This Proxy Statement is
provided for the solicitation of proxies by the Board of Directors
of Commercial National Financial Corporation (the
“Corporation”), a Pennsylvania business corporation,
for use at the Annual Meeting of Shareholders on May 18, 2004 (the
“Annual Meeting”), and at any and all adjournments or
postponements thereof. This Proxy Statement and the form of proxy,
together with the Corporation’s Annual Report to Shareholders
for 2003, are being mailed on April 12, 2004, or as soon as
possible thereafter, to all shareholders entitled to vote at the
Annual Meeting.
At the Annual Meeting, the
shareholders will be asked to consider and take action on the
proposals listed below:
election as directors the five persons set forth in this Proxy
Statement, each in a class of directors as set forth in the
following pages;
ratification of the appointment of Beard Miller Company LLP, as
independent auditors for the Corporation; and
any other business as may be properly brought before the
meeting.
The Board of Directors of
the Corporation recommends the election of the five nominees for
directors listed in this Proxy Statement. The five nominees
receiving the highest number of votes cast, including votes cast
cumulatively, shall be elected as directors. For all other
purposes, other than election of directors, each share of stock is
entitled to one vote.
Voting Rights and
Requirements
Record
Date
. The Board has fixed the close of business on
April 9, 2004 as the Record Date for the determination of the
shareholders entitled to notice of the Annual Meeting (and any
postponements or adjournments thereof). Accordingly, only the
shareholders of record on the Record Date will be entitled to
receive notice of the Annual Meeting and to vote at the Annual
Meeting. The only class of stock of the Corporation presently
issued and outstanding is common stock. As of the Record
Date, 3,430,376 shares of common stock were issued and outstanding
and entitled to vote.
Voting Rights
Generally.
Under the Bylaws of the Corporation,
the presence, in person or by proxy, of shareholders entitled to
cast at least a majority of the votes which all shareholders are
entitled to cast, shall constitute a quorum. Abstentions will be
counted as present for purposes of determining the existence of a
quorum. Abstentions and broker non-votes will be treated as shares
that neither are capable of being voted nor have been voted and,
accordingly, will have no effect on the outcome of the vote on the
election of directors or on the outcome of the proposal to ratify
the appointment of Beard Miller Company LLP.
Cumulative Voting
Rights
. The Articles of Incorporation of the
Corporation provide that cumulative voting rights shall exist with
respect to the election of directors.
Each shareholder entitled
to vote shall have the right to vote the number of shares owned,
for as many persons as there are directors to be elected in each
class, or to cumulate such shares and give one nominee the whole
number of such votes, or distribute the votes among any two or more
nominees in each class. For all other purposes, each share is
entitled to one vote. Management of the Corporation reserves the
right to instruct the proxy holders to vote
cumulatively.
Voting and Revocation
of Proxy
The shares of stock
represented by each proxy properly signed and returned to the
Corporation prior to the date of the Annual Meeting will be voted
in the manner set forth in this Proxy Statement and in accordance
with the instructions marked on the proxy enclosed.
A shareholder who returns
a proxy may revoke it at any time before it is voted by delivering
a written notice of revocation to Wendy S. Schmucker, Secretary of
the Corporation, or by executing a later dated proxy and giving
written notice thereof to the Secretary of the Corporation, or by
voting in person at the Annual Meeting after giving written notice
to the Secretary of the Corporation.
The cost of preparing,
printing, and soliciting proxies will be paid by the
Corporation. In addition to the use of the mails, certain
directors, officers and employees of the Corporation may solicit
proxies personally. Arrangements will be made with brokerage
houses and other custodians, fiduciaries and nominees to forward
proxy solicitation materials to the beneficial owners of stock held
of record by these persons, and, upon request therefor, the
Corporation will reimburse them for reasonable forwarding
expenses.
ELECTION OF
DIRECTORS
The Bylaws of the
Corporation provide that the Board of Directors shall consist of
not less than three directors, and shall be classified into three
classes, each class to be elected for a term of three years.
The Board of Directors, within the limits set in the Bylaws, may
from time to time fix the number of directors and the respective
classifications.
