NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
FENTURA BANCORP, INC.
175 North Leroy Street
P.O. Box 725
Fenton, Michigan 48430
The Fentura Bancorp, Inc. 2001 Annual Shareholders Meeting will be held at
the St. John Activity Center, 610 N. Adelaide Street, Fenton, Michigan,
Wednesday, April 25, 2001, at 7:00 p.m. for the following purposes:
1. To elect three directors; and
2. Transact any other business that may properly come before the meeting
or any adjournment of the meeting.
The Board of Directors has fixed the close of business on March 14, 2001, as the
record date for the purpose of determining shareholders who are entitled to
notice of and to vote at the meeting and any adjournment of the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Ronald L. Justice
Ronald L. Justice
Secretary
Fenton, Michigan
March 20, 2001
IMPORTANT
All shareholders are cordially invited to attend the meeting. WHETHER OR NOT YOU
PLAN TO ATTEND IN PERSON, YOU ARE URGED TO DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT PROMPTLY IN THE POSTAGE PAID ENVELOPE PROVIDED. This will assure
your representation and a quorum for the transaction of business at the meeting.
If you do attend the meeting in person and if you have submitted a proxy card,
it will not be necessary for you to vote in person at the meeting. However, if
you attend the meeting and wish to change your proxy vote, you will be given an
opportunity to do so.
PROXY STATEMENT
FENTURA BANCORP, INC.
175 North Leroy Street
P.O. Box 725
Fenton, Michigan 48430
Telephone: (810) 750-8725
ANNUAL MEETING OF SHAREHOLDERS
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Fentura Bancorp, Inc. (the "Corporation")
to be voted at the annual meeting of its shareholders to be held at the St. John
Activity Center, 610 N. Adelaide Street, Fenton, Michigan, on Wednesday, April
25, 2001, at 7:00 p.m., Fenton time, and at any adjournment of the meeting, for
the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders. This proxy statement and form of proxy are first being sent to
shareholders on or about March 20, 2001.
If a proxy in the accompanying form is properly executed, duly returned to
the Corporation, and not revoked, the shares represented by the proxy will be
voted at the annual meeting of the Corporation's shareholders and at any
adjournment of that meeting. Where a shareholder specifies a choice, a proxy
will be voted as specified. If no choice is specified, the shares represented by
the proxy will be voted for election of all nominees of the Board of Directors.
The Corporation's management does not know of any other matters to be presented
at the annual meeting. If other matters are presented, the shares represented by
proxy will be voted at the discretion of the persons designated as proxies, who
will take into consideration the recommendations of the Corporation's
management.
Any shareholder executing a proxy in the enclosed form has the power to
revoke it by notifying the Secretary of the Corporation in writing at the
address indicated above at any time before it is exercised, or by appearing at
the meeting and voting in person.
Solicitation of proxies is being made by mail. Directors, officers, and
regular employees of the Corporation and its subsidiaries may also solicit
proxies in person or by telephone without additional compensation. In addition,
banks, brokerage firms, and other custodians, nominees, and fiduciaries may
solicit proxies from the beneficial owners of shares they hold and may be
reimbursed by the Corporation for reasonable expenses incurred in sending proxy
material to beneficial owners of the Corporation's stock. The Corporation will
pay all expenses of soliciting proxies.
Board Reorganization
Historically, the Board of Directors of the Corporation and the Board of
Directors of The State Bank (a subsidiary bank of the Corporation) have been
identical except for new directors who served on The State Bank Board prior to
their eventual election to the Board of the Corporation. After the formation
last year of The Davison State Bank (a newly formed subsidiary bank of the
Corporation)("Davison"), a decision was made to reorganize the Corporation and
the Affiliate Bank Boards. The reorganized corporation Board has two directors
who do not serve on any of the Affiliate Bank Boards. Two of the Corporation's
directors serve on The State Bank Board and four of the Corporation's directors
serve on the Davison Board.
FENTURA BANCORP, INC. THE STATE BANK DAVISON STATE BANK
BOARD OF DIRECTORS BOARD OF DIRECTORS BOARD OF DIRECTORS
David A. Duthie Richard A. Bagnall Darrell H. Cooper
President, Creative Retired, Former Executive Chairman, Fernco, Inc.
Foam Corporation Vice President, The State
Bank
Donald L. Grill Jon S. Gerych Thomas G. Donaldson
President & CEO President, Gerych Senior Vice President &
Fentura & The State Bank Greenhouse, Inc. CFO, McLaren Health
Care Corporation
Peggy L. Haw-Jury Donald L. Grill John A. Emmendorfer, Jr.
CPA, Dupuis & Ryden, President & CEO President & CEO
P.C. Fentura & The State Bank Davison State Bank
J. David Karr Philip J. Lasco David H. Fulcher
Attorney Chairman & President President, The Fulcher
Lasco Ford Companies, Inc.
