April 13, 1998
Dear Shareholder:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Shareholders of FNB Corporation. The meeting will be held
at 2:00 p.m., on Tuesday, May 12, at Custom Catering, Inc., in Blacksburg,
Virginia. The bank will host a reception following the business meeting. I
encourage you to take this opportunity to visit with your friends and fellow
shareholders.
Information about the business meeting and the list of nominees for election
as Directors are in the enclosed meeting notice and proxy statement. This
year, you are requested to elect Directors of Class II, increase the number of
authorized shares of the Corporation, and ratify the appointment of
independent accountants. Please return your proxy by Friday, May 8, in the
enclosed postage-paid envelope.
We hope you will be able to attend. A map to the site is printed on the back
of this proxy statement for your convenience.
Sincerely,
Samuel H. Tollison
President
Enclosures
<PAGE>
Notice of Annual Meeting of Shareholders
To Our Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
FNB Corporation (the "Corporation") will be held at Custom Catering, Inc., 902
Patrick Henry Drive, Blacksburg, Virginia, on May 12, 1998, at 2:00 p.m., for
the following purposes:
(1) To elect two (2) Directors of the Corporation to fill the
vacancies created by the expiration of terms of the Directors of
Class II;
(2) To increase the number of authorized shares of the Corporation's
common stock, par value $5.00, from 5,000,000 to 10,000,000;
(3) To ratify the appointment of McLeod & Company, independent
certified public accountants, as auditors for 1998; and
(4) To transact any other business that may properly come before the
meeting or any adjournment thereof.
The record date for determining shareholders entitled to notice of, and
to vote at, the Annual Meeting has been fixed by the Board of Directors as of
the close of business at 2:00 p.m., on March 31, 1998. The number of shares
outstanding and entitled to vote is 3,384,015 shares.
This notice and the accompanying proxy materials enclosed herewith are
sent to you by order of the Board of Directors. The Board of Directors of FNB
Corporation recommends that shareholders elect the nominated Directors of
Class II, approve the increase in the number of authorized shares of the
Corporation, and ratify the appointment of McLeod & Company, independent
certified public accountants, as auditors for the Corporation for 1998.
Peter A. Seitz, Secretary
FNB Corporation
IMPORTANT: To assure that your shares will be voted at the meeting, you are
requested to complete and sign the enclosed proxy and return it in the
postage-paid envelope provided as soon as possible. The giving of a proxy will
not affect your right to vote in person in the event you attend the meeting
and elect that right.
<PAGE>
Proxy Statement
Date, Time, and Place. The Annual Meeting of Shareholders of FNB
Corporation will be held at Custom Catering, Inc., 902 Patrick Henry Drive,
Blacksburg, Virginia, on May 12, 1998, at 2:00 p.m.
Voting Securities and Principal Holders Thereof. The number of shares
outstanding and entitled to vote is 3,384,015 shares of common stock. There
are no other outstanding classes of Corporation stock. The record date for
shareholders entitled to notice of, and to vote at, the Annual Meeting has
been fixed as of the close of business, at 2:00 p.m., on March 31, 1998.
Cumulative Voting. Shareholders of the Corporation shall have no
cumulative voting rights.
PROPOSAL 1: Election of Directors. Two Directors of Class II are to be
elected at the Annual Meeting to serve until the Annual Meeting in 2001 and
until their respective successors are duly elected and qualified. A majority
of shares cast is required to approve the election of Directors. Management
proposes that the two (2) nominees listed in this Proxy Statement as Directors
of Class II be elected. The nominees (Directors of Class II) for whom the
persons named as Proxy Holders intend to vote as Directors, unless otherwise
indicated on the form of proxy, and all Directors of Class I and III, and
certain information with regard to their ownership of the common stock of the
Corporation is set forth below. The dates of service include years serving on
the Board of First National Bank (the "Bank"), the Corporation's only
subsidiary. Principal occupations of the members of the Board include
associations during the past five years.
