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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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Page 1 of 22
May 14, 1998
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 12, 1998
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, June 12, 1998, at Elk Mountain Ski Resort, Route 374, Union Dale,
Pennsylvania 18470, for the following purposes:
1. To elect ten (10) directors to serve for a one-year term and until
their successors are duly elected and qualified;
2. 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, 1998; and
3. 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
March 31, 1998, 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, 1997, are being mailed with this Notice. Copies of the Company's
Annual Report for the 1996 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,
/c/William F. Farber, Sr.
-----------------------------------
William F. Farber, Sr.
Chairman of the Board
PROXY STATEMENT FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON JUNE 12, 1998
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, June 12, 1998, 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 May 14, 1998.
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 election of the ten (10) nominees for director named below; 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, 1998. 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
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At the close of business on March 31, 1998, the Company had issued and
outstanding 2,204,169 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
March 31, 1998, 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 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 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 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 March 31, 1998,
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:
<TABLE>
<CAPTION>
PERCENT OF OUTSTANDING
SHARES BENEFICIALLY COMMON STOCK
NAME AND ADDRESS OWNED(1) BENEFICIALLY OWNED
- ---------------- ------------------- ----------------------
<S> <C> <C>
Joseph P. Moore, Jr. 219,772(2) 9.97%
400 Williamson Road
Gladwyne, PA 19035
William F. Farber, Sr. 188,820 8.57%
Crystal Lake Road
R.R. 1, Box 1281
Carbondale, PA 18407
Gerald B. Franceski 114,835(3) 5.21%
Lewis Lake, P.O. Box 88
Union Dale, PA 18470
<FN>
(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 March 31, 1998. Beneficial
ownership may be disclaimed as to certain of the shares.
(2) Includes 30,518 shares held individually; 6,358 shares held in the Moore Motors, Inc. Profit
Sharing Plan, an automobile dealership of which he was President; and 182,896 shares held by
Moore & Company, which are held in trust for his various relatives.
(3) Includes 68,740 shares held jointly with his spouse; 26,955 shares held jointly in various
combinations with relatives; and 19,140 shares held individually by his spouse.
</TABLE>
BENEFICIAL OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------------------------------
The following table sets forth as of March 31, 1998, the amount and
percentage of the Common Stock beneficially owned by each director and officer
and all directors and officers of the Company as a group:
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL AMOUNT AND NATURE OF PERCENT
OR IDENTITY OF GROUP BENEFICIAL OWNERSHIP(1)(2)(3) OF CLASS(4)
- -------------------- ----------------------------- -----------
<S> <C> <C>
David L. Baker 11,314(5) ----
William F. Farber, Sr. 188,820 8.57%
Judd B. Fitze 11,786(6) ----
John P. Kameen 20,302(7) ----
Erwin T. Kost 8,917(8) ----
William B. Lopatofsky 25,410(9) 1.15%
J. Robert McDonnell 33,551(10) 1.52%
Joseph P. Moore, Jr. 219,772(11) 9.97%
Theodore W. Porosky 3,586(9) ----
Scott A. Seasock 3,128(12) ----
Thomas E. Sheridan 6,260(13) ----
Eric Stephens 7,000(14) ----
All Executive Officers and
Directors of the Company
as a Group (10 Directors,
6 Officers, 12 Persons in
Total) 539,846 24.49%
<FN>
(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; 737
shares held under his IRA; and 737 shares held under his spouse's IRA.
(6) Includes 9,067 shares held jointly with his spouse; and 2,719 shares held under his IRA.
(7) Includes 17,280 shares held jointly with his spouse; and 3,022 shares held jointly with
other individuals.
(8) Includes 4,464 shares held individually; and 4,453 shares held jointly with his spouse.
(9) Held jointly with his spouse.
(10) Includes 16,272 shares held individually; 16,272 held individually by his spouse; and 1,007
shares held individually by his son.
(11) See footnote (2) under the above caption entitled "Principal Owners."
(12) Includes 831 shares held jointly with his spouse; 1,531 shares held jointly with his spouse
and sons; 101 shares held as custodian for his sons under the Uniform Gift to Minors Act;
and 665 shares held under his IRA.
(13) Includes 1,777 shares held jointly with his spouse; 4,080 shares held jointly with his
father; 211 shares held under his IRA; and 192 shares held under his spouse's IRA.
(14) Includes 5,380 shares held individually; 900 shares held individually by his spouse; and 720
shares held individually by his children.
</TABLE>
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
MARCH 31, WITH THE COMPANY AND COMPANY/COMMUNITY
NAME 1998 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)
William F. Farber, Sr. 61 President, Farber's 1983/1970
Restaurants; Chairman of the
Boards of Directors of the
Company and Community Bank
Judd B. Fitze 46 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 54 President, Kost Tire & Muffler 1997/1993
William B. Lopatofsky 66 Retired 1983/1982
J. Robert McDonnell 62 Owner, McDonnell's Restaurant; 1983/1979
Vice President of the Company
Joseph P. Moore, Jr. 71 President, Elk Mountain Ski 1988/1992
Resort, Inc.; Retired President,
Moore Motors Inc. (automobile
dealership)
Theodore W. Porosky 50 Owner, Porosky Lumber Company 1997/1989
Eric Stephens 46 Auto Dealer, H.L. Stephens 1988/1993
and Son (automobile dealership)
</TABLE>
The Executive Compensation Committee (the "Committee") of Community Bank is
responsible for reviewing 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 five (5)
times in 1997. Committee members received no remuneration for serving on this
committee.
