<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
[x] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Corpus Christi Bancshares, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
[ ] 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:
- --------------------------------------------------------------------------------
- ------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
CORPUS CHRISTI BANCSHARES, INC.
POST OFFICE BOX 9664
CORPUS CHRISTI, TEXAS 78469
(512) 887-3000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 31, 1995
To the Shareholders:
The 1995 Annual Meeting of the Shareholders of Corpus Christi
Bancshares, Inc. (the "Company") will be held on May 31, 1995 at 3:00 p.m.
(Central Daylight Savings Time) at Citizens State Bank of Corpus Christi, 2402
Leopard Street, Corpus Christi, Texas, for the following purposes:
1. To elect four Class A directors to serve until the 1998 Annual
Meeting of Shareholders and until their successors shall have been
elected and qualified;
2. To elect one Class C director to serve until the 1997 Annual
Meeting of Shareholders and until his successor shall have been
elected and qualified;
3. To consider and vote upon a proposal, which is RECOMMENDED by the
Board of Directors, to ratify the selection of KPMG Peat Marwick as
the independent auditors of the Company for the current fiscal
year;
4. To consider and vote upon a proposal, which is RECOMMENDED by the
Board of Directors, to amend the Company's Amended Articles of
Incorporation to increase the authorized shares of Common Stock
from 2,000,000 shares to 4,000,000 shares;
5. To consider and vote upon a shareholder proposal, which is OPPOSED
by the Board of Directors, to amend the Company's Amended Bylaws to
require shareholder approval for the issuance of stock options to
key employees or directors of the Company and its subsidiaries;
6. To consider and vote upon a shareholder proposal, which is OPPOSED
by the Board of Directors, which would require shareholders to vote
on any written purchase, merger or consolidation offer where the
aggregate consideration for such offer equals 150% or more of the
then current book value of the issued and outstanding shares of
the Company's Common Stock; and
7. To act on such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on April 6,
1995, as the date for the determination of shareholders entitled to notice of,
and to vote at, the Annual Meeting. The stock transfer book of the Company
will not be closed for purposes of determining shareholders of record.
Your attention is directed to the accompanying Proxy Statement. To
constitute a quorum for the conduct of business at the Annual Meeting, it is
necessary that at least 50% of all outstanding shares be present in person or
be represented by proxy. We hope you can attend the Annual Meeting in person,
but regardless of whether you attend, please sign and return the enclosed proxy
card in the enclosed stamped envelope. If you attend the Annual Meeting and
wish to vote, you may then withdraw your proxy and vote in person.
By Order of the Board of Directors
Eduardo A. Lopez
Secretary
April 24, 1995
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR
SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE
PRESENCE OF A QUORUM MAY BE ASSURED. THE PROMPT RETURN OF YOUR SIGNED PROXY,
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, WILL AID THE COMPANY IN REDUCING
THE EXPENSE OF ADDITIONAL PROXY SOLICITATIONS. THE GIVING OF SUCH PROXY DOES
NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE MEETING.
<PAGE> 3
CORPUS CHRISTI BANCSHARES, INC.
POST OFFICE BOX 9664
CORPUS CHRISTI, TEXAS 78469
PROXY STATEMENT
INTRODUCTION
This Notice of Annual Meeting of Shareholders and Proxy Statement is
furnished in connection with the solicitation of proxies by the Board of
Directors of Corpus Christi Bancshares, Inc., a Texas corporation (the
"Company"), for use at the 1995 Annual Meeting of Shareholders (the "Annual
Meeting") to be held on May 31, 1995, at the time and place and for the
purposes set forth in the Notice and at any recess or adjournments thereof.
The Company encourages the personal attendance of its shareholders at
the Annual Meeting, and execution of the accompanying proxy will not affect a
shareholder's right to attend the Annual Meeting and vote in person. Any
shareholder giving a proxy has the right to revoke his or her proxy by giving
written notice of such revocation to the Secretary of the Company at the
Company's principal executive offices at any time before the proxy is exercised
by executing and delivering a later-dated proxy or attending the Annual Meeting
and voting his or her shares in person. No such notice of revocation or
later-dated proxy, however, will be effective until received by the Company at
or prior to the Annual Meeting.
Only holders of record of the Company's Common Stock at the close of
business on April 6, 1995, the record date for those entitled to notice of the
Annual Meeting, will be entitled to vote at the meeting. On such date there
were 1,600,000 shares of Common Stock issued and outstanding. Generally, all
issued and outstanding shares of Common Stock are entitled to one vote per
share on each matter properly submitted at the Annual Meeting. Shareholders
have no cumulative voting rights. This proxy statement and accompanying form of
proxy are being mailed on or about April 24, 1995.
VOTING OF PROXIES
The presence of the holders of at least 50% of the issued and
outstanding shares of Common Stock entitled to vote at the Annual Meeting,
either in person or represented by a properly executed proxy, is necessary to
constitute a quorum for the transaction of business at the Annual Meeting. If
there are not sufficient shares represented in person or by proxy at the Annual
Meeting to constitute a quorum, the Annual Meeting may be recessed, postponed
or adjourned in order to permit further solicitation by the Company.
The election of directors will be determined by a plurality of the
votes cast by holders of shares of Common Stock entitled to vote thereon. The
approval of any other proposal or matter (except for the amendment to the
Amended Articles of Incorporation) will require the affirmative vote of the
holders of a majority of the shares present in person or represented by duly
executed proxies at the meeting. The approval of the amendment to the Amended
Articles of Incorporation will require the affirmative vote of the holders of a
majority of the outstanding shares entitled to vote thereon. Votes will be
tabulated by Morrow & Co., Inc. and the results will be certified by election
inspectors who are required to resolve impartially any interpretative questions
as to the conduct of the vote.
With regard to the election of directors, votes may be cast in favor
or withheld; votes that are withheld will be excluded entirely from the votes
and will have no effect. Abstentions may be specified on all proposals except
the election of directors, and will be counted as present for purposes of the
item on which the abstention is noted. Abstentions will have the effect of a
negative vote on any proposal other than the election of directors. A broker
non-vote (which results when a broker holding shares for a beneficial owner
has not received voting instructions on certain matters from such beneficial
owner) will have the same effect as a vote against a proposal,
<PAGE> 4
but will have no effect on the outcome of the election of directors.
Except as set forth above, or unless otherwise instructed, the enclosed proxy
will be voted FOR the director nominees set forth herein; FOR ratification of
the selection of the Company's independent auditors; FOR the amendment to the
Amended Articles of Incorporation to increase the authorized shares of Common
Stock; AGAINST the shareholder proposal to amend the Amended Bylaws to require
shareholder approval for the issuance of Company stock options to key employees
or directors of the Company and its subsidiaries; and AGAINST the shareholder
proposal to require shareholders to vote on any written purchase, merger or
consolidation offer where the aggregate consideration for such offer equals
150% or more of the then current book value of the Company.
