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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] 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 23, 1996
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 23, 1996 at 10:00 a.m. at Yoder's Restaurant, 14 South
Tower Road, New Holland, 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. AMENDMENT OF ARTICLES. To consider and vote upon
a proposal to amend the Articles of Incorporation
to increase the number of authorized shares of
common stock from 10,000.000 shares to
20,000,000 shares.
3. 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 15, 1996, 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
March 29, 1996
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 March 29, 1996
= = = = = = = = = = = = = = = = = = = =
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 23, 1996
TABLE OF CONTENTS
PAGE
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . 1
Date, Time and Place of Meeting. . . . . . . . . . . . 1
Shareholders Entitled to Vote. . . . . . . . . . . . . 1
Purpose of Meeting . . . . . . . . . . . . . . . . . . 1
Solicitation of Proxies. . . . . . . . . . . . . . . . 1
Revocability and Voting of Proxies . . . . . . . . . . 1
Voting of Shares and Principal Holders Thereof . . . . 2
Shareholder Proposals. . . . . . . . . . . . . . . . . 3
Recommendations of the Board of Directors. . . . . . . 3
INFORMATION CONCERNING ELECTION OF DIRECTORS. . . . . . . . 3
General Information. . . . . . . . . . . . . . . . . . 3
Information About Nominees and Continuing Directors. . 4
Meetings and Committees of the Board of Directors. . . 6
Compensation of Directors. . . . . . . . . . . . . . . 7
Executive Officers of PennRock Financial Services
Corp. . . . . . . . . . . . . . . . . . . . . . . 7
Executive Compensation and Related Matters . . . . . . 8
Transactions with Directors and Executive Officers . . 15
PROPOSAL TO AMEND ARTICLES OF INCORPORATION . . . . . . . . 16
General Information. . . . . . . . . . . . . . . . . . 16
Recommendation of the Board of Directors . . . . . . . 17
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS. . . . . . 18
ADDITIONAL INFORMATION. . . . . . . . . . . . . . . . . . . 18
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . 18
<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 tenth 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 23, 1996,
at 10:00 a.m. at Yoder's Restaurant, 14 South Tower Road, New
Holland, Pennsylvania.
Shareholders Entitled to Vote
Shareholders of record at the close of business on March 15,
1996, 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, (ii) to
consider and vote upon a proposal to amend the Articles of
Incorporation to increase the number of authorized shares of
common stock from 10,000,000 shares to 20,000,000 shares, and
(iii) 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 23, 1996, 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 and FOR the proposal to amend
the Articles of Incorporation. 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 15, 1996, 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
6,077,299 shares of $2.50 par value common stock. There is no
other class of stock authorized or outstanding. As of the record
date, 189,535 shares of PennRock Financial Services Corp. common
stock were held by the Trust Department of Blue Ball National
Bank as sole fiduciary (representing approximately 3.12 percent
of the shares outstanding) and will be voted FOR the election of
the three nominees identified in this Proxy Statement and FOR the
proposal to amend the Articles of Incorporation.
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. In the case of the proposal
to amend the Articles of Incorporation, the affirmative vote of a
majority of the outstanding shares entitled to vote is required
for approval. 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 1997
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 2, 1996 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 and FOR the proposal to amend the Articles of
Incorporation.
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
nine. Of these nine directors, there are three directors whose
terms of office will expire at the 1996 Annual Meeting and six
continuing directors whose terms of office will expire at the
1997 or 1998 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 C
For a Term of
Three Years
Aaron S. Kurtz
Robert K. Weaver
Lewis M. Good
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 1996 Annual Meeting and concerning the six
continuing directors is set forth below:
<PAGE>
<TABLE>
<CAPTION>
Shares(1) of
PennRock Financial
Services Corp.
Common Stock
Beneficially Percent Principal Occupation
Director Owned(2) as of of for the Past 5 Years
Name and Age Since(3) February 10, 1996 Class and Other Directorships(4)
CLASS A - (TERM EXPIRES IN 1997) - CONTINUING DIRECTORS
<S> <C> <C> <C> <C>
Norman Hahn (59) 1976 123,053(5) 2.00% President, Conestoga Wood
Specialties, Inc. (manufacturer of
wood products)
Robert L. Spotts (65) 1985 15,745(6) 0.26% President, Martin Limestone, Inc.
(quarry)
Dale M. Weaver (57) 1977 116,998(7) 1.93% President, New Holland Custom
Woodwork, Ltd. (church furniture and
millwork)
Melvin Pankuch (56) 1988 2,192(8) 0.04% Executive Vice President and Chief
Executive Officer, PennRock Financial
Services Corp. and President and
Chief Executive Officer, Blue Ball
National Bank
CLASS B (TERM EXPIRES IN 1998) - CONTINUING DIRECTORS
Elton Horning (64) 1989 27,705(9) 0.46% Auctioneer and Owner of Elton Horning
Farm Agency (real estate agency)
Glenn H. Weaver (61) 1985 74,249(10) 1.22% President, PennRock Financial
Services Corp.; Partner R & G Associates (real
estate investment); formerly
President, Weaver & Witwer, Inc.
