UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
MID PENN BANCORP INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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[_] Fee paid previously with preliminary materials:
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[_] 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:
________________________________________________________________________________
[Mid Penn Bancorp Logo]
March 26, 2001
Dear Shareholders:
It is my pleasure to invite you to attend the 2001 Annual Meeting of
Shareholders of Mid Penn Bancorp, Inc. to be held on Tuesday, April 24, 2001, at
10:00 a.m., prevailing time. The annual meeting will be held at Mid Penn Bank,
349 Union Street, Millersburg, Pennsylvania 17061.
The Notice of the Annual Meeting and the enclosed proxy statement address
the formal business of the meeting. The formal business schedule includes the
election of 3 Class C Directors and the ratification of the selection of the
independent auditors for 2001. At the meeting, the corporation's management
will review the corporation's operations during the past year and will be
available to respond to questions.
We strongly encourage you to vote your shares, whether or not you plan to
attend the meeting. It is very important that you sign, date and return the
accompanying proxy as soon as possible in the postage-paid envelope. If you do
attend the meeting and wish to vote in person, you must give written notice to
the corporation's Secretary so that your proxy will be superseded by any ballot
that you submit at the meeting.
Sincerely,
/s/ Eugene F. Shaffer
---------------------
Eugene F. Shaffer
Chairman of the Board
[Mid Penn Bancorp Logo]
------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 2001
------------------------------------------------
TO THE SHAREHOLDERS OF MID PENN BANCORP, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of Mid Penn
Bancorp, Inc. will be held at 10:00 a.m., prevailing time, on Tuesday, April 24,
2001, at Mid Penn Bank, 349 Union Street, Millersburg, Pennsylvania 17061, for
the following purposes:
1. To elect 3 Class C Directors to serve for a 3 year term and until
their successors are elected and qualified;
2. To ratify the selection of Parente Randolph, PC, Certified Public
Accountants, as the independent auditors for the corporation for the
fiscal year ending December 31, 2001; and
3. To transact any other business that may properly come before the
annual meeting and any adjournment or postponement of the meeting.
In accordance with the corporation's Bylaws and action of the Board of
Directors, only those shareholders of record at the close of business on
February 23, 2001, are entitled to notice of and to vote at the annual meeting
and any adjournment or postponement thereof.
We enclose a copy of the corporation's Annual Report to Shareholders for
the fiscal year ended December 31, 2000. You may obtain a copy of the
corporation's annual report on Form 10-K including the financial statements and
any exhibits for the 2000 fiscal year, at no cost, by contacting Alan W. Dakey,
President and Chief Executive Officer, 349 Union Street, Millersburg,
Pennsylvania 17061, telephone: (717) 692-2133.
We urge you to mark, sign, date and promptly return your proxy in the
enclosed envelope so that you may vote your shares and in order that we may
assure the presence of a quorum. The prompt return of your signed proxy,
regardless of the number of shares you hold, will aid the corporation in
reducing the expense of additional proxy solicitation. Giving your proxy does
not affect your right to vote in person if you attend the meeting and give
written notice to the Secretary of the corporation.
By Order of the Board of Directors,
/s/ Eugene F. Shaffer
---------------------
Eugene F. Shaffer
Chairman of the Board
Millersburg, Pennsylvania
March 26, 2001
YOUR VOTE IS IMPORTANT.
To vote your shares, please sign, date and complete the enclosed proxy and mail
it promptly in the enclosed, postage-paid return envelope.
MID PENN BANCORP, INC.
349 UNION STREET
MILLERSBURG, PA 17061
AMEX TRADING SYMBOL: MBP
PROXY STATEMENT
2001 ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 2001
Mailed to Shareholders on or about March 26, 2001
TABLE OF CONTENTS
-----------------
PROXY STATEMENT
General Information 1
. Date, Time and Place of Annual Meeting 1
. Description of mid Penn Bancorp, Inc. 1
. Additional Information 1
Voting Procedures 2
. Solicitation and Voting of Proxies 2
. Quorum and Vote Required for Approval 3
. Revocability of Proxy 3
. Methods of Voting 4
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS 4
Governance 4
Directors of mid Penn Bancorp, Inc. 4
Executive Officers of mid Penn Bancorp, Inc. 5
Executive Officers of mid Penn Bank 5
Committees and Meetings of the Corporation's Board of Directors 6
Committees and Meetings of mid Penn Bank's Board of Directors 6
Audit Committee Report 7
Qualifications and Nomination of Directors 8
Compensation of the Board of Directors 10
SALARY & PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION 11
Chief Executive Officer Compensation 12
Executive Officer Compensation 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION 13
EXECUTIVE COMPENSATION 13
Summary Compensation Table 13
Profit Sharing Retirement Plan 14
Employee Stock Ownership Plan 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 15
BENEFICIAL OWNERSHIP OF MID PENN BANCORP'S STOCK HELD BY
PRINCIPAL SHAREHOLDERS AND MANAGEMENT 15
Principal Shareholders 15
Share Ownership by the Directors, Officers and Nominees 16
COMPLIANCE WITH SECTION 16(A) REPORTING 17
SHAREHOLDER RETURN PERFORMANCE GRAPH 18
PROPOSALS 19
1. Election of Class C Directors 19
2. Ratification of Selection of Independent Auditors 19
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING 20
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING 20
AUDIT COMMITTEE CHARTER Appendix
FREQUENTLY ASKED QUESTIONS AND ANSWERS
Q: WHO IS ENTITLED TO VOTE?
A: Shareholders as of the close of business on February 23, 2001 (the voting
record date) are entitled to vote and each share of common stock is
entitled to one vote.
Q: HOW DO I VOTE?
A: There are two methods. You may vote by completing and mailing your proxy or
by attending the meeting and voting in person. (See page 4 for more
details.)
Q: HOW DOES DISCRETIONARY AUTHORITY APPLY?
A: If you sign your proxy but do not make any selections, you give authority
to Roberta A. Hoffman, Randall L. Klinger and Patricia A. Walter, as proxy
holders, to vote on the two proposals and any other matter that may arise
at the meeting.
Q: IS MY VOTE CONFIDENTIAL?
A: Yes. Only the Judges of Elections and the proxy holders have access to your
proxy. All comments remain confidential unless you ask that your name be
disclosed.
Q: WHO WILL COUNT THE VOTES?
A: Kathy I. Bordner, Kevin W. Laudenslager and Dennis E. Spotts will tabulate
the votes and act as Judges of Elections.
Q: WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY?
A: Your shares are probably registered differently or are in more than one
account. Sign and return all proxies to ensure that all your shares are
voted. If you have all of your accounts registered in the same name and
address, you should only receive one set of proxy materials in future
years. You may arrange to have your shares registered in the same name and
address by contacting the corporation's transfer agent, Wells Fargo
Shareowner Services at (800) 468-9716.
Q: WHAT CONSTITUTES A QUORUM?
A: At February 23, 2001, the corporation had 3,037,444 shares of common stock
issued and outstanding. A majority of the outstanding shares, present or
represented by proxy, constitutes a quorum for the transaction of business
at the meeting. If you vote by proxy or in person, we consider your shares
as a part of the quorum.
Q: WHAT PERCENTAGE OF STOCK DO THE DIRECTORS AND OFFICERS OWN?
A: Approximately 18.73% of our common stock, at February 23, 2001. (See
page 16 for more details.)
Q: WHEN ARE THE 2002 SHAREHOLDER PROPOSALS DUE?
