SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant _X_
Filed by a party other than the registrant ___
Check the appropriate box:
___ Preliminary proxy statement
_X_ Definitive proxy statement
___ Definitive additional materials
___ Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
___ Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
SHORELINE FINANCIAL CORPORATION
___________________________________________________________________________
(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 Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(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 file
fee is calculated and s tate how it was determined):
___________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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___ 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.
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[LOGO]
SHORELINE FINANCIAL CORPORATION
823 Riverview Drive
Benton Harbor, Michigan 49022
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
___________________________________________________________________________
The annual meeting of shareholders of Shoreline Financial Corporation
will be held at Lake Michigan College, 2755 E. Napier Avenue, Benton
Harbor, Michigan, on Thursday, May 4, 1995, at 3 p.m. local time, for the
following purposes:
1. To elect directors.
2. To transact any other business that may properly come before the
meeting.
Shareholders of record at the close of business on March 8, 1995, are
entitled to notice of and to vote at the meeting and any adjournment of the
meeting. The following Proxy Statement and enclosed form of proxy are
being furnished to holders of Shoreline Common Stock on and after March 24,
1995.
By Order of the Board of Directors,
Wayne R. Koebel
Secretary
March 24, 1995
___________________________________________________________________________
It is important that your shares be represented at the
meeting. Even if you expect to attend the meeting,
PLEASE SIGN AND RETURN YOUR PROXY PROMPTLY.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
of
SHORELINE FINANCIAL CORPORATION
May 4, 1995
This Proxy Statement and the accompanying form of proxy are being
furnished to holders of Common Stock of Shoreline Financial Corporation
("Shoreline" or the "Corporation") on and after March 24, 1995, in
connection with the solicitation of proxies by the Shoreline Board of
Directors for use at the annual meeting of Shoreline shareholders to be
held on May 4, 1995, and at any adjournment of that meeting. The annual
meeting will be held at Lake Michigan College, 2755 E. Napier Avenue,
Benton Harbor, Michigan, at 3 p.m. local time.
The purpose of the annual meeting is to elect directors. If a proxy
in the form distributed by Shoreline is properly executed and returned to
Shoreline, the shares represented by that proxy will be voted at the annual
meeting of Shoreline shareholders and at any adjournment of that meeting.
If a shareholder specifies a choice, the proxy will be voted as specified.
If no choice is specified, the shares represented by the proxy will be
voted for the election of all nominees of the Board of Directors named in
this Proxy Statement. Shoreline management does not know of any other
matter to be presented at the annual meeting. If other matters are
presented, all shares represented by the proxy will be voted in accordance
with the judgment of the persons named as proxies with respect to those
other matters.
A proxy may be revoked at any time prior to its exercise by written
notice delivered to the Secretary of Shoreline. A proxy may also be
revoked by attending and voting at the annual meeting.
Solicitation of proxies will be made initially by mail. Directors,
officers and employees of Shoreline and its subsidiaries may also solicit
proxies in person or by telephone without additional compensation. In
addition, proxies may be solicited by nominees and other fiduciaries who
may mail material to or otherwise communicate with the beneficial owners of
shares held by them. All expenses of solicitation of proxies will be paid
by Shoreline.
Election of Directors
The Board of Directors has nominated the following five persons for
reelection to the Shoreline Board of Directors for terms expiring at the
annual meeting to be held in the years indicated below:
<TABLE>
<CAPTION>
Nominee Term Expiring In
<S> <C> <C>
Thomas T. Huff 1998
L. Richard Marzke 1998
Dan L. Smith 1998
Ronald L. Zile 1998
Jeffrey H. Tobian 1997
</TABLE>
Eight other directors are serving terms that will expire in 1996 and
1997. It is the intent of the persons named in the accompanying proxy to
vote for the election of the five nominees listed above. The proposed
nominees are willing to be elected and to serve. In the event that any
nominee is unable to serve or is otherwise unavailable for election, which
is not contemplated, the incumbent Shoreline Board of Directors may or may
not select a substitute nominee. If a substitute nominee is selected, all
proxies will be voted for the person so selected. If a substitute nominee
is not selected, all proxies will be voted for the election of the
remaining nominees. Proxies will not be voted for a greater number of
persons than the number of nominees named.
A plurality of the shares represented in person or by proxy and voting
at the meeting is required to elect directors. For the purpose of counting
votes on the election of directors, abstentions, broker non-votes and other
shares not voted will not be counted as shares voted, and the number of
shares of which a plurality is required will be reduced by the number of
shares not voted.
YOUR BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR ELECTION OF ALL NOMINEES AS DIRECTORS
Voting Securities
Holders of record of Common Stock at the close of business on March 8,
1995, will be entitled to vote at the annual meeting of shareholders on May
4, 1995, and any adjournment of that meeting. As of March 8, 1995, there
were 4,992,295 shares of Common Stock issued and outstanding. Each share
of Common Stock is entitled to one vote on each matter submitted for
shareholder action.
