OLD POINT FINANCIAL CORPORATION
1 West Mellen Street
Hampton, Virginia 23663
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 22, 1997
TO OUR STOCKHOLDERS:
The Annual Meeting of Stockholders of Old Point Financial
Corporation will be held at The Mariners' Museum, 100 Museum Drive,
Newport News, Virginia, on Tuesday, April 22, 1997 at 6:00 p.m. for
the following purposes:
1. To elect 11 directors to serve for the ensuing year, or until
their successors have been elected and qualified;
2. To ratify the appointment of Eggleston Smith P.C., Certified
Public Accountants, as independent accountants and auditors
for 1997;
3. To ratify and approve the adoption of the 1996 Employee Stock
Purchase Plan; and
4. To transact such other business as may properly come before
the meeting.
Stockholders of record at the close of business on March 11,
1997 will be entitled to notice of and to vote at the Annual Meeting
and any adjournments thereof.
By Order of the Board of Directors
/s/ W. Rodney Rosser
Senior Vice President & Secretary to the Board
March 21, 1997
Please sign, date and mail the enclosed proxy card promptly.
No postage is required if the return envelope is used and mailed in
the United States. If you attend the meeting, you may, if you
desire, revoke your proxy and vote in person.
<PAGE>
March 21, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Old Point Financial Corporation. The meeting will be
held on Tuesday, April 22, 1997 at 6:00 p.m. at The Mariners'
Museum, 100 Museum Drive, Newport News, Virginia.
You will be asked to vote on the election of directors,
ratification of independent certified public accountants, and
ratification and approval of the 1996 Employee Stock Purchase Plan.
During the meeting, we will report to you on the condition and
performance of the Company and the Bank. You also will have an
opportunity to question management on matters that affect the
interest of all stockholders.
We hope to see you on April 22, 1997. Whether you plan to
attend or not, please complete, sign, date and return the enclosed
proxy card as soon as possible in the postage-paid envelope
provided. Your vote is important. We appreciate your continued
loyalty and support.
Enclosed is an invitation to the reception immediately
following the meeting with detailed information.
Cordially,
/s/ Robert F. Shuford
Chairman of the Board and President
<PAGE>
OLD POINT FINANCIAL CORPORATION
1 West Mellen Street
Hampton, Virginia 23663
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
April 22, 1997
GENERAL
The enclosed proxy is solicited by the Board of Directors of
Old Point Financial Corporation (the "Company") for the Annual
Meeting of Stockholders (the "Annual Meeting") of the Company to be
held Tuesday, April 22, 1997, at the time and place and for the
purposes set forth in the accompanying Notice of the Annual Meeting.
Stockholders may revoke proxies at any time prior to their exercise
by written notice to the Company, by submitting a proxy bearing a
later date, or by attending the Annual Meeting and requesting to
vote in person. The approximate mailing date of this Proxy
Statement and accompanying Proxy is March 21, 1997.
Voting Rights and Solicitation
Only those stockholders of record at the close of business on
March 11, 1997 are entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof. The number of shares of common
stock of the Company outstanding and entitled to vote as of the
record date was 1,275,262. The Company has no other class of stock
outstanding. A majority of the shares entitled to vote, represented
in person or by proxy, will constitute a quorum for the transaction
of business.
Each share of Company common stock entitles the record holder
thereof to one vote upon each matter to be voted upon at the Annual
Meeting, except that in the election of directors cumulative voting
entitles a stockholder to give one nominee as many votes as is equal
to the number of directors to be elected, multiplied by the number
of shares owned by such stockholder or to distribute his or her
votes on the same principle between two or more nominees as he or
she sees fit. The Board of Directors will instruct the proxies to
use cumulative voting, if necessary, to elect all or as many of the
nominees as possible.
The cost of solicitation of proxies will be borne by the
Company. Solicitation is being made by mail, and if necessary may be
made in person or by telephone, telegram, or special letter by
officers and regular employees of the Company or its subsidiary,
acting without compensation other than regular compensation.
Principal Shareholders
Mr. Robert F. Shuford and Mrs. Gertrude S. Dixon, both of whom
are directors of the Company and its wholly-owned subsidiary bank,
The Old Point National Bank of Phoebus (the "Bank"), are the only
individuals who beneficially own 5% or more of the Company's common
stock. Their beneficial ownership of the Company common stock as of
March 11, 1997 is shown in the table on page 3. The address of Mr.
