<PAGE>
[LOGO OF CENTURYSOUTHBANKS INC.]
March 24, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Century South Banks, Inc. ("CSBI") which will be held at 2:00 p.m., Dahlonega,
Georgia time, Wednesday, April 23, 1997, at North Georgia College, Stewart
Center for Continuing Education, Dahlonega, Georgia 30533.
The enclosed Notice of Annual Meeting and Proxy Statement contain details
regarding the business to come before the Shareholders at the Annual Meeting.
Please sign and return your proxy in the enclosed envelope at your earliest
convenience to assure that your shares will be represented and voted at the
Annual Meeting even if you cannot attend. If you do attend and wish to vote in
person, you may cancel the proxy at the meeting. It is important that you
complete and mail your proxy as soon as possible.
Matters which will be discussed at the Annual Meeting include proposals to (i)
establish the number of members of the Board of Directors at 15, (ii) elect 15
regular directors and six directors emeritus to serve for the ensuing year, and
(iii) ratify the appointment of KPMG Peat Marwick LLP as independent certified
public accountants of CSBI for calendar year 1997.
The Board of Directors at present knows of no other business to be presented at
the Annual Meeting. If other matters properly come before the Annual Meeting,
the persons named in the proxy will have discretionary authority to vote proxies
with respect to such matters in accordance with the recommendations of the Board
of Directors of CSBI. If you should have questions concerning the Annual
Meeting of CSBI, please feel free to call me.
For the Board of Directors,
/s/ Susan Anderson
Susan J. Anderson, Senior Vice President
and Chief Financial Officer
Secretary-Treasurer
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1997
TO THE HOLDERS OF COMMON STOCK OF CENTURY SOUTH BANKS, INC.
The Annual Meeting of Shareholders of Century South Banks, Inc. ("CSBI") will be
held at North Georgia College, Stewart Center For Continuing Education,
Dahlonega, Georgia 30533, on Wednesday, April 23, 1997 at 2:00 p.m., Dahlonega,
Georgia time, for the following purposes:
1. To vote on a proposal to establish the number of members of the Board of
Directors at 15;
2. To vote on a proposal to elect 15 directors and six directors emeritus to
serve for the ensuing year;
3. To vote on a proposal to ratify the appointment of KPMG Peat Marwick LLP to
serve as independent certified public accountants of CSBI for the 1997
calendar year; and
4. To transact such other business as may properly come before the meeting and
any adjournments thereof.
Management at present knows of no other business to be presented at the meeting.
If other matters properly come before the meeting, the persons named in the
proxy will have discretionary authority to vote proxies with respect to such
matters in accordance with the recommendation of the Board of Directors.
Shareholders of record at the close of business on March 15, 1997 are entitled
to notice of and to vote at the meeting and any adjournment thereof.
By Order of the Board of Directors
Century South Banks, Inc.
/s/ Susan Anderson
Susan J. Anderson, Senior Vice President
and Chief Financial Officer
Secretary-Treasurer
Gainesville, Georgia
March 24, 1997
YOU ARE URGED TO VOTE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED AS
SOON AS POSSIBLE, EVEN IF YOU DO PLAN TO ATTEND THE MEETING. IF YOU ATTEND THE
MEETING, YOU MAY, IF YOU SO DESIRE, REVOKE THE PROXY AND VOTE YOUR SHARES IN
PERSON.
<PAGE>
[LOGO CENTURYSOUTHBANKS INC.]
POST OFFICE BOX 3366
GAINESVILLE, GEORGIA 30503
PROXY STATEMENT
This Proxy Statement is furnished to the Shareholders of Century South Banks,
Inc. ("CSBI") in connection with the solicitation of proxies for the purposes
stated herein by CSBI's Board of Directors for use at the Annual Meeting of
Shareholders to be held at North Georgia College, Stewart Center for Continuing
Education, Dahlonega, Georgia 30533, on April 23, 1997 at 2:00 p.m. Dahlonega,
Georgia time, or any adjournments thereof. The approximate date of the mailing
of this Proxy Statement and the accompanying proxy to the Shareholders is March
24, 1997. The cost of this solicitation of proxies will be borne by CSBI.