The 1994 Annual Report to Shareholders (the "Annual Report") covering
the Company's fiscal year ended December 31, 1994, including audited
consolidated financial statements, accompanies this proxy statement. The Annual
Report does not form any part of the proxy solicitation materials. Additional
copies of the Annual Report may be obtained without charge upon written request
to Eduardo A. Lopez, Secretary, Corpus Christi Bancshares, Inc., Post Office
Box 9664, Corpus Christi, Texas 78469.
ELECTION OF DIRECTORS
(PROPOSALS NO. 1 AND NO. 2)
The Company's Amended Articles of Incorporation provide that the Board
of Directors shall be divided into three classes (individually hereinafter
referred to as "Class A", "Class B", and "Class C", respectively) as nearly
equal in number as possible. The 1994 Board of Directors initially consisted
of six Class A directors, five Class B directors and three Class C directors.
In order to realign the Board of Directors to more closely conform to the
Amended Articles of Incorporation, during November 1994 two Class A directors
and one Class B director resigned from the Board. The number of directorships
comprising the entire Board of Directors was then reduced from fourteen
directorships to twelve directorships. Thereafter, one of the two resigning
Class A directors, J.B. Clark, was reappointed to the Board of Directors as a
Class C director while the other two resigning directors were appointed
advisory directors to the Board. As so realigned, the current Board of
Directors is comprised of four Class A directors, four Class B directors and
four Class C directors. The term of office of the Class A directors and Class
C director J.B. Clark expires at the 1995 Annual Meeting of Shareholders, while
the terms of the Class B and remaining Class C directors will expire at the
1996 and 1997 Annual Meeting of Shareholders, respectively. Any vacancy
occurring in the Board of Directors may be filled by the affirmative vote of a
majority of the remaining directors, even though less than a quorum. A
director elected to fill a vacancy shall serve until the next annual meeting of
the shareholders.
Proxies cannot be voted for a greater number of persons than the one
Class C director nominee and the four Class A director nominees.
It is the intention of the persons named in the accompanying proxy,
unless otherwise instructed, to vote "FOR" the election of J.B. Clark, as the
sole Class C director nominee, and "FOR" all the Class A director nominees set
forth below. If any nominee should become unavailable to serve, the proxy may
be voted for the election of a substitute nominee designated by the Board. The
Board recommends the Class C nominee and each Class A nominee for election and
has no reason to believe any of the nominees will be unable to serve if
elected.
INFORMATION CONCERNING NOMINEES AND DIRECTORS
The following information, including the principal occupation during
the past five years, is given in respect of the nominees for election to the
Board at the Annual Meeting and for the Class B and Class C directors who will
continue to serve until the 1996 Annual Meeting of Shareholders and the 1997
Annual Meeting of Shareholders, respectively.
2
<PAGE> 5
CLASS A NOMINEES
<TABLE>
<CAPTION>
SHARES OF COMPANY
COMMON STOCK
BENEFICIALLY OWNED
AS OF 2/28/95
NAME, AGE AND -----------------------------
POSITION WITH PRINCIPAL OCCUPATION FOR LAST FIVE YEARS, DIRECTOR SHARES PERCENT
THE COMPANY OTHER DIRECTORSHIPS SINCE OWNED (1) OF CLASS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John C. Brooke, Shareholder, Kleberg & Head, a Professional 1980 68,378 (2) 4.25
age 58, Director Corporation (Attorneys); Director, Alice
National Bancshares, Inc. and Alice Bank of
Texas.
Roy M. Grassedonio, Investments. 1974 11,874 (3) .74
age 54, Director
Jack Powers, Ranching. 1983 30,950 (4) 1.93
age 55, Director
John T. Wright, III, President of the Company from December 1984 to 1983 36,851 (5) 2.27
age 55, Director, April 1987; President and Chief Executive
Chairman of the Officer of the Company from April 1987 to
Board April 1992; Vice Chairman of the Board of the
Company from April 1992 to April 1993;
Chairman of the Board of the Company since
April 1993; President of Citizens State Bank
from September 1984 to February 1989; Chairman
of the Board of Citizens State Bank since
February 1989.
</TABLE>
John T. Wright, III, is the son of John T. Wright, Jr.
(Table continues on following page)
______________________________
(1) The number of shares stated as being owned beneficially includes shares
held beneficially by spouses, children and affiliated corporations of the
nominees and directors. The inclusion herein of any such shares, however,
does not constitute an admission by the nominees and directors that they
are the direct or indirect beneficial owner of such shares. Unless
otherwise indicated below, all nominees and directors are record owners
of their shares.
If a person has the right to acquire beneficial ownership of any shares
by exercise of options within 60 days of the date of this proxy
statement, such shares are deemed beneficially owned by such person and
are deemed to be outstanding solely for the purpose of determining the
percentage of the Company's Common Stock that he owns. Such shares are
not included in the computations for any other person.
(2) Includes options to purchase 10,686 shares plus 244 shares owned by Mr.
Brooke's wife.
(3) Includes options to purchase 6,286 shares plus 5,588 shares owned by a
limited partnership of which Mr. Grassedonio is a principal partner.
(4) Includes options to purchase 6,286 shares.
(5) Includes options to purchase 23,543 shares plus 56 shares owned by Mr.
Wright's children.
3
<PAGE> 6
CLASS C NOMINEE
<TABLE>
<CAPTION>
SHARES OF COMPANY
COMMON STOCK
BENEFICIALLY OWNED
AS OF 2/28/95
NAME, AGE AND -----------------------------
POSITION WITH PRINCIPAL OCCUPATION FOR LAST FIVE YEARS, DIRECTOR SHARES PERCENT
THE COMPANY OTHER DIRECTORSHIPS SINCE OWNED (1) OF CLASS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
J.B. Clark, Owner, Mid-Coastal Farms; Oil and Gas 1984 8,746 (6) .55
age 69, Director Investments
</TABLE>
______________________________
(6) Includes options to purchase 4,286 shares.
CLASS B DIRECTORS
(Serving Until the 1996 Annual Meeting)
<TABLE>
<CAPTION>
SHARES OF COMPANY
COMMON STOCK
BENEFICIALLY OWNED
AS OF 2/28/95
NAME, AGE AND -----------------------------
POSITION WITH PRINCIPAL OCCUPATION FOR LAST FIVE YEARS, DIRECTOR SHARES PERCENT
THE COMPANY OTHER DIRECTORSHIPS SINCE OWNED (1) OF CLASS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Marvin L. Berry, President and Chairman of the Board, Berry 1966 38,562 (7) 2.40
age 71, Director Contracting, Inc. and President, Lone Star
Equipment, Inc. and Harbor Refining, Inc.
Joe R. DeLeon, Jr., President, Professional Pharmacy, Inc. and 1972 9,746 (8) .61
age 66, Director Clinic Pharmacy (Retail Pharmacies);
President, KORO TV Station.
Stephen R. Karp, President and Chief Operating Officer, 1987 23,706 (9) 1.47
age 53, Director Periodical Services, Inc.