Shuford is the same as the Company's principal offices, and the
address of Mrs. Dixon is P.O. Box 3152, Hampton, Virginia 23663. In
addition, the Bank holds as trustee of various trust accounts a
total of 215,569 shares (or approximately 16.9%) of Company common
stock. The Trust Department of the Bank possesses sole voting and
investment power with respect to 152,701 of these shares, but as to
which, as a matter of state law, it must refrain from voting unless
a co-fiduciary is appointed for the sole purpose of voting such
shares.
As of March 11, 1997, the persons nominated as directors of
the Company, and the executive officers of the Company and the Bank,
beneficially owned as a group 288,836 shares (or approximately
22.5%) of Company common stock outstanding (including shares for
which they hold presently exercisable stock options).
RECENT DEVELOPMENTS
Mr. John G. Sebrell, who served as President and CEO of the
Bank and as Executive Vice President of the Holding Company, since
May 1, 1993, resigned from his position on January 14, 1997, and
decided not to stand for re-election to the Board of Directors of
the Holding Company and the Bank. Mr. Robert F. Shuford has been
appointed as President and CEO of the Bank by the Board of Directors
of the Bank. Mr. Sebrell served the Company ably since his
employment on August 3, 1992, and contributed to the company's
success. The Board wishes him well in the future.
ELECTION OF DIRECTORS
The eleven persons named below, all of whom currently serve as
directors of the Company will be nominated to serve as directors
until the 1998 Annual Meeting, or until their successors have been
duly elected and have qualified.
<TABLE>
<CAPTION>
Amount and Nature of
Principal Beneficial Ownership
Director Occupation For As of March 11, 1997
Name and (Age) Since <F1> Past Five Years (Percent of Class) <F2>
<S> <C> <C> <C>
Dr. Richard F. Clark (64) 1981 Pathologist 30,589 <F3>
Sentara Hampton General Hospital 2.4%
Gertrude S. Dixon (83) 1981 Real Estate Management 96,062 <F3>
and Ownership 7.5%
Russell Smith Evans Jr. (54) 1993 Assistant Treasurer and 725* <F3>
Corporate Fleet Manager
Ferguson Enterprises
G. Royden Goodson, III (41) 1994 President 1,950*
Warwick Plumbing & Heating Corp.
Dr. Arthur D. Greene (52) 1994 Surgeon - Partner 1,382*
Tidewater Orthopaedic Associates
Stephen D. Harris (55) 1988 Attorney-at-Law - Partner 4,200*
Geddy, Harris & Geddy
John Cabot Ishon (50) 1989 President 6,290* <F3>
Hampton Stationery
Eugene M. Jordan (73) 1964 Attorney-at-Law 13,890 <F3>
Cumming, Hatchett & Jordan, P.C. 1.1%
John B. Morgan, II (50) 1994 President 1,200* <F3>
Morgan-Marrow Insurance
Dr. H. Robert Schappert (58) 1996 Veterinarian - Owner 44,870 <F3>
Beechmont Veterinary Hospital 3.5%
Robert F. Shuford (59) 1965 Chairman of the Board, President & CEO 71,858 <F3> <F4>
Old Point Financial Corporation 5.6%
Chairman of the Board, President & CEO
Old Point National Bank
*Represents less than 1.0% of the total outstanding shares.
<FN>
<F1>
Refers to the year in which the individual first became
a director of the Bank. Dr. Richard F. Clark, Gertrude S. Dixon,
Eugene M. Jordan, and Robert F. Shuford became directors of the
Company upon consummation of the Bank's reorganization on October 1,
1984. Russell Smith Evans, Jr. was elected April 27, 1993, G. Royden
Goodson, III was elected on August 9, 1994, Dr. Arthur D. Greene was
elected on August 9, 1994, John B. Morgan, II was elected on October
11, 1994, Stephen D. Harris was elected October 11, 1988, John Cabot
Ishon was elected March 27, 1990, and, Dr. H. Robert Schappert was
elected February 13, 1996. All present directors of the Company are
directors of the Bank.
<F2>
For purposes of this table, beneficial ownership has been
determined in accordance with the provisions of Rule 13d-3 of the
Securities Exchange Act of 1934 under which, in general, a person is
deemed to be the beneficial owner of a security if he or she has or
shares the power to vote or direct the voting of the security or the
power to dispose of or direct the disposition of the security, or if
he or she has the right to acquire beneficial ownership of the
security within sixty days.
<F3>
Includes shares held (i) by their close relatives or held
jointly with their spouses, (ii) as custodian or trustee for the
benefit of their children or others, or (iii) as attorney-in-fact
subject to a general power of attorney - Dr. Clark, 54 shares; Mrs.
