<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CNB FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(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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Notes:
<PAGE>
[LOGO OF CNB
FINANCIAL CORPORATION]
P.O. Box 42
Clearfield, PA 16830
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of CNB
FINANCIAL CORPORATION will be held at the County National Bank, One South Second
Street, Clearfield, Pennsylvania 16830 on Tuesday, April 21, 1998, at 2:00 P.M.
for the following purposes:
1. ELECTION OF DIRECTORS: The election of five Class 2 directors to serve
until the Annual Meeting in the year 2001 or until their respective
successors are elected and qualified.
2. AMENDMENT TO ARTICLES OF INCORPORATION: To consider and act on a proposed
amendment to the Articles of Incorporation to increase the number of
authorized shares of common stock from 2,500,000 shares to 10,000,000
shares and to decrease the par value of the common stock to $1.00 per
share.
3. TRANSACTION OF OTHER BUSINESS: To transact such other business as
may properly come before the meeting or any adjournment thereof.
The Board of Directors has fixed March 11, 1998, as the record date for the
determination of shareholders entitled to notice of and to vote at the meeting.
The annual report to shareholders for the year ended December 31, 1997 and a
form of proxy are enclosed.
YOU ARE URGED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING IN PERSON. PLEASE RETURN THE PROXY AS PROMPTLY AS
POSSIBLE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY BY SO
NOTIFYING THE SECRETARY AND VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors,
/s/ William A. Franson
William A. Franson
Secretary
Clearfield, Pennsylvania
March 26, 1998
<PAGE>
This page left intentionally blank
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
TUESDAY, APRIL 21, 1998
CNB Financial Corporation (the "Corporation") is a Pennsylvania business
corporation and a bank holding company registered with the Federal Reserve Board
having its principal offices at County National Bank, Clearfield, Pennsylvania
16830. The only subsidiary of the Corporation is County National Bank (the
"Bank").
The enclosed proxy is being solicited by the Board of Directors of the
Corporation for use at the Annual Meeting of Shareholders to be held April 21,
1998. The cost of preparing, assembling and mailing the notice of annual
meeting, proxy statement and form of proxy is to be borne by the Corporation. In
addition to the solicitation of proxies by use of the mails, directors, officers
or other employees of the Corporation may solicit proxies personally or by
telephone and the Corporation may request certain persons holding stock in their
names or in the names of their nominees to obtain proxies from and send proxy
material to the principals and will reimburse such persons for their expenses in
so doing. The date on which this proxy statement and the accompanying form of
proxy was mailed to shareholders was March 26, 1998.
A quorum for the transaction of business at the annual meeting will require
the presence, in person or by proxy, of shareholders entitled to cast at least a
majority of the total number of votes entitled to be cast on a particular matter
to be acted upon at the meeting. Abstentions and broker non-votes are counted as
shares present for determination of a quorum but are not counted as affirmative
or negative votes and are not counted in determining the number of votes cast on
any matter.
The enclosed proxy is revocable at any time prior to the actual voting of such
proxy, by the filing of an instrument revoking it, or a duly executed proxy
bearing a later date, with the Secretary of the Corporation. In the event your
proxy is mailed and you attend the meeting, you have the right to revoke your
proxy and cast your vote personally. All properly executed proxies delivered
pursuant to this solicitation will be voted at the meeting and in accordance
with the instructions, if any. Unless otherwise directed, proxies will be voted
in favor of (1) the election as directors of the five nominees named under the
caption "Election of Directors" herein and in favor of (2) amending the Articles
of Incorporation as set forth in the Notice of Meeting. The Board of Directors
is not aware of any other matters which will be presented for action at the
meeting, but the persons named in the proxies intend to vote or act according to
their discretion with respect to any other proposal which may be presented for
action.