A: As a shareholder, you must submit your proposal in writing by
December 26, 2001, to Cindy L. Wetzel, Secretary, Mid Penn Bancorp, Inc.,
349 Union Street, Millersburg, Pennsylvania 17061. (See page 20 with regard
to director nomination procedures.)
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
MID PENN BANCORP, INC.
APRIL 24, 2001
GENERAL INFORMATION
Date, Time and Place of Annual Meeting
Mid Penn Bancorp, Inc., a Pennsylvania business corporation and registered
bank holding company, furnishes this proxy statement in connection with the
Board of Directors solicitation of proxies to be voted at the annual meeting of
shareholders. The annual meeting will be held at Mid Penn Bank, 349 Union
Street, Millersburg, Pennsylvania 17061, on Tuesday, April 24, 2001, at 10:00
a.m., prevailing time. The corporation's principal executive office is located
at 349 Union Street, Millersburg, Pennsylvania 17061; the telephone number is
(717) 692-2133. All inquiries regarding the annual meeting should be directed to
Alan W. Dakey, President and Chief Executive Officer of Mid Penn Bancorp, Inc.
Description of Mid Penn Bancorp, Inc.
Mid Penn Bancorp, Inc. became a bank holding company under Pennsylvania law
and the Bank Holding Company Act of 1956 on December 31, 1991. Mid Penn Bank is
the corporation's wholly-owned subsidiary and is a Pennsylvania chartered
commercial bank.
We are mailing a copy of the corporation's Annual Report to Shareholders
for the fiscal year ended December 31, 2000, with this Proxy Statement. You may
obtain a copy of the corporation's annual report on Form 10-K including the
financial statements and exhibits for the 2000 fiscal year at no cost by
contacting Alan W. Dakey, President and Chief Executive Officer, 349 Union
Street, Millersburg, Pennsylvania 17061, telephone: (717) 692-2133.
We have not authorized anyone to provide you with information about the
corporation. You should rely only on the information contained in this document
or on information to which we refer. Although we believe we have provided you
with all the information helpful to you in your decision to vote, events may
occur at Mid Penn Bancorp, Inc. subsequent to printing this proxy statement that
might affect your decision or the value of your stock.
Additional Information
In accordance with Securities Exchange Act Rule 14a-3(3)(1), Mid Penn
Bancorp, Inc., in the future intends to deliver only one annual report and proxy
statement to multiple shareholders sharing an address unless we receive contrary
instructions from one or more of the shareholders. This method of delivery is
known as "householding". Upon written or oral request, Mid Penn Bancorp, Inc.
will promptly deliver a separate copy of the annual report or proxy statement,
as applicable, to a shareholder at a shared address to which a single copy of
the documents was delivered. Further, shareholders can notify Cindy L. Wetzel at
Mid Penn Bancorp, Inc., 349 Union Street, Millersburg, PA 17061 or by calling
(717) 692-2133 and informing us that the shareholder wishes to receive a
separate copy of an annual report or proxy statement in the
future. In addition, if you are receiving multiple copies of Mid Penn Bancorp,
Inc.'s annual report or proxy statement, you may request that we deliver only a
single copy of annual reports or proxy statements by notifying us at the above
address or telephone number.
VOTING PROCEDURES
Solicitation and Voting of Proxies
The Board of Directors solicits this proxy for use at the corporation's
2001 annual meeting of shareholders. The corporation's directors, officers and
bank employees may solicit proxies in person or by telephone, facsimile,
telegraph or other similar means without additional compensation. The
corporation will pay the cost of preparing, assembling, printing, mailing and
soliciting proxies and any additional material that the corporation sends to its
shareholders. The corporation will make arrangements with brokerage firms and
other custodians, nominees, and fiduciaries to forward proxy solicitation
materials to the beneficial owners of stock held by these entities. The
corporation will reimburse these third parties for their reasonable forwarding
expenses.
Only shareholders of record as of the close of business on February 23,
2001, may vote at the annual meeting. The corporation's records show that, as of
the voting record date, 3,037,444 shares of common stock were outstanding. On
all matters to come before the annual meeting, shareholders may cast one vote
for each share held. Cumulative voting rights do not exist with respect to the
election of directors. See "Principal Shareholders" on page 15 for a list of the
persons known by the corporation to be beneficial owners of 5% or more of the
corporation's common stock.
If your shares are registered directly in your name with Mid Penn Bancorp,
Inc.'s transfer agent, Wells Fargo Shareowner Services, you are considered, with
respect to those shares, the shareholder of record, and these proxy materials
are being sent directly to you by the corporation. As the shareholder of record,
you have the right to grant your voting proxy directly to the proxy holders or
to vote in person at the meeting. The corporation has enclosed a proxy card for
your use.
If your shares are held in a stock brokerage account or by a bank or other
nominee, you are considered the beneficial owner of shares held in street name,
and these proxy materials are being forwarded to you by your broker or nominee
which is considered, with respect to those shares, the shareholder of record. As
the beneficial owner, you have the right to direct your broker how to vote and
are also invited to attend the meeting. However, because you are not the
shareholder of record, you may not vote these shares in person at the meeting.
Your broker or nominee has enclosed a voting instruction card for you to use in
directing the broker or nominee how to vote your shares.
By properly completing a proxy, the shareholder appoints Roberta A.
Hoffman, Randall L. Klinger and Patricia A. Walter as proxy holders to vote the
shares as indicated on the proxy. Proxy holders will vote any proxy not
specifying to the contrary as follows:
2
FOR the election of Earl R. Etzweiler, William G. Nelson and Donald E.
Sauve as Class C directors for 3 year terms expiring in 2004; and
FOR the ratification of the selection of Parente Randolph, PC, as the
corporation's independent auditors for the fiscal year ending December 31,
2001.
The Board of Directors proposes to mail this proxy statement to the
corporation's shareholders on or about March 26, 2001.
Quorum and Vote Required For Approval
In order to hold the annual meeting, a "quorum" of shareholders must be
present. Under Pennsylvania law and the corporation's Bylaws, the presence, in
person or by proxy, of the holders of a majority of the shares entitled to vote
is necessary to constitute a quorum for the transaction of business at the
meeting. The proxy holders will count votes withheld and abstentions when
determining the presence of a quorum for each matter. The proxy holders will not
count broker non-votes when determining the presence of a quorum for the
particular matter as to which the broker withheld authority.
If a quorum is present, the candidates for director receiving the highest
number of votes cast by shareholders will be elected. The proxy holders will not
cast votes withheld or broker non-votes for the Board's nominees.
If a quorum is present, ratification of the selection of the independent
auditors requires the affirmative vote of a majority of all votes cast by
shareholders. Abstentions and broker non-votes are not deemed to constitute
"votes cast" and, therefore, do not count either for or against ratification.
Abstentions and broker non-votes, however, have the practical effect of reducing
the number of affirmative votes required to achieve a majority for the matter by
reducing the total number of shares voted from which the required majority is
calculated.
Revocability of Proxy
Shareholders of record who sign proxies may revoke them at any time before
they are voted by:
. giving written notice of revocation to Cindy L. Wetzel, Secretary of
Mid Penn Bancorp, Inc., at 349 Union Street, Millersburg, Pennsylvania
17061;
. executing a later-dated proxy and giving written notice to the
Secretary of the corporation; or
. voting in person after giving written notice to the Secretary of the
corporation.
