SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
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 Rule 14a-11(c) or Rule 14a-12
CCFNB BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
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(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(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:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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NOTICE OF 2004
ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY STATEMENT
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PLEASE COMPLETE, SIGN, DATE AND RETURN
YOUR PROXY PROMPTLY
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Wednesday, May 5, 2004
10:30 A.M.
The Danville Elks
Located on Route 11 between
Bloomsburg and Danville
Pennsylvania
March 30, 2004
Dear CCFNB Stockholder:
You are cordially invited to join us at the 2004 Annual Meeting of Stockholders
of CCFNB Bancorp, Inc. (the "Corporation") at the Danville Elks located on Route
11 between Bloomsburg and Danville, Pennsylvania on Wednesday, May 5, 2004 at
10:30 am.
Enclosed with this Proxy Statement are your voting instructions and the 2003
Annual Report.
At this meeting, we will vote on the matters described in the Proxy Statement.
We know that it is not practical for most stockholders to attend the Annual
Meeting in person. In addition, annual meetings are not the most efficient way
to communicate with our stockholders. Therefore, we encourage you to visit our
site on the Worldwide Web at http://www.ccfnb.com for up-to-the-moment news
about the Corporation. As an alternative, you may call for current news releases
via our facsimile on demand service at (570) 387-4017.
Whether or not you plan to attend the Annual Meeting, we strongly encourage you
to designate the proxies shown on the enclosed card to vote your shares. Please
complete, sign, date and return the enclosed proxy card in the postage pre-paid
envelope.
I would like to take this opportunity to remind you that your vote is important.
Sincerely,
Lance O. Diehl
President
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DATE: May 5, 2004
TIME: 10:30 A.M.
PLACE: The Danville Elks
Located on Route 11 between
Bloomsburg and Danville, PA
MATTERS TO BE VOTED UPON:
1. Election of three Class 2 directors to hold office for a three-year
term;
2. Ratification of the appointment of J. H. Williams & Co., LLP as our
independent auditors for the year 2004; and
3. Any other matters that may properly come before the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS YOU VOTE IN FAVOR OF THE ELECTION OF
DIRECTORS AND THE APPOINTMENT OF J. H. WILLIAMS & CO., LLP.
Stockholders who are holders of record of the Common Stock at the close of
business on March 23, 2004, will be entitled to vote at the meeting.
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IF YOU PLAN TO ATTEND:
Please note that space limitations make it necessary to limit attendance to
stockholders. If you wish to attend, please indicate your wish by checking the
box that appears on the proxy card.
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IT WILL BE HELPFUL TO US IF YOU WILL READ THE PROXY STATEMENT AND THE VOTING
INSTRUCTIONS ON THE PROXY CARD, AND THEN VOTE BY FILLING OUT, SIGNING AND DATING
THE PROXY CARD AND RETURNING IT BY MAIL IN THE POSTAGE PRE-PAID ENVELOPE.
LANCE O. DIEHL Bloomsburg, Pennsylvania
President March 30, 2004
TABLE OF CONTENTS
Page No.
--------
QUESTIONS AND ANSWERS........................................................... 1
BOARD OF DIRECTORS.............................................................. 2
* Election Of Directors........................................................ 3
Committees Of The Board Of Directors Of The Corporation...................... 4
Committees Of The Board Of Directors Of The Bank............................. 5
Board Of Directors' Compensation............................................. 5
STOCK OWNERSHIP................................................................. 6
Stock Owned By Directors And Executive Officers.............................. 6
Section 16(A) Beneficial Ownership Reporting Compliance...................... 7
Voting Stock Owned By "Beneficial Owner"..................................... 7
EXECUTIVE COMPENSATION.......................................................... 7
Summary Compensation Table(1)................................................ 7
Human Resource Committee Report On Executive Compensation.................... 8
Five-Year Performance Graph.................................................. 10
AUDIT COMMITTEE REPORT.......................................................... 11
INDEPENDENT AUDITORS............................................................ 11
* Proposal To Approve The Appointment Of J. H. Williams & Co., LLP............. 11
Required Vote................................................................ 12
Audit Fees................................................................... 12
Audit-Related Fees........................................................... 12
Tax Fees..................................................................... 12
All Other Fees............................................................... 12
OTHER INFORMATION............................................................... 12
Transactions Involving The Corporation's Directors And Executive Officers.... 12
No Significant Legal Proceedings............................................. 13
Other Proposed Action........................................................ 13
Stockholder Proposals For 2005 Annual Meeting................................ 13
Additional Information Available............................................. 13
How To Contact Our Directors................................................. 13
ATTACHMENTS
Audit Committee Charter
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* Matter to be voted upon.
i
QUESTIONS AND ANSWERS
Q: WHAT AM I VOTING ON?
A: Two proposals. Item numbers below refer to item numbers on the proxy
card.
Item 1. Election of three Class 2 directors
Item 2. Ratification of appointment of J. H. Williams & Co., LLP
as independent auditors of the Corporation
Q: WHO CAN VOTE?
A: All stockholders of record at the close of business on March 23, 2004 are
entitled to vote. Holders of the Corporation's Common Stock are entitled
to one vote per share. Fractional shares, such as those in the dividend
reinvestment plan, may not be voted.
Q: HOW DO I VOTE FOR DIRECTORS?
A: Each share is entitled to cast one vote for each nominee. For example, if
you can vote 100 shares, you can cast up to 100 votes for each nominee
for director.
