March 14, 1997
Dear Stockholder:
You are cordially invited to attend the first Annual Meeting of
Stockholders of Fidelity Bankshares, Inc. (the "Company"). The
Annual Meeting will be held at the Omni Hotel, 1601 Belvedere
Road, West Palm Beach, Florida 33406 at 10:00 a.m., (local time)
on April 15, 1997.
The enclosed Notice of Annual Meeting and Proxy Statement
describe the formal business to be transacted.
The Annual Meeting is being held so that stockholders will be
given an opportunity to elect two directors and to ratify the
appointment of Deloitte & Touche LLP as auditors for the
Company's 1997 fiscal year.
The Board of Directors of the Company has determined that the
matters to be considered at the Annual Meeting are in the best
interest of the Company and its stockholders. For the reasons
set forth in the proxy statement, the Board of Directors
unanimously recommends a vote "FOR" each matter to be considered.
On behalf of the Board of Directors, we urge you to sign, date
and return the enclosed proxy card as soon as possible even if
you currently plan to attend the Annual Meeting. Your vote is
important, regardless of the number of shares that you own.
Voting by proxy will not prevent you from voting in person, but
will assure that your vote is counted if you are unable to attend
the meeting.
Sincerely,
Vince A. Elhilow
President and Chief Executive Officer
<PAGE>
Fidelity Bankshares, Inc.
218 Datura Street
West Palm Beach, Florida 33401
(561) 659-9900
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 15, 1997
Notice is hereby given that the Annual Meeting of Fidelity
Bankshares, Inc. (the "Company") will be held at the Omni Hotel,
1601 Belvedere Road, West Palm Beach, Florida 33406 on April 15,
1997 at 10:00 a.m., local time.
A Proxy Card and a Proxy Statement for the Annual Meeting
are enclosed.
The Annual Meeting is for the purpose of considering and
acting upon:
1. The election of two directors of the Company;
2. The ratification of the appointment of Deloitte &
Touche LLP as auditors for the Company for the fiscal
year ended December 31, 1997; and
such other matters as may properly come before the Annual
Meeting, or any adjournments thereof. The Board of Directors is
not aware of any other business to come before the Annual
Meeting.
Any action may be taken on the foregoing proposals at the
Annual Meeting on the date specified above, or on any date or
dates to which by original or later adjournment the Annual
Meeting may be adjourned. Stockholders of record at the close of
business on February 28, 1997 are the stockholders entitled to
vote at the Annual Meeting, and any adjournments thereof.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE
ANNUAL MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED AT
ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY
FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR
A DULY EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER
PRESENT AT THE ANNUAL MEETING MAY REVOKE HIS OR HER PROXY AND
VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL MEETING.
HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED
IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER IN ORDER TO VOTE PERSONALLY AT THE ANNUAL
MEETING.
By Order of the Board of Directors
Patricia C. Clager
Secretary
West Palm Beach, Florida
March 14, 1997
- -----------------------------------------------------------------
IMPORTANT: A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED
STATES.
- -----------------------------------------------------------------
<PAGE>
PROXY STATEMENT
of
FIDELITY BANKSHARES, INC.
218 Datura Street
West Palm Beach, Florida 33401
(561) 659-9900
- -----------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
April 15, 1997
- -----------------------------------------------------------------
This Proxy Statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of
Fidelity Bankshares, Inc. (the "Company") to be used at the
Annual Meeting of Stockholders of the Company (the "Meeting"),
which will be held at the Omni Hotel, 1601 Belvedere Road, West
Palm Beach, Florida 33406 on April 15, 1997 at 10:00 a.m., local
time, and all adjournments thereof. The accompanying Notice of
Annual Meeting of Stockholders and this Proxy Statement are first
being mailed to stockholders on or about March 14, 1997.
- -----------------------------------------------------------------
Recent Event
- -----------------------------------------------------------------
On January 29, 1997, the Company's wholly-owned subsidiary,
Fidelity Federal Savings Bank of Florida (the "Bank") completed
its reorganization into the two-tier form of mutual holding
company ownership. Pursuant to the reorganization, the Company
is the majority owned subsidiary of Fidelity Bankshares, MHC, the
Company's mutual holding company parent. Each share of the
Bank's common stock was automatically converted into one share of
Fidelity Bankshares, Inc. common stock. The Company's common
stock continues to be listed on the Nasdaq National Market under
the symbol "FFFL".
- -----------------------------------------------------------------
Revocation of Proxies
- -----------------------------------------------------------------
Stockholders who execute proxies in the form solicited
hereby retain the right to revoke them in the manner described
below. Unless so revoked, the shares represented by such proxies
will be voted at the Meeting and all adjournments thereof.
Proxies solicited on behalf of the Board of Directors of the
Company will be voted in accordance with the directions given
thereon. Where no instructions are indicated, proxies will be
voted "FOR" the proposals set forth in this Proxy Statement for
consideration at the Meeting.
Proxies may be revoked by sending written notice of
revocation to the Secretary of the Company, Patricia C. Clager,
at the address of the Company shown above. The presence at the
Meeting of any stockholder who had given a proxy shall not revoke
such proxy unless the stockholder delivers his or her ballot in
person at the Meeting or delivers a written revocation to the
Secretary of the Company prior to the voting of such proxy.
- -----------------------------------------------------------------
Voting Securities and Principal Holders Thereof
- -----------------------------------------------------------------
Holders of record of the Company's common stock, par value
$.10 per share (the "Common Stock"), as of the close of business
on February 28, 1997 (the "Record Date") are entitled to one vote
for each share then held. As of the Record Date, the Company had
6,760,249 shares of Common Stock issued and outstanding. The
presence in person or by proxy of a majority of the outstanding
shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Meeting.
<PAGE>
Persons and groups who beneficially own in excess of five
percent of the Common Stock are required to file certain reports
with the Securities and Exchange Commission ("SEC") regarding
such ownership pursuant to the Securities Exchange Act of 1934
(the "Exchange Act"). The following table sets forth, as of the
Record Date, the shares of Common Stock beneficially owned by
named executive officers individually, by executive officers and
directors as a group and by each person who was the beneficial
owner of more than five percent of the Company's outstanding
shares of Common Stock on the Record Date. The shares of Common
Stock beneficially owned by directors individually are listed
under Proposal I - Election of Directors.
<TABLE>
<CAPTION>
Name Owned and Nature Percent of Shares
and Address of of Beneficial of Common Stock
Beneficial Owner Ownership Outstanding
- ---------------- ---------------- -----------------
<S> <C> <C>
Fidelity Bankshares, MHC 3,542,000 52.39%
218 Datura Street
West Palm Beach, FL 33401
Named Executive Officers: (1)
Vince A. Elhilow(2) 115,630 1.71%
President and Chief
Executive Officer
Richard D. Aldred(3) 30,121 .45%
Executive Vice President
-- Finance
J. Robert McDonald(4) 46,782 .69%
Executive Vice President
-- Appraisal
Joseph C. Bova(5) 25,430 .38%
Executive Vice President
-- Lending Operations
Robert L. Fugate(6) 33,848 .50%
Executive Vice president
-- Banking Operations
Christopher C. Cook(7) 17,013 .25%
Executive Vice president
and Corporate Counsel
All named executive officers 456,408 6.75%
and directors as a group
(10 persons)(8)
- --------------------
(1) The Company's executive officers and directors are also
executive officers and directors of Fidelity Bankshares,
M.H.C. (the "Mutual Holding Company") and of the Bank.