Directors of Class II to be elected for a term expiring 2001
Amount of Common Stock Owned
Name, Principal Director Beneficially and Nature of Percent
Occupation and (Age) Since Ownership on March 5, 1998 of Class
(A) (B)
Kendall O. Clay (55) 1988 21,658 *
Attorney,
Kendall O. Clay, P.C.
Julian D. Hardy, Jr. (48) 1992 36,815 1.1
Executive Vice President,
the Corporation, and
President and CEO, the Bank;
formerly EVP/CAO, the Bank
Directors of Class III to continue in office until 1999
Amount of Common Stock Owned
Name, Principal Director Beneficially and Nature of Percent
Occupation and (Age) Since Ownership on March 5, 1998 of Class
(A) (B)
Samuel H. Tollison (65) 1971 137,873 4.1
President, CEO and Chairman,
the Corporation and;
formerly President and
CEO, the Bank
<PAGE>
Directors of Class I to continue in office until 2000
Amount of Common Stock Owned
Name, Principal Director Beneficially and Nature of Percent
Occupation and (Age) Since Ownership on March 5, 1998 of Class
(A) (B)
Joan H. Munford (64) 1994 4,790 *
Owner, Advisor,
HCMF Corporation
Blacksburg, Virginia
Daniel D. Hamrick (51) 1992 2,368 *
Attorney,
Daniel D. Hamrick, P.C.;
formerly, Attorney, Stone,
Hamrick, Harrison & Turk
Directors and Executive
Officers as a group
(6 persons) 230,090 6.9
* Less than one percent.
(A) Includes shares that may be deemed beneficially owned due to joint
ownership, voting power, or investment power; including shares owned by
or held for the benefit of a Board member's spouse or another immediate
family member residing in the household of the Board member, which may
be deemed beneficially owned.
(B) Includes estimated 1997 Employee Stock Ownership Plan allocation.
Board of Directors and Committees of the Board. The Board of Directors
of the Corporation held eleven meetings during 1998. The Corporation has no
standing committees. Instead, selected Directors have served on ad hoc
committees dealing with issues concerning Board succession, executive
management compensation, shareholder relations, growth opportunities, and new
products and services. No director attended fewer than 75% of the
Corporation's Board meetings during the year.
Effective January 1, 1998, outside Directors of the Corporation receive
$1500 compensation each month. Prior to that date, Directors of the
Corporation did not receive any compensation for service on the Corporation
Board, but received compensation for service on the Bank's Board. Bank Board
compensation included a monthly retainer of $500 as well as $300 and $150,
respectively, for attendance at each Board and Board committee meeting. The
Chairman received a monthly retainer of $1,000 as well as $375 and $150,
respectively, for attendance at each Board and Board committee meeting.
The Corporation's Board reviews senior management's budget and
compensation projections for the ensuing year for the Corporation. As part of
this process, the Board also recommends the annual compensation (including a
performance bonus) of the President and Chief Executive Officer and Executive
Vice President of the Corporation. Factors taken into consideration by the
Board in establishing executive compensation (including a performance bonus)
were:
a. Review of peer executive compensation as presented in a report
prepared by the Virginia Bankers Association;
b. Net earnings of the Corporation during the prior year;
<PAGE>
c. Status of criticized loans and assets during the prior year;
d. Overall performance of the Corporation during the prior year.
As further evaluation of performance, qualitative factors considered
include the quality of the strategic plan, organization and management
development progress, and civic involvement.
The Board recommended an increase in Mr. Tollson's salary from $164,000
to $185,000 and Mr. Hardy's salary from $125,000 to $145,000, effective June
1, 1997. The Board also awarded a bonus during 1997 to Mr. Tollison of $60,000
and $40,000 to Mr. Hardy based on prior- year performance. These are the same
amounts awarded to them in 1996.
In reaching a conclusion to award the salary increase and match the
prior-year bonus, the Board evaluated the Corporation's year-to-year
performance, peer performance ratios published by Sheshunoff Information
Services, and salary and bonus peer comparisons as compiled by the Virginia
Banker's Association and SNL Securities L.P. Peer Group Analysis.
