Anthony D. Andora
Chairman of the Board
Dear Interchange Stockholder:
You are cordially invited to attend the 1996 Annual Meeting of Stockholders
on Thursday, May 23, 1996 at 3 p.m. at the Marriott Hotel in Saddle Brook, New
Jersey.
The Notice of the Annual Meeting and Proxy Statement accompanying this
letter describe the business to be acted upon at the meeting. Please promptly
vote, date, sign and return your proxy for the meeting even though you plan to
attend. You may vote in person at that time if you so desire.
Sincerely
Anthony D. Andora
April 18, 1996
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Interchange Financial Services
Corporation will be held on Thursday, May 23, 1996, at 3:00 p.m. at the Marriott
Hotel in Saddle Brook, New Jersey to consider and act upon the following
matters:
1. The election of four directors for three-year terms.
2. The ratification of the appointment of Deloitte & Touche, LLP as
the Company's independent auditors for 1996.
3. The transaction of such other business as may properly come
before the meeting or any adjournment thereof. The Company knows
of no other business to be brought before the meeting.
Benjamin Rosenzweig
Secretary
PLEASE COMPLETE, SIGN, AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE
POSTAGE-PAID ENVELOPE PROVIDED.
APRIL 18, 1996
<PAGE>
PROXY STATEMENT
This proxy statement and the accompanying proxy/voting card (proxy card)
are being mailed beginning April 18, 1996, in connection with the solicitation
of proxies by the Board of Directors, for the Annual Meeting of Stockholders on
May 23, 1996. Proxies are solicited to give all stockholders of record at the
close of business on April 18, 1996, an opportunity to vote on matters that come
before the meeting. On that date, 2,704,598 shares of common stock were
outstanding, each of which is entitled to one vote on each matter brought before
the meeting.
When your proxy card is returned properly signed, the shares represented
will be voted in accordance with your directions. Abstentions are voted neither
"for" nor "against," but are counted in the determination of a quorum. You can
specify your choices by marking the appropriate boxes on the enclosed proxy
card. If your proxy card is signed and returned without specifying choices, the
shares will be voted as recommended by the directors.
1. ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
The accompanying proxy will be voted for the election of the following
nominees unless otherwise instructed. Each nominee for director and each
continuing director also serves as director of Interchange State Bank, (the
"Bank") a subsidiary of the Company. If a nominee should become unavailable for
any reason, which management does not anticipate, the proxy will be voted for a
substitute or, if no substitute is selected, the number of directors may be
reduced.
NOMINEES AND DIRECTORS
"NOMINEES TO BE ELECTED DIRECTORS FOR TERMS OF THREE YEARS EXPIRING IN 1999."
ANTHONY S. ABBATE, age 56, is President and Chief Executive Officer. Mr. Abbate
has been a member of the Board of Directors of the Company since 1984 and
the Bank since 1981. He is a member of the Executive Committee and serves
ex-officio on all committees.
ANTHONY AMATO, age 65, formerly a principal of Amato Grain & Seed Company, is
active in real estate development, ownership and management. Mr. Amato has
been a member of the Board of Directors of the Company and the Bank since
1985. He serves as a member of the Executive Committee, Investment
Committee and the Compensation/Stock Option Committee.
JOHN J. ECCLESTON, age 70, is a partner of R.D. Hunter & Company, Certified
Public Accountants. Prior to January 1995, he was Senior Partner of John J.
Eccleston & Company, Certified Public Accountants. Mr. Eccleston has been a
member of the Board of Directors of the Company since 1984 and the Bank
since 1969. He is Chairman of the Audit Committee and a member of the
Executive Committee and Investment Committee.
ELEANORE S. NISSLEY, age 64, is President of Steffens Realty Company, a
commercial real estate brokerage firm and she serves as Vice Chairperson of
the Hackensack Meadowlands Development Commission. Mrs. Nissley has been a
director of the Company and of the Bank since 1992. She is a member of the
Audit Committee and the Nominating Committee and is an alternate member of
the Executive Committee.
"DIRECTORS TO CONTINUE IN OFFICE FOR TERMS EXPIRING IN 1997"
DONALD L. CORRELL, age 45, is Chairman, President and CEO (since 1992) of United
Water Resources, Inc.. Prior to 1992 he was Senior Vice President of
Finance, Treasurer and Chief Financial Officer of United Water Resources,
Inc. United Water Resources, Inc., is a holding company whose subsidiaries
are active in public water supply, water-related services and real estate.
