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 [ ]
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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)
- --------------------------------------------------------------------------------
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[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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previously. Identify the previous filing by registration statement number,
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NOTICE OF 2007
ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY STATEMENT
PLEASE COMPLETE, SIGN, DATE AND RETURN
YOUR PROXY PROMPTLY
Wednesday, May 2, 2007
10:30 A.M.
The Danville Elks
Located on Route 11 between
Bloomsburg and Danville
Pennsylvania
March 30, 2007
Dear CCFNB Stockholder:
You are cordially invited to join us at the 2007 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 2, 2007 at
10:30 A.M.
Enclosed with this Proxy Statement are your voting instructions and the 2006
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 submit any
questions you may have prior to the annual meeting to allow us time to gather
information to adequately answer your questions at the meeting. We also
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 2, 2007
TIME: 10:30 A.M.
PLACE: The Danville Elks
Located on Route 11 between
Bloomsburg and Danville, PA
MATTERS TO BE VOTED UPON:
1. Election of three Class 2 directors to hold office for a three-year term;
and
2. Any other matters that may properly come before the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE ELECTION OF CLASS 2
DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS.
Stockholders who are holders of record of the Common Stock at the close of
business on March 21, 2007, 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, 2007
TABLE OF CONTENTS
Page No.
--------
QUESTIONS AND ANSWERS................................................ 2
CORPORATE GOVERNANCE................................................. 4
NOMINATION PROCESS................................................ 4
CODE OF CONDUCT AND ETHICS........................................ 4
HOW TO CONTACT OUR DIRECTORS...................................... 5
STOCK OWNERSHIP...................................................... 5
STOCK OWNED BY DIRECTORS AND NAMED EXECUTIVE OFFICERS............. 5
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE........... 5
BOARD OF DIRECTORS................................................... 5
- ELECTION OF DIRECTORS........................................... 6
COMMITTEES OF THE BOARD OF DIRECTORS OF THE CORPORATION........... 7
COMMITTEES OF THE BOARD OF DIRECTORS OF THE BANK.................. 7
DIRECTORS' COMPENSATION........................................... 8
EXECUTIVE COMPENSATION............................................... 9
COMMITTEE REPORT ON EXECUTIVE COMPENSATION........................ 9
COMPENSATION DISCUSSION AND ANALYSIS.............................. 11
SUMMARY COMPENSATION TABLES....................................... 14
DEFERRED COMPENSATION AGREEMENTS.................................. 16
RETIREMENT PLANS.................................................. 17
CERTAIN TRANSACTIONS AND RELATIONSHIPS............................ 18
AUDIT COMMITTEE REPORT............................................... 18
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM........................ 19
FEES PAID TO J. H. WILLIAMS & CO., LLP............................ 19
AUDIT COMMITTEE PROCEDURES........................................ 20
OTHER INFORMATION.................................................... 20
NO SIGNIFICANT LEGAL PROCEEDINGS.................................. 20
OTHER PROPOSED ACTION............................................. 20
STOCKHOLDER PROPOSALS FOR 2008 ANNUAL MEETING..................... 20
ADDITIONAL AVAILABLE INFORMATION.................................. 20
APPENDIX A - CODE OF CONDUCT AND ETHICS.............................. 21
APPENDIX B - AUDIT COMMITTEE CHARTER................................. 26
- ----------
- - Matter to be voted upon.
i
QUESTIONS AND ANSWERS
Q: WHO IS SOLICITING MY VOTE?
A: The board of directors of CCFNB Bancorp, Inc. is soliciting your vote at
the 2007 annual meeting of its stockholders.
Q: WHAT AM I VOTING ON?
A: One proposal. The item numbers below refer to item numbers on the proxy
card.
Item 1. Election of three Class 2 directors
Q: WHO CAN VOTE?
A: All stockholders of record at the close of business on March 21, 2007 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: HOW MANY VOTES ARE REQUIRED TO ELECT DIRECTORS?
A: Directors are elected by a plurality of the votes cast.
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 unless other voting opportunities are made available
through your broker. By voting, 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.
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. If your shares are
held in street name through a broker, any changes need to be made through
them. Your last vote will be the vote that is counted.
Q: HOW MANY VOTES MUST BE PRESENT TO HOLD THE MEETING?
A: As of the record date, March 21, 2007, the Corporation had 1,238,221 shares
of Common Stock outstanding. The holders of Common Stock have the right to
cast a total of 1,238,221 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
2
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.
Q: DOES ANY SINGLE STOCKHOLDER CONTROL AS MUCH AS 5% OF OUR SHARES OF COMMON
STOCK?
A: No.
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: HOW ARE MY VOTES COUNTED?
A: You may either vote for or withhold authority to vote for each nominee for
the board. If you withhold authority to vote with respect to any nominee,
your shares will be counted for purposes of establishing a quorum, but will
have no effect on the election of that nominee.
Q: WHO WILL COUNT THE VOTES?
A: Employees of American Stock Transfer & Trust Company will tabulate the
votes prior to the meeting, and the judges of election will tabulate all
votes cast at the annual meeting as well as those votes previously
tabulated by American Stock Transfer.
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: WHAT HAPPENS IF THE MEETING IS POSTPONED OR ADJOURNED?
A. Your proxy will still be good and may be voted at the postponed or
adjourned meeting. You will still be able to change or revoke your proxy
until it is voted.
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.
3
CORPORATE GOVERNANCE
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.
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.
Willard H. Kile, Jr.
Charles E. Long
W. Bruce McMichael, Jr.
CODE OF CONDUCT AND ETHICS
Our Board has adopted a Code of Conduct and Ethics governing the principal
executive officers of the Corporation, the bank and all indirect subsidiaries.
This Code of Conduct and Ethics governs the activities of not only our principal
executive officers, but also our employees, agents and representatives and
establishes guidelines for professional conduct in the workplace. Pursuant to
the Sarbanes-Oxley Act of 2002, this Code of Conduct and Ethics contains a
provision for a person to report an actual or apparent violation of this code as
well as a complaint regarding our accounting or auditing matters to the Audit
Committee without fear of dismissal or retaliation of any kind. All reports or
complaints under this Whistleblower provision are also kept in confidence. A
copy of this Code of Conduct and Ethics is attached to this proxy statement at
Appendix A and is also available on our website at www.ccfnb.com.
4
HOW TO CONTACT OUR DIRECTORS
Stockholders 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.
STOCK OWNERSHIP
STOCK OWNED BY DIRECTORS AND NAMED EXECUTIVE OFFICERS
This table indicates the number of shares of Common Stock owned by the named
executive officers and directors as of February 28, 2007. The aggregate number
of shares owned by all directors, principal financial officer and named
executive officers is 4.95%. Unless otherwise noted, each individual has sole
voting and investment power for the shares indicated below.
NAME OF INDIVIDUAL AMOUNT AND NATURE OF PERCENT
OF IDENTITY OF GROUP BENEFICIAL OWNERSHIP(1) OF CLASS
- -------------------- ----------------------- --------
Robert M. Brewington, Jr. 9,272.413 --
Edward L. Campbell 7,637.008 --
Lance O. Diehl 1,946.077 --
Frank D. Gehrig 2,310.897
Elwood R. Harding, Jr. 15,719.310 1.27%
Willard H. Kile, Jr. 6,164.197 --
Virginia D. Kocher 391.000 --
Charles E. Long 6,700.386 --
W. Bruce McMichael, Jr. 1,629.000 --
Paul E. Reichart 8,880.000 --
Jacob S. Trump 266.956 --
Edwin A. Wenner 325.000 --
All Officers and Directors as a group
(9 directors, 3 nominees, 7 named
officers, 12 persons in total) (2) 61,242.244 4.95%
(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.
