SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
F&M NATIONAL CORPORATION
(Name of Registrant as Specified in its Charter)
F&M NATIONAL CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-7(i)(1), or 14a-6(i)(3).
( ) $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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
4) Proposed maximum aggregate value of transaction:
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
( ) 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:
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of F&M NATIONAL CORPORATION (the
"Company") will be held at the TraveLodge of Winchester, 160 Front Royal Pike,
Winchester, Virginia, on Tuesday, April 23, 1996, at 10 a.m. for the following
purposes:
1. To elect directors to serve for the ensuing year and until
their successors are elected and qualified;
2. To ratify the selection by the Audit Committee of the
Board of Directors of Yount, Hyde & Barbour, P. C.,
independent certified public accountants, as auditors of
the Company for 1996, and
3. To transact such other business as may properly come
before the Annual Meeting or any adjournment thereof.
Only shareholders of record at the close of business on February 29,
1996, will be entitled to vote at the Annual Meeting.
Attendance at the Annual Meeting will be limited to shareholders of
record, persons holding proxies from shareholders and certain representatives of
the press and financial community. If you wish to attend the Annual Meeting, but
your shares are held in the name of a broker, bank or other nominee, you should
bring with you written confirmation from such nominee of your beneficial
ownership.
You are cordially invited to attend the Annual Meeting in person.
Whether or not you plan to attend the meeting, it is important that your shares
be represented. Please complete, sign, date and return the enclosed proxy card
promptly. If you attend the Annual Meeting, you may withdraw any proxy
previously given and vote in person.
Due to limited seating space, lunch will not be served.
Following the adjournment of the Annual Meeting, officers and directors
of the Company will be available to meet with you.
By Order of the Board of Directors
Alfred B. Whitt
Senior Vice President, Secretary and
Senior Financial Officer
Winchester, Virginia
March 21, 1996
F&M NATIONAL CORPORATION
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of F&M National Corporation (the "Company")
to be voted at the 1996 Annual Meeting of Shareholders to be held Tuesday, April
23, 1996, at 10 a.m. at the TraveLodge of Winchester, 160 Front Royal Pike,
Winchester, Virginia, and any adjournment thereof. The distribution of this
Proxy Statement and related proxy material will commence on or about March 21,
1996.
VOTING AND REVOCATION OF PROXIES
All properly executed proxies delivered pursuant to this solicitation
will be voted at the Annual Meeting in accordance with instructions noted
thereon or, if no direction is indicated, they will be voted in favor of the
proposals set forth in the Notice of Annual Meeting. Any shareholder giving a
proxy has the power to revoke it at any time before the proxy is voted by giving
written notice to the Secretary of the Company, by executing or delivering a
substitute proxy or by attending the Annual Meeting and revoking the proxy at
the meeting.
VOTING RIGHTS OF SHAREHOLDERS
Only shareholders of record at the close of business on February 29,
1996, will be entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof. As of the close of business on the record date, 16,517,797
shares of Common Stock, par value $2.00 per share, were outstanding and entitled
to vote at the Annual Meeting. The Company has no other class of stock
outstanding. Each share of Common Stock will entitle the holder thereof to one
vote on all matters to come before the Annual Meeting. A majority of the votes
entitled to be cast, represented in person or by proxy, will constitute a quorum
for the transaction of business.
SOLICITATION OF PROXIES
The cost of the solicitation of proxies will be borne by the Company.
In addition to solicitation by use of the mails, certain officers and employees
of the Company (who will not be compensated in addition to their regular
salaries) may solicit proxies personally or by telephone. The Company will
reimburse brokerage firms, and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in forwarding proxy material to beneficial
owners of Company Common Stock.
ELECTION OF DIRECTORS - PROPOSAL ONE
The thirteen persons named below, each of whom currently serves on the
Board of Directors, will be nominated to serve as directors until the 1997
Annual Meeting of Shareholders or until their successors have been duly elected
and qualified. The persons named in the proxy will vote for the election of the
nominees named below unless authority is withheld. If for any reason any of the
persons named below should become unavailable to serve, an event which
management does not anticipate, proxies will be voted for the remaining nominees
and such other person or persons as the Board of Directors may designate.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
NOMINEES SET FORTH BELOW.