Q: WHO CAN ATTEND THE MEETING?
A: All stockholders as of the record date, or their duly appointed proxies,
may attend the meeting. Seating, however, is limited. Please indicate
your wish to attend on the proxy card. Everyone must check in at the
registration desk at the meeting.
Q: HOW DO I VOTE?
A: Complete, date, sign and mail the proxy card in the enclosed postage
pre-paid envelope. By voting with the proxy card, you will authorize the
individuals named on the proxy card, referred to as the proxies, to vote
your shares according to your instructions.
Q: WHAT HAPPENS IF I DO NOT INDICATE MY PREFERENCE FOR ONE OF THE ITEMS?
A: If you do not indicate how you wish to vote for one or more of the
nominees for director, the proxies will vote FOR election of all the
nominees for Director (Item 1). If you "withhold" your vote for any of
the nominees, this will be counted as a vote AGAINST that nominee. If you
leave Item 2 blank, the proxies will vote FOR ratification of the
appointment of J. H. Williams & Co., LLP (Item 2).
Q: WHAT IF I VOTE AND THEN CHANGE MY MIND?
A: You can revoke your proxy by writing to us, by voting again via mail, or
by attending the meeting and casting your vote in person. Your last vote
will be the vote that is counted.
Q: WHAT CONSTITUTES A QUORUM?
A: As of the record date, March 23, 2004, the Corporation had 1,276,914
shares of Common Stock outstanding. The holders of Common Stock have the
right to cast a total of 1,276,914 votes. The presence, in person or by
proxy, of stockholders entitled to cast at least a majority of the votes
which all stockholders are entitled to cast constitutes a quorum for
adopting the proposals at the meeting. If you have properly designated
the proxies and indicated your voting preferences by mail, you will be
considered part of the quorum, and the proxies will vote your shares as
you have instructed them. If a broker holding your shares in "street"
name indicates to us on a proxy card that the broker lacks discretionary
authority to vote your shares, we will not consider your shares as
present or entitled to vote for any purpose.
1
Q: IS MY VOTE CONFIDENTIAL?
A: Yes. Proxy cards, ballots and voting tabulations that identify individual
stockholders are kept confidential except in certain circumstances where
it is important to protect the interests of the Corporation and its
stockholders. Generally, only the judges of election and the employees of
American Stock Transfer & Trust Company processing the votes will have
access to your name. They will not disclose your name as the author of
any comments you include on the proxy card unless you ask that your name
be disclosed to management.
Q: WHO WILL COUNT THE VOTES?
A: Employees of American Stock Transfer & Trust Company will tabulate the
votes and the judges of election will review their tabulation process.
Q: WHAT SHARES ARE INCLUDED IN THE PROXY CARD?
A: The shares listed on your card sent by the Corporation represent all the
shares of Common Stock held in your name (as distinguished from those
held in "street" name), including those held in the dividend reinvestment
plan. You will receive a separate card or cards from your broker if you
hold shares in "street" name.
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
A: It indicates that your shares are held in more than one account, such as
two brokerage accounts and registered in different names. You should vote
each of the proxy cards to ensure that all of your shares are voted. We
encourage you to register all of your brokerage accounts in the same name
and address for better stockholder service. You may do this by contacting
our transfer agent, American Stock Transfer & Trust Company, at
1-800-937-5449.
Q: HOW MUCH DID THIS PROXY SOLICITATION COST?
A: The Corporation has retained American Stock Transfer & Trust Company to
solicit and tabulate proxies from stockholders at an estimated fee of
$750.00, plus expenses. (Note that this fee does not include the costs of
printing and mailing the proxy statements.) Some of the officers and
other employees of the Corporation also may solicit proxies personally,
by telephone and by mail. The Corporation will also reimburse brokerage
houses and other custodians for their reasonable out-of-pocket expenses
for forwarding proxy and solicitation material to the beneficial owners
of Common Stock.
Q: WHOM CAN I CALL WITH ANY QUESTIONS?
A: You may call American Stock Transfer & Trust Company at 1-800-937-5449 or
visit their website: http://www.amstock.com.
BOARD OF DIRECTORS
THIS SECTION GIVES BIOGRAPHICAL INFORMATION ABOUT OUR DIRECTORS AND DESCRIBES
THEIR MEMBERSHIP ON BOARD OF DIRECTORS' COMMITTEES, THEIR ATTENDANCE AT MEETINGS
AND THEIR COMPENSATION.
2
ELECTION OF DIRECTORS
Item 1 on Proxy Card
The Corporation has nine directors who are divided into three classes: three
directors are in Class 1; three directors are in Class 2; and three directors
are in Class 3. Each director holds office for a three-year term. The terms of
the classes are staggered, so that the term of office of one class expires each
year.
At this meeting, the stockholders elect three Class 2 directors. Unless you
withhold authority to vote for one or more of the nominees, the persons named as
proxies intend to vote for the election of the three nominees for Class 2
director. All of the nominees are recommended by the Board of Directors:
Lance O. Diehl
William F. Hess
Paul E. Reichart
All nominees have consented to serve as directors. The Board of Directors has no
reason to believe that any of the nominees should be unable to act as a
director. However, if any director is unable to stand for re-election, the Board
of Directors will designate a substitute. If a substitute nominee is named, the
proxies will vote for the election of the substitute.
The following information includes the age of each nominee and current director
as of the date of the meeting. All directors of the Corporation are also
directors of the bank.