The number of directors to
constitute the entire board has been fixed by the Board of
Directors at fifteen with five directors in each of three
classes. There are currently two vacancies on the Board of
Directors. At the Annual Meeting, there shall be elected five
directors as a class to serve until the Annual Meeting of
shareholders in the year 2007. John T. Babilya, George A.
Conti, Jr., Frank E. Jobe, Steven H. Landers, and C. Edward Wible
have been designated by the Nominating Committee and the Board of
Directors as its nominees for election as directors at the Annual
Meeting.
If the enclosed proxy card
is properly executed and returned prior to voting at the Annual
Meeting, the shares represented thereby will be voted in accordance
with the instructions marked thereon. In the absence of
instructions, shares represented by executed proxies will be voted
as recommended by the Board of Directors, that is, in favor of the
election of the nominees listed on the proxy and in this Proxy
Statement. With the exception of Steven H. Landers, all of the
nominees are now and have been directors of the Corporation and of
Commercial Bank of Pennsylvania (the
“Bank”).
Other nominations for
director may be made in accordance with procedures set forth in
Section 9.1 of the Bylaws of the Corporation, which require written
notice to the Secretary of the Corporation of any such nomination
at least sixty days prior to the date of any meeting of the
shareholders for the election of directors. Such notice shall
contain the following information to the extent known by the
notifying shareholder:
the name, address, and age of each proposed nominee;
the number of shares of the Corporation owned by each proposed
nominee;
the total number of shares of the Corporation that will be
voted for each proposed nominee;
the name and address of the notifying shareholder; and
the number of shares of common stock of the Corporation owned
by the notifying shareholder.
the principal occupation of each proposed nominee;
Nominations not made
pursuant to the foregoing procedures may be disregarded by the
Chairman at the Annual Meeting.
Biographical
Information for Director Nominees
Each nominee has consented
to be named and to serve as a director, if elected. If any
nominee becomes unable to serve as a director, the proxies named in
the proxy will vote for a substitute nominee selected and
recommended by the Board of Directors of the
Corporation.
The names and ages of the
nominees, and the year each nominee began continuous service as a
director of the Corporation, together with the principal occupation
of each at present and for at least the previous five years, are as
follows:
Nominees
Name
Age; Principal
Occupation
For The Past Five
Years
Term
Expires
Director
Since
John T. Babilya
44, President, Chief
Executive Officer and Co-owner
Arc Weld, Inc.
A precision
custom-manufacturing firm servicing steel, mining, drilling,
construction and electrical industries
2007
1999
George A. Conti,
Jr.
65, Attorney at
Law
2007
1996
Frank E. Jobe
82, Retired
Former Executive Vice
President of the Bank
2007
1990
Steven H.
Landers
46, Vice President,
Service
R&L Development
Company
A land development
company
2007
--
C. Edward Wible
58, Certified Public
Accountant
|
Horner Wible & Terek,
PC
Certified Public
Accountants
2007
1995
The Board of Directors
of the Corporation recommends the election of the five nominees
listed above for directors listed in this Proxy
Statement.
Biographical
Information for Continuing Directors
The remaining eight
directors will continue to serve in their respective classes.
The following table, based in part on information received from the
respective directors and in part on the records of the Corporation,
sets forth information regarding each continuing director as of
March 19, 2004. There are currently 2 vacancies on the Board
of Directors, one in the class whose term expires in 2005 and one
in the class whose term expires in 2006. The Board intends to fill
the vacancies in the future in accordance with the Bylaws of the
Corporation.
Continuing Directors
Name
Age; Principal
Occupation
For The Past Five
Years
Term
Expires
Director
Since
Richmond H.
Ferguson
72, Attorney at
Law
2005
1990
Dorothy S.
Hunter
79, Vice
President
Latrobe Foundry Machine
& Supply Company
2005
1990
John C.
McClatchey
66, Retired,
Former Chief Executive
Officer, JCM Industries, Inc.
Manufacturer of hardwood
lumber and pallets
2005
1990
Joseph A. Mosso
72, Retired
Former President,
Mosso’s Pharmacy, Inc.
2005
1990
Dorothy S. Hunter,
director, is the mother of Gregg E. Hunter, director.
On February 12, 2002, JCM
Industries, Inc. filed a liquidation proceeding under Chapter 7 of
the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the
Western District of Pennsylvania. John C. McClatchey, a
director, was Chief Executive Officer, director and principal
shareholder of JCM Industries, Inc.
