RARITAN BANCORP INC.
9 WEST SOMERSET STREET
RARITAN, NEW JERSEY 08869
(908) 725-0080
March 27, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders (the "Annual Meeting") of Raritan Bancorp Inc. (the
"Company") to be held at the Raritan Valley Country Club, State
Highway No. 28, Somerville, New Jersey on Wednesday, April 24, 1996
at 10:00 a.m., New Jersey time.
As described in the enclosed Proxy Statement, matters
scheduled to be presented for shareholder action at the Annual
Meeting include the election of two directors, the ratification of
the appointment of independent auditors for the year ending
December 31, 1996, and a shareholder proposal, which is opposed by
your Board of Directors. During this meeting, we will also report
on the operations of The Raritan Savings Bank (the "Bank"), the
wholly-owned subsidiary of the Company. Detailed information
concerning the activities and operating performance of the Company
and the Bank during the year ended December 31, 1995 is contained
in our Annual Report, which is enclosed. Directors and officers of
the Company, as well as representatives of our independent
auditors, will be present to respond to any questions which
shareholders may have.
We hope you will be able to attend this meeting in person.
Whether or not you expect to attend, we urge you to sign, date and
return the enclosed Proxy Card so that your shares will be
represented.
On behalf of the Board of Directors and all of the employees
of the Company and the Bank, I wish to thank you for your support
and interest. I look forward to seeing you at the Annual Meeting.
Sincerely,
Arlyn D. Rus
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
RARITAN BANCORP INC.
9 WEST SOMERSET STREET
RARITAN, NEW JERSEY 08869
(908) 725-0080
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On April 24, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
(the "Annual Meeting") of Raritan Bancorp Inc. (the "Company") will
be held at the Raritan Valley Country Club, State Highway No. 28,
Somerville, New Jersey on Wednesday, April 24, 1996 at 10:00 a.m.,
New Jersey time, for the following purposes:
1. The election of two directors for a term of three years
each;
2. The ratification of KPMG Peat Marwick LLP as independent
auditors of the Company for the year ending December 31,
1996;
3. The consideration of a shareholder proposal regarding the
sale of the Company. NOTE: Your Board of Directors
believes that this proposal is adverse to the best
interests of the Company and its shareholders and
recommends a vote AGAINST this proposal; and
4. Such other matters as may properly come before the Annual
Meeting or any adjournments thereof.
Pursuant to the Bylaws of the Company, the Board of Directors
has fixed March 11, 1996 as the voting record date for the
determination of shareholders entitled to notice of and to vote at
the Annual Meeting and any adjournments thereof. Only holders of
the Common Stock of the Company as of the close of business on that
date will be entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof. A list of shareholders
entitled to vote at the Annual Meeting will be available at 9 West
Somerset Street, Raritan, New Jersey, for a period of ten days
prior to the Annual Meeting and will also be available for
inspection at the meeting itself.
By Order of the Board of Directors
Lucille H. Daniel
Secretary
Raritan, New Jersey
March 27, 1996
EACH SHAREHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL
MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY
CARD WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE>
RARITAN BANCORP INC.
9 WEST SOMERSET STREET
RARITAN, NEW JERSEY 08869
(908) 725-0080
_________________________
PROXY STATEMENT
_________________________
ANNUAL MEETING OF SHAREHOLDERS
April 24, 1996
_________________________
Solicitation and Voting of Proxies
This Proxy Statement is being furnished to shareholders of
Raritan Bancorp Inc. (the "Company") in connection with the
solicitation by the Board of Directors of proxies to be used at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held at
the Raritan Valley Country Club, State Highway No. 28, Somerville,
New Jersey on Wednesday, April 24, 1996 at 10:00 a.m., New Jersey
time, and any adjournments thereof. The 1995 Annual Report to
Shareholders, including the consolidated financial statements of
the Company for the year ended December 31, 1995, accompanies this
Proxy Statement and Proxy Card, which are first being mailed to
shareholders on or about March 29, 1996.
Regardless of the number of shares of Common Stock owned, it
is important that shareholders be represented by proxy or be
present in person at the Annual Meeting. Shareholders are requested
to vote by completing the enclosed Proxy Card and returning it,
signed and dated, in the enclosed postage-paid envelope.
Shareholders are urged to indicate the way they wish to vote in the
spaces provided on the proxy card. Proxies solicited by the Board
of Directors of the Company will be voted in accordance with the
directions given therein. Where no instructions are indicated,
signed proxies will be voted FOR the election of each of the
nominees for director named in this Proxy Statement, FOR the
ratification of KPMG Peat Marwick LLP as independent auditors of
the Company for the year ending December 31, 1996, and AGAINST the
shareholder proposal regarding the sale of the Company (the
"Shareholder Proposal").
The Board of Directors knows of no additional matters that
will be presented for consideration at the Annual Meeting.
Execution of a proxy, however, confers on the designated
proxyholders discretionary authority to vote the shares in
accordance with their best judgement on such other business, if
any, that may properly come before the Annual Meeting or any
adjournments thereof.
A proxy may be revoked at any time prior to its exercise by
the filing of a written notice of revocation with the Secretary of
the Company, by delivering to the Company a duly executed proxy
bearing a later date, or by attending the Annual Meeting and voting
in person. However, if you are a shareholder whose shares are not
registered in your own name, you will need appropriate
documentation from your record holder to vote personally at the
Annual Meeting.
