SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /_/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FIRST COLONIAL GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/_/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/_/ 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:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/_/ 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 No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
FIRST COLONIAL GROUP, INC.
76 South Main Street
Nazareth, Pennsylvania 18064
-----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held May 1, 1997
-----------------------------------------
To the Shareholders of First Colonial Group, Inc.:
The Annual Meeting of Shareholders of First Colonial Group, Inc.
("Company") will be held on Thursday, May 1, 1997, at 9:00 a.m., prevailing
time, at the Bethlehem Holiday Inn, Routes 22 and 512, Bethlehem, Pennsylvania
18017, for the purpose of considering and acting upon the following:
1. To elect three Class 1 directors to hold office for a term of four
years and until their successors are duly elected and qualified, as more fully
described in the accompanying Proxy Statement; and
2. To transact such other business as may properly come before the
Annual Meeting.
Only shareholders of record, as shown by the transfer books of the
Company, at the close of business on March 14, 1997, will be entitled to notice
of, and to vote at, the Annual Meeting or any adjournment or postponement
thereof.
If the Annual Meeting is adjourned for one or more periods aggregating
at least 15 days because of the absence of a quorum, those shareholders entitled
to vote who attend the reconvened Annual Meeting, if less than a quorum as
determined under applicable law, shall nevertheless constitute a quorum for the
purpose of acting upon any matter set forth in this Notice of Annual Meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED
TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY. A SELF-ADDRESSED ENVELOPE
IS ENCLOSED FOR YOUR CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
By Order of the Board of Directors
S. ERIC BEATTIE
President and Chief
Executive Officer
Nazareth, Pennsylvania
March 27, 1997
<PAGE>
FIRST COLONIAL GROUP, INC.
76 South Main Street
Nazareth, Pennsylvania 18064
(610) 746-7300
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
The accompanying proxy is solicited by the Board of Directors of First
Colonial Group, Inc. ("Company") for use at the Annual Meeting ("Meeting") of
Shareholders to be held on Thursday, May 1, 1997 at 9:00 a.m., prevailing time,
at the Bethlehem Holiday Inn, Routes 22 and 512, Bethlehem, Pennsylvania 18017,
and any adjournments or postponements thereof. This Proxy Statement and
accompanying proxy card are first being mailed to Company shareholders on or
about March 27, 1997.
The cost of the solicitation will be borne by the Company. In addition
to solicitation by mail, proxies may be solicited in person or by telephone,
facsimile or similar means by officers, directors or employees of the Company,
without additional compensation. Upon request, the Company will pay the
reasonable expenses incurred by record holders of the Company's common stock,
par value $5.00 per share ("Common Stock"), who are brokers, dealers, banks or
voting trustees, or their nominees, for mailing proxy material and annual
shareholder reports to beneficial owners.
Only shareholders of record, as shown on the transfer books of the
Company, at the close of business on March 14, 1997 ("Record Date") will be
entitled to notice of, and to vote at, the Meeting. On the Record Date, there
were 1,562,673 shares of Common Stock outstanding. All share and per share
information in this Proxy Statement has been adjusted to reflect the 5% stock
dividends paid in June 1996 and 1994.
Sending in a signed proxy will not affect a shareholder's right to
attend the Meeting and vote in person since the proxy is revocable. Any
shareholder giving a proxy has the power to revoke it by, among other methods,
giving written notice to the Secretary of the Company at any time before the
proxy is exercised.
Proxies in the accompanying form, properly executed and received in
time for voting, and not revoked, will be voted as indicated in accordance with
the instructions thereon. If no directions to the contrary are indicated, the
persons named in the enclosed proxy will vote all shares of Common Stock for the
election of all nominees for directors hereinafter named.
The presence, in person or represented by proxy, of the holders of a
majority of the outstanding shares of Common Stock will constitute a quorum for
the transaction of business at the Meeting. All shares of the Company's common
stock present in person or represented by proxy and entitled to vote at the
Annual Meeting, no matter how they are voted or whether they abstain from
voting, will be counted in determining the presence of a quorum. If the Annual
Meeting is adjourned because of the absence of a quorum, those shareholders
entitled to vote who attend the adjourned meeting, although constituting less
than a quorum as provided herein, shall nevertheless constitute a quorum for the
purpose of electing directors. If the Annual Meeting is adjourned for one or
more periods aggregating at least 15 days because of the absence of a quorum,
those shareholders entitled to vote who attend the reconvened Annual Meeting, if
less than a quorum as determined under applicable law, shall nevertheless
constitute a quorum for the purpose of acting upon any matter set forth in the
Notice of Annual Meeting.
Except for certain restrictions (hereinafter summarized), each share of
Common Stock is entitled to one vote on each matter which may be brought before
the Meeting except that, in the
<PAGE>
election of directors, shareholders are entitled to cumulate their votes.
Cumulative voting entitles each shareholder to cast as many votes as is equal to
the number of shares held by such shareholder multiplied by the number of
directors to be elected; all such votes may be cast for one candidate or they
may be distributed among any two or more candidates in the election. The persons
named in the accompanying proxy may exercise cumulative voting rights in any
manner they deem desirable to secure the election of as many as possible of the
nominees named below. See "ELECTION OF DIRECTORS."
