SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-12
IBT Bancorp, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[IBT BANCORP, INC. LETTERHEAD]
March 19, 2004
Dear Stockholder:
On behalf of the Board of Directors and management of IBT Bancorp, Inc.
(the "Company"), I cordially invite you to attend the 2004 Annual Meeting of
Stockholders to be held at the Irwin Masonic Temple, located at 417 Main Street,
Irwin, Pennsylvania on Tuesday, April 20, 2004 at 2:00 p.m., local time. The
attached Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted at the Annual Meeting. During the Annual Meeting, I
will report on the operations of the Company. Directors and officers of the
Company, as well as a representative of Edwards Sauer & Owens, certified public
accountants, will be present to respond to any questions you may have.
You will be asked to elect four directors and to ratify the appointment
of Edwards Sauer & Owens as the Company's independent accountants for the fiscal
year ending December 31, 2004. The Board of Directors has unanimously approved
each of these proposals and recommends that you vote FOR them.
Your vote is important, regardless of the number of shares you own and
regardless of whether you plan to attend the Annual Meeting. I encourage you to
read the enclosed proxy statement carefully and sign and return your enclosed
proxy card as promptly as possible because a failure to do so could cause a
delay in the Annual Meeting and additional expense to the Company. A
postage-paid return envelope is provided for your convenience. This will not
prevent you from voting in person, but it will assure that your vote will be
counted if you are unable to attend the Annual Meeting. If you do decide to
attend the Annual Meeting and feel for whatever reason that you want to change
your vote at that time, you will be able to do so. If you are planning to attend
the Annual Meeting, please let us know by marking the appropriate box on the
proxy card.
Sincerely yours,
/s/Charles G. Urtin
-------------------------------------
Charles G. Urtin
President and Chief Executive Officer
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IBT BANCORP, INC.
309 MAIN STREET
IRWIN, PENNSYLVANIA 15642
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 20, 2004
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of IBT Bancorp, Inc. (the "Company"), will be held at the Irwin Masonic Temple,
located at 417 Main Street, Irwin, Pennsylvania, on Tuesday, April 20, 2004 at
2:00 p.m., local time, for the following purposes:
1. To elect four directors of the Company;
2. To ratify the appointment of Edwards Sauer & Owens as the
independent accountants for the Company for the fiscal year
ending December 31, 2004; and
3. Such other business as may properly come before the Meeting
and any adjournments.
The Board of Directors is not aware of any other business to come before the
Meeting. Stockholders of record at the close of business on March 2, 2004 are
the stockholders entitled to vote at the Meeting and any adjournments thereof.
A copy of the Company's Annual Report for the year ended December 31,
2003 is enclosed.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU
OWN. WE ENCOURAGE YOU TO VOTE BY PROXY SO THAT YOUR SHARES WILL BE REPRESENTED
AND VOTED AT THE MEETING EVEN IF YOU CANNOT ATTEND. ALL STOCKHOLDERS OF RECORD
CAN VOTE BY WRITTEN PROXY CARD. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES
ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER TO VOTE PERSONALLY AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Robert A. Bowell
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Robert A. Bowell
Secretary
Irwin, Pennsylvania
March 19, 2004
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
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PROXY STATEMENT
OF
IBT BANCORP, INC.
309 MAIN STREET
IRWIN, PENNSYLVANIA 15642
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ANNUAL MEETING OF STOCKHOLDERS
APRIL 20, 2004
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This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of IBT Bancorp, Inc. (the "Company") to be
used at the Annual Meeting of Stockholders which will be held at the Irwin
Masonic Hall, located at 417 Main Street, Irwin, Pennsylvania, on Tuesday, April
20, 2004, 2:00 p.m., local time (the "Meeting"). The accompanying Notice of
Annual Meeting of Stockholders and this Proxy Statement are being mailed to
stockholders on or about March 19, 2004.
All properly executed written proxies that are delivered pursuant to
this proxy statement will be voted on all matters that properly come before the
Meeting for a vote. If your signed proxy specifies instructions with respect to
matters being voted upon, your shares will be voted in accordance with your
instructions. If no instructions are specified, your shares will be voted (a)
FOR the election as directors of the nominees named in Proposal I, (b) FOR
Proposal II (ratification of independent public accountants), and (c) in the
discretion of the proxy holders, as to any other matters that may properly come
before the Meeting. Your proxy may be revoked at any time prior to being voted
by: (i) filing with the Corporate Secretary of the Company (Robert A. Bowell, at
309 Main Street, Irwin, Pennsylvania 15642) written notice of such revocation,
(ii) submitting a duly executed proxy bearing a later date, or (iii) attending
the Meeting and giving the Secretary notice of your intention to vote in person.
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VOTING STOCK AND VOTE REQUIRED
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The Board of Directors has fixed the close of business on March 2, 2004
(the "Record Date") as the record date for the determination of stockholders who
are entitled to notice of, and to vote at, the Meeting. On the Record Date,
there were 2,977,655 shares of the Company's common stock outstanding (the
"Common Stock"). Each stockholder of record on the Record Date is entitled to
one vote for each share held.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Meeting. With respect to any matter, any shares for which a broker
indicates on the proxy that it does not have discretionary authority as to such
shares to vote on such matter (the "Broker Non-Votes") will not be considered
present for purposes of determining whether a quorum is present. In the event
there are not sufficient votes for a quorum or to ratify any proposals at the
time of the Meeting, the Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of directors, the proxy being provided by the Board
enables a stockholder to vote for the election of the nominees as submitted as
Proposal I proposed by the Board, or to withhold authority to vote for the
nominee being proposed. Directors shall be elected by a plurality of votes of
the shares present in person or represented by proxy at a meeting and entitled
to vote in the election of directors.
