PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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USBANCORP, INC.
(Name of Registrant as Specified in its Charter)
_________________________________________________________________
(Name of Person(s) Filing Proxy Statement
if other than Registrant)
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NOTICE OF
ANNUAL
MEETING OF
SHAREHOLDERS
AND PROXY
STATEMENT
USBANCORP, INC.
MAIN AND FRANKLIN STREETS
P.O. BOX 670
JOHNSTOWN, PENNSYLVANIA 15907-0670
To Be Held April 23, 1996
March 22, 1996
Dear Shareholder:
USBANCORP, Inc.'s Annual Meeting of Shareholders will be
held Tuesday, April 23, 1996, at 1:30 p.m., Eastern Time, at the
Holiday Inn, Cambria Room, 250 Market Street, Johnstown,
Pennsylvania, 15901-2996.
The matters to be acted upon at the meeting are:
(a) the election of five Class I directors; and
(b) consideration of a shareholder proposal.
Please review the enclosed material and sign, date and
return the proxy card whether you plan to attend or not so that
the matters coming before the meeting may be acted upon.
I look forward to meeting you and welcome the opportunity to
discuss the business of your Corporation.
Cordially,
/s/ Terry K. Dunkle
Terry K. Dunkle
Chairman, President and
Chief Executive Officer
USBANCORP, Inc.
Johnstown, Pennsylvania 15901
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 22, 1996
To The Shareholders:
NOTICE IS HEREBY GIVEN that pursuant to the call of its
directors, the Annual Meeting of Shareholders of USBANCORP, Inc.
will be held at the Holiday Inn, Cambria Room, 250 Market Street,
Johnstown, Pennsylvania, 15901-2996, on Tuesday, April 23, 1996,
at 1:30 p.m., Eastern Time, for the purpose of considering and
voting on the following matters:
1. Election of five Class I directors for a term of three
years from the date of election and until their successors shall
have been elected and qualified (Matter No. 1);
2. Consideration of a shareholder proposal (Matter No. 2);
and
3. Such other business as may properly come before the
meeting or any adjournment thereof.
Only those shareholders of record at the close of business
on March 5, 1996 shall be entitled to notice of and to vote at
the meeting. A Proxy Statement, a proxy and a self-addressed
postage prepaid envelope are enclosed. Please complete, sign and
date the proxy and return it promptly in the envelope provided.
If you attend the meeting, you may revoke your proxy and vote in
person.
This Notice, the accompanying Proxy Statement and form of
proxy are sent to you by order of the Board of Directors.
/s/ Betty L. Jakell
Betty L. Jakell,
Secretary
Johnstown, Pennsylvania
March 22, 1996
USBANCORP, Inc.
Main and Franklin Streets
P.O. Box 670
Johnstown, Pennsylvania 15907-0670
PROXY STATEMENT
GENERAL
Introduction
The Proxy Statement and enclosed proxy are being mailed to
the shareholders of USBANCORP, Inc. ("USBANCORP" or the
"Company"), on or about March 22, 1996, in connection with the
solicitation of proxies by the Board of Directors of USBANCORP.
The proxies will be voted at the Annual Meeting of the
Shareholders of USBANCORP to be held on Tuesday, April 23, 1996,
at 1:30 p.m., Eastern Time, at the Holiday Inn, Cambria Room,
250 Market Street, Johnstown, Pennsylvania, 15901-2996 (the
"Annual Meeting"). USBANCORP's Annual Report and Form 10-K for
the year ended December 31, 1995, accompanies this Proxy
Statement. It should not be regarded as proxy solicitation
material.
Solicitation of Proxies
The cost of the solicitation of proxies will be borne by
USBANCORP. In addition to the use of the mails, some directors
and officers of USBANCORP may solicit proxies, without additional
compensation, in person, by telephone, telegram, or otherwise.
Arrangements may be made by USBANCORP with banks, brokerage
houses and other custodians, nominees and fiduciaries to forward
solicitation material to the beneficial owners of shares held by
them of record, and USBANCORP may reimburse them for reasonable
expenses they incur in so doing.
Voting Securities
Holders of record of USBANCORP Common Stock as of the close
of business on March 5, 1996 (the "Record Date"), are entitled to
notice of and to vote at the Annual Meeting. As of the close of
business on March 5, 1996, there were outstanding
5,292,739 shares of common stock, par value $2.50 per share, of
USBANCORP (the "USBANCORP Common Stock"), the only class of
capital stock of USBANCORP outstanding. As a result of
USBANCORP's previously announced stock repurchase program,
USBANCORP has repurchased approximately 472,912 shares or 8.29%
of the outstanding USBANCORP Common Stock as of the Record Date.
These shares may not be voted at the Annual Meeting. Except with
respect to the election of directors, each shareholder is
entitled to one vote for each share held. Holders of USBANCORP
Common Stock are entitled to cumulate their vote in the election
of directors.
If a shareholder participates in USBANCORP's Dividend
Reinvestment and Common Stock Purchase Plan, the proxy card sent
to such shareholder will represent the number of shares
registered in the shareholder's name and the number of shares,
including fractional shares, credited to the shareholder's
Dividend Reinvestment Plan account.
If the enclosed form of proxy is appropriately marked,
signed and returned in time to be voted at the Annual Meeting,
the shares represented by the proxy will be voted in accordance
with the instructions marked thereon. Signed proxies not marked
to the contrary will be voted "FOR" the election of the nominees
of USBANCORP's Board of Directors and "AGAINST" the shareholder
proposal.
Right of Revocation
Proxies may be revoked at will at any time before they have
been exercised by filing with the Secretary of USBANCORP an
instrument of revocation or a duly executed proxy bearing a later
date. Any shareholder attending the Annual Meeting may also
revoke a previously granted proxy by voting in person at the
Annual Meeting.
Quorum
Under USBANCORP's Bylaws, the presence, in person or by
proxy, of shareholders entitled to cast at least a majority of
the votes that all shareholders are entitled to cast, constitutes
a quorum for the transaction of business at the Annual Meeting.
Principal Shareholders
The following table sets forth information regarding
persons or entities known to USBANCORP's management to own, as of
March 5, 1996, 5% or more of the outstanding shares of USBANCORP
Common Stock:
Amount of
Name and Address Beneficial Percent of
of Beneficial Owner Ownership Common Stock
Integra Investment Company 275,000 5.19%
103 Springer Building
3411 Silverside Road
Wilmington, Delaware 19810
MATTER NO. 1
ELECTION OF USBANCORP DIRECTORS
General
The Articles of Incorporation of USBANCORP provide that
USBANCORP's business shall be managed by a Board of Directors of
not less than 5 and not more than 25 persons. Under the Articles
of Incorporation, the total number of directors may be determined
by either a resolution adopted by a majority vote of the
directors then in office or by resolution of the shareholders at
a meeting. The number of directors for 1996 has been set by the
Board at 16.
USBANCORP's Board of Directors, as provided in its Articles
of Incorporation, is divided into three classes: Class I, Class
II and Class III, each being as nearly equal in number as
possible. The directors in each class serve terms of three years
each and until their successors are elected and qualified. Under
USBANCORP's Bylaws, a person elected to fill a vacancy on the
Board of Directors serves as a director for the remaining term of
office of the class to which he or she was elected.
