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 Section 240.14a-11(c)
or Section 240.14a-12
PENNROCK FINANCIAL SERVICES CORP.
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(l),
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.
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 Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________
3) Filing Party:
________________________________________________
4) Date Filed:
________________________________________________
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 1995
TO THE SHAREHOLDERS OF PENNROCK FINANCIAL SERVICES CORP.:
NOTICE IS HEREBY GIVEN that, pursuant to the call of its
directors, the regular Annual Meeting of the shareholders of
PENNROCK FINANCIAL SERVICES CORP., will be held on Tuesday,
April 25, 1995 at 10:00 a.m. at Blue Ball National Bank,
Operations Center, 114 Ranck's Church Road, Blue Ball,
Pennsylvania, for the purpose of considering and voting upon the
following matters:
1. ELECTION OF DIRECTORS. To elect the three nominees
listed in the accompanying Proxy Statement.
2. OTHER BUSINESS. To consider such other business as may
properly be brought before the meeting and any
adjournments thereof.
Only those shareholders of record at the close of business
on March 17, 1995, shall be entitled to notice of and to vote at
the meeting.
It is requested that you promptly execute the enclosed proxy
and return it in the enclosed postpaid envelope. You are
cordially invited to attend the meeting. Your proxy is
revocable and may be withdrawn if you elect to attend the
meeting and wish to vote in person.
A copy of the Annual Report of PennRock Financial Services
Corp. is enclosed.
BY ORDER OF THE BOARD OF DIRECTORS
GLENN H. WEAVER
President
Enclosures
April 1, 1995
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE
MEETING. PLEASE PROMPTLY DATE, SIGN AND RETURN YOUR PROXY IN THE
ENVELOPE WHICH ACCOMPANIES THIS PROXY STATEMENT.
<PAGE>
PROXY STATEMENT
= = = = = = = = = = = = = = = = = = = =
Dated and to be Mailed April 1, 1995
= = = = = = = = = = = = = = = = = = = =
PENNROCK FINANCIAL SERVICES CORP.
1060 MAIN STREET
P.O. BOX 580
BLUE BALL, PENNSYLVANIA 17506
(717) 354-4541
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 25, 1995
TABLE OF CONTENTS
PAGE
GENERAL
Introduction
Date, Time and Place of Meeting
Shareholders Entitled to Vote
Purpose of Meeting
Solicitation of Proxies
Revocability and Voting of Proxies
Voting Shares and Principal Holders Thereof
Shareholder Proposals
Recommendations of the Board of Directors
INFORMATION CONCERNING ELECTION OF DIRECTORS
General Information
Information About Nominees and Continuing Directors
Meetings and Committees of the Board of Directors
Compensation of Directors
Executive Officers of PennRock Financial
Services Corp.
Executive Compensation and Related Matters
Transactions with Directors and Executive Officers
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
ADDITIONAL INFORMATION
OTHER MATTERS
<PAGE>
GENERAL
Introduction
On July 31, 1986, Blue Ball National Bank became a wholly-
owned subsidiary of PennRock Financial Services Corp., a
Pennsylvania business corporation organized for the purpose of
becoming a bank holding company. As of that date, the
shareholders of Blue Ball National Bank became shareholders of
PennRock Financial Services Corp. The meeting to which this
Proxy Statement relates will be the ninth Annual Meeting of the
shareholders of PennRock Financial Services Corp.
Date, Time and Place of Meeting
The regular Annual Meeting of the shareholders of PennRock
Financial Services Corp. will be held on Tuesday, April 25, 1995,
at 10:00 a.m. at Blue Ball National Bank, Operations Center, 114
Ranck's Church Road, Blue Ball, Pennsylvania.
Shareholders Entitled to Vote
Shareholders of record at the close of business on March 17,
1995, shall be entitled to vote at the meeting.
Purpose of Meeting
The shareholders will be asked to consider the following
matters at the meeting: (i) to elect three directors, and (ii)
to consider and vote upon such other business as may be properly
brought before the meeting and any adjournments thereof.
Solicitation of Proxies
This Proxy Statement is furnished in connection with the
solicitation of proxies, in the accompanying form, by the Board
of Directors of PennRock Financial Services Corp. for use at the
Annual Meeting of shareholders to be held at 10:00 a.m. on
Tuesday, April 25, 1995, and any adjournments thereof.
The expense of soliciting proxies will be borne by PennRock
Financial Services Corp. In addition to the use of the mails,
directors, officers and employees of PennRock Financial Services
Corp. and Blue Ball National Bank may, without additional
compensation, solicit proxies personally or by telephone.
Revocability and Voting of Proxies
The execution and return of the enclosed proxy will not
affect a shareholder's right to attend the meeting and to vote in
person. Any proxy given pursuant to this solicitation may be
revoked by delivering written notice of revocation to Glenn H.
