<PAGE> 1
HABERSHAM BANCORP
282 Historic Highway 441 North
P.O. Box 1980
Cornelia, Georgia 30531
(706) 778-1000
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SATURDAY, APRIL 17, 1999.
To the Shareholders of Habersham Bancorp:
The annual meeting of shareholders of Habersham Bancorp (the "Company")
will be held on Saturday, April 17, 1999, at 1:00 p.m., in the Central Office of
Habersham Bank at 282 Historic Highway 441 North, Cornelia, Georgia, for the
following purposes:
(1) To elect directors to serve until the 2000 annual meeting of
shareholders; and
(2) To transact any other business that may properly come before
the meeting or any adjournment.
March 5, 1999 is the record date for the determination of shareholders
entitled to notice of and to vote at the meeting.
Please mark, date, sign and return the enclosed form of proxy as soon
as possible. If you attend the meeting and wish to vote your shares in person,
you may do so at any time before the vote takes place.
By Order of the Board of Directors,
David D. Stovall
President and Chief Executive Officer
March 18, 1999
<PAGE> 2
HABERSHAM BANCORP
282 HISTORIC HIGHWAY 441 NORTH
P.O. BOX 1980
CORNELIA, GEORGIA 30531
PROXY STATEMENT
-----------------------------------
INTRODUCTION
TIME AND PLACE OF THE MEETING
The Company's Board of Directors is furnishing this Proxy Statement to
solicit proxies for use at the annual meeting of shareholders to be held on
Saturday, April 17 1999, at 1:00 p.m., in the Central Office of Habersham Bank
at 282 Historic Highway 441 North, Cornelia, Georgia, and at any adjournment of
the meeting.
PROCEDURES FOR VOTING BY PROXY
If you properly sign, return and do not revoke your proxy, the persons
named as proxies will vote your shares according to the instructions you have
specified on the proxy card. If you sign and return your proxy card but do not
specify how the persons appointed as proxies are to vote your shares, your proxy
will be voted FOR the election of the nominated directors and in accordance with
the best judgment of the persons appointed as proxies as to all other matters
properly brought before the meeting. You can revoke your proxy by delivering to
Edward D. Ariail, Vice President and Secretary of the Company, at the Company's
Central Office, either a written revocation of your proxy or a duly executed
proxy bearing a later date or by attending the meeting and voting in person.
RECORD DATE AND MAILING DATE
The close of business on March 5, 1999 is the record date for the
determination of shareholders entitled to notice of and to vote at the meeting.
We first mailed this Proxy Statement and accompanying proxy card to shareholders
on or about March 18, 1999.
NUMBER OF SHARES OUTSTANDING
As of the close of business on the record date, the Company had
10,000,000 shares of common stock, $1.00 par value, authorized, of which
2,448,777 shares were issued and outstanding. Each such share is entitled to one
vote on matters to be presented at the meeting.
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<PAGE> 3
REQUIREMENTS FOR SHAREHOLDER APPROVAL
A quorum will be present if a majority of the votes entitled to be cast
are present in person or by valid proxy. We will count abstentions and broker
non-votes, which are described below, in determining whether a quorum exists. To
be elected, a director must receive more votes than any other nominee for the
same seat on the Board of Directors. As a result, if you withhold your vote as
to one or more directors, it will have no effect on the outcome of the election
unless you cast that vote for a competing nominee. To approve any other matter
presented for shareholder approval, the number of shares voted in favor of the
proposal must exceed the number of shares voted against the proposal, provided a
quorum is present. Only votes actually cast will count in determining whether
the shareholders have approved a proposal. Georgia law treats abstentions and
broker "non-votes" resulting from a broker's inability to vote a client's shares
on non-discretionary matters as "true abstentions" and not as negative votes. As
a result, abstentions and broker non-votes will not effect the outcome of the
vote on other proposals that may be brought before the meeting.
THE COMPANY
The Company was incorporated in 1984 as a bank holding company under
the laws of the State of Georgia. The Company's direct subsidiaries are listed
below.
