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 Section 240.14a-11(c) or Section 240.14a-12
COMMUNITY FIRST BANCORPORATION
(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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid
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 statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
COMMUNITY FIRST BANCORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO OUR SHAREHOLDERS:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of the Shareholders of Community
First Bancorporation will be held at Community First Bank, Seneca Office, 1600
Sandifer Boulevard, Seneca, South Carolina, on Tuesday, April 20, 1999, at 1:30
p.m., for the following purposes:
(1) To elect four directors to each serve a three-year term; and
(2) To act upon other such matters as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on March 1, 1999, are
entitled to notice of and to vote at the meeting. In order that the meeting can
be held, and a maximum number of shares can be voted, whether or not you plan to
be present at the meeting in person, please fill in, date, sign and promptly
return the enclosed form of proxy. The Company's Board of Directors unanimously
recommends a vote FOR approval of all of the proposals presented.
Returning the signed proxy will not prevent a record owner of shares from
voting in person at the meeting.
Included herewith is the Company's 1999 Proxy Statement. Also included is
the Company's 1998 Annual Report to Shareholders.
By Order of the Board of Directors
March 25, 1999 Frederick D. Shepherd, Jr.
President
<PAGE>
COMMUNITY FIRST BANCORPORATION
3685 Blue Ridge Boulevard
Walhalla, South Carolina 29691
(864) 638-2105
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Community First Bancorporation (the
"Company") for use at the Annual Meeting of Shareholders to be held at 1:30 p.m.
on Tuesday, April 20, 1999 in Community First Bank's Seneca Office, 1600
Sandifer Boulevard, Seneca, South Carolina. A Notice of Annual Meeting is
attached hereto, and a form of proxy is enclosed. This statement was first
mailed to shareholders on or about March 25, 1999, in connection with the
solicitation. The cost of this solicitation is being paid by the Company. The
only method of solicitation to be employed, other than use of the proxy
statement, is personal telephone contact by directors and regular employees of
the Company.
ANNUAL REPORT
The Annual Report to Shareholders covering the Company's fiscal year ended
December 31, 1998, including financial statements, is enclosed herewith. Such
Annual Report to Shareholders does not form any part of the material for the
solicitation of proxies.
REVOCATION OF PROXY
Any record shareholder who executes and delivers a proxy has the right to
revoke it at any time before it is voted. The proxy may be revoked by a record
shareholder by delivering to Frederick D. Shepherd, Jr., President, Community
First Bancorporation, 3685 Blue Ridge Boulevard, Walhalla, South Carolina 29691
or by mailing to Mr. Shepherd at Post Office Box 1097, Walhalla, South Carolina
29691, an instrument which by its terms revokes the proxy. The proxy may also be
revoked by a record shareholder by delivery to the Company of a duly executed
proxy bearing a later date. Written notice of revocation of a proxy or delivery
of a later dated proxy will be effective upon receipt thereof by the Company.
Attendance at the Annual Meeting will not in itself constitute revocation of a
proxy. However, any shareholder who desires to do so may attend the meeting and
vote in person in which case the proxy will not be used.
QUORUM AND VOTING
At the close of business on March 1, 1999, there were outstanding 1,793,792
shares of the Company's common stock (no par value). Each share outstanding will
be entitled to one vote upon each matter submitted at the meeting. Only
stockholders of record at the close of business on March 1, 1999 (the "Record
Date"), shall be entitled to notice of and to vote at the meeting.
A majority of the shares entitled to be voted at the annual meeting
constitutes a quorum. If a share is represented for any purpose at the annual
meeting by the presence of the registered owner or a person holding a valid
proxy for the registered owner, it is deemed to be present for purposes of
establishing a quorum. Therefore, valid proxies which are marked "Abstain" or
"Withhold" and shares that are not voted, including proxies submitted by brokers
that are the record owners of shares (so-called "broker non-votes"), will be
included in determining the number of votes present or represented at the annual
meeting. If a quorum is not present or represented at the meeting, the
shareholders entitled to vote, present in person or represented by proxy, have
the power to adjourn the meeting from time to time. If the meeting is to be
reconvened within thirty days, no notice of the reconvened meeting will be given
other than an announcement at the adjourned meeting. If the meeting is to be
adjourned for thirty days or more, notice of the reconvened meeting will be
given as provided in the Bylaws. At any reconvened meeting at which a quorum is
present or represented, any business may be transacted that might have been
transacted at the meeting as originally noticed.