The Asset/Liability Committee ("ALCO") of Community Bank is responsible for
making 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. William R. Boyle, Vice President and Branch
Administrator of Community Bank, 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 ten (10) times in 1997.
Committee members received no remuneration for serving on this committee.
The Director's Loan Committee of Community Bank is responsible for
reviewing commercial loans over $100,000 and consumer loans over $150,000. The
full Board of Directors reviews all loans over $500,000. David L. Baker,
William F. Farber, Sr., Allan A. Hornbeck, Erwin T. Kost, William A. Kerl,
William B. Lopatofsky, J. Robert McDonnell and Theodore W. Porosky served as
members of this committee. Mr. Thomas W. Sheppard is an ex-officio member of
this committee. This committee met twenty-two (22) times in 1997. Committee
members received no remuneration for serving on this committee.
The Audit Committee of Community Bank is responsible for making
recommendations to the Board of Directors concerning the auditing function
of the Company and Community Bank. John P. Kameen, J. Robert McDonnell and
William B. Lopatofsky served as members of this committee. M. Evelyn Pantzar,
Vice President and Internal Auditor of Community Bank, is an ex-officio member
of this committee. This committee met six (6) times in 1997. Committee members
received no remuneration for serving on this committee.
The Investment Committee of Community Bank is responsible for reviewing the
investment portfolio with regard to the purchases and sales made, the schedule
of maturities, and the portfolio's risk and return. 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. This committee met ten (10) times in 1997. Committee members
received no remuneration for serving on this committee.
The Trust Committee of Community Bank is responsible for reviewing the
activities of the Trust Department of Community Bank. 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. The committee
met four (4) times in 1997. Committee members received no remuneration for
serving on this committee.
The Marketing Committee of Community Bank is responsible for reviewing the
marketing strategies of Community Bank. Douglas Gay, Duane Jerauld, John P.
Kameen and Susan Mancuso served as members of such committee. Mr. David L.
Baker and Mesdames Valerie Hite and Erin Keough are ex-officio members of this
committee. This committee met one (1) time in 1997. Committee members received
no remuneration for serving on this committee.
The Board of Directors of the Company met twelve (12) times in 1997. Each
of the directors of the Company attended at least seventy-five percent (75%)
of the combined total number of meetings of the Boards of Directors of the
Company and Community Bank and the Community Bank 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.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5 was
required for any of those persons, the Company believes that during the period
January 1, 1997, through December 31, 1997, its officers and directors were in
compliance with all filing requirements applicable to them.
EXECUTIVE COMPENSATION
Presented below is information concerning the annual compensation for
services in all capacities to the Company and Community Bank for the fiscal
years ended December 31, 1997, 1996 and 1995, to David L. Baker, President and
CEO of the Company and Community Bank. No other officer's total annual salary
and bonus exceeded $100,000 during the fiscal years reported:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
- ------------------------------------------------------------------------------------------------------------
<S>
Other
Name and Annual Restricted All Other
Principal Compensa- Stock Options LTIP Compensa-
Position Year Salary($) Bonus($) tion($) Award(s) /SARs Payouts tion($)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <d> <d> <d> <d> <d> <d> <d> <d>
David L. Baker 1997 111,401 18,700 3,346(2) -0- -0- -0- -0-
President and 1996 101,029 10,000 3,012(2) -0- -0- -0- 27,958(3)
CEO (1) 1995 84,666 6,000 1,632(2) -0- -0- -0- -0-
<FN>
(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.
</TABLE>
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 1997, $67,890 was allocated among the participants' accounts for
the Plan. The amount contributed by Community Bank in 1997 to the Plan for Mr.
Baker, the President and CEO of the Company and Community Bank, was $3,346. Mr.
Baker had eleven (11) years of credited service under the Plan.
COMPENSATION OF DIRECTORS
- -------------------------
During 1997, 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 or 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 $500 per month for 1997.
Aggregate fees paid by the Company in 1997 totaled $48,000. Except for Mr.
Farber, members of Community Bank's Board of Directors received a fee of $1,000
per month in 1997. Mr. Farber, as the Chairman of Community Bank, received a
fee of $3,000 per month for January through November of 1997. Effective
December 1, 1997, Mr. Farber's fee was increased to $3,500 per month. In
addition, all members of Community Bank's Board of Directors, including Mr.
