SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
HARBOR FLORIDA BANCSHARES, INC.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No Fee Required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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4. Proposed maximum aggregate value transaction:
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5. Total fee paid:
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration number, or
the Form or Schedule and the date of its filing.
1. Amount previously paid:
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<PAGE>
HARBOR FLORIDA BANCSHARES, INC.
100 S. Second Street
Fort Pierce, FL 34950
(561) 461-2414
December 15, 2000
Dear Stockholder:
You are invited to attend the Annual Meeting of Stockholders (the "Annual
Meeting") of Harbor Florida Bancshares, Inc. ("Bancshares" or the "Company"),
the stock holding company for Harbor Federal Savings Bank (the "Bank"). The
purpose of the Annual Meeting is to consider the election of two (2) directors
of the Company for three year terms and to ratify the appointment by the
Company's Board of Directors of the firm of KPMG LLP as independent public
accountants for the Company for the fiscal year ending September 30, 2001. The
Annual Meeting is scheduled to be held on Friday, January 19, 2001, at 10:00
a.m., Florida time, at Old City Hall Annex, 315 Avenue A, Fort Pierce, Florida.
The attached Notice of Annual Meeting and Proxy Statement describes the
proposals in detail. Directors and officers of the Company will be present at
the Annual Meeting to respond to any questions that you may have regarding the
agenda for the Annual Meeting.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOUR COOPERATION
IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK OUTSTANDING MUST BE
REPRESENTED EITHER IN PERSON OR BY PROXY TO CONSTITUTE A QUORUM FOR THE CONDUCT
OF BUSINESS AT THE ANNUAL MEETING.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, I wish to thank you for all your support and interest. We
look forward to seeing you at the Annual Meeting.
Sincerely yours,
Michael J. Brown, Sr.
President and CEO
HARBOR FLORIDA BANCSHARES, INC. IS THE HOLDING COMPANY FOR HARBOR FEDERAL
SAVINGS BANK
<PAGE>
HARBOR FLORIDA BANCSHARES, INC.
100 S. Second Street
Fort Pierce, Florida 34950
(561) 461-2414
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 19, 2001
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Harbor
Florida Bancshares, Inc. ("Bancshares" or the "Company") will be held at Old
City Hall Annex located at 315 Avenue A, Fort Pierce, Florida on Friday, January
19, 2001, at 10:00 a.m. Florida time, for the following purposes, as more
completely set forth in the accompanying Proxy Statement:
1. To elect two (2) directors of the Company for three year terms.
2. To ratify the appointment by the Company's Board of Directors of the
firm of KPMG LLP as independent public accountants for the Company for the
fiscal year ending September 30, 2001.
3. To transact such other business as may properly come before the
meeting. Except with respect to procedural matters incident to the conduct of
the meeting, management of Bancshares is not aware of any matters other than
those set forth above which may properly come before the meeting.
The Board of Directors of Bancshares has fixed December 8, 2000, as the
voting record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting. Only those stockholders of record as of the
close of business on that date will be entitled to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF
DIRECTORS
Michael J. Brown, Sr.
President & CEO
December 15, 2000
Fort Pierce, Florida
YOUR VOTE IS IMPORTANT. YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE
ANNUAL MEETING YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN
MAY BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE
THEREOF. PROXIES MUST BE RECEIVED PRIOR TO THE COMMENCEMENT OF THE MEETING.
<PAGE>
HARBOR FLORIDA BANCSHARES, INC.
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 19, 2001
This Proxy Statement is being furnished to the holders of the common
stock, par value $0.10 per share ("Common Stock"), of Harbor Florida Bancshares,
Inc. ("Bancshares" or the "Company"), in connection with the solicitation of
proxies by the Board of Directors for use at its Annual Meeting of Stockholders
("Annual Meeting") to be held on Friday, January 19, 2001, at Old City Hall
Annex located at 315 Avenue A, Fort Pierce, Florida at 10:00 a.m. Florida time,
for the purposes set forth in the attached Notice of Annual Meeting of
Stockholders. This Proxy Statement is first being mailed to stockholders on or
about December 15, 2000.
Each proxy solicited hereby, if properly signed and returned to Bancshares
and not revoked prior to its use, will be voted in accordance with the
instructions indicated on the proxies. If no contrary instructions are given,
each signed proxy received will be voted in favor of the election of Messrs.
Brown and Hellstrom and in favor of the ratification of KPMG LLP and in the
discretion of the proxy holder, as to any other matter which may properly come
before the Annual Meeting. Only proxies that are returned can be counted and
voted at the Annual Meeting.
SOLICITATION OF PROXIES
All costs of the solicitation of proxies will be borne by Bancshares. In
addition, directors, officers and other employees of Bancshares or Harbor
Federal Savings Bank (the "Bank") may solicit proxies personally or by telephone
or other means without additional compensation. Bancshares 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.
REVOCATION OF PROXIES
A stockholder who has given a proxy may revoke it at any time prior to its
exercise at the Annual Meeting by (i) giving written notice of revocation to the
Secretary of Bancshares, (ii) properly submitting to Bancshares a duly executed
proxy bearing a later date, or (iii) attending the Annual Meeting and voting in
person. All written notices of revocation and other communications with respect
to revocation of proxies should be addressed as follows: Harbor Florida
Bancshares, Inc., 100 S. Second Street, Fort Pierce, Florida 34950, Attention:
Secretary. Proxies solicited hereby may be exercised only at the Annual Meeting
and will not be used for any other meeting.
VOTING SECURITIES
The securities that may be voted at the Annual Meeting consists of shares
of Common Stock, with each share entitling its owner to one vote on all matters
to be voted on at the Annual Meeting, except as described below. Only holders of
record of Common Stock at the close of business on December 8, 2000 (the "Record
Date"), will be entitled to notice of and to vote at the Annual Meeting. On the
Record Date there were 24,939,297 shares of Common Stock issued and outstanding.
Bancshares had no other class of securities outstanding at this time.
1
<PAGE>
As provided in Bancshares' Certificate of Incorporation, holders of Common
Stock who beneficially own in excess of ten percent of the outstanding shares of
Common Stock (the "Limit") are not entitled to any vote with respect to shares
held in excess of the Limit. A person or entity is deemed to beneficially own
shares owned by an affiliate of, as well as by persons acting in concert with,
such person or entity. The Company's Certificate of Incorporation authorizes the
Board of Directors (i) to make all determinations necessary to implement and
apply the Limit, including determining whether persons or entities are acting in
concert and (ii) to demand that any person who is reasonably believed to
beneficially own stock in excess of the Limit supply information to the Company
to enable the Board of Directors to implement and apply the Limit.
