Proxy Statement Pursuant to Section 14(a)
Of the Securities Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to "240.14a-12
Juniata Valley Financial Corp.
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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)
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TABLE OF CONTENTS
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GENERAL INFORMATION..........................................................................1
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VOTING PROCEDURES............................................................................1
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MANAGEMENT AND CORPORATE GOVERNANCE..........................................................2
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DIRECTORS OF THE COMPANY..................................................................3
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Nominees for Election..................................................................3
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Directors Continuing in Office.........................................................3
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EXECUTIVE OFFICERS OF THE COMPANY.........................................................5
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS.........................................5
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Audit Committee........................................................................6
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Nominating Committee...................................................................7
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Personnel Committee....................................................................8
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SHAREHOLDER COMMUNICATIONS WITH THE BOARD.................................................8
-----------------------------------------
TRANSACTIONS BETWEEN MANAGEMENT AND BANK..................................................8
----------------------------------------
ATTENDANCE OF DIRECTORS AT ANNUAL MEETING.................................................9
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COMPENSATION OF MANAGEMENT...................................................................9
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EXECUTIVE OFFICERS........................................................................9
------------------
Summary Compensation Table.............................................................9
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Option/SAR Grants In Last Fiscal Year.................................................10
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Aggregated Options/SAR Exercises In Last Fiscal Year and FY-End Option/SAR Values.....10
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Pension Plan Table....................................................................11
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Employment Contracts..................................................................11
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Personnel Committee Report On Executive Compensation..................................12
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Stock Performance Graph...............................................................13
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DIRECTOR'S COMPENSATION..................................................................14
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Director's Deferred Compensation Plans................................................14
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STOCK OWNERSHIP BY MANAGEMENT AND BENEFICIAL OWNERS.........................................16
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..................................17
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OTHER MATTERS...............................................................................17
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SHAREHOLDER PROPOSALS FOR THE 2005 ANNUAL MEETING OF SHAREHOLDER.........................17
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OTHER BUSINESS...........................................................................17
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INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.................................................18
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ANNUAL REPORT ON FORM 10-K...............................................................18
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OBTAINING MULTIPLE COPIES OF THE PROXY STATEMENT AND ANNUAL REPORT.......................19
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AUDIT COMMITTEE CHARTER....................................................................A-1
CHARTER OF THE NOMINATING COMMITTEE OF THE BOARD OF DIRECTORS..............................B-1
i
JUNIATA VALLEY FINANCIAL CORP.
Bridge and Main Streets
Post Office Box 66
Mifflintown, PA 17059
Telephone (717) 436-8211
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date: May 18, 2004
Time: 10:30 a.m.
Place: Clarion Inn, Burnham, Pennsylvania
MATTERS TO BE VOTED ON:
1. Election of Directors: Election of five Class B Directors to serve
----------------------
until the 2007 annual meeting.
2. Other Business: Any other business properly brought before the
---------------
shareholders at the meeting.
You can vote your shares of common stock if our records show that you owned
the shares at the close of business on April 12, 2004 (the "Record Date"). Your
vote at the annual meeting is very important to us. Please vote your shares of
common stock by completing the enclosed proxy and returning it to us in the
enclosed prepaid envelope. This proxy will not be used if you are present at the
meeting and desire to vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
RONALD H. WITHERITE, Secretary
Mifflintown, Pennsylvania
April 13, 2004
PROXY STATEMENT
APRIL 13, 2004
GENERAL INFORMATION
-------------------
This proxy statement has information about the annual meeting of
shareholders of Juniata Valley Financial Corp. We refer to Juniata Valley
Financial Corp. in this proxy statement as the "Company" or "we," "our" or "us."
The Company is the holding company for Juniata Valley Bank, which we refer to as
the "Bank." The enclosed proxy is being solicited by the Board of Directors of
the Company for use at the annual meeting. We first mailed this proxy statement
and the enclosed proxy card to shareholders on April 13, 2004.
We will pay the costs of preparing, printing and mailing the proxy and all
related materials. In addition to sending you these materials, some of our
employees may contact you by telephone, by mail or in person.
Our executive offices are located at Bridge and Main Streets, Mifflintown,
Pennsylvania 17059, and our telephone number is (717) 436-8211. Our mailing
address is P.O. Box 66, Mifflintown, PA 17059.
VOTING PROCEDURES
-----------------
WHO CAN VOTE?
You can vote your shares of common stock if our records show that you owned
the shares at the close of business on April 12, 2004 (the "Record Date"). A
total of 2,284,703 shares of common stock were outstanding on March 1, 2004, and
can vote at the annual meeting. You get one vote for each share of common stock
that you own, and there is no cumulative voting for the election of directors.
The enclosed proxy card shows the number of shares you can vote. We will hold
the annual meeting if the holders of a majority of the shares of the common
stock entitled to vote either sign and return their proxy cards or attend the
meeting in person.
WHAT VOTE IS REQUIRED?
The directors will be elected by a plurality of the votes cast. Because
five directors are being elected at the 2004 annual meeting, the five nominees
receiving the greatest number of votes will be elected. All other matters to be
voted on at the annual meeting must be approved by the holders of a majority of
the shares of common stock present at the annual meeting in person or by proxy.
WHAT IF OTHER MATTERS COME UP AT THE ANNUAL MEETING?
The matters described in this proxy statement are the only matters we know
will be voted on at the meeting. If other matters are properly presented at the
annual meeting, the proxy holders named in the enclosed proxy card will vote
your shares in accordance with their best judgment.
HOW ARE VOTES COUNTED?
At the annual meeting, our judges of election will manually count all votes
which are cast in person or by proxy. Voting is an important right of
shareholders. Abstentions will be counted for purposes of determining whether
there is a quorum, but they will not be counted as votes. Broker non-votes,
which occur when a broker or a bank holding your shares does not have discretion
to vote on your behalf or has not received voting instructions from you, may be
counted to determine whether there is a quorum but will not be counted as a vote
on any matter.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. At any time before the vote on a proposal, you can change your vote
either by:
o Giving the Company's secretary a written notice revoking your
proxy card; or
o Signing, dating and returning to us a new proxy card.
We will honor the proxy card with the latest date.
CAN I VOTE IN PERSON AT THE ANNUAL MEETING?
Yes. We encourage you to complete and return the proxy card to ensure that
your vote is counted. However, you may attend the meeting and vote in person
whether or not you have previously returned a proxy card.
MANAGEMENT AND CORPORATE GOVERNANCE
-----------------------------------
DIRECTORS OF THE COMPANY
NOMINEES FOR ELECTION AS DIRECTORS TO CONTINUE IN OFFICE
--------------------------------------------------------
UNTIL THE 2007 ANNUAL MEETING
-----------------------------
With respect to electing directors, the Company's bylaws provide as
follows:
o The board of directors will consist of not less than five nor
more than 25 directors;
o There will be three classes of directors (A, B and C), as nearly
equal in number as possible;
o Each class will be elected for a term of three years; and
2
o Each class will be elected in a separate election so that the
term of office of one class of directors will expire each year.