<PAGE>
If a quorum is present at the Annual Meeting, directors will be elected by
a plurality of the votes cast by shares present and entitled to vote at the
annual meeting. Cumulative voting is not permitted. Votes that are withheld or
that are not voted in the election of directors will have no effect on the
outcome of election of directors. If a quorum is present all other matters that
may be considered and acted upon at the Annual Meeting will be approved if the
number of shares of Common Stock voted in favor of the matter exceed the number
of shares of Common Stock voted against the matter.
ACTIONS TO BE TAKEN BY THE PROXIES
The persons named as proxies were selected by the Board of Directors of the
Company. When the form of proxy enclosed is properly executed and returned, the
shares that it represents will be voted at the meeting. Each proxy, unless the
shareholder otherwise specifies therein, will be voted "FOR" the election of the
persons named in this Proxy Statement as the Board of Directors' nominees for
election to the Board of Directors. In each case where the shareholder has
appropriately specified how the proxy is to be voted, it will be voted in
accordance with his specifications. As to any other matter of business which may
be brought before the Annual Meeting, a vote may be cast pursuant to the
accompanying proxy in accordance with the best judgment of the persons voting
the same, but the Board of Directors does not know of any such other business.
SHAREHOLDER PROPOSALS
Any shareholder who wishes to submit proposals for the consideration of the
shareholders at the next Annual Meeting may do so by mailing them in writing to
Frederick D. Shepherd, Jr., President, Community First Bancorporation, Post
Office Box 1097, Walhalla, South Carolina 29691, or by delivering them in
writing to Mr. Shepherd at the Company's main office, 3685 Blue Ridge Boulevard,
Walhalla, South Carolina 29691. Such written proposals must be received prior to
November 26, 1999, for inclusion, if otherwise appropriate, in the Company's
Proxy Statement and form of Proxy relating to that meeting. With respect to any
shareholder proposal not received by the Company prior to February 9, 2000,
proxies solicited by management of the Company will be voted on the proposal in
the discretion of the designated proxy agents.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS
Set forth below is information as of March 1, 1999 about persons who are
currently beneficial owners of 5% or more of the Company's common stock.
Name and Number of Shares % of outstanding
Address Beneficially owned common stock
------- ------------------ ------------
Frederick D. Shepherd, Jr. 128,960(1) 6.9%
3685 Blue Ridge Blvd.
Walhalla, S.C. 29691
Dwight A. Holder 109,190 6.1%
P.O. Box 998
Pickens, S.C. 29671
James E. Turner 115,182(2) 6.4%
P. O. Box 367
Seneca, S.C. 29679
- - ----------
(1) Includes presently exercisable options to purchase 69,756 shares.
(2) Includes presently exercisable options to purchase 1,200 shares.
2
<PAGE>
The number of shares owned, and the percentage of outstanding common stock
such number represents, for all directors, nominees and officers of the Company
is set forth below under "MANAGEMENT OF THE COMPANY."
ELECTION OF DIRECTORS
At the Annual Meeting, four directors are to be elected to hold office for
the next three years, their terms expiring at the 2002 Annual Meeting of
Shareholders, or until their successors are duly elected and qualified. Pursuant
to the bylaws of the Company, the Board of Directors acts as a nominating
committee. The Board has nominated R. Theo Harris, Sr., James E. McCoy, James E.
Turner and Charles L. Winchester each to serve a three year term. Any other
nominations must be made in writing and delivered to the President of the
Company in accordance with the procedures set forth below under "--Committees of
the Board of Directors."
