SCHEDULE 14(A) INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
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
FVNB Corp.
________________________________________________
(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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(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>
FVNB CORP.
101 S. Main Street
P. O. Box 1338
Victoria, Texas 77902
(512) 573-6321
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 1999
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of FVNB Corp. (the "Company") will be
held at the offices of the First Victoria National Bank at 101 S. Main Street,
DeLeon Plaza, Victoria, Texas at 2:00 P.M., local time, on Thursday, May 13,
1999, for the following purposes:
(1) To elect twelve directors to serve until the next Annual Meeting of
Shareholders and until their successors shall have been duly elected
and qualified;
(2) To approve the appointment by the Board of Directors of the firm
KPMG LLP as the independent public accountants of the Company for
the current fiscal year; and
(3) To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only holders of record of Company common stock, par value $.01 per share,
at the close of business on March 16, 1999 are entitled to notice of the Annual
Meeting and to vote at the Annual Meeting.
Shareholders are cordially invited to attend the meeting in person.
Whether planning to attend the meeting or not, shareholders are urged to
complete, date and sign the enclosed Proxy and to return it promptly. Any Proxy
given pursuant to this solicitation may be revoked by the person giving it at
any time before it is voted at the Annual Meeting. Proxies may be revoked by
delivering to C. Dee Harkey, Secretary, 101 S. Main Street, P. O. Box 1338,
Victoria, Texas 77902, a written notice of revocation bearing a later date than
the Proxy, by duly executing and delivering to the Secretary a subsequently
dated Proxy relating to the same shares or by attending the Annual Meeting and
voting in person (although attendance at the Annual Meeting will not in and of
itself constitute revocation of a Proxy). The enclosed, addressed envelope
requires no postage if mailed in the United States.
By order of the Board of Directors,
April 5, 1999 /s/C. DEE HARKEY
C. Dee Harkey
Secretary
YOUR VOTE IS IMPORTANT
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FVNB CORP.
101 S. Main Street
P. O. Box 1338
Victoria, Texas 77902
PROXY STATEMENT
SOLICITATION AND REVOCATION OF PROXIES
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of FVNB Corp. (the "Company") for use at the Annual Meeting of
Shareholders to be held on Thursday, May 13, 1999, at the time and place and for
the purposes set forth in the accompanying Notice and at any recess or
adjournments thereof. The original solicitation will be made by mail. The total
expense of such solicitation will be borne by the Company and will include
reimbursement paid to brokerage firms and other custodians, nominees and
fiduciaries for their reasonable expenses incurred in forwarding solicitation
material regarding the meeting to beneficial owners. It may be that further
solicitation of Proxies will be made by telephone or oral communication with
some of the shareholders of the Company following the original solicitation. All
further solicitation will be by regular employees of the Company who will not be
additionally compensated therefore.
Any Proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted at the Annual Meeting. Proxies may be
revoked by delivering to the Secretary of the Company, C. Dee Harkey, 101 S.
Main Street, P. O. Box 1338, Victoria, Texas 77902, a written notice of
revocation bearing a later date than the Proxy, by duly executing and delivering
to the Secretary a subsequently dated Proxy relating to the same shares or by
attending the Annual Meeting and voting in person (although attendance at the
Annual Meeting will not in and of itself constitute revocation of a Proxy).
All shares entitled to vote represented by a properly executed and
unrevoked Proxy received in time for the meeting will be voted at the meeting in
accordance with the instructions given, but in the absence of instructions to
the contrary, such shares will be voted FOR the proposal to elect all of the
twelve nominees for director and FOR the proposal to approve the appointment by
the Board of Directors of the firm KPMG LLP as the independent public
accountants of the Company for the current fiscal year. Persons empowered as
Proxies will also be empowered to vote in their discretion upon such other
matters as may properly come before the meeting or any adjournment thereof. The
Proxy Statement and Proxy are being mailed to shareholders on or about April 5,
1999.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the fiscal year ended
December 31, 1998, is being furnished with this Proxy Statement to shareholders
of the Company. The Annual Report to Shareholders does not constitute a part of
this Proxy Statement or the proxy solicitation material.
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<PAGE>
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
Holders of record of common stock of the Company at the close of business
on March 16, 1999, the record date for those entitled to notice of the meeting,
will be entitled to vote at such meeting. With respect to any matter other than
the election of directors, the vote of the holders of a majority of the shares
present or represented by proxy at the meeting and entitled to vote shall be the
act of the shareholders, unless the vote of a different number is required by
the Act, or the Articles of Incorporation of the Company. With respect to the
election of directors, the directors of the Company shall be elected by
plurality vote and, therefore, the twelve (12) nominees receiving the highest
number of affirmative votes shall be elected as directors provided a quorum is
present. Cumulative voting by the shareholders of the Company at any election
for directors or upon any other matter is prohibited. As of the record date,
there were 2,372,792 issued and outstanding shares of common stock held of
record by 654 shareholders.
As of March 16, 1999, the officers, directors and principal shareholders
of the Company beneficially own a total of approximately 34.07% of the
outstanding common stock of the Company, which amount includes the 9.20% held by
the Trust Department of First Victoria National Bank in the name of Oster & Co.
