SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. [ ])
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the Appropriate Box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
MID PENN BANCORP, INC.
-------------------------------------------------
(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] No filing fee required.
<PAGE>
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-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 O-11 (Set forth
the amount on which the filing fee is calculated and state
how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of
its filing.
1) Amount Previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
March 27, 1998
DEAR SHAREHOLDER:
It is my pleasure to invite you to attend the 1998 Annual Meeting of
Shareholders of Mid Penn Bancorp, Inc. to be held on Tuesday, April 28, 1998, at
10:00 a.m., prevailing time. The Annual Meeting this year will be held at Mid
Penn Bank, 349 Union Street, Millersburg, Pennsylvania 17061.
The Notice of the Annual Meeting and the Proxy Statement on the following
pages address the formal business of the meeting. The formal business schedule
includes the election of two (2) Class C Directors and the ratification of the
selection of the independent auditors for 1998. At the meeting, members of the
Corporation's management will review the Corporation's operations during the
past year and will be available to respond to questions.
We strongly encourage you to vote your shares, whether or not you plan to
attend the meeting. It is very important that you sign, date and return the
accompanying Proxy as soon as possible, in the postage prepaid envelope. If you
do attend the meeting and wish to vote in person, you must give written notice
thereof to the Secretary of the Corporation so that your Proxy will be
superseded by any ballot that you submit at the meeting.
Sincerely,
/s/ Eugene F. Shaffer
----------------------
Eugene F. Shaffer
Chairman of the Board,
President and Chief Executive
Officer
<PAGE>
[This page intentionally left blank.]
<PAGE>
--------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 1998
--------------------------------
TO THE SHAREHOLDERS OF MID PENN BANCORP, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of MID PENN
BANCORP, INC. (the "Corporation") will be held at 10:00 a.m., prevailing time,
on Tuesday, April 28, 1998, at Mid Penn Bank, 349 Union Street, Millersburg,
Pennsylvania 17061, for the following purposes:
1. To elect two (2) Class C Directors to serve for a three-year term and until
their successors are elected and qualified;
2. To ratify the selection of Parente, Randolph, Orlando, Carey & Associates,
Certified Public Accountants, of Wilkes-Barre, Pennsylvania, as the
independent auditors for the Corporation for the year ending December 31,
1998; and
3. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
In accordance with the By-laws of the Corporation and action of the Board
of Directors, only those shareholders of record at the close of business on
March 20, 1998, will be entitled to notice of and to vote at the Annual Meeting
and any adjournment or postponement thereof.
A copy of the Corporation's Annual Report for the fiscal year ended
December 31, 1997, is enclosed with this Notice. Copies of the Corporation's
Annual Report for the 1996 fiscal year may be obtained, at no cost, by
contacting Eugene F. Shaffer, Chairman of the Board, President and Chief
Executive Officer, 349 Union Street, Millersburg, Pennsylvania 17061, telephone:
(717) 692-2133.
<PAGE>
You are urged to mark, sign, date and promptly return your Proxy in the
enclosed envelope so that your shares may be voted in accordance with your
wishes and in order that the presence of a quorum may be assured. The prompt
return of your signed Proxy, regardless of the number of shares you hold, will
aid the Corporation in reducing the expense of additional proxy solicitation.
Giving your Proxy does not affect your right to vote in person, if you attend
the meeting and give written notice to the Secretary of the Corporation.
By Order of the Board of Directors,
/s/ Eugene F. Shaffer
---------------------
Eugene F. Shaffer
Chairman of the Board,
President and Chief Executive Officer
March 27, 1998
<PAGE>
MID PENN BANCORP, INC.
PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON APRIL 28, 1998
GENERAL
Introduction, Date, Time and Place of Annual Meeting
This Proxy Statement is furnished in connection with the solicitation of
proxies, by the Board of Directors of MID PENN BANCORP, INC. (the
"Corporation"), a Pennsylvania business corporation, to be voted at the Annual
Meeting of Shareholders of the Corporation to be held on Tuesday, April 28,
1998, at 10:00 a.m., prevailing time, at Mid Penn Bank, 349 Union Street,
Millersburg, Pennsylvania 17061, and at any adjournment or postponement of the
Annual Meeting.
The principal executive office of the Corporation is located at Mid Penn
Bank (the "Bank"), 349 Union Street, Millersburg, Pennsylvania 17061. The
telephone number for the Corporation is (717) 692-2133. All inquiries should be
directed to Eugene F. Shaffer, Chairman of the Board, President and Chief
Executive Officer of the Corporation. The Bank is a wholly-owned subsidiary of
the Corporation.
Solicitation and Voting of Proxies
This Proxy Statement and the enclosed form of proxy (the "Proxy") are first
being sent to shareholders of the Corporation on or about March 27, 1998.