The presence in person or by proxy of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote (after
subtracting any shares in excess of the Limit) is necessary to constitute a
quorum at the Annual Meeting. With respect to any matter, any shares for which a
broker indicates on the proxy that it does not have discretionary authority as
to such shares to vote on such matter ("Broker Non-Votes") will be considered
present for the purposes of determining whether a quorum is present. In the
event there are not sufficient votes for a quorum or to approve or ratify any
proposal at the time of the Annual Meeting, the Annual Meeting shall be
adjourned in order to permit further solicitation of proxies.
VOTING PROCEDURES
Once a quorum has been established, the affirmative vote of a majority of
the outstanding shares of Common Stock present or represented in proxy at the
Annual Meeting is required to approve the proposals described in this proxy
statement, except that directors can be elected by a plurality of stockholders.
Stockholders are not permitted to cumulate their votes for the election of
directors or any other purpose. Votes may be cast for or withheld from each
nominee for election as directors. Votes that are withheld and Broker Non-Votes
will have no effect on the outcome of the election for directors because
directors will be elected by a plurality of votes cast.
With respect to the other proposals to be voted upon at the Annual
Meeting, stockholders may vote for or against a proposal and may abstain from
voting. Ratification of KPMG LLP as independent auditors for the fiscal year
ending September 30, 2001, will require the affirmative vote of a majority of
the outstanding shares of Common Stock present in person or by proxy at the
Annual Meeting and entitled to vote. Abstentions will have the same effect as a
vote against this proposal. Broker Non-Votes, however, are not counted as
present and entitled to vote on the proposals, and have no effect on such vote.
The Company's annual report to stockholders for its fiscal year ended
September 30, 2000 (the "Annual Report"), is mailed herewith to stockholders.
The Company will file with the Securities and Exchange Commission (the "SEC") an
Annual Report on Form 10-K for the fiscal year ended September 30, 2000.
Stockholders may obtain, free of charge, either an additional copy of the Annual
Report or a copy of the Annual Report on Form 10-K by requesting it by telephone
or in writing from Toni Santiuste, Harbor Florida Bancshares, Inc., 100 S.
Second Street, Fort Pierce, FL 34950, (561) 460-7002.
Executed, unmarked proxies will be voted for all proposals.
Proxies solicited hereby are to be returned to the Company's transfer
agent, American Stock Transfer & Trust Company. The Board of Directors has
designated Nixon Peabody LLP, the Company's special counsel, to act as Inspector
of Election and tabulate votes at the Annual Meeting. After the final
adjournment of the Annual Meeting, the proxies will be returned to the Company.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of September 30, 2000,
except as specifically noted, with respect to ownership of the Company's Common
Stock by: (i) the Harbor Federal Savings Bank Employee Stock Ownership Plan (the
"ESOP"); (ii) Thomson Horstmann & Bryant, Inc. and Westport Asset Management;
(iii) the executive officers and directors of the Company; and (iv) all the
directors, the Chief Executive Officer and the four
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<PAGE>
highest paid officers (the "Executive Officers") of the Company as a group.
Except for those listed below, Bancshares has no knowledge of any other person
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) who owns beneficially more than 5%
of the Common Stock.
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned(1)
------------------
Name Title or Address Number(2) Percent
---- ---------------- ------ -------
<S> <C> <C> <C>
Harbor Federal Savings Bank Employee 100 S. Second Street
Stock Ownership Plan Fort Pierce, FL 34950 2,137,455 8.46%
Thomson Horstmann & Bryant, Inc. Park 80 West, Plaza Two
Saddle Brook, NJ 07663 1,706,100 6.75%
Westport Asset Management 245 Riverside Avenue
Westport, CT 06880 1,355,500 5.36%
Bruce R. Abernethy, Sr. Vice Chairman of the Board 359,028(3)(12)(14) 1.42%
Richard N. Bird Director 172,071(8) (14) *
Michael J. Brown, Sr. Director, President and Chief
Executive Officer 812,337(4)(15) 3.21%
Edward G. Enns Chairman of the Board 110,915(6)(14) *
Frank H. Fee, III Director 415,541(3)(13)(14) 1.64%
Richard B. Hellstrom Director 178,238(7)(14) *
Richard V. Neill Director 31,231(3)(5) *
Don W. Bebber Senior Vice President 161,108(9) (15) *
Albert L. Fort Senior Vice President 152,489(10) (15) *
David C. Hankle Senior Vice President 254,929(11) (15) 1.01%
J. Hal Roberts Senior Vice President 60,593(16) *
Directors and Executive Officers as a
group (11 persons) N/A 2,708,480 10.72%
</TABLE>
--------------------
(1) Except as otherwise noted, all beneficial ownership by directors and
executive officers is direct and each director or executive officer
exercises sole voting and investment power over the shares.
(footnotes continued on next page)
3
<PAGE>
(2) Reflects information provided by these persons, filings made by these
persons with the Securities and Exchange Commission, and other information
known to Bancshares.
(3) Includes 144,504, 110,755 and 800 shares, respectively, held by the
Directors' Deferred Compensation Plan for the benefit of Messrs.
Abernethy, Fee and Neill.
(4) Includes currently exercisable options to purchase 52,524 shares. Does not
include 34,005 shares held by spouse or 1,201 shares held in trust for the
benefit of grandchildren. Mr. Brown disclaims beneficial ownership of
these shares.
(5) Includes currently exercisable options to purchase 2,000 shares.
(6) Includes currently exercisable options to purchase 41,609 shares. Does not
include 27,026 shares held by spouse. Mr. Enns disclaims beneficial
ownership of the shares held by his spouse.
(7) Includes currently exercisable options to purchase 16,514 shares and
12,018 shares held by spouse.
(8) Includes currently exercisable options to purchase 21,924 shares and
29,635 shares held by spouse, of which 5,797 shares are unvested shares of
restricted stock ("RRP Stock") awarded pursuant to the Harbor Florida
Bancshares 1998 Stock Incentive Plan for Directors, Officers and Employees
(the "Plan").
(9) Includes currently exercisable options to purchase 49,303 shares. Does not
include 2,002 shares held by spouse. Mr. Bebber disclaims beneficial
ownership of the shares held by his spouse.
(10) Includes currently exercisable options to purchase 13,130 shares. Does not
include 22,574 shares held by spouse. Mr. Fort disclaims beneficial
ownership of the shares held by his spouse.
