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.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] 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:
------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
------------------------------------------------------------------------
(3) Filing party:
------------------------------------------------------------------------
(4) Date filed:
------------------------------------------------------------------------
NOTICE OF 2005
ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY STATEMENT
PLEASE COMPLETE, SIGN, DATE AND RETURN
YOUR PROXY PROMPTLY
Wednesday, May 4, 2005
10:30 A.M.
The Danville Elks
Located on Route 11 between
Bloomsburg and Danville
Pennsylvania
March 30, 2005
Dear CCFNB Stockholder:
You are cordially invited to join us at the 2005 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 4, 2005 at
10:30 am.
Enclosed with this Proxy Statement are your voting instructions and the 2004
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
website at 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 4, 2005
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 1 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 2005;
3. Approval of the proposed Amended and Restated Articles of Incorporation;
and
4. Any other matters that may properly come before the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE ELECTION OF CLASS 1
DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS, THE APPOINTMENT OF J. H. WILLIAMS
& CO., LLP, AND THE AMENDED AND RESTATED ARTICLES OF INCORPORATION.
Stockholders who are holders of record of the Common Stock at the close of
business on March 21, 2005, will be entitled to vote at the meeting.
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.
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, 2005
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................................... 5
Committees Of The Board Of Directors Of The Bank.......................................... 5
Board Of Directors' Compensation.......................................................... 6
STOCK OWNERSHIP.............................................................................. 7
Stock Owned By Directors And Executive Officers........................................... 7
Section 16(A) Beneficial Ownership Reporting Compliance................................... 7
Voting Stock Owned By "Beneficial Owner".................................................. 7
EXECUTIVE COMPENSATION....................................................................... 8
Committee Report On Executive Compensation (How We Determine Executive Compensation)...... 8
Deferred Compensation Agreements.......................................................... 10
Five-Year Performance Graph............................................................... 11
AUDIT COMMITTEE REPORT....................................................................... 12
INDEPENDENT AUDITORS......................................................................... 13
*Proposal To Approve The Appointment Of J. H. Williams & Co., LLP......................... 13
Required Vote............................................................................. 13
Audit Fees................................................................................ 13
Audit Related Fees........................................................................ 13
Tax Fees.................................................................................. 13
All Other Fees............................................................................ 13
AMENDED AND RESTATED ARTICLES OF INCORPORATION............................................... 14
*Proposal To Approve The Amended And Restated Articles Of Incorporation................... 14
General................................................................................... 14
Reasons For These Amended And Restated Articles Of Incorporation.......................... 14
Description Of Changes.................................................................... 14
Required Vote............................................................................. 15
OTHER INFORMATION............................................................................ 15
Transactions Involving The Corporation's Directors And Executive Officers................. 15
No Significant Legal Proceedings.......................................................... 15
Other Proposed Action..................................................................... 15
Stockholder Proposals For 2006 Annual Meeting............................................. 15
Additional Information Available.......................................................... 16
How To Contact Our Directors.............................................................. 16
Exhibit - A
Amended and Restated Articles of Incorporation
- ---------------------------------
* Matter to be voted upon.
i
QUESTIONS AND ANSWERS
Q: WHAT AM I VOTING ON?
A: Three proposals. Item numbers below refer to item numbers on the proxy
card.
Item 1. Election of three Class 1 directors
Item 2. Ratification of appointment of J. H. Williams & Co., LLP as
independent auditors of the Corporation
Item 3. Approval of the proposed Amended and Restated Articles of
Incorporation
Q: WHO CAN VOTE?
A: All stockholders of record at the close of business on March 21, 2005 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). If you leave Item 3
blank, the proxies will vote FOR the proposed Amended and Restated
Articles of Incorporation (Item 3).
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 21, 2005, the Corporation had 1,264,083
shares of Common Stock outstanding. The holders of Common Stock have the
right to cast a total of 1,264,083 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 1 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 1
director. All of the nominees are recommended by the Board of Directors:
Robert M. Brewington, Jr.
Willard H. Kile, Jr.
Charles E. Long
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 AND NOMINEES FOR CLASS 1 DIRECTORS
WHOSE TERM WILL EXPIRE IN 2008
ROBERT M. BREWINGTON, JR., 54
Director since 1996. Owner of Sutliff Motors and Brewington Transportation
and a part owner of J&B Honda (sales and service of cars and trucks;
school bus contractor). Mr. Brewington is the brother of Sally Tucker, the
bank's Marketing Director.
WILLARD H. KILE, JR., D.M.D., 50
Director since 2000. Partner of Kile & Robinson LLC (dentists); Partner of
Kile & Kile Real Estate. Mr. Kile is a first cousin to Lance O. Diehl, our
President and Chief Executive Officer.
CHARLES E. LONG, 69
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 2007
LANCE O. DIEHL, 39
Director since 2003. President and Chief Executive Officer of the
Corporation and the bank. Former Executive Vice President of Branch
Operations and Marketing of the bank. Mr. Diehl is a first cousin to Mr.
Kile, a director.
WILLIAM F. HESS, 71
Director since 1983. Former Chairman of the Corporation and the bank.
Dairy farmer.
PAUL E. REICHART, 67
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
EDWARD L. CAMPBELL, 66
Director since 1985. Secretary of the Corporation and the bank. President
of ELC Enterprises, Inc. and the sole proprietor of Heritage Acres
Christmas tree sales.
FRANK D. GEHRIG, 59
Director since 2004. Partner in Accounting Firm of Brewer, Gehrig &
Johnson, Certified Public Accountants.