Shares represented by proxies on the accompanying Proxy, if properly signed
and returned, will be voted in accordance with the specifications made thereon
by the shareholders. Any Proxy not specifying to the contrary will be voted FOR
the election of the nominees for Class C Director named below and FOR the
ratification of the selection of Parente, Randolph, Orlando, Carey & Associates,
Certified Public Accountants, of Wilkes-Barre, Pennsylvania, as the independent
auditors for the Corporation for the year ending December 31, 1998. Execution
and return of the enclosed Proxy will not affect a shareholder's right to attend
the Annual Meeting and to vote in person, after giving written notice to the
Secretary of the Corporation. The cost of preparing, assembling, printing,
mailing and soliciting proxies, and any additional material that the Corporation
may furnish shareholders in connection with the Annual Meeting, will be borne by
the Corporation. In addition to the use of the mails, certain directors,
officers and employees of the Corporation and of the Bank may solicit proxies
personally, by telephone, telegraph and telecopier. The Corporation will make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries to forward proxy solicitation material to the beneficial owners of
stock held of record by these persons, and, upon request therefor, the
Corporation will reimburse them for their reasonable forwarding expenses.
- 1 -
<PAGE>
Revocability of Proxy
A shareholder who returns a Proxy may revoke the Proxy at any time before
it is voted only: (1) by giving written notice of revocation to Cindy L. Wetzel,
Secretary of Mid Penn Bancorp, Inc., at 349 Union Street, Millersburg,
Pennsylvania 17061; (2) by executing a later-dated proxy and giving written
notice thereof to the Secretary of the Corporation; or (3) by voting in person
after giving written notice to the Secretary of the Corporation.
Voting Securities, Record Date and Quorum
Only holders of Common Stock of record at the close of business on March
20, 1998, (the "Record Date"), will be entitled to notice of and to vote at the
Annual Meeting. Cumulative voting rights do not exist with respect to the
election of directors. On all matters to come before the Annual Meeting, each
share of Common Stock is entitled to one vote. At the close of business on the
Record Date, the Corporation had 2,607,552 shares of common stock, par value
$1.00 per share outstanding (the "Common Stock"). The Common Stock is the
Corporation's only authorized class of stock.
Under Pennsylvania law and the By-laws of the Corporation, the presence of
a quorum is required for each matter to be acted upon at the Annual Meeting.
Pursuant to Article 3, Section 3.1, of the By-laws of the Corporation, the
presence, in person or by proxy, of shareholders entitled to cast at least a
majority of the votes that all shareholders are entitled to cast constitutes a
quorum for the transaction of business at the Annual Meeting. Votes withheld and
abstentions will be counted in determining the presence of a quorum for a
particular matter. Broker non-votes will not be counted in determining the
presence of a quorum for the particular matter as to which the broker withheld
authority.
Assuming the presence of a quorum, the two nominees for director receiving
the highest number of votes cast by shareholders entitled to vote for the
election of directors shall be elected. Votes withheld from a nominee and broker
non-votes will not be cast for such nominee.
Assuming the presence of a quorum, the affirmative vote of a majority of
all votes cast by shareholders is required for the ratification of the selection
of independent auditors. Abstentions and broker non-votes are not deemed to
constitute votes cast and therefore do not count either for or against such
ratification. Abstentions and broker non-votes, however, have the practical
effect of reducing the number of affirmative votes required to achieve a
majority for each such matter by reducing the total number of shares voted from
which the required majority is calculated.
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<PAGE>
PRINCIPAL BENEFICIAL OWNERS OF THE CORPORATION'S
STOCK
Principal Owners
The following table sets forth as of March 1, 1998, the persons who own of
record or who are known by the Board of Directors to be the beneficial owners,
as defined below, of more than five percent (5%) of the Corporation's
outstanding Common Stock, the number of shares beneficially owned by such person
and the percentage of the Corporation's outstanding Common Stock so owned.
<TABLE>
<CAPTION>
Name of Individual Amount and Nature of Percent
or Identity of Group Beneficial Ownership of Class
<S> <C> <C>
NEBCO (1) 262,664 10.07%
349 Union Street
Millersburg, PA 17061
<FN>
(1) NEBCO is the nominee registration of the Bank's trust department. Shares of
Common Stock are held for various Trust Accounts. It is the intent of NEBCO
to cast all shares for which it has voting power FOR the two nominees for
Class C Director and FOR the ratification of the selection of the
independent auditors for the year ending December 31, 1998, as discussed
below.
</FN>
</TABLE>
Beneficial Ownership by Officers, Directors and Nominees
The following table sets forth, as of March 1, 1998, and from information
supplied by the respective individuals, the amount and percentage, if over one
percent (1%), of the Common Stock beneficially owned by each director, each
nominee for the Board of Directors and all officers and directors of the
Corporation as a group. Unless designated to the contrary in a footnote, all
shares are individually held.
<TABLE>
<CAPTION>
Name of Individual Amount and Nature of Percent
or Identity of Group Beneficial Ownership (1) of Class
- -------------------- ------------------------ --------
Current Class C Directors
(To Serve Until 1998) and
Nominees For Class C Director
(To Serve Until 2001)
<S> <C> <C>
Earl R. Etzweiler 99,832 3.83%
William G. Nelson 58,046 (2) 2.23%
Class A Directors
(To Serve Until 1999)
Warren A. Miller 20,216 (3) --
Edwin D. Schlegel 63,020 (4) 2.42%
Eugene F. Shaffer 113,248 (5) 4.34%
- 3 -
<PAGE>
Class B Directors
(To Serve Until 2000)
Jere M. Coxon 31,860 1.22%
Alan W. Dakey 3,737 (6) --
Charles F. Lebo 29,604 (7) 1.14%
Guy J. Snyder, Jr. 75,415 (8) 2.89%
All Officers and Directors
as a Group (11 persons) 497,092 19.06%
- ------------------
<FN>
(1) The securities "beneficially owned" by an individual
are determined in accordance with the definitions of "beneficial
ownership" set forth in the General Rules and Regulations of the
Securities and Exchange Commission and may include securities owned by or for
the individual's spouse and minor children and any other relative who has
the same home, as well as securities to which the individual has, or
shares, voting or investment power or has the right to acquire
beneficial ownership within 60 days after March 1, 1998. Beneficial
ownership may be disclaimed as to certain of the securities.
