SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GRANGE NATIONAL BANC CORP.
------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
N/A
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
/X/ No Fee Required
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
GRANGE NATIONAL BANC CORP.
Main and Bee Streets
Laceyville, Pennsylvania 18623
Dear Shareholders:
The Annual Meeting of Shareholders of Grange National Banc Corp. will be
held at 10:00 a.m. on May 5, 2000 at the Pink Apple Restaurant, 651 SR 6W,
Tunkhannock, Pennsylvania.
The items to be voted on at this meeting are listed in the attached proxy
statement.
Enclosed is a form of proxy for your use. We urge you to vote by signing the
proxy, even though you plan to attend the meeting, and mailing it to us in the
accompanying stamped envelope. Be sure it is signed exactly as the name or names
appear on the proxy.
A copy of our Annual Report for 1999 is enclosed.
Sincerely yours,
Robert C. Wheeler
Chairman of the Board
April 5, 2000
Enclosures
<PAGE>
GRANGE NATIONAL BANC CORP.
Main and Bee Streets
Laceyville, Pennsylvania 18623
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held May 5, 2000
TO OUR SHAREHOLDERS;
Notice is hereby given that the annual meeting of shareholders of GRANGE
NATIONAL BANC CORP. ("Company") will be held on May 5, 2000 at 10 a.m.
(prevailing time), at the Pink Apple Restaurant, 651 SR 6 W, Tunkhannock,
Pennsylvania 18657, for the following purposes:
1. To elect three Class 3 Directors named herein to serve for a
three-year term as Directors of the Company, as more fully described
in the accompanying Proxy Statement;
2. To transact such other business as may properly come before this
meeting or any postponement or adjournment thereof.
The Board of Directors has fixed March 31, 2000 as the record date for the
determination of shareholders entitled to vote at the annual meeting. Only
shareholders of record at the close of business on that date will be entitled to
notice of, and to vote at, the annual meeting.
If the annual meeting is adjourned for one or more periods aggregating at
least 15 days because of the absence of a quorum, those shareholders entitled to
vote who attend the reconvened annual meeting, if less than a quorum as
determined under applicable law, shall nevertheless constitute a quorum for the
purpose of acting upon any matter set forth in this Notice of Annual Meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER
OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED TO SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY. A SELF- ADDRESSED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
April 5, 2000 By Order of the Board of Directors,
Robert C. Wheeler, Chairman of the Board
<PAGE>
GRANGE NATIONAL BANC CORP.
Main and Bee Streets
Laceyville, Pennsylvania 18623
PROXY STATEMENT
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Grange National Banc Corp. ("Company") for use at the annual
meeting ("Annual Meeting") of shareholders to be held on May 5, 2000 at 10:00
a.m. (prevailing time) at the Pink Apple Restaurant, 651 SR 6 W, Tunkhannock,
Pennsylvania 18657 and at any postponement or adjournment thereof. The
approximate date on which this Proxy Statement and the accompanying form of
proxy will first be sent or given to shareholders is April 5, 2000.
Sending in a signed proxy will not affect the shareholders' right to attend
the meeting and vote in person since the proxy is revocable. Any shareholder
giving a proxy has the power to revoke it by, among other methods, giving
written notice to the Secretary of the Company at any time before the proxy is
exercised.
The expense of the proxy solicitation will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone, telegraph or teletype by directors, officers or employees of the
Company and its bank subsidiary, Grange National Bank ("Bank"), without
additional compensation. Upon request by record holders of the Company's Common
Stock, par value $5.00 per share ("Common Stock"), who are brokers, dealers,
banks or voting trustees, or their nominees, the Company is required to pay the
reasonable expenses incurred by such record holders for mailing proxy material
and annual shareholder reports to any beneficial owners of Common Stock.
A form of proxy is enclosed. If properly executed and received in time for
voting, and not revoked, the enclosed proxy will be voted as indicated in
accordance with the instructions thereon. If no directions to the contrary are
indicated, the persons named in the enclosed proxy will vote all shares of the
Company's Common Stock for election of all nominees for Class 3 Directors
hereinafter named.
The enclosed confers discretionary authority to vote with respect to any
and all of the following matters that may come before the meeting: (I) matters
which the Company does not know that are presented at the meeting; (ii) approval
of the minutes of a prior meeting of shareholders, if such approval does not
amount to ratification of the action taken at the meeting; (iii) the election of
any person to any office for which a bona fide nominee is unable to serve or for
good cause will not serve; (iv) any proposal omitted from this Proxy Statement
and form of proxy pursuant to Rules 14a-8 or 14a-9 under the Securities Exchange
Act of 1934, as amended; and (v) matters incident to the conduct of the meeting.
