FNB FINANCIAL CORPORATION
PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD APRIL 25, 2000
________________________________
GENERAL
Introduction, Day, Date, Time and Place of Meeting
FNB Financial Corporation, a Pennsylvania business
corporation, is furnishing this proxy statement in connection with
the solicitation by its Board of Directors of proxies to be voted
at the Annual Meeting of Shareholders of the corporation. The
corporation is holding the Annual Meeting at the main office of
The First National Bank of McConnellsburg, 101 Lincoln Way West,
McConnellsburg, Pennsylvania, 17233, on Tuesday, April 25, 2000,
at 1:00 p.m., Eastern time.
The principal executive office of the corporation is located
at 101 Lincoln Way West, McConnellsburg, Pennsylvania 17233. The
telephone number for the corporation is (717) 485-3123. All
inquiries should be directed to Daniel E. Waltz, Treasurer of the
corporation. The First National Bank of McConnellsburg is a
wholly-owned subsidiary of the corporation.
Solicitation and Voting of Proxies
We are first sending this proxy statement and the enclosed
form of proxy to shareholders of the corporation on or about March
20, 2000.
Shares represented by proxies, if properly signed and
returned, will be voted in accordance with the specifications made
on the form of proxy by the shareholder. If the shareholder does
not make any selections on the proxy, the proxy holders will vote
his or her shares FOR the election of the four nominees for Class
1 Director named below and FOR the ratification of the selection
of Smith Elliott Kearns and Company, Certified Public Accountants,
of Chambersburg, Pennsylvania, as the independent auditors for the
corporation for the year ending December 31, 2000. Execution and
return of the enclosed proxy will not affect a shareholder's right
to attend the annual meeting and vote in person, after giving
written notice to the Secretary of the corporation. The
corporation will pay for preparing, assembling, printing, mailing,
and soliciting proxies, and any additional material which the
corporation may furnish shareholders in connection with the annual
meeting. In addition to the use of the mails, certain directors,
officers and employees of the corporation and the bank may solicit
proxies personally or by telephone, tele-copier, or other
electronic means. The corporation will make arrangements with
brokerage houses and other custodians, nominees and fiduciaries to
forward proxy solicitation material to the beneficial owners of
stock held of record by these persons, and, upon request, the
corporation will reimburse them for their reasonable forwarding
expenses.
Revocability of Proxy
A shareholder who returns a proxy may revoke the proxy at any
time before it is voted only:
* By giving written notice of revocation to George S.
Grissinger, Secretary, FNB Financial Corporation, 101
Lincoln Way West, McConnellsburg, Pennsylvania, 17233;
* By executing a later-dated proxy and giving written notice
thereof to the Secretary of the corporation; or
* By voting in person after giving written notice to the
Secretary of the corporation.
Voting Securities and Quorum
At the close of business on Monday, March 6, 2000, the
corporation had issued and outstanding 400,000 shares of common
stock, par value $0.63 per share, the only authorized class of
stock.
Only shareholders of common stock of record at the close of
business on Monday, March 6, 2000 will be entitled to notice of
and to vote at the annual meeting. Cumulative voting rights do
not exist with respect to the election of directors. On all
matters to come before the annual meeting, each share of common
stock is entitled to one vote.
Quorum and Votes Required for Approval
Under Pennsylvania law and the By-laws of the corporation,
the presence, in person or by proxy, of shareholders entitled to
cast at least a majority of the votes that all shareholders are
entitled to cast shall constitute a quorum for the transaction of
business at the annual meeting. Votes withheld and abstentions
will be counted in determining the presence of a quorum for the
particular matter. Broker non-votes will not be counted in
determining the presence of a quorum for the particular matter as
to which the broker withheld authority.
Assuming the presence of a quorum, the four nominees for
director receiving the highest number of votes cast by
shareholders entitled to vote shall be elected. Votes withheld
from a nominee and broker non-votes will not be cast for the
nominee.
