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.
[ ] 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 26, 1999
Dear Shareholders:
It is my pleasure to invite you to attend the 1999 Annual Meeting of
Shareholders of Mid Penn Bancorp, Inc. to be held on Tuesday, April 27, 1999, 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 4 Class A Directors and the ratification of the
selection of the independent auditors for 1999. 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,
Eugene F. Shaffer
Chairman of the Board,
President and Chief Executive Officer
<PAGE>
--------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 27, 1999
--------------------------------
TO THE SHAREHOLDERS OF MID PENN BANCORP, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of Mid Penn
Bancorp, Inc. will be held at 10:00 a.m., prevailing time, on Tuesday, April 27,
1999, at Mid Penn Bank, 349 Union Street, Millersburg, Pennsylvania 17061, for
the following purposes:
1. To elect 4 Class A Directors to serve for a 3 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,
1999; and
3. To transact any other business that may properly come before the annual
meeting and any adjournment or postponement of the meeting.
In accordance with the Bylaws of the corporation and action of the Board of
Directors, only those shareholders of record at the close of business on March
19, 1999, will be entitled to notice of and to vote at the annual meeting and
any adjournment or postponement thereof.
We enclose a copy of the corporation's Annual Report to Shareholders for
the fiscal year ended December 31, 1998. You may obtain a copy of the
corporation's Annual Report to Shareholders for the 1997 fiscal year, 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>
We urge you to mark, sign, date and promptly return your proxy in the
enclosed envelope so that you may vote your shares and in order that we may
assure the presence of a quorum. 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,
Eugene F. Shaffer
Chairman of the Board,
President and Chief Executive Officer
March 26, 1999
Your vote is important.
To vote your shares, please sign, date and complete the enclosed proxy
and mail it promptly in the enclosed, postage-paid return envelope.
<PAGE>
MID PENN BANCORP, INC.
349 UNION STREET
MILLERSBURG, PA 17061
Trading Symbol: MBP
PROXY STATEMENT
1999 ANNUAL MEETING OF SHAREHOLDERS
To be held on April 27, 1999
Mailed to Shareholders on or about March 26, 1999
<PAGE>
FREQUENTLY ASKED QUESTIONS AND ANSWERS
Q: WHO IS ENTITLED TO VOTE?
A: Shareholders as of the close of business on March 19, 1999 (the Voting
Record Date) are entitled to vote and each share of common stock is
entitled to one vote.
Q: HOW DO I VOTE?
A: There are two methods. You may vote by completing and mailing your proxy or
by attending the meeting and voting in person. (See page 3 for more
details.)
Q: HOW DOES DISCRETIONARY AUTHORITY APPLY?
A: If you sign your proxy but do not make any selections, you give authority
to Roberta A. Hoffman, Randall L. Klinger and Patricia A. Walter, as proxy
holders, to vote on the two proposals and any other matter that may arise
at the meeting.
Q: IS MY VOTE CONFIDENTIAL?
A: Yes. Only the Judges of Elections and the proxy holders have access to your
proxy. All comments remain confidential unless you ask that your name be
disclosed.
Q: WHO WILL COUNT THE VOTES
A: Kathy I. Bordner, Kevin W. Laudenslager and Larry L. Novinger will tabulate
the votes and act as Judges of Elections.
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY ?
A: Your shares are probably registered differently or are in more than one
account. Sign and return all proxies to ensure that all your shares are
voted. Then, if you have all of your accounts registered in the same name
and address, you should receive one proxy in future years. You may arrange
to have your shares registered in the same name and address by contacting
Norwest Shareowner Services at (800) 468-9716.
Q: WHAT CONSTITUTES A QUORUM?
A: At March 19, 1999, the corporation had 2,892,930 shares of common stock
issued and outstanding. A majority of the outstanding shares, present or
represented by proxy, constitutes a quorum for the transaction of business
at the meeting. If you vote by proxy or in person, we consider your shares
as a part of the quorum.
<PAGE>
Q: WHAT PERCENTAGE OF STOCK DO THE DIRECTORS AND OFFICERS OWN?
A: Approximately 18.7% of our common stock, at February 19, 1999. (See page 16
for more details.)
Q: WHEN ARE THE 2000 SHAREHOLDER PROPOSALS DUE?
A: As a shareholder, you must submit your proposal in writing by November 30,
1999, to Cindy L. Wetzel, Secretary, Mid Penn Bancorp, Inc., 349 Union
Street, Millersburg, Pennsylvania 17061.