Thomas P. McKenney Thomas P. McKenney Donald L. Grill
Attorney Attorney President & CEO
Fentura & The State Bank
Forrest A. Shook Brian P. Petty Kevin M. Hammer
President, NLB Corporation Chairman & President Senior Vice President
Fenton Glass Service, Inc Davison State Bank
Russell H. Van Gilder, Jr. Glen J. Pieczynski Peggy L. Haw-Jury
Chairman, VG's Food Owner and President, CPA, Dupuis & Ryden, P.C.
Center, Inc. Linden True Value
Hardware, Inc.
Janis L. Rizzo J. David Karr
Controller, McLaren Attorney
Health Care Corporation
Craig L. Stefanko
DCC Development/Minto
Brothers Construction
Russell H. Van Gilder, Jr.
Chairman, VG's Food
Center, Inc.
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2001 ELECTION OF DIRECTORS
The only matter scheduled to be considered at the annual meeting will be
the election of three persons to the Board of Directors of the Corporation. The
Corporation's Board of Directors is divided into three classes. Each year, on a
rotating basis, the terms of office of the directors in one of the three classes
expire. Directors are elected for a three (3) year term. The directors whose
terms expire at the annual meeting ("Class I Directors") are David A. Duthie, J.
David Karr and Thomas P. McKenney. The Board has nominated these same
individuals for reelection as Class I Directors. If elected, the terms of these
directors' will expire at the 2004 annual meeting of shareholders.
Except for those individuals nominated by the Board of Directors, no
persons may be nominated for election at the 2001 annual meeting. The
Corporation's Bylaws require at least 120 days prior written notice of any other
proposed shareholder nominations and no such notice has been received.
The proposed nominees are willing to be elected and to serve. In the event
that any nominee is unable to serve or is otherwise unavailable for election,
which is not now contemplated, the incumbent Board of Directors may or may not
select a substitute nominee. If a substitute nominee is selected, all proxies
will be voted for the person so selected. If a substitute nominee is not so
selected, all proxies will be voted for the election of the remaining nominee.
Proxies will not be voted for a greater number of persons than the number of
nominees named.
A vote of shareholders holding a plurality of shares voting is required to
elect directors. For the purpose of counting votes on this proposal,
abstentions, broker nonvotes, and other shares not voted will not be counted as
shares voted.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR ELECTION OF ALL NOMINEES AS DIRECTORS
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STOCK OWNERSHIP INFORMATION
Stock Ownership Of Directors, Executive Officers And Certain Major Shareholders
At the close of business on March 14, 2001, the record date for
determination of the shareholders entitled to vote at the annual meeting, the
Corporation had issued and outstanding 1,725,089 shares of its common stock, the
only class of voting securities presently outstanding. Each share entitles its
holder to one vote on each matter to be voted upon at the meeting.
In general, "beneficial ownership" includes those shares a Director or
officer has the power to vote or transfer, and stock options that are
exercisable currently or within 60 days. The table below shows the beneficial
stock ownership of the Corporation's Directors, executive officers named in the
summary compensation table below and those shareholders who hold more than 5% of
the total outstanding shares as of March 14, 2001.
Shares Percent
Name of Beneficially Of
Beneficial Owner Owned(1) Outstanding(2)
- --------------------------------------------------------------------------------------------------------------------
David A. Duthie (Director)(3)............................... -0- *
John A. Emmendorfer, Jr. (Executive Officer)................ 205(4) *
Donald L. Grill (Director, Executive Officer)............... 5,071(4) *
Peggy L. Haw-Jury (Director)(3)............................. -0- *
Ronald L. Justice (Executive Officer)....................... 90(4) *
J. David Karr (Director)(3)................................. 200 *
Thomas P. McKenney (Director)............................... 3,682(4)(5) *
Robert E. Sewick (Executive Officer)........................ -0- *
Forrest A. Shook (Director, Executive Officer).............. 15,645(4)(5) *
Russell H. Van Gilder, Jr. (Director, Executive Officer).... 29,925(5) 1.69
Donald E. Johnson, Jr.(6)................................... 180,089 10.44
Linda J. Lemieux(6)......................................... 95,569 5.49
Mary Alice Heaton(6)........................................ 94,626 5.49
Directors and Executive Officers
as a group (10 persons)............................... 54,037 3.14
- --------------------------------------------------------------------------------------------------------------------
(1) The number of shares in this column includes shares owned directly or
indirectly, through any contract, arrangement, understanding or
relationship, or the indicated beneficial owner otherwise has the power
to vote, or direct the voting of, and/or has investment power. Also
includes shares that may be acquired pursuant to stock options that are
exercisable within 60 days.
(2) The symbol * shown in this column indicates ownership of less than 1%.