(11) Includes currently exercisable options to purchase 13,130 shares. Does not
include 16,413 shares held by spouse and 12,415 shares held by his
daughters. Mr. Hankle disclaims beneficial ownership of these shares.
(12) Includes currently exercisable options to purchase 53,895 shares. Does not
include 18,981 shares held by spouse. Mr. Abernethy disclaims beneficial
ownership of the shares held by his spouse.
(13) Includes currently exercisable options to purchase 16,514 shares. Does not
include 13,304 shares held by spouse. Mr. Fee disclaims beneficial
ownership of the shares held by his spouse.
(14) Includes 16,546, 14,863, 18,549, 14,863 and 14,863 unvested shares of RRP
Stock awarded, respectively, to Messrs. Abernethy, Bird, Enns, Fee and
Hellstrom. These shares will continue to vest in equal annual installments
for the next three years of continued service on the Board of Directors.
(15) Includes 126,060, 31,515, 31,515 and 31,516 of unvested shares of RRP
Stock awarded, respectively, to Messrs. Brown, Bebber, Fort and Hankle.
These shares will continue to vest in equal annual installments over the
next eight years of continued employment with the Company.
(16) Includes currently exercisable options to purchase 6,500 shares and an
award of 35,493 shares of unvested RRP Stock. Awards of RRP stock will
vest at 15,600 shares over a four year period and 19,893 shares over a
five year period starting on April 19, 2005.
* Represents less than 1% of outstanding shares.
4
<PAGE>
---------------
PROPOSAL I - ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provide that the Board of
Directors be composed of not less than five nor more than 15 members. Currently,
there are seven members, whose terms are divided into three approximately equal
classes. The members of each class are elected for a term of three years. One
class is elected annually.
Two directors, Michael J. Brown, Sr. and Richard B. Hellstrom, will be
elected at the Annual Meeting. The Board of Directors has renominated current
directors Michael J. Brown, Sr. and Richard B. Hellstrom for re-election. If
elected, Messrs. Brown and Hellstrom will each serve as director for a three
year term expiring at the Annual Meeting to be held in 2004.
The Nominating Committee of the Board of Directors determines management
nominees for election as directors. The Bylaws also allow stockholders to submit
nominations in writing directly to the Corporate Secretary of the Company not
fewer than ninety (90) days prior to the date of the Annual Meeting. No
stockholder nominations have been received by the Company. There are no
arrangements known to management between the persons named and any other person
pursuant to which such nominees were selected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE ABOVE
NOMINEES FOR DIRECTOR UNDER THIS PROPOSAL I.
The persons named in the enclosed proxy intend to vote for the election of
the named nominees, unless the proxy is marked by the stockholder to the
contrary. If any nominee is unable to serve, all valid proxies will be voted for
the election of such substitute as the Board of Directors may recommend. The
Board of Directors knows of no reason why any nominee might be unable to serve.
The following table sets forth certain information, as of September 30,
2000, with respect to each nominee, and each director continuing in office.
<TABLE>
<CAPTION>
Name Age Director Since(1) Current Term to Expire(2)
---- --- -------------- ----------------------
<S> <C> <C> <C>
BOARD NOMINEES
Michael J. Brown, Sr. 59 1977 2001
Richard B. Hellstrom 64 1988 2001
DIRECTORS CONTINUING IN OFFICE
Bruce R. Abernethy 65 1983 2002
Edward G. Enns 67 1977 2002
Frank H. Fee, III 57 1987 2003
Richard N. Bird 60 1997 2003
Richard V. Neill, Sr. 66 2000 2003
</TABLE>
--------------------
(1) Includes prior service on the Board of Directors of the Bank, if
applicable.
(2) All terms expire on the date of the Annual Meeting.
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<PAGE>
The principal occupation for the last five years for each nominee and
continuing director of the Company is set forth below.
Bruce R. Mr. Abernethy was elected to the Board in 1983. He
Abernethy, Sr. served as Executive Vice President of the Fort
Pierce/St. Lucie County Chamber of Commerce from May
1991 to May 1993. Prior to that Mr. Abernethy was
operations manager for the Southern Bell Telephone
Company. He currently resides in St. Lucie County,
Florida, and is retired.
Richard N. Bird Mr. Bird was elected to the Board in 1997. He is
President and principal broker of Bird Realty Group,
Inc., a real estate brokerage firm specializing in
commercial real estate in Indian River County. He is
recently retired from elected office after serving
sixteen years on the Indian River County Commission. Mr.
Bird assisted the Bank in forming the Indian River
County Advisory Board and served as a member of that
Board in 1996. He conducts his business in Indian River
County, Florida.
Michael J. Brown, Sr. Mr. Brown has served as President and Chief Executive
Officer of the Bank since 1976. He was elected to the
Board in 1977. Prior to joining the Bank, Mr. Brown was
the Chief Financial Officer at University Federal
Savings in Coral Gables, Florida and Prudential Savings
in Clayton, Missouri. Mr. Brown has served as president
of the Chamber of Commerce and the Rotary Club. He has
also been a member of the Federal Home Loan Mortgage
Corporation Advisory Board, and currently serves as a
director of America's Community Bankers.
Edward G. Enns Mr. Enns has served as a Director since 1977. He is the
former owner of the Enns Agency, a property and casualty
insurance agency located in Fort Pierce, Florida. He is
a former County Commission Chairman of St. Lucie County,
Florida, and presently serves as mayor of the city of
Fort Pierce.
Frank H. Fee, III Mr. Fee has served as a Director since 1987. He is an
attorney and President of the law firm of Fee &
Koblegard, P.A. which does business under the registered
name of Fee, Koblegard & DeRoss, a general practice law
firm located in Fort Pierce, Florida. Mr. Fee is also
President of Treasure Coast Abstract & Title Insurance
Company, an abstracting and title insuring agent firm,
and in the business of citrus and cattle production.
6
<PAGE>
Richard B. Hellstrom Mr. Hellstrom has been a Director since 1988. He is the
former President of Lindahl, Browning, Ferrari &
Hellstrom, Inc., a firm specializing in civil,
environmental and agricultural engineering. He currently
resides in St. Lucie County, and is retired.
Richard V. Neill, Sr. Mr. Neill is an attorney and Chairman of the Board of
the law firm of Neill, Griffin, Jeffries, Fowler,
Tierney & Neill, Chartered. The firm conducts a general
practice. Mr. Neill engages in trial practice in Fort
Pierce, Florida. He has served on the Board of Governors
of the Florida Bar and is a Fellow of the American
College of Trial Lawyers. Through a family business, Mr.
Neill is also engaged in tomato farming and production
of cattle.
