SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Interchange Financial Services 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:
_______________________________________________
2) Aggregate number of securities to which transaction applies:
_______________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
_______________________________________________
4) Proposed maximum aggregate value of transaction:
_______________________________________________
5) Total fee paid:
_______________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Formor 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>
Anthony D. Andora
Chairman of the Board
Dear Interchange Stockholder:
On behalf of the Board of Directors and management of Interchange Financial
Services Corporation, you are cordially invited to attend the 1999 Annual
Meeting of Stockholders to be held at 3:00 p.m. on Thursday, April 22, 1999 at
the Marriott Hotel, Garden State Parkway at I80 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. We have also
enclosed a copy of the Company's Annual Report.
In order to ensure that your shares are represented at the Annual Meeting,
please promptly vote, date, sign and return your proxy for the meeting even if
you plan to attend. You may vote in person at that time if you so desire.
Thank you for your prompt attention to this important matter.
Sincerely,
/s/ Anthony D. Andora
______________________
Anthony D. Andora
March 24, 1999
<PAGE>
Interchange Financial Services Corporation
Park 80 West/Plaza II
Saddle Brook, NJ 07663
(201) 703-2265
- --------------------------------------------------------------------------------
Notice of Annual Meeting of Stockholders
To Be Held on April 22, 1999
- --------------------------------------------------------------------------------
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Interchange Financial Services Corporation (the "Company") will be
held at 3:00 p.m. on Thursday, April 22, 1999 at the Marriott Hotel, Garden
State Parkway at I80 in Saddle Brook, New Jersey to consider and act upon the
following matters:
1. The election of five directors.
2. The ratification of the appointment of Deloitte & Touche LLP
as the Company's independent auditors for the year ending
December 31, 1999.
3. The transaction of such other business as may properly come before
the Annual Meeting or any adjournment thereof.
The Company knows of no other business to be brought before the
Annual Meeting.
Stockholders of record at the close of business on March 22, 1999 are the
stockholders entitled to notice of and to vote at the Annual Meeting and any
adjournment thereof. The Company's Proxy Statement for the Annual Meeting
accompanies this Notice and a form of proxy is enclosed herewith. You are
requested to complete, sign and date the enclosed proxy card, which is solicited
on behalf of the Board of Directors, and to mail it promptly in the enclosed
return envelope. The proxy will not be used if you attend and vote at the Annual
Meeting in person.
By Order of the Board of Directors
/s/Benjamin Rosenzweig
_______________________
Benjamin Rosenzweig
Secretary
Your vote is important. Please complete, sign, and return promptly the enclosed
proxy in the postage-paid envelope provided even if you plan to attend the
Annual Meeting in person. If you do attend the Annual Meeting, you may then
withdraw your proxy and vote in person, if you wish.
Saddle Brook, New Jersey
March 24, 1999
<PAGE>
- --------------------------------------------------------------------------------
PROXY STATEMENT
of
INTERCHANGE FINANCIAL SERVICES CORPORATION
Park 80 West/Plaza II
Saddle Brook, NJ 07663
ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 1999
- --------------------------------------------------------------------------------
General
This proxy statement and the accompanying proxy/voting card (proxy card)
are being mailed beginning March 24, 1999, in connection with the solicitation
of proxies by the Board of Directors of Interchange Financial Services
Corporation (the "Company"), for the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 3:00 p.m. on April 22, 1999 at the Marriot Hotel, Garden
State Parkway at I80 in Saddle Brook, New Jersey and at any adjournment thereof.
Proxies are solicited to give all stockholders of record at the close of
business on March 22, 1999 (the "Record Date"), an opportunity to vote on
matters that come before the Annual Meeting. At the Annual Meeting, the
stockholders of the Company are being asked to consider and vote on the proposal
to elect five directors of the Company and to ratify the appointment by the
Board of Directors of the Company's independent auditors for the year ending
December 31, 1999.
Proxies will be solicited by mail. Some directors, officers, and other
employees of the Company may also solicit proxies in person and by telephone or
otherwise. The cost of soliciting proxies for the Annual Meeting will be borne
by the Company. 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.
Voting Rights, Revocability of Proxies and Proxy Information
The Company's common stock, no par value (the "Common Stock"), is the only
class of voting security of the Company. As of the Record date, 7,210,237 shares
of Common Stock were issued and outstanding. Each share of Common Stock
outstanding on the Record Date is entitled to one vote with respect to each
matter properly brought before the Annual Meeting.
All shares of Common Stock represented at the Annual Meeting by properly
executed proxies received prior to or at the Annual Meeting, and not revoked,
will be voted at the Annual Meeting in accordance with the instructions thereon.
