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Coastal Banking Company, Inc.
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<PAGE>
COASTAL BANKING COMPANY, INC.
1001 Bay Street, Suite 202
Beaufort, South Carolina 29902
Notice of Annual Meeting of Shareholders
Dear Fellow Shareholder:
We cordially invite you to attend the 2000 Annual Meeting of
Shareholders of Coastal Banking Company, Inc., the holding company for
Lowcountry National Bank (in organization). At the meeting, we will report on
our performance in 1999 and answer your questions. We are excited about our
accomplishments since we completed our initial public offering in November 1999,
and we look forward to discussing both our accomplishments and our plans with
you. We hope that you can attend the meeting and look forward to seeing you
there.
This letter serves as your official notice that we will hold the
meeting on May 23, 2000 at 10:00 AM at the Oyster Cove Club House, Beaufort,
South Carolina for the following purposes:
1. To elect five members to the Board of Directors;
2. To consider a proposal to approve the company's 2000 Stock Incentive
Plan; and
3. To transact any other business that may properly come before the
meeting or any adjournment of the meeting.
Shareholders owning our common stock at the close of business on March
31, 2000 are entitled to attend and vote at the meeting. A complete list of
these shareholders will be available at the company's offices prior to the
meeting.
Please use this opportunity to take part in the affairs of your company
by voting on the business to come before this meeting. Even if you plan to
attend the meeting, we encourage you to complete and return the enclosed proxy
to us as promptly as possible.
By order of the Board of Directors,
/s/ Ladson F. Howell
Chairman
Beaufort, South Carolina
April 10, 2000
<PAGE>
COASTAL BANKING COMPANY, INC.
1001 Bay Street, Suite 202
Beaufort, South Carolina 29902
Proxy Statement For Annual Meeting of
Shareholders to be Held on May 23, 2000
Our Board of Directors is soliciting proxies for the 2000 Annual
Meeting of Shareholders. This proxy statement contains important information for
you to consider when deciding how to vote on the matters brought before the
meeting. We encourage you to read it carefully.
Voting Information
The Board set March 31, 2000 as the record date for the meeting.
Shareholders owning our common stock at the close of business on that date are
entitled to attend and vote at the meeting, with each share entitled to one
vote. There were 948,281 shares of common stock outstanding on the record date.
A majority of the outstanding shares of common stock represented at the meeting
will constitute a quorum. We will count abstentions and broker non-votes, which
are described below, in determining whether a quorum exists.
When you sign the proxy card, you appoint Randolph C. Kohn and Ladson
F. Howell as your representatives at the meeting. Mr. Kohn and Mr. Howell will
vote your proxy as you have instructed them on the proxy card. If you submit a
proxy but do not specify how you would like it to be voted, Mr. Kohn and Mr.
Howell will vote your proxy for the election to the Board of Directors of all
nominees listed below under "Election Of Directors" and for approval of the 2000
Stock Incentive Plan. We are not aware of any other matters to be considered at
the meeting. However, if any other matters come before the meeting, Mr. Kohn and
Mr. Howell will vote your proxy on such matters in accordance with their
judgment.
You may revoke your proxy and change your vote at any time before the
polls close at the meeting. You may do this by signing and delivering another
proxy with a later date or by voting in person at the meeting. Brokers who hold
shares for the accounts of their clients may vote these shares either as
directed by their clients or in their own discretion if permitted by the
exchange or other organization of which they are members. Proxies that brokers
do not vote on some proposals but that they do vote on others are referred to as
"broker non-votes" with respect to the proposals not voted upon. A broker
non-vote does not count as a vote in favor of or against a particular proposal
for which the broker has no discretionary voting authority. In addition, if a
shareholder abstains from voting on a particular proposal, the abstention does
not count as a vote in favor of or against the proposal.
We are paying for the costs of preparing and mailing the proxy
materials and of reimbursing brokers and others for their expenses of forwarding
copies of the proxy materials to our shareholders. Our officers and employees
may assist in soliciting proxies but will not receive additional compensation
for doing so. We are distributing this proxy statement on or about April 11,
2000.
