SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
AF BANKSHARES, 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.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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.):
----------------------------------------------------------------------
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.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
[AF BANKSHARES, INC. LETTERHEAD]
October 1, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders
(the "Annual Meeting") of AF Bankshares, Inc. (the "Company"), which will be
held on Monday, November 2, 1998 at 6:00 p.m., local time, at the Executive
Offices of AF Bankshares, Inc., 206 South Jefferson Avenue, West Jefferson,
North Carolina 28694.
The attached Notice of the 1998 Annual Meeting of Shareholders and Proxy
Statement describe the formal business to be transacted at the Annual Meeting.
Directors and officers of the Company, as well as a representative of McGladrey
& Pullen, LLP, the accounting firm appointed by the Board of Directors to be the
Company's independent auditors for the fiscal year ending June 30, 1999, will be
present at the Annual Meeting to respond to appropriate questions.
The Board of Directors of the Company has determined that an affirmative
vote on each matter to be considered at the Annual Meeting is in the best
interests of the Company and its shareholders and unanimously recommends a vote
"FOR" each of these matters.
Please complete, sign and return the enclosed proxy card promptly whether
or not you plan to attend the Annual Meeting. YOUR VOTE IS IMPORTANT REGARDLESS
OF THE NUMBER OF SHARES YOU OWN. VOTING BY PROXY WILL NOT PREVENT YOU FROM
VOTING IN PERSON AT THE ANNUAL MEETING, BUT WILL ASSURE THAT YOUR VOTE IS
COUNTED IF YOU ARE UNABLE TO ATTEND. IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE
NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER TO ATTEND AND TO VOTE PERSONALLY AT THE ANNUAL MEETING.
EXAMPLES OF SUCH DOCUMENTATION INCLUDE A BROKER'S STATEMENT, LETTER OR OTHER
DOCUMENT CONFIRMING YOUR OWNERSHIP OF SHARES OF THE COMPANY.
On behalf of the Board of Directors and the employees of AF Bank, AF
Insurance Services, Inc. and the Company, we thank you for your continued
support.
Sincerely yours,
/s/ James A. Todd
James A. Todd
President and Chief Executive Officer
<PAGE>
AF BANKSHARES, INC.
206 SOUTH JEFFERSON AVENUE
WEST JEFFERSON, NORTH CAROLINA 28694
(336) 246-4344
NOTICE OF THE 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 2, 1998
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders of AF
Bankshares, Inc. (the "Company") will be held at the Executive Offices of the AF
Bankshares, Inc., 206 South Jefferson Avenue, West Jefferson, North Carolina, on
November 2, 1998 at 6:00 p.m., local time, to consider and vote upon the:
1. Election of two directors for terms of three years each;
2. Ratification of the appointment of McGladrey & Pullen, LLP as
independent auditors for the fiscal year ending June 30, 1999; and
3. Such other matters as may properly come before the Annual Meeting or
any adjournment or postponement thereof. The Company is not aware of
any other business that may properly come before the Annual Meeting.
The Board of Directors has fixed September 4, 1998 as the record date for
the determination of shareholders entitled to notice of and to vote at the
Annual Meeting and any adjournment or postponement thereof. Only shareholders of
record at the close of business on that date will be entitled to notice of and
to vote at the Annual Meeting and any adjournment or postponement thereof.
By Order of the Board of Directors
/s/ Melanie Paisley Miller
Melanie Paisley Miller
Secretary
West Jefferson, North Carolina
October 1, 1998
- --------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF SHARES YOU OWN. THE
BOARD OF DIRECTORS URGES YOU TO SIGN, DATE AND MARK THE ENCLOSED PROXY CARD
PROMPTLY AND RETURN IT IN THE ENCLOSED ENVELOPE. RETURNING THE PROXY CARD WILL
NOT PREVENT YOU FROM VOTING IN PERSON IF YOU ATTEND THE ANNUAL MEETING.
- --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
AF BANKSHARES, INC.
1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 2, 1998
GENERAL INFORMATION
GENERAL
This Proxy Statement and accompanying proxy card are being furnished to the
shareholders of AF Bankshares, Inc. (the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company from holders of
the shares of the Company issued and outstanding common stock, par value $.01
per share (the "Common Stock"), as of the close of business on September 4, 1998
(the "Record Date"), for use at the 1998 Annual Meeting of Shareholders of the
Company (the "Annual Meeting") to be held on November 2, 1998 at the main office
of AF Bankshares, Inc., 206 South Jefferson Avenue, West Jefferson, North
Carolina, at 6:00 p.m., local time and at any adjournment or postponement
thereof. This Proxy Statement together with the enclosed proxy card, is first
being mailed to shareholders on or about October 1, 1998.
On October 4, 1996, AF Bank (the Bank") completed its reorganization into
mutual holding company form (the "MHC Reorganization") and its initial public
offering of shares of its Common Stock. On June 16, 1998, the Bank reorganized
into a two-tier mutual holding company structure (the "Reorganization") pursuant
to a plan of reorganization between the Bank, the Company and Ashe Interim
Savings Bank (the "Plan of Reorganization"). As a result of the reorganization,
the Bank became the wholly-owned subsidiary of the Company and shareholders of
the Bank became shareholders of the Company in a share for share exchange.
AsheCo, M.H.C. (the "MHC") is the majority owner of the Company, and, as of
the Record Date, owns 538,221 shares of Common Stock of the Company, which
constitutes approximately 51.08% of the total issued and outstanding Common
Stock of the Company.
RECORD DATE AND VOTING RIGHTS
The Board of Directors of the Company has fixed the close of business on
September 4, 1998 as the date as of which the Company's shareholders are
entitled to notice of and to vote at the Annual Meeting. Accordingly, only
holders of record of shares of Common Stock at the close of business on such
date will be entitled to vote at the Annual Meeting. On the Record Date, there
were 1,053,678 shares of Common Stock issued and outstanding, of which 515,457
shares of Common Stock were held by persons other than the MHC (the "Minority
Shareholders"). The presence, in person or by proxy, of the holders of at least
a majority of the total number of outstanding shares of Common Stock entitled to
vote at the Annual Meeting is necessary to constitute a quorum thereat.
