SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CATAWBA VALLEY BANCSHARES,INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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>
CATAWBA VALLEY BANCSHARES, INC.
1039 SECOND STREET, N.E.
HICKORY, NORTH CAROLINA 28601
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------
TO BE HELD ON APRIL 25, 2000
Catawba Valley Bancshares, Inc. will hold its annual meeting of
shareholders at the offices of J. C. Bradford & Co., 400 Second Avenue, N. W.,
Hickory, North Carolina, at 2:00 p.m. local time on April 25, 2000, to vote on
the following proposals:
1. To elect three members of the Board of Directors for three year
terms.
2. To ratify the appointment of Dixon Odom PLLC as Catawba Valley
Bancshares' independent accountants for 2000.
3. Any other matters that properly come before the annual meeting, or
any adjournments or postponements of the annual meeting.
Record holders of Catawba Valley Bancshares' Common Stock at the close
of business on February 29, 2000, will receive notice of and may vote at the
annual meeting, including any adjournments or postponements. Your Board of
Directors cordially invites you to attend the annual meeting.
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY, WHETHER OR NOT
YOU PLAN TO ATTEND THE ANNUAL MEETING. YOUR BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE MATTERS THAT YOU WILL VOTE ON AT
THE ANNUAL MEETING.
By Order of the Board of Directors
/s/Carole F. Teague Secretary
Carole F. Teague, Secretary
Hickory, North Carolina
March 15, 2000
<PAGE>
CATAWBA VALLEY BANCSHARES, INC.
1039 SECOND STREET, N.E.
HICKORY, NORTH CAROLINA 28601
PROXY STATEMENT
MAILING DATE: ON OR ABOUT MARCH 15, 2000
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
------------------------------
TO BE HELD APRIL 25, 2000
GENERAL
This Proxy Statement is being furnished to the shareholders of Catawba
Valley Bancshares, Inc. ("Bancshares") in connection with the solicitation by
the Board of Directors of Bancshares of proxies for use at its annual meeting of
Shareholders. The purposes of Bancshares' annual meeting are to consider and
vote on (a) election of three directors for three year terms; and (b)
ratification of the appointment of Dixon Odom PLLC as Bancshares' independent
accountants for 2000.
The principal executive office of Bancshares is located at 1039 Second
Street, N.E., Hickory, North Carolina 28601. Its telephone number is (828)
431-2300.
This Proxy Statement is first being mailed to shareholders on or about
March 15, 2000.
RECORD DATE; VOTING RIGHTS
Shareholders of record at the close of business on February 29, 2000
(the "Record Date") are entitled to vote at the annual meeting, or at any
adjournment or postponement. As of the Record Date, there were 1,495,351 shares
of Common Stock outstanding and entitled to vote held of record by approximately
1,770 persons. Each share of Common Stock entitles the holder to one vote on
each matter submitted to a vote at the meeting. Pursuant to Bancshares' Bylaws,
a majority of the votes entitled to be cast by holders of Common Stock,
represented in person or by proxy, will constitute a quorum for the transaction
of business at the meeting. In accordance with North Carolina law, shareholders
will not be permitted to vote cumulatively in the election of directors.
In the case of Proposal 1 below, the three directors receiving the
greatest number of votes shall be elected. In the case of Proposal 2 below, for
such a proposal to be approved, the number of votes cast for approval must
exceed the number of votes cast against approval. Broker non-votes and
abstentions are not treated as votes cast and therefore will not have any effect
on the vote for either Proposal.
<PAGE>
The executive officers and directors of Bancshares, together with their
affiliates, beneficially owned, directly or indirectly, as of December 31, 1999,
an aggregate of 447,834 shares of Bancshares' Common Stock (including 137,544
shares subject to outstanding, vested stock options) constituting approximately
27% of the sum of (i) all shares outstanding and entitled to vote on that date
plus (ii) shares capable of being issued within 60 days upon the exercise of
stock options held by such persons.
SOLICITATION, REVOCATION AND USE OF PROXIES
A proxy card is enclosed for your use. YOU ARE SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF BANCSHARES TO COMPLETE, DATE, SIGN, AND RETURN THE
PROXY CARD IN THE ACCOMPANYING ENVELOPE, which is postage-paid if mailed in the
United States.
