SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
CNB FINANCIAL CORP.
- --------------------------------------------------------------------------------
(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 fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------
3) Filing Party:
-------------------------------------------------------
4) Date Filed:
-------------------------------------------------------
<PAGE>
CNB FINANCIAL CORP.
24 Church Street
Canajoharie, New York 13317
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
- --------------------------------------------------------------------------------
April 14, 1997
TO THE SHAREHOLDERS OF CNB FINANCIAL CORP.
NOTICE IS HEREBY GIVEN that the ANNUAL MEETING OF SHAREHOLDERS of CNB
FINANCIAL CORP., the parent company of Central National Bank, Canajoharie, will
be held at the FORT RENSSELAER CLUB, Moyer Street, Canajoharie, New York, on May
15, 1997 at 9:30 A.M. for the purpose of considering and voting on the following
matters:
1. The election of three directors for a term of three years or until
their successors have been elected.
2. The approval of an amendment to the Certificate of Incorporation of
the Company to increase the number of authorized shares of Common
Stock from 5,000,000 to 10,000,000.
3. The transaction of any other business which may be properly brought
before the meeting or any adjournment thereof.
Only those shareholders of record at the close of business on March 31,
1997 shall be entitled to notice of the meeting and to vote at the meeting.
By Order of the Board of Directors,
Lawrence G. Knudsen
Secretary
YOUR VOTE IS IMPORTANT. YOU ARE THEREFORE REQUESTED TO SIGN AND RETURN THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE, EVEN IF YOU EXPECT TO BE PRESENT AT
THE MEETING. YOU MAY WITHDRAW YOUR PROXY AT ANY TIME PRIOR TO THE MEETING, OR IF
YOU DO ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY AT THAT TIME AND VOTE IN
PERSON IF YOU WISH.
<PAGE>
CNB FINANCIAL CORP.
24 Church Street
Canajoharie, New York 13317
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 15, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of CNB Financial Corp. (the "Company"), the
holding company for Central National Bank, Canajoharie (the "Bank") and Central
Asset Management, Inc., for use at the Annual Meeting of Shareholders of the
Company (the "Meeting") to be held on May 15, 1997 and at any and all
adjournments thereof, for the purposes stated in the accompanying notice of the
meeting. This Proxy Statement, together with the enclosed proxy, is first being
mailed to shareholders on or about April 14, 1997.
At the Meeting, the Shareholders will be asked to vote for the election of
directors. Three of the directors who serve on the Company's classified Board of
Directors will stand for re-election to the Board at the Meeting. In addition,
the Shareholders will be asked to approve an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 5,000,000 to 10,000,000. Voting will also be conducted on any
other matters which are properly brought before the Meeting.
VOTING RIGHTS AND PROXIES
Shareholders of record at the close of business on March 31, 1997 (the
"Record Date") will be entitled to notice of and to vote at the Meeting. On the
Record Date, there were 3,870,929 shares of Common Stock issued and outstanding,
and the Company had no other class of equity securities outstanding. Each share
of Common Stock is entitled to one vote, except that in the election of
directors, the Common Stock has cumulative voting rights permitting each
shareholder to vote the number of shares held multiplied by the number of
directors to be elected, distributing his or her votes among as many candidates
as he or she may wish. A majority of the outstanding shares of the Company,
represented in person or by proxy, shall constitute a quorum at the Meeting.
The proxy provided with this Proxy Statement grants the proxy agent
discretionary authority to exercise the cumulative voting rights of the
shareholder if no specific instructions are given by the shareholder. The proxy
may be revoked by a later dated proxy or by written notification delivered to
Lawrence G. Knudsen, Secretary of the Company, at the above address at any time
prior to the Meeting. If you attend the Meeting, you may withdraw your proxy and
vote by ballot. If not revoked, all properly executed proxies will be voted as
directed.
The solicitation of proxies shall be made through mailings, but proxies may
also be solicited by telephone communications and in person by directors,
officers, and other regular employees of the Company or of the Bank. The cost of
solicitation of proxies will be borne by the Company. The Company will reimburse
brokerage firms and other custodians, nominees and fiduciaries for reasonable
expenses incurred by them in sending the proxy materials to the beneficial
owners of the Common Stock.
