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
F&M NATIONAL CORPORATION
(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>
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 22, 1997, at 10 a.m. for the following
purposes:
1. To elect fourteen directors to serve for the ensuing year;
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 1997; 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 28,
1997, 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, 1997
<PAGE>
F&M NATIONAL CORPORATION
P R O X Y S T A T E M E N T
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 1997 Annual Meeting of Shareholders to be held Tuesday, April
22, 1997, 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,
1997.
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 28,
1997, 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, 20,348,174
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. Shares for which the holder has elected to
abstain or to withhold the proxies' authority to vote (including broker
non-votes) on a matter will count toward a quorum, but will not be included in
determining the number of votes cast with respect to such matter.
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.
<PAGE>
ELECTION OF DIRECTORS - PROPOSAL ONE
The fourteen persons named below, each of whom currently serves on the
Board of Directors, will be nominated to serve as directors until the 1998
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
election of each nominee requires the affirmative vote of the holders of a
plurality of the shares of Common Stock cast in the election of directors.
The Board of Directors recommends that shareholders vote for the
nominees set forth below.
<TABLE>
<CAPTION>
Served as Principal Occupation
Name and Age Director Since During Past Five Years
<S> <C>
Leonard L. Abel (70) 1996 Financial consultant with the accounting firm of
Kershenbaum, Abel, Kernus and Wychulis, Rockville,
Maryland; Chairman of the Board, F&M Bank-Allegiance.
Frank Armstrong, III (60) 1985 Chairman, President and Chief Executive Officer of
National Fruit Product Company, Inc. (food processor and
distributor), Winchester, Virginia.
William H. Clement (69) 1988 Vice Chairman, Hidden Creek Industries, Inc. (a private
real estate investment company), Winchester, Virginia;
Retired in 1995 as Chairman of the Board of Automotive
Industries, Inc. and Vice Chairman of the Board of
Automotive Industries Holding, Inc. (automobile parts
manufacturer), Strasburg, Virginia.
Charles E. Curtis (58) 1996 President and Chief Executive Officer, F&M Bank-Northern
Virginia.
W. M. Feltner (77) 1970 Chairman of the Board and Chief Executive Officer of the
Company; Chairman of the Board of F&M Bank-Winchester.
William R. Harris (68) 1986 Chairman of the Board of Harris Heating & Plumbing, Inc.,
Richmond, Virginia; Chairman of the Board, F&M
Bank-Richmond.
L. David Horner, III (62) 1986 Chairman of the Board of Horner Properties, Inc. (real
estate developer), Stuart, Florida.
Jack R. Huyett (64) 1990 President, Chief Administrative Officer of the Company;
Vice Chairman of the Board of F&M National Corporation.
William A. Julias (62) 1980 Attorney, President of the law firm of Julias, Blatt &
Wolfe, P.C., Harrisonburg, Virginia; Chairman of the
Board of F&M Bank-Massanutten.
George L. Romine (85) 1986 Retired Vice President and Director of Abex Corporation
(automobile parts manufacturer), Winchester, Virginia;
Retired Executive Director of the Winchester-Frederick
County Economic Development Commission.
John S. Scully, III (86) 1970 President of Winchester Cold Storage Co., Inc.,
Winchester, Virginia.
J. D. Shockey, Jr. (54) 1970 President of Shockey Industries, Inc. (general
construction contractor), Winchester, Virginia.
Ronald W. Tydings (57) 1996 Attorney, President of the law firm of Tydings Bryan and
Adams, P.C., Fairfax, Virginia; Chairman of the Board,
F&M Bank-Northern Virginia.
Fred G. Wayland, Jr. (68) 1994 Retired in 1992 as President and Chief Executive Officer
of PNB Financial Corporation (a bank holding company
which affiliated with the Company in 1994), Warrenton,
Virginia.
</TABLE>
Mr. C. Ridgely White, a director since 1970, is retiring as a
director as of the Annual Meeting and will not stand for re-election. Mr. White
has been elected Director Emeritus in honor of his long and valued service.
Board of Directors and Committees
During 1996, the Board of Directors held twelve regular monthly
meetings. No special Board meetings were held. All nominees to 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
1996 were Messrs. White, Harris, Romine, Feltner, and Huyett. The Company's
Bylaws empower the Executive Committee to exercise the full authority of the
Board of Directors when it is not in session, except for certain matters
reserved to the Board by law.
<PAGE>
Audit Committee. The Audit Committee, whose members are 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 1996.
Nominating Committee. The Nominating Committee was composed of
Messrs. Clement, Romine, and Shockey. The Nominating Committee recommends
to the Board of Directors candidates for election as directors of the
Company. This committee met once during 1996.
Human Resources Committee. The members of the Human Resources Committee
are 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 1996.
Directors' Fees
During 1996, 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 28, 1997, 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 28, 1997, no person beneficially owned 5% or more of the
Company's Common Stock. The directors and all executive officers as a group
beneficially owned as of that date, 7% of the outstanding shares of Common
Stock.