You can specify your choices by marking the appropriate boxes on the enclosed
proxy card. If no instructions are indicated, properly executed proxies will be
voted for the election of the nominees for directors named herein and for
ratification of auditors described herein. The Company does not know of any
matters, other than as described in the Notice of Annual Meeting, that are to
come before the Annual Meeting. If any other matters are properly presented at
the Annual Meeting for action, the persons named in the enclosed proxy will have
the discretion to vote on such matters in accordance with their best judgment.
A majority of the shares of the Common Stock, present in person or
represented by proxy, shall constitute a quorum for purposes of the Annual
Meeting. Abstentions and withholding of votes for directors will not be counted
as votes cast. In addition, shares held in street name which have been
designated by brokers on proxy cards as not voted (so-called broker non-votes)
will not be counted as votes cast. Proxies marked as abstentions, withhold or as
broker non-votes, however, will be treated as shares present for purposes of
determining whether quorum is present.
<PAGE>
Directors shall be elected by a plurality of the votes present in person or
represented by proxy at the Annual Meeting. The affirmative vote of a majority
of the shares present in person or represented by proxy and voting at the Annual
Meeting is necessary to ratify the appointment of Deloitte & Touche LLP as
independent auditors of the Company.
A stockholder who grants a proxy pursuant to this solicitation retains the
right to revoke it at any time before it is voted. Unless so revoked, the shares
represented by properly executed proxies will be voted at the Annual Meeting and
at any adjournment thereof. Proxies may be revoked by: (i) filing with the
Secretary of the Company at or before the Annual Meeting a written notice of
revocation bearing a later date than the proxy, (ii) duly executing a subsequent
proxy relating to the same shares and delivering it to the Secretary of the
Company at or before the Annual Meeting, or (iii) attending the Annual Meeting
and voting in person (although attendance at the Annual Meeting will not in
itself constitute revocation of a proxy). Any written notice revoking a proxy
should be delivered to Benjamin Rosenzweig, Secretary, Interchange Financial
Services Corporation, Park 80 West/Plaza II, Saddle Brook, New Jersey, 07663.
1. Election of Directors
(Item 1 on Proxy Card)
The first item to be acted upon at the Annual Meeting is the election of
five directors. The Company's Board of Directors currently consists of thirteen
members. In accordance with the Company's Certificate of Incorporation, the
Board is divided into three classes, each of which contains approximately
one-third of the Board. Approximately one-third of the directors are elected
annually. Directors of the Company are generally elected to serve for three-year
terms or until their respective successors are elected and qualified.
Unless contrary instruction is given, it is intended that the named proxies
will vote in favor of each of the five nominees listed below.
Each nominee for director and each continuing director also serves as
director of Interchange Bank (the "Bank"), formerly known as Interchange State
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. There are no arrangements or understandings between any director or
nominee and any other person pursuant to which such director or nominee was
selected, and no director, nominee or executive officer is related to any other
director, nominee or executive officer by blood, marriage or adoption.
Nominees and Directors
Nominee to be elected Director for a term of one year expiring in 2000
RICHARD A. GILSENAN, age 81, is a Principal of Gilsenan & Company, LLP, a
privately held real estate and insurance business. Mr. Gilsenan is the
former Chairman of the Board of Jersey Bank for Savings which was acquired
by the Company on May 31, 1998. He had served as Chairman of the Board of
Jersey Bank for Savings since 1988. At the time of the acquisition, Mr.
Gilsenan was appointed to the Board of Directors of the Company and the
Bank until the 1999 annual meeting. He is a member of the Investment
Committee and the Audit Committee.
Nominees to be elected Directors for terms of three years expiring in 2002
ANTHONY S. ABBATE, age 59, 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 the
Corporate Planning and Finance Committee and serves ex-officio on all
Committees.
ANTHONY R. COSCIA, age 39, is a partner and executive committee member of the
law firm of Windels, Marx, Davies & Ives in New York and New Brunswick, New
Jersey. He is currently serving in his second term as Chairman of the New
Jersey Economic Development Authority. Mr. Coscia has been a member of the
Board of Directors of the Company and the Bank since 1997. He serves on the
Audit Committee, Oversight/Insider Committee and is an alternate member of
the Executive Committee.
2
<PAGE>
JOHN J. ECCLESTON, age 73, 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, the Investment Committee, the Oversight/Insider
Committee and Corporate Planning and Finance Committee.