(2) Includes 8,046 shares held by Mr. Nelson's spouse.
(3) Shares held jointly by Mr. Miller and his spouse.
(4) Shares held jointly by Mr. Schlegel and his spouse.
(5) Includes 5,744 shares held jointly by Mr. Shaffer and his spouse. Mr.
Shaffer is trustee of seven trusts, held for the benefit of various
family members, which hold a total of 42,022 shares.
(6) Shares held jointly by Mr. Dakey and his spouse.
(7) Includes 9,672 shares held jointly by Mr. Lebo and his spouse.
(8) Includes 39,035 shares held jointly by Mr. Snyder and his spouse and
36,380 shares held individually by his spouse.
</FN>
</TABLE>
ELECTION OF DIRECTORS
The By-laws of the Corporation provide that the Corporation's business be
managed by its Board of Directors. The Corporation's By-laws provide for a
classified Board of Directors with three-year terms of office. Section 10.2 of
the By-laws provides that the number of directors be not less than five or more
than twenty-five members. The Board of Directors is divided into three classes.
Each class is elected for a term of three years. Within the foregoing limits,
the Board of Directors may, from time to time, fix the number of directors and
their respective classifications. The terms of the respective classes expire in
successive years, as provided in Section 10.3 of the By-laws. On April 22, 1997,
Harvey J. Hummel and Charles R. Phillips retired from the Board of Directors.
The Board of Directors has fixed the number of Board members at nine (9), with
three (3) directors in Class A, four (4) directors in Class B and two (2)
directors in Class C. Pursuant to Section 11.1 of the By-laws, vacancies on the
Board of Directors, including vacancies resulting from
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<PAGE>
an increase in the number of directors, are filled by a majority of the
remaining members of the Board of Directors, though less than a quorum, and each
person so appointed is a director until the expiration of the term of office of
the class of directors to which the director was appointed.
In accordance with Section 10.3 of the By-laws, at the 1998 Annual Meeting
of Shareholders of the Corporation, the shareholders shall elect two (2) Class C
Directors to serve for a three-year term and until their successors are elected
and qualified. At each annual meeting of shareholders, successors to the class
of directors whose term expire are elected to hold office for a term of three
(3) years, so that the term of office of one class of directors expires each
year.
Unless otherwise instructed, the Proxyholders will vote the Proxies
received by them for the election of the nominees named below. If any nominee
should become unavailable for any reason, Proxies will be voted in favor of a
substitute nominee as the Board of Directors of the Corporation shall determine.
The Board of Directors has no reason to believe that the nominees named will be
unable to serve, if elected.
There is no cumulative voting for the election of directors. Each share of
Common Stock is entitled to cast only one vote for each nominee. For example, if
a shareholder owns ten shares of Common Stock, he or she may cast up to ten
votes for each of the two directors in the class to be elected.
INFORMATION AS TO NOMINEES, DIRECTORS AND EXECUTIVE
OFFICERS
The following table contains certain information with respect to
the Corporation's directors, nominees for Director and executive officers:
<TABLE>
<CAPTION>
Age as of Principal Occupation for
March 20, Past Five Years and Position
Name 1998 Held with Corporation and Bank
- ---- ---- ------------------------------
Current Class C Directors
(To Serve Until 1998) and
Nominees for Class C Director
(To Serve Until 2001)
<S> <C> <C>
Earl R. Etzweiler 64 Attorney - Owner,
(1)(3) Etzweiler & Associates
Attorneys at Law;
Vice Chairman of the
Board of the Corporation
since 1991
William G. Nelson 62 President, Victory Leasing,
(1)(3)(4)(5) Inc.; President, Hess
Trucking Co., Inc.;
President, Victory Services
& Nelson Terminals, Inc.
- 5 -
<PAGE>
Class A Directors
(To Serve Until 1999)
Warren A. Miller 65 Retired
(4) Assistant Vice President
of the Bank
Edwin D. Schlegel 59 Retired
(2)(3) Superintendent, Millersburg
Area School District
Eugene F. Shaffer 62 Chairman of the Board,
(1)(3)(4)(5) President and Chief
Executive Officer of
the Corporation since
1991; Chairman of the
Board of the Bank
since 1976; President and
Chief Executive Officer
of the Bank from 1976-1994
CLASS B DIRECTORS
(To Serve Until 2000)
Alan W. Dakey 46 Executive Vice President
(1)(3)(4)(5) of the Corporation since
1994; President and Chief
Executive Officer of the Bank
since 1994; Executive Vice
President and Chief Operating
Officer of the Bank from
July 1993 to May 1994; and
Senior Vice President of
the Dime Bank from October
1986 to July 1993.
Jere M. Coxon 55 Executive Vice President,
(2)(4)(5) Penn Wood Products, Inc.