(2) 7 named officers include: Paul E. Reichart, Chairman of the Board; Elwood
R. Harding, Jr., Vice-Chairman of the Board, Edward L. Campbell, Secretary
of the Board; Lance O. Diehl, President and Chief Executive Officer; Edwin
A. Wenner, Chief Operating Officer and Executive Vice President; Jacob S.
Trump, Senior Vice President and Financial Planning Officer and Virginia D.
Kocher, Treasurer and Principal Financial Officer. Messrs. Wenner and Trump
and Ms. Kocher are not Directors of the Corporation.
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 named
executive officers and directors. The Corporation believes that all filing
requirements were met during 2006.
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.
5
ELECTION OF DIRECTORS
Item 1 on Proxy Card
The Corporation has nine directors who are divided into three classes: three
directors are in Class 1; three directors are in Class 2; and three directors
are in Class 3. Each director holds office for a three-year term. The terms of
the classes are staggered, so that the term of office of one class expires each
year.
At this meeting, the stockholders elect three Class 2 directors. Unless you
withhold authority to vote for one or more of the nominees, the persons named as
proxies intend to vote for the election of the three nominees for Class 2
director. All of the nominees are recommended by the Board of Directors:
Lance O. Diehl
W. Bruce McMichael, Jr.
Paul E. Reichart
All nominees have consented to serve as directors. The Board of Directors has no
reason to believe that any of the nominees should be unable to act as a
director. However, if any director is unable to stand for re-election, the Board
of Directors will designate a substitute. If a substitute nominee is named, the
proxies will vote for the election of the substitute.
The following information includes the age of each nominee and current director
as of the date of the meeting. All directors of the Corporation are also
directors of the bank.
CLASS 1 DIRECTORS WHOSE TERM EXPIRES IN 2008
ROBERT M. BREWINGTON, JR., 56
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, sales of motorcycles and ATVs). Mr. Brewington is the
brother of Sally Tucker, the bank's Marketing Director.
WILLARD H. KILE, JR., D.M.D., 52
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, 71
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 AND NOMINEES FOR CLASS 2 DIRECTORS
WHOSE TERM WILL EXPIRE IN 2010
LANCE O. DIEHL, 41
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.
W. BRUCE MCMICHAEL, 47
Director since 2006. Licensed Funeral Director; President, McMichael
Funeral Home, Inc.
PAUL E. REICHART, 69
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.
CLASS 3 DIRECTORS WHOSE TERM EXPIRES IN 2009
EDWARD L. CAMPBELL, 68
Director since 1985. Secretary of the Corporation and the bank. President
of ELC Enterprises, Inc. and a partner of Heritage Acres, Evergreens.
6
FRANK D. GEHRIG, 61
Director since 2004. Partner in Accounting Firm of Brewer, Gehrig &
Johnson, Certified Public Accountants.
ELWOOD R. HARDING, JR., 60
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).
NUMBER OF MEETINGS
During 2006, the Corporation's Board of Directors held 13 meetings and the
bank's Board of Directors held 23 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 2006.
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: "Committee Report on Executive Compensation".
COMMITTEES OF THE BOARD OF DIRECTORS OF THE BANK
LONG
BOARD OF RANGE CREDIT HUMAN ASSET-
NAME DIRECTORS EXECUTIVE AUDIT PLANNING ADMINISTRATION RESOURCE TRUST LIABILITY
- ---- --------- --------- ----- -------- -------------- -------- ----- ---------
Robert M. Brewington, Jr. [X] [X] [X] [X](1)
Edward L. Campbell [X] [X] [X](1) [X] [X]
Lance O. Diehl [X] [X] [X] [X] [X] [X] [X]
Frank D. Gehrig [X] [X] [X](1)
Elwood R. Harding, Jr. [X] [X] [X] [X](1) [X]
Willard H. Kile, Jr. [X] [X](1) [X]
Charles E. Long [X] [X] [X](1) [X] [X]
W. Bruce McMichael, Jr. [X] [X] [X]
Paul E. Reichart [X](1) [X](1) [X] [X] [X] [X] [X]
(1) Chairman.
EXECUTIVE COMMITTEE
The Executive Committee reviews the operations of the Board of Directors with
respect to directors' fees and frequency of Board of Directors' meetings as well
as the Corporation's capital structure, stock position and earnings. In
addition, the Executive Committee analyzes other management issues and
periodically makes recommendations to the Board of Directors based on its
findings.
AUDIT COMMITTEE
The Audit Committee is responsible for the review and evaluation of the system
of internal controls and corporate compliance with applicable rules, regulations
and laws. The Audit Committee meets with outside independent auditors and senior
management to review the scope of the internal and external audit engagements,
the adequacy of the internal and external auditors, corporate policies to ensure
compliance and significant changes in accounting principles. See "Audit
Committee Report".
7
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 "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. Additionally, the
committee oversees our third party brokerage firm.
ASSET-LIABILITY COMMITTEE
This committee reviews asset-liability positions and provides support and
direction in managing net interest margins and liquidity.
DIRECTORS' COMPENSATION (7)
Interest
Earned on
Deferred
Director's
Fees Fee Plans and
Earned Non-Equity Nonqualified
Or Paid Stock Option Incentive Plan Deferred All Other
in Cash Awards Awards Compensation Compensation Compensation
Name ($) ($) (1) ($) (2) ($)(3) Earnings ($) ($) (6) Total ($)
- ---- ------- ------- ------- -------------- ------------- ------------ ---------
Robert M.
Brewington, Jr. 13,400 0 0 0 1,632(4) N/A 15,032
Edward L.
Campbell 14,625 0 0 0 0 N/A 14,625
Frank D. Gehrig 13,675 0 0 0 0 N/A 13,675
Elwood R.
Harding, Jr. 13,400 0 0 0 12,128(5) N/A 25,528
Willard H. Kile, Jr. 15,325 0 0 0 1,912(4) N/A 17,237
Charles E. Long 14,775 0 0 0 0 N/A 14,775
W. Bruce
Michael, Jr. 9,875 0 0 0 139(4) N/A 10,014
Paul E. Reichart 40,000 0 0 0 0 N/A 40,000
(1) No Stock Awards were given by the Corporation in 2006.
(2) No Option Awards were given by the Corporation in 2006.
(3) No Non-Equity Incentive Plan Compensation was paid to Directors in 2006.
(4) Represents interest earned on deferred director's fees.
(5) Represents increase in value due to interest earned on two Nonqualified
Deferred Compensation Plans.
8
(6) No director listed incurred more than $10,000 in all other compensation.
(7) See "Deferred Compensation Agreements" for more information.
Lance O. Diehl, President and CEO, is also a Director. Refer to Summary
Compensation Table.
DEFERRED COMPENSATION AGREEMENTS FOR DIRECTORS
The bank entered into two agreements with Elwood R. Harding, Jr., to establish
non-qualified deferred compensation plans. Each of these plans was limited to a
four-year period of deferment of director's fees. Mr. Harding'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 policies (designating
the bank as beneficiary) on the life of Mr. Harding which is intended to cover
the bank's obligations and related costs under these agreements. As of December
31, 2006 and 2005, the net cash surrender value of these and other insurance
policies was $490,887 and $448,101, respectively, and the total accrued
liability was $208,734 and $210,768, respectively, relating to these agreements.
Mr. Harding is currently a Director of the Corporation and his total accrued
liability was $156,930 and $145,312 at December 31, 2006 and 2005, respectfully.
