PEOPLES BANCORP
212 West Seventh Street o Auburn, Indiana 46706-1723
Phone: (219)925-2500 o Fax: (219)925-1733
December 12, 2000
Dear Stockholder,
You are cordially invited to attend the Annual Meeting of Stockholders of
Peoples Bancorp, the holding company for Peoples Federal Savings Bank of DeKalb
County (Bank). The meeting will be held at the Ramada Limited and Suites,
located at 306 Touring Drive, Auburn, Indiana 46706, on, Wednesday, January 10,
2001, at 2:00 p.m. local time.
As described in the accompanying materials, the stockholders are being asked at
the annual meeting to elect four Directors and approve the appointment of the
Company's independent auditors. During the meeting, members of the Company's
management will also report on operations and other matters affecting the
Company, and will be available to respond to stockholders' questions.
Your vote is very important regardless of the number of shares you own. On
behalf of the Board of Directors, I urge you to mark, sign, and date your proxy
card today and return it in the envelope provided, even if you plan to attend
the Annual Meeting. This will not prevent you from voting in person, but will
ensure that your vote is counted if you are unable to attend.
Your continued support of and interest in Peoples Bancorp is sincerely
appreciated.
Sincerely,
Roger J. Wertenberger
Chairman of the Board
<PAGE>
PEOPLES BANCORP
212 West 7th Street
Auburn, Indiana 46706
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on January 10, 2001
NOTICE IS HEREBY GIVEN that the annual meeting of the stockholders of
Peoples Bancorp (the "Company"), will be held at the Ramada Limited and Suites,
located at 306 Touring Drive, Auburn, Indiana 46706, on, Wednesday, January 10,
2001, at 2:00 p.m. local time (the "Meeting"), for the following purposes:
1. To elect four directors.
2. To approve the appointment of Olive LLP, independent certified public
accountants, as the auditors of the Company for the fiscal year ending
September 30, 2001.
Execution of a proxy in the form enclosed also permits the proxy holder
to vote, in his or her sole discretion, upon such other business as may properly
come before the Meeting or any adjournment thereof. As of the date of mailing,
the Board of Directors is not aware of any other matters that may come before
the Meeting.
The Board of Directors has selected November 30, 2000, as the record
date for the Meeting. Only those stockholders of the Company of record at the
close of business on that date will be entitled to notice of and to vote at the
Meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
[GRAPHIC OMITTED]
Cheryl L. Taylor
Corporate Secretary
Auburn, Indiana
December 12, 2000
<PAGE>
2
PEOPLES BANCORP
212 West Seventh Street
Auburn, Indiana 46706
Annual Meeting of Stockholders
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Peoples Bancorp (the "Company"), for use at
the annual meeting of the stockholders of the Company to be held on Wednesday,
January 10, 2001, and at any adjournments thereof (the "Meeting"). The Annual
Report to Stockholders for the fiscal year ended September 30, 2000, and a form
of proxy to be voted at the meeting are being furnished to stockholders with
this Proxy Statement. The approximate date of mailing of this proxy statement is
December 12, 2000.
The close of business on November 30, 2000, has been selected as the
record date for the determination of stockholders entitled to notice of and to
vote at the annual meeting. On that date, 3,644,251 shares of the Company's
Common Stock, par value $1.00 per share, were outstanding. Stockholders will be
entitled to one vote for each share of the Company's Common Stock held by them
of record at the close of business on the record date on any matter that may be
presented for consideration and action by the stockholders.
A plurality of the votes cast by stockholders in person or by proxy at the
annual meeting will be necessary for approval of Proposal 1 described herein. A
majority of the votes cast by stockholders in person or by proxy at the annual
meeting will be necessary for approval of Proposal 2.
All valid proxies received in response to this solicitation will be voted
in accordance with the instructions indicated thereon by the stockholders giving
such proxies. If no instructions are given, signed proxies will be voted in
favor of the election of the directors named in this proxy statement and in
favor of Proposal 2. Abstentions and broker non-votes (shares as to which a
broker indicates that it does not have authority to vote) are counted for the
purpose of determining the presence of a quorum for the transaction of business
at the annual meeting. Abstentions and broker non-votes will have no effect on
the outcome of the proposals presented herein, since such actions do not
represent votes cast by stockholders.
The Board of Directors does not know of any business, other than that
described herein, to be presented for action at the annual meeting. However, if
any other business is properly presented before the annual meeting and may
properly be voted upon, the proxies solicited hereby will be voted on such
matters in accordance with the best judgment of the proxy holders named therein.
