<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ____________)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
HERITAGE BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[LOGO OF HERITAGE BANCORP, INC. APPEARS HERE]
March 14, 1997
ALLEN E. KIEFER
President and Chief
Executive Officer
To The Stockholders of Heritage Bancorp, Inc.
The Annual Meeting of Stockholders of your Company, Heritage Bancorp, Inc.,
will be held at The Pottsville Club, 201 South Twenty-Sixth Street,
Pottsville, Pennsylvania, on Tuesday, April 15, 1997, at 9:00 A.M. A Notice of
the Annual Meeting, a Proxy Statement and a Proxy are enclosed.
The 1996 Annual Report of Heritage Bancorp, Inc. also is enclosed. Included
with the Annual Report is our 1996 Form 10-K as filed with the Securities and
Exchange Commission. The 10-K includes our consolidated financial statements
and Management's Discussion and Analysis of Financial Condition and Results of
Operations. We hope that you have the opportunity to review the material
contained in the Annual Report and Form 10-K.
If you plan to attend the Annual Meeting, there is enclosed a return card
for you to indicate that you will be with us for a Continental Breakfast, so
that we may plan accordingly. We urge you to complete, sign, date and return
the Proxy as promptly as possible, whether or not you plan to attend the
meeting in person. A postage paid return envelope is enclosed for your
convenience. The return of the enclosed Proxy will not in any way affect a
stockholder's right to attend the Annual Meeting.
Very truly yours,
/s/ Allen E. Kiefer
Allen E. Kiefer
President and Chief Executive
Officer
<PAGE>
[LOGO OF HERITAGE BANCORP, INC. APPEARS HERE]
120 SOUTH CENTRE STREET
POTTSVILLE, PENNSYLVANIA 17901
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
To the Stockholders of Heritage Bancorp, Inc.
NOTICE IS HEREBY GIVEN, that the Annual Meeting of Stockholders of Heritage
Bancorp, Inc. will be held at The Pottsville Club, 201 South Twenty-Sixth
Street, Pottsville, Pennsylvania, on Tuesday, April 15, 1997, at 9:00 A.M. to
hear the Annual Report of the President and to vote upon the following
matters:
1. To elect four Class II Directors to hold office for three years from
the date of election and until their successors shall have been elected and
qualified; for a list of nominees, see the enclosed Proxy Statement.
2. Other Business: To consider and act upon such other business as may
properly come before the Annual Meeting or any adjournments or
postponements thereof.
Only stockholders of record at the close of business on March 3, 1997, will
be entitled to notice of, and to vote at, the Annual Meeting or any
adjournments or postponements thereof.
A Proxy Statement and a Proxy are enclosed. Please complete, sign, date and
return the Proxy as promptly as possible. The return of the enclosed Proxy
will not in any way affect a stockholder's right to attend the Annual Meeting.
By Order of the Board of Directors,
/s/ Guy H. Boyer
Guy H. Boyer
Secretary
March 14, 1997
<PAGE>
[LOGO OF HERITAGE BANCORP, INC. APPEARS HERE]
120 SOUTH CENTRE STREET, P.O. BOX 1100
POTTSVILLE, PENNSYLVANIA 17901
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 15, 1997
APPROXIMATE DATE OF MAILING PROXY STATEMENT AND
PROXY TO SHAREHOLDERS:
MARCH 14, 1997
USE OF PROXY
A Proxy for use in connection with the Annual Meeting of Stockholders of
Heritage Bancorp, Inc. (herein called the "Corporation") to be held on
Tuesday, April 15, 1997, at 9:00 A.M., at The Pottsville Club, 201 South
Twenty-Sixth Street, Pottsville, Pennsylvania, is enclosed. This Proxy is
solicited by the Board of Directors of the Corporation and costs of
solicitation will be borne by the Corporation. This Proxy is revocable by the
person giving it, by filing with the Secretary of the Corporation either a
written notice revoking the Proxy or a duly executed Proxy bearing a later
date. Shares of stock of the Corporation represented by properly executed and
filed Proxies will be voted FOR the election as Class II Directors of the four
nominees named in this Proxy Statement or so many of them as can be elected,
and upon the transaction of such other business as may properly come before
the meeting, in accordance with the best judgment of the persons appointed as
Proxies.
OUTSTANDING STOCK AND PRINCIPAL HOLDERS THEREOF
As of March 3, 1997, there were 2,379,055 shares of common stock of the
Corporation issued and outstanding, having a par value of $5.00 per share.
Only those stockholders of record at the close of business on March 3, 1997
will be entitled to receive notice of, and to vote at, the Annual Meeting of
Stockholders of the Corporation. Each outstanding share of stock will entitle
the holder to one vote on all business of the meeting. Stockholders do not
have the right to vote their shares cumulatively with regard to the election
of Directors. A majority of the outstanding common stock present in person or
by proxy constitutes a quorum for the transaction of business at the Annual
Meeting. In the case of the election of Directors, the nominees receiving the
highest number of votes, up to the number of Directors to be elected, shall be
elected to the Board of Directors. Abstentions and broker non-votes will not
constitute or be counted as votes cast for purposes of the Annual Meeting.
