<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Texas Security Bancshares, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Texas Security Bancshares, Inc.
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $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 transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
TEXAS SECURITY BANCSHARES, INC.
777 WEST ROSEDALE
FORT WORTH, TEXAS 76104
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 5, 1995
Notice is hereby given that pursuant to the call of its Board of Directors,
the Annual Meeting of Shareholders of Texas Security Bancshares, Inc. (the
"Corporation") will be held at Central Bank & Trust, 777 West Rosedale, Fort
Worth, Texas, on April 5, 1995, at 2:00 p.m., for the purpose of considering and
voting on the following matters:
1. To elect the eight (8) persons listed in the Proxy Statement dated
March 6, 1995, accompanying this Notice, to serve as directors of the
Corporation.
2. To approve an amendment to the Articles of Incorporation to change the
name of the Corporation to Central Bancorporation, Inc.
3. To approve the appointment of KPMG Peat Marwick as the Corporation's
independent auditors for the fiscal year ending December 31, 1995.
4. To transact such other business as may properly come before the Annual
Meeting of Shareholders or any adjournment or adjournments thereof.
Only those shareholders of record at the close of business on March 6, 1995
are entitled to notice of and to vote at the Annual Meeting of Shareholders or
at any adjournment or adjournments thereof.
All shareholders are urged to sign, date and return as promptly as possible
the enclosed proxy in the enclosed postage-paid envelope. It is important that
as many shares as possible be represented at the Annual Meeting of Shareholders.
Consequently, whether or not you expect to be present, please execute and return
the enclosed proxy.
By Order of the Board of Directors,
J. Andy Thompson, Chairman of the
Board and Chief Executive Officer
March 6, 1995
Fort Worth, Texas
<PAGE>
TEXAS SECURITY BANCSHARES, INC.
777 WEST ROSEDALE
FORT WORTH, TEXAS 76104
TELEPHONE 817-347-8100
PROXY STATEMENT FOR ANNUAL
MEETING OF SHAREHOLDERS
April 5, 1995
The following information is furnished to the shareholders of TEXAS
SECURITY BANCSHARES, INC. (the "Corporation") in connection with the
solicitation by the Board of Directors of the Corporation (the "Board") of
proxies to be used at the Annual Meeting of Shareholders of the Corporation to
be held at Central Bank & Trust, 777 West Rosedale, Fort Worth, Texas on April
5, 1995, at 2:00 p.m., and at any adjournment or adjournments thereof. This
Proxy Statement and accompanying proxy are being mailed on or about March 6,
1995 to the shareholders of the Corporation.
GENERAL INFORMATION
The close of business on March 6, 1995 has been fixed as the record date
for determining the shareholders entitled to vote at the Annual Meeting of
Shareholders.
The Annual Meeting of Shareholders is called for the purposes of (i)
electing the directors of the Corporation to serve for the ensuing year; (ii)
approving an amendment to the Articles of Incorporation to change the name of
the Corporation to Central Bancorporation, Inc.; (iii) approving the appointment
of KPMG Peat Marwick as the independent auditors of the Corporation for the
fiscal year ending December 31, 1995; and (iv) transacting such other business
as may properly come before the Annual Meeting of Shareholders or any
adjournment or adjournments thereof.
Any person executing the accompanying proxy may revoke it at any time prior
to the actual voting thereof by filing with the Secretary of the Corporation a
written revocation thereof or a duly executed proxy bearing a later date.
Shares represented by each signed proxy received by the Board will be voted
in accordance with the direction specified by the shareholder, and if no
direction is specified, such shares will be voted "FOR" each proposal of the
Board.
The cost of soliciting proxies will be borne by the Corporation. The
solicitation will be made by mail. The Corporation will also supply brokerage
firms and other custodians, nominees and fiduciaries with such number of proxy
materials as they may require for mailing to beneficial owners, and will
reimburse them for their reasonable expenses in connection therewith. Certain
directors, officers and employees of the Corporation, not specifically employed
for the purpose, may solicit proxies, without remuneration therefore, by mail,
telephone, telegraph or personal interview.
<PAGE>
OUTSTANDING SHARES AND VOTING RIGHTS
At the close of business on March 6, 1995, the record date for
determining the shareholders of the Corporation entitled to notice of and to
vote at the Annual Meeting of Shareholders, the Corporation had 2,616,723 shares
of common stock, $2.50 par value (the "Common Stock"), issued and outstanding.
The presence, in person or by proxy, of the holders of a majority of
the issued and outstanding shares of Common Stock of the Corporation is
necessary to constitute a quorum at the Annual Meeting of Shareholders.
Each holder of shares of Common Stock will be entitled to one vote, in
person or by proxy, for each share of Common Stock of the Corporation owned of
record at the close of business on March 6, 1995. Cumulative voting for
directors is not permitted.
BOARD OF DIRECTORS
Various meetings of the Board are held each year, including an
organizational meeting following the conclusion of the Annual Meeting of
Shareholders. The Board has established an Executive Committee, a Compensation
and Benefits Committee (the "Compensation Committee"), an Audit Committee and a
Pension Fund Committee.
EXECUTIVE COMMITTEE
Members: J. Andy Thompson (Chairman), Ervin D. Cruce and F. D. Thompson,
Jr.
The function of the Executive Committee is to manage the business and
affairs of the Corporation to the extent delegated to the Executive Committee by
the Board and otherwise in accordance with the bylaws of the Corporation and
applicable law.
COMPENSATION COMMITTEE
Members: Ervin D. Cruce (Chairman), Richard L. Brown, Nancy W. Smith
and F. D. Thompson, Jr., none of whom is an officer of the Corporation. Mr.
Thompson is a former officer of the Corporation.
The function of the Compensation Committee is to make recommendations
to the Board with regard to the base salary, incentive compensation and other
compensation of the executive officers and directors of the Corporation and its
subsidiaries. The Compensation Committee also administers the 1988 Incentive
Stock Option Plan of the Corporation. See "EXECUTIVE COMPENSATION AND OTHER
INFORMATION - Option Grants, Exercises and Holdings."
AUDIT COMMITTEE
Members: Nancy W. Smith (Chairman) and Richard L. Brown, neither of whom is
an officer of the Corporation.
- 2 -
<PAGE>
The function of the Audit Committee is to (i) meet with the independent
auditors of the Corporation to review the annual audit and its results, (ii)
oversee the implementation of internal audit controls and procedures for the
Corporation and its subsidiaries, and (iii) make recommendations to the Board as
to the engagement of the independent auditors of the Corporation.
PENSION FUND COMMITTEE
Member: J. Andy Thompson (Chairman).
The function of the Pension Fund Committee is to administer the
noncontributory defined benefit plan of the Corporation and its subsidiaries.
DIRECTORS' COMPENSATION
The Corporation compensates its directors on the following basis: (i)
each director is paid a retainer fee in the amount of $6,000 upon election or
re-election to the Board, (ii) each director is paid $300 for each meeting of
the Board attended, and (iii) each director is also paid $100 for attendance at
each meeting of a committee of the Board and $250 for attendance at and chairing
of a meeting of such a committee.
Honorary directors receive an annual directors' fee in the amount of
$1,000.
Central Bank & Trust compensates its directors on the following basis:
(i) each director who is not a director of the Corporation is paid a retainer
fee in the amount of $2,500 upon election or re-election to the Board of
Directors of Central Bank & Trust, (ii) each director is paid $200 for each
meeting of the Board of Directors of Central Bank & Trust attended, and (iii)
each director is also paid $100 for attendance at each meeting of a committee of
the Board of Directors and $250 for attendance at and chairing of a meeting of
such a committee.
Directors who are officers of the Corporation and/or Central Bank &
Trust are not paid the retainer fees or fees for board or committee meeting
attendance.
