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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
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 Section 240.14a-11(c) or Section 240.14a-12
First Northern Community Bancorp
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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)(4) and 0-11.
(1) Title of each class 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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[_] 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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(4) Date Filed:
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Notes:
FIRST NORTHERN [LOGO]
COMMUNITY BANCORP
April 4, 2002
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
First Northern Community Bancorp on Thursday, April 25, 2002, at 7:30 p.m. The
meeting will be held at First Northern Bank's Operations Center located at 210
Stratford Avenue in Dixon.
At the meeting, Shareholders will be asked to elect as directors the nine
individuals nominated by the Board of Directors, to ratify the appointment of
KPMG LLP as the Company's auditors for 2002, and to approve such other matters
as may properly come before the Annual Meeting. The following Proxy Statement
provides detailed information about the nominees, the auditors and other matters
regarding the Annual Meeting.
The Board of Directors recommends that you vote "FOR" the election of the
directors nominated and "FOR" the proposals listed in the Proxy Statement.
It is very important that as many shares as possible be represented at the
meeting. Whether or not you plan to attend the Annual Meeting, we respectfully
ask that you sign and return the enclosed Proxy in the postage-paid envelope as
soon as possible. So that we may provide adequate seating and refreshments,
please be sure to indicate whether or not you plan to attend by completing the
bottom portion of the Proxy form.
We look forward to seeing you at the meeting on April 25/th/.
Sincerely,
/s/ Owen J. Onsum
Owen J. Onsum
President and Chief Executive Officer
Enclosures
FIRST NORTHERN [LOGO]
COMMUNITY BANCORP
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 25, 2002
To the Shareholders of First Northern Community Bancorp:
The Meeting of Shareholders of First Northern Community Bancorp will be
held at the First Northern Bank Operations Center, 210 Stratford Avenue, Dixon,
California 95620, on Thursday, April 25, 2002 at 7:30 p.m. to:
1. Elect the following nine (9) directors to serve until the next annual
meeting of Shareholders and until their successors are elected and
qualified:
Lori J. Aldrete Gregory DuPratt Foy S. McNaughton
Frank J. Andrews, Jr. John F. Hamel Owen J. Onsum
John M. Carbahal Diane P. Hamlyn David W. Schulze
2. Ratify the appointment by the Board of Directors of KPMG LLP to act as
independent auditors of First Northern Community Bancorp for the year
ending December 31, 2002.
3. Act upon such other matters as may properly come before such meeting or any
adjournment or postponement thereof.
All of the above matters are more fully described in the accompanying Proxy
Statement.
Shareholders of record at the close of business February 28, 2002, are
entitled to notice of and to vote at the Meeting or any postponement or
adjournment thereof.
You are strongly encouraged to attend the Meeting and also to complete,
sign, date and return as promptly as possible, the proxy submitted herewith in
the return envelope provided for your use whether or not you plan to attend the
meeting in person. The giving of such proxy will not affect your right to revoke
such proxy or to vote in person, should you later decide to attend the Meeting.
BY ORDER OF THE
BOARD OF DIRECTORS
/s/ Diane P. Hamlyn /s/ Owen J. Onsum
Diane P. Hamlyn Owen J. Onsum
Chairman of the Board President and Chief Executive Officer
Dated: April 4, 2002
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YOUR VOTE IS IMPORTANT
YOU ARE URGED TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN YOUR PROXY SO THAT
YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES.
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FIRST NORTHERN COMMUNITY BANCORP
195 North First Street, Dixon California 95620
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished to the shareholders of First Northern
Community Bancorp ("FNCBancorp" or the "Company") in connection with the
solicitation of proxies (each a "Proxy" collectively, the "Proxies") to be used
in voting at the Meeting of Shareholders of FNCBancorp to be held on April 25,
2002, at 210 Stratford Avenue, Dixon, California at 7:30 p.m., and at any
adjournment or postponement thereof (the "Meeting" or "Annual Meeting"). The
solicitation of the Proxy accompanying this Proxy Statement is made by the Board
of Directors of First Northern Community Bancorp, and the costs of such
solicitation, including the expense of preparing, assembling, printing and
mailing this Proxy Statement and the material used in this solicitation of
proxies, will be borne by First Northern Community Bancorp. It is contemplated
that Proxies will be solicited through the mail, but officers and staff of First
Northern Community Bancorp may solicit Proxies personally. FNCBancorp may, at
its discretion, engage the services of a proxy solicitation firm to assist in
the solicitation of proxies. The total expense of this solicitation will be
borne by FNCBancorp and will include reimbursement paid to brokerage firms and
others for their expenses in forwarding soliciting material and such expenses as
may be paid to any proxy solicitation firm engaged by FNCBancorp.
It is expected that this Proxy Statement and accompanying Notice will be
mailed to shareholders on or about April 4, 2002.
A Proxy for the Annual Meeting is enclosed. Any shareholder who executes
and delivers a Proxy has the right to revoke it at any time before it is voted
by filing with the Corporate Secretary of FNCBancorp an instrument revoking it
or a duly executed Proxy bearing a later date. In addition, the powers of the
Proxy holders will be revoked if the person executing the Proxy is present at
the Annual Meeting and advises the Chairman of his or her election to vote in
person. UNLESS REVOKED, ALL SHARES REPRESENTED BY A PROPERLY EXECUTED PROXY
RECEIVED IN TIME FOR THE MEETING WILL BE VOTED AS SPECIFIED OR, IF NOT
SPECIFIED, THEN IN FAVOR OF ELECTION OF THE BOARD OF DIRECTOR'S NOMINEES AND IN
FAVOR OF ALL OTHER PROPOSALS SPECIFICALLY DISCUSSED IN THIS PROXY STATEMENT.
The Proxy also confers discretionary authority to vote the shares
represented thereby on any matter that was not known at the time this Proxy
Statement was mailed which may properly be presented for action at the Annual
Meeting, including approval of minutes of the prior Annual Meeting which will
not constitute ratification of the action taken at such meeting; action with
respect to procedural matters pertaining to the conduct of the Annual Meeting;
and election of any person to any office for which a bona fide nominee is named
herein, if such nominee is unable or unwilling to serve.
Voting Rights and Vote Required
Only shareholders of record at the close of business on February 28, 2002
(the "Record Date"), will be entitled to vote in person or by proxy. On that
date, there were 3,178,302 shares of common stock issued and outstanding and
entitled to vote.
Shareholders of common stock of FNCBancorp are entitled to one vote for
each share held, except that in the election of Directors, under California law
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and the bylaws of FNCBancorp each shareholder may be eligible to exercise
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cumulative voting rights and may be entitled to as many votes as shall equal the
number of shares of common stock held by such shareholder multiplied by the
number of directors to be elected, and such shareholder may cast all of such
votes for a single nominee or may distribute them among
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two or more nominees. No shareholder, however, shall be entitled to cumulate
votes (in other words, cast for any candidate a number of votes greater than the
number of shares of common stock held by such shareholder multiplied by the
number of directors to be elected) unless the name(s) of the candidate(s) has
(have) been placed in nomination prior to the voting in accordance with Article
III, Section 23 of FNCBancorp's bylaws (which requires that nominations made
other than by the Board of Directors be made at least 30 and not more than 60
days before the meeting) and a shareholder has given notice to FNCBancorp of an
intention to cumulate votes prior to the voting according to Article II, Section
13 of FNCBancorp's bylaws. If any shareholder has given such notice, all
shareholders may cumulate their votes for candidates in nomination, in which
event votes represented by Proxies delivered pursuant to this Proxy Statement
may be cumulated, in the discretion of the proxy holders, in accordance with the
recommendation of the Board of Directors. Discretionary authority to cumulate
votes in such event is, therefore, solicited in this Proxy Statement.
The vote required to approve each proposal is as follows:
. In the election of directors, the nine nominees receiving the highest
number of votes will be elected.
. Approval of the selection of the independent auditors will require the
affirmative vote of a majority of the shares represented at the
Meeting.
Abstentions and broker "non-votes" (shares as to which brokerage firms have
not received timely voting instructions from their clients and therefore do not
have the authority to vote at the Meeting) will not count as votes in favor of
the election of directors or any of the other proposals.
Voting of Proxies--Quorum
The shares represented by all properly executed proxies received in time
for the Meeting will be voted in accordance with the shareholders' choices
specified therein; provided, however, that where no choices have been specified,
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the shares will be voted "FOR" the election of the nine nominees for director
recommended by the Board of Directors, and "FOR" the ratification of the
appointment of KPMG LLP as independent auditors, and, at the proxy holder's
discretion, on such other matters, if any, which may properly come before the
Meeting (including any proposal to adjourn the Meeting). A majority of the
shares entitled to vote, represented either in person or by a properly executed
Proxy, will constitute a quorum at the Meeting. Abstentions and broker
"non-votes" are each included in the determination of the number of shares
present and voting for purposes of determining the presence of a quorum. A
broker "non-vote" occurs when a nominee holding shares for a beneficial owner
does not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner. Abstentions will be included in
tabulations of the votes cast on proposals presented to the shareholders and
therefore will have the effect of a negative vote. Broker "non-votes" will not
be counted for purposes of determining the number of votes cast for a proposal.
Revocability of Proxy
A Shareholder using the enclosed proxy may revoke the authority conferred
by the proxy at any time before it is exercised by delivering written notice of
revocation to the Secretary of the Company or a duly executed proxy bearing a
later date, or by appearing and voting by ballot in person at the Meeting. In
the event that signed proxies are returned without voting instructions, proxies
will be voted in favor of the actions to be voted upon.
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PROPOSAL 1
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Election of Directors
FNCBancorp is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended, and is incorporated in the State of California.