As of March 3, 1997, Heritage National Bank (the "Bank", all of the
outstanding stock of which is held by the Corporation) held, either directly
or by way of its nominees, approximately 9.61%, or approximately 228,643
shares, of the outstanding stock of the Corporation in its trust department as
fiduciary for certain trusts, estates and agency accounts which beneficially
own such shares. Of these shares, the Bank had sole voting and investment
power with respect to 127,656 shares, and shared voting and investment power
with respect to 41,545 shares. Pursuant to provisions of the applicable
governing instruments and/or in accordance with applicable principles of
fiduciary law, the Bank, as fiduciary, has the right and power, exercisable
either alone or in conjunction with a co-fiduciary, to vote the shares in
which it has sole or shared voting power, either in person or by proxy, for
the election, as Class II Directors, of the Board of Directors' four nominees,
so long as such votes are in the best interest of any such trust, estate or
agency account and the beneficiaries or principals thereof. The Bank intends
to vote such shares in favor of the Board of Directors' four nominees for
Class II Director.
To the best of the Corporation's information and belief, no other person
holds beneficially or of record, directly or indirectly, five percent (5%) or
more of the outstanding shares of the Corporation's common stock.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information relating to beneficial ownership
of shares of common stock of the Corporation by all of the Corporation's
present Directors, each nominee for Director, each named executive officer of
the Corporation set forth in the Summary Compensation Table, and by all of the
Corporation's Directors and executive officers as a group, without naming
them, as of March 3, 1997. Unless otherwise indicated in a footnote below,
each individual holds sole voting and investment power over the shares listed
in the table. For purposes of the table, beneficial ownership also includes
any shares which the individual has the right to acquire within 60 days of
March 3, 1997 through the exercise of outstanding stock options granted
pursuant to the Corporation's stock option plans.
<TABLE>
<CAPTION>
NO. OF SHARES AND
NATURE OF BENEFICIAL PERCENTAGE
NAME OF BENEFICIAL OWNER POSITION WITH CORPORATION OWNERSHIP OF CLASS
- ------------------------ ------------------------- -------------------- ----------
<S> <C> <C> <C>
Ermano O. Agosti........ Director 3,125(1) .13%
Richard D. Biever....... Director 9,278(2) .39%
Guy H. Boyer............ Executive Vice President, 8,019(3) .34%
Secretary/ Treasurer and
Director
Jane C. Deibert......... Director 9,316(4) .39%
Albert L. Evans, Jr..... Chairman of the Board 11,963(5) .50%
Richard T. Director 4,928(6) .21%
Fenstermacher..........
Frederick A. Gosch...... Director 7,368(7) .31%
Richard A. Ketner....... Executive Vice President and 11,008(8) .46%
Director
Allen E. Kiefer......... President, Chief Executive 13,749(9) .58%
Officer and Director
Robert F. Koehler....... Director 15,239(10) .64%
Joanne C. McCloskey..... Director 10,630(11) .45%
Raman V. Patel.......... Director 6,355(12) .27%
Joseph P. Schlitzer..... Director 16,620(13) .70%
William J. Zimmerman.... Director 1,914(14) .08%
All Directors and
Executive Officers
(16 Persons)........... 134,909 5.67%
</TABLE>
- --------
(1) Includes 2,162 shares held jointly with spouse and 500 shares which may
be acquired upon exercise of stock options.
(2) Includes 500 shares which may be acquired upon exercise of stock options.
(3) Includes 2,187 shares allocated to the account of Mr. Boyer under the
Corporation's Employee Stock Ownership Plan and 401(k) Profit Sharing
Plan and 3,438 shares which may be acquired upon exercise of stock
options.
(4) Includes 1,169 shares which may be acquired upon exercise of stock
options.
(5) Includes 10,373 shares held jointly with spouse and 546 shares which may
be acquired upon exercise of stock options.
(6) 3,808 of the shares reported as beneficially owned by Mr. Fenstermacher
are owned directly by Sonric, a partnership. Also includes 500 shares
which may be acquired upon exercise of stock options.
(7) Includes 6,132 shares held jointly with spouse, 736 shares held by
Pflueger Insurance Agency and 500 shares which may be acquired upon
exercise of stock options.
(8) Includes 4,182 shares held jointly with spouse, 6,625 shares which may be
acquired upon exercise of stock options and 201 shares allocated to the
account of Mr. Ketner under the Corporation's Employee Stock Ownership
Plan and 401(k) Profit Sharing Plan.
(9) Includes 3,684 shares held jointly with spouse, 1,739 shares allocated to
the account of Mr. Kiefer under the Corporation's Employee Stock
Ownership Plan and 401(k) Profit Sharing Plan and 5,312 shares which may
be acquired upon exercise of stock options.
2
<PAGE>
(10) Includes 11,331 shares held directly by spouse. Mr. Koehler disclaims
beneficial ownership of these shares. Also includes 500 shares which may
be acquired upon exercise of stock options.
(11) Includes 8,049 shares held jointly with spouse, 1,356 shares held by
spouse in a self-directed IRA and 500 shares which may be acquired upon
exercise of stock options.
(12) Includes 5,855 shares held jointly with spouse and 500 shares which may
be acquired upon exercise of stock options.
