FNB BANCSHARES, INC.
303 North Granard Street
Gaffney, South Carolina 29341
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 22, 1997
TO OUR SHAREHOLDERS:
You are cordially invited to attend the 1997 Annual Meeting
of
Shareholders (the "Annual Meeting") of FNB Bancshares, Inc. (the
"Company").
This letter serves as notice that the Annual Meeting will be held
at the
Holiday Inn Express, 100 Ellis Ferry Avenue, Gaffney, South
Carolina on
Tuesday, April 22, 1997, at 5:30 p.m., for the following
purposes:
1. To elect three members to the Board of Directors;
2. To consider a proposal to approve the Company's 1997
Stock Option
Plan;
3. To transact such other business as may properly come
before the
Annual Meeting or any adjournment thereof.
Only shareholders of record at the close of business on
March 14, 1997 are
entitled to notice of, and to vote at, the Annual Meeting and at
any
continuation or adjournment thereof. In addition to the specific
matters to be
acted upon, there also will be a report on the operations of the
Company, and
directors and officers of the Company will be present to respond
to your
questions. Whether or not you plan to attend the annual meeting,
please
complete, sign, date and return the accompanying proxy in the
enclosed postage-
paid envelope as promptly as possible.
In accordance with the South Carolina Business Corporation
Act (the "South
Carolina Law"), a list of shareholders entitled to vote at the
Annual Meeting
shall be open to the examination of any shareholder for any
purpose germane to
the Annual Meeting upon written notice during regular business
hours at the
Company's offices located at 303 North Granard Street, Gaffney,
South Carolina,
29341 beginning on the date on which notice of the meeting is
given, and the
list shall be available for inspection at the Annual Meeting by
any shareholder
that is present.
Please use this opportunity to take part in the affairs of
the Company by
voting on the business to come before this Annual Meeting. We
look forward to
seeing you at the Annual Meeting.
By Order of the Board of Directors,
V. Stephen Moss
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
Gaffney, South Carolina
March 30, 1997<PAGE>
FNB BANCSHARES, INC.
6424 U.S. HIGHWAY 98, SUITE A
GAFFNEY, SOUTH CAROLINA 39402
PROXY STATEMENT FOR ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON APRIL 22, 1997
This Proxy Statement and the accompanying Notice of Annual
Meeting and
Proxy Card are being furnished to the shareholders of FNB
Bancshares, Inc., a
South Carolina corporation (the "Company"), in connection with
the solicitation
of proxies by the Board of Directors (the "Board") of the Company
for use at
the 1997 Annual Meeting of Shareholders (the "Annual Meeting").
The Annual
Meeting will be held on Tuesday, April 22, 1997, at 5:30 p.m., at
the Holiday
Inn Express, 100 Ellis Ferry Avenue, Gaffney, South Carolina.
VOTING AND REVOCABILITY OF PROXY APPOINTMENTS
The Company has fixed March 14, 1997, as the record date
(the "Record
Date") for determining the shareholders entitled to notice of and
to vote at
the Meeting. The Company's only class of stock is its Common
Stock, par value
$.01 per share (the "Common Stock"). At the close of business on
the Record
Date, there were outstanding and entitled to vote 616,338 shares
of Common
Stock of the Company with each share being entitled to one vote.
There are no
cumulative voting rights. A majority of the outstanding shares
of Common Stock
represented at the Meeting, in person or by proxy, will
constitute a quorum.
All proxies will be voted in accordance with the
instructions contained in
the proxies. If no choice is specified, proxies will be voted
"FOR" the
election to the Board of Directors of all the nominees listed
below under
"ELECTION OF DIRECTORS," "FOR" approval of the 1997 Stock Option
Plan, and,
at the proxy holders' discretion, on any other matter that may
properly come
before the Meeting. Any shareholder may revoke a proxy given
pursuant to this
solicitation prior to the Meeting by delivering an instrument
revoking it or by
delivering a duly executed proxy bearing a later date to the
Secretary of the
Company. A shareholder may elect to attend the Meeting and vote
in person even
if he or she has a proxy outstanding.