The election of directors will be determined by a plurality vote and
the three nominees receiving the most "for" votes will be elected. Under the
Pennsylvania Business Corporation Law, an abstention, withholding of authority
to vote or broker non-vote will not have the same legal effect as an "against"
vote and will not be counted in determining whether the proposal has received
the required shareholder vote.
Article 7 of the Company's Amended and Restated Articles of
Incorporation, as amended, restricts the rights of a Person (as hereafter
defined) to cast (or execute written consents with respect to) more than 10% of
the total votes which all shareholders are entitled to cast at a meeting, unless
authorized to do so by the Board of Directors and subject to such conditions as
the Board of Directors may impose. The term "Person" includes not only
individuals and entities, but also groups of individuals and entities who act
together for the purpose of acquiring, holding, disposing of or voting Common
Stock.
The restrictions of Article 7 do not apply to the shares of Common
Stock held by the Bank for itself or as trustee of the Company's Employee Stock
Ownership Plan or other trusts. See "VOTING SECURITIES AND PRINCIPAL HOLDERS
THEREOF."
The casting of votes by a Person as a proxy holder for other
shareholders is not counted in computing the 10% limitation to the extent that
the proxies so voted were revocable and were secured from other shareholders who
are not members of a group which includes such Person. Giving a revocable proxy
to a Person does not in itself cause the shareholder giving the proxy to be a
member of a group which includes such Person. Article 7 provides that the
determination by the Board of Directors of the existence or membership of a
group, and of a number of votes any Person or each member of a group is entitled
to cast, is final and conclusive absent clear and convincing evidence of bad
faith.
In the event of a violation of Article 7 and in addition to other
remedies afforded the Company, the judges of election cannot count votes cast in
violation of Article 7 and the Company or its nominees have an option to acquire
from the violator shares of Common Stock in excess of the 10% limit at prices
which would in certain situations be lower than the then current market price of
such shares.
The foregoing is a brief summary of Article 7 and is qualified and
amplified in all respects by the exact provisions of the Amended and Restated
Articles of Incorporation, as amended, a copy of which can be obtained in the
same manner as the Company's Annual Report on Form 10-KSB for 1996. See "ANNUAL
REPORT TO SHAREHOLDERS AND FORM 10-KSB".
The enclosed proxy confers discretionary authority to vote with respect
to any and all of the following matters that may come before the Meeting: (i)
matters which the Company does not know, a reasonable time before the proxy
solicitation, are to be presented at the Meeting; (ii) approval of the minutes
of a prior meeting of shareholders, if such approval does not amount to
ratification of the action taken at the 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; (iv) any proposal omitted from this Proxy Statement
and the form of proxy pursuant to Rules 14a-8 or 14a-9 under the Securities
Exchange Act
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<PAGE>
of 1934, and (v) matters incident to the conduct of the Meeting. In connection
with such matters, the persons named in the enclosed proxy will vote in
accordance with their best judgment.
The Company is not presently aware of any matters (other than
procedural matters) which will be brought before the Meeting which are not
reflected in the attached Notice of the Meeting. If any such matters are brought
before the Meeting, the persons named in the enclosed proxy will act or vote in
accordance with their best judgment.
ELECTION OF DIRECTORS
As permitted under Pennsylvania law, the Bylaws of the Company provide
for staggering the terms of office of the Company's directors by dividing the
Board of Directors into four classes, with members of each class serving
four-year terms. The Company's Bylaws further provide that the Board of
Directors shall consist of not fewer than five nor more than 25 directors, with
the exact number fixed by the Board of Directors. The Board of Directors
currently consists of nine members.
At the Meeting, the shareholders will elect three Class 1 directors to
serve for a term of four years and until their successors are elected and
qualified. As described above, shareholders are entitled to cumulative voting
rights in the election of directors.
The following table sets forth information, as of the Record Date,
concerning the Company's directors and nominees for election to the Board of
Directors. Unless directed otherwise, the persons named in the enclosed proxy
intend to vote such proxy for the election of the listed nominees or, in the
event of death, disqualification, refusal or inability of any nominee to serve,
for the election of such other persons as the management of the Company may
recommend in the place of such nominee to fill the vacancy. The Board has no
reason to believe that any of the nominees will not be a candidate or will be
unable to serve.
The director nominees named below were nominated by the Board of
Directors and currently serve as directors. All of the Company's directors were
first elected directors of the Company in 1983 except for Richard Stevens, III
and Gordon B. Mowrer, who were first appointed to the Board of Directors of the
Company in 1989, Daniel Mulholland and Maria Zumas Thulin, who were first
appointed to the Board of Directors of the Company in 1994 and Charles J.
Peischl who was first appointed to the Board of Directors in 1996. In addition,
all of the directors and director nominees named below also serve on the Board
of Directors of the Company's banking subsidiary, Nazareth National Bank and
Trust Company ("Bank").