The thirteen nominees receiving the greatest number of affirmative
votes cast at the Annual Meeting will be elected.
SERVED AS PRINCIPAL OCCUPATION
NAME (AGE) DIRECTOR SINCE DURING PAST FIVE YEARS
Frank Armstrong, III (59) 1985 Chairman, President and Chief
Executive Officer of National
Fruit Product Company, Inc.
James L. Bowman (68) 1970 Retired President of Bowman
Trucking Company; Chairman of
the Board, F&M
Bank-Martinsburg.
William H. Clement (68) 1988 Vice Chairman, Hidden Creek
Industries, Inc.; Retired in
1995 as Chairman of the Board
of Automotive Industries, Inc.
and Vice Chairman of the Board
of Automotive Industries
Holding, Inc.
W. M. Feltner (76) 1970 Chairman of the Board and Chief
Executive Officer of the
Company; Chairman of the Board
of F&M Bank-Winchester.
William R. Harris (67) 1986 Chairman of the Board of Harris
Heating & Plumbing, Inc.;
Chairman of the Board, F&M
Bank-Richmond.
L. David Horner, III (61) 1986 Chairman of the Board of Horner
Properties, Inc.
Jack R. Huyett (63) 1990 President, Chief Administrative
Officer of the Company since
1992; President of F&M
Bank-Blakeley from 1969 to
1992.
William A. Julias (61) 1980 President of the law firm of
Julias, Blatt & Wolfe, P.C.;
Practicing attorney; Chairman
of the Board of F&M
Bank-Massanutten.
George L. Romine (84) 1986 Retired Vice President and
Director of Abex Corporation;
Retired Executive Director of
the Winchester-Frederick County
Economic Development
Commission.
John S. Scully, III (85) 1970 President of Winchester Cold
Storage Co., Inc.
J. D. Shockey, Jr. (53) 1970 President of Shockey
Industries, Inc., a general
construction contractor.
Fred G. Wayland, Jr. (67) 1994 Retired in 1992 as President
and Chief Executive Officer of
PNB Financial Corporation.
C. Ridgely White (84) 1970 Retired Chairman of the Board
of J. V. Arthur, Inc., a
general insurance brokerage
firm; Vice Chairman of the
Board of F&M National
Corporation.
BOARD OF DIRECTORS AND COMMITTEES
During 1995, the Board of Directors held twelve regular monthly
meetings. There were no special Board meetings held. All members of the Board
attended at least 75%, in the aggregate, of the meetings of the Board and
committees on which they served. The standing committees of the Board of
Directors are the Executive Committee, the Audit Committee, the Nominating
Committee, and the Human Resources Committee.
Executive Committee. The members of the Executive Committee for
1995 were Messrs. White, Harris, Romine, Feltner, Huyett, and Mrs.
Carroll. The Company Bylaws empower the Executive Committee to exercise the
full authority of the Board of Directors when it is not in session, except as
otherwise provided in the Virginia Stock Corporation Act.
Audit Committee. The Audit Committee, whose members were Messrs.
Armstrong, Bowman, Horner, Romine, and Scully, recommends the independent
auditors to be selected by the Board, discusses with the independent auditors
the scope of their proposed audit, reviews the audit reports, discusses with
management the implementation of the auditors' recommendations, reviews the fee
of the independent auditors for audit and non-audit services, reviews the
adequacy of the Company's system of internal accounting controls and reviews
reports of audit activities performed by the Company's staff of internal
auditors. This committee met four times during 1995.
Nominating Committee. The Nominating Committee was composed of
Messrs. Clement, Romine, Harris, and White. The Nominating Committee
recommends to the Board of Directors candidates for election as directors of
the Company. This committee met once during 1995.