Roscoe M. Smith, Executive Vice President of Citizens State 1965 32,286 (10) 2.01
age 71, Director Bank until his retirement from the Bank in
September 1988; Secretary of the Company from
December 1984 until April 1991.
</TABLE>
(Table continues on following page)
______________________________
(7) Includes options to purchase 6,286 shares, plus 17,172 shares owned by a
corporation of which Mr. Berry is an officer, director and principal
shareholder, plus 2,856 shares owned by Mr. Berry's wife.
(8) Includes options to purchase 4,286 shares, plus 336 shares owned by Mr.
DeLeon's children, plus 372 shares over which Mr. DeLeon shares voting
control as one of four independent administrators of the V. DeLeon
estate, plus 752 shares over which Mr. DeLeon shares voting control as
one of four beneficiaries of the J. DeLeon Trust.
(9) Includes options to purchase 10,686 shares.
(10) Includes options to purchase 4,286 shares plus 1,232 shares owned by Mr.
Smith's wife.
4
<PAGE> 7
CLASS C DIRECTORS
(Serving Until the 1997 Annual Meeting)
<TABLE>
<CAPTION>
SHARES OF COMPANY
COMMON STOCK
BENEFICIALLY OWNED
AS OF 2/28/95
NAME, AGE AND ----------------------------
POSITION WITH PRINCIPAL OCCUPATION FOR LAST FIVE YEARS, DIRECTOR SHARES PERCENT
THE COMPANY OTHER DIRECTORSHIPS SINCE OWNED (1) OF CLASS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
R. Jay Phillips, Director of the Company and Citizens State 1989 34,528 (11) 2.13
age 46, Director, Bank since February 1989; President and Chief
President and Chief Executive Officer of the Company since April
Executive Officer 1992; Chief Executive Officer of Citizens
State Bank from February 1989 to February
1990; President and Chief Executive Officer of
Citizens State Bank since February 1990;
Director, President and Chief Executive
Officer of C.S.B.C.C., Inc. since December
1992.
L. L. Woodman, Jr., President, Vestland Investments, Inc.; 1972 32,602 (12) 2.02
age 56, Director Director, Alice National Bancshares, Inc. and
Alice Bank of Texas; Director of C.S.B.C.C.,
Inc. since December 1992.
John T. Wright, Jr., Chairman of the Board of Citizens State Bank 1947 36,450 (13) 2.27
age 74, Director until February 1989; Chairman of the Board and
Chief Executive Officer of the Company from
December 1984 to April 1987; Chairman of the
Board of the Company from April 1987 to April
1992.
</TABLE>
______________________________
(11) Includes options to purchase 24,828 shares.
(12) Includes options to purchase 10,686 shares.
(13) Includes options to purchase 4,286 shares plus 5,764 shares owned by Mr.
Wright's wife.
ADVISORY DIRECTORS
In addition to those directors disclosed above, the Company also has
advisory directors appointed in accordance with Section 3.14 of the Company's
Amended Bylaws. These advisory directors consist of Eduardo A. Lopez, Jon C.
Spradley, John Sloan and Grace Dobson. Advisory directors have the right to
attend all meetings of the Board of Directors but have no right to vote on any
matter before the Board.
5
<PAGE> 8
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
SHARES OF COMPANY
COMMON STOCK
BENEFICIALLY OWNED
AS OF 2/28/95
NAME, AGE AND ------------------------------
POSITION WITH PRINCIPAL OCCUPATION FOR LAST FIVE YEARS, SHARES PERCENT
THE COMPANY OTHER DIRECTORSHIPS OWNED (1) OF CLASS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
John T. Wright, III (See information provided as director)
R. Jay Phillips (See information provided as director)
Eduardo A. Lopez, Senior Vice President of Union National Bank 15,172(2) .94
age 48 of Laredo, Texas from June 1982 until August
1988; Executive Vice President and Senior
Lending Officer of Citzens State Bank from April
1989 to May 1990; Executive Vice President and
Chief Lending Officer of Citizens State Bank from
May 1990 to May 1994; Senior Executive Vice
President and Chief Lending Officer of Citizens
State Bank since May 1994; Advisory Director of
Citizens State Bank since May 1994; Secretary of
the Company since April 1991; Director, Secretary
and Treasurer of C.S.B.C.C., Inc. since December
1992.
</TABLE>
______________________________
(1) The number of shares stated as being owned beneficially includes shares
held beneficially by spouses, children and affiliated corporations. The
inclusion herein of any such shares, however, does not constitute an
admission that such person is the direct or indirect beneficial owner of
such shares. Unless otherwise indicated below, such person is the record
owner of his shares.
If a person has the right to acquire beneficial ownership of any shares
by exercise of options within 60 days of the date of this proxy
statement, such shares are deemed beneficially owned by such person and
are deemed to be outstanding solely for the purpose of determining the
percentage of the Company's Common Stock that he owns. Such shares are
not included in the computations for any other person.
(2) Includes options to purchase 11,572 shares.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company's Board of Directors has a Nominating and Audit Committee.
The Company does not have a Compensation Committee.
NOMINATING COMMITTEE. The Nominating Committee, which is composed of
the whole Board of Directors, is responsible for proposing a slate of directors
for election by the shareholders at each Annual Meeting of Shareholders and
proposing candidates to fill any vacancies on the Board of Directors.
The Committee will consider candidates for the 1996 Board memberships
that are proposed by shareholders who have complied with the following
procedures. In the event a shareholder entitled to vote for the election of
directors wishes to propose a candidate for consideration by the Nominating
Committee as a possible nominee for management's proposed slate of directors,
or such shareholder wishes to make a
6
<PAGE> 9
director nomination at an Annual Meeting of Shareholders, then timely written
notice of such shareholder's interest to make such nomination(s) must be given
either by personal delivery or by United States mail to Eduardo A. Lopez,
Secretary, Corpus Christi Bancshares, Inc., Post Office Box 9664, Corpus
Christi, Texas 78469, no later than April 16, 1996. Each such notice must set
forth (a) as to each person whom the shareholder proposes to nominate for
election or reelection as a director, (i) the name and address of the person or
persons, (ii) a description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the shareholder or that otherwise relates to such nomination or
nominations, (iii) such other information regarding each nominee proposed by
such shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission had the
nominee been nominated, or intended to be nominated, by the Board of Directors,
and (iv) the consent of each nominee to serve as a director of the Company if
so elected; and (b) as to the shareholder giving the notice and the shareholder
who intends to make the nomination, (i) the name and address of the
shareholder, (ii) a representation that the shareholder is the holder of record
of the Common Stock of the Company entitled to vote at such Annual Meeting and
intends to appear in person or by proxy at such Annual Meeting to nominate the
person or persons specified in such notice, and (iii) the class and number of
shares of Common Stock of the Company which are beneficially owned by the
shareholder. The Chairman of the Annual Meeting of Shareholders may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedures. The Secretary of the Company did not receive timely
notice from any shareholder of any nominations of directors for election at the
Annual Meeting.