The cost of solicitation of proxies in the form enclosed
herewith will be borne by the Company. Proxies may also be
solicited personally or by mail, telephone or telegraph by the
Company's Directors, officers and regular employees, without
additional compensation therefor. The Company will also request
persons, firms and corporations holding shares in their names, or
in the name of their nominees, which are beneficially owned by
others, to send proxy material to and obtain proxies from such
beneficial owners, and will reimburse such holders for their
reasonable expenses in doing so. The Company has retained Kissel-
Blake, Inc., a proxy soliciting firm, to assist the Company in the
solicitation of proxies for the Annual Meeting, for a fee of
$5,000, plus out-of-pocket expenses.
<PAGE>
<PAGE>
Voting Securities
The securities which may be voted at this Annual Meeting
consist of shares of common stock of the Company, par value $.01
per share (the "Common Stock"), with each share entitling its owner
to one vote on all matters to be voted on at the Annual Meeting,
except as described below. The close of business on March 11, 1996
has been fixed by the Board of Directors as the record date (the
"Record Date") for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting and any adjournments
thereof. The total number of shares of the Company's Common Stock
outstanding on the Record Date (exclusive of Treasury shares) was
1,449,689 shares.
The presence, in person or by proxy, of at least a majority of
the total number of shares of Common Stock outstanding and entitled
to vote is necessary to constitute a quorum at this Annual Meeting.
In the event there are not sufficient votes for a quorum, or to
approve or ratify any matter being presented, at the time of this
Annual Meeting, the Annual Meeting may be adjourned in order to
permit the further solicitation of proxies.
In accordance with the provisions of the Company's Certificate
of Incorporation, record holders of Common Stock who beneficially
own in excess of 10% of the outstanding shares of Common Stock (the
"Limit") are not entitled to any vote with respect to the shares
held in excess of the Limit. The Company's Certificate of
Incorporation authorizes the Board of Directors (i) to make all
determinations necessary to implement and apply the Limit,
including determining whether persons or entities are acting in
concert, and (ii) to demand that any person who is reasonably
believed to beneficially own stock in excess of the Limit supply
information to the Company to enable the Board to implement and
apply the Limit.
Voting Procedures and Method of Counting Votes
As to the election of Directors, the proxy card being provided
by the Board of Directors enables a shareholder to vote FOR the
election of the nominees proposed by the Board, or to WITHHOLD
AUTHORITY to vote for one or more of the nominees being proposed.
Under Delaware law and the Company's Certificate of Incorporation
and Bylaws, Directors are elected by a plurality of votes cast,
without regard to either broker non-votes, or proxies as to which
authority to vote for one or more of the nominees being proposed is
withheld.
As to the ratification of KPMG Peat Marwick LLP as independent
auditors of the Company and the Shareholder Proposal, by checking
the appropriate box, a shareholder may: (i) vote FOR the item; (ii)
vote AGAINST the item; or (iii) ABSTAIN from voting on such item.
Under the Company's Certificate of Incorporation and Bylaws, the
ratification or approval of either matter shall be determined by a
majority of the votes cast, without regard to broker non-votes, or
proxies marked "ABSTAIN."
Proxies solicited hereby will be returned to the Company, and
will be tabulated by inspectors of election designated by the
Board, who will not be employed by, or a director of, the Company
or any of its affiliates.
<PAGE>
Security Ownership of Certain Beneficial Owners
Persons and groups owning in excess of 5% of the Company's
Common Stock are required to file certain reports regarding such
ownership with the Company and with the Securities and Exchange
Commission (the "SEC"), in accordance with the Securities Exchange
Act of 1934 (the "Exchange Act"). The following table sets forth
information as of the Record Date, the shares of Common Stock
beneficially owned by each person who was the owner of more than
five percent (5%) of the Company's outstanding shares of Common
Stock as of March 11, 1996.
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Percent
of Beneficial Owner Ownership of Class
- ------------------- --------------------- --------
<S> <C> <C>
Raritan Savings Bank
Employee Stock Ownership 139,764 (1) 9.6%
Plan
9 West Somerset Street
Raritan, New Jersey
Arlyn D. Rus 126,035 (2) 8.2
c/o Raritan Bancorp Inc.
9 West Somerset Street
Raritan, New Jersey
William T. Kelleher 75,320 5.2
c/o Kelleher & Moore
23 Maple Street
Post Office Box 727
Somerville, New Jersey
Thomas F. Tansey 75,165 (3) 5.0
c/o Raritan Bancorp Inc.
9 West Somerset Street
Raritan, New Jersey
<FN>
- ----------------------------
(1) The ESOP Administrative Committee, consisting of directors of the Bank, administers the ESOP.
Under the terms of the ESOP, shares of Common Stock allocated to the account of employees are
voted in accordance with the instructions of the respective employees. Unallocated shares
are voted by the ESOP Trustee as directed by the Administrative Committee. The
Administrative Committee shall vote the unallocated shares in a manner that reflects the
directions received from employees as to allocated shares, unless their fiduciary duties
require otherwise. As of the Record Date, 104,682 shares of stock were allocated under the
ESOP and 35,082 shares remained unallocated.
(2) Includes options to purchase 81,750 shares of Common Stock which are exercisable within 60
days of the Record Date. Includes 13,614 shares allocated to Mr.Rus' account under the
Bank's Employee Stock Ownership Plan (the "ESOP").
(3) Includes options to purchase 53,250 shares of Common Stock which are exercisable within 60
days of the Record Date. Includes 9,165 shares allocated to Mr. Tansey's account under the
Bank's Employee Stock Ownership Plan (the "ESOP").
</TABLE>
<PAGE>
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1 - ELECTION OF DIRECTORS
In accordance with the Bylaws of the Company, the number of
Directors is currently set at six. Each of the members of the
Board of Directors of the Company also serves on the Board of
Directors of The Raritan Savings Bank (the "Bank"), the Company's
wholly-owned subsidiary. Directors are elected for staggered terms
of three years each, with the term of office of only one class of
Directors expiring in each year. Directors serve until their
successors are elected and qualified.