Human Resources Committee. The members of the Human Resources Committee
were Messrs. White, Clement, Romine, and Shockey. The primary responsibilities
of this committee are to review and recommend to the Board of Directors
compensation of senior management. This committee also administers cash awards
made under the Company's Officers' Incentive Bonus Plan and the granting of
stock options under the Company's stock option plan. This committee met once
during 1995.
DIRECTORS' FEES
During 1995, each director received $500 for each Board meeting
attended, and each nonemployee director received, in addition, an annual
retainer of $6,500. Board members were not compensated for committee meetings
attended, except that members of the Audit Committee and the Human Resources
Committee received $200 for each committee meeting attended. Directors also
received $1,200 annually to cover travel, lodging, and related expenses incurred
in attending Board and committee meetings.
OWNERSHIP OF COMPANY COMMON STOCK
The following table sets forth, as of February 29, 1996, certain
information with respect to the beneficial ownership of Company Common Stock
held by each director and nominee and each executive officer named in the
Summary Compensation Table below, and by the directors and all executive
officers as a group.
As of February 29, 1996, no person beneficially owned 5% or more of the
Company's Common Stock. Mr. Bowman is the only director who beneficially owned
more than 1% of the Company's Common Stock. His percentage ownership as of
February 29, 1996 was 1.69%, and the directors and all executive officers as a
group beneficially owned as of that date 7.38% of the outstanding shares of
Common Stock.
STOCK
NAME OWNERSHIP (1)
Frank Armstrong, III............................. 17,540
James L. Bowman.................................. 278,756
William H. Clement............................... 67,771
W. M. Feltner.................................... 139,350 (2)
William R. Harris................................ 104,668
L. David Horner, III............................. 98,048
Jack R. Huyett................................... 96,374 (2)
William A. Julias................................ 57,612
George L. Romine................................. 24,851
John S. Scully, III.............................. 86,643
J. D. Shockey, Jr. .............................. 29,718
Fred G. Wayland, Jr.............................. 7,592
C. Ridgely White................................. 41,315
Betty H. Carroll................................. 71,033 (2)
Alfred B. Whitt.................................. 65,085 (2)
F. Dixon Whitworth, Jr. ......................... 32,618 (2)
All Directors & Executive Officers as a Group.... 1,218,974
(1) Includes shares held jointly with spouse and/or as custodian under the
Virginia Uniform Gifts to Minors Act and as trustee under the terms of
certain trusts.
(2) Includes 45,500 shares issuable to Mr. Feltner, 18,137 shares issuable to
Mr. Huyett, 26,838 shares issuable to Mrs. Carroll, 25,301 shares issuable
to Mr. Whitt, and 9,471 shares issuable to Mr. Whitworth under the
Company's 1992 and 1982 Incentive and Non-Qualified Stock Option Plans.
EXECUTIVE COMPENSATION
The table below sets forth certain information concerning the annual
and long-term compensation earned by the Chief Executive Officer and the other
four most highly compensated executive officers of the Company (collectively,
the "Named Officers") for each of the past three years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
SECURITIES
NAME AND ANNUAL COMPENSATION UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS OTHER(2) OPTIONS(3) COMPENSATION(4)
<S> <C> <C> <C> <C> <C> <C>
W. M. Feltner 1995 $507,200 $180,000 -- 10,000 $ 9,346
Chairman of the 1994 407,200 150,000 -- 10,000 9,225
Board/Chief 1993 357,200 110,000 -- 10,000 21,734
Executive Officer
Jack R. Huyett 1995 $207,200 $ 65,000 -- 5,000 $ 9,346
President/Chief 1994 172,200 55,000 -- 5,000 9,225
Administrative 1993 132,200 35,000 -- -- 16,409
Officer
Betty H. Carroll 1995 $207,200 $ 64,000 -- 5,000 $ 9,346
Senior Vice President/ 1994 197,200 54,000 -- 5,000 9,225
President/CEO, F&M 1993 182,200 43,000 -- -- 21,921
Bank-Winchester
Alfred B. Whitt 1995 $157,200 $ 45,000 -- 5,000 $ 9,346
Senior Vice President/ 1994 142,200 37,500 -- 5,000 9,225
Senior Financial 1993 117,200 30,000 -- -- 13,420
Officer/Secretary
F. Dixon Whitworth, Jr. 1995 $132,200 $ 28,000 -- 1,000 $ 9,315
Executive Vice 1994 127,200 22,500 -- 1,000 8,988
President 1993 119,700 20,000 -- -- 12,512
</TABLE>
(1) Includes directors' fees.
