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 Sec. 240.14a-11(c) or
Sec. 240.14a-12
TOWER BANCORP, INC.
-------------------------------------------------
(Name of Registrant as Specified in Its Charter)
SHUMAKER WILLIAMS, P.C.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and O-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 O-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 O-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:
<PAGE>
TOWER BANCORP, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 2, 1997
TO THE SHAREHOLDERS OF TOWER BANCORP, INC.:
Notice is hereby given that the Annual Meeting of
Shareholders of Tower Bancorp, Inc. (the "Corporation") will be
held at 1:30 p.m., prevailing time, on Wednesday April 2, 1997,
at the Rescue Hose Company Special Events Center, 407 South
Washington Street, Greencastle, Pennsylvania 17225, for the
following purposes:
1. To elect two (2) Class A Directors to serve for a
three (3) year term and until their successors are elected;
2. To ratify the selection of Smith Elliott Kearns &
Company, LLC certified Public Accountants, as the independent
auditors for the Corporation for the year ending December 31,
1997; and
3. To transact such other business as may properly come
before the Annual Meeting and any adjournment or postponement
thereof.
In accordance with the By-laws of the Corporation and action
of the Board of Directors, only those shareholders of record at
the close of business on February 15, 1997, will be entitled to
notice of and to vote at the Annual Meeting and any adjournment
or postponement thereof.
A copy of the Corporation's Annual Report for the fiscal
year ended December 31, 1996, is enclosed with this Notice.
Copies of the Corporation's Annual Report for the 1995 fiscal
year may be obtained by contacting Jeff B. Shank, President,
Tower Bancorp, Inc., P.O. Box 8, Center Square, Greencastle,
Pennsylvania 17225; (717) 597-2137.
You are urged to mark, sign, date and promptly return your
proxy in the enclosed envelope so that your shares may be voted
in accordance with your wishes and in order that the presence of
a quorum may be assured. The prompt return of your signed proxy,
regardless of the number of shares you hold, will aid the
Corporation 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 the Secretary of the Corporation.
By Order of the Board of Directors,
/s/ Jeff B. Shank, President
----------------------------------
Jeff B. Shank, President
March 3, 1997
<PAGE>
TOWER BANCORP, INC.
PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON APRIL 2, 1997
GENERAL
Introduction, Date, Time and Place of Annual Meeting
- ----------------------------------------------------
This proxy statement is furnished for the solicitation by
the Board of Directors of Tower Bancorp, Inc. (the
"Corporation"), a Pennsylvania business corporation, of proxies
to be voted at the Annual Meeting of Shareholders of the
Corporation to be held on Wednesday, April 2, 1997, at 1:30 p.m.,
prevailing time, at the Rescue Hose Company Special Events
Center, 407 South Washington Street, Greencastle, Pennsylvania
17225, and at any adjournment or postponement of the Annual
Meeting.
The main office of the Corporation is located at Center
Square, Greencastle, Pennsylvania 17225. The telephone number
for the Corporation is (717) 597-2137. The Corporation has one
wholly-owned subsidiary, The First National Bank of Greencastle
(the "Bank"). All inquiries should be directed to Jeff B. Shank,
President of the Corporation and the Bank.
Solicitation and Voting of Proxies
- ----------------------------------
This proxy statement and the enclosed form of proxy (the
"Proxy") are first being sent to shareholders of the Corporation
on or about March 3, 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
shareholders. Any proxy not specifying to the contrary will be
voted: for the election of the nominees for directors named
below; for the ratification of the selection of Smith Elliott
Kearns & Company, LLC as the independent auditors for the
Corporation for the year ending December 31, 1997; and for the
transaction of such other business as may properly come before
the Annual Meeting and any adjournment or postponement thereof.
Execution and return of the enclosed proxy will not affect a
shareholder's right to attend the Annual Meeting and vote in
person, after giving written notice to the Secretary of the
Corporation. A shareholder who returns a proxy may revoke it at
any time before it is voted by delivering written notice of
revocation to John McDowell, Secretary of Tower Bancorp, Inc., at
P.O. Box 8, Greencastle, Pennsylvania 17225.
The cost of preparing, assembling, printing, mailing and
soliciting proxies, and any additional material that the
Corporation may furnish shareholders in connection with the
Annual Meeting, will be borne by the Corporation. In addition to
the use of the mails, certain directors, officers and employees
of the Corporation and of the Bank may solicit proxies
personally, by telephone, telegraph and telecopier. Arrangements
will be made with brokerage houses and other custodians, nominees
and fiduciaries to forward proxy solicitation material to the
beneficial
- 1 -
<PAGE>
owners of stock held of record by the persons and, upon request
therefor, the Corporation will reimburse them for their
reasonable forwarding expenses.
