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Harleysville Savings Financial Corporation
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
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or the form or schedule and the date of its filing.
(1) Amount previously paid:
----------------------------------------------------------------------
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----------------------------------------------------------------------
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[Harleysville Savings Financial Corporation Letterhead]
December 19, 2006
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
of Harleysville Savings Financial Corporation, the holding company for
Harleysville Savings Bank. The meeting will be held at the Indian Valley Country
Club, located at 650 Bergey Road, Telford, Pennsylvania 18969, on Wednesday,
January 24, 2007 at 9:30 a.m., local time. The matters to be considered by
stockholders at the annual meeting are described in the accompanying materials.
It is very important that your shares be voted at the annual meeting
regardless of the number you own or whether you are able to attend the meeting
in person. We urge you to mark, sign, and date your proxy card today and return
it in the envelope provided, even if you plan to attend the annual meeting. This
will not prevent you from voting in person, but will ensure that your vote is
counted if you are unable to attend.
Your continued support of and interest in Harleysville Savings
Financial Corporation is sincerely appreciated.
Sincerely,
/s/ Edward J. Molnar
Edward J. Molnar
Chairman and Chief Executive Officer
HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
271 Main Street
Harleysville, Pennsylvania 19438
(215) 256-8828
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 24, 2007
--------------------
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of
Harleysville Savings Financial Corporation (the "Company") will be held at the
Indian Valley Country Club, located at 650 Bergey Road, Telford, Pennsylvania
18969, on Wednesday, January 24, 2007 at 9:30 a. m., local time, for the
following purposes, all of which are more completely set forth in the
accompanying proxy statement:
(1) To elect three (3) directors for a three-year term and in each
case until their successors are elected and qualified; and
(2) To transact such other business as may properly come before
the meeting or any adjournment thereof. Management is not
aware of any other such business.
The board of directors has fixed December 8, 2006 as the voting record
date for the determination of stockholders entitled to notice of and to vote at
the annual meeting and at any adjournment thereof. Only those stockholders of
record as of the close of business on that date will be entitled to vote at the
annual meeting or at any such adjournment.
By Order of the Board of Directors
/s/ Marian Bickerstaff
Marian Bickerstaff
Senior Vice President and Secretary
Harleysville, Pennsylvania
December 19, 2006
--------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
--------------------------------------------------------------------------------
HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
-------------------
PROXY STATEMENT
-------------------
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 24, 2007
General
This Proxy Statement is furnished to holders of common stock, $.01 par
value per share, of Harleysville Savings Financial Corporation (the "Company"),
the bank holding company for Harleysville Savings Bank (the "Bank"). Proxies are
being solicited on behalf of the board of directors of the Company to be used at
the annual meeting of stockholders to be held at the Indian Valley Country Club,
located at 650 Bergey Road, Telford, Pennsylvania 18969, on Wednesday, January
24, 2007 at 9:30 a.m., local time, and at any adjournment thereof for the
purposes set forth in the Notice of Annual Meeting of Stockholders. This proxy
statement is first being mailed to stockholders on or about December 19, 2006.
Voting Rights
Only stockholders of record at the close of business on December 8,
2006 will be entitled to notice of and to vote at the annual meeting. At such
date, there were 3,859,958 shares of common stock issued and outstanding and the
Company had no other class of equity securities outstanding.
Each share of common stock is entitled to one vote at the annual
meeting on all matters properly presented at the meeting. The presence in person
or by proxy of at least a majority of the issued and outstanding shares of
common stock entitled to vote is necessary to constitute a quorum at the annual
meeting. Directors are elected by a plurality of the votes cast with a quorum
present.
Under rules applicable to broker-dealers, the election of directors is
considered a "discretionary" item upon which brokerage firms may vote in their
discretion on behalf of their client if such clients have not furnished voting
instructions and, thus, there will not be broker "non-votes" at the meeting.
Abstentions will be counted for purposes of determining the presence of a quorum
at the annual meeting. However, because of the required vote, abstentions will
have no effect on the voting for the election of directors.
Proxies
The proxy solicited hereby, if properly signed and returned to the
Company and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted (i) FOR the nominees for director described herein;
and (ii) upon the transaction of such other business as may properly come before
the meeting, in accordance with the best judgment of the persons appointed as
proxies. Any stockholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the secretary of the Company written
notice thereof (Marian Bickerstaff, Senior Vice President and Secretary,
Harleysville Savings Financial Corporation, 271 Main Street, Harleysville,
Pennsylvania 19438); (ii) submitting a duly-executed proxy bearing a later date;
or (iii) appearing at the annual meeting and giving the secretary notice of his
or her intention to vote in person. Proxies solicited hereby may be exercised
only at the annual meeting and any adjournment thereof and will not be used for
any other meeting.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR, DIRECTORS
WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS
Election of Directors
The articles of incorporation of the Company provide that the board of
directors of the Company shall be divided into three classes which are as equal
in number as possible, and that the members of each class are to be elected for
a term of three years and until their successors are elected and qualified. One
class of directors is to be elected annually and stockholders are not permitted
to cumulate their votes for the election of directors. No nominee for director
is related to any other director or executive officer of the Company by blood,
marriage or adoption.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominees for director listed
below. If any person named as nominee should be unable or unwilling to stand for
election at the time of the annual meeting, the proxies will nominate and vote
for any replacement nominee or nominees recommended by the board of directors.
At this time, the board of directors knows of no reason why any of the nominees
listed below may not be able to serve as a director if elected.
The following tables present information concerning the nominees for
director and each director whose term continues, including his or her tenure as
a director of the Company.
Nominees for Director for a Three-Year Term Expiring in 2010
Name Principal Occupation During Director
Age the Past Five Years Since(1)
--------------------------------------------------------------------------------------------
Sanford L. Alderfer 54 Mr. Alderfer is President of Alderfer 2001
Auction Company, located in Hatfield,
Pennsylvania.
Mark R. Cummins 50 Mr. Cummins is Executive Vice President,
Chief Investment Officer and Treasurer of 1995
Harleysville Insurance Companies located in
Harleysville, Pennsylvania.
Ronald B. Geib 52 Mr. Geib has served as the President and 2001
Chief Operating Officer of the Company and
the Bank since November 2002. Upon Mr.
Molnar's retirement as Chief Executive
Officer, Mr. Geib will serve as President
and Chief Executive Officer of the Company
and the Bank effective January 24, 2007.
Mr. Geib previously served as the Company's
Executive Vice President and Chief Operating
Officer from 1999 to November 2002 and as
the Bank's Executive Vice President and
Chief Operating Officer from September 1999
to November 2002. Mr. Geib served as the
Bank's Senior Vice President, Treasurer, and
Chief Financial Officer from 1980 to 1999.
Mr. Geib joined the Bank in 1976.
The Board of Directors Recommends a Vote FOR Election of the Nominees for Director.