Proposal No. 1: Election of Directors
The Board of Directors is divided into three classes with staggered
terms, so that the terms of only approximately one-third of the Board members'
terms expire at each annual meeting. The current terms of the Class I directors
will expire at the meeting. The terms of the Class II directors expire at the
2001 Annual Shareholders Meeting. The terms of the Class III directors will
expire at the 2002 Annual Shareholders Meeting. Our directors and their classes
are:
<PAGE>
Class I Class II Class III
------- -------- ---------
Marjorie Trask Gray, DMD Mark B. Heles James W. Holden, Jr., DVM
Dennis O. Green, CPA Lila N. Meeks James C. Key
J. Phillip Hodges, Jr. Robert B. Pinkerton Ron Lewis
Randolph C. Kohn John M. Trask, III Matt A. Trumps
Ladson F. Howell
Shareholders will elect five nominees as Class I directors at the
meeting to serve a three-year term, expiring at the 2003 Annual Meeting of
Shareholders. The directors will be elected by a plurality of the votes cast at
the meeting. This means that the five nominees receiving the highest number of
votes will be elected.
The Board of Directors recommends that you elect Marjorie Trask Gray,
DMD, Dennis O. Green, J. Phillip Hodges, Jr., Ladson F. Howell, and Randolph C.
Kohn as Class I directors.
If you submit a proxy but do not specify how you would like it to be
voted, Mr. Howell and Mr. Kohn will vote your proxy to elect Dr. Gray, Mr.
Green, Mr. Hodges, Mr. Howell and Mr. Kohn. If any of these nominees is unable
or fails to accept nomination or election (which we do not anticipate), Mr.
Howell and Mr. Kohn will vote instead for a replacement to be recommended by the
Board of Directors, unless you specifically instruct otherwise in the proxy.
Set forth below is certain information about the nominees. Each of the
nominees is also an organizer and director of our subsidiary, Lowcountry
National Bank.
Marjorie Trask Gray, DMD, Class I director, has been a dentist with a
general practice in Beaufort, South Carolina since 1997. She graduated from the
University of South Carolina in 1992, and from the Medical University of South
Carolina with a DMD in 1997. Dr. Gray is licensed to practice dentistry in the
state of South Carolina, and is a limited partner and shareholder of several
family owned businesses in Beaufort, South Carolina. She is a member of the
South Carolina Dental Association, the American Dental Association, the
Carterett United Methodist Church, the Beaufort County Open Land Trust, and the
Historic Beaufort Foundation. Dr. Gray also is secretary and treasurer of the
Beaufort Dental Study Club.
Dennis O. Green, CPA, Class I director and vice chairman of the board,
served as Chief Auditor for Citicorp, and its principal banking subsidiary,
Citibank N.A. in New York, New York from 1990 to 1997. Mr. Green is president of
Keiretsu Investments, Inc., a private investment company. He currently serves as
Treasurer Designate for Coastal Heritage Community Development Federal Credit
Union (proposed) on St. Helena Island, South Carolina. He graduated in 1967 from
Wayne State University with a degree in Business Administration/Finance. Mr.
Green has been registered as a Certified Public Accountant in the State of
Michigan since 1969. He is a director and vice president of The Olive Tree
Foundation, treasurer and member of the Board of Trustees of Penn Center, Inc.,
and a director and secretary of the Boys and Girls Clubs of Beaufort.
J. Phillip Hodges, Jr., Class I director and secretary, manages KSH
Properties and KSH Properties, LLC, two investment companies. From 1972 until
his retirement in 1998, Mr. Hodges worked as a stockbroker for The
Robinson-Humphrey Company, LLC, a subsidiary of Salomon Smith Barney, in Albany,
Georgia, most recently as first vice president of sales. He received his Master
of Business Administration in 1978 from Valdosta State College, and a degree in
Finance/Economics from Auburn University in 1974. While working for
Robinson-Humphrey, Mr. Hodges held licenses with the National Association of
Security Dealers, New York Stock Exchange, American Stock Exchange, and
Commodities Futures Trading Corporation. He currently is a member of the Rotary
Club of Beaufort, St. Helena's Episcopal Church, and the Beaufort Historic
Foundation.
