BOXES BELOW. IF BOX (c) IS CHECKED,
PLEASE CROSS OUT THE NAME OF EACH NOMINEE FROM THE LIST ABOVE
FOR WHOM YOU WISH YOUR PROXIES NOT TO VOTE FOR IN THE ELECTION OF
DIRECTORS.
(a) TO VOTE FOR all nominees listed above;
(b) NOT TO VOTE FOR any of the nominees listed above;
(c) TO VOTE FOR all the nominees listed above except those whose
names are crossed out.
2. TO RATIFY THE APPOINTMENT OF PARENTE, RANDOLPH, ORLANDO, CAREY &
ASSOCIATES, CERTIFIED PUBLIC ACCOUNTANTS, AS THE INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS FOR SUN BANCORP, INC. FOR THE YEAR
ENDING DECEMBER 31, 1997.
FOR AGAINST ABSTAIN
The Board of Directors recommends a vote FOR this
proposal.
<PAGE>
3. 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.
The undersigned hereby ratifies and confirms all that said
proxies and each of them or their substitute or substitutes
may lawfully do or cause to be done by virtue hereof.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF
NO DIRECTIONS TO THE CONTRARY ARE GIVEN BY THE SHAREHOLDER
IN THIS PROXY, THE PROXYHOLDERS WILL VOTE FOR ALL NOMINEES
LISTED ABOVE AND FOR PROPOSAL 2.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF SUN BANCORP, INC. AND MAY BE REVOKED PRIOR TO
ITS EXERCISE UPON WRITTEN NOTICE THEREOF TO THE SECRETARY OF
THE CORPORATION.
WITNESS the hand and seal of the undersigned, this
______ day of _____________ _________, A.D., 1997.
________________________________ (SEAL)
Signature
________________________________ (SEAL)
Signature
________________________________ (SEAL)
Signature
Number of Shares Owned ___________ Signatures above will be determined to
as of March 6, 1997 have been signed for all matters in
this proxy whether appearing on the
face or the reverse side of this proxy.
IMPORTANT NOTICE
All joint owners should sign this proxy. Please sign
this proxy as your stock is registered. When signing as
attorney, executor, administrator, trustee, guardian, or
other fiduciary, please give full title. If there is more
than one fiduciary, all should sign, for a corporation the
person signing this proxy should show the full corporate
title and be an authorized officer.
Please sign where indicated and promptly return this
proxy to SUN BANCORP, INC. in the enclosed self-addressed
postage prepaid envelope. If you do not sign and return
this proxy, or attend the meeting and vote, your shares will
not be voted.
<PAGE>
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, APRIL 24, 1997
To the Shareholders of SUN BANCORP, INC. (the "Corporation"):
NOTICE is hereby given that the ANNUAL MEETING OF
SHAREHOLDERS OF SUN BANCORP, INC., will be held at the
Susquehanna Valley Country Club, Mill Road, Hummels Wharf,
Pennsylvania on Thursday, April 24, 1997 at 10:30 a.m.,
prevailing time, for the following purposes:
1. To elect four (4) directors to serve for a three (3) year term and until
their successors are elected, qualified and take office;
2. To ratify the appointment of Parente, Randolph, Orlando, Carey &
Associates, Certified Public Accountants, as the independent certified
public accountants for SUN BANCORP, INC. for the year ending
December 31, 1997; and
3. To transact such other business as may properly come before the meeting
and any adjournment or postponement thereof.
Reference is hereby made to the accompanying proxy
statement for details with regard to the above matters. The
Board of Directors of the Corporation does not know of any
matters, other than those listed above, which are likely to
come before the meeting.
Only shareholders of record on the Corporation's books
at the close of business on March 6, 1997 will be entitled
to vote at the meeting and any adjournment or postponement
thereof.
By Order of the Board of
Directors of SUN BANCORP, INC.
Jeffrey E. Hoyt
Executive Vice President, Chief Operating Officer
and Secretary
March 28, 1997
Selinsgrove, Pennsylvania
Important Notice
To assure your representation at the meeting, please
complete, date, sign and promptly mail the accompanying
proxy in the return envelope which has been provided. No
postage is necessary if mailed in the United States. Any
person giving a proxy has the power to revoke it prior to
its exercise and shareholders who are present at the meeting
may then revoke their proxy and vote in
person after giving written notice thereof to the Secretary
of the Corporation.
<PAGE>
PROXY STATEMENT FOR ANNUAL SHAREHOLDERS'
MEETING TO BE HELD ON APRIL 24, 1997
GENERAL
Introduction, Date, Time and Place of Annual Meeting
This proxy statement is furnished in connection with
the solicitation by the Board of Directors of SUN BANCORP,
INC. ("SUN" or the "Corporation") of proxies to be voted at
the 1997 Annual Meeting of Shareholders ("Annual Meeting").
The Annual Meeting is scheduled to be held on Thursday,
April 24, 1997 at 10:30 a.m., prevailing time, at the
Susquehanna Valley Country Club, Mill Road, Hummels Wharf,
Pennsylvania and at any adjournment or postponement of the
Annual Meeting in accordance with the Annual Meeting notice
and By-Laws of SUN. The address of the principal executive
office of the Corporation is 2-16 South Market Street, P.O.
Box 57, Selinsgrove, Pennsylvania 17870, telephone number
(717) 374-1131. All inquiries should be directed to Fred W.
Kelly, Jr., President and CEO of SUN. The Corporation
currently has two (2) wholly-owned subsidiaries, Sun Bank
and Pennsylvania Sun Life Insurance Company.
Matters to be Submitted to the Shareholders at the Annual Meeting
The Board of Directors does not know of any matters
which are likely to be brought before the Annual Meeting
other than the matters set forth in the accompanying notice
of Annual Meeting of Shareholders. If any other matters are
properly presented to the Annual Meeting for action, the
persons named in the accompanying proxy and acting
thereunder will vote on such matters in accordance with
their best judgment.
Solicitation of Proxies for the Annual Meeting
This proxy statement is furnished in connection with
the solicitation by the Board of Directors of the
Corporation for use at the Annual Meeting. The approximate
date upon which this proxy statement and the accompanying
proxy and notice of the Annual Meeting will first be made
available and first sent to the shareholders is on or about
March 28, 1997. In addition to using the mails, proxies may
be solicited by personal interview, telephone calls or
telecopiers by the directors, officers and regular employees
of the Corporation and its wholly-owned banking subsidiary,
Sun Bank.
Cost of Solicitation of Proxies will be Paid by Corporation
The Corporation will bear the entire cost of preparing,
assembling, printing and mailing this proxy statement, the
proxies, and any additional material which the Corporation
may furnish to shareholders in connection with the Annual
Meeting. Copies of solicitation material will be furnished
to brokerage houses, fiduciaries and custodians to forward
to their principals.