Each holder of shares of Common Stock outstanding on the Record Date will
be entitled to one vote for each share held of record (other than Excess Shares
as defined below) at the Annual Meeting and at any adjournment or postponement
thereof. As provided in the Company's Federal Stock Charter, record holders of
Common Stock who beneficially own in excess of 10% of the outstanding shares of
Common Stock ("Excess Shares") shall not be entitled to vote Excess Shares. A
person or entity is deemed to beneficially
<PAGE>
own shares owned by an affiliate or associate as well as by persons acting in
concert with such person or entity.
All properly executed proxies received by the Company will be voted in
accordance with the instructions indicated thereon. IF NO INSTRUCTIONS ARE
GIVEN, EXECUTED PROXIES WILL BE VOTED FOR ELECTION OF EACH OF THE TWO NOMINEES
FOR DIRECTOR, AND FOR EACH OTHER PROPOSAL IDENTIFIED IN THE NOTICE OF THE 1998
ANNUAL MEETING OF SHAREHOLDERS. Management is not aware of any matters other
than those set forth in the Notice of the 1998 Annual Meeting of Shareholders
that may be brought before the Annual Meeting. If any other matters properly
come before the Annual Meeting, the persons named in the accompanying proxy card
will vote the shares represented by all properly executed proxies on such
matters in such manner as shall be determined by a majority of the Board of
Directors of the Company.
IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME,
YOU WILL NEED APPROPRIATE DOCUMENTATION FROM YOUR SHAREHOLDER OF RECORD TO VOTE
PERSONALLY AT THE ANNUAL MEETING. Examples of such documentation would include a
broker's statement, letter or other document that will confirm your ownership of
shares of the Company.
VOTE REQUIRED
The vote required for each proposal is set forth in the discussion of each
proposal under the caption "Vote Required."
VOTE BY MHC
As indicated above and under "Security Ownership of Certain Beneficial
Owners and Management," the MHC owns approximately 51.08% of the shares of
Common Stock entitled to vote at the Annual Meeting. The MHC has indicated to
the Company that it intends to vote such shares of Common Stock FOR the election
of the Company's nominees for director and FOR the ratification of the
appointment of the independent auditors, thereby ensuring a quorum at the Annual
Meeting, and the likelihood of the election of such nominees and the
ratification of the appointment of the independent auditors.
REVOCABILITY OF PROXIES
A proxy may be revoked at any time before it is voted by filing a written
revocation of the proxy with the Secretary of the Company or by submitting a
duly executed proxy bearing a later date. A proxy also may be revoked by
attending and voting at the Annual Meeting or any adjournment or postponement
thereof, if a written revocation is filed with the Secretary of the Company
prior to the voting of such proxy.
SOLICITATION OF PROXIES
The Company will bear the costs of soliciting proxies from its
shareholders. In addition to the use of mail, proxies may be solicited by
officers, directors or employees of the Company, by telephone or through other
forms of communication. The Company will also request persons, firms and
corporations holding shares in their names or in the name of their nominees,
which are beneficially owned by others, to send proxy materials to and obtain
proxies from such beneficial owners, and will reimburse such holders for
reasonable expenses incurred in connection therewith.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL SHAREHOLDERS OF THE COMPANY
The following table sets forth, as of July 1, 1998, certain information as
to Common Stock beneficially owned by persons owning in excess of 5% of the
outstanding shares of Common Stock. Management knows of no person, except as
listed below, who beneficially owned more than 5% of the Bank's outstanding
shares of Common Stock as of July 1, 1998. Except as otherwise indicated, the
information provided in the following table was obtained from filings with the
Office of Thrift Supervision (the "OTS") and with the Company pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Addresses
provided are those listed in the filings as the address of the person authorized
to receive notices and communications. For purposes of the table below and the
table set forth under "Security Ownership of Management," in accordance with
Rule 13d-3 under the Exchange Act, a person is deemed to be the beneficial
owner, for purposes of this table, of any shares of Common Stock (1) over which
he has or shares, directly or indirectly, voting or investment power, or (2) of
which he has the right to acquire beneficial ownership at any time within 60
days after July 1, 1998. As used herein, "voting power" is the power to vote or
direct the voting of shares and "investment power" includes the power to dispose
or direct the disposition of such shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT
---------------- -------------------- -------
<S> <C> <C>
AsheCo, M.H.C. 538,221 51.08%
206 South Jefferson Avenue
West Jefferson, North Carolina 28694
</TABLE>
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information with respect to the shares of
Common Stock beneficially owned by each director of the Company, by each named
executive officer of the Company identified in the Summary Compensation Table
included elsewhere herein, and all directors and executive officers of the
Company as a group as of July 1, 1998. Except as otherwise indicated, each
person and each group shown in the table has sole voting and investment power
with respect to the shares of Common Stock indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL COMMON STOCK
NAME POSITION OWNERSHIP(1)(2)(3)(4) OUTSTANDING(5)
- ---------------------------- -------------------------------- ------------------------------- -----------------
<S> <C> <C> <C>
James A. Todd Director, President and 25,283 2.4%
Chief Executive Officer
Jan R. Caddell Director, Chairman of the 7,494 *
Board of Directors
Kenneth R. Greene Director 7,494 *
William O. Ashley, Jr. Director 7,494 *
Wayne R. Burgess Director 7,567 *
Frank E. Roland Director 7,494 *
Jerry L. Roten Director 7,494 *
John D. Weaver Director 7,494 *
------- ---
All directors and executive officers 142,533 13.5%
as a group (10 persons)
</TABLE>
- ----------
* Less than one percent of Outstanding Common Stock.