Weaver, President of PennRock Financial Services Corp., at any
time before the proxy is voted at the meeting. Unless revoked,
any proxy given pursuant to this solicitation will be voted at
the meeting in accordance with the instructions thereon of the
shareholder giving the proxy. In the absence of instructions,
all proxies will be voted FOR the election of the three nominees
identified in this Proxy Statement. Although the Board of
Directors knows of no other business to be presented, in the
event that any other matters are brought before the meeting, any
proxy given pursuant to this solicitation will be voted in
accordance with the recommendations of the management of PennRock
Financial Services Corp.
Shares held for the account of shareholders who participate
in the Dividend Reinvestment Plan will be voted in accordance
with the instructions of each shareholder as set forth in his
proxy. If a shareholder who participates in the Dividend
Reinvestment Plan does not return a proxy, the shares held for
his account by the Plan Agent will not be voted.
Voting of Shares and Principal Holders Thereof
At the close of business on March 17, 1995, which is the
record date for determination of shareholders entitled to receive
notice of and to vote at the meeting and any adjournments
thereof, PennRock Financial Services Corp. had outstanding
6,025,709 shares of $2.50 par value common stock. There is no
other class of stock authorized or outstanding. As of the record
date, 295,953 shares of PennRock Financial Services Corp. common
stock were held by the Trust Department of Blue Ball National
Bank as sole fiduciary (representing approximately 4.90 percent
of the shares outstanding) and will be voted FOR the election of
the three nominees identified in this Proxy Statement.
A majority of the outstanding common stock present in person
or by proxy constitutes a quorum for the conduct of business.
Each share is entitled to one vote on all matters submitted to a
vote of the shareholders. A majority of the votes cast at a
meeting at which a quorum is present is required in order to
approve any matter submitted to a vote of the shareholders,
unless a greater vote is required by law or under the Articles of
Incorporation or Bylaws. In the case of the election of
directors, the candidates receiving the highest number of votes
cast, up to the number of directors to be elected, shall be
elected to the Board of Directors. Abstentions and broker non-
votes will be treated as shares that are present and entitled to
vote for purposes of determining the presence of a quorum, but
will not be treated as votes cast.
To the knowledge of PennRock Financial Services Corp., no
person owned of record or beneficially on the record date, more
than 5 percent of the outstanding common stock of PennRock
Financial Services Corp.
Shareholder Proposals
Shareholder proposals intended to be presented at the 1996
Annual Meeting must be received at the executive offices of
PennRock Financial Services Corp. at 1060 Main Street, Blue Ball,
Pennsylvania not later than December 4, 1995 in order to be
included in the proxy statement and proxy form to be prepared by
PennRock Financial Services Corp. in connection with that
meeting.
Recommendations of the Board of Directors
The Board of Directors recommends that the shareholders vote
FOR the election of the three nominees identified in this Proxy
Statement.
INFORMATION CONCERNING ELECTION OF DIRECTORS
General Information
The Bylaws of PennRock Financial Services Corp. provide that
the Board of Directors shall consist of not less than two nor
more than 25 persons and that the directors shall be classified
with respect to the time they shall severally hold office by
dividing them into three classes, each consisting as nearly as
possible of one-third of the number of the whole Board of
Directors. The Bylaws further provide that the directors of each
class shall be elected for a term of three years.
At each annual meeting the successors to the class of
directors whose term shall expire that year shall be elected to
hold office for a term of three years, so that the term of office
of one class of directors shall expire in each year. The number
of directors shall be determined by the Board of Directors. Any
shareholder who owns not less than 100 shares of the stock of
PennRock Financial Services Corp. is eligible to be elected to
the Board of Directors.
A majority of the Board of Directors may increase the number
of directors between meetings of the shareholders. Any vacancy
occurring in the Board of Directors, whether due to an increase
in the number of directors, resignation, retirement, death or any
other reason, may be filled by appointment by the remaining
directors. Any director who is appointed to fill a vacancy shall
hold office until his successor is duly elected by the
shareholders at the next Annual Meeting or at a special meeting
called for that purpose.
The Board of Directors has fixed the number of directors at
ten. Of these ten directors, there are three directors whose
terms of office will expire at the 1995 Annual Meeting and seven
continuing directors whose terms of office will expire at the
1996 or 1997 Annual Meeting. The Board of Directors proposes to
nominate the following persons for election to the Board of
Directors for the term specified below:
Class B
For a Term of
Three Years
Elton Horning
Fred Musselman
Glenn H. Weaver
In the event that any of the foregoing nominees is unable to
accept nomination or election, any proxy given pursuant to this
solicitation will be voted in favor of such other persons as the
management of PennRock Financial Services Corp. may recommend.
However, the Board of Directors has no reason to believe that any
of its nominees will be unable to accept nomination or to serve
as a director, if elected.