Assuming the presence of a quorum, the affirmative vote of a
majority of all votes cast by shareholders is required for the
ratification of the selection of independent auditors.
Abstentions and broker non-votes are not "votes cast" and
therefore do not count either for or against ratification.
Abstentions and broker non-votes, however, have the practical
effect of reducing the number of affirmative votes required to
achieve a majority by reducing the total number of shares voted
from which the required majority is calculated.
PRINCIPAL BENEFICIAL OWNERS OF THE CORPORATION'S STOCK
Principal Owners
The following table sets forth, as of March 6, 2000, the name
and address of each person who owns of record or who is known by
the Board of Directors to be the beneficial owner of 5% or more of
the corporation's outstanding common stock, the number of shares
beneficially owned by the person and the percentage of the
outstanding common stock so owned. The footnotes to this table are
set forth below the "Beneficial Ownership by Officers, Directors
and Nominees" table, immediately following. Unless otherwise
indicated, the reporting person individually owns all shares.
Amount and Nature
Of Beneficial Percent of
Name and Address Ownership (1) Class
Forrest R. Mellott 34,057 8.51%
HCR 80 Box 1
Big Cove Tannery, PA 17212
Harvey J. Culler 20,079 5.02%
371 South Second Street
McConnellsburg, PA 17233
Beneficial Ownership by Officers, Directors and Nominees
The following table sets forth, as of March 6, 2000, the
amount and percentage of the common stock of the corporation
beneficially owned by each director, each nominee, and all
officers and directors of the corporation as a group. Unless
otherwise indicated, the reporting person individually owns all
shares.
Name of Individual or Amount and Nature of Percent of
Identity of Group Beneficial Ownership (1)(2) Class (3)
Current Class 1 Directors (to serve until 2000)
and Nominees for Class 1 Directors (to serve until 2003)
Patricia A. Carbaugh 270 (4) ---
Harry D. Johnston, D.O. 14,663 (5) 3.67%
Paul T. Ott 4,720 (6) 1.18%
Lonnie W. Palmer 110 (7) ---
Current Class 2 Directors (to serve until 2001)
Harvey J. Culler 20,079 (8) 5.02%
John C. Duffey 1,298 (9) ---
George S. Grissinger 12,100 (10) 3.03%
Forrest R. Mellott 34,057 (11) 8.51%
Current Class 3 Directors (to serve until 2002)
Henry W. Daniels 10,000 (12) 2.50%
H. Lyle Duffey 3,610 (13) ---
David A. Washabaugh, III 5,000 (14) 1.25%
Daniel E. Waltz 1,124 (15) ---
All Officers and Directors as a
Group (12 persons) 107,031 26.76%
(1) The securities "beneficially owned" by an individual are
determined in accordance with the definitions of "beneficial
ownership" set forth in the General Rules and Regulations of the
Securities and Exchange Commission and may include securities
owned by or for the individual's spouse and minor children and any
other relative who has the same home, as well as securities to
which the individual has, or shares, voting or investment power or
has the right to acquire beneficial ownership within 60 days after
March 6, 2000. Beneficial ownership may be disclaimed as to
certain securities.
(2) Information furnished by the directors and the corporation.
(3) Less than 1% unless otherwise indicated.
(4) Includes 270 shares held individually by Ms. Carbaugh.
(5) Includes 6,120 shares held individually by Dr. Johnston; 7,873
shares held individually by his spouse; 670 shares held by his son
who resides in the same household.
(6) Includes 1,600 shares held individually by Mr. Ott; 3,020
shares held jointly with his spouse; 100 shares held individually
by his spouse.
(7) Includes 110 shares held jointly with his spouse.
(8) Includes 100 Shares held individually by Mr. Culler;
19,979 shares held in trust for the benefit of his children.
Mr. Culler has sole power to vote the shares held in trust
and to revoke the trust.
