NORTHERN ILLINOIS FINANCIAL CORPORATION
486 West Liberty Street
Wauconda, IL 60084
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 1996
TO THE STOCKHOLDERS OF NORTHERN ILLINOIS FINANCIAL CORPORATION:
The Annual Meeting of Stockholders of Northern Illinois Financial
Corporation will be held on Wednesday, May 15, 1996 at 9:00 A.M.,
local time, at Grand National Bank's Niles facility, 7100 West
Oakton, Niles, Illinois, for the following purposes:
1. To elect eight directors of the Company to serve until the
next regular annual meeting of stockholders or until their
successors are elected and have qualified.
2. To transact such other business as may properly come before
the meeting or any adjournments thereof.
The close of business on April 08, 1996 has been fixed by the
Board of Directors as the record date for the determination of
stockholders entitled to notice of, and to vote at, the Annual
Meeting or any adjournment thereof.
A Proxy Statement and Proxy is provided herewith. It is important
that your stock be represented at the meeting, regardless of the
number of shares you may hold. Please sign, mark, date and return
your Proxy in the enclosed envelope as soon as possible. You are
cordially invited to attend the meeting and should you do so, you
may withdraw your Proxy and vote in person if you so desire.
By Order of the Board of Directors
David E. Albright
Secretary
April 15, 1996
PROXY
NORTHERN ILLINOIS FINANCIAL CORPORATION
486 West Liberty Street
Wauconda, IL 60084
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Howard A. McKee, Brenton J.
Emerick, and Robert W. Hinman, or any one of them, as proxies, each
with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares
of Common Stock of Northern Illinois Financial Corporation held of
record by the undersigned on April 08, 1996, at the Annual Meeting
of Stockholders to be held on May 15, 1996, or any adjournment
thereof.
1. Election of Directors:
For all nominees listed below, except as marked to the
contrary below.
Withhold authority to vote for all nominees listed below.
JEAN M. BARRY, HARRY J. BYSTRICKY, FRANK J. CALLERO,
ALAN J. EMERICK, BRENTON J. EMERICK, JAMES ESPOSITO,
ROBERT W. HINMAN, HOWARD A. McKEE
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided below.)
2. In their discretion, the proxies are authorized to vote on
such other matters as may properly come before the meeting or any
adjournments thereof.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no directions
are given, this Proxy, when properly executed, will be voted for
all nominees listed on the Proxy.
Please sign exactly as your name(s) appears below. When shares
are held by joint tenants, both should sign. When signing as
attorney, as executor, as administrator, as trustee or as guardian,
please give full title as such. If a corporation, please sign in
full corporate name by President or other authorized officer. If
a partnership, please sign in partnership name by authorized
person.
Please mark, sign, date and return this Proxy using the envelope
provided, even if you plan to attend the meeting. Signing a Proxy
does not affect your right to vote in person at the meeting.
Dated: , 1996
Signature
Signature, if held jointly
NORTHERN ILLINOIS FINANCIAL CORPORATION
486 West Liberty Street
Wauconda, IL 60084
PROXY STATEMENT
Annual Meeting of Stockholders to be held May 15, 1996
The enclosed Proxy is solicited by the Board of Directors of
Northern Illinois Financial Corporation ("Company") for use at the
Annual Meeting of Stockholders to be held on Wednesday, May 15,
1996, at 9:00 A.M., local time, and at any adjournment thereof.
The purposes of the meeting are set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. The Annual
Meeting will be held at Grand National Bank's Niles facility, 7100
West Oakton, Niles, Illinois.
PROCEDURAL MATTERS
Only stockholders of record at the close of business on April 08,
1996 (the "Record Date") are entitled to notice of and to vote at
the Annual Meeting. At the Record Date, 2,956,784 shares of common
stock, without par value ("Common Stock"), were held by 637
different stockholders of record. Each share of Common Stock
entitles its holder to one (1) vote, exercisable in person or by
proxy, on each matter that may properly come before the Annual
Meeting. In the absence of specific instructions to the contrary,
Proxies received by the Company will be voted in accordance with
recommendations made herein with respect to the proposals described
in this Proxy Statement.