The Board of Directors has fixed the close of business on March 11, 1998, as
the record date (the "Record Date") for determining shareholders entitled to
notice of, and to vote at, the meeting. The only securities of the Corporation
entitled to vote at the meeting consist of 1,722,834 shares of common stock
outstanding on the Record Date.
In the election of directors, each shareholder or a duly authorized proxy will
have the right to vote the number of shares owned for each of the directors to
be elected or to cumulate such votes and give one candidate as many votes as the
number of directors to be elected multiplied by the number of owned shares, or
to distribute these votes among as many candidates in such numbers as the owner
deems fit. The affirmative vote of a majority of the votes cast on the matter is
required for the approval of such other matters as may properly come before the
meeting.
As of the Record Date, there were 1,432 registered owners of the 1,722,834
shares of common stock then outstanding. To the knowledge of the Corporation, no
persons owned of record or beneficially on the Record Date more than five
percent (5%) of the outstanding common stock of the Corporation. At the Record
Date, all officers and directors of the Corporation as a group beneficially
owned 169,197 shares or 9.79% of the shares outstanding.
2
<PAGE>
1. ELECTION OF DIRECTORS
The By-Laws of the Corporation provide that the Board of Directors shall
consist of no more than twenty-four persons. The Board of Directors has acted to
fix the number of directors for the ensuing year at fifteen.
Directors are elected for three year terms with one-third of the total
normally elected each year. Of the persons named below, all of whom are members
of the present Board of Directors, five are nominated to serve as Class 2
directors to hold office for a three year term expiring at the third succeeding
annual meeting (in the year 2001) or until their respective successors have been
duly elected and have qualified. The persons named in the enclosed proxy will
vote for the election of the nominees named below unless authority is withheld.
Each nominee has consented to be named as a nominee and has agreed to serve if
elected. If, for any reason, any of the nominees named below should become
unavailable to serve, the enclosed proxy will be voted for the remaining
nominees and such other person or persons as the Board of Directors may
designate.
NOMINEES: Class 2 directors for a three year term expiring at annual
shareholders meeting in the year 2001.
<TABLE>
<CAPTION>
Shares Percent of
Business Experience Director Beneficially Beneficial Ownership
Name Age (Past Five Years) Since Owned (1) (2) if 1.00% or More
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Richard D. Gathagan 56 President & Owner of 11/8/88 8,607 (3) --
Pharmaceutical & Medical
Companies (Health Care)
Formerly Owner-Life Support
Products (Health Care)
Dennis L. Merrey 49 President, Clearfield 6/4/91 4,836 (4) (5) --
Powdered Metals, Inc.
(Manufacturer)
William R. Owens 60 Retired, Formerly 2/15/83 9,000 --
V. Pres., Sec., and Treas.
CNB Financial Corporation
Formerly President and
Chief Executive Officer
County National Bank
Carl J. Peterson 60 Assistant Secretary 1/28/92 5,562 (3) (6) --
CNB Financial Corporation
Senior Vice President
& Trust Officer
County National Bank
Robert G. Spencer 66 President 2/15/83 11,786 (4) --
Hepburnia Coal Sales Corp.
(Coal Producer)
</TABLE>
The following Class 1 directors terms expire at the time of the annual meeting
in 1999.
<TABLE>
<S> <C> <C> <C> <C> <C>
William F. Falger 50 Executive Vice President 4/16/96 761 (3) (5) --
CNB Financial Corporation 2,604 (6)
President and Chief
Executive Officer
County National Bank
James J. Leitzinger 59 President 10/4/83 23,012 (3) (4) (5) 1.34%
Leitzinger Realty
(Real Estate Investments)
Jeffrey S. Powell 33 President 12/27/94 6,610 (3) --
J. J. Powell, Inc.
(Petroleum Wholesaler-
Retailer)
Peter F. Smith 43 Attorney at Law 9/12/89 5,400 --
L. E. Soult, Jr. 69 Vice President & Treasurer 1/10/67 53,472 (3) (4) 3.10%
Soult Wholesale Co.