(13) Includes 13,177 shares held jointly with spouse, 2,943 shares held by
Higgins Insurance Associates, Inc., a corporation of which Mr. Schlitzer
is a controlling person, and 500 shares which may be acquired upon
exercise of stock options.
(14) Includes 952 shares held jointly with spouse and 500 shares which may be
acquired upon exercise of stock options.
ELECTION OF DIRECTORS
The By-Laws of the Corporation provide that its business and affairs shall
be managed by a Board of Directors of not less than five nor more than twenty-
five persons. The Corporation's Board, as provided in its By-Laws, is divided
into three classes: Class I, Class II and Class III, with each class being as
nearly equal in number as possible. The Directors in each class serve terms of
three years each and until their successors are elected and qualified.
The Board of Directors has fixed the number of Directors in Class II at four
and nominated the four persons listed below for election as Class II
Directors. Each nominee is presently a Director of the Corporation.
It is intended that the shares represented by the enclosed Proxy will be
voted for the election of the Class II nominees named below, unless such
authority to vote for one or more of the nominees is withheld. In the event
that one or more of the nominees is unable or unwilling to serve as a
Director, the persons named in the Proxy will vote for the election of such
substitute nominee, if any, as shall be named by the Board of Directors. The
Board of Directors has no reason to believe that any nominee will be unable or
unwilling to serve as a Director, as each of the nominees has expressed his or
her willingness to serve if elected.
Certain information with respect to each nominee for Director and each
continuing Director is set forth below.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION AND PRINCIPAL DIRECTOR
NAME AND AGE OCCUPATION FOR PAST FIVE YEARS SINCE
------------ ------------------------------------------ --------
NOMINEES AS CLASS II DIRECTORS TO SERVE UNTIL 2000
<C> <S> <C>
Richard D. Biever.. Vice President, Alpha Mills Corporation (Textile 1995*
55 Manufacturer)
Jane C. Deibert.... Retired, formerly President of The Schuylkill 1995*
69 Haven Trust Company
Allen E. Kiefer.... President and Chief Executive Officer of Bank and 1983
53 Corporation
Robert F. Koehler.. Retired, formerly President of Sylray, Inc. 1981
65 (Textile Manufacturer)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION AND PRINCIPAL DIRECTOR
NAME AND AGE OCCUPATION FOR PAST FIVE YEARS SINCE
------------ ------------------------------------------ --------
CONTINUING CLASS I DIRECTORS SERVING UNTIL 1999
<C> <S> <C>
Ermano O. Agosti.......... President, Hometown, IGA, Inc. (Retail 1988
65 Grocery Stores)
Albert L. Evans, Jr....... President, Evans Delivery Company, Inc. 1995*
57
Richard T. Fenstermacher.. Co-owner, Hadesty Hardware Co., Inc. 1991
54 (Major Appliances, Electronics and
Hardware)
Richard A. Ketner......... Executive Vice President of Corporation 1995*
42 and Bank since March, 1995; formerly
President and Chief Executive Officer of
Bankers' Financial Services Corporation
and The Schuylkill Haven Trust Company
Joanne C. McCloskey....... Retired School Teacher 1993
64
Joseph P. Schlitzer....... President, Higgins Insurance Associates 1995
45 and Coldwell Banker Higgins Associates
(Insurance/Real Estate)
<CAPTION>
CONTINUING CLASS III DIRECTORS SERVING UNTIL 1998
<C> <S> <C>
Guy H. Boyer.............. Executive Vice President of Corporation 1995
42 and Bank since March, 1995;
Secretary/Treasurer of Corporation and
Treasurer of Bank since 1983, Chief
Financial Officer of Bank
(1983 to 1995)
Frederick A. Gosch........ President, Pflueger Insurance Agency, Inc. 1995*
55
Raman V. Patel............ Retired, formerly President, Raydyne, Inc. 1995*
60 (Consulting Engineers)
William J. Zimmerman...... Director, Student Affairs and Marketing, 1991
51 Penn State University, Schuylkill Campus
</TABLE>
- --------
* Prior to March 1, 1995, named person served as a Director of Bankers'
Financial Services Corporation, which merged into Miners National Bancorp,
Inc. ("Miners") on March 1, 1995, at which time Miners changed its name to
Heritage Bancorp, Inc.
During 1996, the Audit Committee of the Corporation reviewed the procedures
of the Corporation's internal audit department and the scope of the external
audit by the Corporation's independent auditors. The Committee also reviewed
the examination report of the Comptroller of the Currency and reported to the
Board concerning the operation of the Bank in accordance with law, regulation
and sound management principles. The Committee held 5 meetings in 1996. Mr.
Agosti is Chairman of the Committee with the other members being Messrs.
Gosch, Zimmerman and Mrs. McCloskey.
The Personnel Committee of the Bank reviews and evaluates compensation for
all levels of employment of the Bank. The Committee held 9 meetings during
1996. Mr. Koehler is Chairman of the Committee with the other members being
Messrs. Becker, Deibert and Gosch.
Nominations for election as Director of the Corporation are made by the
Board of Directors which held 1 meeting for this purpose in January, 1997.