(2) Includes 7,590 shares of Common Stock subject to options
pursuant to the Stock Option Plan that may be exercised
within 60 days of the Record Date and 28,810 shares held by
the Management Performance Plan. Includes 21,120 shares
awarded to the executive under the Employee Recognition Plan
which shares vest ratably over a three year period from the
date of the award. Includes 1,572 shares allocated under
the Bank's ESOP. Includes 10,470 shares held under the
Savings Plan for Employees for the benefit of Mr. Elhilow.
(3) Includes 4,862 shares of Common Stock subject to options
pursuant to the Stock Option Plan that may be exercised
within 60 days of the Record Date and 7,295 shares held by
the Management Performance Plan. Includes 8,195 shares
awarded to the executive under the Employee Recognition Plan
which shares vest ratably over a three year period from the
date of the award. Includes 1,500 shares allocated under
the Bank's ESOP. Includes 2,965 shares held under the
Savings Plan for Employees for the benefit of Mr. Aldred.
(4) Includes 3,184 shares of Common Stock subject to options
pursuant to the Stock Option Plan that may be exercised
within 60 days of the Record Date and 18,243 shares held by
the Management Performance Plan. Includes 9,515 shares
awarded to the executive under the Employee Recognition Plan
which shares vest ratably over a three year period from the
date of the award. Includes 1,384 shares allocated under
the Bank's ESOP. Includes 7,179 shares held under the
Savings Plan for Employees for the benefit of Mr. McDonald.
(5) Includes 7,293 shares of Common Stock subject to options
pursuant to the Stock Option Plan that may be exercised
within 60 days of the Record Date and 7,819 shares held by
the Management Performance Plan. Includes 8,195 shares
awarded to the executive under the Employee Recognition Plan
which shares vest ratably over a three year period from the
date of the award. Includes 1,455 shares allocated under
the Bank's ESOP. Includes 3,401 shares held under the
Savings Plan for Employees for the benefit of Mr. Bova.
(6) Includes 2,431 shares of Common Stock subject to options
pursuant to the Stock Option Plan that may be exercised
within 60 days of the Record Date and 7,819 shares held by
the Management Performance Plan. Includes 8,195 shares
awarded to the executive under the Employee Recognition Plan
which shares vest ratably over a three year period from the
date of the award. Includes 1,346 shares allocated under
the Bank's ESOP. Includes 7,397 shares held under the
Savings Plan for Employees for the benefit of Mr. Fugate.
(7) Includes 11,380 shares subject to options that may be
exercised within 60 days of the Record Date granted pursuant
to the Directors' Plan (as defined below) and 4,510 shares
awarded subject to restrictions, pursuant to the Directors'
Recognition Plan (as defined below).
(8) Unless otherwise indicated, includes shares held directly by
the individuals as well as by spouses, in trust, and other
indirect forms of ownership over which shares the
individuals effectively exercise sole or shared voting and
investment power. Includes 45,540 shares of Common Stock
which outside directors of the Company have the right to
acquire within 60 days of the Record Date pursuant to the
exercise of stock options granted under the Bank's Stock
Option Plan for Outside Directors (the "Directors Plan").
Includes 34,980 shares awarded, subject to restrictions,
pursuant to the Bank's Recognition and Retention Plan for
Outside Directors (the "Directors' Recognition Plan") which
shares vest ratably over a three-year period commencing one
year from the date of award.
</TABLE>
- -----------------------------------------------------------------
PROPOSAL I-ELECTION OF DIRECTORS
- -----------------------------------------------------------------
The Company's Board of Directors is composed of six members.
The Company's bylaws provide that approximately one-third of the
directors are to be elected annually. Directors of the Company
are generally elected to serve for a three year period or until
their respective successors shall have been elected and shall
qualify. The terms of the Board of Directors are classified so
that approximately one-third of the directors are up for election
in any one year. Two directors will be elected at the Meeting to
serve for a three-year period and until their respective
successors have been elected and qualified. The Board of
Directors has nominated to serve as directors Vince A. Elhilow
and Donald E. Warren, M.D., each of whom is currently a member of
the Board of Directors.
The table below sets forth certain information regarding the
composition of the Company's Board of Directors, including the
terms of office of Board members. Historical information relates
to the Bank and its mutual predecessor. It is intended that the
proxies solicited on behalf of the Board of Directors (other than
proxies in which the vote is withheld as to one or more nominees)
will be voted at the Meeting for the election of the nominees
identified below. If any nominee is unable to serve, the shares
represented by all such proxies will be voted for the election of
such substitute as the Board of Directors may recommend. At this
time, the Board of Directors knows of no reason why any of the
nominees might be unable to serve, if elected. Except as
indicated herein, there are no arrangements or understandings
between any nominee and any other person pursuant to which such
nominee was selected.
PAGE
<PAGE>
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Positions Held Director Current Term Owned on the Percent
Name Age with the Bank Since(1) To Expire Record Date Of Class
- ------------------------------------------------------------------------------------------------
NOMINEES
<S> <C> <C> <C> <C> <C> <C>
Vince A. Elhilow 57 President and Chief 1984 1997 115,630(2) 1.71%
Executive Officer
Donald E. Warren, 69 Director 1979 1997 29,259(3) *
MD
DIRECTORS CONTINUING IN OFFICE
F. Ted Brown, Jr. 68 Director 1990 1998 38,975(4) *
Christopher H. Book 53 Director 1993 1998 17,013(5) *
Joseph B. Shearouse, 73 Chairman of the Board 1961 1999 84,270 1.25%
Jr.
Keith D. Beaty 47 Director 1992 1999 35,080(6) *
- -----------------------------
</TABLE>
PAGE
<PAGE>
Less than 1%.
(1) Reflects initial appointment to the Board of Directors of
the Bank's mutual predecessor.
(2) Includes 21,120 shares awarded, subject to restrictions,
pursuant to the Employee Recognition Plan and 10,470 shares
held in the Bank's Savings Plan for Employees for the
benefit of Mr. Elhilow. Includes 1,572 shares held under
the Bank's ESOP. Includes 28,810 shares held under the
Bank's Management Performance Plan for Mr. Elhilow.
Includes 7,590 shares subject to options that may be
exercised within 60 days of Record Date.
(3) Includes 15,180 shares subject to options that may be
exercised within 60 days of the Record Date granted pursuant
to the Directors' Plan and 9,130 shares awarded, subject to
restrictions, pursuant to the Directors' Recognition Plan.
(4) Includes 15,180 shares subject to options that may be
exercised within 60 days of the Record Date granted pursuant
to the Directors' Plan and 7,700 shares awarded, subject to
restrictions, pursuant to the Directors' Recognition Plan.
(5) Includes 11,380 shares subject to options that may be
exercised within 60 days of the Record Date granted pursuant
to the Directors' Plan and 4,510 shares awarded, subject to
restrictions, pursuant to the Directors' Recognition Plan.