The Proxy may be revoked by you at any time before it is voted.
This may be done prior to the meeting by written revocation sent to
the Secretary of the Company at the office of the Company, 486 West
Liberty Street, Wauconda, IL 60084 or it may be done personally
upon oral or written request at the Annual Meeting. Attendance at
the Annual Meeting will not in and of itself operate to revoke a
Proxy. The Company will bear all of the costs of solicitation of
Proxies for use at the Annual Meeting. In addition to the use of
the mails, the Proxies may be solicited personally by officers or
employees of the Company by telephone or telegraph, without
compensation, other than the compensation such persons otherwise
receive for their services as officers or employees. A copy of the
Company's 1995 Annual Report, including financial statements, is
being supplied to each stockholder herewith. Copies of the
Company's annual report on Form 10-K are available to stockholders
by written request to, David Albright, Secretary of the Company,
486 West Liberty Street, Wauconda, IL 60084. This Proxy Statement
and the enclosed Proxy are being sent to stockholders on or about
April 15, 1996.
ELECTION OF DIRECTORS
Unless otherwise instructed, the persons named in the Proxy will
vote the shares represented by the Proxies received by them for the
Company's eight nominees named below. If any nominee of the
Company is unable or declines to serve as a director at the time of
the Annual Meeting, which is not anticipated, Proxies will be voted
for a nominee designated by the present Board of Directors to fill
the vacancy. The term of office of each person elected as a
director will continue until the next Annual Meeting of
Stockholders or until his or her successor has been elected and
qualified. The presence in person or by proxy of the holders of a
majority of the outstanding Common Stock will constitute a quorum
for the purposes of the Annual Meeting. Provided that a quorum is
present, the affirmative vote of a majority of the shares of Common
Stock present at the meeting in person or by proxy is required for
the election of each director. Abstentions will be counted as
votes present at the Annual Meeting, but will not counted as votes
"for" any nominee or nominees for whom a stockholder has abstained
from voting or withheld his or her vote. Names of the eight
nominees and certain information about them are set forth below.
INFORMATION CONCERNING NOMINEES
Name, Principal Occupation for Director
Last 5 Years and Directorships Age Since
Jean M. Barry . . . . . . . . . . . . . 40 1991
Vice President of the Company since 1989.
Vice President and Director of Grand
National Bank since 1996. Director of
Grand National Bank - Niles since 1988 and
Grand National Bank - Crystal Lake since
1994.
Harry J. Bystricky . . . . . . . . . . . 76
President, BIWAX Corporation (a chemical
manufacturer) since 1960. Director
Grand National Bank - Niles since 1995
Frank J. Callero . . . . . . . . . . . 68
Partner, Callero and Callero LLP.
(Certified Public Accountants) since
1961. Director of Grand National Bank -
Niles since 1967.
Alan J. Emerick . . . . . . . . . . . 51 1994
Executive Vice President of the Company
since 1994. Executive Vice President and
Director of Grand National Bank since 1996.
Chairman of the Board since 1995, CEO since
1991 and Director since 1979 of Grand National
Bank - Niles. Director of Grand National Bank
- Waukegan since 1994 and President since 1995.
Director of Grand National Bank - Crystal Lake
since 1995.
Brenton J. Emerick . . . . . . . . . . 71 1971
Chairman of the Board of the Company.
Chairman of Board and Director of Grand
National Bank since 1996. Chairman of the
Board and Director of Grand National Bank
- Waukegan since 1967. Chairman of the
Administrative Committee since 1993 and
Director since 1971 of the Grand National
Bank - Niles.
James Esposito . . . . . . . . . . . 63 1987
Executive Vice President and Director of
Grand National Bank since 1996. Director
since 1974, CEO since 1974 and Chairman of
the Board of Grand National Bank - Crete
since 1992.