<TABLE>
<CAPTION>
NAME LOCATION PRINCIPAL BUSINESS
---- -------- ------------------
<S> <C> <C>
Habersham Bank Cornelia, Georgia General commercial bank
Security State Bank Canton, Georgia General commercial bank
The Advantage Group, Inc. Cornelia, Georgia Bank marketing consultation
</TABLE>
In addition, Habersham Bank has the following subsidiaries:
<TABLE>
<CAPTION>
NAME LOCATION PRINCIPAL BUSINESS
---- -------- ------------------
<S> <C> <C>
BancMortgage Financial Corp. Northern Atlanta, Georgia Full service mortgage lending and
metropolitan area servicing
Appalachian Travel Service, Inc. Cornelia, Georgia Full service travel agency
Advantage Insurers, Inc. Cornelia, Georgia Property, casualty and life
insurance agency
</TABLE>
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<PAGE> 4
OWNERSHIP OF STOCK
PRINCIPAL SHAREHOLDERS
On March 5, 1999, the Company had 576 shareholders of record. The
following table lists the persons who, to our best knowledge, beneficially owned
5% or more of the Company's outstanding shares of common stock as of that date.
According to rules adopted by the Securities and Exchange Commission, a
"beneficial owner" of securities has or shares the power to vote the securities
or to direct their investment. Unless otherwise indicated, each person is the
record owner of, and has sole voting and investment power with respect to, his
or her shares. The number of issued and outstanding shares used to calculate the
percentage of total ownership for a given individual or group includes any
shares covered by the option(s) issued to that individual or group.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------- -------------------- ----------------
<S> <C> <C>
John Robert Arrendale 225,847 (1) 9.22%
200 Hillcrest Heights
Cornelia, Georgia 30531
Thomas A. Arrendale, III 654,361 (2) (3) 26.64%
P. O. Box 558
Baldwin, Georgia 30511
Cyndae Arrendale Bussey 510,776 (2) 20.86%
P. O. Box 558
Baldwin, Georgia 30511
David D. Stovall 199,129 (4) 7.89%
P. O. Box 1980
Highway 441 North
Cornelia, Georgia 30531
</TABLE>
Footnotes
(1) Includes 2,812 shares owned by Mr. Arrendale's spouse.
(2) Includes 400,000 shares owned by the Arrendale Undiversified Family
Limited Partnership and 85,000 shares owned by the Thomas A. Arrendale,
Jr. Family Limited Partnership. As general partners of each limited
partnership, Thomas A. Arrendale, III and Cyndae Arrendale Bussey share
voting and dispositive authority with respect to the shares owned by
each partnership.
(3) Includes 7,500 shares subject to options exercisable on or before May
4, 1999.
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<PAGE> 5
(4) Includes 97,795 shares owned of record by Mr. Stovall jointly with his
wife, 8,334 shares owned of record by Mr. Stovall jointly with his
daughter, and 76,000 shares subject to options exercisable on or before
May 4, 1999. Excludes 5,398.67 shares (as of the latest available
valuation of December 31, 1998) held in Mr. Stovall's account in the
Company's 401(k) Savings Investment Plan Trust (the "Savings Plan"), as
to which Mr. Stovall has no voting or investment power.
STOCK OWNED BY MANAGEMENT
The following table lists the number and percentage ownership of shares
of common stock beneficially owned by each director of the Company, each
executive officer named in the Summary Compensation Table contained elsewhere in
this Proxy Statement and all directors and executive officers as a group as of
March 5, 1999. Unless otherwise indicated, each person is the record owner of,
and has sole voting and investment power with respect to, his shares. The number
of issued and outstanding shares used to calculate the percentage of total
ownership includes any shares covered by the option(s) issued to the individual
or to members of the group, as applicable, identified in the table.
<TABLE>
<CAPTION>
Number of Shares Percentage
Name Beneficially Owned of Total
- ---- ------------------ --------
<S> <C> <C>
Directors:
Thomas A. Arrendale, Jr. 7,500 (1) *
Thomas A. Arrendale, III 654,361 (1) (2) 26.64%
James J. Holcomb 26,477 (1) 1.08%
James A. Stapleton, Jr. 7,950 (1) (3) *
David D. Stovall (4) 199,129 (5) 7.89%
C. Kenneth White 114,163 (6) 4.65%
Calvin R. Wilbanks 11,200 (1) *
Named Executive Officers:
Edward D. Ariail 49,992 (7) 2.02%
Robert S. Cannon 53,800 (8) 2.16%
C. Mickle Moye 32,459 (9) 1.32%
Anthony L. Watts 44,500 (10) 1.79%
All Directors and Current Executive
Officers as a Group (14 persons) 1,259,493 (11) 45.72%
</TABLE>
Footnotes
(*) Indicates less than 1%.
(1) Includes 7,500 shares subject to options exercisable on or before May
4, 1999.