Any stockholder has the power to revoke his proxy at any time before it is voted
at the annual meeting by giving written notice of such revocation (including the
filing of a duly executed proxy bearing a later date) to Cheryl L. Taylor, the
Secretary of Peoples Bancorp, 212 West 7th Street, Auburn, Indiana 46706, or
upon request if the stockholder is present at the Meeting and chooses to vote in
person.
PROPOSAL 1
ELECTION OF DIRECTORS
Three directors will be elected at the meeting to serve for a three-year
period and one director will be elected to a two-year term. Unless authority is
withheld, all proxies received in response to this solicitation will be voted
for the election of the nominees listed below. Each nominee has indicated a
willingness to serve if elected. However, if any nominee becomes unable to
serve, the proxies received in response to this solicitation will be voted for a
replacement nominee selected in accordance with the best judgment of the proxy
holders named therein.
The Board of Directors unanimously recommends that stockholders vote "FOR"
each of the named nominees to the Company's Board of Directors.
The following table lists the directors and their terms for both Peoples
Federal Savings Bank (the "Bank") and the Company. The table also sets forth the
number of shares of the Company's Common Stock beneficially owned by the
directors of the Company and by the directors and executive officers of the
Company as a group as of September 30, 2000.
NOMINEES FOR ELECTION AS DIRECTORS
<TABLE>
Shares of
Present Common Stock
Director Term Expires Beneficially Percent
Name Position Since Owned Of Class (1)
---- -------- ----- ------------- ----- ------------
NOMINEES FOR A THREE YEAR TERM:
<S> <C> <C> <C> <C> <C>
Bruce S. Holwerda Director 1998 2001 1,500(2) *
G. Richard Gatton Director 2000 2001 51,307(3) 1.4%
Stephen R. Olsen Director 2000 2001 15,903(4) .4%
NOMINEES FOR A TWO YEAR TERM:
Erica D. Dekko Nominee 3,026(9) *
DIRECTORS CONTINUING IN OFFICE:
Douglas D. Marsh Director 1990 2003 10,000(5) .2%
Maurice F. Winkler III Director and 1993 2003 54,144(6) 1.4%
President
John C. Thrapp Director 1990 2002 34,257(7) .9%
Roger J. Wertenberger Chairman of 1990 2002 137,379(8) 3.7%
The Board
All executive officers and directors of the Company as a group (10 persons) 8.5%
* Under 0.1%
</TABLE>
1. Computed based upon a total of 3,662,641 issued and outstanding
shares of Common Stock as of September 30, 2000.
2. All of the shares owned by Mr. Holwerda are owned jointly with
Mr. Holwerda's wife with shared voting and investment power.
3. Includes 23,760 shares of Common Stock subject to options
exercisable within 60 days of the voting record date. Also,
includes 15,273 shares of Common Stock for which Mr. Gatton
shares voting or dispositive power with his spouse, and 12,274
shares he has voting and dispositive power.
4. Includes 1,364 shares of Common Stock subject to options
exercisable within 60 days of the voting record date. Also,
includes 9,336 shares of Common Stock for which Mr. Olson shares
voting or dispositive power with his spouse, 4,609 shares of
Common Stock owned by the spouse of Mr. Olson for which Mr. Olson
has no voting or dispositive power and which Mr. Olson disclaims
beneficial ownership, and 594 shares that are owned by a
partnership that Mr. Olsen claims shared voting and investment
power.
5. Of the shares owned by Mr. Marsh, 1,000 shares are held by Mr.
Marsh with sole voting and investment power, and 9,000 shares are
held by Mr. Marsh's wife with sole voting and investment power.
6. Of the shares owned by Mr. Winkler, 44,207 are held by Mr.
Winkler with sole voting and investment power, 7,066 shares are
held by Mr. Winkler's wife with sole voting and investment power,
and 2,871 shares are controlled by Mr. Winkler as Trustee under a
Trust for the benefit of his children, for which he has sole
voting and investment power.
7. Of the shares owned by Mr. Thrapp, 33,281 shares are held by Mr.
Thrapp with sole voting and investment power, and 976 are held by
Mr. Thrapp's wife with sole voting and investment power.
8. Of the shares owned by Mr. Wertenberger, 86,379 shares are held
by Mr. Wertenberger with sole voting and investment power, 48,000
shares are held by Mr. Wertenberger's wife with sole voting and
investment power, and 3,000 shares are held jointly by Mr.
Wertenberger's wife and mother-in-law with shared voting and
investment power.
9. All of the shares owned by Ms. Dekko are owned directly with sole
voting and investment power.
The business experience during the past five years of each of the directors is
as follows:
Mr. Wertenberger has served as a director of the Bank since joining the
Bank in 1954. Mr. Wertenberger became President of the Bank in January 1964 and
Chairman of the Board in January 1979. Mr. Wertenberger serves as a director of
Peoples Financial Services, Inc., the Bank's service corporation subsidiary
("Peoples Financial"). Mr. Wertenberger became President, Director, and Chairman
of the Board of Peoples Bancorp upon its inception in 1990. Mr. Wertenberger
currently serves as Chairman of the Board and a director of Peoples Bancorp.
