SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Comm Bancorp, Inc.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_______________________________________________________________
2) Aggregate number of securities to which transaction applies:
_______________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
_______________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________
5) Total fee paid:
________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
____________________________________________
2) Form, Schedule or Registration Statement No.:
_____________________________________________
3) Filing Party:
_____________________________________________
4) Date Filed:
_____________________________________________
August 8, 1997
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 12, 1997
Notice is hereby given that the Annual Meeting of Stockholders of Comm
Bancorp, Inc. (the "Company") will be held at 10:30 a.m., prevailing time, on
Friday, September 12, 1997, at Elk Mountain Ski Resort, Route 374, Union Dale,
Pennsylvania 18470, for the following purposes:
1. To fix the number of directors to be elected at ten (10);
2. To elect ten (10) directors to serve for a one-year term and until
their successors are duly elected and qualified;
3. To approve an amendment to Article 16 of the Amended Articles of
Incorporation;
4. To ratify the selection of Kronick Kalada Berdy & Co. of Kingston,
Pennsylvania, Certified Public Accountants, as the independent
auditors for the Company for the year ending December 31, 1997; and
5. To transact such other business as may properly come before the
Annual Meeting and any adjournment or postponement thereof.
In accordance with the Bylaws of the Company and action of the Board of
Directors, only those stockholders of record at the close of business on
June 30, 1997, will be entitled to notice of and to vote at the Annual Meeting
and at any adjournment or postponement thereof.
Copies of the Company's Annual Report for the fiscal year ended
December 31, 1996, are being mailed with this Notice. Copies of the Company's
Annual Report for the 1995 fiscal year may be obtained at no cost by contacting
Scott A. Seasock, Chief Financial Officer, Comm Bancorp, Inc., 521 Main Street,
Forest City, Pennsylvania 18421, telephone: (717) 785-3181.
You are urged to mark, sign, date and promptly return your Proxy so 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 signed Proxy,
regardless of the number of shares you hold, will aid the Company in
reducing the expense of additional Proxy solicitation. The giving of such Proxy
does not affect your right to vote in person if you attend the meeting and give
written notice to John P. Kameen, Secretary of the Company.
By Order of the Board of Directors,
/s/William F. Farber, Sr.
William F. Farber, Sr.
Chairman of the Board
PROXY STATEMENT FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON SEPTEMBER 12, 1997
GENERAL
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 COMM BANCORP, INC. (the "Company"), a
Pennsylvania business corporation, of Proxies to be voted at the Annual Meeting
of Stockholders of the Company to be held on Friday, September 12, 1997,
at 10:30 a.m., prevailing time, at Elk Mountain Ski Resort, Route 374,
Union Dale, Pennsylvania 18470, and at any adjournment or postponement thereof.
The principal executive offices of the Company are located at Community
Bank & Trust Company ("Community Bank"), 521 Main Street, Forest City,
Pennsylvania 18421. The telephone number for the Company is (717) 785-3181.
All inquiries should be directed to Scott A. Seasock, Chief Financial
Officer ("CFO") of the Company. Community Bank, a Pennsylvania banking
institution, is a wholly-owned subsidiary of the Company.
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement and the enclosed form of Proxy (the "Proxy") will
first be sent to stockholders of the Company on or about August 8, 1997.
Shares represented by Proxies on the accompanying Proxy, if properly
signed and returned, will be voted in accordance with the specifications made
thereon by the stockholders. Any Proxy not specifying to the contrary will be
voted: FOR the proposal to fix the number of Directors to be elected at
ten (10); FOR the election of the ten (10) nominees for director named below;
FOR the proposal to amend Article 16 of the Amended Articles of Incorporation;
and FOR the ratification of the selection of Kronick Kalada Berdy & Co.,
Certified Public Accountants, as the independent auditors for the Company for
the year ending December 31, 1997. Execution and return of the enclosed Proxy
will not affect a stockholder's right to attend the Annual Meeting and vote in
person, after giving written notice to John P. Kameen, Secretary of the Company.
The cost of preparing, assembling, printing, mailing and soliciting Proxies, and
any additional material that the Company may furnish stockholders in
connection with the Annual Meeting, will be borne by the Company. In addition
to the use of the mails, certain directors, officers and employees of the
Company and Community Bank may solicit Proxies personally, by telephone,
telegram and telecopier. Arrangements will be made with brokerage houses
and other custodians, nominees and fiduciaries to forward Proxy solicitation
material to the beneficial owners of stock held of record by these persons,
and, upon request thereof, the Company will reimburse them for their reasonable
forwarding expenses.
REVOCABILITY OF PROXY
A stockholder who returns a Proxy may revoke the Proxy at any time
before it is voted only: (1) by giving written notice of revocation to John P.
Kameen, Secretary of the Company, at 521 Main Street, Forest City,
Pennsylvania 18421; (2) by executing a later-dated Proxy and giving written
notice thereof to the Secretary of the Company; or (3) by voting in person after
giving written notice to the Secretary of the Company.
VOTING SECURITIES, RECORD DATE AND QUORUM
At the close of business on June 30, 1997, the Company had issued and
outstanding 2,200,080 shares of common stock, par value $0.33 per share, the
only authorized class of stock (the "Common Stock").
Only holders of Common Stock of record at the close of business on
June 30, 1997, will be entitled to notice of and to vote at the Annual Meeting.
Cumulative voting rights do not exist with respect to the election of directors.