Mr. Correll has been a member of the Board of Directors of the Company and
the Bank since January 1995 and serves on the Audit Committee and
Compensation/Stock Option Committee and is an alternate member of the
Executive Committee. He is a director of United Water Resources, Inc.
JAMESE. HEALEY, age 55 is Vice President and Treasurer (since July 1995) of CPC
International Inc., a multinational food manufacturing company. Prior to
his election as Vice President and Treasurer, he served as Comptroller and
Chief Accounting Officer of CPC International Inc., since September 1987.
Mr. Healey has been a member of the Board of Directors of the Company and
the Bank since November 1993. He is Chairman of the Compensation/Stock
Option Committee and serves on the Audit Committee, Nominating Committee,
Investment Committee and is an alternate member of the Executive Committee.
JEREMIAH F. O'CONNOR, age 62, is Managing Director of NatWest Financial Markets
Group (since 1994) and a past Commissioner of the Board of Public Utilities
for the State of New Jersey. Prior to that he was Managing Director and
Executive Vice President of Jersey Capital Market Group, Inc., an
investment banking firm and formerly Vice President of Product and
Financial Planning of The Micro Energy Group of Bell & Howell Corporation.
Mr. O'Connor has been a member of the Board of Directors of the Company
since 1984 and the Bank since 1969. He is Vice Chairman of the Board. He
serves on the Executive Committee, Nominating Committee and
Compensation/Stock Option Committee.
ROBERT P. RITTEREISER, age 57, is President and Chief Executive Officer of
Gruntal Financial Corporation, an Investment Services Firm (since November
1995). He also is Chairman of Yorkville Associates Corp., a private
investment and financial advisory concern formed in April 1989. He served
as Chairman since November 1992 and President and Chief Executive Officer
from March 1993 until February 1995 of Nationar, a banking services
corporation. On February 6, 1995, the Acting Superintendent of Banks, State
of New York, filed a Petition in the New York Supreme Court to take over
the business of Nationar. Prior to March 1993, he was President and Chief
Executive Officer of E.F. Hutton Group until its merger with Shearson
Lehman Bros. Until June 1985 he was Executive Vice President and Chief
Administrative Officer of Merrill Lynch & Co. He has been a Director of the
Company and of the Bank since July 1989. He is a member of the
Compensation/Stock Option Committee and is an alternate member of the
Executive Committee. He is a Director of CVC International Ferrofluidics
Corporation and Wallace Computer Systems. He will serve as Trustee of the
DBL Liquidating Trust until April 30, 1996.
"NOMINEES TO CONTINUE IN OFFICE FOR TERMS EXPIRING IN 1998"
ANTHONY D. ANDORA, age 65, is President of Andora, Palmisano & Geaney, a
professional corporation in Elmwood Park, New Jersey. Mr. Andora, a member
of the Board of Directors of the Company since 1984 and of the Bank since
1969, is Chairman of the Board and is ex-officio on all committees.
J. FLETCHER CREAMER, JR., age 45, is President (since 1982) of J. Fletcher
Creamer and Son, Inc. and Creamer Brothers, Inc. of Hackensack, New Jersey.
J. Fletcher Creamer and Son is a full-service, multifaceted contracting
company serving the business community, governmental agencies and utilities
throughout the United States. The company specializes in the installation
of underground transmission lines for communication, cable TV, electric,
sewer, gas and water systems, in addition to heavy and highway
construction. Mr. Creamer has been a member of the Board of Directors of
the Company and the Bank since December 1993 and serves on the Audit
Committee and the Nominating Committee and is an alternate member of the
Executive Committee.
DAVID R. FICCA, age 64, served as Vice Chairman, Executive Vice President and
Senior Legal Officer of Kidde, Inc., prior to March 1988. He has been a
Director of the Company since 1984 and of the Bank since 1983. He is a
member of the Executive Committee and the Compensation/Stock Option
Committee.
BENJAMIN ROSENZWEIG, age 70, is the Senior Executive Partner of Azco Steel
Company, Saddle Brook, New Jersey, a nationwide steel distributor. He has
been a member of the Board of Directors of the Company since 1984 and of
the Bank since 1976 and is Secretary of the Board. He serves as a member of
the Executive Committee, Compensation/Stock Option Committee, the
Nominating Committee and is Chairman of the Investment Committee.