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<PAGE> 6
(2) Includes 400,000 shares owned by the Arrendale Undiversified Family
Limited Partnership and 85,000 shares owned by the Thomas A. Arrendale,
Jr. Family Limited Partnership. As general partners of each limited
partnership, Thomas A. Arrendale, III and Cyndae Arrendale Bussey share
voting and dispositive authority with respect to the shares owned by
each partnership.
(3) Mr. Stapleton owns 450 of the indicated shares jointly with his
children.
(4) Mr. Stovall is also an executive officer of the Company.
(5) Includes 97,795 shares owned of record by Mr. Stovall jointly with his
wife, 8,334 shares owned of record by Mr. Stovall jointly with his
daughter, and 76,000 shares subject to options exercisable on or before
May 4, 1999. Excludes 5,398.67 shares (as of the latest available
valuation of December 31, 1998) held in Mr. Stovall's account in the
Company's 401(k) Savings Investment Plan Trust (the "Savings Plan"), as
to which Mr. Stovall has no voting or investment power.
(6) Includes 7,928 shares subject to options exercisable on or before May
4, 1999 and 103,945 shares registered to Lexus Industries of Georgia
and with respect to which Mr. White may be deemed to have sole voting
and investment power.
(7) Includes 10,815 shares owned of record by Mr. Ariail jointly with his
wife, 350 shares owned of record by Mr. Ariail jointly with his wife
and daughters and 23,000 shares subject to options exercisable on or
before May 4, 1999. Excludes 2,551 shares (as of the latest available
valuation of December 31, 1998) held in Mr. Ariail's account in the
Savings Plan, as to which Mr. Ariail has no voting or investment power.
(8) Includes 41,000 shares subject to options exercisable on or before May
4, 1999. Excludes 382 shares (as of the latest available valuation of
December 31, 1998) held in Mr. Cannon's account in the Savings Plan, as
to which Mr. Cannon has no voting or investment power.
(9) Includes 19,318 shares subject to options exercisable on or before May
4, 1999.
(10) Includes 41,000 shares subject to options exercisable on or before May
4, 1999.
(11) Of the indicated shares, 305,746 shares are subject to options
exercisable on or before May 4, 1999. Excludes 15,222 shares (as of the
latest available valuation of December 31, 1998) held in accounts for
the benefit of the Company's executive officers under the Savings Plan,
as to which participants have no voting or investment power.
- 5 -
<PAGE> 7
PROPOSAL 1: ELECTION OF DIRECTORS
NOMINEES
We propose that the nominees listed below be elected as directors of
the Company to serve until the next annual meeting of shareholders and until
their successors are duly elected and qualified. If any nominee becomes
unavailable to serve as a director, which we do not now anticipate, then the
persons named as proxies will have complete discretion to vote for another duly
nominated candidate.
The following table shows, for each director, his name and age at
December 31, 1998, the year he was first elected as a director, his position
with the Company other than as a director and his principal occupation and other
business experience for the past five years. Thomas A. Arrendale, Jr. and Thomas
A. Arrendale, III are father and son.
<TABLE>
<CAPTION>
YEAR FIRST POSITION WITH COMPANY;
NAME AGE ELECTED BUSINESS EXPERIENCE
- ---- --- ------- -------------------
<S> <C> <C> <C>
Thomas A. Arrendale, Jr. 78 1984 Chairman of the Board of the Company and Habersham Bank; Director and
President, Fieldale Farms, Inc. (poultry processing and distribution)
Thomas A. Arrendale, III 41 1990 Vice Chairman of the Board of the Company; Director of Marketing,
Fieldale Farms, Inc. (poultry processing and distribution)
James J. Holcomb 76 1984 Owner, Mt. Airy Wood Preserving (wood products)
James A. Stapleton, Jr. 50 1990 President and General Manager, Habersham Metal Products
David D. Stovall 42 1989 President and Chief Executive Officer of the Company; Vice Chairman and
Chief Executive Officer of Habersham Bank; President and Chairman of the
Board of The Advantage Group, Inc.; Chairman of the Board of Directors of
Security State Bank, BancMortgage Financial Corp., Appalachian Travel
Service, Inc. and Advantage Insurers, Inc.
C. Kenneth White 57 1995 Consultant, Certified Public Accountant and Private Investor
Calvin R. Wilbanks 52 1990 Co-Owner, C.P. Wilbanks Lumber Company
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE
NOMINEES LISTED ABOVE.