The officers and directors of the Company together beneficially own
approximately 13.41% of the outstanding common stock of the Company. Each share
of common stock is entitled to one vote on the matters presented at the meeting,
except for 218,238 shares held in nominee name by Oster & Co. for the Trust
Department of First Victoria National Bank. Such shares held in nominee name by
Oster & Co. will not be voted in relation to the election of directors, but such
shares may be voted on the other matters. The Trust Department, officers, and
directors of the Company have indicated that their respective shares shall be
voted in favor of the selection of the independent public accountants.
A quorum for the transaction of business at the Annual Meeting consists of
holders of a majority of the outstanding shares of the Company's common stock,
present in person or by Proxy. In the event that less than a majority of the
outstanding shares are present at the Annual Meeting, either in person or by
Proxy, a majority of the shares so represented may vote to adjourn the Annual
Meeting from time to time without further notice, until a quorum shall be
present or represented. Abstentions and broker non-votes (shares held by broker
or nominee as to which a broker or nominee indicates on the proxy that it does
not have the authority, either express or discretionary, to vote on a particular
matter) are counted for the purpose of determining the presence or absence of a
quorum at the Annual Meeting. For the election of directors, abstention from
voting and broker non-votes will have the legal effect of neither a vote for nor
against the nominee. For all other matters, an abstention from voting and broker
non-votes, since they are not affirmative votes, will have the same practical
effect as a vote against the respective matters.
Shareholders may vote at any meeting of the shareholders by Proxies duly
authorized in writing. Proxies with rubber stamped facsimile signatures may be
used and unexecuted Proxies may be counted upon receipt of a photographic,
photo-static, facsimile or similar reproduction of an executed Proxy from the
shareholder. Proxies meeting these requirements submitted at any time prior to
the votes being taken during the shareholder meeting shall be accepted.
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<PAGE>
PRINCIPAL SHAREHOLDERS
In the following table, beneficial ownership of common stock is direct and
the named nominee has sole voting and investment powers with respect to the
shares reflected as owned by him unless otherwise specified. The only persons
known to management of the Company to own beneficially in excess of 5.00% of its
outstanding common stock as of March 16, 1999, are as follows:
NAME AND ADDRESS PERCENTAGE
OF BENEFICIAL OWNER NO. OF SHARES OF CLASS
- ------------------- --------------- ----------
Michael S. Anderson 140,902 5.94%
P. O. Box 2549
Victoria, Texas 77902 (1)
D. H. Braman, Jr. 134,660 5.68%
One O'Connor Plaza, Suite 1100
Victoria, Texas 77901 (2)
Ann W. Harithas 137,280 5.79%
P. O. Box 2549
Victoria, Texas 77902 (3)
Oster & Co. 218,238 9.20%
First Victoria National Bank
101 S. Main St.
Victoria, Texas 77901 (4)
(1) The beneficial stock holdings of Michael S. Anderson include 138,902
shares owned directly by him and 2,000 shares owned by his spouse.
(2) The beneficial stock holdings of D. H. Braman, Jr. include 112,580 shares
owned directly by him and 22,080 shares as to which he has voting rights
as trustee of the Kate S. O'Connor Trust and Thomas E. Braman is a
beneficiary of the trust.
(3) The beneficial stock holdings shown for Ann W. Harithas are held in a
revocable trust known as the Ann W. Harithas Liquid Assets Trust.
Co-trustees for the trust are Ann W. Harithas, R. L. Keller and Kenneth R.
Page.
(4) Oster & Co. is a Texas partnership composed of David M. Gaddis, Dana K.
Fowler and C. Dee Harkey, all officers of First Victoria National Bank,
and is the nominee for stock held in trust by the Trust Department of
First Victoria National Bank. The shares are owned by many different
accounts, each of which is governed by a separate instrument that sets
forth the powers of the fiduciary with regard to the securities held in
such accounts.
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<PAGE>
PROPOSAL - 1
ELECTION OF DIRECTORS
The by-laws of the Company provide that the Board of Directors shall be
comprised of not more than twenty-five (25) members. The Board of Directors has
set the number of directors at twelve (12) and has nominated the twelve (12)
persons named below for election to the Board of Directors each to hold office
until the next Annual Meeting of Shareholders and until his successor is elected
and qualified. The proxies named in the accompanying Proxy, who have been
designated by the Board of Directors, intend to vote for the twelve nominees set
forth below, unless otherwise instructed in such Proxy. Although the Board of
Directors does not contemplate that any of the nominees will be unable to serve,
if it is known that a nominee will be unable to serve before the holding of the
election, proxies received by the Board of Directors will be deemed to authorize
the Proxies' to vote as they, in their discretion, may determine, or to vote for
such other nominee for director, if any, as the Board of Directors may select.
Any director vacancy occurring after the election may be filled by the
affirmative vote of a majority of the remaining directors. During the period
between any two successive annual meetings of the shareholders, the Board of
Directors may fill a maximum of two (2) vacant directorships resulting from an
increase in the number of directors. A director elected to fill a vacancy shall
be elected for the unexpired term of his predecessor in office or if it is a
vacancy resulting from the increase in the number of directors, only until the
next election of directors by the shareholders. All nominees for director are
now serving as directors of the Company.