At retirement age of 69, Mr. Harding will receive $20,283 for 10 years and at
retirement age of 72, Mr. Harding will receive an additional $31,300 for 10
years.
The bank gave the directors the option of receiving or deferring their
directors' fees under a deferred director's fee plan which allows the director
to defer such fees until the year following the expiration of the director's
term. Each year, the director has the option of participating for that year.
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 2006. The current certificate of
deposit rate will reset in January 2008. Three directors, specifically Robert M.
Brewington, Jr., Willard H. Kile, Jr. and W. Bruce McMichael, Jr. have elected
to participate in this program; at December 31, 2005 and 2006, deferred fees and
accrued interest for Mr. Brewington was $33,849 and $48,881; deferred fees and
accrued interest for Mr. Kile was $39,573 and $56,810 and deferred fees and
accrued interest for Mr. McMichael was $0 and $9,996, respectively.
EXECUTIVE COMPENSATION
REPORT OF COMMITTEE ON EXECUTIVE COMPENSATION
All of 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.
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 and, in consultation
with Mr. Diehl, reviewed the compensation for the other named executive officers
in this proxy statement.
Over the past year, the Board, sitting as the Committee on Executive
Compensation, met one time to discuss the performance of the executive officers
in the previous year and to compare their performance with peers. Moreover, the
Human Resources Committee met one time in 2006 to discuss the performance of all
the officers excluding the executive officers. Officer's salaries were also
compared with peer reports.
The Board, sitting as the Committee on Executive Compensation, reviewed the text
of the Compensation Discussion and Analysis section contained in this proxy
statement and approved its inclusion in the proxy statement and in our Annual
Report on Form 10-K for the year ended December 31, 2006, to be filed with the
SEC.
9
ANNUAL COMPENSATION
Annual compensation for our senior executives includes salary, bonus and
contribution to his/her 401K profit sharing plan. This is similar to the
compensation programs for most of our peer group banking companies.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Diehl received total compensation of $196,949 in the year 2006. Please refer
to the Summary Compensation Table on page 15 for more details.
We established the following 2007 compensation package for Mr. Diehl: Annual
salary to be paid is $150,000, and we expect the other payment and benefits
described in the Summary Compensation Table to remain comparable in 2007 as in
2006. A 2006 4% "across the board" bonus was paid in January 2007 which amounted
to $5,400. The bank will also contribute $21,891 in 2007 to Mr. Diehl's deferred
compensation plan.
TREASURER (PRINCIPAL FINANCIAL OFFICER) COMPENSATION
Ms. Kocher received total compensation of $61,069 in the year 2006. Please refer
to the Summary Compensation Table on Page 15 for more details.
We established the following 2007 compensation package for Ms. Kocher: Annual
salary to be paid is $53,045, and we expect the other payment and benefits
described in the Summary Compensation Table to remain comparable in 2007 as in
2006. A 2006 4% "across the board" bonus was paid in January 2007 which amounted
to $2,060.
CHIEF OPERATING OFFICER COMPENSATION
Mr. Wenner received total compensation of $184,606 in the year 2006. Please
refer to the Summary Compensation Table on page 15 for more details.
We established the following 2007 compensation package for Mr. Wenner: Annual
salary to be paid is $125,000, and we expect the other payment and benefits
described in the Summary Compensation Table to remain comparable in 2007 as in
2006. A 2006 4% "across the board" bonus was paid in January 2007 which amounted
to $4,600. The bank will also contribute $46,770 in 2007 to Mr. Wenner's
deferred compensation plan.
SENIOR VICE PRESIDENT OF FINANCIAL PLANNING DEPARTMENT COMPENSATION
Mr. Trump received total compensation of $131,614 in the year 2006. Please refer
to the Summary Compensation Table on Page 15 for more details.
We established the following 2007 compensation package for Mr. Trump: Annual
salary to be paid is $78,003, and we expect the other payment and benefits
described in the Summary Compensation Table to remain comparable in 2007 as in
2006. A 2006 4% "across the board" bonus was paid in January 2007 in the amount
of $3,059. The bank will also contribute $37,051 in 2007 to Mr. Trump's deferred
compensation plan.
OTHER FACTORS THAT INFLUENCED COMPENSATION
We considered Messrs. Diehl's and Wenner's pay and annual bonus appropriate
because of their roles in creating a culture of high performance with high
integrity and in leading the Corporation to strong financial results in 2006:
- Revenues increased 14.8% to $15,102,000
- Earnings from continuing operations grew 8.4% to $2,411,641
- Loans increased 4.1% to $160,641,000
- Return on average total capital was 7.97%
In addition, we considered Mr. Diehl's leadership in meeting the operational and
strategic goals established for the bank in the beginning of 2006.
10
Our Compensation Committee considered that Mr. Diehl has worked for the bank for
a total of 13 years and has 19 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.
Ms. Kocher began her employment at the bank in June 1965. She has 34 years of
banking experience. During this time, she has held duties as Executive
Assistant, Teller, Accountant, Personnel, Assistant Vice President and present
positions of Vice President, Controller and Assistant Secretary of the bank and
Treasurer, Principal Financial Officer, and Assistant Secretary of the
Corporation. Ms. Kocher is a graduate of the Central Atlantic Advanced School of
Banking. Her duties include responsibility for Bank and Bancorp corporate
accounting, financial reporting systems, shareholder relations, accounts
payable, ALCO systems, funds management, Disclosure Committee and regulatory
reporting.
Mr. Wenner has been employed at the bank since May 1974. During this time, he
has held duties as Teller, Technology Director, Internal Auditor, Loan Officer,
Community Office Manager, Credit Administrator, Vice President, Senior Vice
President and his present position of Executive Vice President and Chief
Operating Officer. In his present capacity, Mr. Wenner has direct supervision
over areas which include accounting, data deposit operations, information
technology, human resources, training, compliance, security, credit
administration and branch administration.
Mr. Trump has been employed at the bank since 1989 and has 37 years of banking
experience. His duties have included Office Manager and Commercial Lending
Officer, and he is currently Senior Vice President of the Financial Planning
Department, which he was instrumental in starting in 1990. Mr. Trump is a
graduate of Williamsport Community College, the Paralegal Institute in
Philadelphia and the Pennsylvania Bankers Association Trust School. He has
gained valuable experience working with both public and private foundations, as
well as managing investment portfolios, tax preparations, pension plan
administration and also account administration.
Committee on Executive Compensation
Robert M. Brewington, Jr.
Edward L. Campbell
Frank D. Gehrig
Elwood R. Harding, Jr.
Willard H. Kile, Jr.
Charles E. Long
W. Bruce McMichael, Jr.
COMPENSATION DISCUSSION AND ANALYSIS
The following discussion will touch upon:
- the objectives of our executive compensation policy;
- what our compensation policy is designed to award;
- each element of compensation;
- the reasons why these elements of compensation were selected;
- how we determine the amount of each element of compensation; and
- how each element of compensation chosen by us fits into the objectives
of our overall executive compensation policy.
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;
- award a portion of the executive's compensation based upon our
overall performance; and
- attract and retain talented management.
Our decisions on senior executive officer compensation are based primarily upon
our assessment of each executive's leadership and operational performance and
potential to enhance long-term stockholder value. We rely upon our
11
judgment about each individual - and not on rigid formulas or short-term changes
in business performance - in determining the amount and mix of compensation
elements and whether each particular payment or award provides an appropriate
incentive and reward for performance that sustains and enhances long-term
stockholder value. Key factors affecting our judgment include: performance
compared to the financial, operational and strategic goals established for the
executive at the beginning of the year; nature, scope and level of
responsibilities; contribution to the Corporation's financial results,
particularly with respect to key metrics such as, revenue, earnings and return
on total capital; effectiveness in leading our initiatives to increase customer
value and productivity; contribution to the Corporation's commitment to
corporate responsibility, including success in creating a culture of integrity
and compliance with applicable laws and our ethics policies; and commitment to
community leadership and diversity.
