April 9, 1999
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 11, 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 nominee for election as
Director are in the enclosed meeting notice and proxy statement. This year
you elect a Director of Class III and ratify the appointment of independent
accountants. Please return your proxy by Friday, May 7, 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,
J. Daniel Hardy, Jr.
President/CAO
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 11, 1999, at 2:00 p.m., for
the following purposes:
(1) To elect one (1) Director of the Corporation to fill the
vacancy created by the expiration of terms of the Directors
of Class III;
(2) To ratify the appointment of McLeod & Company, independent
certified public accountants, as auditors for 1999; and
(3) 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, 1999. The number of shares
outstanding and entitled to vote is 3,722,139 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 Director of Class
III and ratify the appointment of McLeod & Company, independent certified
public accountants, as auditors for the Corporation for 1999.
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 11, 1999, at 2:00 p.m.
Voting Securities and Principal Holders Thereof. The number of shares
outstanding and entitled to vote is 3,722,139 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, 1999.
Cumulative Voting. Shareholders of the Corporation shall have no
cumulative voting rights.
Election of Directors. A Director of Class III is to be elected at the
Annual Meeting to serve until the Annual Meeting in 2002 and until their
respective successors are duly elected and qualified. A majority of shares
cast is required to approve the election of a Director. Management proposes
that the nominee listed in this Proxy Statement as Director of Class III be
elected. The nominee (Director of Class III) for whom the persons named as
Proxy Holders intend to vote as Director, unless otherwise indicated on the
form of proxy, and all Directors of Class I and II, 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.
<TABLE>
<CAPTION>
Director of Class III to be elected for a term expiring 2002
Name, Principal Director Amount of Common Stock Owned Percent
Occupation and (Age) Since Beneficially and Nature of of Class
Ownership on March 5, 1999
(A) (B)
<S> <C> <C> <C>
Dr. Douglas Covington (64) 1999 200 *
President, Radford University;
formerly President,
Winston-Salem State University
</TABLE>
<TABLE>
<CAPTION>
Directors of Class I to continue in office until 2000
Name, Principal Director Amount of Common Stock Owned Percent
Occupation and (Age) Since Beneficially and Nature of of Class
Ownership on March 5, 1999
(A)(B)
<S> <C> <C> <C>
Joan H. Munford (65) 1994 9,987 *
Owner, Advisor,
HCMF Corporation
Blacksburg, Virginia
Daniel D. Hamrick (52) 1992 12,899 *
Attorney, Daniel D. Hamrick, P.C.
Christiansburg, Virginia;
formerly Stone, Hamrick,
Harrison & Turk, Radford, Virginia
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Directors of Class II to continue in office until 2001
Name, Principal Director Amount of Common Stock Owned Percent
Occupation and (Age) Since Beneficially and Nature of of Class
Ownership on March 5, 1999
(A)(B)
<S> <C> <C> <C>
Kendall O. Clay (56) 1988 19,124 *
Attorney,
Kendall O. Clay, P.C.,
Radford, Virginia
Julian D. Hardy, Jr. (49) 1992 42,174 1.1
President/CAO,
FNB Corporation;
President/CEO, First
National Bank; formerly
EVP/CAO, the Bank
</TABLE>
Directors and Executive Officers 84,384 2.3
as a group (5 persons)
* 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 1998 Employee Stock Ownership Plan allocation.
Board of Directors and Committees of the Board. The Board of Directors
of the Corporation held 12 meetings during 1998. The Audit Committee of the
Corporation met on one occasion during the year. The Corporation has no other
standing committees. No director attended fewer than 75% of the Corporation's
Board meetings during the year. Nonmanagement Directors of the Corporation
receive $1500 compensation for their services each month.
The Corporation's Board reviews senior management's budget and
compensation projections for the ensuing year for the Bank. As part of this
process, the Board also recommends the annual compensation of the President
and Chief Executive Officer of the Corporation. In 1998, the Board recommended
an increase in Mr. Tollson's salary from $185,000 to $210,200 and an increase
in Mr. Hardy's salary from $145,000 to 168,200. A portion of this increase
offsets the deletion of the payment of director's fees to management Directors.
