PENNS WOODS BANCORP, INC.
Corporate Headquarters
115 South Main Street
Jersey Shore, PA 17740
Theodore H. Reich
President
and
Chief Executive Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 30, 1997
To Our Shareholders:
Notice is hereby given that the Annual Meeting of holders of common
stock of Penns Woods Bancorp, Inc., (the "Corporation") will be held at
the Williamsport Branch Office of Jersey Shore State Bank (the "Bank"),
300 Market Street, Williamsport, PA 17703-0967, on April 30, 1997, at
12:30 P.M. , for the following purposes:
1. To elect four (4) Class 2 Directors, to serve for a three-year
term that will expire in 2000, and until their successors are elected and
qualified.
2. To ratify the appointment by the Corporation's Board of Directors
of Parente, Randolph, Orlando, Carey & Associates of Williamsport,
Pennsylvania, Certified Public Accountants, as the independent auditors
for the Corporation for the year ending December 31, 1997; and
3. To transact such other business as may properly come before the
Annual Meeting, and any adjournment or postponement thereof.
Holders of record at the close of business on March 11, 1997, shall be
entitled to notice of and to vote at the Annual Meeting and any
adjournment or postponement thereof. At the Annual Meeting, each
shareholder is entitled to one vote for each share of common stock, $10.00
par value, of the Corporation registered in the shareholder's name on the
record date.
A shareholder who returns a Proxy may revoke the Proxy at any time
before it is voted by (1) giving written notice of revocation to Sonya E.
Hartranft, Secretary, Penns Woods Bancorp, Inc., 300 Market Street, PO Box
967, Williamsport, PA 17703-0967, (2) executing a later-dated Proxy and
giving written notice thereof to the Secretary of the Corporation or (3)
voting in person after giving written notice to the Secretary of the
Corporation.
All Proxies properly executed and not revoked will be voted as
specified.
A copy of the Corporation's Annual Report and Form 10-K for the fiscal
year ended December 31, 1996 is being mailed with this Notice. The Annual
Report should not be regarded as Proxy solicitation materials.
You are urged to mark, sign, date and promptly return your Proxy in
the enclosed postage-paid envelope so that your shares may be voted in
accordance with your wishes and in order that the presence of a quorum may
be assured. The prompt return of your Proxy, regardless of the number of
shares you hold, will aid the Corporation in reducing the expense of
additional Proxy solicitation.
You are cordially invited to attend the Annual Meeting. The giving of
such Proxy does not affect your right to vote in person at the Annual
Meeting, if you give written notice to the Secretary of the Corporation of
your intention to vote at the Annual Meeting.
By Order of the Board of Directors,
Theodore H. Reich
President and
Chief Executive Officer
Dated: March 25, 1997
PENNS WOODS BANCORP, INC.
115 South Main Street, Jersey Shore, PA 17740
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 30, 1997
Introduction, Date, Time and Place of Annual Meeting
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors of PENNS WOODS BANCORP, INC. (the
"Corporation"), a Pennsylvania business corporation, of proxies to be
voted at the Annual Meeting (the "Annual Meeting") of holders of common
stock (the "common stock") of the Corporation to be held on April 30,
1997, at 12:30 P.M., at the Williamsport Branch Office of Jersey Shore
State Bank (the "Bank"), 300 Market Street, Williamsport, PA 17703-0967,
and any adjournment or postponement thereof.
The main office of the Corporation is located at 115 South Main
Street, Jersey Shore, PA 17740. The telephone number is (717)398-2213.
All inquiries should be directed to Theodore H. Reich, President of the
Corporation, (717)322-1111. The Bank is a wholly owned subsidiary of the
Corporation.
Voting Securities
Holders of record of the common stock, par value $10.00 per share, at
the close of business on March 11, 1997, will be entitled to notice of
and to vote at the Annual Meeting. On March 11, 1997 there were 1,277,298
shares of common stock issued and outstanding. Each share of the common
stock outstanding as of the close of business on March 11, 1997, is
entitled to one vote on each matter that comes before the meeting and
holders do not have cumulative voting rights with respect to the election
of directors.
Under Pennsylvania law and the Bylaws of the Corporation, the
presence of a quorum is required for each matter to be acted upon at the
Annual Meeting. Votes withheld and abstentions will be counted in
determining the presence of a quorum for the particular matter. Broker
non-votes will not be counted in determining the presence of a quorum for
the particular matter as to which the broker withheld authority.
Assuming the presence of a quorum, the four nominees for director
receiving the highest number of votes cast by shareholders entitled to
vote for the election of directors shall be elected. Votes withheld from
a nominee and broker non-votes will not constitute or be counted as votes
cast for such nominee.
Assuming the presence of a quorum, the affirmative vote of a majority
of all votes cast by shareholders at the Annual Meeting is required for
the ratification of the independent auditors. Abstentions and broker
non-votes will not constitute or be counted as votes cast and therefore
will not count either for or against ratification.
All Proxies properly executed and not revoked will be voted as
specified.