Revocability of Proxy
- ---------------------
A shareholder 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 McDowell, Secretary of Tower Bancorp, Inc.,
at P.O. Box 8, Greencastle, Pennsylvania 17225; (2) by executing
a later-dated proxy and giving written notice thereof to the
Secretary of the Corporation; or (3) by voting in person after
giving written notice to the Secretary of the Corporation.
Record Date, Voting Securities, and Quorum
- ------------------------------------------
At the close of business on February 15, 1997, the
Corporation had outstanding 840,213 shares of common stock, par
value $2.50 per share, the only issued and outstanding class of
stock (the "Common Stock"). The record date for the Annual
Meeting is February 15, 1997. Only holders of Common Stock of
record at the close of business on February 15, 1997, will be
entitled to notice of and to vote at the Annual Meeting. The
Corporation is also authorized to issue 500,000 shares of
Preferred Stock, par value $2.50 per share, none of which have
been issued. On all matters to come before the Annual Meeting,
each share of Common Stock is entitled to one vote. Cumulative
voting rights do not exist with respect to the election of
directors.
Under Pennsylvania law and the By-laws of the Corporation,
the presence of a quorum is required for each matter to be acted
upon at the Annual Meeting. The presence, in person or by proxy,
of shareholders entitled to cast at least a majority of the votes
that all shareholders are entitled to cast constitutes a quorum
for the transaction of business at the Annual Meeting. Votes
withheld and abstentions will be counted in determining the
presence of a quorum. 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 quorum, the two (2) nominees for
director receiving the highest number of votes cast by
shareholders entitled to vote for the election of directors shall
be elected. Votes withheld from a nominee and broker non-votes
will not be cast for such nominee.
Assuming the presence of a quorum, the affirmative vote of a
majority of the votes cast by all shareholders entitled to vote
thereon is required for ratification of the selection of the
independent auditors. Abstentions and broker non-votes are not
deemed to constitute "votes cast" and, therefore, do not count
either for or against such ratification. Abstentions and broker
non-votes, however, have the practical effect of reducing the
number of affirmative votes required to achieve a majority for
each matter by reducing the total number of shares voted from
which the required majority is calculated.
- 2 -
<PAGE>
PRINCIPAL BENEFICIAL OWNERS OF THE CORPORATION'S STOCK
Principal Owners
- ----------------
The following table sets forth, as of February 15, 1997, the
name and address of each person who owns of record or who is
known by the Board of Directors to be the beneficial owner of
more than 5 percent (5%) of the Corporation's outstanding Common
Stock. The number of shares beneficially owned by such person
and the percentage of the Corporation's outstanding Common Stock
so owned.
<TABLE>
<CAPTION>
Percent of Outstanding
Number of Shares Common Stock
Name and Address Beneficially Owned<F1> Beneficially Owned
- ------------------ ----------------------- -------------------
<S> <C> <C>
CEDE & Co. 78,343 9.24%
Box #20
Bowling Green Station
New York, NY 10004
Philadep & Co. 54,907 6.47%
1900 Market Street
Philadelphia, PA 19103
First National Bank 51,872<F2> 6.17%
of Greencastle
Trust Department
Center Square
P.O. Box 8
Greencastle, PA 17225
- --------------------
<FN>
<F1> The securities "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 and may include securities
owned by or for the individual's spouse and minor children and
any other relative who has the same home, as well as securities
to which the individual has or shares voting or investment power
or has the right to acquire beneficial ownership within 60 days
after February 15, 1997. Beneficial ownership may be disclaimed
as to certain of the securities.
<F2> Does not include 33,001 shares in which the Bank shares
voting authority with other fiduciaries.
</FN>
</TABLE>
Beneficial Ownership By Officers, Directors and Nominees
- --------------------------------------------------------
The following table sets forth, as of February 15, 1997, and
from information supplied by the respective persons, the amount
and the percentage, if over one percent (1%), of the Common Stock
of the Corporation beneficially owned (as defined in footnote No.
1, above) by each director, each nominee for director and all
officers and directors of the Corporation as a group. Unless
otherwise noted shares are held directly by the respective
individual.
- 3 -
<PAGE>
<TABLE>
<CAPTION>
Name of Individual or Amount and Nature of
Identity of Group Beneficial Ownership Percent of Class<F7>
- ------------------- ------------------- --------------------
<S> <C> <C>
Current Class A Directors and
Nominees for Class A Director
- -----------------------------
(to serve until 2000)
Harold C. Gayman 7,136<F1> --
James H. Craig, Jr. 2,006<F2> --
Class B Directors
- -----------------
(to serve until 1998)
Nelson M. Elliott 8,410<F2> 1.0%
Betty J. Lehman 5,324<F3> --
Jeff B. Shank 5,207<F4> --
Nominees for Class C Director
- -----------------------------
(to serve until 1999)
Robert L. Pensinger 3,220<F5> --
Kermit G. Hicks 14,046<F6> 1.7%
Lois Easton 2,680<F2> --
All Officers, Directors and 51,836 6.2%
Nominees as a Group (11 persons)
- --------------------------------
<FN>
<F1> Includes 3,550 shares held jointly with his spouse. On
January 8, 1997, Mr. Gayman received options to purchase 340
shares under the Directors' Plan. These options are not
exercisable for one year from the date of grant. In addition,
Mr. Gayman has options to purchase 162 shares of Common Stock,
which options are exercisable March 6, 1997. The additional 162
shares were added to the shares currently held by Mr. Gayman and
to total outstanding shares, assuming all exercisable options
were exercised.