It is the intention of the persons named in the enclosed form of proxy to
vote for the election as directors of Messrs. Harris, McCoy, Turner and
Winchester. Unless a contrary specification is indicated, the enclosed form of
proxy will be voted FOR such nominees. In the event that any such nominee is not
available by reason of any unforeseen contingency, it is intended that the
persons acting under the proxy will vote for the election, in his stead, of such
other person as the Board of Directors of the Company may recommend. The Board
of Directors has no reason to believe that any of the nominees will be unable or
unwilling to serve if elected.
MANAGEMENT OF THE COMPANY
The table shows as to each director and nominee his name and positions held
with the Company, the period during which he has served as a director of the
Company, and the number of shares of the Company's common stock owned by him at
March 1, 1999. Directors of the Company serve until the annual meeting for the
year indicated or until their successors are elected and qualified.
<TABLE>
<CAPTION>
NUMBER OF % SHARES POSITIONS WITH DIRECTOR
AGE SHARES(1) OUTSTANDING THE COMPANY SINCE*
Nominees for re-election to the Board of Directors whose terms of
office will continue until the Annual Meeting of Shareholders in 2002 are:
<S> <C> <C> <C> <C> <C>
R. Theo Harris, Sr. 76 26,820 1.5% Director 1989
Westminster, S.C.
James E. McCoy 61 61,556(2) 3.4% Chairman and 1989
Walhalla, S.C. Director
James E. Turner 62 115,182(3) 6.4% Director 1989
Seneca, S.C.
Charles L. Winchester 58 59,890(4) 3.3% Director 1989
Sunset, S.C.
<CAPTION>
Members of the Board of Directors whose terms will continue until the
Annual Meeting of Shareholders in 2001 are:
<S> <C> <C> <C> <C> <C>
Robert H. Edwards 68 62,066(5) 3.5% Director 1989
Walhalla, S.C.
Blake L. Griffith 63 75,928(6) 4.2% Director 1995**
Walhalla, S.C.
Gary V. Thrift 38 38,970(7) 2.2% Director 1995***
Seneca, S.C.
3
<PAGE>
<CAPTION>
Members of the Board of Directors whose terms of office will continue
until the Annual Meeting of Shareholders in 2000 are:
<S> <C> <C> <C> <C> <C>
Larry S. Bowman, M.D. 50 50,210(8) 2.8% Vice Chairman 1989
Seneca, S.C. and Director
William M. Brown 53 51,184(9) 2.9% Director and 1989
Salem, S.C. Secretary
John R. Hamrick 51 52,208(10) 2.9% Director, 1989
Seneca, S.C.
Frederick D. Shepherd, Jr 58 128,960 (11) 6.9% Director, President, 1989
Walhalla, S.C. Chief Executive Officer
and Treasurer
All Directors, nominees
and executive officers
as a group (11 persons) 722,974(12) 38.5%
</TABLE>
Except as otherwise indicated, to the knowledge of management, all shares are
owned directly with sole voting power.
- - --------------------
*Includes service as a director of Community First Bank prior to its acquisition
by the Company in 1997.
**Mr. Griffith previously served on the Board of Directors from 1989 to 1993.
***Mr. Thrift previously served on the Board of Directors from 1989 to 1992.
(1) Includes for each director 1,200 shares subject to currently exercisable
options.
(2) Includes 53,824 shares over which Mr. McCoy shares voting control with his
wife, Charlotte B. McCoy, and an additional 3,266 shares owned by Charlotte
B. McCoy.
(3) Includes 8,154 shares owned jointly with Patricia S. Turner, Mr. Turner's
wife; and 13,310 owned by Mrs. Turner.
(4) Includes 25,682 shares jointly owned with Joan O. Winchester, Mr.
Winchester's wife; 1,944 shares owned by Joan O. Winchester; 276 shares
held as custodian for Samantha Brooke Reeves, 264 shares held as custodian
for Savannah Lauren Kent, 276 shares held as custodian for Andrew Calton
Kent, and 264 shares held as custodian for Charlie Raye Reeves, Mr.