CLASS 1 DIRECTORS WHOSE TERM EXPIRES IN 2005
ROBERT M. BREWINGTON, JR., 53
Director since 1996. Owner of Sutliff Motors and Brewington
Transportation (sales and service of cars and trucks; school bus
contractor).
WILLARD H. KILE, JR., D.M.D., 49
Director since 2000. Partner of Kile & Robinson LLC (dentists); Partner
of Kile & Kile Real Estate.
CHARLES E. LONG, 68
Director since 1993. Retired. Former President of Long Supply Co., Inc.
(a wholesaler and retailer of hardware and masonry products).
CLASS 2 DIRECTORS WHOSE TERM EXPIRES IN 2004 AND NOMINEES FOR CLASS 2 DIRECTORS
WHOSE TERM WILL EXPIRE IN 2007
LANCE O. DIEHL, 38
Director since 2003. President and Chief Executive Officer of the
Corporation and the bank.
WILLIAM F. HESS, 70
Director since 1983. Former Chairman of the Corporation and the bank.
Dairy farmer.
PAUL E. REICHART, 66
Director since 1983. Chairman and former Vice Chairman of the
Corporation and the bank. Former President and Chief Executive Officer
of the Corporation and the bank.
3
CLASS 3 DIRECTORS WHOSE TERM EXPIRES IN 2006
DON E. BANGS, 72
Director since 1985. Secretary of the Corporation and the bank. Former
owner of Bangs Insurance Agency and former agent for The Thrush
Insurance Agency.
EDWARD L. CAMPBELL, 65
Director since 1985. President of ELC Enterprises, Inc. and the sole
proprietor of Heritage Acres Christmas tree sales.
ELWOOD R. HARDING, JR., 57
Director since 1984. Vice Chairman of the Corporation and the Bank.
Attorney at law and President of Premier Real Estate Settlement
Services, Inc. (title insurance).
REQUIRED VOTE
Nominees will be elected who receive a vote equal to a plurality of the shares
of stock represented at the meeting. Your Board of Directors recommends a vote
FOR the nominees for Class 2 director listed above. Abstentions and votes
withheld for directors will have the same effect as votes against.
NUMBER OF MEETINGS
During 2003, the Corporation's Board of Directors held 12 meetings and the
bank's Board of Directors held 24 meetings. All of the Corporation's directors
attended 75% or more of all Board of Directors and Committee meetings of the
Corporation and the bank during 2003.
COMMITTEES OF THE BOARD OF DIRECTORS OF THE CORPORATION
The Audit Committee of the Corporation is composed of the same members
as the Audit Committee of the bank. See discussion under the caption: Audit
Committee Report. The Audit Committee serves as the Qualified Legal Compliance
Committee of the Corporation for purposes of Rule 205 of the Securities and
Exchange Commission ("SEC").
The Corporation has no other standing committees. The bank's Human
Resource Committee performs the functions for a compensation committee of the
Corporation. See the caption "Human Resource Committee Report on Executive
Compensation".
The independent directors of the Corporation who meet the independence
requirements under appropriate rules of the NASDAQ Stock Market, SEC and
applicable bank regulatory agencies, will perform the functions of a nominating
and corporate governance committee. The following directors participate in the
consideration of director nominations:
Don E. Bangs
Robert M. Brewington, Jr.
Edward L. Campbell
Elwood R. Harding, Jr.
William F. Hess
Willard H. Kile, Jr.
Charles E. Long
4
COMMITTEES OF THE BOARD OF DIRECTORS OF THE BANK
LONG CREDIT
BOARD OF RANGE ADMINI- HUMAN ASSET-
NAME DIRECTORS EXECUTIVE AUDIT PLANNING STRATION RESOURCE TRUST LIABILITY
---- --------- --------- ----- -------- -------- -------- ----- ---------
Don E. Bangs x x x x(1)
Robert M. Brewington,Jr. x x x(1)
Edward L. Campbell x x x(1)
Lance O. Diehl x x x
Elwood R. Harding, Jr. x x x x x
William F. Hess x x(1) x x x
Willard H. Kile, Jr. x x(1) x
Charles E. Long x x x x x(1)
Paul E. Reichart x(1) x(1) x x x x x
(1) Chairman.
EXECUTIVE COMMITTEE
The Executive Committee reviews the operations of the Board of Directors with
respect to directors' fees and frequency of Board of Directors' meetings as well
as the Corporation's capital structure, stock position and earnings. In
addition, the Executive Committee analyzes other management issues and
periodically makes recommendations to the Board of Directors based on its
findings.
AUDIT COMMITTEE
The Audit Committee is responsible for the review and evaluation of the system
of internal controls and corporate compliance with applicable rules, regulations
and laws. The Audit Committee meets with outside independent auditors and senior
management to review the scope of the internal and external audit engagements,
the adequacy of the internal and external auditors, corporate policies to ensure
compliance and significant changes in accounting principles. See, "Audit
Committee Report".
LONG RANGE PLANNING COMMITTEE
This committee studies the future growth, capital development and corporate
structure of the Corporation.
CREDIT ADMINISTRATION COMMITTEE
This committee reviews all new loans, past due loans, loan compliance, loan
review and other pertinent matters.
HUMAN RESOURCE COMMITTEE
This committee recommends to the Board of Directors the amount to be considered
for contribution to the profit sharing/401K plan and reviews the proposed salary
increases of the officers, before they are presented to the Board of Directors
for approval. See, "Human Resource Committee Report on Executive Compensation".