FNCBancorp's principal subsidiary is First Northern Bank of Dixon (the "Bank"),
a California state chartered bank organized under the laws of California.
At the Meeting it will be proposed to elect nine directors of FNCBancorp,
each to hold office until the next annual meeting and until successors shall be
elected and qualified. It is the intention of the Proxy holders named in the
enclosed Proxy to vote such Proxies (except those containing contrary
instructions) for the nine nominees named below.
Pursuant to Article III, Section 23 of the bylaws of FNCBancorp, director
nominations, other than those made by the Board of Directors, shall be made by
notification in writing delivered or mailed to the President of FNCBancorp not
less than 30 days or more than 60 days prior to any meeting of shareholders
called for election of directors. The provision also requires that the notice
contain detailed information necessary to determine if the nominee is qualified
under Article III, Section 22 of the bylaws. Nominations not made in accordance
with the procedure set forth in Section 22 of FNCBancorp's bylaws may, in the
discretion of the Chairman of the Meeting, be disregarded, and, upon his
instruction, the inspectors of election shall disregard all votes cast for such
nominee(s). A copy of Sections 22 and 23 of FNCBancorp's bylaws may be obtained
by sending a written request to: Ms. Lynn Campbell, Corporate Secretary, First
Northern Community Bancorp, 195 North First Street, Dixon, California, 95620.
The Board does not anticipate that any of the nominees will be unable to
serve as a director of FNCBancorp, but if that should occur before the Meeting,
the Proxy holders, in their discretion, upon the recommendation of FNCBancorp's
Board of Directors, reserve the right to substitute as nominee and vote for
another person of their choice in the place and stead of any nominee unable so
to serve. The Proxy holders reserve the right to cumulate votes for the election
of directors and cast all of such votes for any one or more of the nominees, to
the exclusion of the others, and in such order of preference as the Proxy
holders may determine in their discretion, based upon the recommendation of the
Board of Directors.
Nominees
The following table sets forth each of the nominees for election as a
director, their age, their position with FNCBancorp, and the period during which
they have served as a director of FNCBancorp and the Bank.
Director of
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Director of FNCBancorp
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Name Age Position with FNCBancorp Bank Since Since
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Lori J. Aldrete 55 Director 1995 2000
Frank J. Andrews, Jr. 53 Director 1993 2000
John M. Carbahal 47 Director 1996 2000
Gregory DuPratt 48 Director 1996 2000
John F. Hamel 61 Director 1975 2000
Diane P. Hamlyn 58 Chairman of the Board 1985 2000
Foy S. McNaughton 51 Director 2000 2000
Owen J. Onsum 57 President, CEO and Director 1996 2000
David W. Schulze 57 Director 1978 2000
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Lori J. Aldrete is a principal of ACS Quantum Strategies, LLC ("ACS"), a
marketing, communications and strategic planning firm established in July 2001.
ACS is headquartered in Sacramento with an office in Pasadena. Ms. Aldrete is
past Vice President/Corporate Communications of Catholic Healthcare West
("CHW"). Ms. Aldrete has worked in the communications field for more than 30
years and in marketing and public relations since 1986. She has been a resident
of Davis since 1979. Ms. Aldrete is a member of the Bank's Management and
Marketing Committees.
Frank J. Andrews, Jr. is President of Andrews, Lando & Associates, a real estate
development firm established in 1990, and Manager of Gainsbourgh-Classics LLC
since January 1999. Prior to that time, Mr. Andrews was President of Andrews
Management Services for three years and Vice President of Amos & Andrews, Inc.,
for fifteen years. Andrews Management Services and Amos & Andrews, Inc. are also
real estate development companies. Mr. Andrews is a member of the Bank's Loan
and Management Committees.
John M. Carbahal is a Certified Public Accountant and is a principal and
shareholder of Carbahal & Company, Inc., an Accountancy Corporation. Mr.
Carbahal is member of the Bank's Audit and Management Committees.
Gregory DuPratt is Vice President/Sales Manager of Ron DuPratt Ford, an
automobile dealership and family business located in Dixon. Mr. DuPratt is
member of the Bank's Audit, Compensation, Information Services, Loan, Marketing,
and Profit Sharing Committees.
John F. Hamel served as the President and Chief Executive Officer of First
Northern Bank of Dixon from 1975 to 1996. Mr. Hamel is presently managing family
agricultural properties. Mr. Hamel is a member of the Bank's Loan and Profit
Sharing Committees.
Diane P. Hamlyn is the President and Founder of Davisville Travel, a full
service travel agency. Davisville Travel was established in 1977. Ms. Hamlyn is
a member of the Bank's Compensation, Loan and Management Committees.
Foy S. McNaughton is the President and Chief Executive Officer of McNaughton
Newspapers--Davis Enterprise, Daily Republic, Mountain Democrat (Placerville),
Winters Express and Life Newspapers (El Dorado Hills and Cameron Park), a
position he has held since 1985. He has served as the Publisher of the Fairfield
Daily Republic since 1995. Mr. McNaughton has been a resident of Davis since
1973. Mr. McNaughton is a member of the Bank's Audit, and Marketing Committees.
Owen J. Onsum has been President and Chief Executive Officer of First Northern
Bank of Dixon since January 1, 1997. He served as Executive Vice President of
First Northern Bank of Dixon from 1982 to 1996. Mr. Onsum has worked for First
Northern Bank of Dixon since 1972 and has lived in Dixon since 1971. Mr. Onsum
is a member of the Bank's Loan, Management, Marketing and Profit Sharing
Committees.
David W. Schulze is the owner/operator of a family row crop farming operation.
Prior to assuming that position, Mr. Schulze was involved in property management
and apartment ownership. Mr. Schulze is a member of the Bank's Compensation,
Information Services, Loan, and Management Committees.
None of the directors of FNCBancorp were selected pursuant to arrangements
or understandings other than with the directors and shareholders of FNCBancorp
acting within their capacity as such. There are no family relationships between
any of the directors, and none of the directors serve as a director of any
company which has a class of securities registered under, or subject to periodic
reporting requirements of, the Securities Exchange Act of 1934, as amended, or
any company registered as an investment company under the Investment Company Act
of 1940.
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Committees of the Board of Directors of Fncbancorp and the Bank
FNCBancorp does not have Audit, Nominating or Compensation Committees or
committees performing similar functions. However, the Board of Directors of the
Bank has several standing committees, as discussed below, including an Audit
Committee and Compensation Committee. The directors of FNCBancorp are also
directors of the Bank. As such, the Bank committees supervise and review the
activities of the Bank, which constitute substantially all of the assets of
FNCBancorp on a consolidated basis. Information regarding the committees of the
Bank, and the members thereof, follows.
The Bank has a standing Audit Committee composed of John M. Carbahal,
Gregory DuPratt, and Foy S. McNaughton. The Audit Committee reviews and oversees
the internal audit results for the Bank. The Audit committee of the Bank held
six meetings during 2001.
The Bank has a standing Management Committee composed of Lori J. Aldrete,
Frank J. Andrews Jr., John M. Carbahal, Diane P. Hamlyn, Owen J. Onsum, and
David W. Schulze. The Management Committee held two meetings during 2001 for the
purpose of considering the Bank's strategic and personnel issues and reviewing
the annual budget.
The Bank has a standing Loan Committee composed of Frank J. Andrews, Jr.,
Gregory DuPratt, John F. Hamel, Diane P. Hamlyn, Owen J. Onsum and David W.
Schulze. The Loan Committee held 12 meetings during 2001 for the purpose of
approving loans and loan policy.
The Bank has a standing Profit Sharing Committee composed of Gregory
DuPratt, John F. Hamel and Owen J. Onsum. The Profit Sharing Committee held
three meetings during 2001 for the purpose of considering plan administration
and investments.
The Bank has a standing Marketing Committee composed of Lori J. Aldrete,
Gregory DuPratt, Foy S. McNaughton, and Owen J. Onsum. The Marketing Committee
held one meeting during 2001 for the purpose of considering the Bank's marketing
plan.
The Bank has a standing Compensation Committee composed of Gregory DuPratt,
Diane P. Hamlyn, and David W. Schulze. The Compensation Committee held four
meetings during 2001 for the purpose of reviewing and recommending to the Bank's
Board of Directors the Bank's compensation objectives and policies and
administering the FNCBancorp's stock plans.
The Bank has a standing Information Services Committee composed of Gregory
DuPratt and David W. Schulze. The Information Services Committee held three
meetings during 2001 for the purpose of reviewing the Bank's data processing
needs.
The Bank has several other committees that meet on an as-needed basis. The
Bank does not have a nominating committee. The procedures for nominating
directors of FNCBancorp, other than by the Board of Directors itself, are set
forth above in this Proxy Statement. These nomination procedures are designed to
give the Board of Directors advance notice of competing nominations, if any, and
the qualifications of nominees, and may have the effect of precluding
third-party nominations if not followed.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee (the "Committee") of the Board of Directors of
the Bank consists of three directors, none of whom is an officer or employee of
the Bank or FNCBancorp.
Report of Audit Committee
In connection with the December 31, 2001 financial statements of
FNCBancorp, the Audit Committee of the Bank: (1) reviewed and discussed the
audited financial statements with management;
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(2) discussed with the independent auditors the matters required by Statement on
Auditing Standards No. 61; and (3) received and discussed with the independent
auditors the matters required by Independence Standards Board Statement No. 1.
Based upon these reviews and discussions, the Audit Committee of the Bank
recommended to the Board of Directors that the audited financial statements of
FNCBancorp be included in the Annual Report on Form 10-K filed with the SEC for
the year ended December 31, 2001.