On all matters to come before the Annual Meeting, each share of Common Stock is
entitled to one vote.
Under Pennsylvania law, the presence of a quorum is required for each
matter to be acted upon at the Annual Meeting. In accordance with Section 1756
of the Business Corporation Law of 1988, as amended, the presence, in person or
by Proxy, of stockholders entitled to cast at least a majority of
the votes that all stockholders are entitled to cast shall constitute a quorum
for the transaction of business at the Annual Meeting. Votes withheld 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 affirmative vote of a majority of
all votes cast by stockholders is required to approve the proposal to fix the
number of directors to be elected at ten (10). Abstentions and broker non-votes
are not deemed to constitute "votes cast" and therefore do not count for or
against such proposal. Abstentions and broker non-votes, however, have a
practical effect of reducing the number of affirmative votes required to achieve
a majority for such matter by reducing the number of shares voted from which the
required majority is calculated.
Assuming the presence of a quorum, the ten (10) nominees for director
receiving the highest number of votes cast by stockholders entitled to vote for
the election of directors shall be elected. Votes withheld from a nominee and
broker non-votes will not be cast for such nominee.
Assuming the presence of a quorum, the affirmative vote of seventy-five
percent (75%) of all outstanding shares of the Common Stock is required to
approve the proposal to amend Article 16 of the Amended Articles of
Incorporation.
Assuming the presence of a quorum, the affirmative vote of a majority of
all votes cast by stockholders is required for the ratification of the selection
of independent auditors. Votes withheld and broker non-votes are not deemed to
constitute "votes cast" and therefore do not count for or against such
ratification. Votes withheld and broker non-votes, however, have the practical
effect of reducing the number of affirmative votes required to achieve a
majority for each such matter by reducing the total number of shares voted from
which the required majority is calculated.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
PRINCIPAL OWNERS
The following table sets forth information, as of June 30, 1997, related
to each person who owns of record or who is known by the Board of Directors to
be the beneficial owner of more than five percent (5%) of the outstanding Common
Stock. Included are the name, address, number of shares beneficially owned by
such person, and the percentage of the outstanding Common Stock so owned:
PERCENT OF OUTSTANDING
SHARES BENEFICIALLY COMMON STOCK
NAME AND ADDRESS OWNED(1) BENEFICIALLY OWNED
Joseph P. Moore, Jr. 218,760(2) 9.94%
400 Williamson Road
Gladwyne, PA 19035
William F. Farber, Sr. 188,820 8.58%
Crystal Lake Road
R.R. 1, Box 1281
Carbondale, PA 18407
Gerald B. Franceski 129,918(3) 5.91%
Lewis Lake, P.O. Box 88
Union Dale, PA 18470
Robert T. Seamans 128,305(4) 5.83%
P.O. Box 462
Factoryville, PA 18419
(1) The shares "beneficially owned" by an individual are determined in
accordance with the definitions of "beneficial ownership" set forth in
the General Rules and Regulations of the Securities and Exchange
Commission ("SEC"). Included may be shares owned by or for the
individual's spouse and minor children and any other relative who has
the same home, as well as shares to which the individual has or shares
voting or investment power or has the right to acquire beneficial
ownership within sixty (60) days after June 30, 1997. Beneficial
ownership may be disclaimed as to certain of the shares.
(2) Includes 30,240 shares held individually; 6,300 shares held in the Moore
Motors, Inc. Profit Sharing Plan, an automobile dealership of which he
was President; and 182,220 shares held by Moore & Company, which are
held in trust for his various relatives.
(3) Includes 100,118 shares held jointly with his spouse; and 29,800 shares
held jointly in various combinations with relatives.
(4) Includes 126,470 shares held individually; and 1,835 shares held
individually by his spouse.
BENEFICIAL OWNERSHIP BY EXECUTIVE OFFICERS, DIRECTORS AND NOMINEES
The following table sets forth as of June 30, 1997, the amount and
percentage of the Common Stock beneficially owned by each nominee and all
officers and directors of the Company as a group:
NAME OF INDIVIDUAL AMOUNT AND NATURE OF PERCENT
OR IDENTITY OF GROUP BENEFICIAL OWNERSHIP(1)(2)(3) OF CLASS(4)
David L. Baker 11,304(5) ----
William F. Farber, Sr. 188,820 8.58%
Judd B. Fitze 11,500(6) ----
John P. Kameen 20,280(7) ----
Erwin T. Kost 8,860(8) ----
William B. Lopatofsky 25,410(9) 1.16%
J. Robert McDonnell 32,544(10) 1.48%
Joseph P. Moore, Jr. 218,760(11) 9.94%
Theodore W. Porosky 3,560(9) ----
Scott A. Seasock 3,105(12) ----
Thomas E. Sheridan 5,844(13) ----
Eric Stephens 6,960(14) ----
All Executive Officers and
Directors of the Company
as a Group (10 Directors,
6 Officers, 12 Persons in
Total) 536,947 24.41%
(1) Does not include any Common Stock held in fiduciary accounts under the
control of the Trust Department of Community Bank.
(2) See footnote (1) under the above caption entitled "Principal Owners."
(3) Information furnished by the Executive Officers, Directors and the
Company.
(4) Less than 1.0 percent unless otherwise indicated.
(5) Includes 5,040 shares held individually; 4,800 shares held jointly with
his spouse; 732 shares held under his IRA; and 732 shares held under his
spouse's IRA.
