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. [ ])
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[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
Neffs Bancorp, Inc.
--------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
_________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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(1) Amount previously paid:
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NEFFS BANCORP, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AND
PROXY STATEMENT
2004
www.neffsnatl.com
PROXY STATEMENT
Dated and to be mailed on or about April 12, 2004
NEFFS BANCORP, INC.
5629 ROUTE 873
NEFFS, PENNSYLVANIA 18065
(610) 767-3875
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 2004
TABLE OF CONTENTS
PAGE
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT........................................................................... 1
GOVERNANCE OF THE CORPORATION............................................................. 2
ELECTION OF DIRECTORS..................................................................... 4
SHARE OWNERSHIP .......................................................................... 5
COMPENSATION AND PLAN INFORMATION......................................................... 7
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION............................. 8
REPORT OF THE AUDIT COMMITTEE............................................................. 10
SHAREHOLDER RETURN PERFORMANCE GRAPH...................................................... 12
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE................................... 13
RATIFICATION OF SELECTION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS..................... 13
ADDITIONAL INFORMATION.................................................................... 13
OTHER MATTERS............................................................................. 13
AUDIT COMMITTEE CHARTER................................................................... EXHIBIT A
NEFFS BANCORP, INC.
5629 ROUTE 873
NEFFS, PA 18065
(610) 767-3875
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 2004
TO THE SHAREHOLDERS OF NEFFS BANCORP, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of Neffs
Bancorp, Inc. will be held at the NOVA Building, 2375 Levans Road, Coplay,
Pennsylvania, on May 12, 2004, at 8 p.m., prevailing time, for the purpose of
considering and voting upon the following matters:
1. To elect 2 Class B directors each to serve for a three-year
term and until their successors are elected and qualified;
2. To ratify the selection of Beard Miller Company LLP as the
corporation's independent certified public accountants for the
year ending December 31, 2004; and
3. To transact such other business as may properly come before
the meeting and any adjournment or postponement thereof.
Only those shareholders of record, at the close of business on March
29, 2004 are entitled to notice of and to vote at the meeting.
Please promptly sign the enclosed proxy card and return it in the
enclosed postpaid envelope. We cordially invite you to attend the meeting. Your
proxy is revocable, and you may withdraw it at any time. You may deliver notice
of revocation or deliver a later dated proxy to the Secretary of the corporation
before the vote at the meeting.
We enclose, among other things, a copy of the 2003 Annual Report of
Neffs Bancorp, Inc.
BY ORDER OF THE BOARD OF DIRECTORS
__________________________________
Secretary Pro-Tem
Neffs, Pennsylvania
April 12, 2004
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY CARD.
PROXY STATEMENT
INTRODUCTION
This proxy statement is furnished in connection with the solicitation
of proxies by Neffs Bancorp, Inc. on behalf of the Board of Directors, for the
2004 Annual Meeting of Shareholders. This proxy statement and the related proxy
form are being distributed on or about April 12, 2004.
Neffs Bancorp, Inc. will bear the expense of soliciting proxies. In
addition, to the use of the mail, directors, officers and employees of the
corporation and its subsidiaries may, without additional compensation, solicit
proxies.
The annual meeting of shareholders will be held on May 12, 2004, at 8
p.m. at the NOVA Building, 2375 Levans Road, Coplay, Pennsylvania. Shareholders
of record at the close of business on March 29, 2004, are entitled to vote at
the meeting.
At the annual meeting, shareholders will vote to:
- Elect 2 Class B directors each to serve for a
three-year term;
- Ratify the selection of Beard Miller Company LLP as
the corporation's independent public accountants for
the year ending December 31, 2004; and
- Transact any other business that may properly come
before the meeting and any adjournment or
postponement of the meeting.
PROXIES AND VOTING PROCEDURES
You can vote your shares by completing and returning a written proxy
card. You can also vote in person at the meeting. Submitting your voting
instructions by returning a proxy card will not affect your right to attend the
meeting and vote, if you later decide to attend in person.
If your shares are held in a stock brokerage account or by a bank or
other nominee, you are considered the beneficial owner of shares held in street
name, and these proxy materials are being forwarded to you by your broker or
nominee which is considered, with respect to those shares, the shareholder of
record. As the beneficial owner, you have the right to direct your broker how to
vote and you are also invited to attend the meeting. However, because you are
not the shareholder of record, you may not vote your street name shares in
person at the meeting, unless you obtain a proxy executed in your favor, from
the holder of record. Your broker or nominee has enclosed a voting instruction
card for you to use in directing the broker or nominee how to vote your shares.
By properly completing a proxy, you appoint Velma Wehr and Ronald
Gildner as proxy holders to vote your shares, indicated on the proxy card. Any
signed proxy card not specifying to the contrary will be voted FOR:
- Election of the nominees identified in this proxy
statement; and
- Ratification of the selection of independent public
accountants for the year ending December 31, 2004.
You may revoke your written proxy by delivering written notice of
revocation to Dawn Hamm, Secretary Pro-Tem, Neffs Bancorp, Inc, or by executing
a later dated proxy and giving written notice of the revocation to Ms. Hamm at
any time before the proxy is voted at the meeting. Proxy holders will vote
shares represented by proxies on the accompanying proxy, if properly signed and
returned, in accordance with instructions of shareholders.
Although the Board of Directors knows of no other business to be
presented, in the event that any other matters are properly brought before the
meeting, any proxy given pursuant to this solicitation will be voted in
accordance with the recommendations of management.
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At the close of business on March 29, 2004, Neffs Bancorp, Inc. had
197,091 shares of common stock, par value $1.00 per share, issued and
outstanding.
QUORUM
A majority of the outstanding shares of common stock, represented in
person or by proxy, constitutes a quorum for the conduct of business. Under
Pennsylvania law and Neffs Bancorp, Inc.'s bylaws, the presence of a quorum is
required for each matter to be acted upon at the meeting. Votes withheld and
abstentions are counted in determining the presence of a quorum for a particular
matter. Broker non-votes are not counted in determining the presence of a quorum
for a particular matter as to which the broker withheld authority. Each share is
entitled to one vote on all matters submitted to a vote of the shareholders. All
matters to be voted upon by the shareholders require the affirmative vote of a
majority of shares voted, in person or by proxy, at the annual meeting, except
in cases where the vote of a greater number of shares is required by law or
under Neffs Bancorp, Inc.'s Articles of Incorporation or Bylaws. In the case of
the election of directors, the candidates receiving the highest number of votes
are elected. Shareholders are not entitled to cumulate votes for the election of
directors.