The following table sets forth information concerning the number of
shares of Common Stock held as of February 15, 1995, by the only
shareholder who is known to Shoreline management to have been the
beneficial owner of more than 5% of the outstanding shares as of that date:
-2-
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership of Common Stock(1)
Sole Voting Shared
and Voting or Total Percent
Name and Address of Dispositive Dispositive Beneficial of
Beneficial Owner Power Power(2) Ownership Class
<S> <C> <C> <C> <C>
Shoreline Bank
Trust Department
823 Riverview Drive
Benton Harbor, Michigan 49022(3) 356,491 400,930 757,421 15.18%
</TABLE>
The following table sets forth information concerning the number of
shares of Common Stock held as of March 8, 1995, by each of Shoreline's
directors and nominees for director, each of the named executive officers
and all of Shoreline's directors and executive officers as a group:
<TABLE>
Amount and Nature of
Beneficial Ownership of Common Stock(1)
Sole Voting Shared
and Voting or Total Percent
Name of Dispositive Dispositive Beneficial of
Beneficial Owner Power Power(2) Ownership Class
<S> <C> <C> <C> <C>
Robert K. Burch 7,926(4) 1,470 9,396(4) *
Louis A. Desenberg -- 19,230 19,230 *
Merlin J. Hanson 119,974 -- 119,974 2.40%
Thomas T. Huff 26,419 -- 26,419 *
Ronald F. Kinney 2,842 -- 2,842 *
Wayne R. Koebel 8,265(4) 5,111 13,376(4) *
James E. LeBlanc 569 -- 569 *
L. Richard Marzke 25,392 -- 25,392 *
James F. Murphy 14,585(4) 46,648 61,233(4) 1.22
Dan L. Smith 15,854(4) 30,306 46,160(4) *
Robert L. Starks 57,691 22,011 79,702 1.60
Jeffrey H. Tobian 112,662 -- 112,662 2.26
Harry C. Vorys 4,563(4) -- 4,563(4) *
Hyman Warshawsky 11,022 5,663 16,685 *
Ronald L. Zile 31,074(4) 7,527 38,601(4) *
All directors and
executive officers
as a group 430,912(4) 136,496 567,408(4) 11.23%
____________________________
<FN>
* Less than 1%.
-3-
(1) The numbers of shares stated are based on information furnished by each person listed and
include shares personally owned of record by that person and shares which under applicable
regulations are considered to be otherwise beneficially owned by that person. Under these
regulations, a beneficial owner of a security includes any person who, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, has or shares
voting power or dispositive power with respect to the security. Voting power includes the
power to vote or direct the voting of the security. Dispositive power includes the power to
dispose or direct the disposition of the security. A person will also be considered the
beneficial owner of a security if the person has a right to acquire beneficial ownership of the
security within 60 days. Shares held in fiduciary capacities by Shoreline Bank are not
included unless otherwise indicated. Shoreline and the directors and officers of Shoreline and
Shoreline Bank disclaim beneficial ownership of shares held by Shoreline Bank in fiduciary
capacities.
(2) These numbers include shares as to which the listed person is legally entitled to share voting
or dispositive power by reason of joint ownership, trust or other contract or property right,
and shares held by spouses and minor children over whom the listed person may have substantial
influence by reason of relationship. Shares held in fiduciary capacities by Shoreline Bank are
not included unless otherwise indicated. The directors and officers of Shoreline and Shoreline
Bank may, by reason of their positions, be in a position to influence the voting or disposition
of shares held in trust by Shoreline Bank to some degree, but disclaim beneficial ownership of
these shares.
(3) These numbers consist of shares held in various fiduciary capacities through the trust
department of Shoreline Bank. Shoreline and the directors and officers of Shoreline and
Shoreline Bank disclaim beneficial ownership of these shares.
(4) These numbers include shares of Common Stock which may be acquired through the exercise of
stock options within 60 days. The right to exercise stock options vests over a 5-year period.
The number of shares subject to vested stock options for each listed person is shown below:
<S> <C> <C>
Mr. Burch 7,926
Mr. Koebel 6,700
Mr. Murphy 6,853
Mr. Smith 15,854
Mr. Vorys 2,857
Mr. Zile 10,004
All directors and
executive officers
as a group 58,120
</TABLE>
Directors and Executive Officers
Shoreline's Board of Directors is divided into three classes, which
are as nearly equal in number as possible. Each class of directors serves
a successive three-year term of office.
Five members of the present Board of Directors are standing for
reelection. Four directors stand for election to the class with terms
expiring in 1998. Mr. Tobian is standing for election to the class with
terms expiring in 1997.
-4-
Biographical information concerning Shoreline's directors and
executive officers, including the five nominees who are nominated for
election to the Board of Directors at the annual meeting, is presented
below. Except as otherwise indicated, all directors and executive officers
have had the same principal employment for over five years. Except as
otherwise indicated, all directors and executive officers have held their
positions with Shoreline since 1987. All executive officers are appointed
annually and serve at the pleasure of the Board of Directors. Effective
May 27, 1994, Inter-City Bank and Citizens Trust and Savings Bank, both
wholly owned subsidiaries of Shoreline, were consolidated into a single
bank under the name "Shoreline Bank" (the "Consolidation").