Robert W. Hinman . . . . . . . . . . 50 1985
President & CEO of the Company since
1988. President and CEO and Director of
Grand National Bank since 1996. Director
of Grand National - Crystal Lake since
1974. Director since 1984 and Chairman of
the Board from 1988 to 1995 of Grand
National Bank - Niles. Director of Grand
National Bank Crete since 1992.
Howard A. McKee . . . . . . . . . . . 80 1971
Chairman of the Executive Committee of the
Company. Chairman of the Executive
Committee and Director of Grand National
Bank since 1996. Chairman of the Board
from 1974 to 1993, Chairman of the
Executive Committee since 1993 and
Director since 1974 of Grand National -
Crystal Lake. Director since 1960,
Chairman of the Board from 1960 to 1992
and Chairman of the Executive Committee
since 1992 of Grand National Bank - Crete.
Director and Chairman of the Executive
Committee of Grand National Bank - Niles
since 1971. Chairman of the Executive
Committee of Grand National Bank -
Waukegan and Director since 1963. Mr.
McKee is also an attorney.
The Board of Directors of the Company has standing Executive,
Investment, Asset/Liability Management and Audit/Compliance
Committees.
The Executive Committee held no meetings during 1995. The
functions of the Committee are to exercise all powers and authority
of the Board of Directors in the management and affairs of the
Company during the interval between meetings of the Board of
Directors. Directors Howard A. McKee, Robert W. Hinman, Brenton J.
Emerick and Jean M. Barry are members of the Executive Committee.
The Investment Committee held ten meetings during 1995. The
functions of the Committee are to manage the financial investments
of the Company and the subsidiary banks and to provide general
advice and direction to, and establish policies for, the Company's
officers regarding investment decisions. In 1995 the members of
the Committee were Directors Jean M. Barry, Robert W. Hinman, Alan
J. Emerick, and Chief Financial Officer David Albright.
The Asset/Liability Management Committee held ten meetings in
1995. The function of the Committee is to oversee the
asset/liability management functions of the subsidiary Banks and
the consolidated Company. In 1995 the members of the Committee
were Directors Jean M. Barry, Robert W. Hinman, Alan J. Emerick,
Chief Financial Officer David Albright, Chief Credit Officer James
Randall and Vice President-Marketing Larry O'Hara.
The Audit/Compliance Committee held four meetings in 1995. The
function of the Committee is to oversee the audit and compliance
functions performed at the subsidiary Banks. In 1995 the Committee
members were Directors Robert W. Hinman, Alan J. Emerick, James
Esposito and Chief Financial Officer David Albright.
The Board of Directors of the Company held eight meetings during
1995. All Directors attended at least 75% of the Board of
Directors and Committee meetings thereof on which the Director
served.
EXECUTIVE OFFICERS
Set forth below is a list of the Company's executive officers,
their names, ages and position with the Company and its
subsidiaries.
Name and Position(s) Age
Howard A. McKee . . . . . . . . . . . 80
Chairman of the Executive Committee of the
Company. Chairman of the Executive
Committee and Director of Grand National
Bank since 1996. Chairman of the Board
from 1974 to 1993, Chairman of the
Executive Committee since 1993 and
Director since 1974 of Grand National -
Crystal Lake. Director since 1960,
Chairman of the Board from 1960 to 1992
and Chairman of the Executive Committee
since 1992 of Grand National Bank - Crete.
Director and Chairman of the Executive
Committee of Grand National Bank - Niles
since 1971. Chairman of the Executive
Committee of Grand National Bank -
Waukegan and Director since 1963.
Brenton J. Emerick . . . . . . . . . . 71
Chairman of the Board of the Company.
Chairman of Board and Director of Grand
National Bank since 1996. Chairman of the
Board and Director of Grand National Bank
- Waukegan since 1967. Chairman of the
Administrative Committee since 1993 and
Director since 1971 of the Grand National
Bank - Niles.
Robert W. Hinman . . . . . . . . . . 50
President & CEO of the Company since
1988. President and CEO and Director of
Grand National Bank since 1996. Director
of Grand National - Crystal Lake since
1974. Director since 1984 and Chairman of
the Board from 1988 to 1995 of Grand
National Bank - Niles. Director of Grand
National Bank Crete since 1992.