4
<PAGE>
The Board of Directors of the Corporation held 7 meetings during 1996. All
incumbent Directors of the Corporation attended 75% or more of the aggregate
of (1) the total number of meetings of the Board of Directors of the
Corporation (held during the period which they served as a Director) and (2)
the total number of meetings held by all committees of the Board of Directors
of the Corporation on which they served (during the periods that they served).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted below, the entire Board of Directors of the Corporation is
responsible for establishing, implementing and monitoring compensation
policies. Messrs. Kiefer, Boyer and Ketner, each of whom is a member of the
Board, also serve as executive officers of the Corporation and the Bank. While
Messrs. Kiefer, Boyer and Ketner participated during 1996 in Board decisions
regarding the compensation of subordinate executive officers, they did not
participate in any Board decisions regarding their own compensation and were
excused from Board meetings at which their respective compensation was
discussed.
BOARD OF DIRECTORS' REPORT ON EXECUTIVE COMPENSATION
The Corporation does not have a Compensation Committee. The full Board of
Directors of the Corporation is responsible for establishing, implementing and
monitoring all compensation policies of the Corporation and its primary
operating subsidiary, Heritage National Bank (the "Bank"). The Board of
Directors is also responsible for evaluating the performance of the Chief
Executive Officer of the Corporation and recommending appropriate compensation
levels. The Chief Executive Officer evaluates the performance of subordinate
officers of the Corporation and recommends individual compensation levels to
the Board of Directors. The Chief Executive Officer does not participate in
any Board decisions regarding his own compensation as an executive officer.
The Board of Directors meets without the Chief Executive Officer present to
evaluate his performance under the Corporation's executive compensation
program.
In 1996, the key elements of the Corporation's executive compensation
package consisted of base salary, annual incentive bonus pursuant to the
Corporation's Incentive Compensation Plan (the "Incentive Bonus Plan") and
stock option grants pursuant to the Corporation's 1995 Stock Incentive Plan
(the "Stock Option Plan"). In addition, at various times in the past, the
Corporation has adopted certain broad-based employee benefit plans in which
executive officers have been permitted to participate including a defined
benefit pension plan, an Employee Stock Ownership Plan, a 401(k) Profit
Sharing Plan and a non-qualified Executive Supplemental Income Benefit Plan.
The Corporation's executive compensation program, particularly the annual
incentive bonus, is designed to be closely linked to corporate performance and
returns to shareholders. To this end, the Corporation, in conjunction with its
independent compensation consultants, has developed an overall compensation
strategy and compensation plan that ties a portion of the executive
compensation to the Corporation's success in meeting specified performance
goals. The objective of this strategy is to attract and retain the best
possible executive talent, to motivate these executives to achieve the goals
inherent in the Corporation's business strategy and to provide a compensation
package that recognizes individual contributions as well as overall business
results.
BASE COMPENSATION
The Chief Executive Officer initially recommends annual base salary levels
for other executive officers to the Personnel Committee of the Board, taking
into account performance and level of responsibility of the respective
officers and overall corporate performance for the prior year. In making
recommendations, the Chief Executive Officer also considers the competitive
market place for executive talent, including a comparison to base compensation
for comparable positions at competing financial institutions in the
Corporation's geographic market area as compiled by the Human Resources
Department of the Bank. Following review and approval by the Personnel
Committee, the annual base salary levels are then presented to the full Board
for final approval.
5
<PAGE>
The base compensation of the Chief Executive Officer is set annually by the
Board of Directors at a meeting which is not attended by the Chief Executive
Officer. In determining the base compensation of the Chief Executive Officer,
the Board treats overall corporate performance as the primary factor. The
Board also takes into account the base compensation of presidents and chief
executive officers at other similarly sized financial institutions as set
forth in surveys subscribed to by the Corporation, along with salary
information compiled by the Human Resource Department of the Bank with regard
to the chief executive officer salaries at competitor institutions located
within the Corporation's geographic market area.
During 1996, the base compensation of Allen E. Kiefer, President and Chief
Executive Officer of the Corporation, was $137,800, which amount represents an
increase of $5,300 or 4.0% over Mr. Kiefer's 1995 base compensation of
$132,500.
ANNUAL INCENTIVE BONUS PLAN
The purpose of the Incentive Bonus Plan is to improve the growth and
operating performance of the Corporation by providing an opportunity for
executive officers and other management level employees of the Corporation to
earn additional cash remuneration in the form of a year-end bonus award if the
Corporation's performance for the year exceeds certain target amounts. Only
executive officers and other management level employees of the Corporation
and/or its subsidiaries who are recommended by the Corporation's Chief
Executive Officer and approved each year by the Personnel Committee of the
Board of Directors are entitled to participate in the Incentive Plan. Awards
are based on corporate performance and individual performance using criteria
established in accordance with the Incentive Plan. As for the named executive
officers, the corporate performance measure accounted for 90% of the award
payment while the individual performance measures were accorded a weight of
10%. The Corporation's corporate performance factor is return on assets
("ROA"). Depending on the ROA target performance factor, a designated
percentage of net profit after taxes of the Corporation is allocated to an
incentive awards pool available for distribution to participants in the
Incentive Plan. The percentage of net profit after taxes allocated to the
awards pool typically ranges from a minimum allocation amount to a maximum
allocation amount depending upon the Corporation's performance. If the minimum
ROA target amount is not achieved, the Corporation does not allocate any
amount to the awards pool. The specific ROA target performance factors each
year are initially set by the Personnel Committee and recommended to the full
Board for final approval. The percentage of the awards pool allocable to the
Chief Executive Officer is recommended by the Corporation's independent
compensation consultant to the full Board. The percentage of the awards pool
allocable to participants other than the Chief Executive Officer is initially
set by the Personnel Committee and recommended to the full Board of Directors
for final approval. The payment of awards is made between December and March
of each year, following review and approval of payments by the Board of
Directors.