You have the right to vote and, if desired, to revoke your proxy any time
before the annual meeting. Should you have any questions, please call Cindy L.
Wetzel, at (717) 692-2133.
3
Methods of Voting
Voting by Proxy
---------------
. Mark your selections.
. Date your proxy and sign your name exactly as it appears on your
proxy.
. Mail to the corporation in the enclosed, postage-paid envelope.
Voting in Person
----------------
. Attend the annual meeting and show proof of eligibility to vote
(including proper identification).
. Obtain a ballot.
. Mark your selections.
. Date your ballot and sign your name exactly as it appears in the
corporation's transfer books.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Governance
The corporation's Board of Directors oversees all business, property, and
affairs of the corporation. The Chairman and the corporation's officers keep the
members of the Board informed of the corporation's business through discussions
and by providing materials to the members.
During fiscal 2000, the corporation's Board of Directors held 6 meetings.
The bank's Board of Directors held 13 meetings during fiscal 2000.
Directors of Mid Penn Bancorp, Inc.
The following table sets forth (in alphabetical order) selected information
about the corporation's directors.
Director Class of Age as of
Name Since Director March 15, 2001
- -------------------- -------- --------- --------------
Jere M. Coxon 1991 B 58
Alan W. Dakey 1995 B 49
Earl R. Etzweiler 1991 C 67
4
Director Class of Age as of
Name Since Director March 15, 2001
- -------------------- -------- --------- --------------
Gregory M. Kerwin 1999 A 50
Charles F. Lebo 1991 B 67
Warren A. Miller 1991 A 68
William G. Nelson 1991 C 65
Donald E. Sauve 1999 C 59
Edwin D. Schlegel 1991 A 62
Eugene F. Shaffer 1991 A 65
Guy J. Snyder, Jr. 1991 B 63
Executive Officers of Mid Penn Bancorp, Inc.
The following table sets forth, as of March 15, 2001, selected information
about the corporation's principal officers, each of whom is elected by the Board
of Directors and each of whom holds office at the Board's discretion.
Position Held Age as of
Name Position Since March 15, 2001
- ----------------------- ----------------------- ----- --------------
Eugene F. Shaffer Chairman 1991 65
Alan W. Dakey President and 2000 49
Chief Executive Officer
Earl R. Etzweiler Vice Chairman 1991 67
Kevin W. Laudenslager Treasurer 1998 37
Cindy L. Wetzel Secretary 1991 39
Executive Officers of Mid Penn Bank
The following table sets forth, as of March 15, 2001, selected information
about the principal officers of Mid Penn Bank, each of whom is elected by the
bank's Board of Directors and each of whom holds office at the Board's
discretion.
Position Employee Age as of
Name Position Held Since Since March 15, 2001
- ---- -------- ---------- ----- --------------
Eugene F. Shaffer Chairman of the Board 1976 1969 65
Alan W. Dakey President and Chief 1994 1993 49
Executive Officer
Robert M. Garst Senior Vice President and 1998 1998 43
Senior Commercial
Loan Officer
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Position Employee Age as of
Name Position Held Since Since March 15, 2001
- ---- -------- ---------- ----- --------------
Randall L. Klinger Senior Vice President 1989 1974 52
and Senior Loan Officer 1986
Norman L. Houser (1) Senior Vice President 1989 1984 61
and Business
Development Officer
Allen R. Spring Senior Vice President 1999 1999 62
and Senior Trust Officer
Allen J. Trawitz Executive Vice President 1998 1998 54
Dennis E. Spotts Vice President and 1980 1973 47
Operations Officer 2001
Larry L. Novinger (2) Vice President and 1997 1985 56
Operations Officer 1986
Kevin W. Laudenslager Vice President and 1997 1985 37
Comptroller
(1) Mr. Houser retired from the bank on February 1, 2001.
(2) Mr. Novinger resigned from the bank on December 31, 2000.
Committees and Meetings of the Corporation's Board of Directors
The Board of Directors of the corporation has, at present, no standing
committees. The corporation does not maintain a compensation or nominating
committee; however, the bank maintains a standing committee that performs the
functions of a compensation committee. The entire Board meets to discuss the
corporation's business.
Committees and Meetings of Mid Penn Bank's Board of Directors
During 2000, Mid Penn Bank's Board of Directors maintained 5 standing
committees: Executive, Trust, Audit, Loan, and Salary & Personnel. The function
of each of these committees is described below.
EXECUTIVE: This committee meets only as needed and acts with limited powers
on behalf of the Board whenever the Board is not in session. Earl
Etzweiler serves as Chairman of this committee.
TRUST: This committee determines the policies and investments of the
Trust Department and approves the acceptance of all fiduciary
relationships and the closing out or the relinquishment of all
fiduciary relationships. William Nelson serves as Chairman of
this committee.
AUDIT: This committee oversees the accounting functions, recommends to
the Board the engagement of independent auditors for the year,
reviews the annual financial statements of the corporation and
any recommended
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changes or modifications to control procedures and accounting
practices and policies, and monitors with management and the
auditor the system of internal controls and its accounting and
reporting practices. Charles Lebo serves as Chairman of this
committee.
LOAN: This committee determines if loans exceeding the loan officers
lending limit authority should be approved or rejected. Warren
Miller serves as Chairman of this committee.
SALARY & This committee reviews employee performance evaluations and makes
PERSONNEL: salary recommendations to the Board of Directors. Gregory Kerwin
serves as Chairman of this committee.
SALARY &
EXECUTIVE TRUST AUDIT LOAN PERSONNEL
--------- ----- ----- ---- ---------
Jere M. Coxon X X X
Alan W. Dakey X X X X
Earl R. Etzweiler X X
Gregory M. Kerwin X
Charles F. Lebo X X X
Warren A. Miller X
William G. Nelson X X X X
Donald E. Sauve X X
Edwin D. Schlegel X X
Eugene F. Shaffer X X X X
Guy J. Snyder, Jr. X X X
MEETINGS HELD IN 2000 0 10 4 24 2
Each of the directors attended at least 75% of the total number of Board of
Directors meetings and committee meetings for the corporation and the bank
during their tenure on the Board in 2000.
Audit Committee Report
The Board of Directors adopted a written charter for the Audit Committee, a
copy of which is attached to this proxy statement as the Appendix. As required
by the Charter, the Audit Committee, in fulfilling its oversight
responsibilities regarding the audit process:
. reviewed and discussed the fiscal year 2000 audited financial
statements with management;
7
. discussed with the independent auditors, Parente Randolph, PC, the
matters required to be discussed by Statement on Accounting Standards
No. 61 (Codification of Statements on Auditing Standards, AU 380, as
amended or supplemented); and
. reviewed the written disclosures and the letter from the independent
accountants required by Independence Standards Board Standard No.1
(Independence Discussions with Audit Committees, as modified or
supplemented), and discussed with the independent auditors any
relationships that may impact their objectivity and independence.
Based upon the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements for the year ended December 31, 2000, be included in the
corporation's Annual Report on Form 10-K and filed with the Securities and
Exchange Commission.
Aggregate fees billed to the corporation and the bank by Parente Randolph,
PC, the independent accountants, for services rendered during the year ended
December 31, 2000, were $47,772.
This report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
corporation specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
The Audit Committee is comprised of five directors, all of whom are
considered "independent" as defined in Section 121 of the AMEX Company Guide.
The foregoing report has been furnished by the current members of the Audit
Committee.