Ladson F. Howell, Class I director and chairman of the board of
directors, is licensed to practice law in South Carolina and has been an
attorney with Howell, Gibson & Hughes, PA, a law firm located in Beaufort,
<PAGE>
South Carolina, since 1968. He received his law degree from the University of
South Carolina Law School in 1968 and a degree in Journalism from the University
of South Carolina in 1965. Mr. Howell was a former president of the Beaufort
County Bar Association. He currently is a member of the South Carolina State Bar
Association, the American Bar Association, and the Administrative Board of
Carterett United Methodist Church.
Randolph C. Kohn, Class I director, serves as the president and chief
executive officer of Coastal Banking Company and Lowcountry National Bank (in
organization). He previously served as senior vice president and senior credit
officer for Clemson Bank & Trust, a community bank located in Clemson, South
Carolina, from 1995 until March 1999. From 1991 to 1995, Mr. Kohn served as
senior vice president and senior credit officer of Citizens Bank, a community
bank located in Canton, Georgia. He has more than 29 years of banking experience
in both Georgia and South Carolina. He graduated from the University of Georgia
in 1970 with a degree in Business Management. While residing in Clemson, Mr.
Kohn was a director of the Clemson Chamber of Commerce, a director of the City
of Clemson Police Advisory Board, and a member of the Clemson Rotary Club. He is
currently a member of the Beaufort Rotary Club.
Set forth below is also information about each of the company's other
directors and each of its executive officers. Each director is also an organizer
and a director of our subsidiary bank.
Mark B. Heles, Class II director, is the owner, president, and chief
executive officer of Tempo Personnel Services, Inc. which he founded in 1985. He
is also a partner in the Magnolia Bakery and Cafe. Mr. Heles received his
license as a Certified Personnel Consultant in 1990 from the National
Association of Personnel Consultants. He graduated from the University of South
Carolina in 1976 with a Bachelor of Science degree in Business
Administration/Finance. Mr. Heles was former president of the Hilton Head Island
Rotary Club, and a past director of the Beaufort Chamber of Commerce. He
currently is a member of the Beaufort and Hilton Head Homebuilders Associations.
James W. Holden, Jr., DVM, Class III director, is a licensed
veterinarian in South Carolina and Georgia, and has been the owner and director
of Sea Island Animal Hospital in Beaufort, South Carolina since 1986. Dr. Holden
is also a general partner and owner of James W. Holden & Co., LLP., a real
estate development company. He received his DVM from the University of Georgia
in 1983, and a degree in Pre-Veterinary Medicine from Clemson University in
1979. He is a member of the Rotary Club of Beaufort where he served as a
director, president, vice president, and secretary.
James C. Key, Class III director, has been a partner with the
Shenandoah Group, LLP, an audit and control solutions business, in Beaufort,
South Carolina since 1997. He is a Certified Internal Auditor and a licensed
real estate agent in South Carolina. Mr. Key served as a director of the
Internal Audit Department of IBM Corporation in Armonk, New York from 1962 until
1997. He graduated from Syracuse University in 1991 with a degree in Liberal
Studies. Mr. Key serves on the Board of Governors of the Institute of Internal
Auditors, Coastal Georgia Chapter and the Seminar Committee of the Institute of
Internal Auditors.
Ron Lewis, Class III director, has been owner and operator of two
McDonald's franchises in Beaufort, South Carolina since 1990. He graduated from
the State University of New York, New York in 1961 with a Bachelor of Science
degree in Business/Economics. He is a member of the Board of Directors of the
Marine Institute, the Beaufort County Economic Development Commission, the
Mayor's Committee for the Disabilities, and president of the Greenville Black
McDonalds Owners Association.
