SCHEDULE 14A
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 ss.240.14a-11(c) or
ss.240.14a-12
Patriot Bank Corp.
(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)(4) 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):
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5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
the Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
PATRIOT BANK CORP.
High & Hanover Streets
Pottstown, Pennsylvania 19464
(610) 323-1500
March 22, 2001
Fellow Shareholders:
You are cordially invited to attend the annual meeting of
Shareholders (the "Annual Meeting") of Patriot Bank Corp. (the
"Company") that will be held on April 24, 2001, at 3:30 p.m.,
Eastern Standard Time, at Brookside, Prospect and Adams Streets,
Pottstown, Pennsylvania.
The attached notice of the Annual Meeting and the proxy
statement describe the formal business to be transacted at the
annual meeting. Directors and officers of the Company, as well
as a representative of KPMG LLP, the Company's independent
auditors for 2000, will be present at the Annual Meeting to
respond to any questions that our shareholders may have
regarding the business to be transacted.
For the reasons set forth in the proxy statement, the Board
unanimously recommends that you vote "FOR" each of the nominees
as directors specified under Proposal 1 and "FOR" Proposal 2.
Please sign and return the enclosed proxy card promptly. Your
cooperation is appreciated because a majority of the Common
Stock must be represented, either in person or by proxy, to
constitute a quorum for the conduct of business.
On behalf of the Board of Directors and all of the employees of
the Company, we thank you for your continued interest and
support.
Sincerely yours,
James B. Elliott
Chairman of the Board
Richard A. Elko
President and
Chief Executive Officer
PATRIOT BANK CORP.
High & Hanover Streets
Pottstown, Pennsylvania 19464
(610) 323-1500
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on April 24, 2001
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders
(the "Annual Meeting") of Patriot Bank Corp. (the "Company")
will be held on April 24, 2001, at 3:30 p.m., Eastern Standard
Time, at Brookside, Prospect and Adams Streets, Pottstown,
Pennsylvania.
The purpose of the Annual Meeting is to consider and vote upon
the following matters:
1. The election of two directors for terms of three years each
or until their successors are elected and qualified;
2. The ratification of the appointment of KPMG LLP as
independent auditors of the Company for the fiscal year ending
December 31, 2001; and
3. Such other matters as may properly come before the meeting
and at any adjournments thereof, including whether or not to
adjourn the meeting.
The Board of Directors has established March 12, 2001, as the
record date for the determination of shareholders entitled to
receive notice of and to vote at the Annual Meeting and at any
adjournments thereof. Only recordholders of the Common Stock of
the Company as of the close of business on that record date will
be entitled to vote at the Annual Meeting or any adjournments
thereof. In the event there are not sufficient votes for a
quorum or to approve or ratify any of the foregoing proposals at
the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit further solicitation of proxies by
the Company. A list of shareholders entitled to vote at the
Annual Meeting will be available at Patriot Bank, High & Hanover
Streets, Pottstown, Pennsylvania 19464, for a period of ten days
prior to the Annual Meeting and will also be available at the
Annual Meeting itself.
By Order of the Board of Directors
Diane M. Davidheiser
Secretary
Pottstown, Pennsylvania
March 22, 2001
PATRIOT BANK CORP.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 2001
SOLICITATION AND VOTING OF PROXIES
This proxy statement is being furnished to shareholders of
Patriot Bank Corp. (the "Company") in connection with the
solicitation by the Board of Directors ("Board of Directors" or
"Board") of proxies to be used at the annual meeting of
shareholders (the "Annual Meeting"), to be held on April 24,
2001, at 3:30 p.m. at Brookside, Prospect and Adams Streets,
Pottstown, Pennsylvania and at any adjournments thereof. The
2000 Annual Report to Shareholders, including consolidated
financial statements for the fiscal year ended December 31,
2000, accompanies this proxy statement, which is first being
mailed to recordholders on or about March 22, 2001.
A majority of the outstanding shares of the Company must be
present in person or by proxy at the Annual Meeting in order to
have a quorum for the transaction of business. Shareholders are
requested to vote by completing the enclosed proxy card and
returning it signed and dated in the enclosed postage-paid
envelope. Proxies solicited by the Board of Directors of the
Company will be voted in accordance with the directions given
therein. Where no instructions are indicated, signed proxy
cards will be voted "FOR" the election of the nominees for
director named in this proxy statement, and "FOR" the
ratification of KPMG LLP as independent auditors of the Company
for the fiscal year ending December 31, 2001.
Other than the matters set forth on the attached Notice of
Annual Meeting of Shareholders, the Board of Directors knows of
no additional matters that will be presented for consideration
at the Annual Meeting. Execution of a proxy, however, confers
on the designated proxy holders discretionary authority to vote
the shares in accordance with their best judgment on such other
business, if any, that may properly come before the Annual
Meeting and at any adjournments thereof, including whether or
not to adjourn the Annual Meeting.
A proxy may be revoked at any time prior to its exercise by
filing a written notice of revocation with the Secretary of the
Company, by delivering to the Company a duly executed proxy
bearing a later date, or by attending the Annual Meeting and
voting in person. However, if you are a shareholder whose
shares are not registered in your own name, you will need
appropriate documentation from your recordholder to vote
personally at the Annual Meeting.
The cost of solicitation of proxies on behalf of management will
be borne by the Company. Proxies also may be solicited
personally or by telephone by directors, officers and other
employees of the Company without additional compensation
therefor. The Company also will request persons, firms and
corporations holding shares in their names, or in the name of
their nominees, which are beneficially owned by others, to send
proxy material to and obtain proxies from such beneficial
owners, and will reimburse such holders for their reasonable
expenses in doing so.
VOTING SECURITIES
The securities that may be voted at the Annual Meeting consist
of shares of common stock of the Company ("Common Stock"), with
each share entitling its owner to one vote on all matters to be
voted on at the Annual Meeting. There is no cumulative voting
for the election of directors.
The close of business on March 12, 2001, has been fixed by the
Board of Directors as the record date (the "Record Date") for
the determination of shareholders of record entitled to notice
of and to vote at the Annual Meeting and at any adjournments
thereof. The total number of shares of Common Stock outstanding
on the Record Date was 6,201,776 shares.
As provided in the Company's Articles of Incorporation,
recordholders of Common Stock who beneficially own in excess of
10% of the outstanding shares of Common Stock (the "Limit") are
not entitled to any vote in respect of the shares held in excess
of the Limit. A person or entity is deemed to beneficially own
shares owned by an affiliate of, as well as, by persons acting
in concert with, such person or entity. The Company's Articles
of Incorporation authorize the Board of Directors to make all
determinations necessary to implement and apply the Limit,
including determining whether persons or entities are acting in
concert.