Management of the Company is not aware of any other matter
to be presented
for action at the Meeting other than those mentioned in the
Notice of Annual
Meeting of Shareholders and referred to in this Proxy Statement.
If any other
matters come before the Meeting, it is the intention of the
persons named in
the enclosed Proxy to vote on such matters in accordance with
their judgment.
SOLICITATION
The costs of preparing, assembling and mailing the proxy
materials and of
reimbursing brokers, nominees, and fiduciaries for the
out-of-pocket and
clerical expenses of transmitting copies of the proxy materials
to the
beneficial owners of shares held of record will be borne by the
Company.
Certain officers and regular employees of the Company or its
subsidiaries,
without additional compensation, may use their personal efforts,
by telephone
or otherwise, to obtain proxies in addition to this solicitation
by mail. The
Company expects to reimburse brokers, banks, custodians and other
nominees for
their reasonable out-of-pocket expenses in handling proxy
materials for
beneficial owners of the Common Stock.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The Company's Bylaws provides that the Board of Directors
shall be divided
into three classes with each class to be as nearly equal in
number as possible.
The Bylaws also provide that the three classes of directors are
to have
staggered terms, so that the terms of only approximately
one-third of the Board
members will expire at each annual meeting of shareholders. The
current Class
I directors are Barry L. Hamrick and Harold D. Pennington, Jr.
The current
Class II directors are Richard D. Gardner, Harold D Pennington,
Sr., and
Heyward W. Porter. The current Class III directors are Haskell
D. Mallory,
Bill H. Mason, and V. Stephen Moss. The current terms of the
Class II
directors will expire at the Meeting. Each of the three current
Class II
directors has been nominated for reelection and will stand for
election at the
Meeting for a three year term. The terms of the Class III
directors will
expire at the 1998 Annual Shareholders Meeting, and the terms of
the Class I
directors will expire at the 1999 Annual Shareholders Meeting.
It is the intention of the persons named as proxies in the
accompanying
proxy to vote FOR the election of the nominees identified below
to serve for a
three-year term, expiring at the 2000 Annual Meeting of
Shareholders. If any
nominee is unable or fails to accept nomination or election
(which is not
anticipated), the persons named in the proxy as proxies, unless
specifically
instructed otherwise in the proxy, will vote for the election in
his stead of
such other person as the Company's existing Board of Directors
may recommend.
The directors shall be elected by a plurality of the votes
cast at the
Meeting. Abstentions and broker non-votes will not be considered
to be either
affirmative or negative votes.
Set forth below is certain information about the nominees,
including each
nominee's age, position with the Company, and position with First
National Bank
of the Carolinas (the "Bank"). All of the nominees are nominated
as Class II
directors and are currently serving as directors of the Company.
Set forth
below is also information about each of the Company's other
directors and each
of its executive officers. Each of the directors has been a
director of the
Company since 1995.
DR. RICHARD D. GARDNER, who is a Class II director, is a
native of
Tennessee and practices orthopaedic surgery with the Carolina
Sports Medicine
and Orthopaedic Clinic in Gaffney. A retired Army Colonel, Dr.
Gardner is a
Rotarian and member of the Gaffney Chamber of Commerce. He is
the chairman for
the South Carolina Medical Association's Medical Aspects of
Sports Committee.
THOMAS W. HALE, who is the Chief Credit Officer, has over 25
years
experience in banking. He is a graduate of the University of
Florida where he
received a Bachelors of Science in Business Administration in
1969. He is also
a 1991 graduate of American Banker's Association Stonier Graduate
School of
Banking and Bank Management Institute, Advanced Commercial
Lending Course at
the University of Buffalo. Mr. Hale began his banking career at
Florida Federal
Savings Bank, working in numerous staff and line positions,
reaching the title
of Area Vice President. He then held the position of Vice
President/Senior
Lending Officer for First National Bank of Clearwater, Florida.
Most recently
he was Vice President/ Relationship Manager with Key Bank of New
York. He is
former Chairman of Better Business Bureau, has been a Rotarian
and has held
various officer positions with numerous civic and community
organizations. He
has taught "Analyzing Financial Statements" for the American
Banker's
Association.