We considered each executive's current salary and prior year bonus, the
appropriate balance between incentives for long-term and short-term performance
and the compensation paid to the executive's peers within the Corporation and
industry.
We also consulted with an executive compensation expert and considered the
compensation levels and performances of banking companies in comparable market
areas, as these companies are most likely to compete with us for the services of
our executives. However, we do not tie our compensation decisions to any
particular range or level of total compensation paid to executives at those
companies.
ELEMENTS OF EXECUTIVE COMPENSATION
We utilize annual compensation which includes salary, cash bonus and cash
contributions to our 401(K) profit sharing plan, as well as certain perquisites.
The key elements of our executive compensation program are:
Base Salary. Base salaries for our executives are established based on the scope
of their responsibilities, taking into account competitive market compensation
paid by other companies for similar positions as well as salaries paid to the
executives' peers within the Corporation and industry. We set base salaries at a
level designed to attract and retain superior leaders. Base salaries are
typically reviewed every 12 months, and adjusted from time to time to take into
account outstanding individual performance, promotions and competitive
compensation levels. The salaries we paid to the named executive officers are
shown in the applicable Summary Compensation Table.
Annual Bonus. We generally pay annual bonuses to all employees to incent and
reward superior performance for the year. Bonuses, which are at the sole
discretion of the Board of Directors, are paid to all employees in cash in
January for the prior year's performance. In addition, the Board of Directors
may award an additional cash bonus based upon the evaluation of each executive's
individual performance during the year, in the context of our assessment of the
overall performance of the Corporation and the executive's function in meeting
the specific financial and other key goals established for the Corporation and
the executive's function. This evaluation also includes an assessment of how the
executive performed compared to the financial, operational and strategic goals
and objectives established for the executive at the beginning of the year. The
annual bonuses we awarded over the last three years are shown in the applicable
Summary Compensation Tables.
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 or
restricted stock in the future.
Perquisites. We provide our senior executive officers with perquisites that we
believe are reasonable, competitive and consistent with the Corporation's
overall executive compensation program. We believe that our perquisites help us
to retain the best leaders and allow them to operate more effectively. These
perquisites, include but are not limited to, profit-sharing plan, employee stock
purchase plan, life insurance plan (including an arrangement with 18 current and
former bank officers under a bank-owned life insurance investment), disability
insurance plan, business expense reimbursement, vacation, holiday, sick and
personal days with pay, as provided by the bank to its regular full-time
employees. Mr. Diehl also receives the use of a bank-provided automobile and the
bank reimburses all expenses relating thereto, including fuel, oil, maintenance
and insurance costs. The use of this automobile is limited to Mr. Diehl, his
spouse, authorized bank personnel or a designated driver in the event of an
emergency. Mr. Reichart also receives the use of a bank-provided vehicle and the
expenses relating thereto. Mr. Reichart does reimburse the Bank for certain
mileage expenses. In addition, Mr. Reichart is afforded the use of a cellphone.
Mr. Reichart's expenses combined do not total more than $10,000 for 2006.
12
BENCHMARKING AND PEER GROUP
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 L. R. Webber
Associates, Inc, PO Box 593, Hollidaysburg, PA 16648, ("Webber") that delineates
compensation at peer group banking companies; discusses such report as well as
the performance and compatibility to the position with each named executive
officer in this proxy statement; and takes into consideration recommendations by
each named executive officer's supervisory officer or by members of the Board of
Directors for the senior most named executive officers. The total executive
compensation for Mr. Diehl places his compensation above the average mid-point
range of the peer group by asset size and above the average minimum range for
the region. The total compensation for Ms. Kocher is determined by the Human
Resource Committee, which uses a quartile system for salary ranges and not the
Webber survey; however, her salary would range half way between the mid-point
and maximum compensation ranges. Mr. Wenner's compensation is placed above the
average maximum range of the peer group by asset size and above the average
mid-point range for the region. Mr. Trump's compensation is determined by the
Human Resource Committee, which uses a quartile system for salary ranges and not
the Webber survey; however, his salary would range in the upper to maximum
compensation range. All of these factors are taken into consideration in the
determination of the compensation of the named executive officers as a group and
of the named executive officers individually.
Webber prepares an annual salary/benefit survey for the bank. This survey
included information on 12 banks and 2 thrifts for the asset group ranging from
$200,000,000 to $299,999,999 in assets. This survey further compared 13 banks
and 4 thrifts for the region including Columbia County and the following
additional Pennsylvania counties: Carbon, Lackawanna, Luzerne, Monroe,
Northampton, Pike, Schuylkill, Susquehanna, Wayne and Wyoming. The average
minimum and maximum salary ranges for the Chief Executive Officer reflect
$89,061 to $325,050, respectfully. Compensation for the Chief Operating Officer
ranges from a minimum of $57,000 to a maximum of $235,000.
The Corporation's quartile system was originally created by Webber. Calculations
are provided each year by the Human Resource Officer showing each current
quartile with projected adjustments of an increase of 2%, 3% and 4%. This
information is then presented to the Board of Directors by the President and
Chief Operating Officer, and the Board of Directors makes the final decision. It
was decided that there would be no adjustments to the quartile ranges for 2007.
The salary ranges for the Controller (Principal Financial Officer) reflect a
minimum of $34,772 with the maximum at $58,288. The Senior Vice President
(Senior Vice President of Financial Planning) position uses the same Webber
classifications system and the minimum salary reflects $47,905 with the maximum
at $81,893.
BASE SALARY AND BENEFITS
Annual base salary is designed to compensate executive officers for their
continued levels of superior performance. The base salary amounts paid to the
named executive officers for the fiscal year 2006 are reflected in the salary
column of the Summary Compensation Table. In addition to base cash compensation,
each executive officer participates in the same retirement plan, profit sharing
plan, savings plan, life insurance plan or disability insurance plan, business
expense reimbursement, vacation pay, holiday pay, sick pay and personal days off
with pay, as provided by the Bank to its regular full time employees. According
to executive employee agreements for the Chief Executive Officer and Chief
Operating Officer, base salary shall not fall below $100,000 and $85,000,
respectively. Benefits included are the same as described above for perquisites.
CASH BONUS AWARDS
The Board of Directors of the bank, in its sole discretion, may provide for
payment of an annual bonus to all of the employees of the bank. However, Messrs.
Diehl and Wenner each received an additional $5,000 cash bonus in December 2006
for outstanding performance.
SEVERANCE AND CHANGE IN CONTROL BENEFIT
As delineated in the employment agreements for the Chief Executive Officer and
the Chief Operating Officer, termination without cause, the Bank shall pay the
executive his annual base salary (minus applicable taxes and withholdings) for a
one (1) year period, together with the dollar value of any accrued vacation and
unreimbursed business expenses as of the date of termination. If the executive's
employment shall be terminated for cause, the Bank shall pay the executive his
full annual base salary, minus applicable taxes and withholdings prorated
through the date of termination at the rate in effect at the time of
termination, together with the dollar value of any accrued
13
vacation and unreimbursed business expenses as of the date of termination. There
are no other employee agreements for the other named executive officers
contained in this proxy statement.
The bank has entered into the following severance and change in control
agreements for the named executive officers identified below:
If Mr. Diehl terminated his employment with the Corporation for good reason
following a change in control, he would have had $270,000 available to him, or
the amount equal to two times his annual base salary, (minus applicable taxes
and withholdings), and his vested share balance in the bank's qualified defined
contribution plan.