ELWOOD R. HARDING, JR., 58
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 1 director listed above. Votes withheld for directors
will have the same effect as votes against.
NUMBER OF MEETINGS
During 2004, the Corporation's Board of Directors held 9 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 2004.
CCFNB'S NOMINATION PROCESS
All the independent members of our Board of Directors act as our
nomination committee. Messrs. Diehl and Reichart do not participate in this
function. All of the other directors meet the independence standards as set
forth in Rule 4200(a)(15) of the listing standards for The NASDAQ Stock Market.
The principal duties of the nomination committee are:
- Evaluation and selection of nominees for the Board of Directors;
- Consideration of qualifications for committee membership;
- Recommendations for revisions to our Code of Conduct and Ethics; and
- Evaluation of the Board of Directors and its committees.
Whenever a stockholder nominates a person for director or a vacancy
occurs, the nomination committee uses the following criteria in making a
decision:
- Backgrounds and experiences of current directors;
- Specific knowledge and experience of a candidate;
- Specific knowledge-based need, for example, do we need a director
with knowledge of the commercial real estate industry?;
- Diversified geographies in which our directors live and work;
- Number of Board seats - we want an odd number of seats;
- Whether a candidate has the time available to fully participate in
the responsibilities of the Board and its committees; and
- Whether a candidate holds at least $1,000 in market value of our
common stock (a bylaws requirement in order to sit also as a bank
director).
4
The nomination committee tries to reach a unanimous consensus on a nominee
for director.
If a stockholder desires to nominate a person for director, the
stockholder must comply with our bylaws and mail the required information for
the candidate to CCFNB Bancorp, Inc. c/o Nomination Committee, 232 East Street,
Bloomsburg, PA 17815. The nomination committee has not adopted a written
charter.
The independent directors of the Corporation who meet the independence
requirements under appropriate rules of The NASDAQ Stock Market, the Securities
and Exchange Commission ("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:
Robert M. Brewington, Jr.
Edward L. Campbell
Frank D. Gehrig
Elwood R. Harding, Jr.
William F. Hess
Willard H. Kile, Jr.
Charles E. Long
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 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".
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
- ------------------------- --------- --------- ----- -------- -------- -------- ----- ---------
Robert M. Brewington, Jr. X X X(1)
Edward L. Campbell X X X X(1)
Lance O. Diehl X X X
Frank D. Gehrig X X X
Elwood R. Harding, Jr. X X X(1) 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
5
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
Directors' fees were paid by the bank in 2004 as follows:
Fee for each Board of Directors' meeting attended .............. $450
Fee for each committee meeting attended ........................ $250
The Chairman received a flat fee of $21,000 annually, and the Secretary received
an additional fee of $1,500 in 2004. Directors received or deferred, in the
aggregate in 2004, $130,150 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, specifically
Willard H. Kile, Sr. and Elwood R. Harding, Jr., 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,
specifically Stanley Barchik, who is now deceased. These plans were limited to
four-year terms. The bank may, however, enter into subsequent similar plans with
its directors. Each of the participating directors deferred the payment to
himself of certain director's fees to which he was 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, 2004 and
2003, the net cash value of insurance policies was $407,319 and $368,924,
respectively, and the total accrued liability was $212,669 and $214,418,
respectively, relating to these directors' deferred compensation agreements.
During 2004, 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
6
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 a five year certificate of deposit rate, which was 4% in 2004. The
current certificate of deposit rate will reset in January 2008. Two directors,
specifically Robert M. Brewington, Jr. and Willard H. Kile, Jr., have elected to
participate in this program, and the total accrued liability at December 31,
2004 and December 31, 2003 was $41,753 and $13,317, respectively.
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 21, 2005. The aggregate number of shares
owned by all directors and executive officers is 4.66%. 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
- ------------------------- ----------------------- ----------------
Robert M. Brewington, Jr. 8,835.277 --
Edward L. Campbell 6,260.466 --
Lance O. Diehl 1,092.108 --
Frank D. Gehrig 2,090.932
Elwood R. Harding, Jr. 15,630.697 1.24%
William F. Hess 4,775.783 --
Willard H. Kile, Jr. 4,439.010 --
Virginia D. Kocher 391.000 --
Charles E. Long 6,605.252 --
Paul E. Reichart 8,821.000 --
All Officers and Directors as a group
(9 directors, 3 nominees, 5 officers,
10 persons in total) 58,941.525 4.66%
(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) of the Securities
Exchange Act of 1934.
We have reviewed the reports and written representations from the executive
officers and directors. The Corporation believes that all filing requirements
were met during 2004 with the exception of the second quarter filing for Frank
D. Gehrig and fourth quarter filing for Willard H. Kile, Jr. Mr. Gehrig was
newly appointed to the Board on April 29, 2004, but an initial Statement of
Beneficial Ownership, Form 3, was not filed until May 25, 2004. Filings are
electronic now with a two-day filing deadline from the date of the transaction.
The bank was unable to obtain the proper paperwork and register Mr. Gehrig's
initial ownership holdings of 2,052.684, held between he and his spouse, within
the new two-day deadline. Mr. Kile was gifted 164 shares on October 18, 2004,
but the bank was not notified of the transaction until October 28, 2004, which
is the date the Form 4 was transmitted.
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 21, 2005.