ELEANORE S. NISSLEY, age 67, is President of Steffens Realty Company, a
commercial real estate brokerage firm, and she serves as Vice Chairperson
of 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, the Oversight/Insider Committee and the Nominating
Committee and is an alternate member of the Executive Committee
Directors to continue in office for terms expiring in 2001
ANTHONY D. ANDORA, age 68, is President of Andora, Palmisano & Geaney, a law
firm in Elmwood Park, New Jersey. Mr. Andora has been a member of the Board
of Directors of the Company since 1984 and of the Bank since 1969. He is
Chairman of the Board, the Executive Committee and the Nominating
Committee. He is a member of the Corporate Planning and Finance committee
and is ex-officio on all committees.
DAVIDR. FICCA, age 67, retired in March 1988 from his position as Vice
Chairman, of Kidde, Inc, a multi-market manufacturing and service
organization. He has been a Director of the Company since 1984 and of the
Bank since 1983. He is a member of the Executive Committee, the
Oversight/Insider Committee, the Corporate Planning and Finance Committee
and the Compensation/Stock Option Committee.
NICHOLAS R. MARCALUS, age 55, is President & CEO of Marcal Paper Mills, Inc., a
manufacturer of paper products, in Elmwood Park, New Jersey, and serves as
a board member of that organization. Mr. Marcalus has been a member of the
Board of the Company and the Bank since 1997, and serves on the
Compensation/Stock Option Committee, Investment Committee and is an
alternate on the Executive Committee.
BENJAMIN ROSENZWEIG, age 73, 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,
Oversight/Insider Committee and the Nominating Committee and is Chairman of
the Investment Committee.
Directors to continue in office for terms expiring in 2000
DONALD L. CORRELL, age 48, is Chairman, President and CEO (since 1992) of United
Water Resources, Inc. which 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 1995 and serves on the Audit Committee, Nominating Committee,
Corporate Planning and Finance Committee, and Compensation/Stock Option
Committee and is an alternate member of the Executive Committee.
JAMESE. HEALEY, age 57 is Executive Vice President and Chief Financial Officer
of Nabisco, Inc., a major international manufacturer of biscuits, snacks
and premium grocery products and is also a certified public accountant. Mr.
Healey has served in this position since 1997. Mr. Healey was formerly Vice
President and Treasurer (since 1995) of CPC International, Inc. and
Comptroller (since 1987). Mr. Healey has been a member of the Board of
Directors of the Company and the Bank since 1993. He is Chairman of the
Compensation/Stock Option Committee and serves on the Audit Committee,
Corporate Planning and Finance Committee, Investment Committee and is an
alternate member of the Executive Committee.
JEREMIAH F. O'CONNOR, age 65, is currently a principal of NW Financial Group
(since 1996), a financial advisory firm. Mr. O'Connor was a formerly
Managing Director of NatWest Financial Markets Group (since 1994). Mr.
O'Connor has been a member of the Board of
3
<PAGE>
Directors of the Company since 1984 and the Bank since 1969. He is Vice
Chairman of the Board. He is Chairman of the Oversight/Insider Committee
and serves on the Executive Committee, Corporate Planning and Finance
Committee, Nominating Committee and Compensation/Stock Option Committee.
ROBERT P. RITTEREISER, age 60, is Chairman and Chief Executive Officer of
Gruntal Financial Corporation, an investment services firm based in New
York City. He is Chairman of Yorkville Associates Corp., a private
investment and financial advisory concern formed in April 1989. He served
as a Trustee of the DBL Liquidating Trust from April 1992 until April 1996.
He also served as a Director in 1990, as Chairman in November 1992 and
President and Chief Executive Officer from March 1993 until February 1995
of Nationar Inc., a banking services corporation.(1). He is director of
Cendant Corporation, a travel, real estate and marketing services company
and of Ferrofluidics, a provider of magnetic fluid products. He has been a
Director of the Company and of the Bank since July 1989. He is Chairman of
the Corporate Planning and Finance Committee and a member of the
Compensation/Stock Option Committee, the Investment Committee, the
Oversight/Insider Committee and the Executive Committee.
- ------------------
(1) On February 6, 1995, the Acting Superintendent of Banks of the State of New
York filed a petition to take over the business of such corporation and the
New York State Banking Department has since been liquidating the assets of
such corporation.
Each of the directors has held the same position or another position with
the same employer during the past five year, unless otherwise indicated.
Board Committees, Meetings and Compensation
The Company has an Audit Committee of the Board of Directors consisting of
Mrs. Nissley, Messrs. Correll, Coscia, Eccleston (Chairman), Gilsenan 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 1998.