(1) See "Principal Shareholders of the "Company" for a definition of
"beneficial ownership." All persons shown in the above table have sole
voting and investment power, except as otherwise indicated.
(2) The figures shown for Mr. Todd include 897 shares held in trust by the
Company, as trustee, pursuant to the Employee Stock Ownership Plan of Ashe
Federal Bank ("ESOP"), which shares have been allocated to Mr. Todd's
account under the ESOP and as to which he has sole voting power, but no
investment power, except in limited circumstances. The figure shown for all
directors and executive officers as a group includes the shares allocated
to Mr. Todd's account under the ESOP and 910 shares allocated to the
accounts of the other executive officers, as to which such executive
officers have sole voting power, but no investment power, except in limited
circumstances. Such figure also includes (a) 5,593 shares allocated to the
accounts of other participants in the ESOP, as to which the Bank, as the
ESOP trustee, and the Bank's Compensation Committee (consisting of Messrs.
Greene and Burgess), which serves as the ESOP Committee, has no voting
power and shared investment power, and (b) 29,542 shares that have not been
allocated to participants' accounts under the ESOP, as to which the
executive officers have shared voting power, but no investment power,
except in limited circumstances, the ESOP trustee has shared voting and
investment power and the ESOP Committee has no voting power and shared
investment power. Except for the shares allocated to their individual
accounts, each executive officer disclaims beneficial ownership of the
shares held in the ESOP, and each member of the Board of Directors
disclaims beneficial ownership of the shares held in the ESOP.
(3) Includes 2,300 shares of restricted stock granted to each outside director
(of which 460 shares vested on December 8, 1997) and 17,959 shares of
common stock granted to Mr. Todd (of which 3,592 shares vested on December
8, 1997) pursuant to the Ashe Federal Bank 1997 Recognition and Retention
Plan (the "RRP"). Each recipient of a restricted stock award has sole
voting power but no investment power over the shares of Common Stock
covered by the award.
(4) Includes the 194 shares of Common Stock which may be acquired by each
outside director pursuant to vested options granted to them under the Ashe
Federal Bank 1997 Stock Option Plan (the "Stock Option Plan"). Also
includes 1,427 shares of Common Stock which Mr. Todd may acquire pursuant
to a vested option granted to him under the Stock Option Plan.
(5) Percentages with respect to each person or group of persons have been
calculated on the basis of 1,053,678 shares of Common Stock, the total
number of shares of the Company's common stock outstanding as of July 1,
1998, plus the number of shares of Common Stock which such person or group
has the right to acquire within 60 days after July 1, 1998.
4
<PAGE>
--------------------------------------
PROPOSAL 1
ELECTION OF DIRECTORS
--------------------------------------
GENERAL
The Federal Stock Charter and Bylaws of the Company provide for the
election of directors by the shareholders. For this purpose, the Board of
Directors of the Company is divided into three classes, as nearly equal in
number as possible. The terms of office of the members of one class expire, and
a successor class is to be elected, at each annual meeting of shareholders.
There are currently eight directors of the Company.
The terms of two directors expire at the Annual Meeting. Each of the two
incumbent directors, Frank E. Roland and Jerry L. Roten has been nominated by
the Nominating Committee of the Board of Directors to be re-elected at the
Annual Meeting for a three-year term expiring at the annual meeting of
shareholders to be held in 2001, or when their successors are otherwise duly
elected and qualified. The terms of the remaining two classes of directors
expire at the annual meetings of shareholders to be held in 1999 and 2000,
respectively, or when their successors are otherwise duly elected and qualified.
Each nominee has consented to being named in this Proxy Statement and to serve
if elected.
In the event that any nominee for election as a director at the Annual
Meeting is unable or declines to serve, which the Board of Directors has no
reason to expect, the persons named in the Proxy Card will vote with respect to
a substitute nominee designated by the present Board of Directors.
VOTE REQUIRED
Directors are elected by a plurality of the votes cast in person or by
proxy at the Annual Meeting. The holders of Common Stock may not vote their
shares cumulatively for the election of directors. Shares underlying broker
non-votes will not be counted as having been voted in person or by proxy and
will have no effect on the election of directors. The MHC intends to vote FOR
the election of the Company's nominees for director thereby ensuring a quorum
and the likelihood of the election of such nominees.
5
<PAGE>
INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS
The following table sets forth certain information with respect to each
nominee for election as a director and each director whose term does not expire
at the Annual Meeting ("Continuing Director"). There are no arrangements or
understandings between the Company and any director or nominee pursuant to which
such person was elected or nominated to be a director of the Company. For
information with respect to security ownership of directors, see "Security
Ownership of Certain Beneficial Owners and Management -- Security Ownership of
Management."
<TABLE>
<CAPTION>
DIRECTOR TERM POSITION(S) HELD WITH THE
NOMINEES AGE(1) SINCE(2) EXPIRES COMPANY
- ------------------------------ ------ -------- ------- ----------------------------
<S> <C> <C> <C> <C>
Frank E. Roland............... 75 1989 2001 Director
Jerry L. Roten................ 52 1992 2001 Director
CONTINUING DIRECTORS
- --------------------
William O. Ashley, Jr......... 69 1965 1999 Director
Wayne R. Burgess.............. 58 1989 1999 Director
John D. Weaver................ 75 1990 1999 Director
James A. Todd................. 54 1994 2000 Director, President and Chief
Executive Officer
Kenneth R. Greene............. 51 1988 2000 Director
Jan R. Caddell................ 58 1981 2000 Director, Chairman of the Board
</TABLE>
- ----------
(1) As of September 30, 1998.
(2) Includes term as a director of AF Bank.
The principal occupation and business experience of each nominee for
election as director and each Continuing Director are set forth below. Unless
otherwise indicated, each of the following persons has held his present position
for the last five years.