Dixon, 48,740 shares; Mr. Evans, 325 shares; Mr. Ishon, 1,640
shares; Mr. Jordan, 8,485 shares; Mr. Morgan, 1,000 shares; Dr.
Schappert, 40,685 shares; and Mr. Shuford, 37,795 shares.
<F4>
Includes shares that may be acquired within 60 days
pursuant to the exercise of stock options granted under the Old
Point Stock Option Plans - Mr. Shuford 5,500.
</FN>
</TABLE>
There are two family relationships among the directors and
executive officers. Mr. Jordan is the father-in-law of Mr. Ishon.
Mr. Shuford and Dr. Schappert are married to sisters. None of the
directors serves as a director of any other company with a class of
securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934.
Nominations may be made at the Annual Meeting in accordance
with the procedures set forth in the by-laws, which are as follows:
Nominations, other than those made by or on behalf of the existing
management of the Company, shall be made in writing and shall be
delivered or mailed to the President, not less than 14 days nor more
than 50 days prior to any meeting of holders called for the election
of Directors, provided, however, that if less than 21 days' notice
of the meeting is given to holders, such nomination shall be mailed
or delivered to the President of the Company not later than the
close of business on the seventh day following the day on which the
notice of meeting was mailed. Such notification shall contain the
following information to the extent known to the notifying holders;
(a) the name and resident address of the stockholder who intends to
make the nomination and of the person or persons to be nominated;
(b) a representation that the stockholder is a holder of record of
stock of the Company entitled to vote at such meeting and intends to
appear in person or by proxy at the Meeting to nominate the person
or persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each
nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to be
made of the stockholder; (d) the principal occupation of each
nominee; (e) the total number of shares that to the knowledge of the
notifying stockholder will be voted for each of the nominees; and
(f) the consent of each nominee to serve as a director of the
Company if so elected. Nominations not made in accordance herewith
may, in his discretion, be disregarded by the Chairman of the
meeting and upon his instructions, the vote tellers may disregard
all votes cast for each such nominee. 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 of the Company may
designate.
Board Committees and Attendance
During 1996, there were thirteen meetings of the Company's
Board of Directors. Each director attended at least 75% of all
meetings of the Board and committees on which he or she served. The
Company's Board has standing Executive and Audit Committees.
The Company's Executive Committee was comprised of Messrs.
Shuford, Sebrell, Jordan, Harris, Dr. Clark and Mrs. Dixon. It
serves in an advisory capacity, reviewing matters and making
recommendations to the Board of Directors. It met five times in
1996.
The Bank's Audit Committee is comprised of Messrs. Jordan,
Ishon, Greene, Morgan and Schappert. The Audit Committee reviews on
a regular basis the work of the internal audit department. It also
reviews and approves the scope and detail of the continuous audit
program which is conducted by the internal audit staff to protect
against improper and unsound practices and to furnish adequate
protection to all assets and records. Subject to the approval of the
Board of Directors, it engages a firm of certified public
accountants to conduct such audit work as is necessary and receives
written reports, supplemented by such oral reports as it deems
necessary, from the audit firm. During 1996, the Audit Committee
held four meetings. The members of the Bank's Audit Committee also
serve as the Audit Committee for the Company.
The Board has no separate nominating committee. The Executive
Committee reviews any recommendations obtained and gives their
recommendations to the Board. The entire Board reviews, on an as
needed basis, the qualifications of candidates for membership to the
Board. Following appropriate review, the Board ascertains the
willingness of selected individuals to serve and extends invitations
to serve as a Board member.
Report on Executive Compensation
Compensation for executive officers is administered by the
Compensation Committee (the "Committee"). The Committee is
comprised of three non-employee directors, Messrs. Goodson
(Chairman), Clark and Evans, and one ex-officio member, Mark A.
Dulaney, First Vice President of Human Resources. All decisions of
the Committee are recommended to the entire Board of Directors,
which makes the final decision.
In an environment characterized by change, regulatory
oversight and increased competition, total executive compensation is
designed to attract and retain qualified personnel by providing
competitive levels of compensation as compared to similarly sized
financial institutions. Executive compensation consists of the
several elements specified in the Summary Compensation Table on
pages 8 & 9; namely, base salary and annual and long-term incentive
compensation.
In making its recommendation to the Board, the Committee
obtains from market and economic research companies information
pertaining to salary levels at other comparable financial
institutions. Annual compensation is determined by evaluating
several factors. The primary factor considered in evaluating the
level of executive compensation is the progress the Company made
during the year in achieving performance goals. The performance
goals evaluated include, but are not limited to, return on average
assets, return on average equity, net income, asset quality, and
deposit and loan growth. Secondary factors considered by the
Committee include comparing the Company's performance with other
local institutions and comparable executive compensation packages.