2
Members of the Board of Directors Continuing in Office
Directors With Terms Expiring in 2008
Name Principal Occupation During Director
Age the Past Five Years Since(1)
------------------------------------------------------------------------------------------------------------
Philip A. Clemens 57 Mr. Clemens is Chairman and Chief Executive 1987
Officer of the Clemens Family Corporation, a
meat processing company located in Hatfield,
Pennsylvania.
Edward J. Molnar 66 Mr. Molnar has served as the Company's 1968
Chairman and Chief Executive Officer since
February 2000 and President from February
2000 until November 2002. Mr. Molnar has
also served as the Bank's Chief Executive
Officer since 1967 and the Bank's President
from 1976 to November 2002. Mr. Molnar
joined the Bank in 1967. Mr. Molnar will
retire as Chief Executive Officer on January
24, 2007 and will continue to serve as
Chairman of the Board.
Charlotte A. Hunsberger 38 Ms. Hunsberger is a partner in the law firm 2005
of Bricker, Landis & Hunsberger, LLP,
located in Souderton, Pennsylvania.
Directors With Terms Expiring in 2009
Principal Occupation During Director
Age the Past Five Years Since(1)
------------------------------------------------------------------------------------------------------------
David J. Friesen 63 Mr. Friesen is a certified public accountant 1987
and serves as the Vice President of Finance
for Trefoil Properties, located in Lansdale,
Pennsylvania since January 2006 and
previously served as Director of Development
at Penn View Christian School located in
Souderton, Pennsylvania.
George W. Meschter 54 Mr. Meschter is the President of Meschter 1981
Insurance Group, an insurance agency located
in Collegeville, Pennsylvania.
James L. Rittenhouse 45 Mr. Rittenhouse is a certified public 2005
accountant and a shareholder in the firm
Detweiler, Hershey & Associates, P.C.,
located in Souderton, Pennsylvania
---------------
(1) Includes service as a director of the Bank.
3
Stockholder Nominations
Article III, Section 3.12 of the Company's bylaws governs nominations
for election to the board and requires all such nominations, other than those
made by the board, to be made at a meeting of stockholders called for the
election of directors, and only by a stockholder who has complied with the
notice provisions in that section. Stockholder nominations must be made pursuant
to timely notice in writing to the secretary of the Company. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
principal executive offices of the Company not later than (i) with respect to an
election to be held at an annual meeting of stockholders, 90 days prior to the
anniversary date of the mailing of proxy materials by the Company for the
immediately preceding annual meeting, and (ii) with respect to an election to be
held at a special meeting of stockholders for the election of directors, the
close of business on the tenth day following the date on which notice of such
meeting is first given to stockholders.
Each written notice of a stockholder nomination shall set forth: (a)
the name and address of the stockholder who intends to make the nomination and
of the person or persons to be nominated; (b) a representation that the
stockholder is a holder of record of stock of the Company entitled to vote at
such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission; and (e) the consent of each nominee
to serve as a director of the Company if so elected. The presiding officer of
the meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedures. The Company did not receive any
nominations from stockholders for the annual meeting.
The Board of Directors and Its Committees
Regular meetings of the board of directors of the Company and the Bank
are typically held on a monthly basis and special meetings of the board of
directors are held from time-to-time as needed. There were 12 meetings of the
board of directors of the Company held during fiscal 2006. No director attended
fewer than 75% of the aggregate of the total number of meetings of the board of
directors and the total number of meetings of committees of the board on which
the director served during the year.
The board of directors of the Company has established various
committees, including Audit, Compensation and Human Resources and Corporate
Governance and Nominating Committees.
The Compensation and Human Resources Committee, which met three times
during fiscal 2006, reviews the Company's compensation programs and recommends
salary and benefits for the Company's employees. The members of the committee
are currently Messrs. Alderfer, Clemens and Meschter. The Compensation and Human
Resources Committee operates pursuant to a written charter.
The Corporate Governance and Nominating Committee, which met one time
during fiscal 2006 with respect to nominations for directors for the annual
meeting, advises the board of directors with respect to nominations of directors
and recommends candidates to the board of directors as nominees for election,
reviews existing corporate governance documents and establishes corporate
governance principles for the Company, reviews nominations for director
submitted by stockholders pursuant to the Company's bylaws and identifies and
recommends to the board the selection of qualified individuals to serve as
officers of the Company. The members of the Corporate Governance and Nominating
Committee are Messrs. Friesen, Meschter and Rittenhouse. Each of these persons
is independent within the meaning of the rules of the Nasdaq Stock Market. The
Corporate Governance and Nominating Committee operates pursuant to a written
charter.
The Corporate Governance and Nominating Committee considers candidates
for director suggested by its members and other directors, as well as management
and stockholders. The Corporate Governance and Nominating Committee also may
solicit prospective nominees identified by it. A stockholder who desires to
recommend a prospective nominee for the board should submit in writing the name
and qualifications, including place of principal residence and place of
employment, of such persons to the Corporate Governance and Nominating Committee
no later than July 31st of any year. Submissions shall be made sent to the
Corporate Governance and Nominating Committee,
4
Harleysville Savings Financial Corporation, Corporate Secretary, 271 Main
Street, Harleysville, Pennsylvania 19438. The Corporate Governance and
Nominating Committee also considers whether to nominate any person nominated
pursuant to the provision of the Company's articles of incorporation relating to
stockholder nominations, which is described above under "- Stockholder
Nominations." The Corporate Governance and Nominating Committee has the
authority and ability to retain a search firm to identify or evaluate potential
nominees if it so desires.
The charter of the Corporate Governance and Nominating Committee sets
forth certain criteria the committee may consider when recommending individuals
for nomination as director including: (a) ensuring that the board of directors,
as a whole, is diverse and consists of individuals with various and relevant
career experience, relevant technical skills, industry knowledge and experience,
financial expertise (including expertise that could qualify a director as a
"financial expert," as that term is defined by the rules of the SEC), local or
community ties and (b) minimum individual qualifications, including strength of
character, mature judgment, familiarity with our business and industry,
independence of thought and an ability to work collegially. The committee also
may consider the extent to which the candidate would fill a present need on the
board of directors.
The charter of the Corporate Governance and Nominating Committee also provides
that a director should have:
o a solid understanding of general management best practices and
their application;
o a history of making good business decisions;
o the ability to read a balance sheet, income statement, cash
flow statement and understand the use of financial ratios and
other indicators for evaluating Company performance;
o the ability and the time to perform during periods of both
short-term and prolonged crises;
o an understanding of what it takes to attract, motivate and
energize a high-performance leadership team;
o an understanding of the importance of the strategic planning
process in creating a competitive advantage through strategy;
o a good reputation for high ethical standards and integrity in
their personal and professional dealings;
o mature confidence and value board and team performance over
individual performance; respects others, is open to the
opinions of others, has good listening skills, is confident
enough to ask tough questions, and can communicate
persuasively;
o a history of high performance standards as reflected in the
person's history of achievements;
o high intelligence, exhibit wisdom and will be expected to
exercise prudence and care in carrying out the
responsibilities of the position; and
o no existing or potential conflict of interest situation.