AUDIT COMMITTEE. On March 15, 1995, the Board of Directors adopted a
resolution establishing an Audit Committee. The Audit Committee is responsible
for (a) reviewing the scope and results of audits performed by each of the
Company's independent auditors and internal auditor; (b) reviewing internal
accounting controls and the scope of services performed by independent
auditors; (c) monitoring the costs of all accounting and financial services;
and (d) recommending, engaging and discharging the Company's independent
auditors. The Audit Committee consists of Messrs. Clark, DeLeon, Jr.,
Grassedonio, Karp, Phillips and Wright, Jr.
During 1994, the Board of Directors held twelve regular meetings and
one special meeting. All directors attended seventy-five percent (75%) or more
of the meetings of the Board of Directors and the Committees of the Board on
which they served.
CITIZENS STATE BANK'S BOARD OF DIRECTORS
The Board of Directors of the Company's subsidiary bank, Citizens
State Bank of Corpus Christi ("Citizens State Bank" or the "Bank"), consists of
Marvin L. Berry, John C. Brooke, J.B. Clark, Joe R. DeLeon, Jr., Roy M.
Grassedonio, Stephen R. Karp, R. Jay Phillips, Jack Powers, Roscoe M. Smith,
Jon C. Spradley, L.L. Woodman, Jr., John T. Wright, Jr. and John T. Wright,
III. The Bank's Board of Directors has an Audit and Salary Committee.
AUDIT COMMITTEE. The Audit Committee is responsible for reviewing:
(i) the scope and results of audits performed by both the Bank's independent
auditors and the Bank's internal auditor, (ii) internal accounting controls and
the scope of services performed by independent auditors, and (iii) the costs of
all accounting and financial services. The Audit Committee also recommends the
engaging and discharging of the Bank's independent auditors. The Audit
Committee, which met five times during 1994, is composed of Messrs. Clark,
DeLeon, Jr., Grassedonio, Karp and Wright, Jr. Mr. Phillips serves as an ex
officio member of the Audit Committee.
SALARY COMMITTEE. The Salary Committee reviews all existing salaries
of the Bank and, where merited, recommends appropriate changes in such
salaries. The Salary Committee, which met one time during 1994, is composed of
Messrs. Berry, Clark, Phillips, Spradley, and Wright, III.
7
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by the Company
and the Bank during the Company's last three fiscal years to its Chief
Executive Officer and each of the next most highly paid executive officers
whose cash compensation exceeded $100,000 during the fiscal years ended
December 31, 1992, December 31, 1993 and December 31, 1994 (the "Named
Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
NAME AND PRINCIPAL ------------------------------------- (STOCK ALL OTHER
POSITION YEAR SALARY (1) BONUS OPTIONS) COMPENSATION(2)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John T. Wright, III 1994 $123,749 $4,400 23,543 $3,709
Director, Chairman 1993 122,900 6,881 23,543 3,287
of the Board 1992 116,575 -0- -0- 1,157
R. Jay Phillips 1994 $140,657 $4,971 24,828 $4,204
Director, President 1993 136,493 7,553 24,828 3,659
and Chief Executive 1992 128,786 -0- -0- 1,490
Officer
</TABLE>
______________________________
(1) Includes salary and director's fees.
(2) The amounts reported in this column consist of the Bank's matching
contribution under the Bank's 401(k) Profit Sharing Plan.
OPTION GRANTS DURING 1994
No options or stock appreciation rights were granted during 1994 under
the Company's Nonqualified Stock Option Plan.
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
TOTAL NUMBER OF TOTAL VALUE OF
UNEXERCISED OPTIONS UNEXERCISED IN-THE-MONEY
NUMBER OF HELD AT FISCAL YEAR-END OPTIONS HELD AT FISCAL YEAR-END (1)
SHARES ACQUIRED VALUE ------------------------- -----------------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John T. 0 0 23,543 0 $117,730 0
Wright,III
Director,
Chairman
of the Board
R. Jay Phillips 0 0 24,828 0 124,140 0
Director,
President
and Chief
Executive
Officer
</TABLE>
______________________________
(1) Market value of underlying securities at year-end, minus the exercise
or base price.
8
<PAGE> 11
COMPENSATION OF DIRECTORS
During 1994, each director received a $300 fee for each Board of
Directors meeting attended and a $200 fee for each committee meeting attended.
Those directors comprising the Board of Directors of C.S.B.C.C., Inc. received
a $300 fee for each C.S.B.C.C., Inc. Board of Directors meeting attended and a
$500 fee for attending C.S.B.C.C., Inc.'s annual meeting. Those directors
comprising the Bank's Board of Directors received a $300 fee for each Board of
Directors meeting attended and a $200 fee for each committee meeting attended.
Directors of the Company who are also directors of the Bank do not receive a
fee for Board of Directors meetings of the Company attended in conjunction
with Board of Directors meetings of the Bank. They do, however, receive a fee
for attending the Bank's Board of Directors meeting. Only non-officer
directors receive a fee for attending committee meetings.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of February 28, 1995
regarding the share ownership of (i) those persons or entities known by
management to beneficially own more than 5% of the Company's Common
Stock, its only class of outstanding securities, and (ii) the amount of Common
Stock beneficially owned by all directors, advisory directors, and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED CLASS
----------------------------------------------------- --------------------------- ------------------
<S> <C> <C>
M.E. Allison and Co., Inc. 112,492 7.03%
112 East Pecan, Suite 1200
San Antonio, Texas 78205
SIFE Trust Fund 84,100 5.26
490 North Wiget Lane
Walnut Creek, CA 94598
All directors, advisory directors and executive 399,607 22.98
officers as a group (18 persons) (1)
</TABLE>
______________________________
(1) Includes options to purchase 138,575 shares.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Mr. Stephen Karp, a director of the Company, inadvertently failed to
timely file seven Statements of Changes of Beneficial Ownership (Form 4) for
seven transactions occurring from January, 1993 through August, 1994. Mr. Joe
R. DeLeon, a director of the Company, inadvertently failed to timely file one
Statement of Changes of Beneficial Ownership (Form 4) for one transaction
occurring in March, 1990, as a result of his one-quarter interest in a
decedent's estate which owns 372 shares. In addition, each director of the
Company, and each executive officer of the Company, failed to timely file one
Statement of Changes of Beneficial Ownership (Form 4) for one transaction
involving a grant of options occurring in October, 1993.
CERTAIN TRANSACTIONS
Some of the directors and officers of the Company presently are, as in
the past, customers of the Bank and have had and expect to have loan
transactions with the Bank in the ordinary course of its business. In addition,
some of the directors and officers of the Company presently are, as in the
past, also directors and/or officers of corporations which are customers of the
Bank and which expect to have loan transactions with the Bank in the ordinary
course of business. The Company's Board of Directors believes that all such
transactions have been made on the same terms as those prevailing for
comparable transactions with others and have not
9
<PAGE> 12
involved more than the normal risk of collectibility at the inception of the
loan or other favorable features.
INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 3)
The Board of Directors of the Company, based upon the recommendation of
the Company's Audit Committee, has selected KPMG Peat Marwick as independent
auditors to audit the books, records and accounts of the Company for the
current fiscal year, and such selection will be submitted to the shareholders
for ratification at the Annual Meeting. KPMG Peat Marwick has served as
auditors of the Company since 1983, and is therefore familiar with the affairs
and financial procedures of the Company. Should the shareholders not ratify
KPMG Peat Marwick as independent auditors, then the Board of Directors,
after giving due consideration to the shareholder vote, shall determine
whether to retain KPMG Peat Marwick as auditors of the Company, or select
another independent accounting firm which the Board deems will serve in the
best interest of the Company.
The Company has been advised that a representative of KPMG Peat Marwick
will be present at the Annual Meeting and will be available to respond to
appropriate questions. Such representative will be afforded the opportunity to
make a statement at the meeting, if he or she desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO RATIFY THE
SELECTION OF KPMG PEAT MARWICK AS THE COMPANY'S INDEPENDENT AUDITORS, AND
PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY
OTHERWISE.
PROPOSED AMENDMENT TO INCREASE AUTHORIZED SHARES OF COMMON STOCK
(PROPOSAL NO. 4)
On March 15, 1995, subject to shareholder approval, the Board of
Directors adopted a resolution setting forth a proposed amendment to Section
4.01 of Article 4 of the Company's Amended Articles of Incorporation to
increase the number of authorized shares of the Common Stock from 2,000,000
shares to 4,000,000 shares. On March 1, 1995, 1,600,000 shares of Common Stock
were issued and outstanding.
The purpose of increasing the number of authorized shares of Common Stock
is to provide additional shares available for proper corporate purposes,
including corporate financing, investments and acquisitions, stock dividends,
shareholder rights plan, employee and management incentive, benefit, and
savings plans, dividend reinvestment plans, responses to takeover attempts, and
other purposes. Except for shares reserved for issuance pursuant to the
Company's stock option plan, the Company has no present plans, understandings
or agreements for the issuance or use of the proposed additional shares of
Common Stock. The Board of Directors believes that the proposed increase in
authorized shares is desirable in order to increase its flexibility in issuing
shares of Common Stock as the need may arise without the expense and delay of a
special shareholders' meeting for increasing the number of authorized shares.
If the proposed amendment to the Amended Articles of Incorporation is
approved, the Board of Directors will have the authority to issue the
additional authorized shares of Common Stock or any part thereof to such
persons and for such consideration as it may deem appropriate without further
action by the shareholders, except as may be required by applicable laws or
regulations or the rules of any stock exchange on which the shares are listed.
Each additional share of Common Stock authorized by the proposed amendment will
have the same rights and privileges as each share of the outstanding Common
Stock. Existing shareholders have no preemptive rights to receive or purchase
any shares of the presently authorized but unissued Common Stock or the shares
authorized by the proposed amendment.
Although the Board of Directors has no present intention of doing so, the
Company's authorized but unissued Common Stock could be issued in one or more
transactions which would make a takeover of the Company more difficult or
costly. Issuing additional shares of Common Stock could also have the effect
of diluting the ownership of persons seeking to obtain control of the Company.
The proposed amendment to the
10
<PAGE> 13
Company's Amended Articles of Incorporation is not being recommended in
response to any specific effort of which the Company is aware to obtain control
of the Company, nor is the Board of Directors currently proposing to
shareholders any anti-takeover measures.
The Board of Directors recommends a vote "FOR" the following proposed
amendment to the Company's Amended Articles of Incorporation, which will be
presented at the Annual Meeting.
RESOLVED: That Article Four, Section 4.01 of the Amended Articles of
Incorporation be amended to read:
The aggregate number of common shares which the Corporation shall have
authority to issue is Four Million (4,000,000) shares of Common Stock
with a $5.00 par value per share. The Corporation shall have no other
class of shares.
The directors of the Company have unanimously approved the proposed
amendment. However, the proposed amendment will not be adopted unless the
holders of a majority of the outstanding shares entitled to vote thereon vote
"FOR" the adoption of such amendment. The enclosed form of proxy provides a
means for shareholders to vote for the proposed amendment, to vote against the
proposed amendment, or to abstain from voting with respect to the proposed
amendment. Each properly executed proxy received in time for the Annual
Meeting will be voted as specified therein.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ADOPTION OF THE
ABOVE DESCRIBED AMENDMENT TO THE AMENDED ARTICLES OF INCORPORATION. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS
SPECIFY OTHERWISE.
SHAREHOLDERS' PROPOSALS AND COMPANY RESPONSES
(PROPOSALS NO. 5 AND NO. 6)
The following shareholder proposals have been submitted for a vote of the
shareholders at the Annual Meeting. The proposals and proponents' statements
in support thereof are set forth below along with the Company's reasons for
recommending a vote AGAINST each proposal. To be adopted, each proposal must
be adopted by the affirmative vote of a majority of the shares present in
person or represented by duly executed proxies at the meeting.
Proposal No. 4
Charles E. Jacobs, a shareholder owning 1,168 shares of Common Stock, has
given notice that he intends to present the following resolution for action at
the Annual Meeting:
RESOLVED: That Section 4.13 of the Company's Amended Bylaws be amended
to read in its entirety as hereinafter follows, and that Section 4.13 as
so amended not be hereafter amended, repealed or superseded without the
prior approval of the Company's shareholders in accordance with
applicable law:
Section 4.13 - Stock Options. In order to attract retain and motivate
key employees and directors of the Company and its subsidiaries, the
Board of Directors, only after obtaining shareholder approval, may
provide additional benefits to such employees and directors for future
services by granting stock options to such employees and directors to
enable them to purchase common stock of the Company. The type, terms and
conditions of any such stock options shall be determined by the Board of
Directors, subject to shareholder approval. Notwithstanding any other
provision contained in these Amended Bylaws, this Section 4.13 may not be
amended, repealed or superseded without the prior consent of the
shareholders of the Company.
11
<PAGE> 14
STATEMENT OF PROPOSING SHAREHOLDER
The proposed amendment reinstates the requirement in the Company's
Amended Bylaws for shareholder approval of the granting of employee stock
options. Historically, the Company's Amended Bylaws had included this
requirement, however, the Company's Board of Directors (the "Board") amended
Section 4.13 on October 20, 1993 to delete the shareholder approval requirement
for the granting of stock options. The proposed amendment would also require
shareholder approval for the grant of any options to directors.