BARRY L. HAMRICK, who is a Class I director, is a resident
of Cherokee
County and is President of Hamrick's, Inc., a family owned
business comprised
of garment manufacturing and retail clothing stores. He is a
member of the
Cherokee County Community Foundation Board and the Renaissance
Board and is a
former member of the Limestone College Board of Trustees and the
NationsBank
Advisory Board.
JOHN W. HOBBS, who is the Chief Financial Officer, is a
native of South
Carolina. He is a graduate of the University of South Carolina
with a
Bachelors of Science in Accounting. Mr. Hobbs began his career
at the public
accounting firm of KPMG, Peat Marwick in Greenville, S.C. He
then held the
position of Vice President/Controller at Standard Savings Bank in
Columbia,
S.C. Most recently he was the Vice President/General Auditor for
First United
Bancorporation in Anderson, S.C.
HASKELL D. MALLORY, who is a Class III director, is a native
of
Spartanburg, South Carolina and has been in the manufacturing
business since
1974. In 1987, Mr. Mallory became co-owner of Weavetec, Inc., a
manufacturer
of woven textiles for home and industry. He is also co-owner of
Carolina
Machinery Sales, Inc. Mr. Mallory served six years in the U.S.
Army as a Chief
Warrant Officer and helicopter pilot.
BILL H. MASON, who is a Class III director, is a native of
Tennessee and
the founder and owner of Bill Mason Enterprises which owns and
operates a group
of McDonald's Restaurants in Cherokee County and Spartanburg
County, South
Carolina. Prior to starting his own business, Mr. Mason worked
27 years for
American Telephone and Telegraph Company. He serves as director
of the
Cherokee County Chamber of Commerce and the Boys and Girls Clubs
of Cherokee
County, is on the advisory board of Cherokee Achieve, and was
previously a
board member of the Saints Club of Limestone College.
V. STEPHEN MOSS, who is a Class III director and the
President and CEO of
the Company and the Bank, is a native of Cherokee County. Mr.
Moss began his
banking career with Southern Bank & Trust, the predecessor to
First Union
National Bank, in 1972. Before joining the Company, Mr. Moss
served as First
Union National Bank's Cherokee County Executive Officer and
Senior Lender over
the upstate community banking area. He graduated from Clemson
University with
a Bachelor's degree in Political Science, as well as from the
South Carolina
Bankers School and the School of Banking of the South at
Louisiana State
University. He has also completed the First Union National Bank
Commercial
Lending School and the First Union Consumer Academy. He has
taught the course
"Money & Banking" at Limestone College.
HAROLD D. PENNINGTON, SR., who is a Class II director, is a
native of
Blacksburg, South Carolina. He graduated from Clemson University
in 1965 with
a Bachelor of Science degree in Textile Management. He is
President and co-
owner of Weavetec, Inc., Vice President and co-owner of Carolina
Machinery
Sales, Inc., and co-owner of Lister's Building Supply, Inc. He
was a member of
the Blacksburg Housing Authority Board for approximately five
years, and served
in the South Carolina Guard for six years. He is the father of
Harold D.
Pennington, Jr.
HAROLD D. PENNINGTON, JR., who is a Class I director, is a
native of
Blacksburg, South Carolina. He graduated with honors from
Clemson University
in 1989 with a Bachelor of Science degree in Mechanical
Engineering. He is
Vice President and co-owner of Weavetec, Inc., President and
co-owner of
Cherokee Building Supply, Inc., and owner of Carolina Country
Outlet. He is
the son of Harold D. Pennington, Sr.
HEYWARD W. PORTER, who is a Class II director, was born and
raised in
Blacksburg, South Carolina. Mr. Porter is founder of Porter's
Electric Motor
Service, Inc. where he currently serves as President. He served
as an advisory
board member of Bank of Gaffney and SCN Bank (now Wachovia) for
14 years and
served as Mayor of Blacksburg, South Carolina from 1964 to 1966.
He formerly
served as an advisory board member for both the Salvation Army
and Boys Club of
Cherokee County. He is a former member of the Cherokee Sertoma
Club and is a
Shriner.
THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF
THE NOMINATED
INDIVIDUALS.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows the cash compensation paid by the
Company to the
Company's Chief Executive Officer for the year ended December 31,
1996. No
other executive officers of the Company or the Bank earned total
annual
compensation, including salary and bonus, in excess of $100,000
for the fiscal
year ended December 31, 1996.
<PAGE>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION
V. Stephen Moss, President 1996 $80,842 $2,689 (1)
and Chief Executive Officer
___________________
(1) Includes Company provided auto, country club dues and
additional life
insurance.
On March 25, 1997, the Board of Directors adopted a stock
option plan
whereby directors, executive officers and certain other key
employees of the
Company and the Bank can receive options to purchase shares of
the Company's
Common Stock, and, as described below, Mr. Moss has been granted
stock options
in accordance with the terms of his employment agreement with the
Company. See
"Employment Agreement" and "Stock Option Plan." The Board will
present the
Stock Option Plan to the shareholders for their approval at the
Annual Meeting.
EMPLOYMENT AGREEMENTS
V. Stephen Moss and the Company entered into an Employment
Agreement
pursuant to which Mr. Moss will serve as the President and Chief
Executive
Officer of the Company and the Bank. The Employment Agreement
provides for a
starting salary of $72,000 per annum, plus medical insurance
premiums until the
Bank opens for business. Thereafter, Mr. Moss will be paid a
salary of $85,000
plus his yearly medical insurance premium. Mr. Moss will be
eligible to
participate in any management incentive program of the Bank or
any long-term
equity incentive program and will be eligible for grants of stock
options and
other awards thereunder. In addition, on the first anniversary
of the opening
date of the Bank, he will be eligible to receive a cash bonus in
an amount
determined by the Board of Directors (with Mr. Moss abstaining).
The agreement
provides that the amount of the bonus will be based on such
intangible criteria
as the Board shall establish. The Board anticipates that among
the factors it
will consider will be Mr. Moss's efforts in connection with
obtaining approvals
from the OCC, the FDIC, and the Federal Reserve, and in
connection with
preparing generally for the Bank's opening. On each anniversary
of the opening
date thereafter, Mr. Moss will be eligible to receive a cash
bonus equal to 5%
of the net pre-tax income of the Bank (determined in accordance
with generally
accepted accounting principles) if the Bank achieves certain
performance levels
established by the Board of Directors from time to time. Upon
the closing of
the offering (or as soon thereafter as an appropriate stock
option plan is
adopted by the Company), Mr. Moss will be granted an option to
purchase an
amount equal to 5% of the shares sold in the offering (30,817) at
$10.00 per
share. The options will vest at the rate of one-fifth per year
for each of the
first five anniversaries of the opening date, subject to Mr.
Moss' being
employed by the Company on such date and meeting certain
performance criteria.
The options will have a term of ten years. Additionally, Mr.
Moss will
participate in the Bank's retirement, welfare and other benefit
programs and is
entitled to a life insurance policy an accident liability policy
and
reimbursement for automobile expenses, club dues, and travel and
business
expenses. The Company will maintain a term life insurance policy
on Mr. Moss
providing for death benefits in the amount of $700,000 payable to
the
Organizers and $300,000 payable to Mr. Moss' family.
The Employment Agreement provides for an initial term of
five years, which
may be extended each year for an additional year so that the
remaining term
shall continue to be five years.
If the Company terminates Mr. Moss' employment without cause
or if Mr.
Moss' employment is terminated due to a sale, merger or
dissolution of the
Company or the Bank, the Company will be obligated to continue
his salary and
bonus for the first twelve months thereafter plus one-half of his
salary and
bonus for the second twelve months thereafter. Furthermore, the
Company must
remove any restrictions on outstanding incentive awards so that
all such awards
vest immediately and the Company must continue to provide his
life insurance
and medical benefits until he reaches the age of 65.