As to the ratification of the independent accountants, which is
submitted as Proposal II, a stockholder may: (i) vote "FOR" the ratification;
(ii) vote "AGAINST" the ratification; or (iii) "ABSTAIN" with respect to the
ratification. Unless otherwise required by law, Proposal II and all other
matters shall be determined by a majority of votes cast affirmatively or
negatively without regard to (a) Broker Non-Votes, or (b) proxies marked
"ABSTAIN" as to that matter.
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PRINCIPAL HOLDERS
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Persons and groups beneficially owning in excess of 5% of the Common
Stock are required to file certain reports regarding such ownership pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Management
knows of no person or group that beneficially owned more than 5% of the
outstanding shares of Common Stock at the Record Date.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the Exchange Act requires the Company's directors and
executive officers to file reports of ownership and changes in ownership of
their equity securities of the Company with the Securities and Exchange
Commission and to furnish the Company with copies of such reports. To the best
of the Company's knowledge, all of the filings by the Company's directors and
executive officers were made on a timely basis during the 2003 fiscal year.
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PROPOSAL I - ELECTION OF DIRECTORS
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The Articles of Incorporation require that directors be divided into
three classes, as nearly equal in number as possible, each class to serve for a
three year period, with approximately one-third of the directors elected each
year. The Board of Directors currently consists of nine members, each of whom
also serves as a director of Irwin Bank & Trust Company (the "Bank").
Robert Rebich, Jr., Grant J. Shevchik and Charles G. Urtin have been
nominated by the Board of Directors for a term of three years, and John N.
Brenzia has been nominated by the Board of Directors for a term of two years
(collectively, the "Nominees"). The Nominees, with the exception of John
Brenzia, currently serve as directors of the Company. The Nominees will serve
for their respective terms or until his successor has been elected and
qualified.
The persons named as proxies in the enclosed proxy card intend to vote
"for" the election of the Nominees, unless the proxy card is marked to indicate
that such authorization is expressly withheld. Should the Nominees withdraw or
be unable to serve (which the Board of Directors does not expect) or should any
other vacancy occur in the Board of Directors, it is the intention of the
persons named in the enclosed proxy card to vote "for" the election of such
persons as may be recommended by the Board of Directors. If there are no
substitute nominees, the size of the Board of Directors may be reduced.
The following table sets forth information with respect to the nominees
and the other sitting directors, including for each their name, age, the year
they first became a director of the Company or the Bank, the expiration date of
their current term as a director, and the number and percentage of shares of the
Common Stock beneficially owned. Beneficial ownership of directors and executive
officers of the Company, as a group, is also set forth below.
2
Shares of
Common Stock
Age at Current Beneficially
December 31, Year First Elected Term Owned as of Percent
Name and Title 2003 or Appointed(1) to Expire the Record Date(2) of Class (%)
- -------------- ---- --------------- --------- ------------------ ------------
BOARD NOMINEE FOR TERM TO EXPIRE IN 2006
John N. Brenzia 62 N/A N/A 200 *
Nominee
BOARD NOMINEES FOR TERM TO EXPIRE IN 2007
Robert Rebich, Jr. 62 1991 2004 103,907(3) 3.49%
Director
Grant J. Shevchik 52 1992 2004 12,188 *
Director
Charles G. Urtin 57 1998 2004 26,781(3) *
Director, President and
Chief Executive Officer
DIRECTORS CONTINUING IN OFFICE
J. Curt Gardner 65 1980 2005 22,800 *
Chairman of the Board
Richard L. Ryan 73 1968 2005 8,032 *
Director
Robert C. Whisner 75 1969 2005 84,658 2.84
Director
Richard J. Hoffman 58 2002 2006 6,447(3) *
Director
Edwin A. Paulone 79 1969 2006 13,853 *
Director
NAMED EXECUTIVE OFFICERS OF THE COMPANY OR BANK WHO ARE NOT DIRECTORS
Robert A. Bowell 48 -- -- 11,974 *
Executive Vice President,
Chief Lending Officer,
Secretary and Treasurer
David A. Finui 49 -- -- 4,989 *
Senior Vice President and
Chief Operating Officer of
the Bank
All directors, nominees and 301,241 10.11
executive officers of the
Company, including certain
executive officers of the
Bank as a group
(12 persons)
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(1) Refers to the year the individual first became a director of the Bank or
Company. All directors of the Bank as of August 1986 became directors of
the Company when it was incorporated in August 1986.
(footnotes continue on next page)
3
(2) Unless otherwise noted, all persons and group named in the table above have
sole or shared voting or investment power with respect to the shares listed
in the table. For Messrs. Gardner, Palone, Rebich and Shevchik the share
amounts include 5,000 shares of common stock that such directors have the
right to acquire within 60 days of the Record Date. Such options granted
are fully vested and exercisable. Mr. Urtin's shares include 12,000 shares
of common stock that may be acquired within 60 days of the Record Date. Mr.