(3) Appointed to the Corporation's Board of Directors effective January
2001.
(4) Ownership and voting rights of all shares are joint with spouse.
(5) Includes 1,104 shares that may be acquired pursuant to stock options
that are exercisable within 60 days.
(6) Each person's address is: SNB Trust Operations, 101 North Washington
Avenue, Saginaw, Michigan 48607
THE CORPORATION'S BOARD OF DIRECTORS
The Board of Directors of the Corporation held twelve regularly scheduled
meetings and three special meetings during 2000. All incumbent directors
attended at least 75% of all meetings of the Board of Directors and any
Committees on which they served.
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Biographical information concerning the current directors and the nominees
who are nominated for election to the Board of Directors at the annual meeting
is presented below. Except as otherwise indicated, all directors and nominees
have had the same principal employment for over five years.
Nominees for 3-Year Terms Expiring in 2004
David A. Duthie, age 54, was appointed a Class I Director of the
Corporation effective January 2001. Mr. Duthie is the President of Creative Foam
Corporation, a Fenton based company that designs, fabricates and forms cellular
and noncellular plastics for automotive, material handling, medical and sports
and leisure applications.
J. David Karr, age 62, serves as a director and Chairman of Davison State
Bank and was appointed as a Class I Director of the Corporation effective
January 2001. Mr. Karr is an attorney with a private practice located in
Davison, Michigan.
Thomas P. McKenney, age 48, has been a director of the Corporation since
1992 and a director of The State Bank since 1991. Mr. McKenney is an attorney
with a private practice located in Bloomfield Hills, Michigan.
Directors with Terms Expiring 2003
Forrest A. Shook, age 58, has been a director and vice chairman of the
Board of Directors of the Corporation since 1997. He served as a director of The
State Bank from 1996 through December of 2000. Mr. Shook is a Class III
Director. Mr. Shook is the founder and President of NLB Corporation located in
Wixom, Michigan. NLB Corporation manufactures high pressure pumps that are used
around the world in many applications.
Donald L. Grill, age 53, has been a Director since 1996. Mr. Grill is a
Class III Director. Mr. Grill joined the Corporation as President and Chief
Executive Officer in late 1996. From 1976- 1983, Mr. Grill was employed by
Chemical Bank-Key State in Owosso, Michigan. From 1983-1996, Mr. Grill was
employed by First of America Bank Corporation and served as President and Chief
Executive Officer of First of America Bank-Frankenmuth.
Directors with Terms Expiring in 2002
Peggy L. Haw-Jury, age 49, served as a director of Davison State Bank
during 2000 and was appointed as a Class II Director of the Corporation
effective January of 2001. She is a Certified Public Accountant and a principal
of the CPA firm Dupuis & Ryden, P.C. Since 1996, Ms. Jury has also been a
partner in an insurance and investment services business, D&R Financial.
Russell H. Van Gilder, Jr., age 67, has been a director of the Corporation
since 1987 and Chairman since 1997. He was a member of The State Bank Board from
1981 through December 2000 and served as its Chairman for the past three years.
He is a Class II Director. Mr. Van Gilder founded VG's Food Center, Inc. where
he is currently Chairman of the Board. Mr. Van Gilder is also a Director of
Spartan Stores, Inc., a regional food retailer and distributor based in Grand
Rapids, Michigan.
DIRECTOR COMPENSATION
The Corporation and the Affiliate Bank directors are compensated in three
ways: Cash retainer fees, stock options and participation in stock purchase
plans. Each director of the Corporation is paid a $9,000 annual retainer fee.
The Chairman of the Board receives an additional annual $2,000 retainer fee.
Directors
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of the Corporation who also serve on Affiliate Bank Boards do not receive
additional compensation because of their Affiliate Bank Board service, even
though a portion of their total compensation may be internally expensed through
the Affiliate Bank.
Stock option grants are available to directors who are not employees of the
Corporation under the 1996 Nonemployee Director Stock Option Plan. However, no
options were granted to directors during the year 2000. Exercisable stock
options issued in prior years are included in the table and footnotes which
appear on page 4.
Directors of the Corporation and the Affiliate Banks may also use director
cash retainer fees to purchase shares of the Corporation issued by the
Corporation at fair market value under the Corporation's Director Stock Retainer
Plan. Directors may also use other personal funds to purchase shares of the
Corporation at fair market value from the Corporation under the Corporation's
Director Stock Purchase Plan. No more than 4,176 shares in total may be
purchased each year under the Director Stock Retainer Plan and no more than
9,600 shares in total may be purchased each year under the Director Stock
Purchase Plan.
COMMITTEES OF THE CORPORATION BOARD
The Corporation maintains the following standing committees: Executive,
Forward Planning, Director Selection, Audit, and Compensation/ESOP.