In addition to the foregoing, the following consulting fees were paid
members of the Board during fiscal year 1994:
Consulting
Director Fee Paid
------------------- ----------
Ervin D. Cruce $24,000
F. D. Thompson, Jr. $30,000
- 3 -
<PAGE>
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During fiscal year 1994 there were seven (7) meetings of the Board, no
meetings of the Executive Committee, three (3) meetings of the Compensation
Committee, five (5) meetings of the Audit Committee, and no meetings of the
Pension Fund Committee. Each director, except Richard L. Brown and C. Rhea
Thompson, attended at least seventy-five percent (75%) of the total number of
meetings of the Board and each committee of the Board of which he or she was a
member during fiscal year 1994.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The bylaws of the Corporation provide that the Board shall be comprised of
not more than fifteen (15) members and that each director shall be elected to
serve until the next Annual Meeting of Shareholders and until his successor
shall be elected and shall qualify. Any vacancies on the Board may be filled by
a majority vote of the Board and any director so elected shall hold office for
the unexpired term of his predecessor or until the next election of directors by
the shareholders of the Corporation.
Names of the nominees for directors and other information about them
appears in the following table. All of the nominees are now directors of the
Corporation and all nominees have consented to serve if elected. If for any
unforeseen reason a nominee is unable to serve if elected, the persons named in
the accompanying proxy may exercise their discretion to vote for a substitute
nominee selected by the Board. However, the Board has no reason to anticipate
that any of the nominees will not be able to serve, if elected.
Name and Age of
Nominee; Years Principal Occupation for Past
Served as Director Five Years; Other Directorships
- --------------------- -----------------------------------------------
J. Andy Thompson Mr. J. Andy Thompson is currently serving as
Age 51 the Chairman of the Board of Directors and
Director Since 1979 Chief Executive Officer of the Corporation.
He has served as Chairman of the Executive
Committee since April 1990. From April 1993
to April 1994 he served as President of the
Corporation. He has served as a director of
Central Bank & Trust since January 1975, and
served as a director of North Fort Worth Bank
from January 1974 until its merger with and
into Central Bank & Trust in March 1992. In
January 1988 he became Chairman of the Board
and Chief Executive Officer of Central Bank &
Trust; he also served as Chairman of the Board
and Chief Executive Officer of North Fort
Worth Bank from January 1988 until its merger
with and into Central Bank & Trust in March
1992. Mr. Thompson is also managing partner
of Thompson Financial, Ltd.
- 4 -
<PAGE>
Name and Age of
Nominee; Years Principal Occupation for Past
Served as Director Five Years; Other Directorships
- --------------------- -----------------------------------------------
Richard L. Brown Mr. Brown has been of counsel to the law firm
Age 69 of Bishop, Payne, Williams and Werley, L.L.P.,
Director Since 1983 Fort Worth, Texas, since July 1991, and he was
previously in private practice with that firm
from May 1984 to May 1989. Mr. Brown was
Chief of the Civil Division of the Tarrant
County (Texas) District Attorney's Office from
May 1989 to July 1991.
Ervin D. Cruce Mr. Cruce is a business consultant and an
Age 63 individual investor. During 1991, he was a
Director Since 1985 general partner in the firm of Cruce &
O'Brien. From April 1985 to present, he has
been a limited partner in the general partners
of Investment Limited Partnership, and from
April 1985 to December 1990 was an employee of
or consultant to the partnership. He is also
a director of J. Baker, Inc., a publicly-held
corporation. He was a partner in the firm of
KPMG Peat Marwick, certified public accoun-
tants, from May 1953 to March 1985.
Stuart W. Murff Mr. Stuart W. Murff has served as President of
Age 43 the Corporation since April 1994 and as Vice
Director Since 1994 Chairman of Central Bank & Trust since Febru-
ary 1993. From 1982 to 1993 he served as a
principal in a bank consulting firm, as well
as president of a bank data processing com-
pany. He has served as a director of Central
Bank & Trust since January 1993.
Nancy W. Smith Mrs. Smith has been engaged in private invest-
Age 63 ments since April 1984. She has served as a
Director Since 1979 director of Central Bank & Trust since March
1992.
C. Rhea Thompson Mr. C. Rhea Thompson has been the owner and
Age 54 operator of the Thompson Ranch, a cattle ranch
Director Since 1992 located in southern Utah, since 1990. He was
President and a director of Flying Colors
Advertising, Inc., an advertising company
located in Santa Clara, California, from 1992
to 1994, and President and a director of Raw
Data, Inc., a computer software development
company located in Santa Clara, California,
from 1992 to 1994. Mr. Thompson previously
served as a director of the Corporation from
May 1980 to January 1984, and as a director of
Central Bank & Trust from January 1975 to
January 1984. Mr. Thompson is also a general
partner of Thompson Financial, Ltd.
- 5 -
<PAGE>
Name and Age of
Nominee; Years Principal Occupation for Past
Served as Director Five Years; Other Directorships
- --------------------- -----------------------------------------------
F. D. Thompson, Jr. Mr. F. D. Thompson, Jr. has served as an offi-
Age 58 cer of the Corporation in various capacities
Director Since 1979 since 1980, and served as a Vice President of
the Corporation until April 1991. He has also
served as a director of Central Bank & Trust
since 1964 and of North Fort Worth Bank from
1968 until its merger with and into Central
Bank & Trust in March 1992. Mr. Thompson also
served as attorney-in-fact and director of
Fort Worth Lloyd's until its liquidation in
1991. Mr. Thompson also currently serves as a
director of Silent Management, Inc.; as an
owner and operator of Hatfield & Associates
Ltd., a realty company; and as a general part-
ner of Thompson Financial, Ltd.
Kelly R. Thompson Mr. Kelly R. Thompson has served as a Senior
Age 35 Vice President of the Corporation since April
Director Since 1986 1994. He served as a Senior Vice President of
Central Bank & Trust from June 1991 to Decem-
ber 1994, and served as a Vice President of
the Corporation from May 1991 to April 1992.
Mr. Thompson was a Vice President of Woodbine
Development Corp., and had been employed with
that company from 1983 to May 1991. He also
served as a director of Central Bank & Trust
from January 1986 to January 1991 and of North
Fort Worth Bank from January 1986 until its
merger with and into Central Bank & Trust in
March 1992.
No family relationships exist among the named executive officers and
directors of the Corporation, except as follows: J. Andy Thompson, F. D.
Thompson, Jr. and C. Rhea Thompson are brothers. F. D. Thompson, Jr. is the
father of Kelly R. Thompson, and J. Andy Thompson and C. Rhea Thompson are the
uncles of Kelly R. Thompson.
No director of the Corporation, other than Ervin D. Cruce, is a
director of any company with a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended, or subject to the
requirements of Section 15(d) of that Act or of any company registered as an
investment company under the Investment Corporation Act of 1940, as amended.
Mr. Cruce is a director of J. Baker, Inc., a publicly-held corporation.
The affirmative vote of the holders of a majority of the issued and
outstanding shares of Common Stock represented and entitled to vote at the
Annual Meeting or any adjournment(s) thereof is necessary for the election of
directors. Assuming the receipt by each such person of the affirmative vote of
at least a majority of the shares of Common Stock represented at the Annual
- 6 -
<PAGE>
Meeting, the eight (8) persons receiving the greatest number of votes will be
elected as directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION AS DIRECTORS OF THE EIGHT (8) PERSONS NAMED ABOVE.
PROPOSAL NO. 2: APPROVAL OF AMENDMENT TO THE ARTICLES
OF INCORPORATION TO CHANGE THE NAME OF THE
CORPORATION TO CENTRAL BANCORPORATION, INC.
On January 17, 1995 the Board of Directors approved the following
resolution, subject to approval by the shareholders at the 1995 Annual Meeting
of Shareholders:
"RESOLVED, that Article One of the Articles of Incorporation of the
Corporation, as amended, shall be amended in its entirety to read as
follows:
ARTICLE ONE: NAME
-----------------
The name of the Corporation is Central Bancorporation, Inc.
RESOLVED FURTHER, that the proposed amendment to the Articles of
Incorporation of the Corporation be presented to the Shareholders of the
Corporation entitled to vote by law on the foregoing amendment for their
approval."
The Board of Directors believes the change in the corporate name to
"Central Bancorporation, Inc." will better allow members of the general public
to identify the Corporation with its subsidiary bank, Central Bank & Trust.