In connection with such matters, the persons named in the enclosed form of proxy
will vote in accordance with their best judgment.
The Company is not aware of any matters which will be brought before the
Annual Meeting (other than procedural matters) which are not referred to in the
enclosed notice of the Annual Meeting.
The Board of Directors has fixed March 31, 2000 as the record date ("Record
Date") for the determination of shareholders entitled to vote at the Annual
Meeting. Only shareholders of record on the Record Date are entitled to notice
of, and to vote at, the Annual Meeting.
The Company had 783,807 shares of Common Stock outstanding on the Record
Date. The presence, in person or by proxy, of shareholders entitled to cast a
majority of the votes which all shareholders are entitled to cast, constitutes a
quorum. All shares of the Company's Common Stock present in person or
represented by proxy and entitled to vote at the Annual Meeting, no matter how
they are voted or whether they abstain from voting will be counted in
determining the presence of a quorum. If the Annual Meeting is adjourned because
of the absence of a quorum, those shareholders entitled to vote who attended the
adjourned meeting, although constituting less than a quorum as provided herein,
shall nevertheless constitute a quorum for the purpose of electing of directors.
If the Annual Meeting is adjourned for one or more periods aggregating at least
15 days because of the absence of a quorum, those shareholders are entitled to
vote who attend the reconvened Annual Meeting, if less than a quorum as
determined under applicable law, shall nevertheless constitute a quorum for the
purpose of acting upon any matter set forth in the Notice of Annual Meeting.
Each share of Common Stock outstanding is entitled to one vote on each matter
which may be brought before the Annual Meeting except for certain restrictions
(hereinafter summarized).
<PAGE>
The election of directors will be determined by a plurality vote and the
three nominees receiving the most "for" votes will be elected.
Under the Pennsylvania Business Corporation Law, an abstention, withholding
of authority to vote or broker non-vote will not have the same legal effect as
an "against" vote and will not be counted in determining whether the proposal
has received the required shareholder vote.
Article 8 of the Company's Amended and Restated Articles of Incorporation,
as amended, restricts the rights of a Person (as hereafter defined) to cast (or
execute written consents with respect to) more than 10% of the total votes which
all shareholders are entitled to cast at a meeting, unless authorized to do so
by the Board of Directors and subject to such conditions as the Board of
Directors may impose. The term "Person" includes not only individuals and
entities, but also groups of individuals and entities who act together for the
purpose of acquiring, holding, disposing of or voting Common Stock.
The casting of votes by a Person as a proxy holder for other shareholders
is not counted in computing the 10% limitation to the extent that the proxies so
voted were revocable and were secured from other shareholders who are not
members of a group which included such Person. Giving a revocable proxy to a
Person does not in itself cause the shareholder giving the proxy to be a member
of a group which includes such Person. Article 8 provides that the determination
by the Board of Directors of the existence or membership of a group, and of a
number of votes any Person or each member of a group is entitled to cast, is
final and conclusive absent clear and convincing evidence of bad faith.
In the event of a violation of Article 8 and in addition to other remedies
afforded the Company, the judges of election cannot count votes cast in
violation of Article 8 and the Company or its nominees have an option to acquire
from the violator shares of Common Stock in excess of the 10% limit at prices
which would in certain situations be lower than the current market price of such
shares.
The foregoing is a brief summary of Article 8 and is qualified and
amplified in all respects by the exact provisions of the Amended and Restated
Articles of Incorporation, as amended, a copy of which can be obtained in the
same manner as the Company's Annual Report on Form 10-KSB for 1999. See "ANNUAL
REPORT TO SHAREHOLDERS AND FORM 10-KSB".
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 15, 2000, the beneficial
ownership of the Company's Common Stock by each director and nominee for
director of the Company, by each executive officer named in the Summary
Compensation Table, and by the directors, nominees for directors and executive
officers of the Company as a group. To the Company's knowledge, there is no
other person who beneficially owned 5% or more of the Company's outstanding
Common Stock as of March 15, 2000. Unless otherwise specified, all persons
listed below have sole voting and investment power with respect to their shares.
