SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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 ss. 240.14a-11(c) or ss. 240.14a-12
Emclaire 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)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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EMCLAIRE FINANCIAL CORP.
EMLENTON, PENNSYLVANIA 16373
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF EMCLAIRE FINANCIAL CORP.:
Notice is hereby given that the Annual Meeting of Shareholders of Emclaire
Financial Corp. (the "Corporation") will be held at 11:00 a.m., prevailing time,
on Wednesday, May 18, 2005, at the Farmers National Bank of Emlenton, 612 Main
Street, Emlenton, PA 16373, for the following purposes:
1. To elect three (3) Class B directors to serve for 3-year terms and until
their successors are duly elected and qualified;
2. To ratify the selection of Beard Miller Company LLP, Certified Public
Accountants, of Wexford, PA as the independent auditors of the Corporation for
the fiscal year ending December 31, 2005; and
3. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
Only those shareholders of record at the close of business, at 5:00 p.m.,
on Monday, March 28, 2005, will be entitled to notice of and to vote at the
Annual Meeting.
A copy of the Corporation's Annual Report for the fiscal year ended
December 31, 2004 is being mailed with this notice.
You are urged to mark, sign, date and promptly return your proxy in the
enclosed envelope so that your shares may be voted in accordance with your
wishes and in order that the presence of a quorum may be assured. 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.
The giving of such proxy does not affect your right to vote in person if you
attend the meeting.
By Order of the Board of Directors,
/s/ David L. Cox
----------------
David L. Cox
Chairman, President and Chief Executive Officer
April 11, 2005
PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD MAY 18, 2005
GENERAL
Introduction, Date, Place and Time of Meeting
This Proxy Statement is being furnished for the solicitation by the Board
of Directors of Emclaire Financial Corp. (the "Corporation"), a Pennsylvania
business corporation, of proxies to be voted at the Annual Meeting of
Shareholders of the Corporation ("Annual Meeting") to be held at the Farmers
National Bank of Emlenton, 612 Main Street, Emlenton, PA 16373, on Wednesday,
May 18, 2005, at 11:00 a.m. prevailing time, or at any adjournment or
postponement of the Annual Meeting.
The main office of the Corporation is located at The Farmers National Bank
of Emlenton (the "Bank"), 612 Main Street, Emlenton, Pennsylvania 16373. The
telephone number for the Corporation is (724) 867-2311. All inquiries should be
directed to David L. Cox, President. This Proxy Statement and the enclosed form
of proxy (the "Proxy") are first being sent to shareholders of the Corporation
on April 11, 2005.
Solicitation
Shares represented by proxies on the accompanying Proxy, if properly signed
and returned, will be voted in accordance with the specifications made thereon
by the shareholders. Any Proxy not specifying to the contrary will be voted for
the election of the three (3) nominees for Class B Directors named below and for
the approval of Beard Miller Company LLP, Certified Public Accountants as the
independent auditors for the fiscal year ending December 31, 2005. Execution and
return of the enclosed Proxy will not affect a shareholder's right to attend the
Annual Meeting and vote in person.
The cost of preparing, assembling, mailing and soliciting proxies will be
borne by the Corporation. In addition to the use of the mail, certain directors,
officers and employees of the Corporation intend to solicit proxies personally,
by telephone and by facsimile. Arrangements will be made with brokerage houses
and other custodians, nominees and fiduciaries to forward proxy solicitation
material to the beneficial owners of stock held of record by these persons, and,
upon request therefore, the Corporation will reimburse them for their reasonable
forwarding expenses.
Right of Revocation
A shareholder who returns a Proxy may revoke it at any time before it is
voted by: (1) delivering written notice of revocation to Raymond M. Lawton,
Secretary, Emclaire Financial Corp., 612 Main Street, Post Office Box D,
Emlenton, Pennsylvania 16373, telephone: (724) 867-2311; (2) executing a
later-dated Proxy and giving written notice thereof to the Secretary of the
Corporation or (3) voting in person after giving written notice to the Secretary
of the Corporation.
Voting Securities and Quorum
At the close of business on March 28, 2005, (the "Voting Record Date") the
Corporation had outstanding 1,267,835 shares of common stock, $1.25 par value. A
majority of the outstanding shares in person or by proxy will constitute a
quorum at the Annual Meeting.
Only holders of common stock, of record, at the close of business on the
Voting Record Date will be entitled to notice of and to vote at the Annual
Meeting. On all matters to come before the Annual Meeting, each share of common
stock is entitled to one (1) vote.
1
As to the election of directors, the proxy being provided by the Board
enables a stockholder to vote for the election of the nominees proposed by the
Board, or to withhold authority to vote for one or more of the nominees being
proposed. Directors are elected by a plurality of votes of the shares present in
person or represented by proxy at a meeting and entitled to vote in the election
of directors.
As to the ratification of independent auditors and all other matters that
may properly come before the Meeting, by checking the appropriate box, a
stockholder may: vote "FOR" the item or vote "AGAINST" the item. Unless
otherwise required by law, all other matters shall be determined by a majority
of votes cast affirmatively or negatively without regard to Broker Non-Votes as
to that matter.