(6) Includes 9,000 shares held jointly with his spouse; and 2,500 shares
held under his IRA.
(7) Includes 17,280 shares held jointly with his spouse; and 3,000 shares
held jointly with other individuals.
(8) Includes 4,440 shares held individually; and 4,420 shares held jointly
with his spouse.
(9) Held jointly with his spouse.
(10) Includes 16,272 shares held individually; and 16,272 held individually
by his spouse.
(11) See footnote (2) under the above caption entitled "Principal Owners."
(12) Includes 825 shares held jointly with his spouse; 1,620 shares held
jointly with his spouse and sons; and 660 shares held under his IRA.
(13) Includes 1,764 shares held jointly with his spouse; and 4,080 shares
held jointly with his father.
(14) Includes 5,340 shares held individually; 900 shares held individually by
his spouse; and 720 shares held individually by his children.
ELECTION OF DIRECTORS
Unless otherwise instructed, the Proxyholders will vote the Proxies
received by them for the election of the ten (10) nominees named under the
caption "INFORMATION AS TO NOMINEES AND EXECUTIVE OFFICERS." If any nominee
should become unavailable for any reason, Proxies will be voted in favor of a
substitute nominee as the Board of Directors of the Company shall determine.
The Board of Directors has no reason to believe that the nominees named will be
unable to serve if elected. Any vacancy occurring on the Board of Directors of
the Company for any reason may be filled by a majority of the directors then in
office until the expiration of the term of the vacancy.
In addition, there is no cumulative voting for the election of
directors. Each share of Common Stock is entitled to cast only one vote for
each nominee. For example, if a stockholder owns ten (10) shares of Common
Stock, he or she may cast up to ten (10) votes for each of the ten (10)
directors to be elected.
INFORMATION AS TO NOMINEES AND EXECUTIVE OFFICERS
The following table contains certain information with respect to the
nominees and executive officers of the Company:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
FOR PAST FIVE YEARS
AGE AS OF AND POSITION HELD DIRECTOR OF
JUNE 30, WITH THE COMPANY AND COMPANY/COMMUNITY
NAME 1997 COMMUNITY BANK BANK SINCE
<S> <C> <C> <C>
David L. Baker 52 President and Chief 1988/1993
Executive Officer ("CEO")
of the Company and
Community Bank (as of
April 26, 1995); Senior
Vice President of
Community Bank (as of
January 20, 1993);
President of the First
National Bank of
Nicholson ("FNB Nicholson")
(1987-1993) prior to its
merger with Community Bank
William F. Farber, Sr. 60 President, Farber's 1983/1970
Restaurants; Chairman of the
Boards of Directors of the
Company and Community Bank
Judd B. Fitze 45 Partner, Farr, Davis & Fitze 1995/1993
(attorney-at-law)
John P. Kameen 56 Publisher, Forest City News; 1983/1979
Secretary of the Company
Erwin T. Kost 53 Owner, Kost Tire Distributors ----/1993
William B. Lopatofsky 65 Owner, Northeast Distributors 1983/1982
and Equipment
J. Robert McDonnell 61 Owner, McDonnell's Restaurant; 1983/1979
Vice President of the Company
Joseph P. Moore, Jr. 70 Retired President, Moore 1988/1992
Motors Inc. (automobile
dealership); President,
Elk Mountain Ski Resort, Inc.
Theodore W. Porosky 49 Owner, Porosky Lumber Co., Inc. ----/1989
Eric Stephens 45 Auto Dealer, H.L. Stephens 1988/1993
and Son (automobile dealership)
</TABLE>
The Executive Compensation Committee (the "Committee") of Community Bank
meets annually or as needed to review salaries, compensation and personnel
policies, and the fee structure for advisory boards and directors of the
Company. William F. Farber, Sr., Judd B. Fitze, John P. Kameen, J. Robert
McDonnell and Joseph P. Moore, Jr. served as members of this committee. This
committee met seven (7) times in 1996. Committee members received no
remuneration for serving on this committee.
The Asset/Liability Committee ("ALCO") of Community Bank meets once a month
to make recommendations to the Board of Directors regarding the asset/liability
functions of Community Bank. William F. Farber, Sr., Judd B. Fitze, Michael T.
Goskowski, John P. Kameen, Joseph P. Moore, Jr. and Eric Stephens served as
members of this committee. Mark E. Caterson, Vice President and Senior Trust
Officer of Community Bank, Scott A. Seasock, Senior Vice President and CFO of
the Company and Community Bank, Thomas W. Sheppard, Vice President and Senior
Loan Officer of Community Bank, and Thomas E. Sheridan, Senior Vice President
and Chief Operations Officer ("COO") of the Company and Community Bank are
ex-officio members of this committee. This committee met twelve (12) times in
1996. Committee members received no remuneration for serving on this committee.
The Director's Loan Committee of Community Bank meets bi-monthly to review
commercial loans over $75,000 and consumer loans over $150,000. The full Board
of Directors reviews all loans over $500,000. Robert J. Babcock, David L.
Baker, Donald R. Edwards, Sr., William F. Farber, Sr., Erwin T. Kost, William B.
Lopatofsky, J. Robert McDonnell, Theodore W. Porosky and Robert T. Seamans
served as members of this committee. This committee met twenty-three (23) times
in 1996. Committee members received no remuneration for serving on this
committee.