The presence, in person or by proxy, of the holders of at least
a majority of the total number of shares of Common Stock
entitled to vote (after subtracting any shares in excess of the
Limit pursuant to the Company's Articles of Incorporation) is
necessary to constitute a quorum at the Annual Meeting. In the
event there are not sufficient votes for a quorum or to approve
or ratify any proposal at the time of the Annual Meeting, the
Annual Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of directors, the proxy card being provided
by the Board of Directors enables a shareholder to vote "FOR"
the election of the nominees proposed by the Board of Directors,
or to "WITHHOLD" authority to vote for one or more of the
nominees being proposed. Under Pennsylvania law and the
Company's Bylaws, directors are elected by a plurality of votes
cast, without regard to either (i) broker non-votes, or
(ii) proxies as to which authority to vote for one or more of
the nominees being proposed is withheld.
As to the approval of KPMG LLP as independent auditors of the
Company and all other matters that may properly come before the
Annual Meeting, by checking the appropriate box, you may:
(i) vote "FOR" the item; (ii) vote "AGAINST" the item; or
(iii) "ABSTAIN" from voting on such item. Under the Company's
Bylaws, unless otherwise required by law, all such matters shall
be determined by a majority of the votes cast, without regard to
either (a) broker non-votes, or (b) proxies marked "ABSTAIN" as
to that matter.
Proxies solicited hereby will be returned to the Company's
transfer agent, Registrar and Transfer Company, and will be
tabulated by inspectors of election designated by the Board of
Directors, who will not be employed by, or a director of, the
Company or any of its affiliates. After the final adjournment
of the Annual Meeting, the proxies will be returned to the
Company for safekeeping.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to those persons
believed by management to be beneficial owners of more than 5%
of the Company's outstanding shares of Common Stock on the
Record Date or as disclosed in reports regarding ownership filed
by persons with the Company and with the Securities and Exchange
Commission ("SEC"), in accordance with Sections 13(d) and 13(g)
of the Securities Exchange Act of 1934, as amended ("Exchange
Act"). Other than those persons listed below, the Company is
not aware of any person, as such term is defined in the Exchange
Act, that owns more than 5% of the Common Stock as of the Record
Date.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
Common Stock Patriot Bank 542,794(1) 8.8%
Employee Stock Ownership
Plan ("ESOP")
High & Hanover Streets
Pottstown, PA 19464
Common Stock James L. Leuthe 460,151(2) 7.4%
3730 Golf Course Road
Allentown, PA 18104
(1) Shares of Common Stock were acquired by the ESOP in the
1995 conversion of Patriot Savings Bank (a predecessor of the
Bank) from mutual to stock form. The Personnel
Compensation/Benefits Committee of the Board of Directors
administers the ESOP. Investors Trust Company is the corporate
trustee for the ESOP ("ESOP Trustee"). The ESOP Trustee,
subject to its fiduciary duty, must vote all allocated shares
held in the ESOP in accordance with the instructions of the
participants. At March 12, 2001, 182,820 shares had been
allocated under the ESOP and 359,934 shares remain unallocated.
With respect to unallocated shares, such unallocated shares will
be voted by the ESOP Trustee in a manner calculated to most
accurately reflect the instructions received from participants
regarding the allocated stock so long as such vote is in
accordance with the provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
(2) James L. Leuthe has executed an irrevocable proxy granting
the Board of Directors the right to vote all shares of stock of
the Company beneficially owned by him. The Company has agreed
with the Federal Deposit Insurance Corporation ("FDIC") that it
will vote such shares "FOR" and "AGAINST" each matter in the
same percentage as all other outstanding shares of stock of the
Company are voted.
PROPOSALS TO BE VOTED ON AT THE MEETING
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of six
directors and is divided into three classes. Each of the six
members of the Board of Directors of the Company also presently
serves as a director of the Bank.
Directors are elected for staggered terms of three years each,
with the term of office of only one of the three classes of
directors expiring each year. Directors serve until their
successors are elected and qualified.
The two nominees proposed for election at this Annual Meeting
are James B. Elliott and Larry V. Thren. No person being
nominated as a director is being proposed for election pursuant
to any agreement or understanding between that person and the
Company.
In the event that any nominee is unable to serve or declines to
serve for any reason, the proxies will be voted for the election
of such other person as may be designated by the present Board
of Directors. The Board of Directors has no reason to believe
that any of the persons named will be unable or unwilling to
serve. Unless authority to vote for the nominee is withheld, it
is intended that the shares represented by the enclosed proxy
card, if executed and returned, will be voted "FOR" the election
of the nominees proposed by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE
ELECTION OF THE NOMINEES NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO THE NOMINEES, CONTINUING DIRECTORS
AND NAMED EXECUTIVE OFFICERS
The following table sets forth, as of the Record Date, the names
of the Nominees, Continuing Directors and Named Executive
Officers (as defined below) as well as their ages, a brief
description of their recent business experience, including
present occupations and employment, certain directorships held
by each, the year in which each director became a director of
the Company and the year in which their terms (or in the case of
the nominees, their proposed terms) as director of the Company
expire. The table also sets forth the amount of Common Stock
and the percent thereof beneficially owned by each Director and
Named Executive Officer and all directors and executive officers
as a group as of the Record Date.
SHARES OF
EXPIRATION COMMON STOCK
NAME AND PRINCIPAL OCCUPATION DIRECTOR OF TERM AS BENEFICIALLY PERCENT
AT PRESENT AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNED(2)(3)(4) OF CLASS
NOMINEES
Larry V. Thren 58 1992 2001 85,700 1.4%
Director of the Company and the Bank.
Vice President of Human Resources
and Support Services, Pottstown
Memorial Medical Center since 1988.
James B. Elliott 60 1990 2001 63,000 1.0%
Chairman of the Board of the Company
and the Bank since July 1998.
President of Strategic Business
Concepts, Inc. Prior thereto,
the Director of Communications
and Marketing for St. Joseph Medical
Center from 1994 to 1997.
CONTINUING DIRECTORS
James A. Bentley, Jr. 42 1998 2002 30,908 *
Director of the Company and
the Bank. President,
CEO, and owner of Bentley Graphic
Communications since 1989.
Richard A. Elko 40 1999 2002 139,829 2.3%
Director of the Company and the Bank.
President and Chief Executive
Officer of the Company and the Bank
since November 3, 2000. Prior
thereto, Executive Vice
President since December 1999 and
Chief Financial Officer of the
Company and the Bank from January
1996 to December 1999.
Russell J. Kunkel 58 2000 2003 5,000 *
Director of the Company and the
Bank. Vice Chairman of National
Penn Bank from April 1996 to
September 1997. Vice Chairman of
Meridian Bancorp, Inc. and Meridian
Bank from 1985 to 1995.
Thomas D. Paulus 35 2000 2003 4,000 *
Director of the Company and the
Bank. President and Chief Investment
Officer of Bonds & Paulus
Associates, Inc., an investment
management company, since 1993.