Executive Committee
The Executive Committee, which met seven times in 2000, consists of Messrs.
Van Gilder, Shook and Grill. This Committee reviews in depth the status and
progress of various projects, management activities and the Corporation's
financial performance. As necessary, it provides guidance and makes
recommendations to management and/or the Board of Directors.
Forward Planning
The Forward Planning Committee, which met three times in 2000, also
consists of Messrs. Van Gilder, Shook and Grill. This Committee evaluates and
recommends strategic initiatives and alternatives to guide the future
performance and direction of the Corporation.
Director Selection
The Corporation's Director Selection Committee, which met two times in
2000, consists of Messrs. Van Gilder, McKenney and Shook. This Committee
coordinates the process of identifying, interviewing and recommending new
director candidates. In reviewing director selections, the Committee will
consider recommendations of shareholders. Shareholders who wish to recommend
nominees should submit their recommendations in writing, delivered or mailed to
the Secretary of the Corporation.
Audit Committee
Ms. Haw-Jury and Messrs. Duthie and Karr are the members of the
Corporation's Audit Committee. The primary function of the Audit Committee is to
assist the Board of Directors in fulfilling its oversight responsibilities by
reviewing the financial reports and other financial information provided by the
Corporation to shareholders, governmental agencies or the public, the
Corporation's systems of internal controls regarding finance, accounting, legal
compliance and ethics that management and the Board have established, and the
Corporation's auditing, accounting and financial reporting processes generally.
The Audit Committee is guided by an Audit Committee Charter which was adopted by
the Board of Directors during 2000. A copy of the
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Audit Committee Charter is attached to this Proxy Statement as Appendix A. All
of the members of the Audit Committee are independent, as defined in Rule
4200(a) of the NASD Listing Standards. During 2000, the Audit Committee held
four meetings. On February 22, 2001, the Audit Committee submitted to the Board
the following report:
AUDIT COMMITTEE REPORT
We have reviewed and discussed with management the Corporation's audited
financial statements as of and for the year ended December 31, 2000.
We have discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter from
the independent auditors required by Independence Standard No. 1, Independence
Discussions with Audit Committees, as amended, by the Independence Standards
Board, and have discussed with the auditors the auditors' independence.
Based on the reviews and discussions referred to above, we recommend to the
Board of Directors that the financial statements referred to above be included
in the Corporation's Form 10-K for the year ended December 31, 2000.
Respectfully submitted,
Peggy L. Haw-Jury
David L. Duthie
J. David Karr
Compensation/ESOP Committee
The members of the Compensation/ESOP Committee are Ms. Haw-Jury and Messrs.
Van Gilder and Duthie. This Committee oversees the administration of the
Corporation's compensation and benefit programs. The Committee also reviews the
performance of the Chief Executive Officer and recommends appropriate Board
action regarding the CEO's compensation. The Committee met two times during
2000.
REPORT ON COMPENSATION/ESOP COMMITTEE
The Corporation and Affiliate Bank Boards use compensation programs based
on the following compensation principles: to provide the level of total
compensation necessary to attract and retain quality employees at all levels of
the organization; compensation is linked to performance and to the interests of
shareholders; incentive compensation programs recognize both individual and
corporate performance; and compensation balances rewards for short-term and
long-term results.
The Corporation and the Affiliate Banks provide a comprehensive
compensation program that is both innovative and competitive in order to attract
and retain qualified talent. The Affiliate Banks through their Compensation
Committees review market data in order to assess the Affiliate Banks'
competitive position and each component of compensation including base salary,
annual incentive and long-term incentive compensation.
Donald L. Grill became President and Chief Executive Officer of the
Corporation and The State Bank in December of 1996 and is evaluated annually as
to his personal performance, and regarding his role in
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directing the Corporation's performance. The Compensation/ESOP Committee meets
annually, in private, to review Mr. Grill's performance. The Committee considers
Bank performance, community involvement and director/chairman communication,
along with employee assessments gathered by the Human Resources Department in
evaluating Mr. Grill's performance.
Respectfully submitted,
Year 2000 Compensation/ESOP Committee
Brian P. Petty
Forrest A. Shook
Russell H. Van Gilder, Jr.
EXECUTIVE COMPENSATION
During 2000, the Corporation did not compensate any of its Executive
Officers, each of whom was also an Executive Officer of one of the Affiliate
Banks and is paid for services by an Affiliate Bank. The following table shows
the compensation for services to Affiliate Banks of Affiliate Bank's executive
officers who received cash compensation in excess of $100,000 for the year 2000.