Farber, received a year-end bonus of $1,500. Aggregate directors' fees paid by
Community Bank in 1997 were $201,500.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
- -------------------------------------------------------------
The Board of Directors of the Company is responsible for the governance
of the Company and its subsidiary, 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 the Company's and 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 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 1997
compensation of $130,101 was appropriate in light of the Company's 1997
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
1997 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 the
Company's performance as measured by, among numerous other factors, the
following: (i) earnings; (ii) revenues; (iii) return on assets; (iv) return on
equity; (v) market share; (vi) total assets; and (vii) 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 Mid-Atlantic Bank Stocks
(Delaware, Maryland, New Jersey, New York, Pennsylvania and Washington, D.C.
Companies) Index during the five-year period ended December 31, 1997. The
stockholder return shown on the graph and table below is not necessarily
indicative of future performance. The Company's Common Stock began trading on
the NASDAQ Stock Market under the symbol "CCBP" on June 17, 1996. Prior to that
date, the Company's Common Stock was traded on the Over-the-Counter Electronic
Bulletin Board Interdealer System.
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
- --------- Comm Bancorp, Inc............................. 100.0 128.9 174.7 186.3 353.8 489.8
_________ Total Returns Index for
NASDAQ Stock Market
(US Companies)................................ 100.0 114.8 112.2 158.7 195.2 239.5
- -- -- -- Total Returns Index for
Mid-Atlantic Bank Stocks...................... 100.0 116.3 113.0 180.9 259.7 369.0
<FN>
NOTES:
A. The lines represent monthly index levels derived from compounded daily returns that include all dividends.
B. The indices 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 12/31/92.
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ----------------------------------------------
Except as described in the paragraph 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/or 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, 1997, to the Company's and Community
Bank's executive officers and directors as a group, members of their immediate
families and companies in which they had an ownership interest of ten percent
(10%) or more was $3,618,087, or approximately ten percent (10%) 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.
At the end of 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 qualified commercial realtor stating that the fair
market value of such property exceeded $600,000. Community Bank paid Mr. Farber
lease payments of $6,020 per month totaling $18,060 for the first three months
of 1997.
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 MARCH 31,1998
- ----------------- ----- -------- ------------------ -------------
<S> <C> <C> <C> <C>
David L. Baker 1995 1995(1) 11,314(3) 52
President and CEO
William F. Farber, Sr. 1983 (2) 188,820 61
Chairman of the Board
John P. Kameen 1996 (2) 20,302(4) 56
Secretary
J. Robert McDonnell 1983 (2) 33,551(5) 62
Vice President
Scott A. Seasock 1989 1989 3,128(6) 40
Senior Vice President
and CFO
Thomas E. Sheridan 1989 1985 6,260(7) 41
Senior Vice President
and COO
<FN>
(1) Prior to his appointment as President and CEO of the Company, Mr. Baker was employed
by Community Bank from 1993 to 1995 as a Senior Vice President.
(2) Messrs. Farber, Kameen and McDonnell are not employees of the Company.
(3) See footnote (5) under the above caption entitled "Beneficial Ownership by Directors and
Executive Officers."
(4) See footnote (7) under the above caption entitled "Beneficial Ownership by Directors and
Executive Officers."
(5) See footnote (10) under the above caption entitled "Beneficial Ownership by Directors and
Executive Officers."
(6) See footnote (12) under the above caption entitled "Beneficial Ownership by Directors and
Executive Officers."
(7) See footnote (13) under the above caption entitled "Beneficial Ownership by Directors and
Executive Officers."
</TABLE>
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 MARCH 31, 1998
- ----------------- ----- ---------- ------------------ --------------
<S> <C> <C> <C> <C>
David L. Baker 1995 1993 11,314(1) 52
President and CEO
Thomas M. Chesnick 1989 1952 28,385(2) 63
Vice President, Cashier
and Assistant Secretary
Scott A. Seasock 1993 1993 3,128(3) 40
Senior Vice President
and CFO
Thomas E. Sheridan 1989 1985 6,260(4) 41
Senior Vice President
and COO
<FN>
(1) See footnote (5) under the above caption entitled "Beneficial Ownership by Directors and
Executive Officers."
(2) Includes 17,952 shares held jointly with his spouse; and 10,433 shares held jointly with
various relatives.
(3) See footnote (12) under the above caption entitled "Beneficial Ownership by Directors and
Executive Officers."
(4) See footnote (13) under the above caption entitled "Beneficial Ownership by Directors and
Executive Officers."
</TABLE>
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.
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,
1998. 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 1997
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 1998
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, 1998.
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, 1997, 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 1999 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
Thursday, December 31, 1998.
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, 1997, 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.
COMM BANCORP, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 12, 1998
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, June 12, 1998, at 10:30 a.m.,
prevailing time, and at any adjournment or postponement thereof as follows:
1. 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
- --------------------------------------------------------------------------------
2. PROPOSAL TO RATIFY THE SELECTION OF KRONICK KALADA BERDY & CO. AS THE
INDEPENDENT AUDITORS FOR THE COMPANY FOR THE YEAR ENDING DECEMBER 31,
1998.
[ ] FOR [ ] AGAINST
The Board of Directors recommends a vote FOR this proposal.
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.
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 PROPOSAL 2.
Dated: , 1998
------------------
------------------------------
------------------------------
Signature(s) (Seal)
Number of Shares Held of
Record on March 31, 1998
- ------------------------
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.