PRINCIPAL BENEFICIAL OWNERS OF THE CORPORATION'S STOCK
Principal Owners
Persons and groups owning in excess of 5% of the Common Stock are required
to file certain reports regarding such ownership pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"). The following tables set
forth, as of the Voting Record Date, persons or groups who own more than 5% of
the Common Stock and the ownership of all executive officers and directors of
the Corporation as a group. Other than as noted below, management knows of no
person or group that owns more than 5% of the outstanding shares of Common Stock
at the Voting Record Date:
Percent of Outstanding
Shares Beneficially Common Stock
Name and Address Owned (1) Beneficially Owned
Bernadette H. Crooks 72,352 (2) 5.71%
Clarion, PA 16214
Mary E. Dascombe 90,574 (3) 7.14%
Raleigh, NC 27609
George W. Freeman 78,740 (4) 6.21%
Knox, PA 16232
Barbara C. McElhattan 66,297 (5) 5.23%
Emlenton, PA 16373
------------------
(1) See footnote (1) under the following caption entitled "Beneficial Ownership
by Officers, Directors and Nominees" for the definition of "beneficial
ownership."
(2) Of the 72,352 shares beneficially owned by Mrs. Crooks, 71,072 shares are
owned individually and 1,280 shares are owned individually by her spouse's
estate.
(3) Of the 90,574 shares beneficially owned by Mrs. Dascombe, 64,386 shares are
owned individually, 2,677 shares are owned jointly with her spouse, and
23,511 shares are owned individually by her spouse.
(4) Of the 78,740 shares beneficially owned by Mr. Freeman, 75,435 shares are
owned individually and 3,305 shares are owned individually by his spouse.
(5) Of the 66,297 shares beneficially owned by Mrs. McElhattan, 33,579 shares
are owned individually, 27,972 shares are owned jointly with her spouse and
4,746 shares are owned individually by her spouse.
2
Section 16(2) Beneficial Ownership Reporting Compliance
The Common Stock is registered pursuant to Section 12(g) of the 1934 Act.
The officers and directors of the Corporation and beneficial owners of greater
than 10% of the Common Stock ("10% beneficial owners") are required to file
reports on Forms 3, 4, and 5 with the Securities and Exchange Commission ("SEC")
disclosing changes in beneficial ownership of the Common Stock. Based on the
Corporation's review of such ownership reports, to the Corporation's knowledge,
no executive officer, director, or 10% beneficial owner of the Corporation
failed to file such ownership reports on a timely basis for the fiscal year
ended December 31, 2004.
Beneficial Ownership by Officers, Directors and Nominees
The following table sets forth as of the Voting Record Date, the amount and
percentage of the Common Stock of the Corporation beneficially owned by each
director, each nominee and all officers and directors of the Corporation as a
group.
Name of Individual Amount and Nature of Percent
or Identity of Group Beneficial Ownership (1) (2) of Class
-------------------- ---------------------------- --------
George W. Freeman (5) 78,740.000 6.21%
Ronald L. Ashbaugh (8) 10,500.000 (3)
Brian C. McCarrier (8) 1,137.211 (3)
Robert L. Hunter (6) 10,097.665 (3)
John B. Mason (7) 5,989.759 (3)
James M. Crooks (10) 4,432.844 (3)
J. Michael King (4) 6,098.000 (3)
Mark A. Freemer (4) 800.000 (3)
David L. Cox (9) 11,580.000 (3)
All Officers and Directors
as a Group (11 persons) 129,375.479 10.204%
(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 the
Voting Record Date. Beneficial ownership may be disclaimed as to certain of
the securities.
(2) Information furnished by the Directors and the Corporation.
(3) Less than one percent (1%).
(4) All shares are owned individually.
(5) See footnote (4) above under the caption entitled "Principal Beneficial
Owners of the Corporation's Stock."
(6) Of the 10,097.665 shares beneficially owned by Mr. Hunter, 5,669.181 shares
are owned individually and 4,428.484 shares are owned individually by his
spouse.
(7) Of the 5,989.759 shares beneficially owned by Mr. Mason, 5,416.093 shares
are owned individually and 573.666 shares are held as custodian for his
daughter.
(8) All shares owned jointly with spouse.
(9) Of the 11,580 shares beneficially owned by Mr. Cox, 10,080 shares are owned
individually and 1,500 shares are held jointly with his spouse.
(10) Of the 4,432.844 shares beneficially owned by Mr. Crooks, 654.085 are owned
individually, 2,844.025 are owned jointly with his spouse, 816.627 are held
as custodian for his children and 118.107 are held individually by his
spouse.
3
ELECTION OF DIRECTORS
The Corporation has a classified Board of Directors with staggered 3-year
terms of office. In a classified board, the directors are generally divided into
separate classes of equal number. The terms of the separate classes expire in
successive years. Thus, at each Annual Meeting of Shareholders, successors to
the class of directors whose term shall then expire shall be elected to hold
office for a term of three years, so that the office of one class shall expire
each year.