Ryan's shares include 3,875 shares of Common Stock that may be acquired
within 60 days of the Record Date. Messrs. Hoffman and Whisner shares
include 500 shares of common stock that may be acquired within 60 days of
the Record Date. Mr. Bowell's shares include 6,000 shares of common stock
that may be acquired within 60 days of the Record Date. Mr. Finui's shares
include 3,167 shares of Common Stock that may be acquired within 60 days of
the Record Date.
(3) Excludes 127,218 shares of Common Stock held by ITrust & Co. ITrust & Co.
was formed by the Bank to act as the record holder for the clients of the
Bank's trust department. Directors Rebich, Urtin, and Hoffman serve as the
trust committee of ITrust & Co. This committee acts as a fiduciary in
directing the voting and disposition of securities held in the accounts of
trusts and estates. This committee had the authority to exercise shared
voting and dispositive power with respect to 75,549 shares and sole voting
and dispositive power over 51,669 shares on the record date. Beneficial
ownership is disclaimed over all shares held by ITrust & Co.
* Less than 1% of the common stock outstanding.
Biographical Information
The principal business experience of each director and executive
officer of the Company is set forth below. The executive officers and all
directors have held their present positions for five years unless otherwise
stated.
Nominees for Directors:
Robert Rebich, Jr. retired in 1995 as the general manager of Parker
Hannifin Corp.
Grant J. Shevchik is a physician with Partners in Health - UPMC.
John N. Brenzia is the vice president and chief financial officer of
Irwin Car and Equipment. Prior to his position with Irwin Car and Equipment, Mr.
Brenzia served in the financial department of Elliott Company, a multi-national
manufacturer of heavy machinery.
Charles G. Urtin is President and Chief Executive Officer of the
Company and the Bank. The Board of Directors appointed Mr. Urtin President of
the Company in April 2000 and Chief Executive Officer of the Company in January
1999. Mr. Urtin became President and Chief Executive Officer of the Bank on
December 31, 1998. Prior to becoming President and Chief Executive Officer, Mr.
Urtin held several executive positions with the Company and the Bank.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION
OF THE ABOVE NOMINEES FOR DIRECTORS.
Continuing Directors:
J. Curt Gardner retired as President of the Company in April 2000 and
was appointed Chairman of the Board in April 2002. Effective December 31, 1998,
Mr. Gardner retired as the President and Chief Executive Officer of the Bank and
as the Chief Executive Officer of the Company.
Richard L. Ryan is Chairman of the Board of Ryan Moving and Storage,
Inc. of Pittsburgh.
Robert C. Whisner is the President, Chief Executive Officer and a
director of Airtek Incorporated, a manufacturer of electric generators. Mr.
Whisner is also a director of Remote Controls, Inc.
4
Richard J. Hoffman is the owner of Hoffman Enterprises, a real estate
development company, in Westmoreland and Allegheny Counties, Pennsylvania.
Edwin A. Paulone is Vice President of Irwin Builders Supply Co.
Named Executive Officers of the Company or the Bank Who Are Not Directors
Robert A. Bowell, 48, was appointed in April 2000 by the Company's
Board of Directors to serve as Executive Vice President, Secretary and Treasurer
of the Company. Since December 1998, Mr. Bowell has been an Executive Vice
President, Secretary and Treasurer of the Bank. Prior to such date, Mr. Bowell
served as Executive Vice President of the Bank.
David A. Finui, 49, was appointed on January 15, 2002, Senior Vice
President and Chief Operating Officer of the Bank. Previous to his new
appointment, Mr. Finui served as Vice President and Trust Officer of the Bank.
Prior to his employment at the Bank, Mr. Finui was Senior Vice President of
Community Banking for First Philson Bank, Somerset, Pennsylvania.
Certain Other Executive Officers Who Are Not Directors
Raymond G. Suchta, 55, was appointed Vice President and Chief Financial
Officer of the Bank on January 15, 2002 and as Chief Financial Officer of the
Company in October 2002 and Senior Vice President in April 2003. Previous to his
employment at the Bank, Mr. Suchta was Chief Financial Officer and Treasurer of
GA Financial Inc., Pittsburgh, Pennsylvania. Mr. Suchta is a Certified Public
Accountant.
Meetings and Certain Committees of the Board of Directors
The Board of Directors conducts its business through meetings of the
Board of Directors and through its committees. During the fiscal year ended
December 31, 2003, the Board of Directors of the Company held 12 regular
meetings and no special meetings. No directors of the Company attended fewer
than 75% of the total meetings of the Board of Directors and committee meetings
on which such Board member served during this period. In addition to other
committees, as of December 31, 2003, the Company had an Audit Committee and a
Compensation Committee. The Compensation Committee of the Bank also acts as the
Compensation Committee for the Company.
The Compensation Committee of the Bank is currently comprised of
Directors Gardner, Rebich, Hoffman, Ryan and Shevchik. The members of the
Compensation Committee are independent in accordance with the listing
requirements of the American Stock Exchange ("AMEX"). This standing committee
recommends to its Board of Directors a salary for the president and chief
executive officer and approves officer salary adjustments. The Compensation
Committee met three times during fiscal year 2003.