<PAGE>
Table of Contents
Proxy Statement Page
General Information............................... .....................1
Date, Time and Place of Annual Meeting........... ......................1
o Description of Mid Penn Bancorp, Inc.............................1
Voting Procedures.............................. .......................1
o Solicitation and Voting of Proxies..... .........................1
o Quorum and Vote Required for Approval. ..........................2
o Revocability of Proxy............................................3
o Methods of Voting................................................3
Board of Directors and Executive Officers....................................4
Governance..............................................................4
Directors of Mid Penn Bancorp, Inc ..................................4
Executive Officers of Mid Penn Bancorp, Inc .........................4
Executive Officers of Mid Penn Bank .................................5
Committees and Meetings of the Corporation's Board of Directors.........6
Committees and Meetings of the Board of Directors of Mid Penn Bank......6
Qualifications and Nomination of Directors..............................7
Compensation of the Board of Directors..................................9
Salary & Personnel Committee Report on Executive Compensation...............11
Chief Executive Officer Compensation...................................11
Executive Officers.....................................................12
Compensation of Officers and Directors.................................12
Profit Sharing Retirement Plan.........................................13
Employee Stock Ownership Plan..........................................14
Certain Relationships and Related Transactions.........................15
Beneficial Ownership of Mid Penn Bancorp's Stock Held by
Principal Shareholders and Management..................................15
Principal Shareholders.................................................15
Share Ownership by the Directors, Officers and Nominees................16
Compliance With Section 16(a) Reporting ...............................17
Shareholder Return Performance Graph........................................18
Proposals...................................................................19
Election of Class A Directors..........................................19
Ratification of Selection of Independent Auditors......................19
Compensation Committee Interlocks And Insider Participation.................20
Shareholder Proposals for 2000 Annual Meeting...............................20
Other Matters That May Come Before the Annual Meeting.......................20
<PAGE>
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
MID PENN BANCORP, INC.
TO BE HELD ON APRIL 27, 1999
GENERAL INFORMATION
Date, Time and Place of Annual Meeting
Mid Penn Bancorp, Inc., a Pennsylvania business corporation and registered
bank holding company, furnishes this proxy statement in connection with the
Board of Directors solicitation of proxies to be voted at the Annual Meeting of
Shareholders. The annual meeting will be held at Mid Penn Bank, 349 Union
Street, Millersburg, Pennsylvania 17061, on Tuesday, April 27, 1999, at 10:00
a.m. The corporation's principal executive office is located at 349 Union
Street, Millersburg, Pennsylvania 17061; the telephone number is (717) 692-2133.
All inquiries should be directed to Eugene F. Shaffer, Chairman of the Board,
President and Chief Executive Officer of Mid Penn Bancorp, Inc.
Description of Mid Penn Bancorp, Inc.
Mid Penn Bancorp, Inc., 349 Union Street, Millersburg, Pennsylvania 17061,
became a bank holding company under Pennsylvania law, on December 31, 1991. Mid
Penn Bank is a wholly-owned subsidiary Pennsylvania chartered commercial bank.
We are mailing a copy of the corporation's Annual Report to Shareholders
for the fiscal year ended December 31, 1998, with this proxy statement. You may
obtain a copy of the corporation's Annual Report to Shareholders for the 1997
fiscal year 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.
We have not authorized anyone to provide you with information on the
corporation. You should rely only on the information contained in this document
or on information to which we refer. Although we believe we have provided you
with all the information you need to vote, events may occur at Mid Penn Bancorp,
Inc. subsequent to printing this proxy statement that might affect your decision
or the value of your stock.
VOTING PROCEDURES
Solicitation and Voting of Proxies
The Board of Directors solicits this proxy for use at the corporation's
1999 Annual Meeting of Shareholders. The corporation's directors, officers and
other employees may solicit proxies in person or by telephone, facsimile,
telegraph or mail, but only for use at the annual
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<PAGE>
meeting. Mid Penn will pay the cost of preparing, assembling, printing, mailing
and soliciting proxies and any additional material that the corporation sends to
shareholders. Mid Penn will make arrangements with brokerage houses and other
custodians, nominees, and fiduciaries to forward proxy solicitation materials to
the owners of stock held by these persons. Mid Penn will reimburse these persons
for their reasonable forwarding expenses.
Only shareholders of record as of the close of business on March 19, 1999
may vote at the annual meeting. Mid Penn records show that, as of the voting
record date, 2,892,930 shares of common stock were outstanding. On all matters
to come before the annual meeting, shareholders may cast one vote for each share
held. Cumulative voting rights do not exist with respect to the election of
directors. See "Principal Shareholders" on page 15 for a list of the persons
known by the corporation to be beneficial owners of 5% or more of Mid Penn
common stock.
By properly completing a proxy, a shareholder appoints Roberta A. Hoffman,
Randall L. Klinger and Patricia A. Walter as proxy holders to vote shares as
specified on the proxy. Proxy holders will vote any proxy not specifying to the
contrary as follows:
FOR the election of Gregory M. Kerwin, Warren A. Miller, Edwin D. Schlegel
and Eugene F. Shaffer as Class A directors for 3 year terms expiring in
2002; and
FOR the ratification of the selection of Parente, Randolph, Orlando, Carey
& Associates, as the corporation's independent auditors for 1999.