(9) Includes 1,238 shares held individually by Mr. John Duffey; 60
shares held by his daughter over which he has voting power.
(10) Includes 5,500 shares held individually by Mr. Grissinger;
5,500 shares held individually by his spouse; 1,100 shares held
jointly with his spouse.
(11) Includes 31,726 shares held individually by Mr. Mellott;
2,331 shares over which he has voting power.
(12) Includes 4,375 shares held individually by Mr. Daniels;
3,250 shares held individually by his spouse; 2,375 shares held
jointly with his son.
(13) Includes 2,860 shares held individually by Mr. Lyle Duffey;
750 shares held jointly and equally with his three sons.
(14) Includes 4,458 shares held individually by Mr. Washabaugh;
542 shares held individually by his spouse.
(15) Includes 404 shares held individually by Mr. Waltz; 720
shares held jointly with his mother and sisters.
ELECTION OF DIRECTORS
The By-laws of the corporation provide for a classified Board
of Directors with staggered three-year terms of office.
Accordingly, at the 2000 Annual Meeting of Shareholders, four
Class 1 Directors shall be elected to serve a three-year term and
until their successors are elected and qualified.
The Board of Directors has nominated the following
individuals to serve as Class 1 Directors, all of whom currently
serve as Class 1 Directors:
* Patricia A. Carbaugh
* Harry D. Johnston
* Paul T. Ott
* Lonnie W. Palmer
Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the election of the four nominees for
Class 1 Director named above. If any nominee should become
unavailable for any reason, proxies will be voted in favor of a
substitute nominee as the Board of Directors of the corporation
shall determine. The Board of Directors has no reason to believe
that, if elected, the nominees named will be unable to serve. A
majority vote of the directors then in office may fill any vacancy
occurring on the Board of Directors of the corporation for any
reason until the expiration of the term of the vacancy.
In addition, there is no cumulative voting for the election
of the directors. Each share of common stock is entitled to cast
only one vote for each nominee. For example, if a shareholder
owns ten shares of common stock, he or she may cast up to ten
votes for each of the named four Class 1 Directors to be elected.
INFORMATION AS TO NOMINEES AND DIRECTORS
The following table contains certain information with respect
to the corporation's directors and the nominees for Class 1
Director:
________________________________
CURRENT CLASS 1 DIRECTORS
WHOSE TERM EXPIRES IN 2000
AND
NOMINEES FOR CLASS 1 DIRECTOR
WHOSE TERM EXPIRES IN 2003
____________________________
Age Principal Director of
as of Occupation for Corporation/
Name 3/6/00 Past Five Years Bank Since
Harry D. Johnston, D.O. 63 Physician; Vice 1987/1980
(2)(4)(6)(8)(9)(10)(12) President of the
corporation, Chairman
of the Board of the bank.
Paul T. Ott 77 Retired 1987/1980
(1)(3)(7)(8)(11)(13)
Patricia A. Carbaugh 56 Administrative 1997/1990
(9) Assistant
Lonnie W. Palmer 47 Dairy Farmer 1997/1994
(3)(7)
____________________________
CLASS 2 DIRECTORS
WHOSE TERM EXPIRES IN 2001
____________________________
Age Principal Director of
as of Occupation for Corporation/
Name 3/6/00 Past Five Years Bank Since
Harvey J. Culler 74 Chairman of the Board 1987/1960
(2)(4)(6)(9)(11)(12) of H.J. Culler Inc.
John C. Duffey 46 President and CEO of 1988/1988
(2)(3)(4)(6)(7)(8) the corporation and
(9)(11)* of the bank
George S. Grissinger 83 Secretary of the 1987/1959
(1)(5)(7)(10)(11)(13) corporation; Retired
Forrest R. Mellott 63 Chairman of Mellott 1998/1998
(2)(8)(11) Enterprises, Inc. &
H.B. Mellott Estates, Inc.