The Audit Committee of Community Bank met eight (8) times in 1996 to make
recommendations concerning the auditors of the Company and Community Bank.
Robert J. Babcock, John P. Kameen and William B. Lopatofsky served as members of
this committee. William F. Farber, Sr. and M. Evelyn Pantzar, Vice President
and Internal Auditor of Community Bank, are ex-officio members of this
committee. Committee members received no remuneration for serving on this
committee.
The Investment Committee of Community Bank met twelve (12) times in 1996 to
review investments made by Community Bank and its investment portfolio with
regard to the purchases and sales made, the schedule of maturities, and the
investment results. William F. Farber, Sr., Judd B. Fitze, Michael T.
Goskowski, John P. Kameen, Joseph P. Moore, Jr. and Eric Stephens served as
members of this committee. Messrs. Mark E. Caterson, Scott A. Seasock and
Thomas E. Sheridan are ex-officio members of this committee. Committee
members received no remuneration for serving on this committee.
The Trust Committee of Community Bank met four (4) times in 1996 to review
the activities of the Trust Department of Community Bank. Robert J. Babcock,
David L. Baker and Judd B. Fitze served as members of this committee. Messrs.
Mark E. Caterson and William F. Farber, Sr. are ex-officio members of this
committee. Committee members received no remuneration for serving on this
committee.
The Marketing Committee of Community Bank met one (1) time in 1996 to review
the marketing strategies of Community Bank. John P. Kameen served as a member
of such committee. Joelyn Mark, Vice President of Marketing, and advisory board
members, Douglas Gay, Duane Jerauld and Susan Mancuso, are ex-officio members of
this committee. Committee members received no remuneration for serving on this
committee.
The Board of Directors of the Company met eleven (11) times in 1996. Each
of the directors of the Company attended at least seventy-five percent (75%) of
the combined total number of meetings of the Board of Directors of the Company
and the committees of which he is a member.
The Board of Directors of the Company has at present no standing committees.
The Company does not have a nominating committee. A stockholder who desires to
propose an individual for consideration by the Board of Directors as a nominee
for director should submit a proposal in writing to John P. Kameen, Secretary of
the Company, in accordance with Section 202 of the Company's Bylaws.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten percent
(10%) of the registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the SEC. Officers, directors
and persons who own more than ten percent (10%) of the Company's Common Stock
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Except as follows, based solely on its review of the copies of such forms
received or written representations from certain reporting persons that no
Form 5 was required for those persons, the Company believes that during the
period January 1, 1996, through December 31, 1996, its officers and directors
were in compliance with all filing requirements applicable to them.
On November 14, 1996, Judd B. Fitze, Director of the Company, purchased 300
shares of the Common Stock at a price of $27.25 per share or $8,175 in the
aggregate. Mr. Fitze failed to report the purchase on Form 5 in a timely
manner. Such Form 5 was required to be filed on or before February 14, 1997.
Mr. Fitze filed his Form 5 with the SEC for such purchase on March 6, 1997.
EXECUTIVE COMPENSATION
The following information presents the annual compensation for services in
all capacities to the Company and Community Bank for the fiscal years ended
December 31, 1996 and 1995, to the President and CEO of the Company and
Community Bank. No other officers' total annual salary and bonus exceeded
$100,000 during the fiscal years reported:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
Other
Name and Annual Restricted All Other
Principal Compensa- Stock Options LTIP Compensa-
Position Year Salary($) Bonus($) tion($) Award(s) /SARs Payouts tion($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David L. Baker 1996 101,029 10,000 2,992(2) -0- -0- -0- 27,958(3)
President and 1995 84,666 6,000 1,379(2) -0- -0- -0- -0-
CEO (1)
</TABLE>
(1) Mr. Baker was named President and CEO of the Company and Community Bank
effective April 26, 1995. Prior to such time, Mr. Baker was a Senior
Vice President of Community Bank.
(2) Represents the contribution Community Bank made on behalf of Mr. Baker
pursuant to the profit sharing plan. Aggregate perquisites and other
personal benefits were less than 10.0 percent of the salary and bonus
reported, and therefore, need not be presented.
(3) Represents the payout from the discontinuance of the Company's deferred
compensation plan for certain senior management employees.
PENSION PLAN
Community Bank has a profit sharing plan ("Plan"), which covers all
employees who have completed 1,000 hours of service, attained twenty-one (21)
years of age and have been employed by Community Bank for at least one year.
The entry date of an employee into the Plan is January 1 of the year following
the satisfaction of the eligibility requirements. Normal retirement age is
sixty-five (65). The normal retirement benefit is the accumulated account
balance of annual contributions, investment income and forfeitures. The annual
contribution is determined by the Board of Directors each year. Contributions
are allocated to each participant based on a pro-rata share of compensation
covered under the Plan. Investment income is allocated to each participant
based on a pro-rata share of the account balances accumulated at the beginning
of the year. Forfeitures are allocated to each participant based on a pro-rata
share of compensation covered under the Plan. If a participant separates from
service prior to retirement, the participant will be entitled to a portion of
the profit sharing account based on years of service according to the following
schedule:
YEARS OF SERVICE VESTED INTEREST
Less than 1 0%
1 10
2 20
3 30
4 40
5 60
6 80
7 or more 100%
A participant is always one hundred percent (100%) vested in pension plan
transferred balances.