At the annual meeting, we will nominate the five persons named below as
directors. Although we do not know of any reason why any of these nominees might
not be able to serve, we will propose a substitute nominee if any nominee is not
available for election. The proxy holders named on the proxy card intend to vote
for the election of the five persons listed as the directors named below to
serve until the 2007 annual meeting. Unless you indicate otherwise, your proxy
will be voted in favor of the election of those nominees. Each nominee for the
position of Class B Director is currently a director of the Company and the
Bank. Besides their service to the Company and the Bank, none of the nominees or
continuing directors has been occupied in businesses that are affiliates or
subsidiaries of the Company or the Bank.
Don E. Haubert. Mr. Haubert, age 64, has been the president of Haubert
Homes, Inc., a residential development and home-building company based in Camp
Hill, Pennsylvania, since 1996. He has been a director of the Bank since 1975
and of the Company since its formation in 1983.
Timothy I. Havice. Mr. Havice, age 56, has been the owner and principal of
T. I. Havice Development, a development company based in Lewistown,
Pennsylvania, since 1975. He has been a director of the Bank and the Company
since 1998 and is currently serving as Vice-Chairman of the Company's Board.
Charles E. Hershberger. Mr. Hershberger, age 58, has been the president of
Stonewall Equity, Inc., an investment company, since 1996 and was president of
Hoenstine Funeral Homes, Inc., based in Lewistown, Pennsylvania, from 1987 to
2002. He has been a director of the Bank and the Company since 1998.
John A. Renninger. Mr. Renninger, age 68, was the president of A. D.
Renninger Lumber Co., a lumber company and manufacturer of lumber products,
based in Richfield, Pennsylvania, from 1968 to 2002 and is now retired. He has
been a director of the Bank since 1979 and of the Company since its formation in
1983.
Ronald H. Witherite. Mr. Witherite, age 66, has been the president and
owner of Ron's Fruit Market, Inc., a retail grocery store and a lawn and garden
equipment center based in Reedsville, Pennsylvania, since 1969. He has been a
director of the Bank and the Company since 1992.
DIRECTORS CONTINUING IN OFFICE
------------------------------
DIRECTORS TO CONTINUE IN OFFICE UNTIL THE 2005 ANNUAL MEETING (CLASS C)
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Joe E. Benner. Mr. Benner, age 65, has been the owner and principal of
Benner Automotive, a retail vehicle sales company based in Mifflintown,
Pennsylvania, since 1985. He has been a director of the Bank and the Company
since 1996 and has served as the Chair of the Board's Audit Committee since
2001.
3
Francis J. Evanitsky. Mr. Evanitsky, age 61, has been the President and a
director of the Bank and the Company since 1998. In 2000 Mr. Evanitsky became
the CEO of the Bank and Company. Prior to 1998, Mr. Evanitsky was the President
and CEO of the Lewistown Trust Company, which merged into the Bank in 1998.
Philip E. Gingerich, Jr. Mr. Gingerich, age 45, has been the president of
Central Insurance Group, Inc, an insurance agency based in Lewistown,
Pennsylvania, since 1982. He has been a director of the Company and the Bank
since 1998.
Dale G. Nace. Mr. Nace, age 59, was the owner and principal of Glenn Nace,
Inc., a cooling and heating contracting company based in Millerstown,
Pennsylvania, from 1975 until his retirement in 2003. Mr. Nace is currently the
owner and principal of GlenDale Storage, a storage business also based in
Millerstown. He has been a director of the Company and the Bank since 1992.
Harold B. Shearer. Mr. Shearer, age 68, owned and operated a farming
business in East Waterford, Pennsylvania from 1961 until his retirement in 1994.
He has been a director of the Company and the Bank since 1988.
Jan Snedeker. Mr. Snedeker, age 57, has been the president of Snedeker Oil,
Inc., a heating oil and propane business based in Lewistown, Pennsylvania, since
1995. He has been a director of the Company and the Bank since 1998.
DIRECTORS TO CONTINUE IN OFFICE UNTIL THE 2006 ANNUAL MEETING (CLASS A)
-----------------------------------------------------------------------
A. Jerome Cook. Mr. Cook, age 63, was the President and CEO of the Bank and
the Company until 1998 when he then became CEO and Chairman of the Board until
his retirement as CEO in 2000. He has been a director of the Bank since 1976 and
of the Company since its formation in 1983.
Martin L. Dreibelbis. Mr. Dreibelbis, age 50, has been a member of the
Boards of the Company and the Bank since 1998 and became Chairman of the Boards
in 2001. He has been a self-employed consultant to the petroleum industry since
1992.
Marshall L. Hartman. Mr. Hartman, age 65, has been the owner and
principal of Traditions, Ltd. an antique gallery based in Lewistown, PA since
1992. Mr. Hartman was the President and CEO of Lewistown Trust Company, based in
Lewistown, Pennsylvania, from 1977 to 1997. Throughout his twenty years as CEO
of Lewistown Trust Company, Mr. Hartman also acted in the role of Chief
Financial Officer of that organization and was responsible for the preparation
of the financial statements submitted by the Lewistown Trust Company to its
shareholder and to banking regulators. He has been a director of the Company and
the Bank since 1998.
Robert K. Metz. Mr. Metz, age 62, was the President of Metz Poultry Farms,
Inc., a poultry production and sales company based in Belleville, Pennsylvania,
from 1985 until his retirement in 2003. He has been a director of the Company
and the Bank since 1998.
4
Richard M. Scanlon, DMD. Dr. Scanlon, age 55, has owned and operated his
own dentistry practice, based in Lewistown, Pennsylvania, since 1979. He has
been a director of the Company and the Bank since 1998.
EXECUTIVE OFFICERS OF THE COMPANY
In addition to Mr. Evanitsky, the following individuals serve as executive
officers of the Company. The officers will hold office until their successors
are elected.
Judy R. Aumiller. Ms. Aumiller, age 61, has been Sr. Vice President of
Operations since 1989.
William L. Barnett. Mr. Barnett age 52, Sr. Vice President Trust &
Investment Division Manager since 2003. Prior to joining the Company, Mr.
Barnett held positions as Account Manager and Vice President of Retirement
Services at other financial institutions.
Pamela S. Eberman. Ms. Eberman, age 52, has been the Sr. Vice President of
Human Resources since 2002. Prior to 2002 Ms. Eberman held the position of Vice
President of Human Resources.
Linda L. Engle. Ms. Engle, age 51, has been the Treasurer of the Company
and the Chief Financial Officer since 1992 and Executive Vice President since
1998.
Edward L. Kauffman. Mr. Kauffman, age 51, has been Sr. Vice President of
Loan Administration since 1989.
Donald L. Musser. Mr. Musser, age 62, has been Sr. Vice President
Facilities and Security Manager since 2002. Prior to 2002, Mr. Musser held the
position of Senior Vice President Branch Administration with the Company.
Thomas L. Parrish. Mr. Parrish, age 57, has been Sr. Vice President
Community Banking Division Manager since 2002. Prior to joining the Company, Mr.
Parrish held positions as Vice President, and Area Manager of other financial
institutions.
Lou Ann Wilson. Ms. Wilson, age 51, has been Vice President, Compliance
Officer since 2001. Ms. Wilson also held the position of Community Office
Manager prior to becoming the Company's Compliance Officer.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company met 12 times in 2003. No director
attended fewer than 75% of the total number of meetings of the Board and the
committee(s) on which he served. The Board has audit, nominating and personnel
committees, in addition to other committees that are more specifically related
to the banking business. Following are descriptions of those committees and
reports from the audit and personnel committees.