Name
Age; Principal
Occupation
For The Past Five
Years
Term
Expires
Director
Since
Gregg E. Hunter
45, Chairman, President
and Chief Executive Officer of the Bank (2004 –
present)
Vice Chairman, President
and Chief Executive Officer of the Corporation (2004 –
present)
Vice Chairman and Chief
Financial Officer
of the Corporation and the
Bank (1995 ‑ 2004)
2006
1995
Joedda M.
Sampson
51, President and
Principal Owner
Allegheny City Restorations, Inc.
A development corporation
engaged in restoring and developing historic properties and
operating business entities that occupy them
2006
1999
Debra L.
Spatola
47, President
Laurel Valley Foods,
Inc.
Restaurateur
2006
1997
George V. Welty
57, Attorney at
Law
Chairman of the
Corporation (2004 - present)
2006
1997
Gregg E. Hunter, director,
is the son of Dorothy S. Hunter, director.
No nominee or continuing
director is a director of any company, other than the Corporation,
that is required to file reports with the Securities and Exchange
Commission.
BENEFICIAL OWNERSHIP OF
COMMON STOCK
The
following table sets forth, as of March 19, 2004, the name and
address of each person who owns of record, or who is known by the
Corporation, to be the beneficial owner of, more than five percent
of the outstanding common stock, the number of shares beneficially
owned by such person, and the percentage of the outstanding common
stock so owned.
Name and Address
of
Beneficial
Owner
Amount and Nature of
Beneficial Ownership
(1) (2)
Percent of
Class
Gregg E. Hunter
P. O. Box 3
Latrobe, PA
15650
551,940
(3)
16.09%
Louis A.
Steiner
430 Youngstown Ridge
Road
Ligonier, PA
15658
521,880
(4)
15.21%
Dorothy S.
Hunter
P. O. Box 28
Latrobe, PA
15650
494,760
(5)
14.42%
George A. Conti,
Jr.
101 North Main
Street
Greensburg, PA
15601
231,600
(6)
6.75%
(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 sixty (60) days after March 19, 2004. Beneficial
ownership may be disclaimed as to certain of the
securities.
Information furnished by the directors and
the Corporation.
(3)
Includes 120,000 shares held as co-trustee of The Hunter Stock
Trust, with shared voting and investment power, 240,000 shares held
by Latrobe Foundry Machine & Supply Company. Gregg E. Hunter is
a director of Latrobe Foundry Machine & Supply Company.
Includes 131,760 shares held by Ridge Properties, Inc. Gregg E.
Hunter is a 10% owner of Ridge Properties, Inc.
(4)
Includes 75,060 shares held by Mr. Steiner’s spouse,
Barbara J. Steiner, 240,000 shares held by Latrobe Foundry
Machine & Supply Company and 131,760 shares held by Ridge
Properties, Inc. Louis A. Steiner is a director and the
president of each company.
(5)
Includes 120,000 shares held as co-trustee of The Hunter Stock
Trust, with shared voting and investment power, 240,000 shares held
by Latrobe Foundry Machine & Supply Company and 131,760 shares
held by Ridge Properties, Inc. Dorothy S. Hunter is a
director and officer of each company.
(6)
Includes 79,260 shares held as trustee of the Corazzi Trust,
145,740 shares held as trustee of the Iorio Trust, 1,000 shares
held as attorney in fact for Robert A. Anderson, and 2,000 shares
held as attorney in fact for Letitia A. Anderson, each with sole
voting and investment power, and 600 shares held as co-trustee of
the Conti Trust, with shared voting and investment
power.
BENEFICIAL OWNERSHIP BY
OFFICERS, DIRECTORS AND NOMINEES
The following table sets
forth as of March 19, 2004, the amount and percentage of the common
stock beneficially owned by each continuing director, nominee,
named executive officer, and all executive officers and directors
of the Corporation as a group.
Name of Beneficial
Owner
Amount
and Nature of
Beneficial Ownership
(1) (2)
Percent
of Class
John T. Babilya
2,508
.07%
George A. Conti,
Jr.
231,600
(3)
6.75%
Richmond H.