Discretionary Authority of Proxy - Right of Revocation of Proxy
The accompanying proxy vests discretionary authority in
the proxyholders to vote with respect to any and all of the
following matters that come before the Annual Meeting: (i)
matters about which the Corporation has no knowledge, a
reasonable time before the proxy solicitation, that may be
presented to the meeting, (ii) approval of the minutes of
the most recent prior meeting of the shareholders, if such
an action does not amount to ratification of the action
taken at that meeting, (iii) the election of any person to
any office for which a bona fide nominee is unable to serve
or for good cause will not serve and (iv) matters incident
to the conduct of the meeting. In connection with such
matters, the persons named in the accompanying proxy will
vote in accordance with their best judgment.
Shareholders giving a proxy have a right to revoke it
by a written instrument, including a later dated proxy,
signed in the same manner as the prior proxy and received by
the Secretary of the Corporation prior to the commencement
of the Annual Meeting.
Record Date - Voting Securities - Quorum
The record date for the Annual Meeting is March 6,
1997. Only holders of record of common stock on the
Corporation's books at the close of business on March 6,
1997 will be entitled to notice of and to vote at the Annual
Meeting. On that date, the Corporation had outstanding
3,381,125 shares of common stock. The shareholders are
entitled to one vote per share on any business which may
properly come before the meeting. There is no cumulative
voting with respect to the election of directors.
If the accompanying proxy is appropriately marked,
signed and returned in time to be voted at the Annual
Meeting, the shares represented by the proxy will be voted
in accordance with the instructions marked on the proxy.
Any shareholder who wishes to withhold authority from the
proxyholders to vote for the election of all the director
nominees or to withhold authority to vote for any individual
nominee as a director, may do so by marking the proxy to
that effect and crossing out the name of the director on the
proxy. No proxy may be voted for a greater number of
persons than the number of nominees named. Signed proxies
not marked to the contrary will be voted "FOR" the election
of the nominees named as directors of the Board of Directors
and "FOR" the ratification of the appointment of the
independent certified public accountants for the year ending
December 31, 1997. Signed proxies will be voted "FOR" or
"AGAINST" any other matter which lawfully comes before the
Annual Meeting and any adjournment or postponement thereof,
in accordance with the best judgment of the person acting by
authorization of the proxy.
Under Pennsylvania law and the By-Laws of the
Corporation, the presence of a quorum is required for each
matter to be acted upon at the Annual Meeting. The
presence, in person or by proxy, of shareholders entitled to
cast at least a majority of the votes which all shareholders
are entitled to cast, will constitute a quorum for the
transaction of business at the Annual Meeting. Votes
withheld and abstentions will be counted in determining the
presence of a quorum for the
<PAGE>
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.
Assuming the presence of a quorum, the four (4)
nominees for director receiving the highest number of votes
cast by shareholders entitled to vote for the election of
directors shall be elected. Votes withheld from a nominee
and broker non-votes will not be cast for such nominee.
Assuming the presence of a quorum, the affirmative vote
of a majority of all votes cast by shareholders on such
matter is required for the ratification of the appointment
of independent certified public accountants. Abstentions
and broker non-votes are not deemed to constitute "votes
cast" and therefore do not count either for or against such
ratification. Abstentions and broker non-votes, however,
have the practical effect of reducing the number of
affirmative votes required to achieve a majority for each
such matter by reducing the total number of shares voted
from which the required majority is calculated.
The Corporation has no present reason to believe that
any of the Board's nominees will be unable to serve as a
director, if elected. The Board of Directors does not know
whether any nominations will be made at the Annual Meeting
other than those specified in this proxy statement. If any
such nominations are made, or if votes are cast for any
candidates other than those nominated by the Board of
Directors, the persons named as proxyholders will vote for
those persons nominated by the Board and identified in this
proxy statement.
Security Ownership of Certain Beneficial Owners
As of March 6, 1997, no person was known by the
Corporation to hold beneficially or of record, directly or
indirectly, five percent (5%) or more of the outstanding
common stock of the Corporation.
BOARD OF DIRECTORS
General
The By-Laws of the Corporation provide that the
Corporation's business shall be managed by a Board of
Directors of not less than six (6) and not more than twenty
five (25) directors. The Corporation's Board, as provided
in the By-Laws, is divided into three (3) classes of
directors, with each class being as nearly equal in number
as possible. The Board of Directors consists currently of
fifteen (15) directors with (i) five (5) directors in the
class whose term expires at the annual meeting in 1997, (ii)
five (5) directors in a class whose term expires at the
annual meeting in 1998, and (iii) five (5) directors in the
class whose term expires at the annual meeting in 1999.
Under the Corporation's By-Laws, persons elected by the
Board of Directors to fill a vacancy on the Board serve as
directors for a term expiring with the next annual meeting,
unless the directors are appointed by the Board after the
shareholder record date for that meeting, in which case the
<PAGE>
person serves as a director until the annual meeting
following that meeting. The directors in each class
normally serve terms of three (3) years each and until their
successors are elected, qualified and take office. All of
the nominees are current directors of the Corporation.
Mr. Raymond C. Bowen, whose term as a director expires
at the 1997 Annual Meeting, has decided not to seek re-
election.
General Information About the Board of Directors*
The Corporation's and Sun Bank's Boards of Directors
hold separate meetings.
There were six (6) meetings of the Corporation's Board
of Directors during 1996. Each incumbent director, other
than Mr. Eaton, attended at least seventy five percent (75%)
of the aggregate of the total number of meetings of the
Corporation's Board of Directors held during the period for
which such incumbent was a director and each incumbent
director, other than Mr. Eaton and Mr. Keller, attended at
least seventy five percent (75%) of the total number of
meetings held by all committees of the Board on which such
incumbent served.
The Committees of the Corporation's Boards
Executive/Asset & Liability Management Committee (the
"Executive/ALCO"). The Executive/ALCO Committee of the
Corporation's Board may exercise the full authority of the
Board of Directors in the management of the business and
affairs of the Corporation between meetings of the Board and
coordinate and control the Corporation's asset/liability
management procedures. The Committee reviews and makes
recommendations to the Board of Directors on all matters
relating to the programs of the Corporation that will
accomplish its long and short range objectives and goals.
The Committee held four (4) meetings in 1996. The members
of the Committee are: Raymond C. Bowen, Chairman; Max E.
Bingaman; Jeffrey E. Hoyt; George F. Keller; Fred W. Kelly,
Jr.; and Lehman B. Mengel.
Audit Committee. The Audit Committee recommends, for
ratification by the shareholders, the independent certified
public accountants that will be retained by the Corporation
and Sun Bank. The Audit Committee approves services to be
performed by the independent accountants. The Committee held
four (4) meetings in 1996. The members of the Committee
are: Max E. Bingaman, Chairman; David R. Dieck; Louis A.
Eaton; Dr. Robert E. Funk; Marlin T. Sierer; Jerry A. Soper;
Jeffrey J. Kapsar, an ex officio member and the
Corporation's Internal Auditor; and Robert C. Longenberger,
an ex officio member and the Corporation's Secretary and
Compliance/Loan Review Officer.
Investment Committee. The Investment Committee, a
subcommittee of the Executive/ALCO Committee, develops and
implements a portfolio investment policy for the
Corporation. The Committee meets at the call of any member
of the Committee. The Committee held three (3) meetings
during 1996. The members of the Committee are: Jeffrey E.