7
EXECUTIVE COMPENSATION
This section of the report contains a table that shows the amounts of
compensation earned by our executive officers whose salary and bonus exceeded
$100,000 for 2004. The bank makes all payments to the applicable executive
officers. This section also contains the performance graph comparing our
performance relative to a peer group and the report of our compensation
committee on executive compensation explaining compensation philosophy for our
most highly paid officers.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-----------------------------------------------
NAME AND PRINCIPAL FISCAL OTHER ANNUAL ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION($) COMPENSATION($)
- ------------------ ---- --------- -------- --------------- ---------------
LANCE O. DIEHL 2004 110,000 3,517(2) 15,391(3) 18,121(4)
PRESIDENT AND CHIEF 2003 100,000 1,883(5) 13,048(6) 13,118(7)
EXECUTIVE OFFICER 2002 72,424 2,796(8) 1,130(9) 7,779(10)
(1) From January 1, 2002 through December 31, 2004, we 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 we
enter into 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 3 1/2% of 2003 base salary.
(3) Includes $10,800 as the payment of directors' fees and $4,591 representing
the year 2004, 100% up to 3% and 50% up to the next 2% matching
contribution to Mr. Diehl's 401K plan.
(4) Includes $16,047 as a payment for a deferred compensation plan; $678
representing car expense;$403 representing cell phone expense; $758
representing cafeteria plan benefits and $235 as annual term insurance
premium payments on the life of Mr. Diehl.
(5) Represents a cash bonus representing 2 1/2% of 2002 base salary.
(6) 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.
(7) 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.
(8) Represents a cash bonus representing 4% of 2001 base salary.
(9) Represents the year 2002, 50% up to 3% matching contribution to Mr.
Diehl's 401K plan.
(10) 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.
COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
(HOW WE DETERMINE EXECUTIVE COMPENSATION)
COMPOSITION OF COMMITTEE
Our independent directors deem executive compensation to be very important
to the overall development and performance of the company, so they decided to
sit as our committee on executive compensation. Mr. Diehl, the President and
Chief Executive Officer, and Mr. Reichart, the Chairman, do not participate in
discussions and decisions concerning their performance and compensation. All of
our other directors meet the independence standards contained in Rule
4200(a)(15) of the listing rules for The NASDAQ Stock Market.
8
In addition to this committee on executive compensation, the bank has a
Human Resource Committee comprised of four of our directors, who also serve as
directors of the bank. One of those directors is Mr. Reichart, who is also the
Chairman of the bank. The bank's Human Resource Committee discusses and reviews
evaluations of all management positions within the bank, except for Messrs
Reichart, the Chairman, Diehl, the President and Chief Executive Officer, and
Wenner, the Executive Vice President and Chief Operating Officer. The
compensation committee on executive compensation is solely responsible for the
compensation decisions involving the latter three officers.
OBJECTIVES OF EXECUTIVE COMPENSATION
Our executive compensation policy aims to:
- Link the executive's goals with your interests as
stockholders;
- Support our strategic business plan and long-term development;
- Tie a portion of the executive's compensation to our overall
performance; and
- Attract and retain talented management.
TYPE OF COMPENSATION
We utilize annual compensation which includes salary, bonus and
contributions to our 401K profit sharing plan. We award bonuses based upon the
bank's performance as a whole and may award bonuses based on the specific
executive's performance.
We do not have a long-term compensation program based upon the award of
stock options and restricted stock or other long-term incentive awards. However,
we do have long-term compensation agreements. See the discussion of these
agreements elsewhere in this proxy statement. We may consider the award of stock
options in the future.
FACTORS CONSIDERED IN DETERMINING COMPENSATION
Our committee on executive compensation wants the compensation of an
executive to be competitive with other commercial banking institutions doing
business in similar markets. Each year, our compensation committee on executive
compensation and the bank's Human Resources Committee reviews a report from an
outside consultant that delineates compensation at peer group banking companies;
discusses such report as well as the performance and compatibility to the
position with each executive; and takes into consideration recommendations by
such executives supervisory officers or by members of the Board of Directors for
the senior most executives. Each of the total executive compensation for Messrs.
Reichart, Diehl and Wenner place them generally in the median percentile of
executives in peer group banking companies based upon the report by the outside
consultant. All of these factors are taken into consideration in the
determination of the compensation of the executives as a group and of the
officers individually.
ANNUAL COMPENSATION
Annual compensation for our senior executives includes salary, any bonus
and contribution to his 401K profit sharing plan. This is similar to the
compensation programs for most of our peer group banking companies. We intend to
pay salaries at the median of the peer group banking companies that are
represented in the report of the outside consultant.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Diehl received total compensation of $147,029 in the year 2004. Please
refer to the Summary Compensation Table on page 8 for more details.
We established the following 2005 compensation package for Mr. Diehl:
Annual salary to be paid is $120,000, and we expect the other payment and
benefits described in the Summary Compensation Table to remain the same in 2005
as in 2004.
9
OTHER FACTORS THAT INFLUENCED COMPENSATION
Our Compensation Committee considered that Mr. Diehl has worked for the
bank for a total of 11 years and has 17 years experience in the financial
services industry. Mr. Diehl is a magna cum laude graduate of Bloomsburg
University, receiving a Bachelor of Science in Business Administration; holds a
Masters in Business Administration from Lehigh University; and is a graduate of
the Stonier Graduate School of Banking.
Committee on Executive Compensation
Robert M. Brewington, Jr.
Edward L. Campbell
Frank D. Gehrig
Elwood R. Harding, Jr.
William F. Hess
Willard H. Kile, Jr.