Mr. Winkler was appointed to the Board of Directors of the Bank and Company
in June 1993. Mr. Winkler joined the Bank in 1979. From 1981 to 1985, he served
as the Bank's Controller and in December 1985 became Vice President-Operations.
Mr. Winkler is the son-in-law of Roger J. Wertenberger. Mr. Winkler as a
director of Peoples Financial. Mr. Winkler assumed the duties of President and
Chief Executive Officer of Peoples Bancorp, Peoples Federal Savings Bank, and
Peoples Financial Services, Inc. effective October 1, 1996.
Mr. Holwerda was elected a director of the Bank in 1998. Mr. Holwerda is
co-owner of Ambassador Steel Corporation Auburn, Indiana, and serves as Vice
President and Chief Operating Officer, positions he has held since 1990. Mr.
Holwerda has worked at Ambassador Steel in various capacities since 1979.
Mr. Gatton has served as President, Chief Executive Officer of Three Rivers
Financial Corporation, and a director of First Savings Bank since December 1990.
From September 1988 to December 1990, Mr. Gatton served as President and Chief
Executive Officer of First National Bank of Wabash, Indiana. Mr. Gatton has been
involved in the banking industry since 1966. He also serves as President and a
director of Alpha Financial, Inc. ("Alpha Financial"), a subsidiary of First
Savings Bank. Upon the merger of Three Rivers Financial Corporation into Peoples
Bancorp, Mr. Gatton became a Director of Peoples Bancorp and retained his
position as President and Chief Executive Officer of First Savings Bank.
Mr. Olson has served as Manager of Morton Buildings, Inc., a construction
company located in Three Rivers, Michigan, since 1970. Mr. Olson is also on the
board of directors of Camp Wakeshma, a non-profit summer youth camp. Mr. Olson
became a Director of Peoples Bancorp upon the merger of Three Rivers Financial
Corporation into Peoples Bancorp.
Ms. Dekko has served as a director of Peoples Federal Savings Bank since
January of 2000. Ms. Dekko completed her MBA form Notre Dame in 2000. She is a
financial Advisor for Dekko Financial Services.
Mr. Marsh has served as a director of the Bank since 1982. He currently
serves as Chairman of the Board of Applied Innovations Inc. in Chicago,
Illinois, Regional Director Excel Communications in Dallas, Texas, and Associate
of Auburn Realty in Auburn, Indiana. From 1991 to 1996, Mr. Marsh served as Vice
President of Sales for Superior Chaircraft, which is a division of JSJ Seating
Corporation, Belton, Texas. From 1976 to 1991, Mr. Marsh served as President and
Chief Executive Officer of Garrett Industries of Hudson, Indiana. Mr. Marsh also
serves as a director of Peoples Financial.
Mr. Thrapp served as a director and officer of First Federal Savings and
Loan Association of Kendallville which merged with the Bank in August 1990.
Since 1962, Mr. Thrapp has been an attorney with the firm of Thrapp & Thrapp in
Kendallville, Indiana.
Executive Officers of the Company Who Are Not Directors
The following table lists the executive officers of Peoples Bancorp.
Name Age Position with Peoples Bancorp
Maurice F. Winkler III 44 President and Chief Executive Officer
Roger J. Wertenberger 68 Chairman of the Board
Cheri L. Taylor 49 Secretary
Deborah K. Stanger 44 Treasurer
Mrs. Stanger joined Peoples Federal in 1989 as Controller. Mrs. Stanger was
promoted to Vice President and Chief Financial Officer of Peoples Federal in
1996. Mrs. Stanger was named Treasurer of Peoples Bancorp in January 1999.
Ms. Taylor joined Peoples Federal in April 1986. She has served in various
capacities for Peoples and was promoted to insurance agent for Peoples
Financial, Peoples Federal's wholly owned subsidiary, in November 1991. In
August of 2000, Ms. Taylor was promoted to Corporate Secretary for Peoples
Bancorp.
Corporate Governance and Other Matters
The Board of Directors of the Company held twelve meetings during the
fiscal year ended September 30, 2000. All directors have attended at least 75%
of all Board of Directors' and committee meetings.
Five regular members of the Board of Directors are members of the Executive
Committee, which is permitted to act with any three members present in the
absence of regularly scheduled Board meetings. The Executive Committee exercises
all the authority of the Board of Directors to the extent permitted by the
Company's Bylaws. The Executive Committee consists of Roger J. Wertenberger,
Chairman, Maurice F. Winkler, John C. Thrapp, John C. Harvey and Douglas D.