(6) Includes 15,180 shares subject to options that may be
exercised within 60 days of the Record Date granted pursuant
to the Directors' Plan and 4,510 shares awarded, subject to
restrictions, pursuant to the Directors' Recognition Plan.
The principal occupation during the past five years of each
director of the Company is set forth below. All directors and
executive officers have held their present positions for five
years unless otherwise stated.
Vince A. Elhilow has been President of the Bank since 1987
and Chief Executive Officer of the Bank since 1992. Prior to his
appointment as President of the Bank, Mr. Elhilow was manager of
the Mortgage Loan Department from 1973 to 1992 and Executive Vice
President and Chief Operating Officer from 1981 to 1987. Mr.
Elhilow joined the Bank in January 1963 and has been a Director
since 1984.
Donald E. Warren, M.D. is a retired physician who practiced
in West Palm Beach for over 36 years. He was associated with
Intracoastal Health Systems until his retirement in November
1996. Dr. Warren has been a Director of the Bank since 1979.
F. Ted Brown, Jr. is the President of Ted Brown Real Estate,
Inc., located in North Palm Beach. Mr. Brown has been a Director
of the Bank since 1990.
Christopher H. Cook was employed by the Bank on February 1,
1996 and is an Executive Vice President and Corporate Counsel to
the Bank. Prior to February 1, 1996 he was the managing officer
with the law firm of Brackett, Cook, Sned, Welch, Hewitt, D'Angio
& Tucker, P.A., located in West Palm Beach. Mr. Cook has acted
as general counsel to the Bank since 1988. Mr. Cook has been a
Director of the Bank since 1993.
Joseph B. Shearouse, Jr. is Chairman of the Board of
Directors. Mr. Shearouse joined the Bank in 1954 and has held
various positions in the Bank. Mr. Shearouse became Chairman of
the Board of the Bank in 1987 and was President of the Bank from
1974 to 1987. Mr. Shearouse has been a Director of the Bank
since 1961. Mr. Shearouse retired as an active officer of the
Bank on January 31, 1995, but has continued as Chairman of the
Board.
Keith D. Beaty is the President and Chief Executive Officer
of Implant Innovations, Inc. a distributor of dental implants,
located in West Palm Beach. Mr. Beaty has been a Director of the
Bank since 1992.
<PAGE>
Ownership Reports by Officers and Directors
The Common Stock is registered pursuant to Section 12(g) of
the Exchange Act. The officers and directors of the Company and
beneficial owners of greater than 10% of the Company's Common
Stock ("10% beneficial owners") are required to file reports on
Forms 3, 4, and 5 with the SEC disclosing changes in beneficial
ownership of the Common Stock. SEC rules require disclosure in
the Company's Proxy Statement and Annual Report on Form 10-K of
the failure of an officer, director or 10% beneficial owner of
the Company's Common Stock to file a Form 3, 4 or 5 on a timely
basis. No such disclosure is required with respect to the
Company's officers and directors.
- -----------------------------------------------------------------
Meetings and Committees of the Board of Directors
- -----------------------------------------------------------------
The business of the Company's Board of Directors is
conducted through meetings and activities of the Board and its
committees. During the year ended December 31, 1996, the Board
of Directors of the Company held 2 regular and special meetings.
During the year ended December 31, 1996, no director attended
fewer than 75 percent of the total meetings of the Board of
Directors of the Company and committees on which such director
served.
The Company does not have a compensation committee. The
Executive Compensation Committee of the Bank meets periodically
to review the performance of officers and employees and determine
compensation programs and adjustments. It is comprised of
Directors Beaty, Brown, Shearouse and Warren. The Executive
Compensation Committee met one time during the year ended
December 31, 1996.
The Audit and Examination Committee consists of Directors
Warren, Beaty, Brown and Shearouse. This committee meets on a
quarterly basis with the internal auditor to review audit
programs and the results of audits of specific areas as well as
other regulatory compliance issues. The Audit Committee also
meets twice a year with the Company's independent auditors. The
Audit Committee met four times during the year ended December 31,
1996.
The Board of Directors serves as the Nominating Committee.
During the year ended December 31, 1996, no meetings were held.
Compensation Committee Interlocks and Insider Participation
The Company does not independently compensate its executive
officers, directors, or employees. The Executive Compensation
Committee of the Bank retains the principal responsibility for
the compensation of the officers, directors and employees of the
Bank. The Executive Compensation Committee consists of Directors
Beaty, Brown, Shearouse and Warren. The Executive Compensation
Committee reviews the benefits provided to the Bank's officers
and employees. During the year ended December 31, 1996, the
Executive Compensation Committee met one time.
Report of the Executive Compensation Committee
Under rules established by the SEC, the Company is required
to provide certain data and information in regard to the
compensation and benefits provided to the Company's Chief
Executive Officer and other executive officers of the Company.
The disclosure requirements for the Chief Executive Officer and
other executive officers include the use of tables and a report
explaining the rationale and considerations that led to
fundamental executive compensation decisions affecting those
individuals. In fulfillment of this requirement, the Executive
Compensation Committee of the Bank, at the direction of the Board
of Directors has prepared the following report for inclusion in
this proxy statement.
The Executive Compensation Committee is composed of
Directors Beaty, Brown, Shearouse and Warren. The Board has
delegated to the committee the responsibility of assuring that
the compensation of the Chief Executive Officer and other
executive officers is consistent with the compensation strategy,
competitive practices, the
<PAGE>
performance of the Bank, and the requirements of appropriate
regulatory agencies. All non-employee directors sit on the
Executive Compensation Committee and participate in executive
compensation decision making. All cash compensation paid to
executive officers is paid by the Bank; the Holding Company does
not currently pay any cash compensation to executive officers.
The primary goal of the Bank and its Executive Compensation
Committee is to provide an adequate level of compensation and
benefits in order to attract and retain key executives. Each
officer is reviewed annually to determine his or her contribution
to the overall success of the institution.
Compensation for senior management is reviewed annually on a
cycle that coincides with the Bank's fiscal year end. In
general, the purpose of the annual compensation review is to
ensure that the Bank's base salary levels are competitive with
financial institutions similar in size, geographic market and
business profile in order for the Bank to attract and retain
persons of high quality. In this regard the Executive
Compensation Committee utilized several salary surveys, including
the "Florida Bankers Salary Survey," "Savings and Community
Bankers Annual Salary Survey," the "Bank Wage-Hour and Personnel
Survey," the "Bank Administration Institute Salary Survey" and
the "SNL Executive Compensation Review." In addition, the
Executive Compensation Committee considers the overall
profitability of the Bank and the executive officer's
contribution to the Bank when making its decision.
The Board of Directors approved a base salary for the Bank's
Chief Executive Officer of $250,000 for fiscal year 1997, which
represented a 5.5% increase from the level of base salary of
$237,000 provided in fiscal 1996. The 1997 salary level was
based upon level of performance and industry standards.
This report has been provided by the Executive Compensation
Committee:
F. Ted Brown, Jr., Donald E. Warren, M.D.,
Keith D. Beaty, and Joseph B. Shearouse, Jr.