If the proposed amendment to the Articles of Incorporation is approved by
the shareholders of the Corporation, such amendment will become effective when a
certificate of amendment is filed with the Secretary of State of Texas. The
Corporation intends to file such a certificate with the Secretary of State of
Texas on or shortly after April 6, 1995.
The affirmative vote of the holders of a majority of the issued and
outstanding shares of Common Stock of the Corporation represented and entitled
to vote at the Annual Meeting or any adjournment(s) thereof is necessary for
approval of the amendment to the Articles of Incorporation of the Corporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
APPROVAL OF THE AMENDMENT TO THE ARTICLES OF INCORPORATION TO CHANGE THE NAME OF
THE CORPORATION TO CENTRAL BANCORPORATION, INC.
- 7 -
<PAGE>
PROPOSAL NO. 3: APPOINTMENT OF INDEPENDENT AUDITORS
It is proposed that the appointment by the Board of Directors of the
firm of KPMG Peat Marwick as the independent auditors of the Corporation for the
fiscal year ending December 31, 1995 be approved. KPMG Peat Marwick has served
as the Corporation's independent auditors since 1983. A representative of such
firm is expected to be present at the meeting. He will be available to answer
questions and will be afforded an opportunity to make a statement, if desired.
The affirmative vote of the holders of a majority of the issued and
outstanding shares of Common Stock represented and entitled to vote at the
Annual Meeting or any adjournment(s) thereof is necessary for the approval of
the appointment of KPMG Peat Marwick as independent auditors of the Corporation
for the fiscal year ending December 31, 1995.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
APPOINTMENT OF KPMG PEAT MARWICK AS THE INDEPENDENT AUDITORS OF THE CORPORATION
FOR THE FISCAL YEAR ENDING DECEMBER 31, 1995.
ACTION TO BE TAKEN UNDER THE PROXY
The accompanying proxy will be voted "FOR" the election of the eight
(8) persons recommended by the Board and named under "PROPOSAL NO. 1: ELECTION
OF DIRECTORS" as nominees for directors of the Corporation, "FOR" the approval
of the amendment to the Articles of Incorporation to change of the name of the
Corporation to Central Bancorporation, Inc., and "FOR" the approval of the
appointment of KPMG Peat Marwick as the Corporation's independent auditors for
the fiscal year ending December 31, 1995, unless the proxy is marked in such a
manner as to withhold authority to so vote.
The accompanying proxy will also be voted in connection with the
transaction of such other business as may properly come before the Annual
Meeting of Shareholders, or any adjournment or adjournments thereof. Management
knows of no other matters to be considered at the Annual Meeting of
Shareholders. If, however, any other matters properly come before the Annual
Meeting of Shareholders, or any adjournment or adjournments thereof, the persons
named in the accompanying proxy will vote such proxy in accordance with their
best judgment on any such matter. The persons named in the accompanying proxy
will also, if in their judgment it is deemed to be advisable, vote to adjourn
the meeting from time to time.
STOCK OWNERSHIP
BY MANAGEMENT
The following table shows beneficial ownership of shares of Common
Stock of the Corporation by all current directors, nominees for director, and
executive officers of the Corporation named under
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<PAGE>
the caption "EXECUTIVE COMPENSATION AND OTHER INFORMATION," individually, and,
together with all current executive officers of the Corporation, as a group, at
December 31, 1994.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Amount and
Name of Individual Nature of
or Number of Beneficial Percent
Persons In Group Ownership/(1)/ of Class
- ----------------------------------------------------------------------
<S> <C> <C>
J. Andy Thompson 1,383,441 shares/(2) / 52.65%
Stuart W. Murff 2,279 shares *
Brian W. Garrison 10,444 shares/(3) / *
Michael J. Tyler 3,599 shares *
Tom F. Turner 20,117 shares/(4) / *
F. D. Thompson, Jr. 1,264,143 shares/(5) / 48.31%
Richard L. Brown 77,412 shares/(6) / 2.96%
Ervin D. Cruce 3,893 shares *
Nancy W. Smith 240,072 shares/(7) / 9.17%
Kelly R. Thompson 11,604 shares/(8) / *
C. Rhea Thompson 1,262,228 shares/(9) / 48.24%
All executive 4,279,232 shares/(10)/ 162.10%
officers and
directors as a
group (11 persons)
</TABLE>
- -------------------
* Less than 1% of all the issued and outstanding shares of Common Stock.
(1) Based on information furnished by persons named and, except as otherwise
indicated below, each person has sole voting power with respect to all
shares of Common Stock owned by such person.
(2) Includes 24,327 shares of Common Stock owned of record; 3 shares of Common
Stock owned by Mr. Thompson's wife; 19,973 shares of Common Stock held as
attorney-in-fact for Mr. Thompson's sons; 12,270 shares of Common Stock
held as Custodian under the Uniform Gift to Minors Act for the benefit of
third parties; 60,170 shares of Common Stock held by 777 Company, of which
Mr. Thompson is a partner; 945 shares of Common Stock held in self directed
trusts for Mr. Thompson and his wife; 1,254,643 shares of Common Stock held
by Thompson Financial, Ltd., of which Mr. Thompson is a general partner;
and 11,110 shares of Common Stock which Mr. Thompson has the right to
acquire within sixty (60) days from the date hereof pursuant to options
granted to him under the 1988 Incentive Stock Option Plan of the
Corporation. See "EXECUTIVE COMPEN-
- 9 -
<PAGE>
SATION AND OTHER INFORMATION - Option Grants, Exercises and Holdings."
(3) Includes 7,349 shares of Common Stock owned of record; 2,832 shares of
Common Stock held in a self directed trust for Mr. Garrison; and 263 shares
of Common Stock owned by Mr. Garrison's children.
(4) Includes 100 shares of Common Stock owned of record; 8,017 shares of Common
Stock held in a self directed trust for Mr. Turner; and 12,000 shares of
Common Stock which Mr. Turner has the right to acquire within sixty (60)
days from the date hereof pursuant to options granted to him under the 1988
Incentive Stock Option Plan of the Corporation. See "EXECUTIVE
COMPENSATION AND OTHER INFORMATION - Option Grants, Exercises and
Holdings."
(5) Includes 8,303 shares of Common Stock owned of record; 1,197 shares of
Common Stock owned by Mr. Thompson's wife; and 1,254,643 shares of Common
Stock held by Thompson Financial, Ltd., of which Mr. Thompson is a general
partner.
(6) Includes 1,725 shares of Common Stock owned of record; and 75,687 shares of
Common Stock owned by trusts for which Mr. Brown serves as trustee.
(7) Includes 676 shares of Common Stock owned of record; 8,500 shares of Common
Stock owned by Mrs. Smith's husband; and 230,896 shares of Common Stock
owned by LNW Family, L.P., of which Mrs. Smith is managing general partner.
(8) Includes 5,430 shares of Common Stock owned of record; 1,938 shares of
Common Stock held in self directed trusts for Mr. Thompson; 4,040 shares of
Common Stock owned by Mr. Thompson's daughters; and 196 shares of Common
Stock held by Kemp Livestock and Investment, of which Mr. Thompson is a
partner.
(9) Includes 4,897 shares of Common Stock owned of record; 1,038 shares of
Common Stock owned by Mr. Thompson's wife; 1,650 shares of Common Stock
held in self-directed trusts for Mr. Thompson and his wife; and 1,254,643
shares of Common Stock held by Thompson Financial, Ltd., of which Mr.
Thompson is a general partner.
(10) Includes 23,110 shares of Common Stock with respect to which certain
executive officers of the Corporation have a right to acquire beneficial
ownership within sixty (60) days from the date hereof through the exercise
of options granted under the 1988 Incentive Stock Option Plan of the
Corporation. See "EXECUTIVE COMPENSATION AND OTHER INFORMATION - Option
Grants, Exercises and Holdings."