AUDIT COMMITTEE
---------------
Charles F. Lebo, Chairman Jere M. Coxon
Donald E. Sauve Edwin D. Schlegel
Guy J. Snyder, Jr.
Qualifications and Nomination of Directors
The corporation's Bylaws authorize the number of directors to be not less
than 5 nor more than 25. The Bylaws also provide for 3 classes of directors with
staggered 3 year terms of office. The Board of Directors nominated the 3 persons
named below to serve as directors until the 2004 annual meeting of shareholders
or until their earlier death, resignation, or removal from office. The nominees
are presently members of the Board of Directors and have consented to serve
another term as a director if re-elected. If the nominees should be unavailable
to serve for any reason, a majority of the Board of Directors then in office may
select someone to fill the vacancy until the expiration of the term of the class
of directors to which he or she is appointed.
8
The Board of Directors is divided into 3 classes. Terms of the members of
each class expire at successive annual meetings. Currently, Class A consists of
4 directors, Class B consists of 4 directors, and Class C consists of 3
directors. Shareholders will elect 3 Class C directors at this annual meeting to
serve for a 3 year term.
The proxy holders intend to vote proxies for the election of each of the 3
nominees named below, unless you indicate that your vote should be withheld from
any or all of them. Each nominee elected as a director will continue in office
until his or her successor has been duly elected and qualified, or until his or
her death, resignation or retirement.
The Board of Directors proposes the following nominees for election as
Class C Directors at the annual meeting:
. Earl R. Etzweiler
. William G. Nelson
. Donald E. Sauve
A shareholder who intends to nominate an individual for election to the
Board of Directors (other than a candidate proposed by the Board of Directors)
must notify the Secretary of the corporation in compliance with the requirements
of Article 10, Section 10.1 of the corporation's Bylaws. Any shareholder who
intends to nominate a candidate for election to the Board of Directors must
notify the Secretary of the corporation in writing not less than 60 days prior
to the date of any shareholder meeting called for the election of directors.
The principal occupation and certain other information regarding the
nominees for director and other directors is set forth below. You will find
information about their share ownership on page 16.
CURRENT CLASS C DIRECTORS (to serve until 2001)
AND
NOMINEES FOR CLASS C DIRECTORS (to serve until 2004)
Earl R. Etzweiler Mr. Etzweiler, age 67, has served as director and Vice
Chairman since 1991. He is the owner of Etzweiler &
Associates, Attorneys at Law.
William G. Nelson Mr. Nelson, age 65, has been a director since 1991. He is
President of Hess Trucking Co., Inc.
Donald E. Sauve Mr. Sauve, age 59, has been a director since 1999. He is a
consultant for Don's Food Market, Inc.
9
BOARD OF DIRECTORS - CONTINUING AS DIRECTORS
CLASS A DIRECTORS (to serve until 2002)
Gregory M. Kerwin Mr. Kerwin, age 50, has been a director since 1999. Mr.
Kerwin is a senior partner with the firm of Kerwin &
Kerwin, Attorneys at Law.
Warren A. Miller Mr. Miller, age 68, has been a director since 1991.
Mr. Miller is retired and previously served as
Assistant Vice President of Mid Penn Bank.
Edwin D. Schlegel Mr. Schlegel, age 62, has been a director since
1991. Mr. Schlegel is retired and previously served
as Superintendent of the Millersburg Area School
District.
Eugene F. Shaffer Mr. Shaffer, age 65, has been Chairman of the
corporation since 1991 and Chairman of the Bank
since 1976. Mr. Shaffer served as President and
Chief Executive Officer of the corporation from 1991
to May 2000 and also served as President and Chief
Executive Officer of the bank from 1976 to 1994.
CLASS B DIRECTORS (to serve until 2003)
Jere M. Coxon Mr. Coxon, age 58, has been a director since 1991.
He is Executive Vice President of Penn Wood
Products, Inc.
Alan W. Dakey Mr. Dakey, age 49, has been a director since 1995.
He has been the President and CEO of the bank since
1994 and became the President and CEO of the
corporation in May 2000.
Charles F. Lebo Mr. Lebo, age 67, has been a director since 1991. He
is a retired educator of the Pennsylvania Department
of Education.
Guy J. Snyder, Jr. Mr. Snyder, age 63, has been a director since 1991.
He is President of Snyder Fuels, Inc.
The Board of Directors recommends that shareholders vote FOR the
proposal to elect the nominees listed above as Class C Directors of Mid Penn
Bancorp, Inc.
Compensation of the Board of Directors
Directors received no remuneration for attendance at the meetings of
the Board of Directors of the corporation.
10
During 2000, Mid Penn Bank directors earned an annual fee of $7,000,
except Mr. Shaffer, who received no fees in 2000. A bonus is payable to
directors each year based upon whether the bank meets certain performance
criteria, with respect to earnings and growth, as outlined in the bank's
Performance Bonus Plan. Members of committees receive $80 for each meeting
attended if the meeting is held on a day other than that of the regularly
scheduled Board meeting. Directors who are also officers of the bank are not
paid for attending committee meetings. In 2000, the Board of Directors
earned $77,300 in the aggregate, for all Board of Directors' meetings and
committee meetings attended.
The Bank maintains a deferred fee plan for outside directors, which
enables a director to defer payment of his fees until he leaves the Board.
Following are the directors and their respective contributions for 2000:
Jere Coxon: $7,000, Earl Etzweiler: $7,250, Gregory Kerwin: $1,200, Charles
Lebo: $2,000, William Nelson: $2,000, Donald Sauve: $5,000, and
Guy Snyder: $3,625.
In May 1995, the Mid Penn Bank directors adopted a retirement bonus
plan. The plan pays a retirement bonus to directors who voluntarily retire
from service, or who have attained the mandatory retirement age of 70. The
retirement bonus is determined by multiplying the "base retirement bonus"
for the member's position ($400 for the Chairman, $200 for all other
directors) by the number of full years the member served. No portion of the
payment under this plan is assignable. The plan contains an inflationary
adjustment provision. Payments due under the plan are paid quarterly. Bruce
C. Adams, Harvey J. Hummel and Charles R. Phillips received a total of
$8,484 under this plan in 2000.
SALARY & PERSONNEL COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The corporation's officers and employees are not compensated by the
corporation. Mid Penn Bank, the wholly-owned bank subsidiary of Mid Penn
Bancorp, Inc., provides compensation to the employees of the bank. The Board
of Directors, acting in the best interests of the corporation's
shareholders, customers, and the communities it serves, is responsible for
providing compensation to all employees based on the individual's
contribution and personal performance. The Salary & Personnel Committee
administers the compensation program. The committee strives to offer a fair
and competitive compensation policy to govern executive officers' base
salaries and incentive plans and to attract and maintain competent,
dedicated, and ambitious managers whose efforts will enhance the products
and services of the corporation and of the bank, resulting in higher
profitability, increased dividends to the corporation's shareholders and
appreciation in market value of the corporation's common stock.
The compensation of the bank's top executives is reviewed and approved
annually by the Board of Directors upon the recommendations of the Salary &
Personnel Committee. As a guideline for determining base salaries, the
committee uses the Salary/Benefits Survey published by L.R. Webber
Associates, Inc. This peer group of banks with assets ranging from $200
million to $299 million by region is different from the peer group used for
the performance chart. The committee uses this peer group of banks because
of common industry issues and competition for the same executive talent
group.