(2) Each Named Officer received certain perquisites and other personal
benefits, the amounts of which are not shown because the aggregate amount
of such compensation during the year did not exceed the lesser of $50,000
or 10% of total salary and bonus reported for such executive officer.
(3) The Company's stock option plan does not permit grants of restricted stock,
and this plan is the Company's only stock-based long term compensation plan
currently in effect.
(4) These amounts represent Company contributions allocated under the
Company's 401(k) Retirement Plan and the Company's Employee Stock
Ownership Plan, respectively, to the Named Officers for 1995 in the
following amounts: W. M. Feltner, $1,846 and $7,500; Jack R. Huyett,
$1,846 and $7,500; Betty H. Carroll, $1,846 and $7,500; Alfred B. Whitt,
$1,846 and $7,500; and F. Dixon Whitworth, Jr., $1,815 and $7,500.
STOCK OPTION GRANTS IN 1995
The Company's stock option plan provides for the granting of both
incentive and non-qualified stock options to executive officers and key
employees of the Company and its subsidiaries. While the option price of
incentive options may not be less than the fair market value of the stock at the
date of grant, non-qualified options may be granted at prices less than the fair
market value of the Common Stock on the date of grant, but in no event at an
exercise price less than one-half of the market price on the date of grant.
The following table provides certain information concerning stock
options granted during 1995 to the Named Officers. No stock appreciation rights
may be granted under the Company's stock option plan.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
PERCENT OF
NUMBER OF TOTAL
SHARES OPTIONS MARKET
UNDERLYING GRANTED TO EXERCISE PRICE POTENTIAL
OPTIONS EMPLOYEES PRICE PER ON GRANT EXPIRATION REALIZABLE VALUE (2)
NAME GRANTED(1) IN 1995 SHARE DATE DATE 0% 5% 10%
---- ---------- ------- ----- ---- ---- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
W. M. Feltner 10,000 38.5% $7.94 $15.875 1/3/05 $79,400 $123,175 $187,221
Jack R. Huyett 5,000 19.2 $7.94 15.875 1/3/05 39,700 61,588 93,611
Betty H. Carroll 5,000 19.2 $7.94 15.875 1/3/05 39,700 61,588 93,611
Alfred B. Whitt 5,000 19.2 $7.94 15.875 1/3/05 39,700 61,588 93,611
F. Dixon
Whitworth Jr. 1,000 3.5 $7.94 15.875 1/3/05 7,940 12,318 18,722
</TABLE>
(1) The stock options granted during 1995 to the Named Officers were
granted on January 3, 1995, and first became exercisable on that date.
(2) Potential realizable value at the assumed annual rates of stock price
appreciation based on actual option term (10 years) and annual compounding
as suggested by the Securities and Exchange Commission rules.
STOCK OPTIONS EXERCISES IN 1995 AND YEAR-END OPTION VALUES
The following table shows certain information with respect to the stock
options exercised during 1995 and the number and value of unexercised options at
year-end.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SHARES UNDERLYING UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED VALUE OPTIONS AT OPTIONS AT
NAME ON EXERCISE REALIZED(1) DECEMBER 31, 1995(2) DECEMBER 31, 1995(3)
---- ----------- ----------- -------------------- --------------------
<S> <C> <C> <C> <C>
W. M. Feltner 0 $ 0 30,500 $363,000
Jack R. Huyett 0 0 10,637 128,390
Betty H. Carroll 0 0 21,900 273,238
Alfred B. Whitt 512 6,524 17,801 215,818
F. Dixon Whitworth Jr. 512 7,100 6,971 84,742
</TABLE>
(1) Market value of underlying shares on the date of exercise, minus the option
exercise price.