The Compensation/Stock Option Committee administers management incentive
compensation plans, including the Company's stock option plan. The committee
makes recommendations to the Board with respect to compensation of directors and
executive officers. The Committee, which met four times in 1998, consists of
Messrs. Correll, Ficca, Healey (Chairman), Marcalus, 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), Correll,
O'Connor and Rosenzweig and met once in 1998. The committee will consider
nominations recommended by stockholders. In accordance with the Company's
by-laws, such nominations, together with accompanying biographical material,
must be in writing and 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 1998, 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 $17,000, $13,750 and $2,100, respectively, and directors who chair committees
of the Board receive an additional retainer of $2,000 annually. A director who
is an employee of the Company or any subsidiary receives no retainer or fees.
During 1998, the Board of Directors of the Company and the Bank held 12
meetings each. All incumbent directors attended at least 75% of the aggregate
meetings of such Boards of Directors and the committees of such Board of
Directors on which they served which were held during fiscal year 1998.
Directors, excluding directors who are employed by the Company, participate
in a retirement benefit plan which entitles the director to receive upon
retirement 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)
4
<PAGE>
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.
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 February 28, 1999, for (a) certain beneficial
owners known to the Company to own more than five percent of the Common Stock;
(b) each director and nominee for director; (c) each of the named executive
officers (as defined in Note (1) of the Summary Compensation Table, herein) not
listed as a director; and (d) all 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.
<TABLE>
<CAPTION>
Beneficially Deferral Percent
Name Owned Plans (1) Total of Class
- --------------------------------------------------------- -------------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
(a)
Interchange State Bank Capital Investment Plan
Park 80 West/Plaza Two
Saddle Brook, NJ 07663. . . . . . . . . . . . . . . 286,656 286,656 4.0 %
First Union Corporation
One First Union Center
Charlotte, NC 28288. . . . . . . . . . . . . . . . . 464,401 (2) 464,401 6.4
(b)
Anthony S. Abbate. . . . . . . . . . . . . . . . . . . 176,762 (3) 19,350 196,112 2.7
Anthony D. Andora. . . . . . . . . . . . . . . . . . . 172,530 172,530 2.4
Donald L. Correll . . . . . . . . . . . . . . . . . .. 5,822 5,822 *
Anthony R. Coscia. . . . . . . . . . . . . . . . . . . 6,950 6,950 *
John J. Eccleston. . . . . . . . . . . . . . . . . . . 82,423 82,423 1.1
David R. Ficca. . . . . . . . . . . . . . . . . . . . 84,057 84,057 1.2
Richard A. Gilsenan . . . . . . . . . . . . . . . . . 32,216 32,216 *
James E. Healey. . . . . . . . . . . . . . . . . . . . 22,050 22,050 *
Nicholas R. Marcalus. . . . . . . . . . . . . . . . . 2,000 2,000 *
Eleanore S. Nissley. . . . . . . . . . . . . . . . . . 45,660 45,660 *
Jeremiah F. O'Connor. . . . . . . . . . . . . . . . . 61,811 61,811 *
Robert P. Rittereiser. . . . . . . . . . . . . . . . . 27,168 27,168 *
Benjamin Rosenzweig. . . . . . . . . . . . . . . . . . 108,117 108,117 1.5
(c)
Patricia D. Arnold . . . . . . . . . . . . . . . . . . 4,317 (4) 11,572 15,889 *
Frank R. Giancola. . . . . . . . . . . . . . . . . . . 26,208 (5) 19,234 45,442 *
Anthony Labozzetta . . . . . . . . . . . . . . . . . . 5,825 (6) 5,483 11,308 *
Nicholas Verdi. . . . . . . . . . . . . . . . . . . . . 1,000 (7) - 1,000 *
(d)
Directors and executive officers as
group (17 persons). . . . . . . . . . . . . . . . . . 864,916 (8) 55,639 920,555 12.7
- ---------------------------------------------------------
<FN>
* Does not exceed one percent of class.
1. Shares held in deferred compensation accounts to which individuals have
sole power to vote but no investment powers.
2. Includes beneficial ownership of 369,847 shares to which First Union
Corporation has sole power to vote and 94,554 for which it has shared power
to vote. First Union Corporation has sole investment power for 361,978
shares and shared investment power for 94,554 shares.
3. Includes beneficial ownership of 29,161 shares which may be acquired upon
the exercise of stock options exercisable within 60 days.
4. Includes beneficial ownership of 2,325 shares which may be acquired upon
the exercise of stock options exercisable within 60 days.
5. Includes beneficial ownership of 16,465 shares which may be acquired upon
the exercise of stock options exercisable within 60 days.
6. Includes beneficial ownership of 2,250 shares which may be acquired upon
the exercise of stock options exercisable within 60 days.
7. Nicholas Verdi joined the Company in October 1998 as Senior Vice President.
8. Includes beneficial ownership of 50,201 shares which may be acquired upon
the exercise of stock options exercisable within 60 days, awarded under an
employee incentive compensation plan.