11
The committee does not deem Section 162(m) of the Internal Revenue Code
to be applicable to the corporation at this time. The committee intends to
monitor the future application of Section 162(m) to the compensation paid to
its executive officers and, in the event that this section becomes
applicable to the corporation, the committee intends to amend the bank's
compensation plans to preserve the deductibility of compensation payable
thereunder.
Chief Executive Officer Compensation
The Board of Directors determined the bank's Chief Executive Officer's
2000 compensation of $151,057 comprised of his annual cash salary and cash
bonus, exclusive of director's fees and bonus, to be appropriate in light of
the corporation's 2000 performance. The 2000 compensation represents the
combined salary and bonus reported on the Summary Compensation Table. No
direct correlation exists between the Chief Executive Officer's compensation
and any specific performance criteria, nor is any weight given by the
committee to any specific individual criteria. The Chief Executive Officer's
compensation is based on the committee's subjective determination after
review of all information that it deems relevant.
Executive Officer Compensation
The committee bases compensation increases to executive officers on
subjective analysis of each individual's contribution to the bank. The Board
of Directors considers numerous factors in determining compensation
increases including:
. the bank's earnings;
. return on assets;
. return on equity;
. market share;
. total assets; and
. loans
Although performance and increases in compensation were measured by these
factors, among others, no direct correlation exists between any specific
criterion and an employee's compensation. The committee's analysis did not
provide a specific weight to any criteria. The committee's determination is
subjective after review of all information deemed relevant.
Individuals are reviewed annually on a calendar basis. Total
compensation opportunities available to bank employees are influenced by
general market conditions, specific individual responsibilities, and the
individual's contributions to the corporation's success. The bank strives to
offer compensation that is competitive with that offered by employers of
comparable size in the banking industry. The corporation strives to meet its
strategic goals and objectives to its constituencies and to provide fair and
meaningful compensation to its employees.
SALARY & PERSONNEL COMMITTEE
----------------------------
Jere M. Coxon Alan W. Dakey
Gregory M. Kerwin William G. Nelson
Eugene F. Shaffer Guy J. Snyder, Jr.
12
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Mr. Eugene F. Shaffer, Chairman of the Board of the corporation, and
Mr. Alan W. Dakey, President and Chief Executive Officer of the corporation,
are members of the Board's Salary & Personnel Committee that performs the
functions of a compensation committee. Messrs. Shaffer and Dakey do not
participate in conducting their own reviews nor do they take part in
determining their own compensation.
EXECUTIVE COMPENSATION
Information concerning the annual cash and non-cash compensation paid,
awarded or earned for services in all capacities to the corporation and the
bank for the fiscal years ended December 31, 2000, 1999 and 1998 of those
persons who were at December 31, 2000, (i) the Chairman, and (ii) the
President and Chief Executive Officer is set forth below. No other executive
officer's total annual salary and bonus exceeded $100,000 during 2000.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards Payout
----------------- ------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- ------------------------------------------------------------------------------------------------------------------
Other
Annual Restricted All other
Compen- Stock Options/ Compen-
Name and Salary Bonus sation Awards SARs Payouts sation
Principal Position Year ($) (1) ($) (2) ($) ($) (#) ($) ($) (3)(4)(5)(6)(7)
- ------------------------ ------ ------- ------ ---------- -------- ------- -- --------------------
Eugene F. Shaffer 2000 10,000 0 -- -- -- -- 6,210
Chairman 1999 10,000 0 -- -- -- -- 5,609
1998 10,000 4,167 -- -- -- -- 5,029
Alan W. Dakey 2000 126,500 27,735 -- -- -- -- 64,710
President and Chief 1999 120,500 42,224 -- -- -- -- 39,994
Executive Officer 1998 113,000 38,261 -- -- -- -- 16,997
(1) Salary includes annual Board of Directors fees of $7,000 paid to Mr. Dakey
in 2000, 1999 and 1998.
(2) Mr. Shaffer's bonus includes a directors bonus paid to Mr. Shaffer in 1998
of $105. Mr. Dakey's bonus includes a directors bonus paid to Mr. Dakey in
2000, 1999 and 1998 of $250, $1,712 and $1,155, respectively.
(3) Includes life insurance premiums of $161and $584, paid by the bank in 1999
and 1998, respectively, on behalf of Mr. Shaffer pursuant to life insurance
maintained for executive officers. Includes premiums paid by the bank in
2000, 1999 and 1998 for split dollar life insurance of $3,672, $3,185 and
$2,945, respectively, on behalf of Mr. Shaffer. The bank can recover the
premium costs upon the death of Mr. Shaffer. Includes life insurance
premiums of $301 and $1,097, paid by the bank in 1999 and 1998,
respectively, on behalf of Mr. Dakey pursuant to life insurance maintained
for executive officers.
(4) Includes $1,000 contributed by the bank to the Profit Sharing Retirement
Plan on behalf of Mr. Shaffer in 2000, 1999 and 1998. Includes $11,950,
$11,350 and $10,600, contributed by the bank to the Profit Sharing
Retirement Plan on behalf of Mr. Dakey in 2000, 1999 and 1998,
respectively.
(5) Includes $500 contributed by the bank to the ESOP on behalf of Mr. Shaffer
in 2000, 1999 and 1998. Includes $5,975, $5,675 and $5,300 contributed by
the bank to the ESOP on behalf of Mr. Dakey in 2000, 1999 and 1998,
respectively.
(6) The bank maintains a salary continuation plan for Mr. Dakey upon his
retirement. The value of the bank's contribution to the plan for 2000 was
$46,434 and for 1999 was $22,407.
13
(7) Life insurance coverage of two times the final salary is being provided to
Mr. Dakey and Mr. Shaffer under an endorsement split dollar arrangement.
The economic value of their respective life insurance coverage for 2000 and
1999 is as follows: Mr. Dakey: $351 and $261, respectively; and Mr.
Shaffer: $1,038 and $763, respectively.
Profit Sharing Retirement Plan
The corporation does not maintain a pension plan. The bank, however,
maintains the Employee Profit Sharing Retirement Plan, created in 1949 and
restated in 1994, which covers all bank employees who accumulate at least 1,000
hours of service in a 12 month period beginning on the first day of employment.
Eligible employees are entitled to receive a share of the bank's contribution to
the plan if they accumulate at least 1,000 hours of service during the plan year
and are bank employees on December 31st.
The annual contribution is determined by the bank's Board of Directors and
is contingent upon current or accumulative profits of the bank with the total
amount of the annual contribution not to exceed 15% of the total eligible
compensation paid by the bank to all participating employees. A participating
employee's share of such annual contribution is allocated on the basis of the
participating employee's eligible compensation up to $150,000 as compared to the
total eligible compensation of all the participating employees. The
contributions to the plan are paid to a trust fund that is administered by the
bank's Trust Department. A participating employee is allocated a share of the
net income of the trust fund and the increase or decrease in the fair market
value of its assets on the basis of such employee's beginning of the plan year
account balance, less any payments as compared to the total beginning account
balances, less payments to all the participating employees. A notice of the
account balance is given to participating employees annually.
Distributions under the plan can be made to participating employees upon
retirement, either normal or early retirement as defined in the plan, at death
or disability of the participating employee or upon severing employment if
either partially or fully vested. The plan provides for percentage vesting of
20% for the first full 3 years of service increasing annually thereafter to 100%
vesting after 7 full years of participation. The plan provides for an
accelerated vesting schedule in the event it becomes top-heavy.