Charles E. Long
DEFERRED COMPENSATION AGREEMENTS
In 1992, the bank entered into agreements with two executive officers, Paul E.
Reichart and J. Jan Girton, to establish non-qualified deferred compensation
plans. Each officer deferred compensation in order to participate in this
Deferred Compensation Plan. If the officer continued to serve as an officer of
the bank until he attained 65 years of age, the bank agreed to pay him 120
consecutive monthly payments commencing on the first day of the month following
that officer's 65th birthday. Each officer's 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 of these officers in an amount which is
intended to cover the bank's obligations under this Deferred Compensation Plan,
based upon certain actuarial assumptions.
During 2002, these agreements with the two executive officers, Paul E. Reichart
and J. Jan Girton, were modified. Under one agreement, the executive officer
will receive monthly payments of $1,875 for 120 consecutive months commencing in
February 2003. Under another agreement, another executive officer will receive
monthly payments of $1,458.33 for 120 consecutive months 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, 2004 and 2003, the net cash values of insurance policies were $407,319 and
$318,119, respectively. The total accrued liability, equal to the present value
of these obligations, was $269,418 and $295,674, respectively. The accrued
liability related to the post employment health care benefit was $13,650 and
$14,336 as of December 31, 2004 and 2003, respectively. Mr. Reichart is the
former President and Chief Executive Officer of the bank and currently the
Chairman of the Board. Mr. Girton served in the capacity of Chief Operating
Officer and Executive Vice President and retired in 2003.
In April 2003, the bank entered into non-qualified deferred compensation
agreements with three additional officers, Lance O. Diehl, Edwin A. Wenner and
Jacob S. Trump, to provide supplemental retirement benefits commencing with
these officer's retirement and ending 15 years thereafter. The deferred
compensation expense related to these agreements for the year ended December 31,
2004 was $79,710 and the total accrued liability as of December 31, 2004 and
December 31, 2003 was $134,841 and $55,131, respectively. Mr. Diehl is currently
the President and Chief Executive Officer. Mr. Wenner is currently the Executive
Vice President and Chief Operating Officer. Mr. Trump is currently the Senior
Vice President of Financial Planning.
10
FIVE-YEAR PERFORMANCE GRAPH
The following graph and table compare the cumulative total stockholder return on
our Common Stock during the five-year period ending on December 31, 2004, with
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 the cumulative total return for all United States
stocks traded on the NASDAQ Stock Market. The comparison assumes the value of
the investment in our Common Stock and each index was $100 on December 31, 1999,
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 GRAPH]
PERIOD ENDING
---------------------------------------------------------------------
INDEX 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
- --------------------------- -------- -------- -------- -------- -------- --------
CCFNB Bancorp, Incorporated 100.00 85.36 122.61 130.89 157.92 156.01
NASDAQ Composite 100.00 60.82 48.16 33.11 49.93 54.49
SNL <$250M Bank Index 100.00 99.01 123.45 151.70 229.40 283.65
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 12/31/99.
(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.
11
AUDIT COMMITTEE REPORT
The Audit Committee is made up of the following directors: Willard H.
Kile, Jr. (Chairman), Robert M. Brewington, Jr., Frank D. Gehrig and Charles E.
Long. For more background information on these directors, see "Board of
Directors." The Audit Committee operates pursuant to a charter. A stockholder
can request, in writing without charge, a copy of the audit committee charter,
by contacting Virginia D. Kocher, Treasurer, CCFNB Bancorp, Inc., 232 East
Street, Bloomsburg, PA 17815.
The Audit Committee is composed of four Directors each of whom meets the
independence standards contained in Rule 4200(a)(15) of the listing rules for
The NASDAQ Stock Market. The Audit Committee membership currently does not
include an individual who satisfies the literal and exact definition of a
"financial expert", as promulgated by the SEC. Our Board considers each member
of the Audit Committee to be financially literate and several members have
significant "financial" qualifications. These qualifications in total however
are not those specifically required by the SEC in order to qualify as a
"financial expert". The Board has reviewed the qualification of the Audit
Committee and is satisfied that the current membership is more than sufficiently
qualified to carry out its responsibilities. In addition, the Audit Committee is
independently empowered to engage consultants and experts should it feel
necessary to do so to gain additional expertise on a given matter. The Board is
continuing to review its composition and may look to add to its membership in
the future an individual who satisfies the strict definition of a "financial
expert".
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 2004 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, 2004, 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, 2005.
Submitted by the members of the Audit Committee:
Willard H. Kile, Jr., Board Member and Committee Chair
Robert M. Brewington, Jr., Board Member
Frank D. Gehrig, Board Member
Charles E. Long, Board Member
12
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 2005. 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.
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 $65,700, in 2004, for
services rendered for the audit of the Corporation's annual financial statements
for the year ended December 31, 2004 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, 2004.
AUDIT RELATED FEES
J. H. Williams & Co., LLP, billed the Corporation $9,775, in 2004, for the
performance of agreed upon procedures with respect to the trust department
($6,200) and the retail sales of non deposit investment products of the bank
($3,575).
TAX FEES
J. H. Williams & Co., LLP, billed the Corporation $5,700, in 2004, for tax
compliance, tax advice and tax planning.
ALL OTHER FEES
J. H. Williams & Co., LLP billed the Corporation $0, in 2004, 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.
13
AMENDED AND RESTATED ARTICLES OF INCORPORATION
PROPOSAL TO APPROVE THE AMENDED AND RESTATED ARTICLES OF INCORPORATION
Item 3 on Proxy Card
GENERAL
On November 10, 2004, our Board of Directors approved the Amended and
Restated Articles of Incorporation, which can be found at Exhibit A to this
proxy statement and directed that these Amended and Restated Articles of
Incorporation be submitted for approval at our 2005 annual meeting of
stockholders.