In addition, a director must be:
o a citizen of the United States of America and shall have his
or her primary residence and place of employment within the
Bank's market area;
o a person who has a reputation for being trusted with
confidential information; and
o a person who will faithfully attend board meetings, committee
meetings and the annual meeting of the shareholders and takes
the time to prepare for meaningful discussion.
5
Once the Corporate Governance and Nominating Committee has identified a
prospective nominee, the committee makes an initial determination as to whether
to conduct a full evaluation of the candidate. This initial determination is
based on whatever information is provided to the committee with the
recommendation of the prospective candidate, as well as the committee's own
knowledge of the prospective candidate, which may be supplemented by inquiries
to the person making the recommendation or others.
The Audit Committee reviews the records and affairs of the Company to
determine its financial condition, reviews with management and the Company's
independent registered public accounting firm the systems of internal control,
monitors the Company's adherence in accounting and financial reporting to
generally accepted accounting principles, and performs such other duties deemed
appropriate by the board of directors. The Audit Committee met seven times in
fiscal 2006. Messrs. Cummins and Rittenhouse and Ms. Hunsberger served on the
Audit Committee in fiscal 2006. The members the Audit Committee are independent
as defined in the listing standards of the Nasdaq Stock Market.
The board of directors has determined that Messrs. Cummins and
Rittenhouse, members of the Audit Committee, meet the requirements recently
adopted by the Securities and Exchange Commission for qualification as an audit
committee financial expert. An audit committee financial expert is defined as a
person who has the following attributes: (i) an understanding of generally
accepted accounting principles and financial statements; (ii) the ability to
assess the general application of such principles in connection with the
accounting for estimates, accruals and reserves; (iii) experience preparing,
auditing, analyzing or evaluating financial statements that present a breadth
and level of complexity or accounting issues that are generally comparable to
the breadth and complexity of issues that can reasonably be expected to be
raised by the registrant's financial statements, or experience actively
supervising one or more persons engaged in such activities; (iv) an
understanding of internal controls and procedures for financial reporting; and
(v) an understanding of audit committee functions.
The identification of a person as an audit committee financial expert
does not impose on such person any duties, obligations or liability that are
greater than those that are imposed on such person as a member of the Audit
Committee and the board of directors in the absence of such identification.
Moreover, the identification of a person as an audit committee financial expert
for purposes of the regulations of the Securities and Exchange Commission does
not affect the duties, obligations or liability of any other member of the Audit
Committee or the board of directors. Finally, a person who is determined to be
an audit committee financial expert will not be deemed an "expert" for purposes
of Section 11 of the Securities Act of 1933.
Relationship with Independent Registered Public Accounting Firm
The consolidated financial statements of the Company included in the
accompanying annual report to stockholders for the fiscal year ended September
30, 2006 were audited by Deloitte & Touche LLP, an independent registered public
accounting firm. Representatives from Deloitte & Touche LLP will be present at
the annual meeting and will be given the opportunity to make a statement, if
they so desire, and will be available to respond to appropriate questions from
stockholders.
The following table sets forth the aggregate fees paid by us to
Deloitte & Touche LLP for professional services rendered by Deloitte & Touche
LLP in connection with the audit of the Company's consolidated financial
statements for fiscal 2006 and 2005, as well as the fees paid by us to Deloitte
& Touche LLP for audit-related services, tax services and all other services
rendered by Deloitte & Touche LLP to us during fiscal 2006 and 2005.
Fiscal Year Ended September 30,
-------------------------------
2006 2005
-------- --------
Audit fees (1) ............................... $173,600 $165,000
Audit-related fees .......................... -- 2,400
Tax fees (2) ................................. -- --
All other fees ............................... -- --
-------- --------
Total .................................... $173,600 $167,400
======== ========
----------------
(1) Audit fees consist of fees incurred in connection with the audit of our
annual financial statements, reporting on management's assertion regarding
the effectiveness of internal controls in accordance with FDICIA when
required, the review of the interim financial statements included in our
quarterly reports filed with the SEC and the issuance of consents and
assistance with, and review of, documents filed with the SEC.
(2) Tax fees consist of fees incurred in connection with tax planning, tax
compliance and tax consulting services.
6
The Audit Committee selects the Company's independent registered public
accounting firm and pre-approves all audit services to be provided by the
independent registered public accounting firm to the Company. The Audit
Committee also reviews and pre-approves all audit-related, tax and all other
services rendered by our independent registered public accounting firm in
accordance with the audit committee's charter and policy on pre-approval of
audit-related, tax and other services. In its review of these services and
related fees and terms, the audit committee considers, among other things, the
possible effect of the performance of such services on the independence of our
independent registered public accounting firm. Pursuant to its policy, the Audit
Committee pre-approves certain audit-related services and certain tax services
which are specifically described by the Audit Committee on an annual basis and
separately approves other individual engagements as necessary. The pre-approval
requirements do not apply to certain services if: (i) the aggregate amount of
such services provided to the Company constitutes not more than five percent of
the total amount of revenues paid by the Company to its independent registered
public accounting firm during the year in which the services are provided; (ii)
such services were not recognized by the Company at the time of the engagement
to be other services; and (iii) such services are promptly brought to the
attention of the committee and approved by the committee or by one or more
members of the committee to whom authority to grant such approvals has been
delegated by the committee prior to the completion of the audit. The committee
may delegate to one or more designated members of the committee the authority to
grant required pre-approvals. The decisions of any member to whom authority is
delegated to pre-approve an activity shall be presented to the full committee at
its next scheduled meeting.
During the year ended September 30, 2006, each new engagement of
Deloitte & Touche LLP was approved in advance by the Audit Committee, and none
of those engagements made use of the de minimis exception to pre-approval
contained in the SEC's rules for auditor independence.
Report of the Audit Committee
The Audit Committee has reviewed and discussed the audited financial
statements with management. The Audit Committee has discussed with the
independent registered public accounting firm the matters required to be
discussed by Statement on Auditing Standards No. 61 "Communication with Audit
Committees". The Audit Committee has received the written disclosures and the
letter from the independent registered public accounting firm required by
Independence Standards Board Standard No. 1, and has discussed with the
independent registered public accounting firm, the independent registered public
accounting firm's independence. Based on the review and discussions referred to
above in this report, the Audit Committee recommended to the board of directors
that the audited financial statements be included in the Company's Annual Report
on Form 10-K for the year ended September 30, 2006 for filing with the
Securities and Exchange Commission.