In performing its functions, as outlined in the Audit Committee Charter
approved annually by the Board of Directors, the Audit Committee of the Bank
acts only in an oversight capacity and necessarily relies on the work and
assurances of management, which has the primary responsibility for financial
statements and reports, and of the independent auditors, who, in their report,
express an opinion on the conformity of the Company's annual financial
statements to generally accepted accounting principles.
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934 that might incorporate this Proxy Statement or future
filings with the SEC, in whole or in part, this report of the Audit Committee of
the Bank shall not be deemed to be incorporated by reference to any such
filings.
The Audit Committee of the Bank consists of three "independent directors",
as defined in Rule 4200(a)(14) of the NASD's listing standards: John M.
Carbahal, Gregory DuPratt and Foy S. McNaughton.
Respectfully submitted,
John M. Carbahal
Gregory DuPratt
Foy S. McNaughton
Audit and Non-Audit Fees
The following table presents fees for professional audit services rendered
by KPMG LLP for the audit of the Company's annual financial statement for 2001,
and fees billed for other services rendered by KPMG LLP.
Audit fees, excluding audit related $ 70,425.00
Financial information systems design and implementation /(1)/ $ 0.00
All other fees:
Audit related fees /(2)/ $ 16,600.00
Other non-audit services /(3)/ $ 23,100.00
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Total all other fees $110,125.00
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(1) Financial information systems design and implementation consisted of
consulting for enterprise-wide financial information system.
(2) Audit related fees consisted principally of audits of financial statements
of certain employee benefit plans and review of registration statements.
(3) Other nonaudit fees consisted of tax compliance and enterprise zone tax
study.
The Audit Committee of the Bank considered whether the provision of the
services other than the audit services is compatible with maintaining KPMG LLP's
independence.
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Report of the Compensation Committee of the Board of Directors of
the Bank on Executive Compensation
Role of the Compensation Committee The Bank's Compensation Committee (the
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"Committee") reviews and recommends compensation objectives and policies to the
Bank's Board of Directors. The Committee also administers FNCBancorp's stock
plans. Lastly, the Committee reviews and recommends the actual compensation of
the Bank's Chief Executive Officer. The Committee is assisted by the Bank's
human resources personnel and by a compensation consulting firm whose
statistical analyses and other compensation information permit the Committee to
compare the Bank's compensation policies with compensation levels and
prerequisites of other banking companies of similar size in California.
Compensation Philosophy: The Bank seeks to design compensation programs
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that are fair and competitive and that attract, motivate, and retain excellently
performing employees throughout the Bank, while maintaining a strong
relationship between the overall performance of the Bank and the level of
compensation. Furthermore, the Bank believes that compensation programs,
especially those for top executives, should be designed in a manner aligning
employee interests with those of the shareholders. The executive compensation
programs have the following objectives:
. Base salaries will be targeted at the 50/th/ percentile of the Bank's
selected peer group levels.
. Bonus or incentive compensation will be targeted between the 50/th/
and 75/th/ percentile of the Bank's selected peer group levels and are
based on individual, unit, or total Bank performance. At least 50% of
an executive's bonus is based on overall Bank results.
. Stock options are granted under the incentive stock option plan by the
Committee when appropriate to advance the Bank's compensation
objectives.
Compensation Components
Base Salary. The Chief Executive Officer's salary is reviewed annually by
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the Committee with reference to several surveys of salaries paid to executives
with similar responsibilities at comparable banks. The banking companies against
which the Bank compares its compensation are not necessarily those included in
the indices used to compare the shareholder return in the Stock Performance
Chart appearing elsewhere in this proxy statement. Moreover, the banking
companies selected for the compensation comparison can vary from year to year
based upon market conditions and changes in both the Bank's and the comparison
banking companies' businesses over time. The Bank believes that base salaries
targeted at the 50th percentile of the selected peer group levels are necessary
to attract and retain high-caliber executives necessary for the successful
conduct of the Bank's business.
Annual Bonus. The Committee annually reviews and recommends an Incentive
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Compensation Bonus Plan. The Bank's Incentive Compensation Bonus Plan seeks to
motivate executives to work effectively to achieve the Bank's financial
performance objectives and to reward executives when objectives are met. The
Bank's Incentive Compensation Bonus Plan acknowledges bank-wide, individual and
unit performance, with targeted bonus levels between the 50/th/ and 75/th/
percentile of the selected peer group levels. At least 50% of the executive's
bonus is tied directly to overall Bank results. Under the Bank's Incentive
Compensation Bonus Plan all employees, including executive officers, are
eligible to receive an annual cash bonus at the end of each year if performance
targets set annually by the Management Committee at the beginning of each year
are achieved.
Option and Stock Purchase Plans. Under the 2000 Stock Option Plan, the
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Committee, in its discretion, may grant key employees stock options. The grants
are intended to retain and motivate key employees and to provide a direct link
with the interests of the shareholders of FNCBancorp. The Committee's decision
to grant stock options takes into account such factors as:
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. Prior award levels,
. Total awards received to date by individual employees,
. The total stock award to be made and the executive's percentage
participation in that award,
. The employee's direct ownership of FNCBancorp common stock,
. The number of options vested and non-vested, and
. The options outstanding as a percentage of total shares outstanding.
The 2000 Stock Option Plan limits the total number shares subject to
options that may be granted to a participant in any year to a maximum of 25,000
shares.
The 2000 Employee Stock Purchase Plan enables eligible employees, including
officers, to purchase shares of FNCBancorp common stock at a 15% discount. The
amount the employee may purchase may not exceed 10% of the employee's annual
compensation.
Benefits. During 2001, the Bank provided medical and other benefits to its
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executive officers that are generally available to the Bank's other employees.
Internal Revenue Code Limitations. The Committee believes it is in the
---------------------------------
shareholders' best interest to retain as much flexibility as possible in the
design and administration of executive compensation plans. FNCBancorp and the
Bank recognize, however, that section 162(m) of the Internal Revenue Code
disallows a tax deduction for non-exempted compensation exceeding $1,000,000
paid for any fiscal year to a corporation's chief executive officer and four
other most highly compensated executive officers. However, the statute exempts
qualifying performance-based compensation from the deduction limit if certain
requirements are met. The Compensation Committee currently intends to structure
performance-based compensation to executive officers who may be subject to
section 162(m) in a manner that satisfies those requirements. The Board and the
Compensation Committee could award non-deductible compensation in other
circumstances as they deem appropriate. Moreover, because of ambiguities in the
application and interpretation of section 162(m) and the related regulations
issued, the Committee's current view is that compensation intended to satisfy
the requirements for deductibility under section 162(m) actually will be
deductible. Currently, remuneration is not expected to exceed $1.0 million for
any employee. Therefore, compensation should not be affected by the qualifying
compensation regulations.
Respectfully submitted,
Gregory DuPratt
Diane P. Hamlyn
David W. Schulze
Board of Directors Meetings
In 2001, the Board of Directors of the Bank held 12 regularly scheduled
meetings, no special meetings and nine joint meetings with the Board of
Directors of FNCBancorp. Each director attended at least 75% of the aggregate
of: (1) the total number of meetings of the Board of Directors held during the
period for which he or she has been a director; and (2) the total number of
meetings of committees of the Board of Directors on which he or she served
during the period for which he or she served.
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Compensation of Directors
Director Fees and Term Life Insurance. The Board of Directors of FNCBancorp
-------------------------------------
and the Bank are comprised of the same nine people. All cash compensation paid
to Directors is paid by the Bank. Each director who is not an officer or
employee of FNCBancorp or the Bank received $800 for each jointly held and
regularly scheduled meeting attended, $400 per special meeting attended, and
$250 per committee meeting attended. The Bank paid a total of $113,550.00 in
directors' fees during 2001. The Bank also pays the premiums on a $25,000 term
life insurance policy on the life of each non-employee director. Annual premiums
for each policy range from $593.76 to $975.24. Effective January 1, 2002, these
policies were cancelled in favor of the split dollar insurance, see
"Compensation of Directors Director Split Dollar Agreement." Mr. Onsum is the
---------------------------------------------------------
only Director who is an employee of the Bank and FNCBancorp, and he receives no
compensation for his services as a director of either company.
Director Stock Options. Under FNCBancorp's Outside Director 2000
----------------------
Nonstatutory Stock Option Plan, directors who are not officers or employees of
the Bank or FNCBancorp are entitled to an automatic, one-time grant of options
to purchase shares at an exercise price equal to the fair market value of the
common stock on the date of grant. See "EXECUTIVE COMPENSATION--Stock-Based
-----------
Plans."
- -----
Director Retirement Agreements. Effective December 1, 2001, the Bank
------------------------------
entered into Director Retirement Agreements with each of its non-employee
directors (each director other than Director Onsum). The agreements are intended
to encourage existing directors to remain directors of the Bank assuring the
Bank that it will have the benefit of the director's experience and guidance in
the years ahead. The Bank believes it is necessary and appropriate to reward
director service with a competitive compensation package, including board fees
and post-retirement benefits. The agreements provide directors with a retirement
benefit that the Bank considers modest.