Amount of Common
Name of Individual or Stock Beneficially Percent of
Identity of Group Owned(a) Class(a)
- ------------------------------------------------------------
Brian R. Ace 13,303(b) 1.68%
Thomas C. Burns 12,079(b) 1.53%
W. Kenneth Price 20,753(b)(g) 2.62%
Sally A. Steele 15,213(b) 1.92%
Edward A. Coach 2,628(c) 0.33%
-2-
<PAGE>
John W. Purtell 52,911(d) 6.70%
Box 70
LeRaysville, PA 18829
Robert C. Wheeler 12,716(e) 1.61%
Thomas A. McCullough 38,492(f) 4.76%
Russell G. Newell 22,249 2.84%
Directors, Nominees, and 224,500(h) 25.64%
Executive Officers as a
Group (11 persons)
- ----------
(a) The securities "beneficially owned" by an individual are determined as of
the Record Date in accordance with the definition of "beneficial ownership"
set forth in the regulations of the Securities and Exchange Commission.
Accordingly, they may include securities owned by or for, among others, the
spouse and minor children of the individual and any other relative who has
the same home as such individual, as well as other securities as to which
the individual has or shares voting or investment power or has the right to
acquire within 60 days after the Record Date. Beneficial ownership may be
disclaimed as to certain of the securities.
(b) Includes 8,132 shares which may be acquired within 60 days upon the
exercise of options granted under the Company's Non-Employee Director Stock
Option Plan and the Company's Incentive Stock Option and Nonstatutory Stock
Option Plan.
(c) Includes 2,106 shares which may be acquired within 60 days upon the
exercise of options granted under the Company's Non-Employee Director Stock
Option Plan and the Company's Incentive Stock Option and Nonstatutory Stock
Option Plan.
(d) Includes 5,943 shares which may be acquired within 60 days upon the
exercise of options granted under the Company's Non-Employee Director Stock
Option Plan and the Company's Incentive Stock Option and Nonstatutory Stock
Option Plan.
(e) Includes 7,363 shares which may be acquired within 60 days upon the
exercise of options granted under the Company's Non-Employee Director Stock
Option Plan and the Company's Incentive Stock Option and Nonstatutory Stock
Option Plan.
(f) Includes 467 shares held by Mr. McCullough as a custodian for his children,
220 shares owned jointly with other relatives, 1,300 shares held in street
name and 24,407 shares which may be acquired within 60 days upon the
exercise of options granted under the Company's Employee Stock Option Plan.
(g) Includes 1,661 shares owned individually by Mr. Price's spouse.
(h) Includes 91,740 shares which may be acquired within 60 days upon exercise
of options.
ELECTION OF DIRECTORS
As permitted under Pennsylvania law, the Articles of Incorporation of the
Company provide for staggering the terms of office of the Company's directors by
dividing the Board of Directors into three classes, with members of each class
serving three-year terms. The Company's Articles of Incorporation further
provide that the Board of Directors shall consist of not fewer than five nor
more than 25 directors, with the exact number fixed by the Board of Directors.
The Board of Directors currently consists of nine members.
-3-
<PAGE>
At the Annual Meeting, the shareholders will elect three Class 3 Directors
to serve for a term of three years and until their successors are elected and
qualified.
The Board of Directors has designated the persons listed below to be
nominees for election as Class 3 Directors. The nominees are being nominated to
serve until the end of their terms and until their successors are elected and
qualified. The Company has no reason to believe that any of the nominees will be
unavailable for election; however, should any nominee become unavailable for any
reason, the Board of Directors may designate a substitute nominee. The proxy
agents intend (unless authority has been withheld) to vote for the election of
the Company's nominees.
A vote in favor of the three Class 3 directors nominated by the Board of
Directors will also be deemed to be a vote in favor of having three Class 3
directors.
The Bylaws of the Company require that nominations for Directors to be
elected at an annual meeting of shareholders, except those made by management of
the Company, must be submitted to the Secretary of the Company in writing not
later than the close of business on the 20th day immediately preceding the date
of the meeting. Such notification shall contain the following information to the
extent known to the notifying shareholder: (a) name and address of each proposed
nominee; (b) the principal occupation of each proposed nominee; (c) the total
number of shares of capital stock of the Company that will be voted for each
proposed nominee; (d) the name and residence address of the notifying
shareholder; and (e) the number of shares of capital stock of the Company owned
by the notifying shareholder. Nominations not made in accordance herewith may,
in such officer's discretion, be disregarded by the presiding officer of the
meeting, and upon the presiding officer's instruction, the vote talliers may
disregard all votes cast for each nominee. In the event the same person is
nominated by more than one shareholder, the nomination shall be honored, and all
shares of capital stock of the Company shall be counted if at least one
nomination for that person complies with this provision.