- 4 -
<PAGE>
<F2> Holds 162 options to purchase Common Stock, which options
are exercisable March 6, 1997. The additional 162 shares were
added to shares currently held and total outstanding shares,
assuming all exercisable options were exercised. Received options
to purchase 340 shares under the Directors' Plan on January 8,
1997. These options are not exercisable for one year from the
date of grant.
<F3> Includes 3,146 shares held jointly with her spouse. On
January 8, 1997, Ms. Lehman received options to purchase 340
shares under the Directors' Plan. These options are not
exercisable for one year from the date of grant. In addition,
Ms. Lehman has options to purchase 162 shares of Common Stock,
which options are exercisable March 6, 1997. The additional 162
shares were added to the shares currently held by Ms. Lehman and
to total outstanding shares, assuming all exercisable options
were exercised.
<F4> Includes 4,004 shares held jointly with his spouse, 37
shares held by each of his two children and 889 shares purchased
and held by the ESOP that are allocated to Mr. Shank's account
and over which he exercises investment control. Mr. Shank has
exercisable options to purchase 340 shares. In calculating
percent of class, the option shares were added to the shares
currently held by Mr. Shank and to total outstanding shares,
assuming all exercisable options were exercised.
<F5> Includes 1,096 shares held with Mr. Pensinger's spouse
and 104 shares held by Mr. Pensinger's spouse. On January 8,
1997, Mr. Pensinger received options to purchase 340 shares under
the Directors' Plan. These options are not exercisable for one
year from the date of grant. In addition, Mr. Pensinger has
options to purchase 162 shares of Common Stock, which options are
exercisable March 6, 1997. The additional 162 shares were added
to the shares partly held by Mr. Pensinger and to total
outstanding shares, assuming all exercisable options were
exercised.
<F6> Includes 3,630 shares held jointly with Mr. Hicks spouse
and 378 shares held in the Hicks Chevrolet, Inc. Profit Sharing
Plan. Mr. Hicks has exercisable options to purchase 664 shares.
In calculating the percent of class, the option shares were added
to shares currently held by Mr. Hicks and to total outstanding
shares, assuming all outstanding options held by Mr. Hicks were
exercised. On January 8, 1997, Mr. Hicks received options to
purchase 340 shares under the Directors' Plan. These options are
not exercisable for one year from the date of grant. In
addition, Mr. Hicks has options purchase 162 shares of Common
Stock, which options are exercisable March 6, 1997. The
additional 162 shares were added to the shares partly held by Mr.
Hicks and to total outstanding shares, assuming all exercisable
options were exercised.
<F7> The percent of class assumes all outstanding options
issued to the directors and officers have been exercised and,
therefore, on a pro forma basis, 841,687 shares of Common Stock
outstanding.
</FN>
</TABLE>
ELECTION OF DIRECTORS
Two (2) Class A Directors are to be elected at the Annual
Meeting. Each director will serve for a three (3) year term and
until his or her successor is elected. Unless otherwise
instructed, the Proxyholders will vote the proxies received by
them for the election of the two (2) nominees named below. 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 Corporation shall determine. The Board of
Directors has no reason to believe the nominees named will be
unable to serve if elected. Any vacancy occurring on the Board
of Directors of the Corporation for any reason may be filled by a
majority of the directors then in office until the expiration of
term of the vacancy.
- 5 -
<PAGE>
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 shareholder
owns ten shares of Common Stock, he or she may cast up to ten
votes for each of the two (2) directors in the class to be
elected.
INFORMATION AS TO NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS
The following table contains certain information, as of
February 17, 1997, with respect to current directors, nominees
for director and certain officers of the Corporation.
<TABLE>
<CAPTION>
Principal Occupation
for the Past Five Years
and Position Held with the Since
Name Age Corporation and the Bank Corp/Since
---- --- ------------------------ ----------
<S> <C> <C> <C>
NOMINEES FOR CLASS A DIRECTORS
TO SERVE UNTIL 2000 AND
CURRENT CLASS A DIRECTORS
- -------------------------
Harold C. Gaymen 70 Dairy Farm 1983/1980
James H. Craig 63 Dentist 1990/1990
CLASS B DIRECTORS
TO SERVE UNTIL 1998
- -------------------
Nelson M. Elliott 74 Retired Appliance 1983/1963
Dealer
Betty J. Lehman 71 Retired Vice 1985/1985
President of the
Bank
Jeff B. Shank 41 President of the 1992/1992
Corporation and the
Bank
CLASS C DIRECTORS
TO SERVE UNTIL 1999
- -------------------
Robert L. Pensinger 63 Insurance Agent 1987/1987
State Farm
Kermit G. Hicks<F1> 61 Automobile Dealer- 1983/1969
President, Hicks
Chevrolet, Inc.