- 6 -
<PAGE> 8
MEETINGS AND COMMITTEES OF THE BOARD
The Company's Board of Directors holds its regular meetings on the
third Saturday of the first month of each quarter and otherwise as necessary.
Habersham Bank's Board of Directors meets on the third Saturday of each month
and Security State Bank's Board of Directors meets on the third Monday of each
month. During 1998, the Company's Board of Directors met seven times, Habersham
Bank's Board of Directors met 12 times and Security State Bank's Board of
Directors met 12 times. Each director of the Company attended at least 75% of
the meetings of the Company's Board of Directors and of any committees of which
he was a member, and each director of Habersham Bank and Security State Bank
attended at least 75% of the aggregate number of meetings of the Board of
Directors and committees of which he was a member.
The Company's Board of Directors has established a Compensation
Committee and an Audit Committee. The Compensation Committee is composed of
Thomas A. Arrendale, Jr. and James J. Holcomb, and was established to determine
the compensation of Company officers. The Committee also administers the
Company's employee stock option plans. The Committee met once in 1998.
The Audit Committee's functions include (a) providing assistance to the
Board of Directors in fulfilling its responsibilities for examinations of the
Company by regulatory agencies and independent auditors; (b) determining that
the Company has adequate administrative, operating and internal accounting
controls and that it is operating in accordance with prescribed procedures; and
(c) serving as an independent party in the review of the Company's financial
information prior to its distribution to the Company's shareholders and the
public. The current members of the Audit Committee are: James J. Holcomb
(Chairman), James A. Stapleton, Jr., C. Kenneth White and Calvin R. Wilbanks.
Either the Chairman or the Company's internal auditor may call a meeting of the
Audit Committee. During 1998, the Audit Committee met four times.
Neither the Company nor any of its subsidiaries has a standing
nominating committee.
COMPENSATION OF DIRECTORS
With the exception of C. Kenneth White, the same individuals who served
as directors of the Company in 1998 also served as directors of Habersham Bank.
They were compensated for their service to the Company and to Habersham Bank at
rates of from $500 to $3,000 per Board meeting attended. Directors of Security
State Bank, including Mr. Stovall and Mr. White, receive the same compensation
as directors of Habersham Bank. Directors are not compensated for their service
as members of committees. Mr. Stovall received a total of $31,500 in director
fees for 1998.
Directors of the Company and its bank subsidiaries who are not
employees of the Company or any of its subsidiaries are granted options annually
under the Habersham Bancorp Outside Directors' Stock Option Plan (the
"Directors' Plan"). On December 31 of each year, so long as the Company or the
applicable bank subsidiary has a return on beginning assets of at least one
percent for the prior 12-month period, each eligible director of the Company
receives
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<PAGE> 9
an option to purchase 1,000 shares of common stock at an exercise price equal to
the fair market value of the common stock on the date of grant and each director
of a bank subsidiary receives an option to purchase 250 shares on the same
terms. Options are exercisable in full six months after the date of grant. No
directors received options under the Directors' Plan in 1998.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16 (a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and persons who own
beneficially more than 10% of the Company's outstanding common stock to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in their ownership of the Company's common stock. Directors,
executive officers and greater than 10% shareholders are required to furnish the
Company with copies of the forms they file. To our knowledge, based solely on a
review of the copies of these reports furnished to the Company, during the
fiscal year ended December 31, 1998, our directors, executive officers and
greater than 10% shareholders complied with all applicable Section 16(a) filing
requirements.
- 8 -
<PAGE> 10
EXECUTIVE OFFICERS
The Company's executive officers are appointed by and hold office at
the discretion of the Board of Directors. The following table lists for each
executive officer (a) the person's name, (b) his or her age at December 31,
1998, (c) the year he or she was first elected as an executive officer of the
Company, (d) his or her position with the Company and its subsidiaries, and (e)
other business experience for the past five years, if he or she has been
employed by the Company or any subsidiary for less than five years.
<TABLE>
<CAPTION>
YEAR FIRST POSITION WITH COMPANY;
NAME AGE ELECTED BUSINESS EXPERIENCE
- ---- --- ------- -------------------
<S> <C> <C> <C>
Thomas A. Arrendale, Jr. 78 1984 Chairman of the Board of the Company and Habersham Bank; Director and
President, Fieldale Farms, Inc. (poultry processing and distribution)
David D. Stovall 42 1984 President and Chief Executive Officer of the Company; Vice Chairman and
Chief Executive Officer of Habersham Bank; President and Chairman of the
Board of The Advantage Group, Inc.; Chairman of the Board of Directors of
BancMortgage Financial Corp., Security State Bank, Appalachian Travel
Service, Inc. and Advantage Insurers, Inc.