BOARD COMMITTEES, MEETINGS AND COMPENSATION
The Company has an Audit Committee of the Board of Directors consisting of
Mrs. Nissley, Messrs. Correll, Creamer, Eccleston (Chairman) and Healey. This
committee reviews significant audit, accounting and other principles, policies
and practices, the activities of independent auditors and of the Company's
internal auditors, and the conclusion and recommendations of auditors and the
reports of regulatory examiners upon completion of their respective audits and
examinations. The committee met five times in 1995.
The Compensation/Stock Option Committee administers management incentive
compensation plans, including the stock option plan. The committee makes
recommendations to the Board with respect to compensation of directors and of
the officers as listed on page 10. The Committee, which met six times in 1995,
consists of Messrs. Amato, Correll, Ficca, Healey (Chairman), O'Connor,
Rittereiser and Rosenzweig.
The Nominating Committee advises and makes recommendations to the Board
concerning the selection of candidates as nominees for election as directors.
The committee consists of Mrs. Nissley, Messrs. Andora (Chairman), Creamer,
O'Connor and Rosenzweig and met once in 1995. The committee will consider
nominations recommended by stockholders. Such nominations should be addressed to
the Secretary of the Board and must be received not later than January 2 of the
year of the annual meeting of stockholders.
In 1995, each director not employed by the Company was paid a retainer at
an annual rate of $11,000, a fee of $150 for each board meeting attended, a fee
of $125 for each executive committee meeting attended and a fee of $100 for
attendance at other committee meetings. The Chairman of the Board, the Vice
Chairman of the Board and Secretary of the Board received additional retainers
of $14,500, $11,250 and $1,100, respectively, and directors who chair committees
of the Board receive an additional retainer of $1,000 annually. A director who
is an employee of the Company or any subsidiary receives no retainer or fees.
Directors participate in a retirement benefit plan which entitles the
director to receive either (1) an amount equal to the annual retainer being paid
directors (exclusive of additional amounts paid to the Chairman of the Board,
the Vice Chairman of the Board, the Secretary of the Board and to committee
chairmen) multiplied by his or her years of service on the board; or (2) an
amount based on the cash surrender value of a life insurance or annuity contract
purchased by the Company. The insurance policies or annuity contracts are owned
by the Company and annual contributions of $5,000 are made by the Company for
each director who has completed five years of service as a director. The
Company's contribution increases by $1,000 for each year's service until it
reaches $10,000 annually, the level at which it remains. Benefits to a director
who retires after ten years of service are equal to the greater of (1) or (2)
above. Mr. Abbate (the only director who is employed by the Company) and any
director who retires after completing at least five years but less than ten
years of service are entitled to benefits only under (2) above.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
The following table sets forth information concerning the ownership of the
Company's common stock as of March 1, 1996, adjusted to reflect a five percent
stock dividend to be issued on April 19, 1996 to stockholders of record at the
close of business on March 20, 1996, for (a) certain beneficial owners known to
the Company to own more than five percent to the common stock; (b) each director
and nominee for director; (c) each of the named officers (the "named officers"
as defined in the Compensation Report, herein) not listed as a director; and (d)
directors and executive officers as a group. Except as otherwise noted, the
nominees, the directors and the executive officers or family members had sole
voting and investment power with respect to such securities.
<PAGE>
<TABLE>
<CAPTION>
BENEFICIALLY DEFERRAL PERCENT
NAME OWNED PLANS(1) TOTAL OF CLASS
---- ----- -------- ----- --------
(a)
<S> <C> <C> <C> <C>
Interchange State Bank Capital Investment
Plan
Park 80 West/Plaza Two
Saddle Brook, NJ 07663. . . . . . . . . . . . . . . 142,354 142,354 5.0 %
First Union Corporation
One First Union Center
Charlotte, NC 28288. . . . . . . . . . . . . . . . 186,270 (2) 186,270 6.6
(b)
Anthony S. Abbate. . . . . . . . . . . . . . . . . 47,499 (3) 22,455 69,954 2.4
Anthony Amato. . . . . . . . . . . . . . . . . . . 68,128 68,128 2.4
Anthony D. Andora. . . . . . . . . . . . . . . . . 76,258 (4) 76,258 2.7
Donald L. Correll. . . . . . . . . . . . . . . . . 210 210 *
J. Fletcher Creamer. . . . . . . . . . . . . . . . 6,300 6,300 *
John J. Eccleston. . . . . . . . . . . . . . . . . 34,330 (4) 34,330 1.2
David R. Ficca . . . . . . . . . . . . . . . . . . 32,943 32,943 1.2
James E. Healey. . . . . . . . . . . . . . . . . . 7,245 7,245 *
Eleanore S. Nissley. . . . . . . . . . . . . . . . 20,160 20,160 *
Jeremiah F. O'Connor. . . . . . . . . . . . . . . 27,223 (4) 27,223 1.0
Robert P. Rittereiser. . . . . . . . . . . . . . . 12,075 12,075 *
Benjamin Rosenzweig. . . . . . . . . . . . . . . . 42,452 42,452 1.5
(c)
Frank R. Giancola. . . . . . . . . . . . . . . . . 9,035 (5) 8,518 17,553 *
Robert N. Harris. . . . . . . . . . . . . . . . . 17,963 (6) 2,344 20,307 *
Richard N. Latrenta. . . . . . . . . . . . . . . . 8,209 (7) 9,165 17,374 *
(d)
Directors and executive officers as a group. . . . 410,030 (8) 42,482 452,512 15.6
*Does not exceed one percent of class
<FN>
FOOTNOTES
1. Shares held in deferred compensation accounts to which individuals have
sole power to vote but no investment powers.