Section 2.3 of Article II of the Bylaws of PennRock
Financial Services Corp. requires that nominations, other than
those made by or in behalf of the existing management of PennRock
Financial Services Corp., must be made in writing and must be
delivered or mailed to the Chairman of the Board of PennRock
Financial Services Corp. not less than 14 days nor more than 50
days prior to the date of the Annual Meeting. The chairman of
the meeting is required to determine whether nominations have
been made in accordance with the requirements of the Bylaws and,
if he determines that a nomination is defective, the nomination
and any votes cast for the nominee shall be disregarded.
Information About Nominees and Continuing Directors
Information concerning the three persons to be nominated for
election to the Board of Directors of PennRock Financial Services
Corp. at the 1995 Annual Meeting and concerning the seven
continuing directors is set forth below:
<TABLE>
<CAPTION>
Shares(1) of
PennRock Financial
Services Corp.
Common Stock Principal
Beneficially Percent Occupation for the
Director Owned(2) as of of Past 5 Years and
Name and Age Since(3) February 10, 1995 Class Other Directorships(4)
CLASS A - (TERM EXPIRES IN 1997) - CONTINUING DIRECTORS
<S> <C> <C> <C> <C>
Norman Hahn (58) 1976 120,283(5) 1.99% President,
Conestoga Wood
Specialties, Inc.
(manufacturer of
wood products)
Robert L. Spotts (64) 1985 15,364(6) 0.26% President,
Martin Limestone, Inc.
(quarry)
Dale M. Weaver (56) 1977 116,706(7) 1.94% President, New Holland
Custom Woodwork, Ltd.
(church furniture and
millwork)
Melvin Pankuch (55) 1988 2,071(8) 0.03% Executive Vice
President and Chief
Executive Officer,
PennRock Financial
Services Corp. and
President and Chief
Executive Officer,
Blue Ball National
Bank
<CAPTION>
CLASS B (TERM EXPIRES IN 1995) - NOMINEES
<S> <C> <C> <C> <C>
Elton Horning (63) 1989 27,129(9) 0.45% Auctioneer and Owner
of Elton Horning Farm
Agency (real estate
agency)
Fred Musselman (64) 1980 59,529(10) 0.99% President, Musselman
Lumber, Inc. (building
materials)
Glenn H. Weaver (60) 1985 73,063(11) 1.21% President, PennRock
Financial Services
Corp.; Partner R & G
Associates (real
estate investment);
formerly President,
Weaver & Witwer, Inc.
(plumbing, heating,
air conditioning,
electrical
contractors)
<CAPTION>
CLASS C (TERM EXPIRES IN 1996) - CONTINUING DIRECTORS
<S> <C> <C> <C> <C>
Aaron S. Kurtz (56) 1980 12,981(12) 0.22% President, Ludwig
Office Furniture, Inc.
(office furniture)
Robert K. Weaver (46) 1975 14,736(13) 0.25% Partner, Wentz,
Weaver & Kling (law
firm)
Lewis M. Good (36) 1991 3,322(14) 0.05% Owner, Original Good's
Potato Chips (food
products)
All Directors and 445,184 7.41%
Executive Officers
as a group (12 persons)
<FN>
Footnotes
(1) Rounded to the nearest whole share.
(2) Beneficial ownership of shares of the common stock of
PennRock Financial Services Corp. is determined in
accordance with Securities and Exchange Commission Rule 13d-
3(d)(1), which provides that a person shall be deemed to own
any stock with respect to which he, directly or indirectly,
through any contract, arrangement, understanding,
relationship or otherwise has or shares: (i) voting power,
which includes the power to vote or to direct the voting of
the stock, or (ii) investment power, which includes the
power to dispose or direct the disposition of the stock.
Unless otherwise indicated in a footnote appearing below,
all shares reported in the table above are owned directly by
the reporting person.
(3) Includes service as a director of Blue Ball National Bank,
predecessor to PennRock Financial Services Corp.
(4) No nominee or continuing director is a director of any other
company which has one or more classes of securities
registered with the Securities and Exchange Commission
pursuant to Section 12 or which is required to file periodic
reports with the Securities and Exchange Commission pursuant
to Section 15(d) of the Securities Exchange Act of 1934.
(5) Includes 71,869 shares held jointly with his spouse, and
17,326 shares held by his spouse.
(6) Includes 2,954 shares held by his spouse.
(7) Includes 6,526 shares held jointly with his spouse, and
5,388 shares held by his spouse.
(8) Includes 967 shares held jointly with his spouse, and 265
shares held in an Individual Retirement Account.
(9) Includes 27,019 shares held jointly with his spouse.
(10) Includes 4,427 shares held jointly with his spouse, and
4,371 shares held by his spouse.
(11) Includes 30,010 shares held jointly with his spouse, 14,263
shares held by his spouse, and 500 shares held in an
Individual Retirement Account.