Marsh. This Committee meets when needed and held no meetings during the fiscal
year ended September 30, 2000. The Board of Directors has standing Budget,
Audit, and Nominating Committees.
The Budget Committee establishes policies and objectives relating to
compensation, reviews compensation costs, and recommends salaries, bonuses, and
ESOP contributions for all employees and executive officers. The members of the
Budget Committee are: John C. Harvey chairman, Douglas D. Marsh, Bruce S.
Holwerda and John C. Thrapp. The Budget Committee held four meetings during the
fiscal year ended September 30, 2000.
The Audit Committee reviews and approves the scope of the audit procedures
employed by the Company's independent auditors and meets with the auditors to
discuss the results of their examination of the Company's financial statements.
The Committee reviews the operations of the Company's internal audits performed
by management and the results of its audit procedures. In addition, the
Committee reviews all reports prepared in connection with the Company's annual
examinations by the regulatory authorities. The members of the Audit Committee
are: Bruce Holwerda Chairman, and John C. Harvey. The Committee held one meeting
during the fiscal year ended September 30, 2000.
The Nominating Committee meets when director vacancies occur and
recommends individuals for nomination to the Company's Board of Directors and to
the governing bodies of its subsidiary corporations. The Nominating Committee
consists of the Board of Directors. The Committee held one meeting during the
fiscal year ended September 30, 2000. The Nominating Committee does not consider
nominees recommended by stockholders. Under the Company's Bylaws, however,
nominations may be made by stockholders and voted upon at an annual meeting if
made in writing and delivered to the Secretary of the Company at least 20 days
prior to the date of the annual meeting. No nominations for directors except
those made by the Nominating Committee or by the stockholders in accordance with
the Bylaws shall be voted upon at the annual meeting.
Securities Ownership of Certain Beneficial Owners
There are no persons known to the Company who own beneficially more than
5% of the Company's common stock as of September 30, 2000.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission ("SEC") initial reports of ownership and
reports of changes in ownership of equity securities of the Company. Officers,
directors and greater than 10% shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 30, 2000, all
Section 16(a) filing requirements applicable to the Company's officers and
directors were complied with.
Transactions With Certain Related Persons
The Bank has followed the policy of offering loans to the Company's and
the Bank's directors, officers and employees for the financing of their
principal residences. These loans are made in the ordinary course of business on
substantially the same terms and collateral, including interest rates, as those
of comparable transactions prevailing at the time and do not involve more than
the normal risk of collectibility or present other unfavorable features. The
Bank grants consumer loans to directors, officers, and employees at rates and
terms applicable to its other customers.
The Bank has 13 executive officers and directors, and the aggregate total
of loans outstanding to these individuals as of September 30, 2000, was
$737,219.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Compensation
Summary of Cash and Certain Other Compensation
The following table sets forth summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer. No other executive officers of the Company had an
annual salary and bonus that exceeded $100,000 during each of the last three
fiscal years.
<TABLE>
Summary Compensation Table
Annual
Compensation
Other Annual All Other
Name and Principal Position Year Salary Bonus Compensation (1) Compensation (2)
--------------------------- ---- -- ------- ------ ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Maurice F. Winkler III 2000 $110,000 $ 8,250 $15,200 $ 3,300
Chief Executive Officer of 1999 $85,000 $ 9,558 $12,000 $ 4,250
Peoples Bancorp 1998 $80,000 $ 4,500 $12,000 $ 4,000
G. Richard Gatton 2000 $104,500 $ 0 $ 1,400 $21,403
Chief Executive Officer of 1999 $100,700 $15,000 $ 0 $19,163
First Savings Bank 1998 $96,800 $14,000 $ 0 $27,261
(1) The amount shown represents director's fees.
(2) The amount shown represents that portion of the Bank's or First Savings Bank's 401K/ESOP contribution
allocated to the accounts of Mr. Winkler and Mr. Gatton.
</TABLE>
Option Exercises and Holdings
On November 10, 1998 the Bank's Board of Directors adopted a Stock Option
and Incentive Plan ("1998 Plan") which permits the granting of shares of the
Company's Common Stock through incentive and non-qualified stock options, as
well as stock appreciation rights. Stockholders approved the 1998 Plan on
January 13, 1999. The Stock Option Committee administers the 1998 Plan. The
members of the Stock Option Committee are Mr. Thrapp, Mr. Marsh, and Mr.
Holwerda.