REASONS FOR THESE AMENDED AND RESTATED ARTICLES OF INCORPORATION
The Board of Directors conducted a review of the bank's articles of
association and bylaws and the Corporation's amended articles of incorporation
and bylaws in order to eliminate provisions that were no longer necessary or
duplicative; to redraft provisions to make the wording more clear; and to add
provisions that were viewed as necessary for better governance and financial
planning.
Changes to the bank's articles of association and bylaws were completed on
November 3, 2004. The Board of Directors adopted a new set of bylaws for the
corporation and filed them on Form 8-K with the SEC on November 10, 2004. A
stockholder can request a copy of our new bylaws, without charge, by writing to
Virginia D. Kocher, Treasurer, CCFNB Bancorp, Inc., 232 East Street, Bloomsburg,
PA 17815.
DESCRIPTION OF CHANGES
Each of the following current articles has been eliminated because it is
no longer required; a similar provision can be found in our bylaws; or the
provision contained in that article is effective by operation of law through the
Pennsylvania Business Corporation Law of 1988 ("BCL"):
WHERE THE PROVISION WILL BE IF
THESE AMENDED AND RESTATED
CURRENT ARTICLES ARE APPROVED,
ARTICLE NUMBER DESCRIPTION IF STILL REQUIRED
-------------- --------------------------------------- --------------------------------
5 Names and Addresses of Incorporators No longer necessary
6 Term of Perpetual Existence Section 1306(a)(6) of BCL
9 Classification of Directors Into Three Sections 10.4 and 10.5 of
Classes Bylaws
10 Filling Vacancies on Board of Directors Section 11.1 of Bylaws
11 Fixing Number of Directors At Not Less Section 10.4 of Bylaws
Than 5 Nor More Than 25
13 Authority to Borrow Money Section 1502 of the BCL
14 Indemnification of Directors, New Article 9 in the Amended and
Officers, Employees or Agents Restated Articles of
Incorporation
The following articles are rewritten or are new provisions:
- Article 4, relating to our capitalization, authorizes the Board of
Directors to issue up to 1,000,000 shares of preferred stock, in one
or more series, with each series to have its own specific voting
powers, designations, preferences, special rights and
qualifications. The Board of Directors provided for preferred stock
in order to have the flexibility to engage in future financings to
strengthen our regulatory capital ratios, and provide funds for
organic expansion and acquisitions. There are no current plans to
issue preferred stock for any of these reasons.
- New Articles 7 and 8, relating to common and preferred stock, allow
the Board of Directors to restore any issued but not outstanding
shares to the status of authorized but unissued and to set the price
and type of consideration to be paid for these shares. The reason
for these new articles was to give the Board of Directors the
flexibility to buy-back our shares and not have to hold them as
treasury shares
14
in our capital described on the balance sheet and to issue shares
other than for cash if a situation arises that makes business sense
to do so.
- New Article 9, relating to indemnification of our directors,
officers, employees or agents, is a description of the current state
of Pennsylvania law and allows for these provisions to incorporate
future changes in the law that would favor these persons. See new
Article 9.4.
The remaining current Articles 1, 2, 3, 7, 8, 12, 15 and 16 are, in
essence, unchanged and can be found in corresponding articles 1, 2, 3, 5, 11,
12, 13 and 14, respectively, in the proposed Amended and Restated Articles of
Incorporation.
REQUIRED VOTE
These proposed Amended and Restated Articles of Incorporation shall be
adopted upon receiving the affirmative vote of a majority of the votes cast by
all stockholders entitled to vote at our annual meeting of stockholders.
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, 2004, 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 $5,027,096 or
approximately 17.6% of the Corporation's total consolidated capital accounts.
The largest amount for all of these loans in 2004 was $9,098,557 or
approximately 31.9% 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.
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 2006 ANNUAL MEETING
Stockholder proposals for the 2006 Annual Meeting must be received by November
30, 2005 to be considered for inclusion in the Corporation's 2006 Proxy
Statement. Stockholder proposals for the 2006 Annual Meeting for which the
proponents do not desire them to be included in the 2006 Proxy Statement must be
received by February 13, 2006. Such proposals should be addressed to the
Secretary.
15
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, TREASURER,
CCFNB BANCORP, INC., 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, 2005
16
EXHIBIT A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF CCFNB BANCORP, INC.
1. The name of the corporation is CCFNB Bancorp, Inc.
2. The registered address of the corporation in the Commonwealth of
Pennsylvania is 232 East Street, Bloomsburg, Pennsylvania, 17815, Columbia
County.
3. The purpose or purposes of the corporation are to have unlimited power to
engage in and do any lawful act concerning any or all lawful business for
which corporations may be incorporated under the Pennsylvania Business
Corporation Law and under any corresponding provisions of succeeding law.
4. The corporation shall have authority to issue five million (5,000,000)
shares of common stock, par value $1.25 per share, and one million
(1,000,000) shares of preferred stock, par value $1.25 per share.