(12) Includes 1,409 shares held by his spouse as custodian for
his minor children, 748 shares held in an Individual
Retirement Account, and 748 shares held in an Individual
Retirement Account for his spouse.
(13) Includes 833 shares held jointly with his spouse and 1,356
shares held in an Individual Retirement Account.
(14) Includes 2,193 shares held jointly with his spouse, 129
shares held by his spouse and 548 shares held as custodian
for his minor children.
</TABLE>
Meetings and Committees of the Board of Directors
The Board of Directors of PennRock Financial Services Corp.
does not have a standing Audit Committee, Nominating Committee,
or Compensation Committee.
The Blue Ball National Bank has a standing Audit Committee.
Since Blue Ball National Bank is presently the only subsidiary of
PennRock Financial Services Corp., the Audit Committee of Blue
Ball National Bank has been acting on behalf of PennRock
Financial Services Corp. and will continue to do so until
PennRock Financial Services Corp. committees are appointed.
Members of the Audit Committee of Blue Ball National Bank
during 1994 were Fred Musselman, Chairman, and Lewis M. Good,
Robert L. Spotts, Norman Hahn, and Elton Horning. The principal
duties of the Audit Committee are to obtain and review such
internal and external financial information as may be necessary
in order to assure that the audit coverage is appropriate and
that satisfactory internal reporting procedures are maintained.
The Audit Committee met eight times during 1994.
The Board of Directors met 28 times during 1994. All
directors attended 75% or more of the aggregate number of
meetings of the Board of Directors and of the various committees
of the Board of Directors on which they served.
Compensation of Directors
The directors of PennRock Financial Services Corp. do not
receive any additional compensation for their services as such,
beyond the compensation paid to them as directors of Blue Ball
National Bank. Each member of the Board of Directors of Blue
Ball National Bank, other than the Chairman of the Board, is paid
an annual fee of $1,600 for his services as a director, a fee of
$255 for each regular meeting of the Board of Directors which he
attends, and $100 for each meeting of a committee of the Board of
Directors which he attends. In addition to the regular
directors' compensation, the Secretary of the Board of Directors
also receives an additional fee of $4,300. The Chairman of the
Board of Directors receives an annual fee of $10,200 and a fee of
$100 for each committee meeting of the Board of Directors which
he attends. No directors' fees are paid to any director who is
also a full-time salaried officer of Blue Ball National Bank or
PennRock Financial Services Corp.
Executive Officers of PennRock Financial Services Corp.
The following persons are the executive officers of PennRock
Financial Services Corp.:
<TABLE>
<CAPTION>
Name Age Office Held and Term of Office
<S> <C> <C>
Norman Hahn 58 Chairman of the Board of PennRock
Financial Services Corp. since
1991; Chairman of Blue Ball
National Bank since 1990; formerly
Vice Chairman of Blue Ball National
Bank and PennRock Financial
Services Corp.
Glenn H. Weaver 60 President of PennRock Financial
Services Corp. since 1989.
Robert K. Weaver 46 Secretary of the Board of PennRock
Financial Services Corp. since
1986; Secretary of Blue Ball
National Bank since 1977.
Melvin Pankuch 55 Executive Vice President and Chief
Executive Officer of PennRock
Financial Services Corp. since
1989; President and Chief Executive
Officer of Blue Ball National Bank
since 1988.
George B. Crisp 47 Vice President and Treasurer of
PennRock Financial Services Corp.
since 1989; Senior Vice President
Operations of Blue Ball National
Bank since 1993, formerly Vice
President and Chief Financial
Officer of Blue Ball National Bank.
Joseph C. Spada 44 Senior Vice President Banking
Sales/Service of Blue Ball National
Bank since 1993.
</TABLE>
Executive Compensation and Related Matters
Summary of Cash and Certain Other Compensation
The following table provides certain summary information
concerning compensation paid or accrued by PennRock Financial
Services Corp. and Blue Ball National Bank to the chief executive
officer of PennRock Financial Services Corp. and to each of the
four other most highly compensated executive officers of PennRock
Financial Services Corp. whose combined salary and bonus
compensation exceeded $100,000 for the year ended December 31,
1994.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
_______________________________________________________________________ ____________________________ ________
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities All
Annual Restricted Underlying Other
Compen- Stock Options/ LTIP Compen-
Name and Salary Bonus sation Award(s) SARs(1) Payouts sation
Principal Position Year ($) ($) ($) ($) (#) ($) ($)(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Melvin Pankuch, 1994 200,000 20,000 None None 1,500 None 20,000
Chief Executive Officer 1993 187,600 34,595 None None 2,250 None 28,329
1992 170,000 30,617 None None None None 26,908
George B. Crisp, 1994 106,000 9,300 None None None None 10,600
Senior Vice President 1993 85,819 13,706 None None None None 13,000
1992 65,508 9,487 None None None None 8,661
Joseph C. Spada, 1994 106,000 9,300 None None None None 10,600
Senior Vice President, 1993 48,942 3,010 None None None None None
Blue Ball National Bank(3)
<FN>
(1) Adjusted to reflect stock splits since the date of
grant.