During 1996, $66,615 was allocated among the participants' accounts of the
Plan. The amount contributed by Community Bank in 1996 to the Plan for Mr.
Baker, the President and CEO of the Company and Community Bank was $2,992.
Mr. Baker had ten (10) years of credited service under the Plan.
COMPENSATION OF DIRECTORS
During 1996, Mr. Baker, an officer of the Company and Community Bank, sat
on the Company's and Community Bank's Board of Directors and various committees
of Community Bank. Mr. Baker received no fees for his services on such
committees. Mr. Baker received no fees for his services on the Company's or
Community Bank's Board of Directors.
All members of the Company's Board of Directors, including Mr. Farber, the
Chairman of the Company, received a fee of $400 per quarter for the first half
of 1996. Effective July 1, 1996, directors received a fee of $500 per month.
Aggregate fees paid by the Company in 1996 totaled $30,400. Except for Mr.
Farber, members of Community Bank's Board of Directors received a fee of $800
per month for the first half of 1996. Effective July 1, 1996, the directors
received $1,000 per month. Mr. Farber, as the Chairman of Community Bank,
received a fee of $2,800 per month for the first half of 1996. Effective
July 1, 1996, Mr. Farber received $3,000 per month. Aggregate directors' fees
paid by Community Bank in 1996 were $175,200.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Board of Directors of the Company is responsible for the governance of
the Company and Community Bank. In fulfilling its fiduciary duties, the Board
of Directors acts in the best interests of the Company's stockholders, customers
and the communities served by the Company and Community Bank. To accomplish the
strategic goals and objectives of the Company, the Board of Directors engages
competent persons who undertake to accomplish these objectives with integrity
and in a cost-effective manner. The compensation of these individuals is part
of the Board of Directors' fulfillment of its duties to accomplish the Company's
strategic mission. Community Bank provides compensation to the employees of the
Company and Community Bank.
The fundamental philosophy of Community Bank's compensation program is to
offer competitive compensation opportunities for all employees based on each
individual's contribution and personal performance. The compensation program is
administered by the Committee comprised of two outside directors and three
members of the Company's Board of Directors listed in the section "Principal
Officers," thereto. The objective of the Committee is to establish a fair
compensation policy to govern executive officers' base salaries and incentive
plans to attract and motivate competent, dedicated and ambitious managers whose
efforts will enhance the products and services of the Company, the results of
which will be improved profitability, increased dividends to our stockholders
and subsequent appreciation in the market value of our stock.
The compensation of the Company's and Community Bank's top executives is
reviewed and approved annually by the Board of Directors. The top executives
whose compensation is determined by the Committee include the President and CEO
and all other executive management. As guidance for review in determining base
salaries, the Committee uses information composed from a Pennsylvania bank peer
group. This bank peer group is different than the peer group utilized for the
performance chart. Pennsylvania peer group banks have been utilized because of
common industry issues and competition for the same executive talent group.
CEO COMPENSATION
The Board of Directors has determined that the President and CEO's 1996
compensation of $111,029 was appropriate in light of the Company's 1996
performance accomplishments. There is no direct correlation, however, between
the President and CEO's compensation and the Company's performance, nor is there
any weight given by the Committee to any specific individual criteria. Such
1996 compensation was based on the Committee's subjective determination after
review of all information that it deemed relevant.
EXECUTIVE OFFICERS
Compensation for the Company's and Community Bank's executive officers is
determined by the Committee based on its subjective analysis of the individual's
contribution to the Company's strategic goals and objectives. In determining
whether strategic goals have been achieved, the Board of Directors considers,
among numerous other factors, the following: the Company's performance as
measured by earnings, revenues, return on assets, return on equity, market
share, total assets and nonperforming loans. Although the performance and
increases in compensation are measured in light of these factors, there is no
direct correlation between any specific criterion and the employees
compensation, nor is there any specific weight provided to any such criteria in
the Committee's analysis. The determination by the Committee is subjective
after review of all information, including the above, it deems relevant.
Total compensation opportunities available to the employees of the Company
and Community Bank are influenced by general labor market conditions, the
specific responsibilities of the individual and the individual's contributions
to the Company's success. Individuals are reviewed annually on a calendar year
basis. The Company strives to offer compensation that is competitive with that
offered by employers of comparable size in the banking industry. Through these
compensation policies, the Company strives to meet its strategic goals and
objectives to its constituents and provide compensation that is fair and
meaningful to its employees.
SUBMITTED BY THE EXECUTIVE COMPENSATION COMMITTEE
William F. Farber, Sr.
Judd B. Fitze
John P. Kameen
J. Robert McDonnell
Joseph P. Moore, Jr.
STOCK PERFORMANCE GRAPH AND TABLE
Set forth below is a line graph comparing the cumulative total stockholder
return on the Company's Common Stock, based on the market price change and
assuming reinvestment of dividends, with the cumulative total return of the
NASDAQ Stock Market (US Companies) Index and the NASDAQ Bank Stocks
(SIC 6000-6099 US Companies) Index during the five-year period ended
December 31, 1996. The stockholder return shown on the graph below is not
necessarily indicative of future performance. The Company's Common Stock began
trading on the NASDAQ National Market Tier of the NASDAQ Stock Market under the
symbol "CCBP" on June 17, 1996.