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<PAGE>
<TABLE>
<CAPTION>
Name/Age Principal Occupation or Director of Term of
as of Record Date Employment for Past Five Years the Bank Since Office Expires
- -------------------------- ----------------------------------------------------- ----------------- ----------------
<S> <C> <C> <C>
Director Nominees
Daniel B. Mulholland President, Mallinckrodt Baker, Inc. (chemical 1994 1997
44 manufacturing), Phillipsburg, New Jersey since 1974
Charles J. Peischl Attorney, Peters, Moritz, Peischl, Zulick & Landes 1996 1997
52
John J. Schlamp Chairman of the Board of the Company since 1974 1997
71 (1) (2) January, 1987 and of the Bank since 1984
Continuing Directors
S. Eric Beattie President of the Company and Chief Executive 1982 2000
50 (1) Officer of the Company and the Bank since January,
1987, and President of the Bank since 1984
Robert J. Bergren Retired; former Vice President Administration, SI 1982 1999
71 (1) (2) (3) Handling Systems, Inc. (manufacturer of materials
handling equipment), Easton, Pennsylvania
Paul A. Lentz Retired; former Consultant; former Professional 1971 1998
69 (3) Manager, Coplay Cement Co. and Fuller Company
(cement industry), Bethlehem, Pennsylvania
Gordon B. Mowrer Pastor, Advent Moravian Church, Bethlehem, 1989 1999
61 Pennsylvania; former President, Hampson-Mowrer-
Kreitz Insurance Agency, Inc. (insurance sales)
Robert C. Nagel Retired; Former Manager, Eastern Division 1976 2000
72 (1)(2) Metropolitan Edison Co. (electric utility), Easton,
Pennsylvania
Richard Stevens, III Division Manager (Marketing) for Computer Aid, 1989 1999
64 (1) (2) (3) Inc. (1987 to present); Director of Educational
Marketing for IBM (1983-1987)
Maria Zumas Thulin Executive Vice President, Arcadia Development 1994 1998
43 Corporation (real estate development and
management), Bethlehem, Pennsylvania since 1989
- --------------------------------
</TABLE>
(1) Member of the Executive Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
There are no other nominees for director known to the Company at this
time.
Under the Company's Bylaws, shareholders have the right to nominate
directors in accordance with the procedures specified therein. Nominations for
directors made by shareholders must be submitted in writing to the Secretary of
the Company not later than the close of business on the fifth day immediately
preceding the date of the meeting. All late nominations will be rejected. In
addition, at any time prior to the election of directors at a meeting of
shareholders, the Board of Directors may designate a substitute nominee to
replace any bona fide nominee who was nominated by a shareholder in accordance
with the Bylaws and who, for any reason, becomes unavailable for election as a
director.
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<PAGE>
Board of Directors, Committees and Attendance at Meetings
The Board of Directors of the Company held 24 meetings during the
fiscal year ended December 31, 1996. The Executive Committee, which held 17
meetings during the fiscal year, makes recommendations to the Board of Directors
with respect to executive compensation and the Company's Stock Option Plan
(among other matters). The Board has a Compensation Committee which makes
decisions concerning executive compensation and stock options and which
administers the Company's Stock Option Plan. The Compensation Committee met one
time during the fiscal year ended December 31, 1996. The Board has an Audit
Committee, which meets at varying intervals. The purpose of the Audit Committee
is to review all recommendations made by the Company's independent public
accountants with respect to the accounting methods used and the system of
internal control followed by the Company and to advise the Board of Directors
with respect thereto. The Audit Committee held six meetings during the fiscal
year ended December 31, 1996. The Board does not have a nominating committee.
During the fiscal year ended December 31, 1996, all directors of the Company
attended at least 75% of the total number of meetings of the Board of Directors
of the Company and of all committees of which they were members.
Compensation of Directors
Directors of the Company and the Bank are compensated at the rate of
$280 per Board meeting attended, $140 per committee meeting attended and $1,000
as a quarterly retainer fee. Each director has the option to defer some or all
of the annual directors' fees pursuant to the Deferred Compensation Plan for
Directors (the "Directors' Plan"). Any such deferred amount will be deemed
invested in an account paying interest equal to rates paid by the Bank on
individual retirement accounts. The director may elect the form and timing of
the benefits payable under the Directors' Plan, but, in general, such benefits
will be payable commencing at age 65. Benefits to a director under the
Directors' Plan are generally made in installments over a 15 year period. If a
director electing installments dies prior to receiving such director's full
benefits under the Directors' Plan, the remaining benefits will be made to the
named beneficiary. Upon establishment to the satisfaction of the Board of
Directors of the existence of a personal financial hardship, a director may
obtain an immediate distribution of some or all of such director's benefits
under the Directors' Plan.
Directors of the Company who are not employees of the Company or the
Bank are eligible to receive automatic grants of options to purchase shares of
Common Stock pursuant to the 1994 Stock Option Plan for Non-Employee Directors.
On July 25, 1996, Charles J. Peischl was granted an option to purchase 1,102
shares of Common Stock at an exercise price of $18.50 per share, the fair market
value of the Common Stock on the date of grant. See "EXECUTIVE COMPENSATION -
1994 Stock Option Plan for Non-Employee Directors."
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information, as of the Record
Date, with respect to the beneficial ownership of the Company's Common Stock by
(1) each shareholder known by the Company to own beneficially more than five
percent of the Company's outstanding Common Stock, (2) all directors of the
Company and the Bank, (3) all executive officers of the Company named in the
Summary Compensation Table which follows and (4) all directors and executive
officers of the Company and the Bank as a group. Except as otherwise specified,
the named beneficial owner has sole voting and investment power with respect to
his shares. The shareholdings set forth below reflect all stock dividends paid
and stock splits effected by the Company through the Record Date, and are
rounded to the nearest whole share.