(2) Consists of contributions to the Profit Sharing Plan
maintained by Blue Ball National Bank.
(3) Mr. Spada was employed by Blue Ball National Bank on
July 12, 1993.
</TABLE>
Stock Options Granted in 1994
The following table sets forth certain information relating
to stock options granted during 1994 to the executive officers
named in the Summary Compensation Table appearing above. No
executive officer, other than the chief executive officer, was
granted a stock option in 1994 and no stock appreciation rights
("SAR's") were granted in 1994.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN 1994
Individual Grants
---------------------------------------------------------------------------------------------
Number of Percent of Total
Shares Options/SAR's Potential
Underlying Granted to Employees Exercise Or Expiration Realizable Value at
Options/SAR's In Fiscal Year Base Price Date Assumed Annual Rates
Granted in 1994 of Stock Price
Name (#) (%) ($/Share) Appreciation for
Option Term(3)
5% 10%
($) ($)
----------------- ---------------- -------------------- ----------- ---------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Melvin Pankuch 1,500(1) 100% $16.92(2) 1/24/04 $15,961 $40,449
<FN>
NOTES
(1) Represents the grant of an incentive stock option on January
25, 1994 pursuant to the terms of the Omnibus Stock Plan, as
adjusted to reflect the three-for-two stock split effective
on November 22, 1994. This option vests and becomes
exercisable one-half after the expiration of three years
from the date of grant and the balance after the expiration
of five years from the date of grant. The option expires,
to the extent not previously exercised, upon termination of
employment for reasons other than retirement, disability or
death.
(2) Exercise price is equal to 100% of fair market value on the
date of grant, as adjusted to reflect the three-for-two
stock split effective on November 22, 1994.
(3) The dollar amounts set forth in these columns are based upon
assumed annual appreciation rates of 5% and 10% as required
under applicable Securities and Exchange Commission
regulations and are not intended to indicate the possible
future price appreciation, if any, of PennRock Financial
Services Corp. common stock. No gain will be realized by
the option holder in the absence of an increase in the
market price of PennRock Financial Services Corp. common
stock, which will benefit all shareholders.
</TABLE>
Stock Option Exercises and 1994 Year-End Values
The following table sets forth with respect to the executive
officers named in the Summary Compensation Table appearing above
certain information relating to the exercise of stock options
during 1994 and relating to the number and value of unexercised
stock options and SAR's held as of December 31, 1994. No
executive officer, other than the chief executive officer, holds
any PennRock Financial Services Corp. stock options. No SAR's
were either granted or exercised in 1994 and none were
outstanding on December 31, 1994.
<TABLE>
<CAPTION>
1994 OPTION EXERCISE AND YEAR-END VALUES
Number of Value of Unexercised
Unexercised In-The-Money
Shares Acquired Value Options/SARs at Options/SARs at
Name On Exercise Realized Fiscal Year-End Fiscal Year-End
(#) ($) (#) ($)
Exercisable Unexercisable Exercisable Unexercisable
------------------- --------------- -------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Melvin Pankuch None None None 3,750 N/A $39,300
</TABLE>
Compensation Committee and Insider Participation
The Board of Directors of PennRock Financial Services Corp.
has no standing Compensation Committee. Instead, decisions
relating to the compensation of executive officers of PennRock
Financial Services Corp. are generally made by the Board of
Directors as a whole, except that Melvin Pankuch, who is a member
of the Board of Directors and Executive Vice President and Chief
Executive Officer, does not participate in deliberations relating
to his compensation. Mr. Pankuch is the only director who is
also an employee; Glenn H. Weaver a former employee, is not now
an employee, but serves as President of PennRock Financial
Services Corp. Robert K. Weaver is a member of the law firm of
Wentz, Weaver & Kling, which has for many years served as general
counsel to PennRock Financial Services Corp. and Blue Ball
National Bank and is expected to continue to do so in the future.
The following report is submitted by the Board of Directors
(exclusive of Mr. Pankuch) and addresses the compensation
policies of PennRock Financial Services Corp. for 1994 as
applicable to executive officers generally and to Mr. Pankuch,
the chief executive officer.