TAX AND ACCOUNTING CONSIDERATION
We will take into account tax consequences to our named executive officers in
designing the various elements of our executive compensation policy, such as the
design terms to defer immediate income recognition in accordance with Section
409A of the Internal Revenue Code of 1986.
SUMMARY COMPENSATION TABLES
The Securities and Exchange Commission (SEC) has amended its rules with respect
to the presentation of information about executive compensation. We are required
to present additional information about how we compensate our named executive
officers, and, in our case, to include additional officers whose names and
compensation were not required to be presented in our proxy statements for past
annual meetings. This new approach to the disclosure of executive compensation
can be phased-in over a 3-year period. Therefore, we are presenting two Summary
Compensation Tables for your review - one for the years ended December 31, 2005
and 2004 and a new expanded one for the year ended December 31, 2006. This
latter table includes information about our principal financial officer as well
as other named executive officers whose annual total compensation, as defined by
the SEC's rules, exceeded $100,000.
14
SUMMARY COMPENSATION TABLE FOR THE
YEAR ENDED DECEMBER 31, 2006
Change in
Non-Stock Nonqualified
Name and Stock Option Incentive Plan Deferred All Other
Principal Salary Bonus Awards Awards Compensation Comp. Plans Compensation
Position Year ($) ($) (1) ($) (6) ($) (7) ($) (8) ($) ($) Total ($)
- --------- ---- ------- ------- ------- ------- -------------- ------------ ------------ ---------
Lance O.
Diehl,
President &
Chief
Executive
Officer 2006 135,000 4,200 0 0 0 20,136 37,613(2) 196,949
Virginia D.
Kocher,
Treasurer &
Principal
Financial
Officer 2006 51,500 1,750 0 0 0 0 7,819(3) 61,069
Edwin A.
Wenner,
Executive
Vice-President
& Chief
Operating
Officer 2006 115,000 3,640 0 0 0 43,024 22,942(4) 184,606
Jacob S.
Trump,
Senior Vice
President 2006 76,473 2,624 0 0 0 34,084 18,433(5) 131,614
(1) Represents a cash bonus representing 3 1/2% of 2005 base salary.
(2) Includes $10,925 as the payment of directors' fees; $5,848 representing the
bank's matching contribution to Mr. Diehl's 401K plan; $11,217 as car
expense; $543 as cellphone expense; $1,178 as cafeteria plan benefits; $649
as term life insurance and bank-owned life insurance premium payments; $600
as a partial corporate membership in the Berwick Golf Club; $1,653 for
various meal and travel expenses; and $5,000 as a one time cash bonus.
(3) Includes $1,597 representing the bank's matching contribution to Ms.
Kocher's 401K plan; $3,584 as cafeteria plan benefits; $2,005 as term life
insurance and bank-owned life insurance premium payments; and $633 for
various meal, dues and travel expenses.
(4) Includes $4,946 representing the bank's matching contribution to Mr.
Wenner's 401K plan; $368 as cellphone expense; $7,563 as cafeteria plan
benefits; $3,147 as term life insurance and bank-owned life insurance
premium payments; $600 as a partial corporate membership in the Berwick
Golf Club; $1,318 for various meal and travel expenses; and $5,000 as a one
time cash bonus.
(5) Includes $3,164 representing the bank's matching contribution to Mr.
Trump's 401K plan; $8,548 as cafeteria plan benefits; $3,999 as term life
insurance and bank-owned life insurance premium payments; $2,200 as an
annual membership in the Eagles Mere Country Club and $522 for various meal
and travel expenses.
(6) No Stock Awards were given by the Corporation in 2006.
(7) No Option Awards were given by the Corporation in 2006.
(8) No Non-stock Incentive Plan Compensation was given by the Corporation in
2006.
15
SUMMARY COMPENSATION TABLE FOR
THE YEARS ENDED DECEMBER 31, 2005 AND 2004
ANNUAL COMPENSATION(1)
--------------------------------------
FISCAL OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) COMPENSATION($)
- --------------------------- ------ --------- -------- --------------- ---------------
LANCE O. DIEHL
PRESIDENT AND CHIEF 2005 120,000 3,870(2) 16,422(3) 22,379(4)
EXECUTIVE OFFICER 2004 110,000 3,517(5) 15,391(6) 20,477(7)
EDWIN A. WENNER
EXECUTIVE VICE PRESIDENT
AND CHIEF 2005 104,000 3,325(2) 4,293(8) 51,418(9)
OPERATING OFFICER 2004 95,000 2,975(5) 3,919(10) 47,873(11)
(1) From January 1, 2004 through December 31, 2005, 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 2004 base salary.
(3) Includes $11,400 as the payment of directors' fees and $5,022 representing
the bank's matching contribution to Mr. Diehl's 401K plan.
(4) Includes $19,405 as a payment for a deferred compensation plan; $949 as car
expense; $258 as cellphone expense; $826 as cafeteria plan benefits, $266
as term life insurance premium payments on the life of Mr. Diehl, $600 as a
partial corporate membership in the Berwick Golf Club and $75 for a Years
of Service Award for ten years of employment at the bank.
(5) Represents a cash bonus representing 3 1/2% of 2003 base salary.
(6) Includes $10,800 as the payment of directors' fees and $4,591 representing
the bank's matching contribution to Mr. Diehl's 401K plan.
(7) Includes $16,047 as a payment for a deferred compensation plan; $678 as car
expense; $403 as cellphone expense; $758 as cafeteria plan benefits, $2,356
as a Berwick Golf Club membership and $235 as term life insurance premium
payments on the life of Mr. Diehl.
(8) Represents the bank's matching contribution to Mr. Wenner's 401K plan.
(9) Includes $40,578 as a payment for a deferred compensation plan; $259 as
cellphone expense; $7,511 as cafeteria plan benefits, $600 as a partial
corporate membership in the Berwick Golf Club and $2,470 as term life
insurance premium payments on the life of Mr. Wenner.
(10) Represents the bank's matching contribution to Mr. Wenner's 401K plan.
(11) Includes $35,174 as a payment for a deferred compensation plan; $408 as
cellphone expense; $8,008 as cafeteria plan benefits, $2,356 as a Berwick
Golf Club membership and $1,927 as term life insurance premium payments on
the life of Mr. Wenner.
DEFERRED COMPENSATION AGREEMENTS
The bank entered into an agreement with Paul E. Reichart, Chairman of the Board,
to establish a non-qualified deferred compensation plan. If Mr. Reichart served
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 his 65th birthday. His monthly payment is based upon the future
value of life insurance purchased with the compensation that he deferred. The
bank has obtained life insurance (designating the bank as the beneficiary) on
Mr. Reichart's life which is intended to cover the bank's obligations under this
Deferred Compensation Plan, based upon certain actuarial assumptions.
Mr. Reichart receives monthly payments of $1,875 for 120 consecutive months
which commenced in February 2003. Mr. Reichart received $22,500 in 2006 from
this deferred compensation arrangement. The accrued liability of his deferred
compensation arrangement at December 31, 2006 was $118,464.
The bank entered into non-qualified deferred compensation agreements with 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 bank has obtained life insurance (designating the bank as the
beneficiary) on Mssrs Diehl, Wenner and Trump's life which is intended to cover
the bank's obligations under this Deferred Compensation Plan, based upon certain
actuarial assumptions. The deferred compensation expense related to these
agreements for the year ended December 31, 2006 was $97,244 and the total
accrued liability as of December 31, 2006 and December 31, 2005 was $323,592 and
$226,348, respectively. Mr. Diehl is currently President and Chief Executive
Officer.
