CITY NATIONAL BANCSHARES CORPORATION
900 Broad Street
Newark, New Jersey 07102
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on Thursday, May 21, 1998
Notice is hereby given that the Annual Meeting (the "Meeting") of Stockholders
of City National Bancshares Corporation (the "Corporation") will be held at City
National Bank of New Jersey (the "Bank"), located at 900 Broad Street, Newark,
New Jersey, on Thursday, May 21, 1998, at 6:00 p.m. for the purpose of
considering and voting upon the following matters:
(1) The election of three directors named in the accompanying Proxy
Statement to serve as directors until their successors are elected
and qualified
(2) Ratification of the appointment of KPMG Peat Marwick LLP as independent
auditors for the fiscal year ending December 31, 1998
(3) Such other business as shall properly come before the Meeting, or any
adjournments thereof.
Stockholders of record at the close of business on April 14, 1998 are entitled
to notice of and to vote at the meeting. Each share of such stock is entitled to
one vote. Whether or not you will attend the Meeting, it is suggested that you
execute and return the enclosed proxy to the Corporation. You may revoke your
proxy at any time prior to the exercise of the proxy by delivering to the
Corporation a later dated proxy or by delivering a written notice of revocation
to the Corporation prior to or at the meeting.
For a period of 10 days prior to the meeting, a stockholders' list will be kept
at the Corporation's principal office and shall be available for inspection by
stockholders during normal business hours. A stockholder list shall be present
and available for inspection at the Meeting.
The Corporation's Proxy Statement and its 1997 Annual Report to Stockholders
accompany this Notice.
By order of the Board of Directors
Lemar C. Whigham
Newark, New Jersey Secretary
April 21, 1998
PROXY STATEMENT
CITY NATIONAL BANCSHARES CORPORATION
900 Broad Street
Newark, NJ 07102
SOLICITATION OF PROXIES
The accompanying proxy is solicited by and on behalf of the Board of Directors
of City National Bancshares Corporation (the "Corporation") for use at the
Annual Meeting (the "Meeting") of Stockholders to be held on Thursday, May 21,
1998, at 6:00 p.m., at City National Bank of New Jersey, located at 900 Broad
Street, Newark, New Jersey or at any adjournment thereof.
Voting and revocability of proxy
A form of proxy is enclosed for use at the meeting if a stockholder is unable to
attend in person. Each proxy may be revoked at any time before its exercise by
giving written notice to the Secretary of the Corporation. A subsequently dated
proxy will, if properly presented, revoke a prior proxy. Any stockholder may
attend the meeting and vote in person whether or not a proxy has previously been
turned in. Where a choice or abstention is specified in the form of proxy with
respect to a matter being voted upon, the shares represented by proxy will be
voted in accordance with such specification. If a proxy is signed but no
specification is given, the shares will be voted for the director nominees named
herein and in favor of the proposals set forth in the Notice of Annual Meeting
of Stockholders.
Only holders of record of the Corporation's common stock at the close of
business on April 14, 1998 (the "Record Date"), are entitled to notice of, and
to vote at, the Annual Meeting. At the close of business on the Record Date,
there were outstanding and entitled to vote, 114,141 shares of common stock,
each of which is entitled to one vote. A majority of the outstanding shares of
common stock will constitute a quorum for the purposes of the Meeting.
For purposes of counting votes, abstentions will be treated as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum, but as unvoted for purposes of determining the approval of this proposal
by the stockholders. If a broker or nominee indicates that it does not have
discretionary authority to vote on this Proposal as to certain shares, those
shares will be counted for general quorum purposes but will not be considered as
present and entitled to vote with respect to this proposal.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information with respect to each person
known to the Corporation, to be a beneficial owner of more than five percent of
the Corporation's common stock as of March 15, 1998.
Number of Shares Percentage of Total
Name Beneficially Owned Shares Outstanding
- --------------------------------------------------------------------------------
Louis E. Prezeau 13,773(1) 11.87%
Lemar C. Whigham 9,122(2) 7.99
Carolyn Whigham 8,495 7.44
Eugene Giscombe 7,100 6.22
United Negro College Fund, Inc. 6,800 5.96
(1) Includes unexercised stock options to acquire 1,900 shares of common stock
and 603 shares held by his sons, 40 shares held by his daughter and 610 shares
held by his wife.
(2) Includes 950 shares held by his wife.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Corporation is divided into three classes of
approximately equal size. Directors are elected for three-year terms on a
staggered basis, so that the term of office of one class will expire each year
at the Annual Meeting of Stockholders when a successor is elected and qualified
and the terms of office of the other classes will extend for additional periods
of one and two years, respectively.
Vote Required
The affirmative vote of the holders of a plurality of the shares of common stock
of the Corporation, present in person or by proxy, and entitled to vote at the
Meeting is required to elect the directors.