The Board of Directors proposes to mail this proxy statement to the
shareholders on or about March 26, 1999.
Quorum and Vote Required For Approval
In order to hold the annual meeting, a "quorum" of shareholders must be
present. Under Pennsylvania law and the corporation's Bylaws, the presence, in
person or by proxy, of the holders of a majority of the shares entitled to vote
is necessary to constitute a quorum for the transaction of business at the
meeting. The proxy holders will count votes withheld and abstentions when
determining the presence of a quorum for the particular matter. The proxy
holders will not count broker non-votes when determining the presence of a
quorum for the particular matter as to which the broker withheld authority.
Assuming the presence of a quorum, the candidates for director receiving
the highest number of votes cast by shareholders will be elected. The proxy
holders will not cast votes withheld or broker non-votes for the Board's
nominees.
Assuming the presence of a quorum, ratification of the selection of
independent auditors requires the affirmative vote of a majority of all votes
cast by shareholders. Abstentions and
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broker non-votes are not deemed to constitute "votes cast" and, therefore, do
not count either for or against ratification. Abstentions and broker non-votes,
however, have the practical effect of reducing the number of affirmative votes
required to achieve a majority for the matter by reducing the total number of
shares voted from which the required majority is calculated.
Revocability of Proxy
Shareholders who sign proxies may revoke them at any time before they are
voted by:
o giving written notice of revocation to Cindy L. Wetzel, Secretary of
Mid Penn Bancorp, Inc., at 349 Union Street, Millersburg, Pennsylvania
17061;
o executing a later-dated proxy and giving written notice thereof to the
Secretary of the corporation; or
o voting in person after giving written notice to the Secretary of the
corporation.
You have the right to vote and, if desired, to revoke your proxy any time
before the annual meeting. Should you have any questions, please call Cindy L.
Wetzel, at (717) 692-2133.
Methods of Voting
Voting by Proxy
o Mark your selections.
o Date your proxy and sign your name exactly as it appears on your
proxy.
o Mail to the corporation in the enclosed, postage-paid envelope.
Voting in Person
o Attend the annual meeting.
o Obtain a proxy.
o Mark your selections.
o Date your proxy and sign your name exactly as it appears in Mid Penn's
transfer books.
3
<PAGE>
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Governance
Mid Penn's Board of Directors oversees all business, property, and affairs
of the corporation. The Chairman and the corporation's officers keep the members
of the Board informed of Mid Penn's business through discussions and by
providing materials to the members. The members also keep themselves informed by
attending Board meetings.
During fiscal 1998, the Board of Directors of the corporation held 6
meetings. The Board of Directors of the Bank held 14 meetings during fiscal
1998.
Directors of Mid Penn Bancorp, Inc.
The following table sets forth selected information about Mid Penn's
directors.
<TABLE>
<CAPTION>
Director Class of Age as of
Name Since Director March 31, 1999
- ---- ----- -------- --------------
<S> <C> <C> <C>
Jere M. Coxon 1991 B 56
Alan W. Dakey 1995 B 47
Earl R. Etzweiler 1991 C 65
Gregory M. Kerwin 1999 A 48
Charles F. Lebo 1991 B 65
Warren A. Miller 1991 A 66
William G. Nelson 1991 C 63
Donald E. Sauve 1999 C 57
Edwin D. Schlegel 1991 A 61
Eugene F. Shaffer 1991 A 63
Guy J. Snyder, Jr. 1991 B 61
</TABLE>
Executive Officers of Mid Penn Bancorp, Inc.
The following table sets forth selected information about Mid Penn's
principal officers, each of whom is elected by the Board of Directors and each
of whom holds office at the discretion of the Board of Directors.
