<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] 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 Rule 14a-11(c) or rule 14a-12
FNB Financial Services Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the 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)(1) 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> 2
FNB FINANCIAL SERVICES CORPORATION
202 South Main Street
Reidsville, North Carolina 27320
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 18, 2000
To Our Shareholders:
NOTICE IS HEREBY GIVEN that, pursuant to the call of the Board of
Directors, the 2000 Annual Meeting of Shareholders of FNB Financial Services
Corporation (the "Company") will be held at the Bryan Enrichment Center, 6275
Bryan Park Road, Brown Summit, North Carolina on Thursday, May 18, 2000, at 1:00
p.m., for the following purposes:
1. To elect three nominees to serve as Class I Directors, each to
serve a three-year term until the Annual Meeting of
Shareholders in 2003;
2. To elect one nominee to serve as a Class II Director with a
term continuing until the Annual Meeting of Shareholders in
2001;
3. To elect one nominee to serve as a Class III Director with a
term continuing until the Annual Meeting of Shareholders in
2002;
4. To ratify the selection by the Board of Directors of
PricewaterhouseCoopers LLP as the Company's independent
auditors for the 2000 fiscal year; and
5. To consider and act upon such other business as may properly
come before the meeting or any adjournment or postponement
thereof.
All shareholders are invited to attend the Annual Meeting. Only those
shareholders of record as of the close of business on March 10, 2000, are
entitled to notice of, and to vote at, the Annual Meeting and all adjournments
and postponements of the meeting. If the Annual Meeting is adjourned or
postponed, the new date, time and place will be announced at the Annual Meeting
prior to adjournment or postponement. It is important that your stock be
represented at this meeting so that the presence of a quorum may be assured.
Information about the activities and operation of the Company during
the fiscal year ended December 31, 1999 is contained in the Company's 1999
Annual Report to Shareholders, a copy of which is enclosed.
IT IS IMPORTANT THAT YOUR SHARES OF STOCK BE REPRESENTED AT THE
MEETING, REGARDLESS OF THE NUMBER OF SHARES YOU MAY HOLD. EVEN THOUGH YOU MAY
PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE AND RETURN THE ENCLOSED
PROXY IN THE ENVELOPE PROVIDED SO THAT IT WILL BE RECEIVED NO LATER THAN FRIDAY,
MAY 12, 2000. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN
PERSON.
By Order of the Board of Directors,
Michael W. Shelton
April 18, 2000 Vice President and CFO
<PAGE> 3
FNB FINANCIAL SERVICES CORPORATION
202 South Main Street
Reidsville, North Carolina 27320
PROXY STATEMENT
GENERAL INFORMATION
The accompanying proxy is solicited by and on behalf of the Board of
Directors of FNB Financial Services Corporation, a North Carolina corporation
(the "Company"), for use at the 2000 Annual Meeting of Shareholders to be held
on Thursday, May 18, 2000, at 1:00 p.m. at the Bryan Enrichment Center, 6275
Bryan Park Road, Brown Summit, North Carolina (the "Annual Meeting"), and at any
adjournment or postponement thereof. The Company's wholly-owned subsidiaries are
FNB Southeast, a North Carolina bank and Black Diamond Savings Bank, a Virginia
savings bank, which was acquired by the Company on August 31, 1999. The purposes
of the Annual Meeting are:
1. To elect three nominees to serve as Class I Directors, each to
serve a three-year term until the Annual Meeting of
Shareholders in 2003;
2. To elect one nominee to serve as a Class II Director with a
term continuing until the Annual Meeting of Shareholders in
2001;
3. To elect one nominee to serve as a Class III Director with a
term continuing until the Annual Meeting of Shareholders in
2002;
4. To ratify the selection by the Board of Directors of
PricewaterhouseCoopers LLP as the Company's independent
auditors for the 2000 fiscal year; and
5. To consider and act upon such other business as may properly
come before the meeting or any adjournment or postponement
thereof.
The Board of Directors knows of no other matters other than those
stated above to be brought before the Annual Meeting or any adjournment or
postponement thereof. Nonetheless, the proxyholders named on the enclosed proxy
card may vote in accordance with the instructions of the Board of Directors or
in the absence thereof, in accordance with their discretion, on any matter
properly presented for action of which the Board of Directors is not now aware.
The shares represented by all properly executed proxies received by the Company
in time to be taken to the Annual Meeting will be voted; and, if a choice is
specified with respect to any matter to be acted upon, the shares will be voted
in accordance with such specifications. IF A SPECIFICATION IS NOT MADE, THE
PROXY WILL BE VOTED FOR THE PROPOSALS SET FORTH ABOVE AND IN THE NOTICE OF THE
ANNUAL MEETING OF SHAREHOLDERS.
This Proxy Statement is first being mailed to shareholders of record as
of March 10, 2000 on or about April 18, 2000.
<PAGE> 4
By signing the proxy, a shareholder will be authorizing the proxyholder
to vote in his discretion regarding any procedural motions which may come before
the Annual Meeting. For example, this authority could be used to adjourn the
meeting if the Company believes it is desirable to do so. Adjournment or other
procedural matters could be used to obtain more time before a vote is taken in
order to solicit additional proxies or to provide additional information to
shareholders. The Company has no current plans to adjourn the meeting, but would
attempt to do so if the Board of Directors believes adjournment would promote
shareholder interests.
Proxies may be revoked at any time before they are exercised by (i)
filing a written notice of revocation with the Secretary of the Company, (ii)
filing a duly executed proxy bearing a later date or (iii) personally appearing
at the Annual Meeting and electing to vote in person.
The cost of the solicitation of proxies will be borne by the Company.
Solicitation of proxies will be made by mail except that, if necessary, proxies
may be solicited personally or by telephone by directors, officers and employees
of the Company, none of whom will receive special compensation for their
efforts. Brokerage houses and nominees have been requested to forward these
proxy materials to the beneficial owners of shares held of record by such
persons, and upon request, the Company will reimburse such persons for the
reasonable out-of-pocket expenses thereby incurred.
VOTING SECURITIES OUTSTANDING
Only shareholders of record as of the close of business on March 10,
2000, will be entitled to notice of, and to vote at, the Annual Meeting. On such
date, the Company had 4,484,182 shares of Common Stock, par value $1.00 per
share, issued and outstanding, each of which is entitled to one vote on each
matter calling for a vote of the shareholders. There are no other voting
securities.