Solicitation
This Proxy Statement and enclosed form of proxy (the "Proxy") are
first being sent to shareholders of the Corporation on or about March 25,
1997. Shares represented by the Proxy, if properly signed and returned,
will be voted in accordance with the specifications made thereon by the
shareholders. Any Proxy not specifying to the contrary will be voted
"FOR" the Class 2 nominees noted, and "FOR" the ratification of the
appointment of Parente, Randolph, Orlando, Carey & Associates, Certified
Public Accountants, as the independent auditors of the Corporation for the
year ending December 31, 1997. The execution and return of the enclosed
Proxy will not affect a shareholder's right to attend the Annual Meeting
and to vote in person if the shareholder gives written notice to the
Secretary of the Corporation. The cost of assembling, printing, mailing
and soliciting Proxies, and any additional material which the Corporation
may furnish shareholders in connection with the Annual Meeting, will be
borne by the Corporation. In addition to the solicitation of Proxies by
use of the mails, directors, officers and employees of the Corporation
and\or the Bank may solicit Proxies by telephone, telegraph or personal
interview, with nominal expense to the Corporation. The Corporation will
also pay the standard charges and expenses of brokerage houses or other
nominees or fiduciaries for forwarding Proxy soliciting material to the
beneficial owners of shares. Right of Revocation
A shareholder who returns a Proxy may revoke the Proxy at any time
before it is voted (1) by giving written notice of revocation to Sonya E.
Hartranft, Secretary, Penns Woods Bancorp, Inc., 300 Market Street, P.O.
Box 967, Williamsport, PA 17703-0967, (2) by executing a later-dated
Proxy and giving written notice thereof to the Secretary of the
Corporation or (3) by voting in person after giving written notice to the
Secretary of the Corporation.
Quorum
Pursuant to the Bylaws of the Corporation, the presence, in person or
by proxy, of shareholders entitled to cast at least a majority of the
votes which all shareholders are entitled to cast, shall constitute a
quorum for transaction of business at the Annual Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL OWNERS As of March 11, 1997, there were no persons who
owned of record or who are known by the Board of Directors to be
beneficial owners of more than 5% of the Corporation's Common Stock.
BENEFICIAL OWNERSHIP AND OTHER INFORMATION REGARDING DIRECTORS AND
MANAGEMENT The following table sets forth as of March 11, 1997,
information regarding the number of shares and percentage of the
outstanding shares of Common Stock beneficially owned by each Director,
each nominee for Director and each Executive Officer named in the Summary
Compensation Table appearing herein, and all Directors and Officers as a
group.The following table also sets forth the name, address, principal
occupation and certain additional information regarding each Director.
Number
Principal Shares Percentage
Name and Occupation AffiliatBeneficallof
Address (1) for past Age Since (3Owned (4) Class
Five Years(2)
Phillip H. BoOwner, 63 1989 16,373(J) 1.41%
Turbotville, Central Equipment (1989) 1,684 (BI)
Class 2 (B) (Equipment Rental)
Lynn S. BowesFarmer 59 1983 10,741 (I)1.86%
Jersey Shore, PA (1974) 11,298 (J)
Class 3 (C) 1,719(BI)
William S. FrOwner, 65 1983 21,838 (I)2.72%
Jersey Shore,Shore Auto Parts, I(1980) 5,857 (J)
Class 3 (C) 7,042 (BI)
James M. FurePresident &49 1990 1,495 (I).20%
Cogan StationGeneral Manager (1990) 874(J)
Class 2 (B) Eastern Wood Products 144(BI)
(Hardwood Lumber Products)
Allan W. LuggPartner in 68 (1995) 9,571(I) .75%
Flemington, PLaw Firm of Lugg and Lugg
Class 1 (A)
Jay H. McCormPresident a59 1983 7,018 (I).65%
Williamsport,J.H.M. Enterprises,(1974) 1,328(BI)
Class 3 (C) (Trucking Company)
R. Edward NesVice Presid44 (1995) 1,035(I) .08%
Lock Haven, P Nestlerode Contracting
Class 1 (A) Co., Inc.
James E. PlumSecretary o54 (1995) 10,944 (I)1.31%
Lock Haven, PBank; 3,300 (J)
Class 2 (B) Retired , Former President 540 (BI)
Lock Haven Savings Bank 1,946 (BI)
Theodore H. RPresident o58 1983 14,766(I) 1.94%
Jersey Shore,Bank & the (1973) 2,661(J)
Class 2 (B) Corporation 1,425(BI)
6,000(BI)
Howard M. ThoDirector an69 1983 1,611 (I)2.27%
Jersey Shore,Chairman of the Boa(1965) 6,400 (J)
Class 1 (A) C.D. Thompson & Sons, Inc. 20,978 (BI)
(Meat Packing)
HR&R Realty Partnership
Ronald A. WalVice Presid50 1986 150 (I) .25%
MontoursvilleSenior Vice President 1389 (J)
and Loan Officer 150 (BI)
of the Bank 1500 (BI)
William F. WiRetired, 70 1983 7,190 (J)56%
Jersey Shore Former Vice Preside(1962)
Class 1(A) of the Bank
All Executive Officers and
Directors as a Group (D) 186,737 14.47%
*(I) Individual Ownership (J) Joint Ownership (BI) Beneficial Interest
(A) A Director whose term expires in 1998.
(B) A Nominee for Class 2 Director whose term, if elected at the Annual
Meeting, will expire in 2000.
(C) A Director whose term expires in 1999.
(D) Executive Officers of the Corporation included are Hubert A.
Valencik, Vice President; Chris B. Ward, Treasurer; and Sonya E.
Hartranft, Secretary.
(1) There is no family relationship, by blood, marriage or adoption
between any of the foregoing Directors and any other Executive Officer or
Director of the Corporation or its subsidiaries. None of the foregoing
Directors or Executive Officers are involved in any legal action that is
material to an evaluation of their ability or integrity to act as a
Director or Executive Officer.
(2) All Directors, nominees and Executive Officers have held the positions
indicated or another senior executive position with the same entity or one
of its affiliates or predecessors for the past five years except Mr. James
E. Plummer who was President of Lock Haven Savings Bank from September
1987 through April 7, 1995.
(3) The date appearing in parenthesis opposite each Director's name in the
"Affiliate Since" column represents the year in which each such nominee or
Director became a Director of the Bank. Each person listed presently
serves as a Director of the Corporation except Mr. Walko, who joined the
Bank in 1986.