<TABLE>
<CAPTION
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Comm Bancorp, Inc.............................. 100.0 102.5 132.1 179.0 190.9 362.5
Total Returns Index for
NASDAQ Stock Market
(US Companies)................................. 100.0 116.4 133.6 130.6 184.7 227.2
Total Returns Index for
NASDAQ Bank Stocks
(SIC 6000-6099 US Companies)................... 100.0 153.3 202.0 204.7 313.4 406.3
</TABLE>
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighed daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day,
the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/91.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as described in the paragraphs below, there have been no material
transactions between the Company and Community Bank, nor any material
transactions proposed, with any director or executive officer of the Company and
Community Bank, or any associate of the foregoing persons. The Company and
Community Bank have had financial transactions in the ordinary course of
business with directors and officers of the Company and Community Bank. The
Company and Community Bank intend to continue to have banking and financial
transactions in the ordinary course of business with directors and officers of
the Company and Community Bank and their associates on substantially the same
terms, including interest rates and collateral, as those prevailing from time to
time for comparable transactions with other persons. Total loans outstanding
from Community Bank as of December 31, 1996, to the Company's and Community
Bank's executive officers and directors as a group and members of their
immediate families and companies in which they had an ownership interest of 10.0
percent or more was $5,005,964, or approximately 16.0 percent of the total
equity capital of the Company. Loans to such persons were made in the ordinary
course of business and were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons, and did not involve more than the normal risk
of collectibility or present other unfavorable features.
Community Bank leased its Carbondale branch office from William F. Farber,
Sr., the Chairman of the Boards of Directors of the Company and Community Bank.
The lease, which commenced in October 1988, was scheduled to expire in 1998 and
contained an option that allowed Community Bank to purchase the property at fair
market value or renew the lease for two additional terms of five years each. In
1996, lease payments to Mr. Farber were $6,020 per month or $72,240 annually.
During the first quarter of 1997, Community Bank purchased such property for the
sum of $600,000. Community Bank received a certified appraisal prior to this
transaction from a local qualified commercial realtor stating that the fair
market value of such property exceeded $600,000.
PRINCIPAL OFFICERS OF THE COMPANY
The following table sets forth selected information about the principal
officers of the Company, each of whom is elected by the Board of Directors and
each of whom holds office at the discretion of the Board of Directors:
<TABLE>
<CAPTION>
COMPANY
HELD EMPLOYEE NUMBER OF SHARES AGE AS OF
NAME AND POSITION SINCE SINCE BENEFICIALLY OWNED JUNE 30, 1997
<S> <C> <C> <C> <C>
David L. Baker 1995 1993 11,304(2) 52
President and CEO
William F. Farber, Sr. 1983 (1) 188,820 60
Chairman of the Board
John P. Kameen 1996 (1) 20,280(3) 56
Secretary
J. Robert McDonnell 1983 (1) 32,544(4) 61
Vice President
Scott A. Seasock 1989 1989 3,105(5) 40
Senior Vice President
and CFO
Thomas E. Sheridan 1989 1985 5,844(6) 40
Senior Vice President
and COO
</TABLE>
(1) Messrs. Farber, Kameen and McDonnell are not employees of the Company.
(2) See footnote (5) under the above caption entitled "Beneficial Ownership
by Executive Officers, Directors and Nominees."
(3) See footnote (7) under the above caption entitled "Beneficial Ownership
by Executive Officers, Directors and Nominees."
(4) See footnote (10) under the above caption entitled "Beneficial Ownership
by Executive Officers, Directors and Nominees."
(5) See footnote (12) under the above caption entitled "Beneficial Ownership
by Executive Officers, Directors and Nominees."
(6) See footnote (13) under the above caption entitled "Beneficial Ownership
by Executive Officers, Directors and Nominees."
PRINCIPAL OFFICERS OF COMMUNITY BANK
The following table sets forth selected information about the principal
officers of Community Bank, each of whom is elected by the Board of Directors of
Community Bank and each of whom holds office at the discretion of Community
Bank's Board of Directors:
<TABLE>
<CAPTION>
COMMUNITY
BANK
HELD EMPLOYEE NUMBER OF SHARES AGE AS OF
NAME AND POSITION SINCE SINCE BENEFICIALLY OWNED JUNE 30, 1997
<S> <C> <C> <C> <C>
David L. Baker 1995 1993(1) 11,304(3) 52
President and CEO
Thomas M. Chesnick 1989 1952 28,200(4) 62
Vice President, Cashier
and Assistant Secretary
Scott A. Seasock 1993 1993(2) 3,105(5) 40
Senior Vice President
and CFO
Thomas E. Sheridan 1989 1985 5,844(6) 40
Senior Vice President
and COO
</TABLE>
(1) Prior to the merger of FNB Nicholson with Community Bank, Mr. Baker was
employed by FNB Nicholson from 1987 to 1993 as the President.
(2) Prior to the merger of FNB Nicholson with Community Bank, Mr. Seasock was
employed by FNB Nicholson from 1987 to 1993 as Senior Vice President and
CFO.
(3) See footnote (5) under the above caption entitled "Beneficial Ownership
by Executive Officers, Directors and Nominees."
(4) Includes 17,820 shares held jointly with his spouse; and 10,380 shares
held jointly with various relatives.
(5) See footnote (12) under the above caption entitled "Beneficial Ownership
by Executive Officers, Directors and Nominees."
(6) See footnote (13) under the above caption entitled "Beneficial Ownership
by Executive Officers, Directors and Nominees."