You may revoke your proxy at any time before it is actually voted at
the annual meeting by delivering written notice of revocation to the Secretary
of Bancshares, Carole F. Teague, 1039 Second Street, N.E., Hickory, NC 28601, by
submitting a subsequently dated proxy, or by attending the annual meeting and
withdrawing the proxy. Each unrevoked proxy card properly executed and received
prior to the close of voting at the annual meeting will be voted as indicated.
Where specific instructions are not indicated, the proxy will be voted "FOR"
each of the Proposals listed in the notice of the meeting.
EXPENSES OF SOLICITATION
The expense of preparing, printing and mailing this Proxy Statement
will be paid by Bancshares. In addition to the use of the mails, proxies may be
solicited personally or by telephone by regular employees of Bancshares and
Catawba Valley Bank without additional compensation. Bancshares will reimburse
banks, brokers and other custodians, nominees and fiduciaries for their costs in
sending the proxy materials to the beneficial owners of Bancshares Common Stock.
AUTHORIZATION TO VOTE ON ADJOURNMENT AND OTHER MATTERS
By signing a proxy, shareholders will be authorizing the proxyholders
to vote in their discretion regarding any procedural motions which may come
before the annual meeting. For example, this authority could be used to adjourn
the annual meeting if Bancshares believes it is desirable to do so. Adjournment
or other procedural matters could be used to obtain more time before a vote is
taken in order to solicit additional proxies or to provide additional
information to shareholders. However, proxies voted against the Proposals will
not be used to adjourn the annual meeting. Bancshares does not have any plans to
adjourn the meeting at this time, but intends to do so, if needed, to promote
shareholder interests.
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<PAGE>
BENEFICIAL OWNERSHIP OF VOTING SECURITIES
As of December 31, 1999, the only shareholder known by Bancshares to
own more than 5% of Bancshares' Common Stock was Wade E. Moose, Hickory, North
Carolina, who owned, to the best knowledge of Bancshares, 87,782 shares of
Common Stock (5.9% of the total shares outstanding.)
As of December 31, 1999, the beneficial ownership of Bancshares Common
Stock by directors individually, and by directors and executive officers as a
group, was as follows:
AMOUNT AND
NATURE OF PERCENT
NAME OF BENEFICIAL OF
BENEFICIAL OWNER OWNERSHIP(1)(3) CLASS (2)
---------------- --------------- ---------
R. Steve Aaron 58,547 3.4%
Hal F. Huffman, Jr. 35,434 2.2%
Robert P. Huntley 38,581 2.4%
W. Steve Ikerd 72,356 4.4%
Robert T. King 31,052 2.0%
Pat M. Moss 22,886 .20%
Cloyd Hugh Propst, Jr. 46,031 2.8%
Howard L. Pruitt 35,453 2.2%
William R. Sigmon, Jr. 36,058 2.2%
All Directors and Executive
Officers as a group
(11 persons). 433,478 26.6%
(1) Except as otherwise noted, to the best knowledge of Bancshares'
management, the above individuals and group exercise sole voting and investment
power with respect to all shares shown as beneficially owned other than the
following shares as to which such powers are shared: W. Steve Ikerd - 12,479
shares; Pat M. Moss - 3,300 shares; R. Steve Aaron - 15,015 shares; Cloyd Hugh
Propst, Jr. - 12,380 shares; and Robert P. Huntley - 7,137 shares.
(2) The calculation of the percentage of class beneficially owned by
each individual and the group is based on a total of 1,632,070 outstanding
shares of Common Stock which equal the sum of (i) 1,495,351 shares outstanding
as of December 31, 1999, plus (ii) 136,719 which is the number of shares capable
of being issued to directors and executive officers within 60 days upon the
exercise of vested stock options.
(3) Included are exercisable options to purchase an aggregate of
137,544 shares (115,544 vested options held by non-officer directors and 22,000
vested options held by executive officers.)
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<PAGE>
REQUIRED REPORTS OF BENEFICIAL OWNERSHIP
Bancshares' directors and executive officers are required to file
certain reports with the Securities and Exchange Commission regarding the amount
of and changes in their beneficial ownership of Bancshares' Common Stock
(including, without limitation, an initial report following the person's
election as an officer or director of Bancshares and a report following the end
of each month during which there has been a change in a reporting person's
beneficial ownership). Based upon a review of copies of reports received by
Bancshares, all required reports of directors and executive officers of
Bancshares were filed on a timely basis.