Assuming the presence of a quorum, the two nominees for director
receiving the highest number of votes cast by shareholders entitled to vote for
the election of directors will be elected. Votes withheld from a nominee and
broker non-votes will not be cast for the nominee.
Assuming the presence of a quorum, the affirmative vote of a majority
of all votes cast by shareholders is required for the ratification of the
selection of independent accountants. Abstentions and broker non-votes are not
deemed to constitute "votes cast" and, therefore, do not count either for or
against ratification. Abstentions and broker non-votes, however, have the
practical effect of reducing the number of affirmative votes required to achieve
a majority for each matter by reducing the total number of shares voted from
which the required majority is calculated.
GOVERNANCE OF THE CORPORATION
Our Board of Directors believes that the purpose of corporate
governance is to ensure that we maximize shareholder value in a manner
consistent with legal requirements and the highest standards of integrity. The
Board has adopted and adheres to corporate governance practices which the Board
and senior management believe promote this purpose, are sound and represent best
practices. We continually review these governance practices, Pennsylvania law
(the state in which we are incorporated), and SEC regulations, as well as best
practices suggested by recognized governance authorities.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee. In addition, the Board
of Directors performs the functions of the Compensation Committee and the
Nominating Committee.
COMPENSATION COMMITTEE. During 2003, the Board of Directors performed
the function of a compensation committee. The compensation of the Chief
Executive Officer and all other executive officers of the corporation is
determined by a majority of independent directors. The Chief Executive Officer
is not present during voting or deliberations on his compensation.
NOMINATING COMMITTEE. The corporation does not maintain a nominating
committee. The Board of Directors performs the functions of a nominating
committee. Nominations are selected by a majority of independent directors. The
Board believes this process adequately performs the function of a nominating
committee. Under our by-laws, nominations for director may be made only by the
Board of Directors or a Board of Directors' committee, or by a shareholder of
record entitled to vote. Section 10.1 Any shareholder who intends to nominate or
to cause to have nominated any candidate for election of the Board of Directors
(other than any candidate proposed by the Corporation's then existing Board of
Directors) shall so notify the Secretary of the Corporation in writing not less
than sixty (60) days prior to the date of any meeting of shareholders called for
the election of directors. You can obtain a copy of the full text of the by law
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provision by writing to Dawn Hamm, Secretary Pro-Tem, Neffs Bancorp, Inc., 5629
Route 873, P.O. Box 10, Neffs, Pennsylvania 18065-0010.
AUDIT COMMITTEE. The Audit Committee performs the duties set forth in
its charter, which is attached to this proxy statement, which include reviewing
significant audit and accounting principles, policies and practices, reviewing
performance of internal auditing procedures, reviewing reports of examination
received from regulatory authorities, and recommending, annually, to the Board
of Directors the engagement of an independent certified public accountant.
Members of the Audit Committee, during 2003, were John Simock, Chairman, Robert
Heintzelman and Mary Ann Wagner. The Audit Committee met 10 times during 2003.
We have no "audit committee financial expert". While, the Board of
Directors does not believe that each audit committee member has sufficient
knowledge in financial and auditing matters to serve on the committee, the
committee has the authority to engage legal counsel or other experts or
consultants as it deems appropriate to carry out its responsibilities.
Currently, there is no independent director available to be the audit committee
financial expert. The Board of Directors continues to look for prospective
directors that may be able to fill this position. In this interim period, the
Audit Committee does have the authority to engage legal counsel or other experts
to assist in their duties.
The Board of Directors of Neffs Bancorp, Inc. met 10 times during 2003.
There were a total of 10 meetings of the various committees of the Board of
Directors in 2003. While the corporation has no specified attendance policy, all
directors attended at least 75% or more of the meetings of the Board of
Directors and of the various committees on which they served. All of our
Directors attended the 2003 Annual Meeting of Shareholders and we expect that
they will all attend this year's meeting.
SHAREHOLDER COMMUNICATIONS
The board of directors does not have a formal process for shareholders
to send communications to the board. Due to the infrequency of shareholder
communications to the board of directors, the board does not believe that a
formal process is necessary.
SUBMISSION OF SHAREHOLDER PROPOSALS
If a shareholder wants us to include a proposal in our proxy statement
for presentation at our 2005 annual meeting of shareholders, the proposal must
be addressed to and received by the Secretary at our principal executive offices
at 5629 Route 873, P.O. Box 10, Neffs, Pennsylvania 18065-0010 no later than
December 13, 2004. We are not required to include any proposal received after
December 13, 2004 in our proxy materials for the 2005 annual meeting.
EMPLOYEE CODE OF ETHICS
Since 2003, we have had a Code of Ethics. Our employee Code of Ethics
is applicable to our directors, officers and employees. The Code of Ethics
encourages individuals to report any conduct that they believe in good faith to
be an actual or apparent violation of the Code of Ethics. The Board periodically
receives reports on our compliance program. Any shareholder can request a copy
of the Code of Ethics, free of charge, by writing to Dawn Hamm, Secretary
Pro-Tem, at 5629 Route 873, P.O. Box 10, Neffs, Pennsylvania 18065-0010. We have
also filed a copy of the Code of Ethics with the SEC as an exhibit to our
December 31, 2003 Annual Report on Form 10-K.
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ELECTION OF DIRECTORS
Section 10.2 of the Neff Bancorp, Inc.'s bylaws provide that the Board
of Directors consists of not less than five or more than twenty five persons.
The Board of Directors is also divided into three classes. Each class consists,
as nearly as possible, of one-third of the directors. The bylaws also provide
that the directors of each class are elected for a term of three years, so that
the term of office of one class of directors expires at the annual meeting each
year. The Board of Directors determines the number of directors in each class.
A majority of the Board of Directors may increase the number of
directors between meetings of the shareholders. Any vacancy occurring in the
Board of Directors, whether due to an increase in the number of directors,
resignation, retirement, death or any other reason, may be filled by appointment
by the remaining directors. Any director who is appointed to fill a vacancy
holds office until the next annual meeting of the shareholders and until a
successor is elected and qualified.