Directors With Terms Expiring in 1995
Thomas T. Huff (age 52) is a partner in the law firm of Varnum,
Riddering, Schmidt & Howlett. He has been a director of Shoreline Bank
and, before the Consolidation, Citizens Trust and Savings Bank since 1986.
L. Richard Marzke (age 61) is President and Chief Executive Officer of
Pri-Mar Petroleum, Inc., a wholesale and retail distributor of gasoline and
other petroleum products and convenience store operator. He has been a
director of Shoreline Bank and, before the Consolidation, Inter-City Bank
since 1977.
Dan L. Smith (age 59) is Chairman of the Board, President and Chief
Executive Officer of Shoreline. Mr. Smith became Chairman of the Board and
Chief Executive Officer on January 1, 1993, having previously served as
President of the Corporation. Mr. Smith was Secretary of Shoreline until
1992. Mr. Smith has served as Chairman of the Board, President and Chief
Executive Officer of Shoreline Bank since the Consolidation. Before the
Consolidation, Mr. Smith had served as President of Inter-City Bank since
1978, Chief Executive Officer of Inter-City since 1988, and a director of
Inter-City since 1972.
Ronald L. Zile (age 62) retired on December 31, 1994, after serving as
Vice Chairman of the Board of Shoreline since 1987 and Vice Chairman of the
Board of Shoreline Bank since the Consolidation. Before the Consolidation,
Mr. Zile had served as President and Chief Executive Officer of Citizens
Trust and Savings Bank since 1979, Chairman of the Board of Citizens since
1984 and a director of Citizens since 1978.
Directors With Terms Expiring in 1996
James E. LeBlanc (age 52) is Chairman, President and Chief Executive
Officer of Whirlpool Financial Corporation, a financial services company,
and Corporate Vice President of Whirlpool Corporation, a manufacturer of
kitchen and household appliances. He has been a director of Shoreline
since 1993. Mr. LeBlanc has also been a director of Shoreline Bank and,
before the Consolidation, Inter-City Bank since 1990.
-5-
James F. Murphy (age 64) retired on December 31, 1992, after serving
as Chairman of the Board and Chief Executive Officer of Shoreline since
1987 and as Chairman of the Board of Inter-City Bank since 1978.
Mr. Murphy has been a director of Shoreline Bank and, before the
Consolidation, Inter-City Bank since 1972.
Robert L. Starks (age 63) is Chairman of Kerley & Starks Funeral
Homes, Inc. He has been a director of Shoreline Bank and, before the
Consolidation, Inter-City Bank since 1983.
Hyman Warshawsky (age 70) is President of Shellbea Corporation, a real
estate partnership. Prior to 1989, Mr. Warshawsky served as President of
Steel Center Supply, a steel distributor. He has been a director of
Shoreline Bank and, before the Consolidation, Citizens Trust and Savings
Bank since 1974.
Directors With Terms Expiring in 1997
Louis A. Desenberg (age 51) is a shareholder in the law firm of
Desenberg & Colip, P.C. He has been a director of Shoreline Bank and,
before the Consolidation, Inter-City Bank since 1978.
Merlin J. Hanson (age 67) has been Chairman of the Board of Hanson
International, Inc., a diversified manufacturing company, since 1987. He
has also been Chairman of the Board of Hanson Cold Storage Co., a
refrigerated warehousing company, since 1991. He has been a director of
Shoreline since 1991 and a director of Shoreline Bank and, before the
Consolidation, Inter-City Bank since 1987.
Ronald F. Kinney (age 63) is Chairman of All-Phase Electric Supply
Co., Inc., a wholesale and retail distributor of electrical equipment.
Mr. Kinney has been a director of Shoreline Bank and, before the
Consolidation, Inter-City Bank since 1967.
Jeffrey H. Tobian (age 43) has been nominated for a two-year term
expiring in 1997. Mr. Tobian has been President of J.T. Investments, Inc.,
a personal investment company, since 1994. Before 1994, Mr. Tobian was the
owner and President of Tobian Metals, Inc., a scrap metal company.
Harry C. Vorys (age 70) retired in 1990 after serving as Executive
Vice President and Treasurer of Shoreline and Executive Vice President of
Citizens Trust and Savings Bank. Mr. Vorys was also a director of Citizens
from 1988 until 1990. Mr. Vorys joined Citizens in 1986 as its Senior Vice
President and Chief Lending Officer. Mr. Vorys is also a director of
Manatron, Inc.
Executive Officers Who Are Not Directors
Richard D. Bailey (age 41) has been Senior Vice President of Shoreline
Bank and, before the Consolidation, Inter-City Bank since 1993. Before
-6-
1993, Mr. Bailey was a Vice President and Commercial Loan Officer at Old
Kent Bank.
Robert K. Burch (age 39) is Executive Vice President of Shoreline Bank
and, before the Consolidation, had served in that position at Inter-City
Bank since 1992. Before 1992, he served Inter-City Bank in various other
executive capacities.