Factors taken into consideration by the Committee in their recommendation for
such executive compensation 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;
c. Status of criticized loans and assets;
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.
<PAGE>
Executive Officers of the Corporation. Samuel H. Tollison, Chairman and
CEO and Julian D. Hardy, Jr., President and CAO 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 $100,000 for the year ended December 31, 1998.
Summary Compensation Table
Annual Compensation
Name and Principal All Other
Position Year Salary($) Bonus($) Compensation($)(A)
Samuel H. Tollison 1998 206,306 10,000 27,116
Chairman/CEO, the 1997 177,096 60,000 39,315
Corporation 1996 164,000 60,000 46,892
Julian D. Hardy, Jr. 1998 165,801 10,000 28,130
President/CAO, the 1997 136,977 40,000 38,705
Corporation, and President 1996 125,000 40,000 46,561
and CEO, the Bank
(A) All other compensation for 1998 consists of an estimated contribution by
the Bank to the ESOP and a matching of 3% of their respective contributions to
the Bank's 401(k) plan. Beginning in 1998, Mr. Tollison and Mr. Hardy no
longer earned any directors fees. In prior years, all other compensation
consists of actual contributions to the ESOP, matching contribution to the
Bank's 401(k) plan and director fees earned.
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, 1998, there were outstanding loans
to executive officers and Directors of the Corporation of approximately
$1,432,320.
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
<PAGE>
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.
As part of Mr. Tollison's retirement from the organization, the
Corporation and Mr. Tollison mutually agreed to terminate his employment
agreement and replace it with a consulting, noncompetition and put option
agreement, effective January 1, 1999. By the terms of the five-year
agreement, Mr. Tollison will provide consulting services to the organization,
he will refrain from assisting any company in competition with the
organization, and he may offer to the Corporation for sale each month blocks
of 1000 shares or more and the Corporation will repurchase the shares at the
then market price. Should the Corporation subsequently complete an affiliation
transaction, the Corporation will reimburse Mr. Tollison for the excess in
price paid by the affiliating organizations to Corporation shareholders above
the price paid by the Corporation to Mr. Tollison for those shares repurchased
within one year before the affiliation announcement. The agreement may be
terminated by the Corporation if Mr. Tollison fails to abide by the agreement,
a bank regulator disqualifies him from service, or he is found guilty of a
crime of moral turpitude. Further, the agreement will terminate immediately
upon Mr. Tollison's death or should the Corporation and he mutually decide to
discontinue their contractual relationship. During the active term of the
agreement, Mr. Tollison will annually receive for his consulting services and
for his agreement not to compete a total sum of $100,000.
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 12, 1999.
Appointment of Auditors. McLeod & Company has served as the Bank's
auditors for 1995 and the Corporation's auditors for 1996 - 1998 and have been
appointed to serve as the Corporation's auditors for 1999. 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.
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, 1999. Any such proposal shall be subject to the
requirements of the proxy rules adopted under the Securities Exchange Act of
1934, as amended.
<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.
[Graph included in proxy sent to shareholders]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
FNB Corporation 100 148 154 165 170 214
Independent Bank Index 100 119 151 191 280 296
S&P 500 Index 100 101 139 171 228 294
</TABLE>
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 1998, 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 Taylor, Senior Vice
President/Comptroller, First National Bank, 105 Arbor Drive, P.O. Box 600,
Christiansburg, Virginia 24068-0600.
BY ORDER OF THE BOARD OF DIRECTORS
Peter A. Seitz
Secretary
Christiansburg, Virginia
April 9, 1999
FNB CORPORATION
Solicited on Behalf of the Board of Directors
JAMES L. HUTTON, DANIEL D. HAMRICK, 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 Drive, Blacksburg, Virginia,
on Tuesday, May 11, 1999, 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. This proxy will be voted for the election of the nominee 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 name below.
Class III Director
Dr. Douglas Covington
2. To vote FOR__________, AGAINST__________, or ABSTAIN__________ from
voting on the appointment of McLeod and Company, independent certified
public accountants, as auditors for the year 1999.
3. 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 election of the director identified in Item 1, FOR the
appointment of accountants in Item 2, and as the Proxy Holders see fit in any
matters that may come up in Item 3.
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