The Annual Report of the Bank for the fiscal year ended December 31, 1996
is being sent to shareholders with this Proxy Statement. Copies of the Annual
Report will be distributed without charge to any shareholder upon written
request of such person addressed to Mr. Lawrence G. Knudsen, Secretary, CNB
Financial Corp., 24 Church Street, Canajoharie, New York 13317.
NOTE REGARDING STOCK SPLIT
On January 15, 1997, the Company effectuated a three-for-two split of its
common stock. All share ownership data in this Proxy Statement reflects
post-split information, and information regarding grants and awards has been
adjusted to reflect post-split equivalent capitalization.
<PAGE>
ITEM 1: ELECTION OF DIRECTORS AND INFORMATION WITH RESPECT TO DIRECTORS AND
EXECUTIVE OFFICERS
The Board of Directors is divided into three classes as nearly equal in
number as possible. The members of each class are elected for a term of three
years or until their successors are elected and qualified. One class of
directors is elected annually. In accordance with the Company's Bylaws, the
Board size has been set at eight, effective as of the date of the Meeting. All
of the three nominees standing for election at the Meeting are presently
directors of the Company. D. Theodore Robinson, who is presently a director of
the Company, is retiring from the Board as of the date of the Meeting, and the
Board has nominated VanNess D. Robinson, who was appointed to the Board in
January 1997, to stand for election in his place. Each of the three nominees has
indicated a willingness to continue to serve as a director. In the event any
nominee declines or is unable to serve, it is intended that the proxies will be
voted for a successor nominee designated by the Board of Directors.
The following information is furnished for each candidate nominated to
serve as a director and for each director of the Company whose term of office
continues after the Meeting. It is the intention of the individuals named as
proxies to vote for the election of the following nominees:
NOMINEES FOR DIRECTOR
NOMINEES FOR DIRECTOR (FOR TERMS EXPIRING IN 2000)
<TABLE>
<CAPTION>
Number of Shares of
Bank Common Stock
Occupation During Director Beneficially Owned
Name and Age Past Five Years Since as of 3/31/97(1)
------------ ----------------- -------- -------------------
<S> <C> <C> <C>
VanNess D. Robinson Chairman of the Board and 1997 375,516 (2)(3)
Age 61 Executive Vice President, New
York Central Mutual Fire Insurance
Co.
Joseph A. Santangelo Administrator, Arkell Hall 1991 2,699 (2)
Age 44 Foundation
John P. Woods, Jr. President, John P. Woods Co., In 1991 266,193 (2)(3)
Age 60 (Reinsurance Intermediaries)
</TABLE>
<TABLE>
<CAPTION>
DIRECTORS CONTINUING IN OFFICE
DIRECTORS CONTINUING IN OFFICE (TERMS EXPIRING IN 1998)
Number of Shares of
Bank Common Stock
Occupation During Director Beneficially Owned
Name and Age Past Five Years Since as of 3/31/97(1)
------------ ----------------- -------- -------------------
<S> <C> <C> <C>
J. Carl Barbic Retired Dairy Farmer, Former 1989 3,814 (2)
Age 70 Clerk of the Schoharie County
Board of Supervisors
Donald L. Brass President and CEO of the Bank 1990 40,200 (4)
Age 48 since January 1992, President of the
Bank since January 1991, President of
the Company since January 1993,
Former Executive Vice President
of the Bank
C. Wendell Smith Retired Senior Vice President & 1986 2,052
Age 74 Comptroller for the Bank
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
DIRECTORS CONTINUING IN OFFICE (TERMS EXPIRING IN 1999)
Number of Shares of
Bank Common Stock
Occupation During Director Beneficially Owned
Name and Age Past Five Years Since as of 3/31/97(1)
------------ ----------------- -------- -------------------
<S> <C> <C> <C>
David J. Nolan Retired Chairman of the Board, 1981 21,343 (2)
Age 72 CEO amd President of the Bank
Allen H. Samuels Attorney, General Practice 1961 24,266 (2)
Age 74
</TABLE>
- -----------------
(1) Includes all shares for which named individuals possessed sole or
shared voting or investment powers, including shares held by, in the name of, or
in trust for, spouse and dependent children of named individual and other
relatives living in the same household even if beneficial ownership has been
disclaimed by named individual.
(2) The listed amounts include shares for which certain directors are
deemed to be beneficial owners but for which they are not the sole beneficial
owner as follows: Mr. Nolan holds 14,284 shares jointly with his wife; Mr.
Samuels' wife holds 12,000 shares in her own name; the amount disclosed for Mr.