- 10 -
<PAGE>
BY OTHERS
The following table sets forth certain information with respect to
shareholders of the Corporation who were known to be beneficial owners of more
than five percent (5%) of the outstanding shares of Common Stock as of December
31, 1994.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
Amount and Nature
Name and Address of of Beneficial Percent of
Beneficial Owner Ownership/(1)/ Class
- -------------------------------------------------------------------
<S> <C> <C>
Thompson Financial, Ltd. 1,254,643/(2)/ 47.95%
777 West Rosedale
Fort Worth, Texas 76104
Fred D. Thompson 1,297,205/(3)/ 49.57%
777 West Rosedale
Fort Worth, Texas 76104
Alice Rhea Thompson 1,285,964/(4)/ 49.14%
777 West Rosedale
Fort Worth, Texas 76104
J. Andy Thompson 1,383,441/(5)/ 52.65%
777 West Rosedale
Fort Worth, Texas 76104
F. D. Thompson, Jr. 1,264,143/(6)/ 48.31%
777 West Rosedale
Fort Worth, Texas 76104
C. Rhea Thompson 1,262,228/(7)/ 48.24%
777 West Rosedale
Fort Worth, Texas 76104
Nancy W. Smith 240,072/(8)/ 9.17%
705 Rivercrest Drive
Fort Worth, Texas 76107
LNW Family, L.P. 230,896 8.82%
705 Rivercrest Drive
Fort Worth, Texas 76107
</TABLE>
- -------------------
(1) Based on information furnished by persons and entities named and, except as
otherwise indicated below, each person and entity has sole voting power
with respect to all shares of Common Stock owned by such person or entity.
(2) In 1983 certain members of the Thompson family and affiliated persons
formed a limited partnership, Thompson Financial, Ltd. (the "Partnership"),
and transferred substantially all of their shares of Common Stock to the
Partnership in exchange for 342,095 units of limited and general
partnership interests in the Partnership. Holders of the general
partnership interests govern the day-to-day operations of the Partnership,
- 11 -
<PAGE>
including the right to vote the shares of Common Stock. Seven (7) voting
units were allocated among the five (5) holders of the general partnership
interests, as follows:
<TABLE>
<CAPTION>
Number of
Name Voting Rights
--------------------- -------------
<S> <C>
Fred D. Thompson 2
Alice Rhea Thompson 2
F. D. Thompson, Jr. 1
C. Rhea Thompson 1
J. Andy Thompson 1
</TABLE>
All 1,254,643 shares of Common Stock are owned of record by Thompson
Financial, Ltd.
(3) Includes 21,110 shares of Common Stock owned of record; 10,211 shares of
Common Stock owned by Mr. Thompson's wife; 11,241 shares of Common Stock
held by three trusts for which Mr. Thompson serves as trustee; and
1,254,643 shares of Common Stock held by Thompson Financial, Ltd., of which
Mr. Thompson is a general partner.
(4) Includes 10,211 shares of Common Stock owned of record; 21,110 shares of
Common Stock owned by Mrs. Thompson's husband; and 1,254,643 shares of
Common Stock held by Thompson Financial, Ltd., of which Mrs. Thompson is a
general partner.
(5) See footnote (2) under "STOCK OWNERSHIP - By Management."
(6) See footnote (5) under "STOCK OWNERSHIP - By Management."
(7) See footnote (9) under "STOCK OWNERSHIP - By Management."
(8) See footnote (7) under "STOCK OWNERSHIP - By Management."
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's executive officers, directors and persons who own more than ten
percent (10%) of a registered class of the Corporation's equity securities to
file reports of ownership with the Securities and Exchange Commission.
Based upon a review of Forms 3, 4 and 5 and amendments thereto furnished to
the Corporation, management of the Corporation has determined that during fiscal
year 1994 the following directors, officers or ten percent (10%) beneficial
shareholders of Common Stock of the Corporation failed to timely file with the
Securities and Exchange Commission one or more required reports on Form 3, 4 or
5 regarding transactions in securities of the Corporation:
- 12 -
<PAGE>
<TABLE>
<CAPTION>
Number Number of
Reporting Person of Reports Transactions
----------------------------- ---------- ------------
<S> <C> <C>
Cleaves Rhea Thompson Trust 1 2
John Andrew Thompson Trust 1 2
</TABLE>
To the best knowledge of management of the Corporation, during fiscal year
1994 no director, officer or ten percent (10%) beneficial shareholder of Common
Stock of the Corporation failed to file with the Securities and Exchange
Commission any required reports on Form 3, 4 or 5 regarding transactions in
securities of the Corporation.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Corporation and its subsidiaries, to or on
behalf of the Corporation's Chief Executive Officer and each of the four other
most highly compensated executive officers of the Corporation (determined as of
the end of the last fiscal year) (hereafter referred to as the "named executive
officers") for the fiscal years ended December 31, 1992, 1993 and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
- ----------------------------------------------------------------------
All Other
Name and Year Salary($) Bonus($) Compensation($)
Principal Position /(1)(2)(3)/ /(4)(5)(6)/
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
J. Andy Thompson 1994 $195,451 $85,000 $ 5,095
Chairman of the Board and 1993 $195,451 $76,400 $ 4,297
Chief Executive Officer 1992 $196,051 $60,000 $ 475
Stuart W. Murff 1994 $160,000 $60,000 $ 4,075
President 1993 $146,667/(7)/ $56,000 $24,990/(8)/
Brian W. Garrison 1994 $161,046 $15,000 $ 5,095
Vice Chairman of Central 1993 $161,046 $26,000 $ 3,696
Bank & Trust 1992 $161,646 $47,000 $ 475
Michael J. Tyler 1994 $100,000 $28,000 $ 3,071
Senior Vice President, 1993 $ 97,500 $28,000 $ 2,303
Chief Financial Officer 1992 $ 92,780 $26,000 $ 475
and Treasurer
Tom F. Turner 1994 $151,524 $28,000 $ 4,158
President of Central 1993 $151,524 $24,000 $ 3,237
Bank & Trust 1992 $151,746 $44,000 $ 475
</TABLE>
- -------------------
(1) The total amounts shown in this column for 1994 consist of salaries paid
for services rendered to the Corporation and its subsidiaries, including
amounts deferred as follows: (i) Mr. Thompson, $9,240 deferred under the
Corporation's 401(k) Plan
- 13 -
<PAGE>
for Employees of Texas Security Bancshares, Inc. and Affiliates, a defined
contribution plan (the "401(k) Plan") and $4,375 deferred under the
Corporation's EDC Plan (see detailed discussion at pages 24 to 25 of this
Proxy Statement); (ii) Mr. Murff, $9,240 deferred under the 401(k) Plan;
(iii) Mr. Garrison, $9,240 deferred under the 401(k) Plan; (iv) Mr. Tyler,
$9,240 deferred under the 401(k) Plan; and (v) Mr. Turner, $7,366 deferred
under the 401(k) Plan and $4,200 deferred under the Corporation's EDC Plan.
(2) The total amounts shown in this column for 1993 consist of salaries paid
for services rendered to the Corporation and its subsidiaries, including
amounts deferred as follows: (i) Mr. Thompson, $7,643 deferred under the
401(k) Plan and $4,375 deferred under the Corporation's EDC Plan; (ii) Mr.
Garrison, $6,442 deferred under the 401(k) Plan; (iii) Mr. Tyler, $4,469
deferred under the 401(k) Plan; and (iv) Mr. Turner, $6,753 deferred under
the 401(k) Plan and $4,200 deferred under the Corporation's EDC Plan.
(3) The total amounts shown in this column for 1992 consist of salaries and
director's fees paid for services rendered to the Corporation and its
subsidiaries, including amounts deferred as follows: (i) Mr. Thompson,
$4,375 deferred under the Corporation's EDC Plan; and (ii) Mr. Turner,
$4,200 deferred under the Corporation's EDC Plan.
(4) Except as otherwise noted, "All Other Compensation" consists of premium
payments with respect to term life insurance for the benefit of the named
executive officer.
(5) The total amounts shown in this column for 1994 consist of the following:
(i) Mr. Thompson, $4,620 for a matching contribution by the Corporation
under the 401(k) Plan and $475 in premium payments with respect to term
life insurance for the benefit of Mr. Thompson; (ii) Mr. Murff, $3,600 for
a matching contribution by the Corporation under the 401(k) Plan and $475
in premium payments with respect to term life insurance for the benefit of
Mr. Murff; (iii) Mr. Garrison, $4,620 for a matching contribution by the
Corporation under the 401(k) Plan and $475 in premium payments with respect
to term life insurance for the benefit of Mr. Garrison; (iv) Mr. Tyler,
$2,747 for a matching contribution by the Corporation under the 401(k) Plan
and $324 in premium payments with respect to term life insurance for the
benefit of Mr. Tyler; and (v) Mr. Turner, $3,683 for a matching
contribution by the Corporation under the 401(k) Plan and $475 in premium
payments with respect to term life insurance for the benefit of Mr. Turner.