16
Mr. Wenner is currently the Executive Vice President and Chief Operating
Officer. Mr. Trump is currently the Senior Vice President of Financial Planning.
The following table illustrates the above deferred compensation arrangements
with our current Chairman of the Board and Messrs. Diehl, Wenner and Trump.
Aggregate Aggregate
Executive Bank Withdrawals/ Balance at
Contributions in Contributions Distributions December 31,
Name 2006 ($) (1) in 2006 ($) ($) (2) 2006 ($)
- ---- ---------------- ------------- ------------- ------------
Lance O. Diehl,
President and Chief
Executive Officer 0 $20,136 0 $ 66,687
Edwin A. Wenner,
Executive Vice-President
and Chief Operating
Officer 0 $43,024 0 $143,104
Paul E. Reichart,
Chairman of the Board (3) 0 $ 6,127 $22,500 $118,464
Jacob S. Trump,
Senior Vice President of
Financial Planning 0 $34,084 0 $113,801
(1) The deferred compensation plans do not allow executive contributions.
(2) Messrs. Diehl, Wenner and Trump have not attained retirement; hence no
withdrawals or distributions.
(3) Mr. Reichart is no longer employed by the Corporation and the bank;
however, he does serve as Chairman of the Board.
RETIREMENT PLANS
We maintain a Non Qualified Deferred Compensation Plan for certain named
executive officers. The following table presents information about these plans
as it pertains to each named executive officer:
Estimated Early
Number of Years Normal Estimated Normal Early Retirement
Credited Retirement Retirement Annual Retirement Annual Benefit
Name Plan Name Service (#) Age (#) Benefit ($) Age (#)(1) ($) (2)
- ---- ------------- --------------- ---------- ----------------- ---------- ---------------
Lance O. Diehl, Non Qualified
President and Deferred
Chief Executive Compensation
Officer Plan 3 3/4 60 90,000 N/A N/A
Virginia D. Kocher,
Treasurer N/A N/A N/A N/A N/A N/A
Edwin A. Wenner, Non Qualified
Executive Deferred
Vice-President Compensation
and Chief Plan
Operating Officer 3 3/4 60 50,000 N/A N/A
Jacob S. Trump, Non Qualified
Senior Vice Deferred
President of Compensation
Financial Planning Plan 3 3/4 62 20,000 N/A N/A
17
(1) A vesting schedule is in place for the Non Qualified Deferred Compensation
Plan. No executive officers are entitled to early retirement in 2006.
(2) No Estimated Early Retirement Annual Benefit is included in non qualified
deferred compensation plan.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
There were no arrangements or vending contracts, etc. with any immediate family
member or business associate of any board member and named executive officer
exceeding $60,000.
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, 2006, 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 $4,183,000 or
approximately 13.83% of the Corporation's total consolidated capital accounts.
The largest amount for all of these loans in 2006 was $5,662,000 or
approximately 18.72% 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.
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 qualifications 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 2006 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
18
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, 2006, 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, 2007.
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
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed J. H. Williams & Co., LLP, (JH Williams)
certified public accountants, as the Corporation's independent registered public
accounting firm to audit the financial statements of the Corporation for the
year ended December 31, 2007.
A member of JH Williams will be present at the annual meeting, and will have the
opportunity to make a statement and be available to respond to appropriate
questions by stockholders.
FEES PAID TO J. H. WILLIAMS & CO., LLP
Aggregate fees for professional services for the Corporation by JH Williams for
the years ended December 31, 2006 and 2005 were:
($ in thousands) 2006 2005
------- -------
Audit 69,200 67,000
Audit Related 11,472 10,250
Tax 5,925 5,800
All Other 0.0 0.0
------- -------
Total $86,597 $83,050
======= =======
AUDIT FEES - Audit fees for 2006 and 2005 were $69,200 and $67,000,
respectively, for the annual audit and quarterly reviews of the consolidated
financial statements for services related to attestation reports required by
statute or regulation and consents in respect of Securities and Exchange
Commission filings.
AUDIT-RELATED FEES - Audit-related fees for 2006 and 2005 were $11,472 and
$10,250 respectively, and are comprised of assurance and related services that
are traditionally performed by the independent registered public accounting
firm. These services include attest and agreed-upon procedures not required by
statute or regulation, which address accounting, reporting and control matters
with respect to the trust department and retail sales of non-deposit investment
products of the bank.
TAX FEES - Tax fees for 2006 and 2005 were $5,925 and $5,800, respectively, for
tax return compliance, tax advice and tax planning.
19
ALL OTHER FEES - The Corporation's current policy restricts the use of JH
Williams to audit, audit-related and tax services only.
AUDIT COMMITTEE PROCEDURES
The Corporation's policy on the use of JH Williams' services is not to engage
its registered independent accounting firm for services other than audit,
audit-related and tax services.
The Audit committee, along with all independent Directors, review and ratify all
accounting firms annually. The terms and fees for the annual audit service
engagement must be pre-approved by the Audit Committee. Additionally, all fees
for audit, audit-related and tax services must be approved by the Audit
Committee and any fees in excess of budgeted fees must also be specifically
approved by the Audit Committee.
OTHER INFORMATION
THIS SECTION SETS OUT OTHER INFORMATION YOU SHOULD KNOW BEFORE YOU VOTE.
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 2008 ANNUAL MEETING
Stockholder proposals for the 2008 Annual Meeting must be received by November
28, 2007 to be considered for inclusion in the Corporation's 2008 Proxy
Statement. Stockholder proposals for the 2008 Annual Meeting for which the
proponents do not desire them to be included in the 2008 Proxy Statement must be
received by February 11, 2008. Such proposals should be addressed to the
Secretary.
ADDITIONAL INFORMATION AVAILABLE
A COPY OF THE ANNUAL DISCLOSURE STATEMENT OF COLUMBIA COUNTY FARMERS NATIONAL
BANK MAY ALSO BE OBTAINED, AT NO COST, FROM MS. VIRGINIA D. KOCHER, TREASURER,
CCFNB BANCORP, INC., 232 EAST STREET, BLOOMSBURG, PA 17815; TELEPHONE: (570)
387-4016.
ALL 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.
20
APPENDIX A
CCFNB BANCORP, INC.
CODE OF CONDUCT AND ETHICS
CCFNB Bancorp, Inc. (Columbia County Farmers National Bank, CCFNB, is a
subsidiary of CCFNB Bancorp, Inc.) has always prided itself on maintaining the
highest ethical standards, and we believe that our employees, officers and
directors are aware of, and share, this commitment. This Code of Conduct and
Ethics provides our employees, officers and directors with additional guidance
and support for ensuring that we maintain a consistent vision and commitment to
a culture of uncompromising honesty and integrity throughout our organization.
1. Applicability.
1.1 - This Code of Conduct and Ethics applies to all of our
employees, officers, Chief Executive Officer, Principal Financial
Officer, and directors without exception. (Each employee, officer
and director of CCFNB is referred to in this Code as a "covered
person.") This Code governs the actions and working relationships
of each covered employee with current and potential customers,
co-workers, government agencies, media, stock exchange and
stockholders. Each covered person should become familiar with
this Code, adhere to the standards and restrictions set forth in
this Code, and conduct himself or herself in accordance with this
Code in order to avoid even the appearance of impropriety.
1.2 - Some of the words and phrases in this Code may be subject to
different interpretations, or it may appear that one ethical
principle conflicts with another, in certain situations. If you
are unsure of the appropriate action, discuss the matter with an
appropriate member of management, such as your manager, a member
of senior management or the Company's Compliance Officer.