(4) The foregoing Directors and Executive Officers, as of March 11, 1997,
according to the information supplied by them, owned beneficially,
directly or indirectly, the number of shares of common stock of the
Corporation set opposite their respective names. Beneficial Ownership is
determined in accordance with the definitions of "beneficial ownership"
set forth in the General Rules and Regulations of the Securities and
Exchange Commission and may include, in addition to shares held by the
Director, securities owned by or for the benefit of the individual's
spouse and minor children and any other relative who has the same home, as
well as securities to which the individual has or shares voting or
investment power or has the right to acquire beneficial ownership within
60 days after March 11, 1997. Beneficial ownership may be disclaimed as
to certain of the securities.
(5) Mr. Reich also serves as: Director & Vice President - Lycoming
Foundation; Director - Norcen Industries, Inc.; Advisory Director -
Northcentral Pennsylvania Conservancy; Director - Little League Baseball,
Inc.; General Partner - Keystone Realty Associates
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Corporation appointed the following committees for 1996Number of
Times Met
During
1996
AUDIT: William S. Frazier, Phillip H. Bower, Lynn S.0
Bowes, Allan W. Lugg William F. Williams, Jr.,
and James E. Plummer
BUILDING: Howard M. Thompson, James M. Furey, II, Phill0
H. Bower Jay H. McCormick, and R. Edward
Nestlerode, Jr.
The Bank appointed the following committees for 1996:
AUDIT: Lynn S. Bowes, James M. Furey, II, Allan W. Lu4
and Jay H. Mc Cormick
BUILDING: Lynn S. Bowes, Howard M. Thompson, Jay H. 1
McCormick William S. Frazier and R. Edward
Nestlerode, Jr.
RETIREMENT: Phillip H. Bower, James E. Plummer, James E. 1
Furey, II Allan W. Lugg and William F. Williams,
Jr.
INSURANCE: R. Edward Nestlerode, Jr., Phillip H. Bower an1
James E. Plummer
SALARY: Phillip H. Bower, William S. Frazier, James M2
Furey, II, Jay H. McCormick, Howard M. Thompson,
William F. Williams, Jr., Lynn S. Bowes, Allan
W. Lugg, R. Edward Nestlerode, Jr. and James E.
Plummer
ASSET
LIABILITY: Theodore H. Reich, Jay H. McCormick, William P3
Young, Hubert A Valencik, Sonya E. Hartranft,
Ronald A. Walko, R. Edward Nestlerode, Jr. and
Howard M. Thompson.
The Board of Directors of the Corporation met nine (9) times during
1996. The Board of Directors of the Bank met twenty-four (24) times
during 1996. All of the Directors attended at least 75% of the aggregate
of all meetings of the Board of Directors and the Committees of which they
were members.
The Board of Directors of the Corporation assumes the role of the
nominating committee. In determining its nominees for election to the
Board, the Board of Directors will consider nominees recommended by
shareholders. Such shareholder recommendations for 1998 shall be made in
writing no later than January 1, 1998, addressed to the Corporate
Secretary, Penns Woods Bancorp, Inc., 300 Market Street, Williamsport,
Pennsylvania 17701. Nominations for director to be made at the Annual
Meeting by shareholders entitled to vote for the election of directors
must be submitted to the Secretary of the Corporation not later than the
close of business on the twentieth day immediately preceding the Annual
Meeting, which notice must contain certain information specified in the
Bylaws. No notice of nomination for election as a director has been
received from any shareholder as of the date of this Proxy Statement. If
a nomination is attempted at the Annual Meeting which does not comply with
the procedures required by the Bylaws or if any votes are cast at the
Annual Meeting for any candidate not duly nominated, then such nomination
and/or such votes may be disregarded.
PRINCIPAL OFFICERS OF THE CORPORATION
The following table lists the Executive Officers of the Corporation as
of March 11, 1997:
Number of
Position and/or Bank Shares ofYear First
Office with the Employee the Elected as
Name Age Corporation Since CorporatiOfficer
Theodore H. R58 President & Chie1970 24,852 1983
Executive Officer
Ronald A. Wal50 Vice President 1986 3,189 1987
Hubert A. Val55 Vice President 1984 4,198 1985
Chris B. Ward50 Treasurer 1973 1,960 1983
Sonya E. Hart37 Secretary 1981 1,612 1984
PRINCIPAL OFFICERS OF THE BANK
The following table lists the Executive Officers of the Bank as of
March 11, 1997
Number of
Position and/or Bank Shares ofYear First
Office with the Employee the Elected as
Name Age Corporation Since CorporatiOfficer
Theodore H. R58 President & Chie1970 24,852 1970
Executive Officer
Hubert A. Val55 Senior Vice Pres1984 4,198 1984
and Operations Officer
Ronald A. Wal50 Senior Vice Pres1986 3,189 1986
and Senior Loan Officer
Chris B. Ward50 Vice President 1973 1,960 1973
Sonya E. Hart37 Controller 1981 1,612 1984
G. David Gund48 Vice President 1992 1,496 1992
Mr. Reich joined the Bank in 1970 as Vice President and Cashier, and
was elected President in 1973. On January 7, 1983, he became President of
Penns Woods Bancorp, Inc.
ELECTION OF DIRECTORS
The Bylaws provide that the Board of Directors shall consist of not
less than five (5) nor more than twenty-five (25) Directors who are
shareholders, the exact number to be fixed and determined from time to
time by resolution of the full Board of Directors or by resolution of the
shareholders at any annual or special meeting. The Board of Directors has
set the number of Directors to be eleven (11). The Bylaws further provide
that the Directors shall be divided into three (3) classes, as nearly
equal in number as possible, known as Class 1, Class 2 and Class 3. The
Directors of each class serve for a term of three(3) years and until
their successors are elected and qualified. The Directors of the
Corporation serve as follows:
Class 1 Directors to serve until 1998.