NAMED EXECUTIVE OFFICER WHO
IS NOT A DIRECTOR
Kevin R. Pyle 34 -- -- 43,189 *
Executive Vice President/Chief
Credit Officer of the Company
and the Bank since February 2001.
Prior thereto, Chief Credit Officer
of the Bank since March 1996.
Joni S. Naugle 42 -- -- 15,210 *
Executive Vice President/Chief
Operating Officer of the
Company and the Bank since
February 2001. Prior thereto,
the Chief Operating Officer of
the Company and the Bank since
December 1998, a Senior Vice
President for Marketing and Retail
Sales at Sovereign Bank from 1979
To April 1998 and a consultant
From April 1998 to December 1998.
James G. Blume
Senior Vice President and Chief
Financial Officer of the Company 35 -- -- 6,740 *
and the Bank since February 2001.
Prior thereto Chief Financial Officer
of the Company and the Bank since
December 1999, Corporate Controller
of the Company and the Bank from
March 1997 to December 1999 and
Accounting Manager of the Bank from
March 1996 to March 1997.
Stock Ownership of all
Directors and Executive Officers
as a Group (11 persons) -- -- 399,886 6.4%
_________________
*Represents less than one percent of the outstanding Common
Stock.
(1) Includes years of service as a director of the Company's
predecessor, the Bank.
(2) Each person effectively exercises sole (or shares with his
spouse or other immediate family member) voting or dispositive
power as to shares reported herein (except as noted).
(3) Includes 13,568 shares awarded to Messrs. Elliott and
Thren, 7,538 shares awarded to Mr. Bentley, and 18,000, 5,000,
and 5,000 shares awarded to Messrs. Elko and Pyle and Ms.
Naugle, respectively, under the Patriot Bank Corp. 1996 Stock-
Based Incentive Plan (the "Incentive Plan"). Stock awards
granted under the Incentive Plan vest in five equal annual
installments. However, recipients have the right to direct the
voting of all awarded shares.
(4) Includes 22,136, 27,136, and 1,100 shares subject to
options granted to directors Elliott, Thren and Bentley,
respectively, that are exercisable within 60 days. Includes
81,412, 4,700, 4000 and 500 shares subject to options granted to
officers Elko, Pyle, Naugle and Blume, respectively, that are
exercisable within 60 days.
Mr. Bentley filed a Form 4 with the SEC on September 15, 2000,
with respect to transactions that occurred in August 2000. The
filing was due on September 10, 2000.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
OF DIRECTORS.
The Company conducts its business through meetings of the Board
of Directors and through activities of its committees. The
Board of Directors of the Company meets monthly and may have
additional meetings as needed. During 2000, the Board of
Directors of the Company held twenty (20) meetings. All of the
directors of the Company attended at least 75% of the total
number of the Company's Board meetings and committee meetings
held on which such directors served during fiscal 2000. The
Board of Directors of the Company maintains committees, the
nature and composition of which are described below:
Audit Committee. The Audit Committee of the Company consists of
Messrs. Bentley, Elliott, Kunkel, Paulus and Thren. The Audit
Committee is responsible for reporting to the Board on the
general financial condition of the Company and the results of
the annual audit, and is responsible for ensuring that the
Company's activities are being conducted in accordance with
applicable laws and regulations. The Audit Committee met four
times in 2000.
Nominating Committee. The Nominating Committee consists of
Messrs. Bentley, Elko, Kunkel and Paulus. The Nominating
Committee considers and recommends the nominees for director to
stand for election at the Company's Annual Meeting. The
Company's Articles of Incorporation and Bylaws provide for
shareholder nominations of directors. These provisions require
such nominations to be made pursuant to timely notice in writing
to the Secretary of the Company. The shareholder's notice of
nomination must contain all information relating to the nominee
that is required to be disclosed by the Company's Bylaws and by
the Exchange Act. The Nominating Committee met on December 28,
2000.
Compensation Committee. The Personnel Compensation/Benefits
Committee of the Company consists of Messrs. Bentley, Elliott
and Thren. The Compensation Committee meets to establish
compensation and benefits for the executive officers and to
review the incentive compensation programs when necessary. The
Compensation Committee also is responsible for establishing
certain guidelines and limits for compensation for other
salaried officers and employees of the Company and the Bank.
The Compensation Committee met four times in 2000.
Executive Committee. The Executive Committee of the Company
consists of Messrs. Bentley, Elliott, Elko and Thren. The
Executive Committee is responsible for conducting the business
of the Company in the absence of the entire Board of Directors.
The Executive Committee met five times in 2000.
DIRECTORS' COMPENSATION
Directors' Fees. Nonemployee directors are currently paid
annual retainers ranging from $10,000 to $16,000, plus an
additional fee ranging from $2,000 to $6,000 to the chairman of
certain committees. Mr. Elliott receives an additional fee of
$15,000 as Chairman of the Board.
On November 1, 2000, James B. Elliott, the Company and the Bank
entered into a Consultant Agreement. Mr. Elliott will perform
consulting services to assist the Company and the Bank with its
business and operations. The Consultant Agreement is for a term
of one year; such term will be extended for consecutive periods
of six additional months unless either party gives notice of
nonrenewal within sixty (60) days of the end of the term. Mr.
Elliott will provide up to twenty (20) hours of consulting
services per week and will be paid at the rate of eighty-five
dollars ($85.00) per hour.
Incentive Plan. On June 7, 1996, shareholders approved the
Patriot Bank Corp. 1996 Stock-Based Incentive Plan, under which
all directors who are not also employees of the Company are
eligible to receive stock awards and options to purchase Common
Stock. Under the Incentive Plan, on June 7, 1996, Messrs.
Elliott and Thren were granted non-statutory options to purchase
33,921 shares of Common Stock at an exercise price of $7.184,
which was the fair market value of shares on the date of the
grant, as adjusted for subsequent stock splits and stock
dividends. On January 1, 1999, Mr. Bentley was awarded a non-
statutory option to purchase 10,000 shares of Common Stock at an
exercise price of $11.75 per share and on November 27, 2000, he
was awarded a non-statutory option to purchase 18,845 shares of
Common Stock at an exercise price of $6.1875 per share. On
December 28, 2000, Messrs. Kunkel and Paulus were granted non-
statutory options to purchase 10,000 shares of Common Stock at
an exercise price of $6.53 per share. All options become
exercisable in five equal annual installments, commencing one
year from the date of grant. Messrs. Elliott, Thren and Bentley
also have received restricted stock awards under the Incentive
Plan. See Note 3 to the table set forth in "INFORMATION WITH
RESPECT TO THE NOMINEES, CONTINUING DIRECTORS AND NAMED
EXECUTIVE OFFICERS."
EXECUTIVE COMPENSATION
The report of the Compensation Committee (the "Committee") and
the stock performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of
1933, as amended (the "Securities Act") or the Exchange Act,
except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed
filed under such Acts.