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<PAGE>
<TABLE>
<CAPTION>
Amount of
Common Stock
Beneficially Percent of
Name Owned (a) Class(a)
- -------------------------------------------------------------------------- ---------------- ------------
<S> <C> <C>
Employee Stock Ownership Plan ("ESOP") Trust
Nazareth National Bank and Trust Company, Trustee
76 South Main Street, Nazareth, PA 18064 (b)............................ 201,482 12.9
S. Eric Beattie (c)..................................................... 22,052 1.4
Robert J. Bergren (d)................................................... 4,178 *
Reid L. Heeren (e)...................................................... 11,038 *
Paul A. Lentz (f)....................................................... 7,364 *
Gordon B. Mowrer (g).................................................... 2,697 *
Daniel B. Mulholland (h)................................................ 2,321 *
Robert C. Nagel (i)..................................................... 14,116 *
Charles J. Peischl (j).................................................. 513 *
John J. Schlamp (k)..................................................... 11,320 *
Richard Stevens, III (l)................................................ 1,676 *
Maria Zumas Thulin (m).................................................. 782 *
All Directors and Executive Officers as a
Group (14 persons) (n).................................................. 90,140 5.7
- --------------------
</TABLE>
* Less than 1%.
(a) The securities "beneficially owned" by an individual are determined as
of the Record Date in accordance with the definition of "beneficial
ownership" set forth in the regulations of the Securities and Exchange
Commission. Accordingly, they may include securities owned by or for,
among others, the spouse and/or minor children of the individual and
any other relative who has the same home as such individual, as well as
other securities as to which the individual has or shares voting or
investment power or has the right to acquire under outstanding stock
options within 60 days after the Record Date. Beneficial ownership may
be disclaimed as to certain of the securities.
(b) Includes 163,059 allocated and 38,423 unallocated shares. Participants
in the ESOP have "pass-through" voting rights and are entitled to
direct the vote on all shares allocated to their accounts as of the
Record Date. Unallocated shares, as well as allocated shares for which
no voting directions are received, are voted by the plan
administrators, who are appointed by the Board of Directors and who
have sole investment power with respect to all shares held in the plan.
Does not include shares held by the Bank in various other trusts for
which the Bank, in its capacity as trustee, has or shares voting or
investment power. As of the Record Date, the Bank had or shared voting
or investment power with respect to 89,069 shares held in trust for the
Company's Dividend Reinvestment and Stock Purchase Plan, 22,746 shares
held in trust for the Company's Optional Deferred Salary Plan and
142,777 shares held in various other trust accounts.
(c) Includes 12,613 shares allocated to his account under the ESOP and
4,696 shares issuable upon the exercise of options granted pursuant to
the Company's Stock Option Plan. Also includes 126 shares held by his
daughter and 252 shares held by Mr. Beattie in custody for his two
sons.
(d) Includes 690 shares owned by his spouse and 826 shares issuable upon
the exercise of options granted pursuant to the 1994 Stock Option Plan
for Non-Employee Directors.
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<PAGE>
(e) Includes 6,321 shares allocated to his account under the ESOP and 2,610
shares issuable upon the exercise of options granted pursuant to the
Company's Stock Option Plan.
(f) Includes 826 shares issuable upon the exercise of options granted
pursuant to the 1994 Stock Option Plan for Non-Employee Directors.
(g) Includes 826 shares issuable upon the exercise of options granted
pursuant to the 1994 Stock Option Plan for Non-Employee Directors.
(h) Includes 719 shares owned by his spouse in custody for his son, 841
shares owned jointly with his spouse and 551 shares issuable upon the
exercise of options granted pursuant to the 1994 Stock Option Plan for
Non-Employee Directors.
(i) Includes 522 shares held by the Bank as trustee of an IRA Rollover
Trust, 2,098 shares owned jointly with his spouse, 5,047 shares owned
by his spouse and 826 shares issuable upon the exercise of options
granted pursuant to the 1994 Stock Option Plan for Non-Employee
Directors.
(j) Includes 275 shares issuable upon the exercise of options granted
pursuant to the 1994 Stock Option Plan for Non-Employee Directors.
(k) Includes 7,000 shares held by the Bank as trustee of an IRA Rollover
Trust and 826 shares issuable upon the exercise of options granted
pursuant to the 1994 Stock Option Plan for Non-Employee Directors. Also
includes 2,481 shares owned by his son and daughter-in-law as to which
Mr. Schlamp disclaims beneficial ownership.
(l) Includes 826 shares issuable upon the exercise of options granted
pursuant to the 1994 Stock Option Plan for Non-Employee Directors.
(m) Includes 551 shares issuable upon the exercise of options granted
pursuant to the 1994 Stock Option Plan for Non-Employee Directors.
(n) Includes an aggregate of 8,486 shares issuable upon the exercise of
options granted pursuant to the Company's Stock Option Plan, an
aggregate of 6,333 shares issuable upon the exercise of options granted
pursuant to the 1994 Stock Option Plan for Non-Employee Directors and
27,860 shares allocated under the ESOP to the accounts of all executive
officers of the Company and the Bank, as a group.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who beneficially own more
than ten percent of a registered class of the Company's Common Stock to file
with the Securities and Exchange Commission ("SEC") initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Executive officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to the
Company's executive officers, directors and greater than ten percent beneficial
shareholders were complied with during the year ended December 31, 1996.