________________________________
CLASS 3 DIRECTORS
WHOSE TERM EXPIRES IN 2002
________________________________
Age Principal Director of
as of Occupation for
Corporation/
Name 3/6/00 Past Five Years Bank Since
Henry W. Daniels 78 Vice Chairman of the 1987/1956
(1)(3)(5)(6)(7)(9) corporation; Retired
(12)(13)
H. Lyle Duffey 77 Chairman of the Board 1987/1956
(1)(2)(3)(4)(6)(9)(13)* of the corporation;
Retired
David A. Washabaugh III 64 President of Fulton 1987/1980
(3)(4)(7)(8)(9)(11) Motor Sales, Inc.
Daniel E. Waltz 37 Treasurer of the 1995/1990
(1)(2)(3)(4)(8)(11)(13) corporation; Sr. VP/CFO
and Secretary of the bank
All of the above named corporate directors also serve on the
Board of Directors of The First National Bank of McConnellsburg.
* H. Lyle Duffey, Chairman of the Board of the corporation and
John C. Duffey, Director and President of the corporation and the
bank, are father and son, respectively.
(1) Member of the bank's Audit Committee. The Audit Committee met
4 times in 1999 to supervise the internal audit activities of the
bank and to supervise and direct the bank and corporation's
internal and external auditors.
(2) Member of the bank's Asset/Liability Committee. The Asset/
Liability Committee met 6 times during 1999 to assist in the
allocation of funds within the guidelines established by bank
policy based upon such matters as interest rate sensitivity,
deposit structures, liquidity, loans, investments and policy
adequacy. The committee also makes recommendations on dividends
and capital adequacy.
(3) Member of the bank's Loan Committee. The Loan Committee met
34 times during 1999 to review and approve loans within the limits
set forth in the bank's Loan Policy.
(4) Member of the bank's Investment Committee. The Investment
Committee met 2 times during 1999. The committee reviews and
recommends investment strategies in line with the bank's
Investment Policy.
(5) Member of the corporation's Nominating Committee. The
Nominating Committee met 1 time during 1999 to set nominations for
directors at the Annual Meeting of Shareholders.
(6) Member of the bank's Executive Committee. The Executive
Committee met 2 times in 1999 to discuss and review matters which
needed immediate action beyond the scope of daily management.
(7) Member of the bank's Appraisal Committee. The Appraisal
Committee met 1 time during 1999 to assess real estate property
lending standards.
(8) Member of the bank's Public Relations Committee. The Public
Relations Committee met 3 times during 1999 to discuss public
relations and marketing matters.
(9) Member of the bank's Personnel Committee. The Personnel
Committee met 2 times during 1999 to oversee personnel and
employment matters of the bank.
(10) Member of the bank's Security Committee. The Security
Committee met 1 time during 1999 to discuss matters regarding the
bank's physical and employee security.
(11) Member of the bank's Building Committee. The Building
Committee met 2 times during 1999 to oversee the corporation's and
bank's physical facilities.
(12) Member of the Compensation Committee. The Compensation
Committee met 1 time during 1999 to review, discuss and set salary
schedules for the bank's executive officers.
(13) Member of the Electronic Data Processing (EDP) Committee.
The EDP Committee met 3 times during 1999 to review issues related
to the bank's internal computer system and to deal with Year 2000
issues.
Nominations
A shareholder who desires to propose an individual for
consideration by the board of directors as a nominee for director
should submit a proposal in writing to the Secretary of the
corporation in accordance with Section 202 of the By-laws of the
corporation.
Board meetings, compensation of directors
During 1999, the bank's Board of Directors held 19 meetings,
and the corporation's Board of Directors held 5 meetings. Each of
the directors of the corporation, who is also a director of the
bank, attended at least 75% of the combined total number of
meetings of the Board of Directors and the committees on which he
or she serves.