The Board of Directors encourages the personal attendance of Shareholders at the
Annual Meeting, and the giving of the proxy does not preclude the right to vote
in person should the person giving the proxy so desire. The person giving the
proxy has the power to revoke the proxy at any time before the proxy is
exercised. The proxy may be revoked by attending the Annual Meeting and voting
in person, or by filing a subsequent proxy with the secretary of CSBI prior to
or at the time of the Annual Meeting.
The close of business on March 15, 1997 has been fixed as the record date for
the determination of Shareholders of CSBI entitled to vote at the Annual
Meeting. At the close of business on that date, CSBI had issued and outstanding
7,767,459 shares of common stock, $1.00 par value per share, which were held of
record by 1,955 shareholders. Each share of the common stock of CSBI is entitled
to one vote on all matters to be voted upon. The affirmative vote of a majority
of the outstanding shares of common stock shall be required as to the election
of directors. The affirmative vote of a majority of the shares represented and
entitled to vote at the Annual Meeting shall constitute the affirmative act of
the Shareholders regarding all other matters to be voted on at the Annual
Meeting as set forth in this Proxy Statement.
The following matters will be voted upon at the Annual Meeting:
ITEM NUMBER 1 - ESTABLISHING THE NUMBER OF MEMBERS OF THE BOARD OF DIRECTORS.
The By-laws of CSBI provide that the number of members of the Board of Directors
shall be not less than five nor more than 25. The Board of Directors recommends
that the number of members of the Board of Directors be established at 15. The
By-laws of CSBI allow the Board of Directors to establish the number of
directors emeritus to serve on behalf of CSBI. The Board of Directors has
established that six directors emeritus shall be elected to serve on behalf of
CSBI for the ensuing year. If a Shareholder specifies a choice on the proxy, the
shares represented by the proxy will be voted as specified. If no specification
is made, the shares represented by the proxy will be voted "FOR" approval of
Item Number 1.
THE BOARD OF DIRECTORS OF CSBI RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
APPROVAL OF ITEM NUMBER 1 IN ORDER TO ESTABLISH THE NUMBER OF MEMBERS OF THE
BOARD OF DIRECTORS AT 15.
<PAGE>
ITEM NUMBER 2 - ELECTION OF DIRECTORS
The persons listed below have been nominated for election to the Board of
Directors of CSBI. Each of the nominees is currently serving as regular
directors or directors emeritus of the Board of Directors of CSBI until the 1997
Annual Meeting of the Shareholders. The name, age, principal occupation and
employment for the past five years of each of the regular and director emeritus
nominees of CSBI are as follows:
Regular Directors
- -----------------
____________________________________________________________________________
ROGER W. BENNETT
Director since 1996
Age 48
Mr. Bennett is the owner of Bennett's Aviation Company d/b/a Georgia Mobile
Radio Sales, Lavonia, Georgia.
____________________________________________________________________________
E. H. CHAMBERS, JR.
Director since 1990
Age 66
Mr. Chambers is owner of Staircorp, LTD., Gainesville, Georgia.
____________________________________________________________________________
WILLIAM L. CHANDLER
Director since 1996
Age 74
Mr. Chandler is owner of Chandler Farm, and is President of Chandler-Stovall, a
real estate investment and management company in Danielsville, Georgia.
____________________________________________________________________________
CLARENCE B. DENARD
Director since 1995
Age 64
Mr. Denard is a realtor in Dawsonville, Georgia.
____________________________________________________________________________
JAMES A. FAULKNER
Director since 1981
Age 52
Mr. Faulkner is President and Chief Executive Officer of CSBI.
____________________________________________________________________________
THOMAS T. FOLGER, JR.
Director since 1981
Age 62
Mr. Folger is a partner in Folger Poultry Farms.
____________________________________________________________________________
2
<PAGE>
____________________________________________________________________________
SHERMAN GREEN
Director since 1981
Age 66
Mr. Green is owner of Greenbriar Shopping Center and Butler Furniture.
____________________________________________________________________________
J. RUSSELL IVIE
Director since 1981
Age 61
Mr. Ivie is Chairman of the Board of CSBI.
____________________________________________________________________________
DUDLEY K. OWENS
Director since 1990
Age 40
Mr. Owens is owner of Wash World,Inc.
____________________________________________________________________________
WILLIAM D. REEVES
Director since 1995
Age 68
Mr. Reeves is a real estate developer in Duluth, Georgia.