For retirement on or after the normal retirement age of 65, the Director
Retirement Agreements provide a benefit for ten years ranging from $10,000
annually for a director with ten years of service to a maximum of $15,000
annually for a director with 15 or more years of service, including years of
service before the Director Retirement Agreements were entered into. Benefits
under the Director Retirement Agreements are payable solely to those directors
who have served for at least ten years, unless the director terminates service
because of disability or unless the director's service terminates within two
years after a change in control. In the case of early termination of a
director's service before age 65 for reasons other than death or disability or
within two years of change of control, he or she will receive over a period of
ten years aggregate payments equal to the retirement-liability balance accrued
by the Bank at the end of the year before the year in which the director's
service terminated. However, early termination benefits will not be payable
unless the director is at least 55 years of age and has served as a director for
at least ten years, including years of service before the Director Retirement
Agreements were entered into. If a director becomes disabled before age 65, the
director will receive a lump-sum payment in an amount equal to the
retirement-liability balance accrued by the Bank at the end of the year before
the year in which disability occurred regardless of whether the director has ten
years of service or has reached age 55. If a change in control occurs and a
director's service terminates within 24 months after the change in control, the
director will receive a lump-sum payment equal to the retirement-liability
balance accrued by the Bank at the end of the year before the year in which
termination occurred, regardless of whether the director has ten years of
service or has reached age 55. For this purpose, the term "change in control"
means:
. A merger occurs and as a consequence FNCBancorp's shareholders end up
with less than 50% of the resulting company's voting stock, or
. A beneficial ownership report is required to be filed under section
13(d) or 14(d) of the Securities Exchange Act of 1934 by a person (or
group of persons acting in concert) to report ownership of 20% or more
of FNCBancorp's voting securities, or
-9-
. During any period of two consecutive years, individuals who constitute
FNCBancorp's Board of Directors at the beginning of the two-year
period cease for any reason to constitute a majority of the Board.
Directors elected during the two-year period are treated as if they
were directors at the beginning of the period if they were nominated
by at least two-thirds of the directors in office at the beginning of
the period.
No benefits are payable under the Director Retirement Agreements to a
director's beneficiaries after the director's death. A director forfeits all
benefits under the Director Retirement Agreement if his or her director service
terminates because of neglect of duties, commission of a felony or misdemeanor,
or acts of fraud, disloyalty, or willful violation of significant Bank policies,
or if the director is removed by order of the Federal Deposit Insurance
Corporation (FDIC).
Director Split Dollar Agreements. The Bank purchased insurance policies on
--------------------------------
the lives of the directors who entered into Director Retirement Agreements,
paying the premiums for these insurance policies with one lump-sum premium
payment of approximately $1.76 million. The Bank expects to recover the premium
in full from its portion of the policies' death benefits. The Bank purchased the
policies as an informal financing mechanism for the post-retirement payment
obligations under the Director Retirement Agreements. Although the Bank expects
the policies on the Directors' lives to serve as a source of funds for benefits
payable under the Director Retirement Agreements, the contractual entitlement
arising under the Director Retirement Agreements are not funded and remain
contractual liabilities of the Bank, payable upon, or after each director's
termination of service.
Under the Bank's Split Dollar Agreements and Split Dollar Policy
Endorsements with the Directors, which were entered into on the same date the
Director Retirement Agreements were executed, the policy interests are divided
between the Bank and each Director. The Split Dollar Agreements provide that a
director's designated beneficiary(ies) will be entitled to receive at the
director's death life insurance proceeds in the amount of (a) $120,000 if the
director dies before age 65, (b) $60,000 if the director dies after reaching age
65 but before age 75, and (c) $30,000 if the director dies thereafter. The
director's beneficiary(ies) would receive no further benefits under the Director
Retirement Agreement, and the Bank's obligations under that agreement would be
extinguished. The Bank is entitled to any insurance policy death benefits
remaining after payment to the director's beneficiary(ies).
Director Elective Deferral Fee Plan. The Bank has implemented an elective
-----------------------------------
deferred director fee plan, a nonqualified plan providing unfunded deferred
benefits for participating directors. Under the Plan, beginning January 1, 2002,
Director Aldrete has elected to defer a portion of her director fees. Her
deferred director fees earn interest at a rate determined annually by the Bank,
currently 7.85%. Deferred fees and interest earned will be paid out to Director
Aldrete at her retirement. If she dies before her retirement age, her
beneficiaries will receive the deferred fees and interest earned. The Bank is
entitled to any insurance policy death benefits from an insurance policy
purchased by the Bank with a lump-sum premium payment of $75,000. None of
FNCBancorp's or the Bank's other directors elected to defer fees under this plan
in 2001.
-10-
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the aggregate remuneration for the services
in all capacities paid by the Bank in the last three fiscal years to the Chief
Executive Officer and to executive officers of the Bank whose total annual
salary and bonus exceeded $100,000. FNCBancorp does not pay any cash
compensation to executive officers beyond the compensation paid to them in their
capacities as officers of the Bank.
Long-Term
Compensation
ANNUAL COMPENSATION Awards
Securities
Name and Principal Fiscal Other Annual Underlying All Other
- ------------------
Position with the Bank Year Salary ($)/(1)/ Bonus ($)/(1)/ Compensation ($) Options(#)/(4)/ Compensation /(5)/
- ---------------------- ----- --------------- -------------- ---------------- --------------- ------------------
Owen J. Onsum 2001 $207,484 $139,572 /(2)/ 21,200 $24,622/(5)/
President, Chief 2000 $192,304 $185,889 /(2)/ 16,854 $25,433
Executive Officer, and 1999 $182,163 $151,338 /(2)/ 13,920 $22,113
Director
Donald J. Fish 2001 $118,710 $ 37,266 /(2)/ 12,720 $25,035/(5)/
Senior Vice President, 2000 $114,569 $ 44,468 /(2)/ 10,112 $23,938
Senior Credit Officer 1999 $111,363 $ 37,084 $ 2,780/(3)/ 7,078 $17,289
Louise A. Walker 2001 $110,500 $ 34,788 /(2)/ 12,720 $21,322/(5)/
Senior Vice 2000 $107,639 $ 41,557 /(2)/ 8,988 $19,855
President/Cashier 1999 $ 97,154 $ 32,352 /(2)/ 7,078 $15,274
Chief Financial Officer
Robert M. Walker 2001 $103,260 $ 32,806 /(2)/ 8,480 $20,362/(5)/
Senior Vice President, 2000 $101,212 $ 39,209 /(2)/ 7,865 $19,355
Branch Administrator 1999 $ 99,466 $ 33,068 /(2)/ 7,078 $15,448
______________________
(1) Includes amounts deferred at the election of the named executive
officers under the Bank's profit sharing/401(k) plan. Also includes
salary deferred by Mr. Onsum under the Bank's Key Executive Elective
Deferred Compensation Plan.
(2) Perquisites and other personal benefits did not exceed the lesser of
$50,000 or 10% of total salary and bonus.
(3) Consists of reimbursement for Mr. Fish's relocation expenses.
(4) Adjusted to reflect a 5% stock dividend on February 26, 1999, and 6%
stock dividends on February 29, 2000 and February 28, 2001.
(5) Includes profit sharing contributions by the Bank in 2001 of $20,102.00
to Mr. Onsum, $19,748.00 to Mr. Fish, $18,402.00 to Ms. Louise Walker,
and $17,242.00 to Mr. Robert Walker. Excludes premiums paid by the Bank
for policies on the executives' lives in connection with the Salary
Continuation Agreements, or the Key Executive Elective Deferred
Compensation Plan. See "Executive Compensation--Agreements Between
First Northern Bank and Executive Officers." Also included are amounts
for health and insurance premiums.
-11-
Option Grants in Last Fiscal Year
The following table shows options granted in 2001 to the officers
identified in the Summary Compensation Table above. All amounts have been
adjusted to account for all stock splits and stock dividends, including the 6%
stock dividend on February 28, 2001.
Number of Percent of Total
Securities Options Granted to Exercise Price Grant Date
Underlying Employees in per share Expiration Present
Name Options Granted/(1)/ Fiscal Year /(2)/ ($/share) Date/(1)/ Value/(3)/
- ----- ------------------- ------------------ -------------- ---------- -------------
Owen J. Onsum 21,200 30.0% $16.04 1/2/2011 $156,085
Donald J. Fish 12,720 20.6% $16.04 1/2/2011 $ 93,651
Louise A. Walker 12,720 20.6% $16.04 1/2/2011 $ 93,651
Robert M. Walker 8,480 13.8% $16.04 1/2/2011 $ 62,434
_______________________
(1) Options are incentive stock options, vesting annually in increments of 20%
of the original grant. The first 20% vests on the date of grant. The
options have a term of 10 years, subject to earlier termination in certain
events related to termination of employment.
(2) Based on options to purchase an aggregate of 61,480 shares of common stock
granted to employees in 2001.
(3) The present value of the options at the date of grant is estimated using a
variation of the Black-Scholes option pricing model, which includes the
following assumptions: a weighted average risk-free interest rate of 4.87%,
an expected volatility of 22%, a weighted average expected option life of
10 years, and an expected dividend yield of zero. The weighted average
grant date present value of the options granted during 2001 was $7.36 per
option. The exercise price of each option is estimated fair market value of
FNCBancorp common stock on the grant date.
Aggregated Option Exercises in Last Fiscal Year/(1)/
and Fiscal Year-End Option Values
The following table shows the number of shares of common stock acquired in
2001 or acquirable upon exercise of options by the executive officers named in
the Summary Compensation Table. The table also indicates the extent to which
options were exercisable at December 31, 2001, as well as the approximate value
of the options based on the estimated value of FNCBancorp's common stock on
December 31, 2001. All amounts have been adjusted to account for all stock
splits and stock dividends, including the 6% stock dividend on February 28,
2001.