Unless otherwise instructed, the Board of Directors of the Corporation or
its designee, the proxy holder, will have the right to cast their votes for the
nominees, unless the shareholder indicates on his or her Proxy how he or she
desires the votes to be cast. If any nominee should become unavailable for any
reason, proxies will be voted in favor of a substitute nominee as the Board of
Directors of the Corporation shall determine. The Board of Directors has no
reason to believe the nominees named will be unable to serve if elected. Any
vacancy occurring on the Board of Directors of the Corporation for any reason
may be filled by a majority of the directors then in office until the expiration
of the term of the vacancy. The Board of Directors recommends that its nominees
be elected as Directors.
INFORMATION AS TO NOMINEES,
DIRECTORS AND EXECUTIVE OFFICERS
The following table contains certain information with respect to the
directors and nominees:
Age as of Principal Occupation Director Since
Name 12/31/04 for Past Five Years Bank/Corporation
---- --------- -------------------- ----------------
Class A Directors Whose Term Expires in 2007
--------------------------------------------
J. Michael King 57 Senior Attorney, Lynn, King & Schreffler, 1988/1989
(1) (3) (4) (5) P.C., Attorneys at Law
Prior to 2004 - President, Lynn, King &
Schreffler, P.C., Attorneys at Law
Prior to 2003 - Senior Partner of Lynn,
King & Schreffler, Attorneys at Law
David L. Cox 54 Chairman, President and Chief Executive 1991/1991
(1) (4) (5) (6) Officer of the Bank and Corporation since
1997.
Mark A. Freemer 45 Partner, Clyde, FERRARO & Co., LLP, 2004/2004
(2) (3) Certified Public Accountants
Class B Directors Whose Term Expires in 2005 and Nominees for Class B Directors Whose Term Expires in 2008
----------------------------------------------------------------------------------------------------------
James M. Crooks 52 Owner, Crooks Clothing Company, Inc., 2004/2004
(1) (2) Retail Sales
Robert L. Hunter 63 Truck Dealer; President of: Hunter Truck 1974/1989
(2) (3) (6) Sales & Service, Inc.; Hunter Leasing, Inc.;
Hunter Keystone Peterbilt, LLP;
Hunter Erie Truck Sales LLP;
Hunter Jersey Peterbilt, LLC;
Director of Idealease of North
America, Inc.
4
John B. Mason 56 President, H. B. Beels & Son, Inc. Prior 1985/1989
(3) (4) (5) to 6/8/01 - Insurance Broker for H. B.
Beels & Son, Inc.
Class C Directors Whose Term Expires in 2006
--------------------------------------------
Ronald L. Ashbaugh 69 Retired, former President of the Bank and 1971/1989
(1) (2) (4) (5) (6) Corporation.
George W. Freeman 74 Owner of Freeman's Tree Farm. 1964/1989
(3) (4) (5) (6)
Brian C. McCarrier 41 President, Interstate Pipe and Supply 1997/1997
(1) (2) (5) (6) Company.
-------------------------------
(1) Member of Finance Committee. This committee is appointed by the
Chairman of the Board and determines investment policy and market risk
management policy. This committee also recommends investment purchases
for the bank portfolio. This committee met three times in fiscal year
2004.
(2) Member of the Audit Committee. This committee is appointed by the
Chairman of the Board and, among other things, meets with the
independent auditors to review their audit of the financial reports of
the Corporation. This committee met five times in fiscal year 2004.
(3) Member of the Human Resource Committee. This committee is appointed by
the Chairman of the Board. This committee acts as the Compensation
Committee and reviews executive and employee compensation, as well as
personnel policy and recommends changes to the Board. This committee
met three times in fiscal year 2004.
(4) Member of the Loan Committee. This committee is appointed by the
Chairman of the Board and is responsible to review and approve loans,
which exceed the loan officer's lending limits. This committee met 26
times in fiscal year 2004.
(5) Member of the Planning Committee. This committee is appointed by the
Chairman of the Board and examines and recommends expansion and
business opportunities to the Board of Directors. This committee met
three times in fiscal year 2004.
(6) Member of the Executive Committee. This committee is comprised of the
Chairs of the other five committees and is responsible for director
education and development. This committee did not meet in fiscal year
2004.
Director Compensation
---------------------
During 2004, Directors received $750 per month through April for their
services as Director of the Bank and $790 thereafter regardless of attendance at
board meetings. The Chairman of the Audit Committee received an additional $100
per month for his services as Audit Committee Chairman. No additional
compensation is paid for service as Directors of the Corporation. In addition,
outside Directors received $190 for each Bank committee meeting that they
attended through May 18, 2004 and $200 thereafter. During 2004, total fees paid
to all Directors were $107,330.
Meeting Attendance
------------------
During 2004, the Board of Directors of the Corporation held five (5)
regular meetings and four (4) special meetings and the Board of Directors of the
Bank held thirteen (13) regular meetings. Each of the Directors attended at
least seventy-five percent (75%) of the combined total number of meetings of the
Corporation's and Bank's Board of Directors and of the committees on which they
serve.
5
Nominating Committee
--------------------
The Corporation does not have a standing nominating committee, and all
director nominations are considered by the Board of Directors as a whole. The
goal of the Board of Directors has been, and continues to be, to identify
nominees for service on the Board of Directors who will bring a variety of
perspectives and skills from their professional and business experience.
Depending upon the current needs of the Board of Directors and the Corporation,
certain factors may be weighed more or less heavily. Eight out nine board
members are considered independent under NASDAQ rules.