In particular, the Corporation's performance during 1996 improved over
1995's performance in net earnings, return on assets, return on equity,
efficiency ratio, and the ratio of nonperforming assets while the rate of
deposit and loan growth slowed. Furthermore, the Corporation continued to
exceed the performance of a majority of its peers on return on assets, return
on equity, efficiency ratio, deposit growth, and ratio of nonperforming
assets.
Executive Officers of the Corporation. Samuel H. Tollison, President
and CEO; Julian D. Hardy, Jr., Executive Vice President; and Perry D. Taylor,
Chief Financial Officer, have been named as Executive Officers of the
Corporation. These officers serve at the pleasure of the Corporation's Board.
They have served the Bank in comparable capacities over the past five years.
Executive Compensation. The following table provides information
concerning those officers of the Corporation and Bank whose compensation
exceeded $100,000 for the year ended December 31, 1997.
Summary Compensation Table
Annual Compensation
Name and Principal All Other
Position Year Salary($) Bonus($) Compensation($)(A)
Samuel H. Tollison 1997 177,096 60,000 34,853
President, CEO, and 1996 164,000 60,000 46,892
Chairman, the Corporation 1995 158,441 50,000 38,297
Julian D. Hardy, Jr. 1997 136,977 40,000 34,376
Executive Vice President, the 1996 125,000 40,000 46,561
Corporation, and President 1995 109,301 30,000 39,251
and CEO, the Bank
(A) All other compensation for 1997 consists of an estimated contribution by
the Bank to the ESOP for Mr. Tollison and for Mr. Hardy of $20,565 and $20,388
respectively and a matching of their respective contributions to the Bank's
401(k) plan in the amounts of $1,388 and $1,088 respectively. Mr. Tollison
and Mr. Hardy each earned $12,900 in Bank directors fees. In prior years, all
other compensation consists of actual contributions to the ESOP and director
fees earned.
<PAGE>
Transactions with Management. Directors and officers of the Bank and
the Corporation, and persons with whom they are associated, have had, and
expect to have in the future, banking transactions with the Bank and the
Corporation in the ordinary course of their businesses. In the opinion of
management of the Bank and the Corporation, all such loans and commitments for
loans were made on substantially the same terms, including interest rates,
collateral, and repayment terms, as those prevailing at the same time for
comparable transactions with other persons; were made in the ordinary course
of business; and do not involve more than a normal risk of collection or
present unfavorable features. As of December 31, 1997, there were outstanding
loans (or commitments to lend) to executive officers and Directors of the
Corporation of approximately $1,760,000.
The Corporation entered into an employment agreement with Messrs.
Tollison and Hardy (the "Senior Executives") during 1997. The agreements for
the Senior Executives provide for employment with the Corporation for a period
of three years. The term of the employment agreement renews each year for an
additional period of one year (for a maximum of three years). The Senior
Executives' salary and benefits are established by the Board from time to
time.
The agreement also provides for certain severance benefits in the event
of a "change in control" of the Corporation followed by termination of
employment within 36 months after the change in control. In such event, the
Senior Executives would be entitled to receive the equivalent of 36 months of
salary and benefits, calculated as of the time of change in control, whether
or not their employment is terminated by the new organization. In addition,
the Senior Executives are entitled to an additional $100,000 immediate
payment. Should the Senior Executive accept employment with a banking
institution located within 50 miles of Christiansburg, however, all salary and
benefits under the employment agreement shall be reduced by the value of those
salary and benefits received from the new employer.
During 1997, the Bank also executed with Mr. Taylor a severance
agreement which entitles him to certain benefits in the event of a change of
control. This agreement provides that in the event of the termination of
employment within 12 months of a change in control, Mr. Taylor could elect to
receive the equivalent of twelve month's salary and benefits, calculated as of
the time of the change in control. Should Mr. Taylor accept employment with a
banking institution located within 50 miles of Christiansburg, however, all
salary and benefits under the employment agreement shall be reduced by the
value of those salary and benefits received from the new employer.