Edward D. Ariail 40 1990 Vice President and Corporate Secretary of the Company; President and
Chief Operating Officer of Habersham Bank since April 1996; prior
thereto, Executive Vice President of Habersham Bank; Executive Vice
President of The Advantage Group, Inc.; member of the Board of Directors
of BancMortgage Financial Corp. and Vice Chairman of the Board of
Appalachian Travel Service, Inc.
Pamela D. Spangler 51 1985 Vice President - Human Resources of the Company, Senior Vice President of
Habersham Bank and Secretary of The Advantage Group, Inc.
Annette Banks 52 1997 Vice President and Chief Financial Officer of the Company since April
1997; prior thereto, Chief Financial Officer of the Company and Vice
President, Controller of Habersham Bank.
</TABLE>
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<PAGE> 11
<TABLE>
<CAPTION>
YEAR FIRST POSITION WITH COMPANY;
NAME AGE ELECTED BUSINESS EXPERIENCE
- ---- --- ------- -------------------
<S> <C> <C> <C>
Bonnie Bowling 40 1997 Vice President, Operations, Audit, Compliance of the Company since April
1997; from December 1994 to 1997, Process Owner of Audit/Compliance of
the Company; prior thereto, Vice President of CB&T - West Georgia,
Carrollton, Georgia
Robert S. Cannon 47 1997 President, Mortgage Banking of the Company and Principal/Director of
BancMortgage Financial Corp. since 1996; prior thereto, President of
HomeBanc Mortgage Corporation, Atlanta, Georgia
Lona Paulos Pope 43 1997 Vice President, Marketing of the Company and President of Appalachian
Travel, Inc. since April 1997; prior thereto, Marketing Director of the
Company and Vice President and Marketing Director of Habersham Bank.
Anthony L. Watts 51 1997 Vice President, Mortgage Banking of the Company since April 1997;
Principal/ Director, Chief Executive Officer of BancMortgage Financial
Corp. since 1996; prior thereto, President and Chief Executive Officer of
Mr. Vernon Federal Savings Bank, Dunwoody, Georgia.
James E. McCollum 48 1998 Executive Vice President of the Company and Director of Habersham Bank,
Appalachian Travel Services, Inc. and Advantage Insurers, Inc. since
August 1998; prior thereto, Manager of Credit Development, First Data
Retail Services, Omaha, Nebraska from 1996 through 1997; Manager of
Credit Development, J.C. Penney, Dallas, Texas from 1980 to 1996.
</TABLE>
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries to or on behalf
of the Company's Chief Executive Officer and the four other mostly highly
compensated executive officers of the Company who earned over $100,000 in salary
and bonus during 1998 for the last three fiscal years or for a shorter period if
their employment by the Company began within the last three fiscal years.
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<PAGE> 12
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation (1) Compensation (2)
---------------- ----------------
Securities Underlying All Other
Name and Principal Position Year Salary ($) Bonus($) Options/ SARs (#) Compensation($) (3)
- --------------------------- ---- ---------- -------- ----------------- -------------------
<S> <C> <C> <C> <C> <C>
David D. Stovall 1998 168,019 0 12,000 8,278 (4)
President and Chief Executive 1997 158,862 0 12,000 7,951 (4)
Officer of the Company and Vice 1996 132,000 0 11,000 4,844 (4)
Chairman and Chief Executive
Officer of Habersham Bank
Edward D. Ariail 1998 108,179 0 3,000 4,490 (5)
Vice President and Corporate 1997 98,248 0 7,500 4,527 (5)
Secretary of the Company and 1996 85,645 0 7,500 4,139 (5)
President and Chief Operating
Officer of Habersham Bank
Robert S. Cannon 1998 320,814 0 9,000 5,200
President, Mortgage Banking of the 1997 151,629 0 9,000 177,968 (6)
Company and Principal/Director of
BancMortgage Financial Corp.
Anthony L. Watts 1998 322,043 0 9,000 5,200
Vice President, Mortgage Banking 1997 151,629 0 9,000 177,968 (6)
of the Company and
Principal/Director and Chief
Executive Officer of BancMortgage
Financial Corp.