LEGAL PROCEEDINGS
GENERAL
The nature of the Company's and Community Bank's business generates a
certain amount of litigation involving matters arising in the ordinary course of
business. However, in the opinion of management of the Company and Community
Bank, there are no proceedings pending to which the Company and Community Bank
are a party or to which their property is subject, which, if determined
adversely, would be material in relation to the Company's and Community Bank's
undivided profits or financial position, nor are there any proceedings pending
other than ordinary routine litigation incident to the business of the Company
and Community Bank. In addition, no material proceedings are pending or are
known to be threatened or contemplated against the Company and Community Bank by
government authorities or others.
ENVIRONMENTAL ISSUES
There are several federal and state statutes that govern the obligations of
financial institutions with respect to environmental issues. Besides being
responsible for its own conduct under such statutes, a bank may also be held
liable under certain circumstances for actions of borrowers or other third
parties on properties that collateralize loans held by the bank. Such potential
liability may far exceed the original amount of the loan made by the bank.
Currently, Community Bank is not a party to any pending legal proceedings under
any environmental statute nor is Community Bank aware of any circumstances that
may give rise to liability of Community Bank under any such statute.
PROPOSED AMENDMENT TO ARTICLE 16 OF
THE AMENDED ARTICLES OF INCORPORATION
GENERAL
On June 10, 1997, the Company's Board of Directors adopted resolutions to
amend Article 16 of the Company's Amended Articles of Incorporation and directed
such proposed amendment to be submitted to the stockholders for their approval
at the 1997 Annual Meeting of Stockholders. A true and correct copy of these
resolutions, which delineate the wording to be amended in Article 16, is
attached to this Proxy Statement as Exhibit A and incorporated by reference into
this section of the Proxy Statement.
REASONS FOR THE PROPOSED AMENDMENT
The Company intends to expand its market area through the acquisition of
branch offices from other financial institutions; the establishment of new
branch offices; and the acquisition of whole financial institutions. Under the
latter strategy, Article 16 is implicated. This provision requires the
affirmative vote of seventy-five percent (75%) of all outstanding shares of
Common Stock to approve a merger or acquisition of another financial
institution. This super-majority vote requirement was placed in the Company's
Amended Articles of Incorporation as an anti-takeover or defensive measure
against an unwanted or coercive attempt to acquire the Company.
The Board of Directors has concluded that in those circumstances in which
the Company is the surviving entity to a merger or acquisition, it is not
necessary to require a seventy-five percent (75%) vote of all outstanding shares
but to have in place the more relaxed requirement of a simple majority of all
outstanding shares. This more relaxed requirement will prevent the holders of a
minority of the shares, i.e., twenty-five percent (25%) of the shares, from
denying a corporate opportunity that the Board of Directors and the holders of a
majority of the outstanding shares would consider desirable and beneficial to
the long-term prospects of the Company.
The Board of Directors recommends unanimously that the stockholders vote FOR
the proposed amendment to Article 16 of the Amended Articles of Incorporation.
RATIFICATION OF INDEPENDENT AUDITORS
Unless instructed to the contrary, it is intended that votes will be cast
pursuant to the Proxies for the ratification of the selection of Kronick Kalada
Berdy & Co., Certified Public Accountants of Kingston, Pennsylvania, as the
Company's independent public accountants for its fiscal year ending
December 31, 1997. The Company has been advised by Kronick Kalada Berdy & Co.
that none of its members has any financial interest in the Company.
Ratification of Kronick Kalada Berdy & Co. will require an affirmative vote of a
majority of the shares of Common Stock represented at the Annual Meeting.
Kronick Kalada Berdy & Co. served as the Company's independent public
accountants for the Company's 1996 fiscal year.
In addition to performing customary audit services, Kronick Kalada Berdy &
Co. assisted the Company with the preparation of its federal and state tax
returns, and provided assistance in connection with regulatory matters, charging
the Company for such services at its customary hourly billing rates. These
non-audit services were approved by the Company's and Community Bank's Board of
Directors, after due consideration of the effect of the performance thereof on
the independence of the accountants and after the conclusion by the Company's
and Community Bank's Board of Directors that there was no effect on the
independence of the accountants.
In the event that the stockholders do not ratify the selection of Kronick
Kalada Berdy & Co. as the Company's independent public accountants for the 1997
fiscal year, another accounting firm will be chosen to provide independent
public accounting audit services. The Board of Directors recommends that the
stockholders vote FOR the ratification of the selection of Kronick Kalada Berdy
& Co. as the auditors for the Company for the year ending December 31, 1997.
It is understood that even if the selection of Kronick Kalada Berdy & Co. is
ratified, the Board of Directors, in its discretion, may direct the appointment
of a new independent auditing firm at any time during the year if the Board of
Directors determines that such a change would be in the best interests of the
Company and its stockholders.
ANNUAL REPORT
A copy of the Company's Annual Report for its fiscal year ended December 31,
1996, is enclosed with this Proxy Statement. A representative of Kronick Kalada
Berdy & Co., the accounting firm that 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 at his
discretion will respond to any appropriate questions presented by stockholders
at the Annual Meeting.
STOCKHOLDER PROPOSALS
Any stockholder who, in accordance with and subject to the provisions of the
Proxy rules of the SEC, wishes to submit a proposal for inclusion in the
Company's Proxy Statement for its 1998 Annual Meeting of Stockholders, must
deliver such proposal in writing to the President and CEO of the Company at its
principal executive offices in Forest City, Pennsylvania 18421, no later than
Monday, December 29, 1997.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented for
consideration other than the matters described in the accompanying Notice of
Annual Meeting of Stockholders, but if any matters are properly presented, it is
the intention of the persons named in the accompanying Proxy to vote on such
matters in accordance with their best judgment.