Each shareholder entitled to vote has the right to vote, in person or
by proxy, the number of shares standing of record in his name for as many
persons as there are directors to be elected.
The holders of a majority of the outstanding shares of Common Stock
present in person or represented by proxy at the Annual Meeting will constitute
a quorum. Since many of the shareholders cannot attend the Annual Meeting, it is
necessary that a large number be represented by proxy. Accordingly, the Board of
Directors has designated proxies to represent those shareholders who cannot be
present in person and who desire to be so represented.
3
<PAGE> 5
SHARE OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information, as of March 10,
2000, regarding shares of Common Stock of the Company owned of record or known
to the Company to be owned beneficially by each director and nominee for
director, each executive officer named in the Summary Compensation Table in the
Proxy Statement and all directors and officers as a group. As of March 10, 2000,
there were no individuals or entities known to the Company who beneficially
owned more than five percent of the Company's outstanding Common Stock. Except
as set forth in the footnotes to the table below, each of the shareholders
identified in the table below has sole voting and investment power over the
shares beneficially owned by such person.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME OWNED (1)(2) OF CLASS (1)
- ---- ------------ ------------
<S> <C> <C>
Ernest J. Sewell................................................. 92,351 1.9
Willard B. Apple, Jr. ........................................... 17,919 *
Gary G. Blosser.................................................. 76,933 1.6
Charles A. Britt................................................. 24,900 *
Barry Z. Dodson.................................................. 12,856 *
Don M. Green..................................................... 84,381 1.8
O. Eddie Green................................................... 37,894 *
Joseph H. Kinnarney.............................................. 23,730 *
Clifton G. Payne................................................. 65,992 1.4
Elton H. Trent, Jr. ............................................. 45,203 1.0
Kenan C. Wright.................................................. 16,902 *
Robert F. Albright............................................... 36,795 *
Directors and executive officers as a group, including those
listed above (14 persons)........................................ 568,481 12.0
</TABLE>
- ---------------------------
* Less than one percent.
(1) Based upon 4,484,182 shares of Common Stock outstanding on March 10,
2000. The securities "beneficially owned" by an individual are
determined in accordance with the definition of "beneficial ownership"
set forth in the regulations of the Securities and Exchange Commission.
Accordingly, they may include securities owned by or for, among others,
the spouse and/or minor children of the individual and any other
relative who has the same home as such individual, as well as other
securities as to which the individual has or shares voting or
investment power or has the right to acquire under outstanding stock
options within 60 days of March 10, 2000. Beneficial ownership may be
disclaimed as to certain of the securities.
(2) Under presently exercisable stock options, Charles A. Britt, Clifton G.
Payne and Elton H. Trent, Jr. have the right to acquire 3,590 shares of
Common Stock, Joseph H. Kinnarney and Kenan C. Wright have the right to
acquire 11,407 shares, Ernest J. Sewell 67,191 shares, Willard B.
Apple, Jr. 6,000 shares, Barry Z. Dodson 4,833 shares, Don M. Green
73,332 shares, O. Eddie Green 6,882 shares and Robert F. Albright
31,140 shares. All directors and executive officers as a group have the
right to acquire 254,615 shares of Common Stock under stock options
exercisable currently or within 60 days of March 10, 2000. These shares
are shown as beneficially owned.
4
<PAGE> 6
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Board of Directors is fixed at 11 members and is divided
into three classes, as nearly equal in number as possible. Each year the
shareholders will elect the members of one of the three classes to a three year
term of office. In accordance with the Company's Bylaws, during August 1999 the
Board of Directors elected Don M. Green and Gary G. Blosser to fill pre-existing
vacancies on the Board.
The term of office of the Class I directors expires at the Annual
Meeting; the term of office of the Class II directors expires at the 2001 Annual
Meeting of Shareholders; and the term of office of the Class III directors
expires at the 2002 Annual Meeting of Shareholders, or in any event at such time
as their respective successors are duly elected and qualified or their earlier
resignation, death or removal from office.
The following table lists the directors of the Company and the classes
in which they serve as of the date of this Proxy Statement:
Class I (Nominees) Class II Class III
- ------------------ -------- ---------
(Term Expiring 2003) (Term Expiring 2001) (Term Expiring 2002)
Ernest J. Sewell Willard B. Apple, Jr. Joseph H. Kinnarney
Charles A. Britt O. Eddie Green Elton H. Trent, Jr.
Barry Z. Dodson Clifton G. Payne Kenan C. Wright
Don M. Green (Nominee) Gary G. Blosser (Nominee)
The Board of Directors has approved the nomination of the Class I
directors indicated above for election at the Annual Meeting to serve until the
Annual Meeting of Shareholders in the year 2003 (or until such time as their
respective successors are elected and qualified or their earlier resignation,
death or removal from office). The Board of Directors has also nominated Don M.
Green to serve as a Class II director. If elected, Mr. Green will serve until
the Annual Meeting of Shareholders in 2001, or until such time as his successor
is elected and qualified or his earlier resignation, death or removal from
office. The Board of Directors has also nominated Gary G. Blosser to serve as a
Class III director. If elected, Mr. Blosser will serve until the Annual Meeting
of Shareholders in 2002, or until such time as his successor is selected and
qualified or his earlier resignation, death or removal from office.
The Board of Directors has no reason to believe that the persons named
as nominees for directors will be unable or will decline to serve if elected.
However, in the event of death or disqualification of any nominee or the refusal
or inability of any nominee to serve as a director, it is the intention of the
proxyholders named in the accompanying proxy card to vote for the election of
such other person or persons as the proxyholders determine in their discretion.
In no circumstance will the proxy be voted for more than five nominees. Properly
executed and returned proxies, unless revoked, will be voted as directed by the
shareholder or, in the absence of such direction, will be voted in favor of the
election of the recommended nominees.
5
<PAGE> 7
In tallying shareholder votes, abstentions and broker non-votes will be
counted as present for purposes of determining the existence of a quorum at the
Annual Meeting. Under the North Carolina Business Corporation Act, to be elected
as a director, a nominee need only receive a plurality of the votes cast,
provided a quorum of shareholders is present. Accordingly, abstentions and
broker non-votes will not be counted against such nominees.