C. Mickle Moye 1998 120,845 0 -0- 3,613
Former Vice President, Commercial 1997 120,828 0 3,000 3,335
Banking of the Company and
President and Chief Executive
Officer of Security State Bank (7)
</TABLE>
(1) We have omitted information on "perks" and other personal benefits
because the aggregate value of these items does not meet the minimum
amount required for disclosure under Securities and Exchange Commission
regulations.
(2) The Company has not awarded any restricted stock or long-term
incentives other than stock options. Accordingly, we have omitted
columns relating to these types of awards.
- 11 -
<PAGE> 13
(3) Includes the following Company contributions to the indicated person's
savings plan account for the year indicated:
1998 1997 1996
---- ---- ----
Mr. Stovall $4,725 $4,398 $3,956
Mr. Ariail 2,930 2,967 2,579
Mr. Cannon 5,200 4,621 --
Mr. Watts 5,200 4,621 --
Mr. Moye 3,613 3,335 --
(4) Includes the following premiums paid by the Company under a split
dollar life insurance plan for the benefit of Mr. Stovall in the years
indicated:
1998 1997 1996
------ ------ -----
$3,553 $3,553 $ 888
(5) Includes the following in premiums paid by the Company under a split
dollar life insurance policy for the benefit of Mr. Ariail in the years
indicated:
1998 1997 1996
------ ------ ------
$1,560 $1,560 $1,560
(6) Includes $173,347 paid as a part of a distribution required under an
agreement entered into by Habersham Bank with Messrs. Cannon and Watts
relating to the establishment of BancMortgage Financial Corp. See
"-Employment Agreements."
(7) Mr. Moye retired on December 31, 1998.
The following table sets forth information regarding the grant of stock options
to the executives named in the Summary Compensation Table during 1998. All
options shown are presently exercisable. The Company did not award any stock
appreciation rights during 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL OPTIONS POTENTIAL REALIZABLE VALUE
SECURITIES GRANTED TO EXERCISE AT ASSUMED ANNUAL RATE
UNDERLYING EMPLOYEES IN PRICE EXPIRATION OF STOCK PRICE APPRECIATION
NAME OPTIONS GRANTED FISCAL YEAR ($/SHARE) DATE FOR OPTION TERM
---- --------------- ----------- --------- ---- ---------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
David D. Stovall 12,000 16.1 14.25 12/31/03 47,880 104,310
Edward D. Ariail 3,000 4.0 14.25 12/31/03 11,970 25,875
Robert S. Cannon 9,000 12.1 14.25 12/31/03 35,910 78,233
Anthony L. Watts 9,000 12.1 14.25 12/31/03 35,910 78,233
C. Mickle Moye -0- 0.0 -- -- -0- -0-
</TABLE>
- 12 -
<PAGE> 14
The following table contains information, with respect to the
executives named in the Summary Compensation Table, concerning the exercise of
options during 1998 and unexercised options held as of the end of 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS/SARS
ACQUIRED OPTIONS AT FY-END (#) AT FY /END ($) (1)
ON VALUE --------------------- -------------------------
EXERCISE REALIZED
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ---------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David D. Stovall 10,000 50,620 50,318 0 $30,371 0
Edward D. Ariail 5,000 25,310 23,000 0 3,750 0
Robert S. Cannon 0 0 41,000 0 9,375 0
Anthony L. Watts 0 0 41,000 0 9,375 0
C. Mickle Moye 0 0 19,318 0 26,621 0
</TABLE>
(1) Calculated by subtracting the exercise price from the market price of
the common stock at fiscal year-end ($14.25) and multiplying the
resulting figure by the number of shares subject to options for which
the exercise price was less than the market price of the common stock
at fiscal year-end.
EMPLOYMENT AGREEMENTS
Under an agreement dated as of January 2, 1996 among the Company,
Habersham Bank (the "Bank"), BancMortgage Financial Corp. ("BancMortgage"),
Robert S. Cannon and Anthony L. Watts, each of Messrs. Cannon and Watts is
entitled to an annual base salary of $150,000 and a percentage of BancMortgage's
annual net income before taxes. Other elements of compensation include the use
of a company car, club memberships, life insurance and such other benefits as
are provided under the Bank's employee benefit plans. If the Company or the Bank
is acquired or if the Bank receives and wishes to accept a bona fide offer for
the acquisition of BancMortgage, Messrs. Cannon and Watts have a right of first
refusal to acquire BancMortgage.