(6) The total amounts shown in this column for 1993 consist of the following:
(i) Mr. Thompson, $3,822 for a matching contribution by the Corporation
under the 401(k) Plan and $475 in premium payments with respect to term
life insurance for the benefit of Mr. Thompson; (ii) Mr. Garrison, $3,221
for a
- 14 -
<PAGE>
matching contribution by the Corporation under the 401(k) Plan and $475 in
premium payments with respect to term life insurance for the benefit of Mr.
Garrison; (iii) Mr. Tyler, $1,828 for a matching contribution by the
Corporation under the 401(k) Plan and $475 in premium payments with respect
to term life insurance for the benefit of Mr. Tyler; and (iv) Mr. Turner,
$2,762 for a matching contribution by the Corporation under the 401(k) Plan
and $475 in premium payments with respect to term life insurance for the
benefit of Mr. Turner.
(7) Mr. Murff became an employee of the Corporation in February 1993.
(8) Consists of premium payments with respect to term life insurance in the
amount of $435 and payments in the amount of $24,555 paid in 1993 for
consulting services rendered prior to employment by the Corporation.
OPTION GRANTS, EXERCISES AND HOLDINGS
No incentive stock options were granted to the named executive officers
under the 1988 Incentive Stock Option Plan of Texas Security Bancshares, Inc.
(the "1988 Plan") during the fiscal year ended December 31, 1994.
The following table provides information with respect to the named
executive officers concerning the exercise of incentive stock options during the
last fiscal year and unexercised incentive stock options held as of the end of
the last fiscal year under the 1988 Plan:
AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($)
----------------------------------------
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise(#) Realized($) Unexercisable Unexercisable/(1)/
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
J. Andy Thompson -0- -0- 11,110/-0-/(2)/ $24,442/-0-
Stuart W. Murff -0- -0- -0-/-0- -0-/-0-
Brian W. Garrison -0- -0- -0-/-0- -0-/-0-
Michael J. Tyler -0- -0- -0-/-0- -0-/-0-
Tom F. Turner -0- -0- 12,000/-0-/(3)/ $66,000/-0-
</TABLE>
- -------------------
(1) Market value of underlying securities as of the fiscal year-end ($22.00),
minus the exercise or base price.
- 15 -
<PAGE>
(2) Mr. Thompson's options are exercisable at $19.80 per share.
(3) Mr. Turner's options are exercisable at $16.50 per share.
LONG-TERM INCENTIVE PLANS
On September 20, 1993 the Corporation adopted the Executive Deferred
Compensation Plan of Texas Security Bancshares, Inc. (the "TSB Plan"). On April
21, 1993 Central Bank & Trust adopted the Executive Deferred Compensation Plan
of Central Bank & Trust (the "Bank Plan"). The TSB Plan and the Bank Plan are
hereinafter collectively referred to as the "Deferred Compensation Plans." The
following table provides information with respect to cumulative awards made to
the named executive officers under such Deferred Compensation Plans through
fiscal year 1994:
LONG-TERM INCENTIVE PLANS
CUMULATIVE AWARDS THROUGH FISCAL YEAR 1994
<TABLE>
<CAPTION>
- ------------------------------------------------------
Estimated Future Payouts Under
Non-Stock Price-Based Plans
----------------------------------------------------
Number of Performance or
Shares, Other Period
Units or Until Threshold Target Maximum
Name Other Rights Maturation ($ or #)/(3)/ ($ or #)/(4)/ ($ or #)/(5)/
(#) or Payout/(2)/
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
J. Andy Thompson /(1)/ Contingent $58,590 $58,590 $458,128
Stuart W. Murff /(1)/ Contingent $28,396 $28,396 $300,983
Brian W. Garrison /(1)/ Contingent $50,045 $50,045 $206,993
Michael J. Tyler /(1)/ Contingent $13,805 $13,805 $115,356
Tom F. Turner /(1)/ Contingent $25,022 $25,022 $206,993
</TABLE>
- -------------------
(1) The TSB Plan and Bank Plan (see detailed discussion at pages 21 to 24 of
this Proxy Statement) provide for deferred compensation payments to the
named executive officers that are based on: (i) a percentage of the
earnings of the Corporation and Central Bank & Trust, with different
percentages assigned to the various categories of named executive officers
and certain minimum earnings required for the named executive officers to
receive a credit to their accounts (the "Percentile of Earnings"); (ii) the
actual earnings per share of the Corporation or Central Bank & Trust as
compared to the planned earnings per share of the Corporation or Central
Bank & Trust, as set forth in the Deferred Compensation Plans; (iii) the
number of years the named executive officers are credited with
participation in the Deferred Compensation Plans; and (iv) the type of
event that causes a payment to be made (the "Triggering Event").
(2) The payment date for amounts due under the Deferred Compensation Plans is
February 28, 1998 (the initial termination date
- 16 -
<PAGE>
for each Deferred Compensation Plan), but a later payment date is
established if the Deferred Compensation Plan is extended and an earlier
payment date is established on the occurrence of a Triggering Event (see
detailed discussion at pages 23 to 24 of this Proxy Statement).
(3) The threshold amount payable under the Deferred Compensation Plans is
determined with reference to the actual and planned earnings per share of
the Corporation and Central Bank & Trust for 1994 and prior plan years.
The calculation of the amounts set forth above assumes that the named
executive officer will terminate employment prior to December 31, 1995
(excluding a termination for cause). The Deferred Compensation Plans do
not provide for a minimum payment if predetermined levels of earnings are
not reached, but a minimum payment is reflected above because minimum
performance targets were met for 1993 and 1994. If a named executive
officer is employed on December 31, 1995, a new calculation will be made
utilizing the Percentile of Earnings applicable for 1995, actual earnings
per share for 1995, planned earnings per share for 1995, and the Cumulative
Earnings Per Share Variance (as defined in the Deferred Compensation Plans)
from calendar years 1993 and 1994 ($0.90 and $0.14 per share under the TSB
Plan and $0.83 and $0.11 per share under the Bank Plan).
(4) Specified performance targets were met under both Deferred Compensation
Plans for calendar years 1993 and 1994, and the target amounts reflect what
would be paid to a named executive officer on a termination of employment
prior to December 31, 1995, excluding a termination for cause (which
results in no payment) and the occurrence of a "Sale of TSB," a specific
type of Triggering Event (see discussion at pages 23 to 24 of this Proxy
Statement and footnote (5) below). New calculations will be made under the
Deferred Compensation Plans for those employed on December 31, 1995, and
these amounts may be more or less than those shown above.
(5) The maximum amount payable under the Deferred Compensation Plans, as
calculated for calendar year 1994, would result only in the event of a Sale
of TSB prior to December 31, 1995. These amounts may be more or less than
those shown above in the event of a Sale of TSB after December 31, 1995.
PENSION PLAN
The following table shows the estimated annual pension benefits payable to
a participant in the Corporation's qualified defined benefit pension plan (the
"Pension Plan") at normal retirement age (age 65), based on a participant's
compensation that is covered under the Pension Plan, and years of service with
the Corporation and its subsidiaries.
- 17 -
<PAGE>
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Highest Five-
Year Average
Remuneration Years of Credited Service at Retirement
15 20 25 30 35
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$125,000 $30,285 $ 41,630 $ 52,976 $ 64,321 $ 64,321
$150,000 36,848 50,630 64,413 78,196 78,196
$175,000 43,410 59,630 75,851 92,071 92,071
$200,000 49,973 68,630 87,288 105,946 105,946
$225,000 56,535 77,630 98,726 119,821 119,821
$250,000 63,098 86,630 110,163 133,696 133,696
$300,000 76,223 104,630 133,038 161,446 161,446
</TABLE>
- -------------------
NOTE: Benefits under the Pension Plan are subject to the maximum annual
benefit limitation under Section 415 of the Internal Revenue Code of 1986
(the "Code") of $120,000 during 1995. In addition, compensation that can
be considered by the Pension Plan is limited during 1995 to $150,000, as
provided by Section 401(a)(17) of the Code. These limitations are subject
to annual cost-of-living adjustments. In addition, the Corporation has
adopted the Restoration Plan, a non-qualified plan that pays to certain
officers amounts restricted by the Code. Therefore, the benefits shown
above represent the total amounts payable from both plans.