2. Includes beneficial ownership of 146,370 shares to which First Union
Corporation has sole power to vote and 39,900 shares to which it shares
power to vote. First Union Corporation has sole investment power for
186,270 shares.
3. Includes beneficial ownership of 26,813 shares which may be acquired within
60 days pursuant to stock options.
4. Includes beneficial ownership of 8,323 shares held by Washington
Interchange Corporation in which Messrs. Andora, Eccleston and O'Connor are
principals.
5. Includes beneficial ownership of 8,000 shares which may be acquired within
60 days pursuant to stock options.
6. Includes beneficial ownership of 10,179 shares which may be acquired within
60 days pursuant to stock options.
7. Includes beneficial ownership of 8,209 shares which may be acquired within
60 days pursuant to stock options.
8. Includes beneficial ownership of 50,667 shares which may be acquired within
60 days pursuant to stock options awarded under an employee incentive
compensation plan.
</FN>
</TABLE>
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The members of the Board of Directors, the executive officers of the Company
and persons who hold more than ten percent of the Company's common stock are
subject to reporting requirements of Section 16(a) of the Securities Exchange
Act of 1934, which require them to file reports with respect to their ownership
of and transactions in the Company's securities and furnish the Company with
copies of all such reports they file. Based upon the copies of those reports
furnished to the Company and written representations that no other reports were
required to be filed, the Company believes that all reporting requirements under
Section 16(a) for the fiscal year ended December 31, 1995, were met in a timely
manner by its executive officers, board members and greater than ten percent
stockholders with the exception of the late filing by Mr. J. Fletcher Creamer,
Jr., a director of the company, of one Form 4 reporting the purchase of common
stock; the late filing by Mr. Jeremiah F. O'Connor, a director of the Company,
of one Form 4 reporting the sale of common stock and the late filing by Mr.
Anthony Amato, a director of the Company, of one Form 4 reporting a change
involving the nature of ownership of common stock.
COMPENSATION/STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION STRATEGY
The objectives of this committee's strategy are to attract and retain top
quality executives and provide compensation programs designed to motivate and
reward executives to achieve business goals that foster both the enhancement of
long-term stockholder values through stock appreciation and dividend yields, and
also, the long-term best interest of the organization. Compensation programs for
executives link compensation to the performance of the Company and generally
provide competitive compensation for executives at the mean pay level of peer
group banks and other organizations of similar size, performance and geographic
location. The committee utilizes professional surveys prepared by outside
consultants focusing on compensation levels of the aforementioned groups in
order to assure competitiveness in its compensation programs. The compensation
mix reflects a balance of cash awards, including incentive awards, and
equity-based incentives. Annual cash compensation (base salaries and annual
bonus) is granted based on the achievement of corporate financial targets and
individual performance. The Stock Option Plan, approved by stockholders in 1989
and amended in 1995, is intended to function as the basis for fostering
alignment of executive compensation with the interest of stockholders.
The policies, with respect to each of these compensation elements as well
as the basis for determining the compensation of executive officers, including
the President and CEO, Mr. Abbate, are described below:
BASE SALARY
Base salaries for executive officers are based on the salary ranges that
are established for each position. These position salary ranges are determined
by evaluating the responsibilities and accountabilities of the position and
comparing it with other executive officer positions in the market place on an
annual basis. The base salary of each executive officer, including President and
CEO, is reviewed annually and adjusted within the position range based upon a
performance evaluation. Evaluations of other executive officers are submitted to
the committee by the President and CEO. These evaluations, and an evaluation of
the President and CEO by the committee, are reviewed and submitted together with
the committee's recommendations to the full board for action. Salary increases
are generally based upon the extent to which the executive is considered to have
contributed to a furtherance of the Company's goals and/or met objectives
specifically assigned to that individual.