Wayne R. Koebel (age 48) is Executive Vice President, Chief Financial
Officer, Secretary and Treasurer of Shoreline. Mr. Koebel became Executive
Vice President in August 1994. Before August 1994, Mr. Koebel had served
as Senior Vice President of Shoreline. Mr. Koebel became Secretary and
Treasurer in January 1993. Mr. Koebel is Executive Vice President and
Chief Financial Officer of Shoreline Bank and, before the Consolidation,
had served as Senior Vice President and Chief Financial Officer of Inter-
City Bank since 1986. Before 1986, he served as Senior Vice President and
Controller of Inter-City Bank.
James R. Milroy (age 35) has been Senior Vice President and Controller
of Shoreline since May 1993. He previously served as Vice President and
Controller of Shoreline and Inter-City Bank from 1990 until 1993. Before
1990, Mr. Milroy was an associate and manager at Crowe, Chizek & Company,
an accounting firm.
The Shoreline Board of Directors has five standing committees:
Audit Committee. The Audit Committee is responsible for causing a
suitable examination of the financial records and operations of Shoreline
and its subsidiaries to be made by the internal auditors of Shoreline and
its subsidiaries through a program of continuous internal audits. The
Audit Committee recommends to Shoreline's Board of Directors independent
certified public accountants for employment to examine the financial
statements of Shoreline and make such additional examinations as the
committee deems advisable. The Audit Committee also reviews reports of
examination of Shoreline and its subsidiaries received from regulatory
authorities, and reports to the Board of Directors at least once each
calendar year the results of examinations made and such conclusions and
recommendations as the committee deems appropriate. Directors Marzke,
Starks, Vorys and Warshawsky presently serve on this committee. The Audit
Committee met four times during 1994.
Organization, Compensation, and Stock Option Committee. The
Organization, Compensation, and Stock Option Committee administers
Shoreline's Retirement Plan, Profit-Sharing Plan and bonus plan. This
committee also reviews key personnel policies and programs, including
individual salaries of executive officers, and submits recommendations to
the Board of Directors. This committee also serves as Shoreline's Stock
Option Committee and administers Shoreline's 1989 Stock Option Plan. In
this capacity, the committee determines the persons to be granted options
and rights, the amount of stock subject to options and rights to be granted
to each such person, and the terms of the options and rights to be granted.
Directors who are also employees of Shoreline or its subsidiaries and who
may participate in the plans that this committee administers may not serve
-7-
on this committee. Directors Hanson, Kinney, LeBlanc and Marzke presently
serve on this committee. The Organization, Compensation, and Stock Option
Committee met three times during 1994.
Nominating Committee. The Nominating Committee considers nominees for
election as directors of Shoreline submitted by any shareholder of record.
Any shareholder desiring to nominate a candidate for director must deliver
a notice to the Secretary of Shoreline, not less than 120 days prior to the
meeting, setting forth (i) the name, age, business address and residence
address of the nominee; (ii) the principal occupation or employment of the
nominee; (iii) the number of shares of Common Stock beneficially owned by
the nominee; (iv) a statement that the nominee is willing to be nominated
and serve; and (v) such other information regarding the nominee as would be
required under the rules of the Securities and Exchange Commission to be
included in a proxy statement soliciting proxies for the election of the
nominee. Directors Desenberg, Huff, Murphy, Smith, Warshawsky and Zile
presently serve on this committee. The Nominating Committee met once
during 1994.
Management Committee. The Management Committee develops and
administers policies for Shoreline and Shoreline Bank. It also functions
as Shoreline's Asset/Liability Management Committee. Director Smith
presently serves on this Committee, along with other executive officers who
are not directors. The Management Committee met twelve times during 1994.
Strategic Issues Committee. The Strategic Issues Committee
investigates and considers issues related to business expansion, lines of
business and corporate structure. Directors Hansen, Huff, Marzke, Smith
and Starks presently serve on this committee. The Strategic Issues
Committee met once during 1994.
During 1994, the Shoreline Board of Directors held four regular
meetings. All directors attended at least 75% of the aggregate number of
meetings of the Board of Directors and meetings of committees on which they
served during the year.
Section 16(a) Reporting Delinquencies
Section 16(a) of the Securities Exchange Act of 1934 requires
directors and officers of Shoreline and persons beneficially owning more
than 10% of the outstanding shares of Common Stock to file reports of
ownership and changes in ownership of shares of Common Stock with the
Securities and Exchange Commission. Directors, officers and greater than
10% beneficial owners are required by Securities and Exchange Commission
regulations to furnish Shoreline with copies of all Section 16(a) reports
they file. Based on its review of the copies of such reports received by
it or written representations from certain reporting persons that no Forms
5 were required for those persons, Shoreline believes that, except as
described below, all applicable Section 16(a) reporting and filing
requirements were satisfied from January 1, 1994, through December 31,
1994. One report for Mr. Tobian indicating the number of shares of Common
Stock owned when he joined the Board of Directors was filed late, and one
report for Mr. Bailey indicating that he does not own any Common Stock was
-8-
also filed late. These delinquencies were due to oversights by Shoreline
personnel, and appropriate reports were filed to correct them as soon as
they were discovered. Mr. Kinney failed to timely file one report
reflecting four exempt acquisitions of shares through Shoreline's dividend
reinvestment plan.