NOMINEES FOR ELECTION AND SECURITY OWNERSHIP OF MANAGEMENT
The name of each nominee for director, his present address, age, the year
he first became a director of the Company, his principal occupation or
employment, executive offices with the Company, and the number of shares of
common stock of the Company beneficially owned by him at March 16, 1999, are set
forth below. Beneficial ownership of common stock is direct and the named
nominee has sole voting and investment power with respect to the shares
reflected as owned by him unless otherwise specified.
<TABLE>
<CAPTION>
SERVED AS EXECUTIVE OFFICES WITH THE NO. OF SHARES &
DIRECTOR BANK, PRINCIPAL OCCUPATION NATURE OF BENEFICIAL PERCENTAGE
NOMINEE & ADDRESS AGE SINCE (1) OR EMPLOYMENT(2) OWNERSHIP(3) OF CLASS
- ----------------- ----- ----------- -------------------------------- -------------------- -----------
<S> <C> <C> <C> <C> <C>
Michael S. Anderson 36 1990 Chairman of the Board, 140,902 (4) 5.94%
P. O. Box 2549 FVNB Corp. and First Victoria
Victoria, Texas 77902 National Bank; Attorney at Law
O. D. Edwards, Jr. 59 1973 Ranching, farming, oil & gas; 29,424 (5) 1.24%
P. O. Box 459 Formerly General Manager,
Sinton, Texas 78387 Welder-Edwards Cattle Co.
David P. Engel 48 1994 President, Airgas Texas, Inc. 2,900 *
206 Oleander
Corpus Christi, Texas 78404
David M. Gaddis 49 1989 President and 2,184 (6) *
303 Champions Row Chief Executive Officer,
Victoria, Texas 77904 FVNB Corp. and First Victoria
National Bank
Walter T. Haenggi 41 1998 Ranching 21,529 (7) *
P. O. Box 2549
Victoria, Texas 77902
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SERVED AS EXECUTIVE OFFICES WITH THE NO. OF SHARES &
DIRECTOR BANK, PRINCIPAL OCCUPATION NATURE OF BENEFICIAL PERCENTAGE
NOMINEE & ADDRESS AGE SINCE (1) OR EMPLOYMENT(2) OWNERSHIP(3) OF CLASS
- ----------------- ----- ----------- -------------------------------- -------------------- -----------
<S> <C> <C> <C> <C>
Robert L. Halepeska 45 1993 Executive Vice President, 17,900 (8) *
206 Tracy Lane M. G. and Lillie A. Johnson
Victoria, Texas 77904 Foundation, Inc.
Thomas Lane Keller 41 1994 Certified Public Accountant1,000 *
P. O. Box 2549
Victoria, Texas 77902
James Robert (Bob) McCan 41 1997 McFaddin Enterprises, Inc. 1,200 (9) *
P. O. Box 146 (Ranching)
Victoria, Texas 77902
J. E. McCord 82 1951 Retired (Previous partner, 8,304 *
P. O. Box 3142 McCord Partnership - real
Victoria, Texas 77903 estate development)
Thomas M. O'Connor 76 1951 Sole Proprietor 83,624 (10) 3.52%
P. O. Box 1398 (Ranching and farming)
Victoria, Texas 77902
Billy W. Ruddock 66 1990 Retired, Formerly 3,440 (11) *
408 Masters Executive Assistant
Victoria, Texas 77904 to the President,
First Victoria National Bank
Roger Welder 40 1992 Vice-Chairman of the Board, 3,500 *
2406 Lower Mission Valley FVNB Corp and First Victoria
Road National Bank;
Victoria, Texas 77905 J. F. Welder Heirs
(Ranching, mineral holdings)
All Directors and Executive Officers 320,107 (12) 13.49%
As a group (14 persons)
</TABLE>
* less than one percent
(1) With the exception of Walter T. Haenggi, the year indicated is the year
each person first became a director of First Victoria National Bank. Upon
the formation of the holding company in September 1998, each of these
individuals became directors of both First Victoria National Bank and the
Company. Walter T. Haenggi was appointed as director of both First
Victoria National Bank and the Company during 1998.
(2) All nominees have been actively engaged in the business identified as
their principal occupation for at least five years. All nominees except
David P. Engel, David M. Gaddis and Robert L. Halepeska are self-employed.
(3) Except as otherwise indicated in the following notes to this table, each
nominee for director owns directly the number of shares indicated in the
table. Any family relationships are also indicated in the following notes
to this table.
(4) The beneficial stock holdings of Michael S. Anderson include 138,902
shares owned directly by him and 2,000 shares owned by his spouse.
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<PAGE>
(5) The beneficial stock holdings shown for O. D. Edwards, Jr. include 5,824
owned by him and 17,280 shares to which he is co-executor of the Patti
Welder Edwards Trust. He is also Trustee for the Edwards Children Trust
which has 6,320 shares.
(6) The beneficial stock holdings of David M. Gaddis include 2,144 shares
owned directly by him and 40 shares owned by his children.