Board Report on Executive Compensation
The Board of Directors is responsible for establishing an
appropriate compensation policy applicable to the executive
officers of PennRock Financial Services Corp. and for overseeing
the administration of that policy. The overall objective of the
Board's policy is to provide competitive levels of compensation
that integrate pay with annual and long term performance goals,
reward above average performance, recognize individual initiative
and achievements and assist PennRock Financial Services Corp. in
attracting, motivating and retaining capable senior executive
officers. The Board's policy provides for competitive base
salary compensation which reflects individual performance and for
annual performance incentive compensation opportunities earned
through the achievement of financial performance and other goals
established by the Board and management. In addition, the Board
intends in the future to provide longer term stock-based
incentive opportunities through the implementation of the Omnibus
Stock Plan, which was approved by the shareholders at the 1992
Annual Meeting. The Board is of the view that stock ownership by
senior executive officers and stock-based incentive compensation
arrangements are beneficial in aligning the interests of
management and shareholders in the overall enhancement of
profitability and shareholder value. The Board believes for this
reason that it may in the future rely more heavily upon stock-
based incentive compensation arrangements in designing the
compensation packages of the executive officers of PennRock
Financial Services Corp.
In designing and administering the individual elements of
its executive compensation policy, the Board of Directors strives
to balance short term and long term incentive objectives and to
employ prudent judgement in establishing performance criteria,
evaluating performance and in determining the amount of overall
compensation. What follows is a discussion of each of the
elements of the Board's compensation policy, together with a
summary of decisions made by the Board in 1994 with respect to
the compensation of Mr. Pankuch.
Base Salary
The base salary component of an executive officer's
compensation is determined annually by the Board of Directors by
reference to salary surveys and other data and is adjusted as
necessary to be competitive with average salaries paid to
executive officers at other banks and bank holding companies of
equivalent size and characteristics. The actual salary paid to
an executive officer is determined through an annual performance
appraisal, which evaluates performance by reference to the
following factors: supervisory and management performance,
marketing and sales plan performance, internal cooperation,
reporting and communication, customer and public relations,
strategic and business plan development and achievement, and
profit planning and budgeting. The Board also considers the
financial goals that were set at the beginning of the year by the
Board and management and relates them to year end results. Some
of these goals are growth in assets, growth in deposits,
percentage increase in net income for the year, growth in loans,
return on equity and return on assets.
Bonus Compensation Plan
The Bonus Compensation Plan is an annual incentive program
for all employees, including executive officers and other key
management employees. The purpose of the Plan is to provide a
direct financial incentive in the form of an annual bonus which
is related to return on equity. Bonuses under the Bonus
Compensation Plan are paid partly in cash and partly in the form
of a contribution to an employee's account under the Blue Ball
National Bank Profit Sharing Plan.
Executive Compensation Bonus Plan
The Executive Compensation Bonus Plan is a compensation plan
under which key officers (vice presidents and above) of PennRock
Financial Services Corp. and Blue Ball National Bank are eligible
to receive cash bonuses equal to a percentage of base salary, if
certain corporate and individual performance goals are achieved.
The Board of Directors at the beginning of each year identifies
those officers who will participate in the Executive Compensation
Bonus Plan during that year and establishes objective corporate
performance goals for that year (based upon historical
performance as measured by return on assets and comparative peer
company performance as measured by return on equity). The amount
of bonus paid to a participating officer is a function of the
extent to which the established corporate and individual goals
are achieved or surpassed and is also dependent upon a
participating officer's individual performance evaluation. No
bonus is paid, however, unless: (i) a predetermined threshold
for return on assets is achieved, and (ii) the return on equity
peer group ranking of PennRock Financial Services Corp. is at the
75th percentile or higher. Bonuses are paid in May in respect of
the preceding calendar year. The Executive Compensation Bonus
Plan was terminated in 1994 and replaced with the Executive
Incentive Compensation Plan described below.
Executive Incentive Compensation Plan
The Executive Incentive Compensation Plan is a compensation
plan under which key officers (vice presidents and above) of
PennRock Financial Services Corp. and Blue Ball National Bank are
eligible to receive bonuses equal to a percentage of salary.
This Plan was adopted by the Board of Directors in 1994 and
replaces the Executive Compensation Bonus Plan described above.
The amount of bonus, if any, awarded under this plan is
determined on the basis of an objective two part formula. The
first part of the formula is based upon return on equity relative
to peer group bank holding company performance. The second part
of the formula is based upon year to year comparative growth in
PennRock Financial Services Corp. net income. A bonus earned
under the Plan in respect of current year performance is paid in
the spring of the following year; the first bonuses to be awarded
under the Plan will be paid in May of 1995 in respect of calendar
year 1994 performance. Bonuses are payable 70% in cash and 30%
in shares of PennRock Financial Services Corp. common stock
valued at fair market value.
Omnibus Stock Plan
The Omnibus Stock Plan, which was approved by the
shareholders at the 1992 Annual Meeting, is a long-term incentive
plan for senior executives of PennRock Financial Services Corp.