Nominating Procedures
---------------------
The Board of Directors identifies nominees by first evaluating, on an
informal basis, the current members of the Board of Directors willing to
continue in service. Current members of the Board of Directors with skills and
experience that are relevant to the Corporation's business and/or unique
situation who are willing to continue in service are considered for
renomination, balancing the value of continuity of service by existing members
of the Board of Directors with that of obtaining a new perspective or skill set.
If any member of the Board of Directors does not wish to continue in service or
if the Board of Directors decides not to renominate a member for re-election,
the Board of Directors will then determine if there is a need to replace that
director or reduce the number of directors serving on the Board of Directors, in
accordance with the Corporation's Bylaws. If the Board of Directors determines a
need to replace a non-continuing director, it identifies the desired skills and
experience in light of the criteria set forth above. Current members of the
Board of Directors are polled for suggestions as to individuals meeting those
criteria, and research may also be performed to identify qualified individuals.
To date, the Board of Directors has not formally engaged third parties to assist
in identifying or evaluating potential nominees, although the Board of Directors
reserves the right to do so in the future.
Section 10.1 of the Corporation's bylaws contains provisions addressing the
process by which a stockholder may nominate an individual to stand for election
to the Board of Directors at the Corporation's Annual Meeting. Historically, the
Corporation has not had a formal policy concerning stockholder recommendations
for nominees. Given the size of the Corporation, the Board of Directors does not
feel that such a formal policy is warranted at this time. The absence of such a
policy, however, does not mean that a reasonable stockholder recommendation will
not be considered, in light of the particular needs of the Corporation and the
policies and procedures set forth above. The Board of Directors will reconsider
this matter at such time as it believes that the Corporation's circumstances,
including its operations and prospects, warrant the adoption of such a policy.
Director Attendance at Annual Meetings
--------------------------------------
All directors are expected to attend the Corporation's annual meeting of
stockholders. All nine directors attended the Corporation's 2004 annual meeting
of stockholders.
Audit Committee
---------------
The audit committee of the Board is composed of five members and operates
under a written charter adopted by the Board of Directors. The responsibilities
of the audit committee are contained in the Audit Committee Report. The audit
committee during fiscal year 2004 consisted of Brian C. McCarrier, Chairman;
Ronald L. Ashbaugh, Robert L. Hunter, Mark A. Freemer and James M. Crooks. The
Board of Directors has determined that each committee member is "independent,"
as defined by Corporation policy, SEC rules and the NASDAQ listing standards.
6
Audit Committee Financial Expert
--------------------------------
The Board of Directors has identified Brian C. McCarrier as an audit
committee financial expert.
Audit Committee Report
----------------------
The following Report of the Audit Committee does not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other Corporation filings under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent we specifically
incorporate this Report by reference.
The audit committee reports to the Board and is responsible for overseeing
and monitoring financial accounting and reporting, the system of internal
controls established by management and the audit process of the Corporation.
The Audit Committee Charter adopted by the Board sets out the
responsibilities, authority and specific duties of the audit committee. The
audit committee charter was included as an attachment to the Corporation's Proxy
Statement dated April 14, 2004. Pursuant to the charter, the audit committee has
the following responsibilities:
o To monitor the preparation of quarterly and annual financial reports;
o To review the adequacy of internal control systems and financial reporting
procedures with management and independent auditors; and
o To review the general scope of the annual audit and the fees charged by the
independent auditors.
In discharging its oversight responsibility the audit committee has met and
held discussions with management and Crowe Chizek and Company LLC, the
independent auditors for the Corporation. Management represented to the audit
committee that all consolidated financial statements were prepared in accordance
with accounting principles generally accepted in the United States of America,
and the audit committee has reviewed and discussed the consolidated financial
statements with management and the independent auditors.
In addition, the Audit Committee has discussed with the independent
auditors the auditors' independence from management and the Corporation, and has
received and discussed with the independent auditors the matters in the written
disclosures required by the Independence Standards Board and as required under
the Sarbanes-Oxley Act of 2002, including considering the permissibility of
nonaudit services with the auditors' independence.
The audit committee also obtained from the independent auditors a formal
written statement describing all relationships between Emclaire Financial Corp.
and Crowe Chizek and Company LLC and the auditors that bear on the auditors'
independence consistent with Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committee. The audit committee discussed
with the independent auditors any relationships that may impact on the firm's
objectivity and independence and satisfied itself as to the auditors'
independence.
Based on these discussions and reviews, the audit committee recommended
that the Board of Directors approve the inclusion of the Corporation's audited
consolidated financial statements in its Annual Report on Form 10-K for the year
ended December 31, 2004, for filing with the Securities and Exchange Commission.
7
Respectfully submitted by the members of the audit committee of the Board of
Directors:
Brian C. McCarrier, Chairman
Ronald L. Ashbaugh
Robert L. Hunter
Mark A. Freemer
James M. Crooks
Fees to Crowe Chizek and Company LLC
------------------------------------
Audit Fees. The audit fees include only fees that are customary under
generally accepted auditing standards and are the aggregate fees Emclaire
Financial Corp. incurred for professional services rendered for the audit of
Emclaire Financial Corp.'s annual financial statements for fiscal year 2004 and
the reviews of the financial statements included in Emclaire Financial Corp.'s
Quarterly Reports on Forms 10-Q for fiscal year 2004.