Under the 1998 Plan, the maximum number of shares of Common Stock that
may be issued pursuant to awards granted under the 1998 Plan is 200,000 (subject
to adjustment to prevent dilution). The 1998 Plan shall continue in effect for a
term of ten (10) years following its adoption unless sooner terminated. A
committee of two or more directors appointed by the Board administers the 1998
Plan. Pursuant to the 1998 Plan, officers, directors, key employees and
consultants of the Company (or any Affiliate as defined in the 1998 Plan) may be
granted options at an exercise price not less than 100% of the fair market value
of the Company's Common Stock on the date of the grant. During fiscal 2000, no
options were granted. At September 30, 2000, options to purchase 25,000 shares
were outstanding under the 1998 Plan.
During fiscal 2000, the Company's Chief Executive Officer, Maurice F.
Winkler III, did not own or exercise any stock options of the Company.
Defined Benefit Pension Plan
The Bank maintains a defined benefit pension plan (the "Retirement
Plan") for all eligible employees (the "Participants"). In order to be eligible
to participate, an employee must attain age 21 and complete 1,000 hours of
credited service during an eligibility computation period. The Retirement Plan
is funded solely by Bank contributions and generally provides for vested
benefits to Participants with 100% vesting after five years of credited service.
Total Retirement Plan expenses for the fiscal year ended September 30, 2000,
were $4,721. At September 30, 2000, the Retirement Plan was fully funded.
A Participant's benefit at normal retirement age (65) is dependent upon
his total years of credited service and his average annual salary for the five
consecutive years of highest salary during credited service. However, the
benefit so determined is subject to proportionate reduction for credited service
of fewer than 30 years at normal retirement age, and is also subject to
actuarial reduction for commencement of benefit payment prior to normal
retirement age. The Retirement Plan also provides a death benefit payment in the
event of death prior to retirement.
The table below shows estimated annual benefits (computed on the normal
life annuity basis) payable under the Company's Retirement Plan to any employee
upon retirement in 2000 at age 65 after selected periods of service. There is no
benefit reduction for Social Security or other offset amounts.
<TABLE>
Remuneration Years of Service
----------------------------------------------------------------------------------- --------
10 Years 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years 45 Years
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000
75,000 15,000 22,500 30,000 37,500 45,000 52,500 60,000 67,500
100,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000
150,000 30,000 45,000 60,000 75,000 90,000 105,000 120,000 135,000
200,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000
250,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000 225,000
</TABLE>
Employee Stock Ownership Plan
401(k) Plan. On November 15, 1988, the Board of Directors of the Bank
adopted an Employee Stock Ownership Plan (commonly known as an "ESOP"), which
was approved by the stockholders on January 11, 1989.
On May 1, 1999, the ESOP was amended to convert it into a 401(k) plan.
The 401(k) plan provides for employee contributions of between 1% and 15% of
salary on a pre-tax basis with matching employer contributions equal to 50% of a
participant's contributions up to 6% of salary. The vesting schedule is the same
as the vesting schedule under the ESOP. All shares originally contributed to the
ESOP were allocated to participants' accounts under the 401(k) plan. Withdrawals
under the 401(k) plan are permitted on the attainment of age 591/2 or hardship.
Participants are allowed to choose from a variety of investment vehicles to
invest their 401(k) accounts and in the absence of a choice by a participant are
invested in a money market fund account.
The ESOP maintained an account for each participant in the ESOP. The
ESOP accounts were transferred into each participant's 401(k) plan account. With
respect to shares of Common Stock allocated to a participant's account, each
participant is entitled to direct the trustee as to the manner of voting such
shares. If the Participant fails to so direct the trustee, such unvoted shares
will be voted by the trustee only upon instructions from the committee.
As of September 30, 2000, the 401(k) plan held 53,518 shares of Common
Stock, 100% of which has been allocated to participant accounts. The Company
contributed $64,235 for the benefit of participants under
the 401(k) plan during the fiscal year ended September 30, 2000 and assumed
expenses of $5,807 for 401(k) plan administration.
Insurance Plans
The Bank's officers and employees are provided with hospitalization,
major medical, life, accidental death and dismemberment insurance and long-term
disability insurance under group plans which are available generally and on the
same basis to all full-time employees.
Bonus Plan
The Bank has a bonus plan for all employees of the Bank. The plan does
not apply to employees of subsidiaries or affiliates of the Bank. Under the
plan, bonus money is made available to the extent of the net profits of the Bank
up to 10% of an employee's base annual salary as defined in the plan. The
determination of the amount of a bonus to be paid under the plan is made by the
Board of Directors in its sole discretion, after consideration and
recommendation by the Budget Committee, based on profitability of the Bank.
During the fiscal year ended September 30, 2000, bonuses under this
plan aggregating $96,517 were paid to employees of the Bank. Amounts allocated
under the bonus plan are included in the Summary Compensation Table.