Charlie T. Lovering, serves as senior vice president and chief
financial officer of Coastal Banking Company and Lowcountry National Bank (in
organization). He previously served as senior vice president and controller for
Ameribank, N.A., in Savannah, Georgia from 1997 until August 1999. From May 1996
until July 1997, Mr. Lovering served as assistant vice president and state
compliance and Community Reinvestment Act officer for SouthTrust Bank of South
Carolina in Charleston. From 1990 until 1996 he served as a senior audit officer
for SouthTrust Corporation. He has more than 14 years of banking experience
throughout the Southeast. He graduated from Auburn University in 1990 with a
degree in business administration and accounting. While working in South
Carolina, Mr. Lovering served on the South Carolina Bankers Association
Compliance Committee. He is a member of the Port Royal Rotary Club.
<PAGE>
Lila N. Meeks, Class II director, has been the Dean of Academic Affairs
for the University of South Carolina in Beaufort, South Carolina since 1994. She
graduated from Auburn University in 1962, and received a Masters degree in
English from Auburn in 1966. Ms. Meeks is a member of the Beaufort County Open
Land Trust, the Arts Council, the Beaufort County Historical Society, the
Historic Beaufort Foundation, and St. Helena's Episcopal Church.
Bryan K. Newton serves as senior vice president and senior credit
officer of Lowcountry National Bank (in organization). He previously served as
senior vice president and senior lender for FirstBank, a former community bank
located in Beaufort, South Carolina, from 1992 until September 1999. Mr. Newton
has more that 21 years of banking experience in Louisiana and South Carolina. He
graduated from the University of Louisiana - Monroe with a Masters Degree in
Business Administration, the School of Banking of the South at Louisiana State
University, and the School of Bank Marketing at the University of Colorado. He
is a member of the Kiwanis Club of Beaufort and treasurer for Beaufort County
Water Festival.
Robert B. Pinkerton, Class II director, has been the president and
chief executive officer of Athena Corporation, a manufacturer and installer of
cast polymer products, since 1990. Mr. Pinkerton served on the Advisory Board
for First Citizens Bank in Beaufort, South Carolina in 1998. He is also involved
with several real estate development companies in Beaufort. He received a law
degree from Wayne State University in 1976, a masters degree from the Chrysler
Institute of Engineering in 1967, and a degree in mechanical engineering from
the Detroit Institute of Technology in 1965. Mr. Pinkerton is a member of the
Rotary Club of Beaufort, the Greater Beaufort Chamber of Commerce, the
Homebuilders Association of the Lowcountry, the South Carolina Chamber of
Commerce, the Beaufort Roundtable, and the United Way of Beaufort County
Director's Circle. In addition, Mr. Pinkerton was named Greater Beaufort Chamber
of Commerce Business Person of the Year in 1998.
John M. Trask, III, Class II director, has been an owner of Lowcountry
Real Estate, a local real estate company, since 1996. He formerly owned and
managed Pikes Peak of Memphis, a wholesale florist company from 1991 until 1996.
Mr. Trask is active in the Beaufort business community and he has additional
ownership interests in several local businesses. He graduated from Vanderbilt
University with a Bachelor of Arts degree in 1987. Mr. Trask is a licensed real
estate broker in South Carolina. He serves on the Board of Directors of the Boys
and Girls Clubs of Beaufort, and Main Street Beaufort.
Matt A. Trumps, Class III director, has been the owner of Tideland
Realty, a local real estate brokerage company, since 1994. He is also a director
of Greenwave Biotech in Beaufort, South Carolina. He was the director of
admissions at Beaufort Academy in Beaufort from 1992 to 1994. Mr. Trumps
received a degree in Political Science from the College of Charleston in 1991.
He is a member of St. Peter's Catholic Church.
Proposal No. 2: Approval of the 2000 Stock Incentive Plan
General
The Board of Directors has adopted the company's 2000 Stock Incentive
Plan effective February 15, 2000. The Plan has been submitted to our bank
regulators, and we expect to receive their approval by the second quarter of
2000. We believe that the issuance of stock options can promote the growth and
profitability of the company by providing additional incentives for participants
to focus on the company's long-range objectives. We also believe that stock
options help us to attract and retain highly qualified personnel and to link
their interests directly to shareholder interests. Therefore, we ask you to
approve this plan at the meeting.