In 1996, the Board determined that the incentive award for Mr. Kiefer should
be $44,746. This award is reflective of ROA of 1.58%, which exceeded the
maximum ROA target amount of 1.55%.
STOCK OPTION PLAN
Under the Stock Option Plan, which was approved by the shareholders at the
1995 Annual Meeting, incentive stock options, non-qualified stock options and
stock appreciation rights in conjunction with such options, may be granted to
executive officers of the Corporation or its subsidiaries. The Personnel
Committee sets guidelines for the size of stock option awards based on a
recommendation each year from management. Although the size of awards is
largely a subjective determination based on the particular executive officer,
factors considered include competitive compensation data from the list of peer
group companies compiled by the Human Resources Department of the Bank, the
amount of options previously awarded to an executive officer and the value of
unexercised in-the-money options at year end. In the event of poor corporate
performance, the Personnel Committee can elect not to award options.
Stock options during 1996 were granted with an exercise price equal to 100%
of the fair market value of the common stock on the date of grant and vest in
full one year from the date of grant. All options granted were non-qualified
stock options. No stock appreciation rights were granted during 1996.
6
<PAGE>
In 1996, Mr. Kiefer received options to purchase 2,812 shares of common
stock with an exercise price of $20.30 per share. Mr. Kiefer presently is the
beneficial owner, directly or indirectly, of 8,437 shares of common stock and
also holds presently exercisable options to purchase an additional 5,312
shares. The Board of Directors believes that significant equity interests in
the Corporation held by the Corporation's senior management are beneficial to
the common interests of shareholders and management.
Board of Directors
Albert L. Evans, Jr., Chairman
Ermano O. Agosti
Richard D. Biever
Guy H. Boyer
Jane C. Deibert
Richard T. Fenstermacher
Frederick A. Gosch
Richard A. Ketner
Allen E. Kiefer
Robert F. Koehler
Joanne C. McCloskey
Raman V. Patel
Joseph P. Schlitzer
William J. Zimmerman
7
<PAGE>
EXECUTIVE COMPENSATION
The following table shows, for the years ending December 31, 1994, 1995 and
1996, the cash compensation paid or accrued, as well as certain other
compensation paid or accrued for those years, to Allen E. Kiefer, President
and Chief Executive Officer of the Corporation, Guy H. Boyer, Executive Vice
President and Secretary/Treasurer of the Corporation and Richard A. Ketner,
Executive Vice President of the Corporation. Pursuant to the executive
compensation disclosure rules of the Securities and Exchange Commission,
information is not required as to the compensation of the Corporation's other
executive officers because the total salary and bonus earned by such executive
officers during 1996 did not exceed $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------- ------------------- -------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
OTHER ALL
NAME ANNUAL RESTRICTED OTHER
AND COMPEN- STOCK OPTIONS/ LTIP COMPEN-
PRINCIPAL SALARY BONUS SATION AWARD(S) SARS PAYOUTS SATION
POSITION YEAR ($) ($)(1) ($) ($) (#) ($) ($)
--------- ---- ------- ------ ------- ---------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Allen E. Kiefer, 1996 145,090 44,746 -- -- 2,812 -- 5,845(2)
President and Chief 1995 140,353 40,365 -- -- 2,000 -- 4,245
Executive Officer 1994 138,225 15,525 -- -- -- -- 6,266
of the Bank and
Corporation
Guy H. Boyer, 1996 99,123 33,158 -- -- 1,875 -- 4,052(3)
Executive Vice 1995 96,253 26,929 -- -- 1,250 -- 2,840
President and 1994 87,047 10,500 -- -- -- -- 2,615
Secretary/Treasurer
of Corporation;
Executive Vice
President and
Treasurer of Bank
Richard A. Ketner, 1996 100,815 33,158 -- -- 1,875 -- 3,894(5)
Executive Vice 1995 94,461 26,816 -- -- 1,250 -- 2,810
President of Bank and 1994 -- -- -- -- -- -- --
Corporation;
Secretary of Bank(4)
</TABLE>
- --------
(1) Reflects bonus earned during the fiscal year, including a portion of which
is paid during the next fiscal year.
(2) Consists of $1,704 in Bank-matching contributions to the Corporation's
401(k) Profit Sharing Plan and approximately $4,141 allocated to Mr.
Kiefer's account under the Corporation's Employee Stock Ownership Plan.
(3) Consists of $1,310 in Bank-matching contributions to the Corporation's
401(k) Profit Sharing Plan and approximately $2,742 allocated to Mr.
Boyer's account under the Corporation's Employee Stock Ownership Plan.
(4) Mr. Ketner was not an executive officer of the Corporation during 1994 and
compensation information for that year is not reported.