At the same October 20, 1993 Board meeting, the Board adopted a new
Non-Qualified Stock Option Plan (the "Plan"). Under the Plan, the members of
the Board then granted to themselves and certain employees of the Company's
subsidiary bank fully vested options to purchase in the aggregate 160,000
shares of the Company's Common Stock, or 10% of the aggregate number of
outstanding shares, at an option price of $5.00 per share. The members of the
Board received in the aggregate options to purchase 127,003 shares of the
Company's stock. The effect of adopting the Plan was to dilute the ownership
interests of the shareholders of the Company. At the time the Board adopted
the Plan, the directors knew that two days later the Company's stock would
commence trading on the American Stock Exchange. At a price of $10.00 per
share, the net economic benefit to the directors as a result of the option
grants to themselves, if exercised, is more than $600,000. The Board of
Directors through these actions has furthered their own interests and personal
economic benefit at the expense of the Company's other shareholders.
Accordingly, in order to protect the interests of the shareholders of the
Company, the shareholders are urged to adopt the proposed resolution.
RECOMMENDATION OF DIRECTORS AGAINST THE PROPOSAL
THE BOARD OF DIRECTORS ASKS THAT YOU VOTE AGAINST THIS PROPOSAL.
The foregoing proposal is based on the mistaken and incorrect view that
the October 1993 grant of stock options was improper. As shown below, the
options were completely proper, reasonable and in the best interests of
shareholders of the Company.
WHY DID THE BOARD GRANT THE OPTIONS? The options were granted in
recognition of the extraordinary efforts of your Company's officers and
directors in successfully guiding the Company through the difficult economic
circumstances that confronted the banking, real estate and energy industries in
Texas in the 1980s. During 1988-1990 Texas had 349 bank failures, which
accounted for about one-half of all bank failures in the U.S. and which
completely wiped out shareholders' equity in most cases.
Your Company survived those difficult years primarily due to the diligent
and productive hard work of your officers and directors. Rather than resigning
as many other financial institution officers and directors did, your officers
and directors conscientiously stayed at their jobs without regard to the risk
of significant personal liability. During those difficult times, your
directors and officers devoted substantially more time and effort to their jobs
than most directors and officers of public companies, as shown by the
following: in 1988 the eleven outside directors who served throughout the year
attended an average of 54 meetings for an average of over 94 hours of meeting
time, not counting substantial pre-meeting preparation time (compare that to a
typical director who may attend 12 meetings per year for three or four hours,
or a total of only 36-48 hours). In 1989 the eleven outside directors who
served throughout the year attended an average of 50 meetings for 89 hours, and
in 1990 the averages were 41 meetings for 68 hours. Moreover, despite these
huge time commitments, your directors voted to reduce their director fees in
view of the Company's difficulties.
It is also significant that, after the Company was on the road to
recovery, your directors and officers wanted to purchase stock of the Company
but were advised by counsel that they could not do so during long periods of
time because of insider trading issues, and thus were denied the opportunity to
purchase Company stock at its lowest prices.
12
<PAGE> 15
DID THE BOARD OBTAIN INDEPENDENT ADVICE REGARDING THE OPTIONS? Yes. The
Board first considered an option plan in May 1993. At that time it retained an
independent financial advisor, D. Latin and Company, Inc. in Dallas, and
independent counsel, Winstead Sechrest & Minick in Dallas, to advise the Board
regarding appropriate terms for an option plan. Based on this independent
advice, the Board and its committees had a total of 8 meetings or conference
calls to design the option plan prior to its grant of options in October 1993.
After several shareholders began to ask questions about the stock options
in the spring of 1994, the Board decided, in an excess of caution in order to
be fully responsive to its shareholders, to once again seek independent advice
regarding the option plan and options, and thus retained the firm of Towers
Perrin. Towers Perrin is an independent, international firm of management
compensation consultants and actuaries whose 8,000 clients worldwide include
333 of the world's 500 largest companies and close to 700 of the Fortune 1,000
U.S. companies. As discussed in more detail below, in a letter dated April 18,
1994 Towers Perrin concluded that the Company's October 1993 stock option
grants "WERE REASONABLE AND WELL WITHIN THE BOUNDARIES OF COMPETITIVE PRACTICE
AND STANDARDS." It also stated that "THE OPTION GRANT WILL NOT PROVIDE ANY
MEANINGFUL LONG-TERM VALUE TO DIRECTORS UNLESS THERE IS A SIGNIFICANT INCREASE
IN THE VALUE OF COMPANY STOCK -- AT WHICH POINT ALL SHAREHOLDERS WILL HAVE
BENEFITED AS WELL."
WAS THE NUMBER OF OPTIONS GRANTED EXCESSIVE? No. Towers Perrin
concluded that the number of shares allocated was "REASONABLE GIVEN OUR
EXPERIENCE WITH OTHER INSTITUTIONS." It further stated that the value of the
options on the date of grant "RANGED FROM $1.00 . . . TO $2.00" per option, and
thus concluded that "TOWERS PERRIN DOES NOT FIND THE OPTION VALUE DELIVERED TO
DIRECTORS TO BE EXCESSIVE." It is also stated that "THE ACTUAL VALUE OF EACH
OPTION GRANT SPREAD OVER A PERIOD OF YEARS RESULTS IN A GRANT VALUE THAT TOWERS
PERRIN BELIEVES TO BE BELOW THE COMPETITIVE AVERAGE." We believe that the
Towers Perrin opinion completely disposes of any possible concerns regarding
the number of options granted or the terms of the options.
WAS THE OPTION EXERCISE PRICE TOO LOW? No. Based on the fact that
recent trades in the Company's stock prior to its listing, as provided by an
independent brokerage firm, Rauscher, Pierce & Refsnes, Inc., ranged from $5.00
to $6.00 and the stock's initial trade on the American Stock Exchange was at
$6.00 per share, Towers Perrin stated that it "BELIEVES THAT THERE IS NO BASIS
FOR THE ASSERTION THAT A $5.00 EXERCISE PRICE FOR THE STOCK OPTION CONSTITUTED
A SIGNIFICANT DISCOUNT." Furthermore, it noted that the actual value of the
options was considerably less since the stock issuable on exercise of the
options (i) must be held for at least two years before it can be freely
transferable since the Company did not register such stock under federal and
state securities laws and (ii) is subject to significant additional federal
securities law restrictions on transfer since the Company did not grant
qualified stock options approved by shareholders.
WAS IT APPROPRIATE FOR NON-EMPLOYEE DIRECTORS TO GET OPTIONS? Yes. As
Towers Perrin stated, "EQUITY PARTICIPATION AMONG DIRECTORS OF U.S.
CORPORATIONS HAS BECOME INCREASINGLY POPULAR OVER THE LAST FEW YEARS. IN
ADDITION TO OUTRIGHT OWNERSHIP OF SHARES, OPTION GRANTS ARE CONSIDERED TO BE AN
EXCELLENT APPROACH TO ALIGNING THE INTERESTS OF DIRECTORS WITH THAT OF
SHAREHOLDERS." Towers Perrin gave considerable weight to the "ACTIVE" role of
the Board and its "MAJOR ROLE IN THE COMPANY'S SURVIVAL AND PROSPERITY." As a
result it concluded that the "STOCK OPTION GRANTS ARE A VALID APPROACH TO
REWARD DIRECTORS FOR INCREASING THE VALUE OF THE COMPANY."