NOMINEES FOR ELECTION AS DIRECTOR
Frank E. Roland has served as a Director of the Bank since 1989. Mr. Roland
retired from the U.S. Postal Service in 1985 and has since served as a director
of Ashe Memorial Hospital, Riverview Community Center and Skyline Telephone
Membership Corporation. He has also served on the Ashe County Bond Authority.
Jerry L. Roten has served as a Director of the Bank since 1992. Mr. Roten
has served as the Clerk of the Superior Court of Ashe County for the past 12
years.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
NOMINEES FOR ELECTION AS DIRECTORS.
CONTINUING DIRECTORS
James A. Todd has served as the Bank's President and Chief Executive
Officer since February 1994 and as President and Director since August 1994.
Before joining the Bank, Mr. Todd was a Senior Examination Officer at the OTS.
6
<PAGE>
Jan R. Caddell has served as a Director of the Bank since 1981 and Chairman
of the Board of the Bank since 1991. Mr. Caddell served as Chairman of the Bank
from 1991 to 1993. He is also President and General Manager of Caddell
Broadcasting, Inc. and its commercial radio station, WKSK.
Kenneth R. Greene has served as a Director of the Bank since 1988 and also
serves as Vice Chairman of the Board. Mr. Greene has over 20 years experience in
the concrete sales and building-supply business, and he is currently the manager
at East Jefferson Builders Mart.
William O. Ashley, Jr. has served as a Director of the Bank since 1965.
From 1964 to 1994, Mr. Ashley served as Managing Officer, Secretary and
Treasurer of the Bank, and also served as a consultant to the Bank in 1994.
Wayne R. Burgess has served as a Director of the Bank since 1989. Mr.
Burgess is also a part-owner, Vice President and Manager of Burgess Furniture of
West Jefferson, North Carolina.
John D. Weaver has served as a Director of the Bank since 1990. Mr. Weaver
is President of Weaver Tree Farm, Inc., a retail and wholesale Christmas tree
farm.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS OF THE BANK AND THE COMPANY
The Board of Directors meet on a monthly basis and may have additional
special meetings upon the request of the Chairman of the Board, the President or
one-third of the Board of Directors. During the fiscal year ended June 30, 1998,
the Board of Directors of the Bank met 12 times and the Company's Board of
Directors did not meet, as the reorganization of the Bank into a two-tier mutual
holding company did not occur until June 16, 1998. No current director attended
fewer than 75% of the total number of Board meetings and committee meetings of
which such director was a member.
The Board of Directors of the Company has established the following
committees:
Nominating Committee. The Nominating Committee is chaired by Director
Weaver, with Director Ashley as a member. Membership changes annually. This
committee nominates candidates for Board membership. The Nominating Committee
met once in fiscal 1998.
Compensation Committee. The Compensation Committee is chaired by Director
Greene, with Director Burgess and Director Ashley as members. This committee
establishes the compensation of the Chief Executive Officer, approves the
compensation of other officers and determines the compensation and benefits to
be paid to employees of the Company and the Bank. The Compensation Committee
also establishes directors' fees and bonuses. The committee meets at least twice
a year and whenever requested by the Board of Directors. The Compensation
Committee met two times in fiscal 1998.
Audit Committee. The Audit Committee is composed of Directors Roland and
Weaver. This committee meets when the Bank's regulatory examiners and the
Company's auditors begin their review process and when the examiners and
auditors present their reports to the Company and the Bank. The Audit Committee
met six times during the fiscal year ended June 30, 1998.
7
<PAGE>
EXECUTIVE OFFICERS
The following individuals are executive officers of the Bank and the
Company and hold the offices set forth below opposite their names.
<TABLE>
<CAPTION>
NAME AGE POSITION HELD WITH THE COMPANY
---- --- ------------------------------
<S> <C> <C>
James A. Todd 54 President and Chief Executive
Officer
Melanie Paisley Miller 27 Senior Vice President, Secretary,
Treasurer and Chief Financial Officer
Martin G. Little 37 Senior Vice President and
Chief Lending Officer
</TABLE>
The executive officers of the Company are elected annually and hold office
until their respective successors have been elected and qualified or until
death, resignation, or removal by the Board of Directors. The Company has
entered into Employment Agreements with certain of its executive officers which
set forth the terms of their employment. See "Compensation of Directors and
Executive Officers -- Employment Agreements."
Biographical information of executive officers of the Company or the Bank
who are not directors is set forth below.
Melanie Paisley Miller served as Secretary and Treasurer of the Bank from
August 1995 to April 1996, at which time her title was changed to Senior Vice
President, Secretary, Treasurer and Chief Financial Officer of the Bank. Ms.
Miller served as corporate secretary of the Bank from July 1994 to August 1995,
and as an administrative assistant from March 1994 to July 1994. From 1991 to
December of 1993, Ms. Miller was a student at Appalachian State University,
where she earned her Bachelor of Science degree in Business Administration with
a major in accounting.
Martin G. Little served as Vice President/Branch Manager of the Bank from
1994 to April 1996, at which time his title was changed to Senior Vice President
and Retail Banking Manager of the Bank. In 1997, his title was changed to Senior
Vice President and Chief Lending Officer. Mr. Little also served as Loan Officer
of the Bank from 1987 to 1994.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS' COMPENSATION
Fee Arrangements. Currently, each non-employee director of the Company
receives a fee of $400 per month, except for the Chairman who receives a fee of
$500 per month. Directors do not receive additional compensation for attending
committee meetings. Each non-employee director also receives an annual retainer
fee of $5,000, payable in June, if such director has attended a minimum of 75%
of the aggregate number of Board and committee meetings called during the fiscal
year. Directors of both the Company and the Bank will not be compensated for
their services on the Board of the Company. Directors of the Company are also
eligible to receive stock options and restricted stock awards pursuant to the
Company's Stock Option Plan and RRP. For descriptions of the Stock Option Plan,
RRP and awards granted under such plans, see "Stock Option Plan" and
"Recognition and Retention Plan."