</FN>
</TABLE>
5
<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, 1998,
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 Messrs.
Andora, Correll, Coscia, Ficca, Marcalus, O'Connor, Rosenzweig and Labozzetta of
one Form 4 each. Mr. Gilsenan was late in filing Form 3 and Mrs. Arnold and
Messrs. Abbate, Giancola and Labozzetta filed Forms 5 late due to delays with
respect to shares allocated to their accounts in the Capital Investment Plan
("401(k)") caused by administrative delays.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-term Compensation
------------------------------------------------------------------
Other Restricted All Other
Name and Principal Annual Stock Options Compensation
Position (1) Year Salary($) Bonus($) Compensation($) Awards($)(3) (No. of Shares) ($) (2)
- ------------------------------- ----- --------- ---------- ----------------- -------------- ---------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Anthony S. Abbate . . . . . . . 1998 315,000 99,225 - 119,700 11,500 61,309
President and CEO 1997 300,000 86,250 - 112,500 12,000 49,581
1996 287,000 61,700 3,687 80,211 (4) - 53,823
Anthony Labozzetta . . . . . . 1998 120,000 37,800 - 27,000 4,000 4,066
Executive Vice President and 1997 107,675 33,263 11,080 23,135 4,500 3,657
Chief Financial Officer 1996 94,135 12,825 - - 1,575 2,406
Frank R. Giancola . . . . . . . 1998 127,500 40,163 - 6,375 4,000 4,997
Senior Vice President 1997 125,000 35,937 463 8,965 4,500 4,464
1996 120,000 24,000 - 9,588 - 4,314
Richard N. Latrenta . . . . . . 1998 109,981 33,250 - - 108,846
Senior Vice President 1997 127,000 36,512 - 21,800 4,500 4,524
1996 122,000 24,400 - 15,252 - 4,374
Patricia D. Arnold . . . . . . 1998 106,667 34,650 - 18,700 4,000 4,187
Senior Vice President 1997 91,862 17,238 3,330 6,104 4,500 3,040
- ---------------------------
<FN>
(1)Includes the President and CEO and all other executive officers whose total
annual salary and bonus exceeded $100,000 in 1997.
(2)Represents payments as shown below:
</FN>
</TABLE>
<TABLE>
<CAPTION>
Year Abbate Labozzetta Giancola Latrenta Arnold
------- ----------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Amounts contributed to 401(k) plan 1998 5,433 3,551 4,216 3,168 3,514
1997 4,800 3,230 3,750 3,810 2,756
1996 4,500 2,201 3,600 3,660 -
Value of life insurance premium paid in 1998 4,500 515 781 678 673
respect to coverage in excess of 1997 3,150 427 714 714 284
$50,000 1996 3,150 205 714 714 -
Contribution to life insurance 1998 - (6) - - - -
policy/annuity contract 1997 10,000 - - - -
1996 10,000 - - - -
Premium on disability policy 1998 7,614 - - - -
1997 7,287 - - - -
1996 6,963 - - - -
Contribution to Supplemental Executives'1998 43,762 (6) - - - -
Retirement Plan 1997 24,344 - - - -
1996 29,210 (5) - - - -
Severance 1998 - - - 105,000 (7) -
- -------------------------------------
<FN>
(3) The unvested restricted stock awards granted, to date, (adjusted for the
effects of a 5% stock dividend issued in 1996 and 3 for 2 stock splits
granted in both 1997 and 1998), totaled 1,436, 25,803, 2,861 and 2,854 for
Mrs. Arnold and Messrs. Abbate, Labozzetta and Giancola, respectively. The
value of such awards at December 31, 1998, were $23,335, $419,299, $46,491
and $46,378, respectively. The value of these shares at the date of grant
is reflected in the table above. The awards for Mrs. Arnold and Messrs.
Abbate, Labozzetta, and Giancola vest in three years following the date of
grant provided they do not terminate their employment during that period.
Mr. Latrenta forfeited 3,641 shares upon the termination of his employment.
Dividends will be paid on all restricted stock awards.
(4) The 1996 restricted stock awards for Mr. Abbate includes $22,804
attributable to an adjustment to correctly reflect his achievement under
the 1995 incentive plan.
(5) The 1996 contribution to the Supplemental Executives' Retirement Plan for
Mr. Abbate includes adjustments of $3,420 and $4,381 for 1994, and 1995,
respectively, attributable to the 401(k) portion of the Plan.
(6) In 1998, the Board of Directors amended the Supplemental Executives'
Retirement Plan to provide Mr. Abbate with the retirement benefits he is
entitled to as a member of the Board of Directors. The 1998 contribution to
the Supplemental Executives' Retirement Plan includes the costs associated
with the life insurance policy.