Lois Easton 61 Retired Marketing 1996/1996
Manager of the Bank
- -----------------
- 6 -
<PAGE>
<FN>
<F1> Mr. Hicks serves as a member of the Board of Directors of
Accel International Corp, a Company with a class of Securities
registered pursuant to Section 12 of the Securities Exchange Act
of 1934, as amended.
</FN>
</TABLE>
Every member of the Board of Directors is a member of each
committee of the Bank. The directors of the Corporation are also
directors of the Bank. Committee members receive no fee for
attendance at Committee meetings. To date, none of the
Committees have designated a Chairman.
Asset/Liability Committee of the Bank: This Committee reviews the
investment portfolio of the Bank and the budget, and oversees
implementation of budget guidelines and expenditures. The
Committee meets monthly.
Loan Committee of the Bank: This Committee reviews lines of
credit and substandard loans and makes recommendations to the
Board of Directors with respect thereto. The Committee meets
monthly.
Trust Committee of the Bank: This Committee reviews all accounts
and investments held in the Bank's Trust Department. The
Committee reviews Trust Department policies and procedures and
determines that the Trust Department is administered in
accordance with Federal Regulations. The Committee meets
quarterly.
Executive Committee of the Bank: This Committee consists of the
Chairman, Vice-Chairman, President, Chief Executive Officer and
Senior Vice President of the Bank. This Committee meets when
necessary, at the request of the Chairman, Vice-Chairman or
President of the Bank to discuss and prepare recommendations on
various business matters prior to the regular Board of Directors
meeting. The Committee met three (3) times during 1996.
Audit Committee of the Bank: This Committee reviews the annual
audit and reports submitted by the independent auditors. The
Committee also reviews the performance of internal auditing
functions and reviews examination reports from the various
regulatory agencies. The Committee meets quarterly.
Trust Audit Committee: This Committee determines that the Bank's
fudiciary activities comply with policies established by the
Board of Directors or the Trust Committee. This Committee met
once during 1996.
During 1996, the directors of the Corporation held 7
meetings and the directors of the Bank held 52 meetings. Each of
the directors attended at least 75 percent (75%) of the combined
total number of meetings of the Boards of Directors and of the
Committees.
The Corporation does not have a standing nomination and
compensation committee. A shareholder 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 the
President of the Corporation in
- 7 -
<PAGE>
accordance with Section 10.1 of the Corporation's By-Laws. Any
shareholder who intends to nominate any candidate for election to
the Board of Directors must notify the Secretary of the
Corporation in writing not less than forty-five (45) days prior
to the date of any meeting of shareholders called for the
election of directors.
EXECUTIVE COMPENSATION
Shown below is information concerning than annual
compensation for services in all capacities to the Corporation
for the fiscal years ended December 31, 1996, 1995 and 1994 of
those persons who were, as of December 31, 1996 (i) the Chief
Executive Officer, and (ii) the four (4) other most highly
compensated Executive Officers of the Corporation to the extent
that such persons total annual salary and bonus exceeded
$100,000:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
-------------------
(a) (b) (c) (d) (e)
Other
Name Other
and Annual
Principal Salary Bonus Compen-
Position Year ($) ($) sation
- --------- ---- ------ ----- -------
<S> <C> <C> <C> <C>
Jeff B. Shank 1996 81,000 20,000 9,800
President and 1995 75,000 20,000 9,800
Chief Executive 1994 70,000 10,000 9,800
Officer
<CAPTION>
Long-Term Compensation
----------------------
Awards Payouts
(a) (f) (g) (h) (i)
All
Name Restricted Other
and Stock Options/ Compen-
Principal Awards SARs Payouts sation
Position ($) (#)<F1> ($) ($)<F2>
- --------- --------- -------- ----- --------
<S> <C> <C> <C> <C>
Jeff B. Shank -- 324 -- 18,890
President and -- 144<F1> -- 17,357
Chief Executive -- -- -- 13,909
Officer
- --------------------
<FN>
<F1> Adjusted to reflect two for one stock split declared
April 3, 1996, and payable May 15, 1996.
<F2> Includes ESOP, profit sharing, and pension plan
contributions.
</FN>
</TABLE>
Options Grants and Fiscal Year End Values
- -----------------------------------------
The following table shows all grants in 1996 of stock
options to the Executive Officers named in the summary
compensation table above.