5
AUDIT COMMITTEE
---------------
Members, Number of Meetings, Function, Charter
----------------------------------------------
and Audit Committee Financial Expert
------------------------------------
The members of the Audit Committee are Joe Benner Chairman, Marshall
Hartman, Don Haubert, Charles Hershberger and Robert Metz. Each member is an
independent director, based on the qualifications for independence established
by the Nasdaq Stock Market, Inc. and applicable Securities and Exchange
Commission regulations. The Board of Directors has determined that Mr. Hartman
is an audit committee financial expert. The Audit Committee, which met five
times in 2003, oversees the Company's financial reporting process on behalf of
the Board of Directors. The Committee, along with the Board of Directors, has
formally adopted an audit committee charter setting forth its responsibilities.
A copy of the charter is included in this Proxy Statement as Appendix A.
Report of the Audit Committee
-----------------------------
Management has the primary responsibility for the financial statements and
the reporting process including the systems of internal control. In fulfilling
its oversight responsibilities, the Committee reviewed the audited financial
statements in the Annual Report with management including a discussion of the
quality, not just the acceptability of the accounting principles, the
reasonableness of significant judgments and the clarity of disclosure in the
financial statements.
The Committee reviewed with the independent auditors who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality, not just the acceptability, of the Company's accounting principles
and such other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the Committee has discussed
with the independent auditors the matters required to be discussed by Statement
on Auditing Standards No. 61, "Communications with Audit Committees." We have
also received from Beard Miller Company LLP, the Company's independent auditors,
written disclosures and a letter concerning the firm's independence from the
Company, as required by Independence Standards Board No. 1, "Independence
Discussions with Audit Committees."
The Committee discussed with the Company's internal and independent
auditors the overall scope and plans for their respective audits. The Committee
meets with the internal and independent auditors, with and without management
present, to discuss the results of their examinations, their evaluations of the
Company's internal controls and the overall quality of the Company's financial
reporting.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended December 31, 2003 for filing with the Securities and Exchange
Commission. The Committee and the Board of Directors have also approved the
selection of Beard Miller Company LLP as the Company's independent auditors for
2004.
By: Joe Benner, Chairman, Charles Hershberger, Marshall Hartman,
Don Haubert and Robert Metz
6
NOMINATING COMMITTEE
--------------------
Members, Meetings, Function and Charter
---------------------------------------
The members of the Nominating Committee are Joe Benner, Martin Dreibelbis,
Philip Gingerich, Jr., Tim Havice and Harold Shearer. Each member is an
independent director, based on the qualifications for independence established
by the Nasdaq Stock Market, Inc. The function of the Committee is to identify
and recommend qualified candidates for election to the Board of Directors and to
nominate candidates to fill vacancies that occur between shareholder meetings.
The Committee has adopted a charter, which is included in this Proxy Statement
as Appendix B. A current copy of the charter is also posted on the Bank's
website at jvbonline.com, under the Investor Relations tab. Because the
Nominating Committee was formed by the Board of Directors at its meeting in
January 2004, it did not meet in 2003. Before recommending candidates for
election to the Board, the Nominating Committee will consider the candidate's
character, judgment, business experience, expertise and acumen, as well as any
other criteria contained in the bylaws for membership on the Board.
Process for Identifying and Evaluating Nominees for Director
------------------------------------------------------------
The Committee will utilize current board members, management and other
appropriate sources to identify potential nominees. The Committee will conduct
any appropriate and necessary inquiries into the backgrounds and qualifications
of possible candidates after considering the function and needs of the Board of
Directors, and recommend nominees for approval by the Board of Directors and
stockholders. The Committee's process for the consideration of potential
nominees will be the same for nominees identified by shareholders, as well as
the other sources identified above.
The Nominating Committee will receive and consider nominee recommendations
that shareholders address to the Secretary of the Company at the address listed
on the first page of this proxy statement. If shareholders wish to nominate
candidates for election at the Company's annual meeting of shareholders,
however, they must comply with additional procedures contained in the Company's
bylaws. To nominate someone at the annual meeting, you must deliver or mail a
notice to the secretary of the Company not less than 45 days prior to the date
of the annual meeting. Your notice must state your name and residence address
and the number of shares of the Company which you own. Your notice must also
contain the following information on each proposed nominee:
the name, address and age of the nominee;
the principal occupation of the nominee;
the number of shares of the Company common stock owned by the nominee; and
the total number of shares that, to your knowledge, will be voted for the
nominee.
7
If you do not follow this procedure, the Chairman of the meeting will disregard
a nomination made at the annual meeting, and the judges of election will
disregard any votes cast for your nominees.
PERSONNEL COMMITTEE
-------------------
Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------
The Personnel Committee makes recommendations to the Board regarding
executive compensation. Its members are Timothy Havice, Chairman, Jan Snedeker,
Richard Scanlon and Ronald Witherite, each of whom is independent based on the
qualifications for independence established by the Nasdaq Stock Market, Inc. The
Committee met three times in 2003. The report of the Personnel Committee is
contained in the section of this Proxy Statement entitled "Compensation of
Management." None of the members of the Personnel Committee has been an officer
or employee of the Company or the Bank at any time. As is the case with other
Board members, any indebtedness of the members of the Personnel Committee to the
Bank is on the same terms, including interest rates and collateral on loans, as
those prevailing at the time for comparable transactions with others, and did
not involve more than the normal risk of collectibility or present other
unfavorable features.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD
The Board has established a process whereby shareholders are able to
communicate directly with the Board by addressing communications either to the
Audit Committee Chair, or in the case of recommendations for Board candidates,
the Secretary, c/o Juniata Valley Financial Corporation, Bridge and Main
Streets, Post Office Box 66, Mifflintown, Pennsylvania 17059. Every
communication sent to the Audit Committee Chair will be delivered directly to
that director, who will in turn forward the communication to the specific member
of the Board to whom it has been addressed and to the Board as a whole. All
communications regarding nominations that are sent to the Secretary will be
forwarded to the Chair of the Nominating Committee.
TRANSACTIONS BETWEEN MANAGEMENT AND BANK
During 2003, the Bank had and expects to continue having banking
transactions in the ordinary course of business with our directors and executive
officers on the same terms, including interest rates and collateral on loans, as
those prevailing at the time for comparable transactions with others. Management
believes that these loans present no more than the normal risk of collectibility
or other unfavorable features. During 2003, the highest aggregate amount of
credit the Bank extended to directors, officers and their associates, either
directly or indirectly, did not exceed 10% of equity capital. Also during 2003,
extension of credit to any one director, officer, principal shareholder did not
exceed 5% of equity capital.
ATTENDANCE OF DIRECTORS AT ANNUAL MEETINGS
The Board has adopted a policy requiring the attendance of all directors at
the annual meeting, absent extenuating circumstances. All members of the Board
attended the 2003 annual meeting.