Audit-Related Fees. In both years, the audit-related services included
audits of the Corporation's benefit plans and student loans. These audit-related
services are assurance and related services that are reasonably related to the
performance of the audit or review of the Company's financial statements.
Tax Fees. Tax services consisted of the preparation and/or review of, and
consultations with respect to, federal and state tax returns.
All Other Fees. Other fees consisted primarily of aggregate fees billed for
services rendered by Crowe Chizek and Company LLC other than those services
covered above.
Audit Committee's Pre-Approval Policies and Procedures. Effective November
19, 2003, the Board of Directors adopted a new Audit Committee Charter which,
among other things, requires the Audit Committee to pre-approve the rendering by
our independent auditor of audit or permitted non-audit services. The Chair of
the Audit Committee may pre-approve the rendering of services on behalf of the
Committee, provided the matter is then presented to the full Committee at the
next scheduled meeting.
Fees for Fiscal 2004 and Fiscal 2003. The table below sets forth the
aggregate fees paid by the Corporation for audit, audit-related, tax and other
services provided by Crowe Chizek and Company LLC to the Firm during each of the
last two fiscal years.
2004 2003
--------- ---------
Audit fees $49,000 $43,790
Audit-related fees (1) 0 17,800
Tax Fees (2) 8,200 8,000
All other fees 0 150
--------- ---------
Total $57,200 $69,740
-----------------------------
(1) Includes Pension Plan audit.
(2) Includes preparation of federal & state income tax returns, shares tax
returns and calculations of estimated tax payments. Also includes
additional tax work related to the Rehabilitation Tax Audi and Sec. 263(a)
regulation credit.
8
Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
On January 19, 2005, the Corporation's Board of Directors replaced its
independent auditors, Crowe Chizek and Company LLC (Crowe Chizek) with Beard
Miller Company LLP (Beard Miller) to be effective upon filing of the 2004 Form
10-K. Crowe Chizek completed its engagement as independent auditor for the
Corporation's fiscal year ended December 31, 2004 upon the filing of the
Corporation's Form 10-K for the year ended December 31, 2004. Crowe Chizek's
report on the Corporation's consolidated financial statements during the two
most recent fiscal years preceding the date hereof contained no adverse opinion
or a disclaimer of opinions, and was not qualified or modified as to
uncertainty, audit scope or accounting principles. The decision to change
accountants was approved by the Corporation's Audit Committee. During the last
two fiscal years and the subsequent interim period to the date hereof, there
were no disagreements between the Corporation and Crowe Chizek on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope or principles, which disagreement(s), if not resolved to the satisfaction
of Crowe Chizek, would have caused it to make a reference to the subject matter
of the disagreement(s) in connection with its reports. None of the "reportable
events" described in Item 304(a)(1)(v) of Regulation S-K occurred with respect
to the Corporation within the last two fiscal years and the subsequent interim
period to the date hereof.
Effective January 19, 2005, the Corporation engaged Beard Miller as its
independent auditors for the fiscal year ending December 31, 2005. During the
last two fiscal years and the subsequent interim period to the date hereof, the
Corporation did not consult Beard Miller regarding any of the matters or events
set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.
Remuneration of Officers
The following table sets forth all cash compensation for services in all
capacities paid by the Bank during 2004 to the chief executive officer and the
chief lending officer. No other officer's compensation exceeded $100,000. The
Corporation pays no salaries or benefits.
SUMMARY COMPENSATION TABLE
Name and Principal All Other Annual All Other
Position Year Salary Bonus Compensation (1) Compensation (2)
-------- -------- ----------- ---------- ------------------ -------------------
David L. Cox 2004 $147,000 $35,000 $9,320 $21,048
President and Chairman 2003 140,000 30,580 8,200 19,643
of the Board 2002 125,000 4,080 6,400 3,507
Raymond M. Lawton 2004 90,000 17,000 - 16,932
Senior Vice President 2003 85,000 14,209 - 15,778
Chief Lending Officer
-------------------------------
(1) Includes Director fees. Does not include the value of certain other
benefits, which do not exceed $50,000 or 10% of the total salary and bonus
of the individual.
(2) Represents amount accrued during 2004, 2003 and 2002 for supplemental
retirement agreement and the Bank's match of employee's contribution to the
401(k) plan for years 2004 and 2003.
9
Pension Plan
The Bank maintains a defined benefit pension plan for all eligible
employees. An employee becomes vested in the plan after 5 years. Upon retirement
at age 65, a terminated participant is entitled to receive a monthly benefit.
Prior to a 2002 amendment to the plan, the benefit formula was 1.1% of average
monthly compensation plus .4% of average monthly compensation in excess of six
hundred seventy five ($675) multiplied by years of service. In 2002, the plan
was amended to change the benefit structure to a cash balance formula under
which the benefit payable is the actuarial equivalent of the hypothetical
account balance at normal retirement age. However, the benefits already accrued
by the employees prior to the amendment were not reduced. In addition, the prior
benefit formula continues through December 31, 2012, as a minimum benefit. In
2004, the Bank contributed $209,292 to the Plan.