<PAGE>
<TABLE>
<CAPTION>
Stock
Name Ownership (1)
<S> <C>
Leonard L. Abel............................................. 68,962
Frank Armstrong, III........................................ 15,937
William H. Clement.......................................... 87,771
Charles E. Curtis........................................... 161,950(2)
W. M. Feltner............................................... 154,245(2)
William R. Harris........................................... 108,868
L. David Horner, III........................................ 98,048
Jack R. Huyett.............................................. 107,829(2)
William A. Julias........................................... 60,112
George L. Romine............................................ 25,651
John S. Scully, III......................................... 89,143
J. D. Shockey, Jr........................................... 29,718
Ronald W. Tydings........................................... 171,120
Fred G. Wayland, Jr......................................... 7,800
C.R. White.................................................. 41,215
Betty H. Carroll............................................ 78,936(2)
Alfred B. Whitt............................................. 76,179(2)
F. Dixon Whitworth, Jr...................................... 38,475(2)
All Directors & Executive Officers as a Group............... 1,421,959
</TABLE>
(1) Includes shares held by affiliated corporations, spouses and minor
children, and shares held jointly with spouses or as custodians or
trustees for children and others.
(2) Includes: 55,250 shares issuable to Mr. Feltner; 27,625 shares
issuable to Mr. Huyett; 27,625 shares issuable to Mrs. Carroll; 27,625
shares issuable to Mr. Whitt; 20,301 shares issuable to Mr. Curtis;
and 9,525 shares issuable to Mr. Whitworth under the Company's 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.
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long-term
Compensation
Securities
Name and Annual Compensation(1) Underlying All Other
Principal Position Year Salary(2) Bonus Options(3) Compensation(4)
<S> <C>
W. M. Feltner 1996 $507,200 $ 200,000 15,000 $ 7,500
Chairman of the Board/ 1995 507,200 180,000 10,000 9,346
Chief Executive Officer 1994 407,200 150,000 10,000 9,225
Jack R. Huyett 1996 $232,200 $ 75,000 7,500 $ 9,750
President/Chief 1995 207,200 65,000 5,000 9,346
Administrative Officer 1994 172,200 55,000 5,000 9,225
Betty H. Carroll 1996 $222,200 $ 74,000 7,500 $ 9,761
Senior Vice President; 1995 207,200 64,000 5,000 9,346
President/CEO, F&M 1994 197,200 54,000 5,000 9,225
Bank-Winchester
Alfred B. Whitt 1996 $170,000 $ 55,000 7,500 $ 9,723
Senior Vice President/ 1995 157,200 45,000 5,000 9,346
Senior Financial 1994 142,200 37,500 5,000 9,225
Officer/Secretary
F. Dixon Whitworth, Jr. 1996 $142,200 $ 38,000 2,500 $ 9,723
Executive Vice President 1995 132,200 28,000 1,000 9,315
1994 127,200 22,500 1,000 8,988
</TABLE>
(1) 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.
(2) Includes directors' fees.
(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 1996 in
the following amounts: W. M. Feltner, $0 and $7,500; Jack R. Huyett,
$2,250 and $7,500; Betty H. Carroll, $2,261 and $7,500; Alfred B.
Whitt, $2,223 and $7,500; and F. Dixon Whitworth, Jr., $2,223 and
$7,500.
Stock Option Grants in 1996
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.
<PAGE>
The following table provides certain information concerning stock
options granted during 1996 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 1996 Share Date Date 0% 5% 10%
---- ---------- ------- ----- ---- ---- -- -- ---
<S> <C>
W. M. Feltner 15,000 30.0% $10 $20 1/2/06 $150,000 $347,505 $606,120
Jack R. Huyett 7,500 15.0 10 20 1/2/06 75,000 173,752 303,060
Betty H. Carroll 7,500 15.0 10 20 1/2/06 75,000 173,752 303,060
Alfred B. Whitt 7,500 15.0 10 20 1/2/06 75,000 173,752 303,060
F. Dixon
Whitworth Jr. 2,500 5.0 10 20 1/2/06 25,000 57,917 101,000
</TABLE>
(1) The stock options granted during 1996 to the Named Officers were
granted on January 2, 1996, 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.
Stock Option Exercises in 1996 and Year-End Option Values
The following table shows certain information with respect to the stock
options exercised during 1996 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, 1996(2) December 31, 1996(3)
---- ----------- ----------- -------------------- --------------------
<S> <C>
W. M. Feltner 10,250 $ 92,434 35,250 $440,736
Jack R. Huyett 512 5,600 17,625 196,548
Betty H. Carroll 9,213 107,377 20,187 254,634
Alfred B. Whitt 6,651 66,143 18,650 234,077
F. Dixon Whitworth Jr. 4,946 52,425 4,525 55,449
</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. (footnotes continued on next page)
(3) Values are calculated by subtracting the exercise price from the
fair market value of the stock at December 31, 1996.