In addition, the employment agreement provides that
following termination
of his employment with the Bank and for a period of twelve months
thereafter,
Mr. Moss may not (i) be employed in the banking business as a
director, officer
at the vice-president level or higher, or organizer or promoter
of, or provide
executive management services to, any financial institution
within Cherokee
County, (ii) solicit major customers of the Bank for the purpose
of providing
financial services, or (iii) solicit employees of the Bank for
employment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
GENERAL
The following table sets forth the number and percentage of
outstanding
shares of Common Stock beneficially owned at the Record Date by
(a) each
executive officer of the Company, (b) each director of the
Company, (c) all
executive officers and directors of the Company as a group, and
(d) each person
or entity known to the Company to own more than 5% of the
outstanding Common
Stock.
Shares Beneficially Owned
Number of
Name Shares(1) Percent(2)
Richard Gardner(3) 25,000 4.06%
Barry Hamrick(4) 25,000 4.06%
Haskell Mallory(5) 30,000 4.87%
Bill Mason(6) 20,200 3.28%
V. Stephen Moss(7) 5,000 .81%
<PAGE>
Harold Pennington, Jr.(8) 28,000 4.54%
Harold Pennington, Sr. 30,000 4.87%
Heyward Porter 15,000 2.43%
John Hobbs 200 .03%
TOTAL 178,400 28.95%
____________________
(1) Information relating to the beneficial ownership of Common
Stock is based
upon "beneficial ownership" concepts set forth in rules of
the Securities
Exchange Commission under Section 13(d) of the Securities
Exchange Act of
1934. Under these rules a person is deemed to be a
"beneficial owner" of
a security if that person has or shares "voting power,"
which includes the
power to vote or direct the voting of each security, or
"investment
power," which includes the power to dispose or to direct the
disposition
of such security. A person is also deemed to be a
beneficial owner of any
security of which that person has the right to acquire
beneficial
ownership within 60 days. Under the rules, more than one
person may be
deemed to be a beneficial owner of the same securities, and
a person may
be deemed to be a beneficial owner of securities as to which
he has no
beneficial interest. For instance, beneficial ownership
includes spouses,
minor children, and other relatives residing in the same
household, and
trusts, partnerships, corporations or deferred compensation
plans which
are affiliated with the principal.
(2) Percent is calculated by treating shares subject to options
held by the
named individual for whom the percentage is held by the
named individual
for whom the percentage is calculated which are exercisable
within the
next 60 days as if outstanding, but treating shares subject
to options
held by another stockholder as not outstanding.
(3) Owned jointly with Mr. Gardner's wife.
(4) Includes 5,000 shares for which the beneficial ownership is
attributable
to Mr. Hamrick as a result of his daughter's ownership of
5,000 shares.
(5) Includes 1,860 shares for which the beneficial ownership is
attributable
to Mr. Mallory as a result of his wife's ownership of 1,860
shares.
(6) Owned jointly with Mr. Mason's wife.
(7) Includes 750 shares for which the beneficial ownership is
attributable to
Mr. Moss as a result of his children's ownership of 750
shares.
(8) Includes 8,000 shares for which the beneficial ownership is
attributable
to Mr. Pennington as a result of his joint ownership with
his wife of
6,000 shares and his daughter's ownership of 2,000 shares.
<PAGE>
PROPOSAL NO. 2: APPROVAL OF THE 1997 STOCK OPTION
PLAN
GENERAL
The Board of Directors of the Company has established the
1997 FNB
Bancshares Stock Option Plan (the "Plan"), attached hereto as
Exhibit A. The
Plan provides that restricted stock may be awarded, and stock
options may be
granted, with respect to an aggregate of no more than 92,450
shares, subject to
adjustment upon changes in capitalization. Stock appreciation
rights may also
be granted under the Plan. The purpose of the Plan is to advance
the interest
of the Company, any subsidiaries, and its shareholders by
affording certain
persons, principally directors and key employees of the Company,
an opportunity
to acquire or increase their proprietary interests in the
Company. The
objective of the issuance of the stock options and awards of
restricted stock
is to promote the growth and profitability of the Company because
the grantee
or recipients will be provided with an additional incentive to
achieve the
Company's objectives through participation in its success and
growth and by
encouraging their continued association with or service to the
Company. The
effective date of the Plan was March 25, 1997.