- 8 -
<PAGE>
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
------------------------------------
<CAPTION>
<S> <C> <C> <C>
Number of % of
Securities Total
Underlying Options/SARS Exercise
Options/SARS Granted to or Base
Granted Employees In Price
Name (#)<F1> Fiscal Year ($/Sh)
- ---- ------------ ------------ --------
Jeff B. Shank 324 100% $1/sh
President and
CEO
<S> <C> <C>
Expiration Grant Date
Name Date Present Value ($)
- ---- ---------- -----------------
Jeff B. Shank None $10,854
President and CEO
- -----------------------
<FN>
<F1> All options were granted on January 3, 1996, and became
exercisable on the same day with no vesting schedule or
expiration date.
</FN>
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<S> <C> <C>
Shares Acquired
Name On Exercise (#) Value Realized($)
---- --------------- -----------------
Jeff B. Shank 324 $10,670
President/CEO
<S> <C> <C>
Value of
Number of Unexercised
Securities Underlying In-the-Money
Unexercised Options/ Options/SARs at
SARs at FY-End(#) FY End($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
---- ------------- -------------
Jeff B. Shank -0-/-0- -0-/-0-
President/CEO
- ------------------------
</TABLE>
Profit Sharing Plan
- -------------------
The Bank maintains a profit-sharing plan that generally
covers all employees who have completed one (1) year of service
and attained the age of twenty (20). Contributions to the plan
are based on Bank performance as a percentage of assets and are
computed as a percentage of the participant's total earnings.
The payment of benefits to participants is made at death,
disability, termination or retirement. Contributions to the plan
for all employees charged to operations during 1996 amounted to
$63,255.00.
- 9 -
<PAGE>
Employee Stock Option Plan
- --------------------------
The Bank maintains an Employee Stock Option Plan that
generally covers all employees who have completed one (1) year of
service and attained the age of twenty (20). Contributions to
the Plan are based on Bank performance as a percentage of assets
and are computed as a percentage of the participants' total
earnings. The payment of benefits to participants is made at
death, disability, termination or retirement. Contributions to
the Plan for all employees charged to operations during 1996
amounted to $126,510.00.
Insurance
- ---------
The Bank also maintains a group health, accident, and life
insurance plan that is generally available to all employees. The
aggregate amount of personal benefits to any one person did not
exceed $5,000.
The Bank maintains an executive supplemental insurance plan
for certain key executives designated by the Executive Committee
of the Board. This plan provides payments after retirement which
supplement the Bank's pension plan and provides certain life
insurance benefits. The deferred payments will be paid from the
general funds of the Bank; however, the Bank purchases and is the
beneficiary of insurance on the lives of participants, the
proceeds of which are used to help recover the net after-tax cost
of the benefits and insurance premiums paid. Premiums may also
be offset by borrowing against the cash values of the insurance
policies. At December 31, 1996, these policies had a net
accumulated cash value of $780,502.00.
Compensation of Directors
- -------------------------
During 1996, the Bank's Board of Directors held 52 meetings.
Directors receive $150 for each meeting they attend. Each
director is permitted four (4) absences each year, and will not
receive the $150 meeting fee for any meeting missed in excess of
four (4) meetings per year. In addition, each director receives
a fee of $2,000 per year, payable in installments of $500 each
quarter. The Chairman of the Board receives $950 per quarter.
Other than the supplemental insurance plan described below, there
are no other special arrangements with any directors. In 1996,
the Board of Directors of the Bank received $56,675.00, in the
aggregate, for all Board of Directors meetings attended and all
fees paid.
The Bank maintains a supplemental insurance plan for
directors pursuant to which a director may elect to defer receipt
of a portion of fees for Board Meetings for at least four (4)
years or until he reaches age 65, whichever is later. An amount
equal to fees waived in addition to interest at an annual rate of
10 percent (10%) per year will be paid to each participating
director or his designated beneficiary during a period of 10
years after the director reaches age 65. Fees and interest paid
by the Bank will be recovered through insurance policies on the
lives of
- 10 -
<PAGE>
participating directors. Funds from the deferred fees of a
participating director will be used to reimburse the Bank for the
costs of the premium for the insurance policies. The cost of the
insurance premiums in 1996 was $31,129.
Pension Plan
- ------------
The Bank maintains a non-contributory target benefit pension
plan with employer contributions being based on a pension formula
which targets a certain monthly benefit for each plan participant
at retirement. This target benefit becomes the basis for a
contribution to the plan for each eligible participant. Once
determined, these contributions are placed into an individual
account for each participant and accumulated with interest
earnings each year. The ultimate benefit payable to each
employee under this pension plan is the total account balance of
the employee as of their respective retirement date. The normal
retirement date for employees is the later of the participant's
sixty-fifth birthday, or the fifth anniversary of the participant
joining the Plan. An employee must be at least twenty years of
age and have one full year of service to become a plan
participant. Full vesting in accumulated plan benefits occurs at
the end of five years of service there is no partial vesting.
For the 1996 plan year, the estimated employer contribution
for all plan participants was $35,358.00.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION.