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<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all cash compensation paid by the
Company and the Bank for services rendered in all capacities to the Company and
its subsidiaries during the fiscal years ended December 31, 1996, 1995 and 1994
to (1) the Chief Executive Officer of the Company and the Bank and (2) each
executive officer of the Company and the Bank whose salary and bonus exceeded
$100,000 during the fiscal year ended December 31, 1996.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long Term Compensation
------------------------------------ ------------------------
Other Annual All Other
Name and Principal Position Fiscal Year Salary Bonus Compensation Securities Underlying Options Compensation
- --------------------------- ----------- ----------- ---------- ------------- ------------------------------ -------------
<S> <C> <C> <C> <C> <C> <C>
S. Eric Beattie, President, 1996 $154,121 $16,000 $10,020(1) -- $15,300(2)
Chief Executive Officer 1995 $154,005 $ -- $ 9,600(1) -- $14,080
and Director of the 1994 $150,757 $4,530 $10,440(1) 2,100 $13,750
Company and Bank
Reid L. Heeren, Senior 1996 $95,651 $5,000 $ -- -- $ 9,443(3)
Vice President, Chief 1995 $95,579 $ -- $ -- -- $ 8,840
Financial Officer of the 1994 $93,801 $2,810 $ -- 1,575 $ 7,518
Bank, Vice President and
Treasurer of the Company
- -------------------------------
</TABLE>
(1) Represents director fees.
(2) Includes a contribution to his account in the Company's Employee Stock
Ownership Plan of $8,849, the Company's matching contribution to his
account under the Optional Deferred Salary Plan of $3,951 and
reimbursement pursuant to the Company's medical reimbursement program
of $2,500.
(3) Includes a contribution to his account in the Company's Employee Stock
Ownership Plan of $5,492, the Company's matching contribution to his
account under the Optional Deferred Salary Plan of $2,451 and
reimbursement pursuant to the Company's medical reimbursement program
of $1,500.
Stock Option Plans
In March 1996, the Board of Directors of the Company adopted the 1996
Employee Stock Option Plan (the "1996 Plan") which was approved by the
shareholders of the Company in April 1996. The 1996 Plan replaces the 1986 Stock
Option Plan (the "1986 Plan") adopted in 1986 under which no new options could
be granted after December 1996. Pursuant to the 1996 Plan and 1986 Plan (the
"Plans"), stock options may be granted which qualify under the Code as incentive
stock options ("Incentive Options") as well as stock options that do not qualify
as Incentive Options under the Code ("Non-Qualified Options"). All officers and
key employees of the Company or any current or future subsidiary who are
employed on a full-time basis will be eligible to receive an option or options
under the 1996 Plan. As of December 31, 1996, options to purchase an aggregate
of 11,508 shares of Common Stock had been granted pursuant to the 1986 Plan, of
which 8,489 are currently exercisable. Options issued pursuant to the 1986 Plan
continue to be administered under the terms of that Plan.
-8-
<PAGE>
The purpose of the Plans is to provide additional incentive to
employees of the Company by encouraging them to invest in the Company's Common
Stock and thereby acquire a proprietary interest in the Company and an increased
personal interest in the Company's continued success and progress. The Plans are
administered by the Compensation Committee (the "Committee") which is appointed
by the Board and consists only of directors who are not eligible to receive
options under the Plans. The Committee is to determine, among other things,
which officers and key employees receive an option or options, the type of
option (Incentive Options or Non-Qualified Options, or both) to be granted, the
number of shares subject to each option, the rate of option exercisability, and,
subject to certain other provisions to be discussed below, the option price and
duration of the option.
The aggregate number of shares which may be issued upon the exercise of
options under the 1996 Plan is 262,500 shares of Common Stock. The Code provides
that the aggregate fair market value, determined at the time the Incentive
Option is granted, of the shares with respect to which Incentive Options are
exercisable for the first time by an optionee during any calendar year shall not
exceed $100,000 and any excess amount will be treated as Non-Qualified Options.
The option price for stock options issued under the Plan is to be an
amount at least equal to 100% of the fair market value of the Company's Common
Stock, as of the date the option is granted. The fair market value is to be
determined by the Committee. The rate of option exercisability is set by the
Committee at the time of grant. In the event of "change in control" of the
Company, as defined in the Plan, each optionee may exercise the total number of
shares then subject to the option. Unless terminated earlier by the option's
terms, options expire ten years after the date they are granted.
No options were granted under the Plans during the year ended December
31, 1996.
The following table sets forth certain information concerning the
number of unexercised options and the value of unexercised options at December
31, 1996 held by the executive officers of the Company named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
Aggregated Option Exercises in 1996 and December 31, 1996 Option Values
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Shares Acquired Value December 31, 1996 December 31, 1996(2)
Name on Exercise Realized (1) Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
S. Eric Beattie 3,646 $15,897 4,696.50/1,050.00 $23,566/$6,353
Reid L. Heeren 1,823 $ 7,948 2,610.75/787.50 $13,370/$4,764
- --------------------------
</TABLE>
(1) Represents the difference between the last sale price of the Common
Stock on the date of exercise, as reported on the Nasdaq National
Market, and the exercise price per share of the options exercised
multiplied by the number of options exercised.