<PAGE>
Employment Arrangements
The Company has employment agreements with certain executive officers,
including Mrs. Carroll and Messrs. Huyett, Whitt, Whitworth and 24 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 year period following a change in control 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 for Mrs.
Carroll and Messrs. Huyett, Whitt, and Whitworth, and one times the sum of the
other senior officers' base salaries, annual bonuses, 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.
<PAGE>
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 period ending December
31, 1995, the Company's ROAA was 1.35%, compared to 1.13% for its 110 Peer Group
Banks (110 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 10.78%,
compared to 12.28% 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 12.
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.
No salary increase was recommended for 1996.
Although the 1996 salary 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 $2,731,000 increase in net income, and (2) a $24,493,000
increase in shareholders' equity. The growth of the Company for 1995 exceeded
$182,900,000 or 11.1%. Peer group banks at December 31, 1995, increased by
12.28%. 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
shareholders' equity. The formula for 1996 adopted by the Board of Directors 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 1996 from the incentive fund to other
eligible employees, including other 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.
<PAGE>
In determining the Chief Executive Officer's award for 1996, 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,
1996, was 16.4% or $300,464,000. Net income growth was 7.4% 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 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 has successfully focused the Company's senior management
on building profitability and shareholder value. Stock options granted in 1996
are reflected in the table, "Stock Option Grants in 1996".
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 evaluation 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. Clement, Romine, and
Shockey.
Compensation Committee Interlocks and Insider Participation
During 1996 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, 1991, 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.
<PAGE>
Comparison of Five Year Cumulative Total Return Among
F&M National Corporation, S&P 500 Stock Index and
the SNL $1B-$5B Bank Index
[GRAPH]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C>
F&M National Corporation 100.00 169.52 167.09 173.34 226.37 251.30
S&P 500 Total Return 100.00 107.62 118.47 120.03 165.13 202.89
$1B - $5B Bank Index 100.00 144.84 174.08 183.28 246.47 319.51
</TABLE>
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, 1996, for the 121 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, averaged for the five-year period ending September 30,
1996, for the Company and the Peer Group Banks.
<PAGE>
<TABLE>
<CAPTION>
Peer Group
Financial Institutions
F&M National Corporation Between $1 - $3 Billion
------------------------ -----------------------
<S> <C>
Return on assets 1.36% 1.09%
Asset growth 16.86% 12.67%
Equity capital to assets 10.10% 8.66%
Cash dividend/net income 45.35% 27.93%
Efficiency Ratio 59.86% 62.70%
</TABLE>
INTEREST OF DIRECTORS AND OFFICERS IN CERTAIN TRANSACTIONS
During 1996, 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 1996. 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. Mr. Julias 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 1996 in connection with the renovation of the 9 Court
Square Complex which is under contract with Shockey Industries, Inc. Ronald W.
Tydings, a director of the Company, is also Chairman of the Board of F&M
Bank-Northern Virginia, a subsidiary of the Company. Mr. Tydings is President of
the Fairfax, Virginia, law firm of Tydings Bryan and Adams, P.C., which serves
as legal counsel for that bank.
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 1996, except that William R. Harris, a director, did not
timely file a report in connection with the acquisition of 4,200 shares of
Common Stock in April 1996.
<PAGE>
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, 1997, 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 1998 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.
The 1998 Annual Meeting of Shareholders is scheduled for April 21,
1998.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for 1996 filed with
the Securities and Exchange Commission, 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 VA 22604.
By Order of the Board of Directors
Alfred B. Whitt
Senior Vice President and Secretary
Winchester, Virginia
March 21, 1997
<PAGE>
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
<PAGE>
F&M NATIONAL CORPORATION
This Proxy is solicited on behalf of the Board of Directors.
The undersigned, revoking all prior proxies, hereby appoints Joseph E. Kalbach,
Alice J. Childs and Thom F. Hanes as proxies, and each or any of them with full
power of substitution, and hereby authorizes them to represent and to vote, as
designated below, all the shares of Common Stock of F&M NATIONAL CORPORATION
held of record by the undersigned on February 28, 1997, at the Annual Meeting of
Shareholders to be held April 22, 1997, or any adjournment thereof, on each of
the following matters:
2. Election of directors.
[ ] FOR all Nominees listed below [ ] WITHHOLD AUTHORITY TO VOTE FOR
THOSE INDICATED BELOW
Leonard L. Abel; Frank Armstrong, III; William H. Clement; Charles E. Curtis;
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.;
Ronald W. Tydings; and Fred G. Wayland, Jr.
INSTRUCTIONS: To withhold authority to vote for an 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 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. 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
herein 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 hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
DATED ______________ _____________________________
Signature
NUMBER OF SHARES
____________________ _____________________________
Signature (if jointly owned)
________________________________________________________________________________
PLEASE MARK, SIGN, DATE & RETURN THIS PROXY PROMPTLY IN ENCLOSED ENVELOPE.
________________________________________________________________________________