PROPOSAL 1: ELECTION OF DIRECTORS
---------------------------------
Bancshares' Bylaws provide that its Board of Directors shall consist
of between nine and 18 members, as determined by the Board of Directors or the
shareholders, and that the Board shall be divided into three classes
approximately equal in number. The Board has set the number of directors at
nine. The three directors named below, whose terms expire at the annual meeting,
have been renominated to the Board for three-year terms.
<TABLE>
<CAPTION>
POSITION(S) DIRECTOR PRINCIPAL OCCUPATION AND
NAME AND AGE HELD SINCE BUSINESS EXPERIENCE DURING PAST 5 YEARS
- ------------- ---- ----- ---------------------------------------
<S> <C>
Robert P. Huntley Director 1995 Private investor; Executive Vice President, Newton
(62) Transportation Company, Inc. (trucking company) until March
1997.
Cloyd Hugh Propst, Jr. Director 1995 Co-owner, Hickory Sand Co., Inc. (utility contractor).
(50)
Howard L. Pruitt Director 1995 Secretary, Southwood Furniture Company (furniture
(63) manufacturer); President, Pruitt Machinery, Inc., 1971-1995
(woodworking machinery sales).
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF
THE THREE NOMINEES FOR DIRECTOR OF BANCSHARES AS SET FORTH ABOVE.
INCUMBENT DIRECTORS
Bancshares' current Board of Directors includes the following directors
whose terms will continue after the annual meeting. Certain information
regarding those directors is set forth in the following table:
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AND AGE SINCE BUSINESS EXPERIENCE DURING PAST 5 YEARS EXPIRES
- ------------- ----- --------------------------------------- -------
<S> <C> <C>
R. Steve Aaron 1995 President and Chief Executive Officer, Catawba Valley Bank 2002
(53) since January 1995; prior to that, Regional Senior Vice
President, Southern National Bank since
1994; prior to that, President, First
Savings Bank.
4
<PAGE>
DIRECTOR TERM
NAME AND AGE SINCE BUSINESS EXPERIENCE DURING PAST 5 YEARS EXPIRES
- ------------- ----- --------------------------------------- -------
Hal F. Huffman, Jr. 1995 Owner and President, ACE Hardware, Inc. 2001
(45)
W. Steve Ikerd 1995 President and Owner, Ikerd Enterprises (real estate 2002
(60) developers).
Robert T. King 1995 Private investor. 2001
(72)
Pat M. Moss 1995 Alderwoman, City of Hickory; Private investor; President, 2002
(59) Trehan Corp. (farming operation).
William R. Sigmon, Jr. 1995 Physician and President, Sigmon Radiation Oncology, P.A. 2001
(39)
</TABLE>
DIRECTOR RELATIONSHIPS
With the exception of Robert P. Huntley who serves as a director of
Burke Mills, Inc., a company with a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934 (the "Exchange Act"), no
director also is a director of any company with a class of securities registered
pursuant to Section 12 of the Exchange Act or subject to the requirements of
Section 15(d) of the Exchange Act, or any company registered as an investment
company under the Investment Company Act of 1940.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Bancshares' Board of Directors held 12 regular meetings and one special
meeting during 1999. Each director attended 75% or more of the aggregate number
of meetings of the Board of Directors and any committees on which he or she
served.
Bancshares' Board of Directors has several standing committees,
including an Audit Committee, a Compensation Committee and a Nominating
Committee.
The current members of the Audit Committee are Robert P. Huntley -
Chairman, Pat M. Moss, Cloyd H. Propst, Jr. and Hal F. Huffman, Jr. The Audit
Committee receives and reviews the annual audit report of Bancshares'
independent accountants and the reports of examinations by bank regulatory
agencies, and helps to formulate, implement and review Bancshares' and Catawba
Valley Bank's internal audit program. The Audit Committee also meets as needed
with Bancshares' internal auditor. The committee met four times in 1999.