TRUST COMMITTEE
This committee is responsible for the oversight of the Trust Department,
including the Trust Department investments and operations.
ASSET-LIABILITY COMMITTEE
This committee reviews asset-liability positions and provides support and
direction in managing net interest margins and liquidity.
BOARD OF DIRECTORS' COMPENSATION
DIRECTORS' FEES
5
Directors' fees were paid by the bank in 2003 as follows:
Fee for each Board of Directors' meeting attended............... $425
Fee for each committee meeting attended......................... $250
The Chairman received a flat fee of $20,000 annually, and the Secretary received
an additional fee of $1,500 in 2003. Directors received or deferred, in the
aggregate, in 2003, $124,350 in fees. Directors of the Corporation are not paid
for attendance at the Corporation's Board of Directors meetings. Such meetings
usually occur immediately after meetings of the Bank's Board of Directors.
DEFERRED COMPENSATION AGREEMENTS FOR DIRECTORS
During 1990, the bank entered into agreements with two directors to establish
non-qualified deferred compensation plans for each of these directors. In 1994,
additional plans were established for these two directors plus another director.
These plans are limited to four-year terms. The bank may, however, enter into
subsequent similar plans with its directors. Each of the participating directors
is deferring the payment to himself of certain director's fees to which he is
entitled. Each director's future payment is based upon the cumulative amount of
deferred fees together with interest currently accruing thereon at the rate of
8% per annum, subject to change by the Board of Directors. The bank has obtained
life insurance (designating the bank as beneficiary) on the lives of certain
directors in face amounts which are intended to cover the bank's obligations and
related costs under the Director's Deferred Compensation Plan. As of December
31, 2003 and 2002, the net cash value of insurance policies was $368,924 and
$331,095, respectively, and the total accrued liability was $214,418 and
$216,039, respectively, relating to these directors' deferred compensation
agreements.
During 2003, the directors were given the option of receiving or deferring their
directors' fees under a non-qualified deferred compensation plan which allows
the director to defer such fees until the year following the expiration of the
director's term. Payments are then made over specified terms under these
arrangements up to a ten year period. Interest is to accrue on these deferred
fees at the five year certificate of deposit rate, which was 4% in 2003. Two
directors have elected to participate in this program, and the total accrued
liability at December 31, 2003 was $13,317.
STOCK OWNERSHIP
THIS SECTION DESCRIBES HOW MUCH STOCK OUR DIRECTORS AND EXECUTIVE OFFICERS OWN.
IT ALSO DESCRIBES THE PERSONS OR ENTITIES THAT OWN MORE THAN 5% OF OUR VOTING
STOCK.
STOCK OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
This table indicates the number of shares of Common Stock owned by the executive
officers and directors as of March 23, 2004. The aggregate number of shares
owned by all directors and executive officers is 4.98%. Unless otherwise noted,
each individual has sole voting and investment power for the shares indicated
below.
NAME OF INDIVIDUAL AMOUNT AND NATURE OF
OF IDENTITY OF GROUP BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
-------------------- ----------------------- ----------------
Don E. Bangs 8,826.504 ----
Robert M. Brewington, Jr. 8,646.589 ----
Edward L. Campbell 6,109.820 ----
Lance O. Diehl 544.051 ----
Elwood R. Harding, Jr. 15,589.529 1.22%
William F. Hess 4,660.931 ----
Willard H. Kile, Jr. 3,632.237 ----
Virginia D. Kocher 391.000 ----
Charles E. Long 6,509.862 ----
6
Paul E. Reichart 8,741.000 ----
All Officers and Directors as a group
(9 directors, 3 nominees, 5 officers,
10 persons in total) 63,651.523 4.98%
(1) Includes shares held (a) directly, (b) jointly with a spouse, (c)
individually by spouse, (d) by the transfer agent in the Corporation's
dividend reinvestment account, (e) in the 401(k) plan, and (f) in various
trusts.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Executive officers and directors and "beneficial owners" of more than ten
percent of the Common Stock must file initial reports of ownership and reports
of changes in ownership with the SEC pursuant to Section 16(a).
We have reviewed the reports and written representations from the executive
officers and directors. The Corporation believes that all filing requirements
were met during 2003 with the exception of the second quarter filings for Lance
O. Diehl, Robert M. Brewington, Jr. and retired Chief Operating Officer, J. Jan
Girton. These Form 4 filings were submitted via paper format rather than
electronically due to a misinterpretation of the new regulation effective on
June 30, 2003. Mr. Diehl's and Mr. Brewington's filings were corrected by
submitting them electronically on July 14, 2003. Mr. Girton's form was submitted
electronically on July 17, 2003.
VOTING STOCK OWNED BY "BENEFICIAL OWNER"
There are no persons or entities known by the Corporation to own beneficially
more than five percent of the Common Stock as of March 23, 2004.
EXECUTIVE COMPENSATION
THIS SECTION CONTAINS CHARTS THAT SHOW THE AMOUNT OF COMPENSATION EARNED BY OUR
EXECUTIVE OFFICERS WHOSE SALARY AND BONUS EXCEEDED $100,000 FOR 2003. IT ALSO
CONTAINS THE PERFORMANCE GRAPH COMPARING THE CORPORATION'S PERFORMANCE RELATIVE
TO ITS PEER GROUP AND THE REPORT OF OUR HUMAN RESOURCE COMMITTEE EXPLAINING THE
COMPENSATION PHILOSOPHY FOR OUR MOST HIGHLY PAID OFFICERS.