Robinson includes 375,316 shares held by New York Central Mutual Fire Insurance
Company for which Mr. Robinson serves as Chairman and Executive Vice President;
Mr. Santangelo holds 1,885 shares jointly with his wife and 135 shares jointly
with his children; Mr. Woods holds 81,756 shares jointly with his wife and the
amount disclosed for Mr. Woods also includes 183,801 shares held by companies in
which Mr. Woods owns a controlling interest.
(3) The percentage of Common Stock beneficially owned by each director is
less than 1%, except with respect to Mr. Woods whose percentage ownership is
6.8%, Mr. Robinson whose percentage ownership is 9.7%, and Mr. Brass whose
percentage ownership is 1.0%.
(4) Includes 23,250 shares that Mr. Brass has the right to acquire through
the exercise of stock options issued by the Company. These shares are included
in the total number of shares outstanding for the purpose of calculating Mr.
Brass's percentage ownership, but not for the purpose of calculating the
percentage ownership of other individuals listed in the table.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Each director of the Company also serves as a director of the Bank. The
Bank's Board of Directors meets regularly each month, and the Company's Board
meets at least quarterly. The Board of Directors of the Bank held 13 meetings
during 1996. No incumbent director attended less than 75% of the aggregate
number of meetings of the Board of Directors and meetings held by all committees
of the Board on which such director served during 1996.
Among its standing committees, the Board of the Company has an Executive
Committee, Examining/Audit Committee, and a Personnel Committee. The President
acts as ex-officio member of all committees except the Examining/Audit
Committee. The full Board nominates individuals for election to the Board. The
Board will consider written recommendations from shareholders for nominees to be
elected to the Board of Directors that are sent to the Secretary of the Company
at the Company's address.
Section 202 of the Company's Bylaws provides that nominations for
directors, except those made by the Board, must be submitted in writing to the
Secretary of the Company not less than fourteen (14) or more than fifty (50)
days prior to the annual meeting setting forth the name, address and principal
occupation of the proposed nominee and the number of shares which will be voted
for the proposed nominee, as well as the name and address and the number of
shares owned by the notifying shareholder. In the event that less than
twenty-one (21) days notice of the meeting is given to shareholders, such
nominations may be submitted to the Secretary of the Company not later than
seven (7) days following the date of the mailing of the notice of the meeting.
If any nomination is properly and timely made
-3-
<PAGE>
by a shareholder in accordance with Section 202 of the Company's Bylaws, ballots
will be provided for use by shareholders at the annual meeting bearing the name
of such nominee or nominees.
The Examining/Audit Committee, currently composed of Directors C. Wendell
Smith, Allen H. Samuels, David J. Nolan and D. Theodore Robinson, reviews the
Bank's internal control and audit procedures and coordinates with the audit
program conducted by Price Waterhouse, LLP on behalf of the Board of Directors
to examine the financial affairs of the Bank. Status reports were reviewed by
the Committee Chairman periodically at regular Board Meetings. The
Examining/Audit Committee met four (4) times in 1996.
The Personnel Committee, composed of Directors J. Carl Barbic, Allen H.
Samuels and John P. Woods, Jr., reviews and makes recommendations to the Board
concerning compensation levels, adjustments and employee benefits. The Personnel
Committee met five (5) times in 1996.
Directors, other than those employed by the Bank in other capacities,
receive a fee of $400 per month plus $400 per meeting of the Board and $250 per
meeting for committee meeting attendance. Directors who are also officers of the
Company or Bank receive no compensation for attendance at Board or committee
meetings.
CERTAIN TRANSACTIONS
During 1996 the Bank had, and expects in the future to have, various
transactions including loans with directors and officers of the Company, the
Bank and their associates in the ordinary course of business. All such
transactions were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the same time for comparable transactions
with other persons and do not involve more than normal risk of collectability or
present other unfavorable features.
ITEM 2: SHAREHOLDER APPROVAL OF INCREASE IN AUTHORIZED
SHARES OF COMMON STOCK OF THE COMPANY
The Board of Directors is recommending that the shareholders take action at
the Meeting to approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
5,000,000 to 10,000,000. Presently, the Company has 3,933,179 shares of Common
Stock issued and outstanding or subject to options granted, leaving only
1,066,821 shares available for issuance to meet corporate needs.