(Building Material
Wholesaler)
</TABLE>
The following Class 3 directors terms expire at the time of the annual meeting
in 2000.
<TABLE>
<S> <C> <C> <C> <C> <C>
Robert E. Brown 56 President 2/15/83 8,028 (3) --
E. M. Brown, Inc.
(Coal Producer)
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
James P. Moore 62 President and 4/13/82 4,791 (3) (5) --
Chief Executive Officer
CNB Financial Corporation
Chairman of the Board
County National Bank
Robert C. Penoyer 63 President 2/15/83 6,042 (3) (4) (5) --
Penoyer Contracting Co., Inc.
(Contractor)
Edward B. Reighard 84 Retired 2/15/83 5,844 (4) (5) --
Joseph L. Waroquier, Sr. 64 President 5/13/86 11,880 (3) --
Waroquier Coal, Inc.
(Coal Producer)
</TABLE>
Beneficial Ownership of Other Named Executive Officers:
<TABLE>
<S> <C> <C> <C>
William A. Franson Secretary 962 (5) --
CNBFinancial Corporation 2,604 (6)
Executive Vice President
and Cashier Chief Operating
Officer County National Bank
</TABLE>
(1) Information furnished by directors and executive officers.
(2) The shares "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and Exchange Commission and include shares as
to which the individual has or shares voting or investment power on the
Record Date or has the right to acquire beneficial ownership within 60 days
after the Record Date.
(3) This figure includes joint ownership with relatives as to which the director
has joint voting or investment powers.
(4) This figure includes indirect ownership of shares as to which the director
has voting or investment powers.
(5) This figure includes shares through a trust or pension plan agreement.
(6) This figure includes shared voting rights for shares indirectly held in
trust for the Bank's 401(k) employees' savings plan.
2. AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES
OF COMMON STOCK AND THE PAR VALUE OF COMMON STOCK
The Board of Directors proposes and recommends an amendment to Article 5 of
the Articles of Incorporation to increase the number of shares of Corporation
common stock to 10,000,000 shares and to reduce the par value of the common
stock to $1.00 per share. The affirmative vote of the holders of a majority of
the outstanding shares of common stock entitled to vote thereon is necessary for
adoption of this proposal.
The action recommended by the Board of Directors and unanimously approved at
its board meeting on January 27, 1998 is an amendment to Article 5 of the
Articles of Incorporation so as to read in its entirety as follows:
"The total number of authorized shares shall be 10,000,000 with a par value
of $1.00. The shares of the Corporation shall not have preemptive rights
but shall have the right of cumulative voting in regard to the election of
directors only as hereinafter set forth."
The text of Article 5 in its present form, which would remain in effect if
this proposal is not approved, is as follows:
"The total number of authorized shares shall be 2,500,000 with a par value
of $4.00. The shares of the Corporation shall not have preemptive rights
but shall have the right of cumulative voting in regard to the election of
directors only as hereinafter set forth."
The purpose of increasing the number of shares of common stock is to provide
additional shares which could be used for proper corporate purposes including
acquisitions, financing, stock dividends, stock splits, equity based employment
benefit plans and other purposes, some of which activities will not require
further shareholder approval. Unless required by applicable law or regulation,
it is not expected that further shareholder approval will be sought prior to
issuance. This availability would enable the Board of Directors and management
to act with flexibility and dispatch when favorable opportunities arise to
expand or strengthen the corporation's business.
Each additional share of common stock authorized by the proposed amendment
will have the same rights and privileges as each share of common stock currently
authorized and outstanding. Shareholders of common stock have no preemptive
rights to receive or purchase any shares of the presently authorized but
unissued common stock or to the shares authorized by the proposed amendment.