(plumbing, heating, air conditioning,
electrical contractors)
CLASS C (TERM EXPIRES IN 1996) - NOMINEES
Aaron S. Kurtz (57) 1980 10,202(11) 0.17% President, Ludwig Office Furniture,
Inc. (office furniture)
Robert K. Weaver (47) 1975 15,906(12) 0.25% Partner, Wentz, Weaver & Kling (law
firm)
Lewis M. Good (37) 1991 3,393(13) 0.06% Owner, Original Good's Potato Chips
(food products)
All Directors and 392,150 6.45%
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 1,389 shares held jointly with his spouse, and
60,715 shares held by his spouse.
(6) Includes 3,068 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 1,819 shares held by his spouse, 269 shares held in
an Individual Retirement Account and 1,125 shares issuable
upon the exercise of stock options.
(9) Includes 27,705 shares held jointly with his spouse.
(10) Includes 30,010 shares held jointly with his spouse,
14,964 shares held by his spouse, and 500 shares held in an
Individual Retirement Account.
(11) Includes 1,439 shares held by his spouse as custodian for
his minor children, 759 shares held in an Individual
Retirement Account, and 751 shares held in an Individual
Retirement Account for his spouse.
(12) Includes 1,565 shares held jointly with his spouse and
1,737 shares held in an Individual Retirement Account,
561 shares held in an Individual Retirement Account for his
spouse and 288 shares held in a Custodial Account for his
son.
(13) Includes 2,240 shares held jointly with his spouse,
132 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.
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 1995 were Robert L. Spotts, Chairman, and Lewis M. Good,
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 1995.
The Board of Directors met 28 times during 1995. 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.:
Name Age Office Held and Term of Office
Norman Hahn 59 Chairman of the Board of PennRock
Financial Services Corp. since 1991;
Chairman of Blue Ball National Bank
since 1990.
Glenn H. Weaver 61 President of PennRock Financial Services
Corp. since 1989.
Robert K. Weaver 47 Secretary of the Board of PennRock
Financial Services Corp. since 1986;
Secretary of Blue Ball National Bank
since 1977.
Melvin Pankuch 56 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 48 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 45 Senior Vice President Banking
Sales/Service of Blue Ball National Bank
since 1993.
Michael H. Peuler 45 Senior Vice President Trust Sales
Service of Blue Ball National Bank since
1995.
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
other most highly compensated executive officers of PennRock
Financial Services Corp. whose combined salary and bonus
compensation exceeded $100,000 for the year ended December 31,
1995.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
-------------------------------
Annual Compensation Awards Payouts
- ------------------------------------------------- ---------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities All
Annual Restricted Underlying Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Salary Bonus sation Awards SARs(1) Payouts sation
Position Year ($) ($) ($) ($) (#) ($) ($)(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Melvin Pankuch, 1995 210,000 9,713 None None 1,000 None 21,129
Chief Executive 1994 200,000 20,000 None None 1,500 None 20,000
Officer 1993 187,600 34,595 None None 2,250 None 28,329
George B. Crisp, 1995 110,240 5,099 None None None None 11,504
Senior Vice 1994 106,000 9,300 None None None None 10,600
President 1993 85,819 13,706 None None None None 13,000
Joseph C. Spada, 1995 110,240 5,099 None None None None 11,504
Senior Vice 1994 106,000 9,300 None None None None 10,600
President, Blue 1993 48,942 3,010 None None None None None
Ball National
Bank(3)
Michael H. Peuler, 1995 100,000 4,625 None None None None 9,286
Senior Vice 1994 74,200 7,910 None None None None 7,420
President, Blue 1993 39,940 2,464 None None None None None
Ball National
Bank(4)
_______________
<FN>
(1) Adjusted to reflect stock splits since date of grant.
(2) Consists of contributions to the Profit Sharing Plan
maintained by Blue Ball National Bank.
(3) Mr. Spada was employed by Blue Ball National Bank on
July 12, 1993.
(3) Mr. Peuler was employed by Blue Ball National Bank on
June 14, 1993.