(5) Consists of $1,119 in Bank-matching contributions to the Corporation's
401(k) Profit Sharing Plan and approximately $2,775 allocated to Mr.
Ketner's account under the Corporation's Employee Stock Ownership Plan.
8
<PAGE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Corporation's 1995 Stock Incentive Plan to the Chief
Executive Officer and the other named executive officers during the year
ending December 31, 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (1)
- ------------------------------------------------------------------ ---------------------
(A) (B) (C) (D) (E) (F) (G)
NO. OF % OF
SECURITIES TOTAL
UNDER- OPTIONS
LYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE EXPIRA-
GRANTED IN FISCAL PRICE TION
NAME (#) (2) YEAR ($/SH) (3) DATE (4) 5% ($) 10% ($)
---- ---------- ---------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Allen E. Kiefer......... 2,812 28.30% $20.30 03/26/06 $ 35,900 $ 90,977
Guy H. Boyer............ 1,875 18.87% $20.30 03/26/06 $ 23,937 $ 60,662
Richard A. Ketner....... 1,875 18.87% $20.30 03/26/06 $ 23,937 $ 60,662
</TABLE>
- --------
(1) Illustrates value that would be realized upon exercise of the options
immediately prior to the expiration of their term, assuming the specified
compounded rates of appreciation of the Corporation's common stock over
the term of the options.
(2) The date of grant for all options is March 26, 1996. All options granted
are non-qualified stock options without SAR's. All options vest one year
from the date of grant becoming exercisable for shares on the anniversary
of the date of grant. To the extent not already exercisable, the options
become automatically exercisable in the event of a merger or consolidation
of the Corporation in which the Corporation is not the surviving entity,
or the sale of all or substantially all of the assets of the Corporation,
or an offer to purchase made by a party, other than the Corporation, to
all stockholders of the Corporation for at least 35% of the outstanding
stock. In addition, the Personnel Committee of the Board of Directors may,
in its discretion, accelerate the vesting schedule, upon such terms and
conditions as it may impose.
(3) The exercise price of all options granted is equal to the market price of
the common stock on the date of grant. The exercise price shall be paid in
cash, provided, however, that the Personnel Committee, in its sole
discretion, may permit the payment of the exercise price in shares of
common stock owned by the option holder prior to exercising the option,
provided such shares have a fair market value on the date of payment equal
to the option exercise price for the shares of common stock being
purchased, or partly in cash and partly in such shares of common stock.
(4) All options expire 10 years from the date of grant. Notwithstanding the
foregoing: (1) In the event of retirement, death or disability prior to
the end of the option term, the option shall remain exercisable for a
period of one year from the date of retirement, death or disability (but
not later than the end of the option term) to the extent the option was
vested, by acceleration or otherwise, at the time of retirement; and (2)
in the event an option holder ceases to be employed other than by reason
of retirement, death or disability, the option shall remain exercisable
for three months from the date of cessation of employment (but not later
than the end of the option term) to the extent the option was exercisable
at the time of cessation of employment.
9
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Chief
Executive Officer and the other named executive officers of the Corporation
concerning the exercise of options during the year ending December 31, 1996
and unexercised options held as of the end of 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUE
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#) FY-END ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($)(1) UNEXERCISABLE UNEXERCISABLE(2)
---- --------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Allen E. Kiefer......... 0 $ 0 2,500/2,812 $ 5,375/$5,483
Guy H. Boyer............ 0 $ 0 1,563/1,875 $ 3,358/$3,656
Richard A. Ketner....... 0 $ 0 4,750/1,875 $24,675/$3,656
</TABLE>
- --------
(1) Fair market value of common stock at exercise, minus the exercise price.
(2) Fair market value of common stock at year-end ($22.25 per share).
DEFINED BENEFIT PENSION PLAN
The Bank has a Defined Benefit Pension Plan for all eligible employees (age
21 plus one year of service). All the costs of the Plan, as determined by the
Plan actuaries, are paid by the Bank. Employees do not and cannot contribute
to the Plan. A plan participant's pension benefit, which becomes fully vested
after 5 years of service, is determined by multiplying years of service by 1%
by career average salary.
The following table indicates sample pension benefits which would be payable
under this Plan to a retiring participant at age 65. Various levels of
compensation and years of service are shown.
<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL AVERAGE ---------------------------
COMPENSATION 10 20 30 40
------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
$ 15,000........................................ 1,500 3,000 4,500 6,000
30,000........................................ 3,000 6,000 9,000 12,000
45,000........................................ 4,500 9,000 13,500 18,000
60,000........................................ 6,000 12,000 18,000 24,000
75,000........................................ 7,500 15,000 22,500 30,000
90,000........................................ 9,000 18,000 27,000 36,000
105,000........................................ 10,500 21,000 31,500 42,000
120,000........................................ 12,000 24,000 36,000 48,000
135,000........................................ 13,500 27,000 40,500 54,000
150,000........................................ 15,000 30,000 45,000 60,000
165,000........................................ 16,500 33,000 49,500 66,000
180,000........................................ 18,000 36,000 54,000 72,000
195,000........................................ 19,500 39,000 58,500 78,000
210,000........................................ 21,000 42,000 63,500 84,000
225,000........................................ 22,500 45,000 67,500 90,000
</TABLE>
The Benefit amounts set forth in the table are not subject to reduction for
social security benefits. With respect to the named executive officers, the
annual compensation set forth in the Summary Compensation Table does not
differ substantially from the remuneration which would be covered under the
Plan. For purposes of the Plan at December 31, 1996, Mr. Kiefer had 27 years
and 8 months of service, Mr. Boyer had 16 years and 6 months of service and
Mr. Ketner had 2 years of service.