Organization, Compensation, and Stock Option Committee Report on Executive
Compensation
The Organization, Compensation, and Stock Option Committee of
Shoreline's Board of Directors (the "Committee") administers benefit plans,
reviews Shoreline's key personnel policies and programs, including
individual salaries of executive officers, and submits recommendations to
the Board of Directors. Directors who are also employees of Shoreline or
Shoreline Bank and who may participate in the plans that the Committee
administers may not serve on the Committee.
Successful long-term financial performance and increasing shareholder
value are Shoreline's primary corporate goals. Shoreline's executive
compensation practices are intended to encourage successful financial
performance and attract and retain talented key executives who are critical
to the Corporation's long-term success.
Shoreline's executive compensation program consists of three
components: base salary, annual cash incentive bonus opportunities, and
long-term incentives through awards of stock options. In determining the
levels of some components, the Committee considers corporate performance
alone. In determining the levels of other components, such as base salary,
the Committee will consider a number of factors in addition to corporate
performance.
The Committee's primary goal in establishing base salary levels is to
be competitive. The Committee establishes ranges for base salaries of
executive officers by comparing the Company to other more or less
comparable bank holding companies. In general, salaries paid to Shoreline
executives have been closer to the median rather than either the high or
low end of each range. Although corporate performance is considered by the
Committee in establishing base salary levels, corporate performance is not
the most important factor. A discretionary assessment of job performance
is another factor considered by the Committee in establishing base salary
levels.
Annual cash incentive bonuses are based entirely on corporate
performance. Annual cash bonus awards are determined by the application of
a formula. The formula for 1992 compared Shoreline's return on assets with
those of a national peer group of bank holding companies with assets
between $500 million and $1 billion as reported in the Uniform Bank
Performance Report for bank holding companies published by Federal
Financial Institution Examination Counsel. For Shoreline's executives to
earn a bonus, Shoreline's return on assets had to rank in the top half of
the peer group. Under the formula, Shoreline's executives received an
increasing percentage of base salary as bonus compensation as Shoreline's
-9-
return on assets increased as a percentile of the returns of the peer
group.
A three-part bonus formula was used for 1993. Shoreline's rate of net
income growth over the most recent three-year period was the most important
component. The other two components of the 1993 bonus formula compared
Shoreline's overhead and capital ratios to those of a national peer group
of bank holding companies with assets between $500 million and $1 billion
as reported in the Uniform Bank Performance Report. The maximum cash bonus
allowable under the plan was 30% of base salary.
While a three-part formula was used once again for 1994, it was not
the same formula used for 1993. The comparison of Shoreline's results to a
peer group of banks was discontinued, and an asset quality component
replaced the previous year's capital adequacy component. Shoreline's
overhead and nonperforming asset ratios were compared to targeted levels to
determine the amount of bonus payable under those two components of the
formula. The maximum cash bonus allowable under the 1994 plan was 39% of
base salary.
Long-term incentives are provided to reward executives for achieving
the long-term goal of increasing shareholder value. All of Shoreline's
long-term incentives involve awards of stock options. Stock ownership is
considered important. Through stock ownership, the interests of executives
are joined with those of the shareholders. Under the stock option plan,
executives are rewarded for the enhancement of shareholder value through
the increase in the value of shares subject to options. Stock options were
awarded to one executive officer of Shoreline during 1994. The only factor
considered by the Committee was the fact that the officer had not
previously been awarded any stock options which, when compared to other
executive officers of Shoreline, the Committee believed did not reflect the
officer's position and responsibilities in the Corporation.
Shoreline generally maintains a conservative level of perquisites and
personal benefits. The dollar value of perquisites and personal benefits
provided to executive officers does not exceed 10% of each executive
officer's respective annual salary and bonus.
Dan L. Smith, Shoreline's Chief Executive Officer during 1994, also
serves as Chairman, President and Chief Executive Officer of Shoreline
Bank. Prior to 1993, Mr. Smith was President and Secretary of Shoreline
and President and Chief Executive Officer of Inter-City Bank.
In determining Mr. Smith's base salary for 1994, the Committee placed
primary emphasis on the Corporation's strong performance during 1993.
Improved earnings and completion of a successful acquisition resulted in a
greater return for shareholders, who benefited from a healthy appreciation
in the market value of Common Stock. Mr. Smith's active involvement in
community improvement activities was also favorably considered by the
Committee. Another factor considered by the Committee was the goal of
making Mr. Smith's total compensation comparable to that of chief executive
officers of similar-sized bank holding companies. Based upon these
-10-
considerations, the Committee set Mr. Smith's base salary for 1994 at
$190,000.
Mr. Smith's 1994 incentive bonus of $51,300 was based entirely on
corporate performance as measured by the bonus formula used for all
executives that is discussed above. Mr. Smith was not awarded any stock
options during 1994.
In 1993, Congress amended the federal Internal Revenue Code to add
Section 162(m). This new section provides that publicly held corporations
may not deduct compensation paid to certain executive officers in excess of
$1 million annually, with certain exemptions. Shoreline has examined its
executive compensation policies in light of Section 162(m) and the
regulations that have currently been proposed by the Internal Revenue
Service to implement that section. It is not expected that any portion of
the Corporation's deduction for employee remuneration will be disallowed in
1995 or in future years by reason of actions expected to be taken in 1995.