The Audit Committee, a standing committee, is currently comprised of
Directors Paulone, Ryan, Gardner and Shevchik, four non-employee members of the
Board of Directors. All members of the Audit Committee are independent in
accordance with the listing standards of the AMEX. The Audit Committee meets
with the independent accountants, Edwards Sauer & Owens, to discuss the annual
audit and any related matters. The Audit Committee is further responsible for
internal controls for financial reporting. The Audit Committee has adopted a
written charter which is attached to this proxy statement at Appendix A. The
Audit Committee met ten times in fiscal year 2003.
5
The Board of Directors has determined that Mr. Gardner, a member of the
Company's Audit Committee, is an "Audit Committee Financial Expert" as that term
is defined in the Securities Exchange Act of 1934. The Board of Directors has
also determined that Mr. Gardner is independent as that term is used in item
7(d)(3)(iv)(A) of Schedule 14A of the Securities Exchange Act of 1934.
Report of the Audit Committee
For the fiscal year ended December 31, 2003, the Audit Committee: (i)
reviewed and discussed the Company's audited financial statements with
management, (ii) discussed with the Company's independent auditor, Edwards,
Sauer & Owens, all matters required to be discussed under Statement on Auditing
Standards No. 61, and (iii) received Edwards, Sauer & Owens disclosures
regarding Edwards, Sauer & Owens's independence as required by Independence
Standards Board Standard No. 1 and discussed with Edwards, Sauer & Owens its
independence. Based on the foregoing review and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2003.
Audit Committee:
Grant J. Shevchik- Chairman
Edwin A Paulone
J. Curt Gardner
Richard L. Ryan
Director Nomination Process
The entire Board of Directors acts as a nominating committee for the
selection of management's nominees for Director. The Board of Directors met as a
nominating committee one time during the year ended December 31, 2003. The
Company has not adopted a written nominating committee charter.
By resolution of the Board of Directors, all nominees must be approved
by a majority of the independent directors. The Board of Directors believes that
its procedures comply with the requirements of the American Stock Exchange and
provide adequate assurance that nominations are approved by independent
directors. The Board of Directors will consider director candidates recommended
by shareholders. Any such recommendations must be submitted to the Secretary at
least 120 days prior to the date of the Annual Meeting and should include the
nominee's name and qualifications for board membership. The Board believes that
all nominees for director, including shareholder nominees, should have the
highest personal and professional ethics and integrity; substantial business or
other professional experience in the market area served by IBT Bancorp, Inc. and
its subsidiary, Irwin Bank and Trust; commitment to enhancing the business and
prospects of the Company and the Bank; ability to work with existing board
members and management; ability to make appropriate level of commitment of time
and resources to their duties as director; an understanding of banking and
financial matters and the role of directors in the management of the Company;
and personal investment in the Company common stock.
For the 2004 Annual Meeting, Mr. Rebich, a stockholder and
non-management member of the Board of Directors, recommended Mr. Breznia as a
nominee to the Company's Board of Directors.
6
Stockholder Communications
The Board of Directors does not have a formal process for stockholders
to send communications to the Board. In view of the infrequency of stockholder
communications to the Board of Directors, the Board does not believe that a
formal process is necessary. Written communications received by the Company from
stockholders are shared with the full Board no later than the next regularly
scheduled Board meeting. The Board encourages, but does not require, directors
to attend the annual meeting of stockholders. All of the Board's members
attended the 2003 annual meeting of stockholders.
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DIRECTOR AND EXECUTIVE COMPENSATION
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Director Compensation
The directors of the Company are not compensated. However, each
non-employee director of the Bank received a fee of $1,000 for each meeting
attended for the year ended December 31, 2003. Each member of a board committee
(other than employees who are also directors) receives a fee of $250 per
committee meeting attended, except members of the executive committee are paid a
fee of $500 per meeting attended in person. At December 31, 2003, board and
committee fees totaled approximately $209,000.
All directors of the Bank were, prior to 1995, eligible to defer
receipt of board fees earned prior to 1995 until a later date, such as following
retirement or reaching a certain age. Directors Paulone, Whisner, Fawcett and
Gardner participate in this program that provides a guaranteed net rate of
return by the Bank over a specified time period for the fees deferred. Director
Fawcett is a director emeritus. During 2003, this program resulted in payments
to Directors Paulone, Whisner and Fawcett of $6,916, $11,276, and $33,116,
respectively.
The Bank pays life insurance premiums for Directors Fawcett, Gardner,
Paulone and Whisner. However, the premiums on the policies are currently being
paid by the dividends on the policies.
Upon his retirement on December 31, 1998, the Bank entered into an
agreement with Mr. Gardner to pay him $2,000 per month for 50 months, plus
continuation of medical coverage for him and his spouse until they each attain
age 65.
Under the 2000 Stock Option Plan, each non-employee director was
granted options to purchase 2,250 shares of Common Stock in May 2000, 1,125
shares of Common Stock in May 2001, 1,125 shares of Common Stock in May 2002 and
500 shares in May 2003. In 2003, Mr. Urtin was granted options to purchase 1,200
shares of Common Stock. The exercise price of the options is the fair market
value of the Company's Common Stock on the effective date of grant.
See"Executive Compensation -- Stock Awards."
7
Executive Compensation
Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by Messrs. Urtin, Bowell and Finui.
No other executive officer had a salary and bonus during the fiscal year ended
December 31, 2003 that exceeded $100,000 for services rendered in all capacities
to the Company and the Bank.
Long Term
Compensation
Annual Compensation Awards
------------------------- -------------------
Securities
Name and Underlying All Other
Principal Position Year Salary($) Bonus($) Options/SARs (#)(1) Compensation($)
- ------------------ ---- --------- -------- ------------------- ---------------
Charles G. Urtin 2003 187,778 15,000 1,200 2,905(2)
President and Chief 2002 176,901 60,000 4,000 2,437
Executive Officer 2001 140,000 19,000 4,000 2,091
Robert A. Bowell 2003 122,572 9,455 1,200 1,892(2)
Executive Vice 2002 112,074 35,000 2,000 1,543
President, 2001 88,000 14,000 2,000 1,300
Secretary, Treasurer
and Chief Lending
Officer
David A. Finui 2003 105,197 8,296 1,200 1,865(2)
Senior Vice 2002 100,540 19,720 1,500 1,327
President and Chief 2001 70,088 17,648 1,000 1,360
Operating Officer of
the Bank
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(1) See "-- Stock Awards."
(2) Consists of matching contributions to the 401(k) plan by the Bank.
8
Stock Awards. The following table sets forth information with respect
to previously awarded stock options to purchase the Common Stock granted to
Messrs. Urtin, Bowell and Finui and held by each as of December 31, 2003. The
Company has not granted to Messrs. Urtin, Bowell and Finui any stock
appreciation rights.
OPTION GRANTS TABLE
Option Grants in Last Fiscal Year
---------------------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term(1)
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% of Total
# of Securities Options Exercise
Underlying Granted to or Base
Options Employees in Price Expiration
Name Granted(#)(1) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
---- ------------- ----------- ------ ---- --------------
Charles G. Urtin 1,200 5.8% $51.40 9/02/2013 44,699 113,277
Robert A. Bowell 1,200 5.8% $51.40 9/02/2013 44,699 113,277
David A. Finui 1,200 5.8% $51.40 9/02/2013 44,699 113,277
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(1) The amounts represent certain assumed rates of appreciation only over a 10
year period. Actual gains, if any, on stock option exercises and Common
Stock holdings are dependent on the future performance of the Common Stock
and overall stock market conditions. There can be no assurance that the
amount reflected in the table will be achieved. The values in the table are
based upon the exercise price of $51.40 and the closing price of $59.23 at
December 31, 2003.
OPTION/SAR EXERCISES AND YEAR END VALUE TABLE
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End Option
----------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Options In-The-Money Options
at FY-End (#) at FY-End ($)
------------------------- -------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- -------------------------
Charles G. Urtin 8,000 / -- 277,840 / -- (1)
2,667 / 1,333 96,625 / 48,295 (2)
1,333 / 2,667 32,125 / 70,275 (3)
-- / 1,200 9,396 / -- (4)
Robert A. Bowell 4,000 / -- 138,920 / -- (1)
1,333 / 667 48,295 / 24,165 (2)
667 / 1,333 17,575 / 35,125 (3)
-- / 1,200 -- / 9,396 (4)
David A. Finui 2,000 / -- 69,460 / -- (1)
667 / 333 24,165 / 12,065 (2)
500 / 1,000 13,175 / 26,350 (3)
-- / 1,200 -- / 9,396 (4)
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(1) Based on the exercise price of $24.50 and the closing price on December 31,
2003 of $59.23.
(2) Based on the exercise price of $23.00 and the closing price on December 31,
2003 of $59.23.
(3) Based on the exercise price of $32.88 and the closing price on December 31,
2003 of $59.23.
(4) Based on the exercise price of $51.40 and the closing price on December 31,
2003 of $59.23.
9
Other Benefits
Change in Control Agreements. The Bank has entered into change in
control severance agreements with Messrs. Urtin, Bowell and Finui, respectively.
The agreements are each for a three year term and may be renewed annually by the
board of directors upon a determination of satisfactory performance within the
board's sole discretion. The agreement may be terminated by the Bank for just
cause, as that term is defined in the agreement, or for no cause. If Messrs.
Urtin's, Bowell's or Finui's employment is terminated without just cause in
connection with, or within two years after, any change in control of the Bank or
the Company, such officer will be paid a lump sum equal to 2.99, 2.0 or 1.0
times, respectively, of his average annual taxable compensation paid during the
five years prior to the change in control. In the event of a change of control
at December 31, 2003, Messrs. Urtin, Bowell and Finui would have received a
payment of approximately $471,361,$196,448 and $69,915, respectively.
Pension Plan. The Bank maintained one non-contributory defined benefit
pension plan for its employees prior to 1995 (Plan #1). In 1995, various plan
assumptions were changed which resulted in a reduction in benefits for older and
long-standing employees. To compensate for this, a supplemental non- qualified
plan was installed for those employees so affected (Plan #2). The Bank's funding
policy is to contribute annually the maximum amount that can be deducted for
federal income tax purposes for Plan #1. Contributions are intended to provide
not only for benefits attributed to service to date, but also for those expected
to be earned in the future. Assets for the plans are primarily invested in U.S.
Government obligations, corporate obligations and equity securities whose
valuations are subject to market fluctuations.
For employees who attained age 50 and completed 10 years of service
prior to December 31, 1994, benefits under Plan #1 and #2 will be calculated at
normal retirement at age 65 as a monthly benefit equal to the sum of 1.1% of
average monthly compensation multiplied by years of service (with a maximum of
44 years), plus .65% of average monthly compensation in excess of the social
security taxable wage base for each year multiplied by years of service (not to
exceed 35 years). Effective October 15, 1994, the pension formula was revised to
..8% rather than 1.1% of average monthly compensation, as noted above, for all
employees, except those who attained age 50 and completed 10 years of service
prior to December 31, 1994.
Benefits are payable in the form of various annuity alternatives,
including a joint and survivor option. For the pension plan year ended December
31, 2003, the highest permissible annual benefit under the Internal Revenue Code
is $160,000.
Mr. Urtin has 19 years of service and will have 27 years of service at
his expected retirement date of January 1, 2012, at age 65. Mr. Bowell has 15
years of service and will have 32 years of service at his expected retirement
date of October 1, 2020 at age 65. Mr. Finui has 4 years of service and will
have 20 years of service at his expected retirement date of November 1, 2019 at
age 65. Based upon their 2003 compensation level, the projected monthly benefit
payable at normal retirement date would be approximately $5,084, $3,175 and
$1,690, respectively for Messrs. Urtin, Bowell and Finui. These payments are
lifetime benefits. Mr. Urtin will also be entitled to a monthly benefit from the
supplemental plan in the amount of approximately $565.
10
Compensation Committee Interlocks and Insider Participation.
The Compensation Committee currently consists of Directors Gardner,
Rebich, Ryan, Shevchik and Hoffman. No member of the Committee is, or was, an
executive officer of another company whose board of directors has a comparable
committee on which one of the Company's executive officers serves. None of the
executive officers of the Company is, or was during 2003, a member of a
comparable compensation committee of a company of which any of the directors of
the Company is an executive officer. Additionally, Mr. Gardner was, until April
2000, an officer of the Company, and until December 1998, an officer of the
Bank. See "Director Compensation."
Compensation Committee Report on Executive Compensation
The Compensation Committee meets annually to review compensation paid
to the chief executive officer. The Committee reviews various published surveys
of compensation paid to employees performing similar duties for depository
institutions and their holding companies, with a particular focus on the level
of compensation paid by comparable stockholder institutions in and around the
Bank's market areas, including institutions with total assets of between $400
million and $700 million. Although the Committee does not specifically set
compensation levels for executive officers based on whether particular financial
goals have been achieved by the Bank, the Committee does consider the overall
profitability of the Bank when making these decisions. The Compensation
Committee has the following goals for compensation programs impacting the
executive officers of the Company and the Bank:
o to provide motivation for the executive officers to enhance
stockholder value by linking their compensation to the future
value of the Company's stock;
o to retain the executive officers who have led the Company to
build its existing market franchise and to allow the Bank to
attract high quality executive officers in the future by
providing total compensation opportunities which are consistent
with competitive norms of the industry and the Company's level of
performance; and
o to maintain reasonable fixed compensation costs by targeting base
salaries at a competitive average.
During the year ended December 31, 2003, Charles G. Urtin, President
and Chief Executive Officer, received an increase in his base salary from
$175,000 to $185,00 due to his continued leadership in the management of the
Company and the Bank. Additionally, Mr. Urtin was awarded additional stock
options under the Stock Option Plan. Such awards are intended to provide
incentive to the President for implementation of a business plan that will
enhance shareholder value in the intermediate and long term. The Committee will
consider the annual compensation paid to the presidents and chief executive
officers of publicly owned commercial banks nationally, in the Commonwealth of
Pennsylvania and surrounding geographic areas with assets of between $400
million and $700 million and the job performance of such individual as
determined by the Committee.
Compensation Committee:
Robert Rebich - Chairman
J. Curt Gardner
Richard L. Ryan
Grant J. Shevchik
Richard J. Hoffman
11
Stock Performance Graph
The following graph compares the cumulative total shareholder return on
the Common Stock with (a) the cumulative total shareholder return on stocks
included in the Nasdaq Stock Market index and (b) the cumulative total
shareholder return on stocks included in the Nasdaq Bank index, as prepared by
the Center for Research in Securities Prices ("CRSP") at the University of
Chicago. All three investment comparisons assume the investment of $100 as of
December 31, 1998 and the reinvestment of dividends. The graph provides
comparisons at December 31, 1998 and each fiscal year through December 31, 2003.
[GRAPHIC OMITTED]
- ------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
12/31/98($) 12/31/99($) 12/31/00($) 12/31/01($) 12/31/02($) 12/31/03($)
- ------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
IBT Bancorp, Inc. 100 126 77 116 158 254
- ------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
CRSP Nasdaq Bank Index 100 96 110 119 122 157
- ------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
CRSP Nasdaq U.S. Index 100 185 112 89 61 92
- ------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
There can be no assurance that the Company's future stock performance
will be the same or similar to the historical performance shown in the above
graph. The Company neither makes nor endorses any predictions as to stock
performance.
12
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
The Bank, like many financial institutions, has followed a policy of
granting various types of loans to officers, directors and employees. All loans
to executive officers, directors and immediate family members of such persons
have been 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 the Bank's other customers, and do not involve more than the normal risk of
collectibility, or present other unfavorable features.
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PROPOSAL II -- RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
- --------------------------------------------------------------------------------
Edwards Sauer & Owens was the Company's independent public accountants
for the 2003 fiscal year. The Board of Directors has appointed Edwards Sauer &
Owens to be its accountants for the fiscal year ending December 31, 2004,
subject to ratification by the Company's stockholders. The engagement of Edwards
Sauer & Owens was approved in advance by the Audit Committee. A representative
of Edwards Sauer & Owens is expected to be present at the Meeting to respond to
stockholders' questions and will have the opportunity to make a statement if the
representative so desires.
Audit Fees
The aggregate fees billed by Edwards, Sauer & Owens for professional
services rendered for the audit of the Company's annual consolidated financial
statements and for the review of the consolidated financial statements included
in the Company's Quarterly Reports on Form 10-Q for the fiscal years ended
December 31, 2003 and 2002 were $62,360 and $57,400, respectively.
Audit Related Fees
The aggregate fees billed by Edwards, Sauer & Owens for assurance and
related services related to the audit of the annual financial statements and to
the review of the quarterly financial statements for the years ended December
31, 2003 and 2002 were $10,855 and $9,890, respectively.
Tax Fees
The aggregate fees billed by Edwards, Sauer & Owens for professional
services rendered for tax compliance, tax advice or tax planning for the years
ended December 31, 2003 and 2002 were $13,380 and $14,340, respectively.
All Other Fees
The aggregate fees billed by Edwards, Sauer & Owens for professional
services rendered for services or products other than those listed under the
captions "Audit Fees," "Audit-Related Fees," and "Tax Fees" for the years ended
December 31, 2003 and 2002 were $18,121 and $27,225, respectively, and consisted
of assistance in accounting matters, trust examinations and assistance with
benefit plans.
It is the Audit Committee's policy to pre-approve all audit and
non-audit services prior to the engagement of the Company's independent auditor
to perform any service. All of the services listed above for 2002 and 2003 were
approved by the Audit Committee prior to the service being rendered. No services
were approved pursuant to the de minimus exception of the Sarbanes-Oxley Act of
2002.
13
Ratification of the appointment of the accountants requires the
affirmative vote of a majority of the votes cast by the stockholders of the
Company at the Meeting. The Board of Directors recommends that stockholders vote
"FOR" the ratification of the appointment of Edwards Sauer & Owens as the
Company's accountants for the 2004 fiscal year.
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STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be considered for inclusion in the Company's proxy
statement for the annual meeting of stockholders to be held in 2005, all
stockholder proposals must be submitted to the Secretary at the Company's
office, 309 Main Street, Irwin, Pennsylvania 15642, on or before November 12,
2004. In order to be considered for possible action by stockholders at the 2005
annual meeting of stockholders, stockholder proposals not included in the
Company's proxy statement must be submitted to the Secretary of the Company, at
the address set forth above, no later than February 12, 2005.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of soliciting proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers, and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
- --------------------------------------------------------------------------------
FORM 10-K
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2003 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE
RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, IBT BANCORP, INC., 309 MAIN
STREET, IRWIN, PENNSYLVANIA 15642.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Robert A. Bowell
----------------------------------
Robert A. Bowell
Secretary
Irwin, Pennsylvania
March 19, 2004
14
APPENDIX A
IBT BANCORP, INC.
AUDIT COMMITTEE CHARTER
1. Members. The Board of Directors of IBT Bancorp, Inc. (the "Company")
-------
shall appoint an Audit Committee of at least two members, consisting entirely of
"independent" directors of the Board, and shall designate one member as
chairperson. For purposes hereof, "independent" shall mean a director who meets
the definition of "independence" as used in Item 7(d)(3)(iv) of Schedule 14A of
the Securities Exchange Act of 1934 ("Exchange Act").
Each member of the Company's Audit Committee must be financially
literate, and at least one member of the Audit Committee shall have Audit
Committee experience.
2. Purposes, Duties, and Responsibilities. The Audit Committee shall
----------------------------------------
represent the Board of Directors in discharging its responsibilities relating to
the accounting, reporting, and financial practices of the Company and its
subsidiaries, and shall have general responsibility for surveillance of internal
controls and accounting and audit activities of the Company and its
subsidiaries. The Audit Committee does not itself prepare financial statements
or perform audits, and its members are not auditors or certifiers of the
Company's financial statements. Specifically, the responsibilities of the Audit
Committee shall include, but not be limited to:
(i) Recommend to the Board of Directors, and evaluate, the
firm of independent certified public accountants to be
appointed as auditors of the Company, which firm shall be
ultimately accountable to the Board of Directors through the
Audit Committee.
(ii) Be directly responsible for the appointment, compensation
and oversight of the Company's independent auditors and
internal auditors.
(iii) Review and discuss with the outside auditors their audit
procedures, including the scope, fees and timing of the audit,
and the results of the annual audit examination and any
accompanying management letters, and any reports of the
outside auditors with respect to interim periods.
(iv) Review and discuss the written statement from the outside
auditor of the Company concerning any relationships between
the auditor and the Company or any other relationships that
may adversely affect the independence of the auditor and,
based on such review, assess the independence of the outside
auditor.
(v) Review and discuss with management and the outside
auditors the financial statements of the Company, including an
analysis of the auditors' judgment as to the quality of the
Company's accounting principles.
(vi) Recommend to the Board of Directors whether, based on the
review and discussions described in paragraphs (ii) through
(v) above, the financial statements should be included in the
Annual Report on Form 10-K.
A-1
(vii) Review and discuss with management and the outside
auditors: (a) any material financial or non-financial
arrangements of the Company which do not appear on the
financial statements of the Company; and (b) any transactions
or courses of dealing with parties related to the Company
which transactions are significant in size or involve terms or
other aspects that differ from those that would likely be
negotiated with independent parties, and which arrangements or
transactions are relevant to an understanding of the Company's
financial statements.
(viii) Review and discuss with management and the outside
auditors the adequacy of the Company's internal controls.
(ix) Review and discuss with management and the outside
auditors the accounting policies which may be viewed as
critical, and review and discuss any significant changes in
the accounting policies of the Company and accounting and
financial reporting proposals that may have a significant
impact on the Company's financial reports.
(x) Establish policies and procedures for the engagement of
the outside auditor to provide non-audit services, and
consider whether the outside auditor's performance of
information technology and other non-audit services is
compatible with the auditor's independence.
(xi) Review material pending legal proceedings involving the
Company and other contingent liabilities.
(xii) Establish procedures to receive and respond to employee
and others' complaints and concerns regarding the Company's
accounting or auditing matters.
(xiii) Establish procedures to coordinate the procedures of
the Audit Committee with the Company's Disclosure Committee
responsible for overseeing the accuracy of the Company's
filings under the Exchange Act.
(xiv) Review the appropriateness of the Audit Committee
Charter on a periodic basis.
3. Meetings. The Audit Committee shall meet as often as may be deemed
---------
necessary or appropriate in its judgment, generally four times each year, either
in person or telephonically. The Audit Committee shall meet in executive session
with the outside auditors at least annually. The Audit Committee may create
subcommittees who shall report to the Audit Committee. The Audit Committee shall
report to the full Board of Directors with respect to its meetings. The majority
of the members of the Audit Committee shall constitute a quorum.
4. Outside Advisors and Funding. The Audit Committee shall have the
------------------------------
appropriate funding and authority to retain such outside counsel, experts, and
other advisors as it determines appropriate to assist in the full performance of
its functions.
5. Investigations. The Audit Committee shall have the authority to
---------------
conduct or authorize investigations into any matters within its scope of
responsibilities and shall have the authority to retain outside advisors to
assist it in the conduct of any investigation.
A-2
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IBT BANCORP, INC.
309 MAIN STREET
IRWIN, PENNSYLVANIA 15642
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ANNUAL MEETING OF STOCKHOLDERS
APRIL 20, 2004
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The undersigned hereby appoints the Board of Directors of IBT Bancorp,
Inc. (the "Company"), or its designee, with full powers of substitution, to act
as attorneys and proxies for the undersigned, to vote all shares of Common Stock
of the Company which the undersigned is entitled to vote at the 2004 Annual
Meeting of Stockholders (the "Meeting"), to be held at the Irwin Masonic Hall,
located at 417 Main Street, Irwin, Pennsylvania on Tuesday, April 20, 2004, at
2:00 p.m., local time and at any and all adjournments thereof, in the following
manner:
FOR WITHHELD
--- --------
1. The election as director of the nominees
listed below with terms to expire
during the year listed: |_| |_|
Robert Rebich, Jr. (2007)
Grant J. Shevchik (2007)
Charles G. Urtin (2007)
John N. Brenzia (2006)
INSTRUCTIONS: To vote for or withhold your vote for all nominees, mark the
appropriate box above. To withhold your vote for either one or more nominees,
mark the "FOR" box above and write the name of the nominee(s), for whom
authority to vote is being withheld, on the line provided below.
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FOR AGAINST ABSTAIN
--- ------- -------
2. To ratify the appointment of
Edwards Sauer & Owens as
independent accountants for the
Company for the fiscal year ending
December 31, 2004. |_| |_| |_|
The Board of Directors recommends a vote "FOR" the above listed
propositions. ---
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THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED
IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting, or
at any adjournments thereof, and after notification to the Secretary of the
Company at the Meeting of the stockholder's decision to terminate this proxy,
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned may also revoke this proxy by filing a
subsequently dated proxy or by written notification to the Secretary of the
Company of his or her decision to terminate this proxy.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of an annual report, a Notice of Annual Meeting of
Stockholders and a proxy statement dated March 19, 2004.
Dated: , 2004 Please check here if you plan to attend the Meeting. |_|
________
- ----------------------------------------- ---------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ----------------------------------------- ---------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
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PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
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