The objectives to be achieved by the grant of awards under the
Omnibus Stock Plan are to align executive and shareholder long-
term interests by creating a strong and direct link between
overall executive compensation and shareholder return and to
enable senior officers to develop and maintain a significant,
long-term stock ownership position in PennRock Financial Services
Corp. common stock. Awards may be granted under the Omnibus
Stock Plan in the form of non-qualified stock options, incentive
stock options, stock appreciation rights, performance shares,
performance units and restricted stock. On January 25, 1994, Mr.
Pankuch was granted an incentive stock option to purchase 1,500
shares of the common stock of PennRock Financial Services Corp.
at an exercise price equal to 100% of the market price per share
on the date of grant. This incentive stock option vests and
becomes exercisable one-half after three years and the balance
after five years, provided that Mr. Pankuch remains an employee
of PennRock Financial Services Corp.
Compensation of Melvin Pankuch
Mr. Pankuch's compensation is determined in accordance with
the compensation policy of the Board of Directors summarized
above and he is eligible to participate in the compensation plans
described above. The general approach adopted by the Board of
Directors in determining Mr. Pankuch's annual compensation is to
seek to be competitive with other bank holding companies of
equivalent size and characteristics, but to have a significant
percentage of his total compensation based upon the achievement
of short-term and long-term performance goals.
This approach provides a strong incentive to achieve or
surpass the goals established by the Board of Directors, while
simultaneously providing an element of stability in Mr. Pankuch's
compensation.
Mr. Pankuch's base salary during 1993 was $187,000 and was
set by the Board of Directors at $200,000 for 1994 (an increase
of approximately 7%), based upon the factors discussed above and
upon an evaluation conducted by the Board of Directors.
Mr. Pankuch received a bonus of $30,000 under the Bonus
Compensation Plan in 1994, which is reflected in the Summary
Compensation Table set forth above. The amount of this bonus was
determined by the Board of Directors in accordance with the terms
of the Bonus Compensation Plan. Specifically, $10,000 was paid
in cash and $20,000 was contributed to Mr. Pankuch's account in
the Blue Ball National Bank Profit Sharing Plan.
Mr. Pankuch will receive in May of 1995 a bonus of
approximately $10,000 under the Executive Incentive Compensation
Plan with respect to 1994 performance, which bonus appears as
1994 bonus compensation in the Summary Compensation Table set
forth above. The amount of this bonus was determined by the
Board of Directors in accordance with the terms of the Executive
Incentive Compensation Plan.
The foregoing report is furnished by Norman Hahn, Chairman
of the Board and by Messrs. Elton Horning, Lewis M. Good,
Aaron S. Kurtz, Fred Musselman, Robert L. Spotts, Dale M. Weaver,
Glenn H. Weaver and Robert K. Weaver.
Stock Performance Graph
The Securities and Exchange Commission requires that a
publicly held company include in its proxy statement a graph
comparing five year cumulative total shareholder returns
(assuming the reinvestment of dividends) with a broad market
index and with a published industry or line-of-business index or
an index of peer group companies. The graph appearing below
illustrates the five year cumulative return to a shareholder of
PennRock Financial Services Corp. as compared to the S&P 500
Index and to a peer group of ten other comparable banks and bank
holding companies, in each case weighted by market capitalization
and assuming an initial investment of $100.00 and the
reinvestment of dividends over the periods indicated.
<TABLE>
<CAPTION>
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG PENNROCK FINANCIAL SERVICES CORP.,
S & P 500 INDEX, AND PEER GROUP INDEX
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
PennRock $100.00 $94.60 $107.97 $140.47 $206.49 $304.25
S&P 500 $100.00 $94.44 $118.02 $123.29 $131.99 $129.96
Peer Group $100.00 $94.26 $ 98.14 $122.31 $178.55 $199.03
</TABLE>
PEER GROUP SPECIFICATIONS
1. Total assets of $200 to $650 million.
2. Market capitalization of at least $30 million.
3. Headquartered in Pennsylvania.
Institution Headquarters
ACNB Corporation Gettysburg
CNB Financial Corporation Clearfield
Citizens & Northern Corporation Wellsboro
Drovers Bancshares York
First West Chester Corporation West Chester
Franklin Financial Services Corp. Chambersburg
Hanover Bancorp, Inc. Hanover
Penn Security Bank and Trust Company Scranton
PennRock Financial Services Corp. Blue Ball
Penns Woods Bancorp, Inc. Jersey Shore
Sterling Financial Corporation Lancaster
Transactions with Directors and Executive Officers
Some of the directors and executive officers of PennRock
Financial Services Corp. and Blue Ball National Bank and the
companies with which they are associated were customers of and
had banking transactions with Blue Ball National Bank in the
ordinary course of the Bank's business during 1994.