SUMMARY COMPENSATION TABLE (1)
ANNUAL COMPENSATION
------------------------------------------------ ---------------
NAME AND PRINCIPAL FISCAL OTHER ANNUAL ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION($) COMPENSATION($)
- -------- ---- --------- -------- --------------- ---------------
Lance O. Diehl 2003 100,000 1,883(2) 13,048(3) 13,118(4)
President and Chief 2002 72,424 2,796(5) 1,130(6) 7,779(7)
Executive Officer 2001 67,547 2,350(8) 1,048(9) 8,455(10)
(1) From January 1, 2001 through December 31, 2003, the Corporation did not
pay any long-term compensation in the form of stock options, stock
appreciation rights, restricted stock or any other long-term
compensation, nor did it make any long-term incentive plan payments.
Accordingly, no such information is presented in the summary compensation
table set forth above. No such arrangements are currently in effect.
(2) Represents a cash bonus representing 2 1/2% of 2002 base salary.
(3) Includes $8,925 as the payment of directors' fees and $4,123 representing
the year 2003, 100% up to 3% and 50% up to the next 2% matching
contribution to Mr. Diehl's 401K plan.
(4) Includes $11,099 as a payment for a deferred compensation plan; $711
representing car expense; $420 representing cell phone expense; $661
representing cafeteria plan benefits and $227 as annual term insurance
premium payments on the life of Mr. Diehl.
(5) Represents a cash bonus representing 4% of 2001 base salary.
(6) Represents the year 2002, 50% up to 3% matching contribution to Mr.
Diehl's 401K plan.
(7) Includes $3,411 as a contribution to the bank's profit sharing plan; $420
representing cell phone expense; $3,680 representing cafeteria plan
benefits and $268 as annual term insurance premium payments on the life
of Mr. Diehl.
(8) Represents a cash bonus representing 3 1/2% of 2000 base salary.
(9) Represents the year 2001, 50% up to 3% matching contribution to Mr.
Diehl's 401K plan.
(10) Includes $3,647 as a contribution to the bank's profit sharing plan; $420
representing cell phone expense; $4,172 representing cafeteria plan
benefits and $216 as annual term insurance premium payments on the life
of Mr. Diehl.
7
HUMAN RESOURCE COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Executive compensation for the officers of the Corporation and the bank is
determined by the Human Resource Committee of the Corporation's Board of
Directors. Salaries and bonuses for the executive officers are reviewed
annually. All executive compensation is paid by the bank to the applicable
executive.
COMPENSATION PHILOSOPHY
The Corporation's executive compensation philosophy is designed to attract,
retain, and motivate the best managerial talent available in line with three
central themes: alignment, accountability, and attraction.
- Alignment with the long-term interests of our stockholders;
- Accountability for results by linking executives to the
Corporation and individual performance; and
- Attraction, motivation and retention of critical talent.
The Human Resource Committee annually conducts a full review of the performance
of the Corporation and its executives in determining compensation levels. For
2003, the Human Resource Committee considered various qualitative and
quantitative indicators of the Corporation and individual performance in
determining the level of compensation for the Corporation's President and Chief
Executive Officer and its other executive officers. The review included an
evaluation of the Corporation's performance both on a short and long-term basis.
This review included an analysis of quantitative measures, such as Return on
Equity. The Human Resource Committee considered also qualitative measures such
as leadership, experience, strategic direction, community representation and
social responsibility. The Human Resource Committee has been sensitive to
management's maintaining a balance between actions that foster long-term value
creation and short-term performance. In addition, the Human Resource Committee
evaluates total executive compensation in light of the operational and financial
performance and compensation practices of the commercial banking industry in the
Pennsylvania region.
Base salaries are reviewed each year and generally adjusted relative to
individual performance and competitive salaries with the commercial banking
industry in the Pennsylvania region.
A base salary average decrease of 26.62% was made to all executives in 2003.
Actual salaries will continue to be set according to the scope of the
responsibilities of each executive officer's position.
DEFERRED COMPENSATION AGREEMENTS FOR EXECUTIVE OFFICERS
In 1992, the bank entered into agreements with two executive officers to
establish non-qualified deferred compensation plans. Each officer deferred
compensation in order to participate in this Deferred Compensation Plan. If the
officer continues to serve as an officer of the bank until he attains sixty-five
(65) years of age, the bank has agreed to pay him 120 guaranteed consecutive
monthly payments commencing on the first day of the month following the
officer's 65th birthday. Each officer's guaranteed monthly payment is based upon
the future value of life insurance purchased with the compensation the officer
has deferred. The bank has obtained life insurance (designating the bank as the
beneficiary) on the life of each participating officer in an amount which is
intended to cover the bank's obligations under the deferred compensation plan,
based upon certain actuarial assumptions.
During 2002, the agreements with the two executive officers were modified. Under
one agreement, the executive officer will receive $225,000 payable monthly over
a 10 year period commencing in February 2003. Under another agreement, another
executive officer will receive $175,000 payable monthly over a 10 year period
commencing in April 2003. This second agreement will also provide post
employment health care benefits to the executive officer until the attainment of
age 65. As of December 31, 2003 and 2002, the net cash value of insurance
policies was $318,119 and $292,515, respectively, and the total accrued
liability, equal to the present value of these obligations, was $295,674 and
$314,674, respectively, relating to these executive officers' and directors'
deferred compensation agreements, and the accrued liability related to the post
employment health care benefit was $14,336 and $14,668 as of December 31, 2003
and December 31, 2002, respectively.