The current members of the Compensation Committee are Robert T. King -
Chairman, Cloyd H. Propst, Jr. and Howard L. Pruitt. The Compensation committee
reviews and approves all personnel salaries and benefits, recommends officer
salaries for Board of Director approval, and
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<PAGE>
reviews and makes recommendations to the Board of Directors regarding matters
involving personnel policies. The Compensation Committee met one time in 1999.
The current members of the Nominating Committee are Howard L. Pruitt -
Chairman, Hal F. Huffman and William R. Sigmon, Jr. The Nominating Committee
recommends nominees to the full Board of Directors for election as directors.
The committee met one time during 1999. In making its recommendations to the
Board of Directors, the committee will consider candidates recommended by
shareholders. Bancshares' Bylaws provide that nominations for director, other
than those made by the Nominating Committee, shall be in writing and delivered
or mailed to the Secretary of Bancshares not less than 120 days prior to any
meeting of shareholders called for the election of directors.
DIRECTOR COMPENSATION
BOARD FEES. In 1999, each director received $200 for each Board meeting
attended and $50 for each committee meeting attended. Board fees for 2000 will
be increased to $250 per meeting.
1998 NONQUALIFIED STOCK OPTION PLAN FOR DIRECTORS. The shareholders of
Catawba Valley Bank at the 1998 annual meeting approved the 1998 Nonqualified
Stock Option Plan for Directors (the "Nonqualified Option Plan") pursuant to
which options covering 105,035 shares of Catawba Valley Bank's Common Stock are
available for issuance to members of the Board of Directors and the board of any
subsidiary. In connection with the reorganization of Catawba Valley Bank into
the holding company form of organization which resulted in the creation of
Bancshares, the Nonqualified Stock Option Plan was adopted by Bancshares and
options under such plan are now options of Bancshares. In April 1998, each of
the eight non-employee directors was granted 8,753 options to purchase shares of
the Bank's Common Stock at an exercise price of $14.50, the fair market value of
the Common Stock on the date of grant. As a result of the declaration and
payment of stock dividends in 1998 and 1999, the number of options and exercise
price have been adjusted pursuant to the terms of the Nonqualified Option Plan.
Accordingly, seven non-officer directors currently hold options to purchase
14,443 shares, and due to a previous exercise and disposition, one non-officer
director holds options to purchase 13,618 shares, all at an exercise price of
$8.78. Based on information known to management of Bancshares, the current
market price of the Common Stock is $15.00 per share. All options are
immediately exercisable for a ten year period from the date of grant and
terminate upon such director's resignation or completion of his term without
reelection. However, upon retirement from the Board of Directors or upon a
director's death, the options granted such director may be exercised within 12
months of such event.
6
<PAGE>
EXECUTIVE OFFICERS
Set forth below is certain information regarding Bancshares' and
Catawba Valley Bank's executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH REGISTRANT BUSINESS EXPERIENCE
<S> <C>
R. Steve Aaron 52 Director, President and Chief President and Chief Executive Officer, Catawba
Executive Officer, Catawba Valley Valley Bank since January 1995; prior to that,
Bank and Bancshares. Regional Senior Vice President, Southern
National Bank since 1994; prior to that,
President, First Savings Bank
Joe S. Tripp 53 Vice President/Lending, Catawba Vice President/Lending, Catawba Valley Bank
Valley Bank and Bancshares. since January 1995; prior to that, Senior
Retail Banking Officer, First Savings Bank
Carole F. Teague 41 Vice President/Retail Services, Vice President/Retail Services, Catawba Valley
Catawba Valley Bank; Secretary of Bank since January 1995; prior to that, Senior
Catawba Valley Bank. Vice President of Retail Services, First
Savings Bank
</TABLE>
EXECUTIVE COMPENSATION
Executive officers of Bancshares do not receive any separate
compensation for such position. All officers and employees receive compensation
only from Catawba Valley Bank. Except for R. Steve Aaron, no current executive
officer of Bancshares or Catawba Valley Bank received compensation for 1997,
1998, or 1999 which exceeded $100,000. The compensation information for R. Steve
Aaron is disclosed below:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation (1) Long Term Compensation
----------------------- ----------------------
AWARDS PAYOUTS
------ -------
Securities
Name and Restricted Underlying
Principal Other Annual Stock Options/ LTIP All Other
Position Year Salary Bonus Compensation (1) Award(s) SARS Payouts Compensation(2)
- -------- ---- ------ ----- ---------------- -------- ----- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. Steve 1999 $125,000 $20,080 -0- -0- -0- -0- $9,900
Aaron,
President and 1998 $90,000 $10,080 -0- -0- 5,000 -0- $7,806
Chief Executive
Officer 1997 $75,000 -0- -0- -0- -0- -0- $6,900
</TABLE>
(1) Perquisites and personal benefits awarded to R. Steve Aaron did not
exceed 10% of the total annual salary and bonus in any year reported.