(7) Effective October 1, 1998, Mr. Latrenta's employment with the Company was
terminated. Severance includes salary totaling $86,962, benefits totaling
$2,538 and the value of his automobile totaling $15,500.
</FN>
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Stock Option Grants in Last Fiscal Year *
The following table sets forth certain information concerning grants of
stock options awarded to the named executive officers during the year ended
December 31, 1998. All options granted during the year were incentive stock
options:
Potential Realized Value
Number of % of Total at Assumed Annual Rates
Securities Options of Stock Price Appreciation
Underlying Granted to Exercise or For Option Term (3)
Options Employees in Base Price Expiration ------------------------------
Name Granted (1) Fiscal Year ($/Sh) (1) Date (2) 5% 10%
- --------------------------- -------------- ----------------- --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Anthony S. Abbate 11,500 20.1% $17.00 2/25/2009 $318,449 $507,077
Anthony Labozzetta 4,000 7.0 17.00 2/25/2009 110,765 176,374
Patricia Arnold 4,000 7.0 17.00 2/25/2009 110,765 176,374
Frank R. Giancola 4,000 7.0 17.00 2/25/2009 110,765 176,374
- ---------------------------
<FN>
* The grant of stock options presented in this table was made in early 1999
based upon 1998 performance criteria.
(1) The exercise price was based on the closing price of a share of the
Company's stock on the date of grant as reported on the American Stock
Exchange.
(2) Options are exercisable starting one year from the date of grant and become
vested 1/3 each year from the grant date. Options expire if not exercised
within 10 years of grant date.
(3) Pre-tax gain. The dollar amounts under these columns are the result of
calculations at the 5% and 10% rates set by the Securities and Exchange
Commission in the proxy disclosure rules and, therefore, are not intended
to forecast possible future appreciation, if any, of the Company's stock
price. The Company's per share stock price would be $27.69 and $44.09 if
increased 5% and 10%, respectively, compounded annually over the option
term.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year and Year End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Year End In-the-Money Options
No. Shares --------------------------------- at Year-end (3)
Acquired on Value Shares Shares ------------------------------
Name Exercise Realized (2) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------- ---------------- ------------- ----------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Anthony S. Abbate 22,318 $257,550 25,161 12,000 $227,707 -
Anthony Labozzetta 1,575 12,427 750 6,787 188 $6,584
Patricia D. Arnold 994 8,140 825 5,287 6,509 6,209
Frank R. Giancola 6,500 75,010 14,965 4,500 146,813 -
Richard N. Latrenta (1) 17,825 189,657 - - - -
- -----------------------------
<FN>
(1) 7,638 option shares were forfeited by Mr. Latrenta upon termination of
employment.
(2) Pre-tax gain. Amounts shown represent the difference between the stock
option grant price and the market value of the stock on the date of
exercise.
(3) Pre-tax gain. Value of unexercised in-the-money options based on the
December 31, 1998 closing price of $16.25 as reported on the American Stock
Exchange.
</FN>
</TABLE>
PENSION PLAN AND SUPPLEMENTAL EXECUTIVES' RETIREMENT PLAN
The Company, through its subsidiary bank, maintains a non-contributory
defined benefit pension plan covering all eligible employees including Mrs.
Arnold, Messrs. Abbate, Giancola, Labozzetta, Latrenta and Verdi. 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 (the "SERP"), 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. In 1998, the Company amended the
Plan to include the director related retirement benefits relating to Mr.
Abbate's membership in the Board of Directors. Benefits under the SERP are paid
from the general assets of the Company.
7
<PAGE>
The following table shows the annual benefits payable based on a range of
average compensation (comprised solely of base salary) and years of future
service at normal retirement date.
<TABLE>
<CAPTION>
Pension Plan
5-Year Years of Service at Normal Retirement Date
Average --------------------------------------------------------------------------
Compensation 5 10 20 30 35
--------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 100,000 $ 5,849 $11,697 $ 23,394 $ 35,091 $ 40,940
150,000 9,599 19,197 38,394 57,591 67,190
200,000 13,349 26,697 53,394 80,091 93,440
250,000 17,099 34,197 68,394 102,591 119,690
300,000 20,849 41,697 83,394 125,091 145,940
400,000 28,349 56,697 113,394 170,091 198,440
- -------------------------
<FN>
Footnotes:
1. This Plan was effective January 1, 1993.
2. Benefits calculated are based on average compensation and total years of
credited service at normal retirement date (up to a maximum of 35 years)
from the later of (a) January 1, 1993 or (b) date of hire. The benefits
above are inclusive of both benefits from the qualified defined benefit
plan and from the defined benefit portion of the supplemental plan.