The Board believes that the authorization of additional shares of Common
Stock is desirable and would provide future flexibility for the Company. The
increase in authorized shares would provide authorized Common Stock for issuance
from time to time as may be necessary in connection with the dividend
reinvestment plan, future financings, investment opportunities, acquisitions of
other companies, the declaration of stock dividends or stock splits, other
distributions, or for other corporate purposes. The Company has no present
plans, understandings or agreements for issuing the additional shares to be
authorized by the proposed Certificate amendment, but it is necessary to have
authorization for additional shares in order to enable the Company, as the need
may arise, to take prompt advantage of market conditions and the availability of
favorable opportunities without the delay and expense incident to the holding of
a special meeting of shareholders of the Company.
Although the increase in the number of authorized shares of Common Stock is
not intended for anti-takeover purposes, SEC rules require disclosure of
existing Certificate and Bylaw provisions which could have an anti-takeover
effect. These include: (i) Board authority under the Certificate of
Incorporation to oppose a takeover attempt on the basis of factors other than
economic benefit to shareholders (e.g. impact of the proposed transaction on the
community, employees, depositors and other customers; and the reputation and
business practices of the proposed acquiror); (ii) the requirement that certain
business combinations be approved by a supermajority vote of directors and
shareholders, and meet certain price requirements; and (iii) the Company's
staggered Board of Directors. In addition, the additional authorized shares, if
issued, could be utilized to deter future attempts to gain control of the
Company.
-4-
<PAGE>
Under New York law, shareholders are not entitled to dissenters' rights
with respect to the proposed amendment to the Company's Certificate of
Incorporation. Holders of Common Stock have no preemptive rights with respect to
any shares which may be issued in the future. The issuance of additional shares
of Common Stock may dilute the equity ownership position of current
shareholders. Unless required by applicable law, no further authorization or
vote of the shareholders will be solicited for the issuance of the additional
shares of Common Stock.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock is required for the approval of the proposed amendment to the
Company's Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS PROPOSAL.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE
PROPOSAL UNLESS SHAREHOLDERS SPECIFY OTHERWISE.
PRINCIPAL HOLDERS OF COMMON STOCK
The following table sets forth as of the Record Date the ownership of
Common Stock by any person who is known to the Company to be the beneficial
owner of more than five percent of Common Stock and by all directors and
executive officers of the Company as a group.
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP PERCENT
BENEFICIAL OWNER AS OF 3/31/97 OF CLASS
------------------- -------------------- --------
John P. Woods, Jr. 266,193(1) 6.8%
Canajoharie, NY 13317
New York Central Mutual 375,516(2) 9.7%
Fire Insurance Company
Edmeston, NY 13335
Number of shares of 799,561(3) 20.3%
Common Stock beneficially
owned by all directors and
executive officers as a group
(12 persons)
(1) Includes 81,756 shares held jointly with his wife, 15,492 shares held
by the Woods Corporation, and 168,309 shares held by John P. Woods Co. Inc. Mr.
Woods holds a controlling interest in both the Woods Corporation and John P.
Woods Co. Inc.
(2) Includes 200 shares held by VanNess D. Robinson, a director of the
Company, who also serves as Chairman of the Board and Executive Vice President
of New York Central Mutual Fire Insurance Company.
(3) Includes 58,500 shares that executive officers have the right to
acquire through the exercise of stock options issued by the Company. These
shares are included in the total number of shares outstanding for the purpose of
calculating the percentage ownership of the group as a whole, but not for the
purpose of calculating the percentage ownership of the other beneficial owners
listed in the table.
-5-
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning compensation paid by
the Bank to the chief executive officer and other most highly compensated
executive officers whose annual salary and bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
-----------
Annual Compensation (1) Securities All Other
Name and ----------------------------------- Underlying Compensation
Principal Position Year Salary ($) Bonus ($)(2) Options (#) ($)(3)
------------------ ---- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Donald L. Brass 1996 $205,000 $96,863 11,250 $14,300
President and CEO 1995 190,000 73,720 0 19,874
1994 170,000 65,950 15,000 15,623
Peter J. Corso 1996 107,000 40,596 6,000 8,582
Executive Vice 1995 100,000 29,200 0 10,460
President and CFO 1994 91,000 26,572 8,000 8,363
Lawrence G. Knudsen 1996 91,000 26,053 3,750 6,174
Senior Vice President 1995 85,000 24,820 0 8,891
and Cashier 1994 77,000 22,484 5,000 7,076
Allan F. Woodmancy 1996 87,800 25,137 3,750 6,450
Senior Vice President 1995 82,000 23,944 0 8,577
and Senior Lending Office 1994 76,000 22,192 5,000 6,984
</TABLE>
- --------------
(1) Includes compensation for which payment was deferred pursuant to
non-qualified deferred compensation plans until such time that the executive
retires or leaves the employment of the Company.