Mark R. Cummins
James L. Rittenhouse
Charlotte A. Hunsberger
7
Executive Officers Who Are Not Directors
The following table sets forth certain information with respect to the
executive officers of the Company and the Bank who are not directors or
nominees.
Position(s) with the Company and Principal Occupation
Age During the Past Five Years
------------------------------- ---------------- ---------------------------------------------------------
Marian Bickerstaff 56 Mrs. Bickerstaff has served as the Company's Secretary
since January 2001, the Company's Senior Vice President
since February 2000, the Bank's Senior Vice President
since September 1999 and as the Bank's Chief Lending
Officer since 1985. Mrs. Bickerstaff was Vice President
of the Bank from 1985 to 1999. Mrs. Bickerstaff joined
the Bank in 1975. Effective January 1, 2007, Mrs.
Bickerstaff will serve as the Bank's Vice President,
Director of Marketing, a non-executive officer position.
Brendan J. McGill 38 Mr. McGill has served as the Company's Senior Vice
President, Treasurer and Chief Financial Officer since
February 2000 and joined the Bank in September 1999 as
Senior Vice President, Chief Financial Officer and
Treasurer. Prior thereto, Mr. McGill was an auditor with
the accounting firm of Deloitte & Touche LLP,
specializing in financial institutions.
Adrian D. Gordon 35 Mr. Gordon has served as Senior Vice President/Chief
Information Officer for the Company and the Bank since
January 2006. Mr. Gordon joined the Bank in 1995
serving as Loan Servicing Manager/Data Information
Coordinator until 1997, as Information Systems Manager
from 1997 until 1999, as Assistant Vice President from
1999 until 2000 and as Vice President from 2000 until
January 2006.
Sheri Strouse 43 Ms. Stouse has served as Senior Vice President/Branch
Administrator for the Company and the Bank since January
2006. Ms. Strouse previously served as Vice President
of the Bank from 2001 until January 2006, Assistant Vice
President from 1999 until 2001 and as a branch manager
from November 1997 until 1999.
Stephen J. Kopenhaver 44 Mr. Kopenhaver has served as Senior Vice
President/Commercial Services for the Company and the
Bank since January 2006. Mr. Kopenhaver has 21 years of
commercial banking experience.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who own
more than 10% of the Common Stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the Nasdaq Stock
Market. Officers, directors and greater than 10% stockholders are required by
regulation to furnish the Company with copies of all Section 16(a) forms they
file. The Company knows of no person who owns 10% or more of the common stock.
Based solely on review of the copies of such forms furnished to the Company, the
Company believes that during the year ended September 30, 2006, all Section
16(a) filing requirements applicable to its executive officers and directors
were met.
8
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the common
stock as of the record date, and certain other information with respect to (i)
the only persons or entities, including any "group" as that term is used in
Section 13(d)(3) of the Exchange Act, who or which was known to the Company to
be the beneficial owner of more than 5% of the issued and outstanding common
stock on the record date, (ii) each director and nominee for director of the
Company, (iii) certain named executive officers of the Company, and (iv) all
directors, nominees for director and executive officers of the Company as a
group.
Amount and Nature
Name of Beneficial of Beneficial
Owner or Number of Ownership as of Percent of
Persons in Group December 8, 2006(1)(2) Common Stock
----------------- ---------------------- ------------
Harleysville Savings Financial 276,072(3) 7.2%
Corporation Employee Stock
Ownership Pension Plan
271 Main Street
Harleysville, Pennsylvania 19438
First Manhattan Company 264,500 (4) 6.9
437 Madison Avenue
New York, New York 10022
Directors:
Sanford L. Alderfer 10,021 (5)(6) *
Philip A. Clemens 40,800 (6)(7) 1.1
Mark R. Cummins 128,331 (8) 3.3
David J. Friesen 50,421 (9) 1.3
Ronald B. Geib 110,344 (10) 2.8
Charlotte A. Hunsberger 1,450 (11) *
George W. Meschter 54,393 (6)(12) 1.4
Edward J. Molnar 145,275 (13) 3.8
James L. Rittenhouse 2,706 (14) *
Named Executive Officers:
Marian Bickerstaff 123,337 (15) 3.2
Brendan J. McGill 33,457 (16) *
All directors and executive 724,840 (17) 18.3
officers as a group (14 persons)
----------------------------
*Less than 1% of the outstanding common stock.
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. Under regulations promulgated
pursuant to the Exchange Act, shares of common stock are deemed to be
beneficially owned by a person if he or she directly or indirectly has
or shares (i) voting power, which includes the power to vote or to
direct the voting of the shares, or (ii) investment power, which
includes the power to dispose or to direct the disposition of the
shares. Unless otherwise indicated, the named beneficial owner has sole
voting and dispositive power with respect to the shares.
9
(2) Under applicable regulations, a person is deemed to have beneficial
ownership of any shares of common stock which may be acquired within 60
days of the record date pursuant to the exercise of outstanding stock
options. Shares of common stock which are subject to stock options are
deemed to be outstanding for the purpose of computing the percentage of
outstanding common stock owned by such person or group but not deemed
outstanding for the purpose of computing the percentage of common stock
owned by any other person or group.
(3) Includes 276,072 shares held in the Company's Employee Stock Ownership
Pension Plan ("ESOP") for the account of employees who may direct the
voting of such shares.
(4) Pursuant to filings under the Exchange Act, includes 245,521 shares
which First Manhattan Company has sole voting and dispositive power and
6,666 shares which it has shared dispositive and voting power.
(5) Includes 2,658 shares held jointly with Mr. Alderfer's wife, and 4,666
shares held in the Sanford Alderfer Auction Company, Inc. Profit
Sharing Plan, which Mr. Alderfer is a trustee. Also includes 2,083
shares which may be acquired within 60 days of the record date pursuant
to vested stock options.
(6) Does not include the shares held in the ESOP as to which Messrs.
Alderfer, Clemens and Meschter serve as trustees and disclaim
beneficial ownership.
(7) Includes 1,609 shares held by Mr. Clemens' wife and 9,554 shares held
by Mr. Clemens' daughters.
(8) Includes 3,333 shares held jointly with Mr. Cummins' wife and 123,748
shares owned by the Harleysville Insurance Companies of which Mr.
Cummins is the Executive Vice President, Chief Investment Officer and
Treasurer, and as such, Mr. Cummins has the power to direct the voting
and disposition of these shares. Mr. Cummins disclaims beneficial
ownership of these 123,748 shares. Also includes 1,250 shares which may
be acquired within 60 days of the record date pursuant to vested stock
options.
(9) Includes 19,088 shares held jointly with Mr. Friesen's wife and 6,940
shares held solely by Mr. Friesen's wife.
(10) Includes 67,725 shares held by Mr. Geib under the ESOP, 1,850 shares
held by Mr. Geib's children and 20,500 shares which may be acquired
within 60 days of the record date pursuant to vested stock options.