Allan W. Lugg
R. Edward Nestlerode, Jr.
Howard M. Thompson
William F. Williams, Jr.
Nominees for election as Class 2 Directors whose term expires in 2000:
Phillip H. Bower
James M. Furey, II
James E. Plummer
Theodore H. Reich
Class 3 Directors to serve until 1999:
Lynn S. Bowes
William S. Frazier
Jay H. McCormick
It is intended that the Proxies solicited hereunder will be voted FOR
(unless otherwise directed) the four (4) nominees listed previously for
election asClass 2 Directors. Each nominee has agreed to serve if elected
and qualified. The Corporation does not contemplate that any nominee will
be unable to serve as a Director for any reason. However, in the event
one or more of the nominees should be unable to stand for election,
Proxies will be voted for the remaining nominees in accordance with the
best judgment of the Proxyholders.
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation for services
in all capacities to the Corporation and the Bank for the three years
ended December 31, 1996 for those persons who were as of December 31,1996,
Named Executives, (i) the Chief Executive officer and (ii) the only other
Executive Officer whose total annual salary and bonus exceeded $100,000:
<TABLE>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATIO Long Term Compensation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AWARDS PAYOUTS
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Securities
Name Other RestricteUnderlying
and Annual Stock Options/ LTIP All Other
Principal Salary Bonus CompensatiAward(s) SAR's Payouts Compensation
Position Year ($) ($) ($) (($) (#) ($) ($)
Theodore H. R1996 $167,904$50,500 $0 $0 3,000 $0 $5,939
Chief Executi1995 $168,204$25,500 $0 $0 3,000 $0 $5,854
Officer (6) 1994 $167,504$20,500 $0 $0 3,000 $0 $5,852 (4)
Ronald A. Wal1996 $95,420 $12,500 $0 $0 750 $0 $2,158
Vice Presiden1995 $90,012 $8,500 $0 $0 750 $0 $1,970
1994 $84,760 $500 $0 $0 750 $0 $1,705 (5)
</TABLE>
(1) Total includes base salary and directors fees for Mr. Reich and base
salary for Mr. Walko. Directors fees paid to Mr. Reich were $7,900,
$8,200 and $7,500 in 1996, 1995 and 1994, respectively. A retainer fee
of $1,000 is included in the directors fee totals for 1995 and 1996.
(2) The cost of certain perquisites and other personal benefits are not
included because they do not exceed the lesser of $50,000 or 10% of the
total annual salary and bonus.
(3) Indicates number of shares of Common Stock of the Corporation for
which options were granted during applicable periods. The options granted
in 1994 have been adjusted for the 50% stock dividend issued in July 1995.
(4) Indicates contributions paid in 1996, 1995, and 1994 in the amount of
$3,167, $3,082, and $3,080 respectively, by the Bank to the Bank's 401(k)
Plan for the benefit of Mr. Reich and life insurance premiums of $2,772
for each year indicated.
(5) Indicates contributions paid by the Bank to the Bank's 401(k) Plan for
the benefit of Mr. Walko.
(6) Mr. Reich serves as both President and Chief Executive Officer of the
Corporation and the Bank and is a member of the Board of Directors of the
Corporation and the Bank.
(7) Mr. Walko serves as Vice President of the Corporation and as Senior
Vice President and Senior Loan Officer of the Bank.
OPTION/SAR GRANTS
The following table sets forth information concerning grants of stock
options to the Named Executives during the fiscal year ended December 31,
1996.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
Potential
Realizable Value
at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term (2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Number of %of
Securities Total
Underlying Options/
Options/ SARs ExerciseMarket
SARs Granted or Base Price at
Granted to Price Grant Expiration
Name (#) Employee($/Sh) Date Date 0% ($) 5% ($) 10% ($)
in
Fiscal
Year
Theodore H. 3,000 58% $35.00 $41.00 12/13/99 $18,000 $37,388 $58,713
Reich
Ronald A. 750 15% $35.00 $41.00 12/13/99 $4,500 $9,347 $14,678
Walko
</TABLE>
(1)All amounts represent stock options. No SARs or SARs granted in tandem
with stock options were granted to the Named Executives during the three
years ended December 31, 1996. Options were granted by the Corporation
to Mr. Reich and Mr. Walko pursuant to Stock Option Agreements by and
between the Corporation, Mr. Reich and Mr. Walko. All options granted
under the agreements represent nonqualified stock options. The options
are exercisable for a period of three years from the date of the grant.
The exercise price of the options is $35.00 per share.
(2) The dollar amounts set forth above are the result of calculations made
at the 0%, 5% and 10% appreciation rates set forth in Securities and
Exchange Commission regulations and are not intended to indicate future
price appreciation, if any, of the Corporation's Common Stock.
The following table sets forth information concerning the exercise
of options to purchase Common Stock by the Named Executives during the
fiscal year ended December 31, 1996, as well as the number of securities
underlying unexercised options and the potential value of unexercised
options (both options which are presently exercisable and options which
are not presently exercisable) as of December 31, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs at
Shares Value at FY-End (#) FY-End ($)
Acquired onRealizedExercisable/ Exercisable/
Name Exercise (#($) Unexercisable (1) Unexercisable (2)
Theodore H. R3,000 59,000 6,000 / 0 45,000 / 0
Ronald A. Wal750 14,750 1,500 / 0 11,250 / 0
(1) All amounts represent stock options. No SARs or SARs granted in
tandem with stock options were either exercised during 1996 or outstanding
at fiscal year-end 1996. Options to acquire 3,000 shares of the
Corporations Common Stock were granted to Mr. Reich in 1995 and an option
to acquire 3,000 shares was granted in 1996. Options to acquire 750
shares were granted to Mr. Walko in 1995 and an option to acquire 750
shares was granted in 1996. The exercise price of such options was $35.00
per share.