1.3 - This Code does not cover all of the Company's policies, but
supplements other policies set forth in our employee handbook.
Each covered person is expected to comply with all of the
Company's policies. The fact that particular conduct is not
mentioned in this Code of Ethics does not prevent it from being
viewed as violating this Code of Conduct and Ethics..
2. Compliance with Laws, Rules and Regulations.
2.1 - Covered persons are expected to obey, and ensure that the
Company obeys, all applicable laws, rules and regulations of the
United States and other countries, and the states, counties,
cities and other jurisdictions in which we conduct business. This
is true even if your manager or anyone in management has directed
otherwise.
2.2 - While you are not expected to know the full details of all of
the laws, rules and regulations that you and the company must
adhere to, some examples of the types of laws that the Company is
subject to include laws requiring the company and its employees
to:
2.2.1 - maintain a workplace that is free from discrimination or
21
harassment based on race, gender, age, religion or other
characteristic that is unrelated to the Company's interests
or otherwise protected by law;
2.2.2 - comply with applicable environmental, health and safety
standards;
2.2.3 - support fair competition and laws prohibiting restraints
of trade and other unfair trade practices;
2.2.4 - prohibit improper or other questionable payments
(including bribes or kickbacks), gifts, favors or other
gratuities to suppliers, customers, government officials or
other third parties; and
2.2.5 - comply with all applicable federal and state securities
laws, including laws prohibiting insider trading. (Covered
persons are referred to the Company's Corporate Controller
for further information regarding this issue.)
2.3 - If a law, rule or regulation conflicts with a policy in this
Code, you should comply with the law. If a local custom conflicts
with this Code, you must comply with this Code.
2.4 - If you are unsure about the legal course of action, you should
request guidance from your manager or other member of management.
3. Conflicts of Interest
3.1 - Each covered person should avoid any situation that might lead
to a real or apparent conflict of interest between your
self-interest and your duties and responsibilities as an
employee, officer or director of the Company. A conflict of
interest exists whenever your self-interest is inconsistent, or
appears to be inconsistent in any way, with the interests of the
Company as a whole.
3.2 - Although the following list is not exhaustive, some examples of
situations in which a conflict of interest may arise are as
follows:
3.2.1 - When a covered person takes actions or has interests that
make it difficult to perform work for the Company
objectively and effectively.
3.2.2 - When a covered person receives improper personal benefits
as a result of the person's position with the Company.
3.2.3 - When the Company makes a loan to a covered person or
guarantees an obligation of a covered person.
3.2.4 - When a covered person uses corporate property or
nonpublic information gained in his or her employment with
the
22
Company for his or her own advantage.
3.2.5 - When a covered person competes with the Company.
Any such conflict of interest may also arise as a result of actions
taken by, or interests of, a family member of a covered person.
4. Confidentiality.
4.1 - Nonpublic information regarding the Company, its businesses,
employees, officers, directors, customers or suppliers is
confidential. As an employee, officer or director of the Company
you are trusted with such confidential information. You are only
to use such confidential information for the business purposes of
the Company for which they were intended. Confidential
information should not be shared with anyone outside the Company,
including family or friends, or other employees who do not need
the information to carry out their duties, except when disclosure
is authorized by your President or legally mandated.
4.2 - Communications about the Company, its businesses, employees,
officers, directors, customers or suppliers with the media,
stockholders, or other members of the public must be approved in
advance by the President.
5. Fair Dealing.
5.1 - We seek to outperform our competition fairly and honestly and
seek competitive advantages through superior performance of the
members of our team. Each covered person is expected to deal
fairly with the Company's customers, suppliers, competitors and
employees. Stealing proprietary information that was obtained
without the owner's consent, or inducing such disclosures by past
or present employees of other companies is prohibited. No one
should take unfair advantage of another through manipulation,
concealment, abuse of privileged information, misrepresentation
of material facts or any other unfair-dealing practice
6. Protection and Proper Use of Company Property.
6.1 - All covered persons should seek to protect and preserve the
Company's assets and ensure their efficient use. Theft,
carelessness and waste have a direct impact on the Company's
profitability. All assets of the Company should be used only for
legitimate business purposes.
7. Public Company Reporting: Whistleblower Procedures
7.1 - As a public company, our filings with the Securities and
Exchange Commission (the"SEC") must be full, fair, accurate,
timely and include understandable disclosure of information that
is required to be made public pursuant to Federal security laws
and rules of the applicable exchange commissions. Whether or not
you are directly involved in the process of preparing such
filings, every covered person is responsible:
7.1.l - if called upon by management to provide information
relevant to such a filing, to assure that the information
you provide is complete, fair, and understandable. Such
requests for information
23
must be responded to promptly as our filings with the SEC
are time-sensitive.
7.1.2 - to ensure that the Company's books and records
appropriately reflect our transactions and are posted in
accordance with the Company's system of internal controls.
Unrecorded or "off the books" funds or entries should not be
maintained unless permitted by applicable law or regulation;
7.1.3 - to make management aware if you believe that any of our
public reports is inaccurate or fails to fairly reflect what
is happening at the Company.
7.2 - Because of the importance of this issue, the Audit Committee of
the Board of Directors has been charged with responsibility for
ensuring that every employee has a means of reporting,
anonymously and confidentially, any concerns about the manner in
which the Company's financial statements or public reports are
prepared, the sufficiency of its internal financial controls, the
honesty or competence of its financial management or independent
auditors or any other matter regarding any accounting or auditing
matters. Procedures for such reporting are set forth in the
Company's Whistleblower Policy that is part of the Employee
Handbook. We will not tolerate retaliation against any person who
reports potential issues to the Audit Committee in good faith.
8. Covering Up Mistakes; Falsifying Records; Retention of Business
Records.
8.1 - Falsification of any Company, customer or third party record is
prohibited. Mistakes should not be covered up, but should be
immediately and fully disclosed and corrected.
8.2 - Company records must be maintained for the periods specified by
management. Records may be destroyed only at the expiration of
the pertinent period. In no case may documents involved in a
pending or threatened litigation, government inquiry or under
subpoena or other information request, be discarded or destroyed,
regardless of the periods specified by management. In addition,
you should never destroy, alter, or conceal any record or
otherwise impeded any official proceeding or investigation,
either personally, in conjunction with, or by attempting to
influence another person.
8.3 - In the event of litigation, government inquiry or
investigation, we will designate a member of management that you
should consult with to determine whether records should be
produced.
9. Reporting of Illegal or Unethical Behavior.
9.1 - Covered persons have a duty to adhere to this Code and all
other Company policies and to report any suspected violations of
this Code or any other illegal or unethical behavior to, or when
in doubt to consult with, your manager or the Compliance Officer.
If you do not believe that talking to your manager is
appropriate, or if doing so does not result in a response with
which you are comfortable, then you should discuss the matter
with another member of management, or in the case of accounting
or auditing issues, a member of the Audit Committee of the Board
of Directors.
24
If asked, the Company will keep your name confidential unless
this would violate applicable law or our responsibilities to
others or make adequate investigation of the matter
impracticable.
10. Protection Against Retribution.
10.1 - The Company will not tolerate retaliation against anyone who
reports a violation or possible violation of this Code in good
faith. Any person who takes any action whatsoever in retaliation
against any employee who has in good faith raised any question or
concern about compliance with this Code will be subject to
serious sanctions, which may include termination.
11. Administration and Waiver of Code of Conduct and Ethics.
11.1 - This Code of Conduct and Ethics shall be administered and
enforced by the Human Resources Department. Any questions and
further information regarding this Code of Ethics should be
directed to the Manager of the Human Resources
Department/Compliance Officer.