The Board of Directors has fixed the number of directors at six. There
are two nominees for the Board of Directors for election at the 2004 Annual
Meeting. The Board of Directors has nominated the following two persons for
election to the Board of Directors for the terms specified:
Nominees for Class B Directors
For a Term of Three Years
Robert Heintzelman
Kevin Schmidt
Mr. Heintzelman presently serves as a director. Mr. Schmidt currently
serves as the Executive Vice President and Chief Executive Officer of The Neffs
National Bank. The Board of Directors endeavors to act in the best interest of
the corporation's shareholders in nominating potential candidates for
directorship. The directors will review the candidate's education, prior work
experience, general business knowledge, community involvement, and overall
integrity prior to nomination. Based on the review of these skills and
qualities, the Board of Directors as a whole recommended the nomination of Kevin
Schmidt.
In the event that any of the nominees are unable to accept nomination
or election, proxy holders will vote proxies given pursuant to this solicitation
in favor of other persons recommended by management. The Board of Directors has
no reason to believe that any of its nominees will be unable to serve as a
director if elected.
INFORMATION ABOUT NOMINEES AND CONTINUING DIRECTORS
Information, as of March 29, 2004, concerning the two nominees to the
Board of Directors and the four continuing directors appear below.
Director Principal Occupation for the Past Five Years and
Name and Age Since Positions Held with Neffs Bancorp, Inc. and Subsidiaries
- ------------ ----- --------------------------------------------------------
Nominees - Class B Directors - For a Term of Three Years
Robert B. Heintzelman, 45 1999 Mr. Heintzelman and his family are the owners of Heintzelman Funeral
Home, Inc. located in Schnecksville, Pennsylvania.
Kevin A. Schmidt, 42 N/A Mr. Schmidt serves as the Executive Vice President and Chief Executive
Officer of The Neffs National Bank.
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Class A - Continuing Directors
John J. Remaley, 69 1986 Mr. Remaley was employed by The Neffs National Bank from 1953 to 1995,
when he retired. Mr. Remaley continues to serve as President of The
Neffs National Bank and President and Chief Executive Officer of Neffs
Bancorp, Inc. Mr. Remaley also serves on the boards of several
non-profit organizations.
Herman P. Snyder, 91 1986 Mr. Snyder has been Vice President of Neffs Bancorp, Inc. since 1986 and
he has been Chairman of The Neffs National Bank's board since 1986.
Class C - Continuing Directors
John F. Simock, 67 1997 Mr. Simock is the prior owner of John F. Simock, Inc., a general
contracting firm, and he is now retired.
Mary Ann Wagner, 63 2003 Ms. Wagner is the President of A. J. Henry Lumber located in Neffs,
Pennsylvania.
SHARE OWNERSHIP
PRINCIPAL HOLDERS
The following table shows, to the best of our knowledge, those persons
or entities, who owned of record or beneficially, on March 29, 2004 more than 5%
of the outstanding Neffs Bancorp, Inc. common stock.
Beneficial ownership of Neffs Bancorp, Inc. common stock was determined
by referring to Securities and Exchange Commission Rule 13d-3, which provides
that a person should be credited with the ownership of any stock held, directly
or indirectly, through any contract, arrangement, understanding, relationship,
or otherwise has or shares:
- Voting power, which includes power to vote or to direct the
voting of the stock; or
- Investment power, which includes the power to dispose or
direct the disposition of the stock; or
- The right to acquire beneficial ownership within 60 days after
March 29, 2004
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership Class
------------------- -------------------- -----
John J. Remaley
4116 Kilmer Ave. 10,443(1) 5.3%
Allentown, PA 18104
Herman P. Snyder
5519 Route 873 13,500(2) 6.85%
Neffs, PA 18065
William F. and Alma P. Deibert
4801 E. Texas Rd. 11,720 5.95%
Allentown, PA 18106
CEDE & Co.
P.O. Box 20 28,410 14.41%
Bowling Green Station
New York, NY 10274
- ------------------------------
(1) Includes 4,250 shares owned individually by Mr. Remaley, 3126 shares owned
directly by his spouse, 3,062 shares owned directly by his sons and five shares
owned directly by his grandson.
(2) Includes 1,000 shares owned individually by Mr. Snyder, 4,000 shares owned
jointly with his daughter, 4,000 shares owned jointly with his son, 2,750 shares
owned directly by his son and 1,750 shares owned jointly by his daughter and
son-in-law.
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BENEFICIAL OWNERSHIP OF EXECUTIVE OFFICERS, DIRECTORS AND NOMINEES
The following table shows, as of March 29, 2004 the amount and
percentage of Neffs Bancorp, Inc. common stock beneficially owned by each
director, each nominee, each named executive officer and all directors, nominees
and executive officers of the corporation as a group.
Beneficial ownership of shares of Neffs Bancorp, Inc. common stock is
determined in accordance with Securities and Exchange Commission Rule 13d-3,
which provides that a person should be credited with the ownership of any stock
held, directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares:
- Voting power, which includes the power to vote or to
direct the voting of the stock; or
- Investment power, which includes the power to dispose
or direct the disposition of the stock; or
- The right to acquire beneficial ownership within 60
days after March 29, 2004.
Unless otherwise indicated in a footnote appearing below the table, all
shares reported in the table below are owned directly by the reporting person.
The number of shares owned by the directors, nominees and executive officers is
rounded to the nearest whole share.
Amount and Nature
of Beneficial Percent of
Name of Individual or Identity of Group Ownership Class
- --------------------------------------- --------- -----
Directors and Nominees
Robert B. Heintzelman 2,040(1) 1.04%
John J. Remaley 10,443(2) 5.30%
John F. Simock 1,500(3) .76%
Herman P. Snyder 13,500(4) 6.85%
Mary Ann Wagner 4,146(5) 2.10%
Kevin A. Schmidt 1,005(6) .51%
Other Named Executives
Michael Bailey 10(7) .01%
Carol Jones 10(8) .01%
All Directors, Nominees and Executive
Officers as a Group (8 persons) 32,654 16.57%
- -------------------
(1) Includes 1,010 shares owned individually by Mr. Heintzelman, 4 shares owned
directly by his spouse, 30 shares owned directly by his sons and daughters, 55
shares owned by jointly his mother and father, 250 shares owned jointly by his
mother and brother, 606 shares owned directly by his mother, 45 shares owned
directly by his brother, and 40 shares held directly by his nieces.
(2) Includes 4,250 shares owned individually by Mr. Remaley, 3126 shares owned
directly by his spouse, 3,062 shares owned directly by his sons and five shares
owned directly by his grandson.