Recommendation of Directors. Your directors believe that the grant of
the options was entirely proper, which conclusion has been unequivocally
confirmed by the Board's highly experienced and independent experts. Your
directors believe that questions about the options have arisen primarily as a
result of misinformation circulated by a few disruptive shareholders motivated
by individual self-interests in an ill-conceived effort to attempt to discredit
your directors and officers and force them into agreeing to sell the Company at
a time when they did not believe such a sale would be in the best interests of
the Company and its shareholders. However, in order to assure shareholders
that the October 1993 option grant was a unique, one-time grant of options in
recognition of extraordinary efforts in difficult economic times, on March 15,
1995 your Board adopted an amendment to the Company's Amended Bylaws that
requires shareholder approval for the grant of any future
13
<PAGE> 16
options to directors who are not also officers (granting of options to
officers, including officers who are directors, still can be done by Board
action without seeking shareholder approval). Thus, your directors believe
that there is no need for adoption of the proposal and recommends against it.
ACCORDINGLY, YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST THE
PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY OTHERWISE.
Proposal No. 5
Christopher R. Allison, a shareholder owning 500 shares of Common Stock,
has given notice that he, or a qualified representative of his, intends to
present the following resolution for action at the Annual Meeting:
RESOLVED: That the Board of Directors of the Company (the "Board"), upon
receipt of any written offer to purchase the Company or substantially all
of the assets of the Company, or for the merger or consolidation of the
Company, for an aggregate consideration which is equal to, or greater
than, one hundred fifty percent (150%) of the then- current book value of
the issued and outstanding shares of the Company's Common Stock, submit
such offer to the Company's shareholders for their consideration at a
special meeting of the shareholders, to be called by the Board and held
as soon as practicable after the receipt of such an offer by the Board.
STATEMENT OF PROPOSING SHAREHOLDER
The Board has previously stated in a letter to the shareholders of the
Company and in a press release that the Board has carefully analyzed the
question of whether the shareholders' value in the Company would be maximized
through a sale of the Company or by retaining ownership in an independent
organization. The Board stated that it had unanimously decided that remaining
independent was in the best interests of the Company's shareholders. The
proponent of this proposal does not believe that the Board's decision to remain
independent is consistent with the view of a majority of the Company's
shareholders.
The proponent of the above proposal believes that the fact that the
Board's interests and the interests of other shareholders may be divergent is
well evidenced by the Board's actions in adopting a non-qualified stock option
plan on October 20, 1993 and the Board's contemporaneous grant of options to
themselves to purchase 127,003 shares of the Company's Common Stock at a price
of $5.00 per share. The effect of the grant of such options was to dilute the
interests of other shareholders in the Company. Prior to the grant of said
options, the Board amended the Amended Bylaws of the Company to remove a
requirement that the grant of stock options be made subject to the approval of
the shareholders. Accordingly, the proponent of said proposal does not believe
that the Board should be the ultimate decision maker with respect to such a
most important business decision as it effects the interests of all
shareholders.
Therefore, the proponent of the above proposal believes that such an
important decision as the sale of the Company is a matter upon which all of the
shareholders of the Company, including those who are not members of the Board
and who hold more than seventy-five percent of the issued and outstanding
shares of the Company's stock, should have an opportunity to consider and vote.
RECOMMENDATION OF DIRECTORS AGAINST THE PROPOSAL
THE BOARD OF DIRECTORS ASKS THAT YOU VOTE AGAINST THIS PROPOSAL.
THE BOARD BELIEVES THAT THE FOREGOING PROPOSAL IS MISGUIDED IN FIVE
PRINCIPAL RESPECTS. FIRST, even though a small group of shareholders,
including the proponent and his father, M.E. Allison, Jr., have embarked upon a
campaign to attempt to force the sale of the Company, since 1985 the COMPANY
HAS NOT RECEIVED A SINGLE PROPOSAL TO ACQUIRE THE COMPANY OR ITS SUBSIDIARY
BANK AT ANY PRICE!
SECOND, your Board has NEVER said that it is opposed to a sale of the
Company. On July 7, 1993 your
14
<PAGE> 17
Board stated that, after a detailed analysis of strategic alternatives, it had
"unanimously decided that remaining independent AT THIS TIME is in the best
interests of its shareholders." Since then, your Board has actively pursued
its strategic plan to increase shareholder value, which among other things
includes growth of the Bank through expansion of its existing banking
operations internally and through acquisitions. As stated in our 1994 Annual
Report to Shareholders, your Board invested significant amounts of capital and
time to add new branches and new lines of business in 1994, and expects that
the Company will begin to receive significant returns on such investments in
future years. However, your Board periodically compares the potential
advantages to the Company's shareholders of pursuing its strategic plan versus
a sale of the Company. WHILE THE BOARD CONTINUES TO BELIEVE THAT THE BEST WAY
TO MAXIMIZE SHAREHOLDERS VALUE IS TO CONTINUE TO PURSUE ITS STRATEGIC PLAN TO
BUILD FRANCHISE VALUE AND ALLOW TIME FOR THE RESULTS OF ITS STRATEGIC PLAN
IMPLEMENTATION TO BE RECOGNIZED IN THE MARKET VALUE OF THE COMPANY'S STOCK, THE
BOARD IS NOT OPPOSED TO A SALE OF THE COMPANY. In the event the Company were
to receive an unsolicited acquisition proposal, the Board would fulfill its
fiduciary duties to the Company's shareholders by reviewing and responding
appropriately to such proposal, which would include a decision to agree to a
sale of the Company if that were in the best interests of shareholders.
THIRD, the proponent's proposal appears to be based upon the following
assumptions, both of which the Board believes are incorrect and not prudent:
(a) that the purchase price of a proposed acquisition, which the proponent
would define as anything greater than 150% of then-current book value, is the
determining factor for deciding whether an acquisition proposal should be
submitted to shareholders and (b) that it is prudent to submit all such
proposals to shareholders. With respect to the first assumption, the Board
strongly believes that there are many other terms of an acquisition proposal
that are important to shareholders, including the form of payment (an offer of
cash may be more valuable than an offer of risky securities that have a face
value of more than book value). Moreover, acquisitions of banks are
increasingly priced on the basis of other criteria, such as franchise value or
price/earnings ratios, without regard to price/book ratios. As for the second
assumption, the purpose of a board of directors is to represent shareholders by
exercising its best independent business judgment regarding any acquisition
proposal and, if and only if it believes it appropriate, to submit an
acquisition proposal to shareholders.
FOURTH, since the proposal does not seek to amend the Company's Articles
of Incorporation or Amended Bylaws, it is only a "precatory" proposal that,
even if adopted, would not be legally binding on your Board of Directors.