____________________________________________________________________________
C. J. (JIM) SISSON
Director since 1993
Age 56
Mr. Sisson is President of Sisson Log Homes, Blue Ridge, Georgia.
____________________________________________________________________________
E. PAUL STRINGER
Director since 1981
Age 65
Mr. Stringer is owner and operator of Stringer Insurance Agency.
____________________________________________________________________________
MYRON B. TURNER
Director since 1995
Age 55
Mr. Turner is the Youth Apprenticeship coordinator for the Union County Board of
Education. Previously, Mr. Turner was General Manager of Builders Way in
Blairsville, Georgia from April, 1993 to July, 1995. Mr. Turner was a Sears
Roebuck & Co. authorized merchant in Blairsville, Georgia for the previous 23
years.
______________________________________________________________________________
3
<PAGE>
______________________________________________________________________________
AL J. WIMPY
Director since 1996
Age 57
Mr. Wimpy is President of Appalachian Material Service, Inc.
______________________________________________________________________________
GEORGE A. WINN
Director since 1995
Age 56
Mr. Winn is Division Manager of Gold Kist Inc. Northwest Georgia Poultry
Division in Ellijay, Georgia.
______________________________________________________________________________
Directors Emeritus
- ------------------
J. E. Owens
Director Emeritus since 1990
Age 77
Mr. Owens is the owner of Owens Farms.
_____________________________________________________________________________
James H. Sanders, Sr.
Director Emeritus since 1990
Age 77
Mr. Sanders is a retired Colonel from the U. S. Army.
______________________________________________________________________________
Forrest J. Sisk, Sr.
Director Emeritus since 1991
Age 76
Mr. Sisk is retired.
_____________________________________________________________________________
Glen W. Marshall
Director Emeritus since 1995
Age 72
Mr. Marshall is retired.
_____________________________________________________________________________
Rodney B. McCombs
Director Emeritus since 1995
Age 63
Mr. McCombs is retired.
_____________________________________________________________________________
J. Marvin Anderson
Director Emeritus since 1996
Age 71
Mr. Anderson is retired and is part owner of Dahlonega Feed and Poultry.
_____________________________________________________________________________
4
<PAGE>
All nominees for director have been engaged in their respective principal
occupations and associated with their respective employers for the past five
years with the exception of Myron B. Turner. The business locations for all
nominees for director are in Dahlonega, Georgia, unless otherwise noted above.
J. E. Owens, a director emeritus who has been nominated for re-election, is the
father of Dudley K. Owens, currently a regular director who has also been
nominated for re-election. There are no family relationships among the nominees
for regular or directors emeritus or between any nominee and any executive
officer of CSBI other than as described above.
If a Shareholder specifies a choice on the proxy, the shares represented by the
proxy will be voted for the nominees as specified. If no specification is made
and the power to vote the shares is not withheld, the shares represented by the
proxy will be voted "FOR" each nominee for regular and director emeritus named
on the proxy.
THE BOARD OF DIRECTORS OF CSBI RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
APPROVAL OF ITEM NUMBER 2 IN ORDER TO ELECT THE SLATE OF 15 DIRECTORS AND THE
SIX DIRECTORS EMERITUS SET FORTH ABOVE.
Board Committees and Meetings
- -----------------------------
The Board of Directors of CSBI held 12 meetings during the year ended December
31, 1996. All of the directors attended at least 75% of the aggregate of such
meetings.
Certain information regarding the functions of the various committees of the
Board of Directors of CSBI and their present membership is presented below.
The Audit Committee annually reviews and recommends to the Board of Directors
the firm to be engaged as independent certified public accountants of CSBI
for the next calendar year, reviews the plan and results of the audit
engagement with the independent certified public accountants, inquires as to
the adequacy of CSBI's internal control structure, and considers each
professional service provided by the independent certified public
accountants, and whether the providing of such service impairs the
independence of the accountants. The members of the Audit Committee are:
Myron B. Turner, Dudley K. Owens, Al J. Wimpy and Clarence B. Denard. Cecil
Holcomb, Internal Auditor, serves as ex-officio member of the Audit
Committee. The Audit Committee met four times during 1996.
The Nominating Committee nominates individuals to serve as members of the
Board of Directors. The members of the Nominating Committee are: J. Marvin
Anderson, Thomas T. Folger, Jr. and James A. Faulkner. The Nominating
Committee met one time during 1996.