The plan authorizes the grant to our employees and directors of stock
options for up to 142,242 shares of common stock from time to time during the
term of the plan, subject to adjustment upon changes in capitalization so that
the number of shares authorized shall at all times equal 15% of the outstanding
shares of common stock. Under the plan, the company may grant either incentive
stock options (which qualify for certain favorable tax consequences, as
described below) or nonqualified stock options. Of the shares available under
the plan, we may grant up to 142,242 shares as incentive stock options.
<PAGE>
The plan will be administered by a committee consisting of at least two
members of the Board of Directors. The committee will determine the employees
and directors who will receive options and the number of shares that will be
covered by their options. The committee will also determine the periods of time
(not exceeding ten years from the date of grant in the case of an incentive
stock option) during which options will be exercisable and will determine
whether termination of an optionee's employment under various circumstances
would terminate options granted under the plan to that person. If granted an
option under the plan, the optionee will receive an option agreement specifying
the terms of the option, such as the number of shares of common stock the
optionee can purchase, the price per share, when the optionee can exercise the
option, and when the option expires. The plan provides that options will become
exercisable immediately upon a change in control of the company.
The option price per share is an amount to be determined by the Board
of Directors, but will not be less than 100% of the fair market value per share
on the date of grant. Generally, the option price will be payable in full upon
exercise. Payment of the option price of any stock option may be made in cash,
by delivery of shares of common stock (valued at their fair market value at the
time of exercise), or by a combination of cash and stock. The company will
receive no consideration upon granting of an option.
Options generally may not be transferred except by will or by the laws
of descent and distribution, and during an optionee's lifetime may be exercised
only by the optionee (or by his or her guardian or legal representative, should
one be appointed). The grant of an option does not give the optionee any rights
of a shareholder until the optionee exercises the option.
The Board of Directors will have the right at any time to terminate or
amend the plan but no such action may terminate options already granted or
otherwise affect the rights of any optionee under any outstanding option without
the optionee's consent.
Federal Income Tax Consequences
There are no federal income tax consequences to the optionee or to
Coastal Banking Company on the granting of options. The federal tax consequences
upon exercise will vary depending on whether the option is an incentive stock
option or a nonqualified stock option.
Incentive Stock Options. When an optionee exercises an incentive stock
option, the optionee will not at that time realize any income, and Coastal
Banking Company will not be entitled to a deduction. However, the difference
between the fair market value of the shares on the exercise date and the
exercise price will be a preference item for purposes of the alternative minimum
tax. The optionee will recognize capital gain or loss at the time of disposition
of the shares acquired through the exercise of an incentive stock option if the
shares have been held for at least two years after the option was granted and
one year after it was exercised. The company will not be entitled to a tax
deduction if the optionee satisfies these holding period requirements. The net
federal income tax effect to the holder of the incentive stock options is to
defer, until the acquired shares are sold, taxation on any increase in the
shares' value from the time of grant of the option to the time of its exercise,
and to tax such gain, at the time of sale, at capital gain rates rather than at
ordinary income rates.
If the holding period requirements are not met, then upon sale of the
shares the optionee generally recognizes as ordinary income the excess of the
fair market value of the shares at the date of exercise over the exercise price
stated in the option agreement. Any increase in the value of the shares
subsequent to exercise is long or short-term capital gain to the optionee
depending on the optionee's holding period for the shares. However, if the sale
is for a price less than the value of the shares on the date of exercise, the
optionee might recognize ordinary income only to the extent the sales price
exceeded the option price. In either case, the company is entitled to a
deduction to the extent of ordinary income recognized by the optionee.
Nonqualified Stock Options. Generally, when an optionee exercises a
nonqualified stock option, the optionee recognizes income in the amount of the
aggregate market price of the shares received upon exercise less the aggregate
amount paid for those shares, and the company may deduct as an expense the
amount of income so
<PAGE>
recognized by the optionee. The holding period of the acquired shares begins
upon the exercise of the option, and the optionee's basis in the shares is equal
to the market price of the acquired shares on the date of exercise.