The Board of Directors fixed the number of directors in
Class I at five and has nominated Messrs. Jerome M. Adams,
James M. Edwards, Sr., Richard W. Kappel, James C. Spangler, and
Robert L. Wise for election as Class I directors for three-year
terms to expire at the 1999 Annual Meeting of Shareholders, and
until their successors are duly elected and qualified. Each of
the Board nominees for election as director is presently a
director of USBANCORP. Directors Adams, Kappel, Spangler and
Wise were elected by the shareholders at the 1993 Annual Meeting.
Director Edwards was appointed to the Board to fill a vacancy
created in accordance with the Merger Agreement dated
November 10, 1993, as amended on January 18, 1994, among
USBANCORP, United States National Bank in Johnstown ("U.S. Bank")
and Johnstown Savings Bank ("JSB"). The remaining directors will
continue to serve in accordance with their previous election with
the terms of the Class II and Class III directors expiring in
1997 and 1998, respectively.
The Bylaws of USBANCORP permit nominations for election to
the Board of Directors to be made by the Board of Directors or by
any shareholder entitled to vote for the election of directors.
All nominations for director to be made at the Annual Meeting by
shareholders entitled to vote for the election of directors must
be preceded by notice in writing, delivered or mailed by first
class United States mail, postage prepaid, to the President of
USBANCORP not less than 60 days nor more than 90 days prior to
the Annual Meeting, which notice must contain certain information
specified in the Bylaws. No notice of nomination for election as
a director has been received from any shareholder as of the date
of this Proxy Statement. If a nomination is attempted at the
Annual Meeting which does not comply with the procedures required
by the Bylaws or if any votes are cast at the Annual Meeting for
any candidate not duly nominated, then such nomination and/or
such votes may be disregarded.
With respect to the election of directors, each shareholder
has the right to vote, for each share of USBANCORP Common Stock
held by him or her, as many votes as shall equal the number of
directors to be elected, and he or she, or his or her proxy, may
cast the whole number of votes for one nominee or distribute them
among two or more nominees. Unless authority is withheld as to a
particular nominee or as to all nominees, all proxies will be
voted for the five nominees listed below. The proxies will have
authority to cumulate votes in their discretion except to the
extent a shareholder withholds such authority on the form of
proxy. The five persons receiving the highest number of votes
cast at the Annual Meeting will be elected as Class I directors.
Abstentions and broker non-votes will not constitute or be
counted as "votes" cast for purposes of the Annual Meeting, but
will be counted for purposes of determining the presence of a
quorum.
Except as noted above, it is intended that shares
represented by proxies will be voted for the nominees listed
below, each of whom is now a director of USBANCORP and each of
whom has expressed his willingness to serve, or for any
substitute nominee or nominees designated by the USBANCORP Board
of Directors in the event any nominee or nominees become
unavailable for election. The USBANCORP Board of Directors has
no reason to believe that any of the nominees will not serve if
elected.
The following tables set forth, as to each of the nominees
for election as a Class I director and as to each of the
continuing Class II and Class III directors, his age, principal
occupation and business experience, the period during which he
has served as a director of USBANCORP or an affiliate and other
business relationships. There are no family relationships
between any of the listed persons.
Nominees for Election as
Class I Directors - Terms Expire in 1999
Directorship in
Director other Reporting
Name and Principal Occupation(1) Age Since(2)(3) Companies
Jerome M. Adams 64 1973 None
Senior Partner, Adams,
Myers and Baczkowski,
Attorneys-at-Law
James M. Edwards, Sr. 56 1984 None
President and Chief Executive
Officer, WJAC, Inc.
Richard W. Kappel 64 1967 None
CEO, Secretary and Treasurer,
Wm. J. Kappel Wholesale Co.
James C. Spangler 68 1980 None
Retired; Former Owner,
Somerset Auction and
Transfer, Inc.
Robert L. Wise 52 1986 General Public
President, GPU Generation Utilities Service
Corporation Corporation, General
Public Utilities
Nuclear Corporation and
Energy Initiatives,
Inc.
Class II Directors - Terms Expire in 1997
Directorship in
Director other Reporting
Name and Principal Occupation(1) Age Since(2)(3) Companies
Clifford A. Barton 67 1966 Crown American
Retired; Former Chairman, Realty Trust
President and Chief Executive
Officer of USBANCORP and
Chairman of the Board of
United States National Bank
in Johnstown, Three Rivers
Bank and Trust Company,
Community Bancorp, Inc. and
USBANCORP Trust Company
Louis Cynkar 51 1994 None
Executive Vice President and
Corporate Senior Commercial
Loan Officer, USBANCORP, Inc.
James F. O'Malley 70 1983 None
Senior Lawyer, Yost &
O'Malley, Attorneys-at-Law
Frank J. Pasquerilla 69 1969 Crown American
Chairman of the Board and Realty Trust
Chief Executive Officer,
Crown American Realty Trust
Thomas C. Slater 53 1980 None
Owner, President and Director,
Slater Laboratories, Inc.,
Clinical Laboratory
W. Harrison Vail 55 1984 None
President and Chief Executive
Officer, Three Rivers Bank
and Trust Company, Community
Bancorp, Inc. and Community
Savings Bank
Class III Directors - Terms Expire in 1998
Directorship in
Director other Reporting
Name and Principal Occupation(1) Age Since(2)(3) Companies
Michael F. Butler 60 1993 None
Business Consultant and
Attorney-at-Law
James C. Dewar 58 1974 None
President and Owner, Jim
Dewar Oldsmobile, Inc.
Terry K. Dunkle 54 1988 None
Chairman, President and
Chief Executive Officer
of USBANCORP and Chairman
of the Board of United
States National Bank in
Johnstown, Three Rivers
Bank and Trust Company,
Community Bancorp, Inc.
and USBANCORP Trust Company
John H. Kunkle, Jr. 68 1989 None
Retired; Former Vice
Chairman and Director,
Commonwealth Land Title
Insurance Company
Jack Sevy 65 1984 None
Retired; Former Owner and
Operator, New Stanton West
Auto/Truck Plaza
________________________
<FN>
(1) All directors and nominees have held the positions indicated
or another senior executive position with the same entity or
one of its affiliates or predecessors for the past five
years.
(2) Reflects the earlier of the first year as a director of
USBANCORP, U.S. Bank, Three Rivers Bank and Trust Company
("Three Rivers Bank"), Community Bancorp, Inc.
("Community"), or JSB.
(3) All incumbent directors were elected by the shareholders
except for Directors Cynkar and Edwards, who were appointed
by the Board of Directors in 1994. Director Edwards was
appointed to serve as a Class I director in connection with
the merger of JSB with and into U.S. Bank. Under the terms
of the merger agreement, USBANCORP has agreed to use its
best efforts to cause Director Edwards to be renominated for
an additional term upon the expiration of his initial term,
which, is the term expiring in 1996.
Security Ownership of Management
The following table sets forth information concerning the
number of shares of USBANCORP Common Stock beneficially owned, as
of March 5, 1996, by each present director, nominee for director,
and each executive officer named in the compensation table set
forth elsewhere herein.