</TABLE>
Stock Options Granted in 1995
The following table sets forth certain information relating
to stock options granted during 1995 to the executive officers
named in the Summary Compensation Table appearing above. No
executive officer, other than the chief executive officer, was
granted a stock option in 1995 and no stock appreciation rights
("SAR's") were granted in 1995.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN 1995
Individual Grants
- -------------------------------------------------------------------------- Potential Realiz-
Percent able Value
Number of of Total at Assumed
Shares Options/SAR's Annual Rates
Underlying Granted to Exercise of Stock Price
Options/SAR's Employees or Base Appreciation for
Granted in 1995 in Fiscal Year Price Option Term(3)
----------------
Expiration 5% 10%
Name (#) (%) ($/Share) Date ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Melvin Pankuch 1,000(1) 100% $23.25(2) 3-27-05 $14,622 $37,055
<FN>
NOTES
(1) Represents the grant of an incentive stock option on
March 28, 1995 pursuant to the terms of the Omnibus Stock
Plan. This option vests and becomes exercisable one-half
after the expiration of three years from the date of grant
and the balance after the expiration of five years from the
date of grant. The option expires, to the extent not
previously exercised, upon termination of employment for
reasons other than retirement, disability or death.
(2) Exercise price is equal to 100% of fair market value on the
date of grant.
(3) The dollar amounts set forth in these columns are based upon
assumed annual appreciation rates of 5% and 10% as required
under applicable Securities and Exchange Commission
regulations and are not intended to indicate the possible
future price appreciation, if any, of PennRock Financial
Services Corp. common stock. No gain will be realized by
the option holder in the absence of an increase in the
market price of PennRock Financial Services Corp. common
stock, which will benefit all shareholders.
</TABLE>
Stock Option Exercises and 1995 Year-End Values
The following table sets forth with respect to the executive
officers named in the Summary Compensation Table appearing above
certain information relating to the exercise of stock options
during 1995 and relating to the number and value of unexercised
stock options and SAR's held as of December 31, 1995. No
executive officer, other than the chief executive officer, holds
any PennRock Financial Services Corp. stock options. No SAR's
were either granted or exercised in 1995 and none were
outstanding on December 31, 1995.
<TABLE>
<CAPTION>
1995 OPTION EXERCISE AND YEAR-END VALUES
Number of Value of Unexercised
Shares Unexercised In-The-Money
Acquired Value Options/SARs Options/SARs
on Exercise Realized Fiscal Year-End Fiscal Year-End
Name (#) ($) (#) ($)
---------------------- ----------------------
Unexer- Unexer-
Exercisable cisable Exercisable cisable
<S> <C> <C> <C> <C> <C> <C>
Melvin Pankuch None None 1,125 3,625 $18,709 $60,284
</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 1995 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 1995 with respect to
the compensation of Mr. Pankuch.
The Omnibus Budget Reconciliation Act of 1993 (the "Act")
imposes certain limitations on the deductibility for federal
income tax purposes of annual compensation in excess of
$1 million payable to certain officers of PennRock Financial
Services Corp. Because the Board of Directors does not
anticipate that the annual compensation of any officer will
exceed $ 1 million, it does not intend to modify the compensation
policy of PennRock Financial Services Corp. in response to the
provisions of the Act.
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 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
replaced the Executive Compensation Bonus Plan. 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 peer group used for this
purpose consists of the approximately 156 bank holding companies
comprising Peer Group No. 4 as published by the Federal Reserve
Board in its annual Bank Holding Company Performance Report.)
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. 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 March 28, 1995,
Mr. Pankuch was granted an incentive stock option to purchase
1,000 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 1994 was $200,000 and was
set by the Board of Directors at $210,000 for 1995 (an increase
of 5%), based upon the factors discussed above and upon an
evaluation conducted by the Board of Directors.
Mr. Pankuch received a bonus of $30,842 under the Bonus
Compensation Plan in 1995, 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, $9,713 was paid in
cash and $21,129 was contributed to Mr. Pankuch's account in the
Blue Ball National Bank Profit Sharing Plan. No bonus is payable
to Mr. Pankuch in 1996 in respect of 1995 performance under the
Executive Incentive Compensation Plan because PennRock Financial
Services Corp. did not achieve its targeted rate of return on
equity in 1995.
The foregoing report is furnished by Norman Hahn, Chairman
of the Board and by Messrs. Elton Horning, Lewis M. Good,
Aaron S. Kurtz, 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.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG PENNROCK FINANCIAL SERVICES CORP.,
S & P 500 INDEX, AND PEER GROUP INDEX
1990 1991 1992 1993 1994 1995
PennRock $100.00 $113.97 $148.44 $218.37 $322.01 $229.94
S&P 500 $100.00 $ 93.44 $118.02 $123.29 $131.99 $129.96
Peer Group $100.00 $ 99.34 $124.63 $179.49 $201.56 $228.28
PEER GROUP SPECIFICATIONS
1. Total assets of $230 to $680 million.
2. Market capitalization of at least $40 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 1995.
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.