The nominees proposed by the Board for election at this Annual
Meeting are William T. Anderson, M.D. and William W. Crouse. Each
of these nominees is presently a Director of the Company. Set
forth below is certain information concerning the nominees and the
other members of the Board as of March 11, 1996. The Board
believes that such nominees will stand for election and will serve
if elected as Director. However, if any of the nominees proposed
by the Board of Directors fails to stand for election or is unable
to accept election, the proxies will be voted for the election of
such other person or persons as the Board of Directors may
recommend.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
THE NOMINEES WHOSE NAMES APPEAR BELOW.
<TABLE>
<CAPTION>
Term to Expire Amount and Nature of
Name, Principal Occupation and Following Fiscal Year Beneficial Ownership Percent
Business Experience for Past 5 Years Ending December 31, of Stock (1) of Class
- ------------------------------------ ---------------------- -------------------- ----------
<S> <C> <C> <C>
William T. Anderson, M.D., Age 60 1998 24,914 (2)(3) 1.7%
Dr. Anderson has served as a Director
of the Bank since 1981 and of the
Company since its formation in 1987.
He is a physician with a family
practice at Anderson and Jobanputra,
M.D. He is also a director of
Somerset Health Care Affiliates.
William W. Crouse, Age 53. 1998 10,500 (2) .7
Mr. Crouse has served as a Director
of the Company and the Bank since
April, 1994. He is Vice Chairman and
General Partner of HealthCare
Investment Corporation, and he has 25
years experience in the health care
industry.
Richard E. Fischer, Age 65 1997 53,445 (2) 3.7%
Mr. Fischer has served as a Director
of the Bank since 1969 and of the
Company since its formation in 1987.
He is President of the Hunterdon
Lumber Company, a retail lumber and
building products company.
William T. Kelleher, Jr., Age 44. . . . 1996 35,079 (2)(4) 2.4
Mr. Kelleher, Jr. has served as a
Director of the Bank since 1983 and
of the Company since its formation in
1987. He is a partner in the law
firm of Kelleher and Moore, and has
been a municipal court judge in the
Borough of Somerville (New Jersey)
since 1983 and in the Township of
Branchburg since 1990.
Arlyn D. Rus, Age 55 . . . 1997 126,035 (5) 8.2
Mr. Rus has served as Chairman,
President and Chief Executive Officer
of the Company since its formation in
1987. He has served as Director,
President and Chief Executive Officer
of the Bank since 1971. Mr. Rus
currently serves as a member of the
Board of Directors of America's
Community Bankers and the New Jersey
Council of Savings Institutions.
Thomas F. Tansey, Age 51 . 1996 75,165 (6) 5.0
Mr. Tansey has served as Executive
Vice President, Chief Operating
Officer and Treasurer of the Company
since its formation in 1987. He has
served as Executive Vice President,
Chief Operating Officer and Treasurer
of the Bank since May 1984. He has
served as a Director of the Bank
since January, 1986 and of the
Company since its formation in 1987.
NAMED EXECUTIVE OFFICER NOT A DIRECTOR
John J. Lukens, Age 48 . . 12,223 (7) .8
Mr. Lukens has served as Senior Vice
President of the Company and Senior
Vice President and Senior Lending
Officer of the Bank since June, 1992.
Prior to June, 1992, he served as a
Credit Officer at National
Westminster Bank.
All directors and executive officers
as a group (11 persons) . . . . . 594,017 (8) 35.9
<FN>
- -------------------------------------
(1) Unless otherwise indicated, each person effectively exercises sole (or shared with spouse) voting
and dispositive power as to the shares reported.
(2) Includes 7,500 shares that may be acquired pursuant to the exercise of options granted under the
Directors Option Plan.
(3) Includes 862 shares owned of record by Dr. Anderson's wife.
(4) Includes 2,654 shares owned of record by Mr. Kelleher as custodian for minor children.
(5) Includes 2,129 shares owned of record by Mr. Rus' wife, 81,750 shares that may be acquired pursuant
to presently exercisable stock options, and 13,614 shares allocated to Mr. Rus' account under the
Bank's ESOP.
(6) Includes 1,500 shares owned of record by Mr. Tansey's wife, 53,250 shares that may be acquired
pursuant to presently exercisable stock options and 9,165 shares allocated to Mr. Tansey's account
under the Bank's ESOP.
(7) Includes 10,500 shares that may be acquired pursuant to presently exercisable stock options, and
1,273 shares allocated to Mr. Lukens' account under the Bank's ESOP.
(8) Includes 203,775 shares that may be acquired pursuant to presently exercisable stock options, 139,764
shares held by the ESOP and 90,320 shares owned by Directors Emeritus.
</TABLE>
<PAGE>
<PAGE>
<PAGE>
Meetings of the Board of Directors and Committees of the Board
The Board of Directors of the Company has established an audit
committee and a nominating committee. The Bank maintains an audit
committee, nominating committee, personnel committee and investment
committee. The Chairman, President and Chief Executive Officer
serves as an ex officio member of all committees except the audit
committee.
The Board of Directors of the Company and the Bank met fifteen
times during 1995. No Director attended fewer than 75% in the
aggregate of the total number of Board meetings held and the total
number of committee meetings on which he served during 1995.
The audit committee consists of Messrs. Anderson, Crouse,
Fischer and Kelleher, Jr., and meets no less frequently than on a
quarterly basis. The audit committee reviews audit performance and
evaluates policies and procedures relating to auditing functions
and controls. The audit committee met four times in 1995.