Lastly, the Committee gives some consideration to the expected
future contributions of the executive, general economic conditions,
the executive's length of service and standing within the local
banking communities, and other factors. Bonuses are awarded based
on evaluation of the foregoing factors relating to the Company's
financial performance in the preceding year. All decisions
regarding compensation, however, are subjective in nature, and no
specific formulas are used to calculate an executive's compensation.
In light of the overall financial performance of the Company
and the Bank in fiscal year 1996, the Committee recommended to the
Board a bonus be granted to Mr. Shuford in the amount of $10,000
with no change in his base pay.
The foregoing report was furnished by the Committee, and
approved by the directors of the Company.
G. Royden Goodson, III
Dr. Richard F. Clark
Russell S. Evans, Jr.
Directors' Compensation
Directors of the Company and Bank receive $300 for each
meeting of the Company and Bank Boards of Directors they attend.
The Directors of the Bank receive $150 for each committee meeting
they attend. The Directors of the Company receive $150 for
attending the Strategic Planning Committee meetings, but are not
remunerated for Executive Committee meetings. In addition, non-
officer directors of the Bank are paid a retainer fee of $3,000
annually. Company directors have been appointed as directors of the
Bank, but there is no assurance that this practice will continue.
Directors who are employees of the Company and Bank are
compensated for attendance at Bank Board meetings but do not receive
any fees for attendance at committee meetings.
Indebtedness and Other Transactions
Some of the Company directors, executive officers, and members
of their immediate families, and corporations, partnerships and
other entities of which such persons are officers, directors,
partners, trustees, executors or beneficiaries, are customers of the
Bank. All loans and commitments to lend included in such
transactions were made in the ordinary course of business, upon
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more than normal
risk of collectibility or present other unfavorable features. It is
the policy of the Bank to provide loans to officers who are not
executive officers and to employees at more favorable rates than
those prevailing at the time for comparable transactions with other
persons. These loans do not involve more than the normal risk of
collectibility or present other unfavorable features.
The law firm of Cumming, Hatchett and Jordan, P.C. serves as
legal counsel to the Bank. Mr. Eugene M. Jordan is a member of the
firm. During 1996, the firm received from the Bank a retainer and
fees totalling $63,180. Hampton Stationery, of which John Cabot
Ishon is the owner, provided furniture and supplies to the Bank for
which it paid $72,244 during 1996. In addition, Morgan-Marrow
Company, of which John B. Morgan, II is President, provided
insurance to the Bank during 1996. Geddy, Harris & Geddy, of which
Stephen D. Harris is a partner, also provided legal services to the
Bank during 1996.
EXECUTIVE COMPENSATION
Cash Compensation
The following table presents all compensation paid or accrued
by the Company and the Bank to the Company's Chief Executive Officer
and each executive officer whose salary and bonus for 1996 exceeded
$100,000. Mr. Shuford is compensated by the Company and Mr. Sebrell
is compensated by the Bank.
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation
<CAPTION>
Other
Name Annual All Other
and Compen- Compen-
Principal Salary Bonus sation sation
Position Year ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Robert F. Shuford 1996 $147,900 <F1> $10,000 <F2> $ 3,500 $ 8,715 <F3>
Holding Company 1995 $147,900 <F1> $ 0 $ 2,891 $55,053 <F3>
Chairman, President 1994 $143,400 <F1> $ 6,000 <F2> $ 2,941 $42,610 <F3>
& CEO
John G. Sebrell 1996 $113,900 <F1> $ 0 $ 9,271 $ 7,172 <F4>
Bank 1995 $113,900 <F1> $ 0 $ 8,047 $ 6,369 <F4>
President & CEO 1994 $110,400 <F1> $12,244 <F2> $ 8,631 $ 5,682 <F4>
<FN>
<F1>
Salary includes directors' fees as follows: Mr. Shuford - 1996 of
$3,900, 1995 of $3,900, and 1994 of $5,400; Mr. Sebrell - 1996 of
$3,900 - 1995 of $3,900, and 1994 of $5,400.
<F2>
Beginning in 1994, bonus consideration for Mr. Shuford and Mr. Sebrell
was deferred until January of the following year so that year end
results could be evaluated by the Compensation Committee.