Compensation Committee Report on Executive Compensation. Under
rules established by the SEC, the Company is required to provide
certain information regarding the compensation and benefits
provided to the Company's Chief Executive Officer and other
executive officers of the Company. The disclosure requirements
for the Chief Executive Officer and other executive officers
include the use of tables and a report explaining the rationale
and considerations that led to fundamental compensation
decisions affecting those individuals. In fulfillment of this
requirement, the Committee, at the direction of the Board of
Directors, has prepared the following report for inclusion in
this proxy statement.
Compensation Policies. The Committee of the Board has
established a policy for executive compensation, taking into
account both subjective performance criteria and certain
specified objective performance measures. The purpose of the
policy is to: (i) provide compensation opportunities that are
competitive with other financial services companies;
(ii) support the Company's goal setting and strategic planning
process; (iii) motivate the executive management of the Company
to achieve profit and other key goals of the institution,
including but not limited to the Company's commitment to the
communities it serves and to its employees, customers and
investors; (iv) motivate the executive management to operate the
Company in a safe and sound manner and in compliance with all
governmental and regulatory requirements; and (v) minimize
potential overhead by designating a portion of the annual
compensation of executives as variable rather than fixed.
During the course of 2000, the Company took into account a
variety of objective and subjective criteria in evaluating the
performance of the executive management of the Company. The
Committee assessed in detail the various challenges facing the
Company and the significant competitive pressures within the
Company's trading area.
In the course of this assessment of competitive salary ranges
among other similarly situated companies, it was noted that
competitive executive compensation packages vary in relationship
to these various subjective and objective factors. A variety of
resources were utilized that provided peer data regarding
executive compensation and financial performance of the Company,
that included but was not limited to the "SNL Executive
Compensation Review 2000" for both Commercial Banks and Thrifts,
an assessment that reviews executive compensation and company
performance for publicly traded banks and thrifts. Comparisons
were made with institutions located within Southeastern
Pennsylvania, the Middle Atlantic trading area, and relative to
national averages. The peer groups considered in these analyses
are not necessarily comprised of the same institutions used in
the peer group for the stock performance graph.
In establishing an Executive Compensation Plan for 2000, the
Executive Committee of the institution established certain
specific objectives for executive management, which included the
creation and execution of a strategic business plan, identifying
and completing acquisition opportunities, strengthening of
senior management, and reaching certain financial goals based on
asset size, earnings per share, net income, return on assets and
return on equity.
Additionally, the Company utilized a number of subjective
elements as part of the decision making process regarding
executive compensation. The individual skills and talents of
the executive managers of the Company, including but not limited
to experience, leadership ability, planning and organizational
skills, administrative talent, vision for the future, and work
ethic were given consideration in establishing executive
compensation.
Mr. Joseph W. Major was the President and Chief Executive
Officer of the Company and the Bank until November 3, 2000. His
2000 salary and bonus were contractually determined. Mr. Elko
was appointed the President and Chief Executive Officer of the
Company and the Bank on November 3, 2000. His annual salary of
$225,000 was determined by the Committee after a review of the
1999 compensation practices of similarly sized institutions.
The Committee set Mr. Elko's 2001 base compensation at 98% of
the 1999 midpoint base compensation for CEOs of comparable
institutions in recognition of the fact that Mr. Elko is new to
the position. In addition, because of his short tenure in the
position, Mr. Elko was not awarded a bonus with respect to 2000.
THE COMPENSATION COMMITTEE
Larry V. Thren, Chairman
James A. Bentley, Jr.
James B. Elliott
Stock Performance Graph. The following graph shows a comparison
of total shareholder return on the Common Stock, based on the
market price of the Common Stock, with the cumulative total
return of companies on The Nasdaq Stock Market (U.S.) Index and
The Nasdaq Banking Index for the period beginning on January 1,
1996, through December 31, 2000.
[GRAPHIC]
In the printed version of the document, a line graph appears
that depicts the following plot points:
Comparison of Cumulative Total Returns for Patriot Bank Corp.
Common Stock, The Nasdaq Stock Market (U.S.) Index and The
Nasdaq Banking Index.
SUMMARY
COMPANY/INDEX/MARKET 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
Patriot Bank Corp...................... 100.00 127.81 244.82 173.23 163.28 108.03
The Nasdaq Stock Market (U.S.) Index
(Broad Market) ...................... 100.00 123.00 150.20 210.43 391.28 238.17
The Nasdaq Banking Index
(Industry Index)..................... 100.00 128.97 214.01 192.27 181.27 212.45
Notes:
A. The lines represent annual index levels derived from
compounded daily returns that include all dividends.
B. The indexes are reweighed daily, using the market
capitalization on the previous trading day.
C. If the fiscal year-end is not a trading day, the preceding
trading day is used.
D. The index level for all the series was set to $100.00 on
December 29, 1995.
Summary Compensation Table. The following table shows, for the
years ended December 31, 2000, 1999 and 1998 the cash
compensation paid by the Company, as well as certain other
compensation paid or accrued for those years, to the President
and Chief Executive Officer, the former President and Chief
Executive Officer, the Chief Lending Officer, the Chief
Operating Officer and the Chief Financial Officer ("Named
Executive Officers").
Summary Compensation Table
ANNUAL COMPENSATION LONG TERM COMPENSATION
AWARDS PAYOUTS
OTHER RESTRICTED
ANNUAL STOCK LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION(1) YEAR ($)(2) ($) ($)(3) ($)(4) (#)(5) ($)(6) ($)(7)
Richard A. Elko 2000 $214,904 -- -- -- -- -- $ 12,458
President, Chief Executive 1999 $148,796 $ 95,849 -- -- -- -- $ 16,638
Officer and Director 1998 $123,375 $ 97,603 -- -- -- -- $ 20,265
Joseph W. Major 2000 $300,000 $100,000 -- -- -- -- $ 16,569
Former President, Chief 1999 $255,692 $221,699 -- -- -- -- $ 22,520
Executive Officer and Director 1998 $205,000 $153,090 -- -- -- -- $ 25,190
Kevin R. Pyle 2000 $140,192 $ 8,498 -- -- -- -- $ 12,753
Executive Vice President/ 1999 $ 95,192 $ 35,820 -- $16,611 5,500 -- $ 14,852
Chief Lending Officer 1998 $ 73,832 $ 27,338 -- -- -- -- $ 19,210
Joni S. Naugle 2000 $169,231 -- -- -- -- -- $ 10,090
Executive Vice President/ 1999 $110,577 $ 51,400 -- -- -- -- $ 721
Chief Operating Officer
James G. Blume 2000 $100,000 $ 4,386 -- -- -- -- $ 10,841
Senior Vice President and 1999 $ 55,538 $ 35,000 -- -- -- -- $ 7,897
Chief Financial Officer 1998 $ 43,425 $ 14,200 -- -- 1,250 -- $ 9,113
(1) Mr. Elko was appointed President and Chief Executive
Officer of the Company and the Bank on November 3, 2000.