The Personnel and Compensation Committee ("Compensation Committee")
periodically reviews the compensation and other benefits provided to
personnel of CSBI and advises the Board of Directors with respect to such
compensation. The members of the Compensation Committee are: James A.
Faulkner, Thomas T. Folger, Jr., J. Russell Ivie, E. H. Chambers, Jr., George
A. Winn and E. Paul Stringer. The Compensation Committee met three times
during 1996.
5
<PAGE>
Director Compensation
- ---------------------
Officers of CSBI who are also regular directors do not receive any fee or
remuneration for services as members of the Board of Directors. In 1996, non-
management regular directors of CSBI received a fee of $500.00 per month and $75
per committee meeting, with the exception that members of the loan committee
received $100 per committee meeting and members of the executive committee
received $300 per committee meeting attended for their services. Directors
Emeritus do not receive any fee or revenue from CSBI and are not required to
attend directors' meetings.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of CSBI's outstanding
common stock by (i) the current director nominees and executive officers named
herein, and (ii) all executive officers and the current directors as a group,
as of March 1, 1997. Unless otherwise indicated, the listed persons are the
owners of record and have sole voting and investment powers over their shares.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Amount and Nature Percent
Name of Beneficial Ownership of Class*
- --------------------------------------------------------------------------------
<S> <C> <C>
Roger W. Bennett 173,486/1/ 2.2
E. H. Chambers, Jr. 18,726/2/ *
William L. Chandler 236,992/3/ 3.1
Clarence B. Denard 27,992/4/ *
Gary L. Evans 12,289/5/ *
James A. Faulkner 98,714/6/ 1.3
Thomas T. Folger, Jr. 174,633/7/ 2.2
Sherman Green 57,540 *
J. Russell Ivie 295,865/8/ 3.8
Dudley K. Owens 51,928/9/ *
William D. Reeves 57,545/10/ *
C. J. (Jim) Sisson 2,025/11/ *
E. Paul Stringer 228,882/12/ 2.9
Myron B. Turner 1,747/13/ *
Al J. Wimpy 34,000/14/ *
George A. Winn 3,818/15/ *
All Executive Officers and 1,506,676/16/ 19.4
Current Directors as a Group (18 persons)
</TABLE>
_______________________________
* less than 1% not applicable
6
<PAGE>
/1/ Includes 35,166 shares owned individually, 41,649 shares owned as custodian
for his children and 96,671 shares owned by his father, sister and niece
for which he has power of attorney.
/2/ Includes 8,822 shares owned individually, and 9,904 shares held in a self-
directed retirement account.
/3/ Includes 112,000 shares owned individually and 124,992 shares owned by
Chandler-Stovall Corp. Does not include 5,600 shares owned by his wife
individually to which he disclaims beneficial ownership.
/4/ Includes 9,243 shares owned individually and 18,749 shares held in street
name in a retirement account owned individually. Does not include 4,239
shares held in street name owned by his wife to which he disclaims
beneficial ownership.
/5/ Includes 4,060 shares owned individually, 7,229 shares held in a
401(k)/ESOP plan, and 1,000 shares under the CSBI Incentive Stock Option
Plan to which he disclaims beneficial ownership.
/6/ Includes 73,087 shares owned individually, 56 shares owned jointly with his
wife, 2,000 shares held in street name owned jointly with his wife, 15,571
shares held in a 401(k)/ESOP plan, 5,000 shares of restricted stock options
and 3,000 shares under the CSBI Incentive Stock Option Plan both to which
he disclaims beneficial ownership.
/7/ Includes 167,823 shares owned individually, 5,234 shares held in a self-
directed retirement account owned individually and 1,576 shares held in
street name in a retirement account owned individually. Does not include
19,239 shares owned individually by his wife, and 4,605 shares owned by his
wife jointly with their children.
/8/ Includes 143,814 shares owned individually, 14,434 shares owned jointly
with his wife, 16,506 shares held in street name, 19,277 shares for which
he serves as trustee under the will of his father, 14,429 shares held in
street name owned individually in a retirement account, 30,357 shares held
in street name owned by the Ivie Family Limited Partnership, 43,809 shares
owned by the Ivie Family Limited Partnership, 13,122 shares held in a
401(k)/ESOP plan and 117 shares owned as custodian for his son. Does not
include 117 shares owned by his wife to which he disclaims beneficial
ownership.