ANNUAL BONUS
The Management Incentive Plan is a short-term annual incentive plan
designed to reward key management employees for achievement of specific
financial, individual and business results. The specific financial target is
primarily based upon the year-to-year increase in the Company's net after-tax
earnings. The targeted goal is established annually through a budgeting process
which is reviewed and approved by the full board using input relating to
performance opportunities for the year and the historical performance results of
the Company. Individual and business results are pre-established targets for
specific objectives relating to the executives area of responsibility. An
objective of the Management Incentive Plan is to relate a portion of the
executives compensation to the overall financial results of the Company for the
year. The bonus for 1995 results reflects the achievement in excess of 100
percent of the financial target set in 1994 and the granting of discretionary
amounts. The committee reserves the right to award discretionary bonus awards in
the event the financial target is not met or is exceeded. In so doing, the
committee, among other matters, will take into account whether the Company,
while not reaching its threshold target, has performed better on a comparable
basis than its peers. In addition to the attainment of the earnings target, the
level of the President and CEO's annual bonus award is also based upon
performance related factors including the completion of prudent acquisition
strategies, management of overall company efficiencies, attainment of long range
planning goals, and capital requirement and asset utilization necessary to
ensure long-term growth.
A portion of the incentive compensation awarded to executive management was
in the form of restricted stock. The restriction is for three years and is
forfeitable upon termination of employment during that time period. In addition,
executive officers were given the option to utilize their cash bonus to purchase
two-year restricted, non-forfeitable stock at a twenty-five percent discount.
The excess of market value over the purchase price is included in the summary
compensation table as other annual compensation.
STOCK OPTION PLAN
The Stock Option Plan approved by stockholders in 1989, as amended in 1995,
is designed to align stockholders' and executive officers' interests. The Plan
is administered by the Compensation/Stock Option Committee and awards are
determined by that committee. Stock options are granted with an exercise price
equal to the price of a share of stock at the close of business on the date of
the grant as reported by the American Stock Exchange. Stock options may be
exercisable between one and ten years from the date granted. Such stock options
provide a retention and motivational program for executives and an incentive for
the creation of shareholder value over the long-term since their full benefit
cannot be realized unless an appreciation in the price of the Company's common
stock occurs over a specified number of years. A total of 270,000 shares were
made available for option under the Plan of which 64,251 shares have been
granted to date.
CEO COMPENSATION
The compensation of the President and CEO, Mr. Anthony S. Abbate, is
reviewed by the Compensation/Stock Option Committee which presents its
recommendations to the board for action. Mr. Abbate participates in the same
plans as the other executive officers, including the base salary program, the
annual bonus plan, the Stock Option Plan, and the staff benefit programs as
outlined elsewhere in this Proxy. Mr. Abbate receives no compensation for his
duties as a director; however, he does participate in the Directors' Retirement
Plan. The committee bases Mr. Abbate's compensation on the same criteria used
for all executive officers with particular emphasis on the factors which will
promote the Company's long-term growth, organization stability, and financial
strength. Mr. Abbate's salary was at the midpoint of the 1995 salary range for
his position and his annual bonus for 1995 performance was 100% of target due to
exceeding the plan goals for that year. Mr. Abbate continues to provide the
Company and the Bank with exemplary leadership, vision and commitment, and
strives to meet the long-term strategic goals.
Submitted by the Compensation/Stock Option Committee
James E. Healey, Chairman
Anthony Amato
Donald L. Correll
David R. Ficca
Jeremiah F. O'Connor,
Robert P. Rittereiser
Benjamin Rosenzweig
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long-term Compensation
------------------------------------------------ -------------------------
Other Restricted Options All Other
Annual Stock (No. of Compensation
Name and Principal Position (1) Year Salary($) Bonus($) Compensation Awards Shares) ($) (2)
($) ($)(3)
- ------------------------------- ------- ---------- -------- ------------ -------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Anthony S. Abbate 1995 $274,500 $58,473 $5,375 $58,738 - $37,097
President and CEO 1994 264,000 69,000 - - - 41,254
1993 240,000 49,584 - - 10,650 20,552
Frank R. Giancola 1995 114,400 24,481 806 11,438 - 4,131
Senior Vice President 1994 110,000 24,600 - - - 3,973
Retail Banking 1993 97,000 15,000 - - 4,400 3,504
Robert N. Harris 1995 142,500 30,495 9,503 9,976 - 20,284
Executive Vice President 1994 137,000 23,500 - - - 19,024
1993 125,000 19,368 - - 5,450 8,664
Richard N. Latrenta 1995 116,500 24,931 1,666 11,653 - 4,209
Senior Vice President 1994 112,000 30,000 - - - 4,045
Senior Loan Officer 1993 101,000 15,644 - - 4,500 3,430
(1) Includes the President and CEO and all other officers whose total
annual salary and bonus exceeded $100,000 in 1995.