FINALLY, your Board believes that its responsibilities are to maximize
shareholder value -- which does not mean bowing to the desire of a few vocal
shareholders to force the sale of the Company at a price that is less than the
Company's long-term value. YOUR BOARD BELIEVES THAT MAXIMIZING SHAREHOLDER
VALUE IS ITS PRINCIPAL OBJECTIVE, AND THAT YOU AND YOUR BOARD MUST AVOID
YIELDING TO THE PRESSURES CREATED BY THE SELFISH EFFORTS OF A FEW TO ATTEMPT TO
CREATE SHORT-TERM VALUE THAT FALLS FAR SHORT OF THE COMPANY'S LONG-TERM VALUE.
ACCORDINGLY, YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST THE
PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY OTHERWISE.
SHAREHOLDER PROPOSALS
In order to be considered for inclusion in the Company's proxy materials
for next year's Annual Meeting of Shareholders, any shareholder proposal to
take action at such meeting must be received at the Company's principal
executive offices, 2402 Leopard Street, Corpus Christi, Texas 78408, no later
than December 13, 1995. Any such proposals shall be subject to the
requirements of the proxy rules adopted under the Securities Exchange Act of
1934.
In order for a shareholder to bring new business before an Annual Meeting
of Shareholders (not otherwise included in the Company's proxy materials),
certain conditions set forth in Section 2.15 of the Amended Bylaws must be
complied with, including, but not limited to, the delivery of a notice to the
Secretary of the Corporation not less than 45 days prior to the month and day
in the current year that corresponds to the month and day in the previous year
on which the Annual Meeting of Shareholders was held, if not a holiday, and if
a holiday, then
15
<PAGE> 18
prior to the day next following which is not a holiday. The requirements as to
the content of such notice are set forth in Section 2.15 of the Amended Bylaws.
The Secretary of the Company did not receive timely notice from any shareholder
of any new business to be brought before the Annual Meeting.
SOLICITATION OF PROXIES
The solicitation of proxies will be made by mail, telephone or personal
contact by directors or regular employees of the Company or the Bank without
remuneration. Proxies also will be solicited by Morrow & Co., Inc. at an
estimated cost of up to $30,000 plus out of pocket expenses. The cost of
preparing, assembling, printing and mailing the proxy material will be borne by
the Company and will include reimbursement paid to Morrow & Co., Inc.,
brokerage firms and other custodians, nominees and fiduciaries for their
reasonable expenses incurred in forwarding proxy material to principals and
obtaining their proxies for the Annual Meeting.
OTHER BUSINESS
Management of the Company does not know of any other matters that are
likely to be brought before the Annual Meeting for action. However, if any
matters do properly come before the meeting for action, it is intended that the
accompanying proxy will be voted in accordance with the judgment of the
person(s) voting the proxy.
AVAILABILITY OF FORM 10-KSB
The Company will furnish without charge to each person whose proxy is
being solicited, upon the written request of any such person, a copy of the
Annual Report of the Company on Form 10-KSB for the fiscal year ended December
31, 1994, as filed with the Securities and Exchange Commission, including the
financial statements and schedules thereto. Requests for copies of such report
should be directed to: Eduardo A. Lopez, Secretary, Corpus Christi Bancshares,
Inc., Post Office Box 9664, Corpus Christi, Texas 78469.
APRIL 12, 1995
EDUARDO A. LOPEZ
SECRETARY
16
<PAGE> 19
<TABLE>
<S> <C> <C> <C>
CORPUS CHRISTI BANCSHARES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
P The undersigned, hereby revoking all prior proxies, hereby appoints JOHN T. WRIGHT, III, R. JAY
R PHILLIPS and EDUARDO A. LOPEZ, jointly and severally, with full power to act alone, as my true and lawful
O attorneys-in-fact, agents and proxies, with full and several power of substitution to each, to vote all the
X shares of Common Stock of CORPUS CHRISTI BANCSHARES, INC. (the "Company") which the undersigned would be
Y entitled to vote if personally present at the Annual Meeting of Shareholders of CORPUS CHRISTI BANCSHARES,
INC. to be held on May 31, 1995 and at adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED, BUT WHERE NO DIRECTION IS GIVEN, IT WILL
BE VOTED "FOR" SAID NOMINEES, "FOR" SAID AUDITORS, "FOR" ITEM 4, AND "AGAINST" ITEMS 5 AND 6 EACH AS DESCRIBED
IN THE ACCOMPANYING PROXY STATEMENT DATED APRIL 24, 1995 AND IN THE DISCRETION OF THE ABOVE-NAMED PERSONS
ACTING AS PROXIES ON SUCH OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.
[ ] To vote for all items AS RECOMMENDED BY THE BOARD
OF DIRECTORS, mark this box, sign, date and
return this proxy. (NO ADDITIONAL VOTE IS
NECESSARY.)
The undersigned(s) acknowledges receipt of the
Notice of 1995 Annual Meeting of Shareholders
and the Proxy Statement accompanying the same,
each dated April 24, 1995, and the Company's
1994 Annual Report to Shareholders.
</TABLE>
<PAGE> 20
<TABLE>
<S> <C>
/x/ Please mark
your vote
as this
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3
AND 4 AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT.
FOR AGAINST ABSTAIN
3. Selection of KPMG Peat Marwick / / / / / /
1. ELECTION OF CLASS A FOR all nominees WITHHOLD as independent auditors.
DIRECTORS for the listed below (except AUTHORITY to vote FOR AGAINST ABSTAIN
term set forth in as marked to the for all nominees 4. Amendment to the Amended Articles / / / / / /
the accompanying contrary below) listed below of Incorporation.
proxy statement. / / / /
The Board of Directors recommends a vote AGAINST items 5 and 6
as described in the accompanying Proxy Statment.
5. Shareholder proposal to amend the FOR AGAINST ABSTAIN
Amended Bylaws. / / / / / /
6. Shareholder proposal to obtain
shareholder consent to purchase, FOR AGAINST ABSTAIN
John C. Brooke, Roy M. Grassedonio, merger or consolidation offers. / / / / / /
Jack Powers, John T. Wright, III
7. In their discretion, the proxies are authorized to vote
2. ELECTION OF CLASS C FOR the nominees WITHHOLD upon such other business as may properly come before the
DIRECTOR for the listed below (except AUTHORITY to vote meeting.
term set forth in as marked to the for all nominees
the accompanying contrary below) listed below The undersigned(s) acknowledges receipt of the Notice of
proxy statement. / / / / 1995 Annual Meeting of Shareholders and the proxy statement
accompanying the same, each dated April 24, 1995, and the
Company's 1994 Annual Report to shareholders.
J.B. Clark Please date this proxy and sign your name exactly as it
appears hereon. If there is more than one owner, each
INSTRUCTION: To withhold authority to vote for any individual should sign. When signing as an agent, attorney,
nominee, write that nominee's name on the space provided administrator, executor, guardian or trustee, please
below. indicate your title as such. If executed by a corporation,
this proxy should be signed in the corporate name by a duly
- ------------------------------------------------------------ authorized officer who should so indicate his title.
PLEASE DATE, SIGN AND RETURN THIS PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE.
---------------------------------------------
Date
---------------------------------------------
Signature
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Signature if held jointly
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