(2) "In-the-money" options are stock options with respect to which the
market value of the Corporation's Common Stock exceeded the exercise price
at December 31, 1996. The value of such options is determined by
subtracting the aggregate exercise price of such options from the
aggregate fair market value of the underlying shares of Common Stock on
December 31, 1996.
RETIREMENT PLAN
The Bank has a noncontributory defined benefit pension plan (the
"Plan") for all employees meeting certain age and length of service
requirements. Benefits are based primarily on years of service and the
average annual compensation earned by an employee, which is the employee's
annual compensation averaged over the five highest paid consecutive
calendar years within the final ten years of employment. Annual
compensation is based upon the employee's W-2 wages, which includes base
salary, bonus, personal vehicle mileage for certain executive officers and
life insurance coverage that exceeds $50,000. The Bank's funding policy
is consistent with the funding requirements of Federal law and
regulations. Plan assets are comprised of common stock and U.S.
Government and and corporate debt secutities.
The accrued Normal Retirement Benefit is determined by the following
formula:
1.4% of the average annual compensation up to social security covered
compensation multiplied by the credited service, plus 2% of the average
annual compensation that is in excess of the Social Security covered
compensation multiplied by the number of years of credited service.
Based on the preceding formula, projected annual retirement benefits for a
participant turning age 65 in 1996 are set forth below.
Final Five Years Total Projected Years of Service
Average Annual Compensation 35
10,000 2,100 2,800 4,200 4,900
20,000 4,200 5,600 8,400 9,800
30,000 6,518 8,691 13,036 15,209
40,000 9,518 12,691 19,036 22,209
50,000 12,518 16,691 25,036 29,209
60,000 15,518 20,691 31,036 36,209
70,000 18,518 24,691 37,036 43,209
80,000 21,518 28,691 43,036 50,209
90,000 24,518 32,691 49,036 57,209
100,000 27,518 36,691 55,036 64,209
125,000 35,018 46,691 70,036 81,709
150,000 * 42,518 56,691 85,036 99,209
175,000 42,518 56,691 85,036 99,209
200,000 42,518 56,691 85,036 99,209
225,000 42,518 56,691 85,036 99,209
250,000 42,518 56,691 85,036 99,209
* Compensation for the purpose of calculating benefits is limited by the
Internal Revenue Code to $150,000.
Current remuneration covered by the Plan in 1996 for Mr. Reich was
$25,758 and for Mr. Walko was $2,313. The estimated annual benefits
payable upon retirement at normal retirement age to Theodore H. Reich for
the fiscal year 1996 is $89,595 and to Mr. Walko is $38,290. As of
December 31, 1996, Mr. Reich was credited with twenty-four years of
service and Mr. Walko was credited with nine years of service. The number
of Plan Participants in 1996 was 122. Total Plan assets as of December
31, 1996, were $2,137,040.
COMPENSATION OF DIRECTORS
All directors of the Bank receive $300.00 for each meeting of the Board
of Directors and $150.00 for each committee meeting of the Board of
Directors of the Bank. A $1,000 retainer fee was also paid to each
Director of the Corporation during 1996. In addition, directors receive
compensation for accompanying an officer on property appraisals at a rate
of $20.00 for the first hour and $10.00 for each subsequent hour. The
Secretary of the Board of Directors also receives $50.00 for each Board
meeting. In the aggregate, the Board of Directors received $88,945.25
for all Board of Directors' meetings and committee meetings of the Bank
attended. This total also includes the total received for appraisals, the
secretarial function and the retainer fee. A portion of these fees were
used to fund a deferred compensation plan for Directors who participated
in the plan. In addition, beginning in May 1995, members of the Jersey
Shore State Bank/Lock Haven Advisory Board received $150.00 per advisory
board meeting attended, for a total of $7,800 received.
BOARD COMPENSATION REPORT ON EXECUTIVE COMPENSATION
The Board of Directors of the Corporation is responsible for the
management of the affairs of the Corporation and the supervision of its
subsidiary, Jersey Shore State Bank. The Board of Directors best serves
the interests of its shareholders, customers and the communities served by
the Corporation and its subsidiary by engaging persons who have the skills
and expertise to implement the strategic goals and objectives of the
Corporation in a cost-effective manner.
The Corporation's philosophy concerning the Bank's compensation
program is to offer competitive compensation for each employee based upon
their personal performance and contributions to the success of the
Corporation.
The Salary Committee, which is comprised of the ten outside directors
listed below, administers the compensation program. The Committee's
objective is to establish a compensation policy that will enable the
Corporation to attract, retain, motivate and reward executive officers who
are critical to the success of the Corporation. The Committee believes
that the existing compensation program accomplishes these objectives. The
Committee determines annually the compensation of the executive officers,
which includes the chief executive officer (the "CEO"), the senior vice
presidents, the controller and other vice presidents. The Board of
Directors ratifies all actions taken by the Committee as they relate to
the compensation of the executive officers.
CEO and Named Executive Compensation
The Board of Directors determined that the 1996 base compensation for
the CEO, Mr. Theodore H. Reich, would be $160,004 based upon an
Executive Employment Agreement that was adopted in January 1995. The
1996 base compensation for Mr. Ronald A. Walko was determined to be
$95,420 based upon an Employment Agreement that was adopted in August
1991. The Employment Agreements are described on the following pages.
Executive Officers
Increases in the compensation of the other executive officers is
determined by the Committee based upon, among other things, the following
factors: earnings, return on assets, return on equity, total assets, and
the quality of the loan portfolio of the Corporation and the Bank.