A broker non-vote occurs when a nominee holding shares for a beneficial
owner does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that proposal and has not received
voting instructions from the beneficial owner (despite voting on at least one
other proposal for which it does have discretionary authority or for which it
has received instructions).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE NOMINEES FOR ELECTION
AS DIRECTORS.
Set forth below are the names and other information pertaining to the
Board's nominees and other directors whose terms of office will continue after
the 2000 Annual Meeting:
<TABLE>
<CAPTION>
FIRST YEAR
ELECTED DIRECTOR OF
THE COMPANY OR
NAME POSITION WITH COMPANY AGE PREDECESSOR BANK
---- --------------------- --- -------------------
<S> <C> <C> <C>
CLASS I
Ernest J. Sewell Director, President and CEO 59 1995
Charles A. Britt (1)(2) Director 50 1985
Barry Z. Dodson (1) Director 51 1997
CLASS II
Williard B. Apple, Jr.(1)(2) Director and Chairman 69 1969
O. Eddie Green (2) Director 65 1970
Clifton G. Payne (1) Director 68 1976
Don M. Green Director 59 1999
CLASS III
Joseph H. Kinnarney (2) Director 46 1988
Elton H. Trent, Jr. (2) Director 67 1969
Kenan C. Wright (1)(2) Director 47 1990
Gary G. Blosser Director 52 1999
</TABLE>
- ----------------------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
Ernest J. Sewell is the President, Chief Executive Officer and a
Director of the Company. He assumed his current position on January 26, 1995
after the resignation of Willard B. Apple, Jr. from those positions on that
date. Prior to joining the Company, Mr. Sewell served as Senior Vice President
of Branch Banking and Trust Company, with 26 years of previous banking
experience. Mr. Sewell is a member of the Board of Trustees of Annie Penn
Memorial Hospital, Reidsville, North Carolina, and is Chairman of its Investment
Committee. He is an avid pilot who also serves on the boards of various
charitable organizations and is Vice Chairman of the Rockingham County Airport
Authority.
6
<PAGE> 8
Charles A. Britt joined the Board of Directors of the Company in 1985
and has been the owner of Carolina Apothecary, Inc. since October, 1979 and
Belmont Pharmacy, Inc. since August, 1980. Mr. Britt has a degree in pharmacy,
which he earned in 1972 from the University of North Carolina.
Barry Z. Dodson joined the Board of Directors of the Company in 1997
and is a self-employed Certified Public Accountant. He is the owner of Barry
Dodson CPA, an accounting firm with offices located in Madison and Reidsville,
North Carolina.
Willard B. Apple, Jr., a former mayor of Reidsville, North Carolina,
has been Chairman of the Board of Directors of the Company since 1993. He also
served as President and Chief Executive Officer of the Company from its
organization as a bank holding company in 1984 until 1993. Mr. Apple also acted
as interim Chief Executive Officer of the Company from August 1994 to January
1995. Mr. Apple is a former member of the Board of Directors of the Federal
Reserve Bank of Richmond and is a Life Member of the Reidsville Jaycees. He has
also served and currently serves on the boards of various charitable and civic
organizations located in the Rockingham County area of North Carolina.
O. Eddie Green joined the Board of Directors of the Company in 1984 and
has been the Division Manager of Chandler Concrete Co., Inc., providers of
ready-mixed concrete located in Reidsville, North Carolina, since 1991. Mr.
Green obtained his degree in Civil Engineering from N.C. State University in
1956.
Clifton G. Payne joined the Board of Directors of the Company in 1984
and has been retired from the practice of medicine since 1991. Dr. Payne earned
his M.D. degree from the University of North Carolina in 1956.
Don M. Green joined the Board of Directors of the Company in August
1999 following the Company's acquisition of Black Diamond Savings Bank. He
served as President and as a Director of Black Diamond from 1983 until it was
acquired by the Company on August 31, 1999 and has since served as President and
Chief Executive Officer of Black Diamond, now a subsidiary of the Company.
Joseph H. Kinnarney joined the Board of Directors of the Company in
1988 and has been the President of Reidsville Veterinary Hospital, Inc. since
1988. In 1976, Mr. Kinnarney earned a Masters degree from the University of
Kentucky in Animal Science and a Doctorate of Veterinary Medicine from Cornell
University in 1980.
Elton H. Trent, Jr. joined the Board of Directors of the Company in
1984 and has been the Vice Chairman since 1994. Mr. Trent is a former councilman
of the City of Reidsville and is now retired.
Kenan C. Wright joined the Board of Directors of the Company in 1990
and has been the President of The Wright Co. of N.C. Inc., a general contractor
located in Eden, North Carolina, since 1990.
Gary G. Blosser joined the Board of Directors of the Company in August
1999 following the Company's acquisition of Black Diamond Savings Bank. He has
served as President and owner of STM
7
<PAGE> 9
Landscape Services, Inc. since 1977. He also served as a Director of Black
Diamond from 1992 until it was acquired by the Company on August 31, 1999.
ATTENDANCE AT BOARD MEETINGS; COMMITTEES
During fiscal 1999, there were 12 regular meetings and one special
meeting of the Board of Directors of the Company. Each of the incumbent
directors attended 75% or more of the meetings held by the Company's Board of
Directors. The Company has an Audit Committee and a Compensation Committee, but
does not have a standing Nominating Committee. The members of the Audit
Committee, which reviews the reports and oversees the actions of the internal
audit function performed by PricewaterhouseCoopers LLP in 1999, are Messrs.
Payne, Britt, Dodson and Wright. The Audit Committee met three times during
1999. The Compensation Committee, which met four times during 1999, is comprised
of Messrs. Britt, Green, Kinnarney, Trent, Jr., and Wright. The function of the
Compensation Committee is to review and recommend executive salary and benefit
programs. The Board of Directors of the Company performs the functions that
would be performed by a nominating committee. The Chairman of the Board of
Directors, Mr. Apple, is an ex officio member of all Board committees.
Presently, the Board of Directors does not have a policy or procedure
restricting or limiting shareholder recommendations for nominees to the Board.