Summary Compensation Table
Annual Compensation
------------------------------------------------------
Name and Other Annual All Other
Principal Position Year Salary Bonus Compensation(1) Compensation(2)
- ------------------------------------------------------------------------------------------------------------------------------
Donald L. Grill 2000 $187,000 $54,098 $10,250 $9,245
President 1999 179,760 90,892(3) 10,250 10,412
Chief Executive Officer 1998 171,200 72,746 10,250 3,021
of the Corporation and
The State Bank
Ronald L. Justice 2000 $90,000 $19,373 - $6,796
Chief Financial Officer 1999 82,175 24,717 - 6,530
of the Corporation and 1998 73,500 21,631 - 6,923
The State Bank
Robert E. Sewick(4) 2000 $120,000 $27,413 - $1,274
Senior Vice President 1999 64,135 49,066 - -
and Senior Loan 1998 - - - -
Officer of The State
Bank
John A. Emmendorfer, Jr.(5) 2000 $78,000 $16,710 $2,000 $6,367
President and Chief 1999 74,678 19,375 - 5,970
Executive Officer of the 1998 64,450 12,349 - 5,858
Davison State Bank(6)
(1) Includes fees paid to Messrs. Grill and Emmendorfer for their service as
directors.
(2) The column of "All Other Compensation" consists of Employer's 401k and
ESOP contribution(s).
(3) In 1999, Mr. Grill received an extra bonus incentive in the amount of
$10,000 for his personal performance in directing The State Bank in its
achievement of one hundred percent of its objectives.
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(4) Mr. Sewick joined The State Bank in June of 1999, at an annual salary of
$115,000, plus an initial hiring bonus of $25,000. The table discloses
his compensation earned from the time he was hired through December 31,
2000.
(5) Prior to becoming president and CEO of Davison State Bank, Mr. Emmendorfer
headed the commercial lending department at The State Bank.
(6) Davison State Bank was formed in March of 2000.
Stock Option Information
The Corporation's 1996 Employee Stock Option Plan permits the grant of
stock options to the officers and other key employees of the Corporation and its
subsidiaries. Stock options are believed to help align the interests of
employees with the interests of shareholders by promoting stock ownership by
employees and rewarding them for appreciation in the price of the Corporation's
stock.
The following tables contain information concerning stock options granted
during 2000 to and retained by the named executives of the Corporation at
December 31, 2000. None of the named executives exercised any stock options
during the year 2000.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
---------------------------------------------------------
Percent of
Total
Number of Options Potential Realizable Value at
Shares Granted to Assumed Annual Rates of
Underlying Employees Stock Price Appreciation
Options In Fiscal Exercise Expiration for Option Term(3)
Name Granted(1) Year Price(2) Date 5% 10%
---- ---------- ---- -------- ---- -- ---
Donald L. Grill 688 38.9% $39.21 2010 $16,948 $42,950
Ronald L. Justice 210 11.9% 39.21 2010 5,173 13,110
Robert E. Sewick 205 11.6% 39.21 2010 5,050 12,798
John A. Emmendorfer, Jr. 164 9.3% 39.21 2010 4,040 10,238
YEAR END OPTION VALUES
Number of Shares Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Year End(1) Year End
Exercisable/Unexercisable Exercisable/Unexercisable
Donald L. Grill 0/688 0/0
Ronald L. Justice 0/210 0/0
Robert E. Sewick 0/445 0/0
John A. Emmendorfer, Jr. 0/164 0/0
(1) The numbers have been adjusted in accordance with the stock option plan to
reflect stock dividends and stock splits.
(2) The per share exercise price of each option is equal to the market value of
the common stock on the date each option was granted. All outstanding
options were granted for a term of ten years. Options terminate, subject to
certain limited exercise provisions, in the event of death, retirement or
other
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termination of employment. The right to exercise each option vests as to
one-third of the shares covered by the option on the third, fourth and
fifth anniversary of the date of grant.
(3) These amounts are based on assumed rates of appreciation over the entire
option period without any discount to present value. Actual gains, if any,
on stock option exercises will be dependent on overall market conditions
and on the future performance of the Corporation's common stock. The
amounts realized, if any, may be more or less than the amounts reflected in
the table.
RETIREMENT AND CHANGE IN CONTROL ARRANGEMENTS
Retirement Plans
Supplemental Executive Retirement Plan
The Corporation and The State Bank have established a Supplemental
Executive Retirement Plan (SERP) for key executives. The plan is designed to
encourage executives to remain long term employees of the Corporation and The
State Bank, and to provide the executive with supplemental retirement income.
Unfunded plan benefits are accrued based on participant longevity and the
Corporation's return on equity. In 2000, the SERP accrued $15,830 on behalf of
Donald L. Grill and $6,340 on behalf of Robert E. Sewick. The SERP target
retirement benefit is an annual retirement payment equal to a percentage of the
executive's projected final salary, 25% for Mr. Grill and 20% for Mr. Sewick.