A participant's compensation for purposes of the formula utilized by the
Pension Plan includes the salary, bonus, and elective employee salary deferrals
under Section 401(k) of the Code reported in Columns (c) and (d) of the Summary
Compensation Table. However, Column (c) of the Summary Compensation Table also
includes certain benefits under a deferred compensation plan for named executive
officers that are not treated as compensation for purposes of the Pension Plan.
The benefit levels in the Pension Plan Table assume continued existence of
the current plan without substantial change, and payment of benefits in the form
of a single life annuity. A participant's normal retirement benefit is not
subject to any deductions or other offsets.
Annual compensation that is covered under the Pension Plan, and credited
years of service as of December 31, 1994, for the named executive officers are
as follows: J. Andy Thompson, $282,491.45 (27 years); Stuart W. Murff,
$221,548.76 (2 years); Brian W. Garrison, $194,467.74 (6 years); Michael J.
Tyler $130,369.97 (6 years); and Tom F. Turner, $176,058.98 (13 years).
- 18 -
<PAGE>
RESTORATION PLAN
The Board has adopted the non-qualified Restoration Retirement Plan for
Certain Employees of Texas Security Bancshares, Inc. (the "Restoration Plan")
effective January 1, 1994, that reinstates retirement benefits to certain
executive officers of the Corporation whose benefits are restricted under the
limitations set forth in Section 415 or Section 401(a)(17) of the Code. The
compensation covered by the Restoration Plan is the same as a participant's
compensation for purposes of the Pension Plan. All of the named executive
officers, except Michael J. Tyler, are participants in the Restoration Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following served as members of the Compensation Committee during fiscal
year 1994: Ervin D. Cruce (Chairman), Richard L. Brown, Nancy W. Smith and
F. D. Thompson, Jr. Mr. Thompson is a former officer of the Corporation.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") is comprised of four non-
employee members of the Board. Among other duties, the Committee reviews and
recommends to the Board all aspects of compensation for the five named executive
officers of the Corporation.
The Corporation retained the services of a compensation consulting firm to
assist the Committee in connection with the performance of its review of
salaries and other benefits paid to the five named executive officers of the
Corporation. The consulting firm provided compensation surveys and other advice
to the Committee as to the reasonableness of the salaries and other benefits
paid to the named executive officers of the Corporation. In doing so, the
consulting firm took into account how such compensation compared with the amount
of compensation paid by competing companies as well as with the Corporation's
own performance.
The compensation policy of the Corporation, which is endorsed by the
Committee, is that a substantial portion of the annual compensation of each
named executive officer relate to and be contingent on the performance of the
Corporation, as well as the individual contribution of each officer. As a
result, much of a named executive officer's compensation is "at risk," with
annual bonus compensation ranging from 30% to 50% of base compensation for the
Chairman of the Board and ranging at lower percentages of base compensation for
the other four named executive officers of the Corporation.
The consulting firm reviewed the compensation of the named executive
officers for 1994 and reported to the Committee that, in the firm's opinion, the
salaries of all such named executive officers were generally reasonable as
compared to the salaries paid by similarly sized companies.
- 19 -
<PAGE>
As a result of the previously mentioned surveys, the Chief Executive
Officer's salary was maintained at the previous year's level and the other named
executive officers' salaries were either retained at their previous years'
levels because of comparable market levels or increased as appropriate. The
individual performance of each named executive officer was also considered.
Under the Corporation's annual bonus plan, bonuses are paid only if the
Corporation realizes targeted income. The Corporation exceeded targeted income
in 1994, and, therefore, the five named executive officers were eligible for
bonus compensation. The amount of bonuses paid under the Corporation's annual
bonus plan is based on both the performance of the named executive officers and
the performance of the Corporation. For fiscal year 1994 bonuses were awarded
to the Chief Executive Officer and the four other named executive officers of
the Corporation within the ranges recommended by the consulting firm and
incorporated into the Corporation's policy with respect to the payment of
bonuses.
Compensation and Benefits Committee
of the Board of Directors
Ervin D. Cruce (Chairman)
Richard L. Brown
Nancy W. Smith
F. D. Thompson, Jr.
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock of the Corporation with that of the MG Industry Group 047 - West
South Central Banks Index, a bank stock index published by Media General
Financial Services, Inc., and the American Stock Exchange Index, a broad market
index published by the American Stock Exchange. The comparison for each of the
periods assumes that $100 was invested on December 31, 1989 in each of the
Common Stock of the Corporation, the stocks included in the MG Industry Group
047 - West South Central Banks Index, and the stocks included in the American
Stock Exchange Index. These indexes, which reflect formulas for dividend
reinvestment and weighting of individual stocks, do not necessarily reflect
returns that could be achieved by individual investors.
- 20 -
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG THE CORPORATION, THE MG INDUSTRY GROUP 047 -
WEST SOUTH CENTRAL BANKS INDEX,
AND THE AMERICAN STOCK EXCHANGE INDEX
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------
Corporation $100.00 $79.63 $ 66.14 $ 83.97 $122.09 $151.95
- ------------------------------------------------------------------------
MG Industry Group $100.00 $59.98 $101.12 $172.89 $202.80 $ 93.89
047 - West South
Central Banks
- ------------------------------------------------------------------------
American Stock $100.00 $84.80 $104.45 $105.88 $125.79 $111.12
Exchange
- ------------------------------------------------------------------------
</TABLE>
TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Corporation has entered into termination of employment and change
in control agreements with certain of its employees, as more fully described
below. While these agreements were not entered into to deter takeovers, they
may have an incidental anti-takeover effect by making it more expensive for a
bidder to acquire control of the Corporation.
THE TSB PLAN AND THE BANK PLAN. On September 20, 1993 the Corporation
------------------------------
adopted the Executive Deferred Compensation Plan of Texas Security Bancshares,
Inc. (the "TSB Plan"). On April 21, 1993 Central Bank & Trust adopted the
Executive Deferred Compensation Plan of Central Bank & Trust (the "Bank Plan").
The TSB Plan
- 21 -
<PAGE>
and the Bank Plan are hereinafter collectively referred to as the "Deferred
Compensation Plans."
The TSB Plan is administered by the Compensation Committee of the
Board of Directors of the Corporation (the "TSB Committee") and the Bank Plan is
administered by the Compensation and Benefits Committee of the Board of
Directors of Central Bank & Trust (the "Bank Committee"). The TSB Committee and
the Bank Committee are hereinafter collectively referred to as the "Committees."
The initial term of each of the Deferred Compensation Plans is five
years (ending February 28, 1998), subject to extension for an unlimited number
of additional one year periods and subject to earlier termination at any time
during the initial or any extended term, in the sole discretion of the
Committees.
The obligations of the Corporation and Central Bank & Trust under the
Deferred Compensation Plans to pay deferred compensation to participants
thereunder constitute an unfunded unsecured promise to pay compensation in the
future to the participants. Any deferred amounts remain the general assets of
the Corporation and Central Bank & Trust and are subject to the claims of the
Corporation's and Central Bank & Trust's creditors.
Pursuant to the terms of the Deferred Compensation Plans, the
Committees have selected each of the named executive officers to participate in
the Deferred Compensation Plans, and a participation account has been
established for each named executive officer. A named executive officer's
account is utilized solely as a device for the measurement and determination of
the amount of deferred compensation to be paid to him upon the occurrence of
certain events. The account is not treated as a trust fund for the participant,
and the participant has no ownership rights with respect to the account.