Hoyt, Chairman; Raymond C. Bowen; and Fred W. Kelly, Jr.
See Footnote Information Concerning Directors on Page 8.
<PAGE>
Long Range Planning/Merger & Acquisition Committee (the
"Long Range Planning/M&A"). The Long Range Planning/M&A
Committee develops and implements long range planning for
the Corporation and develops and implements the
Corporation's policy concerning mergers and acquisitions.
The Committee meets at the call of the Chairman of the
Committee. The Committee held fifteen (15) meetings during
1996. The members of the Committee are: Fred W. Kelly,
Jr., Chairman; Raymond C. Bowen; Robert A. Hormell; Jeffrey
E. Hoyt; and George F. Keller.
Nominating Committee. The Nominating Committee meets
once a year, or more often if necessary, to consider or
nominate candidates for directorships. The Committee
considers director nominees recommended by the Board and
shareholders. Pursuant to Article II, Section 2 of the By-
Laws, a shareholder wishing to nominate a candidate must
file a written notice of the nomination or candidacy with
the Secretary of the Corporation not less than one hundred
twenty (120) days prior to the election of directors. When
submitting a recommendation to the Secretary, the
shareholder must send biographical information about the
candidate, together with a statement of the candidate's
qualifications and any other data supporting the
recommendation. If it is determined that the candidate has
no conflicts of interest or directorships with other
companies that would disqualify the candidate from serving
as a director of the Corporation, the candidate's name will
be presented to the Nominating Committee for consideration.
The Committee held two (2) meetings during 1996. The
members of the Committee are: Jerry A. Soper, Chairman;
Louis A. Eaton; Dr. Robert E. Funk; Fred W. Kelly, Jr.;
Howard H. Schnure; and Marlin T. Sierer.
Personnel and Retirement Committee. The Personnel and
Retirement Committee meets to review the provisions of SUN's
Pension Plan, 401(k) Plan and the Non-Qualified Supplemental
Income Plan, to recommend appropriate changes in any of
their provisions and to recommend to the Board,
contributions to be made to the plans. In addition, the
Committee determines the eligibility requirements for SUN's
Pension Plan, 401(k) Plan and the Non-Qualified Supplemental
Income Plan and determines who is eligible to participate
and to obtain benefits pursuant to those plans. The
Committee meets at the call of the Chairman of the Committee
or the President of the Corporation. The Committee held
three (3) meetings during 1996. A subcommittee of the
Personnel and Retirement Committee called the Compensation
Committee, which is comprised of four (4) outside Directors
(Mr. Bowen, Mr. Bingaman, Mr. Hormell and Mr. Soper),
determines the executive compensation policy of SUN and
administers SUN's Stock Incentive Plan and SUN's Employee
Stock Purchase Plan. The Committee meets at the call of its
Chairman and held one (1) meeting in 1996. The members of
the Personnel and Retirement Committee are: Raymond C.
Bowen, Chairman; Max E. Bingaman; Robert A. Hormell; Jeffrey
E. Hoyt; Paul R. John; George F. Keller; Fred W. Kelly, Jr.;
Jerry A. Soper; Dennis J. Van; and Carol A. Swineford, an ex
officio member and Sun Bank's Vice President of Human
Resources.
<PAGE>
Members of the Boards of Directors - Biographical Information
NOMINEES FOR ELECTION TO SERVE UNTIL 2000
JEFFREY E. HOYT, age 41, is Executive Vice President,
Chief Operating Officer and Secretary of the Corporation and
Sun Bank. Mr. Hoyt is a Certified Public Accountant (CPA)
and a Certified Financial Planner (CFP) and maintains
membership both on a national and state level with these
professional associations. He was appointed to Sun Bank's
and the Corporation's Boards on December 27, 1996 and he
serves on the Executive/ALCO, Investment, Long Range
Planning/M&A and Personnel and Retirement Committees. Mr.
Hoyt's term as a director expires in 1997 and if elected
will serve until 2000.
PAUL R. JOHN, age 59, is President and Director of
Ritz-Craft Corporation of PA, Inc., a housing manufacturer
located in Mifflinburg, PA, and a director of Inter Industry
Reinsurance Co., LTD, an offshore foreign independent
insurance company; and a director of the John Family
Foundation. He has served on Sun Bank's Board since 1990
and was appointed to the Corporation's Board on August 1,
1994, and he serves on the Personnel and Retirement
Committee. Mr. John's term as a director expires in 1997
and if elected will serve until 2000.
FRED W. KELLY, JR., age 52, President and Chief
Executive Officer of the Corporation and Sun Bank. Mr.
Kelly is Vice President and a director of Wm. F. Groce,
Inc., a silk and fabric processing company in Selinsgrove,
Pennsylvania, and Chairman of Selinsgrove Area Industrial
Development, Inc. He is a trustee and President of Sunbury
Community Hospital, Past Secretary of the Central
Susquehanna Valley Chamber of Commerce, Director of
Susquehanna University, and a member of the Degenstein
Foundation. He has served as President and Chief Executive
Officer of the Corporation since its formation in 1982 and
as President of Sun Bank since 1975 and its Chief Executive
Officer since 1981 and has served on Sun Bank's Board since
1975 and the Corporation's Board since 1982, and he serves
on all the Board Committees of the Corporation other than
the Audit Committee. Mr. Kelly's term as a director expires
in 1997 and if elected will serve until 2000.
JERRY A. SOPER, age 64, former Vice President of Ott
Packagings, Inc., Selinsgrove, Pennsylvania, a manufacturer
of paper box products having retired in February 1992. He
has served on the Boards of the Corporation and Sun Bank
since 1982, and he serves on the Audit, Nominating and
Personnel and Retirement Committees. Mr. Soper's term as a
director expires in 1997 and if elected will serve until
2000.
DIRECTOR NOT SEEKING RE-ELECTION
RAYMOND C. BOWEN, age 81, Chairman of the Board of
Directors, retired Sales Representative for Cleveland
Brothers Equipment Company, engaged with that company in
retail sales of heavy earth moving equipment from 1947
through 1982. He has served on Sun Bank's Board since 1967
and the Corporation's Board since 1982, having served as
Vice Chairman of the Board from 1981 to 1985 and Chairman
since 1986, and he serves on the Executive/ALCO, Investment,
Long Range Planning/M&A and Personnel and Retirement
Committees. Mr. Bowen's term as a director expires in 1997
and he has chosen not to seek re-election.
<PAGE>
DIRECTORS CONTINUING IN OFFICE UNTIL 1999
DAVID R. DIECK, age 63, President and co-owner of
Lancaster Laundry, Inc., Lancaster, Pennsylvania, since July
1, 1990. He is a former Vice President and co-owner of
Valley Glass Company of Sunbury, Pennsylvania, and a former
partner in Valley Realty Company having sold his interest in
both businesses as of June 30, 1990. Mr. Dieck was employed
by Brush Industries in Sunbury, Pennsylvania, for thirty
four (34) years serving in various capacities including
Treasurer and General Manager and left that company in 1985.