8
<PAGE>
Directors' Retirement Plan. The Bank has adopted a nonqualified Retirement
Plan for Board Members of the Bank (the "Directors' Retirement Plan"), which
will provide benefits to each eligible outside director commencing on his
termination of Board service at or after age 65. Each outside director
automatically becomes a participant in the Directors' Retirement Plan. An
eligible outside director retiring at or after age 65 will be paid an annual
retirement benefit equal to the annual rate of retainer paid to outside
directors immediately prior to his termination of Board service, multiplied by a
fraction, the numerator of which is the number of his years of service as an
outside director (including service as a director or trustee of the Bank or any
predecessor) not in excess of 10 years and the denominator of which is 10. An
individual who terminates Board service after having served as an outside
director for 10 years may elect to begin collecting benefits under the
Directors' Retirement Plan at or after attainment of age 55, but the annual
retirement benefits payable to him will be reduced pursuant to the Directors'
Retirement Plan's early retirement reduction formula to reflect the commencement
of benefit payments prior to age 65. Benefits are generally paid for a fixed
period of 10 years, but a director may elect to convert such benefit to a single
life or joint and survivor annuity based on actuarial factors specified in the
Directors Retirement Plan. Upon a change in control, participants will receive
an immediate lump sum distribution of a benefit that is the actuarial equivalent
of a single life annuity providing an annual payment equal to the annual rate of
retainer paid to outside directors immediately prior to the change of control
multiplied by a fraction, the numerator of which is the director's year of
service not in excess of 10 and the denominator of which is 10.
9
<PAGE>
EXECUTIVE COMPENSATION
Cash Compensation. The following table sets forth the cash compensation
paid by the Company and the Bank for services rendered in all capacities during
the fiscal years ended June 30, 1998, 1997 and 1996 to the President and Chief
Executive Officer of Company and the Bank. No executive officer of the Company
or the Bank had salary and bonus during the fiscal years ended June 30, 1998,
June 30, 1997 and June 30, 1996 aggregating in excess of $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION(1) AWARDS PAYOUTS
---------------------- ------ -------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
OTHER RESTRICTED
ANNUAL STOCK LTIP ALL OTHER
SALARY COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITIONS YEAR ($)(1) BONUS($) ($)(2) ($)(3) (#)(4) ($) ($)(5)
- -------------------------------------- ---- ------ -------- ------------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James A. Todd 1998 $ 82,400 $ 12,000 -- $ 332,242 7,134 -- $ 8,614
President and Chief Executive Officer. 1997 $ 80,000 $ 10,000 -- -- -- -- $ 6,278
1996 $ 57,084 $ 10,000 -- -- -- -- $ 365
</TABLE>
- ----------
(1) Includes amounts, if any, deferred pursuant to Section 401(k) of the Code
under the Bank's 401(k) Plan.
(2) For fiscal year 1998, there were no: (a) perquisites with an aggregate
value for any named individual in excess of the lesser of $50,000 or 10% of
the total of the individual's salary and bonus for the year; (b) payments
of above-market preferential earnings on deferred compensation; (c)
payments of earnings with respect to long-term incentive plans prior to
settlement or maturation; (d) tax payment reimbursements; or (e)
preferential discounts on stock.
(3) Pursuant to the RRP, Mr. Todd was awarded 17,959 shares of restricted
stock, as of December 8, 1997, which vest in 20% increments on an annual
basis, beginning on December 8, 1997. Dividends attributable to such shares
are held in the trust fund and are held for distribution in accordance with
the terms of the restricted stock award. The value of the 17,959 restricted
share award shown in the table above for the fiscal year ending June 30,
1998 is based on the closing price of a share of Common Stock on December
8, 1997, the date of grant, which was $18.50. At June 30, 1998, the
aggregate fair market value of the restricted stock award made to Mr. Todd
was $350,201, based on a closing price of $19.50 per share. During the
fiscal years ended June 30, 1997 and 1996, neither the Bank, nor the
Company maintained any restricted stock plans. In the case of death,
disability, retirement or a change in control, as defined in the RRP, all
restricted stock awards become immediately exercisable.
(4) Includes 7,134 shares of Common Stock subject to options granted to Mr.
Todd, pursuant to the Stock Option Plan on December 8, 1997. The options
granted under the Stock Option Plan are intended to qualify as "incentive
stock options" under Section 422 of the Internal Revenue Code, as amended
(the "Code") to the maximum extent possible, and any options that do not
qualify will constitute non-qualified stock options. The Stock Option Plan
provides for options to become exercisable in five equal installments,
beginning on December 8, 1997, and generally remain exercisable until the
tenth anniversary of the grant date. In the case of death, disability,
retirement or a change in control, as defined in the Stock Option Plan, all
options granted become immediately exercisable.
(5) Includes (i) the dollar value of premiums, if any, paid by the Bank with
respect to term life insurance (other than group term insurance coverage
under a plan available to substantially all salaried employees) for the
benefit of the executive officer; and (ii) an allocation of 423 and 473
shares to Mr. Todd's account under the ESOP for the fiscal years ended June
30, 1998 and 1997, respectively, with a total market valueof $8,248.50 and
$5,912.50 as of June 30, 1998 and 1997, respectively. See
"--Benefits--Employee Stock Ownership Plan and Trust."
10
<PAGE>
EMPLOYMENT AGREEMENTS
The Bank is a party to an Employment Agreement with each of Mr. Todd, Ms.
Miller and Mr. Little ("Senior Executive(s)"). These Employment Agreements
establish the respective duties and compensation of the Senior Executives and
are intended to ensure that the Bank will be able to maintain a stable and
competent management base. The continued success of the Bank depends to a
significant degree on the skills and competence of the Senior Executives.