10
<PAGE>
The amount of contribution, payment or accrual in respect of a specified
person is not and cannot readily be separately or individually calculated by
the regular actuaries for the Plan. The Bank made no pension contribution in
1996 due to the Full Funding Limitation under the Employee Retirement Income
Security Act of 1974, as amended.
EXECUTIVE SUPPLEMENTAL INCOME PLAN
The Board of Directors adopted a nonqualified Executive Supplemental Income
Benefit Plan ("ESI Plan") effective as of January 1, 1989. The ESI Plan
provides death benefits and supplemental retirement benefits for selected
officers of the Bank.
Under the ESI Plan, the Bank enters into individual agreements with
participants. The agreements provide for annual payments to the participant's
designated beneficiary for a specified period of years following the
participant's death. The ESI Plan also provides for supplemental retirement
benefits for a participant who has attained age 65 and who has remained in the
continuous employment of the Bank until his retirement; however, in the case
of the sale of the stock or assets, merger, or substantial change in the
ownership of the Bank, continuous employment of the participant is required
only until the date the participant voluntarily terminates his employment or
is discharged by the Bank or its successor without just cause.
Under the supplemental retirement provisions, participants are eligible for
supplemental benefits up to 75% of the participant's final average salary.
Those supplemental retirement benefits are subject to reduction for social
security benefits and benefits received under the Defined Benefit Pension
Plan. Subject to the approval of the Bank Board of Directors, a participant
can elect early retirement at age 55. However, a participant can elect early
retirement without Board approval at age 55 if there is a sale of the stock or
assets, merger, or substantial change in ownership of the Bank. The retirement
benefits payable to a participant who has elected early retirement will be
actuarially reduced. Mr. Kiefer's yearly supplemental pension benefit,
commencing at his normal retirement and payable for 15 years, is $37,605. Mr.
Boyer's yearly supplemental pension benefit, commencing at his normal
retirement and payable for 15 years, is $22,980.
CHANGE IN CONTROL AND EMPLOYMENT AGREEMENTS
The Corporation has entered into Change in Control Agreements with the named
executive officers. Under the terms of the agreements, in the event the
executive officer's employment with the Corporation or Bank is terminated by
the Corporation, Bank or the executive officer, pursuant to a change in
control of the Bank or the Corporation, the executive officer's cash
compensation in effect prior to the change in control will continue for a
period of three (3) years. Cash compensation is defined to include base salary
plus the incentive bonus earned for the preceding calendar year. A termination
pursuant to a change in control may occur in connection with a merger,
consolidation, acquisition, reorganization, sale of assets or significant
stock acquisition of the Corporation or Bank. The Change in Control Agreements
also provide that the Corporation will continue to provide the executive
officer with available insurance coverages in effect at the time of
executive's termination pursuant to a change in control for a period of three
(3) years, offset by coverage from any subsequent employment, or until the
executive attains age 65.
The Corporation also has entered into Employment Agreements with the named
executive officers. Pursuant to the Employment Agreements, each of the
executive officers will continue employment with the Corporation and Bank in
their current positions for a term of three (3) years after the effective date
of the merger of Bankers' Financial Services Corporation into the Corporation
on March 1, 1995, after which it is anticipated that each of the executive
officers will continue employment as employees "at will." The Employment
Agreements provide that each of the executive officers shall be entitled to
receive as compensation their respective base salaries in effect on the
consummation date of the merger, subject to increase based on merit review,
plus participation in the Corporation's Incentive Compensation Plan and
participation in the Corporation's employee benefit plans.
11
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Corporation's common stock during the five
years ended December 31, 1996 with the cumulative total return on (i) an
overall stock market index, the Nasdaq Stock Market Index; and (ii) a peer
group index, the Nasdaq Bank Stocks Index. The comparison assumes $100 was
invested on December 31, 1991 in the Corporation's common stock and in each of
the indices and assumes reinvestment of dividends.
Heritage Bancorp Inc.
[LINE GRAPH OF TOTAL RETURN PERFORMANCE APPEARS HERE]
<TABLE>
<CAPTION>
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>
HBCI $100.00 $109.81 $149.32 $182.34 $189.02 $216.73
NASDAQ Bank Stocks $100.00 $145.55 $165.99 $165.38 $246.32 $325.60
NASDAQ Stock Market $100.00 $116.38 $133.59 $130.59 $184.67 $227.16
</TABLE>
12
<PAGE>
DIRECTOR COMPENSATION
Directors of the Corporation and Directors of the Bank receive an annual
retainer of $2,000, provided, however, that an individual serving as both a
Corporation and Bank Director receives only one $2,000 annual retainer.