8
COMPENSATION OF MANAGEMENT
--------------------------
EXECUTIVE OFFICERS
The following tables and reports apply to the compensation our Company paid
to Mr. Evanitsky. Pursuant to the rules of the Securities and Exchange
Commission, we have only included Mr. Evanitksky's compensation information in
this proxy statement, because he is the only executive officer of the Company
whose salary and bonus exceeded $100,000 in 2003.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
----------------------
-------------------------------------------
ANNUAL COMPENSATION | Awards | Payouts |
------------------- | ------ | ------- |
----------------------------------------|-------------------------------|----------|
(a) (b) (c) (d) (e) | (f) (g) | (h) | (i)
--- --- --- | --- | --- | ---
Other | | |
Name Annual | Restricted Securities | | All Other
and Compen- | Stock Underlying | LTIP | Compen-
Principal sation | Awards Options/ |Payouts(1)| sation(2)
Position Year Salary ($) Bonus ($) ($) | ($) SARs (#) | ($) | ($)
----------------------------------------------------------------|-------------------------------|----------|-----------
Francis J. | | |
Evanitsky, 2003 151,501 2,057 - | - 2,540 | - | 59,909
President 2002 148,271 1,185 - | - 2,544 | - | 55,346
and CEO 2001 128,923 1,185 - | - 2,429 | - | 40,667
(1) The Company does not maintain any Long-Term Incentive Plans as defined by
the Securities and Exchange Commission.
(2) Mr. Evanitsky received $8,700 in 2003, $8,400 in 2002, and $8,100 in 2001
as compensation for serving as a director of the Company and the Bank. Mr.
Evanitsky is provided with the use of an automobile, and the compensation
element of this automobile was $2,988 in 2003, $2,421 in 2002, and $1,756
in 2001. In 2003, 2002 and 2001, benefits were accrued for Mr. Evanitsky
under supplemental retirement, director's retirement and split dollar life
insurance agreements, described below, in the amounts of $48,221, $44,525,
and $30,811 respectively.
9
OPTION/SAR GRANTS IN LAST FISCAL YEAR
At the 2000 annual meeting, the shareholders of the Company approved the
2000 Incentive Stock Option Plan, which is the only stock option plan that the
Company maintains. The following table shows the options awarded to Mr.
Evanitsky in 2003.
----------------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Individual Grants Appreciation
----------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities
Underlying
Options/SARS % of Total
------------- Options/SARS Exercise
Granted Granted to Or Base
------- Employees in Price Expiration
Name (#) Fiscal Year ($/Sh) Date 5%($) 10%($)
----- --- ----------- ------ ---- ----- ------
----------------------------------------------------------------------------------------------------------------
Francis J. Evanitsky, 2,540 30% 30.25 11/18/13 58,665 138,925
President & CEO
AGGREGATED OPTION/SAR EXERCISED IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
Mr. Evanitsky did not exercise any options in 2003. The following table
shows the value of all unexercised options and the number of in-the-money
unexercised options held by Mr. Evanitsky as of the end of 2003.
(a) (b) (c) (d) (e)
Number
of
Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired on Exercisable/ Exercisable/
Name Exercise (#) Value Realized ($) Unexercisable Unexercisable
----------------------------------------------------------------------------------------------------------------------
Francis J. Evanitsky, -0- -0- 2,467/5,046 $15,288/$26,074
President & CEO
10
PENSION PLAN TABLE
We maintain a pension plan for employees of the Company and the Bank, in
which Mr. Evanitsky participates. The following table shows the annual benefits
payable to a participant in the plan, assuming that the participant retires at
age 65.
Years of Service
----------------
-------------------------------------------------------------------------------------------------
Remuneration 15 20 25 30 35
-- -- -- -- --
100,000 $17,814 $23,752 $29,690 $35,628 $41,566
120,000 $22,914 $30,552 $38,190 $45,828 $53,466
140,000 $28,014 $37,352 $46,690 $56,028 $65,366
160,000 $33,114 $44,152 $55,190 $66,228 $77,266
180,000 $38,214 $50,952 $63,690 $76,428 $89,166
200,000 $43,314 $57,752 $72,190 $86,628 $101,066
The compensation covered by the Pension Plan includes salary and bonuses,
as shown in columns (c) and (d) on the Summary Compensation Table. Benefits are
computed on the basis of straight line annuity amounts. The benefits listed do
not take into account deductions for Social Security or other offset amounts. As
of December 31, 2003, Mr. Evanitsky had 7 years of credit service under the
Pension Plan.
EMPLOYMENT CONTRACTS
In 1998, we entered into an employment agreement with Mr. Evanitsky. The
agreement provides that we will pay Mr. Evanitsky severance compensation equal
to 2.95 times his average annual compensation over the five years immediately
preceding termination of his employment if:
o Mr. Evanitsky's employment is terminated without cause;
o Mr. Evanitsky's employment is terminated by either Mr. Evanitsky or us
at any time during the six months before or nine months after a change
in control of the Company and the Bank.
The agreement will expire when Mr. Evanitsky retires. In addition to his
employment agreement, Mr. Evanitsky participates in the Supplemental Retirement
and Split Dollar Life Insurance Agreements for Selected Officers compensation
arrangement.
11
Supplemental Retirement and Split Dollar Life Insurance
-------------------------------------------------------
Agreements for Selected Officers
--------------------------------
In order to attract and retain key officers and to encourage such officers
to remain with the Bank, the Bank has provided certain officers with retirement
and death benefits, as described below; supplementing the retirement benefits
they will receive under the qualified retirement plans.
The agreements provide the selected officers with supplemental retirement
income benefits upon reaching age 65 with a reduced benefit available at age 62;
such benefit is to be paid in 180 equal monthly installments. Benefits are also
payable upon disability, early retirement, and change in control or death. It is
projected that the supplemented retirement income benefit will allow each
participant to receive an annual retirement benefit of 50% to 80% of his or her
final salary, when such supplemental retirement benefit is added to the annual
benefit that will be available from social security and the other retirement
plan benefits sponsored by the Bank. In addition, the selected officers will be
eligible to retain life insurance coverage equal to one or two times their final
salary, if they comply with the terms of their split dollar agreements. The
officer will not be required to contribute any premium payments, but will have
the economic value of the coverage included in taxable income. Supplemental
retirement income benefits accrue monthly, but no vesting occurs until age 62.
The estimated liability under the agreements is accrued as earned by the
employee. Benefits were accrued for Mr. Evanitsky in 2003 in the amount of
$39,423. Under the supplemental retirement plan, Mr. Evanitsky will be paid
$30,000 annually, upon his retirement at normal retirement age. This amount is
in addition to the annual benefits payable to Mr. Evanitsky under the pension
plan, as shown on the Pension Plan Table.
The program is funded with life insurance and is not expected to result in
any material cost to the Bank.
PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Personnel Committee makes recommendations to the Board of Directors
regarding executive compensation. The Board of Directors then reviews and
ratifies the Personnel Committee's recommendations.
The Personnel Committee's objective is to provide a level of salary
competitive with that offered by other similar regional bank holding companies
and banks. The Personnel Committee reviews the results of several salary and
compensation surveys. Executive compensation is not based solely on the
Company's corporate performance. The process of determining executive
compensation is mostly subjective and not based on quantitative data.
Mr. Evanitsky participates in the same two bonus programs in which all of
our employees participate. These programs pay modest bonuses. One bonus is paid
at year end. The other bonus is paid after the Company's return on assets is
calculated. We offer no special incentive programs for Mr. Evanitsky.
Executive officer compensation appears in the Summary Compensation Table on
Page 9.
By: Timothy Havice, Chairman, Jan Snedeker, Richard Scanlon and Ronald
Witherite.