(2) Represents the difference between $22.00, the last sale price of the
Common Stock on December 31, 1996, as reported on the Nasdaq National
Market, and the exercise price per share of in-the-money options
multiplied by the number of exercisable and unexercisable options held,
respectively.
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<PAGE>
1994 Stock Option Plan for Non-Employee Directors
In March 1994, the Board of Directors adopted, and in April 1994 the
shareholders approved, the 1994 Stock Option Plan for Non-Employee Directors
(the "Director Plan"). An amendment to the Director Plan was approved by the
shareholders in April 1995. The purpose of the Director Plan is to provide
additional incentive to members of the Boards of Directors of the Company and
each present and future subsidiary corporation who are not also employees by
encouraging them to invest in the Company's Common Stock and thereby acquire a
further proprietary interest in the Company and an increased personal interest
in the Company's continued success and progress.
Pursuant to the Director Plan, each person who was, as of May 1, 1994,
a director of the Company or any subsidiary corporation, and who was not as of
such date an employee of the Company or any subsidiary corporation, was, as of
May 1, 1994, automatically granted an option to purchase 1,050 shares of the
Company's Common Stock. Non-employee directors who were first elected or
appointed to the Board after May 1, 1994 receive an automatic grant of options
under the Director Plan upon the date of their election or appointment, except
that any non-employee director appointed after May 1, 1994 and prior to the 1995
Annual Meeting of Shareholders received an automatic grant of options on the
date of the 1995 Annual Meeting. On the fifth anniversary of the initial option
grant under the Director Plan and provided a grant recipient continues to be a
non-employee director on such anniversary, such person shall, on such fifth
anniversary, automatically be granted an option to purchase 1,102 shares of the
Company's Common Stock or such lower number of shares as shall be equal to the
number of shares as shall then be available (if any) for grant under the
Director Plan divided by the number of persons who are to receive an option on
such anniversary.
The Director Plan is administered by the Board of Directors of the
Company, including non-employee directors. Under the Director Plan, the Board
has the right to adopt such rules for the conduct of its business and the
administration of the Director Plan as it considers desirable. The Board of
Directors has the exclusive right to construe the Director Plan and the options
issued pursuant to it, to correct defects and omissions and to reconcile
inconsistencies to the extent necessary to effectuate the purpose of the
Director Plan and the options issued pursuant to it.
The aggregate number of shares which may be issued upon the exercise of
options under the Director Plan is 22,050 shares of the Company Common Stock. In
the event of any change in the capitalization of the Company, such as by stock
dividend, stock split or what the Board of Directors deems in its sole
discretion to be similar circumstances, the aggregate number and kind of shares
which may be issued under the Director Plan will be appropriately adjusted in a
manner determined in the sole discretion of the Board of Directors. Reacquired
shares of the Company's Common Stock, as well as unissued shares, may be used
for the purpose of the Director Plan. Common Stock of the Company subject to
options which have terminated unexercised, either in whole or in part, will be
available for future options granted under the Director Plan.
The option price for options issued under the Director Plan shall be
equal to the fair market value as determined by the Board of the Company Common
Stock on the date of grant of the option. Payment of the option price on
exercise of options granted under the Director Plan may be made in (a) cash,
(b)(unless prohibited by the Board of Directors) Company Common Stock which will
be valued by the Secretary of the Company at its fair market value on the date
of delivery or (c) (unless prohibited by the Board of Directors) any combination
of cash and Common Stock of the Company valued as provided in clause (b).
Options granted pursuant to the Director Plan may be exercised at the
following rates, whichever is higher: (i) 25% commencing one year after the date
of their grant, 50% after two years,
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<PAGE>
75% after three years and 100% after four years, or (ii) 100% commencing upon a
"change in control" of the Company, as such term is defined in the Director
Plan. Unless terminated earlier by the option's terms, options granted under the
Director Plan expire ten years after the date they are granted. Options
terminate three months after the optionee ceases to be a director of the Company
or a subsidiary corporation (whether by death, disability, resignation, removal,
failure to be reelected or otherwise, and regardless of whether the failure to
continue as a director was for cause or otherwise), but not later than ten years
after the date of option grant. Options granted pursuant to the Director Plan
are not transferable, except by the will or the laws of descent and distribution
in the event of death. During an optionee's lifetime, the option is exercisable
only by the optionee, including, for this purpose, the optionee's legal guardian
or custodian in the event of disability. Options may not be granted pursuant to
the Director Plan after the expiration of eight years from and after the
adoption of the Director Plan by the Company's shareholders at the 1994 Annual
Meeting. Options granted pursuant to the Director Plan will not qualify as
incentive stock options under the Code.
Severance Agreements
On July 19, 1994, the Bank entered into a Severance Agreement with S.
Eric Beattie providing for certain severance payments in the event that (a) the
Bank terminates his employment without cause or (b) Mr. Beattie terminates his
employment with the Bank (i) for any reason, whether with or without cause, at
any time within three years after a "change in control" of the Bank, or (ii) due
to the fact that, without his consent and whether or not a change in control of
the Bank has occurred, the nature and scope of his duties and authority or his
responsibilities with the Bank or the surviving or acquiring person are reduced
to a level below that which he enjoys on the date of the agreement, his then
current base annual salary is reduced to a level below that which he enjoys on
the date of the agreement or at any time thereafter (whichever may be greater),
the fringe benefits which the Bank provides him on the date of the agreement or
at any time thereafter (whichever may be greater) are materially reduced, his
position or title with the Bank or the surviving or acquiring person is reduced
from his current position or title with the Bank, or his principal place of
employment with the Bank is changed to a location greater than 80 miles from his
current principal place of employment with the Bank.