(7) The beneficial stock holdings of Walter T. Haenggi include 1,000 shares
owned directly by him and 20,529 shares owned by his spouse.
(8) The beneficial stock holdings shown for Robert L. Halepeska include 1,000
shares owned by him and 16,900 shares as to which he has sole voting
rights as Executive Vice President of the M. G. and Lillie Johnson
Foundation, Inc.
(9) The beneficial stock holdings shown for James Robert McCan include 1,200
shares owned by him in a management trust to which he holds sole voting
rights.
(10) The beneficial stock holdings shown for Thomas M. O'Connor include 66,336
shares owned by him, 2,336 shares held in the Madeline F. O'Connor Trust,
and 14,952 shares in the name of Greta Investment Company for which he has
sole voting rights.
(11) The beneficial stock holdings of Billy W. Ruddock include 3,240 shares
owned directly by him and 200 shares owned by his spouse.
(12) The beneficial stock holders of the directors and executive officers of a
group include the stock holdings of all the nominees as well as those of
C. Dee Harkey, Secretary and Principal Accounting Officer, and R. L.
Keller who retired from the Board on December 31, 1998.
None of the nominees for director is a director of any other company which
has a class of securities registered under, or is required to file reports
under, the Securities and Exchange Act of 1934, or of any company registered
under the Investment Company Act of 1940.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
Section 16(a) of the Securities Exchange of 1934 requires the Company's
directors, executive officers and persons who own more than 10% of the Company's
Common Stock to file initial stock ownership reports and reports of changes in
ownership with the Securities and Exchange Commission. The Company is required
to disclose in this Proxy Statement any failure to file such reports by the
applicable dates during the last fiscal year. The Company believes that all of
the reports were filed on a timely basis. In making these disclosures, the
Company has relied solely on its review of the copies of the filings furnished
to the Company and written representations of the applicable persons.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1998, the Board of Directors of the Company held five regular
meetings and an organizational meeting. In addition, the Board of Directors of
First Victoria National Bank held twelve regular meetings. No directors attended
fewer than 75% of the total board meetings and the meetings held by the
committees of the Board of Directors on which they served during 1998.
The Audit Committee of the Board of Directors of First Victoria National
Bank met five times during 1998. The function of the committee, which meets
quarterly, is to insure compliance with accepted audit procedures. The members
of the Audit Committee are outside directors who are independent of management.
The Audit Committee is required to review the basis for all financial reports
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<PAGE>
with management and the independent public accountant. The committee was
composed of Thomas Lane Keller, Chairman; Roger F. Welder, Vice-Chairman; O. D.
Edwards, Jr., James R. McCan and J. E. McCord. The Audit Committee of the Board
of Directors of the Company consists of the same members and the committee met
one time during 1998.
The Compensation and Retirement Committee of the Board of Directors of
First Victoria National Bank met three times during 1998. The function of this
committee, which meets on a call basis, is to approve compensation policies of
the Company and Subsidiary Banks which include: setting of salaries, incentive
compensation plans, and other matters concerning compensation and retirement of
staff and members of the Board. The committee was composed of David P. Engel,
Chairman; O. D. Edwards, Jr., Vice-Chairman; R. L. Keller; Thomas Lane Keller;
James R. McCan and Thomas M. O'Connor. No cash-based compensation is paid by the
Company. Consequently, the Company does not have a Compensation and Retirement
Committee. The 1998 FVNB Corp. Stock Incentive Plan Committee is composed of the
same directors and it determines stock-based compensation of the Company.
The Executive and Nominating Committee of the Board of Directors of First
Victoria National Bank met six times during 1998. The committee, which meets on
a call basis, serves two functions: to establish executive policy and to
consider nominations for directors made by the shareholders. The committee was
composed of Roger F. Welder, Chairman; David P. Engel, Vice-Chairman; Michael S.
Anderson; R. L. Keller; Thomas Lane Keller; J. E. McCord and Thomas M. O'Connor.
The Executive and Nominating Committee of the Board of Directors of the Company
is composed of the same directors and it did not meet during 1998.
Nominations for directors may be submitted to the Company's Executive and
Nominating Committee until December 10, 1999, and will be considered for
inclusion in the list of nominees recommended by the Board of Directors for
election at the Annual Meeting of Shareholders to be held in 2000. If the
nomination is not included among those recommended by the Board of Directors, it
will be presented in the Proxy Statement as a nomination that has been made, but
that is not recommended by the Board of Directors. Additional written
nominations may be made no later than thirty days prior to the Annual Meeting;
however, such nominations will not be included in the Proxy Statement, but they
will be included in the ballot used by the shareholders voting in person at the
Annual Meeting.
Shareholders desiring to make nominations should do so in writing,
certified mail, return receipt requested, addressed to the Executive and
Nominating Committee, Attention: Roger F. Welder, FVNB Corp., 101 S. Main
Street, P. O. Box 1338, Victoria, Texas 77902.
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<PAGE>
EXECUTIVE OFFICERS
The following lists the executive officers of the Company as of March 16, 1999,
the positions in which they served as executive officers, their principal
occupation for the past five years and their stock ownership in the Company:
<TABLE>
<CAPTION>
SERVED IN NO. OF
CAPACITY SHARES PERCENTAGE
NAME AGE TITLE SINCE OWNED(1) OF CLASS
- ---- --- ----- --------- -------- ----------
<S> <C> <C> <C> <C>
David M. Gaddis 49 President and 09/98 2,184 *
Chief Executive Officer,
FVNB Corp.