Currently, the supplemental plan only covers Mr. Abbate.
3. Average compensation is the average of base salary over the five (5)
consecutive calendar years producing the highest average.
4. The chart reflects a Social Security integration level based on the average
age of the executive officer group, which was 45 years as of December 31,
1998.
5. Annual benefit is payable as a life annuity which is the normal form of
retirement benefit for non-married participants. For married participants,
the normal form of benefit is an actuarial equivalent joint and 50%
survivor annuity.
6. At December 31, 1998, the estimated credited years of service for purposes
of computing the retirement benefits under the Pension Plan and the SERP
for the named executive officers are as follows: Mr. Abbate - 6 years; Mr.
Labozzetta - 3 years; Mr. Giancola - 6 years; Mr. Latrenta - 6 years; and
Mrs. Arnold - 6 years.
</FN>
</TABLE>
The Company also maintains a Capital Investment Plan ("401(k)") covering
all eligible employees. Retirement income is based on the value of each
participant's account balance and is paid upon retirement, termination of
employment, disability or death. The SERP also supplements the retirement
benefits payable to certain participants under the 401(k). At present, only Mr.
Abbate participates in the SERP. These benefits are intended to provide
participants with an amount (plus earnings) that the Company would have
contributed under the 401(k) as matching employer contributions and for fixed
employer contributions (in excess of the amounts the Company actually
contributed) but for certain limitations imposed by the Internal Revenue Code
under the 401(k). The benefits under the SERP with respect to the 401(k) are to
be paid in lump sum in cash at the same time as the distribution of a
participant's account balance is made under the 401(k).
Compensation/Stock Option Committee Report on Executive Compensation
The Compensation/Stock Option Committee is responsible for setting
executive compensation and administering the Company's executive compensation
programs and plans. The Committee reports regularly to the Board of Directors.
During 1998, the Committee consisted of seven Directors who were not employees
of the Company, and also, therefore, were not eligible to participate in such
programs and plans.
Compensation Strategy
The objectives of this Committee 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 yield, and
the long-term best interests of the organization. Compensation programs for
executives are designed to 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
8
<PAGE>
prepared by outside consultants focusing on compensation levels of the
aforementioned peer group 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 established based on the achievement of corporate
financial targets and individual performance. The Stock Option and Incentive
Plan, approved by stockholders in 1998, is intended to function as the basis for
fostering alignment of executive compensation with the interests of
stockholders.
The policies with respect to each of these compensation elements as well as
the basis for determining the compensation level 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 by the Committee annually 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 an incentive plan designed to reward key
management employees for achievement of specific financial, individual and
business results for the year. The specific financial targets are primarily
based upon (i) the year-to-year increase in the Company's net after-tax earnings
and (ii) achievement of target return on equity. The targeted goal is
established annually through the budgeting process which is reviewed and
approved by the 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 1998 (paid in 1999)
reflects the achievement in excess of 100 percent of the financial targets set
in 1998. The Board reserves the right to award discretionary bonus awards in the
event the financial target is either not met or is exceeded. No discretionary
bonuses were paid in 1998. 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 various
predetermined strategic objectives.
A portion of the incentive compensation awarded to executive management is
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, 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 and Incentive Plan
The Stock Option and Incentive Plan of 1997 (the "Plan") approved by
stockholders, 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
9
<PAGE>
on a discretionary basis 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 Common Stock occurs over a specified
number of years.
The Plan also provides for the issuance of incentive stock awards as
determined by the Board of Directors of the Company. Certain key executives may
be awarded incentive compensation in the form of 3-year restricted stock, which
is forfeitable upon termination of employment during that time period. Key
employees may also use their cash bonus to purchase two-year restricted stock at
a twenty-five percent discount. This stock is forfeitable should they terminate
their employment during that time period. Incentive stock awards are an
important factor in attracting and motivating key executives who will dedicate
their maximum efforts toward the advancement of the Company.
A total of 637,875 shares were made available for option and incentive
awards under the Plan of which 318,650 shares have been granted to date. Options
granted in 1998 and those granted in 1999 as a result of 1998's performance are
included in the summary compensation table.
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 Management Incentive Plan, the Stock Option Plan, and the staff benefit
programs as outlined elsewhere in this Proxy Statement. Mr. Abbate also
participates in the Supplemental Executives' Retirement Plan. Mr. Abbate
receives no compensation for his duties as a director. 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 third quartile of the 1998 salary range for his position and his annual
cash bonus for 1998 performance was based upon achieving 113.0% of targeted
financial 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
Donald L. Correll
David R. Ficca
Nicholas R. Marcalus
Jeremiah F. O'Connor,
Robert P. Rittereiser
Benjamin Rosenzweig
10
<PAGE>
FIVE-YEAR PERFORMANCE COMPARISON
The graph below provides an indicator of cumulative total stockholder
returns for the Company as compared with a Peer Group (1) and the AMEX Market
Value Index.