Directors of the Corporation receive $600 for attendance at each regular
monthly meeting of the Corporation Board and the Chairman receives $960 for
attendance at each regular monthly meeting of the Board. Directors of the
Corporation are paid $50 per hour for each Board Committee meeting attended.
Directors of the Bank are paid $600 for attendance at each regular monthly
meeting of the Bank Board and the Chairman is paid $960 for attendance at each
regular monthly meeting of the Board. Bank Board Committee members are paid
$50 per hour for each Committee meeting attended.
TRANSACTIONS WITH MANAGEMENT
The Bank has had in the past and expects to have in the future, transactions
in the ordinary course of its business, with directors and officers of the
Bank and the Corporation and their associates, on substantially the same
terms, including interest rates and collateral on loans, as those prevailing
at the same time for comparable transactions with other persons, which do not
involve more than the normal risk of collectibility, or present other
unfavorable features.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that directors
and certain officers of the Corporation file reports of ownership and changes
in ownership with the Securities and Exchange Commission as to the shares of
Corporation common stock beneficially owned by them.
Based solely on its review of copies of such forms received by it, the
Corporation believes that during the Corporation's fiscal year ending on
December 31, 1996, all filing requirements applicable to its directors and
officers were complied with in a timely fashion.
RELATIONS WITH INDEPENDENT AUDITORS
Beard and Company, Inc., Reading, Pennsylvania, was the appointed
independent auditor for the Corporation and the Bank in 1996. It is
anticipated that Beard and Company, Inc. will be selected for the current
year. During 1996, the independent auditors, Beard and Company, Inc.,
performed certain non-audit services which are in addition to its basic
engagement for the examination of the Corporation and Bank's financial
statements. A representative of Beard and Company, Inc. will be present at the
Annual Meeting of Stockholders to make a statement if he desires to do so and
to respond to appropriate questions.
SHAREHOLDER PROPOSALS
The Corporation must receive by November 17, 1997 any stockholder proposals
for such proposals to be considered for inclusion in the Corporation's Proxy
Statement and Proxy for the 1998 Annual Meeting of Stockholders.
13
<PAGE>
OTHER BUSINESS
The Board of Directors of the Corporation does not intend to present any
business at the Annual Meeting other than the matters hereinabove referred to,
and the Board does not know of any other matters to be presented for action at
the meeting. Discretionary authority to vote on any other matters that may
come before the meeting will be conferred by such Proxies upon the person
voting them, unless a stockholder specifically indicates in such Proxy that
such authority is withheld. It is the intention of the persons designated as
proxies to vote in accordance with their best judgment on such matters.
It is important that proxies be returned promptly. Stockholders are urged to
vote, sign, date and return the accompanying form of Proxy in the enclosed
envelope.
By Order of the Board of Directors,
/s/ Guy H. Boyer
Guy H. Boyer
Secretary
March 14, 1997
THE CORPORATION IS FURNISHING EACH PERSON SOLICITED A COPY OF ITS 1996
ANNUAL REPORT TO SHAREHOLDERS WHICH INCLUDES A COPY OF THE CORPORATION'S
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE SECURITIES EXCHANGE ACT
OF 1934.
14
<PAGE>
HERITAGE BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Christine A. Zanis, Anne B. Reed and James T.
O'Brien, or any of them, my true and lawful attorney(s) with full power of
substitution for me and in my name, place and stead, to vote all the Common
Stock of the Corporation, standing in my name on its books on March 3, 1997, at
the Annual Meeting of Stockholders to be held at The Pottsville Club, 201 South
Twenty-Sixth Street, Pottsville, Pennsylvania, on the 15th day of April, 1997,
at 9:00 A.M., or at any adjournments or postponements thereof, with all powers
the undersigned would possess if personally present, as designated on the
reverse side.
This proxy when properly executed will be voted in the manner directed hereon.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS.
This proxy also will be voted, in the discretion of the proxyholders, upon such
other business as may properly come before the Annual Meeting of Stockholders or
any adjournments or postponements thereof.
The vote shown on the reverse side are the total votes that may be cast by this
proxy, based on one vote per each share of Heritage Bancorp, Inc. common stock
held.
Please vote and sign on reverse side. No postage is required if this proxy is
returned in the enclosed return envelope and mailed in the United States.
The undersigned hereby acknowledges receipt of the Proxy Statement dated March
14, 1997, and hereby revokes any proxy or proxies heretofore given to vote
shares at said meeting or any adjournments or postponements thereof.
<PAGE>
HERITAGE BANCORP, INC.
PROXY
MATTER NO. 1 ELECTION OF CLASS II DIRECTORS
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
(except as marked to vote for all
to contrary below) nominees listed
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
- -----------------------------------
Nominees for Class II Directors
- -------------------------------
Richard D. Biever
Jane C. Deibert
Allen E. Kiefer
Robert F. Koehler
MATTER NO. 2 In the discretion of the persons named in this Proxy, to vote upon
the transaction of such other business as may properly come before said meeting
or any adjournments or postponements thereof. NOTE: The signature(s) on this
Proxy must correspond with the name(s) as written upon the face of the share
certificate. Executors, administrators, trustees, guardians, and other
fiduciaries please so indicate when signing.
Dated: , 1997
----------------------
- -------------------------------------------
Signature
- -------------------------------------------
Signature if held jointly
(OVER)