Alan J. Emerick . . . . . . . . . . . 51
Executive Vice President of the Company
since 1994. Executive Vice President and
Director of Grand National Bank since 1996.
Chairman of the Board since 1995, CEO since
1991 and Director since 1979 of Grand National
Bank - Niles. Director of Grand National Bank
- Waukegan since 1994 and President since 1995.
Director of Grand National Bank - Crystal Lake
since 1995.
Jean M. Barry . . . . . . . . . . . . . 40
Vice President of the Company since 1989.
Vice President and Director of Grand
National Bank since 1996. Director of
Grand National Bank - Niles since 1988 and
Grand National Bank - Crystal Lake since
1994.
James Esposito . . . . . . . . . . . 63
Executive Vice President and Director of
Grand National Bank since 1996. Director
since 1974, CEO since 1974 and Chairman of
the Board of Grand National Bank - Crete
since 1992.
David Albright . . . . . . . . . . . . 46
Chief Financial Officer and Secretary since
1988.
James Randall . . . . . . . . . . . . 40
Chief Credit Officer since 1994. Senior Loan
Officer of Grand National Bank - Niles since
1989.
Frank Soltis . . . . . . . . . . . . . 43
Vice President-Systems and Technology since
1992. Vice President - Operations for First
Chicago Corporation 1988 - 1992.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the shares of Common Stock
beneficially owned as of February 29, 1996 by (i) all current
directors, nominees and the five most highly compensated executive
officers and (ii) all directors and officers as a group:
Number of Shares
Name of Director and Nature of Percent
or Nominee Beneficial Owners(1) of Class
Jean M. Barry . . . . . . . . . . . . . 138,293 (2) 4.68%
Harry J. Bystricky . . . . . . . . . . . .1,001 *
Frank J. Callero . . . . . . . . . . . . 27,619 (3) *
Alan J. Emerick . . . . . . . . . . . . .12,381 (4) *
Brenton J. Emerick . . . . . . . . . . 174,062 (5) 5.89%
James Esposito . . . . . . . . . . . . . 7,019 (6) *
Robert W. Hinman . . . . . . . . . . . .17,456 (7) *
Howard A. McKee . . . . . . . . . . . 1,533,848 (8) 51.88%
All Directors and Executive
Officers of the Company as a
Group (11 persons) . . . . . . . . . 1,917,434 64.85%
* Less than 1%.
(1) Nature of beneficial ownership of securities is direct unless
otherwise indicated by footnote. Beneficial ownership as
shown in the table arises from sole voting power and sole
investment power unless otherwise indicated by footnote.
(2) Includes 1,441 shares held by Ms. Barry as custodian for minor
children. Includes 113,437 shares held by Municipal Insurance
Company and 5,308 shares held by Public Service Investment &
Management Corporation in which Ms. Barry shares investment
power. Ms Barry is Mr. McKee's daughter.
(3) Includes 2,560 shares held by Mr. Callero's spouse.
(4) Excludes 3,387 shares held by Mr. Emerick's spouse, as to all
of which Mr. Emerick disclaims beneficial interest. Alan J.
Emerick is Brenton J. Emerick's son.
(5) Excludes 34,190 shares held by Mr. Emerick's spouse, as to all
of which Mr. Emerick disclaims beneficial interest. Excludes
113,437 shares held by Municipal Insurance Company in which
Mr. Emerick shares investment power, the shares of which are
included in the beneficial interest ascribed to Ms. Barry
see note number (2).
(6) Includes 6,662 shares held jointly with Mr. Esposito's spouse.
Excludes 4,299 shares held by Mr. Esposito's spouse, as to all
of which Mr. Esposito disclaims beneficial interest.
(7) Excludes 17,644 shares held by Mr. Hinman's spouse, as to all
of which Mr. Hinman disclaims beneficial interest. Excludes
113,437 shares held by Municipal Insurance Company in which
Mr. Hinman shares investment power, the shares of which are
included in the beneficial interest ascribed to Ms. Barry
see note number (2). Mr. Hinman is Mr. McKee's son-in-law.