The class of persons eligible to participate in the Plan
shall consist of
all persons whose participation in the Plan the Committee
described below
determines to be in the best interests of the Company, which will
include, but
not be limited to, all directors and employees, including but not
limited to
executive personnel, of the Company or any subsidiary.
Stock options may be granted either as incentive stock
options (which
qualify for certain favorable tax consequences, as described
below) or as
nonqualified stock options. Options generally may not be
transferred except by
will or by the laws of descent and distribution, and during an
optionee's
lifetime may be exercised only by the optionee (or by his or her
guardian or
legal representative, should one be appointed).
The Plan will be administered by a committee consisting of
at least two
members of the Board of Directors. The committee determines the
employees and
directors who will receive options or restricted stock and, based
on each such
person's position and current and potential contribution to the
Company or the
Bank, the amount of restricted stock or the number of shares that
will be
covered by their options. The committee also determines the
periods of time
(not exceeding ten years from the date of grant in the case of an
incentive
stock option) during which options will be exercisable and
determines whether
termination of an optionee's employment under various
circumstances would
terminate options granted under the Plan to that person. In
addition, the
committee determines the restriction period and vesting
conditions, the
consequences of any termination of employment, and the other
terms of any grant
of restricted stock. The option price per share is an amount
determined by the
Board of Directors, but will not be less than 100% of the fair
market value per
share on the date of grant for incentive stock options.
Generally, the option
price will be payable in full upon exercise. The Company and the
Bank receive
no consideration upon the granting of an option.
Payment of the option price of any stock option may be made
in cash, by
delivery of shares of Common Stock (valued at their fair market
value at the
time of exercise), or by a combination of cash and stock. In the
discretion of
the committee, options under the Plan may include a "reload
option." A reload
option, if included in the original option, would be triggered
when an optionee
paid the exercise price of all or a portion of the original
option by
delivering shares of Common Stock. In that event, the optionee
would
automatically be granted an additional option to acquire the same
number of
shares as had been delivered to pay such exercise price. The
reload option
would be subject to all of the terms and conditions of the
original option,
except that the option price per share would be equal to the fair
market value
of the Common Stock on the date the original option was
exercised, and except
that the committee could specify additional conditions or
contingencies, such
as continued employment by the Company or the holding of the
shares acquired
upon exercise of the original option for a specified period of
time.
The Board of Directors has the right at any time to
terminate or amend the
Plan, but no such action may terminate options already granted or
otherwise
affect the rights of any optionee under any outstanding option
without the
optionee's consent. Without obtaining shareholder approval
within twelve
months of the date of the proposed amendment, the Board of
Directors may not
adopt any amendment of the Plan that would (i) increase the total
number of
shares issuable pursuant to incentive stock options under the
Plan or (ii)
change or modify the class of employees eligible to receive
incentive stock
options that may participate in the Plan.
FEDERAL INCOME TAX CONSEQUENCES
There are no federal income tax consequences to the optionee
or to the
Company or the Bank on the granting of options. The federal tax
consequences
upon exercise will vary depending on whether the option is an
incentive stock
option or a nonqualified stock option.
INCENTIVE STOCK OPTIONS. When an optionee exercises an
incentive stock
option, the optionee will not at that time realize any income,
and the Company
will not be entitled to a deduction. The optionee will recognize
capital gain
or loss at the time of disposition of the shares acquired through
the exercise
of an incentive stock option if the shares have been held for at
least two
years after the option was granted and one year after it was
exercised. The
Company will not be entitled to a tax deduction if the optionee
satisfies these
holding period requirements. The net federal income tax effect
to the holder
of the incentive stock options is to defer, until the acquired
shares are sold,
taxation of any increase in the shares' value from the time of
grant of the
option to the time of its exercise, and to tax such gain, at the
time of sale,
at capital gain rates rather than at ordinary income rates.
If the holding period requirements are not met, then upon
sale of the
shares the optionee generally recognizes as ordinary income the
excess of the
fair market value of the shares at the date of exercise over the
exercise price
stated in the option agreement; any increase in the value of the
shares
subsequent to exercise is long or short-term capital gain to the
optionee
depending on the optionee's holding period for the shares.