Winchester's grandchildren.
(5) Includes 14,360 shares jointly owned with Ruth D. Edwards, Mr. Edward's
wife; 4,048 shares owned by Ruth D. Edwards; 8,188 shares owned by Edwards
Auto Sales, Inc. Profit Sharing Plan; 3,674 shares owned by Robert H.
Edwards LLC; and 834 shares held as trustee for Bobbie Jean Shepard, 974
shares held as trustee for Catherine Elizabeth Edwards, and 834 shares held
as Trustee for Natalie M. Edwards, Mr. Edwards' grandchildren.
(6) Includes 10,922 shares owned by Susan P. Griffith, Mr. Griffith's wife; and
63,706 shares jointly owned with Susan P. Griffith.
(7) Includes 3,676 shares held as guardian for Catherine Hayley Thrift, 882
shares held as guardian for Rushton G. Thrift, and 2,574 shares held as
guardian for Ford H. Thrift, Mr. Thrift's children.
(8) Includes 22,082 shares jointly owned with Mary M. Bowman, Dr. Bowman's
wife; 14,468 shares owned by Mary M. Bowman; 3,300 shares owned by Mary W.
Bowman, Dr. Bowman's daughter; and 2,792 shares held as trustee for Mary W.
Bowman and 6,092 shares held as trustee for Robert B. Bowman, Dr. Bowman's
children.
(9) Includes 2,792 shares held as custodian for Lamar Bailes Brown and 2,792
shares held as custodian for William M. Brown, Jr., Mr. Brown's sons; and
1,064 shares owned by Annie B. Brown, Mr. Brown's wife.
(10) Includes 1,344 shares jointly owned with Frances R. Hamrick, Mr. Hamrick's
wife; 3,515 shares owned by Mr. Hamrick's Defined Benefit Plan; 2,472
shares held as trustee for Maryanne R. Hamrick and 2,472 shares held as
trustee for Sarah E. Hamrick, Mr. Hamrick's daughters; 3,854 shares owned
by Mrs. Hamrick's Defined Benefit Plan; 815 shares owned by Maryanne R.
Hamrick; and 816 shares owned by Sarah E. Hamrick.
(11) Includes presently exercisable options to purchase 69,756 shares.
(12) Includes presently exercisable options to purchase 81,756 shares.
4
<PAGE>
Directors' Business Experience For The Past Five Years
Larry S. Bowman, M.D. Orthopaedic surgeon with Blue Ridge Orthopaedic
Association, P.A.
William M. Brown President and Chief Executive Officer of Lindsay
Oil Company, Inc.
Robert H. Edwards President of Edwards Auto Sales.
Blake L. Griffith President and Chief Executive Officer of Next Day
Apparel, Inc.
John R. Hamrick President of Lake Keowee Real Estate, Inc. and
Broker of ERA Central Real Estate, Inc., (Seneca);
Owner of John Hamrick Real Estate
R. Theo Harris, Sr. Retired educator, beef cattle farmer and trustee
for Blue Ridge Electric Cooperative.
James E. McCoy Plant Manager of the Walhalla Plant of the
Torrington Company.
Frederick D. Shepherd, Jr. President, Chief Executive Officer and Treasurer
of Community First Bank since 1989; President,
Chief Executive Officer and Treasurer of the
Company since May, 1997.
Gary V. Thrift President, Thrift Development Corporation, since
February 1996; Vice President and Secretary,
Thrift Development Corporation July 1995 to
February 1996; General Manager, Tri-County
Builders Supply, since July 1995; Associated with
Thrift Brothers, Inc. November 1992 to July 1995.
James E. Turner Chairman of the Board of Turner's Jewelers, Inc.
Charles L. Winchester President, Winchester Lumber Company, Inc. of
Salem, South Carolina; Vice President, Boones
Lumber Company.
Neither the principal executive officer nor any directors are related
by blood, marriage or adoption in the degree of first cousin or closer.