4
<PAGE>
<TABLE>
<CAPTION>
Position Held
Name Position Since
- ---- -------- -----
<S> <C> <C>
Eugene F. Shaffer Chairman 1991
President &
Chief Executive Officer
Alan W. Dakey Executive Vice President & 1995
Chief Operating Officer
Earl R. Etzweiler Vice Chairman 1991
Kevin W. Laudenslager Treasurer 1998
Cindy L. Wetzel Secretary 1991
<CAPTION>
Age as of
Name March 31, 1999
- ---- --------------
<S> <C>
Eugene F. Shaffer 63
Alan W. Dakey 47
Earl R. Etzweiler 65
Kevin W. Laudenslager 35
Cindy L. Wetzel 37
</TABLE>
Executive Officers of Mid Penn Bank
The following table sets forth selected information about the principal
officers of Mid Penn 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>
Position Held
Name Position Since
- ---- -------- -----
<S> <C> <C>
Eugene F. Shaffer Chairman of the Board 1976
Alan W. Dakey President and Chief 1994
Executive Officer
Robert M. Garst Senior Vice President 1998
and Senior Commercial
Loan Officer
Randall L. Klinger Senior Vice President 1989
and Senior Loan Officer 1986
Norman L. Houser Senior Vice President 1989
and Business
Development Officer
Allen J. Trawitz Executive Vice 1998
President
Dennis E. Spotts Vice President and 1980
EDP Manager 1976
Larry L. Novinger Vice President and 1997
Operations Officer 1986
Kevin W. Laudenslager Vice President and 1997
Comptroller
<CAPTION>
Employee Age as of
Name Since March 31, 1999
- ---- ----- --------------
<S> <C> <C>
Eugene F. Shaffer 1969 63
Alan W. Dakey 1993 47
Robert M. Garst 1998 41
Randall L. Klinger 1974 50
Norman L. Houser 1984 60
Allen J. Trawitz 1998 52
Dennis E. Spotts 1973 45
Larry L. Novinger 1985 55
Kevin W. Laudenslager 1985 35
</TABLE>
5
<PAGE>
Committees and Meetings of the Corporation's Board of Directors
The Board of Directors of Mid Penn Bancorp, Inc. does not have committees.
The entire Board meets to discuss Mid Penn's business.
Committees and Meetings of the Board of Directors of Mid Penn Bank
During 1998, Mid Penn Bank's Board of Directors maintained 5 standing
committees: Executive, Trust, Audit, Loan and Salary & Personnel. The function
of each of these committees is described below.
EXECUTIVE: Acts with limited powers on behalf of the Board whenever the
Board is not in session. Meets only as needed.
TRUST: 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.
AUDIT: At least once a year, completes a review of the audit of the books
and affairs of Mid Penn Bank, including the Trust Department, made by
certified public accountants; upon completion of the audit, reviews the
report and makes recommendations to the Board of Directors at its next
regular meeting.
LOAN: Determines if loans over the lending limit of the loan officers
should be approved or rejected.
SALARY & PERSONNEL: Reviews employee performance evaluations and makes
salary recommendations to the Board of Directors.
<TABLE>
<CAPTION>
Salary &
Executive Trust Audit Loan Personnel
<S> <C> <C> <C> <C> <C>
Jere M. Coxon X X X
Alan W. Dakey X X X X
Earl R. Etzweiler X X
Gregory M. Kerwin X
Charles F. Lebo X X X
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<PAGE>
Salary &
Executive Trust Audit Loan Personnel
Warren A. Miller X
William G. Nelson X X X X
Donald E. Sauve X
Edwin D. Schlegel X X
Eugene F. Shaffer X X X X
Guy J. Snyder, Jr. X X X
Meetings Held in 1998 0 12 4 23 2
</TABLE>
Qualifications and Nomination of Directors
The Corporation's Bylaws authorize the number of directors to be not less
than 5 nor more than 25. The Bylaws also provide for 3 classes of directors with
staggered 3 year terms of office. The Board of Directors nominated the 4 persons
named below to serve as directors until the 2002 Annual Meeting of Shareholders
or until their earlier death, resignation, or removal from office. The nominees
are presently members of the Board of Directors and have consented to serve
another term as a director if re-elected. If the nominees should be unavailable
to serve for any reason, a majority of the Board of Directors then in office may
select someone to fill the vacancy until the expiration of the term of the class
of directors to which he is appointed.
The Board of Directors is divided into 3 classes. Terms of the members of
each class expire at successive annual meetings. Currently, Class A consists of
4 directors, Class B consists of 4 directors, and Class C consists of 3
directors. Shareholders will elect 4 Class A directors at this annual meeting to
serve for a 3 year term.
The proxy holders intend to vote proxies for the election of each of the 4
nominees named below, unless you indicate that your vote should be withheld from
any or all of them. Each nominee elected as a director will continue in office
until his successor has been duly elected and qualified, or until his death,
resignation or retirement.
The Board of Directors is proposing the following nominees for election as
Class A Directors at the annual meeting:
o Gregory M. Kerwin
o Warren A. Miller
o Edwin D. Schlegel
o Eugene F. Shaffer
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The principal occupation and certain other information regarding the
nominees and other directors is set forth below. You will find information about
the share ownership of the nominees and other directors on page 15.
Current Class A Directors (to serve until 1999)
and
Nominees for Class A Directors (to serve until 2002)
Gregory M. Kerwin Mr. Kerwin, age 48, has been a director since 1999. Mr.
Kerwin is a senior partner with the firm of Kerwin & Kerwin, Attorneys at
Law.
Warren A. Miller Mr. Miller, age 66, has been a director since 1991. Mr.
Miller is retired and previously served as Assistant Vice President of Mid
Penn Bank.