Charles F. Lebo 64 Retired Educator, PA
(1)(2)(4) Dept. of Education
Guy J. Snyder, Jr. 60 President, Snyder Fuels,
(2)(3)(5) Inc.
<CAPTION>
Director
Since
Corporation/
Name Bank
- ---- ----
Current Class C Directors
(To Serve Until 1998) and
Nominees for Class C Director
(To Serve Until 2001)
<S> <C>
Earl R. Etzweiler 1991/1972
(1)(3)
William G. Nelson 1991/1970
(1)(3)(4)(5)
Class A Directors
(To Serve Until 1999)
Warren A. Miller 1991/1985
(4)
Edwin D. Schlegel 1991/1981
(2)(3)
Eugene F. Shaffer 1991/1973
(1)(3)(4)(5)
CLASS B DIRECTORS
(To Serve Until 2000)
Alan W. Dakey 1995/1994
(1)(3)(4)(5)
Jere M. Coxon 1991/1981
(2)(4)(5)
Charles F. Lebo 1991/1978
(1)(2)(4)
Guy J. Snyder, Jr. 1991/1984
(2)(3)(5)
<FN>
(1) Member of the Bank's Executive Committee. This committee exercises the
authority of the Bank's Board of Directors in the intervals between
meetings of the Board of Directors to the extent permitted by law. This
committee did not meet in 1997. Mr. Earl R. Etzweiler is Chairman of the
Executive Committee.
- 6 -
<PAGE>
(2) Member of the Bank's Audit Committee. The Audit Committee conducts, at
least once a year, a complete audit of the books and affairs of the Bank,
including the Trust Department, through the engagement of a certified
public accountant or through the use of an approved internal audit program.
Upon completion of the audit, the committee reviews the report and makes
recommendations to the Board of Directors at its next regular meeting. This
committee met three (3) times in 1997. Mr. Charles F. Lebo is Chairman of
the Audit Committee.
(3) Member of the Bank's Trust Committee. This committee determines the
policies and investments of the Trust Department and approves the
acceptance of all fiduciary relationships and the closing out or the
relinquishment of all fiduciary relationships. The committee ratifies the
acceptance, closing out or relinquishment of fiduciary relationships by
officers designated for that purpose. This committee met twelve (12) times
in 1997. Mr. William G. Nelson is Chairman of the Trust Committee.
(4) Member of the Bank's Loan Committee. This committee reviews and approves or
rejects loans over the limit of the Bank's loan officers. This committee
met twenty-three (23) times in 1997. Mr. Warren A. Miller is the Chairman
of the Loan Committee.
(5) Member of the Bank's Salary and Personnel Committee. This committee reviews
employee performance evaluations and makes salary recommendations to the
Board of Directors. This committee met once in 1997.
</FN>
</TABLE>
During 1997, the Bank's Board of Directors held thirteen (13) meetings and
the Corporation's Board of Directors held eight (8) meetings. Each of the
Directors attended at least 75 percent of the combined total number of meetings
of the Corporation's and of the Bank's Board of Directors and of the Committees
of which he was a member.
The Corporation does not have a nominating committee. A shareholder who
desires to propose an individual for consideration by the Board of Directors as
a nominee for director should submit a proposal in writing to the Secretary of
the Corporation in accordance with Section 10.1 of the Corporation's By-laws.
Any shareholder who intends to nominate or to cause to have nominated any
candidate for election to the Board of Directors must notify the Secretary of
the Corporation in writing not less than sixty (60) days prior to the date of
any meeting of shareholders called for the election of directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's officers and directors, and persons who own more than ten
percent (10%) of the registered class of the Corporation's equity securities, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("SEC"). Officers, directors and greater than ten percent
(10%) shareholders are required by SEC regulation to furnish the Corporation
with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
and/or written representations from certain reporting persons that no Forms 5
were required for those persons, the Corporation believes that during the period
January 1, 1997, through December 31, 1997, its officers and directors were in
compliance with all filing requirements applicable to them, with the exception
of Mr. Dakey, who inadvertently filed one late form to report one transaction.
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<PAGE>
EXECUTIVE COMPENSATION
Shown below is information concerning the annual compensation for services
in all capacities to the Corporation for the fiscal years ended December 31,
1997, 1996 and 1995 of those persons who were, at December 31, 1997, (i) the
Chief Executive Officer, and (ii) the four other most highly compensated
executive officers of the Corporation to the extent such persons' total annual
salary and bonus exceeded $100,000: <TABLE> <CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
(a) (b) (c) (d) (e)
Other
Annual
Compen-
Name and Principal Salary Bonus sation
Position Year ($)(1) ($)(2) ($)
-------- ---- ------ ------ ---
<S> <C> <C> <C> <C>
Eugene F. Shaffer 1997 132,000 31,113 --
Chairman, 1996 56,800 8,384 --
President and 1995 56,800 12,377 --
Chief Executive
Officer
Alan W. Dakey, 1997 108,000 36,965 --
Executive Vice 1996 101,800 22,734 --
President 1995 91,800 26,860 --
<CAPTION>
Long-Term Compensation
Awards Payouts
(f) (g) (h) (i)
Restricted All other
Stock Options/ LTIP Compen-
Name and Principal Award(s) SARs Payouts sation
Position ($) (#) ($) ($)(3)(4)
-------- --- --- --- ---------
<S> <C> <C> <C> <C>
Eugene F. Shaffer -- -- -- 25,026
Chairman, -- -- -- 13,423
President and -- -- -- 12,109
Chief Executive
Officer
Alan W. Dakey, -- -- -- 16,202
Executive Vice -- -- -- 14,929
President -- -- -- 13,369
<FN>
(1) Salary includes annual Board of Directors fee of $7,000 paid to Messrs.