Notwithstanding the foregoing, the Committee's determination is based upon
a review of all information that it deems relevant in determining, with
respect to each particular executive officer, the compensation to be paid
to such officer.
In addition to base salary, the executive officers of the Corporation
and the Bank may participate in the annual and long term incentive plans,
including stock options and bonuses that are granted to certain senior
executive officers and a 401(k) plan. This plan is available to all
qualified Bank employees.
The compensation opportunities that are available to the Bank's
employees are influenced by market conditions, the individual's
responsibilities, and the employee's contributions to the success of the
Corporation. Employees are reviewed annually on a calendar basis. The
Bank attempts to offer compensation that is comparable with that offered
by other employers in our industry. The Corporation strives to meet its
objectives and strategic goals by providing fair compensation to its
employees.
Members of the Salary Committee
Phillip H. Bower Jay H. McCormick
Lynn S. Bowes Howard M. Thompson
William S. Frazier William F. Williams, Jr.
James M. Furey, II Allan W. Lugg
R. Edward Nestlerode, JrJames E. Plummer
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. William F. Williams, Jr. was a former Vice President of Jersey
Shore State Bank who retired in January 1992. Mr. James E. Plummer
retired from Jersey Shore State Bank in June 1995. He was the President
of Lock Haven Savings Bank until April 1995. They are currently members
of the Salary Committee. Mr. Williams has no disclosable relationships or
related transactions with the Corporation, the Bank or any other
subsidiary. Mr. Plummer has no disclosable relationships or related
transactions with the Corporation or any other subsidiary. He is
Secretary of the Board of Directors of the Bank.
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly dollar change in
the cumulative shareholder return on the Corporation'sCommon Stock against
the cumulative total return of the S&P 500 Stock Index and the Peer Group
Index for the period of five fiscal years commencing January 1, 1992 and
ending December 31, 1996. The shareholder return shown on the graph below
is not necessarily indicative of future performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Penns Woods Bancorp, Inc. Common Stock, S&P 500 & Peer Group Index (1)
1991 1992 1993 1994 1995 1996
S & P 500 $100.00 $104.46 $111.83 $110.11 $147.67 $177.60
Peer Group $100.00 $126.02 $177.33 $204.84 $219.95 $239.53
Penns Woods $100.00 $118.41 $204.86 $244.68 $286.70 $355.24
Bancorp, Inc.
1 The Peer Group for which information appears above includes the
following companies: ACNB Corporation; CNB Financial Corporation;
Citizens and Northern Corporation; Drovers Bancshares Corporation; First
West Chester Corporation; Franklin Financial Services Corp.; Hanover
Bancorp Inc.; Penn Security Bank and Trust Company; Pennrock Financial
Services Corp.; and Sterling Financial Corporation. These companies were
selected based on four criteria: total assets between $300 million and
$750 million; market capitalization greater than $45 million; headquarters
located in Pennsylvania; and are quoted on the NASDAQ stock market. This
is the same Peer Group Index as used in year ending December 31, 1995.
EXECUTIVE EMPLOYMENT AGREEMENTS
Mr. Theodore H. Reich
In January 1995, the Corporation and the Bank entered into an
Employment Agreement with Theodore H. Reich, Director, President and Chief
Executive Officer of the Corporation and the Bank. Under the terms of the
Employment Agreement, Mr. Reich will serve as President and Chief
Executive Officer of the Corporation. The initial term of the Employment
Agreement is three years, subject to an automatic one year extension on
each anniversary date thereof, unless either party gives notice to the
other of an intention not to renew. Under the Employment Agreement, the
Corporation or the Bank will pay an annual base salary of $160,000 to the
executive. This base salary will be reviewed annually by the Board of
Directors and will be subject to annual adjustments. In addition, the
Board of Directors of the Corporation in its sole discretion provide for
the payment of periodic bonuses to the executive. The Employment
Agreement also provides for the payment of severence benefits in the event
of termination as result of death, disability or without cause as defined
in the Employment Agreement by the Corporation or for Good Reason (as
defined in the Employment Agreement) by the executive. In the event of
the executive's termination as a result of his death, the Corporation or
the Bank will make a lump sum payment to his estate in an amount equal to
the highest of the base salaries paid to the executive over the three
calendar years preceding his termination due to his death but in any event
not less than $160,000. In the event of his termination as a result of
disability, the Corporation or the Bank will pay to the executive annually
an amount equal to his base salary in effect immediately prior to his
termination because of a disability for a period of three years beginning
on the date of such termination. However, payment of such amount will be
reduced by the sum of any benefits payable to the executive under any
disability plan of the Corporation or the Bank or under any government
regulated plan. In the event of the termination by the executive for Good
Reason (as defined in the Employment Agreement) or by the Corporation or
the Bank without cause, the executive will receive annually for a period
of three years following the date of termination an amount equal to the
highest of his base salaries over the three years preceding the date of
his termination but in any event not less than $160,000 and an amount
equal to the average of the three highest annual base salaries paid to the
executive over the five years preceding the date of his termination. The
Employment Agreement also requires the Corporation or the Bank to provide
certain medical and health benefits to the executive and his spouse
following his termination.
The Employment Agreement also contains a covenant which restricts the
ability of the executive to compete with the Corporation for a period of
three years following his termination unless such termination was by the
executive for Good Reason or by the Corporation or the Bank for other than
cause.