Initial Option Grants
Upon receipt of regulatory approval of the stock incentive plan, we
intend to make the stock option grants reflected on the following table. Each of
these option grants will include the following features:
o An exercise period of ten years
o A 5 year vesting term (based on February 15, 2000, the date the
plan was adopted)
o Restrictions on transferability
o An exercise price of $10.00 per share
o A provision allowing the OCC or the FDIC to require the optionee to
exercise or forfeit the option if Lowcountry National Bank's capital
falls below the regulatory minimum requirements
New Plan Benefits
Lowcountry National Bank 2000 Stock Incentive Plan
Securities
Underlying
Name And Position Dollar Value($) Options
----------------- --------------- ---------
Randolph C. Kohn, Chief Executive Officer and President $474,140 47,414
Executive Group........................................ -- --
Non-Executive Director Group........................... -- --
Non-Executive Officer Employee Group................... -- --
Shareholder Approval Required
The affirmative vote of the holders of a majority of the votes entitled
to be cast at the meeting is required for approval of the plan. Because
directors will receive options under the plan, the directors of the company have
a personal interest in seeing the plan approved.
The Board of Directors recommends a vote for approval of the 2000 Stock
Incentive Plan.
Compensation of Directors and Executive Officers
Summary of Cash and Certain Other Compensation
The following table shows the cash compensation paid by Coastal Banking
Company or Lowcountry National Bank to its Chief Executive Officer and President
for the year ended 1999.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Annual Compensation Compensation Awards
----------------------------------- -------------------
Other Annual Number of Securities
Name and Principal Position Year Salary Bonus Compensation Underlying Options
- --------------------------- ---- ------ ----- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Randolph C. Kohn 1999 $63,000.00 --- $ 13,897.61 47,414
Chief Executive Officer and
President
</TABLE>
<PAGE>
Employment Agreements
We have entered into an employment agreement with Randy Kohn for a
five-year term, pursuant to which he serves as the president, the chief
executive officer, and a director of Coastal Banking Company and Lowcountry
National Bank (in organization). Mr. Kohn is paid an initial salary of $96,000,
plus his yearly medical insurance premium. He is also entitled to receive an
annual increase in his salary equal to the previous year's salary times the
increase in the Consumer Price Index during the previous year. The board of
directors may increase Mr. Kohn's salary above this level, but not below it. He
is entitled to receive a bonus of $10,000 upon the opening of the bank and will
be eligible to receive an annual bonus of up to 5% of the net pre-tax income of
the bank, if the bank meets performance goals set by the board. He will be
eligible to participate in any management incentive program of the bank or any
long-term equity incentive program and will be eligible for grants of stock
options and other awards thereunder. Upon approval of our stock incentive plan
by our bank regulators, Mr. Kohn will be granted options to purchase a number of
shares of common stock equal to 5% of the number of shares sold in this
offering, or 47,414 shares. These options will vest equally over a five-year
period and will have a term of ten years. Additionally, Mr. Kohn will
participate in the bank's retirement, welfare, and other benefit programs and is
entitled to a life insurance policy and an accident liability policy and
reimbursement for automobile expenses, club dues, and travel and business
expenses.
Mr. Kohn's employment agreement also provides that following
termination of his employment and for a period of twelve months thereafter, he
may not (a) compete with the company, the bank, or any of its affiliates by,
directly or indirectly, forming, serving as an organizer, director or officer
of, or consultant to, or acquiring or maintaining more than 1% passive
investment in, a depository financial institution or holding company thereof if
such depository institution or holding company has one or more offices or
branches within a radius of thirty miles from the main office of the company or
any branch office of the company, (b) solicit major customers of the bank for
the purpose of providing financial services, or (c) solicit employees of the
bank for employment. If Mr. Kohn terminates his employment for good cause as
that term is defined in the employment agreement or if he is terminated
following a change in control of Coastal Banking Company as defined in the
agreement, he will be entitled to severance compensation of his then current
monthly salary for a period of 12 months, plus accrued bonus, and all
outstanding options and incentives shall vest immediately.