11.2 - Appropriate disciplinary penalties for violations of this Code
may include counseling, reprimand, warning, suspension (with or
without pay), demotion, salary reduction and termination of
employment.
11.3 - The Human Resources Department will be responsible for
affirming compliance with this Code of Conduct and Ethics by all
covered persons. Each covered person will be required to sign a
certificate that he or she has Read and understands the provision
of this code annually.
12. Waivers.
12.1 - Covered persons are expected to follow this Code at all times.
Generally, there should be no waivers to this Code of Conduct and
Ethics, however, in rare circumstances conflicts may arise that
necessitate waivers. Waivers will be determined on a case-by-case
basis by the Human Resources Department with the advice of senior
management and/or the Audit Committee as appropriate; provided,
however, that waivers for directors and executive officers may be
determined only by the Board of Directors who shall have the sole
and absolute discretionary authority to approve any deviation or
waiver from this Code of Ethics with respect to any director or
executive officer. Any waiver, and the grounds for such waiver,
approved by the Board of Directors with respect to any director
or executive officer shall be promptly disclosed to stockholders,
not later than in the Company's next periodic report.
Reviewed and approved by the Board of Directors of Columbia County Farmers
National Bank this 22nd day of February 2007.
/s/ Edward L. Campbell
----------------------------------------
SECRETARY OF THE BOARD
25
APPENDIX B
COLUMBIA COUNTY FARMERS NATIONAL BANK
CHARTER OF THE AUDIT COMMITTEE
MAY 11, 2006
OBJECTIVE
The objective of the Audit Committee is to assist the full Board of Directors in
fulfilling its fiduciary responsibilities. The Audit Committee is responsible
for evaluating the Bank's compliance with laws, regulations, policies and
procedures, and determining that the Bank has adequate administrative, operating
and internal accounting controls. In addition, the Audit Committee is
responsible for providing reasonable assurance regarding the integrity of
financial and other data used by the Board of Directors.
RESPONSIBILITIES
The Audit Committee is responsible for:
- Reviewing published Bank financial statements and the annual Report
for accuracy, timeliness, and appropriate financial statement
disclosures.
- Reviewing the adequacy and effectiveness of key accounting and
financial policies, including any significant changes thereto.
- Evaluating security for computer systems, facilities, and backup
systems.
- Determining that no restrictions are imposed upon the audit scope that
would hinder independence of the audit function.
- Evaluating responses by management to audit findings and reports.
- Monitoring management implementation of audit recommendations.
- Assessing the impact of new accounting principles or policies
promulgated by the accounting profession or proposed by Bank
personnel.
- Overseeing the investigation of conflicts of interest and unethical
conduct.
- Facilitating communication among the Board of Directors, the Bank's
external auditors, internal auditors, the O.C.C. and The Federal
Reserve Bank.
- Reviewing and approving annual audit plans of the external and
internal auditors.
- Ensuring the receipt from the external and internal auditors of a
formal written statement delineating all relationships between the
auditor and the Bank. Also, actively engages in a dialogue with the
auditor with response to any disclosed relationships or services that
may impact the objectivity and independence of the auditor, and to
take appropriate action to ensure the independence of the outside
auditors.
- Requiring the external and internal auditor to discuss with the audit
committee the auditors judgments about the quality, not just
acceptability, of the Bank's accounting principles applied in its
financial reporting. Also, recommends that outside auditors discuss
the clarity of the company's disclosures.
- Requiring a disclosure to shareholders to disclose whether the audit
committee:
1. discussed with management the quality of the accounting
principles and significant judgments affecting the company's
financial statements;
26
2. discussed with the outside and internal auditor the auditors
assessment of the quality of management's accounting principles
and judgments;
3. discussed among themselves, without the presence of management or
the outside or internal auditor, the information from (1) and
(2); and
4. believes that the company's financial statements are fairly
presented in conformity with GAAP.
The above responsibilities of the Audit Committee will be discharged through
review of audit reports and discussions with external auditors, as well as Bank
management.
ADMINISTRATIVE
- The Audit Committee will consist of at least two Board members and a
Chair-person designated by the Board. The process of appointing
members to the Audit Committee will provide a level of service
continuity.
- Each committee member shall be independent according to the specified
criteria in Section 301 of the Sarbanes-Oxley Act of 2002.
- The Audit Committee members will be directly responsible for the
appointment, compensation, retention, and oversight of the issuer's
outside and internal auditors, and the outside and internal auditors
must report directly to the Audit Committee.
- The Audit committee will establish procedures for handling complaints
regarding accounting, internal controls and auditing matters.
- The Audit committee will have the authority to engage independent
counsel and other advisors.
- CCFNB will provide appropriate funding for the Audit Committee.
- The Audit Committee will meet at least four times a year and will have
the opportunity to meet in executive session with external and
internal auditors at least annually. Furthermore, the Committee has
the authority to call additional meetings and has the ability to
communicate with Senior Management between regularly scheduled
meetings, as deemed necessary.
- Written minutes shall be prepared for each meeting and distributed to
the full Board of Directors.
- Require disclosure to shareholders of whether the audit committee has
adopted a written charter, and if so, whether the committee has
satisfied its responsibilities during the prior year in compliance
with the charter. The charter should be disclosed at least triennially
in the annual report and in the next annual report after any
significant amendments are made to the charter.
- This charter will be reviewed and approved at least annually by the
Audit Committee. The Audit Committee Charter also will be reviewed and
approved by the Board of Directors on an annual basis.
27
ANNUAL MEETING OF SHAREHOLDERS OF
CCFNB BANCORP, INC.
MAY 2, 2007
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
-- Please detach along perforated line and mail in the envelope provided. --
20300000000000001000 4 050207
- --------------------------------------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS
SHOWN HERE [X]
- --------------------------------------------------------------------------------------------------------------
1. ELECTION OF CLASS 2 DIRECTORS TO SERVE FOR A 2. In their discretion, the proxies are
THREE-YEAR TERM: authorized to vote upon such other business
as may properly come before the annual
NOMINEES: meeting and any adjournment or postponement
[ ] FOR ALL NOMINEES [ ] Lance O. Diehl thereof.
[ ] W. Bruce McMichael, Jr.
[ ] WITHHOLD AUTHORITY [ ] Paul E. Reichart THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED
FOR ALL NOMINEES IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
[ ] FOR ALL EXCEPT WILL BE VOTED FOR ALL NOMINEES.
(See instructions below)
THIS PROXY MUST BE DATED, SIGNED BY THE
INSTRUCTION: To withhold authority to vote for any SHAREHOLDER(S) AND RETURNED PROMPTLY TO THE
individual nominee(s), mark "FOR ALL EXCEPT" TRANSFER AGENT IN THE ENCLOSED ENVELOPE.
and fill in the circle next to each nominee
you wish to withhold, as shown here:
- ----------------------------------------------------------
- ----------------------------------------------------------
To change the address on your account, please check
the box at right and indicate your new address in the [ ]
address space above. Please note that changes to the YES, I(WE) PLAN TO ATTEND THE ANNUAL MEETING. [ ]
registered name(s) on the account may not be submitted
via this method. INSERT NUMBER ATTENDING: __________
- ----------------------------------------------------------
Signature of Shareholder _____________ Date: __________ Signature of Shareholder ____________ Date: __________
NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each
holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in partnership name by
authorized person.
CCFNB BANCORP, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 2, 2007
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 2,
2007 at 10:30 A.M., prevailing time, and at any adjournment or postponement
thereof as follows:
(PLEASE DATE AND SIGN ON REVERSE SIDE)
14475