Stockholders will elect three directors at the Meeting. Messrs. Jeffries and
Whigham along with Ms. Coleman will be elected to serve until the 2001 Annual
Meeting of Stockholders. It is intended that the proxies will be voted for the
aforementioned nominees, or if any nominee is unable or declines to serve as
director at the time of election, for any substitute nominee selected by the
Board of Directors of the Corporation. The Board has no reason to believe that
any nominee will be unable or unwilling to serve if elected.
Information is presented below as of March 15, 1998, as to age, business
experience, the number of shares of City National Bancshares Corporation
beneficially owned and the period during which each director has served on the
Board of City National Bancshares Corporation and City National Bank of New
Jersey (the "Bank") as well as the number of shares of such common stock
beneficially owned by all "named" officers.
Name of Director Age Director Term Business Experience Number of Percentage of
Since Ends Shares Total Shares
Outstanding
- --------------------------- ------ ----------- -------- -------------------------------------------- ------------ -----------------
Douglas E. Anderson 48 1989 1999 Senior Vice President, Chase Manhattan 225 *
Bank
Barbara Bell Coleman 47 1995 1998 Retired 168 *
Leon Ewing 69 1973 2000 President, Ewing Bonding Agency 2,340(1) 2.05%
Eugene Giscombe 57 1991 1999 President, Giscombe Henderson, Inc. 7,100 6.22
(property management firm)President, 103
East 125th Street Corporation (property
holding company)
Norman Jeffries 55 1989 1998 Fiscal Manager, Newark Preschool Council, 174 *
Inc.
Louis E. Prezeau 54 1989 1999 President and Chief Executive Officer, 13,773(2) 11.87
City National Bank of New Jersey and City
National Bancshares Corporation
Lemar C. Whigham 53 1989 1998 President, L & W Enterprises (vending 9,122(3) 7.99
machine operations)
Directors and executive 36,000 31.02(4)
officers as a group (9
persons)
<FN>
(1) Includes 1,790 shares held by Mr. Ewing individually and 550 shares held jointly with his wife.
(2) Includes unexercised stock options to acquire 1,900 shares of common stock and 603 shares held by his sons, 40 shares held by
his daughter and 610 shares held by his wife.
(3) Includes 950 shares held by his wife.
(4) The number of shares of common stock used in calculating the percentage of
total shares owned includes 116,041 shares of common stock outstanding as
of March 15, 1998 plus 1,900 shares purchasable pursuant to unexercised
options.
* Less than 1%
</FN>
Committees of the Board of Directors
All directors of the Corporation are also directors of the Bank. Regular
meetings of the Corporation and the Bank are held monthly. Additional meetings
are held when deemed necessary. In addition to meeting as a group to review the
Corporation's business, certain members of the Board also devote their time and
talents to certain standing committees. Because the Board of Directors of the
Corporation has no committees, their functions were fulfilled by the committees
of the Board of Directors of the Bank. Messrs. Giscombe and Prezeau serve as
ex-officio members of all committees except for the Audit/Examining Committee.
Committee members, other than ex-officio members and principal functions of each
committee are set forth below.
The Audit/Examining Committee of which Mr. Jeffries is chairperson, and also
consists of Messrs. Ewing and Whigham, meets with the independent accountants,
reviews significant auditing and accounting matters, reviews the adequacy of the
system of internal controls, and reviews examination reports of national and
federal regulatory agencies and independent accountants.
The Loan and Discount Committee, of which Mr. Anderson is chairperson, and also
consists of Messrs. Ewing, Jeffries, Giscombe, Jeffries, Prezeau and Whigham and
Ms. Coleman, reviews all loan policy changes and loans approved by management,
and approves loans over specific amounts.
The Investment Committee, of which Mr. Prezeau is chairperson, and also consists
of Messrs. Anderson, Ewing, Giscombe, and Whigham, reviews all investment policy
changes, along with purchases and sales.
The Personnel/Director and Management Review Committee, of which Mr. Giscombe is
chairperson, and also consists of Messrs. Jeffries and Whigham and Ms. Coleman,
deals in broad terms with personnel matters and reviews director and officer
compensation.
The Building and Grounds Committee, of which Mr. Ewing is chairperson, also
consists of Messrs. Giscombe, Prezeau and Whigham, meets to consider branch
expansion and matters concerning Corporation premises.
The Marketing Committee, of which Ms. Coleman is chairperson, and also consists
of Messrs. Anderson and Whigham, deals in broad terms with marketing matters.