The years of benefit service for the Chief Executive Officer and the
executive officer listed in the Summary Compensation Table are: Mr. Cox has 32
years of benefit service and Mr. Lawton has 5 years of benefit service.
The following table illustrates estimated annual retirement benefits from
the Pension Plan based on a hire age of 25:
5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
Compensation Service Service Service Service Service Service Service Service
$100,000 19,542 35,142 47,594 57,534 65,468 71,802 76,858 80,893
200,000 39,085 70,284 95,188 115,068 130,937 143,604 153,715 161,787
401k Plan
The Bank matches 50% of an employee's contribution to the 401(k) plan up to
6% of the participant's salary.
Supplemental Retirement Agreements
In October 2002, following Board of Director approval, the Bank entered
into supplemental retirement agreements ("Supplemental Agreements") with four
key executives. The Supplemental Agreements are non-qualified defined benefit
plans and are unfunded. The Supplemental Agreements have no assets, and the
benefits payable under the Supplemental Agreements are not secured. The
Supplemental Agreement participants are general creditors of the Corporation in
regards to their vested Supplemental Agreement benefits. The Supplemental
Agreements provide for retirement benefits upon reaching age 65, and the four
participants are fully vested five years after the inception of the Supplemental
Agreements. Upon attaining the age of 65, Mr. Cox would be entitled to $520,000
over a 20 year period under his Supplemental Agreement. The Corporation accrued
$38,000 in expense for the Supplemental Agreements for the year ended December
31, 2004.
During September 2002, the Bank purchased single premium bank owned life
insurance on the lives of the participants. The cash surrender value of the
twenty life insurance policies purchased aggregated $4.4 million at December 31,
2004. The Corporation intends to utilize the increase in cash surrender value of
these insurance policies to offset executive and employee benefit costs.
Each of the Supplemental Agreements provide that in the event of a change
of control of the Corporation (as defined in the agreements), the officer (i) if
he has not yet qualified for retirement benefits, shall have the right to demand
his withdrawal benefits (which is an amount equal to the present value of the
normal retirement benefit, using a 7% discount rate and monthly compounding of
interest) in a single lump sum payment, or (ii) if he has qualified for
retirement benefits or has begun receiving a retirement benefit under the
Supplemental Agreement, shall have the right to demand his benefits in a single
lump sum payment in an amount equal to the normal retirement benefit. In the
event of a change in control on December 31, 2004, Mr. Cox and the remaining
three officers (in the aggregate) would be entitled to lump sum payments of
$132,737 and $234,723, respectively.
10
Change of Control Severance Agreements
The Bank has entered into severance agreements with the chief executive
officer and the chief lending officer. The agreements provide that in the event
certain events take place after there is a change in control of the Corporation,
or for a period two years thereafter, the executive will be entitled to a lump
sum payment in the amount two (2) times the executive's base salary immediately
preceding the change in control. The events triggering such compensation
include: (a) the involuntary termination of the officer's employment; or (b) if
(i) there are any changes in the executive's duties, responsibilities or title,
(ii) his annual salary is reduced; (iii) his benefits are materially reduced, or
(iv) the Bank's headquarters or the officer's place of business is moved more
than 10 miles, all in (b) as were in existence immediately prior to the change
in control. In addition, for two years after such termination, the Bank is
required to provide life, disability, accident and health insurance benefits
substantially similar to what was in place immediately prior to such
termination. In the event of a change in control of the Bank, at December 31,
2004, the chief executive officer and the chief lending officer would currently
be entitled to lump sum payments of approximately $294,000 and $180,000,
respectively.
Certain Transactions
There have been no material transactions, proposed or consummated, between
the Corporation and the Bank with any director or executive officer of the
Corporation or the Bank, or any associate of the foregoing persons. The Bank,
like many financial institutions, has followed a policy of granting various
types of loans to officers, directors, and employees. With the exception of the
loans presented in the following table, all loans to executive officers and
directors of the Corporation and the Bank have been made in the ordinary course
of business and on substantially the same terms and conditions, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with the Bank's other customers, and do not involve more than the
normal risk of collectibility nor present other unfavorable features. The Board
of Directors maintains a policy granting a discount of 100 basis points on loans
extended to all employees including executive officers. The following table
presents a summary of loans outstanding to named officers that were extended, or
amended, under this policy:
Highest
Principal
Name and Year Balance Balance Interest Market
Position Type Made During Year 12/31/04 Rate Rate
---------------- ---------------- --------- ------------- ------------- ------------ -----------
David L. Cox Residential
President and Mortgage 2003 $165,975 $160,159 5.625% 6.625%
Chairman Overdraft
Protection 2003 $152 $0 5.250% 5.250%
Compensation Committee Interlocks and Insider Participation
None of the members of the Human Resources Committee serves or has served
as an officer or employee of the Corporation or its subsidiaries. J. Michael
King and John B. Mason, committee members, have had the following related
business transactions: Mr. King is a member of the law firm of Lynn, King &
Schreffler, P.C. and during fiscal year 2004 the firm received less than $60,000
for services performed for the Corporation. Mr. Mason is President of H. B.