All loans and commitments to loan made to such persons and
to the companies with which they are associated were made on
substantially the same terms, including interest rates,
collateral and repayment terms, as those prevailing at the time
for comparable transactions with other persons and did not
involve more than a normal risk of collectibility or present
other unfavorable features. It is anticipated that the Bank will
enter into similar transactions in the future.
As a matter of policy and as an employee benefit, Blue Ball
National Bank makes available home mortgage loans and other loans
on a nondiscriminatory basis to all employees at interest rates
below those prevailing for comparable transactions with other
persons. The amount of these loans is not considered material
and it is anticipated that the Bank will continue its present
policy. Loans at preferential rates are not, however, extended
to any executive officer or director of PennRock Financial
Services Corp. or Blue Ball National Bank.
Robert K. Weaver, Secretary of PennRock Financial Services
Corp., is a member of the law firm of Wentz, Weaver & Kling, New
Holland, Pennsylvania. Wentz, Weaver & Kling has for many years
served as general counsel to PennRock Financial Services Corp.
and Blue Ball National Bank and is expected to continue to do so
in the future.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
For the year ended December 31, 1994, PennRock Financial
Services Corp. engaged Simon Lever & Co., independent certified
public accountants, to certify its financial statements and those
of Blue Ball National Bank. It is anticipated that Simon Lever &
Co. will be similarly engaged in 1995. Representatives of Simon
& Lever and Co. are expected to be present at the shareholder
meeting with the opportunity to make a statement if they desire
to do so and to be available to respond to appropriate questions.
ADDITIONAL INFORMATION
A copy of the Annual Report of PennRock Financial
Services Corp. for the year ended December 31, 1994 on Form 10-K
as filed with the Securities and Exchange Commission is available
without charge to shareholders, depositors, and other interested
persons upon request from Glenn H. Weaver, President, PennRock
Financial Services Corp., P.O. Box 580, Blue Ball, Pennsylvania
17506.
OTHER MATTERS
The Board of Directors of PennRock Financial Services Corp.
knows of no other matters other than those discussed in this
Proxy Statement which will be presented at the 1995 Annual
Meeting. However, if any other matters are properly brought
before the meeting, any proxy given pursuant to this solicitation
will be voted in accordance with the recommendations of the
management of PennRock Financial Services Corp.
BY ORDER OF THE BOARD OF DIRECTORS
GLENN H. WEAVER
President
Blue Ball, Pennsylvania
April 1, 1995
<PAGE>
APPENDIX A
FORM OF PROXY -- PENNROCK FINANCIAL SERVICES CORP.
1995 ANNUAL MEETING OF SHAREHOLDERS
[Front Side of Proxy]
PENNROCK FINANCIAL SERVICES CORP.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Raymond Horning, Raymond
Newswanger, and Edward H. Martin, or any one of them, as proxies,
with full power of substitution, to represent and vote, as
directed below, all of the shares of PennRock Financial Services
Corp. common stock held of record by the undersigned and held of
record by the Plan Agent for the account of the undersigned under
the Dividend Reinvestment Plan on March 17, 1995 at the Annual
Meeting of the shareholders to be held on Tuesday, April 25, 1995
at 10:00 a.m., or any adjournment thereof, with all of the powers
the undersigned would possess if personally present.
It is important that your shares be represented at the
meeting. Please sign, date and return this proxy as promptly as
possible, whether or not you plan to attend the meeting. This
proxy is revocable at any time before it is exercised and may be
withdrawn if you elect to attend the meeting and wish to vote in
person.
(To be Signed on Reverse Side)
<PAGE>
[Reverse Side of Proxy]
( X ) Please mark your
votes as shown in
this example
1. ELECTION OF DIRECTORS
( ) FOR all nominees listed below (except as marked to
the contrary below)
( ) WITHHOLD AUTHORITY to vote for all nominees listed
below
(INSTRUCTION: To withhold authority to vote for
any individual nominee, strike a line through the
nominee's name in the list below.)
Nominees: Elton Horning
Fred Musselman
Glenn H. Weaver
The shares represented by this proxy will be voted as
directed herein. If no directions are given, such shares will be
voted for the election of the nominees listed herein. This proxy
also confers authority as to whatever other business may be
brought before the meeting or any adjournment thereof. The Board
of Directors at present knows of no other business to be brought
before the meeting, but if any other business is brought before
the meeting, the shares represented by this proxy will be voted
in accordance with the recommendations of the management of
PennRock Financial Services Corp.
The undersigned hereby acknowledges receipt of the Notice of
Annual Meeting of Shareholders and Proxy Statement dated April 1,
1994 and hereby revokes all proxies heretofore given.
SIGNATURE(S) _______________________________
DATED: _______________________________, 1995
PLEASE SIGN exactly as name appears above. If stock is jointly
held, each joint owner should sign. If signing for a corporation
or a partnership, or as attorney or fiduciary, indicate your full
title. If more than one fiduciary is involved, all should sign.