(3) Includes 1,427 shares owned individually by Mr. Simock, 35 shares owned
directly by his spouse, 8 shares owned directly by his son, 5 shares owned
directly by his daughter-in-law, 15 shares owned directly by his grandsons, 5
shares owned directly by his son-in-law, and 5 shares owned directly by his
daughter
(4) Includes 1,000 shares owned individually by Mr. Snyder, 4,000 shares owned
jointly with his daughter, 4,000 shares owned jointly with his son, 2,750 shares
owned directly by his son and 1,750 shares owned jointly by his daughter and
son-in-law.
(5) Includes 2555 shares owned individually by Ms. Wagner, 791 shares owned
individually by Ms. Wagner's daughters and 800 shares owned individually by Ms.
Wagner's son-in -law.
(6) Includes 1,000 shares owned individually by Mr. Schmidt, 2 shares owned by
Mr. Schmidt's brother, 2 shares owned by his sister-in-law and 1 share owned by
his niece.
(7) The shares are held jointly with Mr. Bailey's spouse.
(8) The shares are held jointly with Mrs. Jones spouse.
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EXECUTIVE OFFICERS
The following table provides information, as of March 29, 2004 about
the corporation's and the subsidiary's executive officers.
Principal Occupation For the Past Five Years and Position
Name Age Held with Neffs Bancorp, Inc. and Subsidiaries
---- --- ----------------------------------------------
Herman P. Snyder 91 Chairman of the Board, The Neffs National Bank and Vice President,
Neffs Bancorp, Inc.
John J. Remaley 69 President and Chief Executive Officer, Neffs Bancorp, Inc. and
President, The Neffs National Bank
Kevin A. Schmidt 42 Executive Vice President and Chief Executive Officer, The Neffs
National Bank
Michael J. Bailey 48 Cashier and Chief Operations Officer, The Neffs National Bank
Carol L. Jones 55 Assistant Cashier and Operations Officer, The Neffs National Bank
COMPENSATION AND PLAN INFORMATION
EXECUTIVE COMPENSATION
The following table summarizes the total compensation, for each of the
last three years for John J. Remaley, Neffs Bancorp, Inc.'s Chief Executive
Officer since 1986, and Kevin A. Schmidt, the The Neffs National Bank's Chief
Executive Officer since 1995.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
------------
Awards Payouts
------ -------
Securities
Annual Compensation Underlying
------------------------ Other Annual Options/ LTIP All Other
Name and Principal Position Year Salary Bonus Compensation SARs Payouts Compensation
--------------------------- ---- ------ ----- ------------ ---- ------- ------------
John J. Remaley, President and Chief 2003 $ 0 $ 0 $ 12,000.00(1) $ 1,000.00(2)
Executive Officer, Neffs Bancorp,
Inc. and President, The Neffs
National Bank 2002 $ 0 $ 0 $ 12,000.00(1) $ 1,000.00(2)
2001 $ 0 $ 0 $ 11,200.00(1) $ 1,000.00(2)
Kevin A. Schmidt, Executive Vice 2003 $ 76,100.00 $ 0 $ 6,000.00(3) $ 7,571.00(4)(5)
President and Chief Executive
Officer, The Neffs National Bank 2002 $ 75,000.00 $ 0 $ 6,000.00(3) $ 7,844.00(4)(5)
2001 $ 73,250.00 $ 0 $ 5,600.00(3) $ 7,949.00(4)(5)
- -----------------------
(1) These amounts represent directors fees only, Mr. Remaley does not receive a
salary from the corporation or the bank.
(2) These amounts represent the banks contribution on behalf of Mr. Remaley to
the bank's Director Retirement Fund.
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(3)These amounts represent the fees paid to Mr. Schmidt for attending Board
meetings.
(4) These amounts represent the bank's contribution on behalf of Mr. Schmidt to
the Employee Profit Sharing and Retirement Trust Plan.
(5) These amount also represent $516.00, $516.00, $444.00 paid by the bank in
2003, 2002, and 2001 on behalf of Mr. Schmidt for Life insurance and $206.00,
$203.00, $180.00 paid by the bank in 2003, 2002, and 2001 on behalf of Mr.
Schmidt for disability insurance.
EMPLOYEE PROFIT SHARING AND RETIREMENT TRUST FUND PLAN
The bank maintains and sponsors a defined contribution 401(k) savings
and investment plan. The plan is administered by the bank and is subject to the
Internal Revenue Code of 1986 and to the regulations promulgated thereunder.
Participants are entitled to certain rights and protection under the Employee
Retirement Income Security Act of 1974.
Each bank employee who attains the age of 21, successfully completes
any probationary period(s) and completes 1,000 hours of service per year may
participate in the bonus (other than year-end bonus), or other direct
remuneration to the plan. Generally, eligible employees may not contribute more
than 15% of their compensation. Each year, the bank determines the amount, if
any, which it will contribute to the plan. The bank's contributions to the
401(k) plan for each participant vest in 5 to 6 years from plan enrollment. The
employee's contribution to the 401(k) plan vest immediately. The bank incurred
expenses of $60,000.00, $61,000.00, and $59,000.00 for financial reporting
purposes during 2003, 2002, and 2001 and respectively, in connection with the
plan.
NEFFS BANCORP, INC. DIRECTORS' COMPENSATION
Directors receive no remuneration for attendance at meetings of the
Board of Directors of Neffs Bancorp, Inc. Each director of the bank received, in
2003, $1,000.00 dollars per month for attendance at Board meetings and committee
meetings of the bank. In addition, directors receive $25.00 for each trip made
in the course of performing site inspections, relating to mortgages, with a
maximum of $1,250.00 per year. During 2003, the bank paid its directors
$2,150.00 for site inspections. The bank also contributed $1,000 to each
director's respective retirement plan with the bank.
In the aggregate, the directors received $61,000.00 from the bank
during the 2003 fiscal year.
In addition, the bank paid Kevin A. Schmidt, the bank's Executive Vice
President and Chief Executive Officer $6,000.00 in 2003 for his attendance at
board meetings.
TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
Some of Neffs Bancorp, Inc.'s directors and executive officers and the
companies with which they are associated were customers of and had banking
transactions with Neffs Bancorp, Inc's subsidiary during 2003. All loans and
loan commitments made to them and to their companies were made in the ordinary
course of bank business, on substantially the same terms, including interest
rates, collateral and repayment terms, as those prevailing at the time for
comparable transactions with other customers of the bank, and did not involve
more than a normal risk of collectibility or present other unfavorable features.