Director Compensation
We do not intend to pay directors' fees until the bank is profitable.
However, we reserve the right to pay directors' fees. If we decide to pay
directors' fees in the future, we intend to determine the fees after taking into
account the fees that other banks of our age and size pay to their directors.
<PAGE>
Security Ownership of Certain
Beneficial Owners and Management
General
The following table shows how much common stock in the company is owned
by the directors, certain executive officers, and owners of more than 5% of the
outstanding common stock, as of March 15, 2000. In addition, each organizer
received a warrant to purchase one share of common stock at a purchase price of
$10.00 per share for every share purchased by that organizer in the offering,
for a total of 202,000 shares. The warrants, which are represented by separate
warrant agreements, will vest over a three year period beginning one year from
the date of completion of the offering and will be exercisable in whole or in
part during the ten year period following that date.
Number of Percentage
Shares of Beneficial
Name Owned(1) Ownership
---- --------- -------------
Marjorie Trask Gray 15,000 1.72%
Dennis O. Green 21,500 2.47%
Mark B. Heles 15,000 1.72%
J. Phillip Hodges, Jr. 17,000 1.95%
James W. Holden, Jr. 11,500 1.32%
Ladson F. Howell 10,000 1.15%
James C. Key 10,000 1.15%
Randolph C. Kohn 15,000 1.72%
Ron Lewis 13,000 1.49%
Charlie T. Lovering 5,000 .57%
Lila N. Meeks 14,000 1.61%
Robert B. Pinkerton 20,000 2.30%
John M. Trask, III 25,000 2.87%
Matt A. Trumps 15,000 1.72%
All directors and executive officers 207,000 23.79%
as a group (14 persons)
(1) Includes shares for which the named person:
o has sole voting and investment power,
o has shared voting and investment power with a spouse or other person, or
o holds in an IRA or other retirement plan program, unless otherwise
indicated in these footnotes.
Does not include shares that may be acquired by exercising options or warrants
because no options or warrant are exercisable within the next 60 days.
<PAGE>
Meetings and Committees of the Board of Directors
During the year ended December 31, 1999, the Board of Directors of the
company held 34 meetings and the Board of Directors of Lowcountry National Bank
held no meetings. All of the directors of the company and Lowcountry National
Bank attended at least 75% of the aggregate of such board meetings and the
meetings of each committee on which they served.
The company's Board of Directors has appointed a number of committees,
including a audit, personnel, asset/liabilty, and loan committee. The audit
committee is composed of Jim Key, Dennis Green, Marjorie Gray, Lila Meeks and
Philip Hodges. The audit committee met one time in 1999. The audit committee has
the responsibility of reviewing internal audit and compliance reports,
evaluating internal accounting controls, reviewing reports of regulatory
authorities, and determining that all audits and examinations required by law
are performed. The committee recommends to the Board the appointment of the
independent auditors for the next fiscal year, reviews and approves the
auditor's audit plans, and reviews with the independent auditors the results of
the audit and management's responses. The audit committee is responsible for
overseeing the entire audit function and appraising the effectiveness of
internal and external audit efforts. The audit committee reports its findings to
the Board of Directors.
The personnel committee is composed of Marjorie Gray, Lila Meeks, John
Trask, Mark Heles, Randy Kohn, and Ladson Howell. The personnel committee met
four times in 1999. The personnel committee has the responsibility of
establishing and approving all major policies concerning salary administration,
incentive compensation and employee benefits.
The asset/liability committee is composed of Ron Lewis, Philip Hodges,
Matt Trumps, Jim Key, Charlie Lovering, Bryan Newton, Randy Kohn, and Ladson
Howell. The asset/liability committee met one time in 1999. The asset/liability
committee has the responsibility of reviewing the investment portfolio on an
ongoing basis to assure investments are prudent and in accordance with bank
policy.