(11) Includes 425 shares which may be acquired within 60 days of the record
date pursuant to vested stock options.
(12) Includes 12,367 shares owned by Meschter Insurance Group of which Mr.
Meschter is President, 7,640 shares held in a trust which Mr. Meschter
is trustee, 1,434 shares held by Mr. Meschter's son and 2,915 shares
which may be acquired within 60 days of the record date pursuant to
vested stock options.
(13) Includes 52,767 shares held by Mr. Molnar under the ESOP, 52,767 held
jointly with Mr. Molnar's wife and 12,833 shares which may be acquired
within 60 days of the record date pursuant to vested stock options.
(14) Includes 1,262, shares held by Mr. Rittenhouse's children and 425
shares which may be acquired within 60 days of the record date pursuant
to vested stock options.
(15) Includes 56,929 shares held by Mrs. Bickerstaff under the ESOP, 6,000
shares held by Mrs. Bickerstaff's husband and 18,833 shares which may
be acquired within 60 days of the record date pursuant to vested stock
options.
(16) Includes 1,261 shares held by Mr. McGill under the ESOP, 917 shares
held by Mr. McGill's wife and 27,083 shares which may be acquired
within 60 days of the record date pursuant to vested stock options.
(17) Includes 103,208 shares subject to outstanding stock options which are
exercisable within 60 days of the record date and 182,849 shares held
in the ESOP for the account of all executive officers and directors as
a group.
10
MANAGEMENT COMPENSATION
Summary Compensation Table
The following table sets forth a summary of certain information
concerning the compensation awarded to or paid by the Company and the Bank for
services rendered in all capacities during the past three years to the Chief
Executive Officer and the only other executive officers of the Company and its
subsidiaries whose total compensation during the year ended September 30, 2006
exceeded $100,000.
Long Term
Annual Compensation Compensation
------------------------ --------------------
Name and Stock All Other
Principal Position Year Salary Bonus(1) Grants Options Compensation(2)
------------------------------ -------- ---------- ----------- -------- --------- ----------------
Edward J. Molnar(3) 2006 $242,000 $ -- -- 5,500 $31,220
Chairman and Chief 2005 230,450 44,482 -- 7,333 31,029
Executive Officer 2004 224,500 46,440 -- 7,333 29,939
Ronald B. Geib(3) 2006 178,581 -- -- 4,000 28,185
President and Chief 2005 167,500 32,331 -- 5,333 26,975
Operating Officer 2004 160,395 33,179 -- 5,333 24,520
Marian Bickerstaff(3) 2006 128,250 -- -- 3,000 11,137
Senior Vice President 2005 121,650 23,481 -- 4,000 10,704
and Corporate Secretary 2004 118,489 24,510 -- 4,000 9,907
Brendan J. McGill 2006 129,000 -- -- 3,000 11,250
Senior Vice President 2005 120,525 23,264 -- 4,000 10,401
and Chief Financial Officer 2004 112,852 23,344 -- 4,000 9,052
---------------
(1) Bonus is determined pursuant to the Company's Profit Sharing Incentive
Plan.
(2) In fiscal 2006, represents $12,600, $10,215, $7,380 and $7,380
contributed by the Company pursuant to the ESOP to the accounts of
Messrs. Molnar and Geib, Mrs. Bickerstaff and Mr. McGill, respectively,
$6,570, $5,320, $3,757 and $3,870 contributed by the Company under the
Harleysville Savings' 401(k) Plan pursuant to the company match of
contributions to the accounts of Messrs. Molnar and Geib, Mrs.
Bickerstaff and Mr. McGill, respectively, and the payment of $12,600
and $12,600 in directors' fees to Messrs. Molnar and Geib,
respectively.
(3) Effective January 24, 2007, Mr. Molnar will retire as Chief Executive
Officer and Mr. Geib will assume the position of President and Chief
Executive Officer. Effective December 31, 2006, Mrs. Bickerstaff will
retire as an executive officer.
Director's Fees
Directors of the Company received an annual fee of $4,800, plus $650
for each regular board meeting attended during fiscal 2006. Directors of the
Company, with the exception of Chief Executive Officer Molnar and President
Geib, received $300 and the chairman of each committee received $300 for each
committee meeting attended during fiscal 2006. The chairman of the Audit
Committee received $900 and each member of the Audit Committee received $600 for
each meeting attended in fiscal 2006.
11
Stock Options
The following table sets forth certain information concerning
individual grants of stock options pursuant to the Company's stock option plans
to the named executive officers during the year ended September 30, 2006.
Potential Realizable
Value at
Individual Grants Assumed Annual Rates
-------------------------------------------------------------------------------------- of Stock Price
% of Total Appreciation
Options for Option Term(3)
Options Granted to Exercise Expiration ---------------------------
Name Granted Employees(1) Price(2) Date 5% 10%
------------------- ----------- -------------- --------- --------------- ---------------------------
Edward J. Molnar 5,500(4) 8.4% $18.00 January 1, 2016 $62,260 $157,795
Ronald B. Geib 4,000(5) 6.0 18.00 January 1, 2016 45,280 114,760
Marian Bickerstaff 3,000(4) 4.6 18.00 January 1, 2016 33,960 86,070
Brendan J. McGill 3,000(5) 4.6 18.00 January 1, 2016 33,960 86,070
---------------------
(1) Percentage of options to purchase common stock granted to all employees
during fiscal 2006
(2) The exercise price was based on the market price of the common stock on the
date of grant.
(3) Assumes compounded rates of return for the remaining life of the options
and future stock prices of $29.32 and $46.69 at compounded rates of return
of 5% and 10%, respectively.
(4) The options vest and become exercisable one year from the date of grant.
(5) The options vest and become exercisable five years from the date of grant.
The following table sets forth certain information concerning exercises
of stock options by the named executive officers during the year ended September
30, 2006 and stock options held at September 30, 2006.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
Value of
Number of Unexercised
Unexercised Options at
Shares Options at Year End Year End(1)
Acquired on Value ------------------------------ ----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------------------------- ----------- -------- ----------- ------------- ----------- -------------
Edward J. Molnar -- -- 7,333 5,500 $ -- --
Ronald B. Geib -- -- 20,500 4,000 53,754 --
Marian Bickerstaff -- -- 15,833 3,000 48,198 --
Brendan J. McGill -- -- 27,083 3,000 130,622 --
---------------------
(1) Based on an assumed market price of $16.90 per share of common stock at
September 30, 2006.
Compensation Committee Interlocks and Insider Participation
The Compensation and Human Resource Committee of the board of directors
determines executive compensation. During fiscal 2006, the members of the
committee were Messrs. Alderfer, Clemens and Meschter. No member of the
committee is a current or former officer or employee of the Company or the Bank.
The report of the committee with respect to compensation for the Chief Executive
Officer and all other executive officers is set forth below.