PROPOSAL 2: Increase in Number of Authorized Shares. On February 11,
1998, the Board unanimously approved and recommended that the shareholders
consider and approve an amendment to Article III of the Corporation's Articles
of Incorporation (the "Articles") that would increase the number of authorized
shares of the Corporation's Common Stock par value $5.00 from 5,000,000 shares
to 10,000,000 shares (the "Common Stock"). To be adopted, this proposal
requires the affirmative vote of the holders of more than two-thirds of all
outstanding shares of Common Stock of the Corporation entitled to vote at the
meeting.
As of March 5, 1998, there were 3,384,015 shares of Common Stock
outstanding. There are no other shares issued but not outstanding. This
leaves a balance of 1,615,985 shares available for future uses.
The Board considers the proposed increase in the number of authorized
shares desirable because it would give the Board the necessary flexibility to
issue Common Stock in connection with stock dividends and splits,
acquisitions, employee benefit plans, and other general corporate purposes
without the expense and delay incidental to obtaining shareholder approval of
<PAGE>
an amendment to the Articles by special called meeting of the shareholders,
except as may be required for a particular issuance by applicable law or by
the rules of any stock exchange on which the Corporation's securities may be
then listed. The shareholders do not have preemptive rights with respect to
the issuance of any additional shares of Common Stock, and the shares of
Common Stock authorized pursuant to this proposal would likewise contain no
preemptive rights. The Corporation has no current plans, understandings or
agreements regarding stock dividends and splits, acquisitions, and employee
benefit plans that would cause the Corporation to issue any of the additional
shares of Common Stock authorized by this proposal.
Dilutive Effect of the Issuance of Additional Shares. The authorization
of additional shares of Common Stock pursuant to this proposal will have no
dilutive effect upon the proportionate voting power of the present
shareholders of the Corporation. However, to the extent that shares are
subsequently issued to other persons other than the present shareholders
and/or in proportions other than the proportion that presently exists, such
issuance could have a substantial dilutive effect on present shareholders.
The Board believes, however, that the proposed amendment to Article III
of the Articles will provide several long-term benefits to the Corporation and
its shareholders, including the flexibility to pursue acquisitions in exchange
for Common Stock of the Corporation. While the Corporation has no such plans,
proposals, understandings or agreements for any such acquisition, the issuance
of additional shares of Common Stock for an acquisition may have a dilutive
effect on earnings per share and book value per share, as well as a dilutive
effect on the voting power of existing shareholders. The Corporation would
expect that any such dilutive effect on earnings per share and/or book value
per share would be relatively short-term in duration.
Anti-Takeover Effect. The issuance of additional shares of Common Stock
by the Company also may potentially have an anti-takeover effect by making it
more difficult to obtain shareholder approval of various actions, such as a
merger. The proposed increase in the number of authorized shares of Common
Stock could enable the Board of Directors to render more difficult an attempt
by another person or entity to obtain control of the Corporation, though the
Board has no present intention of issuing additional shares for such purposes
and has no present knowledge of any such takeover efforts.
PROPOSAL 3: Appointment of Auditors. McLeod & Company has served as
the Bank's auditors for 1995 and the Corporation's auditors for 1996 and 1997
and have been appointed to serve as the Corporation's auditors for 1998. The
appointment of the auditors must be ratified by a majority of the votes cast
by the stockholders of the Corporation at the Annual Meeting of Shareholders.
A representative of McLeod & Company is anticipated to be present at the
Annual Meeting of Shareholders. This representative will be prepared to
answer any appropriate questions and, while not anticipated, will have the
opportunity to make a statement, if he or she so chooses.
Proxy. The accompanying proxy is solicited on behalf of the Board of
Directors of the Corporation with related costs to be borne by the
Corporation. A proxy may be revoked at any time before the stock to which it
relates is voted, either by written notice (which may be in the form of a
substitute proxy delivered to the Secretary of the Meeting) or by attending
the Meeting and voting in person.
Principal Security Holders. The Corporation knows of no person or group
acting in concert that beneficially owned more than five percent of the
outstanding shares of the Corporation's common stock as of March 5, 1998.