Certain Relationships and Related Transactions
Interests of Management and Others in Certain Transactions
The company and Lowcountry National Bank have banking and other
transactions in the ordinary course of business with directors and officers of
the company and Lowcountry National Bank and their affiliates. It is the
company's policy that these transactions be on substantially the same terms
(including price, or interest rates and collateral) as those prevailing at the
time for comparable transactions with unrelated parties. The company does not
expect these transactions to involve more than the normal risk of collectibility
nor present other unfavorable features to the company or Lowcountry National
Bank. Loans to individual directors and officers must also comply with
Lowcountry National Bank's lending policies and statutory lending limits, and
directors with a personal interest in any loan application are excluded from the
consideration of the loan application. The company intends for all of its
transactions with its affiliates to be on terms no less favorable to the company
than could be obtained from an unaffiliated third party and to be approved by a
majority of disinterested directors.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
As required by Section 16(a) of the Securities Exchange Act of 1934,
the company's directors, its executive officers, and certain individuals are
required to report periodically their ownership of the company's common stock
and any changes in ownership to the SEC. Based on a review of Forms 3, 4, and 5
and any representations made to the company, it appears that all such reports
for these persons were filed in a timely fashion during 1999.
<PAGE>
Independent Auditors
The company has selected Tourville, Simpson & Henderson, L.L.P. to
serve as independent auditors to the company for the year ended December 31,
2000.
Shareholder Proposals for the 2001 Annual Meeting of Shareholders
If shareholders wish a proposal to be included in the company's proxy
statement and form of proxy relating to the 2001 annual meeting, they must
deliver a written copy of their proposal to the principal executive offices of
the company no later than November 30, 2000. To ensure prompt receipt by the
company, the proposal should be sent certified mail, return receipt requested.
Proposals must comply with the company's bylaws relating to shareholder
proposals in order to be included in the company's proxy materials.
April 10, 2000
<PAGE>
PROXY SOLICITED FOR ANNUAL MEETING
OF SHAREHOLDERS OF
COASTAL BANKING COMPANY, INC.
to be held on May 23, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby constitutes and appoints Ladson F. Howell and
Randolph C. Kohn and each of them, his or her true and lawful agents and proxies
with full power of substitution in each, to represent and vote, as indicated
below, all of the shares of common stock of Coastal Banking Company, Inc. that
the undersigned would be entitled to vote at the Annual Meeting of Shareholders
of the company to be held at Oyster Cove Club House, Beaufort, South Carolina
29902, at 10 a.m. local time, and at any adjournment, upon the matters described
in the accompanying Notice of Annual Meeting of Shareholders and Proxy
Statement, receipt of which is acknowledged. These proxies are directed to vote
on the matters described in the Notice of Annual Meeting of Shareholders and
Proxy Statement as follows:
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is made, this
proxy will be voted: (i) "for" Proposal No. 1 to elect the five identified Class
I directors to serve on the Board of Directors for three-year terms and (ii)
"for" Proposal No. 2 to approve the 2000 Stock Incentive Plan.
1. PROPOSAL to elect the five identified Class I directors to serve for
three year terms Class I:
Marjorie Trask Gray, DMD
Dennis O. Green, CPA
J. Phillip Hodges, Jr.
Ladson F. Howell
Randolph C. Kohn
|_| FOR all nominees |_| WITHHOLD AUTHORITY
listed (except as marked to to vote for all nominees
the contrary)
(INSTRUCTION: To withhold authority to vote for any individual nominee(s),
write that nominees name(s) in the space provided below).
2. PROPOSAL to approve the 2000 Stock Incentive Plan.
|_| FOR |_| AGAINST |_| ABSTAIN
Dated: , 2000
--------------------------
___________________________ ___________________________
Signature of Shareholder(s) Signature of Shareholder(s)
___________________________ ___________________________
Please print name clearly Please print name clearly
Please sign exactly as name or names appear on your stock certificate. Where
more than one owner is shown on your stock certificate, each owner should sign.
Persons signing in a fiduciary or representative capacity shall give full title.
If a corporation, please sign in full corporate name by authorized officer. If a
partnership, please sign in partnership name by authorized person.