/9/ Includes 45,084 shares owned individually and 6,844 shares owned as
custodian for his children.
/10/ Includes 57,545 shares owned individually. Does not include 7,018 shares
owned by his wife to which he disclaims beneficial ownership.
/11/ Includes 2,025 shares owned individually. Does not include 2,502 shares
owned by his daughter to which he disclaims beneficial ownership.
/12/ Includes 200,262 shares owned individually, 5,946 shares owned jointly with
his wife and children, 750 shares owned jointly with his wife, 18,924
shares owned by his insurance agency for which he has exclusive voting
rights, and 3,000 shares held in a retirement account owned individually.
Does not include 43,164 shares owned individually by his wife or 1,904
shares held in street name in a retirement account owned individually by
his wife to which he disclaims beneficial ownership.
7
<PAGE>
/13/ Includes 1,747 shares owned individually. Does not include 1,164 shares
owned by his wife to which he disclaims beneficial ownership.
/14/ Includes 34,000 shares owned individually. Does not include 34,965 shares
owned by his wife to which he disclaims beneficial ownership.
/15/ Includes 2,043 shares owned jointly with his wife and 1,775 shares held in
street name owned jointly with his wife.
/16/ Includes 2,000 shares available to two officers under the CSBI Incentive
Stock Option Plan in addition to the options disclosed in footnotes 3 and 4
above to which beneficial ownership is disclaimed.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Under rules established by the Securities and Exchange Commission, CSBI is
required to provide certain data and information in regard to the compensation
and benefits provided to CSBI's chief executive officer and to one additional
executive officer. The disclosure requirements for the named executive officers
include the use of tables and a report explaining the rationale and
consideration that led to fundamental executive compensation decisions affecting
these individuals.
The following table shows all cash and noncash compensation paid or accrued over
the past three years for the chief executive officer and the named executive
officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
-------------
Annual Compensation Awards
-------------------------- -------------
Securities
Underlying All Other
Name and Principal Salary Bonus Options Compensation
Position Year ($) ($) (#) ($)/(1)/
-------------------- ---- ------- ------ ------------ -----------
<S> <C> <C> <C> <C> <C>
James A. Faulkner, 1996 210,000 400 -0- 4,835
President and CEO
1995 195,000 400 -0- 4,741
1994 150,000 500 5,500 4,741
Gary L. Evans, Senior 1996 113,250 400 -0- 3,372
Vice President, CCO and
Assistant Secretary
1995 105,000 15,350 -0- 3,191
1994 97,000 21,150 1,000 3,015
</TABLE>
/(1)/ Includes deferred compensation of $3,600 for Mr. Faulkner and $2,250 for
Mr. Evans and insurance premiums paid by CSBI in the amount of $1,235 for Mr.
Faulkner in 1996 and $1,141 in 1995 and 1994 and for Mr. Evans $1,122 in 1996,
$941 in 1995 and $765 in 1994.
8
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table shows stock option exercises by the named executive officers
during 1996, including the aggregate value of gains on the date of exercise. In
addition, this table includes the number of shares covered by both exercisable
and non-exercisable options as of December 31, 1996. Also reported is the
positive spread between the exercise price of any such existing options and the
year end price of the common stock of CSBI.
<TABLE>
<CAPTION>
Securities Underlying Unexercised Value of Unexercised In-the-Money
Shares Options at FY-end (#) Options at FY-end($)
Acquired on Value --------------------- --------------------
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
James A. Faulkner -0- -0- 5,000/0 $ 65,000 /$0
-0- -0- 3,000/0 $ 18,000 /$0
Gary L. Evans -0- -0- 1,000/0 $ 6,000 /$0
</TABLE>
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
9
<PAGE>
PERFORMANCE GRAPH
The following is a performance graph comparing CSBI's cumulative total
shareholder return with the total return of (i) a performance indicator of broad
equity market index that includes companies whose securities are traded on the
Nasdaq Stock Market. CSBI has selected the Nasdaq Stock Market (US Companies)
as the broad equity market index. This index includes all domestic common
shares traded on the NASDAQ National Market Value Index; and, (ii) a peer group
comparison. The peer group comparison is the Media General Industry Group which
was comprised of 96 South Atlantic Banks.