<PAGE>
Performance Graph
Set forth hereunder is a performance graph comparing (a) the
total return on the Bank's common stock for the period beginning
on January 7, 1994, the date of the Bank's mutual holding company
reorganization, through December 31, 1996, (b) the cumulative
total return on stocks included in the Nasdaq Composite Index
over such period, and (c) the yearly cumulative total return on
stocks included in the Nasdaq Bank Index over such period. The
cumulative total return on the Bank's common stock was computed
assuming the reinvestment of cash dividends. The Company's
Common Stock began trading on the Nasdaq National Market on
January 30, 1997.
There can be no assurance that the Company's stock
performance will continue in the future with the same or similar
trend depicted in the graph. The Company will not make or
endorse any predictions as to future stock performance.
<TABLE>
<CAPTION>
TOTAL RETURN PERFORMANCE
1/7/94 9/30/94 6/30/95 3/31/96 12/31/96
------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Fidelity Federal Savings 100 145.37 129.86 159.23 221.11
Nasdaq-Total US 100 98.22 121.07 143.73 168.90
Banks ($500M to $1B) 100 111.15 117.94 151.00 177.70
OTS Traded Banks 100 107.59 119.76 155.85 197.66
</TABLE>
<PAGE>
- -----------------------------------------------------------------
Executive Compensation
- -----------------------------------------------------------------
The following table sets forth the cash compensation paid by
the Bank for services during the years ended December 31, 1996,
1995 and 1994 to the Bank's Chief Executive Officer and the
Bank's five most highly compensated executive officers other
than the Chief Executive Officer.<PAGE>
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
Restricted
Other Annual Stock Options/ All Other
Name and Year Ended Salary Bonus Compensation Award(s) SARs Compensation
Principal Position December 31, ($)(1) ($)(2) ($)(3)(4) ($)(5) (#)(6) Payout ($)(7)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Vince A. Elhilow 1996 $237,000 $11,634 $36,855 $ -- -- $66,778
President and 1995 230,000 15,809 34,309 -- -- -- 48,054
Chief Executive 1994 218,000 18,613 26,400 192,000 37,950 -- 35,845
J. Robert McDonald 1996 $120,000 $ 5,890 $ 2,400 -- -- -- $44,628
Executive Vice 1995 114,000 7,836 2,400 -- -- -- 32,047
President-Appraisal: 1994 108,000 9,221 2,400 86,500 13,640 -- 27,537
President of FRAS
Richard D. Aldred 1996 $130,000 $ 6,381 $ -- -- -- -- $30,494
Executive Vice 1995 122,500 8,421 -- -- -- -- 24,039
President-Finance 1994 116,500 9,947 -- 74,500 12,155 -- 16,716
Joseph C. Bova 1996 $117,000 $ 5,743 $ -- -- -- -- $31,981
Executive Vice 1995 110,000 7,561 -- -- -- -- 24,473
President-Lending : 1994 102,000 8,709 -- 74,500 12,155 -- 18,572
Operations
Robert L. Fugate 1996 $114,500 $ 5,620 $ -- -- -- -- $33,909
Executive Vice 1995 107,500 7,390 -- -- -- -- 20,550
President-Banking 1994 101,500 8,666 -- 74,500 12,155 -- 16,559
Operations Manager
Christopher C. Cook 1996 $130,000 $ -- $25,175 -- -- -- $ 277
Executive Vice 1995 -- -- -- -- -- -- --
President-Corporate 1994 -- -- -- -- -- -- --
Counsel
</TABLE>
PAGE
<PAGE>
- ------------------
(1) Includes compensation deferred at the election of the named
individual under the Bank's Savings Plan for Employees, the
Bank's flexible benefit plan and the Bank's LTDC plan (as
defined herein).
(2) Includes amounts deferred at the election of the executive
under the Bank's Management Performance Plan.
(3) Includes $24,000, $25,175 and $2,400 in Directors' fees for
the Bank and its subsidiaries, payable to Messrs. Elhilow,
Cook and McDonald, respectively, in 1996.
(4) Consists of automobile lease payments and club dues for Mr.
Elhilow. The aggregate amount of such benefits did not
exceed the lesser of $50,000 or 10% of cash compensation for
the named individual.
(5) Shares were awarded to Messrs. Elhilow, McDonald, Aldred,
Bova and Fugate on January 7, 1994. Messrs. Elhilow,
McDonald, Aldred, Bova and Fugate were awarded 21,120,
9,515, 8,195, 8,195, and 8,195 shares, respectively.
(6) Options were awarded to Messrs. Elhilow, McDonald, Aldred,
Bova and Fugate on January 7, 1994. Includes effect of 10%
stock dividend in November 1995.
(7) Includes amount allocated to executive officers under the
Bank's ESOP, LTDC plan and matching contributions allocated
under the Bank's Savings Plan for Employees.
<PAGE>
Employment and Severance Arrangements
Employment Agreement. The Bank has entered into an
employment agreement with Vince A. Elhilow, President and Chief
Executive Officer of the Bank. The employment agreement is
intended to ensure that the Bank and the Holding Company will be
able to maintain a stable and competent management. The
continued success of the Bank and the Holding Company depends to
a significant degree on the skill and competence of the President
and Chief Executive Officer.
The employment agreement provides for a three-year term for
Mr. Elhilow. Commencing on the first anniversary date and
continuing each anniversary date thereafter, the Board of
Directors may extend the employment agreement for an additional
year such that the remaining term shall be three years unless
written notice of nonrenewal is given by the Board of Directors
after conducting a performance evaluation of the executive. The
agreement provides that the base salary of Mr. Elhilow will be
reviewed annually. Effective January 1, 1997, the current base
salary of Mr. Elhilow is $250,000. In addition to the base
salary, the employment agreement provides that Mr. Elhilow is to
receive all benefits provided to permanent full-time employees of
the Bank, including among other things, participation in stock
benefit plans and other fringe benefits applicable to executive
personnel. The employment agreement provides for termination by
the Bank for cause at any time. In the event the Bank chooses to
terminate his employment for reasons other than for cause, or
upon the termination of his employment for reasons other than a
change in control, as defined, or in the event of his resignation
from the Bank upon: (i) failure to re-elect him to his current
office; (ii) a material change in his functions, duties or
responsibilities which change would cause his position to become
one of lesser responsibility, importance or scope; (iii)
relocation of his principal place of employment by more than 30
miles; (iv) the liquidation or dissolution of the Bank; or (v) a
breach of the agreement by the Bank, the executive, or in the
event of death, his beneficiary, would be entitled to receive an
amount equal to the greater of the remaining payments, including
base salary, bonuses and other payments due under the remaining
term of the employment agreement or three times the average of
the executive's base salary, including bonuses and other cash
compensation paid, and the amount of any benefits received
pursuant to any employee benefit plans maintained by the Bank.
If termination, whether voluntary or involuntary, follows a
change in control of the Bank or the Holding Company, as defined
in the employment agreement, the executive or, in the event of
death, his beneficiary, would be entitled to a payment equal to
the greater of (i) the payments due under the remaining term of
the employment agreement or (ii) 2.99 times his average annual
compensation over the five years preceding termination. The Bank
would also continue the executive's life, health, and disability
coverage for the remaining unexpired term of the employment
agreement to the extent allowed by the plan or policies
maintained by the Bank from time to time.