During 1997, the Board of Directors held 12 regular monthly meetings and one
special meeting. A quorum was present at all meetings. No incumbent director
attended fewer than 75% of the meetings held by the Board and Committees of
which such director was a member. In addition, during 1997, the Audit/Examining
Committee held four meetings, the Loan and Discount Committee held 12 meetings,
the Investment Committee held four meetings, the Personnel/Director and
Management Review Committee held two meetings and the Marketing Committee held
one meeting.
Each director of the Corporation receives an annual retainer of $1,500 and a
$400 fee for each board meeting attended except for the Chairperson, who
receives $550, and the Secretary who receives $500. Audit Committee members
receive $175 for each meeting attended, while members of other committees
receive $150 for each committee meeting attended, except for the chairperson,
who receives $200 for each committee other than the Loan and Discount Committee,
for which the chairperson fee is $250.
Salary Continuation Plan
During 1997, the Corporation adopted a Salary Continuation Agreement for certain
highly compensated officers. The Agreement provides each such officer with a
normal retirement benefit equal to 40% of the annual base salary payable to the
officer during the last complete fiscal year of the Corporation. The benefit is
payable beginning at age 65 for a period of fifteen years. If the officer
terminates employment before the normal retirement date for reasons other than
death, the annual benefit is equal to of the officer's annual base salary prior
to termination, which is multiplied by a fraction. The numerator of the fraction
is the officer's actual years of service prior to the termination date and the
denominator is the years of service the officer would have had, if he had worked
until normal retirement date. The benefit is payable for fifteen beginning with
the month following the early retirement.
If a change of control of the Corporation, as defined, occurs and the officer
leaves the employment of the Corporation, then the officer would be entitled to
a lump sum benefit payable within thirty days after a change of control. The
amount of the benefit is equal to the present value of a theoretical series of
180 equal monthly payments with each payment equal to 1/12 of the normal
retirement benefit. This amount is computed using an annual discount rate of 4%.
No reduction due to years of service applies to the change of control benefit.
The table below sets forth information with respect to the estimated and annual
benefits payable upon retirement based upon specified compensation levels under
the Salary Continuation Plan:
- ---------------------------------------------------------
FINAL ANNUAL BASE SALARY SALARY CONTINUATION ANNUAL
BENEFIT
- ---------------------------------------------------------
$100,000 $40,000
$125,000 $50,000
$150,000 $60,000
$175,000 $70,000
$200,000 $80,000
$225,000 $90,000
$250,000 $100,000
- ---------------------------------------------------------
Director Retirement Plan
Directors also participate in a Director Retirement Plan, which is intended to
assure that the compensation arrangements for directors of the Corporation are
adequate to attract and retain highly qualified individuals. Under the Director
Retirement Plan, an amount of director fees paid to the director during the then
last full fiscal year of the the Corporation. The annual benefit is to be paid
each year for ten years beginning at age 65. If the director terminates
employment before the normal retirement date, a reduced benefit is paid to the
director based upon the completion a minimum number of years of service as
follows:
- ---------------------------------------------------------
YEARS OF SERVICE APPLICABLE PERCENTAGE
- ---------------------------------------------------------
- ---------------------------------------------------------
more than or equal 5,
less than 7 20%
more than or equal 7,
less than 8 40%
more than or equal 8,
less than 9 60%
more than or equal 5,
less than 7 80%
10 or more 100%
- ---------------------------------------------------------
If a change of control of the Corporation, as defined, occurs and a director
leaves the Bank, a lump sum benefit is payable to the director within thirty
days after the change of control. The amount of the benefit is equal to the
present equal to 1/12 of the normal retirement benefit. This amount is computed
using an annual discount rate of 4%. No reduction due to years of service
applies to the change of control benefit.
EXECUTIVE COMPENSATION
The following table sets forth the compensation of those executive officers with
annual compensation in excess of $100,000 during 1997.
Summary compensation table
Annual Compensation Long-term Compensation
Name and Other Options/
Principal Position Year Salary Bonus Compensation(1) SARs (number of shares)
- ------------------------------------------------------------------------------------------------------------------------------------
Louis E. Prezeau 1997 $ 137,500 $ 40,000 $ 8,790 (2)
President and Chief Executive Officer, 1996 125,000 27,500 6,102 (2) -
City National Bancshares Corporation 1995 125,000 30,000 6,733 (2) -
and City National Bank of New Jersey
Stanley Weeks 1997 $ 89,962 $ 40,000 $ 8,790 (3) -
Senior Vice President and Chief Credit
Officer, City National Bank of New Jersey
<FN>
(1) Perquisites and other personal benefits paid to any named executive officer did not exceed the lesser of $50,000 or 10% of the
annual salary and bonus reported in the table for that individual and are, therefore, not presented.
(2) Includes payments made under the Corporation's profit sharing plan of
$5,220, $2,197, and $2,813 in 1997, 1996, and 1995, respectively, and
insurance premiums paid on a life insurance policy on the life of Mr.