The Company's Bylaws provide that every Director must be a shareholder of
the Company and must own in the Director's name the number of shares (if any)
required by law in order to qualify as such Director.
-4-
<PAGE>
Information as to Directors and Nominees
The following table contains certain information with respect to the
nominees for Class 3 Directors.
<TABLE>
<CAPTION>
Year First Elected
or Appointed
Principal Occupation Director of the
Name/Age as of Record Date During Last 5 Years Company or Bank
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Robert C. Wheeler, Age 71 Retired; Chief Executive Officer 1998
of the Bank and the Company until
1990
Thomas A. McCullough, Age 53 President and Chief Executive Officer 1990
of the Bank and the Company.
Edward A. Coach, Age 51 Certified Public Accountant 1997
</TABLE>
The following table contains certain information with respect to the
nominees for Class 1 Directors whose term expires in the year 2001.
<TABLE>
<CAPTION>
Year First Elected
or Appointed
Principal Occupation Director of the
Name/Age as of Record Date During Last 5 Years Company or Bank
- --------------------------------------------------------------------------------------------
<S> <C> <C>
W. Kenneth Price, Age 59 Co-owner of Ken Mar Home 1992
Furnishings
Russell G. Newell, Age 62 Petroleum Business Owner 1999
Sally A. Steele, Age 44 Attorney 1991
</TABLE>
The following table contains certain information with respect to the
nominees for Class 2 Directors whose terms of office expire in 2002.
<TABLE>
<CAPTION>
Year First Elected
or Appointed
Principal Occupation Director of the
Name/Age as of Record Date During Last 5 Years Company or Bank
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas C. Burns, Age 65 Retired; Dentist 1972
John W. Purtell, Age 70 President, S.F. Williams Inc., 1969
automobile dealership.
Brian R. Ace, Age 45 Owner of Laceyville Hardware Store 1992
</TABLE>
Board of Directors, Committees and Attendance at Meetings
During 1999, there were 21 meetings of the Board of Directors of the
Company and 25 meetings of the Board of Directors of the Bank. All Directors
except Thomas C. Burns and former Director, R. Levi Tyler (deceased) attended
more than 75% of the meetings of the Board of Directors and all Committee
members attended more than 75% of their meetings.
The Board has an Audit Committee consisting of Brian Ace, W. Kenneth Price,
Edward Coach and Robert C. Wheeler,
-5-
<PAGE>
which was formed in January 1994. Prior to the formation of the Audit Committee,
its function was performed by the Board of Directors as a whole. The purpose of
the Audit Committee is to review all recommendations made by the Company's
independent public accountants with respect to the accounting methods used and
the system of internal controls followed by the Company and to advise the Board
of Directors with respect thereto. The Audit Committee met once during 1999.
The Company has a Compensation Committee consisting of Sally A. Steele,
John W. Purtell, W. Kenneth Price, Thomas C. Burns and Thomas A. McCullough. The
Compensation Committee makes recommendations to the Board with respect to the
compensation of the officers and key employees, with the exception of Mr.
McCullough whose compensation is determined by the Board of Directors as a
whole. The Compensation Committee met one time during 1999.
The Company has a Nomination Committee for nomination of new directors,
consisting of W. Kenneth Price, Sally A. Steele and Robert C. Wheeler. The
Nominating Committee met once during 1999.
Board of Directors Fees
Members of the Board of Directors were compensated at the rate of $300.00
per meeting attended in 1999 and will be paid $315.00 per meeting attended in
2000. Non-employee Trust Committee members were paid $100 per meeting in 1999
and will be paid $100 per meeting in 2000.
Directors Stock Options
The Company has a Non-Employee Director Stock Option Plan pursuant to which
each Director of the Company on April 1, 1994 received an option to purchase
2,189 shares of Common Stock, another option on April 1, 1997 to purchase an
additional 2,189 shares of Common Stock, and pursuant to which each Director is
entitled on April 1, 2000 to receive an additional option to purchase 2,189
shares of Common Stock or such lower number as then available divided by the
number of persons eligible to receive options. In addition, each Non-Employee
Director received in 1996 a grant of an option to purchase 3,754 shares of
Common Stock under the Company's Incentive Stock Option and Nonstatutory Stock
Option Plan which was approved at the 1996 Annual Meeting of shareholders.