The Board of Directors is hereby authorized from time to time to provide
by resolution for the issuance of shares of preferred stock in one or more
classes or series not exceeding the aggregate number of shares of
preferred stock authorized by these Amended and Restated Articles of
Incorporation, as amended from time to time; and to determine with respect
to each such series the voting powers, if any (which voting powers if
granted may be full or limited), designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions applicable thereto, including, without
limiting the generality of the foregoing, the voting rights applicable to
any class or series (which may be any whole or fractional number of votes
per share, and which may be applicable generally or only upon stated
matters, events or conditions); the rate of dividend to which holders of
preferred stock of any class or series may be entitled (which may or may
not be cumulative and/or participating); the rights of holders of
preferred stock of any series in the event of liquidation, dissolution or
winding up of the affairs of the corporation or other circumstances; the
rights, if any, of holders of preferred stock of any class or series to
convert or exchange such shares of preferred stock for shares of any other
class of capital stock of this corporation or any other entity or to
convert or exchange such preferred stock for any other form of property
(including in each case the determination of the price or prices or the
rate or rates applicable to such rights to convert or exchange and the
adjustment thereof, the time or times during which the right to convert or
exchange shall be applicable and the time or times during which a
particular price or rate shall be applicable); the rights to redeem any
class or series of preferred stock (which may be mandatory at a fixed time
or upon the occurrence of specified event, or it may be optional on the
part of the corporation and/or the shareholder).
Unless otherwise provided by law or in a resolution or resolutions
establishing a particular class or series of preferred stock, the
aggregate number of authorized shares of preferred stock may be increased
by an amendment to these Amended and Restated Articles of Incorporation
approved solely by the holders of common stock and of any preferred stock
which is entitled pursuant to its voting rights designated by the Board of
Directors, to vote thereon, if at all, voting together as a class.
The Board of Directors shall be entitled to increase or decrease the
number of shares previously designated by the Board of Directors to a
series of preferred stock without prior shareholder approval.
Before the corporation shall issue any shares of preferred stock of any
class or series, a certificate, setting forth a copy of the resolution or
resolutions of the Board of Directors, fixing the attributes of such class
or series shall be filed in the manner prescribed by the laws of the
Commonwealth of Pennsylvania.
5. Cumulative voting shall not exist with respect to the election of
directors.
17
6. The holders of common and preferred stock shall have no preemptive right
to subscribe for or purchase any shares (or any option, warrant or other
optional rights or securities having conversion or option or purchase
rights with respect to any shares) issued or sold by the corporation for
cash or any other form of consideration.
7. Any issued and outstanding shares of common and preferred stock of the
corporation that are acquired by the corporation shall be deemed to be
issued but not outstanding, except that the Board of Directors may, by
resolution, restore any or all of such issued but not outstanding shares
to the status of authorized but unissued shares, and may thereafter
reissue those shares.
8. Shares of the common and preferred stock may be issued at a price
determined by the Board of Directors or the Board of Directors may set a
minimum price or establish a formula or method by which the price may be
determined. Consideration for shares may consist of money, obligations
(including an obligation of a shareholder), services performed, whether or
not contracted for, contracts for services to be performed, shares or
other securities or obligations of the issuing business corporation, or
any other tangible or intangible property or benefit to the corporation.
If shares are issued for other than money, the value of the consideration
shall be determined by or in a manner provided by the Board of Directors.
Consideration for shares shall be provided or paid to the corporation or
as ordered by the Board of Directors.
9. Limitation of Directors' Liability
9.1 No director of the corporation shall be personally liable for monetary
damages as such for any action taken or any failure to take any action
unless: (a) the director has breached or failed to perform the duties of
his or her office under Subchapter B of Chapter 17 of the Pennsylvania
Business Corporation Law, and (b) the breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness; provided,
however, that the provisions of this Article 9 shall not apply to the
responsibility or liability of a director pursuant to any criminal
statute, or to the liability of a director for the payment of taxes
pursuant to local, Pennsylvania or federal law.
9.2 Indemnification and Insurance
(a) Indemnification of Directors and Officers.
(i) Each Indemnitee (as defined below) shall be indemnified and
held harmless by the corporation for all actions taken by him
or her and for all failures to take action (regardless of the
date of any such action or failure to take action) to the
fullest extent permitted by Pennsylvania law against all
expense, liability and loss (including, without limitation,
attorneys' fees, judgments, fines, taxes, penalties, and
amounts paid or to be paid in settlement) reasonably incurred
or suffered by the Indemnitee in connection with any
Proceeding (as defined below). No indemnification pursuant to
this Article 9 shall be made, however, in any case where the
act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted
self dealing, willful misconduct or recklessness.
(ii) The right to indemnification provided in this Article 9 shall
include the right to have the expenses incurred by the
Indemnitee in defending any Proceeding paid by the corporation
in advance of the final disposition of the Proceeding to the
fullest extent permitted by Pennsylvania law; provided that,
if Pennsylvania law continues so to require, the payment of
such expenses incurred by the Indemnitee in advance of the
final disposition of a Proceeding shall be made only upon
delivery to the corporation of an undertaking, by or on behalf
of the Indemnitee, to repay all amounts so advanced without
interest if it shall ultimately be determined that the
Indemnitee is not entitled to be indemnified under this
Article 9 or otherwise.
(iii) Indemnification pursuant to this Article 9 shall continue as
to an Indemnitee who has ceased to be a director or officer
and shall inure to the benefit of his or her heirs, executors
and administrators.