Estimated annual benefits payable over a period of 15 years following retirement
at age 65 are $62,853 for Mr. Grill and $35,056 for Mr. Sewick. The retirement
benefits accruing on behalf of the executives are backed by prepaid life
insurance policies. The Corporation plans to use the investment earnings on
these policies to pay all or part of the annual costs for the SERP.
Split-Dollar Retirement Plan
The Corporation and the Affiliate Banks have established a Split Dollar
Supplemental Retirement Plan (the "Split Dollar Plan") for key executives not
covered under the SERP. The plan is designed to encourage executives to remain
long term employees of the Corporation and the Affiliate Banks, and to provide
the executive with supplemental retirement income. The plan is a life insurance
backed product that allows participants to direct the investment of funds
through various investment vehicles. During 2000, $16,541 was invested through
the Split Dollar Plan on behalf of Ronald L. Justice and $14,096 was invested on
behalf of John A. Emmendorfer, Jr. Upon retirement, the executives who
participate in the plan receive the earnings from funds invested on their behalf
and the invested funds are returned to their employer.
Qualified Retirement Plans
The Corporation and the Affiliate Banks offer two separate qualified
retirement plans, the first of which is the Employee Stock Ownership Plan (ESOP)
and the second is a 401k profit sharing plan. The ESOP is one hundred percent
funded by Affiliate Banks. Based on particular Affiliate Bank's earnings the
Board approves an amount to be distributed into eligible participants accounts.
In order to promote longevity with the Affiliate Banks, this plan includes a
vesting schedule of seven years before a participant is fully vested. The 401k
profit sharing plan allows participants to defer compensation, before taxes, in
order to invest in various investment vehicles. Participants also receive a
corporate match of 50% up to a maximum of 6% (participants are allowed to defer
up to 15%).
Severance Agreement
The Corporation and The State Bank have entered into a Severance
Compensation Agreements with each of Messrs. Grill, Justice and Sewick. Under
this agreement, if a "change in control" (as defined in the
-10-
agreement) occurs while the Executive is an employee of the Corporation or The
State Bank, and if within five years thereafter the Executive's employment is
terminated by either of them without "cause," by the Executive for "good
reason," or by either party because of the Executive's death or "disability" (in
each case, as such terms are defined in the agreements), then the Corporation
and The State Bank are required to pay the Executive an annual amount equal to
50% of the highest amount of the Executive's "annual compensation" (as defined
in the agreement) in the five preceding calendar years, for a period of five
years after the termination date (or until the first day of the month
immediately preceding the Executive's "normal retirement date." if earlier). If
the Executive dies after this payment obligation begins, or if the Executive so
elects, the Corporation and The State Bank will be obligated to make a lump sum
payment of these payments, discounted to the then present value using a 10% per
year discount rate. In addition, the Corporation and The State Bank are required
to provide the Executive with hospital and medical coverage for the full "COBRA"
period. However, if the payments exceed the ceiling amount for deductibility
under Section 280G of the internal Revenue Code of 1986 (generally, three times
the Executive's annual compensation), then the payments shall be reduced to the
maximum amount allowable under Section 280G.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Consolidated financial statements of the Corporation for the year ended
December 31, 2000, have been examined by Grant Thornton LLP, independent public
accountants. A representative of Grant Thornton LLP is expected to be present at
the annual meeting with the opportunity to make a statement, if desired, and
will be available to respond to appropriate questions. The Corporation's Audit
Committee selects the Corporation's auditors before the end of each calendar
year.
Audit Fees
Aggregate fees billed for professional services rendered for the audit of
the Corporation's annual consolidated financial statements for the fiscal year
ended December 31, 2000 and the review of financial statements included in the
Corporation's Forms 10-Q filed with the Securities and Exchange Commission for
that fiscal year were: $58,500.
Financial Information System Design and Implementation Fees
No professional services were rendered by Grant Thornton LLP for the year
ended December 31, 2000, with respect to, directly or indirectly, operating, or
supervising the operation of, the Corporation's information systems or managing
the Corporation's local area network or designing or implementing a hardware or
software system that aggregates source data underlying the financial statements
or generates information that is significant to the Corporation's financial
statements taken as a whole.
All Other Fees
The aggregate fees billed for services rendered by Grant Thornton LLP for
services not covered under the two preceding captions (principally tax services)
totaled $23,265.
The Corporation's Audit Committee has concluded that the provision of
services covered under the caption All Other Fees is compatible with Grant
Thornton LLP maintaining their independence. None of the hours expended on Grant
Thornton's engagement to audit the Corporation's consolidated financial
statements for the year ended December 31, 2000, were attributed to work
performed by persons other than Grant Thornton's full-time, permanent employees.