During 1994, all recommendations of the Committee were unanimously
approved by the Board of Directors without modification.
Respectfully submitted,
Merlin J. Hanson
Ronald F. Kinney
James E. LeBlanc
L. Richard Marzke
Stock Performance
The following graph compares the cumulative total shareholder return
on Shoreline Common Stock to the Standard & Poor's 500 Stock Index and the
KBW 50 Index. The Standard & Poor's 500 Stock Index is a broad equity
market index published by Standard & Poor's. The KBW 50 Index is a market
capitalization weighted bank stock index published by Keefe, Bruyette &
Woods, Inc., an investment banking firm that specializes in the banking
industry. The KBW 50 Index is composed of 50 money center and regional
bank holding companies. The Standard & Poor's 500 Stock Index and the KBW
50 Index both assume dividend reinvestment. Cumulative total return is
measured by dividing the sum of the cumulative amount of dividends for the
measurement period, assuming dividend reinvestment, and the difference
between the share price at the end and the beginning of the measurement
period by the share price at the beginning of the measurement period.
-11-
STOCK PERFORMANCE GRAPH
Five Year Cumulative Total Shareholder Return
[STOCK PERFORMANCE GRAPH]
The dollar values for total shareholder return plotted in the graph
above are shown in the table below:
<TABLE>
<CAPTION>
KBW 50 S & P 500
December 31, Shoreline Index Index
<S> <C> <C> <C> <C>
1989 $100.0 $100.0 $100.0
1990 74.0 71.8 96.9
1991 106.6 113.7 126.4
1992 157.5 144.8 136.1
1993 211.3 152.9 149.8
1994 189.5 144.8 151.7
</TABLE>
Compensation of Executive Officers and Directors
The following table shows certain information concerning the
compensation for services rendered during each of the three years in the
period ended December 31, 1994, of each executive officer of Shoreline
whose cash compensation exceeded $100,000 during 1994. Each executive
officer was compensated by Shoreline Bank (or, before the Consolidation,
the respective predecessor bank) in the capacity indicated in the table.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
Name and
Principal All Other
Position(1) Year Salary(2) Bonus(3) Compensation(4)
<S> <C> <C> <C> <C>
Dan L. Smith 1994 $199,000 $51,300 $11,074
Chairman of the Board, 1993 173,000 41,250 22,111
President and Chief 1992 155,312 29,562 9,900
Executive Officer of
Shoreline and Shoreline
Bank (Inter-City Bank)
Ronald L. Zile 1994 164,000 41,850 22,266
Director; retired Vice 1993 151,324 35,831 10,551
Chairman of the Board of 1992 145,312 27,562 9,331
Shoreline and Shoreline
Bank and Chairman of
the Board, President
and Chief Executive
Officer of Citizens(5)
-12-
Wayne R. Koebel, 1994 97,906 27,000 7,673
Executive Vice President, 1993 90,811 22,703 8,555
Chief Financial Officer, 1992 85,995 17,199 5,830
Secretary and Treasurer
of Shoreline and Executive
Vice President and Chief
Financial Officer of
Shoreline Bank
(Inter-City Bank)
Robert K. Burch 1994 81,000 21,870 6,861
Executive Vice President 1993 75,000 18,750 5,850
of Shoreline Bank 1992 65,000 13,000 5,773
______________________________________
<FN>
(1) Capacities indicated are those in which a majority of compensation was
paid if capacities changed during the year. All of Shoreline's
executive officers also serve as executive officers of Shoreline Bank.
(2) Includes compensation deferred under Shoreline's Profit-Sharing/401(k)
Plan and director fees paid by Shoreline, Shoreline Bank, Inter-City
Bank and/or Citizens Trust and Savings Bank to Messrs. Smith and Zile.
(3) Includes compensation deferred under Shoreline's Profit-Sharing/401(k)
Plan.
(4) All other compensation includes: (i) 401(k) matching contributions by
Shoreline under the Shoreline Profit-Sharing/401(k) Plan; (ii) profit-
sharing contributions by Shoreline under the Shoreline Profit-
Sharing/401(k) Plan; and (iii) cash paid representing the value of
accrued vacation time. The amounts included for each such factor for
1994 are:
(i) (ii) (iii)
<S><C> <C> <C> <C>
Mr. Smith $3,830 $7,244 --
Mr. Zile 3,099 7,244 $11,923
Mr. Koebel 1,848 5,825 --
Mr. Burch 2,011 4,850 --
(5) Compensation reported in this table does not include amounts paid
under Shoreline's defined benefit plans.
</TABLE>
Shoreline's 1989 Stock Option Plan provides that options to purchase
shares of Common Stock and related tax benefit rights may be granted to
officers and other key employees of Shoreline and its subsidiaries. A
stock option entitles the recipient to purchase shares of Common Stock for
a specified period of time at a specified price. Subject to certain
restrictions, the Organization, Compensation, and Stock Option Committee of
Shoreline's Board of Directors determines who will be granted options, the
number of shares subject to each option, the form of consideration that may
be paid upon exercise of an option and other matters related to the plan.