(2) All the stock options shown for each Named Officer are currently
exercisable.
(3) Values are calculated by subtracting the exercise price from the fair
market value of the stock at December 31, 1995.
EMPLOYMENT ARRANGEMENTS
The Company has employment agreements with certain executive officers,
including Mrs. Carroll and Messrs. Huyett, Whitt, Whitworth and 21 senior
officers that become effective upon a change in control of the Company. In the
case of the Named Officers, with the exception of Mr. Feltner, the Company or
its successor agrees to continue these officers in its employ for a term of
three years after the date of a change in control. During the contract term,
these officers will retain commensurate authority and responsibilities and
compensation benefits. They will receive base salaries at least equal to the
immediate prior year and bonuses at least equal to the annual bonus paid prior
to the change in control. If the officer's employment is terminated during the
three years other than for cause or disability as defined in the agreement, or
if the officer should terminate employment because a material term of the
contract is breached by the Company, the officer will be entitled to a lump sum
payment, in cash, within thirty days after the date of termination. This lump
sum will be equal to two times the sum of the officer's base salary, annual
bonus, and equivalent benefits.
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Human Resources Committee of the Board of Directors of the Company
(the "Committee") has furnished the following report on executive compensation:
The Committee has developed and implemented compensation policies and
plans which seek to enhance the profitability of the Company and, thus,
shareholder value. In furtherance of these goals, the policies and plans are
designed to provide competitive levels of compensation that rely on annual and
longer term incentive compensation to attract and retain corporate officers and
other key employees of outstanding abilities and to motivate them to perform to
the full extent of their abilities. Both types of incentive compensation are
variable and closely tied to corporate and individual performance in a manner
that encourages a continuing focus on building profitability and shareholder
value.
In its review of management performance and compensation, the Committee
has taken into account management's consistent commitment to the long-term
success of the Company. Based on its evaluation of these factors, the Committee
believes that the senior management of the Company is dedicated to achieving
significant improvements in long-term financial performance and that the
compensation policies and plans the Committee has implemented and administered
have contributed to achieving this management focus.
Compensation for each of the Named Officers, as well as other senior
executives, consists of a base salary and annual and longer term incentive
compensation. The Committee fixes base salaries at levels that are competitive
or somewhat below the competitive amounts paid to senior executives with
comparable qualifications, experience, and responsibilities, after comparing
salary ranges of other bank holding companies and other large locally
headquartered companies. The annual incentive compensation is approved as a
percentage of the net income of the Company. The longer-term incentive
compensation is closely tied to the Company's success in achieving significant
financial performance goals. The Committee considers the total compensation
(earned or potentially available) of each of the Named Officers and the other
senior executives in establishing each element of compensation.
During the fourth quarter of each year, the Chief Executive Officer
submits to the Committee the annual salaries for the past three years for the
Company's senior executives (other than the Chief Executive Officer), and the
Committee reviews the salaries and responsibilities of the officers, and makes
any modifications it deems appropriate. Salary proposals are developed by the
Company's Chief Executive Officer based on industry peer groups, surveys, and
performance judgments as to the past and expected future contributions of the
individual senior executives.
In addition to internal measurements and goals, the Committee considers
return on average assets (ROAA) and growth in total assets when evaluating the
performance of executive officers. ROAA is a measure used in the industry to
compare the profitability of banking companies. For the year ended December 31,
1994, the Company's ROAA was 1.32%, compared to 1.04% for its 115 Peer Group
Banks (115 financial institutions, like the Company, between $1 billion and $3
billion in asset size, as supplied by the Federal Reserve Board's Division of
Banking). During the same period, the Company's total assets grew at 17.92%,
compared to 12.58% for the Peer Group Banks. For a four-year average comparison
of the Company's performance to the Peer Group Banks, please see the table on
page 11.