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SHAREHOLDER RETURN PERFORMANCE GRAPH
The graph compares the cumulative total shareholder return on the
Corporation's common stock for the last five years with the cumulative total
return of the Midwest Quadrant Pink Bank Index, published by SNL Securities LC,
the KBW 50 Index, published by Keefe, Bruyette & Woods, Inc., and the Nasdaq
Market Index assuming a $100 investment at the end of 1995. The Nasdaq Market
Index is a broad equity market index. The KBW 50 Index is composed of 50 money
center and regional bank holding companies. The Midwest Quadrant Pink Bank Index
is composed of 69 banks and bank holding companies located in the Midwest and
whose shares primarily trade on the Over-the-Counter Bulletin Board. The latter
index is believed to reflect a better comparison than the KBW 50 Index.
Cumulative total return is measured by dividing (i) the sum of (A) the
cumulative amount of dividends for the measurement period, assuming dividend
reinvestment, and (B) the difference between the share price at the end and the
beginning of the measurement period; by (ii) the share price at the beginning of
the measurement period. The graph assumes the investment of $100 in the
Corporation's common stock, the Nasdaq Market Index, the KBW 50 Index, and the
Midwest Quadrant Pink Bank Index at the market close on December 31, 1995 and
the reinvestment of all dividends through the period ending December 31, 2000.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG FENTURA BANCORP, INC., NASDAQ MARKET INDEX, KBW 50 INDEX,
AND MIDWEST QUADRANT PINK BANK INDEX
[GRAPH OMITTED]
-12-
- ----------------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
- ----------------------------------------------------------------------------------------------------------------------
Fentura Bancorp 100 120.07 149.74 290.19 260.21 180.99
Midwest Bank Index 100 114.45 144.96 177.97 153.91 126.85
KBW50 Index 100 141.46 206.80 223.91 216.14 259.50
NASDAQ Market Index 100 123.04 150.69 212.51 394,92 237.62
- ----------------------------------------------------------------------------------------------------------------------
*Source: SNL Securities LC
COMPLIANCE WITH SECTION 16 REPORTING
The rules of the Securities and Exchange Commission require that the
Corporation disclose late filings of reports of stock ownership (and changes in
stock ownership) by its Directors, Executive Officers and beneficial owners of
more than 10% of the Corporation's common stock. Based solely on its review of
the copies of such reports received by it, and written representations from
certain reporting persons, the Corporation believes that during the year ended
December 31, 2000, its Directors, Executive Officers and beneficial owners of
more than 10% of the Corporation's common stock have complied with all filing
requirements applicable to them.
OTHER INFORMATION
Annual Report on Form 10K
The Corporation will provide a copy of its 2000 Annual Report on SEC Form
10K to any shareholder who asks for it in writing, without charge. Please direct
your request to our Secretary, Ronald L. Justice, at 175 North Leroy Street,
Fenton, Michigan 48430. The Form 10-K and certain other periodic filings are
filed with the Securities and Exchange Commission ("SEC"). The SEC maintains an
Internet web site that contains reports and other information regarding
companies, including the Corporation, that file electronically. The SEC's web
site address is http\\www.sec.gov.
Transactions with Certain Interested Parties
Certain of the Corporation's Directors and executive officers, including
their affiliates, were loan customers of Affiliate Banks during 2000, 1999, and
1998. Such loans were made in the ordinary course of business at normal credit
terms and interest rates, and do not represent more than a normal risk of
collection. Total loans to these persons at December 31, 2000, 1999, and 1998
amounted to $1,133,995, $1,448,629 and $909,025, respectively. During 2000,
$216,624 of new loans were made and repayments totaled $531,258. At December 31,
2000, these loans aggregated 3.17% of consolidated stockholders' equity.
Shareholder Proposals
An eligible shareholder who wants to have a qualified proposal considered
for inclusion in the proxy statement for the 2002 Annual Meeting of Shareholders
must notify the Corporation's Secretary by delivering a copy of the proposal to
the Corporation's offices no later than November 23, 2001.
-13-
Expenses of Solicitation
The Corporation pays the cost of preparing, assembling and mailing this
proxy-soliciting material. In addition to the use of the mail, proxies may be
solicited personally, by telephone or telegraph, or by the Corporation's
officers and employees without additional compensation. The Corporation pays all
costs of solicitation, including certain expenses of brokers and nominees who
mail proxy material to their customers or principals.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Ronald L. Justice
Ronald L. Justice
Secretary
Dated: March 20, 2001
See enclosed voting (proxy) form please sign and mail promptly.
-14-
APPENDIX A
FENTURA AUDIT COMMITTEE CHARTER
STATEMENT OF PURPOSE
The primary function of the Audit Committee is to assist the Board of Directors
in fulfilling its oversight responsibilities by reviewing the financial reports
and other financial information provided by the Corporation to shareholders,
governmental agencies or the public; the Corporation's systems of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the Board have established; and the Corporation's auditing,
accounting and financial reporting processes generally. Consistent with this
function, the Audit Committee should encourage continuous improvement of, and
should foster adherence to, the Corporation's policies, procedures, and
practices at all levels.