Employment Agreements
Effective May 18, 2000, Mr. Maurice F. Winkler III, a director and
Chief Executive Officer of the Company and President and Chief Executive Officer
of the Bank entered into an employment agreement with the Company and the Bank.
The employment agreement provides for full-time employment for a period of three
years as President and Chief Executive Officer of the Bank. The agreement
provides for a base salary of $110,000 per year subject to cost of living
increases or decreases in certain circumstances. Additionally, upon a change in
control of the Company or the Bank, as defined in the agreement, Mr. Winkler
will receive 2.99 times his base salary plus 2.99 times the average amount of
any bonus compensation earnings during the three year period prior to any change
in control, plus certain other benefits as provided for in the agreement. In
addition, Mr. Winkler will be eligible to receive such other benefits as are
made available to senior executives of the Bank.
Effective February 29, 2000, upon the merger of Three Rivers Financial
Corporation into Peoples Bancorp, Mr. G. Richard Gatton, a director of the
Company and the President and Chief Executive Officer of First Savings Bank
entered into an employment agreement with Peoples Bancorp. The employment
agreement provides for full-time employment for at least three years and a
part-time employment for three years at a reduced salary. Each of these periods
may be extended upon agreement of the parties. Mr. Gatton will receive a base
salary of $104,000 under the employment agreement, which will be reduced to
$75,000 upon entering the part-time phase of the agreement, if Mr. Gatton works
full time for three years following the effective date and $60,000 if he does
not. If Mr. Gatton works for the term provided in the employment agreement, he
will receive additional retirement benefits equal to the lost retirement
benefits he would have received under the First Savings Bank retirement plan had
he remained employed with First Savings Bank until age 65. Moreover, under the
employment agreement, Mr. Gatton's unvested stock options will vest upon his
termination of employment for any reason. Mr. Gatton will remain President and
Chief Executive Officer of First Savings Bank.
Although the above-described employment agreements could increase the
cost of any acquisition of control of the Company or the Bank, management of the
Company and the Bank do not believe that the terms thereof would have a
significant anti-takeover effect.
Director Compensation
Directors of the Company receive fees of $200 per month for serving as
directors of the Company. Directors of the Bank currently receive $12,000 per
year. For the fiscal year ended September 30, 2000, directors' fees for the
Company, the Bank, and directors of the Company who also serve as directors of
First Savings Bank totaled $98,800. In addition, Directors Emeritus of the Bank
are paid for each meeting at a monthly fee equal to the fee they received at the
time of retirement from the Board. For the fiscal year ended September 30, 2000,
Director Emeritus fees totaled $31,800.
Directors are also eligible to receive awards under the Company's 1998
Stock Option and Incentive Plan. During 2000 there were no options granted nor
were there any outstanding options.
Benefits relating to First Savings Bank
Under the merger between Three Rivers Financial Corporation and Peoples
Bancorp, certain benefits have been maintained for the officers and directors
and employees of First Savings Bank.
401(k) Plan. Effective April 1, 1995, First Savings Bank established a
401(k) plan for all eligible employees. To be eligible, an employee must attain
age 21 and complete one year of service with First Savings Bank. Annual
contributions to the plan are made at the discretion of First Savings Bank's
Board of Directors under a formula provided in the plan based upon each
employee's salary. Contributions are allocated among employee members of the
plan who were in the employ of First Savings Bank on the last day of the plan
year and who have at least 1,000 hours of service during the plan year.
Participants may elect to contribute to the plan between 1% and 10% of their
base salary. First Savings Bank matches contributions at a rate of $0.50 for
every $1.00 contributed by the participant up to the first 6% of the
participant's base salary. During the fiscal year ended September 30, 2000,
First Savings Bank contributed $21,095 to the First Savings Bank 401(k) plan.
Contributions by First Savings Bank vest over a six year period
commencing at the end of the second full year of plan membership as to 20% of
First Savings Bank's contribution and rising 20% a year to 100% at the end of
the sixth full year of plan membership. If a participant's employment is
terminated for any reason, the participant is entitled only to the vested
portion, if any, of his or her account.
Pension Plan. Effective December 1, 1994, First Savings Bank became a
participating employer in a multi-employer pension plan sponsored by the
Financial Institutions Retirement Fund (the "Pension Plan"). The terms of the
Pension Plan as it relates to First Savings Bank were determined in March 1995.
All full-time employees of First Savings Bank are eligible to participate after
one year of service and attainment of age 21. A qualifying employee becomes
fully vested in the Pension Plan upon completion of five years of service or
upon attainment of the normal retirement age of 65. The Pension Plan is intended
to comply with the Employee Retirement Income Security Act of 1974, as amended.