-12-
Number of securities underlying
unexercised options Dollar value of in-the-money
at fiscal year end options at fiscal year end (1)
------------------ --------------------------
Number of
shares
acquired on Dollar value
Name exercise realized Exercisable Unexercisable Excercisable Unexercisable
- ---- -------- -------- ----------- ------------ ------------ -------------
Owen J. Onsum 7,431 $90,658 38,209 37,360 $521,098 $456,285
Donald J. Fish 7,431 $95,488 24,046 22,380 $327,862 $272,968
Louise A. Walker 5,647 $66,070 21,605 20,762 $295,104 $250,425
Robert M. Walker 2,972 $24,370 22,984 16,695 $319,763 $207,271
- --------------------------
(1) The value of unexercised options is the estimated fair market value of a
share acquirable upon exercise of an option at December 31, 2001, less the
exercise price, multiplied by the number of shares acquirable upon exercise
of the options. FNCBancorp common stock is quoted on the OTC Bulletin Board
of the NASD under the symbol "FNRN." Solely for purposes of the preceding
table and for no other purpose, FNCBancorp has estimated the per share
market value of the common stock at December 31, 2001 as $26.00. This is an
estimate only. The estimate does not necessarily reflect the price
shareholders may obtain upon sale of their stock or the price at which
shares of FNCBancorp common stock may be acquired, nor should it be taken
to represent management or the board's estimate of the intrinsic value or
appropriate market value of the shares of FNCBancorp common stock.
Agreements Between First Northern Bank and Executive Officers
Employment Agreements. In July 2001, the Bank entered into employment
---------------------
agreements with Messrs. Owen J. Onsum, Donald J. Fish, and Robert M. Walker, and
with Ms. Louise A.Walker. Except for base salaries and potential termination
payments, the four employment agreements are largely identical. The agreements
have three-year terms expiring on December 31, 2003, but the agreements will
renew automatically for consecutive three-year terms unless the executive
officer of the Bank gives advance notice that the agreement will not renew. The
base salaries stated in the employment agreements are $205,020 for Mr. Onsum,
$117,300 for Mr. Fish, $109,500 for Ms. Walker, and $103,260 for Mr. Walker. The
base salary may be adjusted at the beginning of each year based on the
executive's performance in the preceding year, as determined by the Board of
Directors in Mr. Onsum's case or by Mr. Onsum in the case of the three other
executive officers.
The amount of the termination payment due to the executive officer under
the employment agreement depends upon the circumstances of termination. If
termination is a result of the executive's death, disability, or voluntary
termination, or if the executive is terminated for cause, the executive's estate
or the executive generally will receive his or her base salary through the date
of termination, along with any incentive compensation earned by not yet paid.
The executive would also retain any rights he or she may have under stock
options previously granted and under the salary continuation and split dollar
agreements discussed below. If on the other hand the executive is involuntarily
terminated without cause, or if the executive terminates employment for "good
reason" (as defined in the employment agreement), the executive's termination
rights under the employment agreement will consist of:
. If a Change in Control Had Not Occurred in the Two Years Before
-------
Termination: the right to a cash payment in an amount equal to 150% of
the sum of the executive's base salary at the time of termination (in
the case of Mr. Onsum only, and 100% in the case of Messrs. Fish and
Robert Walker and Ms. Louise Walker) plus the average annual bonus
awarded in the three consecutive
-13-
years before the date of termination, assuming a "Change in Control"
(as defined in the employment agreement) did not occur in the two
years before termination of employment,
. If a Change in Control Had Occurred in the Two Years Before
---
Termination: the right to a cash payment in an amount equal to 250% of
the sum of the executive's base salary at the time of termination (in
the case of Mr. Onsum only, and 200% in the case of Messrs. Fish and
Robert Walker and Ms. Louise Walker) plus the average annual bonus
awarded in the three consecutive years before the date of termination,
assuming a "Change in Control" did occur in the two years before
termination of employment. In this case, the executive might also be
entitled to a so-called "gross-up" payment, discussed below,
. Earned but Unpaid Incentive Compensation: any incentive compensation
earned but not yet paid, and
. Retained Rights under Other Benefit Plans and Arrangements: the
executives may have rights to termination-related payments arising
under other benefit plans and arrangements, including the salary
continuation and split dollar agreements discussed below. If an
executive is terminated involuntarily without cause, or if the
executive terminates employment for "good reason," he or she generally
would have 90 days to exercise vested stock options. Under section
6(e) of the 2000 Stock Option Plan, all of the unvested stock options
held by an executive become fully vested when a change in control
occurs. Otherwise, options vest in annual increments based on an
established vesting schedule. See "Executive Compensation--Stock Based
-----------
Plans."
-----
Accordingly, an executive's entitlement to a termination payment depends on
whether a "Change in Control" has occurred and whether the executive's
termination is involuntary and without cause or the executive's voluntary
termination is for "good reason." The employment agreements define a "Change in
Control" to include the following circumstances:
. Any person or group is or becomes the beneficial owner of FNCBancorp
securities representing 20% or more of the combined voting power of
the outstanding securities (excluding acquisition of FNCBancorp
securities by an employee benefit plan maintained by the Bank of its
employees), or
. FNCBancorp is a party to a merger, consolidation, sale of assets or
other reorganization, or a proxy contest, and as a consequence members
of the FNCBancorp's Board of Directors in office immediately before
the transaction or proxy contest constitute less than a majority of
the Board of Directors afterwards, or
. During any period of 24 consecutive months, individuals who at the
beginning of the 24-month period constituted FNCBancorp's Board of
Directors cease for any reason to constitute a majority, but a new
director approved by at least two-thirds of the directors who were
directors at the beginning of the 24-month period is considered for
this purpose to have also been a director at the beginning of the
24-month period, or
. A change in control of FNCBancorp is reported in its proxy statement.
The employment agreements define "good reason" to mean a material reduction
in the executive's compensation or benefits, a material reduction in the
executive's title or responsibilities, a relocation of executive's principal
office increasing the executive's commute by more than 40 miles, or a failure of
a successor to assume and perform the Bank's obligations under the employment
agreement.
The Bank has also conditionally promised in the employment agreements
to make an additional payment to the executive officers if they are
involuntarily terminated or if they terminate employment for
-14-
good reason, in either case within two years after a change in control. But the
additional payment, sometimes referred to as a "tax gross-up payment," will be
payable if and only if the total benefits or payments to which the executive
officer is entitled are subject to the "golden parachute" provisions of the
Internal Revenue Code (whether the benefits or payments arise under the
employment agreement or under another compensation plan or arrangement, such as
the Salary Continuation Agreements). The "Golden parachute" provisions of the
Internal Revenue Code include section 280G, which can eliminate the employer's
compensation expense deduction for a substantial portion of the
change-in-control benefits paid to an executive, and section 4999, which imposes
a 20% excise tax on the executive receiving change-in-control benefits over a
certain threshold. If an executive's change-in-control benefits exceed that
threshold, which is roughly three times the executive's average annual
compensation over the preceding five years, the executive can be forced by
section 4999 to pay a 20% excise tax on the portion of the change-in-control
benefits that exceeds the multiple of the executive's five-year average W-2
reported compensation, and under section 280G the employer forfeits its
compensation expense deduction for benefits that are subject to the excise tax.
The calculation of total change-in-control benefits is a very complicated one,
taking into account all change-in-control benefits, whether under a severance or
employment agreement, a salary continuation agreement, a stock option plan, and
so on.
The amount of the additional payment that could be required under the
employment agreements if the "golden parachute" provision of the Internal
Revenue Code apply is the amount necessary to compensate the executive for his
or her excise taxes as well as for taxes payable on the additional payment
itself. The net amount the executive receives is intended to be the amount the
executive would have received if the "golden parachute" provision of the
Internal Revenue Code had not applied. The tax gross-up payment would not be
deductible by FNCBancorp or the Bank.
Salary Continuation and Split Dollar Agreements. FNCBancorp and the Bank do
-----------------------------------------------
not have a defined benefit pension plan providing benefits based on final
compensation and years of service. However, in 2001 the Bank's Board of
Directors authorized the Bank to enter into Salary Continuation Agreements
effective January 2, 2002 with six officers, including Mr. Onsum and the three
other executive officers named in the Summary Compensation Table above. The
Salary Continuation Agreements are intended to provide the officers with a fixed
annual benefit for 10 years subsequent to retirement on or after the normal
retirement age of 65. Although the Salary Continuation Agreements provide for
payment of stated, fixed benefits, the Bank's Board of Directors has the
discretion to increase benefits payable under the Salary Continuation
Agreements.
The Salary Continuation Agreements provide for reduced benefits in the case
of early termination on or after reaching an early retirement threshold age, or
in the case of termination due to disability occurring at any age. Benefits are
also payable under the Salary Continuation Agreements if the officer's service
with the Bank terminates at any age but within 24 months after a change in
control. The term "change in control" is defined in the Salary Continuation
Agreements in the same way it is defined in the Director Retirement Agreements
discussed previously in this proxy statement, but unlike the Director Retirement
Agreements change in control benefits under the Salary Continuation Agreements
are payable if and only if the executive (a) is involuntarily terminated without
cause within 24 months after a change in control, or (b) terminates employment
voluntarily for "good reason" within 24 months after a change in control. For
this purpose "good reason" is defined in the Salary Continuation Agreements to
include a material reduction in the executive's title or responsibilities, a
reduction in the executive's base salary or benefits, a relocation of the
executive's principal office increasing the executive's commute by more than 40
miles, and the failure of a successor to assume and perform the Bank's
obligations under the Salary Continuation Agreement. Like the executives'
employment agreements discussed elsewhere in this proxy statement, the Salary
Continuation Agreements of Mr. Onsum and the three other officers identified in
the Summary Compensation Table also provide for payment of a tax gross-up
benefit if these four officers' benefits are subject to excise taxes under
section 280G and 4999 of the Internal Revenue Code.
-15-
The Bank has also agreed to pay legal fees incurred by the officers
associated with the interpretation, enforcement, or defense of their rights
under the Salary Continuation Agreements in the event of a change of control, up
to a maximum of $500,000 for Mr. Onsum and $250,000 for each of the three other
officers identified in the Summary Compensation Table.