Mr. Major was the President and Chief Executive Officer prior to
November 3, 2000. Mr. Blume was appointed Chief Financial
Officer of the Company and the Bank in December 1999. Mr. Pyle
was appointed Chief Lending Officer of the Company and the Bank
in March 1996. Ms. Naugle was appointed Chief Operating Officer
of the Company and the Bank in December 1998.
(2) Includes compensation deferred at the election of
Messrs. Elko, Major, Pyle and Blume and Ms. Naugle through the
Company's 401(k) Plan.
(3) There were no (a) perquisites in excess of the lesser of
$50,000 or 10% of the individual's total salary and bonus for
the last year, (b) payments of above-market preferential
earnings on deferred compensation, (c) payments of earnings with
respect to long-term incentive plans prior to settlement or
maturation, (d) tax payment reimbursements, or (e) preferential
discounts on stock.
(4) Pursuant to the Incentive Plan, Messrs. Elko, Major and
Pyle were awarded 18,000, 67,842 and 3,240 shares, respectively,
(as adjusted for stock dividends and stock splits) of Common
Stock in 1996 that had a market value on the date of grant of
$129,996, $489,955 and $23,399, respectively. As of
December 31, 2000, the market value of the 18,000, 67,842 and
3,240 shares was $121,500, $457,934 and $21,870, respectively.
In 1999, Mr. Pyle was awarded an additional 1,760 shares that
had a market value of $16,611 on the date of grant and a market
value of $11,880 at December 31, 2000. In 1998, Ms. Naugle was
awarded 5,000 shares under the Incentive Plan with a market
value on the date of grant of $43,125 and a market value of
$33,750 at December 31, 2000. Stock awards granted under the
Incentive Plan vest in five equal annual installments on each
anniversary of the effective date of the stock award.
(5) Includes shares subject to options granted to Messrs. Elko,
Major, Pyle and Blume and Ms. Naugle under the Incentive Plan.
All options granted under the Incentive Plan become exercisable
in five equal annual installments on each anniversary of the
effective date of the grant.
(6) For 2000, 1999 and 1998, the Company had no long-term
incentive plans in existence. Accordingly, there were no
payments or awards under any long-term incentive plan.
(7) Includes 835, 913, 815, 606 and 717 shares allocated to
Messrs. Elko, Major, Pyle and Blume and Ms. Naugle,
respectively, for 2000, pursuant to the ESOP with a market value
of $5,636, $6,163, $5,501, $4,091 and $4,840, respectively.
Includes $6,822, $10,406, $7,252, $6,750 and $5,250 in matching
and discretionary contributions by the Company to the Company's
401(k) plan during 2000 for Messrs. Elko, Major, Pyle and Blume
and Ms. Naugle, respectively. Includes 858, 858, 751 and 352
shares allocated to Messrs. Elko, Major, Pyle and Blume,
respectively, for 1999 pursuant to the ESOP with a market value
of $9,224, $9,224, $8,073 and $3,784 respectively. Includes
$7,414, $13,296, $6,779, $4,113 and $721 in matching and
discretionary contributions by the Company to the Company's
401(k) plan during 1999 for Messrs. Elko, Major, Pyle and Blume
and Ms. Naugle, respectively. Includes 821, 1,568, 934 and 499
shares allocated to Messrs. Elko, Major, Pyle and Blume,
respectively, for 1998 pursuant to the ESOP with a market value
of $9,467, $18,424, $10,975 and $5,863, respectively. Includes
$6,615, $11,540, $5,560 and $3,230 in matching and discretionary
contributions by the Company to the Company's 401(k) plan during
1998 for Messrs. Elko, Major, Pyle and Blume, respectively.
EMPLOYMENT AGREEMENTS
President and Chief Executive Officer
The Company and the Bank have entered into an employment
agreement with Mr. Elko (the "Executive"). This employment
agreement is intended to ensure that the Company and the Bank
will be able to maintain a stable and competent management base.
The continued success of the Company and the Bank depends, to a
significant degree, on the skills and competence of Mr. Elko.
The employment agreement provides for a three-year term for
Mr. Elko. The terms of the Company's employment agreement shall
be extended on a daily basis unless written notice of non-
renewal is given by the Board of the Company. The agreement
provides that the Executive's base salary will be reviewed
annually. The current base salary for Mr. Elko is $225,000. In
addition to the base salary, the agreement provides for, among
other things, participation in stock benefits plans and other
fringe benefits applicable to executive personnel. The
agreement provides for termination by the Company or the Bank
for cause, as defined in the agreement, at any time. In the
event the Company or the Bank chooses to terminate the
Executive's employment for reasons other than for cause, or in
the event of the Executive's resignation from the Company and
the Bank upon: (i) failure to re-elect the Executive to his
current offices; (ii) a material change in the Executive's
functions, duties or responsibilities; (iii) a relocation of the
Executive's principal place of employment by more than 20 miles;
(iv) a material reduction in the benefits and perquisites
provided to the Executive; (v) liquidation or dissolution of the
Company or the Bank; (vi) a breach of the agreement by the
Company or the Bank; (vii) the refusal of the Company or the
Bank to extend the agreement as described above; or (viii) the
voluntary or involuntary termination following a change in
control of the Company or the Bank, the Executive or, in the
event of death, his beneficiary would be entitled to receive an
amount equal to the greater of: (a) the remaining payments due
to the Executive, or (b) three times the Executive's average
annual compensation as defined in the agreement. The Company
and the Bank would also continue and pay for the Executive's
life, health and disability coverage for the remaining term of
the agreement. Notwithstanding that both agreements provide for
a severance payment in the event of a change in control, the
Executive would only be entitled to receive a severance payment
under one agreement.
Any payments under the agreement in the event of a change in
control may constitute an excess parachute payment under Section
280G of the Internal Revenue Code (the "Code") for executive
officers, resulting in the imposition of an excise tax on the
recipient and denial of the deduction for excess amounts to the
Company and the Bank. Under the agreement, the Company and the
Bank have agreed to pay to the Executive such additional amount,
if any, as is necessary, after the deduction of any applicable
taxes, to pay any such excise tax imposed on the Executive.
Payments to the Executive under the Bank's agreement will be
guaranteed by the Company in the event that payments or benefits
are not paid by the Bank. Payment under the Company's agreement
would be made by the Company. All reasonable costs and legal
fees paid or incurred by the Executive pursuant to any dispute
or question of interpretation relating to the agreement shall be
paid by the Company or the Bank, respectively, if the Executive
is successful pursuant to a legal judgment, arbitration or
settlement. The employment agreements also provide that the
Company and the Bank shall indemnify the Executive to the
fullest extent allowable under federal and Pennsylvania law,
respectively.