4
<PAGE>
On the record date, 1,728,000 of the authorized 2,500,000 shares of common
stock were issued. The Board of Directors has authorized a two-for-one stock
split to shareholders of record on April 30, 1998 should the shareholders
authorize this item 2. AMENDMENT TO THE ARTICLES OF INCORPORATION at this annual
meeting. This stock split would require 1,728,000 shares resulting in total
shares issued of 3,456,000 shares. Except for the 2 for 1 stock split, the
Corporation has no present plans, arrangements, agreements or understandings,
written or oral, for the issuance of any of the additional shares of common
stock.
The following table reflects the capitalization of the Corporation at December
31, 1997 with the par value of the stock at $4.00 and at $1.00 post split
respectively.
<TABLE>
<CAPTION>
$1.00 Par Value
$4.00 Par Value Split Adjusted
--------------- ---------------
<S> <C> <C>
Common Stock, 1,728,000 shares $ 6,912,000 $ 3,456,000
outstanding at December 31, 1997
Surplus 0 3,456,000
Undivided Profits 34,246,000 34,246,000
--------------- ---------------
$41,158,000 $41,158,000
</TABLE>
The Board of Directors recommends the shareholders vote for the increase in
authorized common stock and the decrease in the par value of the common stock.
3. OTHER MATTERS
The Boards of Directors does not intend to bring any other matters before the
annual meeting and does not know of any matter which anyone proposes to present
for action at the meeting. However, if any other matters properly come before
the meeting, the persons named in the accompanying proxy, or their duly
constituted substitutes acting at the meeting, will be authorized to vote or
otherwise act thereon in accordance with their judgment.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held thirty-three meetings during 1997.
The Board of Directors of the Corporation and the Board of Directors of the
Bank have a number of joint committees that serve both the Corporation and the
Bank. These include an Examining Committee (audit committee), a Personnel
Committee, an Executive Compensation Committee and a Nominating Committee.
The Examining Committee met five times during 1997. This Committee consists of
Edward B. Reighard, Chairman; Dennis L. Merrey; Robert C. Penoyer; Jeffrey S.
Powell; Robert G. Spencer and Joseph L. Waroquier, Sr. It meets quarterly with
the internal auditor and, periodically, with the Corporation's independent
public accountants to review accounting, auditing and financial reporting
matters, including the review of audit plans.
The Personnel Committee met four times in 1997 and consists of Robert G.
Spencer, Chairman; Richard D. Gathagan; Dennis L. Merrey and Peter F. Smith.
This Committee reviews personnel policies and makes recommendations to the
Boards of Directors regarding all salary ranges and benefit programs.
The Executive Compensation Committee consists of William R. Owens, Chairman;
Robert E. Brown; Richard D. Gathagan; Dennis L. Merrey; Peter F. Smith and
Robert G. Spencer. The Committee met eight times during 1997. See "Executive
Compensation - Executive Compensation Committee."
The Nominating Committee met twice during 1997. The Committee consists of
Peter F. Smith, Chairman; Robert E. Brown; Richard D. Gathagan; Jeffrey S.
Powell and L.E. Soult, Jr. Its function is to recommend candidates for
nomination for election to the Board of Directors. Any shareholder who wishes to
have the committee consider a candidate should submit the name of the candidate,
along with any biographical or other relevant information that the shareholder
wishes the Committee to consider and the consent of such candidate evidencing
his or her willingness to serve as a director, to the President of the
Corporation at the address appearing on the first page of this Proxy Statement.
Any nomination is subject to Article V, Section 2 of the By-Laws.
Directors L.E. Soult, Jr., James P. Moore and William F. Falger are ex officio
members of all committees if not otherwise named, except the Examining Committee
as to Messrs. Moore and Falger.
5
<PAGE>
EXECUTIVE COMPENSATION
Report of the Executive Compensation Committee
The Executive Compensation Committee ("Committee") is composed of six non-
employee, independent directors selected from the Boards of Directors of the
Corporation and the Bank.