Mr. Ronald A. Walko
In August of 1991, Mr.Walko entered into an employment agreement
with Jersey Shore State Bank, pursuant to which Mr. Walko agreed to serve
as Senior Vice President of Lending for the Bank. Under the terms of the
Employment Agreement, he will receive an annual base salary of $70,000.
The term of the Agreement was five years, subject to automatic renewal
after each successive five year term. The Agreement was reviewed in
1996.
Under the current Employment Agreement, increases in compensation
will be determined in accordance with the annual performance evaluation.
Mr. Walko has the right to terminate this agreement upon 60 days written
notice to the Bank if he does not receive an increase in compensation on
each annual anniversary date. The bank will also provide at its expense
Mr. Walko with an automobile for business purposes, annual membership at
the Ross Club or similar organization and all benefits provided to other
employees as set forth in the Employee Handbook.
The Employment Agreement may be terminated by the Bank for cause, as
defined in the agreement, whereby the Bank shall pay one-half the salary
of Mr. Walko for the period of time between the date of termination and
the end of term of the agreement, or the date Mr. Walko commences
comparable employment on a full time basis elsewhere, whichever occurs
first. If the agreement is terminated by the Bank without cause the Bank
shall pay Mr. Walko his full salary for the period of time between the
date of termination and the end of the term of the agreement, or the
date Mr. Walko commences comparable employment elsewhere on a full time
basis, whichever occurs first. If during the term of the agreement
Mr.Walko dies or becomes disabled, Mr. Walko or his estate shall be paid
an amount equal to six months compensation or the balance due on this
contract, whichever is less. If Mr. Walko terminates this agreement
because he is reduced to a lessor stature and authority, the Bank shall
pay the balance of all sums due under the contract up to the date of
termination. If Mr. Walko voluntarily terminates his agreement for
reasons other than changes in stature and authority, he shall not work for
another banking institution having an office in Lycoming County,
Pennsylvania for a one- year period after the date of termination.
Severance Agreement
The Bank has entered into a severance agreement with Mr. Walko.
Under the terms of the agreement, if the executive officer's employment
is terminated within two years after a Change in Control of the Company he
will be entitled to receive from the Corporation (i) his full
compensation and benefits from the Notice of Termination (as defined)
until the Date of Termination and (ii) a lump sum severance payment equal
to two times the annual average of salary plus bonuses earned by him
during the five calendar years preceeding the Date of Termination; such
amount would be prorated, however, if the termination occurs within two
years of his 65th birthday. The Agreement also provides the executive
officer with insurance coverage similar to those in effect immediately
prior to the Notice of Termination for a period of twenty-four months,
however, these will be reduced to the extent that comparable benefits are
received by him from another employer during the corresponding period. In
addition to the retirement benefits he is entitled to receive under the
Jersey Shore State Bank Pension Plan or any other pension or retirement
plan in which he participates, the Corporation will pay him a lump sum
equal to the actuarial equivalent of the excess of the accrued retirement
pension up to the Date of Termination adjusted for an additional
twenty-four months of credited service at his compensation and the actual
accrued up to his Date of Termination (in no event will months of age or
service credit be accumulated after his 65th birthday)
During any period following a Change in Control of the Corporation,
if employment is terminated by the employer for Disability, or by the
employer or the employee by reason of retirement or death, the benefits
shall be determined in accordance with the Corporation's programs then in
effect. If the employee is terminated by his employer for cause
subsequent to a Change in Control or is terminated by the employee for
other than Good Reason or retirement, he shall receive full compensation
through the date of termination and shall have no further rights under
this Agreement thereafter.
This Agreement will be in effect until Mr. Walko attains age 65 or until
the Date of Termination, whichever occurs first.
CERTAIN TRANSACTIONS
There have been no material transactions between the Corporation and
the Bank, nor any material transactions proposed, with any Director or
executive officer of the Corporation and the Bank, or any associate of the
foregoing persons. The Corporation and the Bank have had, and intend to
continue to have, banking and financial transactions in the ordinary
course of business with Directors and Officers of the Corporation and the
Bank and their associates on comparable terms and with similar interest
rates as those prevailing from time to time for other customers of the
Corporation and the Bank.
Total loans outstanding from the Bank at December 31, 1996 to the
Corporation's and the Bank's Officers and Directors as a group and members
of their immediate families and companies in which they had an ownership
interest of 10% or more was $2,014,440 or approximately 7.05% of the total
equity capital of the Bank. Loans to such persons were made in the
ordinary course of business, were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons, and did not involve more
than the normal risk of collectability or present other unfavorable
features.
LEGAL PROCEEDINGS
In the opinion of the management of the Corporation and the Bank,
there are no proceedings pending to which the Corporation and the Bank are
a party or to which their property is subject, which, if determined
adversely to the Corporation and the Bank, would be material in relation
to the Corporation's and the Bank's undivided profits or financial
condition. There are no proceedings pending other than ordinary, routine
litigation incident to the business of the Corporation and the Bank. In
addition, no material proceedings are pending or are known to be
threatened or contemplated against the Corporation and the Bank by the
government authorities.
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors of the Corporation has appointed the firm of
Parente, Randolph, Orlando, Carey & Associates, certified public
accountants (the "Auditors"), of Williamsport, Pennsylvania, as the
Corporation's independent auditors for its 1997 fiscal year. Such
appointment is being submitted to shareholders for ratification.