The nominating committee consists of Messrs. Anderson, Crouse,
Fischer and Kelleher, Jr., and meets semi-annually to appoint
officers and to nominate directors for election by the
shareholders. While the committee will consider nominees
recommended by shareholders, it has not actively solicited
recommendations from shareholders. Nominations by shareholders
must comply with certain procedural and informational requirements
set forth in the Company's Bylaws. See "Advance Notice of Business
to be Conducted at an Annual Meeting."
The Bank's personnel committee consists of Messrs. Anderson,
Crouse, Fischer and Kelleher, Jr. The personnel committee reviews
compensation, officer promotions, benefits and other matters of
personnel policy and practice. The personnel committee met one
time in 1995.
The Bank's investment committee consists of Messrs. Crouse,
Kelleher, Jr., Tansey and Ms. Daniel, and meets monthly. The
investment committee is responsible for establishing investment
policies for the Bank.
In addition, the Bank has a trust committee, conflict of
interest committee, mortgage and real estate committee, site and
building committee and planning committee, which meet periodically.
Directors' Compensation
Fees. Directors of the Bank are paid an annual retainer fee
of $4,000, as well as a fee of $750 per board meeting attended and
$200 per committee meeting attended. In addition, Directors are
reimbursed for any amount of out-of-pocket expenses incurred in
attending meetings. Directors do not receive fees from the Company
for services on the Company's Board.
PAGE
<PAGE>
Stock Option Plan for Outside Directors. Under the 1993 Stock
Option Plan for Outside Directors, each Outside Director of the
Company who was an Outside Director of the Company or the Bank at
the time of adoption of the Plan, received a non-statutory option
to purchase 7,500 shares of Common Stock at an exercise price equal
to the fair market value of the Common Stock at the time of the
adoption of the plan. To the extent options for shares are
available, each subsequent Outside Director will be granted,
effective as of the date on which such subsequent Outside Director
is qualified and first begins to serve as an Outside Director, a
non-statutory stock option to purchase 7,500 shares of Common
Stock, or such lesser number of shares as remain in the plan, at an
exercise price equal to the then fair market value of the Common
Stock. An aggregate of 45,000 shares of Common Stock are reserved
for issuance pursuant to the exercise of options granted under the
1993 Stock Option Plan for Outside Directors. Options as to 30,000
shares of Common Stock reserved for issuance under this plan have
been granted as of the date of this Proxy Statement. Each option
may be exercised in whole or in part for a period of ten years from
the date of grant or one year following the date the Outside
Director ceases to be a Director. The exercise price of a
Director's option may be paid in cash or stock.
Executive Compensation
Summary Compensation Table. The following table sets forth
the cash compensation paid by the Bank, for services rendered
during the years ended December 31, 1995, 1994 and 1993 to the
Chief Executive Officer, and other executive officers of the Bank
who received an amount in salary and bonus in excess of $100,000 in
the year ended December 31, 1995 (the "Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------------------- ---------------------- -------
Other Restricted Options/ All Other
Name and Year Ended Annual Stock SARS(#) LTIP Compensation
Principal Position December 31, Salary(1) Bonus Compensation Awards (3) Payouts (4)
- ------------------ ------------ --------- ----- ------------ ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Arlyn D. Rus, 1995 $190,500 $33,750 $ -- -- -- $ -- $32,325
Chairman, President 1994 184,500 36,000 $ -- -- -- -- 53,325
and Chief Executive 1993 175,400 18,000 $ -- -- 13,500 -- 35,174
Officer
Thomas F. Tansey 1995 $130,500 $20,250 $ -- -- -- $ -- $26,881
Executive Vice 1994 123,000 21,000 $ -- -- -- -- 34,995
President, Chief 1993 115,400 12,000 $ -- -- 9,000 -- 33,371
Operating Officer
and Treasuerer
John J. Lukens 1995 $ 95,000 $13,360 $ -- -- -- $ -- $13,199
Senior Vice 1994 90,000 10,632 $ -- -- -- -- 15,663
President 1993 85,000 6,500 $ -- -- -- -- 981
<FN>
____________________________________
(1) Salary amounts for Messrs. Rus and Tansey include directors fees in the amounts of $10,500, $10,500 and $10,400
for the years 1995, 1994, and 1993, respectively.
(2) Perquisites did not exceed the lesser of $50,000 or 10% of the individual's salary and bonus for any of the
years. Personal benefits include an automobile provided by the Bank to Messrs. Rus and Tansey, and club
membership for Mr. Rus.
(3) All numbers adjusted to reflect three-for-two stock split as of December 1, 1993.
(4) Reflects the Bank's matching contributions to the Employee's Deferred Compensation 401(k) Plan with respect to
Mr. Rus in the amounts of $4,620, $4,620 and $4,497, with respect to Mr. Tansey in the amounts of $4,620, $3,375
and $3,150, and with respect to Mr. Lukens in the amounts of $2,832, $2,233, and $981 for the years 1995, 1994
and 1993, respectively. Also includes the market value of shares at December 31 of each year which have been
allocated to the employee's account pursuant to the Employee Stock Ownership Plan during such fiscal year; for
Mr. Rus in the amounts of $27,705, $48,705 and $30,677, for Mr. Tansey in the amounts of $22,261, $31,620 and
$20,221, and for Mr. Lukens in the amounts of $10,367, $13,430, and $0 for the years 1995, 1994 and 1993,
respectively.