During the first five months of 1999, the bank's Board of
Directors received $125 for each meeting attended, $25 for each
committee meeting attended, and a $2,000 annual fee. Effective
June 1, 1999, board meetings were held monthly and the bank's
Board of Directors received $250 for each meeting attended. The
directors of the corporation do not receive compensation for
attendance at the corporation's Board of Director's meetings. In
the aggregate, the bank paid $70,954 in 1999 to all directors for
attending all bank and committee meetings of the Board of
Directors.
EXECUTIVE COMPENSATION
Shown below is information concerning the annual compensation
for services in all capacities to the corporation and the bank for
the fiscal years ended December 31, 1999, 1998 and 1997 for the
Chief Executive Officer. There was no executive officer of the
corporation or the bank whose total annual salary and bonus during
1999 exceeded $100,000.
Summary Compensation Table
(a) (b) (c) (d) (e) (f) (g) (h)
Other All
Annual Other
Compen- Stock Option/ Compen-
Salary Bonus sation Awards SARs sation
Name Year ($)(1) ($) ($) ($) (#) ($)(2)
John C. 1999 94,396 2,000 -- -- -- 4,469
Duffey, 1998 92,002 1,500 -- -- -- 4,197
CEO 1997 86,208 2,835 -- -- -- 3,943
(1) Represents Mr. Duffey's salary as the Chief Executive Officer,
and an annual director's retainer fee of $2,000, and $2,800 in
fees for his service as director in 1999, $3,000 in 1998, and
$2,900 in 1997.
(2) Represents insurance premiums paid by the bank for straight
term life insurance for Mr. Duffey in the following amounts:
$1,024 in 1999, $752 in 1998, and $230 in 1997. This figure also
includes the bank's share of the contribution to Mr. Duffey's 401-
K Plan of $3,445 in 1999, $3,445 in 1998, and $3,713 in 1997.
Compensation Committee Report On Executive Compensation
The corporation's overall executive compensation philosophy,
which is carried out by the Compensation Committee, is to:
* Attract and retain quality talent, which is critical to
both the short-term and long-term success of the
corporation.
* Reinforce strategic performance objectives through the use
of incentive bonus programs.
* Create a mutuality of interest between executive officers
and shareholders through compensation structures that
share the rewards and risks of strategic decision-making.
The committee's approach to total compensation is to offer
competitive salaries and benefits as they relate to comparisons
with similar market practices. The committee annually examines
market compensation levels and trends observed in the labor market
through the use of available survey data. For its purposes, the
committee has defined the labor market as the pool of executives
who are employed in similar positions within financial
institutions of similar asset size and geographic region as the
First National Bank of McConnellsburg utilizing as the guide the
total compensation paid by banks who participate in the annual LR
Webber Associates Salary and Benefits Survey. This survey reports
on salary information as it relates to 126 Pennsylvania financial
institutions. In addition, the committee considers executive
performance as it relates to the bank's financial performance as
compared to peer groups analyzed in the Uniform Bank Performance
Report as prepared by the Federal Financial Institutes Examination
Council (FFIEC). Market and survey information are used as a
frame of reference for annual total compensation adjustments.
Compensation of Chief Executive Officer
John C. Duffey, the President and CEO of the corporation and
of the bank, has entered into an employment contract as described
in a later section of this proxy statement entitled "Employment
and Severance Agreements". This contract contains a section
entitled "Annual Direct Salary" which specifies that annually, the
executive's base salary shall be adjusted to assure that his
salary is, at a minimum, equal to the weighted average base salary
published in the latest L.R. Webber Salary and Benefits Survey for
the Chief Executive Officer category as related to banks of
similar asset size. The executive's base salary is then factored
as a part of the total compensation figure. Total compensation
includes base salary, bonus, and other taxable compensation.
Total compensation is based, in part, on both individual and bank
performance, but these factors are not specifically weighted.