-13-
Tax benefit rights granted under the plan entitle a recipient to receive a
cash payment upon the exercise of a related option. No tax benefit rights
have been awarded under the plan.
The following table sets forth information concerning stock options
exercised by the specified individuals during 1994 and options held by such
individuals at December 31, 1994. No stock options were granted to the
named executives during 1994.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
<CAPTION>
Number of Number of Shares Value of
Shares Underlying Unexercised Unexercised In-the-Money
Acquired on Value Options at Year End(1) Options at Year End(2)
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Dan L. Smith -- -- 15,854/0 $135,235/0
Ronald L. Zile 2,400 $43,920 10,004/0 85,334/0
Wayne R. Koebel -- -- 7,926/0 67,609/0
Robert K. Burch -- -- 7,926/0 67,609/0
__________________________
<FN>
(1) Under the stock option plan, the per share exercise price for each option is 100% of the market
value of Common Stock at the time the option is granted. Options terminate, subject to certain
limited exercise provisions, in the event of retirement, death or other termination of
employment. The right to exercise options vests proportionately over a 5-year period.
(2) The value of options is based on the trading value of Shoreline Common Stock of $17 per share
as of the close of business on December 31, 1994.
</TABLE>
Shoreline adopted a defined benefit pension plan effective January 1,
1989. The plan was established through a merger of two separate defined
benefit pension plans previously maintained by Inter-City Bank and Citizens
Trust and Savings Bank. Executive officers of Shoreline or Shoreline Bank
who satisfy certain eligibility requirements are participants in the plan.
The plan provides no vesting until a participant has completed five years
of credited service, at which time the participant becomes 100% vested.
All participants in the plan receive credit for vesting purposes for all
periods of prior service with Inter-City or Citizens.
The following table illustrates the projected annual pension benefit
payable to Shoreline's executive officers upon retirement at age 65 at the
annual levels of average remuneration and years of service indicated:
-14-
<TABLE>
PENSION PLAN TABLE
<CAPTION>
Average
Remuneration Years of Benefit Service
10 15 20 25 30 or More
<S> <C> <C> <C> <C> <C> <C>
$ 80,000 $10,550 $15,825 $21,100 $ 26,375 $ 31,650
120,000 16,150 24,225 32,300 40,375 48,450
160,000 21,750 32,625 43,500 54,375 65,250
200,000 27,350 41,025 54,700 68,375 82,050
240,000 32,950 49,425 65,900 82,375 98,850
280,000 38,550 57,825 77,100 96,375 115,650
320,000 44,150 66,225 88,300 110,375 132,450
</TABLE>
As of February 15, 1995, Mr. Smith had 30 years of service under the
plan, Mr. Koebel had 17 years of service under the plan, and Mr. Burch had
9 years of service under the plan. At his retirement, Mr. Zile had
17 years of service under the plan. Pension benefits under the plan are
payable monthly under a ten year certain and life annuity. Participants
may elect upon retirement to receive a lump-sum payment equal to the
present value of benefits payable under the plan. Benefits are based on
the average of the highest compensation received by a participant during
any period of five consecutive years within the last ten years prior to the
participant's retirement ("average remuneration"). The compensation
covered by the plan is the participant's gross salary, wages and other
compensation, including any elective deferrals that are excluded from gross
income. Covered compensation for the four individuals named in the Summary
Compensation Table is substantially the same as the aggregate amount
reported as "Annual Compensation" in that table. Upon his retirement at
the end of 1994, Mr. Zile elected to receive a lump-sum payment of $344,181
in lieu of benefits payable under the plan.
The benefits shown in the above table are based upon 0.75% of a
participant's average remuneration, multiplied by the number of the
participant's years of credited service for benefits (subject to a maximum
of 30 years), plus 0.65% of the participant's excess average remuneration
(determined by reference to the Social Security wage base), multiplied by
the number of the participant's years of credited service for benefits
(subject to a maximum of 30 years). The above benefits are not reduced by
primary Social Security payments.
The Shoreline defined benefit plan also contains a "grandfather"
provision under which participants may receive a pension benefit based upon
their accrued benefit as of December 31, 1988, under the defined benefit
plan previously maintained by Inter-City Bank or Citizens Trust and Savings
Bank, as the case may be, if that accrued benefit would exceed the pension
benefits determined under the other provisions of the Shoreline defined
benefit plan described above. Certain individuals who previously
participated in the Citizens defined benefit plan and who had attained age
45 and had at least 10 years of credited service for benefits as of
-15-
December 31, 1988, or who had attained age 55 and had at least five years
of credited service for benefits as of December 31, 1988, including
Ronald L. Zile, have entered into agreements with Citizens (now Shoreline
Bank) regarding their retirement benefits. Under these agreements,
periodic payments are made to these individuals following retirement which,
when added to their retirement benefit under the Shoreline defined benefit
plan, will provide a total retirement benefit equal to that which they
would have received under the Citizens plan. Upon his retirement, Mr. Zile
elected to receive a lump-sum payment of $164,969 in lieu of benefits
payable under his agreement with Shoreline Bank.