8
In April 2003, the bank entered into non-qualified deferred compensation
agreements with three executive officers to provide supplemental retirement
benefits commencing with the executive's retirement and ending 15 years
thereafter. The deferred compensation expense related to these agreements for
the year ended December 31, 2003 and the total accrued liability as of December
31, 2003 was $55,131.
9
FIVE-YEAR PERFORMANCE GRAPH
The following graph and table compare the cumulative total stockholder return on
the Corporation's Common Stock during the five-year period ending on December
31, 2003, with (i) the cumulative total return on the SNL Securities Corporate
Performance Index (1) for 35 publicly-traded banks with under $250 million in
total assets in the United States of America, and (ii) the cumulative total
return for all United States stocks traded on the NASDAQ Stock Market. The
comparison assumes the value of the investment in the Corporation Common Stock
and each index was $100 on December 31, 1998, and assumes further the
reinvestment of dividends into the applicable securities. The stockholder return
shown on the graph and table below is not necessarily indicative of future
performance.
CCFNB BANCORP, INCORPORATED
(PERFORMANCE CHART)
PERIOD ENDING
---------------------------------------------------------------------
INDEX 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
- ----- -------- -------- -------- -------- -------- --------
CCFNB Bancorp, Incorporated 100.00 79.63 67.97 97.63 104.22 125.75
NASDAQ - Total US 100.00 185.95 113.19 89.65 61.67 92.90
SNL <$250M Bank Index 100.00 87.81 86.94 108.40 133.20 201.44
SOURCE : SNL FINANCIAL LC, CHARLOTTESVILLE, VA (434) 977-1600
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding day is used.
D. The index level for all series was set to $100 on 12/31/98.
(1) SNL Securities is a research and publishing firm specializing in the
collection and dissemination of data on the banking, thrift and financial
services industries.
10
AUDIT COMMITTEE REPORT
The Audit Committee is made up of the following directors: Willard H.
Kile, Jr. (Chairman), Don E. Bangs, Robert M. Brewington, Jr., and Charles E.
Long. For more background information on these directors, see "Board of
Directors." The Audit Committee operates pursuant to a charter. A copy of the
Audit Committee Charter is attached to this Proxy Statement. In accordance with
the charter, all of the members of the Audit Committee are independent and
financially literate and at least one member of the Audit Committee has
accounting or related financial management expertise.
The Board of Directors has deemed Willard H. Kile, Jr. as the financial
expert member of the Audit Committee in accordance with appropriate rules of the
NASDAQ Stock Market and SEC.
The Audit Committee, on behalf of the Board, oversees the Corporation's
financial reporting process. In fulfilling its oversight responsibilities, the
Audit Committee reviewed with management the audited financial statements and
the footnotes to these statements in the Corporation's fiscal year 2003 Annual
Report to Shareholders and discussed with management the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments and the clarity of disclosures in the financial statements.
The Corporation's external auditors are responsible for expressing an
opinion on the conformity of the Corporation's audited financial statements to
generally accepted accounting principles. The Audit Committee reviewed and
discussed with the external auditors their judgments as to the quality, not just
the acceptability, of the Corporation's accounting principles and such other
matters as are required to be discussed by the Audit Committee with the
Corporation's external auditors under generally accepted auditing standards. The
Corporation's external auditors have expressed the opinion that the
Corporation's audited financial statements conform to generally accepted
accounting principles.
The Audit Committee discussed with the external auditors their
independence from management and the Corporation, and received the written
disclosures concerning the external auditors' independence required by the
Independence Standards Board to be made by the external auditors to the
Corporation.
Over the past year, the Audit Committee discussed with the
Corporation's external auditors the overall scope and plans for their respective
audits. The Audit Committee met with the external and internal auditors to
discuss the results of their examinations, their evaluations of the
Corporation's internal controls and the overall quality of the Corporation's
financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Annual Report on Form 10-K for the year ended
December 31, 2003, to be filed with the Securities and Exchange Commission. The
Audit Committee also recommended to the Board of Directors the selection of J.H.
Williams & Co., LLP, Certified Public Accountants, to serve as the Corporation's
external auditors for the year ending December 31, 2004.
Submitted by the members of the Audit Committee:
Willard H. Kile, Jr., Board Member and Committee Chair
Don E. Bangs, Board Member
Robert M. Brewington, Jr., Board Member
Charles E. Long, Board Member
INDEPENDENT AUDITORS
PROPOSAL TO APPROVE THE APPOINTMENT OF J. H. WILLIAMS & CO., LLP
Item 2 on Proxy Card
J. H. Williams & Co., LLP, Certified Public Accountants, have audited the
consolidated financial statements of the Corporation and the bank for many
years, and the Board of Directors has appointed them for 2004. The firm has no
relationship with the Corporation except for the existing professional
relationship as Certified Public Accountants. The Audit Committee and the Board
of Directors believe that J. H. Williams & Co., LLP's long-term knowledge of the
Corporation and the bank is valuable to the Corporation. Representatives of J.
H. Williams & Co., LLP have direct access to members of the Audit Committee and
regularly attend their meetings.