Meetings of the Board of Directors
During the last full fiscal year, ending December 31, 1998, the Board
of Directors of the Company met 12 times, including regular and special
meetings. Mr. Griffith was the only incumbent director who attended fewer than
75% of the total number of meetings of the Board of Directors and committees of
which he was a member.
Committees of the Board of Directors
Nominating Committee. The Board of Directors acts as nominating committee, but
any Shareholder of any outstanding class of capital stock of the Company
entitled to vote for the election of Directors may also present nominations for
directors. Nominations, other than those made by or on behalf of the existing
management of the Company, shall be made in writing and shall be delivered or
mailed to the President of the Company, not less than 14 days nor more than 50
days prior to any meeting of Shareholders called for the election of Directors;
provided, however, that if less than 21 days' notice of the meeting is given to
Shareholders, such nomination shall be mailed or delivered to the President of
the Company not later than the close of business on the seventh day following
the date on which the notice of meeting was mailed. Such notification shall
contain the following information to the extent known to the notifying
Shareholder: (a) the name and address of each proposed nominee; (b) the
principal occupation of each proposed nominee; (c) the total number of shares of
capital stock of the Company that will be voted for each proposed nominee; (d)
the name and residence address of the notifying Shareholder. Nominations not
made in accordance with these requirements may be disregarded by the President
of the meeting, and upon his instructions, the vote tellers may disregard all
votes cast for each such nominee.
5
<PAGE>
Audit Committee. The Audit Committee is responsible for seeing that audits of
the Company are conducted annually. A firm of certified public accountants is
employed for that purpose by the Board of Directors upon recommendation of the
Audit Committee. Reports on these audits are reviewed by the Committee upon
receipt and a report thereon is made to the Board at its next meeting. The Audit
Committee is comprised of Messrs. Edwards, Hamrick, Winchester and Harris. The
Audit Committee met twice in 1998.
Compensation Committee. The Company does not have a standing compensation
committee of the Board of Directors or a committee serving similar functions.
MANAGEMENT COMPENSATION
Executive Officer Compensation
The following table sets forth information about the chief executive
officer's compensation. No other executive officers earned $100,000 or more
during the year ended December 31, 1998.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Annual Compensation Awards
------------------- ------
Number of
Securities
Underlying All Other
Options Compen-
Name and Principal Position Year Salary(1)(2) Bonus Awarded sation(3)
- - --------------------------- ---- ------------ ----- ------- ---------
<S> <C> <C> <C> <C> <C>
Frederick D. Shepherd, Jr. 1998 $151,279 $14,500 14,000(4) $5,000
President, Chief Executive 1997 129,400 12,700 - 3,871
Officer and Treasurer 1996 123,983 -0- 5,750(5) 2,988
- - ---------------
</TABLE>
(1) Includes $3,600, $3,600 and $2,400 of director's fees in 1998, 1997, and
1996, respectively.
(2) The Company also pays club dues for Mr. Shepherd and provides him with the
use of a Company car for business and personal use. Mr. Shepherd reimburses
the Company for mileage for personal use of the car. The total of such
benefits paid for Mr. Shepherd was less than 10% of his annual salary and
bonus payments. Mr. Shepherd participates in broad-based life and medical
insurance plans that are available generally to all employees on the same
terms generally available to all employees.
(3) Consists of matching contributions paid by the Company pursuant to the
401(k) plan.
(4) Adjusted for a two-for-one stock split effected in 1998.
(5) Adjusted for 15% stock dividend effective December 30, 1997 and a
two-for-one stock split effected in 1998.
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth information about options granted to the
Chief Executive Officer in 1998. The amounts in the table have been adjusted to
reflect the two-for-one stock split effected in 1998.