Board Meetings and Committees
The Board of Directors currently meets once a month and may have
additional meetings. During the fiscal year ended September 30, 2000, the Board
met 13 times. All Directors who served as directors during the fiscal year ended
September 30, 2000, attended at least 75% of Board meetings. All committee
members attended at least 75% of the meetings of their respective committees.
The standing committees include the following:
Report of the Audit Committee. The Audit Committee met four times during
the fiscal year ended September 30, 2000. The Audit Committee is appointed by
the Board of Directors to assist the Board in fulfilling its oversight
responsibilities. No member of the Audit Committee is employed by or has any
material relationships with the Company. The Audit Committee's primary duties
and responsibilities are to:
o Monitor the integrity of the Company's financial reporting
process and system of internal controls regarding finance,
accounting, legal and regulatory compliance.
o Monitor the independence and performance of the Company's
independent auditors and internal audit/compliance department.
o Provide an avenue of communication among the independent
auditors, management, the internal audit/compliance department
and the Board of Directors.
The Audit Committee is independent in accordance with the amended issuer
rules of the National Association of Securities Dealers. The Audit Committee
recommended, and the Board of Directors has adopted, a written Audit Committee
Charter. The charter is attached as Exhibit A. In addition, during the fiscal
year the Audit Committee has taken the following actions:
o Reviewed and discussed the Company's financial statements for
the 2000 fiscal year with management of the Company.
o Discussed with the Company's independent auditors the matters
required to be discussed under SAS 61 (Codification of
Statements on Auditing Standards) and discussed and received
written disclosures and the letter required by Independence
Standards Board Standard No. 1 (Independence Standards Board
Standard No. 1, "Independence Discussions With Audit
Committees").
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Based upon the foregoing, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Company's
annual report on Form 10-K for the fiscal year ended September 30, 2000.
Bruce R. Abernethy, Sr., Chairman
Edward G. Enns
Richard B. Hellstrom
Compensation Committee. The Compensation Committee met six times in fiscal
2000. It reviews and discusses employee performance and prepares recommendations
for annual salary adjustments and bonuses. The Committee also administers the
Bank and the Company's stock benefit plans, except the ESOP. This committee
currently consists of Messrs. Abernethy, Enns, and Hellstrom.
Credit Committee. The Credit Committee met 12 times in fiscal 2000. It
evaluates and takes action on credit applications that represent a total
exposure over a certain threshold. The Committee meets on an as-needed basis and
consists of Directors Abernethy, Bird, Enns, Fee, Hellstrom and Neill. The
Committee requires a quorum of three (3) members in order to conduct business.
ESOP Committee. The ESOP Committee administers the ESOP. The Committee
currently consists of Messrs. Abernethy, Enns and Hellstrom. The Committee held
no meetings during the 2000 fiscal year.
Directors' Fees
All directors receive an annual fee of $22,260 per year for serving on the
Board. The Chairman of the Board, Edward G. Enns, and the Vice Chairman, Bruce
R. Abernethy, Sr., receive $27,780 and $24,780 per year, respectively. Directors
Abernethy, Fee and Neill defer their compensation through the Directors'
Unfunded Deferred Compensation Plan. In addition, each Director is covered by a
Group Accident and Travel Plan at a cost of $210 per year per Director. The
Chairman and Vice-Chairman devote approximately 10% and 8%, respectively, of
their professional time to the affairs of the Company. President Brown receives
no fees for serving on the Board of Directors.
Director Retirement Plan
The Bank has established a Director Retirement Plan. Under this plan,
non-employee directors who served on the Board of Directors for ten (10) years
and have attained the age of 65 are entitled to receive annually until death a
payment upon retirement equal to 2 1/2% of the average of the annual Board fee
paid such directors for the last three years of service multiplied by his years
of Board service (not to exceed 50% of the average annual retainer). In 1996,
the Board discontinued this plan on a prospective basis. Directors who were
elected to the Board after 1996, such as Richard N. Bird and Richard V. Neill,
are not eligible to participate in this plan.
Directors' Unfunded Deferred Compensation Plan
The Unfunded Deferred Compensation Plan for Directors (the "Directors'
Deferred Compensation Plan") provides that a director may elect to defer all or
part of his annual director fees to fund the Directors' Deferred Compensation
Plan. The plan also provides that deferred fees are to earn interest at an
annual rate equal to the 30-month certificate of deposit rate adjusted and
compounded quarterly. Amounts deferred under the Directors' Deferred
Compensation Plan are distributed in annual installments over a ten year period
beginning with the first day of the calendar year immediately following the year
in which the director ceases to be a director. The Directors' Deferred
Compensation Plan also provides methods of distribution in the event of the
death of the participant as well as retirement or removal from the Board. As of
September 30, 2000, the Directors' Deferred Compensation Plan held 144,504
110,755, 800 and 39,327 shares of common stock for Messrs. Abernethy, Fee, Neill
and Director Emeritus Richard Davis, respectively. These shares were acquired by
the Plan utilizing deferred annual director fees of Messrs. Abernethy, Davis,
Fee and Neill. Currently Directors Abernethy, Neill and Fee are deferring
director fees pursuant to the Directors' Deferred Compensation Plan.
8
<PAGE>
Executive Compensation
The following table sets forth the compensation paid to Mr. Michael J.
Brown, Sr., President and Chief Executive Officer and the four Executive
Officers.
<TABLE>
<CAPTION>
Long-Term All Other
Annual Compensation Compensation Compensation(2)
------------------- ------------ ------------
Restricted
Name and Stock Number of
Principal Position Year(1) Salary Bonus Awards(3) Options(4)
------------------ ---- ------ ----- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Brown, Sr. 2000 $284,270 $0 $0 0 $142,550
President 1999 277,613 26,758 0 0 159,556
1998 265,057 25,244 1,684,466 262,623 153,370
Don W. Bebber 2000 $135,833 $0 $0 0 $19,159
Senior Vice President- 1999 130,858 12,265 0 0 34,377
Chief Financial Officer 1998 120,792 11,150 421,111 65,656 36,074
Albert L. Fort 2000 $114,917 $0 $0 0 $20,276
Senior Vice President- 1999 112,017 10,710 0 0 31,882
Operations 1998 106,083 10,100 421,111 65,655 34,313
David H. Hankle 2000 $141,003 $0 $0 0 $19,220
Senior Vice President - 1999 137,708 13,275 0 0 37,850
Credit Administration/ 1998 131,792 12,700 421,111 65,655 42,192
Commercial Lending
J. Hal Roberts 2000 $140,833 $0 $213,850 7,155 $4,077
Senior Vice President - 1999 62,560 0 231,660 58,500 543
Marketing/Human Resources
</TABLE>
--------------------------
(1) The Company and the Bank's fiscal years each end September 30.