Shaffer and Dakey in 1997 and $6,800, paid to Messrs. Shaffer and Dakey in
1996 and 1995.
(2) Mr. Shaffer's bonus includes a Directors bonus paid to Mr. Shaffer in 1997,
1996 and 1995 of $1,738, $884, and $1,377, respectively. Mr. Dakey's bonus
includes a Directors bonus paid to Mr. Dakey in 1997, 1996 and 1995 of
$1,738, $884 and $1,360, respectively.
(3) Includes life insurance premiums of $l,566, $1,541, and $1,100, paid by the
Bank in 1997, 1996 and 1995, respectively, on behalf of Mr. Shaffer
pursuant to life insurance maintained for executive officers. Includes
premiums paid by the Bank in 1997, 1996 and 1995 for split dollar life
insurance of $4,710, $4,383 and $3,509, respectively, on behalf of Mr.
Shaffer. The Bank can recover the premium costs upon the death of Mr.
Shaffer. Includes life insurance premiums of $1,052, $679, and $619, paid
by the Bank in 1997, 1996 and 1995, respectively, on behalf of Mr. Dakey
pursuant to life insurance maintained for executive officers.
(4) Includes $18,750, $7,500, and $7,500, contributed by the Bank to the Profit
Sharing Retirement Plan on behalf of Mr. Shaffer in 1997, 1996 and 1995,
respectively. Includes $15,150, $14,250, and $12,750, contributed by the
Bank to the Profit Sharing Retirement Plan on behalf of Mr. Dakey in 1997,
1996 and 1995, respectively.
</FN>
</TABLE>
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<PAGE>
Profit Sharing Retirement Plan
The Corporation does not have a pension plan. The Bank, however, maintains
the Employee Profit Sharing Retirement Plan, created in 1949 and restated in
1984, which covers all Bank employees who accumulate at least 1,000 hours of
service in a twelve (12) month period beginning on the first day of employment.
Eligible employees are entitled to receive a share of the Bank's contribution to
the Plan if he or she accumulates at least 1,000 hours of service during a Plan
Year and is employed at the end of the year, December 31st.
The annual contribution is determined by the Board of Directors of the Bank
and is contingent upon current or accumulative profits of the Bank with the
total amount of the annual contribution not to exceed fifteen percent (15%) of
the total eligible compensation paid by the Bank to all participating employees.
A participating employee's share of such annual contribution is allocated on the
basis of the participating employee's eligible compensation up to $150,000 as
compared to the total eligible compensation of all the participating employees.
Participating employees are permitted to make after-tax contributions of no more
than ten percent (10%) or less than three percent (3%) of their eligible
compensation. The contributions to the Plan are paid to a Trust Fund that is
administered by the Bank's Trust Department. A participating employee is
allocated a share of the net income of the Trust Fund and the increase or
decrease in the fair market value of its assets on the basis of such employee's
beginning of the Plan Year account balance, less any payments as compared to the
total beginning account balances, less payments to all the participating
employees. A notice of the account balance is given to participating employees
annually.
Distribution under the Plan can be made to participating employees upon
retirement (either normal or early retirement as defined in the Plan), at death
or disability of the participating employee or upon severing employment if
either partially or fully vested. The Plan provides for percentage vesting of
twenty percent (20%) for the first full three (3) years of service increasing
annually thereafter to one hundred percent (100%) vesting after seven (7) full
years of participation. The Plan provides for an accelerated vesting schedule in
the event it becomes top-heavy.
It is not possible to determine the extent of the benefits that any
participating employee may be entitled to receive under the Plan on the date of
termination of employment because the amount of the benefits is dependent, among
other things, upon the future earnings of the Bank, the future compensation of
the participants and the future earnings of the Plan's Trust Fund. As of
December 31, 1997 the total market value of the Employee Profit Sharing
Retirement Fund is approximately $3,276,996. There are 27,150 shares of Common
Stock in the Plan and the market value of these shares is $31.50 per share for a
total of $855,225.
Contributions paid to the Plan by the Bank were $258,462 and $228,620 for
1997 and 1996, respectively. The amount contributed by the Bank in 1997 to the
Plan for Mr. Shaffer, Chairman of the Board, President and Chief Executive
Officer of the Corporation, was $18,750. The amount contributed by the Bank in
1997 to the Plan for Mr. Dakey, Executive Vice President of the Corporation, was
$15,150. As of March 1, 1998, Mr. Shaffer and Mr. Dakey have twenty-seven (27)
years and four (4) years, respectively, of credited service under the Plan.
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<PAGE>
Compensation of Directors
During 1997, the directors received an annual fee of $7,000 and a bonus of
$l,738. A bonus is payable to directors each year based upon whether the Bank
meets certain performance criteria, with respect to earnings and growth, as
outlined in the Bank's Performance Bonus Plan. Members of special committees
receive $75 for each meeting attended if the meeting is held on a day other than
that of the regularly scheduled Board meeting. Directors who are also officers
employed by the Bank are not paid for attending meetings of special committees.