- 13 -
<PAGE> 15
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report discusses the compensation objectives and policies
applicable to our executive officers and our policy generally with respect to
the compensation of all executive officers as a group for 1998 and specifically
reviews the compensation established for our Chief Executive Officer during
1998.
COMPENSATION PHILOSOPHY
Our executive compensation program has three objectives: (1) to align
the interests of the executive officers with those of our shareholders by basing
a significant portion of an executive's compensation on the Company's
performance, (2) to attract and retain highly talented and productive
executives, and (3) to provide incentives for superior performance by our
executives. To achieve these objectives, our executive compensation program
consists of base salary and incentive compensation in the form of stock options.
These compensation elements are in addition to the general benefit programs that
are offered to all of our employees.
In determining the amount and type of compensation to be awarded to
executive officers, we study the compensation packages for executives of a peer
group of the Company's most direct publicly held competitors for executive
talent, assess the competitiveness of our executive compensation program and
review the Company's financial performance for the previous year. We also gauge
our success in achieving the compensation program's objectives in the previous
year and consider the Company's overall performance objectives. Each element of
our executive compensation program is discussed below.
BASE SALARIES
Base salaries for our executive officers for 1998 are reflected in the
Summary Compensation Table. In addition to the factors described above that
support our executive compensation program generally, we evaluate subjectively
the responsibilities of the specific executive position and the individual
executive's experience and knowledge in determining his or her base salary.
Salaries are not based upon the achievement of any predetermined performance
targets.
INCENTIVE COMPENSATION
Our incentive compensation is based upon our Incentive Stock Option
Plan. We believe that placing a portion of executives' total compensation in the
form of stock options achieves three objectives. It aligns the interest of our
executives directly with those of our shareholders, gives executives a
significant long-term interest in the Company's success and helps us retain key
executives. In determining the number and terms of options to grant an
executive, we primarily consider subjectively the executive's past performance
(or, in the case of a new executive, his or her knowledge, and experience and
the degree to which we can recruit executives with similar skills) and the
degree to which an incentive for long-term performance would benefit the
Company.
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<PAGE> 16
BENEFITS
We believe we must offer a competitive benefits program to attract and
retain key executives. We provide the same medical and other benefits to our
executive officers that are generally available to our other employees.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
We based our Chief Executive Officer's 1998 salary and stock options on
our review of the compensation packages for chief executive officers of our most
direct competitors and on our subjective assessment of his experience, knowledge
and abilities. We have and will continue to base salary adjustments, stock
option awards or other long-term incentive compensation on the same elements and
measures of performance as we review in determining the compensation for our
other executive officers. Aside from the incentives inherent in the grant of
stock options, we do not directly tie our Chief Executive Officer's compensation
to the Company's performance.
SECTION 162(M) OF THE INTERNAL REVENUE CODE
It is our responsibility to address the issues raised by Section 162(m)
of the Internal Revenue Code, as amended. The revisions to Section 162(m) made
certain non-performance based compensation in excess of $1,000,000 to executives
of public companies non-deductible to the companies beginning in 1994. We have
reviewed these issues and have determined that no portion of compensation
payable to any executive officer for 1998 is non-deductible. Our Incentive Stock
Option Plan limits to $100,000 the aggregate fair market value of the common
stock subject to options that first become exercisable during any calendar year
for any individual optionee.
Submitted by: THE COMPENSATION COMMITTEE
Thomas A. Arrendale, Jr.
James J. Holcomb
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<PAGE> 17
PERFORMANCE GRAPH
The following Performance Graph compares the yearly percentage change
in the cumulative total shareholder return on our common stock to the cumulative
total return on the Nasdaq Stock Market (U.S.) Index and the Nasdaq Bank Stock
Index from July 17, 1995, when the Company commenced trading on the Nasdaq Stock
Market, through the last trading day of each succeeding fiscal year through
December 31, 1998. The Performance Graph assumes reinvestment of dividends,
where applicable.
<TABLE>
<CAPTION>
07/1995 12/1995 12/1996 12/1997 12/1998
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Habersham Bancorp 100.0 122.0 155.2 180.6 134.9
Nasdaq Stock Market (US Companies) 100.0 105.1 129.2 158.3 223.1
Nasdaq Bank Stocks 100.0 118.2 156.1 261.3 259.2
SIC 6020-6029, 6710-6719 US & Foreign
</TABLE>
NOTES:
A. The lines represented monthly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 07/17/1995.
- 16 -
<PAGE> 18
CERTAIN TRANSACTIONS
Some of our directors, officers, principal shareholders and their
associates were customers of, or had transactions with, the Company or its
subsidiaries in the ordinary course of business during 1998. Some of our
directors are directors, officers, trustees or principal securities holders of
corporations or other organizations that also were customers of, or had
transactions with, the Company or its subsidiaries in the ordinary course of
business during 1998.