Ferguson
5,128
.15%
Dorothy S.
Hunter
494,760
(4)
14.42%
Gregg E. Hunter
551,940
(5)
16.09%
Frank E. Jobe
30,317
.88%
Gerard R. Kunic
(7)
1,000
.03%
Steven H.
Landers
1,800
.05%
John C.
McClatchey
3,000
.09%
Joseph A. Mosso
25,603
.75%
Joedda M.
Sampson
1,000
.03%
Debra L.
Spatola
1,200
.03%
Louis A. Steiner
(7)
521,880
(6)
15.21%
Louis T. Steiner
(7)
40,085
1.17%
George V. Welty
4,787
.14%
C. Edward Wible
2,000
.06%
All executive
officers
a
1,055,088
30.76%
and directors as a
group
(15 directors, 4 officers,
16 persons in total)
(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 sixty (60) days after March 19, 2004. Beneficial
ownership may be disclaimed as to certain of the
securities.
(2)
Information furnished by the directors and the
corporation.
Includes 79,260 shares held as trustee of
the Corazzi Trust, 145,740 shares held as trustee of the Iorio
Trust, 1,000 shares held as attorney in fact for Robert A.
Anderson, and 2,000 shares held as attorney in fact for Letitia A.
Anderson, each with sole voting and investment power, and 600
shares held as co-trustee of the Conti Trust, with shared voting
and investment power.
(4)
Includes 120,000 shares held as co-trustee of The Hunter Stock
Trust, with shared voting and investment power, 240,000 shares held
by Latrobe Foundry Machine & Supply Company and 131,760 shares
held by Ridge Properties, Inc. Dorothy S. Hunter is a director and
officer of each company.
(5)
Includes 120,000 shares held as co-trustee of The Hunter Stock
Trust, with shared voting and investment power, 240,000 shares held
by Latrobe Foundry Machine & Supply Company. Gregg E. Hunter is
a director of Latrobe Foundry Machine & Supply Company.
Includes 131,760 shares held by Ridge Properties, Inc. Gregg E.
Hunter is a 10% owner of that company.
(6)
Includes 75,060 shares held by Mr. Steiner’s spouse,
Barbara J. Steiner, 240,000 shares held by Latrobe Foundry
Machine & Supply Company and 131,760 shares held by Ridge
Properties, Inc. Louis A. Steiner is a director and the
president of each company.
(7)
Louis A. Steiner, Louis T. Steiner and Gerard R. Kunic each
resigned his position as officer and/or director of the Corporation
and/or the Bank in the first quarter of 2004.
DIRECTORS’
MEETINGS AND COMMITTEES
It is the policy of the
Corporation that the directors of the Corporation also serve as the
directors of the Bank. During 2003, the Board of the
Corporation met six (6) times and the board of the Bank met twelve
(12) times. The Board of the Corporation has standing audit,
executive compensation and nominating committees, each of which is
more fully described below.
Audit
Committee
The Board of the
Corporation has an Audit Committee that consists of John T.
Babilya, George A. Conti Jr., Debra L. Spatola and C. Edward Wible,
each of whom is considered an “independent director”
under the rules of Nasdaq and the SEC. The Board has
determined that Mr. Wible qualifies as an audit committee
financial expert within the meaning of the SEC
regulations.
The role of the Audit
Committee is to assist the board of directors in preserving the
integrity of the financial information published by the Corporation
through review of financial and accounting controls and policies,
financial reporting systems, alternative accounting principles that
could be applied and the quality and effectiveness of the
independent auditors.
The Audit Committee meets
quarterly, or more often as needed, with the Corporation’s
internal auditor and staff to monitor and review compliance with
regulations and internal policies and procedures and provides
direct liaison with the Corporation’s audit department and
board of directors. The Audit Committee of the Corporation
met five times during 2003.
The Audit Committee meets
with the Corporation’s independent auditors as it deems
necessary, not less often than annually, to facilitate and
encourage private communication between the Audit Committee and the
independent auditors.
The Audit Committee acts
under a written charter first adopted and approved by the board of
directors on May 16, 2000. The charter was revised and
approved by the board of directors on November 18, 2003. A
copy of the Audit Committee’s charter is attached as
Appendix A
to this Proxy Statement.
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