The Auditors served as the Corporation's independent public
accountants for the 1996 fiscal year, assisted the Corporation and the
Bank with the preparation of their federal and state tax returns and
provided assistance in connection with regulatory matters, charging the
Bank for such services at its customary hourly billing rates. The
non-audit services were approved by the Corporation's and the Bank's Board
of Directors after due consideration of the effect of the performance
thereof on the independence of the Auditors and after the conclusions by
the Corporation's and the Bank's Board of Directors that there was no
effect on the independence of the Auditors. The Corporation has been
advised by the Auditors that none of its members has any financial
interest in the Corporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
RATIFICATION FOR THE APPOINTMENT OF PARENTE, RANDOLPH, ORLANDO, CAREY &
ASSOCIATES AS THE CORPORATION'S INDEPENDENT AUDITORS FOR THE 1997 FISCAL
YEAR. The affirmative vote of a majority of all votes cast at the Annual
Meeting is required to ratify the appointment. All proxies will be voted
"FOR" ratification appointment unless a shareholder specifies to the
contrary on such shareholder's proxy card.
ADDITIONAL INFORMATION REGARDING DIRECTORS AND OFFICERS
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
'Exchange Act"), requires the Corporation's Officers and directors, and
any persons owning ten percent or more of the Corporation's Common Stock,
to file in the personal capacities initial statements of ownership,
statements of changes in ownership and annual statements of ownership
with the Securities and Exchange Commission (the "SEC"). Persons filing
such ownership statements are required by SEC regulation to furnish the
Corporation with copies of all such statements filed with the SEC. The
rules of the SEC regarding the filing of such statements require that
"late filings" be disclosed in Penns Woods' proxy statement. Based
solely on the Corporation's review of any copies of such statements
received by it, the Corporation believes that during 1996, Lynn S. Bowes
and Howard M. Thompson each inadvertently neglected to file on a timely
basis, statements in changes of ownership.
ANNUAL REPORT
A copy of the Corporation's Annual Report and Form 10-K for its
fiscal year ended December 31, 1996 is enclosed with this Proxy Statement.
A representative of Parente, Randoph, Orlando, Carey & Associates, the
accounting firm which examined the financial statements in the Annual
Report, will attend the Annual Meeting. This representative will have the
opportunity to make a statement, if he desires to do so, and will be
available to respond to any appropriate questions presented by
shareholders at the Annual Meeting.
SHAREHOLDER PROPOSALS
Securities and Exchange Commission Regulations permit shareholders to
submit proposals for consideration at Annual Meetings of Shareholders.
Any such proposals for the Corporation's Annual Meeting of Shareholders to
be held in 1998, must be submitted in writing to the President of Penns
Woods Bancorp, Inc. at its principal executive office, 300 Market Street,
PO Box 967, Williamsport, PA 17703-0967, on or before November 25, 1997,
and must comply with applicable regulations of the SEC in order to be
included in proxy materials relating to that Meeting.
OTHER MATTERS
The Board of Directors of the Corporation is not aware that any other
matters are to be presented for action, other than the matters described
in the accompanying Notice of Annual Meeting of Shareholders, but if any
other matters properly come before the Meeting, or any adjournments
thereof, the holder(s) of any Proxy is (are) authorized to vote thereon at
their discretion.
ADDITIONAL INFORMATION
UPON WRITTEN REQUEST OF ANY SHAREHOLDER, A COPY OF THE CORPORATION'S
REPORT ON FORM 10-K FOR ITS FISCAL YEAR ENDED DECEMBER 31, 1996, INCLUDING
THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, REQUIRED TO BE FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 13a-1 UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, MAY BE OBTAINED, WITHOUT
CHARGE, FROM THEODORE H. REICH, PRESIDENT, PENNS WOODS BANCORP, INC.
By Order of the Board of Directors
Theodore H. Reich
President and
Chief Executive Officer
Dated: March 25, 1997
PROXY CARD
PENNS WOODS BANCORP, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 30, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder(s) of Penns Woods Bancorp, Inc., (the
"Corporation") hereby constitutes and appoints Ronald A. Walko, Huburt A.
Valencik and Sonya E. Hartranft and each or any of them, proxies of the
undersigned, with full power of substitution, to vote all of the shares of
common stock of the Corporation, standing in my (our) names on its books on
March 11, 1997, at the Annual Meeting of Shareholders of the Corporation to
be held at the Williamsort Branch Office, Jersey Shore State Bank, 300 Market
Street, Williamsport, Pennsylvania 17703-0967 on April 30, 1997 at 12:30 p.m.,
and at any adjournment or postponement therof as follows:
Mark an "X" below to indicate your vote.
1. ELECTION OF DIRECTORS TO SERVE FOR A THREE-YEAR TERM
Phillip H. Bower, James M. Furey, II, James E. Plummer, Theodore H. Reich
_______FOR all nominees listed above (except as marked to the contrary)
_______WITHHOLD AUTHORITY to vote for all nominees listed above
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE ANY INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME ON THE SPACE PROVIDED BELOW)
2. Proposal to Ratify the selection of Parente, Randolph, Orlando, Carey &
Associates, Certified Public Assountants, of Williamsport, Pennsylvania, as the
independent auditors for the Corporation for the year ending December 31, 1997.
_______FOR _______AGAINST _______ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment or
postponement therof.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES LISTED ABOVE, FOR PROPOSAL 2 AND IN THE BEST JUDGEMENT OF
THE PERSONS NAMED IN THIS PROXY WITH RESPECT TO PROPOSAL 3.
Dated:_________________________________, 1997
_______________________________________
_______________________________________
Signature(s)
Number of Shares Held of Record on March 11, 1997__________________________
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER(S) AND RETURNED PROMPTLY
TO THE CORPORATION IN THE ENCLOSED ENVELOPE. WHEN SIGNING AS ATTORNEY, EXECTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE. IF MORE THAN ONE
TURSTEE, ALL SHOULD SIGN. IF STOCK IS HELD JOINTLY, EACH OWNER MUST SIGN.