(2) For fiscal 2000 other compensation consists of insurance payments of
$3,749, $3,677, $2,961, $3,739 and $3,488 for Messrs. Brown, Bebber, Fort,
Hankle and Roberts, respectively and contributions to the ESOP in the
equivalent amount of $15,482, $15,482, $15,482 and $15,482 for Messrs.
Brown, Bebber, Fort and Hankle, respectively. Additionally, the Bank
contributed $1,831 and $589 to Messrs. Fort and Roberts, respectively,
pursuant to the Bank's 401(k) Profit Sharing Plan and Trust. The Bank also
contributed $123,318 to fund Mr. Brown's Supplemental Executive Retirement
Plan. Other personal benefits provided by the Company or the Bank have not
been listed. The aggregate amount of such benefits does not exceed the
lesser of $50,000, or 10% of each named executive officers' cash
compensation.
(3) Represents restricted shares of Common Stock awarded by the Compensation
Committee pursuant to the Harbor Florida Bancshares, Inc. 1998 Stock
Incentive Plan for Directors, Officers and Employees (the "Plan"). On
April 19, 2000, Mr. Roberts was awarded additional restricted stock
pursuant to the Plan in equal annual installments of 20% beginning on
April 19, 2005. The value of such shares, when awarded,
9
<PAGE>
was determined by the closing price of the Common Stock on April 19, 2000
($10.75 per share), multiplied by the number of shares awarded.
(4) Options awarded in fiscal 2000 were awarded pursuant to the 1998 Stock
Incentive Plan.
----------------------
Option Grants in Last Fiscal Year. No options were granted during fiscal
2000 to Messrs. Brown, Hankle, Bebber and Fort. Mr. Roberts was awarded options
at $10.75 per share for 7,155 shares.
Aggregate Option Exercises and Year-End Option Values. The following table
sets forth the number of shares acquired on the exercise of stock options and
the aggregate gains realized on the exercise during fiscal 2000 by Messrs.
Brown, Bebber, Fort, Hankle and Roberts. The table also sets forth the number of
shares covered by exercisable and unexercisable options held by the named
individuals on September 30, 2000, and the aggregate gains that would have been
realized had these options been exercised on September 30, 2000, even though
these options were not exercised, and the unexercised options could not have
been exercised, on September 30, 2000. Certain per share numbers are adjusted
for the conversion at which all existing shares of Harbor Florida Bancorp, Inc.
were exchanged for 6.0094 shares of Common Stock.
<TABLE>
<CAPTION>
Shares
Acquired On
Exercise Number of Shares Value of Unexercised
During Value Covered by Unexercised In-The-Money
Name Fiscal 2000 Realized(1) Options on 9/30/00 Options As Of 9/30/00(2)
---- ----------- -------- ------------------ ---------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Brown, Sr. 0 $0 52,524 240,145 $72,089 $494,972
Don W. Bebber 11,613 115,535 49,303 55,530 394,311 94,840
Albert L. Fort 0 0 13,130 55,525 18,021 94,838
David C. Hankle 0 0 13,130 55,529 18,021 94,838
J. Hal Roberts 0 0 6,500 59,155 6,488 18,750
</TABLE>
--------------------------
(1) Equals the difference between the aggregate exercise price of the options
exercised and the aggregate fair market value of the Common Stock received
upon exercise computed using the price of the last sale of the Common
Stock on the exercise date, as quoted on the Nasdaq National Market and,
if necessary, adjusted for the Conversion. All options exercised had an
adjusted exercise price of $1.66 per share. Mr. Bebber exercised 2,413
options on December 22, 1999, when the adjusted market price of the Common
Stock was $12.50 per share and 9,200 options on January 24, 2000, when the
adjusted market price of the Common Stock was $11.375 per share.
(2) Equals the difference between the aggregate exercise price of such options
and the aggregate fair market value of the Common Stock that will be
received upon exercise, assuming such exercise occurred on Wednesday,
September 30, 2000, at which date the last sale of the Common Stock as
quoted on the NASDAQ National Market was at $12.0625 per share.
--------------------
Employee Stock Ownership Plan. In 1994, the Bank established the ESOP for
employees age 21 or older who have at least one year of credited service with
the Bank. Following the creation of Bancshares, investments in the Harbor
Florida Bancorp, Inc., and previously the Bank's, common stock by the ESOP were
exchanged for Common Stock.
10
<PAGE>
As of September 30, 2000, the ESOP held 2,137,455 shares of Common Stock.
These shares represent both those received by the ESOP in exchange for shares of
Harbor Florida Bancorp, Inc. common stock held before the conversion and as well
as shares purchased by the ESOP in the conversion. Shares of Common Stock
purchased by the ESOP were funded by borrowed funds from Bancshares in the
conversion. Shares purchased in the conversion by the ESOP will be allocated to
participants' accounts over 20 years.
The ESOP is administered by an unaffiliated corporate trustee in
conjunction with the ESOP Committee of the Board. The ESOP trustee must vote all
allocated shares held by the ESOP in accordance with the instructions of
participating employees. Shares for which employees do not give instructions
will be voted by the ESOP trustee.
GAAP requires that any third party borrowing by the ESOP be reflected as a
liability on Bancshares' statement of financial condition. Since the ESOP is
borrowing from Bancshares, such obligation is eliminated in consolidation.
However, the cost of unallocated shares are treated as a reduction of
shareholders' equity.
Contributions to the ESOP and shares released from the suspense account
are allocated among ESOP participants on the basis of participants' compensation
as it relates to total participant compensation. Employees are fully vested upon
completion of five years of service. Benefits may be payable upon retirement,
early retirement, disability, death or separation from service.
The ESOP is subject to the requirements of ERISA and the regulation of IRS
and the United States Department of Labor.
Pension Plan. The Bank provides a noncontributory, defined benefit pension
plan through the Financial Institutions Retirement Fund of White Plains, New
York (the "Pension Plan") which covers all full-time employees who have one year
of service with the Bank and have attained twenty-one years of age. An employee
is 100% vested in the Pension Plan when he/she completes five years of
employment at the Bank. Employees who reach the age of sixty-five (65) are also
100% vested in the Pension Plan, regardless of completed years of employment.
The following table illustrates the annual pension benefits at age 65
under the most advantageous plan provisions available at various levels of
average annual salary and years of service.