He has served on the Boards of the Corporation and Sun Bank
since April of 1987 and his term as a director expires in
1999. He serves on the Audit Committee.
LOUIS A. EATON, age 75, was a Sales Engineer since 1981
for Dorsey Trailers, Inc., a manufacturer and distributor of
truck trailers and retired on December 31, 1986. He has
served in various capacities with Dorsey Trailers, Inc.
(formerly Trailco Manufacturing and Sales Co., Inc.) since
1947. He has served on Sun Bank's Board since 1979 and the
Corporation's Board since 1982 and his term as a director
expires in 1999. He serves on the Audit and Nominating
Committees.
DR. ROBERT E. FUNK, age 66, a practicing dentist in
Watsontown having started his general dentistry office in
1957. He was elected to the Corporation's Board in 1993 and
served on Sun Bank's Board since 1977 and his term as a
director expires in 1999. He serves on the Audit and
Nominating Committees.
GEORGE F. KELLER, age 63, Vice Chairman of the
Corporation, Retired President of Keller Marine Service,
Inc., a wholesale distributor of marine products. He is a
past President of the National Marine Distributors
Association. In 1996, Mr. Keller received the Jim Barker
Memorial Award, a life time achievement award, "in grateful
recognition for his contribution of leadership and service
to the RV After Market Industry." He has served on Sun
Bank's Board since 1967 and the Corporation's Board since
1982, was appointed Vice Chairman of Sun Bank's and the
Corporation's Board in 1990 and his term as a director
expires in 1999. He serves on the Executive/ALCO, Long
Range Planning/M & A and Personnel and Retirement
Committees.
DENNIS J. VAN, age 50, is President and owner of The
Colonial Furniture Company, a manufacturer of quality home
furniture located in Freeburg, PA. He has served on Sun
Bank's Board since 1990 and was appointed to the
Corporation's Board on August 1, 1994, and his term as a
director expires in 1999. He serves on the Personnel and
Retirement Committee.
<PAGE>
DIRECTORS CONTINUING IN OFFICE UNTIL 1998
MAX E. BINGAMAN, age 61, President since 1969 of
Bingaman and Son Lumber Company, Inc., supplier of hardwood
lumber to the furniture and cabinet industry, President
since 1975 of Tru-Wood Corporation, engaged in the lumber
dimensions business and Secretary/Treasurer since 1978 of
Pine Creek Lumber, Inc., a saw mill. Mr. Bingaman serves as
a director of the Hardwood Lumber Manufacturers Association
of Penna. and Bethesda Treatment Center, a privately
operated program for troubled youth, located in Milton, and
he serves as a member of the Board of Associates of Messiah
College at Grantham, PA. He has served on the Boards of Sun
Bank and the Corporation since 1983 and his term as a
director expires in 1998. He serves on the Audit,
Executive/ALCO and Personnel and Retirement Committees.
ROBERT A. HORMELL, age 49, is Assistant Director of the
Susquehanna Economic Development Association - Council of
Governments (SEDA-COG) which provides management of economic
and community development for an eleven (11) county
organization in central Pennsylvania. Mr. Hormell is a
director of the Warrior Run Community Corporation. He has
served on Sun Bank's Board since 1991 and was appointed to
the Corporation's Board on August 1, 1994, and his term as a
director expires in 1998. He serves on the Long Range
Planning/M & A and Personnel and Retirement Committees.
LEHMAN B. MENGEL, age 69, Chairman and Director of L/B
Water Service South, Inc. since 1984, which provides the
water and sewer works industry with materials and service
and Director and Treasurer of the Sunbury Grouse Club. He
has served on the Board of Sun Bank since 1974 and the
Corporation's Board since 1982, and his term as a director
expires in 1998. He serves on the Executive/ALCO Committee.
HOWARD H. SCHNURE, age 86, owner from 1936 to 1984 and
since 1984 part owner of Central Penn Wilbert Vault Company,
manufacturer of burial vaults. He has served on Sun Bank's
Board since 1967 and the Corporation's Board since 1982, and
his term as a director expires in 1998. He serves on the
Nominating Committee.
MARLIN T. SIERER, age 74, prior owner for 32 years of
the Sierer Brothers Fruit Farm, Inc. Mr. Sierer sold the
business in 1974 and retired in 1985 from that company. He
has served on the Boards of Sun Bank and the Corporation
since 1982, and his term as a director expires in 1998. He
serves on the Audit and Nominating Committees.
* Footnote Information Concerning Directors
(1) References to service on the Board of Directors refers to Snyder County
or Watsontown only prior to 1982 and to Snyder County, Watsontown and
Corporation since 1982, unless specifically otherwise stated. Effective
December 1, 1993, the Board of Directors of Snyder County and Watsontown
were consolidated under a common charter with the title of Sun Bank,
which has a 14 member Board. All ages of the directors are as of
March 6, 1997, the record date for the Annual Meeting.
(2) The Corporation is not aware of any arrangement or understanding between a
nominee or director pursuant to which he or any other person or persons
were to be selected as a director or nominee.
<PAGE>
Information Concerning Executive Officers of the Corporation*
Name Title and Position Age
Fred W. Kelly, Jr. President and Chief Executive Officer 52
of the Corporation and Sun Bank
Mr. Kelly has served as President of Snyder County,
incorporated as Sun Bank, since July 1975, having advanced
from Vice President, and was appointed Chief Executive
Officer of Snyder County in 1981. Mr. Kelly has served as
President and Chief Executive Officer of the Corporation
since its establishment in 1982.
Name Title and Position Age
Jeffrey E. Hoyt Executive Vice President, Chief Operating 41
Officer and Secretary of the Corporation
and Sun Bank
Mr. Hoyt has served as Vice President and Chief Financial
Officer of Snyder County, now Sun Bank, since October 1988
and was appointed Senior Vice President and Chief Financial
Officer on October 26, 1995. Mr. Hoyt has also served as
Chief Financial Officer of the Corporation since that date
and was appointed as Vice President and Chief Financial
Officer in 1993. On December 27, 1996, he was appointed to
his new position of Executive Vice President, Chief
Operating Officer and Secretary. Prior to joining Snyder
County, now Sun Bank, and the Corporation, Mr. Hoyt, a CPA
and CFP, was employed in public accounting, and from 1981
until October 1988, was employed at the Williamsport
National Bank, initially as its auditor and later as its
controller.
Name Title and Position Age
Byron M. Mertz III Vice President and Assistant Secretary 52
of the Corporation, Vice President of
Sun Bank and President of the Watsontown
Bank, Incorporated as Sun Bank
Mr. Mertz has served as President of Watsontown, now Sun
Bank, since March 1991. Mr. Mertz joined Watsontown as Vice
President in August 1988 after having been employed by other
financial/lending organizations for more than 20 years. Mr.
Mertz was appointed as Vice President and Assistant
Secretary of the Corporation on August 2, 1993. On December
1, 1993, Mr. Mertz was appointed a Vice President of Sun
Bank.
<PAGE>
Name Title and Position Age
Jeffrey J. Kapsar Internal Auditor and Compliance Officer 30
of the Corporation and Assistant Vice
President, Internal Auditor and Compliance
Officer of Sun Bank
Mr. Kapsar began his banking career with Watsontown Bank in
August 1990 and served as Assistant Vice President at
Watsontown until December 1, 1993. He worked in the Audit
Department and was appointed as Internal Auditor of Snyder
County, now Sun Bank, and the Corporation in April 1995.