The Committee has the overall responsibility for reviewing, establishing, and
administering policies which govern executive compensation programs. In
discharging these responsibilities, the Committee seeks to maintain a position
of "equity" with respect to the balancing of interests of the shareholder with
those of the executive officers.
At the request of the Committee, executive officers of the Corporation or Bank
may be present at Committee meetings for discussion purposes. However, they have
no involvement in the decisions made by the Committee, nor do they have a vote
on any matters brought before the group. Independent, outside advisors and
consultants may also be used from time to time by the Committee in a similar
manner.
Executive Compensation Philosophy & Policy
The written executive compensation philosophy is an integral part of the
Executive Compensation Program since it reflects the attitudes of the Board(s)
of Directors toward program participation, peer group comparisons, plan design,
etc. Within the overall objectives of equity and regulatory compliance, the
philosophy serves to guide the deliberations of the Committee and acts as a
standard against which plan performance may be measured.
Executive compensation programs are designed to encourage executive decisions
and actions that have a positive impact on the Corporation's overall
performance. For that reason, program participation is limited to those
individuals who have the greatest opportunity to influence the achievement of
strategic corporate objectives.
The pay philosophy defines what the organization will pay for, e.g.,
performance, job worth, etc. The Committee has established the following
parameters for the pay philosophy under the current program:
1. Base compensation levels for the Corporation's executive officers that are
competitively set relative to companies in the banking industry of
comparable size within Pennsylvania as well as the United States. The
committee also takes into account individual experience and performance of
executive officers relative to the specific needs of the Corporation.
2. Compensation adjustments that are subjective and discretionary on the part
of the Committee and the Board(s) of Directors. However, these
discretionary adjustments will be made taking into account the overall
performance of the Corporation and the individual performance appraisals of
the executive officers.
3. Incentive compensation that is based on overall bank and individual
performance. This form of compensation is in addition to base salary and is
intended to focus executive management on key performance factors leading
to successful performance by the Corporation.
4. The utilization of "qualified" programs, as defined by the Internal Revenue
Code, where these programs are appropriate in meeting shareholder,
Corporation, and executive officer interests.
This executive compensation philosophy and policy has been developed to help
the Executive Compensation Committee meet the objective of the executive
compensation plan. To the extent necessary, it will be regularly evaluated and
revised in order to meet this objective on an ongoing basis.
Executive Compensation Programs
The primary components of the executive compensation program are base salaries
and base benefits. Base salaries are defined by taking into account the job
responsibilities of the positions, characteristics of the organization, and
comparative salary information compiled and reviewed on an annual basis. The
Committee regularly reviews the job assignments of the executive officers and
analyzes a variety of annually-developed compensation salary survey information
in order to maintain executive officer salaries that are equitable and
competitive.
Executive officers participate in the normal benefits programs available to
employees of the Bank, e.g., pension plan, savings plan, group life, disability,
hospitalization, major medical plans, etc. which do not discriminate in favor of
officers and are available to all salaried employees.
In 1995, the Committee established an Executive Incentive Compensation Plan
for executive officers. The purpose of this plan is to provide a direct
financial incentive in the form of an annual cash bonus to executives to achieve
the Corporation's annual goals set at the beginning of the fiscal year. The
primary measure utilized in the plan is return on average assets with additional
measures for asset growth, operating efficiency, loan growth and quality and
trust asset growth and profitability.
Beyond the payment of dues to certain service and social organizations,
executive officers do not receive any additional perquisites.
6
<PAGE>
Chief Executive Officer Compensation
The 1997 salary for the Corporation's Chief Executive Officer, James P. Moore,
was $164,800.00 which was an increase of 3.5% over 1996. In setting Mr. Moore's
salary, the Committee considered the Corporation's prior year and long-term
performance along with Mr. Moore's role in the achievement of these performance
levels. A $4,000 incentive bonus was paid based upon specific achievements
during 1996 within the executive compensation incentive program established by
this Committee.