Beels & Son, Inc. and during fiscal year 2004 the business received less than
$60,000 for services performed for the Corporation.
11
Compensation Committee Report on Executive Compensation
The Human Resources Committee of the Bank (the "Committee") is composed of
five members and has the responsibility to evaluate the performance of and
determine the compensation for the Chief Executive Officer, to approve the
compensation structure for senior management, to review the Bank's salary
administration program, and to determine and authorize for payment the company's
bonus plans. The Human Resources Committee during fiscal year 2004 consisted of
the following individuals:
Robert L. Hunter, Chairman
George W. Freeman
Mark A. Freemer
J. Michael King
John B. Mason.
It remains the philosophy and goal of Farmers National Bank to attract and
retain a highly qualified and motivated workforce at all levels. The salary
administration program is reviewed for consistency with industry peer group
surveys. The peer group consists of banks within the geographical area of
similar asset size. Salary ranges within the plan are reviewed to ensure that
the various positions are being accurately compensated for their value to the
organization.
Salary increases are determined by performance. The Committee reviews the
performance of the Chief Executive Officer on an annual basis by evaluating
factors including, but not limited to, vision, planning, advising and assisting
the Board of Directors, communication to shareholders, the development and
management of subordinates, and the Bank's growth and performance. During 2004,
the Committee determined to award Mr. Cox with a 5% salary increase. Management
of the Bank determines salary increases for all other officers and employees
based upon performance
12
Stockholders Return Performance
Set forth below is a graph comparing the yearly percentage change in the
cumulative total shareholder return on the Corporation's common stock against
the cumulative total return of NASDAQ Composite and SNL $250 million to $500
million Bank Index for the five year period beginning December 31, 1999 and
ending December 31, 2004. Each assumes an investment of $100 on December 31,
1999 and reinvestment of dividends when paid. The graph is not necessarily
indicative of future price performance.
The following performance graph does not constitute soliciting material and
should not be deemed filed or incorporated by reference into any other
Corporation filings under the Securities Act or under the Exchange Act, except
to the extent we specifically incorporate this performance graph by reference.
Emclaire Financial Corp.
Total Return Performance
Period Ending
----------------------------------------------------------------------
Index 12/31/1999 12/31/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004
----------------------------------------------------------------------------------------------------
Emclaire Financial Corp. 100.00 103.31 123.73 165.59 204.63 216.41
NASDAQ Composite 100.00 60.82 48.16 33.11 49.93 54.49
SNL $250M-$500M Bank Index 100.00 96.28 136.80 176.39 254.86 289.27
Source: SNL Financial LC, Charlottesville, VA (434) 977-1600
(C) 2005
13
Principal Officers of the Corporation
The following table sets forth selected information about the principal
officers of the Corporation, each of whom is selected by the Board of Directors
and each of whom holds office at the discretion of the Board of Directors:
Bank Age as of
Held Employee December 31,
Name Since Since 2004
----------------------- ------------ ------------- --------------
David L. Cox,
Chairman, President
and Chief Executive
Officer 1997 1973 54
Shelly L. Rhoades
Treasurer (1) 2004 2000 34
Raymond M. Lawton
Secretary 2004 1999 50
---------------------
(1) Prior to December 2000, Ms. Rhoades was the Controller for Thompson Motor
Sports, Inc., Clarion, PA from October 1999 through November 2000.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Unless instructed to the contrary, it is intended that votes will be cast
pursuant to the proxies for the ratification of the selection of Beard Miller
Company LLP, Certified Public Accountants, of Wexford, PA ("Beard Miller"), as
the Corporation's independent public accountants for its fiscal year ending
December 31, 2005. The Corporation has been advised by Beard Miller that none of
its members have any financial interest in the Corporation. Ratification of
Beard Miller will require an affirmative vote of a majority of the shares of
Common Stock cast at the Annual Meeting.
In addition to performing customary audit services related to the audit of
the Corporation's financial statements, Beard Miller will assist the Corporation
with the preparation of its federal and state tax returns and will perform
required retirement plan audits, charging the Corporation for such services at
its customary hourly billing rates.
Effective January 19, 2005, the Corporation replaced its independent
auditors, Crowe Chizek and Company LLC (Crowe Chizek) with Beard Miller Company
LLP. Crowe Chizek's report on the Corporation's financial statements during the
two most recent fiscal years preceding the date hereof contained no adverse
opinion or a disclaimer of opinions, and was not qualified or modified as to
uncertainty, audit scope or accounting principles. The decision to change
accountants was approved by the Corporation's Audit Committee. During the last
two fiscal years and the subsequent interim period to the date hereof, there
were no disagreements between the Corporation and Crowe Chizek on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreement(s), if not resolved to the satisfaction
of Crowe Chizek, would have caused it to make a reference to the subject matter
of the disagreement(s) in connection with its reports. None of the "reportable
events" described in Item 304(a)(1)(v) of Regulation S-K occurred with respect
to the Corporation within the last two fiscal years and the subsequent interim
period to the date hereof.
During the two fiscal years and the subsequent interim period prior to
January 19, 2005, the Corporation did not consult Beard Miller regarding any of
the matters or events set forth in Item 304(a)(2)(v) and (ii) of Regulation S-K.