18
(iv) For purposes of this Article 9, (A) "Indemnitee" shall mean
each director or officer of the corporation who was or is a
party to, or is threatened to be made a party to, or is
otherwise involved in, any Proceeding, by reason of the fact
that he or she is or was a director or officer of the
corporation or is or was serving in any capacity at the
request or for the benefit of the corporation as a director,
officer, employee, agent, partner, or fiduciary of, or in any
other capacity for, another corporation or any partnership,
joint venture, trust, employee benefit plan, or other
enterprise; and (B) "Proceeding" shall mean any threatened,
pending or completed action, suit or proceeding (including,
without limitation, an action, suit or proceeding by or in the
right of the corporation), whether civil, criminal,
administrative, investigative or through arbitration.
(b) Indemnification of Employees and Other Persons. The corporation may,
by action of its Board of Directors and to the extent provided in
such action, indemnify employees and other persons as though they
were Indemnitees. To the extent that an employee or agent of the
corporation has been successful on the merits or otherwise in
defense of any Proceeding or in defense of any claim, issue or
matter herein, the corporation shall indemnify such person against
expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection therewith.
(c) Non-Exclusivity of Rights. The rights to indemnification and to the
advancement of expenses provided in this Article 9 shall not be
exclusive of any other rights that any person may have or hereafter
acquire under any statute, provision of the Articles of
Incorporation or Bylaws, agreement, vote of shareholders or
directors, or otherwise.
(d) Insurance. The corporation may purchase and maintain insurance, at
its expense, for the benefit of any person on behalf of whom
insurance is permitted to be purchased by Pennsylvania law against
any expense, liability or loss, whether or not the corporation would
have the power to indemnify such person under Pennsylvania or other
law. The corporation may also purchase and maintain insurance to
insure its indemnification obligations whether arising hereunder or
otherwise.
(e) Fund for Payment of Expenses. The corporation may create a fund of
any nature, which may, but need not be, under the control of a
trustee, or otherwise may secure in any manner its indemnification
obligations, whether arising hereunder, under the Bylaws, by
agreement, vote of shareholders or directors, or otherwise.
9.3 Amendment
The provisions of this Article 9, relating to the limitation of directors'
liability, to indemnification and to the advancement of expenses shall
constitute a contract between the corporation and each of its directors
and officers which may be modified as to any director or officer only with
that person's consent or as specifically provided in this Article 9.
Notwithstanding any other provision of these Articles relating to their
amendment generally, any repeal or amendment of this Article 9 which is
adverse to any director or officer shall apply to such director or officer
only on a prospective basis, and shall not reduce any limitation on the
personal liability of a director of the corporation, or limit the rights
of an Indemnitee to indemnification or to the advancement of expenses with
respect to any action or failure to act occurring prior to the time of
such repeal or amendment. Notwithstanding any other provision of these
Articles, no repeal or amendment of these Articles shall affect any and
all of this Article 9 so as either to reduce the limitation of directors'
liability or limit indemnification or the advancement of expenses in any
manner unless adopted by (a) the unanimous vote of the directors of the
corporation then serving, or (b) the affirmative vote of the majority of
the holders of the common stock; provided that no such amendment shall
have retroactive effect inconsistent with the preceding sentence.
9.4 Changes in Pennsylvania Law
References in this Article 9 to Pennsylvania law or to any provision
thereof shall be to such law as it existed on the date this Article 9 was
adopted or as such law thereafter may be changed; provided that
19
(a) in the case of any change which expands the liability of directors or
limits the indemnification rights or the rights to advancement of expenses
which the corporation may provide, the rights to limited liability, to
indemnification and to the advancement of expenses provided in this
Article 9 shall continue as theretofore to the extent permitted by law;
and (b) if such change permits the corporation without the requirement of
any further action by shareholders or directors to limit further the
liability of directors (or limit the liability of officers) or to provide
broader indemnification right or rights to the advancement of expenses
than the corporation was permitted to provide prior to such change, then
liability thereupon shall be so limited and the rights to indemnification
and the advancement of expenses shall be so broadened to the extent
permitted by law.
10. Subchapters G and H of Chapter 25 of the Pennsylvania Business Corporation
Law, or any corresponding provisions of succeeding law, shall not be
applicable to the corporation.
11. (a) The Board of Directors may, if it deems it advisable, oppose a tender
or other offer for the corporation's securities, whether the offer is in
cash or in the securities of a corporation or otherwise. When considering
whether to oppose an offer, the Board of Directors may, but is not legally
obligated to, consider any relevant, germane or pertinent issue; by way of
illustration, but not to be considered any limitation on the power of the
Board of Directors to oppose a tender or other offer for this
corporation's securities, the Board of Directors may, but shall not be
legally obligated to, consider any or all of the following:
(i) Whether the offer price is acceptable based on the historical
and present operating results or financial condition of this corporation;
(ii) Whether a more favorable price could be obtained for this
corporation's securities in the future;
(iii) The social and economic effects of the offer or transaction on
this corporation and any of its subsidiaries, employees, depositors, loan
and other customers, creditors, shareholders and other elements of the
communities in which this corporation and any of its subsidiaries operate
or are located;
(iv) The value of the securities (if any) which the offeror is
offering in exchange for this corporation's securities, based on an
analysis of the worth of the offeror or other entity whose securities are
being offered;
(v) The business and financial conditions and earnings prospects of
the offeror, including, but not limited to, debt service and other
existing or likely financial obligations of the offeror, and the possible
affect of such conditions upon this corporation and any of its
subsidiaries and the other elements of the communities in which this
corporation and any of its subsidiaries operate or are located; and
(vi) Any antitrust or other legal and regulatory issues that are
raised by the offer.