<TABLE>
<CAPTION>
Average
Salary 5 10 15 20 25 30 35
------ - -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C>
$ 20,000 $ 2,000 $ 4,000 $ 6,000 $ 8,000 $ 10,000 $ 12,000 $ 14,000
$ 40,000 $ 4,000 $ 8,000 $12,000 $16,000 $ 20,000 $ 24,000 $ 28,000
$ 60,000 $ 6,000 $12,000 $18,000 $24,000 $ 30,000 $ 36,000 $ 42,000
$ 80,000 $ 8,000 $16,000 $24,000 $32,000 $ 40,000 $ 48,000 $ 56,000
$100,000 $10,000 $20,000 $30,000 $40,000 $ 50,000 $ 60,000 $ 70,000
$125,000 $12,500 $25,000 $37,500 $50,000 $ 62,500 $ 75,000 $ 87,500
$150,000 $15,000 $30,000 $45,000 $60,000 $ 75,000 $ 90,000 $105,000
</TABLE>
Normal retirement benefits under the Pension Plan are based on retirement
at or after age sixty-five (65), with the amount of the benefit dependent on
years of service as well as average annual salary for the five (5) consecutive
years of highest salary during service. However, the maximum annual compensation
which may be taken into account under the Internal Revenue Code of 1986, as
amended, for calculating contributions under qualified defined benefit plans is
currently $170,000.
As of September 30, 2000, Messrs. Brown, Bebber, Fort, Hankle and Roberts
have 24, 24, 16, 14 and 16 credited years of service, respectively, under the
Pension Plan. All benefits are computed as a straight-life annuity and are not
subject to deduction for Social Security.
11
<PAGE>
Supplemental Executive Retirement Program. On September 13, 1995, the
Board of Directors approved a Supplemental Executive Retirement Plan ("SERP")
for President Brown. The SERP became effective on that date. The SERP will pay
Mr. Brown an annual retirement benefit at age 65 of 75% of his final five year
average earnings, less the amount payable from the Pension Plan and less the
amount expected to be paid as a Social Security benefit. The SERP benefit will
accrue evenly over Mr. Brown's career so that if Mr. Brown retires or otherwise
terminates his employment before attaining age 65, his benefit will be reduced
on a pro rata basis. In addition, if Mr. Brown receives his benefit before age
65, such benefit will be subject to a reduction of 3% multiplied by the number
of years prior to age 65 that his benefit commences. The SERP is administered by
the Compensation Committee. Payments by the Bank to fund the SERP were $123,318
in fiscal 2000.
Employment Agreement. The Board of Directors entered into a three-year
employment agreement with President Brown effective September 3, 1995. On
November 8, 2000, the Board voted to approve an extension of this agreement
effective January 6, 2001, with a new initial term to continue through January
6, 2004. During the term of the agreement, Mr. Brown's salary is equal to the
initial salary plus any increases which the Board of Directors may authorize
from time to time. The agreement also provides for reimbursement of reasonable
business expenses, participation in the employee benefit programs of the Company
or the Bank and certain other perquisites.
In the event the Company or the Bank terminates President Brown's
employment without cause, he will receive a severance payment equal to his
salary, and will continue to participate in the employee benefit programs of the
Bank, for the balance of the term of the agreement. Mr. Brown's agreement also
provides for certain payments in the event of a change of control under the Bank
Change in Control Act of 1978, a merger or consolidation, voluntary dissolution,
or transfer of all of the Bank's or Bancshares' assets and liabilities. Should
one of these events occur, the Bank's agreement with Mr. Brown would be assumed
by any acquiring or merging entity. Further, in the one-year period following
one of these events, the agreement provides Mr. Brown with certain protection
against termination other than for cause and against a material diminution in
his duties or reporting responsibilities under the presumption that such a
change would amount to an involuntary termination of President Brown's
employment with the Bank. Should one of the enumerated events occur, Mr. Brown
would be entitled to a severance benefit of three times his base salary plus the
amount of bonuses received during the twelve month period preceding the
involuntary termination plus the cost of all benefits which Mr. Brown was
entitled to in the twelve-month period preceding the involuntary termination,
plus, at his election, the excess of the fair value of shares subject to options
held by him over their exercise price, which would then be canceled. Total
amounts paid to Mr. Brown under this provision of the agreement with the Bank
will not exceed an amount which is $100 less than three times the base amount
paid to Mr. Brown as the term "base amount" is defined in Section 280G(b)(3) of
the Internal Revenue Code of 1986. Any payments under the agreement are also
conditioned upon their conformity with the "golden parachute" provisions of
Section 18(k) of the FDI Act.
Change In Control Agreements. On April 19, 2000, Bancshares and the Bank
entered into Change in Control Agreements with each of Messrs. Bebber, Hankle,
Fort and Roberts and Senior Vice President for Retail Banking, Michael J. Brown,
Jr. These agreements provide that, should the officer be terminated by
Bancshares or the Bank within one year following a change in control of
Bancshares or the Bank (other than termination for cause as defined these
agreements), he will receive one year's salary and continue to participate in
the certain employee benefit programs of Bancshares and the Bank for 12 months
following his termination. The aggregate payments under these agreements,
presuming a termination not for cause, are dependent upon the employees' salary
and level of benefits at the time of a change in control. If all five (5) senior
vice presidents were terminated not for cause during fiscal 2000, the total
payment would be $632,094. These agreements have an initial three year term and
may be extended by the Board of Directors.
12
<PAGE>
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee (the "Committee") currently consists of Directors
Hellstrom, Abernethy and Enns, none of whom have ever been an officer or
employee of the Bank or Bancshares. None of the above are members of a
compensation committee of the Board of Directors of any company other than
Bancshares and the Bank.
Report of the Compensation Committee. The Committee reviews and recommends
to the Board of Directors compensation levels for executive officers and
evaluates executive officer performance. All members of the Committee are
outside directors of the Company.
The Company's compensation policy is to ensure that an appropriate
relationship exists between executive pay and the creation of shareholder value,
while at the same time motivating and retaining key officers. To achieve this
goal, the Company's compensation policy integrates base salary with annual
bonuses, as well as awards of stock options and restricted stock. The Committee
considers each potential element when determining compensation goals.
President Brown's compensation and related benefits are based principally
on his rights under his employment agreement with the Bank, which is described
elsewhere in this Proxy Statement. However, the Committee also considers the
performance of the Company as well as the performance of the Common Stock.