1997 Executive Compensation Actions
The Committee utilizes a peer group of thirty single bank holding companies
and banks in Pennsylvania for comparison purposes when evaluating the
Corporation's financial performance and the salary and benefits of the three
highest paid executives. This peer group was also utilized to establish the
performance targets under the 1997 Executive Incentive Compensation Plan.
Incentive awards for 1997 are determined and awarded in the first quarter of the
following year.
Submitted by the Executive Compensation Committee:
William R. Owens, Chairman Richard D. Gathagan Peter F. Smith
Robert E. Brown Dennis L. Merrey Robert G. Spencer
L.E. Soult, Jr., Ex Officio
Summary Compensation Table
The following table shows, for the fiscal years ended December 31, 1995, 1996
and 1997, the cash compensation paid by the Corporation and its subsidiaries, as
well as certain other compensation paid or accrued for those years, to each
executive officer of the Corporation whose total annual salary and bonus
exceeded $100,000 for any of these years.
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------------------
Annual Compensation Awards Payouts
- --------------------------------------------------------------------------------------------------------------------------
Name and Other Annual Restricted Options/ LTIP All Other
Principal Salary Bonus Compensation Stock Award(s) SARs Payouts Compensation
Position Year ($) ($) [3] ($) [1] ($) (#) ($) ($) [2]
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James P. Moore, 1997 164,800 4,000 0 0 0 0 22,410
President and CEO of 1996 159,300 0 0 0 0 0 21,031
CNB Financial Corp. 1995 155,330 0 0 0 0 0 21,116
Chairman of the Board of
County National Bank
- --------------------------------------------------------------------------------------------------------------------------
William F. Falger, 1997 133,900 13,000 0 0 0 0 18,312
Executive Vice- 1996 128,949 0 0 0 0 0 18,073
President of 1995 122,240 0 0 0 0 0 15,694
CNB Financial Corp.
President and CEO of
County National Bank
- --------------------------------------------------------------------------------------------------------------------------
William A. Franson, 1997 108,150 9,188 0 0 0 0 14,256
Secretary of 1996 104,550 0 0 0 0 0 13,997
CNB Financial Corp. 1995 100,750 0 0 0 0 0 12,232
Executive Vice President,
Cashier and COO of
County National Bank
- --------------------------------------------------------------------------------------------------------------------------
Carl J. Peterson, 1997 92,185 13,984 0 0 0 0 11,688
Assistant Secretary 1996 89,149 0 0 0 0 0 11,353
CNB Financial Corp. 1995 86,997 0 0 0 0 0 10,811
Senior Vice President,
& Trust Officer of
County National Bank
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
[1] It is the policy of the Corporation to pay dues to certain service and
social organizations for the executive officers. The incremental costs of these
items were minimal and did not exceed the lesser of 10% of total compensation or
$50,000 for any named executive officer.
[2] Figures stated in this column include contributions to the County National
Bank Money Purchase Pension Plan, 401(K) Savings Plan and term life insurance
premiums.
[3] All bonuses paid in 1997 were the result of incentive compensation awards
earned in 1996.
7
<PAGE>
Pension Plan
The Corporation does not have a retirement plan. The Bank maintains a non-
contributory pension plan called The County National Bank Money Purchase Pension
Plan. All active officers and employees, 21 years of age or over, employed by
the Bank for one year, are participants in the Plan. The salary contribution
per participant is 9% of total salary plus 5.7% of salary in excess of $65,400,
but subject to a $160,000 salary limit. The total annual contribution to the
retirement plan for the year 1997 was $373,812. Employees become vested after
five years service with the Bank. Directors other than active officers are not
covered by any retirement plan. Retirement funds are held in trust for each
employee. Benefits are determined by the employer's contribution over the years
and the plan earnings. At the time of retirement, the total value is distributed
in one lump sum.