12
STOCK PERFORMANCE GRAPH
The following graph shows the yearly percentage change in the Company's
cumulative total shareholder return on its common stock from December 31, 1998
to December 31, 2003 compared with the S&P 500, the Russell 3000 Index and a
peer group index, (the "Juniata Valley Bank Peer Group"), consisting of eight
Pennsylvania bank holding companies. The bank holding companies in the Peer
Group Index are ACNB Corporation, Citizens & Northern Corporation, Codorus
Valley Bancorp, Inc., Columbia Financial Corp., Community Banks, Inc., Fidelity
D & D Bancorp, Inc., PennRock Financial Services Corp., and Union National
Financial Corp. These companies were selected for our Juniata Valley Peer Group,
because they are community-based banks of similar market capitalization. The
Company has selected the Russell 3000 Index for inclusion in the graph, because
it contains a broader array of publicly traded companies and provides a more
comprehensive market comparison than the S&P 500.
[GRAPHIC OMITTED]
----------- -----------
Index 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
-------------------------------------------------------------------------------------------------------------------
Juniata Valley Financial Corporation 100.00 92.68 73.64 93.97 98.75 120.39
S&P 500* 100.00 121.11 110.34 97.32 75.75 97.40
Russell 3000 100.00 120.90 111.88 99.06 77.72 106.31
Juniata Valley Peer Group** 100.00 92.82 83.13 101.26 121.02 162.79
13
DIRECTOR'S COMPENSATION
We pay each director an annual director's fee of $8,700 for attending 12
regular meetings of the Board of Directors. We also pay each director who is not
an executive officer $90 for attending each committee meeting and special
meeting of the Board of Directors. In addition to meeting fees, the Company
compensated the directors under the following plans.
DIRECTOR'S DEFERRED COMPENSATION PLANS
--------------------------------------
The 1982 Plan
-------------
In 1982, we established a director's deferred compensation plan. This plan
permitted participating directors to defer $3,900 in director's fees each year
for a five year period beginning with the election to participate in the plan.
In return we agreed to pay each participating director a specified amount in 120
equal payments beginning at the age of 65 or five years after the date the
director elects to participate in the plan, whichever is later. If the director
were to die before that time, payments would begin upon the death of the
director. We applied the deferred director's compensation to the purchase of
life insurance policies which will fund our obligations under the plan. The
Company is the owner and the beneficiary of these life insurance policies.
The 1987 Plan
-------------
In 1987, when the first director's deferred compensation plan was fully
funded, we offered directors a second deferred compensation plan. Each director
could elect to defer $4,700 in director's fees each year for five years in
exchange for an additional benefit similar to that offered under the 1982 plan.
The 1991 Plan
-------------
In 1991, when the second plan was funded, we offered a third deferred
compensation plan to directors. Each director could elect to defer $6,000 in
director's fees each year for five years in order to receive an additional
benefit similar to that offered under the 1982 and 1987 plans.
All three plans operate in substantially the same manner and all are funded
by insurance policies as described above. The 1982, 1987 and 1991 plans will
continue in effect.
The 1999 Plan
-------------
Effective January 1, 1999, the Board of Directors adopted a director's
deferred compensation plan which is in addition to the other plans described
above. The 1999 plan is different than the other deferred compensation plans.
The 1999 plan is an unfunded plan. We do not make contributions to the plan.
This plan simply allows our directors to defer receipt of their compensation to
future dates.
Prior to each calendar year, a director may elect to defer receipt of all
or a part of his or her compensation for that calendar year. We will credit the
deferred amounts to an account
14
maintained at the Bank. Each participating director will have a separate
account. The deferred compensation will earn interest, compounded quarterly, at
the current interest rate of the Bank's floating IRA savings program.
A participating director who resigns as director before reaching age 55
will receive his or her account balance in one lump sum distribution. A
participating director who resigns as director after reaching age 55 will
receive his or her account balance in equal semi-annual payments the ten years
beginning on the earlier of January 1 or July 1 after the director resigns.
If a participating director dies prior to receiving all of his or her
account balance, we will pay the director's remaining account balance in one
lump sum to the director's designated beneficiary. In the event of a director's
permanent disability or unforeseeable emergency, the Board of Directors has the
discretion to accelerate payment of that director's account balance.
Director's Retirement Plan
--------------------------
In December, 1988, the Bank established a retirement program for directors.
All persons who were directors of the Bank on January 1, 1988, are eligible for
benefits under the plan. All directors who became directors after January 1,
1988, are eligible upon completing six months of service on the Board. The plan
provides for a target retirement benefit of $7,800 per year for 10 years
beginning at age 65, or, if later, when the director has completed 10 years of
credited service (as defined in the plan) with the Board. The retirement benefit
for each director will accrue over his or her remaining projected period of
service until he or she reaches age 65 or completes 10 years of credited
service. The plan depends on annual funding which is subject to approval by the
Board of Directors. If the Board terminates the plan or declines to make a
contribution in any year, directors will receive only the benefits that have
accrued, even if less than the targeted benefits. Lesser benefits are payable in
the event of the director's death, disability, or other termination (except
terminations caused by the director's fraud or dishonesty).
In January, 2001, certain directors who were not participating in the
December, 1988 directors' retirement plan but who are now on the Board commenced
participation in the retirement program. These directors included directors of
the former Lewistown Trust Company, which merged into the bank in 1998. The
benefit amount was increased to $8,500 per year commencing in 2001, applicable
to all active directors who will commence benefit payments in 2001 or later. In
addition, the director life insurance benefit of $25,000 per director will be
provided through bank-owned life insurance ("BOLI") program because BOLI is a
more cost-efficient way of providing the benefits. As a result, directors who
remain on the Board until age 65 or later will be eligible to retain $25,000 of
life insurance coverage for the rest of their lives. The eligible directors will
not be required to pay any premiums on the life insurance policy, but will have
the imputed value of the insurance coverage included in their taxable incomes.
Benefits are also payable upon death, disability, early retirement or change in
control. Benefits were accrued for Mr. Evanitsky in 2003 in the amount of
$8,798. Mr. Evanitksy will be paid $8,500 per year upon his retirement at normal
retirement age.
15
STOCK OWNERSHIP BY MANAGEMENT AND BENEFICIAL OWNERS
---------------------------------------------------
No individual, group or business owns more than five percent of the
Company's stock. The following table shows the number of shares of common stock
owned by each of the Company's directors, including Mr. Evanitsky (who is both a
director and the Company's president and chief executive officer) and as a
group. Common stock is the only class of equity securities of the Company that
is outstanding.
Owner Number of Shares Percentage of
Outstanding
Common Stock
Joe E. Benner 5,145 (1)(2) *
A. Jerome Cook 5,125 (1)(2)(4) *
Martin L. Dreibelbis 6,036 (2)(4) *
Francis J. Evanitsky 4,967 (2)(3) *
Philip E. Gingerich, Jr. 6,042 (2) *
Marshall L. Hartman 31,646 1.43%
Don E. Haubert 5,474 (2) *
Timothy I. Havice 21,377 (1)(2)(4) *
Charles E. Hershberger 7,106 (5) *
Robert K. Metz 16,413 *
Dale G. Nace 3,205 (2) *
John A. Renninger 13,031 (1) *
Richard M. Scanlon, DMD 2,228 (2) *
Harold B. Shearer 5,751 (2)(6) *
Jan Snedeker 2,565 (2)(4) *
Ronald H. Witherite 1,752 (2) *
Directors (including Mr. Evanitsky) as a group 137,863 (7) 6.03%(8)
*Indicates ownership of less than 1% of the outstanding common stock.