<F3>
Mr. Shuford has received other compensation as follows:
1996 1995 1994
Profit Sharing $4,395 $ 3,233 $ 3,001
401(k) Matching Plan 4,320 4,320 4,149
Split Dollar Life Insurance * 0 24,750 1,460
Sale of ISO ** 0 22,750 34,000
$8,715 $55,053 $42,610
* The Split Dollar policy was awarded to Mr. Shuford in 1995. When this
occurs the gain must be treated as compensation to the employee.
** When an incentive stock option (ISO) share is sold prior to a one
year vesting period, the gain on the sale is treated as compensation
to the employee.
<F4>
Mr. Sebrell has received other compensation as follows:
1996 1995 1994
Profit Sharing $ 3,357 $ 2,469 $ 2,285
401(k) Matching Plan 3,300 3,300 3,159
Split Dollar Life Insurance 515 600 238
$ 7,172 $ 6,369 $ 5,682
</FN>
</TABLE>
Employee Benefit Plans
PENSION PLAN. The Company has a noncontributory defined
benefit pension plan which covers substantially all full-time
employees who have completed one year of service. A participant's
monthly retirement benefit (if he or she has 25 years of Credited
Service at his Normal Retirement Date) is 20% of his final average
pay plus 15% of final average pay in excess of the participant's
Social Security Covered Pay. The Social Security Covered Pay is the
average pay of the calendar year prior to the year the participant
attains his Social Security Retirement Age. If the participant has
less than 25 years of service at his Normal Retirement Date, the
participant's monthly retirement benefit will be actuarially reduced
by 1/25 for each year of credited service less than 25 years. Cash
benefits under the plan generally commence on retirement, death or
other termination of employment and are payable in various forms at
the election of the participant.
THRIFT PLAN. The Company has a contributory 401(k) profit-
sharing and thrift plan. Employees are eligible to participate if
they complete 1,000 hours of service for a plan year and are at
least 21 years old. Participants may elect to defer between 1% to
15% of their base compensation as defined in the plan, which will be
contributed to the plan. The Bank will contribute 50 cents for each
dollar deferred by an employee on the first 6% of the employee's
compensation. Participants may also elect to make additional
deferrals subject to certain limitations, which are not matched by
the Bank.
Distributions to participants are made at death, retirement
or other termination of employment in a lump sum payment, unless a
participant or his beneficiary elects to receive payments in
installments. The plan permits certain in-service withdrawals.
All employee contributions are fully vested and the Bank's
contributions become fully vested when a participant reaches age 65,
becomes totally and permanently disabled or dies. If a participant
leaves the Bank before the occurrence of one of these events, the
Bank's contributions will become 10% vested per year for the first
four years of service and 20% vested per year for the next three
years of service, becoming 100% vested after seven years of service.
STOCK OPTION PLANS. The Company has one stock option plan -
the Old Point 1989 Stock Option Plan (the 1989 "Plan"). The 1989
Plan provides for the award of nonqualified stock options and
incentive stock options to employees of the Company and the Bank
selected by the Board of Directors to participate in the 1989 Plan.
The Board of Directors makes awards under the 1989 Plan and
establishes the terms and conditions of each award in the option
agreement entered into with each optionee. The price of shares of
stock to be issued upon the exercise of options will be at least
100% of the fair market value on the date of award. Options may not
be granted more than ten years after the adoption of the 1989 Plan
by the Board and are exercisable only during the term specified in
the option agreement, which in the case of incentive stock options
shall not exceed ten years. The options are not transferable other
than by will or the laws of descent and distribution.
The Company has reserved 59,050 shares of Company common stock
for the 1989 Plan. Options covering 46,173 shares were granted as of
December 31, 1996.
OTHER BENEFIT PLANS. The Bank provided split dollar life insurance
coverage of $250,000 for President John G. Sebrell. Life, medical,
dental, and disability insurance is provided to all officers and
employees of the Company and Bank.
<TABLE>
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
Aggregated Option/SAR Exercises in Last
Fiscal Year and FY-End Option/SAR Value
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) <F1> Unexercisable Unexercisable <F1>
<S> <C> <C> <C> <C>
Robert F. Shuford 0 0 5,500/4,740 $28,875/$24,885
John G. Sebrell 0 0 12,977/2,666 $178,603/$10,664
<FN>
<F1>
Market value of underlying securities at exercise or year-end, minus
the exercise or base price.