DIRECTOR COMPENSATION
In 1999, directors were paid $450 for each meeting attended of the
Board of Directors, except for the Chairman of the Board, who received $500 per
meeting. Additionally, each director who is not an employee of FNB Southeast or
Black Diamond received an annual retainer of $6,000 during 1999. Directors are
also paid $200 for each committee meeting of the Board of Directors attended,
excluding those directors who are employees. Payment is not made for meetings of
the Board of Directors or Committees where a director has failed to attend. The
directors are also eligible for awards under the Company's Stock Compensation
Plan and under the Company's Omnibus Equity Compensation Plan. During 1999, each
director who was not an employee of the Company received non-qualified stock
options in February 1999 to purchase 1,000 shares of the Company's Common Stock,
at an exercise price of $17.50 per share and in October, 1999 to purchase 6,000
shares of the Company's Common Stock, at an exercise price of $12.00 per share,
both under the Omnibus Equity Compensation Plan. Such options vest in
consecutive annual increments of 25% of the shares subject to the option, with
the first 25% vesting one year after the date of grant, except Dr. Payne, whose
options vest in annual increments of 50% and Mr. Apple, whose options vest 100%
after the passage of one year, in both instances conforming to their normal
retirement date from the Board of Directors.
All of the Company's directors and certain senior management employees
are eligible to participate in the Company's Deferred Compensation Plan, which
is intended to provide additional financial incentives and retirement security
for the Company's directors and executive officers, and to allow for deferral of
up to 100% of director's fees and a portion of eligible employees' compensation.
Eligible employees may elect to defer up to 25% of their base salary and up to
100% of any bonuses. Under the Plan, effective November 1, 1999 deferred
compensation is invested in a menu of mutual fund options, offered under a Trust
Agreement through Morgan Trust Company.
8
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth for 1997, 1998 and 1999 the cash and
other compensation paid to, received or deferred by the Company's chief
executive officer and the Company's other executive officers whose salary and
bonus in 1999 exceeded $100,000 (the "named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
----------------------------------- ----------------------
Awards
----------------------
Securities
Year Restricted Underlying
Ended Other Annual Stock Options/ All Other
Name and Principal Position 12/31 Salary Bonus Compensation Award(s) SARs Compensation
- --------------------------- ----- ------ ----- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ernest J. Sewell, President 1999 $240,000 $74,250(1) (2) -0- 35,000 $17,071(3)
and Chief Executive Officer 1998 225,000 48,000(1) (2) -0- 25,000 17,071(3)
1997 176,666 43,750(1) (2) -0- 20,000 9,539(3)
Robert F. Albright, Executive 1999 $ 91,107 $18,909(1) (2) -0- 13,000 $ 7,622(3)
Vice President and Chief 1998 85,950 14,875(1) (2) -0- 10,000 7,622(3)
Financial Officer 1997 81,858 13,590(1) (2) -0- 7,500 7,622(3)
Don M. Green, President 1999 $158,130 $ 4,935 (2) -0- 6,000 -0-
and CEO, Black Diamond 1998 (4) 152,546 4,994 (2) -0- -0- -0-
Savings Bank 1997 (4) 137,772 4,500 (2) -0- 73,332(5) -0-
</TABLE>
- -----------------------
(1) Represents compensation paid to Messrs. Sewell and Albright under the
Company's Annual Incentive Plan.
(2) Perquisites and other personal benefits received did not exceed the
lesser of $50,000 or 10% of salary and bonus compensation for Messrs.
Sewell, Albright and Green.
(3) Represents benefits to Messrs. Sewell and Albright under the Company's
split-dollar insurance plan.
(4) Represents compensation paid to Mr. Green by Black Diamond Savings Bank
prior to the Company's acquisition of Black Diamond.
(5) Represents an option grant of 50,000 shares of Black Diamond Savings
Bank stock on October 16, 1997, which was (i) increased by 10% as a
result of a 10% stock dividend on Black Diamond Savings Bank stock in
December 1998 and (ii) converted to Company stock at an exchange ratio
of 1 to 1.333 in connection with the Company's acquisition of Black
Diamond Savings Bank on August 31, 1999.
9
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options
to purchase Common Stock granted to the named executive officers during the year
ended December 31, 1999.
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants(1) for Option Term(2)
- ------------------------------------------------------------------------------------- ---------------------------
Number of % of Total
Securities Options Exercise or
Underlying Granted to Base
Options Employees in Price (Per
Name Granted Fiscal Year Share) Expiration Date 5% 10%
---- ------- ----------- ------ --------------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Ernest J. Sewell 10,000 7% $17.50 Feb. 18, 2009 120,600 278,900
25,000 17% $12.00 Oct. 21, 2009 188,750 478,000
------ --- ------- -------
35,000 24% $309,350 $756,900
Robert F. Albright 3,000 2% $17.50 Feb. 18, 2009 33,030 83,670
10,000 7% $12.00 Oct. 21, 2009 75,500 191,200
------ -- ------ -------
13,000 9% $108,530 $274,870
Don M. Green 6,000 4% $12.00 Oct. 21, 2009 $45,300 $114,720
</TABLE>
- -----------------------
(1) The options granted are nonstatutory stock options. The options were
granted effective February 18, 1999 and October 21, 1999 and expire 10
years from the effective date of grant, or if sooner, upon termination
of employment, unless employment is terminated because of retirement,
death or permanent and total disability, in which case the options
remain exercisable for one year following the termination or the
remainder of the option period, if shorter. Shares subject to the
options vest 25% per year over four years with the first 25% vesting
one year from the date of grant.
(2) The Potential Realizable Value of each option grant is calculated
assuming that the market price of the underlying security appreciates
at annualized rates of 5% and 10%, respectively, over the ten year term
of the option.
10
<PAGE> 12
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION VALUES
The following table sets forth certain information concerning options
to purchase Common Stock held by the named executive officers during the year
ended December 31, 1999, the aggregate value of gains on the date of exercise,
and the value of unexercised options as of December 31, 1999.
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised
Acquired Value Underlying Unexercised In-the-Money Options
Name on Exercise Realized Options at FY-End(#) at FY-End ($)(1)
---- ----------- -------- ---------------------- --------------------
Exercisable/ Exercisable/
Unexercisable Unexercisable
------------- -------------
<S> <C> <C> <C> <C>
Ernest J. Sewell -0- -0- 64,692/78,639 $49,863/$12,467
Robert F. Albright -0- -0- 33,641/27,130 $40,609/$3,094
Don M. Green -0- -0- 73,332/6,000 $40,332/-0-
</TABLE>
- ----------------------
(1) The value of the options is based upon the difference between the
exercise price and the closing price per share of the Company's Common
Stock on the Nasdaq National Market System on December 31, 1999 of
$10.50.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
-----------------------------------------------------------------
Final Average Compensation 5 10 15 20 or more
- -------------------------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C>
$100,000 $16,250 $32,500 $48,750 $65,000
200,000 32,500 65,000 97,500 130,000
300,000 48,750 97,500 146,250 195,000
400,000 65,000 130,000 195,000 260,000
500,000 81,250 162,500 243,750 325,000
</TABLE>
The Company maintains a funded, qualified defined benefit plan known as
the FNB Financial Services Corporation Employees' Pension Plan and an unfunded,
non-qualified defined benefit pension plan known as the Benefit Equivalency Plan
(collectively, the "Pensions Plans").