Amount and Nature
of Beneficial Percent
Name of Beneficial Owner(1) Ownership(2) of Class
Jerome M. Adams............... 5,163 *
Clifford A. Barton(3)......... 71,952 1.35
Michael F. Butler............. 5,555 *
Louis Cynkar(4)............... 5,789 *
James C. Dewar................ 20,113 *
Terry K. Dunkle............... 22,829 *
James M. Edwards, Sr.(5)...... 8,588 *
Orlando B. Hanselman.......... 8,433 *
Richard W. Kappel............. 10,064 *
John H. Kunkle, Jr............ 6,261 *
James F. O'Malley(6).......... 34,546 *
Frank J. Pasquerilla(7)....... 51,422 *
Jack Sevy..................... 1,711 *
Thomas C. Slater(8)........... 8,838 *
James C. Spangler............. 5,696 *
W. Harrison Vail.............. 18,364 *
Robert L. Wise(9)............. 2,526 *
Officers, Directors
and Nominees for
Directors as a
Group (10)................... 287,850 5.43
__________________
<FN>
*Less than 1%
(1) Except as noted below, each of the identified beneficial
owners, including the officers, directors and nominees for
director as a group, has sole investment and voting power as
to all the shares shown as beneficially owned with the
exception of those held by certain officers, directors and
nominees for director jointly with their spouses or directly
by their spouses or other relatives.
(2) Includes shares that may be acquired within sixty (60) days
of the Record Date upon the exercise of presently
exercisable stock options as follows: 2,135, 8,000, 5,967,
8,667 and 24,769 shares of USBANCORP Common Stock held by
Directors Cynkar, Dunkle, Hanselman and Vail and the group,
respectively. In addition, Directors Cynkar, Dunkle,
Hanselman, and Vail and the group hold outstanding options
to acquire 1,833, 5,000, 1,833, 1,833, and 10,499 shares of
USBANCORP Common Stock, respectively, that first become
exercisable, in part, in January and February of 1997, and
therefore are excluded.
(3) Includes 35,510 shares of USBANCORP Common Stock held by
Mr. Barton's wife as to which shares Mr. Barton disclaims
beneficial ownership.
(4) Includes 875 shares of USBANCORP Common Stock held by
Mr. Cynkar's wife as to which Mr. Cynkar disclaims
beneficial ownership.
(5) Includes 1,970 shares of USBANCORP Common Stock held by the
WJAC Pension Plan of which Mr. Edwards is one of three
trustees. Mr. Edwards disclaims beneficial ownership of such
shares.
(6) Includes 89 and 2,143 shares of USBANCORP Common Stock held
by Mr. O'Malley's wife and daughter, respectively, as to
which Mr. O'Malley disclaims beneficial ownership.
(7) Includes 1,014 shares of USBANCORP Common Stock held by
Crown American Enterprises, Inc. of which Mr. Pasquerilla is
an officer and controlling shareholder.
(8) Includes 597 shares of USBANCORP Common Stock held by
Mr. Slater's wife as to which Mr. Slater disclaims
beneficial ownership.
(9) Includes 203 shares of USBANCORP Common Stock held by
Mr. Wise's son as to which Mr. Wise disclaims beneficial
ownership.
(10) The group consists of 18 persons, being the members of the
Board of Directors of USBANCORP, the Chief Executive Officer
and each other named executive officer of USBANCORP set
forth on the compensation table elsewhere herein as of
March 5, 1996.
Board and Committees
The Board of Directors has various standing committees
including an Audit Committee, a Nominating Committee and a
Management Compensation Committee (the "Compensation Committee").
During 1995, the Board of Directors held 5 meetings, the Audit
Committee held 9 meetings, the Nominating Committee held
1 meeting, and the Compensation Committee held 7 meetings. Each
director attended at least 75% of the combined total of meetings
of the Board of Directors and of each committee of which he was a
member except Mr. Edwards, who attended 68%, and Mr. Robert A.
Allen, who attended 71%. Mr. Allen, a Class I director, is not
standing for re-election because he has reached the mandatory
retirement age for Board members.
The Audit Committee is responsible for recommending to the
Board of Directors the appointment of an independent public
accountant to audit the books and accounts of USBANCORP and its
subsidiaries, reviewing the reports of the Audit Department and
the reports of examination conducted by the bank and bank holding
company regulators and USBANCORP's independent public
accountants, reviewing the adequacy of internal audit and control
procedures, and reporting to the Board of Directors. The Audit
Committee is presently comprised of Directors Adams, Dewar,
Edwards, Kappel, Kunkle, O'Malley (Chairman), Sevy and Spangler.
The Nominating Committee presently consists of Directors
Barton, Dunkle, O'Malley and Pasquerilla (Chairman). The
Nominating Committee is responsible for nominating individuals to
stand for election as directors at the Annual Meeting of
Shareholders and will consider nominees recommended by
shareholders. Shareholders may nominate persons for election as
directors in accordance with the procedures set forth in
Section 1.3 of USBANCORP's Bylaws. Notification of such
nomination, containing the required information, must be mailed
or delivered to the President of USBANCORP not less than 60 days
or more than 90 days prior to the Annual Meeting.
The Compensation Committee is responsible for reviewing and
making recommendations regarding the compensation of corporate
officers. No director who is eligible to receive any benefit
under plans administered by the Compensation Committee, except
for benefits payable to directors under the Independent Directors
Annual Retainer Plan (the Committee's administration of which is
limited to coordinating the payment of a predetermined retainer)
may serve on the Compensation Committee. The Compensation
Committee is presently comprised of Messrs. Barton, O'Malley,
Pasquerilla and Wise (Chairman). See "Executive Compensation"
herein.
Compensation of Directors
Executive officers of USBANCORP who are directors or members
of committees of the USBANCORP Board of Directors or its
subsidiaries receive no compensation for such positions. In
1995, independent directors of USBANCORP received a retainer of
$6,000 per year payable in USBANCORP Common Stock. In addition,
directors received cash compensation for attendance at USBANCORP
Board of Directors meetings of $450 per meeting. A fee of $200
was paid for attendance at committee meetings of the USBANCORP
Board of Directors. Certain non-officer directors of USBANCORP
are also directors of U.S. Bank, Three Rivers Bank, Community,
Community Savings Bank ("Community Savings") and USBANCORP Trust
Company (the "Trust Company"). Directors serving on the Board of
Directors of U.S. Bank, Three Rivers Bank or the Trust Company
are compensated for their services by a payment of $350 for each
Board of Directors meeting attended and $200 for each committee
meeting of those Boards attended. Directors serving on the Board
of Directors of Community Savings are compensated for their
services by a payment of $600 for each Board of Directors meeting
attended and $200 for each committee meeting attended. Because
the Boards of Directors of Community and Community Savings are
comprised of the same members, the directors serving on the Board
of Directors of Community are not compensated for their services
on the Community Board.
EXECUTIVE COMPENSATION
Compensation Committee Report on Executive Compensation
USBANCORP's Management Compensation Committee oversees the
Company's executive compensation programs to ensure that they:
attract and retain high caliber executives, deliver the total
compensation package in a cost-effective manner, reinforce key
business objectives, provide competitive compensation
opportunities for competitive results, induce management
ownership of Company stock, and comply with applicable
regulations.