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<PAGE>
(2) The amounts disclosed represent annual contributions in 1999, 1998,
and 1997, of $7,500, $5,400 and $4,500, respectively, made by Catawba Valley
Bank on behalf of R. Steve Aaron to match pre-tax elective deferral
contributions (included under salary) made by R. Steve Aaron under Section
401(k) of the Internal Revenue Code of 1986, as amended, and directors' fees
paid in each of 1999, 1998, and 1997 of $2,400.
Catawba Valley Bank (the "Bank") has entered into an employment and
change of control agreement with R. Steve Aaron (dated January 1, 2000) as its
President and Chief Executive Officer to establish his duties and compensation
and to provide for his continued employment with the Bank. The employment
agreement provides for an initial term of three years with an automatic renewal
at the end of the initial term and on each anniversary thereafter for an
additional one year term unless notified prior thereto in accordance with the
employment agreement. The employment agreement provides for an annual base
salary of $125,000, and for discretionary bonuses and participation in other
pension and profit-sharing retirement plans maintained by the Bank on behalf of
its employees, as well as fringe benefits normally associated with Mr. Aaron's
position or made available to all other employees. The employment agreement
provides that Mr. Aaron may be terminated for "cause" as defined in the
employment agreement, and that the employment agreement may otherwise be
terminated, in some cases with certain financial consequences incurred, by the
Bank or by Mr. Aaron. The employment agreement provides that should the Bank
terminate the employment agreement other than for cause or disability within 12
months after a "change in control", or should Mr. Aaron terminate the agreement
within such 12 months during which his compensation or responsibilities have
been reduced, or his workplace location has been moved more than 35 miles from
Hickory, North Carolina, then he shall receive a lump sum equal to 299% of his
average annual salary and cash bonus, and be covered by on the Bank's medical
and disability programs throughout the remaining term of the agreement. A
"Change of Control" shall be deemed to have occurred upon any person becoming
the beneficial owner or otherwise acquiring control, directly or indirectly, of
securities of the Bank representing twenty-five percent (25%) or more of the
voting power of the Bank's then outstanding securities; (ii) the acquisition by
any Person in any manner of the ability to elect, or to control the election, of
a majority of the directors of the Bank; (iii) the merger of the Bank into
another entity, the merger of any entity into the Bank or the acquisition of
assets by the Bank, in any such case with the result that the beneficial owners
of the Bank's outstanding securities immediately prior to such transaction do
not beneficially own more than sixty percent (60%) of the Bank's outstanding
securities after the consummation of such transaction; (iv) the sale or other
transfer of more than fifty percent (50%) of the assets of the Bank to any
entity not controlled by the Bank; (v) the consummation of any transaction by
the Bank that results (A) in the majority of the Board after the consummation of
such transaction not being composed of Incumbent Directors, or (B) the
beneficial owners of the Bank's outstanding securities immediately prior to the
consummation of such transaction not beneficially owning more than sixty percent
(60%) of the Bank's outstanding securities after such transaction; or (vi) the
occurrence of any other event or circumstance which the Board determines affects
control of the Bank. The term "Incumbent Director" shall mean any director who
as of the execution of the employment agreement was a member of the Board, or
any individual becoming a member of the Board subsequent to such execution whose
election by the Bank shareholders was recommended by at least two-thirds (2/3)
of the then Incumbent Directors on the Board. The employment agreement also
contains a covenant not to compete for one year
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<PAGE>
after termination which prohibits Mr. Aaron, without the consent of the Bank,
from being connected with any business located in any county where the Bank or
its subsidiaries have offices and which competes with the Bank or its
subsidiaries. Such covenant shall not apply in the event that Mr. Aaron is
terminated by the Bank without cause.