COMPOSITION, ORGANIZATION AND INDEPENDENCE
The Audit Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be independent directors, and free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Committee. All
members of the Committee shall have a working familiarity with basic finance and
accounting practices, and at least one member of the Committee shall have
accounting or related financial management expertise.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the members
of the Committee may designate a Chair by majority vote of the full Committee
membership.
AUTHORITY, POWERS AND RESPONSIBILITIES
The Audit Committee shall have the following authorities, powers and
responsibilities:
o Review and recommend to the directors the independent auditors to
be selected to audit the financial statements of the Corporation
and its divisions and subsidiaries, approve the compensation of
the independent auditors, and evaluate and discharge independent
auditors.
o Confirm in writing with the independent auditors that they are
ultimately accountable to the Board of Directors and the Audit
Committee.
o Confirm the independent auditors' independence by requiring that
the independent auditors submit a formal written independence
letter at least once each year and monitor disclosed
relationships or services that may impact the auditors'
independence or objectivity.
o Meet with the independent auditors and financial management of
the corporation to review the scope of the proposed audit for the
current year and the audit procedures to
A-1
be utilized, and at the conclusion thereof review such audit,
including any comments or recommendations of the independent
auditors.
o Review with the independent auditors, the Corporation's internal
auditor, and financial and accounting personnel, the adequacy and
effectiveness of the accounting and financial controls of the
corporation, and elicit any recommendations for the improvement
of such internal control procedures or particular areas where new
or more detailed controls or procedures are desirable. Particular
emphasis should be given to the adequacy of such internal
controls to expose any payments, transactions, or procedures that
might be deemed illegal or otherwise improper.
o Review the internal audit function of the corporation including
the independence and authority of its reporting obligations.
Review and approve the proposed audit plans for the coming year.
Assure the coordination of such plans with the independent
auditors.
o Receive prior to each meeting, a summary of findings from
completed internal audits and a progress report on the proposed
internal audit plan, with explanations and approval of any
deviations from the original plan.
o Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to
determine that the independent auditors are satisfied with the
disclosure and content of the financial statements to be
presented to the shareholders. Any changes in accounting
principles should be reviewed.
o Provide sufficient opportunity for the internal and independent
auditors to meet with the members of the audit committee without
members of management present. Among the items to be discussed in
these meetings are the independent auditors' evaluation of the
corporation's financial, accounting, and auditing personnel, and
the cooperation that the independent auditors received during the
course of the audit.
o Submit the minutes of all meetings of the audit committee to, or
discuss the matters discussed at each committee meeting with, the
board of directors.
o Investigate any matter brought to its attention within the scope
of its duties, with the power to retain outside counsel,
accountants or other professionals for this purpose if, in its
judgment, that is appropriate.
o Review Corporation policies and transactions involving the
Corporation, its subsidiaries and its officers and directors.
o Meet at least semi-annually in carrying out these duties.
o Review, at its discretion, compliance with codes of conduct
established by the Corporation.
o Review and approve all financial statements and financial
information for inclusion in the proxy statement, annual report,
or other year-end audited reports summarizing financial
performance. Assure that such statements are suitable for
submission to the shareholders and comply with all oversight
responsibilities outlined in this charter with respect the
company's annual reporting requirements. The Committee will
provide the Board annually its recommendation regarding the
inclusion of the audited financial statements and the company's
annual report on form 10K.
o The Chairman of the Audit Committee will generally consult with
the Independent Auditors at least quarterly to review and discuss
the results of the Auditors quarterly review procedures.
o Review legal and regulatory matters relative to compliance with
policies and procedures and/or the results of regulatory
examination.
o Review and reassess the adequacy of the Audit Committee Charter
on an annual basis.
A-2
Fentura Bancorp, Inc. This Proxy is solicited
175 North Leroy Street. on behalf of the
Fenton, Michigan 48430 Board of Directors
PROXY
The undersigned hereby appoints Russell H. Van Gilder, Jr. and Forrest A
Shook as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares of
Common Stock of Fentura Bancorp, Inc. held of record by the undersigned on March
14, 2001, at the annual meeting of shareholders to be held April 25, 2001, and
at any adjournment thereof.
1. In the election of three directors, each to be elected for a term expiring
in 2004
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY
to vote for the nominees listed below
David A. Duthie - J. David Karr - Thomas P. McKenney
(INSTRUCTION: To withhold authority to vote for any individual nominee
strike a line through the nominee's name in the list above.)
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this Proxy will be
voted FOR all nominees listed in No. 1.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
____________________________________ _______________________________________
Signature Signature if held jointly
Dated: ____________________, 2001
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.