</TABLE>
<PAGE>
Employment Agreements. The Company and the Bank entered into
amended employment agreements with Arlyn D. Rus, Chairman,
President and Chief Executive Officer, and Thomas F. Tansey,
Executive Vice President, Chief Operating Officer and Treasurer, in
January 1990. The employment agreements each provided for a five-
year term. Commencing on the third anniversary date of each
agreement and continuing each anniversary date thereafter, unless
prior notice of non-renewal is given, each agreement automatically
extends for an additional year so that the remaining term shall be
three years. The current base salary under the agreements, which
may be increased at the discretion of the Board of Directors, is
$187,500 for Mr. Rus and $125,000 for Mr. Tansey. In addition to
the base salary, each agreement provides, among other things, for
participation in stock option plans and other fringe benefits
applicable to executive personnel.
Each agreement provides for termination by the Company and the
Bank for "cause," as defined in the agreements, at any time. In
the event the Company and the Bank choose to terminate the
executive's employment for reasons other than for cause, or in the
event of their resignation from the Company and Bank upon failure
to re-elect them to their current offices or because of a material
lessening of their functions, duties or responsibilities, or in the
event of a liquidation, dissolution, consolidation, or merger in
which the Company or Bank is not the resulting institution, or upon
breach of the agreement by the Company or the Bank, the officer or,
in the event of death, his beneficiary, would be entitled to a lump
sum cash payment equal to the greater of (i) thirty-six times his
highest monthly rate of compensation or (ii) the payments owed for
the remaining term of the agreement. If termination of employment
follows a change in control of the Company, as defined in the
agreements, each officer would be entitled to a (i) severance
payment equal to thirty-six times the highest monthly compensation
paid to him under the contract plus a "special retirement benefit."
The special retirement benefit would be an additional payment in an
amount intended to compensate the officer for reduced retirement
benefits under the Bank's pension plan in the event of his
termination following a change of control. The change of control
severance payment to Mr. Rus and Mr. Tansey, based on the annual
compensation and special retirement benefit, would be $735,540 and
$818,595, respectively. The Bank and the Company have agreed to
indemnify the officers for the amount of any excise tax imposed on
such payments under Section 280G of the Internal Revenue Code of
1986. The agreements also permit Mr. Rus and Mr. Tansey to
terminate their employment voluntarily and receive a severance
payment equal to the highest annual rate of compensation paid to
the officer under such agreement for a one-year period or until he
obtains other employment, if earlier.
Special Termination Agreement. The Company has entered into
a thirty-six month special termination agreement with John J.
Lukens, Senior Vice President. The agreement renews for an
additional month at the end of each month so that the term of the
agreement continues to be thirty-six months unless prior written
notice of non-extension is given. The agreement provides that at
any time following a change in control of the Company as defined
therein, should the Company or the Bank terminate the executive's
employment with the Company or the Bank, for any reason other than
"cause," or if the executive terminates his employment following a
demotion, loss of title, office, significant authority, a reduction
in annual compensation, or relocation of his principal place of
employment, he would be entitled to receive a payment in an amount
equal to the product of (a) the monthly rate of base annual salary
paid to him by the Company and the Bank immediately prior to his
termination, times (b) the number of months remaining under the
agreement. Upon termination for cause, no payments or benefits are
due to the executive; however, if termination of employment
following a change in control is purported to be for cause, which
is disputed, the Company shall continue to provide the executive
with salary and other benefits and the dispute shall be settled by
arbitration. If cause is determined in arbitration to have
existed, the executive shall return cash payments made to him.
The executive would also be entitled to the continuation of
life, health and disability insurance coverage maintained by the
Bank at the time of such termination for the earlier of the
expiration of the number of months remaining under the agreement or
his employment by another employer. If a change in control were to
occur, and assuming it occurred on December 31, 1995 followed by
the termination of Mr. Luken's employment, the aggregate cash
amount payable to him under the special termination agreement as
severance payments in addition to other non-cash benefits provided
for under the agreement would have been approximately $285,000.
PAGE
<PAGE>
Retirement Plan. The Bank maintains and funds a tax-
qualified, non-contributory defined benefit pension plan for its
employees, which is administered by the Retirement System Group
Inc. All full-time employees aged twenty-one (21) or older who
have completed at least one year of service participate in the
plan. The plan provides an annual benefit payable at age 65 equal
to two percent of the employee's "average annual salary" (the
average of the highest three years base salary) multiplied by
credited service, up to a maximum of thirty (30) years, and reduced
by a portion of the employee's primary Social Security benefit.
The maximum annual benefit is 60% of the average annual salary,
reduced by a portion of the employee's primary social security
benefit. Messrs. Rus, Tansey and Lukens had 33, 11, and 3 years
of credited service, respectively, under this retirement plan.
Supplemental Executive Retirement Plans. The Bank maintains
a non-qualified supplemental executive retirement plan ("SERP I")
for certain executives of the Bank to compensate those executive
participants in the Bank's tax-qualified benefit plans whose
benefits are limited by Section 415 or Section 401(a)(17) of the
Internal Revenue Code (the "Code"). As of December 31, 1995,
Messrs. Rus and Tansey were participating in the SERP I. The SERP
I provides participants with retirement benefits generally equal to
the difference between the annual benefit the participant would
have received under the Retirement Plan if such benefits were
computed without giving effect to the limitations on benefits
imposed by application of Section 401(a)(17) and Section 415 of the
Code and the amounts actually payable to the Participant under the
terms of the Retirement Plan. In addition, the Participant is
entitled to an ESOP benefit in a dollar amount equal to the
difference between the fair market value of the number of shares of
common stock of the Bank that would have been allocated to the
account of the Participant had the limitations of Section
401(a)(17) and 415 of the Code not been applicable and the fair
market value of the number of shares of common stock actually
allocated to the account of the Participant. SERP I also provides
the Participant with any matching contribution that he is unable to
receive under the Bank's 401(k) Plan as a result of certain
limitations of the Code. Benefits are payable in the same form as
benefits in the Retirement Plan, ESOP and the 401(k) Plan.