(1) Includes shares held solely by the director's spouse: as to Mr. Benner, 719
shares; as to Mr. Cook, 338 shares; as to Mr. Havice, 9,829 shares; as to Mr.
Renninger, 2,521 shares.
(2) Includes shares held jointly by director and his spouse.
(3) Includes 2,467 shares that Mr. Evanitsky may acquire currently through the
exercise of stock options.
(4) Includes shares held jointly by director and his children: and as to Mr.
Cook 787 shares; Mr. Dreibelbis 430 shares. Mr. Havice 120 shares, and Mr.
Snedeker 90 shares held solely by the directors' children.
(5) Includes 6,884 shares held by Stonewall Equity, a limited liability
partnership owned by Mr. Hershberger and his spouse.
(6) Includes 132 shares held in a trust.
(7) Includes 13,617 shares that are indirectly owned.
(8) Based on the total shares outstanding plus the number of shares underlying
Mr. Evanitsky's exercisable stock options.
16
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our directors and certain executive officers must file reports with the
Securities and Exchange Commission indicating the number of shares of Company
common stock they beneficially own and changes in their beneficial ownership. To
the best of our knowledge, our directors and executive officers timely filed all
required reports in 2003.
OTHER MATTERS
-------------
SHAREHOLDER PROPOSALS FOR THE 2005 ANNUAL MEETING OF SHAREHOLDERS
-----------------------------------------------------------------
Under the Company's Bylaws, no business may be brought before an annual
meeting of shareholders unless it is specified in the notice of the meeting or
is otherwise brought before the meeting by the Board of Directors or by a
shareholder entitled to vote who has delivered notice to the Company (containing
information specified in the Bylaws) not less than 120 days prior to the
anniversary of the mailing of the previous year's proxy statement. These
requirements are separate from and in addition to the SEC's requirements that a
shareholder must meet in order to have a shareholder proposal included in the
Company's proxy statement. A shareholder wishing to submit a proposal for
consideration at the 2005 annual meeting of Shareholders, either under SEC Rule
14a-8, or otherwise, should do so no later than December 14, 2004. A proposal
submitted after that date will be considered untimely.
If the corporate secretary of the Company receives notice of a shareholder
proposal that complies with the governing Bylaw provision on or prior to the
required date and if such proposal is properly presented at the 2005 annual
meeting of shareholders, the proxies appointed by the Company may exercise
discretionary authority in voting on such proposal if, in the Company's proxy
statement for such meeting, the Company advises shareholders of the nature of
such proposal and how the proxies appointed by the Company intend to vote on
such proposal, unless the shareholder submitting the proposal satisfies certain
SEC requirements, including the mailing of a separate statement to the Company's
shareholders.
The presiding officer of the meeting may refuse to permit any proposal to
be made at an annual meeting by a shareholder who has not complied with all of
the governing Bylaw procedures, including receipt of the required notice by the
corporate secretary for the Company by the date specified. If a shareholder
proposal is received by the Company after the required notice date but the
presiding officer of the meeting nevertheless permits such proposal to be made
at the 2005 annual meeting of shareholders, the proxies appointed by the Company
may exercise discretionary authority when voting on such proposal.
If the date of our next annual meeting is advanced or delayed more than 30
days from May 17, 2005, we will promptly inform you of the change of the annual
meeting and the date by which shareholder proposals must be received.
OTHER BUSINESS
--------------
At the date of this proxy statement, we are not aware of any business to be
presented at the annual meeting other than the election of directors discussed
in this proxy statement. If other
17
proposals are properly brought before the meeting, the proxy holders named in
the enclosed proxy card will vote your shares in accordance with their best
judgment.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
----------------------------------------
The Audit Committee has engaged Beard Miller Company LLP, Harrisburg,
Pennsylvania, as principal accountant to audit the financial statements of the
Company and the Bank for the year 2004. This firm has no material relationship
with the Company or the Bank and is considered to be well qualified. A
representative of the firm is expected to be at the annual meeting. That
representative will have the opportunity to make a statement if he so desires,
and he will be available to respond to appropriate questions.
Before Beard Miller Company LLP performs any non-audit services for the
Company, the Audit Committee is informed at a meeting that such services are
necessary and is advised of the estimated costs of such services. The Audit
Committee then decides whether to approve Beard Miller's performance of the
services. In 2003, all services performed by Beard Miller Company were approved
in advance pursuant to these procedures. The Audit Committee has determined that
the performance by Beard Miller Company LLP of benefit plan audits, the
preparation of tax returns and advice on SEC accounting issues is compatible
with maintaining that firm's independence. The Company has paid the following
fees to Beard Miller Company LLP in the last two years:
Year Audit Fees(1) Audit-Related Fees(2) Tax Fees(3) All Other Fees(4)
---- ------------- ---------------------- ------------ -----------------
2003 $69,007 $13,819 $3,775 $6,737
2002 $60,543 $14,030 $4,125 -0-
(1) Includes professional services rendered for the audit of the Company's
annual financial statements and review of financial statements included in Forms
10-Q, or services normally provided in connection with statutory and regulatory
filings (i.e., attest services required by FDICIA or Section 404 of the
Sarbanes-Oxley Act), including out-of-pocket expenses.
(2) Assurance and related services reasonably related to the performance of the
audit or review of financial statements include the following: retirement and
401k plans.
(3) Tax fees include the following: preparation of state and federal tax
returns, assistance with calculating estimated tax payments.
(4) Other fees represent discussions with management regarding Sarbanes-Oxley,
employee stock purchase plan issues and the accounting treatment of insurance
proceeds.
ANNUAL REPORT ON FORM 10-K
--------------------------
SHAREHOLDERS CAN OBTAIN A COPY OF OUR ANNUAL REPORT ON FORM 10-K FREE OF
CHARGE BY SENDING A REQUEST TO MS. LINDA L. ENGLE, EXECUTIVE VICE PRESIDENT/CFO,
THE JUNIATA VALLEY BANK, PO BOX 66, MIFFLINTOWN, PA 17059.
18
OBTAINING MULTIPLE COPIES OF THE PROXY STATEMENT AND ANNUAL REPORT
------------------------------------------------------------------
Only one Annual Report and proxy statement are being delivered to
shareholders sharing an address unless we have received contrary instructions
from one or more of the shareholders. We will deliver promptly, upon written or
oral request, a separate copy of the Annual Report and proxy statement to you,
if you reside at a shared address to which single copies were sent. You can make
a request for delivery of individual copies of the Annual Report and proxy
statement (or for delivery of a single copy if you reside at a shared address
and are receiving multiple copies) by calling Linda Engle, Executive Vice
President and CFO at 717-436-8211, or by mailing a request to her at the above
address.
RETURN OF PROXY
---------------
We urge you to sign, date and return the enclosed proxy card as soon as
possible, whether or not you plan to attend the meeting in person. If you do
attend the meeting, you may then withdraw your proxy.
BY ORDER OF THE BOARD OF
DIRECTORS
RONALD H. WITHERITE
Secretary
Mifflintown, Pennsylvania
April 13, 2004
19
JUNIATA VALLEY FINANCIAL CORP.