The total compensation paid to John C. Duffey as compared to
the aforementioned L.R. Webber survey information, places the
named executive's total compensation at 84.64% of the average
total compensation paid to Chief Executive Officers in banks with
similar asset sizes, and 76.41% of average total compensation paid
to Chief Executive Officers in banks within the Franklin and
Fulton County labor market area. As related to the bank's
financial performance, the committee feels the executive's total
compensation accurately reflects the bank's relative position and
related performance as compared to other banks of similar asset
size and regional location.
Executive Officers
As related to the total compensation package for other
executive officers not named in the compensation table, the
committee makes salary decisions utilizing an annual review
process with input from the CEO. The annual review process
considers the decision-making responsibilities of each executive
management position, as well as the experience, work performance,
and related skills of position incumbents. Review factors are
utilized and weighted at the committee's discretion. To help
quantify these measures, the committee utilizes the L.R. Webber
Associates Wage and Salary Survey.
Annual Bonus Plan - The bank provides for bonus payments to
reward executive officers for accomplishing certain annual goals
and objectives. Individual executive officer goals and objectives
are established utilizing a strategic plan approach.
The bonus earned by the Chief Executive Officer in 1999 was
2.23% of salary as compared to 1.72% in 1998. The average bonus
earned in 1999 by the six executive officers of the bank other
than the Chief Executive Officer was 2.54% of base salary,
compared with 1.82% in 1998. The increase in bonus payments to
these individuals is directly related to the increase in financial
performance of the organization in 1999.
Compensation Committee
Harvey J. Culler
Henry W. Daniels
Harry D. Johnston
Employment and Severance Agreements - John C. Duffey has
entered into an employment agreement with the corporation. This
agreement specifies a term of employment of five years beginning
August 1, 1995 and ending July 31, 2000. This agreement provides
that the executive shall serve as the Chief Executive Officer of
the corporation and the bank and as a board member of the
corporation and the bank. During this employment term, the
executive has agreed to devote substantially all of his working
time to the business of the corporation and the bank and has
agreed not to enter into any business arrangement which would be
deemed competitive to the corporation or the bank. The employment
agreement provides for a minimum guaranteed base salary as
described in the above section entitled "Compensation of Chief
Executive Officer". The Employment Agreement also provides for an
incentive compensation bonus plan as described in the above
section entitled "Annual Bonus Plan".
The employment agreement provides fringe benefits equal to
those of other employees of the bank. In addition, the employment
agreement provides for the use of a bank purchased or leased
automobile and reimbursement for all operating expenses of this
automobile. The employment agreement also provides for
reimbursement of all expenses for the executive and, if
applicable, the executive's spouse to attend Pennsylvania trade
association conventions. The agreement also provides for payment
of physical examinations of the executive on an every other year
basis by a physician chosen by the executive.
The employment agreement provides that employment shall be at
will, but if employment is terminated without cause as defined in
the agreement, or the executive resigns for good reason as defined
in the agreement, the executive can receive the greater of twenty
four months' salary or an amount equal to the remaining time of
the employment agreement. The corporation may also be required to
pay certain additional benefits. The employment agreement also
provides that once the executive's employment has terminated, he
shall keep certain information confidential and shall not compete
with the corporation or its subsidiaries for a period of one year.
The employment agreement contains a "Change of Control"
clause which provides for a severance allowance for the executive
in the event of a "Change in Control" equal to the greater of
twenty four months' salary or an amount equal to the remaining
time of the employment agreement. The employment agreement
defines "Change of Control" as:
* The acquisition of the beneficial ownership of at least
twenty five percent of the corporation's voting securities or all
or substantially all of the assets of the corporation by a single
person or entity or a group of affiliated persons or entities
other than the corporation or a person or persons who are officers
or directors of the corporation;
* The merger, consolidation or combination of the corporation
or bank with an unaffiliated corporation in which the directors of
the corporation or bank, as a result of such merger, consolidation
or combination constitute less than a majority of the corporate
Board of Directors of the surviving, new or combined entity,
unless such reason results from a catastrophic accident;
* During any period of two consecutive terms of this
agreement, individuals who at the beginning of such period
constitute the Board of Directors of the corporation cease, for
any reason, to constitute at least a majority of the board, unless
the election of each director who was not a director at the
beginning of the two year period has been approved in advance by
directors representing at least two-thirds of the directors then
in office who were directors at the beginning of the period; and
* An event deemed a "Change of Control" by any federal or
state regulatory body.