(8) Excludes 36,913 shares held by Mr. McKee's spouse, as to all
of which Mr. McKee disclaims beneficial interest. Includes
249,489 shares held by Keeco, Inc, and 258,054 shares held by
Northland Insurance Agency, Inc., as to which Mr. McKee
shares investment power. Excludes 118,745 shares held by
corporations that Mr. McKee's family members and/or business
interests control, as to all of which Mr. McKee disclaims
beneficial interest.
The following table sets forth the only persons known to be
beneficial owners of more than 5% of the Company's Common Stock as
of February 29, 1996 and is determined from information provided to
the Company:
Number of Shares
and Nature of Percent
Name and Address Beneficial Owners of Class
Brenton J. Emerick
350 Glendenning Pl.
Waukegan, IL 60085 174,062 (1) 5.89%
Howard A. McKee
26990 Countryside Lake Drive
Mundelein, IL 60060 1,533,848 (2) 51.88%
Keeco, Inc.
20 S. Clark Street
Suite 2310
Chicago, IL 60603 249,489 (3) 8.44%
Northland Insurance Agency, Inc.
20 S. Clark Street
Suite 2310
Chicago, IL 60603 258,054 (3) 8.73%
(1) Excludes 34,190 shares held by Mr. Emerick's spouse, as to all
of which Mr. Emerick disclaims beneficial interest.
(2) Excludes 36,913 shares held by Mr. McKee's spouse, as to all
of which Mr. McKee disclaims beneficial interest. Includes
249,489 shares held by Keeco, Inc, and 258,054 shares held by
Northland Insurance Agency, Inc., as to which Mr. McKee shares
investment power (see note 3 below). Excludes 118,745 shares
held by corporations that Mr. McKee's family members and/or
business interests control, as to all of which Mr. McKee
disclaims beneficial interest.
(3) Mr. McKee personally owns 34.00% of the outstanding stock of
Northland Insurance Agency, Inc., and with his family and
associates he controls 100%. He also personally owns 49.90%
of the outstanding stock of Keeco, Inc. and with his family
and associates he controls 100%. The shares held by these
companies are also included in the shares controlled by Mr.
McKee.
The following sections of this Proxy Statement set forth and discuss
the compensation paid or awarded during the last three years to the
Company's five most highly compensated executive officers at the end of
1995.
REPORT OF THE BOARD OF DIRECTORS CONCERNING COMPENSATION
-COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
The Board of Directors ("Board") has not appointed a separate
compensation committee, preferring to act as a committee of the whole. As
such, it has direct approval of the policies under which compensation is
paid or awarded to the Company's executive officers.
The Company's compensation program for executive officers currently
consists of the following key elements: annual payments of salary and
bonuses. Each element of the program has a different purpose. Salary
payments are mainly designed to reward past performance and to retain
management talent. Bonuses are primarily designed to provide strong
incentives for superior current performance.
In determining the amount and form of executive compensation to be
paid or awarded in 1995, the Board considered the Company's overall
performance over a five year period as well as its future objectives and
challenges in addition to formulas and guidelines covering given
performance criteria for a single year. Within this framework, the Board
considered, among other things, the following performance factors in making
its compensation decisions in 1995: continued asset growth; continued
growth in shareholders equity; improved productivity in several areas
through enhanced use of systems and technology. The Board's decisions
concerning the compensation of individual executive officers during 1995
were made in the context of historical practice and the current competitive
environment. Base salaries for executive officers are determined by
reference to a range of compensation for persons holding similar positions
at other companies of comparable size in the same industry and geographic
location. For this purpose compensation surveys conducted by Ben S. Cole
Financial Incorporated were the primary source of information. Data from
surveys conducted by Wyatt Data Services, the Illinois Bankers Association
and Crowe Chizek were also used. These surveys are based upon compensation
levels paid by similar companies of comparable size operating within the
same general geographic areas.