Total loans to these persons at December 31, 2003, amounted to $920,000.00.
Neffs Bancorp, Inc's subsidiary bank anticipates entering into similar
transactions in the future.
The bank employed the services of Simock Construction, Inc. during 2003
to repair the bank's main office and other property owned by the corporation.
Simock Construction, Inc. is owned by the son of Director John F. Simock. The
total amount of the transactions was $19,000.00.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The corporation's board of directors governs the corporation and its
subsidiary. In fulfilling its fiduciary duties, the board of directors endeavors
to act in the best interests of the corporation's shareholders, customers, and
the communities served by the corporation and its subsidiary. To accomplish the
corporation's strategic goals and objectives, the board of directors engages
competent persons, who undertake to accomplish these objectives with integrity
and with cost-effectiveness. The board of directors
8
fulfills part of its strategic mission through the compensation of these
individuals. The bank, the corporation's wholly-owned financial subsidiary,
provides compensation to the corporation's and the bank's directors and
employees.
The corporation seeks to offer competitive compensation opportunities
for all employees based on the individual's contribution and personal
performance. The entire board of directors (comprised of the individuals named
below) administers the compensation program. The board seeks to establish a fair
compensation policy to govern the executive officers base salaries and incentive
plans to attract and motivate competent, dedicated, and ambitious managers,
whose efforts will enhance the corporation's products and services and will
result in improved profitability, increased dividends to the shareholders, and
subsequent appreciation in the market value of the corporation's shares.
The board reviews and annually approves the compensation of the
corporation's and the bank's top executives, including the chief executive
officer/executive vice president and the chief operating officer.
The board of directors does not deem Section 162(m) of the Internal
Revenue Code (the IRC) to be applicable to the corporation at this time. The
board of directors intends to monitor the future application of IRC Section
162(m) to the compensation paid to its executive officers; and, in the event
that this section becomes applicable, the board of directors intends to amend
the corporation's and the bank's compensation policies to preserve the
deductibility of the compensation payable under the policies.
Neffs Bancorp, Inc. Chief Executive Officer Compensation
The salary of the Chief Executive Officer of the corporation consists
solely of director's fees. Mr. Remaley does not receive a salary from the
corporation or the bank.
The Neffs National Bank Chief Executive Officer Compensation
The board of directors established the bank's Chief Executive Officer's
2003 compensation of $76,100.00 an increase of $1,100.00 or 1.5% over his 2002
salary. The salary increase was based on a number of factors including: the
corporation's and bank's performance as measured by earnings, revenues,
expenses, return on assets, return on equity and total assets as well as state
of the economy and potential effect on bank earnings. No direct correlation
exists between the bank's Chief Executive Officer's compensation, the bank's
Chief Executive Officer's increase in compensation, and any of the above
criteria, nor does the board give any weight to any of the above specific
individual criteria. The board subjectively determines the increase in the
bank's Chief Executive Officer's compensation based on a review of all relevant
information.
Executive Officers Compensation
The board of directors increased the 2003 compensation of the
corporation's and the bank's executive officers by approximately 1.3% over 2002
compensation. The board determined these increases based on its subjective
analysis of the individual's contribution to the corporation's strategic goals
and objectives. In determining whether the strategic goals have been achieved,
the board considers numerous factors, including the following: the corporation's
performance as measured by earnings, revenues, return on assets, return on
equity, market share, total assets and non-performing loans. Although the board
measured the performance and increases in compensation in light of these
factors, no direct correlation exists between any specific criteria and an
employee's compensation, nor does the board, in its analysis, attribute specific
weight to any such criteria. The board makes a subjective determination after
review of all relevant information, including the above.
In addition to base salary, the corporation's and the bank's executive
officers may participate in annual and long-term incentive plans including the
bank's Employee Profit Sharing and Retirement Trust Fund Plan.
9
General labor market conditions, the individual's specific
responsibilities and the individual's contributions to the corporation's success
influence total compensation opportunities available to the corporation's and
the bank's employees. The board reviews individuals annually and strives to
offer compensation that is competitive with that offered by employers of
comparable size in our industry. Through these compensation policies, the
corporation strives to meet its strategic goals and objectives to its
constituencies and provide compensation that is fair and meaningful to its
executive officers.
This report is furnished by Neffs Bancorp, Inc.'s board of directors,
which performs the functions of a compensation committee.
BOARD OF DIRECTORS
John J. Remaley Herman P. Snyder
Robert B. Heintzelman John F. Simock
Mary Ann Wagner
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is comprised of directors
who meet Nasdaq standards for independence. The Audit Committee operates under a
written charter adopted by the Board of Directors, which was reviewed and
revised in 2003 and which is attached to this proxy statement.
The Audit Committee met with management periodically during the year to
consider the adequacy of the corporation's internal controls and the objectivity
of its financial reporting. The Audit Committee discussed these matters with the
corporation's independent accountants and with appropriate corporation financial
personnel and internal accountants. The Audit Committee also discussed with the
corporation's senior management and independent accountants the process used for
certifications by the corporation's chief executive officer and chief financial
officer which are required for certain of the corporation's filings with the
Securities and Exchange Commission.
The Audit Committee met privately at its regular meeting with both the
independent accountants and the internal accountants, as well as with the chief
financial officer on a number of occasions, each of whom has unrestricted access
to the Audit Committee.
The Audit Committee appointed Beard Miller Company LLP as the
independent accountants for the corporation after reviewing the firm's
performance and independence from management.
Management has primary responsibility for the corporation's financial
statements and the overall reporting process, including the corporation's system
of internal controls.
The independent accountants audited the annual financial statements
prepared by management, expressed an opinion as to whether those financial
statements fairly present the financial position, results of operations and cash
flows of the corporation in conformity with generally accepted accounting
principles and discussed with the Audit Committee any issues they believe should
be raised with the Audit Committee.
The Audit Committee reviewed with management and Beard Miller Company
LLP, the corporation's independent accountants, the corporation's audited
financial statements and met separately with both management and Beard Miller
Company LLP to discuss and review those financial statements and reports prior
to issuance. Management has represented, and Beard Miller Company LLP has
confirmed, to the Audit Committee, that the financial statements were prepared
in accordance with generally accepted accounting principles.
The Audit Committee received from and discussed with Beard Miller
Company LLP the written disclosure and the letter required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees).
These items relate to that firm's independence from the corporation.