The above table sets out the estimated annual pension benefit payable
under the Pension Plans for a participant at age 65 for various levels of Final
Average Compensation (as defined below) and years of service, as supplemented in
the case of Mr. Sewell. Covered compensation under the Pension Plans consists of
the amounts in the Annual Compensation column of the Summary Compensation Table.
The benefits payable under the Benefit Equivalency Plan are fully offset by
benefits paid under the Employees' Pension Plan and are partially offset by
Social Security benefits. The above table does not reflect these offsets.
For purposes of the Pension Plans, Final Average Compensation is equal
to the average of the highest five consecutive calendar years of compensation
paid during the ten calendar years preceding termination of employment. The
average compensation for the current year for the named executive
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<PAGE> 13
officers is indicated in the Annual Compensation column of the Summary
Compensation Table. The years of service for each of the named executive
officers under the Pension Plans (rounded to the nearest whole number) as of
December 31, 1999 are: Mr. Sewell, five years; Mr. Albright, 19 years; Mr.
Green, zero years. No additional benefits are payable under the Pension Plans
for years of service in excess of 20 years.
Mr. Sewell's annual pension from the Company includes a supplemental
benefit (which is in addition to the benefit described in the above table) equal
to 6.00% of his Final Average Compensation multiplied by his years of service.
EMPLOYMENT CONTRACTS AND TERMINATION,
SEVERANCE AND CHANGE-OF-CONTROL ARRANGEMENTS
In May, 1995, Ernest J. Sewell, President and Chief Executive Officer
of the Company and FNB Southeast, entered into an Employment Agreement with the
Company and FNB Southeast, jointly. The Agreement has a rolling three-year term,
meaning that it is automatically renewed each month for a three-year period,
unless either party terminates the Agreement in accordance with its terms. The
Agreement provides for an initial annual base salary of $110,000 (increased to
$255,000 as of January 1, 2000), plus a number of benefits, including
participation in various compensation plans offered to the Company's employees
and senior management. These plans include the Company's Long Term Incentive
Plan and its Annual Management Incentive Plans, and a Benefit Equivalency
(supplemental executive retirement) Plan. Mr. Sewell is also a participant in
the Company's Deferred Compensation Plan. Under the Employment Agreement, if
there is a change in control of the Company, Mr. Sewell may, under certain
circumstances, terminate his employment with the Company, and thereafter
continue to receive his base salary for a period of two years and eleven months,
in addition to any other benefits.
In August 1999, Don M. Green, a director of the Company and President
and Chief Executive Officer of the Company's subsidiary, Black Diamond Savings
Bank, entered into an Amended and Restated Employment Agreement with Black
Diamond. The Agreement has an initial term that expires in August 2002,
renewable annually thereafter, subject to Board approval. The Agreement provides
for an initial annual base salary of $164,500 (which may be increased or
supplemented with bonuses in the discretion of Black Diamond's Board of
Directors), plus a number of benefits, including the use for business purposes
of an automobile owned by Black Diamond and participation in various
compensation plans offered to the Company's employees and senior management.
These plans include Black Diamond's annual management incentive plans, employee
benefit plans, and the Company's Omnibus Equity Compensation Plans. Under the
Employment Agreement, if there is a change in control, Mr. Green may, under
certain circumstances, terminate his employment with the Company, and thereafter
continue to receive his base salary for a period of two years.
The Board of Directors has previously adopted a Stock Compensation Plan
and an Omnibus Equity Compensation Plan. As discussed more fully in the Board
Compensation Committee Report, the stock options awarded under these Plans to
the Company's officers and directors grant such persons the right to acquire up
to a specified number of the Company's shares at certain times in the future at
a fixed price, and thereby reward the recipients for their contribution to
increases in the price of the Company's shares. In the event of a change in
control of the Company, benefits under these Plans may vest early.
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<PAGE> 14
The Board of Directors has adopted two severance policies for the
senior officers of the Company and FNB Southeast. Under the first severance
policy, any officer (other than an officer covered by a currently effective
severance agreement) who has been employed for five years or more, and who has
attained the office of Senior Vice President or above (a "Senior Officer"), is
entitled to receive salary continuation payments if his employment by the
Company or FNB Southeast is terminated "without cause." Any officer covered by
the policy would also be entitled to payments in the event of a "change in
control" of the Company or FNB Southeast if the officer is not offered a
position with the Company, FNB Southeast, or the successor of either, at the
officer's current salary, that does not require the officer to maintain an
office more than 25 miles from his or her office before the change in control.
These payments would be made in the same installments and amounts as the
officer's salary immediately prior to the time of termination and would continue
for a period of time dependent on the officer's length of employment. Any
officer employed for less than ten years would receive payments for one year,
any officer employed for more than ten years but less than 15 years would
receive payments for 18 months, and any officer employed for more than 15 years
would receive payments for two years.
The second severance policy was adopted by the Board of Directors at
its February 1997 meeting, and covers senior officers who have been employed by
FNB Southeast for less than five years and are recommended by the President and
the Board of Directors. Senior officers subject to this second policy receive
payments only if they are terminated as a result of a "change in control." Any
officer employed for less than three years would receive payments for six
months, and any officer employed for more than three years but less than five
years would receive payments for nine months.
Under either severance policy, payments to any officer would
immediately cease if the officer became an officer, director, employee,
consultant, or more than one percent owner of any bank or savings and loan
institution within 50 miles of the Company's home office and in connection with
such position is responsible for soliciting or servicing depositors, borrowers
or other customers. No amounts have ever been paid under either severance
policy.