In 1997, Attorney Etzweiler also received fees of $17,039 for legal services
rendered. In 1997, the Board of Directors received $93,968, in the aggregate,
for all Board of Directors' meetings and committee meetings attended, and all
fees paid to Directors.
Directors received no remuneration for attendance at the meetings of the
Board of Directors of the Corporation.
In May of 1995, the Board of Directors adopted a retirement bonus plan that
provides payment of a retirement bonus to directors who voluntarily retire from
service, or who have attained the mandatory retirement age. The retirement bonus
is determined by multiplying the "base retirement bonus" for the member's
position ($400 for the Chairman, $200 for all other Directors) by the number of
full years the member served. No portion of the payment under this plan is
assignable. The Plan contains an inflationary adjustment provision. Payments due
under the plan are paid quarterly. Messrs. Hummel and Phillips, who retired from
the Board of Directors in April 1997, received $1,240 and $1,756, respectively,
under this Plan.
Compensation Committee Interlocks and Insider Participation
Mr. Eugene F. Shaffer, Chairman of the Board, President and Chief Executive
Officer of the Corporation, and Mr. Alan W. Dakey, Executive Vice President of
the Corporation, are members of the Salary and Personnel Committee. Messrs.
Shaffer and Dakey do not participate in conducting their own reviews or
determining their own salaries.
Salary and Personnel Committee Report on Executive Compensation
Mid Penn Bank (the "Bank"), the wholly-owned bank subsidiary of Mid Penn
Bancorp, Inc. (the "Corporation"), provides compensation to the employees of the
Bank. The Board of Directors, acting in the best interests of the Corporation's
shareholders, customers, and the communities it serves, is responsible for
providing compensation to all of its employees based on the individual's
contribution and personal performance. The compensation program is administered
by the Salary and Personnel Committee. The Committee strives to offer a fair and
competitive compensation policy to govern executive officers' base salaries and
incentive plans and to attract and maintain competent, dedicated, and ambitious
managers whose efforts will enhance the products and services of the Corporation
and of the Bank, resulting in higher profitability, and increased dividends to
the Corporation's shareholders and appreciation in market value of the
Corporation's Common Stock.
- 10 -
<PAGE>
The compensation of the Corporation's and Bank's top executives is reviewed
and approved annually by the Board of Directors upon the recommendations of the
Salary and Personnel Committee. As a guideline for determining base salaries,
the Committee uses the Salary/Benefits Survey published by L. R. Webber
Associates, Inc. This peer group of banks with assets ranging from $200 million
to $299 million by region is different from the peer group used for the
performance chart. The Committee used this peer group of banks because of common
industry issues and competition for the same executive talent group.
The Committee does not deem Section 162(m) of the Internal Revenue Code
(the "IRC") to be applicable to the Corporation at this time. The Committee
intends to monitor the future application of IRC Section 162(m) to the
compensation paid to its executive officers and, in the event that this section
becomes applicable to the Corporation, the Committee intends to amend the
Corporation's and/or the Bank's compensation plans to preserve deductibility of
compensation payable thereunder.
Chief Executive Officer Compensation
The Board of Directors determined the Chief Executive Officer's 1997
compensation of $154,375 (comprised of his annual cash salary and cash bonus,
exclusive of director's fees and bonus) to be appropriate in light of the
Corporation's 1997 performance. The 1997 compensation represents the combined
salary and bonus reported on the Summary Compensation Table. There is no direct
correlation between the Chief Executive Officer's compensation and any specific
performance criteria, nor is there any weight given by the Committee to any
specific individual criteria. The Chief Executive Officer's compensation is
based on the Committee's subjective determination after review of all
information that it deems relevant.
Executive Officers
The Committee based compensation increases to executive officers on
subjective analysis of each individual's contribution to the Corporation. The
Board of Directors considered numerous factors in determining compensation
increases including the Corporation's earnings, return on assets, return on
equity, market share, total assets, and non-performing loans. Although
performance and increases in compensation were measured by these factors, among
others, there is no direct correlation between any specific criterion and an
employee's compensation. The Committee's analysis did not provide a specific
weight to any criteria. The determination by the Committee is subjective after
review of all information deemed relevant.
Individuals are reviewed annually on a calendar year basis. Total
compensation opportunities available to employees of the Bank are influenced by
general market conditions, specific responsibilities of the individual, and the
individual's contributions to the success of the Corporation. The Bank strives
to offer compensation that is competitive with that offered by employers of
comparable size in the banking industry. The Corporation strives to meet its
strategic goals and objectives to its constituencies and to provide fair and
meaningful compensation to its employees.
Salary and Personnel Committee
Jere M. Coxon Alan W. Dakey
William G. Nelson Eugene F. Shaffer
Guy J. Snyder, Jr.