10
The Audit Committee also discussed with Beard Miller Company LLP matters
required to be discussed by the Statement on Auditing Standards No. 61
(Communication with Audit Committees) of the Auditing Standards Board of the
American Institute of Certified Public Accountants to the extent applicable. The
Audit Committee implemented a procedure to monitor accountant independence,
reviewed audit and non-audit services performed by Beard Miller Company LLP and
discussed with the accountants their independence.
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors and the Board has approved that
the audited financial statements be included in the Annual Report on Form 10-K
for the year ended December 31, 2003, for filing with the Securities and
Exchange Commission. The Committee and the Board have also recommended, subject
to shareholder ratification, the selection of Beard Miller Company LLP as Neff
Bancorp, Inc.'s independent accountants for the year ending December 31, 2004.
The Sarbanes-Oxley Act of 2002 and the auditor independence rules of
the United States Securities and Exchange Commission require all public
accounting firms who audit issuers to obtain pre-approval from their respective
Audit Committee in order to provide professional services without impairing
independence. Beard Miller Company LLP previously issued engagement letters to
or obtained formal approval from the Audit Committee for certain services. These
services are summarized below.
The following fees were incurred for 2003 and 2002:
YEAR ENDED DECEMBER 31,
2003 2002
---- ----
Audit fees(1)................ $43,795 $37,015
Audit related fees(2)............. 5,250 5,000
Tax fees........................ -- --
All other fees(3).................. -- 24,850
------- -------
Total: $49,045 $66,865
======= =======
- --------------------
(1) Includes professional services rendered for the audit of the Corporation's
annual financial statements and review of financial statements included in Forms
10-Q, or services normally provided in connection with statutory and regulatory
filings, including out-of-pocket expenses.
(2) Assurance and related services reasonably related to the performance of the
audit or review of financial statements include the following: assistance with
regulatory filings - 10-K and 10-Q and assistance with accounting for FASB No.
107.
(3) Other fees for 2002 include internal audit services.
The Audit Committee has considered whether, and determined that, the
provision of the non-audit services is compatible with maintaining Beard Miller
Company LLP's independence.
Audit Committee
John Simock, Chairman
Robert Heintzelman
Mary Ann Wagner
11
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the yearly dollar change in the cumulative
total shareholder return on Neffs Bancorp, Inc.'s common stock against the
cumulative total return of the S & P 500 Stock Index and the Neffs Bancorp Peer
Group for the period of five fiscal years commencing January 1, 1999, and ending
December 31, 2003. The graph shows the cumulative investment return to
shareholders based on the assumption that a $100 investment was made on December
31, 1998, in each of Neffs Bancorp, Inc's common stock, the S & P 500 Stock
Index and the Neffs Bancorp Peer Group. We computed returns assuming the
reinvestment of all dividends. The shareholder return shown on the following
graph is not indicative of future performance.
NEFFS BANCORP, INC.
TOTAL RETURN PERFORMANCE
[LINE GRAPH]
PERIOD ENDING
-----------------------------------------------------------------
INDEX 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
- -----------------------------------------------------------------------------------------------------------------
Neffs Bancorp, Inc. 100.00 109.22 110.35 105.99 112.48 129.17
S&P 500* 100.00 121.11 110.34 97.32 75.75 97.40
Neffs Bancorp Peer Group** 100.00 91.00 71.92 88.08 102.66 161.70
*Source: CRSP, Center for Research in Security Prices, Graduate School of
Business, The University of Chicago 2004. Used with permission. All rights
reserved. crsp.com.
**The Neffs Bancorp Peer Group Index consists of Codorus Valley Bancorp, Inc.,
Fidelity D&D Bancorp, Inc., First Chester County Corporation, Norwood Financial
Corporation, Penseco Financial Services Corp., Peoples First, Inc., and Premier
Bancorp, Inc. (acquired 8/1/03)
SOURCE : SNL FINANCIAL LC, CHARLOTTESVILLE, VA (434) 977-1600
(C) 2004
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
NEFFS BANCORP, INC. COMMON STOCK, S & P 500 & NEFFS BANCORP PEER GROUP
12
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Neffs
Bancorp, Inc.'s directors, executive officers and shareholders who beneficially
own more than 10% of Neffs Bancorp, Inc.'s outstanding equity stock to file
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of Neffs Bancorp, Inc with the Securities and
Exchange Commission. Based on a review of copies of the reports we received, and
on the statements of the reporting persons, we believe that all Section 16(a)
filing requirements were complied with in a timely fashion during 2003.
RATIFICATION OF SELECTION OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected Beard Miller Company LLP as
independent certified public accountants for the examination of its financial
statements for the fiscal year ending December 31, 2004. Beard Miller Company
LLP served as the corporation's independent certified public accountants for the
year ended December 31, 2003.
Beard Miller Company LLP has advised us that neither the firm nor any
of its associates has any relationship with the corporation or its subsidiaries
other than the usual relationship that exists between independent certified
public accountants and clients.
We expect a representative of Beard Miller Company LLP to be present at
the Annual Meeting to respond to appropriate questions and to make a statement
if the representative desires to do so.
The Board of Directors recommends that the shareholders vote FOR
ratification of the selection of Beard Miller Company LLP as independent
certified public accountants for the fiscal year ending December 31, 2004.
ADDITIONAL INFORMATION
Any shareholder may obtain a copy of Neffs Bancorp, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 2003, including the
financial statements and related schedules and exhibits, required to be filed
with the Securities and Exchange Commission, without charge, by submitting a
written request to the Secretary, Neffs Bancorp, Inc., 5629 Route 873, PO Box
10, Neffs, Pennsylvania 18065, or visiting the SEC website at
www.sec.gov/edgarhp.htm or by calling (610) 767-3875. You may also view these
documents on our website at www.neffsnatl.com.
Pursuant to Securities and Exchange Commission rules, Neffs Bancorp,
Inc. intends to send a single proxy statement and annual report to multiple
shareholders who share the same address and who have the same last name, unless
we receive instructions to the contrary from one or more of the shareholders.
This method of delivery is known as "householding." Upon written or oral
request, a separate copy of the annual report and/or proxy statement, as
applicable, will be delivered promptly to a security holder at a shared address
to which a single copy of the documents was delivered or, if you wish to receive
a separate proxy statement or annual report in the future send a written request
to Dawn Hamm, Secretary Pro-Tem, Neffs Bancorp, Inc., 5629 Route 873, PO Box 10,
Neffs, Pennsylvania 18065. If you are receiving multiple copies of the proxy
statement and annual report and want to request one copy, please notify Dawn
Hamm.