(2) Represents payments as shown below:
<S> <C> <C> <C> <C> <C>
YEAR ABBATE GIANCOLA HARRIS LATRENTA
Amounts contributed to 401(k) plan in 1995 $ 4,500 $ 3,432 $ 4,275 $ 3,495
1993, 1994 and 1995 1994 6,119 3,300 4,110 3,360
1993 6,906 2,910 3,750 3,030
Value of life insurance premium paid in 1995 4,050 699 6,009 714
respect to coverage in excess of $50,000 1994 3,150 673 4,914 685
1993 2,016 594 4,914 400
Contribution to life insurance policy/ 1995 10,000 - 10,000 -
annuity contract 1994 10,000 - 10,000 -
1993 10,000 - - -
Premium paid on disability policy 1995 6,564 - - -
1994 6,245 - - -
1993 1,630 - - -
Contribution to Supplemental Executives' 1995 11,983 - - -
Retirement Plan 1994 15,740 - - -
1993 - - - -
(3) On December 31, 1995, an award of restricted stock was granted to
Messrs. Abbate, Giancola, Harris and Latrenta as part of the Company's
incentive program amounting to 2,732 shares, 532 shares, 464 shares
and 542 shares, respectively. These grants vest in three years
following the date of grant provided the officer does not terminate
his employment during that period. The value of these shares at the
date of grant is reflected in the table above.
</TABLE>
<PAGE>
<TABLE>
YEAR-END VALUES OF OPTIONS
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES UNDERLYING IN-THE-MONEY OPTIONS
UNEXERCISED OPTION AT YEAR END AT YEAR-END
SHARES SHARES ----------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Anthony S. Abbate . . . . . . . . . . 26,813 3,728 $223,237 $15,991
Frank R. Giancola . . . . . . . . . . 8,000 1,540 61,824 6,608
Robert N. Harris . . . . . . . . . . 10,179 1,908 79,242 8,185
Richard N. Latrenta . . . . . . . . . 8,209 1,575 63,495 6,757
</TABLE>
<TABLE>
FIVE-YEAR PERFORMANCE COMPARISON
The table below provides an indicator of cumulative total stockholder returns
for the Company as compared with a Peer Group and the AMEX Market Value Index.
<CAPTION>
Cumulative Total Return
--------------------------------------------------------------------------
12/90 12/91 12/92 12/93 12/94 12/95
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interchange Financial Services Corp. 100 172 223 264 272 402
Peer Group 100 95 127 164 185 254
AMEX Market Value 100 128 130 155 141 178
ASSUMES $100 INVESTED ON DECEMBER 31, 1990, IN INTERCHANGE COMMON STOCK, THE
AMEX MARKET VALUE INDEX AND PEER GROUP COMMON STOCK.
TOTAL STOCKHOLDER RETURNS ASSUMES REINVESTMENT OF DIVIDENDS.
<FN>
1. The Peer Group comprises 21 banking institutions representing all such
institutions in Connecticut, New Jersey and New York with asset size of at
least $250 million, but less than $1 billion, as of December 31, 1995, as
reported in the SNL Quarterly Bank Digest of March 1996. The banking
institutions included are: BNH Bancshares, Inc., New Milford Bank & Trust,
New England Community Bancorp, Lafayette American Bancorp and Westport
Bancorp, Inc. (CT); B.M.J. Financial Corp., Broad National BanCorporation,
Independence Bancorp, Inc., Carnegie Bancorp, Yardville National Bancorp,
and Vista Bancorp, (NJ); Arrow Financial Corporation, CNB Financial Corp.,
Evergreen Bancorp, Inc., FNB Rochester Corp., First of Long Island
Corporation, Hudson Chartered Bancorp, Inc., State Bancorp, Inc., Sterling
Bancorp, Suffolk Bancorp and Tompkins County Trust Company (NY).