[PERFORMANCE GRAPH APPEARS HERE]
10
<PAGE>
Board Compensation Committee Report
- -----------------------------------
The Compensation Committee approves compensation objectives and policy for all
employees and sets compensation for CSBI's executive officers, including the
individuals named in the Summary Compensation Table. The Compensation Committee
reviewed information relative to CSBI's performance compared to a peer group
consisting of 26 banking organizations in the State of Georgia, Florida, North
Carolina and South Carolina ranging in size from $500 million in assets to $1
billion in assets and from $500 to 900 million in assets. This information
included comparisons by asset size, return on assets, and CEO's compensation.
In addition the Compensation Committee reviewed salary survey data prepared by
the Georgia Bankers Association, as well as a survey of CSBI's stock performance
compared to other companies of similar size. In addition, the committee reviewed
five proxy compensation tables from banking organizations of similar size.
CSBI's performance as measured through earnings-per-share growth and return on
assets performance was significantly improved in 1996 over 1995. It is the
consensus of the Compensation Committee that salaries of the executive officers
of the Company, including Mr. Faulkner's salary, be comparable to the median
salaries of the peer group. In 1995, the Compensation Committee with the
approval of the shareholders approved an Incentive Compensation Plan for the
executive officers and certain senior officers of the Company and its
affiliates. The plan was based on performance ratios established by the
Compensation Committee in consultation with KPMG Peat Marwick. Actual salaries
were awarded based upon individual performance as well as the overall
performance of the Company. Messrs. Faulkner and Ivie abstained from voting on
all matters regarding their compensation.
E. H. Chambers, Jr. J. Russell Ivie
James A. Faulkner E. Paul Stringer
Thomas T. Folger, Jr. George A. Winn
Incentive Stock Option Plan
- ---------------------------
CSBI has adopted an Incentive Stock Option Plan (the "ISO Plan") pursuant to
which an aggregate of 50,000 shares of Common Stock could be granted. The ISO
Plan authorizes CSBI to grant incentive stock options to eligible employees as
determined by the ISO Plan. The ISO Plan is administered by the Compensation
Committee, which determines those eligible employees to whom options will be
granted and the number of options granted to each eligible employee. The
Compensation Committee also prescribes the terms and conditions of each option
granted, including the purchase price per share which is subject to each option.
During 1996, no options were granted under the ISO Plan.
Employment and Severance Agreements
- -----------------------------------
Messrs. Faulkner and Evans have entered into employment agreements with CSBI.
These agreements, which are substantially similar, are for one year terms ending
on November 1, 1997 and provide compensation to the officers in the form of
annual base salaries in the amount of $210,000 for Mr. Faulkner and $113,250 for
Mr. Evans in 1996. These agreements shall automatically renew for one year
terms without further action by the parties, commencing on the one year
anniversary of the agreements and each anniversary thereafter unless written
notice that these agreements shall not be so extended is provided by either
party to the other party at least 90 days prior to any said anniversary date.
11
<PAGE>
The employment agreements also provide that in the event of termination of
employment by CSBI other than for cause the officer will receive severance
benefits equal to the remaining term under the one year contract. In the event
of the termination of employment by the officer for reasons such as material
change by CSBI in the officers' duties and responsibilities or as a result of
merger or consolidation of CSBI, or the death or disability of the officer, the
officer shall receive severance benefits from CSBI. These severance benefits
are equal to two and eleven twelfths (2-11/12) multiplied by the officers annual
compensation from CSBI, including salary, bonuses, all perquisites, and all
other forms of compensation paid to officer for his benefit or the benefit of
his family for the fiscal year ended immediately preceding the date of change of
control.
Defined Contribution Plan
- -------------------------
The Board of Directors of CSBI converted its 401(k) retirement plan into the
employee stock ownership plan of CSBI ("ESOP") effective as of January 1, 1989.
All employees of CSBI and its subsidiaries who meet the minimum age, minimum
hours worked and related requirements may participate in the ESOP. The amount
set aside for the ESOP each year is based on the number of participants in the
ESOP and the amount of contributions by the participants through salary
deductions. CSBI's contribution to the ESOP for the year ended December 31,
1996 was $318,000. Contributions made by CSBI during such year were $5,250 for
Mr. Faulkner and $4,222 for Mr. Evans. Messrs. Faulkner and Evans are fully
vested pursuant to the terms of the ESOP. Messrs. Faulkner and Ivie did not
serve as administrator of either the Incentive Stock Option Plan or the
development of the Incentive Bonus Plan.