On September 30, 2001, the Bank purchased insurance policies on the six
officers' lives, making a single premium payment aggregating $3.5 million, of
which $2.6 million is attributable to insurance purchased on the lives of the
four executives named in the Summary Compensation Table. The premium amounts are
not reflected in the Summary Compensation Table. No benefits are payable under
an executive's Salary Continuation Agreement to the executive's beneficiaries
after the executive's death, and the Bank's obligations under that agreement are
extinguished by the executive's death. If the executive dies before the normal
retirment age but in active service to the Bank, his or her beneficiaries will
receive a life insurance death benefit in a fixed amount. If the executive dies
after retirement, his or her beneficiaries will receive life insurance proceeds
in an amont approximating the remaining accrual balance under the Salary
Continuation Agreement. The Bank is entitled to any insurance policy death
benefits remaining after payment to the executive's beneficiary(ies). The Bank
expects to recover the premium in full from its portion of the policies' death
benefits. The Bank purchased the policies as a source of funds for the Salary
Continuation Agreement obligations arising out of executives' death before
retirement, as well as an investment to fund post-retirement payment
obligations. Although the Bank expects the policies to serve as a source of
funds for death benefits payable under the Salary Continuation Agreements, the
executives' contractual entitlements under the Salary Continuation Agreements
are not funded. These contractual entitlements remain contractual liabilities of
the Bank, payable after the executives' termination of employment.
The following table shows benefits payable under the Salary Continuation
Agreements to the executive officers named in the Summary Compensation Table.
Annual benefit
payable under
the Salary Lump sum
Continuation payable for
Agreement for termination
10 years at within 24
Early retirement on months Life insurance
Early termination at or after after a change death benefit
Disability termination first normal in control if the
occurring in occurring in eligibility retirement age occurring in executive dies
Named executive officer 2002/(1)/ 2002/(1)/ 55/(1) (2)/ 65/(2)/ 2002/(3)/ in 2002/(4)/
- ------------------------- ---------------- ---------------- ---------------- ---------------- ----------------- ----------------
Owen J. Onsum $ 9,518 $ 9,518 $ 9,518 $ 125,000 $ 586,408 $ 1,000,000
Donald J. Fish $17,628 0 0 $ 50,000 $ 304,638 $ 450,000
Louise A. Walker $ 708 0 $ 27,931 /(2)/ $ 100,000 $ 211,459 $ 800,000
Robert M. Walker $ 2,533 0 $ 12,872 /(2) / $ 100,000 $ 341,950 $ 800,000
- --------------------------
(1) Benefits generally are not payable if employment terminates before the
early retirement age, which is age 55 or the age at which the executive
will have had 10 years of service, whichever is later. Mr. Onsum is
currently the only executive officer eligible for early termination
benefits. But if termination of service is due to disability or if it
follows within 24 months after a change in control, benefits are payable
under the Salary Continuation Agreements regardless of whether the
executive has 10 years of service or has reach age 55. Having begun service
with the Bank in 1997, Mr. Fish will reach normal retirement age 65 before
accruing 10 years of service, and for that reason he will not be eligible
for early termination benefits. The disability benefit amount increases for
each year of service up to the normal retirement age of 65.
-16-
(2) For each year of service after reaching the early retirement age, the early
termination benefit increases in amount until normal retirement age. Mr.
Onsum is currently eligible to receive an early termination benefits, but
Ms. Louise Walker and Mr. Robert Walker will not become eligible to receive
an early termination benefit until 2015 and 2005, respectively. As
explained in note (1), Mr. Fish will not be eligible for early termination
benefits. Mr. Onsum will reach the normal retirement age of 65 in 2009, Mr.
Fish in 2004, Ms. Walker in 2025, and Mr. Walker in 2015.
(3) Payable within three days after the executive's termination, the change in
control lump sum payable under the Salary Continuation Agreements is the
executive's aggregate normal retirement benefit discounted by the 10-year
Treasury bill rate at the end of the year preceding the year in which
termination of employment occurred. The amount shown assumes a change in
control occurs in 2002, followed in 2002 by termination of the executive
(a) involuntarily and without cause or (b) voluntarily but with "good
reason." The change in control benefit shown is calculated using a 5.07%
discount rate, the 10-year Treasury bill rate at December 31, 2001. The
named executives' employment agreements and Salary Continuation Agreements
also provide for an additional tax gross-up payment if the total payments
and benefits due to them as a result of a change in control exceed the
limits under section 280G of the Internal Revenue Code. The gross-up
feature is discussed in the description of the executives' employment
agreements. The figures in the table above do not include any tax gross-up
payments.
(4) The death benefit is reduced by half at age 65, and by half again at age
75.
Profit Sharing Plan
The First Northern Bank of Dixon Profit Sharing/401(k) Plan and Trust
Agreement has existed since 1955. Employees of the Bank who have worked at the
Bank at least 1,000 hours during a calendar year are eligible to participate in
the Profit Sharing Plan. The Bank generally contributes annually to the Profit
Sharing Plan Trustees an amount equal to the lesser of (a) 10% of the Bank's net
income before taxes, net of loan loss experience or (b) 15% of the total annual
compensation of all Profit Sharing Plan participants. The Bank's contribution is
allocated to each Plan participant's account according to the ratio each
participant's annual compensation bears to the total annual compensation of all
participants. Contributions to a participant's account vest after five years.
Distribution of vested amounts occurs when the participant terminates
employment, retires, becomes disabled, or dies. The Bank added a 401(k)
contribution feature to the Profit Sharing Plan in 1997, allowing employees to
make contributions. The Bank's contribution to the Profit Sharing Plan in 2001
was $870,323.50
Stock-Based Plans
First Northern Community Bancorp has three stock-based benefit plans. Under
the FNCBancorp Outside Directors 2000 Nonstatutory Stock Option Plan, options to
purchase common stock may be awarded to directors of FNCBancorp who are not
employees of FNCBancorp or the Bank. Under the separate FNCBancorp 2000 Stock
Option Plan, options to purchase common stock may be awarded to employees of
FNCBancorp or the Bank. Finally, the 2000 FNCBancorp Employee Stock Purchase
Plan allows eligible employees to contribute a percentage of their compensation
to the plan. The contributed compensation is then applied toward the purchase of
FNCBancorp common stock at a discounted price.
These three plans are successor plans to the Employee Stock Option Plan,
the Outside Director Stock Option Plan, and the Employee Stock Purchase Plan
adopted by the Bank in 1997. No additional awards or rights may be granted under
the original 1997 plans, and rights to the Bank common stock and options to
acquire the Bank common stock became rights to FNCBancorp common stock and
options to purchase FNCBancorp common stock when the holding company
reorganization of the Bank was completed on May 19, 2000. Like the plans
originally adopted in 1997, these three successor plans expire on February 27,
2007.
By providing for the grant of stock options accruing value to the holder as
the value of the stock acquirable by exercise of the option also increases in
value, the 2000 Stock Option Plan and the Outside Directors 2000 Nonstatutory
Stock Option Plan more closely align the financial interests of employees and
-17-
directors with those of shareholders. The purpose of the plans is to promote the
long-term success of FNCBancorp and the creation of shareholder value by:
. Encouraging key personnel to focus on critical long range objectives,
. Increasing the ability of the Bank to attract and retain employees and
directors who can contribute to the Bank's and FNCBancorp's long-term
success, and
. Promoting shareholder interests by ensuring that key employees and
directors have proprietary interests as shareholders in FNCBancorp's
success.
The 2000 Stock Option Plan and the Outside Director 2000 Nonstatutory Stock
Option Plan are administered by a committee designated by FNCBancorp's Board.
The Board designated the Compensation Committee of the Bank to administer the
plans. The committee generally determines the vesting schedule of stock options,
but all stock options granted to date vest and become exercisable in annual 20%
increments, the first 20% vesting and becoming exercisable on the date of grant.
However, all unvested stock options become fully vested and exercisable if a
change in control occurs. According to section 2(b) of each of the stock option
plans, a change in control means any of the following events occur:
. The shareholders of FNCBancorp approve a merger or consolidation
having the result that (a) FNCBancorp is not the surviving entity, or
(b) shareholders of FNCBancorp immediately before the merger or
consolidation end up with less that 50% of the voting power of
FNCBancorp, or
. The composition of FNCBancorp's Board changes, with the result that
less than one half of the incumbent directors (a) are directors who
were directors 24 months before the change, or (b) were more recently
appointed or elected, but were approved by a majority of the directors
who were directors 24 months before the change and who were still in
office at the time of the new director's election or nomination, or
. A person or firm becomes the beneficial owner of 25% or more of the
---
combined voting power of FNCBancorp's outstanding common stock.
Unvested options expire when an employee's or director's service
terminates. Options that are vested and exercisable when an employee's or
director's service terminates may be exercised at any time within 90 days after
termination of his or her service, except in the case of the option holder's
death or termination because of disability, in which case they expire after one
year. If the option holder's service is terminated for cause, all of his or her
options expire immediately. Options granted under the plans are not transferable
except by will or the laws of descent and distribution, and are exercisable
during the option grantee's lifetime by the option grantee only. If an option
under either plan expires, is canceled or forfeited, or terminates without
having been fully exercised, the unpurchased shares subject to that option again
become available for the grant of additional options under the plans.