</FN>
</TABLE>
<PAGE>
PENSION PLANS
The Company maintains a non-contributory defined benefit pension plan
covering all eligible employees including Messrs. Abbate, Giancola, Harris and
Latrenta. Retirement income is based on years of service under the Plan and,
subject to certain limits, on final average compensation.
Effective January 1, 1994, the Company adopted a Supplemental Executives'
Retirement Plan, a non-qualified plan intended to provide retirement income that
would have been paid but for limitations imposed by the Internal Revenue Code
under the qualified plan.
The following tables show the annual benefits payable based on a range of
average compensation and years of future service at normal retirement date.
<TABLE>
<CAPTION>
INTERCHANGE STATE BANK PENSION PLAN
5-YEAR YEARS OF FUTURE SERVICE AT NORMAL RETIREMENT DATE
AVERAGE -------------------------------------------------------------------------------
COMPENSATION 5 10 20 30 35
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$100,000 $ 6,230 $12,460 $24,920 $37,370 $43,600
150,000 9,980 19,960 39,920 59,870 69,850
200,000 11,180 27,460 54,920 82,370 96,100
250,000 11,180 27,760 69,920 104,870 122,350
300,000 11,180 27,760 82,520 127,370 148,600
400,000 11,180 27,760 82,520 172,370 201,100
<FN>
1. This Plan was effective January 1, 1993.
2. Plan benefits are calculated using future service from January 1, 1996, and
base salary only. The maximum salary that may be used is limited by law and
regulations. The maximum salary that can be used for 1996 is $150,000. The
chart above anticipates future salary increases as well as increases to
these legal limits.
3. The above chart is based on the average age of the executive officer group
which is 50.8 years as of January 1, 1996.
4. Average compensation is the average of base salary over the five (5)
consecutive calendar years producing the highest average.
5. Annual benefit is payable as a life annuity which is the normal form of
retirement benefit for married participants. The normal form of retirement
benefit for married participants is an actuarial equivalent joint and 50%
survivor annuity.
</FN>
</TABLE>
<TABLE>
SUPPLEMENTAL EXECUTIVES' RETIREMENT PLAN
<CAPTION>
5-YEAR YEARS OF FUTURE SERVICE AT NORMAL RETIREMENT DATE
AVERAGE --------------------------------------------------------
COMPENSATION 5 10 15 20
------------ ---------- ----------- ---------- --------
<S> <C> <C> <C> <C>
$200,000 $13,950 $27,890 $41,840 $ 55,790
250,000 17,700 35,390 53,090 70,790
300,000 21,450 42,890 64,340 85,790
350,000 25,200 50,390 75,590 100,790
400,000 28,950 57,890 86,840 115,790
<FN>
1. This Plan was effective January 1, 1994.
2. Plan benefits are calculated using future service from January 1, 1996, and
base salary only. The chart above anticipates future salary increases,
ignores legal limits on both compensation and benefits and INCLUDES
benefits payable from the qualified defined benefit plan.
3. The above chart is based on the age of the covered officer which is 56.1 as
of January 1, 1996.
4. Average Compensation is the average of base salary over five (5)
consecutive calendar years producing the highest average.
5. Annual benefit is payable as a life annuity which is the normal form of
retirement benefit for unmarried participants is an actuarially equivalent
Joint and 50% Survivor annuity.
</FN>
</TABLE>
<PAGE>
TRANSACTIONS WITH MANAGEMENT
Officers and directors of the Company and their affiliated companies are
customers and are engaged in transactions with the Company and its subsidiaries
in the ordinary course of business on substantially the same terms as those
prevailing with other borrowers and suppliers.
Certain directors of the Company have engaged in transactions with the
Company related to the Bank's branch in the Township of Washington, New Jersey.
The Bank leases that branch from a Washington Interchange Corp. ("WIC") a
corporation in which Messrs. Andora, Eccleston and O'Connor each has a ten
percent ownership interest. Lease payments in 1995 totaled $82,800 under a lease
expiring in 2003. Through a special board consisting of Messrs. Amato, Healey
and Rosenzweig, the Company negotiated the purchase of all of the outstanding
stock of WIC. The principal assets of WIC consist of the aforementioned banking
premises and 83,237 shares of the Company's common stock. The agreed to
acquisition price of approximately 108,000 shares of the Company's common stock
is to be based upon the discounted fair market value (as determined by
independent valuations) of WIC's real estate and the average closing price of
the Company's common stock for the ten trading days preceding the closing date.