All outstanding loans and other transactions with our directors,
officers and principal shareholders were made in the ordinary course of business
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons and,
when made, did not involve more than the normal risk of collectability or
present other unfavorable features. In addition to banking and financial
transactions, the Company and its subsidiaries may have had additional
transactions with, or used products or services of, various organizations with
which directors of the Company and its subsidiaries were associated. The amounts
involved in these non-credit transactions have not been material in relation to
the business of the Company, its subsidiaries or such other organizations. We
expect that the Company and its subsidiaries will continue to have similar
transactions in the ordinary course of business with such individuals and their
associates in the future.
MISCELLANEOUS
SHAREHOLDER PROPOSALS
If you wish to submit a proposal for action at the next annual meeting
of shareholders and would like to have it included in the proxy statement for
that meeting, you must send a written copy of the proposal to the President of
the Company at the address listed on the first page of this proxy statement on
or before November 17, 1999. The proposal must comply with the rules and
regulations of the Securities and Exchange Commission.
OTHER MATTERS
We know of no other matters that may be brought before the meeting. If,
however, any matter other than the election of directors or a matter incident to
the election of directors properly comes before the meeting, the persons
appointed as proxies will vote on the matter in accordance with their best
judgment.
EXPENSES AND SOLICITATION OF PROXIES
The Company will pay the expenses of soliciting proxies for the 1999
annual meeting of shareholders. In addition to solicitation by mail, certain
directors, officers and regular employees of the Company and its subsidiaries
may solicit proxies by telephone, telegram or personal interview. They will
receive no compensation in addition to their regular salaries for these
activities. The Company will direct brokerage houses and custodians, nominees
and fiduciaries to forward soliciting material to the beneficial owners of the
common stock that these institutions hold of record, and, upon request, will
reimburse them for their reasonable out-of-pocket expenses.
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<PAGE> 19
HABERSHAM BANCORP
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 17, 1999
The undersigned shareholder of Habersham Bancorp (the "Company") hereby appoints
David D. Stovall and Edward D. Ariail as proxies with full power of
substitution, acting unanimously or by either of them if only one be present and
acting, to vote all shares of common stock of the Company which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Shareholders (the "Meeting") to be held at the Central Office of the Company,
282 Historic Highway 441 North, Cornelia, Georgia on Saturday, April 17, 1999 at
1:00 p.m. and at any adjournments thereof, upon the proposals described in the
accompanying Notice of the Annual Meeting and the Proxy Statement relating to
the Meeting (the "Proxy Statement"), receipt of which is hereby acknowledged.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
PROPOSAL 1: To elect the nominees listed below to serve as directors of the
Company for the ensuing year:
Thomas A. Arrendale, Jr., Thomas A. Arrendale III, James J. Holcomb,
James A. Stapleton, Jr., David D. Stovall, C. Kenneth White and Calvin
R. Wilbanks
FOR all nominees WITHHOLD AUTHORITY
---- listed above ---- to vote for all
(except as indicated nominees listed
to the contrary below). above.
INSTRUCTION: To withhold authority for any individual nominee, mark "FOR"
above, and write that nominee's name in the space below:
----------------------------------------------------------
This proxy, when properly executed, will be voted as directed, but if
no direction to the contrary is indicated, it will be voted FOR
Proposal 1.
Discretionary authority is hereby conferred as to all other matters
which may come before the meeting.
Dated: , 1999
--------------------------------
(Be sure to date your Proxy)
--------------------------------------------
Name(s) of Shareholder(s)
--------------------------------------------
Signature(s) of Shareholder(s)
If stock is held in the name of more than one person, all holders
should sign. Signatures must correspond exactly with the name or names appearing
on the stock certificate(s). When signing as attorney, executor, administrator,
trustee, guardian or custodian, please indicate the capacity in which you are
acting. If a corporation, please sign in full corporate name by the President or
other authorized officer. If a partnership, please sign in name by authorized
person.
Please mark, date and sign this Proxy, and return it in the enclosed
return-addressed envelope. No postage is necessary.
PLEASE RETURN PROXY AS SOON AS POSSIBLE