The role of the Committee is to approve executive salary
adjustments, to administer the annual incentive plan (including
establishment of performance goals), and to administer the stock
option plan in a manner that is consistent with the Company's pay
policy. Additionally, from time to time, the Committee reviews
other human resource issues, including qualified and non-
qualified benefits, management performance evaluation, and
succession planning.
Executive Compensation Policies
The Committee uses a formal executive compensation policy to
assist it in evaluating and administering executive pay. The
policy addresses each of the major components of the executive
pay program and is summarized below.
- - Maintain a conservative executive base salary practice
(approximating the 40th percentile of competitive
practices - defined below) in light of stakeholder
sensitivities, sustained performance results, and
USBANCORP's long-term focus.
- - Maintain a competitive annual incentive program that
recognizes the achievement of important milestones en route
to USBANCORP's long-term objectives, providing target and
maximum annual total cash opportunities that approximate the
40th and 60th percentiles of competitive annual total cash
practices, respectively. A portion of all plan
participants' rewards are based upon corporate performance
relative to goal. Some participants are also evaluated and
rewarded based upon subsidiary and individual performance
achievements.
- - Maintain competitive long-term incentives that: align
management's financial interests with those of the Company's
shareholders, help induce management ownership of Company
stock, support the achievement of USBANCORP's long-term
financial objectives, and provide median long-term incentive
reward opportunities.
- - Provide typical benefits through qualified programs
generally available to all employees, supplemented by non-
qualified arrangements, as appropriate.
- - Provide perquisites on a limited basis, only to the extent
that they support legitimate business needs.
- - Competitive pay practices are determined using two different
sets of data -- survey data and peer data.
- Survey data includes compensation data from banking
industry compensation surveys. Competitive
compensation practices are determined using
compensation levels at holding companies and
subsidiaries of comparable size to USBANCORP and its
subsidiaries for positions comparable to those held by
the Named Officers.
- Peer data comes from a group of fifteen multi-bank,
bank holding companies of comparable size to USBANCORP.
Most of the institutions are located in Pennsylvania or
Ohio, to recognize USBANCORP's more immediate labor
markets and similar business environments. The other
institutions are generally located in non-major
metropolitan cities of the following states: Illinois,
Indiana, Michigan, and West Virginia.
- The indices used in the Stock Performance Chart are
NASDAQ/NMS (U.S. Companies) and NASDAQ Bank Stocks.
While USBANCORP believes that some of the surveyed
banks and some of the peer banks may be included within
these indices, it is not the intention of the Committee
to establish executive pay practices based on the pay
practices of the organizations that compose these
indices. The Committee believes that some of the
organizations in these indices would be either too
large or too small to be relevant for setting pay for
USBANCORP and subsidiary executives. The
aforementioned surveyed banks and peer banks provide
the Committee with an organizational-size-sensitive
basis for establishing executive pay practices.
Relationship of Performance Under Compensation Plans
Base salaries for executives of USBANCORP and subsidiaries
are established in light of competitive practices and are
consistent with the Company's compensation policy. Although the
Committee relies primarily on the annual incentive plan and the
stock option plan to establish the desired pay-for-performance
relationship, the existing salary philosophy of providing
USBANCORP and subsidiary executives with base salaries below the
median of competitive practices reflects the Committee's
intention to closely manage fixed compensation expenses until
performance reaches a sustainable level that suggests a median
salary practice is appropriate.
The Company administers an annual incentive plan through
which participants can earn performance-based compensation. The
bonuses of those named officers employed at year-end were based
on three components of corporate performance-return on equity
(ROE), total return to shareholders, and a third-party
comparative estimate of the holding company's CAMEL rating. (A
CAMEL rating is an overall indicator of the performance and
financial soundness of the institution using a variety of
indicators.)
Because USBANCORP did not achieve its ROE goal for plan year
1995, that portion of the named officers' annual bonuses
dependent upon ROE performance was not earned. Based on the
Company's annualized total return to shareholders relative to
absolute standards set by reference to a peer group, the named
officers earned the portion of their awards that was dependent on
USBANCORP's return to shareholders performance over the five-year
period ending in 1995. (This peer group was also used as a
source of competitive compensation data to assist the Committee
in carrying out its stated compensation policy.) A portion of
the named officers' bonuses allocated to CAMEL performance was
earned. Because of a mid-year change in the methodology used in
calculating the CAMEL ratio, determination of performance
relative to pre-set goals was left to the Committee's judgment.
To ensure consistency with the Company's compensation
strategy and to continue to reinforce USBANCORP's commitment to
creating value for shareholders, 20,500 stock options were
granted on January 24, 1995 to 20 executives. Additional stock
option awards of 36,300 were subsequently made to 34 employees
from September 1995 through November 1995. Neither the CEO nor
any of the Named Officers received any additional awards after
January 1995. The supplemental awards were made in consideration
of the exceptional efforts and sacrifices made by key employees
in the Company's quest for achievement of its return on equity
objective.
In October 1995, the Committee approved a stock ownership
program to further enhance the stock option plan's role in
aligning management and shareholder interests. As adopted, the
policy sets a five-year period during which executives are
expected to attain their respective target ownership levels. The
policy also requires executives to retain all or a portion of the
net proceeds from option exercises in the form of Company stock.
The success of the executives in attaining their ownership
targets will be a consideration in determining future
compensation actions.
1995 Compensation for the Chief Executive Officer
At January 1, 1995, Mr. Dunkle's annual base salary rate was
$220,000. In February 1995, the Committee approved a salary
increase of 7%, to an annual base salary rate of $235,000. This
action reflects the Committee's decision to move Mr. Dunkle's
salary to the targeted position over the first several years of
his tenure as CEO. This increase is therefore consistent with
the Company's compensation policy in that the increase moved
Mr. Dunkle's salary closer to the targeted competitive position,
which is at the 40th percentile of competitive practices.
Because the increase occurred after the start of the year, the
salary earned and reported in the summary compensation table
falls between these two annual salary rates.
Mr. Dunkle earned $51,561 under the Company's annual
incentive plan, which represents a portion of the total
opportunity that could have been earned under the plan. As
previously indicated with respect to all named officers, none of
Mr. Dunkle's incentive opportunity allocated to ROE performance
was earned in 1995 and only a portion of the incentive
opportunity allocated to CAMEL rating performance was earned in
1995. With respect to that portion of the incentive opportunity
that was allocated to annualized total returns to shareholders in
the five-year period ending 1995, all of Mr. Dunkle's incentive
opportunity was earned in 1995.
On January 24, 1995, the Committee awarded 5,000 stock
options to Mr. Dunkle. This award is consistent with the
strategy identified in the section Executive Compensation
Policies. The exercise price of $21.44 per optioned share for
all 5,000 options is equal to the fair market price of USBANCORP
stock at the time of the grant. These stock options vest and
become exercisable in three equal installments on the first,
second, and third anniversaries of the grant. The options expire
ten years from the date of the grant.
The stock ownership program approved in October 1995 applies
to Mr. Dunkle and to other executives, including the Named
Officers who remain employees. The value of the stock required
by Mr. Dunkle's stock ownership target exceeded two times his
salary at the time the program was approved.