ADDITIONAL INFORMATION
UPON WRITTEN REQUEST OF ANY STOCKHOLDER, A COPY OF THE COMPANY'S REPORT ON
FORM 10-K FOR ITS FISCAL YEAR ENDED DECEMBER 31, 1996, AS AMENDED, INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE
SEC PURSUANT TO RULE 13a-1 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, MAY BE OBTAINED, WITHOUT CHARGE, FROM SCOTT A. SEASOCK, CFO, COMM
BANCORP, INC.
IN ADDITION, A COPY OF THE ANNUAL DISCLOSURE STATEMENT OF COMMUNITY BANK MAY
ALSO BE OBTAINED, WITHOUT CHARGE, FROM SCOTT A. SEASOCK, CFO OF COMMUNITY BANK.
EXHIBIT A
COMM BANCORP, INC.
RESOLUTIONS OF THE BOARD OF DIRECTORS
ADOPTED ON JUNE 10, 1997
BE IT FURTHER RESOLVED, that the Board of Directors finds that it is in the
best interests of the stockholders that fundamental transactions in which this
corporation shall be the surviving or continuing entity, be submitted to the
stockholders for their approval by a majority vote of the issued and outstanding
shares of Common Stock thereby insuring that twenty-five percent (25%) of the
outstanding shares of the common stock voting against such transaction cannot
negate the vote of the overwhelming majority voting for such transaction; and
BE IT FURTHER RESOLVED, that the Board of Directors approves an amendment to
Article 16 of the Amended Articles of Incorporation to be submitted to the
stockholders for their approval at the 1997 Annual Meeting of Stockholders and
to read as follows (bracketed words are deleted and double underscored words are
inserted):
16. STOCKHOLDER ACTION
No merger, consolidation, liquidation or dissolution of the Corporation
nor any action that would result in the sale or other disposition of all or
substantially all of the assets of the Corporation (THE FOREGOING
TRANSACTIONS REFERRED TO COLLECTIVELY AS A "FUNDAMENTAL TRANSACTION") shall
be valid unless [first] approved by the affirmative vote of the holders of
at least seventy-five percent (75%) of the outstanding shares of Common
Stock;PROIDED, HOWEVER, THAT IF THE CORPORATION SHALL BE THE SURVIVING OR
CONTINUING ENTITY TO A FUNDAMENTAL TRANSACTION, THEN, IN SUCH CASE, THE
FUNDAMENTAL TRANSACTION SHALL BE VALID BY THE APPROVAL OF THE AFFIRMATIVE
VOTE OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF THE COMMON
STOCK. This Article 16 may not be amended unless first approved by the
affirmative vote of the holders of at least seventy-five percent (75%) of
the outstanding shares of Common Stock.
COMM BANCORP, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 12, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Scott A. Seasock and
Thomas E. Sheridan and each or any of them, Proxies of the undersigned, with
full power of substitution, to vote all of the shares of Comm Bancorp, Inc.
(the "Company") that the undersigned may be entitled to vote at the Annual
Meeting of Stockholders of the Company to be held at Elk Mountain Ski Resort,
Route 374, Union Dale, Pennsylvania 18470, on Friday, September 12, 1997, at
10:30 a.m., prevailing time, and at any adjournment or postponement thereof as
follows:
1. PROPOSAL TO FIX THE NUMBER OF DIRECTORS TO BE ELECTED AT TEN (10).
[ ] FOR [ ] AGAINST
The Board of Directors recommends a vote FOR this proposal.
2. ELECTION OF DIRECTORS TO SERVE FOR A ONE-YEAR TERM.
[ ] FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY
LISTED BELOW (except to vote for all
as marked to the nominees listed
contrary below) below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
David L. Baker, William F. Farber, Sr., Judd B. Fitze, John P. Kameen,
Erwin T. Kost, William B. Lopatofsky, J. Robert McDonnell, Joseph P.
Moore, Jr., Theodore W. Porosky, Eric Stephens
3. PROPOSAL TO APPROVE AN AMENDMENT TO ARTICLE 16 OF THE AMENDED ARTICLES OF
INCORPORATION
[ ] FOR [ ] AGAINST
The Board of Directors recommends a vote FOR this proposal.
4. PROPOSAL TO RATIFY THE SELECTION OF KRONICK KALADA BERDY & CO. AS THE
INDEPENDENT AUDITORS FOR THE COMPANY FOR THE YEAR ENDING
DECEMBER 31, 1997.
[ ] FOR [ ] AGAINST
The Board of Directors recommends a vote FOR this proposal.
________________________________________________________________________________
5. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL NOMINEES LISTED ABOVE AND FOR PROPOSALS 1,3 and 4.
Dated: , 1997
__________________
______________________________
______________________________
Signature(s) (Seal)
Number of Shares Held of
Record on June 30, 1997
________________________
THIS PROXY MUST BE DATED AND SIGNED BY THE STOCKHOLDER. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE.
IF MORE THAN ONE TRUSTEE, ALL SHOULD SIGN. IF STOCK IS HELD JOINTLY, EACH OWNER
SHOULD SIGN.