- 11 -
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly dollar change in the
cumulative total shareholder return on the Corporation's Common Stock against
the cumulative total return of the S&P 500 Stock Index and the Peer Group Index
for the period of five fiscal years commencing January 1, 1993 and ending
December 31, 1997. The shareholder return shown on the graph below is not
necessarily indicative of future performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
(1)
[Performance Graph Omitted]
[The following is a description of the Performance Graph in a tabular
format:]
Peer Group Total 1000.00 1361.67 1639.57 1861.36 2326.08 3269.58
Peer Group Index 100.00 136.17 163.96 186.14 232.61 326.96
Mid Penn Bancorp, Inc. 100.00 148.22 183.03 207.15 211.74 441.64
S & P 500 Total Return 100.00 110.02 111.51 153.26 188.36 251.12
S & P 500 Total Return
Index 100.00 110.02 111.51 153.26 188.36 251.12
(1) The Peer Group for which information appears above includes the
following companies: CNB Financial Corporation; Citizens & Northern
Corporation; Citizens Financial Services Inc.; Columbia Financial
Corporation; Comm. Bancorp, Inc.; Heritage Bancorp, Inc.; Norwood
Financial Corporation; Penn Security Bank & Trust Co.; Penns Woods
Bancorp, Inc.; and Pioneer American Holding Company. These companies
were selected based on four criteria: total assets between $150 million
and $600 million; market capitalization greater than $15 million;
headquarters located in Pennsylvania; and not quoted on NASDAQ.
- 12 -
<PAGE>
CERTAIN TRANSACTIONS
There have been no material transactions between the Corporation and the
Bank, nor any material transactions proposed, with any director or executive
officer of the Corporation or of the Bank, or any associate of the foregoing
persons. The Corporation and the Bank have had, and intend to continue to have,
banking and financial transactions in the ordinary course of business with
directors and officers of the Corporation and of the Bank and their associates
on comparable terms and with similar interest rates as those prevailing from
time to time for other customers of the Corporation and of the Bank. Total loans
outstanding from the Corporation and the Bank at December 31, 1997 to the
Corporation's and the Bank's officers and directors as a group and members of
their immediate families and companies in which they had an ownership interest
of 10% or more was approximately $1,143,000 or approximately 4.25% of the total
equity capital of the Bank. Loans to such persons were made in the ordinary
course of business, were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons, and did not involve more than the normal risk
of collectibility or present other unfavorable features. The largest aggregate
amount of indebtedness outstanding at any time during fiscal year 1997 to
officers and directors of the Corporation and the Bank as a group was
approximately $1,692,000.
During 1997, Mr. Earl R. Etzweiler, Esquire, a Director of the Corporation
and the Bank, served as solicitor of the Corporation and of the Bank. During
1997, Mr. Etzweiler received fees of $17,039 from the bank for legal services
rendered.
PRINCIPAL OFFICERS OF THE CORPORATION
The following table sets forth selected information about the principal
officers of the Corporation, each of whom is elected by the Board of Directors
and each of whom holds office at the discretion of the Board of Directors:
<TABLE>
<CAPTION>
Bank Number of Age as of
Held Employee Shares Bene- March 1,
Name and Position Since Since ficially Owned 1998
----------------- ----- ----- -------------- ----
<S> <C> <C> <C> <C>
Eugene F. Shaffer - 1991 1969 113,248 62
Chairman of the Board,
President and Chief
Executive Officer
Earl R. Etzweiler - 1991 (1) 99,832 64
Vice Chairman of the
Board
Alan W. Dakey - 1994 1993 3,737 46
Executive Vice
President
- 13 -
<PAGE>
Kevin W. Laudenslager - 1998 1985 1,180 34
Treasurer
Cindy L. Wetzel - 1991 1979 934 (2) 36
Secretary
<FN>
(1) Mr. Etzweiler is not a Bank employee.
(2) Shares held jointly by Ms. Wetzel and her spouse. </FN>
</TABLE>
PRINCIPAL OFFICERS OF THE BANK
The following table sets forth selected information about the principal
officers of the Bank, each of whom is elected by the Board of Directors and each
of whom holds office at the discretion of the Board of Directors:
<TABLE>
<CAPTION>
Bank
Office and Position Held Employee
Name with the Bank Since Since
---- ------------- ----- -----
Eugene F. Shaffer Chairman of the 1976 1969
Board
Alan W. Dakey President and Chief 1994 1993
Executive Officer
Randall L. Klinger Senior Vice 1989 1974
President and 1986
Senior Loan
Officer
Norman L. Houser Senior Vice 1989 1984
President and
Business
Development
Officer
Dennis E. Spotts Vice President and 1980 1973
EDP Manager 1976
Larry L. Novinger Vice President and 1997 1985
Operations Officer 1986
Kevin W. Vice President and 1997 1985
Laudenslager Comptroller
- ------------------
<CAPTION>
Number
of Shares Age as of
Beneficially March 1,
Name Owned 1998
---- ----- ----
<S> <C> <C>
Eugene F. Shaffer 113,248 62
Alan W. Dakey 3,737 46
Randall L. Klinger 4 49
Norman L. Houser 2,268 (1) 58
Dennis E. Spotts 6,323 43
Larry L. Novinger 695 (1) 53
Kevin W. 1,180 34
Laudenslager
- ------------------
<FN>
(1) Shares held jointly with his spouse.
</FN>
</TABLE>
- 14 -
<PAGE>
LEGAL PROCEEDINGS
In the opinion of the management of the Corporation and of the Bank, there
are no proceedings pending to which the Corporation and the Bank are a party or
to which their property is subject, which, if determined adversely to the
Corporation and the Bank, would be material in relation to the Corporation's and
the Bank's undivided profits or financial condition. There are no proceedings
pending other than routine litigation incident to the business of the
Corporation and of the Bank. In addition, no material proceedings are pending or
are known to be threatened or contemplated against the Corporation and the Bank
by government authorities.