<PAGE>
Performance Graph. The following graph compares the cumulative total
return of the Corporation's common stock over a five-year period to the
returns of the Standard & Poor's 500 stock index and to the returns of an
Independent Peer Bank index. For periods prior to the Reorganization, the
graph represents the performance of the Bank's common stock.
[Following is the performance data presented in tabular form. The proxy
statement as sent to shareholders contains the information in both tabular and
graphical form.]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
FNB Corporation 100 134 198 206 221 228
Independent Bank Index 100 125 153 208 248 358
S&P 500 Index 100 110 111 153 189 251
</TABLE>
<PAGE>
Shareholder Proposals. In order to be eligible for inclusion in the
Corporation's proxy materials for next year's Annual Meeting of Shareholders,
any shareholder proposal to take action at such meeting must be received at
the Corporation's main office, at 105 Arbor Drive, Christiansburg, Virginia,
no later than December 11, 1998. Any such proposal shall be subject to the
requirements of the proxy rules adopted under the Securities Exchange Act of
1934, as amended.
Other Matters. The Board of Directors is not aware of any business to
come before the Meeting other than those matters described above. However, if
any other matters should properly come before the Meeting, it is intended that
proxies in the accompanying form will be voted in respect thereof, in
accordance with the judgment of the person or persons voting the proxies.
IMPORTANT: A copy of the Corporation's Annual Report on Form 10-K, including
the Financial Statements for the year ended 1997, required to be filed with
the Securities Exchange Commission in Washington, D.C., and related schedules
thereto, shall be provided by the Corporation without charge to each
shareholder upon his written request to Perry D. Taylor, Chief Financial
Officer, FNB Corporation, 105 Arbor Drive, P.O. Box 600, Christiansburg,
Virginia 24068.
BY ORDER OF THE BOARD OF DIRECTORS
Peter A. Seitz
Secretary
Christiansburg, Virginia
April 13, 1998
FNB CORPORATION
Solicited on Behalf of the Board of Directors
JAMES L. HUTTON, NELSON J. WIMMER, and _______________________________
or any of them (the "Proxy Holders"), with power of substitution to each,
are hereby authorized to represent the undersigned and vote all shares of FNB
Corporation (the "Corporation") standing in the name of the undersigned at
the Annual Meeting of Shareholders of the Corporation to be held at Custom
Catering, Inc., 902 Patrick Henry Dr., Blacksburg, Virginia, on Tuesday,
May 12, 1997, at 2:00 p.m., or any adjournment thereof, on each of the
following matters. With respect to any adjournment recommended by management
for the purpose of soliciting additional votes on a matter, only proxies
indicating a vote in favor of that matter will be considered a vote in favor
of such adjournment.
1. To vote FOR______________, AGAINST______________, or ABSTAIN___________
from increasing the number of authorized shares of the Corporation's
common stock, par value $5.00, from 5,000,000 to 10,000,000.
2. This proxy will be voted for the election of the nominees to the
Board of Directors of the Corporation listed below, unless the word
"no" is inserted at the end of this sentence.________________.
You may withhold authority to vote for any nominee by lining through
or otherwise striking out his or her name below.
Class II Directors
Kendall O. Clay
Julian D. Hardy, Jr.
3. To vote FOR__________, AGAINST__________, or ABSTAIN__________ from
voting on the appointment of McLeod & Company, independent certified
public accountants, as auditors for the year 1998.
4. The transaction of any other business which may properly come before
the Meeting. Management at present knows of no other business to be
presented at the Meeting.
This proxy, when properly executed, will be voted in the manner
directed by the undersigned shareholder. If no direction is made,
this proxy will be voted FOR the increase in the number of authorized
shares of the Corporation in Item 1, FOR the election of the
directors identified in Item 2, FOR the appointment of accountants in
Item 3, and as the Proxy Holders see fit in any matters that may come
up in Item 4.
When signing as attorney, executor, administrator, trustee, or
guardian, please give full title. If more than one fiduciary, all
should sign. All joint owners MUST sign.
Date:_________________________________
___________________________________ _________________________________
Signature Title, if any Signature, if held jointly
PLEASE MARK, DATE, SIGN AND PROMPTLY RETURN