Amounts credited to a participant's account are determined under a
formula that considers: (i) earnings per share; (ii) the difference in earnings
per share and planned earnings per share as defined in the Deferred Compensation
Plan for the year in question; (iii) shares outstanding each year; and (iv) a
percentage of the foregoing. The percentage factor in the formula changes each
year, and the percentage applicable to a particular named executive officer
depends on the office held. Credits to the participants accounts, if any, are
determined on an annual basis, may be suspended if certain earning levels are
not reached, and are non-cumulative. If the participant's employment is
terminated for cause, all credits to his account are forfeited.
For each calendar year during which a named executive officer
participates in the TSB Plan, his account is credited with an amount equal to:
- 22 -
<PAGE>
(i) the sum of (A) the earnings per share of the Corporation for the
calendar year in question plus (B) the Cumulative Earnings Per
Share Variance (defined below); multiplied by
(ii) the number of shares of common stock of the Corporation issued
and outstanding at the end of the calendar year in question;
multiplied by
(iii) the applicable percentage (as set forth in the TSB Plan) for such
participant for the calendar year in question (the "Percentile of
Earnings").
The "Cumulative Earnings Per Share Variance" is defined as the sum of (i) the
planned earnings per share of the Corporation (as set forth in the TSB Plan)
less (ii) the earnings per share of the Corporation for each calendar year in
which the named executive officer is credited with participation in the TSB
Plan. However, if the earnings per share of the Corporation for a calendar year
are less than 85% of the planned earnings per share for such calendar year and
the Cumulative Earnings Per Share Variance is negative after taking into account
the variance for such calendar year, the Cumulative Earnings Per Share Variance
at the end of such calendar year is deemed to be zero for such calendar year and
for carry-forward purposes of determining the Cumulative Earnings Per Share
Variance in future calendar years.
For each named executive officer that is a participant under the Bank Plan,
the amount credited to his account for each calendar year is calculated in the
same fashion, except that the earnings per share of Central Bank & Trust are
used instead of the earnings per share of the Corporation and the planned
earnings per share of Central Bank & Trust (as set forth in the Bank Plan) are
used instead of the planned earnings per share of the Corporation.
If the earnings per share of the Corporation or Central Bank & Trust, as
the case may be, for a calendar year are less than 85% of the planned earnings
per share (as defined in the Deferred Compensation Plans) for such calendar
year, no amount is credited to the account of a participant for such calendar
year; however, the amount credited to the account for a prior calendar year, if
any, remains in the account. In such event, the Percentile of Earnings for the
calendar year in question is carried forward and used for the next subsequent
calendar year in which the 85% level is met. The Percentile of Earnings for the
subsequent calendar years are carried forward in a similar fashion.
Participants in the Deferred Compensation Plans are entitled to
distributions on the occurrence of certain "Triggering Events." "Triggering
Events" under the Deferred Compensation Plans are defined as the occurrence of
any one of the following events:
- 23 -
<PAGE>
(i) termination of employment of a participant for any reason other
than cause;
(ii) death of a participant;
(iii) disability of a participant;
(iv) a Sale of TSB; and
(v) the expiration of the initial or, if applicable, the last of any
extended term of the Deferred Compensation Plans.
A "Sale of TSB" is defined to include both (i) the merger or consolidation
of the Corporation or Central Bank & Trust with, or the sale of all or
substantially all of the assets of the Corporation or Central Bank & Trust to,
another corporation, as a result of which merger, consolidation or sale less
than 20% of the voting stock or other interest in the surviving corporation or
entity continues to be owned by shareholders of the Corporation or Central Bank
& Trust, as the case may be, immediately prior to such merger, consolidation or
sale and (ii) the acquisition by a third party of more than 80% of the
outstanding voting stock of the Corporation or Central Bank & Trust, other than
by any member of the Thompson family.
Upon the occurrence of a Triggering Event a participant under the Deferred
Compensation Plans is entitled to a distribution of all or a part of the amount
credited to his account. For the amounts payable to the named executive
officers upon the occurrence of a Triggering Event in 1995, see the table under
"EXECUTIVE COMPENSATION AND OTHER INFORMATION - Long-Term Incentive Plans." All
distributions under the Deferred Compensation Plans are payable in cash.
If the Triggering Event is an event other than a Sale of TSB, the
participant's distribution amount is obtained by dividing the account balance by
five and multiplying the resulting amount by the number of calendar years the
participant is credited with participation in the Deferred Compensation Plans,
up to a maximum of five. The resulting distribution is payable in four equal
annual installments.
If the Triggering Event is a Sale of TSB, the participant's distribution is
the amount credited to his account as of the end of the immediately preceding
calendar year. The amount is payable in full upon the occurrence of the
Triggering Event.
To provide a fund for distributions due and payable under the Deferred
Compensation Plans upon the death of a participant, the Corporation and Central
Bank & Trust may, but are not obligated to, apply for insurance on the lives of
any of the participants.
- 24 -
<PAGE>
The Corporation has entered into an agreement with Brian W. Garrison, Vice
Chairman of the Board of Central Bank & Trust, pursuant to which he will receive
a one time payment if a Triggering Event (as defined in the Bank Plan) occurs.
Although the condition precedent to such payment is defined by reference to the
Bank Plan, this agreement is separate and distinct from the Bank Plan. If a
Triggering Event occurs in 1995, the Corporation will be obligated to pay
$70,000 under this separate agreement.
THE EDC PLAN. In 1985 the Corporation adopted the Executives' Deferred
------------
Compensation Plan, a nonfunded, nontrusted and nonqualified deferred
compensation plan (the "EDC Plan"), for certain selected key employees of the
Corporation and Central Bank & Trust. The EDC Plan is designed to provide
supplemental retirement benefits and pre-retirement death benefits to
participants. Participants may also be entitled to receive benefits upon
termination of employment with the Corporation, voluntary termination of
participation in the EDC Plan, or termination of the EDC Plan by the Corporation
("Early Termination Benefits"). The amount of the Early Termination Benefits is
generally equal to the amount of the participant's cumulative deferred
compensation plus interest thereon at 6% per annum. The retirement and death
benefits payable under the EDC Plan to the participants are determined in
accordance with a formula applied to the amount of monthly compensation deferred
by the participant. The Corporation intends, but is not obligated, to fund its
future obligations through the purchase of life insurance policies which are
funded by a participant's deferred cash compensation and by contributions by the
Corporation. The amount of the named executive officers' compensation deferred
during 1994 pursuant to the EDC Plan is reflected in the Summary Compensation
Table (see pages 13 to 14 of this Proxy Statement). During fiscal year 1994 the
Corporation paid $7,762.63 in interest in connection with prior borrowings
against the cash surrender value to finance the payment of premiums on life
insurance policies purchased for the purpose of funding the EDC Plan.
THE 1988 PLAN. The 1988 Plan contains certain "change in control"
-------------
provisions designed to attract and retain valued employees of the Corporation
and to ensure that such employees' performance is not undermined by the possible
threat or occurrence of a change in control. The 1988 Plan provides that in the
event of a "change in control" of the Corporation (in the form of a dissolution
or liquidation of the Corporation or a merger or consolidation in which the
Corporation is not the surviving corporation), any options granted under the
1988 Plan become fully exercisable, notwithstanding any vesting schedule
relating to such options to the contrary.
RESTORATION PLAN. The Retirement Plan for Employees of Texas Security
----------------
Bancshares, Inc. (the "Pension Plan") is a defined benefit pension plan that
provides annual pension benefits payable to the plan participants at normal
retirement age (age 65), based on the participant's compensation that is covered
under the Pension Plan, and years of service with the Corporation and its
subsidiaries.
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<PAGE>
Benefits under the Pension Plan are subject to the maximum annual benefit
limitation under Section 415 of the Internal Revenue Code of 1986 (the "Code")
of $120,000 during 1995. In addition, compensation that can be considered by
the Pension Plan is limited during 1995 to $150,000, as provided by Section
401(a)(17) of the Code. These limitations are subject to annual cost-of-living
adjustments.
The Board has adopted the non-qualified Restoration Retirement Plan for
Certain Employees of Texas Security Bancshares, Inc. (the "Restoration Plan")
effective January 1, 1994, that reinstates retirement benefits to certain
executive officers of the Corporation and its subsidiaries whose benefits under
the Pension Plan are restricted as a result of the limitations set forth in
Section 415 or Section 401(a)(17) of the Code. All of the named executive
officers, except Michael J. Tyler, are participants in the Restoration Plan.