Management cannot determine the extent of the benefits that any
participating employee may be entitled to receive under the plan on the date of
termination of employment because the amount of the benefits is dependent, among
other things, upon the bank's future earnings, the participants' future
compensation and the future earnings of the plan's trust fund. As of
December 31, 2000, the total market value of the Employee Profit Sharing
Retirement Fund was approximately $4,730,911. There are 29,932 shares of Mid
Penn Bancorp, Inc. common stock in the plan and the market value of these shares
was $15 per share for a total of $448,980.
Contributions the bank paid to the plan were $236,471 and $206,899 for 2000
and 1999. The bank contributed $1,000 in 2000 to the plan for Mr. Shaffer,
Chairman of the Board of the corporation. The bank contributed $11,950 in 2000
to the plan for Mr. Dakey, President and Chief Executive Officer of the
corporation and the bank. As of March 15, 2001, Mr. Shaffer and Mr. Dakey have
31 years and 7 years, respectively, of credited service under the plan.
14
Employee Stock Ownership Plan
Effective January 1, 1998, the Board of Directors adopted the Mid Penn Bank
Employee Stock Ownership Plan for all bank employees and its subsidiaries who
satisfy length of service requirements. Participants do not contribute to the
plan. Each year the bank may, in its discretion, contribute to the ESOP. In
2000, the bank contributed $118,236 to the plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Neither the corporation nor the bank have entered into any material
transactions, proposed or consummated, with any director or executive officer of
Mid Penn Bancorp, Inc. or Mid Penn Bank, or any associate of the foregoing
persons. The corporation and the bank have engaged in and intend to continue to
engage in banking and financial transactions in the ordinary course of business
with directors and officers and their associates on comparable terms with
similar interest rates as those prevailing from time to time for other
customers.
Total loans outstanding from the corporation and the bank at December 31,
2000, to the corporation's and the bank's officers and directors as a group,
members of their immediate families and companies in which they had an ownership
interest of 10% or more amounted to $1,431,914, or approximately 7.1% of the
bank's total equity capital. At February 23, 2001, total loans outstanding for
the same group totaled $1,386,434 or 6.8% of the bank's total equity capital.
The bank made these loans in the ordinary course of business, on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons. The loans did not
involve more than the normal risk of collection or present other unfavorable
features.
During 2000, Mr. Earl R. Etzweiler, Esquire, a director of the corporation
and the bank, served as solicitor of the corporation and of the bank. During
2000, Mr. Etzweiler received fees of $40,790 from the bank for legal services
rendered.
BENEFICIAL OWNERSHIP OF
MID PENN BANCORP'S STOCK HELD BY
PRINCIPAL SHAREHOLDERS AND MANAGEMENT
Principal Shareholders
The following table sets forth, as of February 23, 2001, the name and
address of each person who owns of record or who is known by the Board of
Directors to be the beneficial owner of more than 5% of the corporation's
outstanding common stock, the number of shares beneficially owned by the person,
and the percentage of the corporation's outstanding common stock so owned.
15
Title of Class Name and Residential Address Amount and Nature of
of Security of Beneficial Owner Beneficial Ownership Percent of Class
- ---------------- ----------------------------- -------------------- ---------------------
Common Stock NEBCO (1) 332,547 shares 10.95%
c/o Mid Penn Bank
349 Union Street
Millersburg, PA 17061
- ----------
(1) Shares held for various trust accounts.
Share Ownership by the Directors, Officers and Nominees
The following table sets forth, as of February 23, 2001, and from
information received from the respective individuals, the amount and percentage
of the common stock beneficially owned by each director, each nominee for
director, each executive officer and all executive officers, directors and
nominees of Mid Penn Bancorp, Inc. as a group, excluding any fractional share
holdings. The shares are individually held unless otherwise noted in a footnote.
Amount and
Nature of
Name of Beneficial Percent
Beneficial Owner Ownership (1) of Class
- ---------------- ------------- --------
Jere M. Coxon 38,215 (2) 1.26%
Alan W. Dakey 6,822 (3) 0.22%
Earl R. Etzweiler 111,643 3.68%
Gregory M. Kerwin 14,847 (4) 0.49%
Charles F. Lebo 32,661 (5) 1.08%
Warren A. Miller 22,287 (6) 0.73%
William G. Nelson 64,392 (7) 2.12%
Donald E. Sauve 1,731 (8) 0.06%
Edwin D. Schlegel 69,479 (9) 2.29%
Eugene F. Shaffer 111,764 (10) 3.68%
Guy J. Snyder, Jr. 91,838 (11) 3.02%
All Officers and Directors 568,826 18.73%
as a Group (13 persons)
16
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definitions of "beneficial ownership" set forth in the
General Rules and Regulations of the Securities and Exchange Commission and
may include securities owned by or for the individual's spouse and minor
children and any other relative who has the same home, as well as
securities to which the individual has, or shares, voting or investment
power or has the right to acquire beneficial ownership within 60 days after
February 23, 2001. Beneficial ownership may be disclaimed as to certain of
the securities.
(2) Includes 1,546 shares held by Mr. Coxon's spouse.
(3) Includes 6,192 shares held jointly by Mr. Dakey and his spouse.
(4) Shares held jointly by Mr. Kerwin and his spouse.
(5) Includes 10,662 shares held jointly by Mr. Lebo and his spouse.
(6) Shares held jointly by Mr. Miller and his spouse.
(7) Includes 9,267 shares held by Mr. Nelson's spouse.
(8) Shares held jointly by Mr. Sauve and his spouse.
(9) Shares held jointly by Mr. Schlegel and his spouse.
(10) Includes 6,332 shares held jointly by Mr. Shaffer and his spouse. Mr.
Shaffer is trustee of four trusts, held for the benefit of various family
members, which hold a total of 33,056 shares.
(11) Includes 47,688 shares held jointly by Mr. Snyder and his spouse and 44,150
shares held individually by his spouse.
COMPLIANCE WITH SECTION 16(a) REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that officers and directors, and persons who own more than 10% of a registered
class of the corporation's equity securities, file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
directors, and greater than 10% shareholders are required by SEC regulation to
furnish the corporation with copies of all Section 16(a) forms they file.
Based solely on our review of the copies of these forms, or written
representations from certain reporting persons that no Forms 5 were required for
those persons, Mid Penn Bancorp, Inc. believes that during the period from
January 1, 2000, through December 31, 2000, its officers and directors complied
with all applicable filing requirements.
17
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the
cumulative total shareholder return on Mid Penn Bancorp, Inc.'s common stock
against the cumulative total return of the S&P 500 Stock Index and the Peer
Group Index for the period of five fiscal years commencing January 1, 1996, and
ending December 31, 2000. The graph shows that the cumulative investment return
to shareholders, based on the assumption that a $100 investment was made on
December 31, 1995, in each of the corporation's capital stock, the S&P 500 Stock
Index and the Peer Group Index, and that all dividends were reinvested in such
securities over the past five years, the cumulative total return on such
investment would be $131.85, $231.62 and $152.95, respectively. The shareholder
return shown on the graph below is not necessarily indicative of future
performance.
[GRAPH APPEARS HERE]
Mid Penn Bancorp, Inc.