Report of the Compensation and Human Resource Committee
The Compensation and Human Resource Committee reviews and approves the
annual compensation of the Company's executive officers and other key management
personnel. In addition, the Human Resource Committee establishes policies and
guidelines for other benefit plans including the award of stock options.
The members of the Compensation and Human Resource Committee recognize
that the Company must attract, retain and motivate the best people to achieve
its business objectives. To do so, it must compensate its executives fairly and
competitively in the market in which it competes. The competitive market for
executives is primarily financial institutions of a similar asset size. The
principal resource used for peer group comparisons is the 2006 Compensation
Survey compiled by America's Community Bankers.
12
The Compensation and Human Resource Committee has established three
primary components for determining overall executive compensation: base salary
compensation, annual incentive compensation, and long-term incentive
compensation. Components are measured by both individual performance evaluations
and group performance.
Base Salary Compensation
The Compensation and Human Resources Committee establishes base
salaries for executives of Harleysville Savings by determining that job levels
are properly established for comparable job responsibilities. The principal
resource used for establishing appropriate job levels within the Company's
Salary Administration Program is the 2006 Compensation Survey compiled by
America's Community Bankers, a national banking trade organization, which
represents almost two thousand financial institutions throughout the United
States. Subjective annual performance evaluations are used to determine the
appropriate base salary level for each executive officer. An independent
Compensation and Human Resource Committee is responsible for the performance
evaluation of the Chief Executive Officer.
The base salary paid to the Chief Executive Officer in fiscal year 2006
was $242,000 compared to $230,450 in fiscal year 2005. Annual base salary for
the other three executive officers of the Company are shown under the Summary
Compensation Table. The increase in base salary is commensurate with the
Company's compensation objectives and the salary structure of executive
compensation is within the competitive range for the industry based upon
comparison with financial institutions of similar size.
Annual Incentive Compensation
The incentive portion of the executive compensation program is designed
to align itself with the interests of the stockholders. Prior to the beginning
of each fiscal year, the board of directors establishes formal objectives
through a Profit Sharing Incentive Plan. The plan is designed to provide cash
incentive payments to the Bank's officers and employees when the Bank exceeds
certain performance criteria including return on equity goals and meeting
certain risk management tests.
There were no bonuses paid to executive officers under the Profit
Sharing Incentive Plan in fiscal 2006.
Long-Term Incentives
The Company maintains an incentive plan under which executive officers
and other employees may receive grants of stock options to purchase common stock
of the Company. The Compensation and Human Resources Committee believes that
stock ownership is a significant incentive toward building stockholder value and
aligning the interests of employees with shareholders. The exercise price of
options granted is the market value of the common stock on the date of grant.
The value of this component of compensation increases as the common stock of the
Company appreciates in value. The specific grants for certain named executive
officers are reflected in the stock options table under Management Compensation.
Sanford L. Alderfer
Philip A. Clemens
George W. Meschter
13
Performance Graph
The following graph compares the yearly cumulative total return on the
Company's common stock over the past five years with (i) the yearly cumulative
total return on the stocks included in the Nasdaq Stock Market Index and (ii)
the yearly cumulative total return on the stocks included in the Nasdaq Banks
Index (all banks listed on the Nasdaq Stock Market). The cumulative returns are
computed assuming the reinvestment of dividends at the frequency with which
dividends were paid during the applicable years.
[GRAPH OMITTED]
Table of Cumulative Values
2001 2002 2003 2004 2005 2006
-------- -------- -------- -------- -------- --------
Harleysville Savings $ 100.00 $ 145.28 $ 186.41 $ 205.22 $ 209.97 $ 213.83
Nasdaq Market Index 100.00 115.73 176.31 187.30 213.78 225.46
Nasdaq Banks Index 100.00 240.31 299.41 353.46 388.56 438.02
14
Employment Agreements
In October, 2006, the Company and the Bank entered into an amended and
restated employment agreement with Ronald B. Geib in order to update Mr. Geib's
existing employment agreement to comply with Section 409A of the Internal
Revenue Code and the proposed regulations thereunder relating to deferred
compensation arrangements and to reflect Mr. Geib's new position as President
and Chief Executive Officer of the Company and the Bank.
The agreement provides for Mr. Geib to serve in his current position as
President and Chief Operating Officer of the Company and the Bank through
January 23, 2007 and to serve as President and Chief Executive Officer effective
January 24, 2007, at a minimum base salary of $167,500 per year. The initial
term of the agreement is five years from May 1, 2006, which term will extend
automatically on May 1st of each year to continue for a five year term unless
the board of directors of the Company, the Bank or Mr. Geib gives advance notice
not to extend the term.
The agreement is terminable with or without cause by the Company and
the Bank. Mr. Geib shall have no right to compensation or other benefits
pursuant to the agreement for any period after voluntary termination or
termination by the Company and the Bank for cause, retirement or death. If Mr.
Geib's employment is terminated due to disability, he will be entitled to a
declining percentage of his base salary for the remaining term of the agreement.
If prior to a change in control of the Company or the Bank either (i)
Mr. Geib terminates his employment because of failure of the Company and the
Bank to comply with any material provision of the agreement or (ii) the
agreement is terminated by the Company and the Bank other than for cause,
disability, retirement or death, then Mr. Geib will be entitled to a lump sum
cash severance amount equal to his base salary for the remaining term of the
agreement or, if greater, for 2.99 years, with such base salary to be discounted
to present value. If Mr. Geib's employment is terminated concurrently with or
subsequent to a change in control of the Company or the Bank, as defined, by
either (a) the Company or the Bank for other than cause, disability, retirement
or death or (b) Mr. Geib as a result of certain adverse actions by the Company
or the Bank, then Mr. Geib will be entitled to a cash severance amount equal to
three times his annual compensation. Annual compensation is defined as the
average aggregate annual compensation paid to Mr. Geib and includible in his
gross income for federal income tax purposes during the five calendar years
preceding the year in which the date of termination occurs, and such
compensation includes among other things salary, bonuses and income related to
the exercise of stock options. In addition, in any of the termination events set
forth in this paragraph, Mr. Geib will also be entitled to the continuation of
benefits similar to those he is receiving at the time of such termination for
periods specified in the agreement or until he obtains full-time employment with
another employer providing similar benefits, whichever occurs first.
The agreement also provides that in the event that any of the payments
to be made thereunder or otherwise upon termination of employment are deemed to
constitute "parachute payments" within the meaning of Section 280G of the Code,
the Company shall reimburse Mr. Geib for the 20% excise tax owed by Mr. Geib and
shall also pay Mr. Geib an additional amount such that after payment of all
federal, state and local income and employment related taxes and additional
excise tax on the reimbursement, Mr. Geib will be in the same after-tax position
he would have been in if the excise tax had not been imposed. Parachute payments
generally are payments in excess of three times the recipient's average annual
compensation from the employer includible in the recipient's gross income during
the most recent five taxable years ending before the year in which the change in
control of the employer occurs ("base amount"). Recipients of parachute payments
are subject to a 20% excise tax on the amount by which such payments exceed the
base amount, in addition to regular income taxes, and payments in excess of the
base amount are not deductible by the employer as compensation expense for
federal income tax purposes.