Dan L. Smith has an employment agreement with Shoreline. Mr. Zile
also had an employment agreement with Shoreline which terminated upon his
retirement. Under Mr. Smith's agreement, Mr. Smith is to serve Shoreline
and Shoreline Bank in his present capacities. His salary under the
agreement is to be determined by the Organization, Compensation, and Stock
Option Committee of Shoreline's Board of Directors, and may be paid either
by Shoreline or any of its subsidiaries. Mr. Smith's salary may not be
reduced without his consent, except pursuant to a general decrease in the
salaries of all senior officers of Shoreline. Upon termination of his
employment agreement by Shoreline without "cause" or by Mr. Smith for "good
reason" (as these terms are defined in the agreement), Mr. Smith is
entitled to receive monthly severance payments equal to the average of his
aggregate monthly cash compensation received from Shoreline and its
subsidiaries during the five fiscal years preceding termination. Such
severance payments are payable for a number of months equal to the number
of years Mr. Smith has been employed by Shoreline or any of its subsidiary
banks. If termination occurs within three years following a change in
control of Shoreline, such severance payments are payable for a minimum of
36 months.
During 1994, Shoreline, Shoreline Bank (and previously Inter-City and
Citizens) compensated their respective directors at the rate of $4,500 per
year, and directors who were not executive officers of Shoreline, Shoreline
Bank, Inter-City or Citizens also received $250 per regular board meeting
attended and $250 per committee meeting attended. Shoreline Bank has
entered into deferred compensation agreements with certain of its directors
under which payments will be made to these directors after their
retirement.
Certain Relationships and Related Transactions
Directors and officers of Shoreline and their associates were
customers of and had transactions with Shoreline Bank and its predecessors
in the ordinary course of business between January 1, 1994, and March 8,
1995. It is anticipated that such transactions will take place in the
future in the ordinary course of business. All loans and commitments
included in such transactions 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 collectibility or present other unfavorable
features.
-16-
During 1994, Shoreline and Shoreline Bank and its predecessors paid
legal fees to law firms in which Messrs. Desenberg and Huff are
shareholders or partners. Shoreline and Shoreline Bank, combined, paid
legal fees of $56,233 to Mr. Desenberg's firm. These fees were billed at
the regular rates charged by the respective attorneys that were applicable
to all of the firm's clients. The fees paid by Shoreline and Shoreline
Bank to the firm with which Mr. Huff is associated did not exceed 5% of
that firm's gross revenues for its last full fiscal year.
Independent Certified Public Accountants
The board of directors has again selected Crowe, Chizek & Company,
certified public accountants, as Shoreline's principal accountant for 1995.
A representative of Crowe, Chizek & Company is expected to be present at
the annual meeting, will have an opportunity to make a statement, and is
expected to be available to respond to appropriate questions.
Proposals of Shareholders
Proposals of shareholders intended to be presented at the 1996 annual
meeting must be received by Shoreline for consideration for inclusion in
its proxy statement and form of proxy relating to that meeting by
November 25, 1995. Proposals of shareholders should be made in accordance
with Securities and Exchange Commission Rule 14a-8.
Form 10-K Report Available
Shoreline's Form 10-K Annual Report to the Securities and Exchange
Commission, including financial statements and financial statement
schedules, will be provided without charge to shareholders upon written
request. Requests should he directed to Mr. Wayne R. Koebel, Executive
Vice President, Chief Financial Officer, Secretary and Treasurer, Shoreline
Financial Corporation, 823 Riverview Drive, Benton Harbor, Michigan 49022.
-17-
[FRONT]
SHORELINE FINANCIAL CORPORATION
P R O X Y 823 Riverview Drive
Benton Harbor, Michigan 49022
Annual Meeting of Shareholders - May 4, 1995
This proxy is solicited by the Board of Directors. If this proxy
is properly executed and delivered, the shares represented by this proxy
will be voted as specified. If no specification is made, the shares will
be voted for election of all nominees named on this proxy. The shares
represented by this proxy will be voted in the discretion of the proxies on
any other matters which may come before the meeting or any adjournment of
the meeting.
1. Election of Directors
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as indicated below) to vote for all nominees
listed below
Thomas T. Huff L. Richard Marzke Dan L. Smith
Jeffrey H. Tobian Ronald L. Zile
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
Your Board of Directors recommends that you vote FOR all nominees
IMPORTANT! - PLEASE DATE AND SIGN THE OTHER SIDE
[BACK]
The undersigned shareholder appoints Dan L. Smith and Wayne R.
Koebel, or either of them, each with the power to appoint his substitute,
attorneys and proxies to represent the shareholder and to vote and act,
with respect to all shares that the shareholder would be entitled to vote
at the annual meeting of shareholders of Shoreline Financial Corporation
referred to above and at any adjournment of that meeting, on all matters
which come before the meeting.
Please sign exactly as your name appears
on this proxy. If signing for estates,
trusts or corporations, title or
capacity should be stated. If shares
are held jointly, each holder should
sign.
________________________________________
Signature
________________________________________
Signature if held jointly
Dated: __________________________, 1995