Pursuant to the employment contract, Mr. Brown's salary was $284,270 for fiscal
2000. Mr. Brown's present salary is $313,720. Mr. Brown's salary is based on
many factors, including the Company's Return on Assets, the Company's Return on
Equity, growth and earnings per share as well as the price of the Common Stock
throughout fiscal 2000. The Committee noted that the Company's return on average
assets for fiscal 2000 was 1.44%, the return on equity was 9.82% and diluted
earnings per share increased 15.7% to 88 cents per share.
In addition to reviewing this information in determining Mr. Brown's
compensation, the Committee reviewed the Bank's prior year's financial
performance and prevailing market rates of compensation for Mr. Brown's
position. In particular, the Committee took note of the Bank's growth and growth
in earnings per share.
Richard B. Hellstrom, Chairman
Bruce R. Abernethy, Sr.
Edward G. Enns
CERTAIN TRANSACTIONS
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 an executive officer that exceeded in the aggregate an amount
equal to the greater of $25,000 or 5% of the Bank's capital and surplus, or in
any event $500,000, must be approved in advance by a majority of the
disinterested members of the Board of Directors.
Frank H. Fee, III, a director of the Company, is also President of the law
firm of Fee & Koblegard, P.A. which does business under the registered firm name
of Fee, Koblegard & DeRoss, a general practice law firm. The Company paid
approximately $176,682 in legal fees in the year ended September 30, 2000, to
this law firm.
Michael J. Brown, Jr., Senior Vice President - Retail Banking, is the son
of Michael J. Brown, Sr., President and Chief Executive Officer of the Company.
Director Richard N. Bird is the husband of Wendy L. Bird, a Vice President
of the Bank for Community Reinvestment, Sales and Service Quality.
13
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCES
To the knowledge of the Board and based upon a review of Forms 3 and 4 and
amendments thereto furnished to the Company pursuant to Rule 16a-3(e) during the
fiscal year ended September 30, 1999, no person who is a director, officer or
beneficial owner of 10% of the Common Stock failed to file on a timely basis,
the reports required by Section 16(a) of the Securities Exchange Act.
PERFORMANCE GRAPH
The following graph shows a five year comparison of cumulative total
return on the Common Stock, based on the market price of the Common Stock
assuming reinvestment of dividends, with the cumulative total return of
companies in the NASDAQ National Market and NASDAQ Bank Stocks for the period
October 1, 1995, through September 30, 2000. The price of the Common Stock, as
reflected in the graph, has been adjusted for the Conversion, whereby all
existing shares of Harbor Florida Bancorp, Inc. were exchanged for 6.0094 shares
of Common Stock, is not necessarily indicative of possible future performance of
the Common Stock.
[THE FOLLOWING WAS REPRESENTED BY A PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
9/30/95 9/30/96 9/30/97 9/30/98 9/30/99 9/30/00
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Harbor Federal Bancshares 100.000 137.453 269.089 303.753 367.060 372.725
Nasdaq Index 100.000 118.681 162.918 165.500 270.378 358.956
Nasdaq Bank Index 100.000 127.650 212.644 210.941 224.578 240.955
</TABLE>
PROPOSAL II - RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed the firm of KPMG LLP,
Certified Public Accountants, to continue as independent auditors for the
Company for the fiscal year ending September 30, 2001, subject to ratification
of such appointment by the stockholders. A representative of KPMG LLP will be
present at the Annual Meeting, will be given an opportunity to make a statement
if he or she desires to do so and will be available to respond to appropriate
questions.
14
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR FISCAL 2001
UNDER THIS PROPOSAL II.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors of the
Company knows of no matters to be brought before the Annual Meeting other than
procedural matters incident to the conduct of the Annual Meeting. If further
business is properly presented, the proxy holders will vote proxies, as
determined by a majority of the Board of Directors.
STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Pursuant to the proxy solicitation regulations of the Securities and
Exchange Commission (the "SEC"), any shareholder proposal intended for inclusion
in the Company's proxy statement and form of proxy related to the Company's 2002
Annual Meeting of stockholders must be received by the Company at its principal
executive offices no later than August 3, 2001, pursuant to the proxy
solicitation regulations of the SEC. Nothing in this paragraph shall be deemed
to require the Company to include in its proxy statement and form of proxy any
stockholder proposal which does not meet the requirements of the SEC in effect
at that time.
NOTICE OF BUSINESS TO BE CONDUCTED AT
A SPECIAL OR ANNUAL MEETING
The bylaws of the Company set forth the procedures by which a stockholder
may properly bring business before a meeting of stockholders. The bylaws of the
Company provide an advance notice procedure for a stockholder to properly bring
business before an annual meeting. For proposals not included in the proxy
statement, the stockholder must give written advance notice to the Secretary of
the Company not less than one hundred twenty (120) days before the date
originally fixed for such meeting; provided, however, that in the event that
less than one hundred (100) days notice or prior public disclosure of the date
of the meeting is given or made to stockholders, notice by the stockholder to be
timely must be received not later than the close of business on the tenth day
following the date on which the Company's notice to stockholders of the annual
meeting date was mailed or such public disclosure was made. The advance notice
by stockholders must include the stockholder's name and address, as they appear
on the Company's record of stockholders, a brief description of the proposed
business, the reason for conducting such business at the annual meeting, the
class and number of shares of the Company's capital stock that are beneficially
owned by such stockholder and any material interest of such stockholder in the
proposed business. Nothing in this paragraph shall be deemed to require the
Company to include in its proxy statement or the proxy relating to any annual
meeting any stockholder proposal which does not meet all of the requirements for
inclusion established by the Securities and Exchange Commission in effect at the
time such proposal is received.
15
<PAGE>
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are then present at the Annual
Meeting and wish to vote your shares in person, your original proxy may be
revoked by voting at the Annual Meeting. However, if you are a stockholder whose
shares are not registered in your own name, you will need appropriate
documentation from your recordholder to vote personally at the Annual Meeting.
By Order of the Board of Directors
Michael J. Brown, Sr.
President and CEO
Fort Pierce, Florida
December 15, 2000
16
<PAGE>
EXHIBIT A
HARBOR FLORIDA BANCSHARES, INC.
Charter of the Audit Committee of the Board of Directors
I. Audit Committee Purpose
The Audit Committee is appointed by the Board of Directors to assist the
Board in fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:
o Monitor the integrity of the Harbor Florida Bancshares, Inc.'s
(Company) financial reporting process and system of internal
controls regarding finance, accounting, legal and regulatory
compliance.
o Monitor the independence and performance of the Company's
independent auditors and internal audit/compliance department.
o Provide an avenue of communication among the independent auditors,
management, the internal audit/compliance department, and the Board
of Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access
to the independent auditors as well as anyone in the organization. The
Audit Committee has the ability to retain, at the Company's expense,
special legal, accounting or other consultants or experts it deems
necessary in the performance of its duties.