The employment agreement provides that for a period of one
year following termination the executive agrees not to compete
with the Bank in any city, town or county in which the Bank
maintains an office or has filed an application to establish an
office.
Severance Plan. The Bank has entered into severance
agreements (the "Severance Agreements") with Richard D. Aldred,
Executive Vice President, Joseph C. Bova, Executive Vice
President, Robert L. Fugate, Executive Vice President, and
Christopher H. Cook, Esquire, Executive Vice President/Corporate
Counsel, providing for certain benefits in the event of a change
of control of the Bank or the Holding Company. Following a
change of control of the Holding Company or the Bank, as defined
in the Severance Agreements, the officer shall be entitled to a
payment under a severance agreement if the officer terminates
employment following any demotion, loss of title, office or
significant authority, reduction in his annual compensation or
benefits, or relocation of his principal place of employment by
more than 30 miles.
In the event that an officer is entitled to receive payments
pursuant to a severance agreement, he shall receive a cash
payment up to a maximum of three times such officer's annual
compensation prior to termination of employment, plus life and
medical coverage for a period of up to 36 months from the date of
termination.
<PAGE>
- -----------------------------------------------------------------
Directors' Compensation
- -----------------------------------------------------------------
The Chairman of the Board receives a monthly fee of $3,000
and each Director receives a monthly meeting fee of $2,000.
Committee chairmen receive fees of $375 for each meeting attended
and committee members receive $250 for each meeting attended.
The Bank paid a total of $203,050 in Director and Committee fees
during the fiscal year ending December 31, 1996. In addition,
the Bank has three directors emeriti who receive a monthly fee of
$630 and a chairman emeritus who receives $1,200 monthly. One
director emeritus does not receive any fee; however, he receives
$1,294 monthly under the Bank's Retirement Plan for Directors.
The directors emeriti meet informally with members of the Bank to
discuss general matters affecting the Bank. Directors emeriti
are not permitted to attend board meetings and they have no
authority to affect Board or Management decisions. There are
currently four directors emeriti.
Retirement Plan for Directors. The Bank maintains a non-tax
qualified Retirement Plan for Directors (the "Directors'
Retirement Plan") that provides Directors who serve on the Board
for at least five years with an annual retirement benefit equal
to 80% of such Directors' director fees for his or her last full
year of service on the Board. Eligible Directors must have
served on the Board on or after January 1, 1990. Retirement
benefits are payable monthly over a period equal to the number of
months (including partial months) that a Director has served on
the Board. The Directors' Retirement Plan provides for survivor
benefits payable to a designated beneficiary in an amount equal
to the Director's regular benefit for a period of up to 180
months or the number of months the Director served on the Board,
whichever is less. Survivor benefits begin the day a deceased
Director would have reached age 65. Survivors are entitled to
receive the remaining payments due a Director who dies after
retirement from the Board but before payment of all benefits
under the Directors' Retirement Plan. During the year ended
December 31, 1996, the cost to the Bank of the Director's Plan
was $258,549.
- -----------------------------------------------------------------
Benefits
- -----------------------------------------------------------------
Defined Benefit Plan. The Bank maintains a noncontributory
defined benefit plan ("Retirement Plan"). All employees age 21
or older who have worked at the Bank for a period of one year and
been credited with 1,000 or more hours of employment with the
Bank during the year are eligible to accrue benefits under the
Retirement Plan. The Bank annually contributes an amount to the
Retirement Plan necessary to satisfy the actuarially determined
minimum funding requirements in accordance with the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
At the normal retirement age of 65 years old (or the fifth
anniversary of plan participation, if later), the plan is
designed to provide a life annuity guaranteed for ten years.
The retirement benefit provided is an amount equal to the sum of
(1) and (2), where (1) is 1.46% of a participant's average
monthly compensation multiplied by the participant's credited
service; and (2) is .44% of average monthly compensation in
excess of $1,416.67 multiplied by the participant's credited
service (not to exceed 35 years). Retirement benefits are also
payable upon retirement due to early and late retirement,
disability or death. A reduced benefit is payable upon early
retirement at or after age 55 and the completion of 15 years of
service with the Bank. Upon termination of employment other than
as specified above, a participant who was employed by the Bank
for a minimum of five years is eligible to receive his or her
accrued benefit reduced for early retirement or a deferred
retirement benefit commencing on such participant's normal
retirement date. Benefits are payable in various annuity forms
as well as in the form of a single lump sum payment. At December
31, 1996, the market value of the Retirement Plan trust fund
equaled approximately $6.3 million. For the plan year ended
December 31, 1996, the Bank made a contribution to the Retirement
Plan of $766,000.
<PAGE>
The following table indicates the annual retirement benefit
that would be payable under the Retirement Plan upon retirement
at age 65 in calendar year 1996, expressed in the form of a
single life annuity for the final average salary and benefit
service classification specified below.
<TABLE>
<CAPTION>
Years of Service and Benefits Payable at Retirement
------------------------------------------------------------
Final Average
Compensation 15 20 25 30 35 40
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 25,000 $ 6,003 $ 8,004 $10,005 $12,006 $14,007 $ 15,832
$ 50,000 13,128 17,504 21,880 26,25 30,632 34,282
$ 75,000 20,253 27,004 33,755 40,506 47,257 52,732
$100,000 27,378 36,504 45,630 54,756 63,882 71,182
$150,000 41,628 55,504 69,380 83,256 97,132 104,596
</TABLE>
The following table sets forth the years of credited service
(i.e., benefit service) as of December 31, 1996, for each of the
individuals named in the cash compensation table.
<TABLE>
<CAPTION>
Years of
Name Credited Service
- ---- ----------------
<S> <C>
Vince A. Elhilow 33.9
J. Robert McDonald 40.3
Richard D. Aldred 12.0
Joseph C. Bova 25.2
Robert L. Fugate 23.6
Christopher C. Cook 1.0
</TABLE>
Savings Plan for Employees. The Bank maintains the Savings
Plan for Employees (the "401(k) Plan") which is a qualified, tax-
exempt profit sharing plan with a cash-or-deferred feature under
Section 401(k) of the Internal Revenue Code of 1986, as amended
(the "Code"). All employees who have attained age 21 and have
completed one year of employment during which they worked at
least 1,000 hours are eligible to participate. Funds included in
the 401(k) Plan are managed by an independent trustee who is
appointed by the Bank's Board of Directors.
Under the 401(k) Plan, participants are permitted to make
salary reduction contributions to the 401(k) Plan equal to a
percentage of up to 10% of compensation. For these purposes,
"compensation" includes total compensation (including salary
reduction contributions made under the 401(k) Plan or the
flexible benefits plan sponsored by the Bank), but does not
include compensation in excess of the Code section 401(a)(17)
limits. The participants' salary reduction contribution may be
matched by the Bank, in its discretion, in the amount of $.50 per
$1.00 up to a maximum of 6% of the participants' salary. All
employee contributions and earnings thereon are fully and
immediately vested. All employer matching contributions vest at
the rate of 20% per year until a participant is 100% vested after
five years of service. Participants will also vest in employer
matching contributions upon the attainment of the normal
retirement age of 65 or later, death or disability regardless of
their years of service. A participant may also withdraw salary
reduction contributions in the event the participant suffers a
financial hardship.