AUDIT COMMITTEE CHARTER
AUDIT COMMITTEE MISSION
The Audit Committee is appointed by the Board of Directors to assist the Board
in fulfilling its oversight responsibilities. The Audit Committee's primary
duties and responsibilities are to:
o Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting and
regulatory compliance.
o Monitor the independence and performance of the Company's independent
auditors and internal auditing department.
o Provide an avenue of communication among the independent auditors,
management, the internal auditing department, and the Board of
Directors.
To effectively perform his or her role, each Committee member will obtain an
understanding of the detailed responsibilities of Committee membership.
AUDIT COMMITTEE ORGANIZATION
Each member of the Committee shall meet the independence and eligibility
criteria set forth in all applicable rules and regulations of the Securities and
Exchange Commission and NASDAQ, unless the member satisfies an applicable
exemption. The Audit Committee shall be comprised of three or more directors as
determined by the Board. To the extent required by law, regulation or listing
agreement, a member or members of the Audit Committee shall serve as the
Company's "Audit Committee Financial Expert". One of the members shall be
designated "Chairman".
The Committee shall meet quarterly, or more frequently as circumstances dictate.
The Committee believes that the above mission statement sets forth its primary
roles and responsibilities. In that connection, the following is meant to serve
as a guide in achieving that mission.
ROLES AND RESPONSIBILITIES
FINANCIAL STATEMENT REVIEW PROCEDURES
1. Review the Corporation's interim financial results and annual audited
financial statements prior to filing or distribution. The review should
include discussion with management and independent auditors of significant
issues regarding accounting principles, practices, and judgments. Discuss
with Independent Auditors its judgment about the quality, not just
acceptability, of the Company's accounting principles as applied in its
financial reporting.
2. In consultation with management, as well as the Corporation's independent
accountants, verify that the CEO and CFO have certified that they disclosed
to the independent auditors
A-1
and to the Audit Committee all significant deficiencies in the design or
operation of internal controls that could affect the Corporation's ability
to record, process, summarize and report financial data, any material
weaknesses in the internal controls, and any fraud- whether or not
material- that involved management or other employees who have a
significant role in the Corporation's internal controls.
3. Review the adequacy of the Corporation's internal controls.
4. In consultation with management, independent accountants, and internal
auditors, consider the integrity of the Corporation's financial reporting
processes and controls. Discuss significant financial risk exposures and
steps taken by management to monitor, control, and report such exposures.
5. Review significant findings prepared by the independent accountants and the
internal auditors together with management's responses. Confirm that
management has implemented internal control recommendations made by
internal auditors and independent accountants, if any.
6. The Committee's job is one of oversight as set forth in this Audit Charter.
It is not the duty of the Committee to prepare the Company's financial
statements, to plan or conduct audits, or to determine that the Company's
financial statements are complete and accurate and are in accordance with
generally accepted accounting principles. The Company's management is
responsible for preparing the Company's financial statements and for
maintaining internal control, and the independent auditors are responsible
for auditing the financial statements.
7. In performing their duties and responsibilities, as permitted under the
Pennsylvania Business Corporation Law of 1988, as amended, Committee
members are entitled to rely in good faith on information, opinions,
reports or statements prepared or presented by:
o One or more officers or employees of the Company whom the
Committee member reasonable believes to be reliable and competent
in the matters presented;
o Counsel, independent auditors, or other persons as to matters
which the Committee member reasonable believes to be within the
professional or expert competence of such person; or
o Another committee of the Board as to matters within its
designated authority which committee the Committee member
reasonably believes to merit conference.
A-2
INDEPENDENT ACCOUNTANTS
1. The independent accountants are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall review the
independence and performance of the accountants and shall be directly
responsible for the appointment and compensation for the independent
accountants and any discharge of the independent accountants when
circumstances warrant.
2. Review the independent accountants' timetable, scope and approach of the
quarterly reviews and annual examination of the financial statements.
Confirm that the lead partner having primary responsibility for the audit,
the audit partner responsible for reviewing the audit and any other
individual(s) so required, have been rotated on a periodic basis, as may be
required by applicable law or regulation.
3. Review and discuss with the independent accountants, as may be required by
law or regulation (1) all critical accounting policies and practices to be
used, (2) all alternative treatments of financial information within GAAP
that have been discussed with management, ramifications of the use of such
alternative disclosures and treatments, and the treatment preferred by the
independent accountant, and (3) other material written communications
between the independent accountant and management, such as any management
letter or schedule of unadjusted differences.
4. Obtain from the independent accountants their annual communication to the
Audit Committee in satisfaction of SAS 61 regarding communication with the
Audit Committee, and, if applicable, any commentary on internal contracts
or other recommendations.
5. Review and discuss with the independent auditors all relationships they
have with the Company that could impair the auditors' independence,
consistent with Independence Standards Board Standard 1. Take all
appropriate action to ensure the ongoing independence of the independent
accountants.
6. Review and pre-approve all audit and permitted non-audit services provided
by the independent accountants. The Chairman of the Committee has the
authority to grant pre-approvals for certain permitted non-audit services
to the extent permitted by law. All pre-approvals granted by the Chairman
of the Committee shall be presented to and reviewed by the full committee
at its next regularly scheduled meeting.
7. Resolve any financial reporting disagreements between the independent
accountants and management.
A-3
INTERNAL AUDITORS
1. Approve an Annual Risk Assessment and Audit Plan developed by the internal
auditors.
2. Meet quarterly with the internal auditors to gain an understanding of the
effectiveness of the internal audit function. These meetings will also
serve in evaluating their performance.
3. Review significant reports prepared by the internal auditors together with
management's response and follow-up to these reports.
4. The Audit Committee may contract for internal audit services as necessary
to assess the adequacy and effectiveness of internal controls, the accuracy
of management reporting and compliance with laws, regulations and bank
policy. The Audit Committee will set forth the outsourcing vendor's
responsibilities in a written contract the terms of which comply with the
"Interagency Policy Statement of Internal Audit and Internal Audit
Outsourcing."
COMPLIANCE WITH LAWS AND REGULATIONS
1. Receive updates quarterly from management and compliance auditors regarding
compliance with laws and regulations.
2. Review the findings of any examination by regulatory agencies such as the
Federal Reserve, FDIC, Office of the Comptroller of the Currency, or the
United States Securities and Exchange Commission.
3. Review management's response to regulatory examinations.
OTHER COMMITTEE RESPONSIBILITIES
1. Review the Audit Charter annually and submit proposed amendments, if any,
to the Board of Directors for review and approval. Ensure that the charter
is included within the Corporation's proxy statement once every three
years, or as otherwise may be required by law or regulation.
2. Prepare an annual Audit Committee Report for inclusion in the Corporation's
Annual Proxy Statement that states a formal audit charter has been approved
and that the Audit Committee has satisfied its responsibility during the
year.
3. Perform other oversight functions as requested by the Board of Directors.
Further, the Audit Committee shall have the power to conduct or authorize
investigations into any matters within the committee's scope of
responsibilities.
4. The Audit Committee has the authority to engage independent counsel and
other advisors, as they determine necessary to carry out their duties, and
to obtain appropriate funding, as determined by the Audit Committee, for
compensating such advisors, for compensating the
A-4
independent accountants for their audit services and for ordinary
administrative expenses necessary or appropriate in the carrying out of the
committee's duties.
5. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the activities.