* Footnote Information Concerning Executive Officers
(1) Each executive officer of the Corporation serves at the pleasure of the
Board of Directors. All ages of the executive officers are as of
March 6, 1997, the record date for the Annual Meeting.
(2) The Corporation is not aware of any arrangement or understanding between
any executive officer and any other person or persons pursuant to which
any executive officer was or is to be selected as an officer of the
Corporation.
(3) None of the above executive officers has any family relationship with
any other executive officer or with any director of the Corporation.
<PAGE>
<TABLE>
Security Ownership of Nominees, Directors and Executive
Officers of the Corporation
<CAPTION>
The following table sets forth, as of March 6, 1997, and
from data supplied by the respective individual, information
concerning the amount and percentage of Common Stock
beneficially owned by each director, by each nominee for the
Board of Directors and by all directors and executive
officers as a group. Unless otherwise indicated in a
footnote, each director and officer has sole voting and
investment power over the shares listed as beneficially
owned.
Amount and Nature Percentage of
of Beneficial Outstanding
Ownership of Corporation
Common Stock as Common Stock
Name of March 6, 1997(1) Owned
<S>
NOMINEES FOR ELECTION AS DIRECTORS
FOR 3 YEAR TERMS EXPIRING IN 2000 <C> <C>
Jeffrey E. Hoyt (2) 260 .01
Paul R. John (3) 114,994 3.40
Fred W. Kelly, Jr. (4) 20,265 .60
Jerry A. Soper (5) 37,234 1.10
DIRECTOR NOT SEEKING RE-ELECTION IN 1997
Raymond C. Bowen (6) 21,950 .65
DIRECTORS WHOSE TERMS EXPIRE IN 1999
David R. Dieck (7) 7,236 .22
Louis A. Eaton (8) 9,276 .27
Dr. Robert E. Funk (9) 3,840 .11
George F. Keller (10) 115,691 3.42
Dennis J. Van (11) 15,461 .46
DIRECTORS WHOSE TERMS EXPIRE IN 1998
Max E. Bingaman (12) 12,366 .37
Robert A. Hormell (13) 2,340 .07
Lehman B. Mengel (14) 53,433 1.58
Howard H. Schnure (15) 24,782 .73
Marlin T. Sierer (16) 16,839 .50
All directors and executive officers
as a group (17 persons) 460,367 13.62
</TABLE>
Footnote Information Concerning Security Ownership of
Directors and Executive Officers
(1) Securities "beneficially owned" by an individual are determined in
accordance with the definitions of "beneficial ownership" set forth in
the General Rules and Regulations of the Securities Exchange Commission
("SEC") 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 March 6, 1997. Individuals may disclaim beneficial ownership as to
certain of the securities reported.
<PAGE>
(2) Includes 260 shares jointly held by Mr. Hoyt and Kathy J. Hoyt, his wife.
(3) Includes 104,731 shares jointly held by Mr. John and Mildred D. John,
his wife.
(4) Includes 15,749 shares held by Donnell W. Kelly, his wife, and 567 shares
jointly held by Mr. Kelly and Kyle D. Kelly, his son.
(5) Includes 13,214 shares held jointly by Mr. Soper and Craig A. Ott Soper,
his son; 13,219 shares jointly held by Mr. Soper and Kim Marie Soper,
his daughter; 4,025 shares jointly held by M. Corrine Soper, his wife,
and Craig A. Ott Soper, his son; 4,025 shares jointly held by M. Corrine
Soper, his wife, and Kim Marie Soper, his daughter, 2,491 shares held in
an Individual Retirement Account for Mr. Soper; and 260 shares held in a
personal Trust Account for Mr. Soper.
(6) Includes 529 shares held by Mary Jane Bowen, his wife; 19,568 shares held
by the Raymond C. Bowen Company; and 1,853 shares held in an Individual
Retirement Account for Mr. Bowen.
(7) Includes 7,236 shares jointly held by Mr. Dieck and Annetta M. Dieck,
his wife.
(8) Includes 9,276 shares jointly held by Mr. Eaton and Dorothy L. Eaton,
his wife.
(9) Includes 181 shares jointly held by Dr. Funk and Marvene Funk, his wife.
(10) Includes 28,648 shares jointly held by Mr. Keller and Margaret E. Keller,
his wife; 8,949 shares held by Margaret E. Keller, his wife; and
68,647 shares held by Keller Marine Service, Inc.
(11) Includes 6,021 shares jointly held by Mr. Van and Judy A. Van, his wife;
2,531 shares held in an Individual Retirement Account for Mr. Van;
2,887 shares held in an Individual Retirement Account for Judy A. Van,
his wife and 4,022 shares held by Colonial Furniture Company.
(12) Includes 10,494 jointly held by Mr. Bingaman and Martha Bingaman,
his wife and 1,872 shares held by Mr. Bingaman in a 401(k) account
through Bingaman & Son Lumber, Inc.
(13) Includes 1,421 shares jointly held by Mr. Hormell and Jean L. Hormell,
his wife and 463 shares held in an Individual Retirement Account for Mr.
Hormell.
(14) Includes 53,433 shares held by the L & R Mengel Company.
(15) Includes 3,759 shares jointly held by Mr. Schnure and his son, James
Purdy Schnure, and 2,678 shares jointly held by Mr. Schnure and his
daughter, Sarah J. Lindsay.
(16) Includes 10,000 shares held by H. Arlene Sierer, his wife.
<PAGE>
Executive Compensation and Other Information
COMPENSATION COMMITTEE REPORT
The Board of Directors has designated a Compensation
Committee ("Committee"), a subcommittee of the Personnel and
Retirement Committee, which consists of four (4) outside
Directors. To accomplish the strategic goals and objectives
of the Corporation, SUN and Sun Bank engage competent
persons who undertake to accomplish these objectives with
integrity and in a cost-effective manner. The fundamental
philosophy of SUN's and Sun Bank's compensation program is
to offer competitive compensation opportunities based on
individual contribution and personal performance. The
objectives of the Committee are to establish a fair
compensation policy to govern executive salaries and
incentive plans to attract and motivate competent, dedicated
and ambitious executives whose efforts will enhance the
products and services of SUN and its subsidiaries, the
results of which should be improved profitability, increased
dividends to our shareholders and subsequent appreciation in
the market value of SUN's shares.
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 to executive
officers under such plans.
The compensation of SUN's Chief Executive Officer
("CEO") and Chief Operating Officer ("COO") is determined by
the Committee and is reviewed and approved annually by the
Board of Directors. As a guideline for review in
determining the CEO's and COO's base salary, the Committee
uses information found in various surveys based on asset
size within Pennsylvania and SUN's market region.
Pennsylvania peer group banks are utilized because of common
industry issues and competition for the same Executive
talent.
SUN's performance accomplishments using return on
average assets ("ROA") and return on average equity ("ROE")
are reviewed; however, there is no direct correlation
between the CEO's and COO's compensation or the CEO's and
COO's increase in compensation and any of the noted criteria
nor is there any weight given by the Committee to any
specific individual criteria. Increases in the CEO's and
COO's compensation are based on the Committee's subjective
determination after review of all information, including the
above, that it deems relevant.
Members of the Compensation Committee
Raymond C. Bowen, Chairman
Max E. Bingaman
Robert A. Hormell
Jerry A. Soper
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee was an officer,
former officer or employee of SUN or any of its
subsidiaries.
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
The remuneration table contains information with
respect to annual compensation for services in all
capacities to the Corporation for fiscal years ending
December 31, 1996, 1995 and 1994 of those persons who were,
at December 31, 1996, (i) the Chief Executive Officer and
(ii) the four (4) other most highly compensated executive
officers of the Corporation to the extent such person's
total annual salary and bonus exceeded $100,000:
Annual Compensation 1/ Long-Term Compensation
Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Annual Restricted All Other
Name and Salary Bonus Compensa- Stock Options/ LTIP Compensa-
Principal tion 2/ Award(s) SARs Payouts tion
Position Year ($) ($) ($) ($) (#) 3/ ($) ($) 4/5
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fred W. Kelly, Jr.1996 143,653 32,459 4,517 0 8,000 0 22,409
President & CEO 1995 140,300 27,382 11,612 0 8,662 0 21,634
1994 132,741 25,008 11,750 0 9,000 0 21,191
Jeffrey E. Hoyt 1996 96,152 21,103 3,154 0 7,000 0 9,621
Exec. VP & COO 1995 84,157 15,434 4,416 0 6,063 0 9,263
1994 80,166 12,903 3,151 0 7,500 0 7,757
1/ Compensation deferred at election of executive includable in category
and year earned.
2/ Includes perquisites and other personal benefits (No Director or Officer
received in the aggregate more than $10,000 of personal benefits).
3/ Options granted pursuant to SUN's Stock Incentive Plan and adjusted for
3 for 2 Stock Split effective December 1994, the 5% Stock Dividend
granted June 1995, the 10% Stock Dividend granted December 1995 and the
5% Stock Dividend granted June 1996.
4/ Residual category for Mr. Kelly includes: (a) employer contributions to
defined contribution plan ($7,500); (b) employer contributions to a
401(k) plan ($4,500); and (c) employer contributions to a non-qualified
supplemental retirement plan ($10,409). The respective amounts disclosed
for 1995 were (a) $7,500; (b) $4,500; and (c) $9,634 and for 1994 were
(a) $7,502; (b) $3,001; and (c) $10,688.
5/ Residual category for Mr. Hoyt includes: (a) employer contributions to
defined contribution plan ($5,551); (b) employer contribution to a 401(k)
plan ($2,335); and (c) employer contributions to a non-qualified
supplemental retirement plan ($1,735). The respective amounts disclosed
for 1995 were (a) $4,830; (b) $2,898; and (c) $1,535 and for 1994 were
(a) $4,284; (b) $1,567; and (c) $1,906.
</TABLE>
Other than the compensation set forth in the above
table and under the several plan captions below, the other
compensation for services during 1996 aggregated less than
the disclosure thresholds established by the Securities and
Exchange Commission for other than the named executive
officer.
<PAGE>
<TABLE>
OPTION/SAR GRANTS TABLE
<CAPTION>
Option/SAR Grants In Last Fiscal Year
Individual Grants
(a) (b) (c) (d) (e) (f)
Number of % of Total
Securities Options/
Underlying SARs Granted Exercise Grant
Options/ to Employees or Base Date
SARs Granted in Fiscal Price Expiration Present
Name (#) 1/ Year ($/Sh) 2/ Date Value ($)
<S> <C> <C> <C> <C> <C>
Fred W. Kelly, Jr. 8,000 19.28% $32.00 8/5/06 $256,000.00
President & CEO
Jeffrey E. Hoyt 7,000 16.87% $32.00 8/5/06 $224,000.00
Exec. Vice President,
COO & Secretary
1/ Reflects share adjustment based on 5% Stock Dividend granted June 1995,
the 10% Stock Dividend granted December 1995 and the 5% Stock Dividend
granted June 1996. The Options granted under the SUN BANCORP, INC. 1994
Stock Incentive Plan are not exercisable until January 5, 1998.
2/ Reflects price adjustment based on 5% Stock Dividend granted June 1995,
the 10% Stock Dividend granted December 1995 and the 5% Stock Dividend
granted June 1996.
</TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Neither Mr. Kelly nor Mr. Hoyt exercised options in fiscal year 1996.
<PAGE>
Shareholder Return Performance Graph
Set forth below is a line graph comparing the yearly
percentage change in the cumulative total shareholder return
on the Corporation's common stock against the cumulative
total return of all NASDAQ stocks, SNL less than $500
Million Bank Index for the period of five fiscal years
commencing January 1, 1992 and ending December 31, 1996.
The shareholder return shown on the graph below is not
necessarily indicative of future performance.
<TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
SUN BANCORP, INC. Common, All NASDAQ Stocks,
And SNL Less Than $500 Million Bank Index
<CAPTION>
Period Ending
Index 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
<S> <C> <C> <C> <C> <C> <C>
Sun Bancorp Inc. 100.00 144.05 267.35 329.20 451.83 616.52
NASDAQ Total Return 100.00 116.38 133.60 133.60 184.67 227.16
Banks (under $500M) 100.00 132.05 172.41 185.63 253.67 326.50
</TABLE>
<PAGE>
Employment Contracts of SUN Executives
On July 14, 1987, Mr. Kelly entered into a written five
(5) year employment agreement (the "Agreement") with SUN.
The Agreement automatically renews for an additional year,
unless either SUN or Mr. Kelly deliver notice of an
intention to terminate the Agreement, prior to January
thirtieth of that year. Mr. Kelly's Agreement was amended
on December 19, 1988 and provides that Mr. Kelly will
receive (i) a minimum annual base salary of $135,553 in
1996; (ii) a profit sharing pursuant to Sun Bank's Executive
Incentive Plan; (iii) benefits under and the right to
participate in any future or revised compensation and
benefit plan or arrangements offered by SUN or Sun Bank
during the term of the Agreement including SUN's Stock
Incentive Plan and Employee Stock Purchase Plan; (iv) upon
termination of his employment other than for cause, a
benefit equal to that which would have been payable to Mr.
Kelly pursuant to the defined contribution plan had he been
employed for the full term of the Agreement; (v) upon his
disability, benefits equal to his then current salary during
the disability period until termination of his employment,
subject to adjustments for payments made to him under any
applicable disability plan; and (vi) his stated salary and
profit sharing until the termination of the Agreement should
his employment with SUN and/or Sun Bank be terminated for
other than "cause" as defined in the Agreement which
includes willful violation of the Agreement. If Mr. Kelly's
employment was terminated by SUN, without cause, on December
31, 1996, Mr. Kelly would have received an aggregate amount
of $677,765 for his services through January of 2001.
On May 6, 1994, Mr. Hoyt entered into a written five
(5) year employment agreement (the "Agreement") with SUN.