In the past, funds held in trust for the benefit of
participants under the 401(k) Plan were invested by the Trustee,
in its sole discretion, in certificates of deposit of the Bank.
The 401(k) Plan permits employees to direct the investment of
their own accounts into various investment options, including the
Common Stock of the Bank. The Plan permits participants to
direct that all or a portion of their account be invested in such
investments. Participants will direct the Trustee how to vote
their allocable shares of Common Stock.
<PAGE>
Plan benefits will be paid to each participant in either a
lump sum or installments over a period of up to 20 years, at the
participant's election. Upon distribution of a participant's
account, the participant will have the choice of having his
account paid to him in Common Stock (to the extent invested
therein) or in cash. At December 31, 1996, the market value of
the 401(k) Plan trust fund equaled approximately $5.2 million.
The contribution to the 401(k) Plan for the Plan year ended
December 31, 1996, was $169,994. During the year ended December
31, 1996, the Bank contributed $4,750, $3,309, $3,990, $3,759,
$2,850 and $0 to the accounts of Messrs. Elhilow, McDonald,
Aldred, Bova Fugate and Cook, respectively.
Supplemental Executive Retirement Plan. The Bank maintains
a non-qualified supplemental executive retirement plan ("SERP")
for certain executives of the Bank to compensate those executive
participants in the Bank's Retirement Plan whose benefits are
limited by Section 415 or Section 401(a)(17) of the Code. As of
December 31, 1996, there were ten executive employees
participating in the SERP. The SERP provides the designated
executive employees with retirement benefits generally equal to
the difference between 80% of compensation (the "target
percentage") and the employee's accrued benefit under the Bank's
Retirement Plan plus 50% of the social security benefits.
Benefits under the SERP vest over a period ending on normal
retirement age which is age 65 or age 60 with 30 years of
service. Participants may increase their target percentage by 2%
of compensation for each year of service beyond normal retirement
age; however, a participant's target percentage may not exceed
100%. Participants may elect to have benefits paid as a single
life annuity with guaranteed 10 year term or as a joint and 100%
or joint and 50% survivor annuity. Benefits for participants who
retire before normal retirement age are reduced 5% per year for
each year under normal retirement age.
Pre-retirement survivor benefits are provided for designated
beneficiaries of participants who do not survive until retirement
in an amount equal to the lump sum actuarial equivalent of the
participant's accrued benefit under the Plan. Pre-retirement
benefits are payable in 120 equal monthly installments.
The SERP is considered an unfunded plan for tax and ERISA
purposes. All obligations arising under the SERP are payable
from the general assets of the Bank; however, the Bank has set up
a trust to ensure that sufficient assets will be available to pay
the benefits under the SERP.
The benefits paid under the SERP supplement the benefits
paid by the Retirement Plan. The Bank is unable to project the
actual amounts to be paid to each participant under the SERP.
The following table indicates the expected aggregate annual
retirement benefit payable from the Retirement Plan, SERP and 50%
of estimated social security benefits to SERP participants,
expressed in the form of a single life annuity for the final
average salary and benefit service classification specified
below.
<TABLE>
<CAPTION>
Years of Service and Benefit Payable at Retirement
--------------------------------------------------
Final Average
Compensation 25 30 35 40
- ------------- --------------------------------------------------
<S> <C> <C> <C> <C>
$100,000 $ 80,000 $ 80,000 $ 80,000 $ 80,000
$125,000 100,000 100,000 100,000 100,000
$150,000 120,000 120,000 120,000 120,000
$175,000 140,000 140,000 140,000 140,000
$200,000 160,000 160,000 160,000 160,000
$225,000 180,000 180,000 180,000 180,000
$250,000 200,000 200,000 200,000 200,000
$275,000 220,000 220,000 220,000 220,000
$300,000 240,000 240,000 240,000 240,000
</TABLE>
Mr. Joseph Shearouse's SERP benefit will never be less than
the actuarial equivalent of any benefit he could have received on
January 1, 1990. This benefit was $3,616 per month. The total
Retirement Benefit payable to a
<PAGE>
Participant is increased by 2% of salary (not to exceed a total
of 100%) for each year employed past their normal retirement
date.
Messrs. Shearouse, Elhilow, McDonald, Aldred, Bova and
Fugate have 42.9, 33.9, 40.3, 12.0, 25.2 and 23.6 years,
respectively, of credited service under the SERP. Mr. Aldred
will be granted 11 additional years of service under the SERP if
he remains employed with the Bank until age 60. The Bank's
pension cost attributable to the SERP was $821,647 for the year
ended December 31, 1996.
Long Term Deferred Compensation Plan. The Bank maintains a
Long Term Deferred Compensation Plan (the "LTDC Plan") for
selected officers designated by the Board of Directors. As of
December 31, 1996, the Board has designated ten executives to
participate in the LTDC Plan, including Messrs. Shearouse,
Elhilow, McDonald, Aldred, Bova and Fugate. The LTDC Plan
provides the designated executives with the option of deferring
any percentage of compensation until retirement. In addition to
participant deferrals, the Bank may contribute annually an amount
equal to 10% of each participant's compensation. For these
purposes, "compensation" includes salary payable during the
calendar year, before reduction for amounts deferred under this
Plan or any other salary reduction plan, but does not include
bonuses, expense reimbursements, or non-cash compensation.
Participant and Bank contributions are credited to a separate
account which earns "interest" at an annual rate equal to Moody's
corporate bond index plus 3%. Participants are at all times 100%
vested in participant deferrals but vest in the Bank's
contributions over a period of years ending on each participant's
normal retirement date of age 65 (or age 60 with 30 years of
service). Benefits are paid, beginning no later than 60 days
following termination of employment with the Bank, either as a
lump sum or, at the participant's election made at the time of
deferral, over a period of 60, 120 or 180 months. Participants
may alternatively elect to withdraw participant deferrals prior
to their normal retirement date, but no less than seven years
following the end of the deferral period in which the participant
initially elected the early withdrawal option. Early withdrawals
are available from participant deferrals only and may not be made
from Bank contributions or "interest" credited to a participant's
account. Although segregated "accounts" are set up for
participants, all amounts credited to a participant's account
remain subject to the claims of the Bank's general creditors.
For the year ended December 31, 1996, the Bank vested and funded
$47,845, $30,180, $13,494, $15,937, $20,543 and $277 to the
account balances of Messrs. Elhilow, McDonald, Aldred, Bova,
Fugate and Cook, respectively.
Senior Management Performance Incentive Award Program. The
Bank maintains a Senior Management Performance Incentive Award
Program (the "SMPIAP") to reward selected members of senior
management (i.e., senior officers, vice presidents and above) for
their services which contributed to the Bank's success during the
year. Under the SMPIAP, the Bank annually sets aside a varying
percentage of net profits and allocates such sums to key
management employees in proportion to their salaries.
Participants elect either immediate receipt of annual awards or
deferral of such awards in a non-qualified deferred compensation
plan for a designated period of years, or until retirement. In
the past, amounts deferred under the SMPIAP have been annually
increased by a percentage equal to the percentage increase in the
Bank's net worth. In conjunction with the Bank's initial public
offering, the SMPIAP was amended to provide that the amounts
allocated to participants will be invested among five investment
funds, including an Employer Stock Fund. Accordingly, the Bank
no longer provides funds to increase compensation deferred under
the plan. A participant's benefit under the SMPIAP will equal
the value of the benefit booked to the participant's account. At
the time of distribution, deferred amounts will be received in a
lump sum or in installments.