11
A representative of J. H. Williams & Co., LLP will attend the Annual Meeting and
will have the opportunity to make a statement if he desires to do so. This
representative will also be available to respond to appropriate questions.
REQUIRED VOTE
The proposal will be approved if it receives the affirmative vote of a majority
of the shares of Common Stock represented in person or by proxy at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE APPOINTMENT
OF J. H. WILLIAMS & CO., LLP. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL
BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
AUDIT FEES
J. H. Williams & Co., LLP, billed the Corporation $63,500, in 2003, for
services rendered for the audit of the Corporation's annual financial statements
for the year ended December 31, 2003 and the reviews of the financial statements
included in the Corporation's reports on SEC Form 10-Q for the quarters ended
March 31, June 30 and September 30, 2003.
AUDIT RELATED FEES
J. H. Williams & Co., LLP, billed the Corporation $9,450, in 2003, for
the performance of agreed upon procedures with respect to the trust department
($6,000) and the retail sales of non deposit investment products of the bank
($3,450).
TAX FEES
J. H. Williams & Co., LLP, billed the Corporation $5,500, in 2003, for
tax compliance, tax advice and tax planning.
ALL OTHER FEES
J. H. Williams & Co., LLP billed the Corporation $0, in 2003, for other
services rendered.
All such services that were performed by J. H. Williams & Co., LLP were
done by permanent, full-time employees and partners of such firm.
The Audit Committee considered whether the provision of the services
rendered above was compatible with maintaining the independence of J. H.
Williams & Co., LLP as the independent outside auditors. The Audit Committee
concluded that the independence of such firm was maintained.
OTHER INFORMATION
THIS SECTION SETS OUT OTHER INFORMATION YOU SHOULD KNOW BEFORE YOU VOTE.
TRANSACTIONS INVOLVING THE CORPORATION'S
DIRECTORS AND EXECUTIVE OFFICERS
The Corporation encourages its directors and executive officers to have banking
and financial transactions with the bank. All of these transactions are made on
comparable terms and with similar interest rates as those prevailing for other
customers.
The total consolidated loans made by the bank at December 31, 2003, to its
directors and officers as a group, members of their immediate families and
companies in which they have a 10% or more ownership interest was $6,941,927 or
approximately 25.1% of the Corporation's total consolidated capital accounts.
The largest amount for all of these loans in 2003 was $7,415,454 or
approximately 26.9% of the Corporation's total consolidated capital accounts.
These loans did not involve more than the normal risk of collectibility nor did
they present other unfavorable features.
12
NO SIGNIFICANT LEGAL PROCEEDINGS
The Corporation and the bank are not parties to any legal proceedings that could
have any significant effect upon the Corporation's financial condition or
income. In addition, the Corporation and the bank are not parties to any legal
proceedings under federal and state environmental laws.
OTHER PROPOSED ACTION
The Board of Directors is not aware of any other matters to be presented at the
meeting. If any other matters should properly come before the meeting, the
persons named in the enclosed proxy form will vote the proxies in accordance
with their best judgment.
STOCKHOLDER PROPOSALS FOR 2005 ANNUAL MEETING
Stockholder proposals for the 2005 Annual Meeting must be received by November
30, 2004 to be considered for inclusion in the Corporation's 2005 Proxy
Statement. Stockholder proposals for the 2005 Annual Meeting for which the
proponents do not desire them to be included in the 2005 Proxy Statement must be
received by February 11, 2005. Such proposals should be addressed to the
Secretary.
ADDITIONAL INFORMATION AVAILABLE
A COPY OF THE ANNUAL DISCLOSURE STATEMENT OF COLUMBIA COUNTY FARMERS NATIONAL
BANK MAY ALSO BE OBTAINED, AT NO COST, FROM MS. VIRGINIA D. KOCHER, VICE
PRESIDENT, COLUMBIA COUNTY FARMERS NATIONAL BANK, 232 EAST STREET, BLOOMSBURG,
PA 17815; TELEPHONE: (570) 387-4016.
SEC FILINGS FOR CCFNB BANCORP, INC. CAN BE ACCESSED ON THE WEB AT www.ccfnb.com
UNDER THE "ABOUT OUR BANK" AND "CONTACT US" LINKS.
HOW TO CONTACT OUR DIRECTORS
SHAREHOLDERS WHO ARE INTERESTED IN COMMUNICATING WITH OUR INDEPENDENT DIRECTORS
CAN DO SO BY WRITING A LETTER TO THAT INDEPENDENT DIRECTOR, C/O CCFNB BANCORP,
INC., 232 EAST STREET, BLOOMSBURG, PA 17815.
By order of the Board of Directors
Lance O. Diehl
President
Bloomsburg, Pennsylvania
March 30, 2004
13
CCFNB BANCORP, INC.
COLUMBIA COUNTY FARMERS NATIONAL BANK
CHARTER OF THE AUDIT COMMITTEE
APRIL 30, 2003
OBJECTIVE
The objective of the Audit Committee is to assist the full Board of Directors in
fulfilling its fiduciary responsibilities. The Audit Committee is responsible
for evaluating the Bank's compliance with laws, regulations, policies and
procedures, and determining that the Bank has adequate administrative, operating
and internal accounting controls. In addition, the Audit Committee is
responsible for providing reasonable assurance regarding the integrity of
financial and other data used by the Board of Directors.
RESPONSIBILITIES
The Audit Committee is responsible for:
- Reviewing published Bank financial statements and the annual Report for
accuracy, timeliness, and appropriate financial statement disclosures.