- - BASES FOR CHIEF EXECUTIVE OFFICER COMPENSATION
In 1995, Mr. Hinman received cash payments of $220,095 in salary and
bonus (as shown in the Summary Compensation table following this
narrative), placing him among the middle range of similar executives in the
industry. The Board considered these 1995 payments appropriate based on
its overall policy of executive compensation and comparison of actual
versus expected corporate performance. His compensation is also based upon
the Board's assessment of his leadership and vision in strategies that
enhance the long-term value of the Company. In the last five years the
Company's total assets have increased 31.97% and shareholder equity 63.58%
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All of the members of the Company's Board of Directors in 1995 were also
executive officers and employees of the Company. Since the Board of
Directors, as a whole, fixes the compensation of the Company's executive
officers, the following officers and employees of the Company, all of whom
were also members of the Board of Directors, participated in deliberations
concerning executive officer compensation in 1995: Jean M. Barry, Alan J.
Emerick, Brenton J. Emerick, James Esposito, Robert W. Hinman and Howard A.
McKee.
<TABLE>
SUMMARY COMPENSATION TABLE
Long Term(2) All Other(3)
Annual Compensation Compensation Compensation
<CAPTION>
<S> <C> <C> <C> <C> <C>
Name and
Principal Position(s) (1) Year Salary Bonus Other(4)
Howard A. McKee
Chairman of the Executive
Committee of the Company, 1995 $280,000 $ $ 9,200 $ 99,141(5)
Grand National Bank - Niles, 1994 280,000 11,900 102,531(5)
Grand National Bank - Crete and 1993 280,000 12,000 102,068(5)
Grand National Bank - Crystal Lake.
Brenton J. Emerick
Chairman of the Board of the
Company and Grand National Bank - 1995 229,250 5,300 22,760
Waukegan. Chairman of the 1994 248,020 5,475 30,922
Administrative Committee, Grand 1993 248,020 7,750 28,582
National Bank - Niles.
Robert W. Hinman
President and Chief Executive 1995 219,000 1,095 9,750 24,000
Officer of the Company. 1994 210,000 31,203 11,650 30,972
1993 188,093 10,000 10,200 24,868
Alan J. Emerick
Executive Vice President of the
Company. Chairman and CEO of 1995 136,000 35,782 6,500 24,781
Grand National Bank - Niles. 1994 130,000 32,500 5,000 28,608
President of Grand National 1993 120,000 34,500 5,200 17,660
Bank - Waukegan.
James Esposito
Chairman of the Board and CEO of 1995 135,000 29,619 2,600 20,178
Grand National Bank - Crete. 1994 132,000 24,750 2,100 29,370
1993 126,000 31,500 3,000 18,566
(1) See list of the Company's executive officers on pages 4-5 for a description of prior positions
held by the following officers in the Company and its subsidiary banks.
(2) The Company does not provide long term compensation as defined by the SEC.
(3) All other compensation consists, mainly, of Company contributions to the Profit Sharing Plan and
the Company's non-qualified deferred compensation plan.
(4) Represents committee and director fees paid by the subsidiary banks.
(5) Includes legal fees received from the subsidiary banks of $73,627, $65,855 and $84,188 for the
years 1995, 1994 and 1993, respectively.
</TABLE>
Five-Year Performance Graph: 1990-1995
The following graph compares the yearly change in the
cumulative total stockholder return on the common stock of the
Company during the five years ended December 31, 1995 with the
cumulative return of the S & P 500 and the NASDAQ Bank Stocks
Indices. The comparison assumes that $100 had been invested in the
common stock of the Company and each index on December 31, 1990 and
that all quarterly dividends were reinvested.
The Company's stock is not traded on any exchange. Any
transactions that have taken place have been limited in size and
frequency. Included in the graph is the market value based on known
stock trades for these limited transactions. Because the market
value of the Company's stock has not been established on any
exchange, the book value of the Company's stock has also been
included for making comparisons.
The following tabular data represents the data utilized in
creating the five year performance graph.