Deferred Compensation Plan
- --------------------------
CSBI has entered into salary continuation agreements with James A. Faulkner and
Gary L. Evans. These agreements provide for CSBI to pay death and disability
benefits to them or their beneficiaries, subject to certain vesting requirements
and other limitations, and are funded by life insurance policies. No benefits
were paid under these agreements in 1996.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
The Compensation Committee is comprised of: Thomas T. Folger, Jr., E. H.
Chambers, Jr., J. Russell Ivie, James A. Faulkner, E. Paul Stringer and George
A. Winn.
Messrs. Ivie and Faulkner are officers and employees of CSBI. E. Paul Stringer,
director, is the owner of Stringer Insurance Agency in Dahlonega, Georgia, which
was paid insurance premiums during 1996 by CSBI and its subsidiaries in an
amount equal to $143,754 for insurance services.
Transactions with Management
- ----------------------------
In the ordinary course of banking business, CSBI and its subsidiaries have had
and anticipate that they will continue to have transactions with various
directors, officers, principal shareholders of CSBI, and their associates. All
loans and commitments to extend loans included in such transactions were made
substantially on the same terms, including interest rates and collateral, as
12
<PAGE>
those prevailing from time to time for comparable transactions with other
unaffiliated persons. In the opinion of the Board of Directors such loans and
commitments do not involve more than a normal risk of collectibility or present
any other unfavorable features. In the Board of Directors' opinion, the
aggregate amount of extensions of credit outstanding at any time from January 1,
1996 to date of a director, director nominee, executive officer or principal
security holder and their associates did not exceed the maximum permitted under
applicable banking regulations.
William D. Reeves, director, is a party to a lease agreement with a subsidiary
of CSBI for a term ending in June, 1999 with a five year renewal option, at a
rate which the parties believe to be fair market value. Mr. Reeves received
$162,837 from lease payments in 1996.
ITEM NUMBER 3 - RATIFICATION OF ACCOUNTANTS
The Board of Directors has appointed the firm of KPMG Peat Marwick LLP to serve
as independent certified public accountants of CSBI for the calendar year ending
December 31, 1997, subject to ratification by the Shareholders of CSBI. KPMG
Peat Marwick LLP has served as independent certified public accountants of CSBI
since 1983.
CSBI expects a representative of KPMG Peat Marwick LLP to attend the Annual
Meeting of the Shareholders and expects that the representative will have the
opportunity to make a statement if he desires to do so. It is further
anticipated that such representative will be available to respond to appropriate
questions.
If a Shareholder specifies a choice on the proxy, the shares represented by the
proxy will be voted as specified. If no specification is made, the shares
represented by the proxy will be voted "FOR" approval of Item Number 3.
THE BOARD OF DIRECTORS OF CSBI RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
APPROVAL OF ITEM NUMBER 3 IN ORDER TO RATIFY THE APPOINTMENT OF KPMG PEAT
MARWICK LLP TO SERVE AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE YEAR
ENDING DECEMBER 31, 1997.
FILINGS UNDER SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires CSBI's
officers and directors, and persons who own more than 10% of the common stock of
CSBI, to file reports of ownership and changes in ownership of such securities
with the Securities and Exchange Commission and the Nasdaq National Market
System.
Officers, directors and greater than 10% beneficial owners are required by
applicable regulations to furnish CSBI with copies of all Section 16(a) forms
they file. CSBI is not aware of any beneficial owner of more than 10% of its
common stock.
Based solely upon a review of the copies of the forms furnished to CSBI, CSBI
believes that during the 1996 fiscal year all filings applicable to its
13
<PAGE>
officers and directors were complied with except that Roger W. Bennett failed to
timely file a Form 3 and William D. Reeves failed to timely file a Form 4.
SHAREHOLDER PROPOSALS
Any proposal that a Shareholder intends to present at the 1998 Annual Meeting
must be received at CSBI's principal executive offices (please address to the
attention of Susan J. Anderson, Corporate Secretary, Century South Banks, Inc.,
P. O. Box 3366, Gainesville, Georgia 30503), not later than November 21, 1997.
OTHER BUSINESS
Action will be taken on whatever other business may properly come before the
meeting. The Board of Directors is not aware of any other business matters to
be considered at the Annual Meeting. If other matters properly come before the
meeting, the persons named in the proxy will have discretionary authority to
vote proxies with respect to such matters and in accordance with the
recommendations of the Board of Directors.