The Bank has entered into five-year employment agreements with Edward
J. Molnar and Marian Bickerstaff. The agreements are extended automatically each
year to continue for a five-year term. The agreements with Mr. Molnar and Mrs.
Bickerstaff provide for a current salary of $242,000 and $128,250, respectively.
The agreements with Mr. Molnar and Mrs. Bickerstaff are terminable by
the Bank for "just cause" as defined, at any time or in certain events specified
by federal regulations. The agreements also provide for severance payments and
other benefits, respectively: (i) in the event of involuntary termination of
employment in connection with any "change in control" of the Bank, as defined,
or (ii) in connection with a voluntary termination of employment where,
subsequent to
15
an acquisition of control, officers are assigned duties inconsistent with their
positions, duties, responsibilities and status immediately prior to such change
in control.
In the event of a voluntary or involuntary termination pursuant to a
change of control of the Bank, such severance payments would amount to the
aggregate of the product of an employee's average base salary over the five-year
taxable period preceding the taxable year in which the date of termination
occurs (or such lesser amount of time if the employee has not been employed by
the Bank for five years at the time of termination) multiplied by 2.99. Such
severance payment would be made in a lump sum on or before the fifth day
following the date of termination, provided, however, that if the lump sum
severance payment either alone or together with the other payments which the
employee has the right to receive would constitute an "excess parachute payment"
as defined in Section 280G of the Code, such lump sum severance payment is
required to be reduced to the largest amount as will result in no portion of the
lump sum severance payment being an "excess parachute payment."
The agreements with Mr. Molnar and Mrs. Bickerstaff also provide that
an employee may terminate his or her employment following a change in control
for good reason, as defined, which includes a failure by the Bank to comply with
any material provision of the agreement or the assignment of the employee
subsequent to a change in control of the Bank to duties inconsistent with his or
her duties prior to the change in control. In such case, the Bank is required to
pay as severance to the employee an amount equal to the product of his or her
current annual base salary multiplied by the greater of the number of years
remaining in the term of employment or the number 2.99. The agreements do not
contain any provision restricting the right to compete against the Bank upon
termination of employment.
The agreement with Mr. Molnar will terminate upon his retirement on
January 24, 2007 and the agreement with Mrs. Bickerstaff will terminate upon her
retirement as an executive officer on December 31, 2006.
Profit Sharing Incentive Plan
The Company maintains a Profit Sharing Incentive Plan ("Profit Sharing
Plan") which is designed to provide cash incentive payments to the Company's
officers and employees when the Company exceeds certain performance criteria.
All of the Company's employees participate in the Profit Sharing Plan. The
Profit Sharing Plan provides that the Company will make allocations to a bonus
pool provided three performance criteria are satisfied: (1) the Company's return
on total stockholders' equity shall exceed an annualized rate of 10.25 percent
(the "Target Return"), (2) the Company's one year gap position under the asset
liability management policy may not exceed the guidelines established by the
board of directors, and (3) the percentage of the Company's loans which are 60
days or more overdue may not exceed 1.5 percent of its total assets. If these
criteria are satisfied, a percentage of the Company's profit in excess of the
Target Return is allocated to a bonus pool. The percentage of the Company's
profit in excess of the Target Return which is allocated to the bonus pool
ranges from 90 percent of the first fifteen basis points by which the Company's
profit exceeds the Target Return to five percent of any profit greater than 1.35
percent in excess of the Target Return. Awards from the bonus pool are based on
each participant's base earnings as a percentage of the total base earnings of
all participants, and a weighing factor which recognizes that the Company's
senior management, middle management and other employees have varying levels of
responsibility for the Company's overall performance. There is a minimum bonus
of 1.92 percent of compensation for non-executive officers. There were no
bonuses paid to executive officers under the Profit Sharing Plan in the year
ended September 30, 2006. The total amount of incentive payments made to all
employees of the Bank employees (96 people) who received payments pursuant to
the Profit Sharing Plan for the year ended September 30, 2006, was $47,158.
Employee Stock Ownership Pension Plan
The board of directors of the Company and its stockholders have adopted
an Employee Stock Ownership Pension Plan ("ESOP"). The trustees of the ESOP are
Messrs. Alderfer, Clemens and Meschter. The trustees also serve as the
administrators of the ESOP. The trustees hold, invest, reinvest, manage,
administer and distribute the assets of the ESOP for the exclusive benefit of
participants, retired participants and their beneficiaries in accordance with
the terms of the ESOP and the Employee Stock Ownership Trust ("Trust")
established pursuant to the ESOP. All of the assets of the ESOP are held in the
Trust, which is managed by the trustees. The ESOP is subject to the
participation, vesting, fiduciary responsibility, reporting, and disclosure and
claims procedure requirements of ERISA. All officers and employees of the
16
Company who work 1,000 hours or more in a plan year, who have attained the age
of 21 and have completed 12 months of service may participate in the ESOP.
In general, the ESOP requires the Company to contribute to the Trust in
cash each year an amount which is not less than the amount required to enable
the Trust to discharge its current obligations. The Company may make additional
contributions in cash, shares of the common stock or other property, which shall
be valued at its fair market value, as the Company's board of directors may
determine.
Contributions of the Company in cash and other cash received by the
Trust will be applied to pay any current obligations of the Trust incurred for
the purchase of common stock, or may be applied to purchase additional shares of
common stock from current stockholders or from the Company. The investment
policy of the ESOP is to invest primarily in common stock of the Company;
however, the ESOP permits the investment of contributions to the ESOP into other
assets, including certificates of deposit and securities issued by the U.S.
government or its agencies.
The ESOP requires the Company to pay all costs of administering the
ESOP and any similar expenses of the trustees, excluding normal brokerage
charges which are included in the costs of stock purchased. All shares of common
stock which are allocated to participants' stock accounts shall be voted by the
trustees in accordance with instructions from the participants. All unallocated
shares of common stock held by the Trust or in a suspense account shall be voted
by the trustees.
Participation in the ESOP terminates as of the anniversary date
coinciding with or next following a participant's death, disability or
retirement. Upon termination of a participant's employment for any reason other
than death, disability or retirement, or upon a break in service, the
participant shall have vested rights in a portion of his or her stock and
investment accounts based upon the participant's years of credited service at
his or her date of termination. A participant is fully vested in his stock and
investment accounts after three years of plan participation.
Vested benefits under the ESOP will normally be distributed in a single
distribution as soon as possible following a participant's separation from
service. Distribution of benefits under the ESOP may be made in cash or in a
combination of shares of common stock and cash.