Savings Plan
The County National Bank Savings Plan is qualified under Section 401(k) of the
Internal Revenue Code. Participants can elect to deposit up to 10% of their
annual salary into the Plan. Under the Tax Reform Act, participants'
contributions were limited, during 1997, to $9,500.00, and also subject to the
$160,000 compensation limit. All officers and employees of County National Bank,
including those named in the Summary Compensation Table set forth herein, are
eligible to participate in the Plan. The Bank makes matching contributions equal
to 25% of the participant's contribution up to 4% of the participant's salary in
the form of corporation stock. The Bank's total contribution to the savings plan
was $31,334 for the year. All participant's contributions, at the participant's
election, are invested among several mutual fund options maintained by the Bank
as Trustee during 1997. The Bank's contributions to the Savings Plan in 1997 for
the accounts of the officers named in the Summary Compensation Table set forth
herein is included as All Other Compensation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Compensation Committee is composed of Chairman Owens and Messrs.
Brown, Gathagan, Merrey, Smith and Spencer. Mr. Owens was formally an officer of
the Corporation and the Bank. Mr. Smith is general counsel for the Corporation
and the Bank.
COMPENSATION OF DIRECTORS
Members of the Corporation's Board of Directors who are not employees of the
Corporation or the Bank are paid a quarterly retainer fee of $125 and also $150
for attendance at each board and committee meeting. Members of the Bank's Board
of Directors who are not employees of the Corporation or the Bank were paid $325
for attendance at each Board meeting and $200 for attendance at each committee
meeting. Committee Chairpersons are paid $250 for each meeting attended. Non-
Executive Corporate Board Chairperson is also paid a $1,250 quarterly retainer
fee.
CERTAIN TRANSACTIONS
Directors and officers of The Corporation and certain business organizations
and individuals associated with them have been customers of and have had normal
banking transactions with County National Bank. All such transactions have been
made in the ordinary course of business, on terms substantially equivalent,
including interest rates and collateral, to those which prevailed in similar
transactions with unrelated persons and do not involve more than the normal risk
of collectability or present other unfavorable features.
From time to time, The Corporation and the Bank may purchase materials or
services from directors or from companies with which directors are associated.
The disclosures that apply in this regard appear under the section of
Compensation Committee Interlocks.
DIRECTORS DEFERRED COMPENSATION PLAN
On December 16, 1997, the directors approved a Directors Deferred Compensation
Plan whereby, annually, outside directors can elect the level of participation
of their director compensation to be deferred. All deferred compensation will be
a general liability of this Corporation and Bank, respectively. This is a
phantom stock plan whereby any appreciation or depreciation in each directors
account value will reflect precisely CNB Financial Corporation common stock
performance including cash dividends. Deferred fees will serve as a funding
source for a trust. Investments are expected to closely match the appreciated or
depreciated liability. Any variance will be adjusted by an expense or gain to
the Corporation or Bank. In addition to the tax advantages to the directors,
they are each additionally incented toward the general performance of the
Corporation's common stock. Accounting treatment for this plan is subject to the
Financial Accounting Standards Board Statement #123.
8
<PAGE>
PERFORMANCE GRAPH
The following graph illustrates the performance pattern of the common stock of
CNB Financial Corporation as compared to the NASDAQ bank stock index and all
NASDAQ U.S. stocks. The index values are market weighted, dividend reinvestment
numbers which measure the total return for investing $100 five years ago. This
index meets all SEC requirements for showing dividend reinvestment share
performance over a five year period. The bank index values qualify as industry
specific peer groups for reporting purposes and measure the return to an
investor for placing $100 into a basket of stocks and letting that money set
with all dividends being reinvested into the stock paying the dividend.