It is anticipated that the transaction will close during the second quarter of
1996.
The following directors are engaged in transactions with the Company and
are expected to continue to transact such business in the future.
Mr. Andora is a member of Andora, Palmisano & Geaney, a firm that renders
various legal services to the Company and its subsidiaries and received fees for
those services of $322,500 in 1995, including $95,000 paid pursuant to retainer
contracts and $57,300 representing fees for real estate matters, the bulk of
which was reimbursed to the Bank by its customers. The Bank leased its consumer
credit office located in Elmwood Park, New Jersey, from a partnership in which
Mr. Andora is a principal. Lease payments in 1995 totaled $15,900 under a lease
which expired during 1995 and was not renewed.
The Bank leases its office located in Lodi, New Jersey, from a partnership
in which Mr. Amato is a principal. Lease payments in 1995 totaled $58,200 under
a lease expiring in 1996.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 2 ON PROXY CARD)
The board of directors, upon recommendation of the audit committee, has
reappointed the firm of Deloitte & Touche, LLP as the independent auditors to
examine the Company's financial statements for the year 1996. YOUR DIRECTORS
RECOMMEND THAT STOCKHOLDERS VOTE FOR RATIFICATION OF THIS APPOINTMENT.
Representatives of Deloitte & Touche, LLP are expected to attend the annual
meeting and will have the opportunity to make a statement if they desire and to
respond to appropriate questions.
OTHER MATTERS
The Board of Directors is not aware of any other matters to be presented at
the Annual Meeting. If any other matter proper for action at the meeting should
be presented, the holders of the accompanying proxy will vote the shares
represented by the proxy on such matter in accordance with their best judgment.
If any matter not proper for action at the meeting should be presented, the
holders of the proxy will vote against consideration thereof or action thereon.
The affirmative vote of a majority of the shares cast at the Annual Meeting
is necessary to elect the four directors.
The cost of soliciting proxies for the meeting will be borne by the
Company. Some directors, officers, and other employees of the Company may
solicit proxies in person and by telephone or otherwise. The Company will
reimburse brokers and others who are record holders of its shares for the
reasonable expenses incurred in obtaining voting instructions from beneficial
owners of such shares.
SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals intended for inclusion in next year's proxy statement should be
sent to the Secretary of the Company at Park 80 West/Plaza Two, Saddle Brook, NJ
07663, and must be received by December 19, 1996.
<PAGE>
OTHER INFORMATION
Consolidated financial statements of the Company and its subsidiaries are
included in the Company's Annual Report to Stockholders for the year 1995.
Additional copies of the Annual Report and the Company's Annual Report to the
Securities and Exchange Commission on Form 10-K, may be obtained without charge
from the Secretary of Interchange Financial Services Corporation, Park 80
West/Plaza Two, Saddle Brook, NJ 07663.
The above notice and proxy statement are sent by order of the board of
directors.
Benjamin Rosenzweig,
Secretary
Dated: April 18, 1996
<PAGE>
(Front)
PROXY
INTERCHANGE FINANCIAL SERVICES CORPORATION
PARK 80 WEST, PLAZA TWO, SADDLE BROOK, NEW JERSEY 07662
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints as proxies, Jeremiah F. O'Connor, Benjamin
Rosenzweig and John J. Eccleston each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote, as designated below, all
the shares of common stock of Interchange Financial Services Corporation held of
record by the undersigned on April 18, 1996, at the annual meeting of
stockholders to be held on May 23, 1996, or any adjournment thereof.
1. ELECTION OF DIRECTORS
FOR all nominees listed below |_| WITHHOLD AUTHORITY |_|
(except as marked to the contrary below) to vote for all nominees listed below
Anthony S. Abbate, Anthony Amato, John J. Eccleston, Eleanore S. Nissley
(INSTRUCTION: To withhold authority to vote for an individual nominee write that
nominee's name in the space provided below.)
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
|_| FOR |_| AGAINST |_| ABSTAIN
(BACK)
(CONTINUED FROM OTHER SIDE)
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ELECTION OF DIRECTORS.
Please sign exactly as name
appears below. When shares
are held by joint tenants,
both should sign. When
signing as an attorney, as
executor, administrator,
trustee or guardian, please
give full title as such. If
a corporation, please sign
in full corporate name by
president or other
authorized officer. if a
partnership, please sign in
partnership name by
authorized person.
DATED: ,1996
Signature
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