The Company's contributions to the ESOP are deductible by the Company
to the extent provided by the Code and the ESOP will not be subject to federal
income tax on its income and gain. A participant will not be taxed on
contributions made by the Company or earnings on such contributions until he
receives a distribution under the ESOP.
During fiscal 2006, the Company contributed $172,156 to the Trust which
was allocated to participants' accounts according to the terms of the plan. The
amounts allocated to executive officers under the ESOP in fiscal 2006 are
included in the Summary Compensation Table above.
401(k) Plan
The Company maintains the Harleysville Savings 401(k) Plan, a deferred
salary savings plan. All officers and employees working 1,000 hours or more in a
plan year, who have attained the age of 21 and have completed 12 months of
service, may participate in the 401(k) Plan on an optional basis. Under the
plan, participants may defer a portion of their salary by payroll deduction. The
Company or its subsidiaries make a matching contribution of 50% of the first 6%
of the participant's contribution. All contributions are invested via a plan
trust. The Company's matching contributions are vested at 100% after three years
of service. All contributions are invested via a plan trust at the direction of
the participant among several options, including several different mutual funds.
Benefit payments normally are made in connection with a participant's
retirement. Under current Internal Revenue Service regulations, the amount
contributed to the plan and the earnings on those contributions are not subject
to Federal income tax until they are withdrawn from the plan. The amount of the
matching contributions by the Company under the 401(k) Plan to the executive
officers in fiscal 2006 are included in the Summary Compensation Table above.
17
Indebtedness of Management
The Bank offers certain loans to its directors, executive officers and
employees. It is the belief of management that these loans do not involve more
than the normal risk of collectibility. These loans are made on substantially
the same terms as those prevailing at the time for comparable transactions with
nonaffiliated persons. Directors, executive officers and employees of the Bank
receive no discount from the market interest rate for loans made by the Bank. As
of September 30, 2006, three of the Company's directors and executive officers
had loans outstanding with a balance in excess of $60,000.
STOCKHOLDER PROPOSALS AND STOCKHOLDER
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which is scheduled to be held in January 2008, must be received at
the principal executive offices of the Company, 271 Main Street, Harleysville,
Pennsylvania 19438, Attention: Corporate Secretary, no later than August 21,
2007. If such proposal is in compliance with all of the requirements of Rule
14a-8 of the Exchange Act, it will be included in the proxy statement and set
forth on the form of proxy issued for such annual meeting of stockholders. It is
urged that any such proposals be sent certified mail, return receipt requested.
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 of the Exchange Act may be
brought before an annual meeting pursuant to the Company's Bylaws, which
provides that business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the board of directors, or
(b) otherwise properly brought before the meeting by a stockholder. For business
to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the Secretary of
the Company. To be timely a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Company not later than
ninety days prior to the anniversary date of the mailing of proxy materials by
the Company in connection with the immediately preceding annual meeting of
stockholders. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting, (b)
the name and address, as they appear on the Company's books, of the stockholder
proposing such business, (c) the class and number of shares of the Company which
are beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business. To be timely with respect to the next annual
meeting of stockholders of the Company, a stockholders notice must be received
by the Company no later than September 20, 2007.
The board of directors of the Company has adopted a process by which
stockholders may communicate directly with members of the board. Stockholders
who wish to communicate with the board may do so by sending written
communications addressed to the Board of Directors, c/o Corporate Secretary,
Harleysville Savings Financial Corporation, 271 Main Street, Harleysville,
Pennsylvania 19438.
ANNUAL REPORTS
A copy of the Company's annual report to stockholders for the year
ended September 30, 2006 accompanies this proxy statement. Such annual report is
not part of the proxy solicitation materials.
Upon receipt of a written request, the Company will furnish to any
stockholder without charge a copy of the Company's Annual Report on Form 10-K
for the year ended September 30, 2006 required to be filed with the Securities
and Exchange Commission under the Exchange Act. Such written requests should be
directed to the Corporate Secretary, Harleysville Savings Financial Corporation,
271 Main Street, Harleysville, Pennsylvania 19438. The Form 10-K is not part of
the proxy solicitation materials.
18
OTHER MATTERS
Management is not aware of any business to come before the annual
meeting other than the matters described above in this proxy statement. However,
if any other matters should properly come before the meeting, it is intended
that the proxies solicited hereby will be voted with respect to those other
matters in accordance with the judgment of the persons voting the proxies.
The cost of the solicitation of proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending the proxy
materials to the beneficial owners of the common stock. In addition to
solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
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HARLEYSVILLE SAVINGS FINANCIAL CORPORATION REVOCABLE PROXY
HARLEYSVILLE, PENNSYLVANIA
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
HARLEYSVILLE SAVINGS FINANCIAL CORPORATION FOR USE ONLY AT THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON JANUARY 24, 2007 AND AT ANY ADJOURNMENT THEREOF.
The undersigned, being a stockholder of Harleysville Savings Financial
Corporation (the "Company"), hereby appoints the Board of Directors, or any
successors in their respective positions, as proxy, with full powers of
substitution, and hereby authorizes the Board to represent and vote, as
designated below, all the shares of common stock of the Company held of record
by the undersigned on December 8, 2006 at the Annual Meeting of Stockholders to
be held at the Indian Valley Country Club, located at 650 Bergey Road, Telford,
Pennsylvania 18969, on January 24, 2007 at 9:30 a.m., local time, or any
adjournment thereof.
1. ELECTION OF DIRECTORS:
Nominees for a three year term:
Sanford L. Alderfer, Mark R. Cummins and Ronald B. Geib
FOR all nominees listed above WITHHOLD AUTHORITY (to
(except as marked to the vote for all nominees
contrary below) [_] listed above ) [_]
INSTRUCTIONS: To withhold authority to vote for any one or more individual
nominee, write the name of such nominee(s) in the space provided below:
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2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting as described in the
accompanying Proxy Statement.
If not otherwise specified, this proxy will be voted FOR the election
of the Board of Directors' nominees to the Board of Directors named in proposal
1 and otherwise at the discretion of the proxies. In their discretion, the
proxies are authorized to vote with respect to approval of the minutes of the
last meeting of stockholders, the election of any person as director if a
nominee is unable to serve or for good cause will not serve, matters incident to
the conduct of the meeting and upon such other business as may properly come
before the meeting. This proxy may be revoked at any time prior to the time it
is voted at the Annual Meeting.
The undersigned hereby acknowledges receipt
of a Notice of Annual Meeting of
Stockholders of Harleysville Savings
Financial Corporation, to be held on January
24, 2007, or any adjournment thereof, and a
Proxy Statement for the Annual Meeting,
prior to the signing of this proxy.
Date:______________________
Signature:_________________
Signature:_________________
Please sign exactly as your name(s)
appear(s) on this Proxy. When signing in a
representative capacity, please give title.
When shares are held jointly, both should
sign.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.