The Board of Directors of the Corporation is responsible for
the governance of the Corporation and the Bank. In fulfilling
its fiduciary duties, the Board of Directors acts in the best
interests of the Corporation's shareholders, customers and the
communities served by the Corporation and the Bank. To
accomplish the strategic goals and objectives of the Corporation,
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 Corporation's strategic mission. The Bank
provides compensation to the employees of the Corporation and the
Bank.
The fundamental philosophy of the Corporation's and the
Bank's compensation program is to offer competitive compensation
opportunities for all employees based on the individual's
contribution and personal performance. The objectives of the
compensation program are 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 Corporation, the results of which will be improved
profitability, increased dividends to our shareholders and
subsequent appreciation in the market value of our shares.
- 11 -
<PAGE>
The compensation of the Corporation's and the Bank's top
executives is reviewed and approved annually by the Board of
Directors. As a guideline for review in determining base
salaries, the committee uses, among other things, information set
forth in L.R. Webbers Salary Survey. The Performance Chart uses
a different Peer Group, including only Pennsylvania bank holding
companies not quoted on the NASDAQ because of common industry
issues and competition for the same executive talent group.
Chief Executive Officer
- -----------------------
The Board of Directors has determined that the Chief
Executive Officer's 1996 compensation of 101,000 and a 6 percent
(6%) increase in aggregate Chief Executive Officer compensation
over the 1995 fiscal year is appropriate. There is no direct
correlation between the Chief Executive Officer's compensation,
the Chief Executive Officer's increase in compensation and any of
the above criteria, nor is there any weight given by the Board of
Directors to any of the above specific individual criteria. Such
increase in the Chief Executive Officer's compensation is based
on the committee's subjective determination after review of all
information, including the above, that it deems relevant.
Executive Officers
- ------------------
The Board of Directors has established that the compensation
of the Corporation's and the Bank's executive officers increase
by 6.6 percent (6.6%) over 1995 compensation of $254,800.
Compensation increases were determined by the committee based on
its subjective analysis of the individual's contribution to the
Corporation's strategic goals and objectives. In determining
whether strategic goals have been achieved, the Board of
Directors considers among numerous factors the Corporation's
performance as measured by earnings, revenues, return on assets,
return on equity, market share, total assets and non-performing
loans. Although the performance and increases in compensation
were 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.
In addition to base salary, executive officers of the
Corporation and the Bank may participate currently in the Profit
Sharing Plan and the Employee Stock Option Plan.
Total compensation opportunities available to the employees
of the Bank are influenced by general labor market conditions,
the specific responsibilities of the individual, and the
individual's contributions to the Corporation's success.
Individuals are reviewed annually on a calendar year basis. The
Bank strives to offer compensation that is competitive with that
offered by employers of comparable size in our industry. Through
these compensation policies, the Corporation strives to meet its
strategic goals and objectives to its constituencies and provide
compensation that is fair and meaningful to its employees.
- 12 -
<PAGE>
James H. Craig, Jr.
Lois Easton
Nelson M. Elliott
Harold C. Gayman
Kermit G. Hicks
Betty J. Lehman
Robert L. Pensinger
Jeff B. Shank
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Jeff B. Shank, President and Chief Executive Officer of the
Corporation, is a member of the Board of Directors. Mr. Shank
makes recommendations to the Board of Directors regarding
compensation for employees. Mr. Shank does not participate in
conducting his own review. The entire Board of Directors votes
to establish the Corporation's compensation policies.
- 13 -
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change
in the cumulative total shareholder return on the Corporation's
Common Stock against the cumulative total return of the S&P 500
Stock Index and the Peer Group Index for the period of five
fiscal years commencing January 1, 1992 and ended December 31,
1996. The shareholder return shown on the graph below is not
necessarily indicative of future performance.
Comparison of Five-year Cumulative Total Return
Tower Bancorp, Inc.
[PERFORMANCE GRAPH OMITTED.]
[Following is a description of the performance graph in a tabular
format.]
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
Peer Group Total 900.00 1113.81 1475.38 1672.56 1803.73 2006.63
Peer Group Index 100.00 123.76 163.93 185.84 200.41 222.96
Tower Bancorp, 100.00 135.30 176.70 210.37 244.50 330.00
Inc.
S & P 500 417.09 435.71 466.45 459.27 615.93 740.74
S & P 500 Index 100.00 104.46 111.83 110.11 147.67 177.60
NOTE: The peer group for which information appears above
includes the following companies: ACNB Corporation; Century
Financial Corporation; CNB Financial Corporation; Drovers
Bancshares Corporation; First West Chester Corporation;
Franklin Financial Services Corp.; Hanover Bancorp, Inc.;
Penn Security Bank & Trust Co.; and PennRock Financial
Services Corp. These companies were selected based on four
criteria: total assets between $200 million and $700
million; market capitalization between $15 million and $170
million; headquarters located in Pennsylvania; and not
quoted on NASDAQ.