</FN>
</TABLE>
FIVE YEAR STOCK PERFORMANCE
Management provides below a line graph which compares the
Company's shareholder return with the return of the National
Association of Securities Dealers Automated Quotation National
Market System ("NASDAQ") Composite Index, a market-weighted average
of all over-the-counter stocks traded on NASDAQ, and with the NASDAQ
Bank Index, an index of non-holding company banking institutions
traded on NASDAQ. Management believes this is a reasonable
comparison of shareholder return performance, although the Company's
common stock is traded more thinly and not on the over-the-counter
market, and therefore is not as freely tradable or as subject to day
to day market fluctuations. This performance graph was created by
comparing the percentage change in stock prices for the Company and
both indices on a year to year basis, factoring in dividend
payments, and looking only at the closing price of the stock as of
December 31 of each year surveyed. This graph may be affected by
unusually high or low prices at December 31, 1991 or by temporary
swings in stock price at December 31 of any given year. Accordingly,
this is not necessarily the best measure of the Company's
performance.
OLD POINT FINANCIAL CORP
FIVE YEAR STOCK PERFORMANCE
1991 1992 1993 1994 1995 1996
OPFC 100 102 143 154 158 177
NASDAQ BANK INDEX 100 152 197 199 288 363
NASDAQ COMPOSITE 100 115 132 128 179 220
The index reflects the total return on the stock that is shown,
including price appreciation, all stock splits and stock dividends,
and reinvestment of cash dividends at time of payment, relative to
the value of the stock at the beginning of the time period. Thus a
move from 100 to 150 on the index scale indicates a 50% increase in
the value of the investment. The NASDAQ Bank Index contains all non-
holding company banking institutions traded on the NASDAQ exchange.
In addition to traditional banks this includes thrifts but does not
include other non-regulated finance companies. The NASDAQ Composite
is a market value-weighted average of all over-the-counter stocks,
about 3500 stocks in all.
Proposed 1996 Employee Stock Purchase Plan
On May 14, 1996, the Board authorized the adoption, subject to
shareholder approval, of the Old Point Financial Corporation 1996
Employee Stock Purchase Plan (the "Plan"), to be effective July 1,
1996 through June 30, 2001. This action was taken to foster Old
Point Financial Corporation stock ownership by employees.
Eligibility and Participation. Eligible employees of Old Point
Financial Corporation and those of its subsidiaries designated by
the Plan Administrator who are at least age 19 with 6 months of
service as of the July 1 of a plan year (July 1 through the
following June 30) may participate for that plan year. An eligible
employee is one who is customarily employed for more than 5 months
per year. Approximately 220 employees were eligible to participate
as of July 1, 1996, which number represents substantially all of the
eligible employees at that time. All officers and directors who are
eligible employees may participate.
Participation by an eligible employee is voluntary for each
plan year. An eligible employee who wishes to participate for a
plan year does so by electing to contribute from 2% to 15% of his or
her base pay by payroll deduction during the plan year and/or by
making a lump sum contribution by the beginning of the plan year.
The aggregate contributions by any participant are limited to $6,000
for a plan year.
Offerings of Common Stock and Price. Each eligible employee for a
plan year will be granted an option to purchase that number of whole
shares of Common Stock equal to 15% of his or her annual base pay
rate at July 1 (annualized base pay) divided by 95% of the per share
trading price at that time. However, the maximum number of shares
is limited for any plan year to 7,500 plus, in the case of the 1997
through 2000 plan years, shares available to be offered but not
purchased by employees under the Plan in prior years. The Plan
Administrator may decide to offer fewer than the maximum available
number. The total maximum for all 5 years (1996 - 2000) is 37,500.
Certain additional limitations apply, such as (1) a $25,000 limit on
the value (at date of grant) of shares purchased by any one employee
in any calendar year under the Plan (and any other similar plan of
Old Point Financial Corporation or any of its affiliates) and (2) a
prohibition on the issuance of options to 5% or more stockholders.
The exercise price for a plan year is 95% of the lesser of
(1) the Common Stock's fair market value at July 1 or (2) the Common
Stock's fair market value at the following June 30.
Fair market value means the closing price of Common Stock on
the stated date or the last prior date on which trading regularly
occurred on an established securities exchange or, if none, the
value determined by the Plan Administrator.
Withdrawals from the Plan. A participant may discontinue his or her
participation in the Plan for a plan year at any time before June 30
by written notice to the Plan Administrator. If a participant
ceases to be an eligible employee for reason other than retirement
or dies before June 30, he will cease to be a participant for that
plan year.
In any such case, all payroll deduction amounts will be
returned, without interest.