The SERP I is considered an unfunded plan for tax and ERISA
purposes. All obligations arising under the SERP I are payable
from the general assets of the Bank; however, the Bank has set up
a trust to ensure that sufficient assets will be available to pay
the benefits under the SERP I. The Bank's pension cost
attributable to the SERP I was $22,962 for the year ended
December 31, 1995.
The Bank also maintains a non-qualified supplemental executive
retirement plan ("SERP II") for certain executives of the Bank to
provide participants and their beneficiaries with certain pension
benefits not obtainable under the Bank's Retirement Plan and
certain welfare benefits not obtainable under the Bank's
Postretirement Welfare Benefit Plan. SERP II credits the
participant with five additional years of service under the Bank's
Retirement and Welfare Benefit Plan for purposes of determining
benefits under the Retirement and Welfare Benefit Plan formula.
The additional benefits provided by the additional years of service
are funded through SERP II. Currently, Mr. Tansey is the only
participant in SERP II.
The SERP II is considered an unfunded plan for tax and ERISA
purposes. All obligations arising under the SERP II are payable
from the general assets of the Bank; however, the Bank has set up
a trust to ensure that sufficient assets will be available to pay
the benefits under the SERP II. The Bank's pension cost
attributable to the SERP II was $12,000 for the year ended
December 31, 1995.
Incentive Stock Option Plans. The Board of Directors of the
Company has established the Incentive Stock Option Plans which
provide discretionary awards to its officers and key employees.
The grant of awards under the Option Plans is determined by a
committee of the Board of Directors consisting of three directors
(the "Option Plan Committee"), none of whom is eligible to receive
options under the Plans.
PAGE
<PAGE>
Set forth below is certain information concerning options
outstanding to such Named Executive Officers at December 31, 1995.
No options were exercised by, or granted to, a Named Executive
Officer during 1995.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Value of Unexercised
Number of Unexercised In-The-Money
Options at Fiscal Year-End Options at Fiscal Year-End(1)
Shares Acquired Value ---------------------------- -----------------------------
Name Upon Exercise Realized Exercisable/Unexercisable(#) Exercisable/Unexercisable($)
- ---- --------------- -------- ---------------------------- -----------------------------
<S> <C> <C> <C> <C>
Arlyn D. Rus $ 81,750/4,500 $1,055,715/$27,000
Thomas F. Tansey $ 53,250/3,000 $ 684,360/$18,000
John J. Lukens $ 10,500/0 $ 127,785/$0
<FN>
- ---------------------
(1) Equals the difference between the aggregate exercise price of such options and the aggregate fair market
value of the shares of Common Stock that would be received upon exercise, assuming such exercise occurred
on December 31, 1995, at which date the last sale price of the Common Stock as quoted on the Nasdaq National
Market was $21.50.
</TABLE>
Transactions With Certain Related Persons
The Bank offers residential mortgage loans and consumer loans
to its employees (other than executive officers) in the ordinary
course of business and at a preferred rate, which is 1/2% below the
rate otherwise charged. The Bank requires that an eligible
employee have been with the Bank for a minimum of one year. This
rate is charged as long as such employee remains employed by the
Bank. If the employee no longer works for the Bank, the rate
charged is increased to the market rate in effect at the inception
of the loan. The Bank also charges eligible employees 1/2%
percentage point less than the origination fee normally charged to
its customers on loans.
The Bank also makes loans to its executive officers and
Directors and their immediate family members and related interests,
which loans are made in the ordinary course of business, on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other persons and do not involve more than the
normal risk of collectibility or present other unfavorable
features.
The Bank has utilized the services of the Kelleher & Moore law
firm to provide general legal services during 1995. William T.
Kelleher, Jr., a Director, is a member of that law firm. During
1995, the Bank paid $76,500 in fees to Kelleher & Moore, and the
Bank has and will continue to utilize the services of other law
firms.
PAGE
<PAGE>
PROPOSAL 2 - RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the year ended December
31, 1995 were KPMG Peat Marwick LLP. The Company's Board of
Directors has reappointed KPMG Peat Marwick LLP to continue as
independent auditors for the Company for the year ending December
31, 1996, subject to ratification of such appointment by the
shareholders. Representatives of KPMG Peat Marwick LLP are expected
to attend the Annual Meeting. They will be given the opportunity to
make a statement if they desire to do so and will be available to
respond to appropriate questions from shareholders present at the
Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1996.
PROPOSAL 3 - SHAREHOLDER PROPOSAL REGARDING
THE SALE OF THE COMPANY
The following Proposal, including the Supporting Statement set
forth below, has been submitted by a shareholder of the Company:
"Resolved, that stockholders of Raritan Bancorp, request and
recommend that the board of directors commence taking those steps
necessary to achieve the sale of Raritan Bancorp in order to enable
the stockholders to realize the full value of their investment."
The proponent who has owned common stock for more than 2
years, and currently is one of the largest shareholders, believes
that in order to maximize stockholder values Raritan Bancorp should
be sold.
This proposal is very similar to a shareholder proposal that
was submitted in 1993 and 1994 to sell Bancorp New Jersey.
Although the board of directors of Bancorp New Jersey opposed
those proposals, the board eventually negotiated with UJB to
acquire Bancorp for approximately 175% of book value.