- --------------------------------------------------------------------------------
CNB Financial Corporation
Stock Price Performance
Period Ending
<TABLE>
<CAPTION>
12-31-92 12-31-93 12-31-94 12-31-95 12-31-96 12-31-97
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CNB Financial Corp. $ 100.00 $ 119.39 $ 136.18 $ 218.28 $ 215.02 $ 339.42
- ---------------------------------------------------------------------------------------
NASDAQ - TOTAL US $ 100.00 $ 114.80 $ 112.21 $ 158.70 $ 195.19 $ 239.53
- ---------------------------------------------------------------------------------------
NASDAQ BANK INDEX $ 100.00 $ 114.04 $ 113.63 $ 169.22 $ 223.41 $ 377.44
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
</TABLE>
SNL Securities LC
Charlottesville, VA
9
<PAGE>
CONCERNING THE INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has engaged the firm of Ernst & Young LLP, Pittsburgh,
PA Certified Public Accountants as independent auditors to examine the financial
statements of the Corporation and its subsidiary for the year ending December
31, 1998. The firm has acted in this capacity since August 24, 1993.
Representatives of the accounting firm are expected to be present at the Annual
Meeting and will have an opportunity to make a statement and answer appropriate
questions regarding the Corporation and the Bank.
SHAREHOLDER PROPOSALS
The Board of Directors will consider shareholder proposals for the 1999 annual
meeting. Any shareholder wishing to make a proposal to be considered for
inclusion in the proxy statement for the 1999 annual meeting of shareholders
should forward a written copy of such proposal to James P. Moore, President, CNB
Financial Corporation, P.O. Box 42, Clearfield, PA 16830 by certified mail,
return receipt requested, no later than November 24, 1998.
By Order of the Board of Directors,
/s/ William A. Franson
William A. Franson
Secretary
Clearfield, Pennsylvania
March 26, 1998
10
<PAGE>
PROXY [LOGO OF CNB PROXY
FINANCIAL COROPORATION]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING
OF SHAREHOLDERS APRIL 21, 1998
The undersigned hereby appoint Mr. L. Albert Hubler and Mr. J. Carl Ogden and
each of them the undersigned's true and lawful attorneys and proxies (with full
power of substitution in each) to vote all stock of CNB Financial Corporation
standing in the undersigned's name(s) at the Annual Meeting of Shareholders to
be held at the office of CNBFinancial Corporation/County National Bank, One
South Second Street, Clearfield, PA 16830 on April 21, 1998 or at any
adjournment thereof.
1. ELECTION OF DIRECTORS:
To elect the persons named below to serve as Class 2 Directors until the Annual
Meeting in the year 2001 or until their successors are duly elected.
[_] FOR [_] FOR [_] WITHHOLD
all nominees all nominees for all nominees
except those
which I/we with-
hold authority
*(see INSTRUCTION
below)
Richard D. Gathagan William R. Owens Robert G. Spencer
Dennis L. Merrey Carl J. Peterson
*INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE(S), WRITE NOMINEE'S NAME(S)
IN THIS SPACE.
________________________________________________________________________________
________________________________________________________________________________
2. AMENDMENT TO ARTICLES OF INCORPORATION: To increase the number of authorized
shares of common stock to 10,000,000 shares and to decrease the par value to
$1.00 per share.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Transact such other business as may properly come before said meeting. IF
ANY OTHER BUSINESS IS PRESENTED AT SAID MEETING, THE NAMED PROXIES ARE
AUTHORIZED TO VOTE THEREON AT THEIR DISCRETION.
This proxy confers discretionary authority to vote FOR the proposals in the
absence of contrary directions. The action of a majority of said attorneys and
proxies present and acting at said meeting or adjournment (or the one thereof so
present and acting if only one shall be present and acting) shall be the action
of said attorneys and proxies.
Number of shares
of record on
March 11, 1998 Dated __________________________ 19_____
_____________________ ________________________________________
Signature
________________________________________
Signature
Please sign exactly as printed hereon. When signing as attorney, executor,
administrator, trustee, guardian, etc., give full title as such. If stock is
held jointly, each joint owner should sign.