No director has informed CSBI that he intends to oppose any recommended action
as specified in the Proxy Statement. All directors have an interest in the vote
regarding the election of directors to office.
The Board of Directors urges you to sign and return the enclosed proxy as
promptly as possible, whether or not you plan to attend the meeting in person.
--------------
If you do attend, you may then withdraw your proxy.
14
<PAGE>
[LOGO OF CENTURYSOUTHBANK APPEARS HERE]
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON APRIL 23, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder(s) of Century South Banks, Inc. ("CSBI")
appoint(s) Susan J. Anderson, J. Marvin Anderson, and James H. Sanders, Sr.,
and each of them, as proxies with full power of substitution, acting by
majority or by any of them if only one is present and acting, to vote all
shares of common stock of CSBI which the undersigned would be entitled to vote
if personally present at the Annual Meeting of Shareholders to be held on April
23, 1997 at North Georgia College, Stewart Center for Continuing Education,
Dahlonega, Georgia 30533, at 2:00 p.m., Dahlonega, Georgia time, and at any
adjournments thereof, upon the proposals described in the accompanying Notice
of the Annual Meeting and the Proxy Statement relating to the Annual Meeting,
receipt of which is hereby acknowledged.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS YOU VOTE "FOR" THE FOLLOWING
PROPOSALS:
1. Proposal to establish the number of members of the Board of Directors at
15.
[_] FOR [_] AGAINST [_] ABSTAIN
2. Election of Directors:
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all the nominees
contrary below) [_] listed below [_]
ROGER W. BENNETT; E.H. CHAMBERS, JR.; WILLIAM L. CHANDLER; CLARENCE B. DENARD;
JAMES A. FAULKNER; THOMAS T. FOLGER, JR.; SHERMAN GREEN; J. RUSSELL IVIE;
DUDLEY K. OWENS; WILLIAM D. REEVES; C.J. (JIM) SISSON; E. PAUL STRINGER; MYRON
B. TURNER, AL J. WIMPY AND GEORGE A. WINN. DIRECTORS EMERITUS: J.E. OWENS;
JAMES H. SANDERS, SR.; FORREST J. SISK, SR.; GLEN W. MARSHALL; RODNEY B.
MCCOMBS AND J. MARVIN ANDERSON.
Instructions: To withhold authority to vote for any individual nominee
write that nominee's name on the space provided below:
- --------------------------------------------------------------------------------
<PAGE>
3. Proposal to ratify the appointment of KPMG Peat Marwick LLP as independent
certified public accountants of CSBI for the year ending December 31, 1997.
[_] FOR [_] AGAINST [_] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
PROXIES MUST BE RECEIVED BY CSBI PRIOR TO THE COMMENCEMENT OF THE ANNUAL
MEETING IN ORDER TO BE VOTED. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED
IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE PROPOSALS SET OUT IN 1 AND 3 ABOVE AND FOR EACH NOMINEE LISTED IN
2 ABOVE. THE PROXY MAY BE REVOKED BY ATTENDING THE ANNUAL MEETING AND VOTING IN
PERSON, OR BY FILING A SUBSEQUENT PROXY WITH THE SECRETARY OF CSBI PRIOR TO OR
AT THE TIME OF THE ANNUAL MEETING.
----------------------------------
Signature of Shareholder(s)
----------------------------------
Signature of Shareholder(s)
----------------------------------
(Please be sure to date)
IF THE STOCK IS HELD BY JOINT TENANTS, OR IN THE NAME OF MORE THAN ONE PERSON,
ALL HOLDERS SHOULD SIGN. Signatures should correspond exactly with the name(s)
appearing on the label above. If a corporation, please sign in full corporate
name by president or other authorized officer. If a partnership, please sign in
the partnership's name by authorized person(s). If signing as attorney, execu-
tor, trustee, administrator, guardian or custodian, please indicate the capac-
ity in which you are acting. PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN
IT IN THE ENCLOSED POSTAGE PAID ENVELOPE.