- Reviewing the adequacy and effectiveness of key accounting and
financial policies, including any significant changes thereto.
- Evaluating security for computer systems, facilities, and backup
systems.
- Determining that no restrictions are imposed upon the audit scope that
would hinder independence of the audit function.
- Evaluating responses by management to audit findings and reports.
- Monitoring management implementation of audit recommendations.
- Assessing the impact of new accounting principles or policies
promulgated by the accounting profession or proposed by Bank personnel.
- Overseeing the investigation of conflicts of interest and unethical
conduct.
- Facilitating communication among the Board of Directors, the Bank's
external auditors, internal auditors, the Office of the Comptroller of
the Currency and the Federal Reserve System.
- Reviewing and approving annual audit plans of the external and internal
auditors.
- Ensuring the receipt from the external and internal auditors of a
formal written statement delineating all relationships between the
auditor and the Bank. Also, actively engages in a dialogue with the
auditor with response to any disclosed relationships or services that
may impact the objectivity and independence of the auditor, and to take
appropriate action to ensure the independence of the outside auditors.
- Requiring the external and internal auditor to discuss with the audit
committee the auditors judgments about the quality, not just
acceptability, of the Bank's accounting principles applied in its
financial reporting. Also, recommends that outside auditors discuss the
clarity of the company's disclosures.
- Requiring a disclosure to shareholders to disclose whether the audit
committee:
1. discussed with management the quality of the accounting
principles and significant judgments affecting the company's
financial statements;
14
2. discussed with the outside and internal auditor the auditors
assessment of the quality of management's accounting
principles and judgments;
3. discussed among themselves, without the presence of management
or the outside or internal auditor, the information from (1)
and (2); and
4. believes that the company's financial statements are fairly
presented in conformity with GAAP.
The above responsibilities of the Audit Committee will be discharged through
review of audit reports and discussions with external auditors, as well as Bank
management.
ADMINISTRATIVE
- The Audit Committee will consist of at least two Board members and a
Chairperson designated by the Board. The process of appointing members
to the Audit Committee will provide a level of service continuity.
- Each committee member shall be independent according to the specified
criteria in Section 301 of the Sarbanes-Oxley Act of 2002.
- The Audit Committee members will be directly responsible for the
appointment, compensation, retention, and oversight of the issuer's
outside and internal auditors, and the outside and internal auditors
must report directly to the Audit Committee.
- The Audit Committee will establish procedures for handling anonymous
complaints regarding accounting, internal controls and auditing
matters.
- The Audit Committee will have the authority to engage independent
counsel and other advisors.
- CCFNB will provide appropriate funding for the Audit Committee.
- The Audit Committee will meet at least four times a year and will have
the opportunity to meet in executive session with external and internal
auditors at least annually. Furthermore, the Committee has the
authority to call additional meetings and has the ability to
communicate with Senior Management between regularly scheduled
meetings, as deemed necessary.
- Written minutes shall be prepared for each meeting and distributed to
the full Board of Directors.
- Require disclosure to shareholders of whether the Audit Committee has
adopted a written charter, and if so, whether the committee has
satisfied its responsibilities during the prior year in compliance with
the charter. The charter should be disclosed at least triennially in
the annual report and in the next annual report after any significant
amendments are made to the charter.
- This charter will be reviewed and approved at least annually by the
Audit Committee. The Audit Committee Charter also will be reviewed and
approved by the Board of Directors on an annual basis.
15
ANNUAL MEETING OF SHAREHOLDERS OF
CCFNB BANCORP, INC.
MAY 5, 2004
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
- Please detach along perforated line and mail in the envelope provided. -
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [x]
- --------------------------------------------------------------------------------
1. ELECTION OF CLASS 2 DIRECTORS TO SERVE FOR A THREE-YEAR TERM:
NOMINEES:
[ ] FOR ALL NOMINEES
( ) Lance O. Diehl
[ ] WITHHOLD AUTHORITY
FOR ALL NOMINEES ( ) William F. Hess
[ ] FOR ALL EXCEPT ( ) Paul E. Reichart
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: (-)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method. [ ]
- --------------------------------------------------------------------------------
2. Proposal to ratify the selection of J.H. Williams & Co. LLP, Certified
Public Accountants, of Kingston, Pennsylvania, as the independent auditors
for the Corporation for the year ending December 31, 2004.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting and any adjournment
or postponement thereof.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR ALL NOMINEES LISTED ABOVE AND FOR PROPOSAL 2.
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED PROMPTLY TO THE
CORPORATION IN THE ENCLOSED ENVELOPE.
Yes, I(we) plan to attend the Annual Meeting. [ ]
Insert Number Attending: ____________
Signature of Shareholder ________________________________ Date: ________________
Signature of Shareholder ________________________________ Date: ________________
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
CCFNB BANCORP, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 5, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Elaine M. Edwards and Dean R.
Kelchner and each and any of them, proxies of the undersigned, with full power
of substitution, to vote all of the shares of CCFNB Bancorp, Inc. (the
"Corporation") that the undersigned may be entitled to vote at the Annual
Meeting of Shareholders of the Corporation to be held at the Danville Elks,
located on Route 11 between Bloomsburg and Danville, PA, on Wednesday, May 5,
2004 at 10:30 a.m., prevailing time, and at any adjournment or postponement
thereof as follows:
(PLEASE DATE AND SIGN ON REVERSE SIDE)