<TABLE>
<CAPTION>
Individual Grants
-----------------
Number of % of Total
Securities Options Potential Realizable Value at
Underlying Granted to Exercise Assumed Annual Rates of Stock
Options Employees Price Expiration Price Appreciation for 10-Year
Name Granted in 1998 (per share) Date Option Term(3)
- - ---------------------- ------- --------- ----------- ------ ---------------
5% 10%
---- ----
<S> <C> <C> <C> <C> <C> <C>
Frederick D. Shepherd, Jr. 10,000(1) 13.0% $ 9.12 2/19/08 $57,355 $145,349
4,000(2) 5.2% 9.25 6/18/08 23,269 58,968
- - --------------------
</TABLE>
(1) These options were granted on February 19, 1998 and became/become
exercisable in 2,000 share increments on February 19, 1998, 1999, 2000,
2001 and 2002.
(2) These options were granted on June 18, 1998, and became/become exercisable
in 800 share increments on June 18, 1998, 1999, 2000, 2001 and 2002.
(3) The amounts in these columns are the result of calculations based on the
assumption that the market price of the Common Stock will appreciate in
value from the date of grant to the end of the ten-year option term at
rates of 5% and 10% per year. The 5% and 10% annual appreciation
assumptions are required by the Securities and Exchange Commission; they
are not intended to forecast possible future appreciation, if any, of the
Company's stock price.
Option Exercises and Year End Options Outstanding and Values
The following table presents information about options exercised by Mr.
Shepherd during 1998 and about options held by Mr. Shepherd at December 31,
1998. This information has been adjusted to reflect a two-for-one stock split in
1998, a 15% stock dividend paid in 1997, and 5% stock dividends paid in each of
1996, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Acquired Value Options 12/31/98 Options 12/31/98(1)
Name on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- - ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frederick D. 13,980 $139,241 66,356 15,800 $592,584 $81,380
Shepherd, Jr.
</TABLE>
(1) Based on a price of $13.54 per share, the weighted average price at which
the Company's Common Stock has traded during the past year in trades of
which the Company has knowledge, and exercise prices ranging from $3.58 to
$9.25 per share. This weighted average price has been adjusted to reflect
the two-for-one stock split effected in 1998. The Common Stock is not,
however, widely traded and such price may not be indicative of market
value.
6
<PAGE>
1989 Stock Option Plan and 1998 Stock Option Plan
The Company has adopted two stock option plans, both of which have been
approved by the shareholders. The 1989 Stock Option Plan reserved 279,556 shares
of the Company's Common Stock for issuance to eligible employees upon exercise
of options. The 1998 Stock Option Plan reserved 400,000 shares of the Company's
Common Stock for issuance to eligible employees and directors upon exercise of
options. Under both plans, the Board of directors or a committee appointed by
the Board of Directors, determines the persons to whom options will be granted
and sets the terms of the options within the parameters of the plans. At
December 31, 1998, under the 1989 Plan, options to purchase 175,998 shares of
Common Stock were outstanding, 4 shares were available for grant pursuant to
option, and options to purchase 133,000 shares were exercisable. The exercisable
options have an average exercise price of $4.94 per share. At December 31, 1998,
under the 1998 Plan, options to purchase 44,000 shares of Common Stock were
outstanding, 356,000 shares were available for grant pursuant to options, and
options to purchase 8,800 shares were exercisable. The exercisable options have
an average exercise price of $9.25 per share.
The number of shares and average prices in this section have been
retroactively adjusted to reflect 5% stock dividends effective May 1, 1993, May
1, 1994, May 1, 1995 and May 1, 1996, a 15% stock dividend effective December
30, 1997, and a two-for-one stock split effected in 1998.