Edwin D. Schlegel Mr. Schlegel, age 61, has been a director since 1991. Mr.
Schlegel is retired and previously served as Superintendent of the
Millersburg Area School District.
Eugene F. Shaffer Mr. Shaffer, age 63, has been Chairman, President and
Chief Executive Officer of the corporation since 1991 and Chairman of the
bank since 1976.
Board of Directors - Continuing as Directors
Class B Directors (to serve until 2000)
Jere M. Coxon Mr. Coxon, age 56, has been a director since 1991. He is
Executive Vice President of Penn Wood Products, Inc.
Alan W. Dakey Mr. Dakey, age 47, has been a director since 1995. He also
serves as Executive Vice President and Chief Operating Officer of the
corporation and President and Chief Executive Officer of the bank.
8
<PAGE>
Charles F. Lebo Mr. Lebo, age 65, has been a director since 1991. He is a
retired educator of the Pennsylvania Department of Education.
Guy J. Snyder, Jr. Mr. Snyder, age 61, has been a director since 1991. He
is President of Snyder Fuels, Inc.
Class C Directors (to serve until 2001)
Earl R. Etzweiler Mr. Etzweiler, age 65, has served as director and Vice
Chairman since 1991. He is the owner of Etzweiler & Associates, Attorneys
at Law.
William G. Nelson Mr. Nelson, age 63, has been a director since 1991. He is
President of Hess Trucking Co., Inc.
Donald E. Sauve Mr. Sauve, age 57, has been a director since 1999. He is a
Consultant for Don's Food Market, Inc.
The Board of Directors recommends that shareholders vote FOR the proposal
to elect the nominees listed above as Class A directors of Mid Penn Bancorp,
Inc.
Compensation of the Board of Directors
During 1998, the directors of Mid Penn Bank received an annual fee of
$7,000, except Mr. Shaffer, who received no fees in 1998, and Messrs. Kerwin and
Sauve, who each received $3,500 in 1998, because they joined the Board of
Directors in July. 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 $80 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 1998, Attorney Etzweiler also received fees of $28,975 for legal
services rendered. In 1998, the Board of Directors received $106,285 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 of Mid Penn Bank adopted a
retirement bonus plan. The plan pays 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
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plan is assignable. The plan contains an inflationary adjustment provision.
Payments due under the plan are paid quarterly. Bruce C. Adams, Harvey J. Hummel
and Charles R. Phillips received a total of $8,163 under this plan in 1998.
Each of the directors attended at least 75% of the total number of Board of
Directors meetings and committee meetings for the corporation and the bank
during their tenure on the Board in 1998. Messrs. Gregory M. Kerwin and Donald
E. Sauve were appointed to the bank's Board in July 1998 and to the
corporation's Board in February 1999, and attended every meeting since their
appointment.
10
<PAGE>
SALARY & PERSONNEL COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
Mid Penn Bank, the wholly-owned bank subsidiary of Mid Penn Bancorp, Inc.,
provides compensation to the employees of the bank and the corporation. 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 employees based on the individual's contribution
and personal performance. The compensation program is administered by the Salary
& 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.
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 uses 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 to
be applicable to the corporation at this time. The committee intends to monitor
the future application of 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 bank's Chief Executive Officer's 1998
compensation of $143,106 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 1998 performance. The 1998 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.
11
<PAGE>
Executive Officers
The committee bases compensation increases to executive officers on
subjective analysis of each individual's contribution to the corporation. The
Board of Directors considers numerous factors in determining compensation
increases including:
o the corporation's earnings;
o return on assets;
o return on equity;
o market share;
o total assets; and
o 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 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
Gregory M. Kerwin William G. Nelson
Eugene F. Shaffer Guy J. Snyder, Jr.
Compensation of Officers and Directors
We show information below concerning the annual compensation for services
in all capacities to the corporation for the fiscal years ended December 31,
1998, 1997 and 1996 of those persons who were, at December 31, 1998:
o the Chief Executive Officer; and
o the four other most highly compensated executive officers of the
corporation to the extent these persons' total annual salary and bonus
exceeded $100,000.