OTHER MATTERS
The Board of Directors knows of no matters other than those discussed
in this Proxy Statement that will be presented at the Annual Meeting. However,
if any other matters are properly brought before the meeting, any proxy given
pursuant to this solicitation will be voted in accordance with the
recommendations of Board of Directors.
13
FORM OF
NEFFS BANCORP, INC.
AUDIT COMMITTEE CHARTER
I. AUTHORIZATION
The Audit Committee of Neffs Bancorp, Inc. (the "Company") is a standing
committee of the Board of Directors ("Board") authorized by the Company's
Bylaws.
II. PURPOSE
The purpose of the Audit Committee is to assist the Board in fulfilling its
oversight responsibility relating to (i) the integrity of the Company's
financial statements and financial reporting process and the Company's systems
of internal accounting and financial controls; (ii) the performance of the
internal audit function; (iii) the annual independent audit of the Company's
financial statements, the engagement of the independent auditors and the
evaluation of the independent auditors' qualifications, independence and
performance; (iv) the Company's compliance with legal and regulatory
requirements, including the Company's disclosure controls and procedures; (v)
the fulfillment of the other responsibilities set out herein; and (vi) monitor
the Company's compliance with the Code of Conduct. The report of the Audit
Committee required by the rules of the Securities and Exchange Commission
("SEC") shall be included in the Company's annual proxy statement.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements and disclosures are
complete and accurate and are in accordance with generally accepted accounting
principles and applicable rules and regulations. These are the responsibilities
of management and the independent auditors. In carrying out its oversight
responsibilities, as permitted under the Pennsylvania Business Corporation Law
of 1988, as amended, the Audit Committee members are entitled to rely in good
faith on the expertise, integrity and knowledge of management, the internal and
independent auditors and corporate counsel.
III. MEMBERSHIP AND STRUCTURE
The Audit Committee shall be comprised of at least three members of the Board,
and the members shall meet the independence, experience, and expertise
requirements of applicable laws and regulations (including the Sarbanes-Oxley
Act of 2002).
All members of the Audit Committee will have a general understanding of finance
and accounting practices and each member shall be free of any relationship that,
in the opinion of the Board would, under applicable laws and regulations, make
the director not independent. The Board will determine if any member is a
"financial expert" as defined by the SEC.
IV. AUTHORITY
The Audit Committee shall have the sole authority to select, evaluate, appoint,
and replace the independent auditors (subject to shareholder ratification) and
shall approve in advance all audit engagement fees and terms and all non-audit
engagements with the independent
1
auditors. The Audit Committee shall consult with management, but shall not
delegate these responsibilities.
The Audit Committee shall have the authority, to the extent it deems necessary
or appropriate, to retain special legal, accounting, or other consultants to
advise the Audit Committee. The Company shall provide funding, as determined by
the Audit Committee, for payment of compensation to the independent auditors and
to any advisors employed by the Audit Committee. Any communications between the
Audit Committee and legal counsel in the course of obtaining legal advice will
be considered privileged communications of the Company, and the Audit Committee
will take all necessary steps to preserve the privileged nature of those
communications.
The Audit Committee may form and delegate authority to subcommittees, comprised
of one or more members of the Committee, as necessary or appropriate. Each
subcommittee shall have the full power and authority of the Audit Committee.
The Audit Committee may conduct or authorize investigations into any matter,
within the Audit Committee's scope of responsibilities, brought to its
attention.
V. DUTIES AND RESPONSIBILITIES
The Audit Committee shall have the following duties and responsibilities:
Meetings and Access
- Meet on a regular basis at least four times each year, including at
least once each quarter. The Audit Committee may hold special meetings
upon the call of the Chair of the Committee. At Committee meetings, a
majority of the total members will constitute a quorum.
- Meet separately, periodically, with management, independent auditors,
chief audit executives and any other Company Committees that the Audit
Committee determines appropriate.
- Minutes shall be kept by a member of the Audit Committee or a person
designated by the Audit Committee.
- Regularly report to the Board on the Audit Committee's activities.
- Annually review and evaluate its own performance.
- Review and assess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
Financial Statement and Disclosure Matters
- Review and discuss with management and the independent auditors the
annual audited financial statements, including disclosures made in
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," and recommend to the Board whether the audited
financial statements should be included in the Company's Form 10-K.
2
- Prepare annually a report for inclusion in the Company's proxy
statement relating to its annual shareholders meeting. In that report,
the Audit Committee will state whether it has: (i) reviewed and
discussed the audited financial statements with management; (ii)
discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, as that statement
may be modified or supplemented from time to time; (iii) received from
the independent auditors written disclosures and the letter required by
Independence Standards Board Standard 1, as that standard may be
modified or supplemented from time to time, and has discussed with the
independent auditors, the independent auditors' independence.
- Review and discuss with management and the independent auditors the
Company's quarterly financial statements prior to the filing of its
Form 10-Q, including the results of the independent auditors' reviews
of the quarterly financial statements.
- Discuss generally the Company's earnings press releases, including the
use of "pro forma" or "adjusted" non-GAAP information, as well as
financial information and earnings guidance provided to analysts and
rating agencies to the extent required by applicable law or listing
standards. The Committee need not discuss in advance each earnings
release or each instance in which the Company may provide earnings
guidance.
- Receive a disclosure from the Chief Executive Officer and Chief
Financial Officer during their certification process for the 10-K and
10-Q's about (i) any significant deficiencies in design or operation of
internal controls or material weaknesses therein and (ii) any fraud,
whether or not material, involving management or other employees who
have a significant role in the Company's internal controls.
- At least annually prior to the filing of the Audit Report with the SEC
(and more frequently if appropriate), review and discuss reports from
the independent auditors on, among other things, certain:
- Critical accounting policies and practices to be used;
- Alternative treatments of financial information within
generally accepted accounting principles;
- Other material written communications between the independent
auditors and management, such as any management letter and the
Company's response to such letter or schedule of unadjusted
differences; and
- Difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or
access to requested information, any significant disagreements
with management, and communications between the audit team and
the audit firm's national office with respect to difficult
auditing or accounting issues presented by the engagement.
- Discuss with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit.
- Review and discuss with management and the independent auditors, at
least annually, significant accounting and financial reporting issues,
including complex or
3
unusual transactions and judgments concerning significant estimates or
significant changes in the Company's selection or application of
accounting principles, and recent professional, accounting and
regulatory pronouncements and initiatives, and understand their impact
on the Company's financial statements.