Supplemental Survivor Benefit Plan. The Bank maintains a
Supplemental Survivor Benefit Plan that provides all Bank
officers with life insurance in an amount initially equal to
three times such officer's annual compensation. For these
purposes, "officer" means any individual who has achieved the
rank of corporate secretary, vice president or higher. The Bank
is the owner and beneficiary of the life insurance policies;
however, each participant is permitted to designate a beneficiary
or beneficiaries to whom benefits under the plan would be paid by
the Bank in the event of such officer's death. If a participant
does not designate a beneficiary, the Bank will pay the
participant's benefits to his or her spouse, children, or estate.
The plan is intended to qualify as a "top-hat" plan exempt from
the participation, vesting, funding and fiduciary requirements of
Title I of ERISA.
<PAGE>
Supplemental Disability Income. The Bank also has purchased
long term disability income insurance policies for the benefit of
Messrs. Elhilow, McDonald, Aldred, Bova and Fugate to provide
disability income in an amount equal to the lesser of $10,000 per
month or 60% of such participant's basic monthly salary less
disability income payable from other sources. Benefits are
payable for periods of up to 60 months for participants who
become disabled prior to age 60 and for progressively shorter
periods for participants who become disabled after attaining age
60.
Employee Stock Ownership Plan and Trust. The Bank has
established an Employee Stock Ownership Plan and Related Trust
("ESOP") for eligible employees. The ESOP is a tax-qualified
plan subject to the requirements of ERISA and the Code.
Employees with a 12-month period of employment with the Bank
during which they worked at least 1,000 hours and who have
attained age 21 are eligible to participate. As part of the
Reorganization, the ESOP borrowed funds from an unrelated third
party lender to purchase 193,200 shares of Common Stocks which
shares serve as collateral for the loan. The loan will be repaid
principally from the Bank's contributions to the ESOP over a
period of up to seven years. Shares purchased by the ESOP will
be held in a suspense account for allocation among participants
as the loan is repaid.
Contributions to the ESOP and shares released from the
suspense account in an amount proportional to the repayment of
the ESOP loan will be allocated among participants on the basis
of compensation in the year of allocation, up to an annual
adjusted maximum level of compensation. Benefits generally
become 100% vested after five years of credited service.
Forfeitures will be reallocated among remaining participating
employees in the same proportion as contributions. Benefits may
be payable upon death, retirement, early retirement, disability
or separation from service. The Bank's contributions to the ESOP
will not be fixed, so benefits payable under the ESOP cannot be
estimated.
The Board of Directors has established a committee
consisting of all of the non-employee directors of the Bank to
administer the ESOP, and has appointed an unrelated corporate
trustee for the ESOP. The ESOP Committee may instruct the
trustee regarding investment of funds contributed to the ESOP.
The ESOP trustee generally will vote all shares of Common Stock
held under the ESOP in accordance with the written instructions
of the ESOP Committee. In certain circumstances, however, the
ESOP trustee must vote all allocated shares held in the ESOP in
accordance with the instructions of the participating employees,
and unallocated shares and shares held in the suspense account in
a manner calculated to most accurately reflect the instructions
the ESOP trustee has received from participants regarding the
allocated stock, subject to and in accordance with the fiduciary
duties under ERISA owed by the ESOP trustee to the ESOP
participants. Under ERISA, the Secretary of Labor is authorized
to bring an action against the ESOP trustee for the failure of
the ESOP trustee to comply with its fiduciary responsibilities.
Such a suit could seek to enjoin the ESOP trustee from violating
its fiduciary responsibilities and could result in the imposition
of civil penalties or criminal penalties if the breach is found
to be willful.
Stock Option Plan. The Board of Directors of the Bank has
adopted the Fidelity Federal Savings Bank of Florida 1994
Incentive Stock Option Plan (the "Stock Plan") for its officers
and employees because it believes that stock options serve as an
important means for attracting and retaining personnel as well as
rewarding employees who help the Bank achieve its business
objectives. Moreover, the exercise of stock options is
beneficial to the Bank because it provides additional capital at
minimal expense. 227,700 shares of Common Stock were reserved for
grant to eligible officers and employees under the Stock Plan.
Options to purchase 227,700 shares of Common Stock were granted
on January 7, 1994, the date of the Reorganization.
In connection with the Bank's stock offering, the Board of
Directors granted options (with Limited Rights) under the Stock
Plan at an exercise price equal to $9.09 per share (adjusted for
ten percent stock dividend distributed November 30, 1995) to the
named executive officers. Set forth below is information related
to options granted under the Stock Plan to named executive
officers. No options were granted in 1996.
PAGE
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUE
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options at The-Money Options at
Fiscal Year-End Fiscal Year-End(2)
Shares Acquired Value
Name Upon Exercise Realized(1) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Vince A. Elhilow 7,950 $64,872 7,230/22,770 $128,333/$197,188
J. Robert McDonald 5,000 34,550 456,8,184 $8,094/$70,873
Richard D. Aldred 2,431 11,025 2,431/7,293 $21,052/$63,157
Joseph C. Bova 0 0 4,862/7,293 $42,105/$63,157
Robert L. Fugate 4,862 39,674 0/7,293 $0/$63,157
Christopher C. Cook 3,800 22,458 11,380/0 $201,995/$0
</TABLE>
PAGE
<PAGE>
(1) Equals the difference between the aggregate exercise price
of the options exercised and the aggregate fair market value
of the shares of common stock received upon exercise
computed using the price of the Common Stock as quoted on
the Nasdaq National Market at the time of exercise.
(2) Equals the difference between the aggregate exercise price
of such options and the aggregate fair market value of the
shares of common stock that would be received upon exercise,
assuming such exercise occurred on December 31, 1996, at
which date the closing price of the Common Stock as quoted
on the Nasdaq National Market was at $17.75.
Stock Option Plan For Outside Directors. The Board of
Directors of the Bank has adopted the Fidelity Federal Savings
Bank of Florida 1994 Stock Option Plan for Outside Directors (the
"Directors' Plan") for directors who are not employees of the
Bank because it believes that stock options serve as an important
means for attracting and retaining qualified directors and
rewarding outside directors who help the Bank achieve its
business objectives. Moreover, the exercise of stock options is
beneficial to the Bank because it provides additional capital at
minimal expense. 75,900 shares of Common Stock were reserved
for grant to outside directors under the Directors' Plan all of
which were granted on January 7, 1994.
The exercise price per share of each option is $9.09 per
share which was equal to the fair market value of the Common
Stock on the date of grant. All options granted under the
Directors' Plan expire upon the earlier of ten years from the
date of grant or one year following the date the optionee ceases
to be a director. Options for 15,180 shares of Common Stock have
been awarded to each of Directors Warren, Brown, Beaty and Cook.
The Directors' Plan further provides that each new director shall
be granted options to purchase 100 shares of Common Stock to the
extent options remain available in, or are returned to, the
Directors' Plan. Presently, there are no options reserved for
future grant.