401(K) Plan and Non-Executive Officer Cash Bonus Policy
The corporation does not have a retirement or pension plan.
The bank, however, maintains a 401(K) Plan covering all eligible
employees who have attained the age of 20 years and completed six
months of service. Employees become fully vested after six years
of service. Normal retirement is at sixty-five years of age, with
a provision for early retirement at age fifty-five. The bank's
total contribution to the plan for the year ending December 31,
1999 was $42,028.
The bank's Board of Directors makes discretionary annual
bonus payments to non-executive officer employees and non-officer
employees. Factors considered by the Board of Directors in making
a bonus decision include the financial performance of the bank and
the degree in which non-executive officers and non-officer
employees were able to impact the performance of the organization.
The bonus is distributed to this group of employees based on
a percentage of total wages.
CERTAIN TRANSACTIONS
There have been no material transactions between the
corporation and the bank, nor any material transactions proposed,
with any director or executive officer of the corporation and the
bank, or any associate of any of the foregoing persons during
1999. The corporation and the bank have had, and intend to
continue to have, banking and financial transactions in the
ordinary course of business with directors and officers of the
corporation and the bank and their associates on comparable terms
and with similar interest rates and collateral, as those
prevailing at the time for other customers of the corporation and
the bank.
Total loans outstanding from the corporation and the bank as
of December 31, 1999, to the corporation's and bank's officers and
directors as a group and members of their immediate families and
companies in which they had an ownership interest of 10% or more
was $2,370,934 or 19.49% of the bank's total equity capital. Loans
to such persons were made in the ordinary course of business, were
made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other persons, and did not involve more than the
normal risk of collection or present other unfavorable features.
The largest aggregate amount of indebtedness outstanding at any
time during fiscal year 1999 to officers and directors of the
corporation and the bank was $3,027,731. The aggregate amount of
indebtedness outstanding as of the latest practicable date,
January 31, 2000, to the above described group was $2,494,785.
PRINCIPAL OFFICERS OF THE CORPORATION
The following table sets forth selected information about the
principal officers of the corporation as of March 6, 2000, each of
whom is elected by the Board of Directors and each of whom holds
office at the discretion of the board of directors:
Bank # of Shares Age
Office and Held Employee Beneficially as of
Name Position Held Since Since Owned 3/6/00
H. Lyle Chairman of
Duffey the Board 1987 (1) 3,610 77
Henry W.
Daniels Vice Chairman 1987 (1) 10,000 78
John C.
Duffey President 1995 1982 1,298 46
Harry D.
Johnston Vice President 1987 (1) 14,663 63
George S.
Grissinger Secretary 1987 (1) 12,100 83
Daniel E.
Waltz Treasurer 1994 1983 1,124 37
(1) Messrs. H.L. Duffey, Daniels, Johnston and Grissinger are not
employees of the bank.
PRINCIPAL SENIOR OFFICERS OF THE BANK
Age
Bank # of Shares as of
Office and Held Employee Beneficially Mar. 6
Name Position Held Since Since Owned 2000
John C. President and 1993 1982 1,298 46
Duffey Chief Executive
Officer
Daniel E. Senior Vice 1993 1983 1,124 37
Waltz President & Chief
Financial Officer
Thomas H. Vice President 1993 1971 200 48
DeShong and Cashier
William K. Vice President 1999 1999 0 54
Walker III and Loan Services
Division Mgr.