CEO COMPENSATION
The Committee reviews and fixes the base salary of the Chief Executive
Officer based on similar competitive compensation data similar to senior
executives and the Committee's assessment of his past performance and its
expectation as to his future contributions in leading the Company.
Although the 1995 salary increase and option grant were not measured
upon the attainment of any specific goals by the Company, the Committee, in its
discretion and judgment in making these decisions, took into consideration his
individual contribution to the Company's performance for the prior fiscal year
reflected by: (1) a $1,963,000 increase in net income, and (2) a $4,169,000
increase in shareholders' equity. Asset growth of the Company for 1994 exceeded
$249,000,000 or 17.8%. Peer group banks at December 31, 1994, increased in
assets by 12.58%. Although the Committee, in establishing this salary, uses a
subjective approach and does not rely on a formula or weights of specific
factors, it carefully considers all the factors listed above.
ANNUAL INCENTIVES
The Incentive Compensation Plan stresses rewards for achievement of
goals set each year. Financial goals include operating earnings and return on
shareholder equity. The formula for 1995 was adopted by the Board of Directors
and was as follows: 12% of net income in excess of 10% return on equity capital,
plus 6% of net income in excess of 11.5% return on equity capital. At the end of
each year, this formula defines the total fund available for distribution as
bonuses.
The Committee distributes the incentive fund to eligible employees
based on the Committee's subjective evaluation of individual performance and
contribution to the Company and recommendations by certain senior officers.
In determining the awards for 1995 from the incentive fund to other
eligible employees, including the Named Officers other than the Chief Executive
Officer, the Committee reviewed with the Chief Executive Officer recommendations
based on individual performance, as well as its evaluation of factors
substantially comparable to those considered in establishing the award for the
Chief Executive Officer.
In determining the Chief Executive Officer's award for 1995, in
addition to the factors discussed above, the Committee considered its evaluation
of the Company's performance and the state of the economy in the Company's
service area. The growth of the Company for the nine months ending September 30,
1995, was 9.0% or $157,496,000. Net income growth was 16.1% for the same time
period. It considered these factors both on an absolute basis and relative to
the performance of the Company's peers.
STOCK INCENTIVES
The Committee considered the desirability of granting awards under the
Company's 1992 Incentive and Non-Qualified Stock Option Plan which provides the
Committee the flexibility to grant longer-term incentives in stock options. The
Committee believes that its past grant of options have successfully focused the
Company's senior management on building profitability and shareholder value.
Stock options were granted for 1995 and are reflected in the table, "Stock
Option Grants in 1995."
The awards were based, among other things, on a review of competitive
compensation data from selected peer companies and information on their total
compensation as well as the Committee's perception of their past and expected
future contributions to the Company's achievement of its long-term goals. Like
other compensation decisions, the Committee does not use a formula or weight
specific factors in recommending stock options awards, but rather relies on its
own subjective evaluation.
The foregoing report has been furnished by Messrs. White, Clement,
Romine, and Shockey.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995 and up to the present time, there were transactions between
certain of the Company's banking subsidiaries and certain members of the Human
Resources Committee, or their associates, all consisting of extensions of credit
by the banks in the ordinary course of business. Each transaction was made on
substantially the same terms, including interest rates, collateral and repayment
terms, as those prevailing at the time for comparable transactions with the
general public. In the opinion of management, none of the transactions involve
more than the normal risk of collectibility or present other unfavorable
features.
None of the members of the Human Resources Committee has served as an
officer or employee of the Company or any of its affiliates.