Prezeau of $3,570, $3,905, and $3,920, in 1997, 1996, and 1995,
respectively.
(3) Includes payments made under the Corporation's profit sharing plan of $3,635 in 1997 and insurance premiums paid on a life
insurance policy on the life of Mr. Weeks of $832 in 1997.
</FN>
Set forth below are the executive officers of the Corporation or the Bank.
In Office
Name Age Since Office and Business Experience
- ------------------------------------------------------------------------------------------------------------------------------------
Louis E. Prezeau 55 1989 President and Chief Executive Officer, City National Bancshares Corporation
and City National Bank of New Jersey
Stanley Weeks 41 1994 Senior Vice President and Chief Credit Officer City National Bank of New
Jersey1984-1994, Vice President, First Fidelity Bank, N.A.
Edward R. Wright 52 1994 Senior Vice President and Chief Financial Officer, City National Bancshares
Corporation and City National Bank of New Jersey1978-1994, Executive Vice
President and Chief Financial Officer, Rock Financial Corporation
Employment agreements
The Corporation has an employment agreement with Mr. Prezeau expiring May 23,
2000 which provides for an annual base salary of $150,000 in addition to
performance and other bonuses payable in either cash or common stock of the
Corporation.
The agreement also provides that Mr. Prezeau may terminate his employment if
there is a change in control of the Corporation which does not receive prior
approval from the Corporation's Board of Directors or if the stockholders of the
Corporation fail to elect Mr. Prezeau as a director of the Corporation at any
time during which his employment agreement remains in effect. In these
instances, Mr. Prezeau is entitled to accrued but unpaid salary and bonus. In
the event Mr. Prezeau's employment is terminated by the Corporation and the Bank
without cause, or Mr. Prezeau's employment expires and the Corporation and the
Bank fail to renew the employment agreement on substantially the same terms, Mr.
Prezeau is entitled to received an amount equal to his then current annual
salary.
The agreement also grants Mr. Prezeau the option to purchase up to 5,700 shares
of the Corporation's common stock at an option price of $20.00 per share,
subject to adjustments for certain events, such as stock dividends and splits.
The option granted can be exercised as follows:
Year 1 - May 1, 1997 to April 30, 1998 - 1900 shares
Year 2 - May 1, 1998 to April 30, 1999 - 3800 shares less any shares executed in
Year 1 Year 3 - May 1, 1999 to April 30, 2000 - 5700 shares less any shares
executed in Years 1 & 2
ADDITIONAL INFORMATION REGARDING DIRECTORS AND OFFICERS
Transactions With Management
Certain directors of the Corporation had loans with the Bank in 1997. These
loans were on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable loans with others and
did not involve more than the normal risk of collectability or present other
unfavorable features. The Bank may have similar transactions in the future.
Section 16 (a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires CNBC's executive officers and directors, and any persons owning
ten percent or more of CNBC's common stock, to file in their personal capacities
initial statements of beneficial ownership, statements of changes in beneficial
ownership and annual statements of beneficial ownership with the Securities and
Exchange Commission (the "SEC"). The rules of the SEC regarding the filing of
such statements require that late filings of such statements be disclosed in the
proxy statement. To the best of management's knowledge, CNBC believes that all
such statements were timely filed in 1997.
PROPOSAL 2
APPOINTMENT OF INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, Certified Public Accountants, served as the independent
auditors for the Corporation for the year ended December 31, 1997. Services
provided included the examination of the consolidated financial statements and
preparation of the tax returns.
The Board of Directors of the Corporation has appointed KPMG Peat Marwick LLP as
the independent auditors for the Corporation and the Bank for the fiscal year
1998. Stockholder ratification of the appointment is not required under the laws
of the State of New Jersey, but the Board has decided to ascertain the position
of the stockholders on the appointment. The Board of Directors may reconsider
the appointment if it is not ratified. The affirmative vote of a majority of the
shares voted at the Meeting is required for ratification.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
meeting and will be allowed to make a statement if they so desire. Additionally,
they will be available to respond to appropriate questions from stockholders
during the Meeting.
The Corporation has been advised by KPMG Peat Marwick LLP that the firm and its
partners have no direct financial interest and no material indirect financial
interest in the Corporation or the Bank.
STOCKHOLDER PROPOSALS
Stockholders who intend to present proposals at the 1999 Annual Meeting of
Stockholders must present written proposals to the Corporation by December 15,
1998, for inclusion in the Corporations' proxy statement.
OTHER MATTERS
Management knows of no other business scheduled for consideration at the Annual
Meeting. Should any matter properly come before the Meeting or any adjournment
thereof, it is intended that proxies will vote in accordance with their own
judgment.
By order of the Board of Directors
April 21, 1998 Lemar C. Whigham
Secretary