A participant's compensation that is used to determine benefits under the
Restoration Plan is the same as that utilized by the Pension Plan to determine
the participant's annual pension benefit. The benefits payable to a participant
in the Restoration Plan are the benefits calculated for that participant under
the Pension Plan, if the benefits under the Pension Plan were not limited by
Section 415 and Section 401(a)(17) of the Code, less the benefits otherwise
payable to the participant under the Pension Plan. The benefits from the
Restoration Plan are to be paid in the same manner and on the same terms that
benefits are to be paid from the Pension Plan, unless there is a "Sale of TSB."
If there is a Sale of TSB, and if a plan participant's service with the
Corporation or one of its subsidiaries is terminated as a result of a Sale of
TSB, then any benefits due to a participant from the Restoration Plan are to be
paid in a single lump sum on the date that the participant terminates his or her
employment.
A "Sale of TSB" is defined to include both (i) the merger or consolidation
of the Corporation or Central Bank & Trust with, or the sale of all or
substantially all of the assets of the Corporation or Central Bank & Trust to,
another corporation, as a result of which merger, consolidation or sale less
than 20% of the voting stock or other interest in the surviving corporation or
entity continues to be owned by shareholders of the Corporation or Central Bank
& Trust, as the case may be, immediately prior to such merger, consolidation or
sale and (ii) the acquisition by a third party of more than 80% of the
outstanding voting stock of the Corporation or Central Bank & Trust, other than
by any third party (or a group of third parties acting in concert) who owns of
record and beneficially more than 30% of the outstanding voting stock of the
Corporation or Central Bank & Trust as of January 1, 1994.
To provide a fund for the benefits that are due and payable under the
Restoration Plan, the Corporation has established the Trust Agreement for
Restoration Plan for Certain Employees of Texas Security Bancshares, Inc. and
Affiliates (the "Restoration Trust").
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<PAGE>
The Restoration Trust is irrevocable and can not be revoked by the Corporation,
although it can be amended or terminated. In addition, the Restoration Plan
will terminate if the Pension Plan terminates, or if as the result of a merger,
consolidation or acquisition in which the Corporation is not the surviving
corporation, the successor or acquiring corporation does not agree in writing to
maintain the Restoration Plan. In the event of the Restoration Plan's
termination, the payment of accrued benefits to plan participants will be made
in a lump sum.
The Corporation may, but is not obligated to, fund the Restoration Trust in
order to meet its obligations pursuant to the Restoration Plan. The obligations
of the Corporation to pay benefits to participants in the Restoration Plan is an
unsecured promise to pay such benefits in the future. Any assets that would be
used to pay these benefits, including any assets that are contributed by the
Corporation to the Restoration Trust, remain a part of the general assets of the
Corporation and are subject to the claims of the Corporation's creditors in the
event of its insolvency. The Corporation shall be considered "insolvent" for
the purposes of the Restoration Trust if it: (1) is unable to pay its debts as
they become due, (2) is subject to a pending proceeding as a debtor under the
United States Bankruptcy Code, or (3) is determined to be insolvent by
applicable federal or state regulatory agencies.
CERTAIN TRANSACTIONS
Certain of the officers, directors and principal shareholders (and their
affiliates) of the Corporation and Central Bank & Trust have deposit accounts
and other transactions with Central Bank & Trust, including loans in the
ordinary course of business. All loans or other extensions of credit made by
Central Bank & Trust to officers, directors and principal shareholders of the
Corporation and Central Bank & Trust, and to affiliates of such persons, 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 independent third parties and did not involve more
than the normal risks of collectibility or present other unfavorable features.
Central Bank & Trust expects to continue to enter into such transactions in
the ordinary course of business on similar terms with officers, directors and
principal shareholders (and their affiliates) of the Corporation and Central
Bank & Trust.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the next Annual
Meeting of Shareholders must be received by the Corporation at its principal
executive offices not later than November 6, 1995 for inclusion in the
Corporation's Proxy Statement and accompanying proxy relating to the next Annual
Meeting of Shareholders. It is
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<PAGE>
anticipated that the next Annual Meeting of Shareholders will be held on April
3, 1996.
ANNUAL REPORTS
A copy of the Corporation's 1994 Annual Report on Form 10-K, including the
financial statements required to be filed with the Securities and Exchange
Commission, may be obtained without charge (except for exhibits to such Annual
Report, which will be furnished upon payment of the Corporation's reasonable
expenses in furnishing such exhibits) by any shareholder whose proxy is
solicited upon written request to:
Texas Security Bancshares, Inc.
777 West Rosedale, Suite 320
Fort Worth, Texas 76104
Attention: Ms. Karen L. Sweeney
BY ORDER OF THE BOARD OF DIRECTORS
By:_______________________________
J. Andy Thompson, Chairman of
the Board and Chief Executive
Officer
Fort Worth, Texas
March 6, 1995
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<PAGE>
LOGO
TEXAS SECURITY BANCSHARES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION
FOR ANNUAL MEETING OF SHAREHOLDERS
APRIL 5, 1995
The undersigned hereby constitutes and appoints Ervin D. Cruce, F. D. Thompson,
Jr. and J. Andy Thompson, and each of them, proxies with full power of
substitution, to vote, as directed below, all the shares of common stock of
Texas Security Bancshares, Inc. (the "Corporation") held of record by the
undersigned at the close of business on March 6, 1995, at the Annual Meeting of
Shareholders to be held at Central Bank & Trust, 777 West Rosedale, Fort Worth,
Texas, at 2:00 p.m. on April 5, 1995, and at any adjournment or adjournments
thereof.
1. ELECTION OF DIRECTORS--Nominees: Richard L. Brown, Ervin D. Cruce, Stuart
W. Murff, Nancy W. Smith, C. Rhea Thompson, F. D. Thompson, Jr., J. Andy
Thompson and Kelly R. Thompson.
MARK ONLY ONE BOX [_] VOTE FOR all nominees listed above, except vote to be
withheld from the following nominees, if any:
________________________________________________________________________________
[_] VOTE TO BE WITHHELD from all nominees.
2. APPROVAL OF AN AMENDMENT TO THE ARTICLES OF INCORPORATION TO CHANGE THE
NAME OF THE CORPORATION TO CENTRAL BANCORPORATION, INC. FOR [_] AGAINST
[_] ABSTAIN [_]
3. APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS. Proposal to approve the
appointment of KPMG Peat Marwick as independent auditors of the
Corporation for the fiscal year ending December 31, 1995. FOR [_] AGAINST
[_] ABSTAIN [_]
4. OTHER BUSINESS. In their discretion upon such other business as may
properly come before the meeting, or any adjournment or adjournments
thereof. [_] FOR [_] AGAINST [_] ABSTAIN [_]
(continued on other side)
LOGO
This proxy when properly executed will be voted as directed herein by the
undersigned. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR all the
nominees listed on the reverse side, FOR proposals 2 and 3 and, in the
discretion of the persons designated herein as proxies, upon such other
business as may come before the meeting and at any adjournment or adjournments
thereof. The undersigned hereby revokes any proxy or proxies heretofore given
and hereby confirms all that said attorneys and proxies, or any of them, or
their substitutes may do by virtue hereof. In addition, receipt of the 1994
Annual Report, the Notice of Annual Meeting and the Proxy Statement of Texas
Security Bancshares, Inc. dated March 6, 1995 is hereby acknowledged.
SHARES OF COMMON STOCK: ____ DATED ____________________________, 1995
________________________________________
Please date this proxy and ________________________________________
sign your name exactly as Signature of Shareholder(s)
it appears hereon, and mail
today. When signing on ________________________________________
behalf of a corporation, Street Address
partnership, estate, trust,
or the like, indicate title ________________________________________
of persons signing. For City State Zip Code
joint accounts, each joint
owner should sign.
NOTE: I [_] WILL [_] WILL NOT ATTEND THE SHAREHOLDERS' MEETING ON APRIL 5, 1995