12
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
(a) (b) (c) (d) (e)
- --------------------- --------- ----------- ---------- -------------
Other
Annual
Compen-
Name and Salary Bonus sation
Principal Position Year ($)(1) ($)(2) ($)
<S> <C> <C> <C> <C>
Eugene F. Shaffer 1998 10,000 4,167 --
Chairman, 1997 132,000 31,113 --
President and 1996 56,800 8,384 --
Chief Executive
Officer
- --------------------- --------- -------- ---------- -------------
Alan W. Dakey, 1998 113,000 38,261 --
Executive Vice 1997 108,000 36,965 --
President and 1996 101,800 22,734 --
Chief Operating
Officer
- --------------------- --------- -------- ---------- -------------
<CAPTION>
Long-Term Compensation
Awards Payout
(a) (f) (g) (h) (i)
- --------------------- ---------------- ------------ ----------- ------------
Restricted All other
Stock Options/ Compen
Name and Awards SARs Payouts sation
Principal Position ($) (#) ($) ($)(3)(4)(5)
<S> <C> <C> <C> <C>
Eugene F. Shaffer -- -- -- 5,029
Chairman, -- -- -- 25,026
President and -- -- -- 13,423
Chief Executive
Officer
- --------------------- ---------------- ------------ ----------- ------------
Alan W. Dakey, -- -- -- 16,997
Executive Vice -- -- -- 16,202
President and -- -- -- 14,929
Chief Operating
Officer
- --------------------- ---------------- ------------ ----------- ------------
<FN>
(1) Salary includes annual Board of Directors fees of $7,000 paid to Mr. Dakey
in 1998 and $7,000 paid to Messrs. Shaffer and Dakey in 1997 and $6,800,
paid to Messrs. Shaffer and Dakey in 1996.
(2) Mr. Shaffer's bonus includes a Directors bonus paid to Mr. Shaffer in 1998,
1997 and 1996 of $105, $1,738, and $884, respectively. Mr. Dakey's bonus
includes a Directors bonus paid to Mr. Dakey in 1998, 1997 and 1996 of
$1,155, $1,738, and $884, respectively.
(3) Includes life insurance premiums of $584, $1,566, and $1,541, paid by the
Bank in 1998, 1997 and 1996, respectively, on behalf of Mr. Shaffer
pursuant to life insurance maintained for executive officers. Includes
premiums paid by the Bank in 1998, 1997 and 1996 for split dollar life
insurance of $2,945, $4,710, and $4,383, respectively, on behalf of Mr.
Shaffer. The Bank can recover the premium costs upon the death of Mr.
Shaffer. Includes life insurance premiums of $1,097, $1,052 and $679, paid
by the Bank in 1998, 1997 and 1996, respectively, on behalf of Mr. Dakey
pursuant to life insurance maintained for executive officers.
(4) Includes $1,000, $18,750, and $7,500, contributed by the Bank to the Profit
Sharing Retirement Plan on behalf of Mr. Shaffer in 1998, 1997 and 1996,
respectively. Includes $10,600, $15,150 and $14,250, contributed by the
Bank to the Profit Sharing Retirement Plan on behalf of Mr. Dakey in 1998,
1997 and 1996, respectively.
(5) Includes $500 contributed by the Bank to the ESOP on behalf of Mr. Shaffer
in 1998. Includes $5,300 contributed by the Bank to the ESOP on behalf of
Mr. Dakey in 1998.
</FN>
</TABLE>
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
1994, which covers all bank employees who accumulate at least 1,000 hours of
service in a 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 they accumulate at least 1,000 hours of service during the plan year and are
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
13
<PAGE>
contribution not to exceed 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 10% or less than 3% of
their eligible compensation. The contributions to the plan are 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.
Distributions 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
20% for the first full 3 years of service increasing annually thereafter to 100%
vesting after 7 full years of participation. The plan provides for an
accelerated vesting schedule in the event it becomes top-heavy.
The corporation cannot 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, 1998, the total market value of the Employee Profit Sharing
Retirement Fund was approximately $3,588,878. There are 28,507 shares of Mid
Penn Bancorp, Inc. common stock in the plan and the market value of these shares
was $24.50 per share for a total of $698,421.
Contributions paid to the plan by the bank were $174,010 and $258,462 for
1998 and 1997. The bank contributed $1,000 in 1998 to the plan for Mr. Shaffer,
Chairman of the Board, President and Chief Executive Officer of the corporation.
The bank contributed $10,600 in 1998 to the plan for Mr. Dakey, Executive Vice
President of the corporation. As of March 1, 1999, Mr. Shaffer and Mr. Dakey
have 29 years and 5 years, respectively, of credited service under the plan.
Employee Stock Ownership Plan
Effective January 1, 1998, the Board of Directors adopted the Mid Penn Bank
Employee Stock Ownership Plan for all employees of the bank and its subsidiaries
who satisfy length of service requirements. Participants do not contribute to
the plan. Each year the bank may, in its discretion, contribute to the ESOP. In
1998, the bank contributed $87,005 to the plan.
14
<PAGE>
Certain Relationships and Related Transactions
Neither the corporation nor the bank have entered into any material
transactions, proposed or consummated, with any director or executive officer of
Mid Penn Bancorp, Inc. or Mid Penn Bank, or any associate of the foregoing
persons. The corporation and the bank have engaged in and intend to continue to
engage in banking and financial transactions in the ordinary course of business
with directors and officers and their associates on comparable terms with
similar interest rates as those prevailing from time to time for other
customers.
Total loans outstanding from the corporation and the bank at February 16,
1999, to Mid Penn Bancorp, Inc.'s officers and directors as a group, members of
their immediate families and companies in which they had an ownership interest
of 10% or more amounted to $1,510,678, or approximately 5.70% of the total
equity capital of the bank. The Bank made these loans in the ordinary course of
business, on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and did not involve more than the normal risk of collection or
present other unfavorable features.
During 1998, Mr. Earl R. Etzweiler, Esquire, a Director of the corporation
and the bank, served as solicitor of the corporation and of the Bank. During
1998, Mr. Etzweiler received fees of $28,975 from the bank for legal services
rendered.
BENEFICIAL OWNERSHIP OF
MID PENN BANCORP'S STOCK HELD BY
PRINCIPAL SHAREHOLDERS AND MANAGEMENT
Principal Shareholders
The following table sets forth, as of February 19, 1999, the name and
address of each person who owns of record or who is known by the Board of
Directors to be the beneficial owner of more than 5% of the corporation's
outstanding common stock, the number of shares beneficially owned by the person,
and the percentage of the corporation's outstanding common stock so owned.
<TABLE>
<CAPTION>
Title of Class Name and Residential Amount and Nature of
of Security Address of Beneficial Beneficial Ownership Percent of Class
Owner
<S> <C> <C> <C>
Common Stock CEDE & Co 332,349 shares 11.5%
P.O. Box 222
Bowling Green Station
New York, NY 10274
15
<PAGE>
Title of Class Name and Residential Amount and Nature of
of Security Address of Beneficial Beneficial Ownership Percent of Class
Owner
Common Stock NEBCO (1) 324,076 shares 11.2%
c/o Mid Penn Bank
349 Union Street
Millersburg, PA 17061
<FN>
(1) Shares held for various trust accounts.
</FN>
</TABLE>
Share Ownership by the Directors, Officers and Nominees
The following table sets forth, as of February 19, 1999, and from
information received from the respective individuals, the amount and percentage
of the common stock beneficially owned by each director, executive officer and
all officers and directors of Mid Penn Bancorp, Inc. as a group, excluding any
fractional share holdings. The shares are individually held unless otherwise
noted in a footnote.
<TABLE>
<CAPTION>
Amount and
Nature of
Name of Beneficial Percent
Beneficial Owner Ownership (1) of Class
- ---------------- --------- --------
<S> <C> <C>
Jere M. Coxon 33,452 1.16%
Alan W. Dakey 5,266(2) 0.18%
Earl R. Etzweiler 105,472 3.65%
Gregory M. Kerwin 13,101(3) 0.45%
Charles F. Lebo 31,083(4) 1.07%
Warren A. Miller 21,226(5) 0.73%
William G. Nelson 60,948(6) 2.11%
Donald E. Sauve 1,648(7) 0.06%
Edwin D. Schlegel 66,171(8) 2.29%
Eugene F. Shaffer 119,849(9) 4.14%
Guy J. Snyder, Jr. 80,772(10) 2.79%
All Officers and Directors 541,278 18.71%
as a Group (13 persons)
<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, 1999. Beneficial ownership may be disclaimed as to certain of the
securities.
(2) Includes 4,666 shares held jointly by Mr. Dakey and his spouse.
16
<PAGE>
(3) Shares held jointly by Mr. Kerwin and his spouse.
(4) Includes 10,155 shares held jointly by Mr. Lebo and his spouse.
(5) Shares held jointly by Mr. Miller and his spouse.
(6) Includes 8,448 shares held by Mr. Nelson's spouse.
(7)Shares held jointly by Mr. Sauve and his spouse.
(8) Shares held jointly by Mr. Schlegel and his spouse.
(9) Includes 6,031 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 44,888 shares.
(10) Includes 41,807 shares held jointly by Mr. Snyder and his spouse and 38,964
shares held individually by his spouse.
</FN>
</TABLE>
Compliance With Section 16(a) Reporting
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that officers and directors, and persons who own more than 10% of a registered
class of Mid Penn's equity securities, file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors, and
greater than 10% shareholders are required by SEC regulation to furnish the
corporation with copies of all Section 16(a) forms they file.
Based solely on our review of the copies of these forms, or written
representations from certain reporting persons that no Forms 5 were required for
those persons, Mid Penn Bancorp, Inc. believes that during the period from
January 1, 1998, through December 31, 1998, its officers and directors complied
with all applicable filing requirements, except that Messrs. Dakey and Trawitz
each individually filed one late report for one transaction.
17
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
A line graph is set forth below. The line graph compares 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, 1994,
and ending December 31, 1998. The shareholder return shown on the graph below is
not necessarily indicative of future performance.
<TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN (1)
<CAPTION>
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Peer Group Total 100 1199.16 1383.18 1714.51 2362.12 2889.1
Peer Group Index 100.00 119.92 138.32 11.45 236.21 288.91
Mid Penn
Bancorp, Inc. 100.00 123.34 139.56 142.65 297.98 248.68
S&P 500
Total Return 100.00 99.26 139.31 171.21 228.26 293.36
S&P 500
Total Return Index 100.00 99.26 139.31 171.21 228.26 293.36
<FN>
(1) The Peer Group for which information appears above includes the following
companies: CNB Financial Corporation; Citizens & Northern Corporation;
Citizens Financial Services, Inc.; Codorus Valley Bancorp, Inc.; Columbia
Financial Corporation; Comm. Bancorp, Inc.; Norwood Financial Corporation;
Penesco Financial Services, Corp.; 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.
</FN>
</TABLE>
18
<PAGE>
PROPOSALS
ELECTION OF CLASS A DIRECTORS.
Nominees for election this year are:
o Gregory M. Kerwin (director since 1999)
o Warren A. Miller (director since 1991)
o Edwin D. Schlegel (director since 1991)
o Eugene F. Shaffer (director since 1991)
The Board of Directors recommends a vote FOR the election of the 4 nominees
as Class A Directors.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS.
The Board of Directors of the corporation believes that Parente, Randolph's
knowledge of Mid Penn Bancorp, Inc. and Mid Penn Bank is invaluable. Parente,
Randolph advised us that none of its members has any financial interest in the
corporation or the bank. Parente, Randolph has served as our independent
auditors for the 1998 fiscal year. They assisted us with the preparation of our
federal and state tax returns and provided assistance in connection with
regulatory matters, charging for such services at its customary hourly billing
rates. The corporation's and the bank's Board of Directors approved these
non-audit services after due consideration of the accountants' objectivity and
after finding them to be wholly independent.
In the event that the shareholders do not ratify the selection of Parente,
Randolph as independent auditors for the 1999 fiscal year, the Board of
Directors may choose another accounting firm to provide independent public
accountant/audit services for the 1999 fiscal year.
The majority of shares present, in person or by proxy, and entitled to vote
at the annual meeting, must vote in the affirmative to ratify Parente, Randolph
as independent auditors for 1999.
The Board of Directors recommends a vote FOR the ratification of Parente,
Randolph, Orlando, Carey & Associates as independent auditors.
19
<PAGE>
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 Board's Salary & Personnel Committee that
performs the functions of a compensation committee. Messrs. Shaffer and Dakey do
not participate in conducting their own reviews nor do they take part in
determining their own compensation.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any shareholder who, in accordance with the corporation's Bylaws, wishes to
submit a proposal for inclusion in the proxy statement for the 2000 Annual
Meeting of Shareholders must deliver their proposal in writing to the Secretary
of Mid Penn Bancorp, Inc. at its principal executive office, 349 Union Street,
Millersburg, Pennsylvania 17061, not later than Tuesday, November 30, 1999.
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors knows of no matters other than those referred to in
the accompanying Notice of Annual Meeting of Shareholders that properly may come
before the annual meeting. However, if any other matter should be properly
presented for consideration and voting at the annual meeting or any adjournments
of the meeting, the persons named as proxy holders will vote the proxies in what
they determine to be the best interest of Mid Penn Bancorp, Inc.
20
<PAGE>
MID PENN BANCORP, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 27, 1999
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. that the undersigned may be entitled to vote at the Annual
Meeting of Shareholders to be held at Mid Penn Bank, 349 Union Street,
Millersburg, Pennsylvania 17061, on Tuesday, April 27, 1999 at 10:00 a.m.,
E.S.T., and at any adjournment or postponement thereof as follows:
1. ELECTION OF CLASS A DIRECTORS TO SERVE FOR A 3-YEAR TERM.
Gregory M. Kerwin, Warren A. Miller, Edwin D. Schlegel and Eugene F.
Shaffer
The Board of Directors recommends a vote FOR these nominees.
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all nominees
as marked to the contrary below) listed above
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW)
- -------------------------------------------------------------------------------
2. RATIFICATION OF THE SELECTION OF PARENTE, RANDOLPH, ORLANDO, CAREY &
ASSOCIATES, CERTIFIED PUBLIC ACCOUNTANTS, OF WILKES-BARRE, PENNSYLVANIA, AS
THE INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
- -------------------------------------------------------------------------------
3. In their discretion, the proxy holders 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 AND DATED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED SHAREHOLDERS. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES LISTED ABOVE AND FOR PROPOSAL 2.
Dated: ______________________, 1999 ___________________________
Signature
___________________________
Signature
Number of Shares Held of Record
on March 19, 1999
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED PROMPTLY TO MID
PENN BANCORP, INC. 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.