STOCK OPTIONS
The following table sets forth information with regard to stock options
granted under Catawba Valley Bank's 1997 Incentive Stock Option Plan which, upon
the organization of Bancshares, was adopted as the Incentive Stock Option Plan
of Bancshares. No options were granted during the fiscal year ended December 31,
1999.
AGGREGATED OPTION EXERCISES IN FISCAL 1999
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLINING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR END FISCAL YEAR END
--------------- ---------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. Steve Aaron 7,500 $107,475 5,500 13,750 $36,561 $76,160
</TABLE>
401(K) SAVINGS PLAN. Catawba Valley Bank has adopted a tax-qualified
savings plan (the "Savings Plan") which covers all current full-time employees
and any new full-time employees who have been employed by Catawba Valley Bank
for six months. Under the Savings Plan, a participating employee may contribute
up to 16% of his or her base salary on a tax-deferred basis through salary
reduction as permitted under Section 401(k) of the Internal Revenue Code of
1986, as amended (the "Code"). Catawba Valley Bank contributes an amount equal
to 100% of the first 6% of pre-tax salary contributed by each participant and
may make additional discretionary profit sharing contributions to the Savings
Plan on behalf of all participants. Such discretionary profit sharing
contributions may not exceed 6% of the aggregate of the pre-tax base salaries of
all participants in the Savings Plan and are allocated among all participants on
the basis of the participant's age and level of compensation. Amounts deferred
above the first 6% of salary are not matched by Catawba Valley Bank. A
participant's contributions and Catawba Valley Bank's matching and profit
sharing contributions under the Savings Plan will be held in trust accounts for
the benefit of participants. A participant is at all times 100% vested with
respect to his or her own contributions under the Savings Plan, and becomes 100%
vested in the account for Catawba Valley Bank's matching and profit sharing
contributions after completing five years of service with Catawba Valley Bank.
The value of a participant's accounts under the Savings Plan becomes payable to
him or her in full upon retirement, total or permanent disability or termination
of employment for any other reason, or becomes payable to a designated
beneficiary upon a participant's death. The Savings Plan also will contain
provisions for withdrawals in the event of
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<PAGE>
certain hardships. A participant's contributions, vested matching and profit
sharing contributions of Catawba Valley Bank, and any income accrued on such
contributions, are not subject to federal or state taxes until such time as they
are withdrawn by the participant.
INDEBTEDNESS AND TRANSACTIONS OF MANAGEMENT
Catawba Valley Bank has had, and expects to have in the future, banking
transactions in the ordinary course of business with certain of its current
directors, nominees for director, executive officers and their associates. All
loans included in such transactions were made on substantially the same terms,
including interest rates, repayment terms and collateral, as those prevailing at
the time such loans were made for comparable transactions with other persons,
and do not involve more than the normal risk of collectibility or present other
unfavorable features.
PROPOSAL 2: RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------------------------
The Board of Directors has appointed the firm of Dixon Odom PLLC,
Certified Public Accountants, as Bancshares' and Catawba Valley Bank's
independent public accountants for 2000. A representative of Dixon Odom PLLC is
expected to be present at the annual meeting and available to respond to
appropriate questions, and will have the opportunity to make a statement if he
desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF DIXON ODOM PLLC AS THE INDEPENDENT PUBLIC ACCOUNTANTS OF
BANCSHARES AND CATAWBA VALLEY BANK.
OTHER MATTERS
The Board of Directors knows of no other business that will be brought
before the annual meeting. Should other matters properly come before the annual
meeting, the proxies will be authorized to vote shares represented by each
appointment of proxy in accordance with their best judgment on such matters.
PROPOSALS FOR 2001 ANNUAL MEETING
It is anticipated that the 2001 Annual Meeting will be held on a date
during April 2001. Any proposal of a shareholder which is intended to be
presented at the 2001 annual meeting must be received by Bancshares at its main
office in Hickory, North Carolina no later than November 15, 2000 in order that
any such proposal be timely received for inclusion in the proxy statement and
appointment of proxy to be issued in connection with that meeting.