6. Meet periodically with the internal auditors, the independent accountants,
and management in separate executive sessions to discuss any matters that
the committee or these groups believe should be discussed privately with
the Audit Committee.
7. Report Audit Committee actions to the Board of Directors with such
recommendations, as the Audit Committee may deem appropriate.
8. Obtain quarterly updates from the Corporation's loan review function as to
their evaluation of the risk ratings assigned to appropriate loans.
9. Review and validate, at least annually, the Allowance for Loan and Lease
Losses (ALLL) methodology employed by the Corporation.
10. Establish procedures for the receipt, retainment and treatment of
complaints received regarding accounting, internal accounting controls, or
auditing matters. Such procedures shall have provisions designed to protect
the confidentiality of any anonymous complaints from the employees of the
Company or its subsidiary regarding such matters.
A-5
APPENDIX B
JUNIATA VALLEY FINANCIAL CORPORATION
------------------------------------
Charter of the Nominating
-------------------------
Committee of the Board of Directors
-----------------------------------
I. PURPOSE.
The Nominating Committee ("Committee") is appointed by the Board of Directors
for the following purposes:
o Identifying individuals qualified to become Board members and
recommending persons to be nominated by the Board of Directors for
election as Directors of the Corporation.
o Recommending to the Boards of Directors of significant subsidiaries
slates of persons to be nominated as Directors of such subsidiaries.
o Nominating a candidate for election to the Board of Directors of the
Corporation in the event any vacancy may occur in the interval between
shareholders' meetings.
The Committee has the authority to conduct any investigation appropriate to
fulfilling its responsibilities, and it has direct access to anyone in the
organization. The Committee has the ability to retain, at the Corporation's
expense, special legal, accounting or other consultants or experts it deems
necessary in the performance of its duties.
II. COMPOSITION, MEETINGS AND PROCEDURES.
Committee members shall be independent directors who meet the requirements of
the National Association of Securities Dealers Automated Quotation System
("NASDAQ"). The Committee shall be comprised of three or more directors as
determined by the Board of Directors. Committee members, including a Chair and a
Vice Chair, shall be appointed by the Board of Directors on recommendation of
the Committee and serve at the pleasure of the Board. If the Committee Chair is
not present at a meeting of the Committee, the Vice Chair shall preside. The
Committee shall fix its own rules of procedure which shall be consistent with
the Corporation's Bylaws and this Charter.
Except as limited by law, regulation or the rules of NASDAQ, the Committee may
form subcommittees for any purpose that it deems appropriate and may delegate to
such subcommittees such power and authority as it deems appropriate.
The Committee shall meet at least annually, or more frequently as circumstances
dictate. The Chair of the Committee or a majority of its members may call a
meeting of the Committee in addition to any regularly scheduled meeting. The
Committee shall maintain minutes of its meetings and periodically report to the
Board of Directors on significant actions it has taken.
B-1
III. RESPONSIBILITIES AND DUTIES.
The Committee shall:
1. Review and reassess the adequacy of this Charter at least annually and
submit the Charter to the Board of Directors for approval.
2. Annually consider and recommend to the Board of Directors the size of
the Board of Directors.
3. Identify nominees for director. The Committee will utilize current
board members, management and other appropriate sources to identify
potential nominees. The Committee will conduct any appropriate and
necessary inquiries into the backgrounds and qualifications of
possible candidates after considering the function and needs of the
Board of Directors, and recommend nominees for approval by the Board
of Directors and stockholders. The Committee's process for the
consideration of potential nominees is the same for nominees
identified by shareholders, as well as the other sources identified
above.
4. In advance of the annual shareholders' meeting each year, recommend
persons to be nominated by the Board of Directors for election as
Directors of the Corporation.
5. Nominate a candidate for election to the Board of Directors of the
Corporation in the event any vacancy may occur in the interval between
shareholders' meetings.
6. Receive and consider nominee recommendations from shareholders. The
Committee will consider nominees recommended by shareholders for
election as directors of the Corporation, provided that any
shareholder who intends to nominate or to cause to have nominated any
candidate for election to the Board of Directors (other than any
candidate proposed by the Corporation's then existing Board of
Directors) shall so notify the Secretary of the Corporation, Bridge
and Main Streets, Mifflintown, PA 17059, in accordance with any
deadline set forth in the Corporation's by-laws. The Secretary, in
turn, shall promptly deliver such communications to the Chairman of
the Committee.
7. When considering a person to be recommended for nomination as a
Director of the Corporation, consider the skills and background needed
by the Corporation and possessed by the person, diversity of the Board
(in all aspects of that term) and the ability of the person to devote
the necessary time to serve as a Director (including directorships
held at other corporations and organizations). Candidates for director
will be selected for their character, judgment, business experience,
expertise and acumen.
8. Have sole authority to retain and terminate any search firm to be used
to identify director candidates, including sole authority to approve
the search firm's fees and other retention terms.
B-2
9. Recommend appointments of Directors as members of Committees of the
Boards of Directors of the Corporation and Juniata Valley Bank.
Recommendations should consider the qualifications for membership on
each Committee, the desirability of rotation of directors among
Committees and any limitations on the number of consecutive years a
Director should serve on any one Board Committee.
10. Nominate candidates for election as members of any Regional Boards and
Advisory Boards of its subsidiaries.
11. Perform any other activities consistent with this Charter, the
Corporation's Bylaws and governing law as the Board of Directors shall
specifically delegate to the Committee.
B-3
PROXY
JUNIATA VALLEY FINANCIAL CORP.
P.O. Box 66
Mifflintown, PA 17059
Telephone: (717) 436-8211
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF JUNIATA VALLEY FINANCIAL CORP.
The undersigned hereby appoints DAVID E. CONNER, DUSTIN T. POLLOCK, and
JUDY K. TUNALL as Proxies, each with the power to appoint his or her substitute,
and authorizes them to represent and vote, as designated below, all the shares
of common stock of Juniata Valley Financial Corp. held of record by the
undersigned on April 12, 2004, at the annual meeting of shareholders to be held
on May 18, 2004.
DIRECTORS RECOMMEND A "FOR" VOTE FOR THE FOLLOWING MATTER:
1. ELECTION OF DIRECTORS (check one):
For all Nominees Listed Below ___ Withhold authority for all Nominees ___
(except as indicated below)
CLASS B
-------
Don E. Haubert John A. Renninger
Timothy I. Havice Ronald H. Witherite
Charles L. Hershberger
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
write the nominee's name(s) in the space immediately below.
----------------- ----------------- ----------------- ------------------
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO
DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES
LISTED. THIS PROXY ALSO CONFERS AUTHORITY TO VOTE ON ANY OTHER BUSINESS THAT MAY
PROPERLY COME BEFORE THE MEETING, OR, ANY ADJOURNMENT THEREOF, IN ACCORDANCE
WITH THE RECOMMENDATIONS OF MANAGEMENT. THIS PROXY MAY BE REVOKED PRIOR TO ITS
EXERCISE.
---------------------------, 2004 ---------------------------(SEAL)
Dated Signature
---------------------------(SEAL)
Signature
Please sign exactly as your name
appears hereon. When signing as an
Attorney, Executor, Administrator,
Trustee or Guardian, please give full
title. If more than one Trustee, ALL
MUST SIGN. ALL JOINT OWNERS MUST SIGN.