(2) The amounts in this column reflect awards made under the Company's
Management Incentive Plan which are based upon the Company's performance and
obtaining individual goals of executives. Amounts are reported in the year for
which the performance award was based, although such awards are not determined
or paid until the next calendar year.
(3) Consists of amounts contributed by the Company to a 401(k) Profit
Sharing Plan pursuant to a formula which applies uniformly to all employees.
-6-
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides further information on grants of stock options
in fiscal year 1996 to the named executives.
<TABLE>
<CAPTION>
% of Total Potential Realizable Value at
Options Market Assumed Annual Rates of Stock
Granted to Exercise Value on Price Appreciation
Employees or Base Grant for Option Term
Options in Fiscal Price Expiration Date --------------------------------
Name Granted (#) Year ($/Sh) Date ($/Sh) 0% 5% 10%
- ----------------- ---------- ---------- -------- --------- -------- ------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Donald L. Brass 11,250 45.4% $18.75 2/20/06 $19.125 $4,219 $139,529 $347,122
Peter J. Corso 6,000 24.2% $18.75 2/20/06 $19.125 $2,250 $ 74,416 $185,132
Lawrence G. Knudsen 3,750 15.2% $18.75 2/20/06 $19.125 $1,406 $ 46,510 $115,707
Allan F. Woodmancy 3,750 15.2% $18.75 2/20/06 $19.125 $1,406 $ 46,510 $115,707
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table provides information for the named executive officers,
with respect to (i) stock options exercised in fiscal year 1996, (ii) the number
of stock options held at the end of fiscal year 1996, and (iii) the value of
in-the-money stock options at the end of fiscal year 1996.
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised(1)
Acquired on Value Realized Underlying Unexercised(1) In-the-Money Options
Name Exercise (#) ($) Options at 12/31/96 (#) at 12/31/96($)
------ -------------- -------------- -------------------------- ----------------
<S> <C> <C> <C> <C>
Donald L. Brass 4,500 $36,487 23,250 $97,456
Peter J. Corso 750 $6,487 14,250 $66,750
Lawrence G. Knudsen 0 0 11,250 $60,468
Allan F. Woodmancy 0 0 9,750 $48,468
</TABLE>
(1) All unexercised options are presently exercisable.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Personnel Committee makes recommendations to the Board regarding the
compensation level for the Bank's executive officers. The Committee reviews
salary surveys of the banking industry for similar banks based on asset size and
geographic area. This information is used together with other factors including
experience, internal salary structure, performance, and ability to improve the
profitability, growth, and value of the Company, in determining compensation
levels. Mr. Brass' compensation and the compensation of other executive officers
for the last fiscal year was determined by the Committee, in its discretion,
based upon the foregoing factors and criteria. The Committee reviews the
compensation levels of executive officers on an annual basis and makes its
determinations, in its discretion, on the basis of the foregoing factors and
criteria.
-7-
<PAGE>
In addition to the foregoing, the Company has adopted a management
incentive plan. The management incentive plan is designed to promote a superior
level of performance relative to the Bank's competition in its market area by
providing management with rewards for meeting and exceeding the Bank's financial
goals, as well as by providing recognition of individual achievements. The
payment of cash awards under the management incentive plan is triggered by the
Company's performance to targeted return on equity and assets. Award levels,
which amount to a percentage of salary, have been established for different
organizational levels within the Company. The President and CEO may recommend an
adjustment to individual bonus awards, based upon individual merit, not to
exceed 20% of the determined bonus amount. Similar adjustments to the President
and CEO's bonus award may be made by the full Board of Directors. In February,
1997, the Board of Directors approved the payment of incentive awards, as set
forth in the Summary Compensation Table on page 6.
The members of the Personnel Committee are:
J. Carl Barbic
Allen H. Samuels
John P. Woods, Jr.
PENSION PLAN
The Bank has in effect a Pension Plan which conforms to the requirements of
the Employee Retirement Income Security Act of 1974, provides for full vesting
upon five years of participation, and contains provisions which permit early
retirement within ten years prior to normal retirement date for participants
with at least ten years of credited service. The Plan requires no contribution
from participants, covers all eligible employees, provides for normal retirement
at age 65, and is qualified under Section 401(a) of the Internal Revenue Code.
There were 236 participants in the Plan in 1996. Normal retirement benefits are
based on the greater of (i) 40% of average earnings for the highest 36
consecutive months in the last 10 years, reduced proportionately for less than
20 years of service, or (ii) a minimum of $50 per month after 10 years of
service. The following table sets forth the estimated annual benefits payable on
retirement at age 65 by a participating employee assuming earnings as shown. The
estimated retirement benefits in the table below are based on the assumption
that the persons in the Plan will continue in employment until age 65 at 1994
salaries. Messrs. Brass, Corso, Knudsen, and Woodmancy have credited years of
service of 7, 10, 4, and 5, respectively, under the plan.
PENSION PLAN TABLE
Years of Service
Remuneration 15 Years 20 Years 25 Years 30 Years 35 Years
------------ -------- -------- -------- -------- --------
$ 20,000 $ 6,000 $ 8,000 $ 8,000 $ 8,000 $ 8,000
$ 30,000 $ 9,000 $12,000 $12,000 $12,000 $12,000
$ 40,000 $12,000 $16,000 $16,000 $16,000 $16,000
$ 50,000 $15,000 $20,000 $20,000 $20,000 $20,000
$ 60,000 $18,000 $24,000 $24,000 $24,000 $24,000
$ 80,000 $24,000 $32,000 $32,000 $32,000 $32,000
$100,000 $30,000 $40,000 $40,000 $40,000 $40,000
$125,000 $37,500 $50,000 $50,000 $50,000 $50,000
$150,000 $45,000 $60,000 $60,000 $60,000 $60,000
-8-
<PAGE>
EMPLOYMENT AGREEMENTS
Messrs. Brass, Corso, Knudsen, and Woodmancy have Executive Salary
Continuation Agreements with the Bank which provide for a supplemental
retirement benefit designed to provide the executive with total retirement
income benefits which will equal at least 65% of the executive's projected total
annual compensation at the time of the executive's retirement. The executive's
projected total annual compensation at retirement is calculated by assuming a 5%
annual increase in current salary amounts until the executive reaches age 65.
The supplemental retirement benefit shall be paid to the executive or his
beneficiary in monthly installments for a period of fifteen years commencing at
age 65. In the event the executive dies prior to age 65, the executive's
beneficiary shall receive a death benefit equal to the supplemental retirement
benefit payable over fifteen years beginning at the time of death. The benefits
under the Agreements fully vest after the executive has been employed by the
Bank for five years and partially vest prior thereto, although benefits are
subject to forfeiture if the executive engages in competition with the Bank. The
benefits under the Agreements are funded by life insurance policies covering the
executives which are owned by the Bank and which name the Bank as the sole
beneficiary under the policies. If all the assumptions concerning mortality,
dividends and salary are met, the proceeds of the policies will cover the Bank's
cost of the Agreements.
Messrs. Brass, Corso, Knudsen, and Woodmancy have Senior Executive
Severance Agreements with the Bank and Company which provide that in the event
of a Termination of the executive's employment within 24 months after a Change
of Control, the Company shall be obligated to pay the executive 2.99 times his
annual taxable compensation as compensation for services rendered to the
Company. Payments to executives under these agreements are payable in eight
equal quarterly installments without interest. Under these agreements, a Change
of Control shall be deemed to have occurred if (i) any person or group becomes
the beneficial owner of 50% or more of the Company's outstanding securities,
(ii) as a result of a tender offer, merger, business combination or contested
election, the persons who were directors of the Company cease to constitute a
majority of the Board, (iii) the Company or Bank is merged with another entity
in a transaction in which less than 50% of the voting securities of the
resulting entity are held by the former shareholders of the Company, (vi) a
tender offer or exchange offer is made for more than 50% of the Company's
outstanding securities, or (v) the Company transfers substantially all of its
assets to another corporation. Under the Agreements, a Termination of an
executive's employment is deemed to have occurred if (i) the executive is
terminated by the Company for reasons other than cause, death or disability, or
(ii) the executive resigns following a significant change in the nature of
executive's authority, a reduction in executive's total compensation and
benefits, a change in location where executive is required to perform services,
or based on a reasonable determination there is a change in circumstances
significantly affecting his position such that he is unable to exercise the
authority, powers, function or duties of his position.
-9-
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares cumulative total shareholder returns on the
Company's stock over the last five fiscal years to the NASDAQ Index and a peer
group of banks in upstate New York. Total return values were calculated assuming
$100 investment on January 1, 1991 and reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Among CNB Financial Corp., NASDAQ Stock Market (US Companies) &
Self-Determined Peer Group*
Fiscal Year Ending December 31, 1996
[graph]
(The numerical points plotted on the above graph are set forth on the chart
following.)
1991 1992 1993 1994 1995 1996
----- ----- ----- ----- ----- -----
NASDAQ 100.0 116.4 133.6 130.6 184.7 227.2
Peer
Group* 100.0 127.3 161.8 179.0 235.7 311.5
CNB
Financial
Corp. 100.0 102.3 118.1 140.6 223.7 220.2
*Companies in the Self-Determined Peer Group:
- FNB Rochester Corp.
- Arrow Financial Corp.
- NBT Bancorp Inc.
- Evergreen Bancorp Inc.
-10-
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Bank's principal accounting firm during 1996 was Price Waterhouse, LLP.
The accounting firm is selected upon recommendation of the Examining/Audit
Committee and approval of the Board of Directors. The Bank expects to continue
its engagement of Price Waterhouse, LLP and expects that representatives of the
accounting firm will be present at the Meeting. Price Waterhouse, LLP, will have
the opportunity to make a statement and to be available to respond to
appropriate questions.
SHAREHOLDER PROPOSALS
If any shareholder wishes a proposal to be considered for inclusion in the
Company's 1998 Proxy Statement, it must be received by the Secretary of the
Company at 24 Church Street, Canajoharie, New York 13317 no later than December
16, 1997. Any shareholder proposals must be timely submitted and meet the other
requirements established by the Securities and Exchange Commission in order to
be considered for inclusion in the Company's Proxy Statement and proxy relating
to the 1998 Annual Meeting.
ANNUAL REPORT TO SHAREHOLDERS
A copy of the Company's Annual Report to Shareholders for the year ended
December 31, 1996 accompanies this Proxy Statement. The Annual Report includes a
general description of the business of the Company, management's discussion and
analysis of financial condition and results of operations, and the Company's
consolidated financial statements, with the accountant's report thereon.
OTHER MATTERS
The Board of Directors of the Company is not aware of any other matters
that may come before the Meeting. However, the proxies may be voted with
discretionary authority with respect to any other matters that may properly come
before the Meeting.
Dated: April 14, 1997
Lawrence G. Knudsen
Secretary
-11-
<PAGE>
PROXY FOR 1997 ANNUAL MEETING OF
CNB FINANCIAL CORP.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned Shareholder of CNB FINANCIAL CORP. (the "Company") hereby
appoints David J. Nolan and Allen H. Samuels, or either of them, my lawful proxy
with full power of substitution to vote on a cumulative basis all the Common
Stock of Company held of record by me on March 31, 1997 as designated below at
the ANNUAL MEETING of SHAREHOLDERS to be held on May 15, 1997 at 9:30 a.m. or at
any adjournment thereof:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
ITEM 1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed (except as [ ] WITHHOLD AUTHORITY to
marked to the contrary below vote for all nominees listed
VanNess D. Robinson, Joseph A. Santangelo, John P. Woods, Jr.
Instruction: To withhold authority to vote for any individual nominee or give
instructions for cumulative voting, strike that nominee's name
and note your voting instructions.
(continued, and to be signed, on reverse side)
<PAGE>
ITEM 2. Approval of Amendment to Certificate of Incorporation to increase shares
of authorized Common Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are authorized to vote on any other
business that may properly come before the Annual Meeting or any adjournment
thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED ABOVE. IN THE
ABSENCE OF ANY DIRECTIONS, THE SHARES REPRESENTED BY A PROPERLY EXECUTED PROXY
WILL BE VOTED "FOR" ITEMS 1 AND 2.
Date: ___________, 1997 Signature:______________Signature:_________________
Print Name:_____________Print Name:________________
When signing as attorney, executor, administrator, trustee or guardian, please
give full title. If more than one trustee, all should sign. (ALL JOINT OWNERS
MUST SIGN.)