Peer Group Data
Date as of 9/30/00 (except bid price)
Total Shares Market
Assets Outstanding 12/31/00 Capitalization
Institution Headquarters (mils) (000) Bid Price (000)
CNB Financial Corporation Clearfield $552.2 3,666.0 $14.94 $54,761.4
Citizens & Northern Corporation Wellsboro 704.1 5,257.5 20.00 105,150.9
Citizens Financial Services, Inc. Mansfield 351.8 2,772.2 11.88 32,920.4
Codorus Valley Bancorp, Inc. York 293.9 2,450.9 15.13 37,070.2
Columbia Financial Corporation Bloomsburg 198.0 1,253.2 16.13 20,208.6
Comm Bancorp, Inc. Forest City 404.9 1,985.2 28.63 56,827.6
Norwood Financial Corporation Honesdale 325.6 1,743.9 17.13 29,864.9
Penseco Financial Services Corp. Scranton 459.4 2,148.0 20.00 42,960.0
Penns Woods Bancorp Inc. Jersey Shore 385.9 3,116.5 32.75 102,066.5
NOTE: The peer group for which information appears above includes the following
companies: CNB Financial Corporation; Citizens & Northern Corporation; Citizens
Financial Services, Inc.; Codorus Valley Bancorp, Inc.; Columbia Financial
Corporation; Comm. Bancorp, Inc.; Norwood Financial Corporation; Penesco
Financial Services Corporation; and Penns Woods Bancorp, Inc. These companies
were selected based on four criteria as of September 30, 2000: total assets
between $198 million and $704 million; market capitalization between $20 million
and $105 million; and headquarters located in Pennsylvania.
18
PROPOSALS
1. ELECTION OF CLASS C DIRECTORS.
Nominees for election this year are:
. Earl R. Etzweiler (director since 1991)
. William G. Nelson (director since 1991)
. Donald E. Sauve (director since 1999)
Cumulative voting rights do not exist with respect to the election of
directors. The majority of shares present, in person or by proxy, and entitled
to vote at the annual meeting, must vote in the affirmative to elect a director.
The Board of Directors recommends a vote FOR the election of the 3 nominees
as Class C Directors.
2. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS.
The Board of Directors of the corporation believes that Parente Randolph's
knowledge of Mid Penn Bancorp, Inc. and Mid Penn Bank is invaluable. Parente
Randolph advised us that none of its members has any financial interest in the
corporation or the bank. Parente Randolph served as our independent auditors for
the 2000 fiscal year. They assisted us with the preparation of our federal and
state tax returns and provided assistance in connection with regulatory matters,
charging for such services at its customary hourly billing rates. The
corporation's and the bank's Board of Directors approved these non-audit
services after due consideration of the accountants' objectivity and after
finding them to be wholly independent.
In the event that the shareholders do not ratify the selection of Parente
Randolph as independent auditors for the 2001 fiscal year, the Board of
Directors may choose another accounting firm to provide independent public
accountant/audit services for the 2001 fiscal year.
The majority of shares present, in person or by proxy, and entitled to vote
at the annual meeting, must vote in the affirmative to ratify Parente Randolph
as independent auditors for 2001.
The Board of Directors recommends a vote FOR the ratification of Parente
Randolph, PC as independent auditors.
19
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
In order for a shareholder proposal to be considered for inclusion in Mid
Penn Bancorp, Inc.'s proxy statement for next year's annual meeting, the written
proposal must be received by the corporation no later than December 26, 2001.
All proposals must comply the Securities and Exchange Commission regulations
regarding the inclusion of shareholder proposals in company-sponsored proxy
materials. If a shareholder proposal is submitted to the corporation after
December 26, 2001, it is considered untimely; and, although the proposal may be
considered at the annual meeting, the corporation is not obligated to include it
in the 2002 proxy statement. Similarly, in compliance with the corporation's
Bylaws, shareholders wishing to nominate a candidate for election to the Board
of Directors, must notify the corporation's Secretary in writing no later than
60 days in advance of the meeting. Shareholders must deliver any proposals or
nominations in writing to the Secretary of Mid Penn Bancorp, Inc. at its
principal executive office, 349 Union Street, Millersburg, Pennsylvania 17061.
See page 8 for more information about nominations to the Board of Directors.
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors knows of no matters other than those discussed in
this proxy statement or referred to in the accompanying Notice of Annual Meeting
of Shareholders that properly may come before the annual meeting. However, if
any other matter should be properly presented for consideration and voting at
the annual meeting or any adjournments of the meeting, the persons named as
proxy holders will vote the proxies in what they determine to be the best
interest of Mid Penn Bancorp, Inc.
20
APPENDIX
AUDIT COMMITTEE CHARTER
The Audit Committee, as a committee representing the Board, is an important
part of the Bank's overall control system with the following basic objectives:
1. Determining that an effective accounting and administrative internal
control system exists,
2. Ensuring that an adequate audit function is established, and
3. Reviewing significant financial information to determine that it is
timely, fairly presented, and includes appropriate disclosures.
To achieve these objectives the Audit Committee must to a large extent,
delegate the fulfillment of its detail responsibilities to an internal audit
staff and an external accounting firm, relying upon them, with appropriate
authority, to function as an independent part of internal control. The degree of
reliance placed on such controls is a committee decision; however, the scope of
the Audit Committee's responsibility includes, but is not limited to, the
following areas:
1. Determine that a competent internal audit organization exists to meet
the needs of the Bank. To accomplish this, the Audit Committee
recommends the Board adopt the attached Statements of Internal
Auditing Principle and Standards.
2. Review and approve audit policies.
3. Recommend annually to the Bank the selection of an external accounting
firm to perform an examination and report on the financial statements
as required. The Committee or representative of that committee shall
confer with the firm selected prior to, during and upon completion of
each annual audit.
4. Review annually the internal and external audit program with the
internal auditors and the external accounting firm. The scope of the
external accounting firm's proposal is to be reviewed and accepted by
the Committee prior to the engagement.
5. Review the results of audit activities at least semi-annually, calling
for appropriate action as required.
6. Review accounting principles and the adequacy of significant financial
information with appropriate and timely attention to footnotes and
major transactions.
7. Review with management, as is appropriate, compliance with bank
regulator and other agency requirements.
8. Require that the Auditor or other officers bring to their attention
any significant comments or exceptions noted in the examination and
audit reports of federal and state agencies calling for appropriate
actions as required.
9. Review with the Audit Committee, as is appropriate, material
transactions originating from director, director-related enterprises,
and officers loans.
10. Review with management the extent and adequacy of property and
liability insurance coverage, and the security program.
11. Report to the Board annually the effectiveness of the Bank's overall
control system and audit program and any matters relating to policy
which require their attention.
The Auditor is responsible to the Audit Committee and is broadly charged
with assisting the Committee in fulfilling its responsibilities.
i
The audit function is not responsible for internal control. Primary
responsibility for implementing and maintaining an adequate system of internal
controls and operating procedures and policies rests with management and
operating departments. The internal audit function does not in any way relieve
others of the responsibilities assigned to them.
In performing her functions, the Auditor shall have no direct
responsibility or authority over any of the activities which she reviews. The
Auditor shall not develop or install procedures, prepare records or engage in
any other activity reviewed and appraised which could reasonably be construed as
compromising independence. The Auditor's objectivity will not be affected
adversely, however, by the Auditor's determination and recommendation as to
standards of control to be applied in the development of systems and procedures
under the Auditor's review.
COMPOSITION OF THE AUDIT COMMITTEE
- -----------------------------------
The committee will be comprised of three or more directors and determined
by the Board of Directors. The members of the Committee will meet the
independence and experience requirements of the New York Stock Exchange. The
members of the Committee will be elected annually at the organizational meeting
of the full Board of Directors held in May and will be listed in the annual
report to shareholders. The Board will elect one of the members of the Committee
as Committee Chair.