Directors Deferred Income (DDI) Plan
Directors are given the option of deferring their fees or accepting a cash
payment. A non-qualified Directors Deferred Income (DDI) Plan has been
implemented for those Directors who wish to participate in the Plan. Under the
provisions of the DDI Plan, each Director is provided with the opportunity to
defer all or a portion of his fees earned as a Director in return for a future
payment by the Company to the Director of deferred fees plus interest. Under the
provisions of the DDI Plan, the Company and each participating Director executes
an agreement whereby the Director agrees to defer all or a portion of his fees
for a five-year period. The agreement provides each participating Director with
a deferred income payout (payable for a ten-year period) beginning at age 65 (or
at the end of the five-year deferral period if the Director is age 60 or older
at the beginning of the five-year deferral period). The agreement also provides
each participating Director with a pre-payout death benefit, payable to the
Director's named beneficiary for a ten-year period, should a participating
Director die prior to the beginning of the deferred income payout. The DDI
agreement may be amended by mutual written consent of both the Director and the
Company, and the Company, upon written consent of the Director (or his
beneficiary, if applicable) may accelerate payment of benefits in a lump-sum
present-value payment. The DDI Plan is an unfunded plan, although the Company
has the right to acquire investments to informally and indirectly provide
funding for the future payments under the plan.
Directors' Performance Adjusted Plan
The Board of Directors has designed and implemented a Directors'
Performance Adjusted Plan which is designed to provide certain compensation to
members of the Board of Directors. The plan establishes certain annual target
goals of Return on Assets ("ROA") and Return on Equity ("ROE") for the Bank and
increases compensation to participating Directors based on the level of ROA and
ROE reached by the Bank during the year. Target levels on ROA and ROE will be
determined by the Board of Directors on an annual basis. Under the plan
directors are eligible to receive annual fees ranging from $125 to $1,350 per
director. For the Bank's performance in 1999,
-6-
<PAGE>
each Director received $969.88 under this plan.
Executive Compensation
The following table sets forth all cash compensation paid by the Company
and the Bank for services rendered in all capacities to the Company and the Bank
during the fiscal years ended December 31, 1999, 1998 and 1997 to the President
and Chief Executive Officer of the Company and the Bank, the only executive
officer of the Company and the Bank whose salary and bonus exceeded $100,000
during the fiscal year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Securities
Name and Underlying All Other
Principal Position Year Salary Bonus Options Compensation
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Thomas A. McCullough, 1999 $95,400 $48,265(1) 0 $20,043(4)
President and Chief 1998 $90,000 $33,442(2) 0 $18,538(4)
Executive Officer 1997 $79,070 $31,977(3) 0 $17,535(4)
</TABLE>
- ----------
(1) Represents bonus earned for 1999.
(2) Represents bonus earned for 1998.
(3) Represents bonus earned for 1997.
(4) Includes the Bank's 25% matching contribution and the Bank's optional
contribution to his 401(k )retirement plan of $1,692 and $8,160 for 1999,
$1,549 and $7,534 for 1998, and $1,355 and $6,727 for 1997. The Retirement
Plan is a benefit available to all employees as described in the Retirement
Plan below. This figure also includes $2,741 each year representing a
portion of the premium on a split-dollar life insurance policy on Mr.
McCullough's life. The Bank pays the annual premium until Mr. McCullough's
normal retirement. Upon termination or payment of a claim, the premiums paid
by the Bank will be refunded to the Bank and Mr. McCullough or his family
will receive the excess amount. Mr. McCullough also participates in the non-
qualified Directors Deferred Income (DDI) Plan described above which is
available to all Directors who wish to defer all or a portion of their
Directors fees. During 1999 Mr. McCullough elected to defer $7,450 in
Directors fees.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
And FY-End Options/SAR Values
(a) (b) (c) (d) (e)
Number of Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares FY-End(#) FY-End($)
Acquired on Exercisable/ Exercisable/
Name Exercise(#) Value Realized Unexercisable Unexercisable
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas A. McCullough 0 0 23,546/861 $682,582/$24,101
</TABLE>
-7-
<PAGE>
Retirement Plan
On November 22, 1995 the Board of Directors approved the implementation of
an Employee Stock Ownership Plan with 401(k) Provisions ("KSOP"), which replaced
the Simplified Employee Pension Plan ("SEP") which was the retirement plan
previously utilized by the Bank. The KSOP, which is a type of stock bonus plan,
is a plan of deferred compensation in which Company contributions are used to
provide participating employees with stock in Grange National Banc Corp. The
KSOP also provides that participants may make contributions to the Plan on a
before-tax basis, pursuant to provisions found under Section 401(k) of the
Internal Revenue Code. Participants may elect to defer up to 15% of their
compensation up to a maximum of $9,240. During 1999 the Company provided a
matching contribution of 25% of employee contributions up to 6% of total
compensation. The Company contributed $15,077 as matching contributions to
employee deferrals during 1999. The Company also made an optional contribution
to the plan of $83,343 during 1999 which represents 6% of gross salaries.
The Company maintains a plan providing supplemental income for certain
executive officers, including Thomas A. McCullough. The plan provides for the
payment of a fixed annual benefit commencing at age 62, or later at the election
of the Board of Directors and officer. As required by generally accepted
accounting principles, the Company recognized an expense of $31,964 in 1999 and
will recognize an expense of $37,365 in 2000 in connection with Mr. McCullough's
benefit.
Employment Agreement
The Company entered into an Employment Agreement on March 25, 1998 with
Thomas A. McCullough, the President and Chief Executive Officer of the Company
and the Bank. The Agreement provides for an initial term of three years expiring
in March, 2001, but the term is extended automatically for one additional year
on each anniversary date of the date of commencement of the initial term, unless
either the Company or Mr. McCullough gives contrary written notice to the other
before such anniversary date. Under the Agreement, Mr. McCullough will receive a
base annual salary as determined by the Board of Directors (but not less than
$90,000), an annual bonus in the discretion of the Board, director's fees, the
use of an automobile, and other employee benefits under the Company's benefit
plans. If Mr. McCullough's employment is terminated by the Company or him due to
Permanent Disability (as defined), by the Company without Cause (as defined), or
by Mr. McCullough by reason of Constructive Discharge (as defined), Mr.
McCullough shall be entitled to receive his base salary (except that any
payments shall be offset by any amounts paid to him under the Company's
disability program) and shall be entitled to group medical and other insurance
benefits until the end of the term of employment. If Mr. McCullough's employment
is terminated by the Company for Cause or by him for reasons other than
Constructive Discharge or Permanent Disability, he shall receive no payment
under the Agreement. In the event of the termination of Mr. McCullough's
employment after a Change in Control (as defined) of the Company, he shall be
entitled to receive an amount equal to three times the average aggregate annual
salary, bonus and director's fees paid to him by the Company during the three
calendar years preceding the taxable year in which the date of termination
occurred, and he shall be entitled to continued medical and other insurance
coverage for the three-year period following the termination. Mr. McCullough
shall continue to receive the benefit of the split-dollar insurance agreement
and the executive supplemental income plan described above. The Agreement also
provides for the non-disclosure by Mr. McCullough of confidential information of
the Company and contains his agreement not to compete with the Company during
the term of employment or any severance period.
Other Transactions
The Bank has had and expects to have in the future, loan and other banking
transactions in the ordinary course of business with many of its Directors,
executive officers and their associates. All extensions of credit to such
persons have been made in the ordinary course of business on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and in the opinion of the
management of the Bank, do not involve more than a normal risk of collectibility
or present other unfavorable features.
-8-
<PAGE>
Certain Filings
Section 16(a) of the Securities Exchange Act requires the Company's
directors, executive officers and persons who own more than 10% of a registered
class of the Company's equity securities, to file with the SEC initial reports
of beneficial ownership and reports as to changes in beneficial ownership. Such
persons are required to provide the Company with copies of all Section 16(a)
forms they file. Based solely on the review of the copies of such reports
furnished to the Company and representations that no other reports were
required, the Company notes that during 1999, directors and executive officers
filed all reports on time.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Daniel Kenia, P.C. acted as the Company's
independent accountant for the fiscal year ended December 31, 1999. A
representative of Daniel Kenia, P.C. is expected to be present at the Annual
Meeting and to have the opportunity to make a statement, if he desires to do so,
and is expected to be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Shareholder proposals regarding the 2001 Annual Meeting must be submitted
to the Company by December 1, 2000.
ANNUAL REPORT
This Proxy Statement is accompanied by the Annual Report to Shareholders of
the Company for the year ended December 31, 1999.
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 REQUIRED TO BE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WITHOUT CHARGE, EXCEPT FOR
EXHIBITS TO THE REPORT, BY SENDING A WRITTEN REQUEST THEREFOR TO:
Sally A. Steele, Secretary
Grange National Banc Corp.
Main and Bee Streets
P.O. Box 56
Laceyville, Pennsylvania 18623
By Order of the Board of Directors
Sally A. Steele, Secretary
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