- Review with management the Audit Committee's evaluation of the
Company's internal control structure and procedures for financial
reporting and review periodically, but in no event less frequently than
quarterly, management's conclusions about the efficacy of such internal
controls and procedures, including any significant deficiencies in, or
material noncompliance with such controls and procedures.
- Discuss with management the Company's major financial risk exposures
and the steps management has taken to monitor and control such
exposures, including the Company's risk assessment and risk management
policies.
Authorization of the Company's Whistleblower's Policy
- Establish procedures for the receipt, retention, and treatment of
complaints received by the Company regarding accounting, internal
accounting controls, or auditing matters, and the confidential,
anonymous submission by Company employees of concerns regarding
questionable accounting or auditing matters.
Oversight of the Company's Relationship with the Independent Auditors
- The independent auditor shall report directly to the Audit Committee;
- Receive and discuss a report from the independent auditors at least
annually regarding:
- The independent auditors' internal quality-control procedures;
- Any material issues raised by the most recent quality-control
review, or peer review (if applicable), of the independent
auditors, or by any inquiry or investigation by governmental
professional authorities within the preceding five years
respecting one or more independent audits carried out by the
independent auditors;
- Any steps taken to deal with any such issues; and
- All relationships between the independent auditors and the
Company, in order to assess the independent auditors'
independence.
- Approve guidelines for the retention of the independent auditors for
any non-audit services and determine procedures for the approval of
audit and non-audit services in advance. In accordance with such
procedures, the Audit Committee shall approve in advance any audit or
non-audit services provided to the Company by the independent auditors,
all as required by applicable law or listing standards. Pre-approval
authority may be delegated to one or more members of the Audit
Committee.
- Review and discuss the scope and plan of the independent audit.
4
- Evaluate the qualifications, performance and independence of the
independent auditors, including whether the provision of non-audit
services is compatible with maintaining the auditors' independence, and
taking into account the opinions of management and the Company's legal
counsel. This shall include a review and discussion of the annual
communication as to independence delivered by the independent auditors
(Independence Standards Board Standard No. 1 - "Independence
Discussions with Audit Committees.") The Audit Committee shall present
its conclusions to the Board, and if so determined by the Audit
Committee, recommend that the Board take additional action to satisfy
itself of the qualifications, performance and independence of the
auditors.
- Recommend to the Board, policies for the Company's hiring of employees
or former employees of the independent auditors which guidelines shall
meet the requirements of applicable law and listing standards.
Oversight of Audit and Risk Review ("ARR")
The Audit Committee may contract for internal audit services as necessary to
assess the adequacy and effectiveness of internal accounting controls, financial
systems or financial statements, and the accuracy of management reporting and
compliance with laws, regulations and Company policy. As used in this section,
the "lead or coordinating auditor" refers to the Company's internal auditor or
if such services are outsourced, to the auditor of the public accounting firm
primarily responsible for the Company's internal audit functions.
- Review and discuss the appointment and replacement of the lead or
coordinating auditor.
- Review and discuss the ARR findings that have been reported to
management, management's responses, and the progress of the related
corrective action plans.
- Review and evaluate the adequacy of the work performed by the lead or
coordinating auditor and ARR, and ensure that ARR is independent and
has adequate resources to fulfill its duties, including implementation
of the annual audit plan.
Compliance Oversight Responsibilities
- Review periodically with management and the independent auditors any
correspondence with, or other action by, regulators or governmental
agencies, any material legal affairs of the Company and the Company's
compliance with applicable law and listing standards.
- Review and discuss the report of the lead or coordinating auditor
regarding the expenses of, the perquisites paid to, and the conflicts
of interest, if any, of members of the Company's senior management.
- Review and discuss with management and the independent auditor any
correspondence with, or the findings of any examinations by, regulatory
agencies, published reports or auditor observations that raise
significant issues regarding the Company's financial statements or
accounting policies.
5
- Obtain regular updates from management and Company counsel regarding
compliance matters and legal matters that may have a significant impact
on the financial statements or the Company's compliance policies.
Advise the Board with respect to policies and procedures regarding compliance
with the Company's Code of Conduct including review of the process for
communicating the Code of Conduct to Company personnel and for monitoring
compliance.
6
NEFFS BANCORP, INC
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 12, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, as holder of common stock of Neffs Bancorp, Inc (the
"Corporation") hereby constitutes and appoints Velma Wehr and Ronald Gildner and
each or any of them, proxy holders of the undersigned, with full power of
substitution and to act without the other, to vote all of the shares of the
Corporation that the undersigned may be entitled to vote at the NOVA Building,
2375 Levans Rd., Coplay, Pennsylvania on May 12, 2004 at 8 p.m., eastern
standard time, and at any adjournment or postponement thereof, as indicated upon
the matters described in the proxy statement.
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK.
I plan to attend the meeting [ ]
1. ELECTION OF 2 DIRECTORS OF THE CORPORATION FOR 3 YEAR TERMS:
Nominees: Robert B. Heintzelman Kevin A. Schmidt
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except as to vote for all nominees
marked to the contrary below)* listed above
The Board of Directors recommends a vote FOR all these nominees.
*Instruction: To withhold authority to vote for any individual nominees(s),
write that nominee's name(s) on the space provided below:
________________________________________________________________________________
2. RATIFICATION OF THE SELECTION OF BEARD MILLER COMPANY LLP, CERTIFIED
PUBLIC ACCOUNTANTS, AS THE INDEPENDENT AUDITORS 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 proxy holders are authorized to vote upon such
other business as may properly come before the meeting and any
adjournment or postponement of the meeting.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES AND FOR EACH PROPOSAL.
Dated :___________________,2004 ________________________________________
Signature of Shareholder
________________________________________
Signature of Shareholder
Neffs Bancorp, Inc. has 197,091 outstanding shares held as of the Record Date of
March 29, 2004.
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER(S) AND RETURNED PROMPTLY TO
THE CORPORATION IN THE ENCLOSED ENVELOPE. WHEN SHARES ARE HELD BY JOINT TENANTS,
BOTH MUST SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF MORE THAN ONE TRUSTEE, ALL SHOULD
SIGN. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON. IF YOU RECEIVE MORE THAN ONE PROXY CARD, PLEASE DATE AND SIGN
EACH CARD AND RETURN ALL PROXY CARDS IN THE ENCLOSED ENVELOPE.
THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED.