SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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 Sec.240.14a-11(c) or Sec.240.14a-12
NB&T Financial Group, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined)
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
NB&T FINANCIAL GROUP, INC.
48 N. South Street
Wilmington, Ohio 45177
(937) 382-1441
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the 2002 Annual Meeting of Shareholders of
NB&T Financial Group, Inc. ("NBFT"), will be held at 48 N. South Street,
Wilmington, Ohio, on April 23, 2002, at 9:00 a.m., Eastern Time (the
"Annual Meeting"), for the purpose of electing five directors of NBTF for
terms expiring in 2004, and transacting such other business as may properly
come before the Annual Meeting or any adjournments thereof. Such matters are
more completely set forth in the accompanying Proxy Statement.
Only shareholders of NBTF of record at the close of business on
March 6, 2002, will be entitled to receive notice of and to vote at the
Annual Meeting and at any adjournments thereof. Whether or not you expect to
attend the Annual Meeting, we urge you to consider the accompanying Proxy
Statement carefully and to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY
SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND THE
PRESENCE OF A QUORUM MAY BE ASSURED. The giving of a Proxy does not affect
your right to vote in person in the event you attend the Annual Meeting.
By Order of the Board of Directors
/s/James W. Foland
-----------------------------------
March 20, 2002 James W. Foland, Secretary
NB&T FINANCIAL GROUP, INC.
48 N. South Street
Wilmington, Ohio 45177
(937) 382-1441
PROXY STATEMENT
PROXIES
The enclosed Proxy is being solicited by the Board of Directors of
NB&T Financial Group, Inc. ("NBTF"), an Ohio Corporation, for use at the 2002
Annual Meeting of Shareholders of NBTF to be held at 48 N. South Street,
Wilmington, Ohio, on April 23, 2002, at 9:00 a.m., Eastern Time, and at any
adjournments thereof (the "Annual Meeting"). Without affecting any vote
previously taken, the Proxy may be revoked by a shareholder by a later dated
proxy received by NBTF before the Proxy is exercised or by giving notice of
revocation to NBTF in writing before the Annual Meeting or in open meeting.
Attendance at the Annual Meeting will not, of itself, revoke a Proxy.
Each properly executed Proxy received prior to the Annual Meeting and
not revoked will be voted as specified thereon or, in the absence of specific
instructions to the contrary, will be voted:
FOR the election of Charles L. Dehner, Daniel A. DiBiasio, G. David
---
Hawley, Georgia H. Miller and Timothy L. Smith as directors of
NBTF for terms expiring in 2004.
Proxies may be solicited by the directors, officers and other employees
of NBTF in person or by telephone, telecopy, telegraph or mail only for use
at the Annual Meeting, and such Proxies will not be used for any other
meeting. The cost of soliciting Proxies will be borne by NBTF.
Only shareholders of record as of the close of business on March 6, 2002
(the "Voting Record Date"), are eligible to vote at the Annual Meeting and
will be entitled to cast one vote for each share owned. NBTF's records
disclose that, as of the Voting Record Date, there were 3,207,804 votes
entitled to be cast at the Annual Meeting.
This Proxy Statement is first being mailed to shareholders of NBTF on or
about March 25, 2002.
-3-
VOTE REQUIRED
The five nominees receiving the greatest number of votes will be elected
as directors. The presence, in person or by proxy, of a majority of the
issued and outstanding shares entitled to vote at the Annual Meeting is
necessary to constitute a quorum at the Annual Meeting. Under Ohio law,
shares held by a nominee for a beneficial owner which are represented in
person or by proxy but which are not voted ("non-votes") are counted as
present for purposes of establishing a quorum. Shares as to which the
authority to vote is withheld and non-votes are not counted toward the
election of directors or toward the election of the individual nominees
specified on the form of proxy.
VOTING SECURITIES AND OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
only persons known to NBTF to own beneficially more than five percent
of NBTF's outstanding common shares as of March 6, 2002:
Percent of
Name and Address Amount Beneficially Common Shares
of Beneficial Owner Owned (1) Outstanding
- ------------------- ------------------- -------------
<s> <c> <c>
Janet M. Williams (2) 392,196 12.2%
Estate of B. Anthony Williams
6172 U. S. 22 East
Wilmington, Ohio 45177
Brooke A. Williams 182,242 5.7
361 Wilber Avenue
Columbus, Ohio 43215
Dana L. Williams 183,456 5.7
6172 U. S. 22 East
Wilmington, Ohio 45177
Lynn W. Cowan 181,898 5.7
4116 W. Franklin Street
Richmond, Virginia 23221
Beth Ellingwood 209,882 6.5
325 West Sixth Avenue
Columbus, Ohio 43201
The National Bank and 875,444 27.3
Trust Company(3)
48 N. South Street
Wilmington, Ohio 45177
- ---------------------------
-4-
<FN>
(1) Except as indicated for the shares held by The National Bank and Trust
Company (the "Bank"), the beneficial owner has sole voting and
dispositive power.
(2) Janet M. Williams is a director of NBTF and the Bank. Of the
392,196 shares, 188,826 are held in the name of Mrs. Williams, and
203,370 are held by the Estate of B. Anthony Williams, of which Mrs.
Williams is the executor.
(3) All of such shares are held by the Bank as Trustee, 679,549 of which are
held as Trustee for the NB&T Financial Group, Inc., Employee Stock
Ownership Plan (the "ESOP"). Pursuant to the ESOP, the Bank, as
Trustee, has the power to vote in its sole discretion all ESOP shares
that have not been allocated to the accounts of participants. At March
6, 2002, 143,817 shares had not been allocated. The Trustee may dispose
of shares held in the ESOP Trust only under limited circumstances
specified in the ESOP or by law. The Bank also has sole voting, sole
dispositive, and shared dispositive power with respect to 144,241,
79,663 and 200 shares, respectively, held as Trustee for various other
trusts.
</FN>
The following table sets forth certain information with respect to the
number of common shares of NBTF beneficially owned by each director of NBTF
and each of the five highest paid executive officers of NBTF whose cash
compensation during 2001 exceeded $100,000 and by all directors and executive
officers of NBTF as a group as of March 6, 2002:
Amount and Nature of
Beneficial Ownership
--------------------
Sole Voting and Shared Voting and Percent of Common
Name Investment Power Investment Power Shares Outstanding
- ---- ---------------- ----------------- ------------------
<s> <c> <c> <c>
S. Craig Beam 10,628 7,544 0.57%
Charles L. Dehner 57,839 (1) 35,563 (2) 2.90
Daniel A. DiBiasio 53 - 0.00
James W. Foland 14,210 - 0.44
G. David Hawley 300 414 0.02
Georgia H. Miller 1,130 752 0.06
Darleen M. Myers 8,653 - 0.27
Robert A. Raizk 14,468 - 0.45
Timothy L. Smith 61,988 (3) 44,559 (4) 3.29
Janet M. Williams 392,196 - 12.23
Stephen G. Klumb 10,550 (5) 1,296 (6) 0.37
Andrew J. McCreanor 7,461 (7) 15,937 (8) 0.73
Howard T. Witherby 11,708 (9) 27,884 (10) 1.23
All directors and
executive officers of
NBTF as a group
(14 persons) 596,598 (11) 151,540 (12) 22.81
- --------------------------
-5-
<FN>
(1) Includes 16,400 shares that may be acquired currently upon the exercise
of options.
(2) Consists of shares allocated to Mr. Dehner's ESOP account, with respect
to which Mr. Dehner has voting but not investment power.
(3) Includes 28,886 shares that may be acquired currently upon the exercise
of options.
(4) Includes 41,073 shares allocated to Mr. Smith's ESOP account, with
respect to which Mr. Smith has voting but not investment power.
(5) Includes 7,900 shares that may be acquired currently upon the exercise
of options.
(6) Includes 1,166 shares allocated to Mr Klumb's ESOP account, with respect
to which Mr. Klump has voting but not investment power.
(7) Includes 6,550 shares that may be acquired currently upon the exercise
of options.
(8) Includes 15,593 shares allocated to Mr. McCreanor's ESOP account, with
respect to which Mr. McCreanor has voting but not investment power.
(9) Includes 6,550 shares that may be acquired currently upon the exercise
of options.
(10) Includes 27,264 shares allocated to Mr. Witherby's ESOP account, with
respect to which Mr. Witherby has voting but not investment power.
(11) Includes 534 shares owned with sole voting and investment power and
4,780 shares that may be acquired currently upon the exercise of options
by an executive officer of the Bank not named in this table who may be
deemed to act as an officer of NBTF.
(12) Includes 17,591 shares allocated to the ESOP account of an executive
officer of the Bank not named in this table who may be deemed to act as
an officer of NBTF. Such person has voting but not investment power
with respect to such shares.
</FN>
BOARD OF DIRECTORS
Election of Directors
The Articles of Incorporation of NBTF provide for a Board of Directors
consisting of not less than seven nor more than eleven directors, such number
to be fixed or changed by the Board of Directors or the shareholders. The
number of directors is currently set at ten, divided into two classes. Each
class serves for a two-year period. Each of the directors of NBTF is also a
director of the Bank.
In accordance with Section 8.04 of the Articles of Incorporation of
NBTF, nominees for election as directors may be proposed only by the
directors or by any shareholder entitled to vote for directors if such
shareholder makes a timely notice to the Secretary of NBTF. To be timely,
a shareholder's notice must be delivered to or mailed and received at the
principal executive offices of NBTF not less than sixty days nor more than
ninety days prior to the meeting; provided, however, that in the event that
less than thirty-five days' notice or prior public disclosure of the date of
the meeting is given or made to shareholders of an annual meeting held on a
-6-
date other than the date fixed by the Code of Regulations of NBTF, notice by
the shareholder must be received not later than the close of business on the
seventh day following the earlier of the day on which such notice of the date
of the meeting was mailed or such public disclosure was made. Such
shareholder's notice shall set forth (a) as to each person who is not an
incumbent director whom a shareholder proposes to nominate for election as a
director (i) the name, age, business address and residence address of such
person; (ii) the principal occupation or employment of such person; (iii) the
class and number of shares of NBTF which are beneficially owned by such
person; and (iv) any other information relating to such person that is
required to be disclosed in solicitations for proxies for election of
directors pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended; and (b) as to the shareholder giving the notice, (i) the
name and record address of such shareholder and (ii) the class and number of
shares of NBTF that are beneficially owned by such shareholder. Such notice
shall be accompanied by the written consent of each proposed nominee to serve
as a director of NBTF, if elected.
The Board of Directors proposes the election of the following persons
to terms which will expire in 2004:
Director
Name Age Position(s) Held Since
---- --- ---------------- --------
Charles L. Dehner 54 Director and Executive 1989
Vice President of NBTF
and Bank and Treasurer
of NBTF
Daniel A. DiBiasio 52 Director 2001
G. David Hawley 54 Director 2000
Georgia H. Miller 62 Director 1990
Timothy L. Smith 51 Director, Chairman of 1989
the Board, Chief
Executive Officer and
President of NBTF and
the Bank
If any nominee is unable to stand for election, the Proxies will be
voted for such substitute as the Board of Directors recommends.
-7-
The following directors will continue to serve after the Annual Meeting
for the terms indicated:
Director Term
Name Age Position(s) Held Since Expires
- ---- --- ---------------- -------- -------
S. Craig Beam 50 Director 1990 2003
James W. Foland 80 Director and Secretary 1983 2003
Darleen M. Myers 69 Director 1995 2003
Robert A. Raizk 47 Director 1995 2003
Janet M. Williams 62 Director 1999 2003
Charles L. Dehner has been the Executive Vice President of NBTF since
1993, Treasurer of NBTF since 1984 and Executive Vice President of the Bank
since 1991. Mr. Dehner was Senior Vice President and Controller of the Bank
from 1988 to 1991.
Daniel A. DiBiasio was appointed by the Board of Directors of NBTF in
May 2001 to serve a term expiring in 2002. He has been the President of
Wilmington College since 1995. Dr. DiBiasio holds numerous leadership
positions in statewide and national higher education organizations, including
the Ohio Foundation of Independent Colleges, the Association of Independent
Colleges and Universities of Ohio, the Greater Cincinnati Consortium of
Colleges and Universities and the NCAA Division III President's Council. He
also a member of the noon Rotary Club of Wilmington and an Ohio Reads
volunteer at Holmes Elementary School.
G. David Hawley was appointed by the Board of Directors of NBTF to serve
a term expiring in 2002, filling the vacancy created by the resignation of
George F. Bush in January 2000. Mr. Hawley has been the Minister of the
Presbyterian Church of Wilmington for 23 years. In addition, he has been a
director and the Secretary of Hutchins-Rhodes Corporation, a real estate
development company in Wilmington, for six years, and he served on the Board
of Directors of Liberty Savings Bank in Wilmington from 1991 until March
2000.
Georgia H. Miller, formerly Manager of Volunteer Services and Patient
Representative for Clinton Memorial Hospital, retired in 1993. Ms. Miller
serves as a volunteer for Clinton Memorial Hospital and Auxiliary and is a
guardian ad litem for the Juvenile Court of Clinton County. Ms. Miller is
also a member of the Board of Habitat for Humanity and a member of the Board
of Trustees of Southern State Community College.
Timothy L. Smith has been the President and Chief Executive Officer of
NBTF and the Bank since 1989 and the Chairman of the Board of both NBTF and
the Bank since May 2000. From July 1988 until October 1989, Mr. Smith was a
Senior Vice President and Senior Loan Officer of the Bank. He is also
Chairperson of Chatfield College.
-8-
S. Craig Beam has been the President of Melvin Stone Company since 1989
and served as General Manager before being elected President. Mr. Beam is
also the President of MC Trucking and a Trustee of Wilmington College.
James W. Foland, the Secretary of NBTF, was employed by the Bank from
1956 until his retirement as Senior Vice President in 1983.
Darleen M. Myers is a Clinton County Commissioner. From 1993 to 1994,
Ms. Myers served as the Director of the Rainbow Village Child Day Care
Center, and from 1976 to 1993, she was an Extension Agent for The Ohio
Cooperative Extension Services.
Robert A. Raizk has been the President and Chief Executive Officer of
The Wilmington Iron & Metal Co., Inc., since August 1990. From 1985 to 1990,
Mr. Raizk was a commercial real estate broker with The Tipton Group, Inc.
Janet M. Williams has been self-employed in agribusiness for the past
six years.
Meetings of Directors
The Board of Directors of NBTF met 12 times for regularly scheduled and
special meetings during the year ended December 31, 2001. Each director
attended at least 75% of the meetings of the Board of Directors during 2001.
Each director of NBTF is also a director of the Bank. The Board of
Directors of the Bank met 12 times for regularly scheduled and special
meetings during the year ended December 31, 2001.
Committees of Directors
The Board of Directors of NBTF has no committees. The Board of
Directors of the Bank has an Audit Committee, a Trust Policy Committee and a
Compensation Committee.
The Audit Committee is responsible for overseeing NBTF's
accounting functions and controls, as well as recommending to the Board of
Directors an accounting firm to audit NBTF's financial statements.
For a more complete description of the Audit Committee's responsibilities,
see "AUDIT COMMITTEE REPORT." The members of the Audit Committee are Messrs.
DiBiasio, Foland, Hawley and Raizk and Mmes. Miller and Myers. The Audit
Committee met four times in 2001.
The Trust Policy Committee is responsible for the review of the
administration, policies, investment holdings, investment performance,
operating results, earnings, conduct and reports of examinations and audits
of the Trust Department. The members of such committee are Messrs. Beam,
Dehner, DiBiasio and Smith and Ms. Williams. The Trust Policy Committee met
11 times during 2001.
-9-
The Compensation Committee recommends annually to the full Board of
Directors the compensation for the Bank's executive officers. The members of
the Compensation Committee are Messrs. Beam, DiBiasio, Foland, Hawley and
Raizk and Mmes. Miller, Myers and Williams. The Compensation Committee met
once in 2001.
EXECUTIVE OFFICERS
The only executive officers of NBTF are Messrs. Dehner, Foland, and
Smith.
In addition to Mr. Smith and Mr. Dehner, the following persons are
executive officers of the Bank and may be deemed to participate in policy
making for NBTF:
Name Age Positions Held During Last Five Years
- ---- --- --------------------------------------
Stephen G. Klumb 52 Senior Vice President, Senior Loan Officer
since June 1998; prior to June 1998, Executive
Vice President and Chief of Staff of American
Energy Resources, Inc.
Andrew J. McCreanor 52 Senior Vice President, Customer Relations
since January 1997; from October 1992 to
January 1997, Director of Marketing and
Customer Service
Walter H. Rowsey 53 Senior Vice President, Branch Administrator
since September 1993; formerly Vice President,
Loan Division Manager
Howard T. Witherby 46 Senior Vice President, Operations Division
Manager since October 1992; formerly Vice
President
-10-
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Compensation
The following table presents certain information regarding the cash
compensation received by the five executive officers of NBTF or the
Bank whose cash compensation was the highest and exceeded $100,000 during the
fiscal years ended December 31, 2001, 2000 and 1999:
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
------------
Annual Compensation(1) Awards
------------------------------------------------
Other Securities ALL
Annual Underlying Other
Name and Principal Compen- Options/ Compen-
Position Year Salary Bonus sation SARs sation
($) ($) ($)(3) (#) ($)
- -----------------------------------------------------------------------------
<c> <s> <s> <s> <s> <s> <s>
Timothy L. Smith 2001 $240,500 (2) $ 2,070 $ - 6,000/-0- $ -
Chief Executive 2000 224,381 (2) 120,806 - 5,200/-0- 14,984 (4)
Officer, President 1999 211,130 (2) 72,280 - 3,500/-0- 19,138 (4)
of NBTF and Bank
Charles L. Dehner 2001 159,973 (2) 2,070 611 6,000/-0- 1,664 (5)
Treasurer, 2000 149,385 (2) 62,419 611 3,500/-0- 16,648 (6)
Executive Vice 1999 142,389 (2) 37,596 599 3,000/-0- 20,782 (7)
President of
NBTF, Executive
Vice President
of Bank
Stephen G. Klumb 2001 124,000 2,070 - 3,000/-0- 2,800 (5)
Senior Vice 2000 117,700 30,260 734 2,500/-0- 15,666 (6)
President, Senior 1999 110,000 15,278 1,343 1,500/-0- 17,791 (7)
Loan Officer of
Bank
Andrew J. McCreanor 2001 100,000 - - 3,000/-0- 2,800 (5)
Senior Vice 2000 94,250 22,331 63 2,500/-0- 11,695 (6)
President of Bank 1999 88,484 16,019 680 1,500/-0- 13,850 (7)
Howard T. Witherby 2001 98,300 2,850 - 3,000/-0- 2,800 (5)
Senior Vice 2000 93,800 25,548 417 2,500/-0- 11,829 (6)
President of Bank 1999 87,465 18,921 1,186 1,500/-0- 15,033 (7)
- ----------------------------------
-11-
<FN>
(1) Cash compensation does not include amounts attributable to other
miscellaneous benefits received by executive officers. The cost to
NBTF and the Bank of providing such benefits to each of the executive
officers listed above during the years ended December 31, 2001, 2000
and 1999, was less than 10% of the officer's cash compensation, and
such cost for all executive officers as a group was less than 10% of
the group's aggregate cash compensation.
(2) Includes $8,500 for Mr. Smith, and $8,125 for Mr. Dehner of director
fees in 2001 and $7,500 of director's fees in each of 2000 and 1999.
(3) Consists of amounts reimbursed to such executive officers for taxes paid
on whole life insurance premiums paid for the benefit of such executive
officers.
(4) Consists of the aggregate value at the date of allocation of allocations
to Mr. Smith's ESOP account.
(5) Consists of a premium paid on whole life insurance for the benefit of
such executive officer.
(6) Consists of premiums in the amounts of $1,644, $2,625, $1,420 and $1,754
on whole life insurance for the benefit of Messrs. Dehner, Klumb,
McCreanor and Witherby, respectively, and $14,984, $13,041, $10,275 and
$10,075 representing the aggregate value at the date of allocation of
allocations to the ESOP accounts of Messrs. Dehner, Klumb, McCreanor and
Witherby, respectively.
(7) Consists of premiums in the amounts of $1,644, $2,806, $1,600 and $2,400
paid on whole life insurance for the benefit of Messrs. Dehner, Klumb,
McCreanor and Witherby, respectively, and $19,138, $14,985, 12,250 and
$12,633 representing the aggregate value at the date of allocation of
allocations to the ESOP accounts of Messrs. Dehner, Klumb, McCreanor and
Witherby, respectively.
</FN>
The following table sets forth information regarding all grants of
options to purchase NBTF common shares made to Messrs. Smith, Dehner, Klumb,
McCreanor and Witherby during 2001. Each of such options, which are not
intended to qualify as incentive stock options under the Internal Revenue
Code of 1986, has a term of 10 years and becomes exercisable one-fifth per
year over a five-year period.
-12-
Aggregate Option/SAR Grants in Last Fiscal Year
--------------------------------------------------------------
Alternative
to
(f) and (g)
Grant
Date Value
Individual Grants (#)(1)
--------------------------------------------------- --------
Number % of
of Total
Securities Options/ Exercise
Underlying SARs or Grant
Options/ Granted to Base Date
SARs Employees in Price Expiration Present
Name Granted(#) Fiscal Year ($/share) Date Value
----- --------- ----------- --------- ---- -----
<c> <s> <s> <s> <s> <s>
Timothy L. Smith 6,000/-0- 20% $17.25 1/23/11 $26,700
Charles L Dehner 6,000/-0- 20 17.25 1/23/11 26,700
Stephen G. Klumb 3,000/-0- 10 17.25 1/23/11 13,350
Andrew J.McCreanor 3,000/-0- 10 17.25 1/23/11 13,350
Howard T. Witherby 3,000/-0- 10 17.25 1/23/11 13,350
<FN>
(1) The grant date present value was determined using a Black-Scholes option
pricing model and does not necessarily reflect the value that may be
realized upon the exercise of the options.
</FN>
The following table sets forth information regarding the number and
value of unexercised options held at December 31, 2001, by Messrs. Smith,
Dehner, Klumb, McCreanor and Witherby:
-13-
Aggregated Option/SAR Exercises In Last Fiscal Year
and 12/31/01 Option/SAR Values
----------------------------------------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
12/31/01 (#) 12/31/01 (1)
Shares
Acquired
on Value
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexerciseable Unexercisable
---- -------- -------- -------------- -------------
<c> <s> <s> <s> <s>
Timothy L. Smith -0- -0- 24,546/13,660 $172,086/21,718
Charles L. Dehner -0- -0- 12,900/11,600 75,980/19,370
Stephen G. Klumb -0- -0- 6,500/9,500 0/6,750
Andrew J. McCreanor -0- -0- 4,730/6,710 23,627/11,505
Howard T. Witherby 1,150 13,616 4,740/6,310 24,627/9,157
- -------------------
<FN>
(1) An option is "in-the-money" if the fair market value of the underlying
stock exceeds the exercise price of the option. The figure represents
the value of such options, determined by multiplying the number of
shares subject to unexercised options by the difference between the
exercise price and the fair market value of NBTF's common shares on
December 31, 2001, of $19.50 per share, as determined by the Board of
Directors. No established market for NBTF's common shares existed
at December 31, 2001, NBTF's common shares are not traded on any
securities exchange and the prices at which its shares are traded are
not quoted by a national quotation service.
</FN>
Director Compensation
NBTF does not pay director's fees. Each director of NBTF who is not a
full-time employee of the Bank currently receives for services as a director
of the Bank a fee of $7,2000 each year and $500 for each meeting of the Board
of Directors attended. Directors of the Bank who are full-time employees of
the Bank receive $4,000 each year and $375 for each meeting of the Board of
Directors attended.
Compensation Committee Report
NBTF is a bank holding company which directly owns all of the
outstanding capital stock of the Bank. NBTF's business consists primarily of
the business of the Bank. The financial results of NBTF depend primarily
upon the Bank's financial results.
-14-
The Compensation Committee of the Board of Directors of the Bank (the
"Committee") is composed exclusively of non-employee directors. The
Committee's philosophy is to tie executive compensation to the achievement of
the Bank's goals and the resulting performance of NBTF. The Committee
reviews executive performance and compensation and makes recommendations to
the full Board of Directors of the Bank for approval.
The Committee's goal is to accomplish the following specific objectives
through the use of base salary and incentive plans:
(1) Motivate personnel to perform and succeed according to the goals
outlined in the Bank's annual business plan;
(2) Retain key personnel critical to the long-term success of the Bank;
and
(3) Utilize incentive plans, such as stock options, that reward
executives for corporate success and align the interests of
management with those of the shareholders;
Base Salary. Base Salary is the foundation of the Bank's compensation
program, providing income on which the executive can rely, but which is not
so large as to eliminate the executive's motivation to work hard to increase
shareholder value. An executive's base salary is directly related to his or
her position, job responsibilities, performance and contribution to the
Bank's success. The Committee reviews peer group information with respect to
compensation and company performance on a regional and national basis to
ensure salaries are competitive and in line with the industry.
Incentive Plan. The Bank also has an incentive compensation plan
pursuant to which awards are based on the Bank's achievement of predetermined
goals relating to return on average equity and return on average assets, and
on the participant's achievement of goals relating to his or her individual
contributions to the Bank. Threshold, target and maximum goals for corporate
performance are generally established at the beginning of each fiscal year.
All awards are established as a percentage of each participant's base
salary. Awards differ due to the contribution of the individual to the
Bank's success. Participants (except the Chief Executive Officer) earn
awards by achieving individual goals and assisting in achieving the Bank's
goals. The more control and influence a participant has on either individual
goals or Bank goals, the greater the participant's weighting on that
particular factor. The Chief Executive Officer's incentive plan awards are
based solely on the achievement of the Bank's goals.
If individual goals are achieved but the Bank fails to achieve its
goals, no incentive award will be made to any participant.
Stock Options. The Committee annually reviews the appropriateness of
granting stock options to senior management. The purposes of this long-term
incentive compensation are to provide an incentive to officers and key
employees to promote the success of the business and thereby increase
shareholder value, and to attract and retain the best available personnel.
The Committee grants options based on an individual's performance and
contribution to the Bank's success. All options granted to date have a term
of 10 years and may be first exercised to the extent of one-fifth each year
for the first five years after the date of grant.
-15-
Section 162(m) of the Internal Revenue Code. Section 162(m) of the
Internal Revenue Code of 1986, as amended, prohibits a publicly-held
corporation, such as NBTF, from claiming a deduction on its federal
income tax return for compensation in excess of $1 million paid for a given
fiscal year to the chief executive officer and the four most highly
compensated officers of the corporation other than the chief executive
officer at the close of the corporation's fiscal year. The $1 million
compensation deduction limitation does not apply to "performance-based
compensation."
Although none of the officers of NBTF or the Bank currently receives
annual cash compensation near $1 million, the difference between the fair
market value of the shares acquired upon the exercise of a non-qualified
option and the exercise price is considered compensation in the year of
exercise. An option award must meet several requirements to qualify as
"performance-based compensation." NBTF has determined that the options
to purchase NBTF currently outstanding will not qualify for exemption from
the $1 million limit. Neither NBTF nor the Bank has a policy requiring that
all compensation payable in 2002 and thereafter to the covered officers be
deductible under Section 162(m). The Board of Directors of both companies
will, however, continue to consider carefully the after-tax cost and value
to NBTF and the Bank of all compensation.
CEO Compensation. Timothy L. Smith has been the President and the Chief
Executive Officer ("CEO") of NBTF since October 1989. The Committee used the
executive compensation policy described above to determine Mr. Smith's
compensation.
In setting the base salary, cash incentive award and amount of stock
options, the Committee made an overall assessment of Mr. Smith's leadership
in achieving the Bank's long-term strategic and business goals. The Bank
achieved its corporate goals, including those related to return on equity
and return on assets, and Mr. Smith was determined to have contributed
substantially to the Bank's success.
Compensation Committee
S. Craig Beam Georgia H. Miller
James W. Foland Darleen M. Myers
G. David Hawley Robert A. Raizk
Compensation Committee Interlocks and Insider Participation
The Board of Directors of the Bank has a Compensation Committee whose
members are Messrs. Beam, Foland, Hawley and Raizk and Mmes. Myers and
Miller. None of such persons are employees of the Bank or NBTF.
-16-
Performance Graph
The following line graph compares the yearly percentage change in NBTF's
cumulative total shareholder return against the cumulative return of The
Nasdaq National Market, and an index of banks with total assets of $500
million to $1 billion. The graph assumes the investment of $100 on December
31, 1996. Cumulative total shareholder 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 price of
NBTF's common shares at the end and at the beginning of the measurement
period; by (ii) the price of NBTF's common shares at the beginning of the
measurement period.
NB&T Financial Group, Inc.
[Graph Represented by the Following Chart]
Index 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
- -----------------------------------------------------------------------------
<c> <s> <s> <s> <s> <s> <s>
NB&T Financial
Group, Inc. 100.00 147.40 207.05 212.15 133.19 163.71
NASDAQ - Total US* 100.00 122.48 172.68 320.89 193.01 153.15
SNL $500M-$1B
Bank Index 100.00 162.56 159.83 147.95 141.62 183.73
Source: CRSP, Center for Research in Security Prices, Graduate School of
Business, The University of Chicago 2002. Used with permission. All rights
reserved. crsp.com.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank occasionally makes loans of various types to directors,
officers and employees of the Bank. Loans are offered to all employees of
the Bank, including executive officers, at an interest rate that is 25 basis
points less than the rate offered on similar loans to others. All loans
outstanding to executive officers during 2001 were made in the ordinary
course of business, on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions
with other Bank customers and did not involve more than the normal risk of
collectibility or present other unfavorable features.
Loans to non-employee directors outstanding during the last year were
made in the ordinary course of business, on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other Bank customers and did not involve more
than the normal risk of collectibility or present other unfavorable features.
-17-
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, NBTF's directors and executive
Officers and persons holding more than ten percent of the common shares of
NBTF are required to report their ownership of common shares and changes in
such ownership to the Securities and Exchange Commission (the "SEC") and
NBTF. The SEC has established specific due dates for such reports. Based
upon a review of such reports, NBTF must disclose any failures to file such
reports timely in Proxy Statements used in connection with annual meetings of
shareholders. Mr. DiBiasio's Form 3 was filed late, and Mr. Rowsey failed to
file a Form 4 reporting the exercise of an option.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors of The National Bank and
Trust Company is comprised of four directors, all of whom are considered
"independent" under Rule 4200(a)(14) of the National Association of
Securities Dealers' listing standards. The Audit Committee is responsible
for overseeing NBTF's accounting functions and controls, as well as
recommending to the Board of Directors an accounting firm to audit NBTF's
financial statements. The Board of Directors has not adopted a charter to
set forth the responsibilities of the Audit Committee.
The Audit Committee received and reviewed the report of J.D. Cloud &
Company ("J.D. Cloud") regarding the results of their audit, as well as the
written disclosures and the letter from J.D. Cloud required by Independence
Standards Board Standard No. 1. The Audit Committee reviewed the audited
financial statements with the management of NBTF. A representative of J.D.
Cloud also discussed with the Audit Committee the independence of J.D. Cloud
from NBTF, as well as the matters required to be discussed by Statement of
Auditing Standards 61, as amended and supplemented. Discussions between the
Audit Committee and the representative of J.D. Cloud included the following:
J.D. Cloud's responsibilities in accordance with generally accepted
auditing standards
The initial selection of, and whether there were any changes in,
significant accounting policies or their application
Management's judgments and accounting estimates
Whether there were any significant audit adjustments or uncorrected
misstatements determined by management to be immaterial
Whether there were any disagreements with management
Whether there was any consultation with other accountants
Whether there were any major issues discussed with management prior
to J.D. Cloud's retention
Whether J.D. Cloud encountered any difficulties in performing the
audit
-18-
J.D. Cloud's judgments about the quality of NBTF's accounting
principles
J.D. Cloud's responsibilities for information prepared by management
that is included in documents containing audited financial statements
Based on its review of the financial statements and its discussions with
management and the representative of J.D. Cloud, the Audit Committee did not
become aware of any material misstatements or omissions in the financial
statements. Accordingly, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Annual
Report on Form 10-K for the year ended December 31, 2001, to be filed with
the SEC.
Submitted by the Audit Committee:
James W. Foland Georgia H. Miller
Darleen M. Myers Robert A. Raizk
AUDITORS
On March 19, 2002, NBTF, with the approval of the Board of Directors,
Decided to change NBTF's independent public auditors from J.D. Cloud to
BKD, LLP ("BKD"). J.D. Cloud served as NBTF's independent certified
public accountants from 1982 through the fiscal year ended December 31,
2001. The Board of Directors' decision to engage BKD is based on BKD's
service and commitment toward serving financial institutions of NBTF's
size and activities. J.D. Cloud's report on consolidated financial
statements of NBTF for the past two years did not contain any adverse
opinion or disclaimer of opinion, nor were they qualified or modified as
to uncertainty, audit scope or accounting principles. During the last
two fiscal years and the interim period through March 19, 2002, there
have not been any disagreements between NBTF and J.D. Cloud on any
matter of accounting principles or practices, consolidated fiancial
statement disclosure or audit scope or procedure.
BKD has been engaged as NBTF's independent certified public
accountant effective March 19, 2002. NBTF has not requested or
obtained any advice from BKD concerning any material accounting,
auditing or financial reporting issue regarding the application of
accounting principles to a specified transaction or the type of
audit opinion that might be rendered on NBTF's consolidated
financial statements.
Management expects that a representative of BKD will be present
at the Annual Meeting, will have the opportunity to make a statement
if he or she so desires and will be available to respond to
appropriate questions.
-19-
Audit Fees
During the year ended December 31, 2001, J.D. Cloud billed NBTF
$89,650 for professional services in connection with the audit of
NBTF's annual financial statements and the review of financial
statements included in NBTF's Forms 10-Q.
All Other Fees
During fiscal year 2001, NBTF and the Bank were billed $100,565
in fees for services rendered by J.D. Cloud for all accounting services
other than the services discussed in "AUDIT FEES" or "FINANCIAL
INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. " The Audit
Committee has determined that the provision of these additional
Services is compatible with maintaining J.D. Cloud's independence.
PROPOSALS OF SECURITY HOLDERS AND OTHER MATTERS
Any proposals of shareholders intended to be included in NBTF's proxy
statement for the 2003 Annual Meeting of Shareholders should be sent to NBTF
by certified mail and must be received by NBTF not later than November 22,
2002. In addition, if a shareholder intends to present a proposal at the
2003 Annual Meeting without including the proposal in the proxy materials
related to that meeting, and if the proposal is not received by February 7,
2003, then the proxies designated by the Board of Directors of NBTF for the
2003 Annual Meeting of Shareholders of NBTF may vote in their discretion on
any such proposal any shares for which they have been appointed proxies
without mention of such matter in the proxy statement or on the proxy card
for such meeting.
Management knows of no other business which may be brought before the
Annual Meeting. It is the intention of the persons named in the enclosed
Proxy to vote such Proxy in accordance with their best judgment on any other
matters which may be brought before the Annual Meeting.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN AND
RETURN THE PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
By Order of the Board of Directors
March 20, 2002 James W. Foland, Secretary
-20-
REVOCABLE PROXY
NB&T FINANCIAL GROUP, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 23, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder(s) of common shares of NB&T Financial Group, Inc.
(the "Company"), hereby constitutes and appoints Darleen M. Meyers and Robert
A Raizk, or any of them, the Proxy or Proxies of the undersigned, with full
power of substitution and resubstitution, to attend the Annual Meeting of
Shareholders of the Company to be held on April 23, 2002, at 48 N. South
Street, Wilmington, Ohio, at 9:00 a.m., Eastern Time, and at any adjournment
or adjournments thereof, and to vote all of the common shares of the Company
that the undersigned is entitled to vote at such Annual Meeting or at any
adjournment or adjournments thereof on each of the following proposals, which
are described in the accompanying Proxy Statement:
1. The election of five (5) directors to serve for a term of two (2) years
each.
FOR election as directors WITHHOLD AUTHORITY
---- ----
of the Company of all the to vote for all nominees listed
nominees listed below below.
(except as marked to the
contrary below).*
Charles L. Dehner
Daniel DiBiasio
G. David Hawley
Georgia H. Miller
Timothy L. Smith
*(INSTRUCTION: To withhold authority to vote for any individual
nominee, mark the box "FOR" and strike a line through the nominee's
name in the list above).
2 In their discretion, upon such other business as may properly come
before the Annual Meeting or any adjournment or adjournments thereof.
WHERE A CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED OR NOT VOTED AS SPECIFIED. IF NO CHOICE IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES OF
---
THE BOARD OF DIRECTORS AND IN THE DISCRETION OF THE PROXIES ON ANY OTHER
BUSINESS PROPERLY BROUGHT BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT OR
ADJOURNMENTS THEREOF.
-21-
All proxies previously given by the undersigned are hereby revoked.
------------------------------------------------------------------
The undersigned acknowledges receipt of the accompanying Notice of Annual
Meeting of Shareholders and Proxy Statement for the April 23, 2002, meeting.
Please sign exactly as your name appears hereon.
When shares are registered in two names, both
shareholders should sign. When signing as
executor, administrator, trustee, guardian,
attorney or agent, please give full title as
such. If the shareholder is a corporation,
please sign in full corporate name by President
or other authorized officer. If the shareholder
is a partnership, please sign in partnership
name by authorized person. (Please note any
change of address on this proxy.)
--------------------------------------------
Signature of Shareholder(s)
--------------------------------------------
Signature of Shareholder(s)
Dated: , 2002
----------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF NB&T FINANCIAL
GROUP, INC. PLEASE FILL IN, DATE, SIGN AND RETURN IT PROMPTLY USING THE
ENCLOSED ENVELOPE.
If you plan to attend the Annual Meeting, please check here.
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-22-