A "change in control" is defined as a change within a 12 month period
in a majority of the members of the Board of Directors of the Bank or the
Company, a change within a 12 month period in holders of more than 50% of the
outstanding voting stock of the Bank or the Company or any other event deemed to
constitute a "change in control" by the Compensation Committee.
The term of Mr. Beattie's Severance Agreement is three years or the
earlier of his death or permanent disability, the termination of his employment
for cause, mutual agreement, resignation or otherwise. "Cause" is defined as a
conviction for any felony, fraud or embezzlement or failure or refusal to comply
with the written policies or directives of the Board of Directors of the Bank or
for being guilty of misconduct in connection with the performance of his duties
for the Bank and failure to cure such non-compliance or misconduct within 20
days of receiving written notice from the Board of Directors of the Bank.
In the event that Mr. Beattie is entitled to severance payments, he
will be paid annual compensation for a period of three years following the date
on which his employment is terminated ("Termination Date") at a rate equal to
100% of his highest annual cash compensation, including cash bonuses, during the
three year period ending on the Termination Date, without offset for subsequent
earnings, subject to reduction to reduce the present value of any "parachute
payments", determined pursuant to Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") and the regulations thereunder, to below 300% of
his "base amount" (as defined in Section 280G(b)(3)(A)
-11-
<PAGE>
of the Code and the regulations). Any severance payments made to Mr. Beattie
after he reaches age 65 will be reduced by the amount of any pension or annuity
benefits Mr. Beattie would have received under the Bank's defined benefit
pension plan if he had retired at age 65 (regardless of when he actually
retired) and had elected the single life annuity benefit (regardless of the
benefit he actually elected). Mr. Beattie also will be entitled to certain
benefits.
The Severance Agreement also contains provisions restricting Mr.
Beattie's right to compete with the Bank in Northampton County, Pennsylvania for
a period of one year following the Termination Date.
The Bank has entered into similar Severance Agreements with Reid L.
Heeren and certain of the other executive officers of the Company, except that
such agreements do not contain change in control provisions. In the event that
any of these executive officers are entitled to severance payments, he will be
paid annual compensation for one year following the Termination Date at a rate
equal to 100% of his base annual salary on the Termination Date, exclusive of
cash bonuses and payments under the Bank's Annual Incentive Bonus Plan, reduced
by the amount of any pension or annuity benefits he receives under the Bank's
defined benefit pension plan if he had retired at age 65 (regardless of when he
actually retired) and had elected the single life annuity benefit (regardless of
the benefit he actually elected) and by any base salary he earns during the one
year period following the Termination Date. Such executive officers also will be
entitled to certain benefits.
Bonus Plan
The Board approved a bonus plan for 1996 pursuant to which Mr. Beattie,
Mr. Heeren and the three other executive officers of the Company were eligible
for a bonus from a bonus pool of up to $70,000 if the Company's income for 1996
(prior to year-end adjustments) exceeded the budgeted goal. Bonuses were
distributed from the bonus pool in the discretion of the President and as
approved by the Executive Committee of the Board of Directors. Bonuses totaling
$33,000 were paid to the executive officers in February 1997 pursuant to this
Plan.
The Board approved a bonus plan for 1997 pursuant to which Mr. Beattie,
Mr. Heeren and the three other executive officers of the Company will be
eligible for a bonus of up to 8% of their respective salaries if the Company's
income for 1997 (prior to year-end adjustments) exceeds the Board established
goal. The bonus will be distributed at the discretion of the President and as
approved by the Executive Committee of the Board of Directors.
Executive Benefit Program
In 1985, the Bank established an Executive Benefit Program (the
"Program") for certain of its officers. Currently, seven officers of the Bank
are eligible to participate in the Program. Any non-current obligation of the
Bank under the Program constitutes an unfunded general obligation of the Bank.
The Program is administered by the Executive Committee of the Board of the Bank
and provides participants with the following benefits:
(1) Medical Reimbursement Program. Subject to a maximum, the Bank
reimburses participants in the Program for medical or dental expenses which they
or their dependents incur and which are not otherwise covered by an existing
medical insurance plan or other reimbursement arrangement.
(2) Salary Continuation Program. If a participant in the Program dies
while in the employ of the Bank, his designated beneficiary is entitled to
receive 70% of his base-year salary (as defined in the Program) for one year
after his death and thereafter 35% of his base-year salary until the
-12-
<PAGE>
earlier to occur of the 10th anniversary of his death or the date on which the
participant would have attained age 65.