First Northern Community Bancorp 2000 Stock Option Plan. The 2000 Stock
-------------------------------------------------------
Option Plan provides for the grant of options to acquire a maximum of 619,384
shares of common stock (as adjusted for the 6% stock dividend on February 28,
2001). Options to acquire 231,301 shares were issued and outstanding as of
December 31, 2001. Options can be either incentive stock options, sometimes
known as "ISOs," or nonqualified stock options, sometimes known as "NQSOs." An
ISO is an option that satisfies the terms of section 422 of the Internal Revenue
Code. Provided the rules of section 422 are complied with, an option holder is
not taxed when he or she exercises an ISO; however, the option holder may be
subject to paying alternative minimum tax. The holder is ultimately taxed at
capital gains rates when he or she sells shares acquired by exercise of an ISO
after a one-year holding period. The employer is not entitled to a compensation
deduction if the one-year holding period is met. If an ISO is granted pursuant
to which the aggregate Fair Market Value of shares with respect to which it
first becomes exercisable in any calendar year exceeds $100,000, the portion of
such option, which is in excess of the $100,000, shall be treated as a NQSO
pursuant to section 422 (d) (1). The holder of an NQSO may be taxed at ordinary
income rates when he or she exercises an NQSO, and the employer is entitled to a
compensation expense deduction for the amount by
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which the fair market value of the stock acquired by exercise of the NQSO
exceeds the exercise price. The majority of options granted to officers and
employees under the plan to date are ISOs. The exercise price of options is
determined by the Compensation Committee, but the exercise price of ISOs may not
be less than the fair market value of the shares on the date the option was
granted (or 110% of fair market value in the case of any ISO granted to a holder
of more than 10% of FNCBancorp common stock). No employee may be granted in any
year an option or options to acquire more than 25,000 shares. All options have
10-year terms, but the committee may fix a longer or shorter term for NQSOs
granted in the future.
First Northern Community Bancorp Outside Directors 2000 Nonstatutory Stock
--------------------------------------------------------------------------
Option Plan. The Nonstatutory Stock Option Plan provides for the grant of
- -----------
options to acquire a maximum of 185,814 shares of common stock (as adjusted for
the 6% stock dividend on February 28, 2001). Options to acquire 50,599 shares
were issued and outstanding as of December 31, 2001. Unlike the 2000 Stock
Option Plan for employees, all options granted under the Nonstatutory Stock
Option Plan are NQSOs, and all of the options granted to date have five-year
terms. Under the Nonstatutory Stock Option Plan, each non-employee director
receives an automatic, one-time grant of options to purchase 7,432 shares (as
adjusted for the 6% stock dividend on February 28, 2001 at an exercise price
equal to the fair market value of the common stock on the date of grant.
Employee Stock Purchase Plan. Like the stock option plans, the 2000
----------------------------
FNCBancorp Employee Stock Purchase Plan is intended to promote shareholder
interests by encouraging employees to acquire a proprietary interest in the
success of FNCBancorp. Intended to qualify under section 423 of the Internal
Revenue Code, the plan allows eligible employees to purchase shares of
FNCBancorp common stock through payroll deductions. An employee may elect to
have up to 10% of his or her compensation withheld for the purchase of common
stock. Every employee excluding executive officers of the Bank or FNCBancorp
with at least 90 days of service is eligible to participate in the stock
purchase plan, but a person is ineligible to participate if (a) he or she owns
5% or more of FNCBancorp's stock, or (b) he or she would be able to purchase
common stock having an aggregate fair market value exceeding $25,000 in each
calendar year. Using accumulated funds from payroll deductions, shares of
FNCBancorp are purchased directly from FNCBancorp at the end of each
participation period. Under the plan, each participation period can be up to 27
months long. The current participation period began on November 24, 2001 and
ends on November 23, 2003. The shares are purchased at a discounted price of 85%
of the shares' fair market value on (a) the last trading day before the
beginning of the participation period, or (b) the last trading day before the
end of the participation period, whichever amount is less. Fair market value is
determined by a plan administrator selected by FNCBancorp's Board. A total of
619,384 shares (as adjusted for the 6% stock dividend paid on February 28, 2001)
are available for purchase under the 2000 Employee Stock Purchase Plan.
KEY EXECUTIVE ELECTIVE DEFERRED COMPENSATION PLAN-2001 EXECUTIVE DEFERRAL PLAN
Internal Revenue Code limitations on benefits payable under tax-qualified
plans, such as 401(k) plans, work to the disadvantage of senior executives whose
compensation exceeds compensation paid to more junior officers and employees.
Because of tax-law limitations on benefit levels under qualified plans, senior
executives are forced to take a greater percentage of their compensation as
taxable income, without the ability to make elective deferrals under qualified
plans on a basis comparable to junior officers' and employees' elective deferral
rates. To offset the effect of tax-law limitations on benefits under
tax-qualified plans, the Bank modified the previous executive elective deferred
compensation plan called the "1995 Executive Deferral Plan" to the "2001
Executive Deferral Plan. The plan is a nonqualified plan providing key
executives with an unfunded, deferred compensation program. Under the plan,
eligible executives may elect to defer a portion of their current compensation.
Deferred amounts earn interest at an annual rate determined by the Bank's Board,
currently 7.85%. Deferred compensation and interest earned will be paid out to
the participating executive at or following his or her retirement. Mr. Onsum and
Ms. Louise Walker are the only executives who elected to defer compensation in
2001 under this plan, which became effective January 1, 2002. If the executive
dies before retirement age, the Bank will receive the death benefits of an
insurance policy purchased by the Bank on the executive's life. In December
2001, the Bank purchased single-
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premium life insurance policies on the lives of Mr. Onsum and Ms. Walker in
connection with the Executive Deferral Plan, with a single premium of $1.125
million for the policy on Mr. Onsum's life and a premium of $425,000 for the
policy on Ms. Walker's life. The premium amounts are not reflected in the
Summary Compensation Table. The Bank is the beneficiary and owner of the
policies.
Certain Transactions
Certain directors and executive officers and corporations and other
organizations associated with them and members of their immediate families were
customers of and had banking transactions, including loans, with the Bank in the
ordinary course of business in 2001. Such loans were made on substantially the
same terms, including interest rates and collateral, as those available at the
time for similar transactions with other persons. These loans did not involve
more than the normal risk of collection or have other unfavorable features.
Security Ownership of Certain Beneficial Owners and Management
To the best of FNCBancorp's knowledge, as of the record date for the annual
meeting no person or entity was the beneficial owner of more than 5% of the
common stock. The table below shows the beneficial ownership of FNCBancorp
common stock by each director, by each executive officer named in the Summary
Compensation Table, and by all directors and executive officers as a group. The
figures in the table are based on beneficial ownership as of February 28, 2002,
and they are adjusted for the 6% stock dividend on February 28, 2002. Under
Securities and Exchange Commission rules, shares are considered to be
"beneficially" owned by a person if he or she has or shares the power to vote or
direct the voting of the shares, the power to dispose of or direct the
disposition of the shares, or the right to acquire beneficial ownership within
60 days. Except as indicated by footnotes and subject to community property
laws, where applicable, the persons named in the table have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them.
Shares acquirable
Shares within 60 days by
beneficially exercise of Percent of
Directors, nominees and named executive officers owned options stock
- ------------------------------------------------ ----- ------- -----
Lori J. Aldrete /(1)/ 6,462 0 *
Frank J. Andrews, Jr. 3,713 7,877 *
John M. Carbahal /(2)/ 11,113 3,939 *
Gregory DuPratt /(3)/ 7,964 0 *
Donald J. Fish /(4)/ 2,806 36,829 1.11%
John F. Hamel /(5)/ 42,274 0 1.19%
Diane P. Hamlyn /(6)/ 23,079 7,877 *
Foy S. McNaughton /(7)/ 416 3,151 *
Owen J. Onsum /(8)/ 53,031 60,479 3.19%
David W. Schulze /(9)/ 62,418 0 1.75%
Louise A. Walker /(10)/ 6,101 37,998 1.24%
Robert M. Walker /(11)/ 3,150 32,748 1.01%
All directors and executive officers as a group (13 people) 222,527 190,898 11.61%
- --------------------------
* Does not exceed 1%.
-20-
(1) Includes 5,846 shares held jointly with Ms. Aldrete's spouse.
(2) Includes 4,754 shares held jointly with Mr. Carbahal's spouse, 630 shares
held by Carbahal & Company, an accountancy corporation of which Mr.
Carbahal is a principal and shareholder, 4,853 shares held by the Carbahal
& Company Annual Accumulation, and 438 shares held by Mr. Carbahal's
spouse.
(3) Includes 3,328 shares held separately by Mr. DuPratt's spouse.
(4) Includes 32 shares held by The Fish Family Trust, of which Mr. Fish is a
co-trustee and shares voting and investment power with respect to such
shares and 2,941 shares held jointly with Mr. Fish's spouse.
(5) Includes 30,609 shares held by the R/J Hamel Family Trust of which Mr.
Hamel is a co-trustee and shares voting and investment power with respect
to such shares, and 1,132 shares held jointly with Mr. Hamel's spouse.
(6) Includes 59 shares held by Ms. Hamlyn as custodian for Catherine S.
Lindley, 36 shares held by Ms. Hamlyn as custodian for Stephen A. Lindley,
11,438 shares held separately in Ms. Hamlyn's spouse's name, 983 shares
held jointly with Ms. Hamlyn's spouse, 683 shares held separately in the
name of Janet Diane Hamlyn, 2,931 shares held by the Davisville Travel
Profit Sharing Plan of which Ms. Hamlyn is trustee and shares voting and
investment power with respect to such shares.
(7) Includes 416 shares held by The McNaughton Family Trust of which Mr.
McNaughton is a co-trustee and shares voting and investment power with
respect to such shares.