Northern Illinois Financial Corporation market value:
$100.00 $103.39 $127.98 $131.65 $156.01 $160.58
1990 1991 1992 1993 1994 1995
Northern Illinois Financial Corporation book value:
$100.00 $118.14 $129.70 $153.65 $153.41 $201.51
1990 1991 1992 1993 1994 1995
S & P 500:
$100.00 $130.48 $140.42 $154.55 $156.59 $215.36
1990 1991 1992 1993 1994 1995
NASDAQ Bank Stocks:
$100.00 $164.09 $238.85 $272.39 $271.41 $404.35
1990 1991 1992 1993 1994 1995
PENSION PLANS
Grand National Bank, Waukegan formerly American National Bank &
Trust Company of Waukegan, Illinois had a defined benefit
retirement plan which was fully funded as of December 31, 1988.
This Plan was terminated as of March 31, 1989. On December 13,
1991, all assets under this terminated plan were distributed to the
participants. Brenton J. Emerick received a lump sum payment of
$383,869 and Howard A. McKee is receiving benefits of $4,230.12 per
year.
EMPLOYMENT AGREEMENTS
The Company has no employment agreements with any of its
employees. Howard A. McKee is retained by Grand National Bank
pursuant to a consulting agreement which expires February 17, 2000
or earlier upon the mutual agreement of the parties. Mr. McKee
receives a consulting fee for his services of $80,000 per year
which is disclosed as "Salary" in the "Summary Compensation Table"
under annual compensation.
COMPENSATION OF DIRECTORS
In 1995 no directors' fees were paid to the directors of the
Company or for membership on any committees of the Company.
Directors of the subsidiary banks are paid between $200 and $400
for each Board meeting attended and all of the nominee directors
received directors' fees from the Company's subsidiaries for
service on the boards of directors of which they were a member
during the last fiscal year. In addition, some of the subsidiary
banks' committees pay committee members a fee of various amounts
from $25 to $200 for each committee meeting of the subsidiary bank
attended. Nominee Directors Frank J. Callero, Brenton J. Emerick,
Alan J. Emerick, and Robert W. Hinman received committee fees from
one or more of the Company's subsidiary banks during the last
fiscal year. These director & committee fees are included in the
"Summary Compensation Table" under annual compensation.
OTHER TRANSACTIONS WITH MANAGEMENT
Some of the directors of the Company and companies which they are
associated with were customers of, and had banking transactions
with, subsidiaries of the Company in the ordinary course of
business during the last fiscal year. All loans and commitments to
loan 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, in the opinion of management of the Company, did not
involve more than a normal risk of collectibility or present other
unfavorable features. As of February 29, 1996, no such loans were
in default or the subject of any reserve for possible losses.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors retained Hutton, Nelson & McDonald,
Certified Public Accountants, as independent public accountants in
the examination of financial statements of the Company and its
subsidiaries for its 1995 fiscal year. The Board of Directors
generally retains independent public accountants for the Company
following election of the Board at the Annual Meeting of
Stockholders, and no accountants have yet been retained for the
Company's 1996 fiscal year. No representative of Hutton, Nelson &
McDonald is expected to be present at the Annual Meeting.
STOCKHOLDER PROPOSALS, VOTING PROXIES AND OTHER MATTERS
Stockholder proposals intended to be included in the Company's
Proxy Statement and form of Proxy relating to, and to be presented
at, the Annual Meeting of Stockholders of the Company to be held in
1997 must be received by the Company on or before December 15,
1996.
The enclosed Proxy form confers authority to vote, in accordance
with the instructions contained in the Proxy, with respect to the
nominees specified in this Proxy Statement. The Proxy will be
voted in accordance with the choices indicated. If no
specifications are made, Proxies will be voted "FOR ALL NOMINEES"
for director.
The Company knows of no other business that will be presented at
the meeting.
Should any other business come before the meeting, it is the
intention of the persons named in the enclosed Proxy form to vote
in accordance with their best judgement on those matters.
By Order of the Board of Directors
Robert W. Hinman
President
April 15, 1996