(3) Supplemental Retirement Income Program. If a participant in the
Program is continuously employed by the Bank through retirement on or after age
65, the participant will be entitled to a "target benefit" equal to a specified
percentage of the participant's average annual compensation during the five
years immediately prior to his retirement. The "target benefit" amount is to be
provided with reference to the participant's benefits under (a) the Salary Plan
(to the extent of the Bank's contribution only, and excluding employee deferral
amounts or voluntary contributions); (b) the ESOP (including amounts transferred
to the Program as a result of the termination of the Bank's Defined Benefit
Pension Plan); and (c) each participant's Social Security benefits (to the
extent of the participant's primary insurance amount). If amounts payable to the
participant from those three sources are insufficient to fund the "target
benefit", the Bank is obligated to provide the shortfall in an annual
supplemental benefit. Each participant is entitled to terminate before reaching
age 65 and receive the "target benefit" computed as above (with certain
modifications and assumptions), reduced by a factor to reflect the participant's
earlier separation from service. However, if the participant's earlier
separation from service is due to dishonesty, collaboration with a competitor,
fraud or similar cause, the participant will forfeit all benefits under the
Supplemental Retirement Income Program. In general, no separate death benefit is
payable under the Program, except with respect to a participant who dies in the
active employment of the Bank after attaining age 65. Benefits under the Program
will be paid in equal monthly installments during the participant's lifetime,
unless an annuity form of payment is selected.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1996, the Company's Dividend Reinvestment and Stock Purchase Plan
purchased 10,191 original issue shares of Common Stock from the Company at an
average purchase price of $18.10 per share. This Plan also purchased 3,570
shares of Common Stock from the Company held as treasury stock at an average
purchase price of $17.94 per share.
Gordon B. Mowrer, a director of the Company and the Bank, is a director
and was a principal shareholder of an insurance agency to which the Company and
the Bank paid approximately $61,000 in premiums for property, casualty and
workers compensation insurance coverage in the year ended December 31, 1996.
The Bank has had, and expects to have in the future, banking
transactions in the ordinary course of business with many of its directors,
officers and their associates. All extensions of credit to such persons have
been made in the ordinary course of business on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and in the opinion of the management
of the Company and the Bank, do not involve more than a normal risk of
collectibility or present other unfavorable features.
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1998 Annual Meeting of Shareholders must
be submitted to the Company by November 28, 1997 to receive consideration for
inclusion in the Company's Proxy Statement.
-13-
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountant for the fiscal year ended
December 31, 1996, and for the current fiscal year is the firm of Grant Thornton
LLP, Philadelphia, Pennsylvania.
A representative of Grant Thornton LLP is expected to be present at the
Meeting and to be available to respond to appropriate questions. The
representative will have the opportunity to make a statement if he so desires.
ANNUAL REPORT TO SHAREHOLDERS AND FORM 10-KSB
This Proxy Statement is accompanied by the Company's Annual Report to
Shareholders for the year ended December 31, 1996.
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 1996 AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, WITHOUT CHARGE EXCEPT FOR EXHIBITS TO
THE REPORT, BY SENDING A WRITTEN REQUEST THEREFOR TO FIRST COLONIAL GROUP, INC.,
76 SOUTH MAIN STREET, NAZARETH, PENNSYLVANIA 18064, ATTENTION: REID L. HEEREN,
VICE PRESIDENT.
By Order of the Board of Directors
S. ERIC BEATTIE
President and Chief
Executive Officer
-14-
<PAGE>
<PAGE>
PROXY
FIRST COLONIAL GROUP, INC.
ANNUAL MEETING OF SHAREHOLDERS -- MAY 1, 1997
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
FIRST COLONIAL GROUP, INC.
The undersigned hereby constitutes and appoints Maria A. Keller and John M.
DeMelfy, and each of them, as attorneys and proxies of the undersigned, with
full power of substitution, for and in the name, place and stead of the
undersigned, to appear at the Annual Meeting of Shareholders of First Colonial
Group, Inc. (the "Company") to be held on the 1st day of May, 1997, and at any
postponement or adjournment thereof, and to vote all of the shares of the
Company which the undersigned is entitled to vote, with all the powers and
authority the undersigned would possess if personally present.
1. FOR / / the election of Daniel B. Mulholland, Charles J. Peischl and John J.
Schlamp as Class 1 directors of the Company to hold office for a term of four
years and until their successors are duly elected and qualified.
(To withhold authority to vote for all directors, check this box: / /)
To withhold authority to vote for an individual nominee, write that nominee's
name on the space provided below.
_____________________________________________________________________________
2. To transact such other business as may properly come before the Annual
Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTIONS TO THE CONTRARY ARE
INDICATED, THE PROXY AGENTS INTEND TO VOTE FOR THE ELECTION OF ALL THE NOMINEES
LISTED IN PROPOSAL 1.
(continued and to be signed on reverse side)
<PAGE>
BOTH PROXY AGENTS PRESENT AND ACTING IN PERSON OR BY THEIR SUBSTITUTES (OR,
IF ONLY ONE IS PRESENT AND ACTING, THEN THAT ONE) MAY EXERCISE ALL THE POWERS
CONFERRED BY THIS PROXY. DISCRETIONARY AUTHORITY IS CONFERRED BY THIS PROXY AS
TO CERTAIN MATTERS DESCRIBED IN THE COMPANY'S PROXY STATEMENT.
The undersigned hereby acknowledges receipt of the Company's 1996 Annual
Report to Shareholders, Notice of the Company's 1997 Annual Meeting of
Shareholders and the Proxy Statement relating thereto.
DATE: ___________________ , 1997
(Please date this Proxy)
________________________________
________________________________
Signature(s)
It would be helpful if you
signed your name exactly as it
appears on your stock
certificate(s), indicating any
official position or
representative capacity. If
shares are registered in more
than one name, all owners should
sign.
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED POSTAGE PAID ENVELOPE.