SHAREHOLDER RETURN
The Company is subject to the rules of the Securities and Exchange
Commission (the "SEC") that require all public companies to present a graph of
total investment return in their annual proxy statements. The rules require a
line graph which compares the Company's five-year cumulative shareholder return
on its Common Stock with the Standard's & Poor's ("S&P") 500 Stock Index and
either a published industry index or an index of peer companies selected by the
Company. The graph below presents a comparison of the Company's performance with
the S&P 500 Stock Index and the SNL Securities $1 to $5 Billion Bank Index (the
"SNL $1B-$5B Bank Index"), assuming that investments of $100 were made on
December 31, 1990, and that dividends were reinvested. SNL Securities, based in
Charlottesville, Virginia, is a research and publishing firm specializing in the
collection and dissemination of data on the financial services industry.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
F&M NATIONAL CORPORATION, S&P 500 STOCK INDEX AND THE SNL $1B-$5B BANK INDEX
(insert graph)
1990 1991 1992 1993 1994 1995
SNL $1B - $5B Bank Index 100 149.53 217.07 260.24 274.26 379.46
F&M National Corporation 100 124.07 210.33 207.32 215.07 280.86
S&P 500 Stock Index 100 130.48 140.41 154.57 156.29 210.57
While the growth in the Company's stock price over the past five years
has lagged behind the peer group, the Company has outperformed the S&P 500 Stock
Index. The Company has outperformed its peer group for the last four years
according to other measurements. A review of certain performance measurements
for the four-year period ending September 30, 1995, for the 108 Peer Group Banks
with assets ranging from $1 billion to $3 billion, as furnished by the Federal
Reserve System, indicates that the Company's performance compares favorably to
this peer group. The table below presents a comparison of selected annual
performance measurements, averages for the four-year period ending September 30,
1995, for the Company and the Peer Group Banks.
PEER GROUP
FINANCIAL INSTITUTIONS
F&M NATIONAL CORPORATION BETWEEN $1 - $3 BILLION
------------------------ -----------------------
Return on assets 1.36% 0.97%
Asset growth 18.28% 10.45%
Equity capital to assets 10.06% 8.22%
Cash dividend/net income 45.19% 26.51%
Overhead expense/assets 3.26% 3.48%
INTEREST OF DIRECTORS AND OFFICERS IN CERTAIN TRANSACTIONS
During 1995, the Company's banking subsidiaries extended credit to
directors and officers of the Company and its subsidiaries. All such loans (i)
were made in the ordinary course of business, (ii) were made on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons, and (iii) did not
involve more than the normal risk of collectibility or present unfavorable
features.
The banking subsidiaries of the Company, pursuant to the Company's
employee loan policy, make individual general purpose loans on a
nondiscriminatory basis to employees of subsidiaries at interest rates below
those for comparable transactions with other persons. No such loans were
outstanding to any officer or director of the Company during 1995. The banking
subsidiaries are prohibited from making loans, with the exception of residential
mortgages and educational loans, to executive officers in excess of certain
dollar limits fixed by banking laws.
William A. Julias, a director of the Company, is also Chairman of the
Board of F&M Bank-Massanutten, a subsidiary of the Company. He is President of
the Harrisonburg, Virginia, law firm of Julias, Blatt & Wolfe, P.C., which
serves as legal counsel for that bank. J. D. Shockey, Jr., a director of the
Company and F&M Bank-Winchester, performed work for F&M Bank-Winchester during
1995 with the renovation of the 9 Court Square Complex which is under contract
with Shockey Industries, Inc.
COMPLIANCE WITH STOCK OWNERSHIP REPORTING REQUIREMENTS
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as
amended, directors and executive officers of the Company are required to file
reports with the SEC indicating their holdings of and transactions in the
Company's stock. To the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, insiders of the Company complied with all filing
requirements during 1995.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS - PROPOSAL TWO
The Board of Directors, upon recommendation of the Audit Committee, has
appointed Yount, Hyde & Barbour, P. C., as the Company's independent public
accountants for the year ending December 31, 1996, and has further directed that
management submit the selection of independent public accountants for
ratification by the shareholders at the Annual Meeting. Yount, Hyde & Barbour,
P. C., has been serving the Company for many years. This firm has advised the
Company that neither the firm nor any member of the firm now has, or has held
during the past five years, any direct or indirect financial interest in the
Company or any of its subsidiaries. Representatives of the firm are expected to
be present at the Annual Meeting and will be given an opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
OTHER MATTERS
As of the date of this Proxy Statement, management of the Company has
no knowledge of any matters to be presented for consideration at the Annual
Meeting other than those referred to above. If any other matter properly comes
before the Annual Meeting, the persons named in the accompanying proxy intend to
vote such proxy, to the extent entitled, in accordance with their best judgment.