The Board of Directors has adopted a Long Term Incentive Plan to
encourage eligible management employees to make long term decisions that
increase the Company's shareholder value, and enhance the Company's ability to
retain such employees. Under the Plan, these employees are awarded incentive
compensation if the Company reaches specified threshold, target and maximum
performance goals over a specified period, based on: (i) the increase, if any,
in the price per share of the Company's Common Stock; (ii) the increase, if any,
in the annual earnings per share of the Company; and (iii) the growth in the
Company's average earning assets. In the event of a change in control of the
Company, benefits under the Long Term Incentive Plan may vest early. Under the
Long Term Incentive Plan, Mr. Sewell will be entitled to receive a payout in the
following amount as of December 31, 2000: (i) 52,140, if the Company meets the
threshold performance goals; (ii) 260,708, if the Company meets the target
performance goals; or (iii) 391,062, if the Company meets the maximum
performance goals. Mr. Albright will be entitled to receive a payout in the
following amount as of December 31, 2000: (i) 20,555, if the Company meets the
threshold performance goals; (ii) 102,780, if the Company meets the target
performance goals; or (iii) 154,172, if the Company meets the maximum
performance goals. There are seven senior officers of the Company (including
Messrs. Sewell and Albright) who are participants in the Long Term Incentive
Plan. The aggregate potential payouts to such participants as of December 31,
2000 would be: (i) 140,241, if the Company meets the threshold
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<PAGE> 15
performance goals; (ii) 701,216, if the Company meets the target performance
goals; or (iii) 1,051,841, if the Company meets the maximum performance goals.
In addition to the Long Term Incentive Plan, the Board of Directors has
adopted an Annual Management Incentive Plan. Annual incentives exist as a means
of linking compensation to objective performance criteria that are within the
control of the executive officers. Under the Annual Management Incentive Plan,
certain of the Company's officers and management employees are awarded incentive
compensation, based in part on the Company's achievement of specified goals,
such as a minimum net income, over a specified period, generally one calendar
year, and the officer's achievement of certain goals relating to the functions
of the particular officer. If the Company does not meet the specified goals,
discretionary awards may be made to certain officers and management employees if
they meet planned individual goals during the specified period, as recommended
by the Chief Executive Officer of the Company.
Certain highly compensated employees of the Company, including Messrs.
Sewell and Albright, are eligible for the Company's Benefit Equivalency Plan,
which is a supplemental executive retirement plan, intended to "make whole"
those employees whose compensation under the Company's Employees' Pension Plan
is limited by applicable governmental restrictions due to their compensation
level. The Plan includes certain early retirement benefits.
BOARD COMPENSATION COMMITTEE REPORT
General. A compensation committee of the Company was initially
constituted in 1991. Prior thereto, the functions of a compensation committee
were performed by the Executive Committee of the Board of Directors. The
Compensation Committee reviews and oversees the general compensation plans and
policies of the Company and approves the individual compensation arrangements
for the Company's executive officers.
Philosophy. The fundamental philosophy of the Company's compensation
program is to provide and maintain a total compensation program that is
internally competitive in relation to the value of each job, recognizing and
rewarding when appropriate individual differences in performance, and a program
that is externally competitive in relation to the total compensation levels and
compensation practices at other companies in our industry and geographic area.
The overall intent of the program is to motivate superior performance on behalf
of the Company and its shareholders.
Application of Philosophy to CEO and Other Officers' Compensation. In
applying this philosophy, the Compensation Committee (the "Committee") reviews
and develops compensation recommendations to be considered by the entire Board
of Directors. A compensation policy has been adopted that is used as a guide by
the Committee and the Board of Directors to consistently and fairly address
salary/benefit issues for all employees, including executive officers. The
Committee met four times during 1999. The Committee directly determined the
recommendations regarding the compensation of the Chief Executive Officer (the
"CEO"). In addition, the Committee also sets forth recommendations involving
compensation policies, incentive compensation, long term equity participation
and benefit plans. The Committee also delegates to the CEO the responsibility to
determine appropriate levels of salaries and incentive bonuses for the other
officers in the Company. Primary consideration is given to attainment and
performance in relation to individual goals and objectives that are established
at the beginning of each year before increases are granted. Additional
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<PAGE> 16
consideration is given by both the Committee (with regard to the CEO) and the
CEO (with regard to other officers) to the demonstration of the leadership
skills needed to enable the Company to achieve the business objectives set forth
by the Board of Directors.
Components of Compensation. In order to objectively establish a fair,
reasonable and competitive package, a detailed analysis was completed that
formed the basis for decisions that were made in different areas of the
compensation plan. This analysis included the use of surveys with financial
institutions of similar size and complexity to insure that our programs and
decisions are in line with other bank CEOs' in North Carolina and this region of
the country. The North Carolina Bankers Association Survey and the Bank
Administration Institute Survey were among several sources that were used to
obtain relevant information. The following components of the compensation
package were taken into consideration during this analysis and review process:
o Base Salary - The Company's objective is to have salary
parameters, established through comparisons with other
financial institutions, that motivate and reward superior
performance. The Committee felt the CEO's achievements were
significant in terms of the Company's growth and profitability
and that base salary levels and recommendations were
reasonable and in accordance with the salary administration
guidelines prepared from peer group data.
o Bonus Plans - For the Company's officers, including the CEO,
annual incentive bonuses are directly and indirectly linked to
the Company's financial performance and to the officer's
individual performance as it relates to enabling the Company
to achieve its performance goals. During 1999, as in previous
years, the Committee set the CEO's annual incentive bonus as a
percentage of base salary based on overall net income targets
that were established. This goal was attained and the full
payout was earned accordingly. In addition to the annual plan,
the CEO and other selected executive officers participate in a
long term (five year) bonus plan that encourages long term
decisions that increase shareholder value. The goals of this
plan were recommended by the Committee to the Board of
Directors and are monitored at regular intervals to determine
progress.
o Long Term Equity Participation (stock options) - For the
Company's CEO and other selected executive officers approved
by the Committee, stock options may be granted each year at
the recommendation of the Committee and at the discretion and
approval of the Board of Directors. While no formal system is
employed in determining the number of options granted, the
Committee does consider the individual's level of
responsibility and the number of previously granted stock
options. The number and frequency of the grants are in line
with our competition in the industry in which we compete based
on survey information and data compiled by the consultant
engaged by the Committee.
o Miscellaneous Benefit Plans - The Company also provides the
CEO and certain officers the same benefits that are afforded
to all Company employees, including matching contributions
under a defined contribution plan, retirement benefits under
the Company's pension plans and group insurance covering
health, life and disability. Also, the Company's CEO and
selected executive officers participate in a Supplemental
Executive Retirement Plan and Split Dollar Life Insurance
program. These plans are reasonable and frequently
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<PAGE> 17
found in comparisons with other similar sized financial
institutions and are part of a total compensation plan.