<TABLE>
<CAPTION>
Cummulative Total Return
__________________________________________________
12/93 12/94 12/95 12/96 12/97 12/98
_____ _____ _____ _____ _____ _____
<S> <C> <C> <C> <C> <C>
INTERCHANGE FINANCIAL SERVICES CORPORATION 100 103 152 194 356 301
PEER GROUP 100 109 150 191 314 343
AMEX MARKET VALUE 100 91 115 122 148 151
Assumes $100 invested on December 31, 1993, in Interchange Common Stock, the
AMEX Market Value Index and Peer Group Common Stock.
Total stockholder returns assumes reinvestment of dividends.
<FN>
Footnote
1. The Peer Group is comprised of 20 banking institutions in Connecticut, New
Jersey and New York with asset size of at least $250 million, but less than
$1 billion, as of September 30, 1998 the most recently available
information as reported in the SNL Quarterly Bank Digest of December 1998.
The banking institutions included are: NMBT Corp. and New England Community
Bancorp, (CT); Broad National Bancorp, Center Bancorp Inc., Greater
Community Bancorp, Prestige Financial Corp., Ramapo Financial Corporation,
Vista Bancorp and Yardville National Bancorp, (NJ); Arrow Financial
Corporation, CNB Financial Corp., FNB Rochester Corp., First of Long Island
Corporation, Iroquis Bancorp Inc., Letchworth Independent BS Corp., Premier
National Bancorp, Inc., State Bancorp, Inc., Sterling Bancorp, Suffolk
Bancorp and Tompkins County Trust Company (NY).
</FN>
</TABLE>
11
<PAGE>
TRANSACTIONS WITH MANAGEMENT
Officers and directors of the Company and their affiliated companies are
customers of and are engaged in transactions with the Company and its
subsidiaries in the ordinary course of business on substantially the same terms
(including interest rates on loans, collateral and collectibility
considerations) as those prevailing at the time for comparable transactions with
other borrowers and suppliers.
The following director is engaged in transactions with the Company and is
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. During 1998, Andora, Palmisano & Geaney
received fees for legal services of $331,000, including $95,000 paid pursuant to
retainer contracts and $157,000 representing fees for real estate matters, the
bulk of which was reimbursed to the Bank by its customers.
2. Ratification of Appointment of Independent Auditors
(Item 2 on Proxy Card)
Deloitte & Touche LLP served as the Company's independent auditors for the
year ended, December 31,1998. The Board of Directors, upon recommendation of the
Audit Committee, has again reappointed the firm of Deloitte & Touche LLP as the
independent auditors to examine the Company's financial statements for the year
1999. 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.
3. 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 Annual Meeting
should be presented, the persons named in 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 Annual Meeting should be
presented, the named proxies will vote against consideration thereof or action
thereon.
Submission of Stockholder Proposals
Proposals intended for inclusion in the proxy statement for next year's
annual meeting of shareholders must be in writing and must be received by the
Secretary of the Company at Park 80 West/Plaza Two, Saddle Brook, NJ 07663, not
later than December 24, 1999. To be considered for inclusion in the Company's
proxy statement and form of proxy for the forthcoming annual meeting, a
stockholder proposal must be submitted on a timely basis and the proposal and
proponent thereof must meet the requirements established by the Securities and
Exchange Commission for stockholders proposal.
Other Information
Consolidated financial statements of the Company and its subsidiaries are
included in the Company's Annual Report to Stockholders for the year 1998.
Additional copies of the Annual Report to Stockholders and the Company's Annual
Report on Form 10-K as filed with the Securities and Exchange Commission may be
obtained without charge from the Secretary of the Company, 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: March 24, 1999
12
<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 Jeremiah F. O'Connor, Benjamin Rosenzweig
and Robert P. Rittereiser as proxies, 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 March 22, 1999, at the annual
meeting of stockholders to be held April 22, 1999, 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 R. Coscia, John J. Eccleston,
Richard A.Gilsenan and Eleanore S. Nissley
(INSTRUCTION: To withhold authority to vote for an individual nominee write that
nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
(Back)
(Continued from other side)
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
|_| FOR |_| AGAINST |_| ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
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 Proposals 1 and 2.
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: _____________________________________,1999
Signature________________________________________
Signature if held jointly _______________________
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