The Agreement automatically renews for an additional year,
unless either SUN or Mr. Hoyt deliver notice of an intention
to terminate the Agreement, prior to September thirtieth of
that year. Mr. Hoyt's Agreement provides that he will
receive (i) a minimum annual base salary of $96,152 in 1996;
(ii) a profit sharing pursuant to Sun Bank's Executive
Incentive Plan; (iii) benefits under and the right to
participate in any future or revised compensation and
benefit plan or arrangements offered by SUN or Sun Bank
during the term of the Agreement including SUN's Stock
Incentive Plan and Employee Stock Purchase Plan; (iv) upon
termination of his employment other than for cause, a
benefit equal to that which would have been payable to Mr.
Hoyt pursuant to the defined contribution plan had he been
employed for the full term of the Agreement; (v) upon his
disability, benefits equal to his then current salary during
the disability period until termination of his employment,
subject to adjustments for payments made to him under any
applicable disability plan; and (vi) his stated salary and
profit sharing until the termination of the Agreement should
his employment with SUN and/or Sun Bank be terminated for
other than "cause" as defined in the Agreement which
includes willful violation of the Agreement. If Mr. Hoyt's
employment was terminated by SUN, without cause, on December
31, 1996, Mr. Hoyt would have received an aggregate amount
of $456,722 for his services through September of 2001.
Future Remuneration
The officers included in the remuneration table on page
14, as named individuals, may in the future receive benefits
under one or more of the following ongoing plans.
SUN Defined Contribution Plan
On August 6, 1990, SUN's Board adopted a Defined
Contribution Plan (the "Contribution Plan") and made it
available to all eligible employees of Sun Bank.
<PAGE>
Under the Contribution Plan, a minimum of five percent
(5%) of the employee's wages will be paid by Sun Bank and
deposited in the Contribution Plan for the eligible employee
at the end of each calendar year. No contribution on the
part of the employee is required or permitted. The employee
may choose to invest SUN's contribution in any of the
investment options available under SUN's 401(k) Plan
discussed below. After completion of five (5) years of
active service, the employee will be vested in SUN's
contributions made to the Contribution Plan on his/her
behalf.
To be eligible to participate in the Contribution Plan,
an employee must be twenty-one (21) years of age and must
work one (1) continuous year in which the employee has
worked one thousand (1,000) hours. After completing the
eligibility requirements, the employee will enter the
Contribution Plan on January 1, or July 1, whichever date
comes first. Non-employee directors, of SUN and its
subsidiaries, are not eligible to participate in the Defined
Contribution Plan.
Normal retirement is age sixty-five (65) but early
retirement may be elected by an employee who has reached age
fifty-five (55) and has completed five (5) years of service.
After becoming vested, the employee may choose to take a
lump sum distribution or an annuity at retirement,
disability, termination or death. Payment of benefits upon
termination will be made after the year-end valuation which
follows the employee's termination date. No loans or
withdrawals are permitted from the Contribution Plan. Each
employee's benefit is solely determined by the number of
years that the employer has contributed to the Contribution
Plan and the results of the employee's investment choices.
For the executive officers named in the cash
remuneration table reported on page 14, the estimated annual
pension benefit upon retirement at age sixty-five (65)
pursuant to the benefits from the Contribution Plan is
$97,328.67 for Mr. Kelly and $99,721.14 for Mr. Hoyt. This
estimated benefit does not take into consideration any
future increases in the officer's base compensation rate, or
the return on the employee's investment in the Contribution
Plan, and is a life income ten (10) year certain benefit and
would be actuarially reduced for a fifty percent (50%) joint
and survivor annuity to the officer and his spouse.
SUN 401(k) Plan
Effective January 1, 1990, SUN adopted and made
available to eligible employees of Sun Bank, a profit
sharing-savings plan (the "401(k) Plan") for which Sun Bank
is the trustee. The 401(k) 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"). Employees of
SUN's subsidiary, Sun Bank, become eligible to participate
in the 401(k) Plan on January 1st following their employment
and eighteenth (18th) birthday. The participating employees
(the "participants") may elect to have from two percent (2%)
to fifteen percent (15%) of their compensation, as defined
in the 401(k) Plan, contributed to the 401(k) Plan. SUN's
Board will make a determination at the end of each year,
subject to profitability, if a match will be approved.
Under the Tax Reform Act, the maximum amount of elective
contributions that could be made by a participant, during
1996, was nine thousand five hundred dollars ($9,500.00) and
the amount that can be contributed in 1997 is nine thousand
five hundred dollars ($9,500.00). All officers and
employees of Sun Bank, including the officers named in the
Summary Compensation Table set forth herein, are eligible to
participate in the 401(k) Plan. Non-employee directors, of
SUN and its subsidiaries, are not eligible to participate in
the 401(k) Plan.
<PAGE>
All elective contributions are immediately one hundred
percent (100%) vested, however, matching contributions by
the participant's employer are vested only after the
employee has completed five (5) years of active service for
the employer. Participants may direct the investment of
elective contribution into a money market fund, bond fund,
growth fund, an intermediate government trust fund, as well
as the purchase of SUN common stock. All benefits payable
under the 401(k) Plan may be paid in a lump sum or an
annuity upon a participant's retirement, disability,
termination of employment or death. A participant may also
elect to receive benefits at the age of fifty-five (55) upon
early retirement and withdrawal from the 401(k) Plan is
permitted in case of immediate financial hardship.
Supplemental Income Plan
In December 1992, SUN's Board approved a non-qualified
Supplemental Income Plan retroactive to January 1, 1990. It
was designed for the purpose of retaining talented
executives and to promote in these executives a strong
interest in the long term, successful operation of the
Corporation.
Nine (9) executives from Sun Bank participate in this
plan. Each annual contribution is carried on Sun Bank's
records in the participant's name and credited on December
31st of each calendar year. Interest is based on the prior
year's average rate received on federal funds sold. No
contribution on the part of the employee is required or
permitted. Contributions cease at termination, death,
retirement or disability. The Plan is an unfunded plan and
is subject to the general creditors of the Corporation.
Normal retirement is age sixty-five (65) but early
retirement may be elected by an employee who has reached age
fifty-five (55) and completed five (5) years of service. At
retirement, termination, disability or death, the
participant will receive an annual benefit for ten (10)
years. Any portion of the year will be pro-rated. The
Corporation reserves the right to accelerate the payment.
The future estimated benefit does not take compensation
into consideration and the amount credited to Mr. Kelly and
Mr. Hoyt in 1996 is included in the "All Other Compensation"
column of the Summary Compensation Table.
Executive Incentive Plan of Sun Bank
During 1994, the Board of Directors of Sun Bank
established an executive incentive profit sharing plan based
on Sun Bank's profitability and the quality of the
performance during the year of key Sun Bank officers
designated by the President of Sun Bank. The plan is
maintained for certain members of Sun Bank's management to
promote a superior level of performance relating to Sun
Bank's financial goals. The Personnel and Retirement
Committee, with the approval of the Board of Directors, has
established payment criteria based on achieving a stated
earnings per share. Payments aggregating $161,900.03 were
awarded under the previously disclosed profit sharing plan
in 1996. During 1996, Mr. Kelly and Mr. Hoyt received
payment under the profit sharing plan, and the amount is
included in the "Bonus" column of the Summary Compensation
Table.