There have been many more acquisitions in the banking industry
where shareholders received offers from acquirors far above the
market price prior to the offer. Acquisitions in New Jersey
included:
1. First Fidelity
2. Midlantic
3. Summit
4. Flemington National
5. Lakeland Financial
Based upon these, and other subsequent acquisitions, it is
reasonable to assume that Raritan Bancorp shareholders could now
receive an exchange offer for Raritan stock substantially above the
current market price.
PAGE
<PAGE>
However, stock prices do not go up forever. Opportunities
often disappear quickly. Many people have lost a lot of money
because they waited too long to sell a stock, or a piece of
property. Don't let this happen to Raritan shareholders!
I am submitting this proposal because I am worried about the
value of my Raritan stock. Much of the price rise of Raritan stock
was caused by purchases by investors speculating that Raritan will
be acquired at a higher price. These speculators pushed the stock
price far above book value.
If Raritan is not acquired soon, there is no reason for the
stock price to rise, and there are many things which could cause
the stock price to drop. New investors will not be attracted by
the earnings, or the 3% dividend.
If our board of directors opposes the sale of Raritan now it
may discourage potential acquirors, which would disappoint
stockholders who bought stock because they believe Raritan will
soon be sold. Selling by these stockholders would force the market
price of Raritan stock down.
Raritan Bancorp stock has been a good investment in recent
years. However, it is much too risky for shareholders to wait and
hope for some perfect time in the future to sell Raritan.
Unless the board moves quickly to sell Raritan, the price of
an acquisition offer may be lower because many potential acquirors
of Raritan have already been acquired, are in the process of being
acquired, or are now seeking to acquire much larger institutions
than Raritan.
While adoption of this proposal will not legally bind the
board of directors, the proponent urges you to vote FOR this
proposal to tell the board of directors to maximize, and protect,
the value of your investment by immediately taking those steps
necessary to achieve the sale of Raritan Bancorp.
-- END OF PROPOSAL --
THE BOARD OF DIRECTORS BELIEVES THAT THE FOREGOING PROPOSAL
HAS BEEN SUBMITTED IN FURTHERANCE OF THE PROPONENT'S PERSONAL
AGENDA AND IS NOT IN THE BEST INTERESTS OF THE COMPANY AND ALL OF
ITS SHAREHOLDERS.
ACCORDINGLY, YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT THE SHAREHOLDERS VOTE AGAINST THE PROPOSAL.
Shareholders should not be misled by the Proponent's "get rich
quick" scheme for Raritan Bancorp. Your Board of Directors has a
long history of successfully managing the Company for the long-term
benefit of all shareholders. The Proponent has a history of
seeking quick profits by putting companies "in play" through his
stock purchases and "sell the bank" investment strategy. Your
Board has expanded the Bank's franchise through acquisitions and
internal growth; is satisfying the ever-growing housing, small
business and financial services needs of the central New Jersey
communities in which it operates; has provided well-paying jobs to
employees who pay taxes, raise families and otherwise contribute to
the well-being of the communities in which they reside; and has
delivered exceptional value to all shareholders. The Proponent,
who apparently has no experience managing a public company or a
bank, believes that the only way for your company and its
shareholders to make money is to have the company sold. The record
of Raritan Bancorp and the experience of its shareholders prove
otherwise!
As a matter of fact, almost five years ago another stock
speculator attempted to force your Board to place a "for sale" sign
over your company, by means of a shareholder proposal, based on his
belief as to the bleak future prospects for Raritan Bancorp common
stock and the banking industry in general. The Board resisted
those efforts to close its doors, and since that time Raritan
Bancorp's common stock has more than tripled in value, the Company
has increased its annual rate of cash dividend payments for five
consecutive years, and shareholders have realized an annual rate of
return of 26.4%. Your Board has a proven track record of looking
after the best interests of all shareholders and delivering value
to shareholders without having to resort to a fire sale of a
franchise that is increasing in value!
PAGE
<PAGE>
Although the Proponent claims to be a large shareholder, the
records available to the Company indicate that he owns 200 shares
of Common Stock. The six individual members of your Board in the
aggregate beneficially own more than 325,000 shares of Raritan
Bancorp Common Stock, which shares have an investment value of more
than $7.0 million. As stated in the proposal, the Proponent has
submitted a substantially identical proposal to several other
companies in which he owns stock. We believe that his one-track
only investment strategy is clear from both his proposal and from
the actions he has taken with respect to other companies. We
believe that the Proponent is speaking from first hand knowledge in
claiming that some Raritan Bancorp stock has been purchased by
investors speculating that the Company will be sold - we believe
that his investment in your Company is the result of his own
speculation as to a sale of the company and his plans to submit the
proposal to the Company. However, Raritan Bancorp's value has
increased because the value of Raritan Savings Bank's franchise has
increased, due in significant part to the general public's
dissatisfaction with the banking services that result from the
mega-bank mergers of the type being pushed by the Proponent. Your
Board is confident that the value of Raritan Bancorp will continue
to increase, and that Raritan Savings Bank will continue to benefit
from the industry consolidation and disappearance of community
banks.
The Board also believes that the adoption of the Proposal
would be disruptive to the operations of the Company and the
Savings Bank, and would adversely affect the value of shareholders'
investment in Raritan Bancorp common stock. The cornerstone of the
business relationship with many loan and deposit customers is the
community orientation and level of service provided by Raritan
Savings Bank. Significant business is likely to be lost if
customers believe that the Company is likely to be "gobbled up" by
a larger bank, with the decline in customer and community service
that typically results. The adoption of the proposal could also
prove distractive and disruptive to the Company's employees and
lead to lower employee productivity. Placing the Company publicly
"for sale" through the proposal will undermine employees'
confidence in their future status with the Company and will detract
from their ability to promote the business of the Bank.