Recognition And Retention Plan for Employees. The Board of
Directors of the Bank has adopted the Employees' Recognition Plan
as a method of providing officers and key employees of the Bank
with a proprietary interest in the Bank that is designed as a
means of rewarding the service of persons who have helped the
Bank to achieve its business objectives as well as encouraging
such persons to remain with the Bank. 86,460 shares of authorized
but unissued Common Stock were purchased by the Employees's
Recognition Plan for the benefit of eligible officers and
employees. 86,460 shares of restricted stock were awarded to
officers and employees on January 7, 1994.
Recognition And Retention Plan for Outside Directors. The
Board of Directors of the Bank has adopted the Directors'
Recognition Plan as a method of providing directors who are not
employees of the Bank with a proprietary interest in the Bank
that is designed as a means of rewarding persons who have helped
the Bank to achieve its business objectives as well as
encouraging such persons to remain with the Bank. In connection
with the
<PAGE>
Reorganization, 34,980 shares of authorized but unissued Common
Stock were purchased by the Directors' Recognition Plan for the
benefit of outside directors. 34,980 shares of restricted stock
were awarded to outside directors on January 7, 1994.
- -----------------------------------------------------------------
Transactions With Certain Related Persons
- -----------------------------------------------------------------
The Financial Institutions Reform, Recovery and Enforcement
Act of 1989 ("FIRREA") requires that all loans or extensions of
credit to executive officers and directors must be made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with the general public and must not involve more
than the normal risk of repayment or present other unfavorable
features. In addition, loans made to a director or executive
officer in excess of the greater of $25,000 or 5% of the Bank's
capital and surplus (up to a maximum of $500,000) must be
approved in advance by a majority of the disinterested members of
the Board of Directors. Prior to the enactment of FIRREA, the
Bank provided loans to Directors and executive officers at
reduced rates and/or with points waived or reduced. Subsequent
to the enactment of FIRREA, loans made to officers, directors,
and executive officers are made in the ordinary course of
business on the same terms and conditions as the Bank would make
to any other customer in the ordinary course of business and do
not involve more than a normal risk of collectibility or present
other unfavorable features.
The Bank intends that all transactions between the Bank and
its executive officers, directors, holders of 10% or more of the
shares of any class of its common stock and affiliates thereof,
will contain terms no less favorable to the Bank than could have
been obtained by it in arm's-length negotiations with
unaffiliated persons and will be approved by a majority of
independent outside directors of the Bank not having any interest
in the transaction. During the year ended December 31, 1996, the
Bank had no loans outstanding to directors or executive officers
which were made on preferential terms.
- -----------------------------------------------------------------
PROPOSAL II--RATIFICATION OF APPOINTMENT OF AUDITORS
- -----------------------------------------------------------------
The Board of Directors of the Company has approved the
engagement of Deloitte & Touche LLP to be the Company's auditors
for the 1997 fiscal year, subject to the ratification of the
engagement by the Company's stockholders. At the Meeting,
stockholders will consider and vote on the ratification of the
engagement of Deloitte & Touche LLP for the Company's fiscal year
ending December 31, 1997. A representative of Deloitte & Touche
LLP is expected to attend the Meeting to respond to appropriate
questions and to make a statement if he so desires.
In order to ratify the selection of Deloitte & Touche LLP as
the auditors for the 1997 fiscal year, the proposal must receive
at least a majority of the votes cast, either in person or by
proxy, in favor of such ratification. The Board of Directors
recommends a vote "FOR" the ratification of Deloitte & Touche LLP
as auditors for the 1997 fiscal year.
<PAGE>
- -----------------------------------------------------------------
STOCKHOLDER PROPOSALS
- -----------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy
materials for next year's Annual Meeting of Stockholders, any
stockholder proposal to take action at such meeting must be
received at the Company's executive office, 218 Datura Street,
West Palm Beach, Florida 33401, no later than November 14, 1997.
Any such proposals shall be subject to the requirements of the
proxy rules adopted under the Exchange Act.
- -----------------------------------------------------------------
MISCELLANEOUS
- -----------------------------------------------------------------
The Board of Directors is not aware of any business to come
before the Meeting other than the matters described above in the
Proxy Statement. However, if any matters should properly come
before the Meeting, it is intended that holders of the proxies
will act as directed by a majority of the Board of Directors,
except for matters related to the conduct of the Meeting, as to
which they shall act in accordance with their best judgment.
The cost of 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 proxy materials to the beneficial
owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Bank may solicit
proxies personally or by telegraph or telephone without
additional compensation.
A copy of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 will be furnished without
charge to stockholders as of the record date upon written request
to the Corporate Secretary, Fidelity Bankshares, Inc., 218 Datura
Street, West Palm Beach, Florida 33401.
BY ORDER OF THE BOARD OF DIRECTORS
Patricia C. Clager
Secretary
West Palm Beach, Florida
March 14, 1997
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REVOCABLE PROXY
FIDELITY BANKSHARES, INC.
ANNUAL MEETING OF STOCKHOLDERS
April 15, 1997
The undersigned hereby appoints the full Board of Directors,
with full powers of substitution to act as attorneys and proxies
for the undersigned to vote all shares of Common Stock of the
Company which the undersigned is entitled to vote at a Annual
Meeting of Stockholders ("Meeting") to be held at the Omni Hotel,
1601 Belvedere Road, West Palm Beach, Florida 33406 at 10:00 a.m.
(local time) on April 15, 1997. The official proxy committee is
authorized to cast all votes to which the undersigned is entitled
as follows:
VOTE
FOR WITHHELD
1. The election as director of all / / / /
nominees listed below (except
as marked to the contrary below)
Vince A. Elhilow
Donald E. Warren, M.D.
INSTRUCTION: To withhold your
vote for one or more nominees,
write the name of the nominee(s)
on the lines below.
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FOR AGAINST ABSTAIN
1. The ratification of the / / / / / /
appointment of Deloitte &
Touche LLP as auditors for the
fiscal year ending December 31,
1997.
The Board of Directors recommends a vote "FOR" each of the listed
proposals.
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THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS
STATED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH
MEETING, THIS PROXY WILL BE VOTED BY THE ABOVE-NAMED PROXIES AT
THE DIRECTION OF A MAJORITY OF THE BOARD OF DIRECTORS. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS
TO BE PRESENTED AT THE MEETING.
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Meeting or at any adjournment thereof and after notification to
the Secretary of the Company at the Meeting of the stockholder's
decision to terminate this proxy, then the power of said
attorneys and proxies shall be deemed terminated and of no
further force and effect. This proxy may also be revoked by
sending written notice to the Secretary of the Company at the
address set forth on the Notice of Annual Meeting of
Stockholders, or by the filing of a later proxy statement prior
to a vote being taken on a particular proposal at the Meeting.
The undersigned acknowledges receipt from the Company prior
to the execution of this proxy of a Notice of the Meeting and a
proxy statement dated March 14, 1997.
Dated: -----------------, 1997
Check Box if You Plan
to Attend Meeting / /
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PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
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SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this card. When
signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held
jointly, each holder should sign.
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Please complete and date this proxy and return it promptly
in the enclosed postage-prepaid envelope.
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