President and 07/89
Chief Executive Officer,
First Victoria National Bank
C. Dee Harkey 46 Secretary and Principal 09/98 100 *
Accounting Officer,
FVNB Corp.
Executive Vice President 08/96
and Chief Operating Officer,
First Victoria National Bank
Executive Vice President (2) 02/95
and Senior Trust Officer,
First Victoria National Bank
</TABLE>
* less than one percent
(1) Company common stock owned as of March 16, 1999.
(2) Prior to February 1995, C. Dee Harkey was employed by International Bank
of Commerce as Executive Vice President and Cashier from August 31, 1994
to February 15, 1995. He was employed in the capacity of Vice President
and Trust Officer from December 1, 1985 to December 31, 1991 and President
and Chief Operating Officer from January 1, 1992 to August 31, 1994 at
First State Bank and Trust Company, Port Lavaca.
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<PAGE>
EXECUTIVE COMPENSATION AND RELATED INFORMATION
COMPENSATION AND RETIREMENT COMMITTEE REPORT
Under rules established by the Securities and Exchange Commission, the
Company is required to provide certain data and information in regard to the
compensation and benefits provided to the Company's Chief Executive Officer
("CEO") and other four most highly compensated executive officers, provided that
their aggregate compensation exceeded $100,000 in 1998. The disclosure
requirements for these individuals (the "named executive officers") include the
use of tables and a report explaining the rationale and considerations that led
to fundamental executive compensation decisions affecting all executive
officers. In fulfillment of this requirement, the Compensation and Retirement
Committee of First Victoria National Bank ("the Bank"), at the direction of the
Board of Directors, has prepared the following report for inclusion in this
Proxy Statement. All cash compensation paid to both officers of the Company and
officers of the Bank is paid by the Bank.
COMPENSATION PHILOSOPHY
The executive compensation program is administered by the Compensation and
Retirement Committee of the Board of Directors of the Bank (the "Committee")
which is composed of the individuals listed below who are outside directors of
the Bank. The program has been designed to enable the Bank to attract, motivate
and retain officers by providing a fully competitive total compensation
opportunity based on performance. As an executive's level of responsibility
increases, a greater portion of his or her potential total compensation
opportunity is based on performance incentives and less on salary, causing
greater variability in the individual's absolute compensation level from year to
year. The Committee is accountable for the approval of responsible executive
compensation programs which relate the pay levels of executives to the
performance of the Bank, while providing appropriate incentives to deliver the
maximum short and long-term financial results for the benefit of the
shareholders. The program provides for incentive opportunities for the
achievement of financial performance goals established by the Committee in the
form of short-term awards which recognize current achievements and long-term
awards which strengthen the mutuality of interests between management and the
Company. Long-term incentives reward executives for delivering long-term value
to the Bank's shareholder. The Committee makes recommendations to the Board of
Directors on compensation actions involving executive officers of the Bank.
With respect to the CEO, the Committee recommends to the Board of
Directors the CEO compensation. In determining the CEO salary, the Committee
considers such factors and criteria as objectives of the Company and the
attainment thereof, the ability of the CEO to develop, train, and motivate a
competent management team, the success of the CEO of promoting and growing the
Bank in the communities served, the ability to work with and carry-out the
directives of the Board of Directors, and the success of the CEO in rewarding
the Company with a satisfactory return on its investment. Finally, the Committee
considers the success of managing the Bank in a safe and sound manner. The base
salary is determined based on the aforementioned criteria after consideration of
the compensation of CEOs in other comparable financial institutions and the
supply and demand in the market place.
On July 15, 1997, the Committee approved an Officer Annual Incentive Plan
effective as of January 1, 1997. The plan is administered by the Committee and
all awards are payable entirely in cash and are contingent upon the Bank
attaining various growth and financial objectives to be determined annually.
Following is a discussion of the executive compensation program along with
a description of the decisions and actions taken by the Committee with regard to
1998 compensation.
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COMPENSATION PROGRAM
Total annual cash compensation for executive management consists of base
salary and the cash incentive earned under the Incentive Compensation Plan. At
the senior executive levels, base salaries, the fixed regular period component
of pay, are determined by comparison to salary ranges for equivalent positions
in peer groups of banks with similar characteristics. Annual awards, which are
directly linked to the short-term growth and financial performance of the Bank
as a whole, are designed to provide better-than-competitive pay only for
better-than-competitive performance. Total annual cash compensation varies each
year based on achievement of the Bank growth and financial performance goals
established by the Committee and changes in base salary.
Based on the growth and financial objectives which the Committee
established for 1998, the Bank accrued approximately $548,000 under the Officer
Annual Incentive Plan for the year ended December 31, 1998. The resulting annual
compensation is reported in various columns in the Summary Compensation Table
below for the two named executive officers. No other executive officers of the
Company earned in excess of $100,000 during 1998.
The Compensation Committee has considered the limitations on deductibility
of certain compensation under Section 162(m) of the Internal Revenue Code. The
Committee's current policy is to ensure that all compensation is deductible
under Section 162(m) when paid.
The Compensation and Retirement Committee,
David P. Engel, Chairman
O. D. Edwards, Jr., Vice-Chairman
R. L. Keller
Thomas Lane Keller
James R. McCan
Thomas M. O'Connor
REPORT OF 1998 FVNB CORP. STOCK INCENTIVE PLAN COMMITTEE
The 1998 FVNB Corp. Stock Incentive Plan Committee of the Company is
composed of the individuals listed below who are all outside directors of the
Company. The Committee determines the stock option grants to the officers,
directors and employees of the Company and its subsidiaries. During 1998 this
Committee met and granted options to purchase a total of 52,000 shares and 1,000
shares of Common Stock at an exercise price of $33.00 and $34.00, respectively,
to certain directors and officers. Options have a six-month vesting period for
directors and a ratable three-year vesting period for officers. All options
expire ten years from the date of grant. The primary purpose of the Stock
Incentive Plan is to increase the interest of the directors, employees and
officers of the Company and its subsidiaries in the Company's future growth and
success through the added incentive created by the opportunity for stock
ownership under the Plan. The size of the option grants was determined by the
Committee based upon a subjective assessment of the individual's performance and
other factors. The exercise price of each option granted equaled the fair market
value of the Common Stock as of the date of grant.
11
<PAGE>
Stock Incentive Plan Committee,
David P. Engel, Chairman
O. D. Edwards, Jr., Vice-Chairman
R. L. Keller
Thomas Lane Keller
James R. McCan
Thomas M. O'Connor
COMPENSATION AND RETIREMENT COMMITTEE AND STOCK INCENTIVE PLAN COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
O. D. Edwards, Jr., Thomas Lane Keller, James R. McCan, and Thomas M. O'Connor
each have indebtedness outstanding with the Bank in an amount which exceeds
$60,000, which indebtedness is fully performing and is included in the summary
disclosure regarding the aggregate amounts receivable to the Bank from certain
related parties of the Bank set forth on page 16 under the caption "Certain
Relationships and Related Transactions." All of these individuals are members of
both the Stock Incentive Plan Committee and the Compensation and Retirement
Committee.
12
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The following graph compares the five-year cumulative total return of the
Company's common stock with that of the Russell 2000 major market index and the
NASDAQ Banks index. Cumulative total return is calculated assuming an initial
$100 investment and subsequent reinvestment of dividends paid over the five year
period. The NASDAQ Banks index includes banks of various size and value. The
Russell 2000 index is used as the major market index that most closely
approximates the Company's size for a variety of industries not restricted to
banking.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG FIRST VICTORIA NATIONAL BANK, THE RUSSEL 2000 INDEX
AND THE NASDAQ BANK INDEX
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
12/93 12/94 12/95 12/96 12/97 12/98
----- ----- ----- ----- ----- -----
FVNB 100 142 188 193 314 275
RUSSELL 2000 100 98 126 147 180 179
NASDAQ BANK 100 100 148 196 328 325
* $100 INVESTED ON 12/31/93 IN STOCK OR INDEX - INCLUDING REINVESTMENTS OF
DIVIDENTS, FISCAL YEAR ENDED DECEMBER 31.
The foregoing graph assumes that the value of the investment in Company
common stock and each index was $100 on December 31, 1993 and that all dividends
were reinvested. The information presented is as of the fiscal year ending
December 31, for each of the five years shown.
13
<PAGE>
SUMMARY COMPENSATION TABLE
The following compensation table sets forth all compensation for services
in all capacities paid by the Company to the two most highly compensated
executive officers of the Company whose aggregate compensation exceeded $100,000
for 1998.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------ ---------------------------------------
AWARDS
---------------------------------------
OTHER
NAME AND ANNUAL RESTRICTED OPTIONS/ LTIP ALL OTHER
PRINCIPAL SALARY BONUS COMP. STOCK SARS PAYOUTS COMPENSATION
POSITION YEAR (A) (B) (N/A) AWARDS (#) (N/A) (C)
- --------- ---- -------- ------- -------- ---------- --------- ------- -----------
<S> <C> <C> <C> <C> <C>
David M. Gaddis 1998 $181,626 $66,717 0.00 $4,000
President & Chief 1997 $182,500 $36,120 0.00 $4,000
Executive Officer 1996 $180,501 $ 0 0.00 $3,750
C. Dee Harkey 1998 $101,050 $26,910 0.00 $2,476
Secretary & Principal 1997 $ 99,337 $13,429 0.00 $2,208
Accounting Officer 1996 $ 84,479 $ 0 0.00 $1,729
</TABLE>
(a) Represents the annual wages earned by the named executive officer plus any
fees received for service in the capacity of director. Both Mr. Gaddis and
Mr. Harkey received compensation as directors of the Bank during each of
the three years shown in the table above. All cash compensation paid to
the named officers was paid by the Bank. The Company does not pay any cash
compensation to any officer or director.