- 14 -
<PAGE>
CERTAIN TRANSACTIONS
With the exceptions noted below, there have been no material
transactions between the Corporation and the Bank, nor any
material transactions proposed, with any director or executive
officer of the Corporation and the Bank, or any associate or any
of the foregoing persons. The Corporation and the Bank have had
and intend to continue to have banking and financial transactions
in the ordinary course of business with directors and executive
officers of the Corporation and the Bank and their associates on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other customers. Total loans outstanding from
the Bank at December 31, 1996, to the Corporation's and Bank's
officers and directors as a group and members of their immediate
families and companies in which they had an ownership interest of
10 percent (10%) or more was $615,221 or approximately 4.1% of
total equity capital. Such loans do not involve more than the
normal risk of collectibility or present other unfavorable
features.
Change of Control Agreement
- ---------------------------
In 1995, the Corporation and the Bank entered into a Change
of Control Agreement with Jeff B. Shank, President and Chief
Executive Officer of the Corporation and the Bank (the
"Agreement"). The Agreement provides certain benefits to Mr.
Shank in the event of a change of control, as more fully
described below.
In the event that the Corporation and the Bank undergo a
change of control, as defined, Mr. Shank's Agreement provides
that it shall automatically become an employment agreement,
binding on any acquiror of the Corporation and the Bank. Once
triggered by a change of control, the Agreement has a three (3)
year term from the date of the change in control and provides for
an automatic renewal for an additional twelve (12) month period
annually, unless terminated as provided in the Agreement. The
Agreement provides that Mr. Shank continue his duties as
President and Chief Executive Officer of the Corporation and of
the Bank and remain a member of the respective Boards of
Directors. The Agreement restricts Mr. Shank's ability to gain
other employment during the term of the Agreement.
The Agreement provides that, immediately following the
change of control, Mr. Shank is entitled to an annual direct
salary of at least the median salary for peer group financial
institutions, as set forth in L.R. Webber Associates, Inc. Annual
Salary Survey for the calendar year immediately preceding the
change of control. In no event, shall Mr. Shank's salary,
pursuant to the Agreement, be less than his actual salary for the
calendar year during which the change in control occurred. Mr.
Shank's annual direct salary after the change of control is
subject to annual review, but, in no event, may the salary be
reduced below the initial direct salary level set forth in the
Agreement. The Agreement also provides that Mr. Shank is
eligible to receive periodic bonuses at the discretion of the
respective Boards of Directors of the Corporation of the Bank,
all
- 15 -
<PAGE>
in accordance with the bonus programs in place immediately prior
to the change in control. The Agreement also provides that Mr.
Shank is entitled to directors fees and certain fringe benefits,
vacation, reimbursement of business expenses and perquisites.
If, following a change of control, Mr. Shank is discharged
or resigns for good reason, as defined in the Agreement, he is
entitled to a lump sum payment equal to 2.99 times his base
amount, as defined in the Agreement, plus certain benefits.
PRINCIPAL OFFICERS OF THE CORPORATION
The following table sets forth selected information, as of
February 17, 1996, about the principal officers of the
Corporation, 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>
<S> <C> <C>
Bank
Name And Held Employee
Office Held Since Since
----------- ----- --------
Kermit Hicks - Chairman
of the Board 1983 <F1>
Jeff B. Shank - President and 1991 1976
Chief Executive Officer
John McDowell - Executive 1986 1977
Vice President/Secretary
Don Kunkle - Vice President 1990 1987
Don Chlebowski - Treasurer 1990 1980
<S> <C> <C>
Number of
Shares Bene- Age as of
Name And ficially Feb. 15,
Office Held Owned 1997
----------- ------------ ----
Kermit Hicks - Chairman
of the Board 14,046 61
Jeff B. Shank - President and 5,207 41
Chief Executive Officer
John McDowell - Executive 1,801 47
Vice President/Secretary
Don Kunkle - Vice President 3,825 47
Don Chlebowski - Treasurer 533 38
- ---------------------
<FN>
<F1> Mr. Hicks is not an employee of the Bank.
</FN>
</TABLE>
Each of the principal officers of the Corporation has been
employed as an officer or employee of the Bank for more than the
past five (5) years.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Corporation's officers and directors, and
persons who own more than ten percent (10%) of the registered
class of the Corporation's equity securities, to file reports of
ownership and changes in ownership with the Securities and
Exchange Commission ("SEC"). Officers, directors, and greater
than ten percent (10%) shareholders are required by SEC
regulation to furnish the Corporation with copies of all Section
16(a) forms they file.
- 16 -
<PAGE>
Based solely on its review of the copies of such forms
received by it, or written representations from reporting persons
that no Forms 5 were required for those persons, the Corporation
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.