Conclusion. The Committee carefully reviewed the salary and benefit
recommendations made to the Board of Directors and believes all approved
increases were in line with survey information as compiled independently and
with the assistance and advice of an outside consulting organization. The Board
of Directors believes that these executive officer compensation policies and
programs effectively promote the Company's interests and enhance shareholder
value.
This report is submitted by the following members of the Compensation
Committee of the Board of Directors:
COMPENSATION COMMITTEE
CHARLES A. BRITT ELTON H. TRENT, JR., CHAIRMAN
WILLARD B. APPLE, JR. (EX OFFICIO) KENAN C. WRIGHT
O. EDDIE GREEN
JOSEPH H. KINNARNEY
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COMPARISON OF CUMULATIVE TOTAL RETURN
The following graph compares the cumulative shareholder return on the
Company's Common Stock since December 31, 1994 through December 31, 1999, with
the cumulative total return for the same period on the Nasdaq Stock Market Index
(U.S.) and The Carson Medlin Company Independent Bank Index of 23 independent
community banks located in seven southeastern states, with assets averaging
approximately $450 million.(1) The graph assumes that at the beginning of the
period indicated, $100 was invested in the Company's Common Stock and the stock
of the companies comprising the other indices indicated and that all dividends,
if any, were reinvested.
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
FNB FINANCIAL SERVICES CORPORATION 100 130 183 368 246 161
INDEPENDENT BANK INDEX 100 122 155 235 246 222
NASDAQ INDEX 100 141 174 213 300 542
</TABLE>
(1) The Carson Medlin Company Independent Bank Index is a published
industry index of the total return to shareholders over the past five
years of 23 similarly-sized independent community banks located in the
Southeastern United States.
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<PAGE> 19
CERTAIN TRANSACTIONS
Certain of the directors, including those who serve on the Compensation
Committee, and executive officers of the Company are customers of and borrowers
from FNB Southeast in the ordinary course of business. From January 1, 1999 to
December 31, 1999, loans outstanding to directors and executive officers of the
Company, and their associates as a group, amounted to a maximum of approximately
$3,282,691, or 8.08% of the equity capital of FNB Southeast. The peak
indebtedness occurred in December, 1999. Total individual and corporate
obligations, direct and indirect, for any one director did not exceed 10% of the
equity capital of FNB Southeast at any time during the 1999 fiscal year. All
outstanding loans and commitments included in such transactions are made
substantially on the same terms, including rate and collateral, as those
prevailing at the time in comparable transactions with other customers. In the
opinion of management, these loans do not involve more than normal risk of
collectability, or contain other unfavorable features.
FNB Southeast has had, and expects to have in the future, banking
transactions in the ordinary course of its business with directors, officers and
principal shareholders of the Company, and their associates, on the same terms
including interest rates and collateral on loans, as those prevailing at the
same time for comparable transactions with others.
On August 31, 1999, the Company acquired Black Diamond Savings Bank
pursuant to a merger transaction in which Black Diamond became a wholly-owned
subsidiary of the Company and each share of Black Diamond common stock
outstanding immediately prior to the effective time of the merger was converted
into the right to receive 1.3333 shares of Company common stock. Directors Green
and Blosser served as directors of Black Diamond and Mr. Green served as
President of Black Diamond prior to the merger. As a result of the merger and
conversion of Black Diamond common stock shares, Mr. Green received 11,049
shares of the Company's common stock and fully vested options covering 73,332
shares of the Company's common stock, and Mr. Blosser received 76,933 shares of
the Company's common stock and fully vested options covering -0- shares of the
Company's common stock. In addition, as a condition to the obligations of the
Company in the merger transaction, Mr. Green entered into an Amended and
Restated Employment Agreement with Black Diamond, which is described elsewhere
in this Proxy Statement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than ten
percent of the Company's Common Stock, to file reports of ownership and changes
in ownership with the Securities and Exchange Commission ("SEC"). Executive
officers, directors and greater than ten percent beneficial owners are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that during the year ended December 31, 1999,
its executive officers and directors complied with all applicable Section 16(a)
filing requirements except for Willard B. Apple, Jr. Mr. Apple filed a Form 5 in
March 2000 for the following transactions: (i) the sale of 1,000 shares of the
Company's common stock on
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<PAGE> 20
April 30, 1999 at a price of $17.00 per share; (ii) the sale of 1,000 shares of
the Company's common stock on May 3, 1999 at a price of $17.00 per share; and
(iii) the sale of 2,000 shares of the Company's common stock on May 3, 1999 at a
price of $17.25 per share.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
In 1998, the Board of Directors approved the engagement of
PricewaterhouseCoopers LLP as the Company's independent public accountants for
the year ended December 31, 1998, to replace Cherry, Bekaert & Holland, L.L.P.
Cherry, Bekaert & Holland, L.L.P. was notified on August 21, 1998 that the
Company was changing independent public accountants.
The audit reports of Cherry, Bekaert & Holland, L.L.P. on the
consolidated financial statements of the Company for the years ended December
31, 1996 and 1997 did not contain any adverse opinion or disclaimer of opinion,
nor were they qualified or modified as to uncertainty, audit scope or accounting
principles.
In connection with the audits of the Company's financial statements,
for each of the two fiscal years ended December 31, 1997 and in the subsequent
interim period through August 21, 1998, there were no disagreements with Cherry,
Bekaert & Holland, L.L.P. on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope and procedures which, if not
resolved to the satisfaction of Cherry, Bekaert & Holland, L.L.P. would have
caused Cherry, Bekaert & Holland, L.L.P. to make reference to the matter in
their report. Cherry, Bekaert & Holland, L.L.P. affirmed these statements in a
letter furnished to the Company and filed with the Securities and Exchange
Commission.
During the two fiscal years ended December 31, 1997 and in the
subsequent interim period through August 21, 1998, the Company did not consult
PricewaterhouseCoopers LLP regarding any of the matters or events set forth in
Regulation S-K Item 304(a)(2)(i) and (ii).