PROPOSAL TO AMEND ARTICLES OF INCORPORATION
General Information
The Articles of Incorporation of PennRock Financial Services
Corp. as presently in effect provide that the authorized capital
of PennRock Financial Services Corp. consists exclusively of
10,000,000 shares of $2.50 par value common stock. As of
February 1, 1996, there were 6,076,720 shares of common stock
issued and outstanding, which shares were held by approximately
2,525 owners of record. As of that date, 247,212 shares of
common stock were reserved for issuance pursuant to the Omnibus
Stock Plan and 607,128 shares were reserved for issuance pursuant
to the Dividend Reinvestment Plan. Thus, 3,068,940 shares of
common stock are currently available for stock dividends, stock
splits, financing, acquisitions and other corporate purposes.
On February 27, 1996, the Board of Directors adopted a
proposal to amend Article 5 of the Articles of Incorporation of
PennRock Financial Services Corp. for the purpose of increasing
the number of authorized shares of common stock from
10,000,000 shares to 20,000,000 shares. The Board of Directors
believes that it is desirable to have additional authorized
shares of common stock available for issuance for purposes of
raising additional capital, for use in connection with
acquisitions, stock dividends, stock splits, and incentive
compensation and other employee benefit plans and for other
general corporate purposes. Having additional authorized shares
of common stock available for issuance in the future would
provide PennRock Financial Services Corp. with greater
flexibility in pursuing such corporate purposes and would allow
additional shares to be issued without the expense and delay
associated with the need under certain circumstances to call a
special meeting of the shareholders for purposes of approving an
amendment to the Articles of Incorporation. PennRock Financial
Services Corp. has no present plan or intention to issue any
additional shares of common stock, except as required or
permitted in connection with the exercise of outstanding stock
options and in connection with the purchase of original issue
shares under the Dividend Reinvestment Plan.
The additional shares of PennRock Financial Services Corp.
common stock for which authorization is sought would be part of
the existing class of common stock and, if and when issued, would
have the same rights and privileges as the shares of common stock
presently outstanding. The Board of Directors will not seek
shareholder approval to issue additional authorized shares of
common stock, except to the extent that such approval may be
required by law, and such shares may be issued for such
consideration, cash or otherwise, at such times and in such
amounts as the Board of Directors may determine. Although the
Board of Directors presently intends to use the additional
authorized shares of common stock exclusively for the purposes
described above, such shares could be used to dilute the stock
ownership of persons seeking to obtain control of PennRock
Financial Services Corp., thereby possibly discouraging or
deterring a non-negotiated attempt to obtain control of PennRock
Financial Services Corp. and making the removal of incumbent
management more difficult. The holders of PennRock Financial
Services Corp. common stock do not have preemptive rights in
connection with the issuance of additional shares of common
stock.
If approved by the shareholders, the proposed amendment will
become effective upon the filing of Articles of Amendment with
the Secretary of State of the Commonwealth of Pennsylvania.
Under the Articles of Incorporation of PennRock Financial
Services Corp., the affirmative vote of majority of the
outstanding shares entitled to vote is required in order to
approve the proposed amendment.
Recommendation of the Board of Directors
The Board of Directors believes that its proposal to amend
the Articles of Incorporation for the purpose of increasing the
number of authorized shares of common stock is in the best
interests of PennRock Financial Services Corp. and its
shareholders and recommends that the proposal be approved by the
shareholders. Accordingly, the following resolutions will be
presented to the shareholders at the 1996 Annual Meeting:
RESOLVED, that the proposal of the Board of Directors
to amend the Articles of Incorporation of the corporation
for the purpose of increasing the number of authorized
shares of common stock from 10,000,000 shares to
20,000,000 shares be and is hereby approved and adopted by
the shareholders of the corporation; and
RESOLVED FURTHER, that the officers and directors of
the corporation be and are hereby authorized and empowered
on behalf of the corporation to execute and file Articles of
Amendment and to take all such other actions as they may
determine in their discretion to be necessary or appropriate
in order to effect the foregoing amendment of the Articles
of Incorporation.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
For the year ended December 31, 1995, 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 1996. 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, 1995 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 1996 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
March 29, 1996
<PAGE>
APPENDIX
FORM OF PROXY -- PENNROCK FINANCIAL SERVICES CORP.
1996 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 Clyde S. Hibsman, Raymond
Newswanger, and Edgar 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 15, 1996 at the Annual
Meeting of the shareholders to be held on Tuesday, April 23, 1996
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: Aaron S. Kurtz
Robert K. Weaver
Lewis M. Good
2. PROPOSAL TO AMEND ARTICLES OF INCORPORATION
( ) FOR
( ) AGAINST
( ) ABSTAIN
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 and for the
proposal to amend the Articles of Incorporation. 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
March 29, 1996 and hereby revokes all proxies heretofore given.
SIGNATURE(S) _______________________________
DATED: _______________________________, 1996
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.