PROPOSALS FOR THE 1997 ANNUAL MEETING
The Company's Bylaws provide that, in addition to any other applicable
requirements, for business (including shareholder nominations of Director
candidates) to be properly brought before the Annual Meeting by a shareholder,
the shareholder must give timely notice in writing to the Secretary of the
Company at least 90 days prior to the Annual Meeting. As to each matter, the
notice must comply with certain informational requirements set forth in the
Bylaws.
In order for a shareholder proposal to be considered for possible
inclusion in the 1997 Proxy Statement, it must be received by the Secretary of
the Company no later than November 18, 1996.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for 1995 filed with
the SEC, excluding exhibits, can be obtained without charge by writing to Alfred
B. Whitt, Senior Vice President and Secretary, F&M National Corporation, P.O.
Box 2800, Winchester, Virginia 22604.
By Order of the Board of Directors
Alfred B. Whitt
Senior Vice President and Secretary
Winchester, Virginia
March 21, 1996
INSTRUCTIONS AND MAP TO TRAVELODGE OF WINCHESTER
COMING FROM TOWN.
Take Route 50 East. After you cross over Interstate I-81, turn right at
stoplight onto Route 522 South. TraveLodge will be on the right.
COMING FROM THE SOUTH ON I-81 (I.E., TRAVELING NORTHBOUND). EXIT 313.
Take Exit 313 for Route 50 in Winchester. After coming off the Exit, continue
straight through stoplight across Route 50 (and onto Route 522 South).
TraveLodge will be on the right after going through the intersection.
COMING FROM THE NORTH ON I-81 (I.E., TRAVELING SOUTHBOUND). EXIT 313-A.
Take Exit 313-A onto Route 50 East in Winchester. At stoplight, turn right
onto Route 522. TraveLodge will be on the right.
PLEASE USE "BANQUET ROOM" ENTRANCE.
TraveLodge's address is 160 Front Royal Pike, Winchester, VA 22602.
Telephone: 540-665-0685
F&M NATIONAL CORPORATION
This Proxy is solicited on behalf of the board of directors
The undersigned, revoking all prior proxies, hereby appoints GEORGE L.
ROMINE, C. D. BOYER, JR., and ALICE JANE CHILDS as proxies, and each or any of
them with full power of substitution, to represent the undersigned and vote, as
designated below, all the shares of Common Stock of F&M National Corporation
held of record by the undersigned on February 29, 1996, at the Annual Meeting of
Shareholders to be held April 23, 1996, or any adjournment thereof on each of
the following matters:
1. Election of directors.
[ ] FOR all Nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the (to vote for all nominees
contrary below) listed below)
Frank Armstrong, III; James L. Bowman; William H. Clement; W. M. Feltner;
William R. Harris; L. David Horner, III; Jack R. Huyett; William A. Julias;
George L. Romine; John S. Scully, III; J. D. Shockey, Jr.; Fred G. Wayland,
Jr.; and C. Ridgely White.
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, print the name of the nominee in the space provided below.
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2. To ratify the selection by the Audit Committee of the Board of Directors of
Yount, Hyde & Barbour, P.C., independent certified public accountants, as
auditors of the Company for 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. The Board of Directors has not
been notified of any such matters.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" EACH PROPOSAL. ALL JOINT OWNERS MUST SIGN.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THE REVERSE SIDE OF THIS
PROXY CARD. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
DATED ______________________ ______________________________________
SIGNATURE
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NUMBER OF SHARES --------------------------------------
SIGNATURE (IF JOINTLY OWNED)
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PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
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