Brenda Vice President 1993 1972 208 50
Gordon and Sr. Loan Officer
Mary Anne Vice President 1993 1983 891 60
Garland and Customer
Service Officer
Margaret Vice President 1999 1983 10 48
A. Kobel and Human Resource
Officer
LEGAL PROCEEDINGS
The nature of the corporation's and the bank's business
generates a certain amount of litigation involving matters arising
in the ordinary course of business. However, in the opinion of
management of the corporation and bank, there are no proceedings
pending to which the corporation and bank are a party or to which
their property is subject, which, if determined adversely to the
corporation and bank, would be material in relation to the
corporation's and bank's undivided profits or financial condition.
There are no proceedings pending other than ordinary routine
litigation incident to the business of the corporation and bank.
In addition, no material proceedings are pending or known to be
contemplated against the corporation or bank by government
authorities.
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has appointed Smith Elliott Kearns &
Company, Certified Public Accountants of Chambersburg,
Pennsylvania, as the corporation's independent auditors for its
2000 fiscal year. The Board of Directors proposes that
shareholders ratify this selection. Smith Elliott Kearns &
Company have advised the corporation that none of its members has
any financial interest in the corporation. Smith Elliott Kearns &
Company served as the corporation's independent auditors for the
1999 fiscal year, assisted the corporation and the bank with the
preparation of federal and state tax returns, and provided
assistance with regulatory matters. The firm charged the
corporation and the bank for these services at its customary
hourly billing rates. The corporation's and the bank's Board of
Directors approved these non-audit services after due
consideration of the accountant's objectivity and after finding
them to be wholly independent.
Ratification of the selection of Smith Elliott Kearns &
Company will require the affirmative vote of a majority of the
votes cast. Unless a shareholder instructs to the contrary on his
or her proxy, the proxy holders will vote for the ratification of
the selection of Smith Elliott Kearns & Company as the
corporation's independent auditors for the 2000 fiscal year. In
the event shareholders do not ratify the selection of Smith
Elliott Kearns & Company, the Board of Directors may choose
another accounting firm to provide independent public accountant
audit services for the 2000 fiscal year. A representative of
Smith Elliott Kearns & Company will be present to make a statement
and answer questions at the Annual Meeting.
The Board of Directors recommends that the shareholders vote
FOR the ratification of the selection of Smith Elliott Kearns &
Company as the independent auditors for the corporation for the
year ending December 31, 2000.
ANNUAL REPORT
A copy of the corporation's Annual Report for its fiscal year
ended December 31, 1999 is enclosed with this proxy statement. A
representative of Smith Elliott Kearns & Company, the accounting
firm which examined the financial statements in the annual report,
will attend the annual meeting. This representative of Smith
Elliott Kearns & Company will have the opportunity to make a
statement, if he/she desires to do so, and will be available to
respond to any appropriate questions presented by shareholders at
the annual meeting.
SHAREHOLDER PROPOSALS
Any shareholder who, in accordance with and subject to the
provisions of the proxy rules of the Securities and Exchange
Commission, wishes to submit a proposal for inclusion in the
corporation's proxy statement for its 2001 annual meeting of
shareholders must deliver the proposal in writing to the Chairman
of FNB Financial Corporation at the corporation's principal
executive offices at 101 Lincoln Way West, McConnellsburg,
Pennsylvania 17233, not later than Monday, November 20, 2000.
Also, if the corporation does not receive by February 3, 2001,
notice of a shareholder proposal that will not be included in the
corporation's Proxy Statement, the proxy holders at the 2001
Annual Meeting may vote on the proposal at their discretion.
OTHER MATTERS
The Board of Directors does not know of any matters to be
presented for consideration other than those matters described in
the Notice of Annual Meeting of Shareholders, but if any matters
are properly presented, the proxy holders will vote on such
matters in accordance with their best judgement.