RESPONSIBILITES AND DUTIES OF THE AUDIT COMMITTEE
- --------------------------------------------------
DOCUMENTS/REPORTS REVIEW:
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the organization's annual financial statements and any reports
or other financial information submitted to any governmental body, or
the public, including any certification, report, opinion, or review
rendered by the independent accountants.
3. Review the regular internal reports to management prepared by the
internal auditing department and management's response.
4. Review with financial management and the independent accountants the
10- Q prior to its filing or prior to the release of earnings. The
Chair of the Committee may represent the entire Committee for purposes
of this review.
5. Inquire as to the independence of the independent accountants and
obtain from the independent accountants, at least annually, a formal
written statement delineating all relationships between the
independent accountants and the Company as contemplated by
Independence Standards Board Standard No. 1, Independence Discussions
with Audit Committees.
6. After preparation by management and review by internal audit and
independent accountants, approve the report required under SEC rules
to be included in the Company's annual proxy statement. The charter is
to be published as an appendix to the proxy statement every three
years.
AUTHORITY
- ----------
The Auditor is authorized to:
1. Have unrestricted access to all bank functions, records, property and
personnel.
2. Make recommendations to the Audit Committee of any actions that should
be taken to assure protection of assets.
3. Have freedom from the influence of other departments and personnel in
such matters as audit procedures and content of audit reports.
ii
4. The internal auditor shall only engage in activities that do not
conflict with the interests of the Bank.
5. The internal auditor shall adhere to conduct that enhances the
professional stature of internal banking.
6. The internal auditor shall exercise due professional care in the
performance of all duties and in the fulfillment of all
responsibilities.
PERFORMANCE STANDARDS
- ----------------------
The internal auditor shall prepare a formal audit plan that covers all
significant Bank activities over an appropriate cycle of time.
1. The audit plan shall include an evaluation of controls within new
systems and significant modifications to existing systems before they
become operational.
2. Audit procedures shall provide sufficient and competent evidential
matter to support conclusions regarding the adequacy, effectiveness
and efficiency of the systems of control and the quality of ongoing
operations.
3. The organization of the audit functions shall provide for the proper
supervision of persons performing audits and for the proper review of
work performed.
COMMUNICATION STANDARDS
- -----------------------
1. The internal auditor shall prepare a formal report on the scope and
results of each audit performed.
2. Each audit report shall contain an opinion of the systems of control
and the quality of ongoing operations; the degree of compliance with
previously evaluated systems of control; or an explanation of why an
opinion cannot be expressed. When an adverse opinion is expressed, the
report shall contain a statement about the exposures that may exist in
the absence of corrective action.
3. The internal auditor shall communicate audit findings in a timely
manner to the managers responsible for corrective action.
4. At least once each year the internal auditor shall make a report of
audit activities to the Board of Directors and executive management.
The report shall include an opinion on the overall condition of the
Bank's controls and operations.
FUNCTION
---------
Internal auditing shall function as an independent appraisal activity
within the Bank to provide a protective and constructive service to management
and the Board of Directors in the discharge of their duties and responsibilities
to stockholders, depositors and the public.
RESPONSIBILITY
- ---------------
The Auditor shall be responsible to the Audit Committee of the Board of
Directors of this Bank and shall have full authority to independently make
audits, examinations and investigations of all financial records, operations and
affairs of the Bank in accordance with procedures generally accepted in current
internal audit practice.
The Auditor shall be administratively responsible to the Audit Committee
and executive management. The Auditor shall report to the Audit Committee of the
Board of Directors, as the Committee shall prescribe.
The Auditor shall have overall responsibility for internal audit operations
and shall, with the advise of the outside accountants, prescribe policies as
required to ensure the internal audit function is conducted in accordance with
the Bank's Statement of Internal Auditing Principle and Statement of Internal
Auditing Standards.
iii
STATEMENT OF INTERNAL AUDITING PRINCIPLE
- -----------------------------------------
Internal auditing is that management function which independently evaluates
the adequacy, effectiveness and efficiency of the systems of control within the
corporation and the quality of ongoing operations. The systems of control
comprise the plan of organization and all methods and measures designed to:
1. Provide reasonable assurance that assets are safeguarded, information
(financial and other) is timely and reliable, and errors and
irregularities are discovered and corrected promptly.
2. Promote operational efficiency.
3. Encourage compliance with manage0rial policies, laws, regulations, and
sound fiduciary principles.
Ongoing operations comprise all activities involved in the conduct of the
Bank's business.
The internal auditor is accountable to the audit committee of the Board of
Directors and executive management. This accountability precludes the auditor
from organizational relationships that may conflict with the need for
independence.
STATEMENT OF INTERNAL AUDITING STANDARDS
- -----------------------------------------
BANK STANDARDS
--------------
1. The Bank shall have an internal audit function responsible for
evaluating adequacy, effectiveness and efficiency of its systems of
control and the quality of ongoing operations.
2. The Bank shall maintain an environment within which the auditor has
the freedom to act.
3. The Bank shall require management to respond formally to adverse audit
findings and to take appropriate corrective action.
4. The Bank's systems of control shall include measurement of audit
effectiveness and efficiency.
PERSONAL STANDARDS
-------------------
1. The internal auditor shall have adequate training and proficiency.
2. The internal auditor shall maintain a sufficiently independent state
of mind to clearly demonstrate objectivity in matters affecting audit
conclusions.
3. The internal auditor shall respect the confidentiality of information
acquired while performing the audit function.
iv
MID PENN BANCORP, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 24, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Roberta A. Hoffman, Randall
L. Klinger and Patricia A. Walter and each or any of them, proxies of the
undersigned, with full power of substitution to vote all of the shares of Mid
Penn Bancorp, Inc. that the undersigned may be entitled to vote at the Annual
Meeting of Shareholders to be held at Mid Penn Bank, 349 Union Street,
Millersburg, Pennsylvania 17061, on Tuesday, April 24, 2001 at 10:00 a.m.,
prevailing time, and at any adjournment or postponement of the meeting as
follows:
1. ELECTION OF 3 CLASS C DIRECTORS TO SERVE FOR A 3-YEAR TERM.
Earl R. Etzweiler, William G. Nelson, and Donald E. Sauve
The Board of Directors recommends a vote FOR these nominees.
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all nominees
as marked to the contrary below) listed above
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW)
- --------------------------------------------------------------------------------
2. RATIFICATION OF THE SELECTION OF PARENTE RANDOLPH, PC, CERTIFIED PUBLIC
ACCOUNTANTS, AS THE INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
- --------------------------------------------------------------------------------
3. In their discretion, the proxy holders are authorized to vote upon such
other business as may properly come before the meeting and any adjournment
or postponement of the meeting.
THIS PROXY, WHEN PROPERLY SIGNED AND DATED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED SHAREHOLDERS. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES LISTED ABOVE AND FOR PROPOSAL 2.
Dated: , 2001
---------------------- ---------------------------------
Signature
---------------------------------
Signature
Number of Shares Held of Record
on February 23, 2001
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED PROMPTLY TO MID
PENN BANCORP, INC. IN THE ENCLOSED ENVELOPE. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE. IF MORE
THAN ONE TRUSTEE, ALL SHOULD SIGN. IF STOCK IS HELD JOINTLY, EACH OWNER SHOULD
SIGN.