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<PAGE>
ADDITIONAL INFORMATION
BANCSHARES' 1999 ANNUAL REPORT ON FORM 10-KSB WILL BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ON OR BEFORE MARCH 30, 2000. A COPY OF THAT
REPORT WILL BE PROVIDED WITHOUT CHARGE UPON THE WRITTEN REQUEST OF ANY
SHAREHOLDER ENTITLED TO VOTE AT THE ANNUAL MEETING. REQUESTS FOR COPIES SHOULD
BE DIRECTED TO CAROLE F. TEAGUE, SECRETARY, CATAWBA VALLEY BANCSHARES, INC.,
POST OFFICE BOX 2328, HICKORY, NORTH CAROLINA 28603.
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<PAGE>
CATAWBA VALLEY BANCSHARES, INC.
1039 SECOND STREET, N.E.
HICKORY, NORTH CAROLINA 28601
APPOINTMENT OF PROXY
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints R. Steve Aaron, Joe S. Tripp and Carole
F. Teague, or any of them, as attorneys and proxies, with full power of
substitution, to vote all shares of the common stock of Catawba Valley
Bancshares, Inc. ("Bancshares") held of record by the undersigned on February
29, 2000, at the Annual Meeting of Shareholders of Bancshares to be held at the
Conference Room, J. C. Bradford & Co., 400 Second Avenue, N. W., Hickory, North
Carolina, at 2:00 p.m. on April 25, 2000, and at any adjournments thereof. The
undersigned hereby directs that the shares represented by this appointment of
proxy be voted as follows on the proposals listed below:
1. ELECTION OF DIRECTORS: Proposal to elect three directors of Bancshares for
three-year terms indicated below or until their successors are duly elected
and qualified.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as indicated otherwise for all nominees listed
below). below.
NOMINEES: Robert P. Huntley
Cloyd H. Propst, Jr.
Howard L. Pruitt
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the line below.
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2. RATIFICATION OF INDEPENDENT ACCOUNTANTS: Proposal to ratify the appointment
of Dixon Odom PLLC as Bancshares' independent accountants for 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. OTHER BUSINESS: On such other matters as may properly come before the Annual
Meeting, the proxies are authorized to vote the shares represented by this
appointment of proxy in accordance with their best judgment.
PLEASE DATE AND SIGN THIS APPOINTMENT OF PROXY
ON THE REVERSE SIDE AND RETURN TO CATAWBA VALLEY BANCSHARES, INC.
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THE SHARES REPRESENTED BY THIS APPOINTMENT OF PROXY WILL BE VOTED AS
DIRECTED ABOVE. IN THE ABSENCE OF ANY DIRECTION, SUCH SHARES WILL BE VOTED FOR
THE ELECTION OF EACH OF THE NOMINEES LISTED IN PROPOSAL 1 BY CASTING AN EQUAL
NUMBER OF VOTES FOR EACH SUCH NOMINEE, AND FOR PROPOSAL 2. IF, AT OR BEFORE THE
TIME OF THE MEETING, ANY NOMINEE LISTED IN PROPOSAL 1 HAS BECOME UNAVAILABLE FOR
ANY REASON, THE PROXIES ARE AUTHORIZED TO VOTE FOR A SUBSTITUTE NOMINEE. THIS
APPOINTMENT OF PROXY MAY BE REVOKED BY THE HOLDER OF THE SHARES TO WHICH IT
RELATES AT ANY TIME BEFORE IT IS EXERCISED BY FILING WITH THE SECRETARY OF
BANCSHARES A WRITTEN INSTRUMENT REVOKING IT OR A DULY EXECUTED APPOINTMENT OF
PROXY BEARING A LATER DATE OR BY ATTENDING THE ANNUAL MEETING AND ANNOUNCING HIS
OR HER INTENTION TO VOTE IN PERSON.
Dated: _____________________________, 2000
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Signature
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Signature if held jointly
Instruction: Please sign above exactly
as your name appears on this appointment
of proxy. Joint owners of shares should
both sign. Fiduciaries or other persons
signing in a representative capacity
should indicate the capacity in which
they are signing.
IMPORTANT: TO INSURE THAT A QUORUM IS PRESENT, PLEASE SEND IN YOUR
APPOINTMENT OF PROXY WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. EVEN
IF YOU SEND IN YOUR APPOINTMENT OF PROXY, YOU WILL BE ABLE TO VOTE IN PERSON AT
THE MEETING IF YOU SO DESIRE.
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