The Pension Plan provides for monthly payments to each participating
employee at normal retirement age. The annual allowance payable under the
Pension Plan is based on an integrated fixed percentage formula which uses the
highest five consecutive years' average salary. A participant who is vested in
the Pension Plan may take an early retirement and elect to receive a reduced
monthly benefit beginning at age 55. The Pension Plan also provides for payments
in the event of disability or death. Total Pension Plan expenses for the fiscal
year ended September 30, 2000 were $570. At September 30, 2000, the Pension Plan
was fully funded. At September 30, 2000, G. Richard Gatton had eight years of
credited service under the Pension Plan. If Mr. Gatton were to have retired as
of September 30, 2000, Mr. Gatton would be entitled to a pension payment of
$1,760 per month beginning upon his attainment of age 65.
Employee Stock Ownership Plan. In August 1995, First Savings Bank's
Board of Directors adopted an ESOP for the exclusive benefit of participating
employees. Participating employees are all employees of the Company, First
Savings Bank, and their subsidiaries who have attained age 21 and completed one
year of service with the Company. The ESOP received a favorable determination
letter from the IRS as to the tax-qualified status of the ESOP, subject to
certain minor changes to the ESOP.
The ESOP is funded by contributions made by Peoples Bancorp or First
Savings Bank in cash or shares of the Company's Common Stock (Peoples Bancorp
Common Stock). The ESOP borrowed $687,700 from First Savings Bank to purchase
74,271 shares. This loan is secured by the shares of Common Stock and earnings
thereon. Shares purchased with such loan proceeds are held in a suspense account
for allocation among participants as the loan is repaid over a period of 10
years. For the fiscal years ended September 30, 2000 and 1999, $70,044 and
$70,044 in principal payments were made on the ESOP loan, respectively. The ESOP
compensation expense for the fiscal years ended September 30, 2000 and 1999, was
$106,219 and $107,543, respectively. At September 30, 2000, 27,932 shares of
Common Stock had been allocated to participants under the ESOP.
Stock Option Plans. In April 1996, Three Rivers Financial Corporation's
Board of Directors adopted, and the stockholders approved, a Stock Option and
Incentive Plan (the "Option Plan"). The purpose of the Option Plan is to provide
additional incentive to directors and key employees by facilitating their
purchase of the stock through incentive and non-qualified stock option, as well
as stock appreciation rights. Under the Option Plan, 94,558 shares of Common
Stock are reserved for issuance.
During the fiscal year ended September 30, 2000, no options were
granted and options to purchase 9,860 shares were exercised under the Option
Plan. As of September 30, 2000, options to purchase 80,249 shares are
outstanding under the Option Plan.
The following sets forth certain information concerning unexercised options
held at September 30, 2000 for G. Richard Gatton.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED SEPTEMBER 30, 2000
AND FY END OPTION VALUES
<TABLE>
Name Shares Value Number of unexercised Value of unexercised
acquired on realized options at FY- End in-the-money options at
exercise exercisable FY-end exercisable (1)
------------------ ------------ --------- ----------------------- ------------------------
<S> <C> <C> <C> <C>
G. Richard Gatton -0- $0.00 23,760 $68,192
------------------ ------------ --------- ----------------------- ------------------------
(1) The value of unexercised in-the-money options is the difference between
$14.50, the closing price of the Common Stock on September 30, 2000,
and $11.63 the exercise price of the options, multiplied by the number
of exercisable and unexercisable shares subject to the options,
respectively.
</TABLE>
Recognition and Retention Plan and Trust. In April 1996, the Three
Rivers Financial Corporation's Board of Directors adopted, and the stockholders
approved, the RRP as a means of providing the directors and employees of First
Savings Bank and Three Rivers Financial Corporation in a manner designed to
encourage such persons to continue their service with First Savings Bank and
Three Rivers Financial Corporation. During fiscal year ended September 30, 2000
no shares of restricted stock were granted pursuant to the RRP. At September 30,
2000 grants relating to 12,042 shares were outstanding under the RRP.
Report of the Budget Committee
The Budget Committee of the Bank establishes policies and objectives
relating to compensation, reviews compensation costs, and recommends salaries
and bonuses for all employees and executive officers. All decisions of the
Budget Committee are subject to approval by the full Board of Directors. In
fiscal 2000, the Board of Directors made no modifications to the Budget
Committee's compensation recommendations. In recommending the salaries of the
executive officers, the Budget Committee has access to and reviews compensation
data for comparable financial institutions. The officers are also evaluated as
to their performance during the year and compared to the Bank's performance.