RATIFICATION OF INDEPENDENT AUDITORS
Parente, Randolph, Orlando, Carey & Associates, Certified Public
Accountants, of Wilkes- Barre, Pennsylvania, who served as the Corporation's
independent auditors for its 1997 fiscal year assisted the Corporation and the
Bank in the preparation of their federal and state tax returns, and provided
assistance in connection with regulatory matters, charging the Bank for such
services at its customary hourly billing rates. These non-audit services were
approved by the Corporation's and the Bank's Boards of Directors after due
consideration of the effect of the performance thereof on the independence of
the auditors. The Corporation has been advised by Parente, Randolph, Orlando,
Carey & Associates that none of its members has any financial interest in the
Corporation. A representative of Parente, Randolph, Orlando, Carey & Associates
will not be present at the Annual Meeting of Shareholders. Unless otherwise
instructed, the Proxyholders will vote the proxies received by them for
ratification of Parente, Randolph, Orlando, Carey & Associates as the
Corporation's auditors for the 1998 fiscal year. In the event that the
shareholders do not ratify the selection of Parente, Randolph, Orlando, Carey &
Associates as the Corporation's independent auditors for the 1998 fiscal year,
the selection of independent certified public accountants will be reconsidered
by the Board of Directors. The Board of Directors recommends that the
shareholders vote FOR the ratification of the selection of Parente, Randolph,
Orlando, Carey & Associates as the independent auditors for the Corporation for
the year ending December 31, 1998.
ANNUAL REPORT
A copy of the Corporation's Annual Report for its fiscal year ended
December 31, 1997, is enclosed with this Proxy Statement. A representative of
the Corporation will respond to any appropriate questions presented by
shareholders at the Annual Meeting.
SHAREHOLDER PROPOSALS
Any shareholder who, in accordance with and subject to the provisions of
the proxy rules of the Securities and Exchange Commission, wishes to submit a
proposal for inclusion in the Corporation's Proxy Statement for its 1998 Annual
Meeting of Shareholders must deliver such proposal in writing to the President
of Mid Penn Bancorp, Inc. at its principal executive offices, 349 Union Street,
Millersburg, Pennsylvania 17061, not later than Monday, November 30, 1998.
- 15 -
<PAGE>
OTHER MATTERS
The Board of Directors does not know of any matters to be presented for
consideration other than the matters described in the accompanying Notice of
Annual Meeting of Shareholders, but if any matters are properly presented, it is
the intention of the persons named in the accompanying Proxy to vote on such
matters in accordance with their best judgment.
ADDITIONAL INFORMATION
UPON WRITTEN REQUEST OF ANY SHAREHOLDER, A COPY OF THE CORPORATION'S REPORT
ON FORM 10-K FOR ITS FISCAL YEAR ENDED DECEMBER 31, 1997, INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, MAY BE OBTAINED, WITHOUT CHARGE, FROM EUGENE F. SHAFFER, PRESIDENT AND
CHIEF EXECUTIVE OFFICER, MID PENN BANCORP, INC., 349 UNION STREET, MILLERSBURG,
PENNSYLVANIA 17061.
- 16 -
<PAGE>
MID PENN BANCORP, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 28, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Roberta A. Hoffman, Randall
L. Klinger and Patricia A. Walter and each or any of them, proxies of the
undersigned, with full power of substitution, to vote all of the shares of Mid
Penn Bancorp, Inc. (the "Corporation") that the undersigned may be entitled to
vote at the Annual Meeting of Shareholders of the Corporation to be held at Mid
Penn Bank, 349 Union Street, Millersburg, Pennsylvania 17061 on Tuesday, April
28, 1998 at 10:00 a.m., prevailing time, and at any adjournment or postponement
thereof as follows:
1. ELECTION OF CLASS C DIRECTORS TO SERVE FOR A THREE-YEAR TERM
Earl R. Etzweiler, William G. Nelson
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all
as marked to the nominees listed
contrary below) above
(INSTRUCTION: TO WITHHOLD AUTHORITY FROM THE PROXYHOLDERS TO
VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME FOR
WHOM YOU DO NOT WISH THE PROXYHOLDERS TO VOTE FOR ON THE SPACE
PROVIDED BELOW.)
- -------------------------------------------------------------------------------
2. PROPOSAL TO RATIFY THE SELECTION OF PARENTE, RANDOLPH, ORLANDO, CAREY &
ASSOCIATES, CERTIFIED PUBLIC ACCOUNTANTS, OF WILKES-BARRE,
PENNSYLVANIA, AS THE INDEPENDENT AUDITORS FOR THE CORPORATION FOR THE
YEAR ENDING DECEMBER 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
- -------------------------------------------------------------------------------
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment or
postponement thereof.
<PAGE>
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL NOMINEES LISTED ABOVE AND FOR PROPOSAL 2.
Dated: ,1998
----------------------------
Signature(s) (Seal)
------------------------------
Signature(s) (Seal)
------------------------------
Number of Shares held of
Record on March 20, 1998
- ------------------------
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED PROMPTLY
TO THE CORPORATION IN THE ENCLOSED ENVELOPE. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE. IF MORE THAN ONE
TRUSTEE, ALL SHOULD SIGN. IF STOCK IS HELD JOINTLY, EACH OWNER SHOULD SIGN.