The Board of Directors has appointed PricewaterhouseCoopers LLP as
independent auditors for fiscal year 2000. Although shareholder approval is not
required, the Company desires to obtain from the shareholders an indication of
their approval or disapproval of the Board's action in appointing
PricewaterhouseCoopers LLP as the independent auditors of the Company. If the
shareholders do not ratify this appointment, such appointment will be
reconsidered by the Audit Committee and the Board of Directors.
A representative of PricewaterhouseCoopers LLP will be present at the
Annual Meeting to make a statement and respond to questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP FOR FISCAL YEAR 2000.
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<PAGE> 21
SUBMISSION OF SHAREHOLDER PROPOSALS FOR
2001 ANNUAL MEETING
Any proposals which shareholders intend to present for a vote at the
Company's 2001 annual meeting of shareholders, and which such shareholders
desire to have included in the Company's proxy materials relating to that
meeting, must be received by the Company on or before December 19, 2000.
Proposals received after that date will not be considered for inclusion in such
proxy materials. In addition, if a shareholder intends to present a matter for a
vote at the 2001 annual meeting of shareholders, other than by submitting a
proposal for inclusion in the Company's proxy statement for that meeting, the
shareholder must give timely notice in accordance with SEC rules. To be timely,
a shareholder's notice must be received by the Company's Corporate Secretary at
its principal office, 202 South Main Street, Reidsville, North Carolina 27320,
on or before January 31, 2001. Such notice should set forth (a) as to each
matter the shareholder proposes to bring before the meeting, a brief description
of the business desired to be brought before the meeting and the reasons for
conducting such business at the meeting, and (b) the name and record address of
the shareholder, the class and number of shares of capital stock of the Company
that are beneficially owned by the shareholder, and any material interest of the
shareholder in such business.
MISCELLANEOUS
As of the date hereof, the Company knows of no other business that will
be presented for consideration at the Annual Meeting. However, the enclosed
proxy confers discretionary authority to vote with respect to any and all of the
following matters that may come before the meeting: (i) matters that the
Company's Board of Directors did not have notice of by January 31, 2001 in
accordance with the preceding paragraph; (ii) approval of the minutes of a prior
meeting of shareholders, if such approval does not amount to ratification of the
action taken at the meeting; (iii) the election of any person to any office for
which a bona fide nominee is named in this Proxy Statement and such nominee is
unable to serve or for good cause will not serve; (iv) any proposal omitted from
this Proxy Statement and the form of proxy pursuant to Rule 14a-8 or Rule 14a-9
under the Securities Exchange Act of 1934; and (v) matters incidental to the
conduct of the meeting. If any such matters come before the meeting, the proxy
agents named in the accompanying proxy card will vote in accordance with their
judgment.
The Annual Report on Form 10-K of the Company for the year ended
December 31, 1999, which includes financial statements audited and reported upon
by the Company's independent auditor, as well as the 1999 Annual Report to
shareholders, are being mailed along with this Proxy Statement; however, it is
not intended that either report be a part of this Proxy Statement or a
solicitation of proxies.
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<PAGE> 22
THE FORM 10-K FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, WILL BE
PROVIDED FREE OF CHARGE UPON WRITTEN REQUEST DIRECTED TO: FNB FINANCIAL SERVICES
CORPORATION, POST OFFICE BOX 2037, REIDSVILLE, NORTH CAROLINA 27320-2037,
ATTENTION: MICHAEL W. SHELTON (336-342-3346).
By Order of the Board of Directors
Willard B. Apple, Jr.
Chairman of the Board
April 18, 2000
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<PAGE> 23
REVOCABLE PROXY
FNB FINANCIAL SERVICES CORPORATION
202 South Main Street
Reidsville, North Carolina 27320
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - MAY 18, 2000
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Ernest J. Sewell and Michael W.
Shelton, or either of them, as attorney and proxy of the undersigned, each with
full power of substitution to represent the undersigned and to vote all shares
of FNB Financial Services Corporation which the undersigned is entitled to vote
at the above Annual Meeting of Shareholders, and any adjournment or postponement
thereof.
When properly executed and returned, this proxy and the shares represented
hereby will be voted in the manner described herein by the undersigned. If no
direction is made, this proxy and such shares will be voted FOR All Proposals
set forth below and described in the Proxy Statement. The undersigned further
gives the above-named attorneys and proxies the authority to vote in their
discretion upon such other matters as may properly come before the Annual
Meeting and any adjournment or postponement of the meeting. This proxy may be
revoked prior to its exercise.
The Board of Directors recommends a vote FOR the proposals listed below.
1. Election of Class I Directors:
[ ] FOR all nominees listed below (except as marked to the contrary below).
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below.
INSTRUCTION: To withhold authority to vote for any individual nominee, write the
nominee's name in the space provided below.
- ------------------------------------------------------
Ernest J. Sewell, Charles A. Britt, Barry Z. Dodson
2. Election of Class II Director:
[ ] FOR the nominee listed below.
[ ] WITHHOLD AUTHORITY to vote for the nominee listed below.
Don M. Green
3. Election of Class III Director:
[ ] FOR the nominee listed below.
[ ] WITHHOLD AUTHORITY to vote for the nominee listed below.
Gary G. Blosser
4. Ratify appointment of PricewaterhouseCoopers LLP as independent auditors for
the Company for the fiscal year ending December 31, 2000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
By signing the proxy, a shareholder will also be authorizing the proxy
holder to vote in his discretion regarding any procedural motions which may come
before the Annual Meeting. For example, this authority could be used to adjourn
the meeting if the Company believes it is desirable to do so. Adjournment or
other procedural matters could be used to obtain more time before a vote is
taken in order to solicit additional proxies or to provide additional
information to shareholders. The Company has no current plans to adjourn the
meeting, but would attempt to do so if the Company believes that adjournment
would promote shareholder interests.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, the Proxy Statement for such meeting, and the 1999
Annual Report to Shareholders.
Dated: _____________________, 2000
---------------------------------------
SIGNATURE OF SHAREHOLDER
---------------------------------------
SIGNATURE OF SHAREHOLDER
When signing as Attorney-in-Fact, Executor,
Administrator, Trustee or Guardian, please
give full title. If more than one Trustee,
all should sign. All joint owners must sign.
If a corporation, please sign in full
corporate name by any authorized officer.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