Compensation of Directors
Directors receive compensation of $300 for each regular meeting of the
Board of Directors. In addition, in 1998, each director was granted options to
purchase 4,000 shares of common stock. The exercise price of the options is
$9.25 per share (adjusted to reflect the two-for-one stock split effected in
1998), which was the fair market value of the options on the date of grant. The
options became/become exercisable annually in 800 share increments, beginning
June 18, 1998 and expire June 18, 2008.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Extensions of Credit. The Company, in the ordinary course of its business,
makes loans to and has other transactions with directors, officers, principal
shareholders, and their associates. Loans are made on substantially the same
terms, including rates and collateral, as those prevailing at the time for
comparable transactions with other persons and do not involve more than the
normal risk of collectibility or present other unfavorable features. The Company
expects to continue to enter into transactions in the ordinary course of
business on similar terms with directors, officers, principal stockholders, and
their associates. The aggregate dollar amount of such loans outstanding at
December 31, 1998 was $3,288,367. During 1998, $4,082,591 of new loans were made
and repayments totaled $5,443,836.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
As required by Section 16(a) of the Securities Exchange Act of 1934, the
Company's directors, its executive officers and certain individuals are required
to report periodically their ownership of the Company's Common Stock and any
changes in ownership to the Securities and Exchange Commission. Based on a
review of Section 16(a) reports available to the Company, it appears that all
such reports for these persons were filed in a timely fashion during 1998, with
the exception of the following: Each of Messrs. Harris, McCoy, Turner,
Winchester, Edwards, Griffith, Thrift, Bowman, Brown and Hamrick failed to file
timely one report on Form 4 relating to the grant of stock options, and Mr.
Shepherd failed to file timely one report on Form 4 and one report on Form 5
relating to the grant of stock options.
7
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Board has selected Donald G. Jones and Company, P.A., Certified Public
Accountants with offices in Columbia, South Carolina, to serve as the Company's
independent certified public accountants for 1999. It is expected that
representatives from this firm will be present and available to answer
appropriate questions at the annual meeting, and will have the opportunity to
make a statement if they desire to do so.
OTHER MATTERS
The Board of Directors knows of no other business to be presented at the
meeting of stockholders. If matters other than those described herein should
properly come before the meeting, it is the intention of the persons named in
the enclosed form of proxy to vote at such meeting in accordance with their best
judgment on such matters. If a shareholder specifies a different choice on the
Proxy, his or her shares will be voted in accordance with the specifications so
made.
Unless contrary instructions are indicated on the Proxy, all shares of
stock represented by valid proxies received pursuant to this solicitation, and
not revoked before they are voted, will be voted FOR the election of any or all
of the nominees for directors named herein.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-KSB
Shareholders may obtain copies of the Company's annual report on Form
10-KSB required to be filed with the Securities and Exchange Commission for the
year ended December 31, 1998, free of charge by requesting such form in writing
from Frederick D. Shepherd, Jr., President, Community First Bank, Post Office
Box 1097, Walhalla, South Carolina 29691.
8
<PAGE>
PROXY
COMMUNITY FIRST BANCORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS - TUESDAY, April 20, 1999
Frederick D. Shepherd, Jr. or Robert H. Edwards, or either of them, with
full power of substitution, are hereby appointed as agent(s) of the undersigned
to vote as proxies for the undersigned at the Annual Meeting of Shareholders to
be held on April 20, 1999, and at any adjournment thereof, as follows:
1. ELECTION OF FOR all nominees listed WITHHOLD AUTHORITY
DIRECTORS TO below (except any I have to vote for all
HOLD OFFICE written below) [ ] nominees listed
FOR THREE below [ ]
YEAR TERMS.
R. Theo Harris, Sr., James E. McCoy, James E. Turner, Charles L. Winchester
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL(S) WRITE THE
NOMINEE'S(S') NAME(S) ON THE LINE BELOW.
2. And, in the discretion of said agents, upon such other business as may
properly come before the meeting, and matters incidental to the conduct
of the meeting. (Management at present knows of no other business to be
brought before the meeting.)
THE PROXIES WILL BE VOTED AS INSTRUCTED. IF NO CHOICE IS INDICATED WITH RESPECT
TO A MATTER WHERE A CHOICE IS PROVIDED, THIS PROXY WILL BE VOTED "FOR" SUCH
MATTER.
Please sign exactly as name appears below. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title. If more than one
trustee, all should sign. All joint owners must sign.
Dated: , 1999 ----------------------------------------
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