Option Exercise and Stock Issuance. Options will be automatically
exercised at each June 30 with a participant's accumulated payroll
deductions at the applicable exercise price. Any options granted
for a plan year which are not exercised at June 30 of that plan year
will expire then. If all of a participant's payroll deductions
amounts for a plan year are not used to purchase shares because of
any applicable limit on the shares available, the unused amount will
be returned to the participant, without interest.
Plan Administration. The Plan provides for its administration by a
Plan Administrator, which is a committee of at least three persons
appointed by the Board. The Plan Administrator may designate
additional subsidiaries to participate in the Plan. The Plan
Administrator is empowered to adopt rules and regulations for the
administration of the Plan and to interpret the Plan.
Plan Amendment and Termination. The Board of Old Point Financial
Corporation may amend the Plan at any time, except that it may not,
without shareholder approval, increase the number of shares which
may be issued, increase the 15% of base pay limit on contributions
for a plan year, reduce the exercise price, change the class of
employees eligible to participate in the Plan, or permit issuance of
stock before payment in full.
The Plan will continue for 5 years unless terminated earlier.
The Board may terminate the Plan at any time, in which case each
participant's then accumulated payroll deductions will be used for
exercising outstanding options as though the termination date were
a June 30.
Tax Treatment. The Plan is intended to qualify as an "employee
stock purchase plan" under Section 423 of the Internal Revenue Code,
as amended (the "Code"). Under the Code, participants normally do
not realize any income at the date of grant of options or at the
time of exercise and purchase of shares. Recognition of income
normally is postponed until the purchased shares are disposed of.
The tax consequences to participants upon disposition vary depending
upon the circumstances.
If a participant disposes (whether by sale, gift, death or
otherwise) of purchased shares after two years from the July 1 as of
which the option to purchase such shares was granted and after one
year from the June 30 as of which such shares are purchased by him
or her, the participant will be required to include in income, as
compensation for the year in which such disposition occurs, an
amount equal to the lesser of (i) the excess of the fair market
value of such shares at the time of disposition over the exercise
price or (ii) 15% of the fair market value of such shares at the
July 1 as of which the option to purchase such shares was granted.
The participant's basis in the shares disposed of will be increased
by an amount equal to the amount so includible in his or her income
as compensation, and any gain or loss computed with reference to
such adjusted basis which is recognized at the time of the
disposition will be long-term capital gain or loss. In such event,
Old Point Financial Corporation (or the subsidiary by which the
participant is employed) will not be entitled to any deduction for
income tax purposes.
If a participant disposes of purchased shares within such two
year or one year period (that is, within two years from the July 1
as of which the option to purchase such shares was granted or within
one year from the June 30 as of which such shares are purchased by
him or her), the participant will be required to include in income,
as compensation for the year in which such disposition occurs, an
amount equal to the excess of the fair market value of such shares
on the date of purchase over the exercise price. The participant's
basis in such shares disposed of will be increased by an amount
equal to the amount includible in his or her income as compensation,
and any gain or loss computed with reference to such adjusted basis
which is recognized at the time of disposition will be capital gain
or loss, either short-term or long-term, depending on the holding
period for such shares. In the event of a disposition within such
two year or one year period, Old Point Financial Corporation (or the
subsidiary by which the participant is employed) will be entitled to
a deduction for income tax purposes equal to the amount the
participant is required to include in income as a result of such
disposition.
Notwithstanding the normal rules stated in the preceding
paragraphs, if a participant retires during a plan year more than 3
months before the end of the year as of which his options for the
year are exercised and Common Stock purchased by him, then the
participant will be required to include in income, as compensation
for the year in which such purchase occurs, an amount equal to the
excess of the fair market value of such shares on the date of
purchase over the exercise price. The participant's basis in such
shares disposed of will be increased by an amount equal to the
amount includible in his or her income as compensation, and any gain
or loss computed with reference to such adjusted basis which is
recognized at the time of disposition will be capital gain or loss,
either short-term or long-term, depending on the holding period for
such shares. In the event of such a taxable purchase, Old Point
Financial Corporation (or the subsidiary by which the participant is
employed) will be entitled to a deduction for income tax purposes
equal to the amount the participant is required to include in income
as a result of his or her purchase.
Old Point Financial Corporation's (or any subsidiary
corporation's) entitlement to an income tax deduction for
compensation income taxable to an employee is contingent on its
satisfying certain federal income tax withholding requirements.
Adoption of this proposal requires an affirmative vote by the
holders of a majority of the outstanding Common Stock. The Board of
Directors recommends a vote FOR the approval of the 1996 Employee
Stock Purchase Plan.