However, if the
sale is for a price less than the value of the shares on the date
of exercise,
the optionee might recognize ordinary income only to the extent
the sales price
exceeded the option price. In either case, the Company is
entitled to a
deduction to the extent of ordinary income recognized by the
optionee.
NONQUALIFIED STOCK OPTIONS. Generally, when an optionee
exercises a
nonqualified stock option, the optionee recognizes income in the
amount of the
aggregate market price of the shares received upon exercise less
the aggregate
amount paid for those shares, and the Company may deduct as an
expense the
amount of income so recognized by the optionee. The holding
period of the
acquired shares begins upon the exercise of the option, and the
optionee's
basis in the shares is equal to the market price of the acquired
shares on the
date of exercise.
RESTRICTED STOCK. Awards of restricted stock are shares of
Common Stock
that are granted to employees or directors subject to conditions,
such as
continued service with the Company, that are established at the
time of the
award. Restricted stock will become nonforfeitable as its holder
meets the
specified conditions. If the conditions are not satisfied, all
or a portion of
the shares of restricted stock are forfeited to the Company.
Until such time
as the restrictions have lapsed, the shares are nontransferable
and
nonassignable, other than by will or the laws of descent and
distribution.
Upon a grant of restricted stock, the market value of the
stock at the
date of grant is included as a deduction from shareholders'
equity in the
Company's balance sheet and is amortized as compensation expense
on a straight-
line basis over the vesting period. The participant recognizes
taxable income
as the restrictions lapse (subject to an election to accelerate
the income
recognition), based on the fair market value of the shares on the
date of lapse
(or earlier acceleration), and the Company is entitled to a
corresponding tax
deduction.
SHAREHOLDER APPROVAL REQUIRED
The affirmative vote of the holders of a majority of the
votes entitled to
be cast at the Meeting is required for approval of the Plan.
Abstentions and
broker non-votes will not be considered to be either affirmative
or negative
votes. Because directors may receive options under the Plan, the
directors of
the Company have a personal interest in seeing the Plan approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF
THE 1997 FNB
BANCSHARES STOCK OPTION PLAN.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
The Company entered into an agreement to purchase the
Blacksburg Office
property with James L. Moss, who is V. Stephen Moss' uncle. The
Company
believes that this agreement was entered into on terms no less
favorable to the
Company than could be obtained from an unaffiliated third party.
The Company
and the Bank expect to have banking and other transactions in the
ordinary
course of business with Organizers, directors, and officers of
the Company and
the Bank and their affiliates, including members of their
families or
corporations, partnerships, or other organizations in which such
Organizers,
officers, or directors have a controlling interest, on
substantially the same
terms (including price, or interest rates and collateral) as
those prevailing
at the time for comparable transactions with unrelated parties.
Such
transactions are not expected to involve more than the normal
risk of
collectibility nor present other unfavorable features to the
Company and the
Bank. The Bank is subject to a limit on the aggregate amount it
could lend to
its and the Company's directors and officers as a group equal to
its unimpaired
capital and surplus (or, under a regulatory exemption available
to banks with
less than $100 million in deposits, twice that amount). Loans to
individual
directors and officers must also comply with the Bank's lending
policies and
statutory lending limits, and directors with a personal interest
in any loan
application will be excluded from the consideration of such loan
application.
The Company intends for all of its transactions with Organizers
or other
affiliates of the Company or the Bank to be on terms no less
favorable to the
Company than could be obtained from an unaffiliated third party
and to be
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Among other Board committees, the Company has an audit
committee and a
personnel committee. The audit committee is composed of Haskell
Mallory, Bill
Mason, and Richard Gardner. The Company's audit committee did
not meet in
1996. The audit committee has the responsibility of reviewing
the Company's
financial statements, evaluating internal accounting controls,
reviewing
reports of regulatory authorities, and determining that all
audits and
examinations required by law are performed. The committee
recommends to the
Board the appointment of the independent auditors for the next
fiscal year,
reviews and approves the auditor's audit plans, and reviews with
the
independent auditors the results of the audit and management's
response
thereto. The audit committee is responsible for overseeing the
entire audit
function and appraising the effectiveness of internal and
external audit
efforts. The audit committee reports its findings to the Board
of Directors.