II. Audit Committee Composition and Meetings
The Audit Committee members shall meet the requirements of the NASD
Exchange and Section 112 of FDICIA. The Audit Committee shall be comprised
of three directors as determined by the Board, each of whom shall be
independent nonexecutive directors, free from any relationship that would
interfere with the exercise of their independent judgment. All members of
the Committee shall have a basic understanding of finance and accounting
and be able to read and understand fundamental financial statements, and
at least one member of the Committee shall have accounting or related
financial management expertise such as being or having been a chief
executive officer, chief financial officer or other senior officer with
financial oversight responsibilities.
<PAGE>
Harbor Florida Bancshares, Inc.
Audit Committee Charter
Page 2 of 4
Audit Committee members shall be appointed by the Board. If an audit
committee Chair is not designated or present, the members of the Committee
may designate a Chair by majority vote of the Committee membership.
The committee shall meet at least four times annually, or more frequently
as circumstances dictate. The Audit Committee Chair shall prepare and/or
approve an agenda in advance of each meeting. The Committee and/or Board
of Directors should meet at least annually with management, the director
of internal audit/compliance department, and the independent auditors, to
discuss any matters that the committee/board or each of these groups
believes should be discussed. If matters are identified during the
quarterly review which need to be communicated under SAS 61, the
independent auditors will communicate them to the audit committee or be
satisfied that they have been communicated to the audit committee by
management.
III. Audit Committee Responsibilities and Duties
Review Procedures
1. Review and reassess the adequacy of this Charter at least annually.
Submit the charter to the Board of Directors for approval and have
the document published at least every three years in accordance with
SEC regulations.
2. Review the Company's annual audited financial statements prior to
filing or distribution. Review should include discussion with
management and independent auditors of significant issues regarding
accounting principles, practices, and judgments.
3. In consultation with the management, the independent auditors, and
the internal auditors, consider the integrity of the Company's
financial reporting processes and controls. Discuss significant
financial risk exposures and the steps management has taken to
monitor, control, and report such exposures. Review significant
findings prepared by the independent auditors and the internal
audit/compliance department together with management's reponses.
4. Review with financial management and/or the independent auditors,
the Company's quarterly financial results if matters are identified
during the quarterly review, which need to be communicated under SAS
61.
<PAGE>
Harbor Florida Bancshares, Inc.
Audit Committee Charter
Page 3 of 4
Independent Auditors
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall
review the independence and performance of the auditors and annually
recommend to the Board of Directors the appointment of the
independent auditors or approve any discharge of auditors when
circumstances warrant.
6. Review and/or approve the fees and other significant compensation to
be paid to the independent auditors.
7. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with
the Company that could impair the auditors' independence.
8. Review the independent auditors audit plan and engagement letter -
discuss scope, staffing, locations, reliance upon management, and
internal audit and general audit approach.
9. Prior to releasing the audited year-end earnings, discuss the
results of the audit with the independent auditors. Discuss certain
matters required to be communicated to audit committees in
accordance with AICPA SAS 61.
10. Consider the independent auditor's judgements about the quality and
appropriateness of the Company's accounting principles as applied in
its financial reporting.
Internal Audit Department and Regulatory Compliance and Legal Compliance
11. Review the budget, plan, and changes in plan, activities,
organizational structure, and qualifications of the internal
audit/compliance department, as needed.
12. Review the appointment, performance, and replacement of the senior
internal audit executive.
13. Review significant reports prepared by the internal audit/compliance
department together with management's response and follow-up to
these reports.
<PAGE>
Harbor Florida Bancshares, Inc.
Audit Committee Charter
Page 4 of 4
14. Review all reports concerning any significant fraud or regulatory
noncompliance that occurs at the Company.
15. As needed, review with the Company's counsel, any legal matters that
could have a significant impact on the company's financial
statements.
Other Audit Committee Responsibilities
16. Annually prepare a report to shareholders as required by Securities
and Exchange Commission. The report should be included in the
Company's annual proxy statement.
17. Perform any other activities consistent with this Charter, the
Company's by-laws, and governing law, as the Committee or the Board
deems necessary or appropriate.
18. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
<PAGE>
REVOCABLE PROXY REVOCABLE PROXY
HARBOR FLORIDA BANCSHARES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
HARBOR FLORIDA BANCSHARES, INC. TO BE USED AT THE ANNUAL MEETING
OF STOCKHOLDERS ON JANUARY 19, 2001
The undersigned being a stockholder of Harbor Florida Bancshares, Inc.
hereby appoints Frank H. Fee, III and Bruce R. Abernethy, or each of them, with
full power of substitution in each, as proxies to cast all votes which the
undersigned stockholder is entitled to cast at the Annual Meeting of
Stockholders to be held at 10:00 a.m., Florida Time, on January 19, 2001, Old
City Hall Annex, 315 Avenue A, Fort Pierce, Florida 34950, and any adjournments
thereof. The undersigned stockholder hereby revokes any proxy or proxies
heretofore given.
If you receive more than one proxy card, please sign and return all cards
in the accompanying envelope. Please check your mailing address as it appears on
this Revocable Proxy. If it is inaccurate, please include your correct address
below.
This proxy will be voted as directed or, if no direction is given, will be
voted FOR the nominees under PROPOSAL I and FOR the auditors under PROPOSAL II.
NEW ADDRESS:
-----------------------------
-----------------------------
-----------------------------
<PAGE>
The Board of Directors recommends a vote FOR PROPOSALS I and II.
I. Election of two directors for three year terms each.
Nominees: Michael J. Brown, Sr. and Richard B. Hellstrom.
___ FOR all nominees. ___ WITHHELD from all nominees.
___ FOR, except vote withheld from the following:
Nominee: _______________, _______________
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided above.)
II. Ratification of the appointment of KPMG LLP, Certified Public
Accountants, as Harbor Florida Bancshares' independent auditors for
the fiscal year ending September 30, 2001.
___ FOR ___ AGAINST ___ ABSTAIN
In their discretion the proxies are authorized to vote with respect to
approval of the minutes of the last meeting of stockholders, matters incident to
the conduct of the meeting, and upon such other matters as may properly come
before the meeting.
[ ] Dated: _________________, ________
__________________________________
__________________________________
[ ] (Signature)
Please date this Revocable Proxy
and sign, exactly as your name(s)
appears on your stock certificate.
If signing as a fiduciary, please
give your full title.
MARK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING: ____
2