(b) If the Board of directors determines that an offer should be
rejected, it may take any lawful action to accomplish its purpose,
including, but not limited to, any or all of the following: advising
shareholders not to accept the offer; litigation against the
offeror; filing complaints with all governmental and regulatory
authorities; acquiring the offeror's securities; selling or
otherwise issuing authorized but unissued securities or granting
options or warrants with respect thereto; acquiring a company to
create an antitrust or other regulatory problem for the offeror; and
obtaining a more favorable offer from another individual or entity.
12. The power to make, alter, amend and repeal the By-laws is expressly vested
in the Board of Directors, subject however to the right of the
shareholders to change such action by the affirmative vote of a majority
of the outstanding shares of the common and preferred stock of the
corporation.
13. No merger, consolidation, liquidation or dissolution of this corporation
nor any action that would result in the sale or other disposition of all
or substantially all of the assets of this corporation shall be valid
unless first approved by the affirmative vote of the holders of at least
66 2/3% of the outstanding shares of the common and preferred stock of the
corporation. This Article 13 may not be amended
20
unless first approved by the affirmative vote of the holders of at least
66 2/3% of the outstanding shares of the common and preferred stock of the
corporation.
14. Control Events.
a) It is the declared intent and policy of this corporation and its
shareholders that control of this corporation is an asset that
belongs to all shareholders of this corporation and that no
shareholder should have, either directly or indirectly, beneficial
ownership of twenty-five percent (25%) or more of the outstanding
shares of the common or preferred stock of the corporation.
Therefore, to carry out the aforementioned intent and policy, this
corporation and its shareholders approve and adopt this Article 14.
b) When any person is determined by the Board of Directors to be the
beneficial owner, either directly or indirectly, of twenty-five
percent (25%) or more of the outstanding shares of the common or
preferred stock of the corporation (the "Substantial Shareholder"),
then the Board of Directors may issue in its sole discretion on a
pro rata basis to those shareholders of the corporation who are not
affiliated with the Substantial Shareholder warrants to purchase
additional shares of the common stock of this corporation at a
purchase price equivalent to fifty percent (50%) of the average
transaction price of all purchases and sales of the common stock of
this corporation that occurred during the previous twelve-month
period and that are known by the Board of Directors. Such warrants
shall be issued without any consideration, shall not be assignable
and shall expire six (6) months from the date of their issuance. The
Board of Directors shall have the sole discretion in the
determination of the number of shares of common stock of this
corporation that may be purchased pursuant to such warrants.
c) The Board of Directors may use, but is not necessarily limited to,
the following indicia to determine "beneficial ownership": the
effect of stock ownership by a person's spouse and minor children;
ownership of shares held by a corporation or foundation of which a
Substantial Shareholder is an officer or affiliate; the extent of a
Substantial Shareholder's ownership of partnership shares; transfers
pursuant to divorce; installment purchases; stock warrants; grants
and options; control over the voting power of any stock; the status
of a Substantial Shareholder as trustee, trust beneficiary or
settlor of a trust of which part or all of the corpus is shares of
the common stock or preferred stock or both of this corporation; and
stock dividends.
d) "Affiliate" of, or a person "affiliated" with, the Substantial
Shareholder, is a person that directly, indirectly, through one or
more intermediaries, controls, or is controlled by, or is under
common control with, the Substantial Shareholder.
e) "Person" means an individual, corporation, partnership, association,
joint stock company, syndicate, trust where the interest of the
beneficiaries are evidenced by a security, an unincorporated
organization, group of persons acting in consort, or any other
entity. "Person" does not mean the Board of Directors of this
corporation acting collectively in its capacity as the Board of
Directors. "Person" does include an individual who is a member of
the Board of Directors.
f) This Article 14 may not be amended unless first approved by the
affirmative vote of the holders of at least seventy-five percent
(75%) of the outstanding shares of common and preferred stock of
this corporation.
21
PROXY CARD FOR MAY 05 MEETING
ANNUAL MEETING OF SHAREHOLDERS OF
CCFNB BANCORP, INC.
May 4, 2005
Please date, sign and mail your proxy card in the envelope provided
as soon as possible.
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. 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.
1. ELECTION OF CLASS 1 DIRECTORS TO SERVE FOR A THREE-YEAR TERM:
- - Robert M. Brewington, Jr.
- - Willard H. Kile, Jr.
- - Charles E. Long
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, 2005.
3. Proposal to approve the Amended and Restated Articles of Incorporation. The
Board of Directors recommends a vote FOR these proposals.
4. 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 PROPOSALS 2 AND 3. THIS PROXY MUST BE
DATED, SIGNED BY THE SHAREHOLDER(S) AND RETURNED PROMPTLY TO THE TRANSFER AGENT
IN THE ENCLOSED ENVELOPE.
Insert Number Attending: --------------------
FOR AGAINST ABSTAIN
FOR ALL NOMINEES
WITHHOLD AUTHORITY
FOR ALL NOMINEES
FOR ALL EXCEPT
(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:
NOMINEES:
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [x]
Please detach along perforated line and mail in the envelope provided.
- -----------------------------------
Yes, I(we) plan to attend the Annual Meeting.
- -
- --------------------------------------------------------------------------------
- -------------------------------------------
14475
CCFNB BANCORP, INC.
PROXY ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 4, 2005
Page 1
PROXY CARD FOR MAY 05 MEETING
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 4, 2005 at 10:30
a.m., prevailing time, and at any adjournment or postponement thereof as
follows:
(PLEASE DATE AND SIGN ON REVERSE SIDE)
Page 2