Impact of Omnibus Budget Reconciliation Act of 1993 - Section
162(m)
The Omnibus Budget Reconciliation Act of 1993 (OBRA) Section
162(m) prohibits a publicly owned company from taking a
compensation deduction for tax purposes for annual compensation
in excess of $1,000,000 for any of the executive officers named
in its Summary Compensation Table. To the extent that certain
guidelines are met, compensation in excess of $1,000,000 is
exempt from this limitation.
The Committee does not believe that the deduction limit
imposed by OBRA will affect compensation deductibility given the
compensation opportunities of the Named Officers under the
Company's existing compensation programs. The Committee will
continue to evaluate the potential impact of Section 162(m) and
take such actions as it deems appropriate.
This report is furnished by Messrs. Barton, O'Malley,
Pasquerilla, and Wise (Chairman).
Compensation Committee Interlocks and Insider Participation
Messrs. Barton, O'Malley, Pasquerilla, and Wise (Chairman)
served as members of the Management Compensation Committee during
1995. Each member of the Committee is excluded from
participation in any plan administered by the Committee while
serving as a member, except for participation in the Independent
Directors' Annual Retainer Plan (the Management Compensation
Committee's administration of which is limited to coordinating
the payment of a predetermined retainer). Mr. Barton did not
serve on the Management Compensation Committee while serving as
Chairman, President and Chief Executive Officer of USBANCORP.
Mr. Barton also serves on the Compensation Committee of Crown
American Realty Trust, of which Mr. Pasquerilla is the Chief
Executive Officer.
Compensation Paid to Executive Officers
The following table sets forth information for the three
years ended December 31, 1995, concerning the annual and
long-term compensation for services in all capacities to
USBANCORP and its banking subsidiaries of those persons who were
(i) the Chief Executive Officer of USBANCORP during the fiscal
year ended December 31, 1995, and (ii) the other four most highly
compensated executive officers of USBANCORP or its banking
subsidiaries (the "Named Officers").
Summary Compensation Table
Name and Long Term
Principal Position Annual Compensation Compensation(3)
Other Securities
Annual Underlying All Other
Year Salary($) Bonus($)(1) Compensation($)(2) Options(#)(4) Compensation($)(5)(6)(7)
Terry K. Dunkle.................... 1995 231,647 51,561 $ --- 5,000 32,826
Chairman, President and Chief 1994 215,375 53,844 --- 5,000 33,789
Executive Officer of USBANCORP 1993 156,480 39,120 --- 4,000 26,755
and Chairman of the Board of
U.S. Bank, Three Rivers Bank,
Community and the Trust Company
Louis Cynkar...................... 1995 131,723 15,149 $ --- 1,500 11,946
Executive Vice President and 1994 127,350 9,551 --- 2,500 10,889
Corporate Senior Commercial 1993 103,980 16,252 --- 2,000 8,136
Loan Officer, USBANCORP, Inc.
Dennis J. Fantaski............... 1995 122,720 23,906 $ --- 1,500 6,400
Former President and Chief 1994 118,000 --- --- 2,500 8,488
Executive Officer of Community 1993 100,521 21,890 --- 2,000 15,677
and Community Savings
Orlando B. Hanselman............. 1995 136,069 26,555 $ --- 1,500 11,273
Executive Vice President and 1994 117,930 --- --- 2,500 8,309
Chief Financial Officer of 1993 92,790 16,965 --- 2,000 5,789
USBANCORP and President and
Chief Executive Officer of
U.S. Bank
W. Harrison Vail.................. 1995 134,160 25,566 $ --- 1,500 8,856
President and Chief Executive 1994 120,000 --- --- 2,500 9,903
Officer of Three Rivers Bank, 1993 113,828 28,475 --- 4,000 5,598
Community and Community
Savings
__________________
<FN>
(1) Includes the cash and cash value of stock awards made to
executive officers of USBANCORP and its subsidiaries under
the Executive Annual Incentive Plan. For purposes of this
table, the cash value of the stock awards was determined by
multiplying the price USBANCORP paid to acquire the shares
in the open market ($33.25) by the number of shares awarded.
(2) Unless otherwise indicated, no executive officer named in
the Summary Compensation Table received personal benefits or
perquisites in excess of the lesser of $50,000 or 10% of the
officer's total compensation (salary and bonus).
(3) USBANCORP has no long-term compensation plan other than the
1991 Stock Option Plan.
(4) Indicates number of shares for which options were granted
during 1995, 1994 and 1993 under the 1991 Stock Option Plan.
(5) Includes amounts awarded under the Profit Sharing Plan of
USBANCORP and U.S. Bank. All full-time employees of
USBANCORP and U.S. Bank are entitled to participate in the
Profit Sharing Plan. A contribution during any plan year is
equal to 7-1/2% of U.S. Bank's income as defined in the
plan.
(6) Includes (a) the value of the premium paid by USBANCORP of
$10,000 for a split dollar life insurance policy for Mr.
Dunkle, and (b) the premiums paid by USBANCORP and its
subsidiaries for life insurance policies with coverage
limits above $50,000 to Messrs. Cynkar, Dunkle, Fantaski,
Hanselman, and Vail.
(7) Includes amounts contributed under a 401(k) Plan of
USBANCORP to Messrs. Fantaski and Vail. Under the USBANCORP
sponsored 401(k) plan, employees of Three Rivers Bank and
Community Savings are allowed to contribute up to 20% of
their compensation to the plan with an employer match of
$.50 on each $1.00 of employee contribution up to a maximum
of 6% of an employee's compensation.
Option Grants Table
The following table sets forth information with respect to
grants of stock options made during 1995 to the Chief Executive
Officer and each of the Named Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
Potential
Percent Realizable
of Total Value
Options at Assumed
Granted Annual
Number of to Rates of
Securities Employees Stock Price
Underlying in Exercise or Expira- Appreciation
Options Fiscal Base Price tion for Option
Name Granted (#)(1) Year ($/Share) Date Term($)
0% 5% 10%
Terry K. Dunkle....... 5,000 8.8 21.4375 1/24/2005 0 67,410 170,829
Louis Cynkar.......... 1,500 2.6 21.4375 1/24/2005 0 20,223 51,249
Dennis J. Fantaski.... 1,500 2.6 21.4375 1/24/2005 0 20,223 51,249
Orlando B. Hanselman.. 1,500 2.6 21.4375 1/24/2005 0 20,223 51,249
W. Harrison Vail...... 1,500 2.6 21.4375 1/24/2005 0 20,223 51,249
Gains applicable to all
shareholders(2)....... --- --- --- --- 0 73,449,547 186,135,573
__________________
<FN>
(1) Options were granted under the 1991 Stock Option Plan to the
Chief Executive Officer and each of the Named Officers on
January 24, 1995.
(2) The potential realizable gain to all shareholders (based on
5,448,000 shares of USBANCORP Common Stock outstanding at
December 31, 1995, with an assumed market price of $21.4375)
at 5% and 10% assumed annual growth rates over a term of ten
years is provided as a comparison to the potential gain
realizable by the Chief Executive Officer and the Named
Officers at the same assumed annual rates of stock
appreciation.
Option Exercises and Year-End Value Table
The following table sets forth information concerning the
exercise of options to purchase USBANCORP Common Stock by the
Chief Executive Officer and the Named Officers during the year
ended December 31, 1995, as well as the number of securities
underlying unexercised options and potential value of unexercised
options (both options which are presently exercisable and options
which are not presently exercisable) as of December 31, 1995.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUE(1)
Number of Securities
Underlying Unexercised Value of In-the-Money
Shares Options at December 31, 1995 Options at December 31, 1995(3)
Acquired on Value
Name Exercise (#) Realized($)(2) Exercisable(#) Unexercisable(#) Exercisable($) Unexercisable($)
Terry K. Dunkle....... 1,367 7,722 3,834 9,666 38,783 103,639
Louis Cynkar.......... 4,032 43,495 134 3,834 1,241 40,142
Dennis J. Fantaski.... 8,500 78,406 -0- -0- -0- -0-
Orlando B. Hanselman.. 700 3,412 3,966 3,834 50,652 40,142
W. Harrison Vail...... 500 3,375 8,000 4,500 107,896 47,322
_______________________
<FN>
(1) Stock options were granted to the named executive officers
under the 1991 Stock Option Plan on January 24, 1995,
February 22, 1994, January 19, 1993 and December 17, 1991.
Options become exercisable as follows: one-third one year
from date of grant; two-thirds, less the aggregate number
previously exercised, two years from date of grant; and the
remainder three years from date of grant.
(2) Represents the aggregate market value of the underlying
shares of USBANCORP Common Stock at the date of exercise
minus the aggregate exercise prices for options exercised.
(3) "In-the-money options" are stock options with respect to
which the market value of the underlying shares of USBANCORP
Common Stock exceeded the exercise price at December 31,
1995. The value of such options is determined by
subtracting the aggregate exercise price for such options
from the aggregate fair market value of the underlying
shares of USBANCORP Common Stock on December 31, 1995. Fair
market value was determined by reference to the average of
the high and low sale prices of USBANCORP Common Stock as
quoted on the Nasdaq Stock Market.
Retirement Plans
Pension Plan - U.S. Bank
U.S. Bank maintains a qualified defined benefit retirement
plan for its employees (the "U.S. Bank Plan"). Remuneration for
pension benefit purposes is base pay excluding overtime, bonus or
reimbursement of business expense. An employee's benefit under
the U.S. Bank Plan is determined on the basis of Final Average
Pay which means the average annual base pay received by an
employee in the five consecutive years out of the ten ending
before his termination of employment for which the average is
highest.
U.S. Bank expects to make a contribution of $990,000 in 1996
for the 1995 plan year.
Estimated annual benefits payable upon retirement at age 65
after 15 years of service with respect to the specified
remuneration are as follows:
PENSION TABLE
U.S. BANK
Five Calendar Year
Average Salary Annual Benefit at
Preceding Retirement Normal Retirement Date
$ 15,000 $ 5,550
25,000 9,250
40,000 14,800
60,000 22,200
90,000 33,300
100,000 37,000
120,000 44,400
140,000 51,800
150,000(1) 55,500
<FN>
_______________________
(1) Effective for retirements on or after January 1, 1994,
annual compensation for Plan purposes may not exceed
$150,000. Employees with compensation exceeding $150,000 in
years before 1994 may have larger "preserved benefits."
The above benefits are paid for the life of the employee
with a right of survivorship with respect to ten years of
post-retirement benefits. Other optional forms of benefit are
available, in actuarially equivalent amounts. Current
remuneration covered by the U.S. Bank Plan (base salary) in 1995
for Messrs. Dunkle, Cynkar and Hanselman was $231,647, $131,723
and $136,069, respectively, subject to the $150,000 limitation.
As of December 31, 1995, Mr. Dunkle was credited with eight years
of service, Mr. Cynkar with ten years of service and
Mr. Hanselman with nine years of service.
Effective January 1, 1986, the USBANCORP Board of Directors
adopted the U.S. Bank Plan for the benefit of employees of
USBANCORP on the same terms and conditions as for employees of
U.S. Bank. Contributions made by USBANCORP are limited to those
employees whose base salaries are paid by USBANCORP.
Supplemental Pension Plan
The Board of Directors of U.S. Bank on February 20, 1981,
adopted a Supplemental Pension Plan under which the Executive
Committee of the Board of Directors may from time to time
designate executive officers of U.S. Bank as participants and
specify the amount of supplemental pension payment the
participant shall receive.
A participating officer agrees to perform, after retirement,
such advisory services as the Executive Committee may reasonably
request and enters into a noncompetition agreement with U.S.
Bank. Upon his retirement from U.S. Bank, a participant will be
entitled to receive supplemental monthly pension payments in a
specified amount for a period of fifteen years. If he should die
before retirement while in the service of U.S. Bank or if he
should die after payment of benefits has commenced, the
participant's spouse, if any, will be entitled to receive one-
half of the specified amount for the remainder of the fifteen
year period.
No payments are currently being made under this plan. U.S.
Bank purchased an annuity in 1988 for one retired officer who is
the only present participant.
USBANCORP has provided additional life insurance and
retirement benefits for Mr. Dunkle funded through a split-dollar
life insurance policy. USBANCORP pays a portion of the premiums
until Mr. Dunkle's normal retirement. At Mr. Dunkle's
retirement, USBANCORP will recover, through a withdrawal from the
policy, its cumulative premiums or the policy cash value if less.
Mr. Dunkle will receive a paid-up life insurance policy that will
include any remaining cash value. If Mr. Dunkle dies prior to
retirement, USBANCORP will be reimbursed for its total premiums
from the insurance proceeds. The annual premium paid by
USBANCORP is $10,000 per year, and USBANCORP has an interest in
the policy cash value equal to the lesser of its cumulative
premiums or the policy cash value.
The Compensation Committee determined that it was
appropriate to provide additional supplemental retirement
benefits to Mr. Dunkle commencing at his retirement, because
recent revisions in Code regulations significantly limit
retirement benefits payable to highly compensated executives
under qualified pension, profit sharing, and 401(k) plans.
Accordingly, on February 25, 1994, the Board of Directors of
USBANCORP adopted a supplemental executive retirement plan
("SERP") for the benefit of Mr. Dunkle.
The SERP will provide supplemental retirement benefits to
Mr. Dunkle, which, in combination with benefits from all
USBANCORP sponsored qualified and non-qualified pension plans,
will ensure an appropriate total retirement benefit for
Mr. Dunkle. The target retirement benefit is 55% of the final
three-year average salary of Mr. Dunkle commencing at his normal
retirement age of 65. Although the SERP is an unfunded plan,
USBANCORP can set aside assets to meet its obligations under the
plan. USBANCORP has purchased a life insurance policy on
Mr. Dunkle's life. Assuming continuation of current interest
rates and mortality charges, USBANCORP's total premium outlay
will be completed by the time Mr. Dunkle attains normal
retirement age. The policy is designed to accumulate sufficient
cash value at Mr. Dunkle's retirement to allow USBANCORP to
recover the after tax cost of each annual SERP payment. In
addition, at Mr. Dunkle's death, tax-free life insurance proceeds
will reimburse USBANCORP for all unrecovered costs associated
with the plan. USBANCORP will not recover interest for the time
value of money.
The life insurance policy has been assigned to a Rabbi Trust
established by USBANCORP to assist USBANCORP in satisfying its
obligations to Mr. Dunkle. The Trust Company, as trustee, is the
policy owner and beneficiary. Mr. Dunkle remains a general
unsecured creditor of USBANCORP and the assets of the trust are
subject to the claims of creditors.
The Board of Directors also approved the purchase of an
individual disability income policy for Mr. Dunkle. Mr. Dunkle
has collaterally assigned the policy to USBANCORP so that in the
event of his disability prior to retirement, the policy will pay
USBANCORP a monthly benefit sufficient to pay the premium on the
SERP life insurance policy on Mr. Dunkle's life. This would
relieve USBANCORP of the obligations to pay premiums on the SERP
policy if Mr. Dunkle becomes disabled, without reducing the
promised SERP retirement benefits to Mr. Dunkle.
Retirement Plan - Three Rivers Bank
Three Rivers Bank maintained a defined benefit pension plan
that was established during 1970 (the "Three Rivers Plan").
Effective July 1, 1993, the benefit formula of the Three
Rivers Plan was revised to duplicate the benefit formula of the
U.S. Bank Plan. Employees retiring on or after July 1, 1993,
will receive a benefit based upon the U.S. Bank Plan formula but
not less than the benefit earned through June 30, 1993, under the
former Three Rivers Plan formula.
Current remuneration covered by the Retirement Plan (base
salary) in 1995 for Mr. Vail was $134,160. As of December 31,
1995, Mr. Vail was credited with eleven years of service.
Retirement Plan - Community Savings
Prior to June 30, 1993, Community Savings maintained a
retirement plan (the "Community Plan") for all eligible
employees.
Effective July 1, 1993, the Community Plan was merged into
the Three Rivers Plan. Assets and liabilities of the Community
Plan were transferred to the Three Rivers Plan. Employees
retiring on or after July 1, 1993, will receive a benefit based
upon the Three Rivers Plan benefit formula but not less than the
benefit earned through June 30, 1993, under the former Community
Plan formula. Three Rivers Bank and Community Savings expect to
make a total contribution of $741,000 in 1996 for the 1995 plan
year to the Three Rivers Plan. Mr. Fantaski voluntarily
terminated his employment with Community and Community Savings in
April, 1995.
Change in Control Agreements
In 1994, USBANCORP entered into Change in Control Agreements
(the "Agreements") with Messrs. Terry K. Dunkle, Louis Cynkar,
Orlando B. Hanselman, and W. Harrison Vail, pursuant to which
USBANCORP agreed to provide the executives with severance
benefits upon the occurrence of certain enumerated events
("Triggering Events") following a change in control of USBANCORP
("Change in Control") (as defined in the Agreements). The
initial term of the Agreements is three years, subject to an
automatic one year extension on each anniversary date thereof,
unless either party gives notice to the other of an intention not
to renew. Under the Agreements, upon the occurrence of a
Triggering Event following a Change in Control, Mr. Dunkle would
be entitled to receive approximately 2.99 times his combined
salary and bonus which will be determined (a) during the initial
three year term of the Agreement by reference to his highest
salary and bonus paid in the year in which he is terminated or in
any one of the last five fiscal years preceding such termination,
and (b) after the expiration of the initial term, by reference to
the average of the executive's combined salary and bonus in the
preceding five years. The Change in Control Agreements for each
of Messrs. Cynkar, Hanselman and Vail are identical, except that
Messrs. Cynkar, and Vail will receive one times their combined
base salary and bonus and Mr. Hanselman will receive 1.5 times
his combined base salary and bonus. The executives, in their
discretion, may receive these payments in a lump sum or on a
monthly installment basis. The Change in Control Agreements also
entitle the executives to continued participation in the employee
benefits plans of USBANCORP for a period of three years with
respect to Mr. Dunkle, eighteen months with respect to
Mr. Hanselman and one year with respect to the other executives.
In addition, the Agreements provide that options held by the
executives to acquire USBANCORP Common Stock, to the extent not
currently exercisable, will become immediately exercisable upon
the occurrence of a Triggering Event following a Change in
Control and may be exercised by the executives at any time prior
to the earlier of the expiration date of the options or 90 days
after the executive's termination. The Agreements also require
USBANCORP to make additional payments to the executives in the
event that the severance payments described above result in the
imposition of an excise tax, pursuant to Section 4999 of the Code
on the payment of such amounts.
Performance Graph
Set forth is a graph comparing the yearly percentage change
in the cumulative total shareholder return on USBANCORP Common
Stock against the Nasdaq Stock Market (U.S. Companies) and the
NASDAQ Bank Stocks for the five years beginning January 1, 1991
and ended December 31, 1995.
Legend
Symbol Index Description 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
USBANCORP, INC., PA 100.3 142.0 180.1 201.4 185.6 303.7
Index for Nasdaq Stock
Market (US Companies) 84.9 160.6 186.9 214.5 209.7 296.3
Index for Nasdaq Bank
Stocks 73.2 164.1 238.9 272.4 271.4 404.4
MATTER NO. 2
SHAREHOLDER PROPOSAL
Proposal
USBANCORP received the following proposal from a shareholder
for inclusion in this Proxy Statement:
"RESOLVED: That the shareholders recommend that, in order
to enhance share value, the Board of Directors explore the
possible sale of the company for cash and/or securities
valued at no less than forty (40) dollars per share."
Opposing Statement of the Board of Directors
The Board of Directors believes the proposal is contrary to
the best interests of the Company and its shareholders, employees
and the communities that the Company serves, as well as
counterproductive to the goal of maximizing shareholder value.
The Board unanimously recommends that shareholders vote "AGAINST"
the proposal.
Management and the Board are committed to providing a
progressive total shareholder return and, to that end, the Board
evaluates on an ongoing basis all available alternatives, both
transactional and operational, for doing so. All 16 directors
are shareholders and, including management, have a sizeable
ownership position in the Company. Thirteen of the 16 directors
are independent outside directors. To the extent that the
proposal is motivated by a concern that transactional
alternatives have been overlooked as a means of providing a
progressive total shareholder return, the Board believes that the
proposal is clearly unnecessary.
Over the past several years, the Board has pursued a
strategic plan focused on maximizing the value of the Company's
franchise through improved operating efficiencies (based on tight
expense controls and high asset quality standards) and
disciplined in-market acquisitions to increase market penetration
and achieve significant cost savings. As a result of these
programs:
- net income (exclusive of extraordinary acquisition-
related charges) has increased at an average annual
rate of 27% in the last five years;
- the Company's net overhead expense ratio has declined
from a high of 69% in 1991 to 58% in 1995; and
- the common dividend per share has increased from $0.55
in 1991 to $1.06 in 1995, representing an average
annual growth rate of 18%.
The market has begun to recognize the successes achieved through
this strategic plan and, as a result, the Company's stock price
rose by $12.00 per share or 57% and shareholder value has
increased by $64 million in 1995 alone. Over the five year
period 1991-1995, the Company's total shareholder return was 212%
compared to the S & P 500 Index of 115%. The Board of Directors
believes that the Company has achieved significant forward
momentum and is poised to build on these recent achievements to
continue to enhance shareholder value. Accordingly, the Board of
Directors believes that a sale of the Company at this time would
not provide the best price for shareholders, but instead would
deprive shareholders of the full benefits of the Company's
current strategic plans.
The Board believes that the proposal would seriously disrupt
the Company's business operations. From a business development
standpoint, the proposal may be misinterpreted by potential
customers. Many existing customers of the Company's banking
subsidiaries have relationships with these banks because they are
independent and service-oriented. The proposal, if adopted,
would weaken a cornerstone of the Company's long-term strategy by
placing doubts in the minds of customers as to the future
ownership of the Company and as to the implications of a possible
ownership change for ongoing and future customer relationships.
Creating doubts in the minds of loyal customers may very well
undermine the strength of the goodwill and profitability created
from our history of service.
Finally, the Board believes that adoption of the proposal
would in effect put the Company "in play" and thereby handicap
the Board's ability to maximize shareholder value. A "forced
sale" of the Company under these circumstances would seriously
undermine the Board's ability to negotiate a transaction in
confidence and from a position of strength, thus reducing, rather
than maximizing, the value of our shareholders' investment in the
Company.
FOR ALL OF THE ABOVE REASONS, THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE AGAINST THIS PROPOSAL.
FINANCIAL INFORMATION
Requests for printed financial material for USBANCORP or any
of its subsidiaries - annual reports, Forms 10-K and 10-Q and
Call Reports - should be directed to Orlando B. Hanselman,
Executive Vice President and Chief Financial Officer, USBANCORP,
Inc., Main & Franklin Streets, P.O. Box 670, Johnstown, PA
15907-0670, telephone (814) 533-5319.
TRANSACTIONS WITH MANAGEMENT
Certain directors, nominees and executive officers and/or
their associates were customers of and had transactions with
USBANCORP or its subsidiaries during 1995. Transactions that
involved loans or commitments by subsidiary banks were made in
the ordinary course of business and on substantially the same
terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with unrelated
persons and did not involve more than the normal risk of
collectability or present other unfavorable features. These
loans represented in the aggregate less than 3.6% of
shareholders' equity as of December 31, 1995.
Mr. Adams, a director of USBANCORP, Three Rivers Bank and
the Trust Company, is a partner in a law firm which rendered
services to Three Rivers Bank during 1995 and will render such
services in 1996.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has audited USBANCORP's financial
statements for the fiscal year ended December 31, 1995, and the
report on such financial statements appears in the Annual Report
to Shareholders. Arthur Andersen LLP has been selected by the
USBANCORP Board of Directors to perform an examination of the
consolidated financial statements of USBANCORP for the year
ending December 31, 1996.
Representatives of Arthur Andersen LLP are expected to be
present at the Annual Meeting with the opportunity to make a
statement if they desire to do so and are expected to be
available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors knows of no other matters to be
presented at the Annual Meeting. If, however, any other business
should properly come before the Annual Meeting, or any
adjournment thereof, it is intended that the proxies will be
voted with respect thereto in accordance with the best judgment
of the persons named in the proxies.
SHAREHOLDERS PROPOSALS FOR NEXT ANNUAL MEETING
Any shareholder desiring to present a proposal to be
considered at the 1997 Annual Meeting of Shareholders should
submit the proposal in writing to: Terry K. Dunkle, Chairman,
President and Chief Executive Officer, USBANCORP, Inc., Executive
Offices, Main and Franklin Streets, P.O. Box 670, Johnstown, PA
15907-0670 no later than November 22, 1996.
By Order of the Board of Directors
/s/ Betty L. Jakell
Betty L. Jakell
Secretary
March 22, 1996
APPENDIX
USBANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
PROXY
The undersigned shareholder(s) of USBANCORP, Inc.,
Johnstown, Pennsylvania do(es) hereby appoint Earl F. Glock and
James V. Saly, or either one of them my (our) attorney(s) with
full power of substitution, for me (us) and in my (our) name(s),
to vote all the common stock of said Corporation standing in my
(our) name(s) on its books on March 5, 1996 at the Annual Meeting
of its Shareholders to be held at the Holiday Inn, Cambria Room,
250 Market Street, Johnstown, Pennsylvania 15901-2996, on
Tuesday, April 23, 1996, at 1:30 p.m., or any adjournment(s)
thereof, as follows on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
_________________________________________________________________
[Reverse Side]
USBANCORP, Inc. THIS IS YOUR PROXY
YOUR VOTE IS IMPORTANT
Regardless of whether you plan to attend the Annual Meeting of
Shareholders, you can be sure your shares are represented at the
meeting by promptly returning your proxy in the enclosed
envelope.
COMPANY HIGHLIGHTS
* For 1995 the Company's net income was $15.8 million or $2.87
on a fully diluted per share basis. The Company's 1995
performance reflects a 19.7% earnings increase and a 13%
improvement in fully diluted earnings per share when
compared to the $13,202,000 or $2.54 per fully diluted
share, exclusive of an acquisition charge, reported for
1994.
* The success of your Company's diligent work to control
overhead expenses and realize economies and efficiencies
from completed acquisitions has improved its efficiency
ratio from 73.10% in 1991 to 66.97% in 1995. It is
management's goal to reduce this ratio to less than 60% over
the next 12 to 18 months.
* The total return of your Company's stock in 1995, including
investment of dividends, was 64%; over the past five years
the average annual return was 26%. The Company's common
stock market price per share at December 31, 1995, was $33.
[X] Please mark votes as in this example.
IN ABSENCE OF A CONTRARY DIRECTION, THE SHARES REPRESENTED SHALL
BE VOTED IN FAVOR OF ITEM 1, AGAINST ITEM 2 AND IN THE BEST
JUDGMENT OF THE PERSONS NAMED IN THIS PROXY WITH RESPECT TO
ITEM 3.
1. Election of Class 1 Directors for Terms Expiring 1999.
Nominees: Jerome M. Adams, James M. Edwards, Sr.,
Richard W. Kappel, James C. Spangler and Robert L. Wise
[ ] FOR [ ] WITHHELD
[ ] ______________________
For all nominees as
written on the line
above
[ ] MARK HERE IF YOU PLAN TO ATTEND THE MEETING
[ ] MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW
2. Shareholder proposal regarding solicitation of offers.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, vote upon such other matters as may
properly come before the meeting or any adjournment(s)
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND
MAY BE REVOKED PRIOR TO EXERCISE.
This will ratify and confirm all that said attorney(s) may do or
cause to be done by virtue hereof. Said attorney(s) is (are)
authorized to exercise all the power that I (we) would possess if
present personally at said meeting or any adjournment thereof. I
(we) hereby revoke all proxies by me (us) heretofore given for
any meeting of Shareholders of said Corporation.
Receipt is acknowledged of the Notice and Proxy Statement for
said meeting, each dated March 22, 1996.
Please sign and return promptly in enclosed addressed envelope.
Please date and sign exactly as your name(s) appear(s) hereon.
When signing as attorney, executor, administrator, trustee or
guardian, etc., you should indicate your full title. If stock is
in joint name(s), each joint owner should sign.
Signature:_________________________ Date:____________________
Signature:_________________________ Date:____________________