Other Named Executive Officers
In February 2001, the Bank entered into employment agreements
with Mr. Pyle, Ms. Naugle and Mr. Blume each having a term of
three years (individually, an "Employment Agreement"). The
Employment Agreements are substantially similar to prior
employment agreements that existed for each employee, except
that in addition to the existing provisions, the new agreements
each contain a one-year covenant not to compete. As
consideration for each employee agreeing to the covenant not to
compete, Mr. Pyle, Ms. Naugle and Mr. Blume were granted options
to acquire 5,000, 5,000 and 10,000 shares of Common Stock,
respectively. The Employment Agreement provides that,
commencing on the first anniversary date and continuing on each
anniversary date thereafter, the disinterested members of the
Board of Directors of the Bank may extend the Employment
Agreement for an additional year so that the remaining term
shall be three years, unless written notice of nonrenewal is
given by the Board of Directors after conducting a performance
evaluation of the executive. The current base salaries for Mr.
Pyle, Ms. Naugle and Mr. Blume are $155,000, $175,000 and
$103,000, respectively. In addition to the base salary, the
Employment Agreement provides for, among other things,
participation in stock benefit plans and other fringe benefits
applicable to executive personnel.
The Employment Agreement for Mr. Pyle, Ms. Naugle and Mr. Blume
provides for termination by the Bank for cause, as defined in
the Employment Agreement, at any time. In the event the Bank
chooses to terminate the Executive's full-time employment for
reasons other than for cause, or in the event of the Executive's
resignation from the Bank upon: (i) failure to reelect, appoint
or reappoint the Executive to office; (ii) material change in
the Executive's functions, duties or responsibilities which
change would cause the Executive's position to become one of
lesser responsibility, importance or scope from the position and
attributes, unless consented to by the Executive; (iii) a
relocation of the Executive's principal place of employment by
more than 20 miles; (iv) a material reduction in the benefits
and perquisites provided to the Executive; (v) liquidation or
dissolution of the Company or the Bank; (vi) a breach of the
Employment Agreement by the Bank; (vii) the refusal of the
Company or the Bank to extend the term of the Employment
Agreement; or (viii) the voluntary or involuntary termination of
the Executive's employment following a change in control of the
Company or the Bank, the Executive, or the Executive's
beneficiary in the event of the Executive's death, would be
entitled to receive an amount equal to the greater of: (a) the
remaining payments due to the Executive or (b) three times the
Executive's average annual compensation as defined in the
agreement. The Bank would also continue to pay for the
Executive's life, health and disability coverage for the three
years following the date of termination. Any amounts payable
under the Employment Agreement resulting from termination of
employment following a change in control would be reduced to the
extent necessary to avoid such payments constituting an excess
parachute payment under the Code.
Until November 3, 2000, Joseph W. Major was the President and
Chief Executive Officer of the Company and the Bank pursuant to
the terms of employment agreements dated June 30, 1998.
Pursuant to an agreement dated November 3, 2000, Mr. Major
resigned as the President and Chief Executive Officer of the
Company and the Bank, resigned as a director of each entity, and
agreed to terminate his existing employment agreements. Under
the terms of the November 3 agreement, Mr. Major continues as an
employee of the Company and the Bank with the title of Special
Senior Advisor. Mr. Major will be paid compensation of $300,000
per year for each of the years in the three-year period ended
November 2, 2003 and, thereafter, will be paid $50,000 for a
maximum of 300 hours service for each of the years in the two-
year period ended November 2, 2005.
Under the terms of the November 3, 2000, agreement, Mr. Major
will continue to participate in all broad-based employee benefit
plans. Mr. Major will continue to vest in his 1996 restricted
stock award (and will become fully vested in June 2001) and
will, for a period of three years, continue to accrue benefits
under the supplemental retirement plan that the Company and the
Bank previously provided to him. The Company and the Bank have
also assigned to Mr. Major a variable universal life policy
purchased on the life of Mr. Major that had an approximate cash
value of $81,000. Mr. Major agreed to forfeit options to
acquire 67,844 shares of Common Stock and will remain vested in
options to acquire 101,766 shares of Common Stock.
Under the terms of the November 3, 2000, agreement, Mr. Major
may not solicit customers or employees of the Company or the
Bank but otherwise is not subject to a covenant not to compete.
No right of offset exists under the agreement in the event that
Mr. Major secures other employment. In the event of Mr. Major's
death prior to the expiration of the agreement, the Company and
the Bank are obligated to pay Mr. Major's estate the present
value of the cash payments due thereunder and provide continued
participation in employee benefit plans, for a period of one
year, to members of his family that were eligible for benefits
on the date of his death.
In connection with the termination of Mr. Major's existing
employment agreements and the execution of the November 3, 2000,
agreement, the Company took a fourth quarter 2000, one-time,
after-tax charge of approximately $785,000. The Company does
not expect that future payments to Mr. Major under the November
3, 2000, agreement will have any significant further effect on
the financial condition or results of operations of the Company.
Incentive Plan. On June 7, 1996, shareholders approved the
Patriot Bank Corp. 1996 Stock-Based Incentive Plan ("Incentive
Plan") under which all employees of the Company are eligible to
receive awards. The Company maintains the Incentive Plan that
provides discretionary awards to officers and key employees as
determined by a committee of non-employee directors.
The following table provides certain information with respect to
the number of shares of Common Stock represented by outstanding
options held by the Named Executive Officers at December 31,
2000. Also reported are the values for "in-the-money" options
that represent the positive spread between the exercise price of
any such options and the closing sale price of the Common Stock
at December 31, 2000.
FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTION/SARS IN-THE-MONEY OPTION/SARS
AT FISCAL YEAR END(#) AT FISCAL YEAR END($)
NAME EXERCISABLE UNEXERCISABLE(1) EXERCISABLE UNEXERCISABLE(2)
Richard A. Elko 81,412 20,353 0 0
Joseph W. Major 101,766 0 0 0
Kevin R. Pyle (3) 4,700 5,300 0 0
Joni S. Naugle (3) 4,000 6,000 0 0
James G. Blume (3) 750 500 0 0
(1) The 81,412, 101,766 and 4,500 options granted to Messrs.
Elko, Major and Pyle, respectively, on June 7, 1996, have an
exercise price of $7.184 and become exercisable at an annual
rate of 20% beginning June 7, 1997. The 5,500 options granted
to Mr. Pyle on June 7, 1999, have an exercise price of $9.53 and
become exercisable at an annual rate of 20% beginning June 7,
2000. The 10,000 options granted to Ms. Naugle on December 1,
1998 have an exercise price of $12.00 and become exercisable at
an annual rate of 20% beginning December 1, 1999. The 1,250
options granted to Mr. Blume on January 9, 1998, have an
exercise price of $13.70, and become exercisable at an annual
rate of 20% beginning January 9, 1999. The options will expire
ten (10) years from the date of grant.
(2) Based on market value of the underlying stock at the
fiscal year end, minus the exercise price. The market price on
December 31, 2000, was $6.75.
(3) On February 22, 2001, the Company granted options to
acquire 5,000, 5,000 and 10,000 shares of Common Stock to Mr.
Pyle, Ms. Naugle and Mr. Blume, respectively, in consideration
for their agreement to amend their employment contracts. See
"EMPLOYMENT AGREEMENTS."
Supplemental Retirement Plan. The Company maintains a non-
qualified Supplemental Retirement Plan for the benefit of
certain executive officers and directors. The Supplemental
Retirement Plan ("SRP") has been adopted by the Company to
provide supplemental retirement benefits to selected executives
and directors of the Company. Benefits under the SRP vest on a
seven-year schedule subject to acceleration upon a change in
control. The SRP provides a defined benefit payable in fifteen
(15) annual installments of an amount that is determined at the
discretion of the Board. The participants under the SRP are
Messrs. Bentley, Elliott, Major and Thren. Prior to becoming
the President and Chief Executive Officer of the Company and the
Bank, Mr. Elko did not participate under the SRP. Although his
participation has not yet been finalized, the Company expects
that Mr. Elko will also become a participant under the SRP. The
SRP provides for an early start to payment of the installments
in the event of disability, death prior to retirement,
retirement, or a change in control. The SRP is unfunded for
purposes of its tax treatment, however, the Company has entered
into certain life insurance contracts, the proceeds of which
could be used to fund the SRP in the future.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Company's current policy provides that all loans made by the
Company to its directors and officers are made in the ordinary
course of business on substantially the same terms, including
interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons and do not
involve more than the normal risk of collectibility or present
other unfavorable features.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended
December 31, 2000, were KPMG LLP. The Company's Board of
Directors has appointed KPMG LLP as independent auditors for the
Company for the year ending December 31, 2001, subject to
ratification of such appointment by the shareholders.
Representatives of KPMG LLP will be present at the Annual
Meeting. They will be given an opportunity to make a statement
if they desire to do so and will be available to respond to
appropriate questions from shareholders present at the Annual
Meeting.
Unless marked to the contrary, the shares represented by the
enclosed proxy card will be voted "FOR" ratification of the
appointment of KPMG LLP as the independent auditors of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE INDEPENDENT
AUDITORS OF THE COMPANY.
Audit Committee Report and Related Matters
Pursuant to rules adopted by the SEC designed to improve
disclosures related to the functioning of corporate audit
committees and to enhance the reliability and credibility of
financial statements of public companies, the Audit Committee of
Company's Board of Directors submits the following report:
Audit Committee Report to Shareholders
The Audit Committee of the Board of Directors is responsible for
providing independent, objective oversight of the Company's
accounting functions and internal controls. The Audit Committee
is composed of directors Bentley, Elliott, Kunkel, Paulus and
Thren, each of whom is independent as defined by the National
Association of Securities Dealers' listing standards. The Audit
Committee operates under a written charter approved by the Board
of Directors. A copy of the charter is attached to this Proxy
Statement as Appendix A.
Management is responsible for the Company's internal controls
and financial reporting process. The independent accountants
are responsible for performing an independent audit of the
Company's consolidated financial statements in accordance with
generally accepted auditing standards and to issue a report
thereon. The Audit Committee's responsibility is to monitor and
oversee these processes.
In connection with these responsibilities, the Audit Committee
met with management and the independent accountants to review
and discuss the December 31, 2000, financial statements. The
Audit Committee also discussed with the independent accountants
the matters required by Statement on Auditing Standards No. 61
(Communication with Audit Committees). The Audit Committee also
received written disclosures from the independent accountants
required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Audit
Committee discussed with the independent accountants that firm's
independence.
Based upon the Audit Committee's discussions with management and
the independent accountants, and the Audit Committee's review of
the representations of management and the independent
accountants, the Audit Committee recommended that the Board of
Directors include the audited consolidated financial statements
in the Company's Annual Report on Form 10-K for the year ended
December 31, 2000, to be filed with the SEC.
Respectfully submitted,
THE AUDIT COMMITTEE
Russell J. Kunkel (Chairman)
James A. Bentley, Jr.
James B. Elliott
Thomas D. Paulus
Larry V. Thren
Consideration of Non-audit Services Provided
by the Independent Accountant
The Audit Committee has considered whether the services provided
under other non-audit services are compatible with maintaining
the auditor's independence.
Audit Fees
The aggregate fees billed for professional services rendered by
KPMG LLP for the audit of the Company's annual consolidated
financial statements for the year ended December 31, 2000, and
the reviews of the condensed financial statements included in
our quarterly reports on Forms 10-Q for the year ended December
31, 2000, were $106,083.
Financial Information Systems Design and Implementation Fees
There were no fees billed for information technology services
rendered by KPMG LLP during the year ended December 31, 2000.
All Other Fees
The aggregate fees billed for all non-audit services, exclusive
of the fees, if any, disclosed above relating to information
technology services but including fees for tax-related services,
rendered by KPMG LLP during the year ended December 31, 2000,
were $71,100.
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement
and form of proxy relating to the 2002 Annual Meeting of
Shareholders, a shareholder proposal must be received by the
Secretary of the Company at the address set forth on the Notice
of Annual Meeting of Shareholders not later than November 20,
2001. Any such proposal will be subject to 17 C.F.R.
ss.240.14a-8 of the Rules and Regulations under the Exchange
Act.
Notice of Business to be Conducted at an Annual Meeting
The Bylaws of the Company provide an advance notice procedure
for a shareholder to properly bring business before an Annual
Meeting. The shareholder must give written advance notice to
the Secretary of the Company not less than ninety (90) days
before the date originally fixed for such meeting; provided,
however, that in the event that less than twenty-one (21) days
notice of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be
received not later than the close of business on the seventh day
following the date on which the Company's notice to shareholders
of the annual meeting date was mailed. Nominations for
directors by shareholders must be received by the Secretary of
the Company no later than the close of business on the 90th day
preceding the date of the annual meeting. In the case of
nominations to the Board of Directors, certain information
regarding the nominee must be provided. Nothing in this
paragraph shall be deemed to require the Company to include in
its proxy statement or the proxy relating to an annual meeting
any shareholder proposal that does not meet all of the
requirements for inclusion established by the SEC in effect at
the time such proposal is received.
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business that will be
presented for consideration at the Annual Meeting other than as
stated in the Notice of Annual Meeting of Shareholders. If,
however, other matters are properly brought before the Annual
Meeting, it is the intention of the persons named in the
accompanying proxy to vote the shares represented thereby on
such matters in accordance with their best judgment.
Whether or not you intend to be present at the Annual Meeting,
you are urged to return your proxy card promptly. If you are
then present at the Annual Meeting and wish to vote your shares
in person, your original proxy may be revoked by voting at the
Annual Meeting.
By Order of the Board of Directors
Diane M. Davidheiser
Secretary
Pottstown, Pennsylvania
March 22, 2001
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED
TO SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.
/X/ PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE PATRIOT BANK CORP.
ANNUAL MEETING OF SHAREHOLDERS
April 24, 2001
The undersigned hereby appoints the official proxy committee of
the Board of Directors of Patriot Bank Corp. (the "Company"),
each with full power of substitution, to act as attorneys and
proxies for the undersigned, and to vote all shares of Common
Stock of the Company which the undersigned is entitled to vote
only at the Annual Meeting of Shareholders, to be held on
April 24, 2001 at 3:30 p.m. Eastern Standard Time, at Brookside,
Prospect and Adams Streets, Pottstown, Pennsylvania, and at any
and all adjournments thereof, as follows:
FOR WITHHOLD
1. The election as directors
of all nominees listed
(except as marked to the
contrary below): / / / /
James B. Elliott, Larry V. Thren
INSTRUCTION: To withhold your vote for any individual nominee,
write that nominee's name on the line provided below:
FOR AGAINST ABSTAIN
2. The ratification of / / / / / /
the appointment of KPMG LLP as independent auditors of Patriot
Bank Corp. for the fiscal year ending December 31, 2001.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
LISTED PROPOSALS.
Please be sure to sign and date Date
this Proxy in the box below.
Shareholder sign above ------ Co-holder (if any) sign above
Detach above card, sign, date, and mail in postage paid envelope
provided.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
This proxy is revocable and will be voted as directed, but if no
instructions are specified, this proxy will be voted "FOR" each
of the proposals listed. If any other business is presented at
the Annual Meeting, including whether or not to adjourn the
meeting, this proxy will be voted by those named in this proxy
in their best judgment. At the present time, the Board of
Directors knows of no other business to be presented at the
Annual Meeting.
The undersigned acknowledges receipt from the Company prior to
the execution of this proxy of a Notice of Annual Meeting of
Shareholders and of a Proxy Statement dated March 22, 2001 and
of the Annual Report to Shareholders.
Please sign exactly as your name appears on this card. When
signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held
jointly, each holder may sign but only one signature is
required.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
APPENDIX A
PATRIOT BANK CORP.
AUDIT COMMITTEE CHARTER & POLICY
AUDIT COMMITTEE MISSION
The Audit Committee is appointed by the Board of Directors to
assist the Board in fulfilling its oversight responsibilities.
The Audit Committee's primary duties and responsibilities are to:
- Monitor the integrity of the Company's financial
reporting process and systems of internal controls
regarding finance, accounting and regulatory compliance.
- Monitor the independence and performance of the
Company's independent auditors and internal auditing
department.
- Provide an avenue of communication among the independent
auditors, management, the internal auditing department,
and the Board of Directors.
To effectively perform his or her role, each Committee member
will obtain an understanding of the detailed responsibilities of
Committee membership.
AUDIT COMMITTEE ORGANIZATION
Audit Committee members shall meet the requirements of the NASD
Exchange. The Audit Committee shall be comprised of three or
more directors as determined by the Board, each of whom shall be
independent, non-executive directors, free from any relationship
that would interfere with the exercise of his or her independent
judgment. All members shall have a basic understanding of
finance and accounting and be able to read and understand
fundamental financial statements, including a balance sheet,
income statement, and cash flow statement. At least one member
of the Committee shall have accounting or related financial
management expertise. One of the members shall be designated
Chairman.
The Committee shall meet quarterly, or more frequently, as
circumstances dictate.
The Committee believes that the above mission statement sets
forth its primary roles and responsibilities. In that
connection, the following is meant to serve as a guide in
achieving that mission.
ROLES AND RESPONSIBILITIES
Review Procedures
1. Review the Company's annual audited financial statements
prior to filing or distribution. Review should include
discussion with management and independent auditors of
significant issues regarding accounting principles,
practices, and judgments. Discuss with Independent Auditors
its judgment about the quality, not just acceptability, of
the Company's accounting principles as applied in its
financial reporting.
2. In consultation with management, independent auditors, and
internal auditors, consider the integrity of the Company's
financial reporting processes and controls. Discuss
significant financial risk exposures and the steps taken to
monitor, control, and report such exposures.
3. Review significant findings prepared by the independent
auditors and the internal auditors together with management's
responses. Gain an understanding of whether internal control
recommendations made by internal and independent auditors
have been implemented by management.
Independent Auditors
1. The independent auditors are ultimately accountable to the
Audit Committee and the Board of Directors. The Audit
Committee shall review the independence and performance of
the auditors and annually recommend to the Board of Directors
the appointment of the independent auditors or approve any
discharge of auditors when circumstances warrant.
2. Review the independent auditors' timetable, scope and
approach of the quarterly reviews and annual examination of
the financial statements.
3. Obtain from the independent auditors their annual letter to
the Audit Committee in satisfaction of SAS 60 and 61
regarding Reportable Conditions and Report to the Audit
Committee.
4. Review and discuss with the independent auditors all
significant relationships they have with the Company that
could impair the auditors' independence.
Internal Auditors
1. Approve an Annual Risk Assessment and Audit Plan developed
by the Internal Audit Department.
2. Meet quarterly with the Internal Audit Department to gain an
understanding of the effectiveness of the internal audit
function in evaluating their performance.
3. Review significant reports prepared by the internal audit
department together with management's response and follow-up
to these reports.
4. The Audit Committee may contract for internal audit services
as necessary to assess the adequacy and effectiveness of
internal controls, the accuracy of management reporting and
compliance with laws, regulations and bank policy. The
Audit Committee will set forth the outsourcing vendor's
responsibilities in a written contract, the terms of which
comply with the Interagency Policy Statement on Internal
Audit and Internal Audit Outsourcing.
Compliance with Laws and Regulations
1. Periodically obtain updates from management and compliance
auditors regarding compliance with laws and regulations.
2. Review the finding of any examination by regulatory agencies
such as the Federal Reserve, FDIC, or Department of Banking.
3. Be familiar with Management's response to regulatory
examinations.
Other Committee Responsibilities
1. Review and update the Audit Charter annually and submit the
charter to the Board of Directors for approval. Ensure that
the charter is included within the Corporation's Form 10-K
once every three years.
2. Prepare an annual Audit Committee Report for inclusion in
the Corporation's Annual Proxy Statement that states a
formal audit charter has been approved and that the Audit
Committee has satisfied its responsibility during the year.
3. Perform other oversight functions as requested by the full
Board.
4. Maintain minutes of meetings and periodically report to the
Board of Directors on significant results of the foregoing
activities.