LEGAL PROCEEDINGS
In the opinion of the management of the Corporation, there
are no proceedings pending to which the Corporation and the Bank
are a party or to which its property is subject, which, if
determined adversely to the Corporation and the Bank, would be
material in relation to the Corporation's and the Bank's
financial condition. There are no proceedings pending other than
ordinary routine litigation incident to the business of the
Corporation and the Bank. In addition, no material proceedings
are pending or are known to be threatened or contemplated against
the Corporation and the Bank by government authorities.
RATIFICATION OF INDEPENDENT PUBLIC 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 Smith Elliott Kearns & Company, LLC as the
Corporation's independent auditors for its 1997 fiscal year. The
Corporation has been advised by Smith Elliott Kearns & Company,
LLC that none of its members has any financial interest in the
Corporation. Ratification of Smith Elliott Kearns & Company, LLC
will require the affirmative vote of a majority of the shares of
Common Stock represented in person or by proxy at the Annual
Meeting. Smith Elliott Kearns & Company, LLC served as the
Corporation's independent public accountants for the 1996 fiscal
year. In addition to performing customary audit services, Smith
Elliott Kearns & Company, LLC assisted the Corporation and the
Bank with the preparation of their federal and state tax returns,
and provided assistance in connection with regulatory matters,
charging the Corporation for such services at its customary
hourly billing rates. These non-audit services were approved by
the Board of Directors prior to the rendering of such services
after due consideration of the effect of the performance thereof
on the independence of the accountants. These services were
approved by the Corporation's Board of Directors and the Board of
Directors reviewed the nature and expense associated with such
services and concluded that there was no effect on the
independence of the accountants.
In the event that the shareholders do not ratify the
selection of Smith Elliott Kearns & Company, LLC as the
Corporation's independent auditors for the 1997 fiscal year,
another accounting firm may be chosen to provide independent
audit services for the 1997 fiscal year. The Board of Directors
recommends that the shareholders vote FOR the ratification of the
selection of Smith Elliott Kearns & Company, LLC as the
independent auditors for the Corporation for the year ending
December 31, 1997.
- 17 -
<PAGE>
ANNUAL REPORT
A copy of the Corporation's Annual Report for its fiscal
year ended December 31, 1996 is enclosed with this proxy
statement. A representative of Smith Elliott Kearns & Company,
LLC, the accounting firm which examined the financial statements
in the annual report, will attend the annual meeting. This
representative of Smith Elliott Kearns & Company, LLC will have
the opportunity to make a statement, if he desires to do so, and
will be available to respond to any appropriate questions
presented by shareholders at the Annual Meeting.
SHAREHOLDER PROPOSALS
Any shareholder who, in accordance with and subject to the
provisions of the proxy rules of the Securities and Exchange
Commission, wishes to submit a proposal for inclusion in the
Corporation's proxy statement for its 1998 Annual Meeting of
Shareholders must deliver such proposal in writing to the
president of Tower Bancorp, Inc. principal executive offices at
Center Square, Greencastle, Pennsylvania, not later than Tuesday,
November 4, 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 Shareholders, 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 SHAREHOLDER, A COPY OF THE
CORPORATION'S REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996, 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 JEFF B. SHANK, PRESIDENT,
TOWER BANCORP, INC., P.O. BOX 8, CENTER SQUARE, GREENCASTLE,
PENNSYLVANIA 17225.
- 18 -
<PAGE>
TOWER BANCORP, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 2, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Darlene
Niswander and C. Ordean Monn and each or any of them, proxies of
the undersigned, with full power of substitution, to vote all of
the shares of Tower Bancorp, Inc. (the "Corporation") that the
undersigned may be entitled to vote at the Annual Meeting of
Shareholders of the Corporation to be held at the Rescue Hose
Company Special Events Center, 407 South Washington Street,
Greencastle, Pennsylvania 17225, on Wednesday, April 2, 1996 at
1:30 p.m., prevailing time, and at any adjournment or
postponement thereof as follows:
1. ELECTION OF 2 CLASS A DIRECTORS TO SERVE A THREE-YEAR TERM
Harold C. Gayman, James H. Craig, Jr.
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all nominees
as marked to the listed above
contrary below)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME ON THE SPACE
PROVIDED BELOW.)
- -----------------------------------------------------------------
2. PROPOSAL TO RATIFY THE SELECTION OF SMITH ELLIOTT KEARNS
& COMPANY, LLC, CERTIFIED PUBLIC ACCOUNTANTS, AS THE INDEPENDENT
AUDITORS FOR THE CORPORATION FOR THE FISCAL YEAR ENDING DECEMBER
31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
- -----------------------------------------------------------------
<PAGE>
3. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the meeting
and any adjournment thereof.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ABOVE
AND FOR PROPOSAL 2.
Dated: , 1997
-------------- --------------------------
Number of Shares Held of Record on
February 15, 1997 shs. --------------------------
----- Signature(s)
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED
PROMPTLY TO THE CORPORATION IN THE ENCLOSED ENVELOPE. 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.