14
Representatives of Beard Miller will be present at the meeting, will be
available to respond to your questions and will be able to make such statements
as they desire.
In the event that the shareholders do not ratify the selection of Beard
Miller as the Corporation's independent public accountants for the 2005 fiscal
year, another accounting firm will be chosen to provide independent public
accountant audit services for the 2005 fiscal year. The Board of Directors
recommends that the shareholders vote FOR the ratification of the selection of
Beard Miller as the auditors for the Corporation for the year ending December
31, 2005.
It is understood that even if the selection of Beard Miller is ratified,
the Board of Directors, in its discretion, may direct the appointment of a new
independent auditing firm at any time during the year if the Board of Directors
determines that such a change would be in the best interests of the Corporation
and its shareholders.
ANNUAL REPORT
A copy of the Corporation's Annual Report for its fiscal year ended
December 31, 2004, is being mailed with this Proxy Statement. Such Annual Report
is not to be treated as part of the proxy solicitation material or having been
incorporated herein by reference.
SHAREHOLDER PROPOSALS
Any shareholder who, in accordance with and subject to the provisions of
the proxy rules of the Securities and Exchange Commission, wishes to submit a
proposal for inclusion in the Corporation's proxy statement for its 2005 Annual
Meeting of Shareholders must deliver such proposal in writing to the Secretary
of Emclaire Financial Corp. at the principal executive offices of the
Corporation at 612 Main Street, Post Office Box D, Emlenton, Pennsylvania 16373,
no later than Monday, December 12, 2005.
Under the Corporation's current bylaws, business proposal nominations for
directors other than those to be included in the Corporation's proxy materials
following the procedures described in Rule 14a-8 may be made by stockholders
entitled to vote at the meeting if notice is timely given and if the notice
contains the information required by the bylaws. Nominations must be received no
less than sixty (60) days prior to the annual meeting.
In the event the Corporation received notice of a stockholder proposal to
take action at next year's annual meeting of stockholders that is not submitted
for inclusion in the Corporation's proxy material, or is submitted for inclusion
but is properly excluded from the proxy material, the persons named in the proxy
sent by the Corporation to its stockholders intend to exercise their discretion
to vote on the stockholder proposal in accordance with their best judgment.
SHAREHOLDER COMMUNICATION WITH THE BOARD
The Corporation does not have a formal procedure for shareholder
communication with its Board of Directors. In general, officers are easily
accessible by telephone or mail. Any matter intended for the Board, or for any
individual member or members of the Board, should be directed to the president
with a request to forward the same to the intended recipient. In the
alternative, shareholders can direct correspondence to the Board to the
attention of the Board Chairman, David L. Cox, or to the attention of the
Chairman of the Audit Committee, Brian C. McCarrier, in care of the Corporation
at the Corporation address. All such communications will be forwarded unopened.
15
OTHER MATTERS
The Board of Directors does not know of any matters to be presented for
consideration other than the matters described in the Notice of Meeting, but if
any matters are properly presented, it is the intention of the persons named in
the accompanying Proxy to vote on such matters in accordance with their
judgment.
ADDITIONAL INFORMATION
Upon written request, a copy of the Annual Report on Form 10-K of Emclaire
Financial Corp. may be obtained, without charge from Shelly L. Rhoades,
Treasurer, Emclaire Financial Corp., 612 Main Street, Post Office Box D,
Emlenton, Pennsylvania 16373. In addition, the Corporation files reports with
the SEC. Free copies can be obtained from the SEC website at www.sec.gov.
16
EMCLAIRE FINANCIAL CORP.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 18, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints the Board of Directors of
Emclaire Financial Corp. (the "Corporation"), or its designee, proxy of the
undersigned, with full power of substitution, to vote all of the shares the
Corporation that the undersigned may be entitled to vote at the Annual Meeting
of Shareholders of the Corporation to be held on Wednesday, May 18, 2005 at the
Farmers National Bank of Emlenton, 612 Main Street, Emlenton, PA 16373, at 11:00
a.m., prevailing time, and at any adjournment or postponement thereof as
follows:
1. ELECTION OF CLASS B DIRECTORS FOR THREE-YEAR TERMS TO EXPIRE IN 2008
FOR WITHHOLD
James M. Crooks [ ] [ ]
Robert L. Hunter [ ] [ ]
John B. Mason [ ] [ ]
2. Ratification of the selection of Beard Miller Company LLP, Certified Public
Accountants, as auditors of the Corporation for the year ending December
31, 2005.
[ ] FOR [ ] AGAINST
3. In its discretion, the proxy is authorization to vote upon such other
business as may properly come before the meeting and any adjournment or
postponement thereof.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL NOMINEES LISTED ABOVE AND FOR PROPOSAL NO. 2.
The undersigned acknowledges receipt from the Corporation prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders, a Proxy
Statement dated April 11, 2005 and an Annual Report to Stockholders.
Dated: ___________________, 2005 [ ] Please check here if you plan to
attend the Annual Meeting
Number attending
-----------------
------------------------------------------
SIGNATURE OF SHAREHOLDER
--------------------------------------
SIGNATURE OF SHAREHOLDER
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED PROMPTLY
TO THE CORPORATION 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.