The Employment Agreements provide for three-year terms. The Employment
Agreements provide that, prior to the first anniversary of the Agreement's
effective date and each anniversary of such date thereafter, the Board of
Directors may, with the Senior Executive's concurrence, extend the Employment
Agreements for an additional year, so that the remaining terms shall be three
years, after conducting a performance evaluation of the Senior Executive. The
Employment Agreements provide that the Senior Executive's base salary will be
reviewed annually. This review is performed by the Compensation Committee of the
Board and the Senior Executive's base salary may be increased on the basis of
her or his job performance and the overall performance of the Bank. Each Senior
Executive may receive a bonus based upon achievement of prescribed performance
criteria. In addition to base salary, the Employment Agreements provide for,
among other things, entitlement to participation in stock, retirement and
welfare benefit plans and eligibility for fringe benefits applicable to
executive personnel such as fees for club and organization memberships deemed
appropriate by the Bank and the Senior Executive. The Employment Agreements
provide for termination by the Bank at any time for cause as defined in the
Employment Agreements. In the event the Bank chooses to terminate the Senior
Executive's employment for reasons other than for cause, or in the event of the
Senior Executive's resignation from the Bank upon: (i) the Board's or the
stockholder's failure to re-appoint, elect or re-elect the Senior Executive to
her or his current offices; (ii) a material change in the Senior Executive's
compensation, functions, duties or responsibilities; (iii) a "change of control"
as defined in the Employment Agreements; or (iv) a material breach of the
Employment Agreement by the Bank, the Senior Executive or, in the event of
death, her or his beneficiary is entitled to a lump sum cash payment in an
amount equal to the remaining base salary and bonus payments due to the Senior
Executive and the additional contributions or benefits that would have been
earned under any employee benefit plans of the Bank, the Company, or the MHC
during the remaining terms of the Employment Agreements. The Bank would also
continue the Senior Executive's life, health and disability insurance coverage
for the remaining terms of the Employment Agreements.
The Bank's Employment Agreements have restrictions on the dollar amount of
compensation and benefits payable to a Senior Executive in the event of
termination following a "change in control." In general, for purposes of the
Employment Agreements and the plans maintained by the Bank, a "change in
control" will generally be deemed to occur when a person or group of persons
acting in concert acquires beneficial ownership of 25% or more of any class of
equity security, such as Common Stock of the Company, or in the event of a
tender offer, exchange offer, merger or other form of business combination, sale
of assets or contested election of directors which results in a change in
control of the majority of the Board of Directors of the Bank. Cash and benefits
paid to a Senior Executive under the Employment Agreements together with
payments under other benefit plans following a "change in control" of the
Company or the Bank may constitute an "excess parachute" payment under Section
280G of the Code, resulting in the imposition of a 20% excise tax on the
recipient and the denial of the deduction for such excess amounts to the Company
or the Bank. As a result, no payments or benefits will be paid to an Executive
following a "change in control" to the extent such payments would constitute an
"excess parachute payment" under Section 280G of the Code.
11
<PAGE>
BENEFITS
Employee Stock Ownership Plan and Trust. The Company has established and
adopted, for the benefit of eligible employees, an ESOP and related trust. All
salaried employees of the Bank and the Company are eligible to become
participants in the ESOP. The ESOP purchased 36,942 shares of Common Stock
issued in connection with the MHC Reorganization and Offering. In order to fund
the ESOP's purchase of such Common Stock, the ESOP borrowed funds from an
unaffiliated lender equal to the balance of the aggregate purchase price of the
Common Stock. Although contributions to the ESOP are discretionary, the Company
intends to make annual contributions to the ESOP in an aggregate amount at least
equal to the principal and interest requirement on the debt. This loan is for a
term of six years, bears interest at the prime rate minus one-half of one
percent, and calls for level annual payments of principal plus accrued interest
designed to amortize the loan over its term. Prepayments are also permitted.
Shares purchased by the ESOP were pledged as collateral for the loan, and
are held in a suspense account until released for allocation among participants
in the ESOP as the loan is repaid. The pledged shares will be released annually
from the suspense account in an amount proportional to the repayment of the ESOP
loan for each plan year. The released shares will be allocated among the
accounts of participants on the basis of the participants' compensation for the
year of allocation. Benefits provided to participants under the ESOP generally
become 100% vested after three years of service; prior to such time, benefits
are 0% vested. Participants will become immediately vested upon termination of
employment due to death, retirement at age 65, permanent disability or upon the
occurrence of a change in control. Forfeitures will be reallocated among
remaining participating employees, in the same proportion as contributions.
Vested benefits may be paid in a single sum or installment payments and are
payable upon death, retirement at age 65, disability or separation from service.
The ESOP Committee, which is currently comprised of members of the
Compensation Committee, may instruct the trustee regarding investment of funds
contributed to the ESOP. The ESOP trustee, subject to its fiduciary duty, must
vote all allocated shares held in the ESOP in accordance with the instructions
of the participating employees. Under the ESOP, unallocated shares will be voted
in a manner calculated to most accurately reflect the instructions it has
received from participants regarding the allocated stock as long as such vote is
in accordance with the provisions of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). The ESOP may purchase additional shares of Common
Stock in the future.
Stock Option Plan. The Stock Option Plan was adopted by the Board of
Directors of the Bank and approved by the Bank's stockholders at the 1997 Annual
Meeting. The Company assumed sponsorship of the Stock Option Plan pursuant to
the Plan of Reorganization on the effective date of the Reorganization. The
purpose of the Stock Option Plan continues to be to promote the growth of the
Company, the Bank and other affiliates by linking the incentive compensation of
officers, key executives and directors with the profitability of the Company.
The Stock Option Plan is not subject to ERISA and is not a tax-qualified plan.
The Company has reserved an aggregate of 21,322 shares of Common Stock for
issuance upon the exercise of stock options granted under the Plan.
The Stock Option Plan is administered by the members of the Board's
Compensation Committee who are disinterested directors ("Option Committee"). In
general, both "incentive stock options" and non-qualified stock options to
purchase Common Stock of the Company ("Options") may be granted to eligible
officers and outside directors, subject to the restrictions of the Code. The
Option Committee has discretion under the Stock Option Plan to establish certain
material terms of the Options granted to officers and employees provided such
grants are made in accordance with the Plan's requirements. All Options granted
to outside directors are by automatic formula grant and the Option Committee has
no discretion over the
12
<PAGE>
material terms of these grants. As of the effective date of the Stock Option
Plan, each outside director of the Company was granted a non-qualified stock
option to purchase an aggregate of 914 shares of Common Stock at an exercise
price of $18.50 per share.
All stock options granted under the Plan generally vest in 20% increments
over a five year period subject to automatic full vesting upon the optionee's
death, disability or retirement or upon a change in control of the Company, as
defined in the Stock Option Plan, beginning December 8, 1997. The Company
believes the use of a vesting schedule will encourage each option recipient to
remain in the service of the Company (or an affiliate) and contribute to its
profitability in order to enjoy the full economic benefit of the Option. All
costs of the Stock Option Plan are borne by the Company. The Company has
reserved the right to amend or terminate the Plan, in whole or in part, subject
to the requirements of all applicable laws.
The following table summarizes the grants that were made to the Named
Executive Officer during fiscal 1998.
OPTION/SAR GRANTS IN FISCAL YEAR 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF ANNUAL RATE OF
NUMBER OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS/SARS EMPLOYEES IN EXERCISE OR --------------------
GRANTED FISCAL YEAR BASE PRICE EXPIRATION 5% 10%
NAME (#)(1) (%) ($ PER SHARE) DATE ($) ($)
- ----- --------------- -------------------------------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
James A. Todd
President and Chief Executive Officer.. 7,134 47.5% $18.50 12/7/07 $83,001 $210,341
</TABLE>
- ----------
(1) All options granted are incentive stock options which become exercisable in
20% increments on an annual basis, with the first installment vesting on
December 7, 1997. In case of death, disability, retirement or a change in
control, as defined in the Stock Option Plan, all options granted become
immediately exercisable.
The following table provides the value for "in-the-money" options, which
represent the positive spread between the exercise price of any such existing
stock options and the fiscal year-end price of the Common Stock, which was
$19.50 per share. The first installment of options became exercisable on
December 8, 1997. The Named Executive Officer did not exercise any vested
options during the fiscal year ended June 30, 1998.
AGGREGATED OPTIONS IN 1998 FISCAL YEAR AND 1998 FISCAL YEAR END OPTIONS
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT FISCAL OPTIONS/SARS AT FISCAL
YEAR-END YEAR-END(1)
(#) ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
<S> <C> <C>
James A. Todd
President and Chief Executive Officer....... 1,427 / 5,707 $1,427 / $5,707
</TABLE>
- ----------
(1) The closing price per share of Common Stock on June 30, 1998 was $19.50,
and all options have an exercise price of $18.50 per share, which equals a
spread of $1.00.
13
<PAGE>
Recognition and Retention Plan. The RRP was adopted by the Board of
Directors of the Bank and approved by the Bank's stockholders at the 1997 Annual
Meeting. The Company assumed sponsorship of the RRP pursuant to the Plan of
Reorganization on the effective date of the Reorganization. Similar to the Stock
Option Plan, the RRP functions as a long-term incentive compensation program for
eligible officers and outside directors of the Company, the Bank and other
affiliates. The RRP is administered by the members of the Board's Compensation
Committee who are disinterested directors ("RRP Committee"). All costs and
expenses of administering the RRP are paid by the Company.
As required by the terms of the RRP, the Company has established a trust
("Trust") and has issued 53,678 shares of Common Stock, the maximum number of
restricted stock awards ("Restricted Stock Awards") that may be granted under
the RRP, to the Trust from previously authorized, but unissued shares. Shares of
Common Stock subject to a Restricted Stock Award are held in the Trust until the
Award vests at which time the shares of Common Stock attributable to the portion
of the Award that have vested are distributed to the Award holder. An Award
recipient is entitled to exercise voting rights and receive cash dividends with
respect to the shares of Common Stock subject to his Award, whether or not the
underlying shares have vested. If an individual award recipient terminates
service prior to full vesting of the Restricted Stock Awards granted pursuant to
the RRP, the shares subject to the award will be forfeited and returned to the
Company.
Restricted Stock Awards are granted under the RRP on a discretionary basis
to eligible officers and executives selected by the RRP Committee and are
awarded to outside directors pursuant to the terms of the RRP. As of July 1,
1998, each outside director has been granted a Restricted Stock Award with
respect to 2,300 shares of Common Stock. All outstanding Restricted Stock Awards
will vest and become distributable at the rate of 20% per year, over a five year
period, commencing on December 8, 1997, subject to automatic full vesting on the
date of the Award holder's death, disability or retirement or upon a change in
control of the Company.
The Company may amend or terminate the RRP, in whole or in part, at any
time, subject to the requirements of all applicable laws.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA") requires that all loans or extensions of credit to executive officers
and directors must be made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with the general public and must not involve more than the normal
risk of repayment or present other unfavorable features. The Bank makes loans to
executive officers, directors and their affiliates that are no more favorable
and in the ordinary course of business and that do not involve more than the
normal risk of collectibility or present unfavorable features. The Bank intends
that any transactions in the future between the Bank and its executive officers,
directors, holders of 10% or more of the shares of any class of its common stock
and affiliates thereof, will contain terms no less favorable to the Bank than
could have been obtained by it in arm's- length negotiations with unaffiliated
persons and will be approved by a majority of independent outside directors of
the Bank not having any interest in the transaction.
14
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than 10% of Common Stock to file with
the Securities Exchange Commission ("SEC") reports of ownership and changes of
ownership. Officers, directors and greater than 10% shareholders are required by
the regulations of the SEC to furnish the Company with copies of all Section
16(a) forms they file. The Company knows of no other person other than the MHC
who owns 10% or more of the Company's Common Stock. Based solely on its review
of the copies of such forms received by it, or written representations from
certain reporting persons, the Company believes that all filing requirements
applicable to its executive officers, directors and greater than 10% beneficial
owners were complied with.
------------------------------------------------------------------
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
------------------------------------------------------------------
GENERAL
The Board of Directors has appointed the firm of McGladrey & Pullen, LLP to
act as independent auditors for the Company for the fiscal year ending June 30,
1999, subject to ratification of such appointment by the Company's shareholders.
A representative of McGladrey & Pullen, LLP is expected to be present at the
Annual Meeting and 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. No
determination has been made as to what action the Board of Directors would take
if the shareholders do not ratify the appointment.
VOTE REQUIRED
The ratification of the appointment of the Board of Directors of McGladrey
& Pullen, LLP, independent auditors ("Proposal 2") requires the affirmative vote
of the holders of a majority of the outstanding shares of Common Stock
represented in person or by proxy at the Annual Meeting and entitled to vote
thereon. Accordingly, shares as to which the "ABSTAIN" box has been selected on
the Proxy Card will be counted as present and entitled to vote and will have the
effect of a vote against Proposal 2. Shares underlying broker non-votes will not
be counted as having been voted in person or by proxy and will have no effect on
the vote for Proposal 2. The MHC intends to vote for the ratification of the
appointment of McGladrey & Pullen, LLP thereby ensuring a quorum and the
likelihood of the ratification of the appointment of the independent auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS.
15
<PAGE>
ADDITIONAL INFORMATION
NOTICE OF BUSINESS TO BE CONDUCTED AT ANNUAL MEETING
The Bylaws of the Company provides for an advance notice procedure for a
shareholder to properly bring business before an annual meeting or to nominate
any person for election to the Board of Directors. The shareholder must be a
shareholder of record and have given timely notice thereof in writing to the
Secretary of the Company. To be timely, a shareholder's notice must be delivered
to or received by the Secretary not later than five days prior to the date of
the annual meeting. A shareholder's notice to the applicable Secretary shall set
forth such information as required by the Bylaws of the Company. Nothing in this
paragraph shall be deemed to require the Company to include in its proxy
statement and proxy card relating to an annual meeting any shareholder proposal
or nomination which does not meet all of the requirements for inclusion
established by the SEC in effect at the time such proposal or nomination is
received. See "--Date For Submission of Shareholder Proposals."
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Any shareholder proposal intended for inclusion in the proxy statement and
proxy card of the Company relating to the 1999 Annual Meeting of Shareholders of
the Company must be received by the Company by June 3, 1999, pursuant to the
proxy soliciting regulations of the SEC. Nothing in this paragraph shall be
deemed to require the Company to include in its proxy statement and proxy card
for such meeting any shareholder proposal which does not meet the requirements
of the SEC in effect at the time. Any such proposal will be subject to 17 C.F.R.
ss.240.14a-8 of the Rules and Regulations promulgated by the SEC under the
Exchange Act.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not know of any other matters to be brought before the shareholders
at the 1998 Annual Meeting.
By Order of the Board of Directors
/s/ Melanie Paisley Miller
Melanie Paisley Miller
Senior Vice President, Secretary, Treasurer and Chief
Financial Officer
West Jefferson, North Carolina
October 1, 1998
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING PLEASE
COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE
POSTAGE-PAID ENVELOPE PROVIDED.
If any other matter properly come before the Annual Meeting, the persons
named in the accompanying proxy card will vote the shares represented by all
properly executed proxies on such matters in such manner as shall be determined
by a majority of the Board of Directors of the Company.
16
AF Bankshares, Inc. REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF AF BANKSHARES,INC. FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 2, 1998.
The undersigned shareholder of AF Bankshares, Inc. hereby appoints James A.
Todd, Kenneth R. Greene and Jan R. Caddell, each of them, with full powers of
substitution, to represent and to vote as proxy, as designated, all shares of
common stock of AF Bankshares, Inc. held of record by the undersigned on
September 4, 1998, at the 1998 Annual Meeting of Shareholders (the "Annual
Meeting") to be held at 6:00 p.m., local time, on November 2, 1998, or at any
adjournment or postponement thereof, upon the matters described in the
accompanying Notice of the 1998 Annual Meeting of Shareholders and Proxy
Statement, dated October 1, 1998, and upon such other matters as may properly
come before the Annual Meeting. The undersigned hereby revokes all prior
proxies.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF ALL NOMINEES LISTED IN ITEM 1 AND FOR THE PROPOSAL
LISTED IN ITEM 2.
PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
- --------------------------------------------------------------------------------
The Board of Directors unanimously recommends a | Please mark your vote as [X]
vote "FOR" all of the nominees named in Item 1 and| indicated in this example
a vote "FOR" the proposal in Item 2. |
- --------------------------------------------------------------------------------
I will attend the [ ]
Annual Meeting
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1. Election of two Directors. FOR 2. Ratification of the appointment of
NOMINEES: Frank E. Roland and All nominees McGladrey & Pullen, LLP as FOR AGAINST ABSTAIN
Jerry L. Roten for terms of three (except as WITHHOLD independent auditors for the fiscal [ ] [ ] [ ]
years each; otherwise for all year ending June 30, 1999.
indicated) nominees
[ ] [ ]
</TABLE>
INSTRUCTION: TO WITHHOLD AUTHORITY to The undersigned hereby acknowledges
vote for any individual nominee, write receipt of the Notice of the 1998 Annual
that nominee's name in the space Meeting of Shareholders and the Proxy
provided: Statement, dated October 1, 1998 for the
1998 Annual Meeting.
----------------------------------------
----------------------------------------
(Signature(s)
Dated: ___________________________, 1998
Please sign exactly as your name appears
on this proxy. Joint owners should each
sign personally. If signing as attorney,
executor, administrator, trustee or
guardian, please include your full
title. Corporate or partnership proxies
should be signed by an authorized
officer.