In making recommendations with respect to executive compensation, the
Budget Committee attempts to achieve the following objectives while furthering a
policy of cost containment by controlling expenses:
1. Provide compensation comparable to that which is offered by other
similarly situated Financial institutions in order to attract and
retain talented executives who are critical to the Company's
success;
2. Reward executive officers based upon their ability to achieve
both short- and long-term strategic goals and to enhance
shareholder value; and
3. Align the interests of the executive officers with the long-term
interests of the stockholders by granting stock options and
making ESOP contributions.
At the present time, the Company's executive compensation program is
comprised of base salary, annual incentive bonuses and long-term incentive
bonuses in the form of ESOP contributions. Reasonable base salaries are awarded
based on salaries paid by comparable financial institutions and individual
performance. Annual incentive bonuses are tied to the Company's net income
performance for the current fiscal year. The ESOP has a direct relation to the
long-term enhancement of shareholder value. These plans are designed to motivate
the employee to increase shareholder value.
For fiscal year 2000, the Budget Committee recommended, and the Board
of Directors approved, a salary of $110,000 and a bonus of $8,250 for Mr.
Winkler. In addition, Mr. Winkler received long-term compensation in the form of
a $3,300 match to his account under the 401K Plan. In recommending the salary
and bonus amounts for Mr. Winkler, the Budget Committee considered the Bank's
financial performance, Mr. Winkler's operational performance, and levels of
executive compensation at comparable financial institutions. Although Mr.
Winkler's compensation is below the median level for the Bank's peer group, the
Budget Committee believes that the compensation awarded is consistent with the
Bank's efforts to reward performance and control expenses.
Dated: September 19, 2000 BUDGET COMMITTEE
Douglas D. Marsh
John C. Thrapp
John C. Harvey
Compensation Committee Interlocks and Insider Participation
No person who served as a member of the Budget Committee during the
2000 fiscal year has ever been an officer or employee of the Company or any of
its subsidiaries, except for John Thrapp, who serves as Asst. Trust Officer of
the Bank. During the 2000 fiscal year, no executive officer of the Company or
the Bank served as a director or member of the compensation committee of another
entity, one of whose directors or executive officers served as a director or
member of the Budget Committee of the Company or the Bank.
Performance GraphGraphGraph
The following graph compares the yearly percentage change in the
Company's cumulative total shareholder return on the Common Stock with (i) the
cumulative total return of the NASDAQ market index and (ii) the cumulative total
return of the SNL Midwest Thrift Index comprised of all mid-west publicly traded
savings and loan associations and savings and loan holding companies over the
periods indicated. The graph assumes an initial investment of $100 and
reinvestment of dividends. The graph is not necessarily indicative of future
price performance.
<PAGE>
COMPARISON OF THE FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG PEOPLES BANCORP, THE NASDAQ MARKET INDEX, AND THE SNL MIDWEST THRIFT INDEX
The graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act or under the Exchange Act, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
PROPOSAL 2
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Olive LLP, independent
certified public accountants, to audit the consolidated financial statements of
the Company for the fiscal year ending September 30, 2001. A proposal to approve
the appointment of Olive LLP, will be presented to the Company's stockholders at
the Meeting. Representatives of Olive LLP, are expected to be present at the
Meeting and to be available to respond to appropriate questions. The
representatives will also be provided an opportunity to make a statement, if
they desire.
The Board of Directors unanimously recommends that stockholders vote "FOR"
the appointment of Olive LLP.
COSTS OF SOLICITATION
The Company will pay the costs of this proxy solicitation. To the extent
necessary, personnel of the Company in person or may solicit proxies by
telephone, telegram or other means. Company personnel will not receive any
additional compensation for solicitation of proxies unless such solicitation
requires such persons to work overtime. If deemed necessary, the Company may
retain a proxy solicitation firm. The Company will request record holders of
shares beneficially owned by others to forward this proxy statement and related
materials to the beneficial owners of such shares and will reimburse such record
holders for their reasonable expenses incurred therewith.
FORM 10-K ANNUAL REPORT
THE COMPANY WILL PROVIDE (WITHOUT CHARGE) TO ANY STOCKHOLDER SOLICITED
HEREBY A COPY OF ITS 2000 ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION UPON THE WRITTEN REQUEST OF SUCH STOCKHOLDER. REQUESTS
SHOULD BE DIRECTED TO THE COMPANY'S SECRETARY, 212 WEST 7TH STREET, AUBURN,
INDIANA 46706.
OTHER MATTERS
The management does not know of any other matters to be presented for
action by the stockholders at the annual meeting. If, however, any other matters
not now known are properly brought before the meeting, the persons named in the
accompanying proxy will vote such proxy in accordance with their judgment on
such matters.
STOCKHOLDERS' PROPOSALS
The Company must receive all proposals of stockholders to be presented for
consideration at the next annual meeting and included in the proxy statement no
later than October 9, 2001.
December 12, 2000 PEOPLES BANCORP