<PAGE>
Compensation of Directors
All directors were paid a fee of $350 per quarterly or
special meeting attended plus an annual retainer of $1,000,
paid on a quarterly basis. A $50 fee is paid for telephone
conference calls and payment is made in the quarter in which
the call occurred. Attendance is required for payment of
the Board fee but not for the annual retainer. The
Chairman, Vice Chairman and all other directors, who are not
officers of the Corporation or any subsidiary, are paid for
attending the Corporation's Committee meetings. The
Chairman was paid a fee of $200.00 per week for services
rendered to SUN and its management. The Board of Directors
also authorized the payment of a one-time bonus in the
amount of $20,000.00 in recognition of the Chairman's
wisdom, dedication and time commitment to SUN and Sun Bank.
Each outside director, the Chairman and Vice Chairman of the
Corporation were paid $200 for each Executive/Asset &
Liability Committee meeting attended. Each outside
director, the Chairman and the Vice Chairman of the
Corporation was paid a fee of $100 for all other Committee
meetings of the Board attended in 1996.
TRANSACTIONS WITH MANAGEMENT
There have been no material transactions, proposed or
consummated, among the Corporation, or Sun Bank and any
director, executive officer of those entities, or any
associate of the foregoing persons. The Corporation and Sun
Bank have had and intend to continue to have banking and
financial transactions in the ordinary course of business
with their directors and officers and their associates on
comparable terms and with similar interest rates as those
prevailing from time to time for other customers.
Total loans outstanding from the Corporation and Sun
Bank at December 31, 1996, to the Corporation's and the
Banks' officers and directors as a group and members of
their immediate families and companies in which they had an
ownership interest of 10% or more, was $10,323,722 or
approximately 26.56% of the total equity capital of the
Corporation. Loans to such persons were made in the
ordinary course of business, were made on substantially the
same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions
with other persons, and did not involve more than the normal
risk of collectibility or present other unfavorable
features.
SECTION 16(a) BENEFICIAL OWNERSHIP 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.
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 on its review of the copies of such forms
received by it, and/or written statements received from the
respective individuals, 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.
<PAGE>
PROPOSAL 1 ELECTION OF DIRECTORS
(Item 1 on the Proxy)
Nominees for Directors
The following directors, whose terms expire at the 1997
Annual Meeting, have been nominated by the Corporation's
Board of Directors for election:
To serve for a three (3) year term of office which
expires at the 2000 Annual Meeting:
Jeffrey E. Hoyt
Paul R. John
Fred W. Kelly, Jr.
Jerry A. Soper
If one or more of the nominees should at the time of
the Annual Meeting be unavailable or unable to serve as a
director, proxies may vote in favor of a substitute nominee
as the Board of Directors determines or the number of
nominees to be elected will be reduced accordingly and
shares represented by the proxies will be voted to elect the
remaining nominees. The Board of Directors knows of no
reason why any of the nominees will be unavailable or unable
to serve as directors.
Assuming the presence of a quorum, the four (4)
nominees for director receiving the highest number of votes
cast by shareholders entitled to vote for the election of
directors shall be elected. Proxies solicited by the Board
of Directors will be voted for nominees listed above unless
the shareholders specify a contrary choice in their proxies.
The Board of Directors recommends a vote FOR the
nominees listed above.
PROPOSAL 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
(Item 2 on the Proxy)
The Board of Directors has selected the firm of
Parente, Randolph, Orlando, Carey & Associates, Certified
Public Accountants, as its independent certified public
accountants to audit the books, records and accounts of the
Corporation for the year 1997. This firm served as the
Corporation's independent auditors for the 1996 fiscal year.
The Board is herewith presenting the appointment to the
Corporation's shareholders for ratification at the Annual
Meeting. This firm has an outstanding reputation in the
accounting profession and is considered to be well
qualified. The Corporation has been advised by Parente,
Randolph, Orlando, Carey & Associates that none
<PAGE>
of its members has any financial interest in the
Corporation. If the shareholders do not ratify this
selection, the Board of Directors may consider the
appointment of another firm. A representative of Parente,
Randolph, Orlando, Carey & Associates will be at the Annual
Meeting to answer any questions and will have an opportunity
to make a statement if he so desires.
The resolution being voted upon is as follows:
RESOLVED, that the shareholders of the Corporation ratify and confirm
the appointment of Parente, Randolph, Orlando, Carey & Associates, as
the Corporation's, independent certified public accountants for the
year 1997.
The ratification of the selection of the independent
certified public accountants requires the affirmative vote
of at least a majority of the shares of common stock present
in person or by proxy and entitled to vote at the meeting.
Proxies solicited by the Board of Directors will be voted
for the foregoing resolution unless shareholders specify a
contrary choice in their proxies.
The Board of Directors recommends a vote FOR the
resolution ratifying the appointment of Parente, Randolph,
Orlando, Carey & Associates, Certified Public Accountants,
as the Corporation's independent certified public
accountants for the year 1997.
PROPOSAL 3 OTHER BUSINESS
(Item 3 on the Proxy)
Management does not know at this time of any other
matters which will be presented for action at the Annual
Meeting. If any unanticipated business is properly brought
before the meeting, the proxies will vote in accordance with
the best judgment of the person acting by authorization of
the proxies.
SHAREHOLDER PROPOSALS FOR 1998
The Corporation's Annual Meeting of Shareholders will
be held on or about April 23, 1998. Any shareholder
desiring to submit a proposal to the Corporation for
inclusion in the proxy and proxy statement relating to that
meeting must submit such proposal or proposals in writing to
the President of SUN BANCORP, INC. at its principal
executive offices at 2-16 South Market Street, P.O. Box 57,
Selinsgrove, Pennsylvania 17870, not later than Monday,
December 1, 1997.
<PAGE>
ADDITIONAL INFORMATION
A copy of the Annual Report of the Corporation and its
subsidiaries, Sun Bank and Pennsylvania Sun Life Insurance
Company, for the fiscal year ended December 31, 1996,
containing, among other things, consolidated financial
statements certified by its independent public accountants,
was mailed with this Proxy Statement on or about March 28,
1997 to the shareholders of record as of the close of
business on March 6, 1997.
AVAILABILITY OF FORM 10-K
UPON WRITTEN REQUEST OF ANY SHAREHOLDER, A COPY OF THE
CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR ITS FISCAL YEAR
ENDED DECEMBER 31, 1996 INCLUDING THE FINANCIAL STATEMENTS
AND SCHEDULES 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 THE CORPORATION'S EXECUTIVE
VICE PRESIDENT, CHIEF OPERATING OFFICER AND SECRETARY, MR.
JEFFREY E. HOYT, AT 2-16 SOUTH MARKET STREET, P.O. BOX 57,
SELINSGROVE, PENNSYLVANIA 17870.
By Order of the Board of
Directors of SUN BANCORP, INC.
Jeffrey E. Hoyt
Executive Vice President, Chief Operating Officer
and Secretary