The Company's personnel committee is responsible for
establishing the
compensation plans for the Company. Its duties include the
development with
management of all benefit plans for employees of the Company, the
formulation
of bonus plans, incentive compensation packages, and medical and
other benefit
plans. This committee met two times during the year ended
December 31, 1996.
The personnel committee is composed of Harold Pennington, Jr.,
Haskell Mallory,
Heyward Porter, and Steve Moss.
The Board of Directors of the Company held 28 meetings, and
the Board of
Directors of the Bank held 28 meetings, during the year ended
December 31,
1996. All of the directors of the Company and the Bank attended
at least 75%
of the aggregate of such board meetings and the meetings of each
committee on
which they served.
<PAGE>
OTHER MATTERS
The Board knows of no amendment or variation of the matters
referred to in
the Notice of the Annual Meeting and of no other business to be
brought before
the Annual Meeting. However, if any amendment, variation or
other matter is
properly brought before the Annual Meeting, it is the intention
of the persons
designated as proxies to vote in accordance with their best
judgment on such
matters. If any other matter should come before the Annual
Meeting, action on
such matter will be approved if the number of votes cast in favor
of the matter
exceeds the number opposed.
DATED:
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN
AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, POSTAGE FOR
WHICH HAS BEEN
PROVIDED. YOUR PROMPT RESPONSE WILL BE APPRECIATED.
<PAGE>
FNB BANCSHARES, INC.
303 North Granard Street
Gaffney, South Carolina 29341
PROXY SOLICITED BY BOARD OF DIRECTORS
The undersigned hereby appoints V. Stephen Moss, John Hobbs, or
any of them,
attorneys and proxies, with power of substitution, to vote all
outstanding
stock of FNB Bancshares, Inc. held of record by the undersigned
on March 14,
1997, at the Annual Meeting of Shareholders of FNB Bancshares,
Inc. to be held
at Holiday Inn Express, 100 Ellis Avenue, Gaffney, S.C. at 5:30
P.M. on April
22, 1997, or at any adjournments thereof.
The undersigned hereby directs that shares represented by this
proxy be voted
as follows:
1. ELECTION OF DIRECTORS: ______ FOR all nominees listed
below (except
as indicated otherwise)
______ WITHHOLD AUTHORITY to
vote for all
nominees listed below
Nominees: Richard D. Gardner, Harold D Pennington, Sr., and
Heyward W.
Porter
(Instruction: To withhold authority to vote for any
individual nominee,
write that nominee's name on the line provided
___________________________
2. STOCK OPTION PLAN ______ FOR approval of stock option
plan
______ AGAINST
______ ABSTAIN
3. OTHER BUSINESS: The persons named herein as attorneys
and proxies are
authorized to vote the shares
represented by this
proxy according to their best judgment
on such other
matters as may properly come before the
meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED
ABOVE. IN THE
ABSENCE OF ANY DIRECTION, THE PROXY HOLDERS WILL VOTE THIS PROXY
"FOR" PROPOSAL
1 AND "FOR" PROPOSAL 2 . IF, AT OR BEFORE THE TIME OF THE
MEETING, ANY OF THE
NOMINEES LISTED IN PROPOSAL 1 HAVE BECOME UNAVAILABLE FOR ANY
REASON, THE PROXY
HOLDERS HAVE THE DISCRETION TO VOTE FOR A SUBSTITUTE NOMINEE OR
NOMINEES.
Please date and sign exactly as name appears below. When shares
are held by
joint tenants, both should sign. When signing as attorney,
executor,
administrator, trustee or guardian, please give full title as
such. If a
corporation, please sign full corporate name by president or
other authorized <PAGE>
officer. If a partnership, please sign in partnership name by
authorized
person.
Shareholder Name # of Shares
Dated_______________________, 1997
_______________________________(SEAL)
(Signature)
_______________________________(SEAL)
(Signature if held
jointly)
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING
THE ENCLOSED
ENVELOPE.