RATIFICATION OF SELECTION OF ACCOUNTANTS
On the recommendation of the Audit Committee, the Board of
Directors has appointed Eggleston Smith P.C., certified public
accountants, as the Company's and Bank's independent auditors for
1997. Eggleston Smith P.C. rendered audit services to the Company
and Bank during 1996. These services consisted primarily of the
examination and audit of the institution's financial statements, tax
reporting assistance, and other audit and accounting matters.
Representatives of Eggleston Smith P.C. are expected to be
present at the Annual Meeting and are expected to be available to
respond to your questions.
1998 ANNUAL MEETING OF STOCKHOLDERS
In accordance with the By-Laws of the Company as currently in
effect, the Annual Meeting of Stockholders for 1998 will be held on
April 28, 1998.
The Board of Directors need not include an otherwise
appropriate shareholder proposal in its proxy statement or form of
proxy for that meeting unless the proposal is received by the
Holding Company at its main office on or before December 1, 1997.
ANNUAL FINANCIAL DISCLOSURE STATEMENT
An annual Financial Disclosure Statement containing
information about The Old Point National Bank of Phoebus' financial
condition is available upon written or oral request from:
Louis G. Morris
Executive Vice President
The Old Point National Bank of Phoebus
1 West Mellen Street
Hampton, Virginia 23663
(757) 728-1297
OTHER MATTERS
Management knows of no other business to be brought before the
Annual Meeting. Should any other business properly be presented for
action at the meeting, the shares represented by the enclosed proxy
shall be voted by the persons named therein in accordance with their
best judgment and in the best interests of the Holding Company.
<PAGE>
OLD POINT FINANCIAL CORPORATION
Dear Shareholder:
Please take note of the important information enclosed
with this Proxy Ballot. There are a number of issues
related to the management and operation of your Company
that require your immediate attention and approval.
These are discussed in detail in the enclosed proxy
materials.
Your vote counts, and you are strongly encouraged to
exercise your right to vote your shares.
Please mark the boxes on the proxy card to indicate how
your shares shall be voted. Then sign the card, detach
it and return your proxy vote in the enclosed postage
paid envelope.
Your vote must be received prior to the Annual Meeting
of Shareholders, April 22, 1997.
Thank you in advance for your prompt consideration of
these matters.
Sincerely,
Old Point Financial Corporation
<PAGE>
OLD POINT FINANCIAL CORPORATION, HAMPTON, VIRGINIA
P.O. BOX 3392
HAMPTON, VIRGINIA 23663
PROXY CARD FOR
ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Robert T. Fowler and Frank A.
Kearney, Jr. as Proxies, each with full power to appoint his
substitute and hereby authorizes them to represent and to vote, as
designated below, all the shares of voting common stock, $5.00 par
value, of Old Point Financial Corporation held of record by the
undersigned on March 11, 1997 at the Annual Meeting of Shareholders,
to be held on April 22, 1997, and any and all adjournments thereof.
This proxy, will be voted in the manner directed by the
undersigned. If no direction is made, this proxy will be voted FOR
ITEMS 1, 2 AND 3. Please sign exactly as your name appears hereon.
When shares are held by joint tenants, both should sign. When
signing in a representative capacity, please provide full title.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD IN THE ENCLOSED
POSTAGE PAID ENVELOPE AS SOON AS POSSIBLE.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_________________________ __________________________
_________________________ __________________________
_________________________ __________________________
PLEASE MARK VOTES AS IN THIS EXAMPLE
With- For All
For held Except
1. Election of Directors ___ ___ ___
Richard F. Clark, Gertrude S. Dixon, Russell S. Evans, Jr., G.
Royden Goodson, III, Arthur D. Greene, Stephen D. Harris, John Cabot
Ishon, Eugene M. Jordan, John B. Morgan, II, H. Robert Schappert,
Robert F. Shuford
(Instructions: To withhold authority to vote for any nominee, mark
the "For All Except" box and strike a line through the nominee's
name in the list above.)
2. Ratification of the appointment For Against Against
of Eggleston Smith, P.C.,
Certified Public Accounts, as
independent auditors for 1997. ___ ___ ___
3. Ratification and approval of For Against Against
the adoption of the 1996
Employees Stock Purchase Plan. ___ ___ ___
In their discretion the Proxies are authorized to vote upon such
other business as may properly come before the meeting and any
adjournment thereof.
Mark box at right if you plan to attend the Annual Meeting. ___
Mark box at right if comments or address change have
been noted on the reverse side of this card. ___
Please be sure to sign and date this Proxy. Date
___________________________________________________________________________
Shareholder sign here Co-owner sign here
DETACH CARD