(b) Represents the short-term cash award under the Incentive Compensation
Plan. Amounts are payable by March 1st in the year following the year in
which the award was earned. The performance targets established by the
Compensation and Retirement Committee for 1996 were not reached;
therefore, no awards were made for 1996.
(c) Includes portions relating to the Bank's matching of the named executive
officers' 401(k) contribution to the Employees' Profit Sharing Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF
TOTAL
OPTIONS POTENTIAL REALIZABLE
NUMBER OF GRANTED TO VALUE AT ASSUMED
SECURITIES EMPLOYEES ANNUAL RATES OF STOCK
UNDERLYING AND DIRECTORS EXERCISE OR PRICE APPRECIATION
OPTIONS IN FISCAL BASE PRICE EXPIRATION FOR OPTION TERM
GRANTED(1) YEAR ($/SH) DATE ---------------------------
5% ($) (2) 10% ($) (2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
David M. Gaddis 9,000 16.98% 33.00 09/15/08 186,782 473,342
- ---------------------------------------------------------------------------------------------------------------------------
C. Dee Harkey 3,150 5.94% 33.00 09/15/08 65,374 165,670
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The options shown in the table are nonstatutory stock options, each of
which were granted under the Company's 1998 FVNB Corp. Stock Incentive
Plan, with an exercise price equal to the fair market value on the date of
grant. Options have a six month vesting period for directors and a ratable
three year vesting period for officers. All options expire ten years from
the date of the grant.
14
<PAGE>
(2) The dollar amounts shown are based on certain assumed rates of appreciation
and the assumption that the options will not be exercised until the end of
the expiration periods applicable to the options. Actual realizable values,
if any, on stock option exercises and common stockholdings are dependent on
the future performance of the Company's common stock and overall stock
market conditions. There can be no assurances that the amounts reflected
will be achieved.
RETIREMENT PLAN
The retirement plan for employees of First Victoria National Bank is a
non-contributory, trusteed retirement plan, providing retirement and death
benefits to all full-time employees who have completed one year of service.
Benefits accrue to the participants based upon years of service and salary. The
funding is limited to the maximum amounts that are available for deduction for
federal income tax purposes. No contributions were made to the plan during 1996
or 1997 due to the over-funding of the retirement plan. During 1998, a
contribution of approximately $25,700 was made to fund the plan.
Prior to 1996, annual retirement benefits under the plan were based upon
the greater of several specified optional calculations - normally, the highest
benefit being based upon length of service and the average of the highest five
consecutive years of salary during the ten years preceding retirement. Effective
January 1, 1996, the benefit formula was amended to provide for a single benefit
formula that is based on the participant's final adjusted monthly compensation.
Employees are required to complete five years of service for their retirement to
vest. During 1998, no amounts were paid or distributed to executive officers
pursuant to the plan.
As of December 31, 1998, the two most highly compensated executive
officers of the Company whose aggregate compensation exceeded $100,000 had years
of credited service as follows: David M. Gaddis - 19 years and C. Dee Harkey - 4
years. If both Mr. Gaddis and Mr. Harkey work until the normal retirement age of
65, their estimated annual benefit under the plan would be $100,526 and $32,930,
respectively, assuming no future salary increases.
DIRECTORS' COMPENSATION
During 1998, outside directors of the First Victoria National Bank
received an annual retainer fee of $5,000. Prior to May 1998, all members of the
Board of Directors received $500 per meeting for each board meeting attended.
Beginning in May 1998, all directors of the Bank who were also employees of the
Bank received no fee for board meetings. In addition, directors not employed by
the Bank received an additional $300 per meeting for each committee meeting
attended. The Directors of the Company were not compensated for the Board
Meetings of the Company.
The Bank maintains the First Victoria National Bank Board of Directors
Deferred Compensation Plan pursuant to which directors may elect to have their
director fees deferred. Distribution of the amount owing under the plan to each
director commences on the later of January 1 of the year subsequent to the year
in which the director reaches the age of sixty-five or on January 1 of the year
subsequent to the year in which the director ceases to be a director. The method
of distribution of the amount owing, which is determined at the time the
director elects to participate, may be in one lump sum or in any number of equal
annual installments, not to exceed ten. The plan provides for alternative
investment options for plan participants. During 1998, two directors
participated in the plan with total deposits to the plan of approximately
$38,800.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The aggregate amount receivable by the Bank from certain related parties
of the Company (directors and executive officers, including their associates,
immediate family members and companies in which they are principal owners) was
approximately $2,833,758 as of December 31, 1998 (approximately
15
<PAGE>
.51% of the Company's total consolidated assets at such date). In the opinion of
management of the Bank, such loan transactions with related parties have been
and will continue to be entered into in the ordinary course of business on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with others, and do not
involve more than the normal risk of collectability or involve a delinquency as
to payment of principal or interest or present other unfavorable features.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 2)
The Board of Directors of the Company has selected KPMG LLP as independent
public accountants to audit the consolidated financial statements of the Company
and its subsidiaries for the current fiscal year, and such selection will be
submitted to the shareholders for ratification at the meeting. Arthur Andersen
LLP previously served as independent public accountants of the Company from 1982
until the completion of their engagement related to the audit for the year ended
December 31, 1998. There were no disagreements with Arthur Andersen on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure. The Board of Directors of the Company recommends
approval of this selection of auditors by the shareholders. Unless otherwise
indicated, the accompanying Proxy will be voted for the selection of KPMG LLP as
independent public accountants of the Company for the current fiscal year.
Should shareholder ratification not be obtained, the Board of Directors would
consider an alternative appointment for the succeeding fiscal year.
Representatives of KPMG LLP will be present at the Annual Meeting, and they will
have the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Proposals from shareholders intended to be presented at the 2000 Annual
Meeting must be received in writing by the Company at its principal offices not
later than December 10, 1999.
16
<PAGE>
OTHER MATTERS
Management of the Company knows of no other business to be presented at
the meeting, but if other matters do properly come before the meeting, unless
otherwise instructed, it is intended that the persons named in the proxy will
vote shares according to their best judgment.
By Order of the Board of Directors
/s/C. DEE HARKEY
C. Dee Harkey
Secretary
Dated: April 5, 1999
THE COMPANY WILL PROVIDE SHAREHOLDERS WITH A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE PERIOD ENDING DECEMBER 31, 1998 (EXCLUDING
EXHIBITS), WITHOUT CHARGE, UPON WRITTEN REQUEST ADDRESSED TO THE SECRETARY OF
THE COMPANY, MR. C. DEE HARKEY, AT:
FVNB Corp.
101 S. Main Street
P. O. Box 1338
Victoria, Texas 77902
17
<PAGE>
FVNB CORP.
101 S. Main Street
P. O. Box 1338
Victoria, Texas 77902
(512) 573-6321
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 1999
--------------
PROXY
--------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of FVNB Corp. (the "Company") hereby appoints
D. R. Stephenson, Albert W. Harrison, Jr., and Mark E. Zafereo, and each of them
separately, with full power of substitution, proxies to vote all shares of
Company common stock, par value $.01 per share, that the undersigned is entitled
to vote at the close of business on March 16, 1999, at the Annual Meeting of
Shareholders to be held on May 13, 1999 at 2:00 p.m., or any adjournment(s)
thereof, on the following proposals:
1. ELECTION OF DIRECTORS, fix the number of directors at twelve and the
election of the nominees listed below as recommended by the Board of
Directors:
Nominees: Michael S. Anderson, O. D. Edwards, Jr., David P. Engel, David
M. Gaddis, Walter T. Haenggi, Robert L. Halepeska, Thomas Lane Keller,
James Robert (Bob) McCan, J. E. McCord, Thomas M. O'Connor, Billy W.
Ruddock, and Roger Welder.
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to
above (except as set forth below) vote for all nominees listed above
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW.)
--------------------------------------------------------------------------
2. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG LLP as the independent public
accountants of the Company for the current fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE SHAREHOLDERS' MEETING OR ANY
ADJOURNMENT OR ADJOURNMENTS THEREOF INCLUDING THE ELECTION OF ANY DIRECTOR
FOR WHICH A BONA FIDE NOMINEE IS NAMED IN THE PROXY STATEMENT AND SUCH
NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE REFUSES TO SERVE.
ANY PROXY GIVEN PURSUANT TO THIS SOLICITATION MAY BE REVOKED BY THE PERSON
GIVING IT ANY TIME BEFORE IT IS VOTED AT THE ANNUAL MEETING. PROXIES MAY
BE REVOKED BY DELIVERING TO THE SECRETARY OF THE COMPANY, C. DEE HARKEY,
101 S. MAIN STREET, P. O. BOX 1338, VICTORIA, TEXAS 77902, A WRITTEN
NOTICE OF REVOCATION BEARING A LATER DATE THAN THE PROXY, BY DULY
EXECUTING AND DELIVERING TO THE SECRETARY A SUBSEQUENTLY DATED PROXY
RELATING TO THE SAME SHARES OR BY ATTENDING THE ANNUAL MEETING AND VOTING
IN PERSON (ALTHOUGH ATTENDANCE AT THE ANNUAL MEETING WILL NOT IN AND OF
ITSELF CONSTITUTE REVOCATION OF A PROXY).
THIS PROXY WILL BE VOTED AS MARKED. SIGNED BUT UNMARKED PROXIES WILL
BE VOTED IN FAVOR OF THE PROPOSALS.
The undersigned acknowledges receipt of the NOTICE OF SHAREHOLDERS'
MEETING to be held May 13, 1999 and the PROXY STATEMENT dated April 5, 1999 and
hereby revokes all Proxies heretofore given by the undersigned.
Dated: ____________________, 1999
_______________________________
Signature
_______________________________
Number of Shares_________________ Signature (If Held Jointly)
_______________________________
Title or Authority (If Applicable)
SIGNATURE OF SHAREHOLDER(S) SHOULD CORRESPOND WITH THE NAME IN WHICH SHARES ARE
REGISTERED. JOINT HOLDERS SHOULD EACH SIGN. WHEN SIGNING AS ATTORNEY-IN-FACT,
TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN, PARTNER, OR DULY AUTHORIZED OFFICER,
PLEASE GIVE TITLE OR AUTHORITY AND ATTACH AUTHORIZATION DOCUMENTS.