Finally, the Board believes that the proposal is unnecessary
and potentially counterproductive. The Board considers all options
available to it on an ongoing basis in furtherance of its goal of
delivering value to shareholders. A determination to sell the
company that is forced upon a board by means of a shareholder
proposal is not likely to result in the best value being obtained.
Approval of the proposal may enhance the Proponent's ability to
intimidate and harass the next company he invests in, but will not
enhance Raritan Bancorp shareholder value!
FOR ALL OF THE FOREGOING REASONS, YOUR BOARD OF DIRECTORS
UNANIMOUSLY URGES SHAREHOLDERS TO REJECT THE PROPONENT'S SCHEME AND
RECOMMENDS THAT YOU VOTE AGAINST THIS PROPOSAL.
PAGE
<PAGE>
SHAREHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
To be considered for inclusion in the Company's proxy
statement in connection with the annual meeting of shareholders to
be held following the year ending December 31, 1996, a shareholder
proposal must be received by the Secretary of the Company, at the
address set forth on the first page of this Proxy Statement, no
later than November 27, 1996. Any shareholder proposal submitted
to the Company will be subject to SEC Rule 14a-8 under the
Securities Exchange Act of 1934.
ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED
AT AN ANNUAL MEETING
The Bylaws of the Company provide an advance notice procedure
for certain business, or nominations to the Board of Directors, to
be brought before an annual meeting. In order for a shareholder to
properly bring business before an annual meeting, or to propose a
nominee to the Board, the shareholder must give written notice to
the Secretary of the Company not less than ninety (90) days before
the date fixed for such meeting, provided, however, that in the
event that less than one hundred (100) days notice or prior public
disclosure of the date of the meeting is given or made, notice by
the shareholder to be timely must be received not later than the
close of business on the tenth day following the day on which such
notice of the date of the annual meeting was mailed or such public
disclosure was made. The notice must include the shareholder's
name, record address, and number of shares owned by the
shareholder, and describe briefly the proposed business, the
reasons for bringing the business before the annual meeting, and
any material interest of the shareholder in the proposed business.
In the case of nominations to the Board, certain information
regarding the nominee must be provided. Nothing in this paragraph
shall be deemed to require the Company to include in its proxy
statement and proxy relating to an annual meeting any shareholder
proposal which does not meet all of the requirements for inclusion
established by the SEC in effect at the time such proposal is
received. The date on which the 1997 Annual Meeting of
Shareholders is expected to held is April 30, 1997. Accordingly,
advance written notice for certain business, or nominations to the
Board of Directors, to be brought before the 1997 Annual Meeting
must be given to the Company by January 30, 1997.
By Order of the Board of Directors
Lucille H. Daniel
Secretary
Raritan, New Jersey
March 27, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE
REQUESTED TO SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
PAGE
<PAGE>
PROXY
RARITAN BANCORP INC.
ANNUAL MEETING OF SHAREHOLDERS
April 24, 1996
The undersigned hereby appoints Thomas F. Tansey and
William T. Kelleher, Jr. with full powers of substitution to act as
attorneys and proxies for the undersigned to vote all shares of
Common Stock of Raritan Bancorp Inc. which the undersigned is
entitled to vote at the Annual Meeting of Shareholders to be held
at the Raritan Valley Country Club, State Highway 28, Somerville,
New Jersey on Wednesday, April 24, 1996 at 10:00 a.m., New Jersey
time and at any adjournments thereof. The official proxy committee
is authorized to cast all votes to which the undersigned is
entitled as follows:
FOR WITHHELD
1. The election as directors of
all nominees listed below
(except as marked to the --- ---
contrary below)
William T. Anderson, M.D.
William W. Crouse
INSTRUCTION: To withhold
your vote for one or more
nominees, write the name
of the nominee(s) on the
line below.
-------------------------
-------------------------
FOR WITHHELD ABSTAIN
2. The ratification of the
appointment of KPMG Peat
Marwick as auditors for --- --- ---
the fiscal year ending
December 31, 1996.
3. The shareholder proposal
regarding the sale of the
Company. --- --- ---
The Board of Directors
recommends a vote "AGAINST"
Proposal 3.
PAGE
<PAGE>
- -----------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2, AND
AGAINST PROPOSAL 3. IF ANY OTHER BUSINESS IS PRESENTED AT THE
MEETING, THIS PROXY WILL BE VOTED BY THE PROXY HOLDERS IN THEIR
DISCRETION.
- -----------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Meeting or at any adjournment thereof and after notification to the
Secretary of the Company at the Annual Meeting of the shareholder's
decision to terminate this proxy, then the power of said attorneys
and proxies shall be deemed terminated and of no further force and
effect. This proxy may also be revoked by sending written notice
to the Secretary of the Company at the address set forth on the
Notice of Annual Meeting of Shareholders, or by the filing of a
later proxy prior to a vote being taken on a particular proposal at
the Annual Meeting.
The undersigned acknowledges receipt from the Company prior to
the execution of this proxy of a Notice of Annual Meeting and of a
proxy statement dated March 27, 1996.
Dated , 1996 Check Box if You Plan
------------------ --- to Attend Annual Meeting
- ------------------------------ -----------------------------
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
- ------------------------------ -----------------------------
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
Please sign exactly as your name appears on this card. When
signing as attorney, executor, administrator, trustee or guardian,
please give your full title. If shares are held jointly, each
holder should sign.
- -----------------------------------------------------------------
Please complete, sign and date this proxy and return it promptly
in the enclosed postage-prepaid envelope.
- ------------------------------------------------------------------