(8) Includes 16,945 shares held jointly with Mr. Onsum's spouse, 850 shares
held by Mr. Onsum as custodian for Matthew David Onsum, 828 shares held by
Mr. Onsum as custodian for Brandon John Onsum, 34,408 shares held by the
First Northern Bank of Dixon Profit Sharing Plan, of which Mr. Onsum is a
trustee and shares voting and investment power with respect to such shares.
(9) Includes 2,625 shares held separately by Mr. Schulze's spouse.
(10) Includes 5,985 shares held jointly with Ms. Walker's spouse, 59 shares held
by Ms. Walker as custodian for Jonathan Walker, 44 shares held by Ms.
Walker as custodian for Steven Walker, and 13 shares held by Ms. Walker as
custodian for James R. Robinson.
(11) Includes 3,150 shares held jointly with Mr. Walker's spouse.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act, as administered by the Securities and
Exchange Commission (the "SEC") requires FNCBancorp's directors and executive
officers and persons who own more than ten percent of a registered class of
FNCBancorp equity securities to file with the SEC initial reports of ownership
and reports of changes in ownership of common stock of FNCBancorp. Executive
officers, directors and greater than ten percent shareholders are required by
the SEC to furnish FNCBancorp with copies of all Section 16(a) forms they file.
Based upon review of such reports, FNCBancorp believes that all reports required
by Section 16(a) of the Exchange Act to be filed by its executive officers and
directors during the last fiscal year were filed on time.
Stock Performance Graph
The graph below compares the cumulative total shareholder return on First
Northern Community Bancorp common stock to the cumulative total return of the
Russell 2000, 2000 Northern California Peer Group and 2001 Northern California
Peer Group as prepared by SNL Securities LC, which uses the index of 10
commercial banks and bank holding companies as reported on the OTC Bulletin
Board, an electronic, screen-based market maintained by the National Association
of Securities Dealers, Inc.'s subsidiary, NASD Regulation, Inc. The following
comparison covers the period December 31, 1996 to December 31, 2001. The graph
assumes that $100 was invested on December 31, 1996 and that all dividends were
reinvested.
-21-
STOCK PERFORMANCE CHART /(1)/
[GRAPHIC]
______________________________
(1) Assumes $100 invested on December 31, 1996 in the Bank's Common Stock, the
Russell 2000 composite stock index and *SNL Securities' index of ten 2000
Northern California bank stocks and SNL Securities' index of ten 2001
Northern California bank stocks, with reinvestment of dividends.
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
-------- -------- -------- -------- -------- --------
FNCBancorp $100.00 $132.89 $135.89 $140.18 $185.41 $328.24
Russell 2000 $100.00 $122.36 $119.25 $144.60 $140.23 $143.71
2000 No. CA Peer Group* $100.00 $162.07 $153.65 $163.98 $153.03 $186.43
2001 No. CA Peer Group* $100.00 $160.87 $170.29 $155.22 $146.02 $161.81
*Source: SNL Securities L.C.
(2) FNCBancorp is not among the approximately 2000 companies included in the
Russell 2000. The SNL Securities 2000 and 2001 Northern California Peer
Group is a group that includes 10 commercial banks and bank holding
companies whose stocks trade over-the-counter on the OTC Bulletin Board.
FNCBancorp is not included in the Northern California Peer Group.
PROPOSAL 2
----------
Ratification of Auditors
At the Meeting a vote will be taken on a proposal to ratify the appointment
of KPMG LLP, by the Board of Directors, to act as independent auditors of the
Bank and FNCBancorp for the year ending December 31, 2002. KPMG LLP acted as
independent accountants and auditors for the fiscal year ending December 31,
2001.
It is anticipated that a representative of KPMG LLP will be present at the
Meeting, will have the opportunity to make a statement if he or she desires and
will be available to respond to appropriate questions.
-22-
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF KPMG LLP AS
---
THE BANK'S AND FNCBANCORP'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2002.
Information Available to Shareholders
Our annual report is being mailed to shareholders with this proxy
statement. Additional copies of the annual report may be obtained without charge
by writing to Lynn Campbell, Investor Relations, First Northern Community
Bancorp, 195 North First Street, Dixon, California 95620.
First Northern Community Bancorp is required to file periodic reports and
other information with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 and rules there under. Copies of the public
portions of reports to the SEC may be inspected and copied at the headquarters
of the SEC, 450 Fifth Street, NW, Washington, D.C. 20549. Certain information is
available electronically at the SEC's internet web site at www.sec.gov.
A copy of First Northern Community Bancorp's Annual Report on Form 10-K for
the Fiscal Year Ended December 31, 2001 as filed with The Securities and
Exchange Commission is included with this mailing. Any additional copies will be
furnished without charge to shareholders upon written request to: Lynn Campbell,
Corporate Secretary, First Northern Community Bancorp, 195 North First Street,
Dixon, California 95620.
SHAREHOLDER PROPOSALS
Under the rules of the regulatory authorities, if a shareholder wants to
include a proposal in FNCBancorp's proxy statement and form of proxy for
presentation at the 2003 annual meeting of shareholders, the proposal must be
received by FNCBancorp at its principal executive offices by November 27, 2002.
Under FNCBancorp's bylaws, certain procedures are provided which a
shareholder must follow to nominate persons for election as directors or to
introduce an item of business at an annual meeting of shareholders.
Nomination of directors must be made by notification in writing delivered
or mailed to the President of the Company at the Company's principal executive
offices not less that 30 days or more than 60 days prior to any meeting of
shareholders called for elections of directors and must contain certain
information about the director nominee. FNCBancorp's annual meeting of
shareholders is generally held on the fourth Thursday of April. If FNCBancorp's
2003 annual meeting of shareholders is held on schedule, FNCBancorp must receive
notice of any nomination no earlier than February 24, 2003, and no later than
March 26, 2003. The Chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing procedures.
Notice of any business item proposed to be brought before an annual meeting
by a shareholder must be received by the Secretary of FNCBancorp not less than
70 days or more than 90 days prior to the first anniversary of the preceding
year's annual meeting unless the date of the 2003 annual meeting is advanced by
more than 20 days or delayed by more than 70 days in which case notice must be
received not more than 90 days and not less than the later of 70 days prior to
the meeting or 10 days after the public announcement of the meeting date.
Assuming no such advance or delay, FNCBancorp must receive notice of any
proposed business item no earlier than January 26, 2003, and no later than
February 15, 2003. If FNCBancorp does not receive timely notice, FNCBancorp's
bylaws preclude consideration of the business item at the annual meeting. With
respect to notice of a proposed item of business, the bylaws provide that the
notice must
-23-
include a brief description of the business desired to be brought before the
meeting, the reasons for conducting such business at the meeting and certain
information regarding the shareholder giving the notice.
A copy of FNCBancorp's bylaws may be obtained upon written request to the
Secretary of FNCBancorp at the Bank's principal executive offices.
OTHER MATTERS
The management of the Company is not aware of any other matters to be
presented for consideration at the Meeting or any adjournments or postponements
thereof. If any other matters should properly come before the Meeting, it is
intended that the persons named in the enclosed Proxy will vote the shares
represented thereby in accordance with their best business judgment, pursuant to
the discretionary authority granted therein.
By Order of the Board of Directors
/s/ Owen J. Onsum
-----------------
Owen J. Onsum
President and
Chief Executive Officer
-24-
FIRST NORTHERN [LOGO]
COMMUNITY BANCORP
Revocable Proxy Solicited by the Board of Directors for the
Annual Meeting of Shareholders to be Held on April 25, 2002
The undersigned hereby appoint(s) Dorothy F. Wallace and Ernest J. Weyand,
and either of them, each with full power of substitution as Proxy for the
undersigned, to attend the Annual Meeting of the Shareholders of First Northern
Community Bancorp to be held at the First Northern Bank Operations Center, 210
Stratford Avenue, Dixon, California, at 7:30 p.m. on April 25, 2002, and any
adjournment thereof, and to vote the number of shares the undersigned would be
entitled to vote if personally present as indicated below:
THE BOARD OF DIRECTORS RECOMMENDS A "FOR" VOTE ON EACH OF ITEMS 1 AND 2
BELOW:
(1) To elect the following nine (9) persons to the Board of Directors to serve
until the 2003 Annual Meeting of Shareholders and until their successors
are elected and qualified:
Lori J. Aldrete Gregory DuPratt Foy S. McNaughton
Frank J. Andrews, Jr. John F. Hamel Owen J. Onsum
John M. Carbahal Diane P. Hamlyn David W. Schulze
[_] VOTE FOR ALL NOMINEES LISTED ABOVE, except for the nominees
named, if any:
[_] VOTE WITHHELD
(2) PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP as the independent public
accountants for 2002.
[_] FOR [_] AGAINST [_] ABSTAIN
(3) In their discretion, the Proxyholders are authorized to vote upon such
other business as may properly come before the meeting.
This Proxy when properly executed will be voted in the manner directed by
the undersigned shareholder. If no direction is made, This Proxy will be voted
for some or all of the nominees listed under Item 1, in the manner described in
the Proxy Statement dated April 4, 2002, and in favor of Item 2. This proxy
confers on the proxyholders the power of cumulative voting as described in such
Proxy Statement.
Please sign exactly as name appears herein. When shares are held by joint
tenants, both must sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: ____________, 2002 Signed ___________________________
Dated: ____________, 2002 Signed ___________________________
- --------------------------------------------------------------------------------
Please sign exactly as shown below and give your full title, if applicable
- --------------------------------------------------------------------------------
I/We do [_] do not [_] expect to attend this meeting. Number expected to
attend: _____________
Please indicate how you would like your nametag(s) to read:
---------------------------- ----------------------------
Please Type
or Print
---------------------------- ----------------------------
PLEASE PROMPTLY COMPLETE THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE