SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Sec. 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 Rule 14a-
6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
COMSOUTH BANKSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
COMSOUTH BANKSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
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4) Proposed maximum aggregate value of transaction:-----------------
5) Total fee paid:--------------------------------------------------
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:-----------------------------------------
2) Form, Schedule or Registration Statement No.:-------------------
3) Filing Party:---------------------------------------------------
4) Date Filed:-----------------------------------------------------
<PAGE>
COMSOUTH BANKSHARES, INC.
1136 Washington Street, Suite 200
Columbia, South Carolina 29201
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held April 29, 1997
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of the Shareholders (the
"Annual Meeting") of ComSouth Bankshares, Inc., a South Carolina corporation
(the "Corporation"), will be held at The Palmetto Club, 1231 Sumter Street,
Columbia, South Carolina, at 11:00 a.m., local time, on Tuesday, April 29, 1997,
for the following purposes:
(1) To elect three directors of the Corporation to serve three-year terms
expiring in 2000;
(2) To ratify the appointment of J. W. Hunt and Company, LLP as
independent auditors for the Corporation for the fiscal year ending
December 31, 1997; and
(3) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only record holders of Common Stock of the Corporation at the close of
business on March 14, 1997, are entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof.
You are cordially invited and urged to attend the Annual Meeting in
person. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE
ENCLOSED, SELF- ADDRESSED, STAMPED ENVELOPE. IF YOU ARE A RECORD SHAREHOLDER AND
ATTEND THE ANNUAL MEETING AND DESIRE TO REVOKE YOUR PROXY AND VOTE IN PERSON YOU
MAY DO SO. IN ANY EVENT, A PROXY MAY BE REVOKED BY A RECORD HOLDER AT ANY TIME
BEFORE IT IS EXERCISED.
THE CORPORATION'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF
ALL THE PROPOSALS PRESENTED.
By Order of the Board of Directors
Arthur M. Swanson
President
Columbia, South Carolina
March 31, 1997
<PAGE>
COMSOUTH BANKSHARES, INC.
1136 Washington Street, Suite 200
Columbia, South Carolina 29201
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
to be Held April 29, 1997
-------------------------------------------------
This Proxy Statement is furnished to shareholders of ComSouth Bankshares,
Inc., a South Carolina corporation (herein, unless the context otherwise
requires, together with its subsidiaries, the "Corporation"), in connection with
the solicitation of proxies by the Corporation's Board of Directors for use at
the Annual Meeting of Shareholders to be held at The Palmetto Club, 1231 Sumter
Street, Columbia, South Carolina at 11:00 a.m., local time on April 29, 1997,
and any adjournment thereof (the "Annual Meeting"), for the purposes set forth
in the accompanying Notice of Annual Meeting of Shareholders.
Solicitation of proxies may be made in person or by mail, telephone,
telegraph or other electronic means by directors, officers and regular employees
of the Corporation. The Corporation may also request banking institutions,
brokerage firms, custodians, nominees and fiduciaries to forward solicitation
materials to the beneficial owners of Common Stock of the Corporation held of
record by such persons, and the Corporation will reimburse the reasonable
forwarding expenses. The cost of solicitation of proxies will be paid by the
Corporation. This Proxy Statement was first mailed to shareholders on or about
March 31, 1997.
The Corporation has its principal executive offices at 1136 Washington
Street, Suite 200, Columbia, South Carolina 29201. The Corporation's telephone
number is (803) 343-2144.
ANNUAL REPORT
The Annual Report to Shareholders covering the Corporation's fiscal year
ended December 31, 1996, including financial statements, is enclosed herewith.
Such Annual Report to Shareholders does not form any part of the material for
the solicitation of proxies.
REVOCATION OF PROXY
Any record shareholder returning the accompanying proxy may revoke such
proxy at any time prior to its exercise (a) by giving written notice to the
Corporation of such revocation, (b) by voting in person at the meeting, or (c)
by executing and delivering to the Corporation a later dated proxy. Attendance
at the Annual Meeting will not in itself constitute revocation of a proxy. Any
written notice or proxy revoking a proxy should be sent to ComSouth Bankshares,
Inc., 1136 Washington Street, Suite 200, Columbia, South Carolina 29201,
Attention: Harry R. Brown, Secretary. Written notice of revocation or delivery
of a later dated proxy will be effective upon receipt thereof by the
Corporation.
QUORUM AND VOTING
The Corporation's only outstanding voting security is its no par value
Common Stock (the "Common Stock"), each share of which entitles the holder
thereof to one vote on each matter to come before the Annual Meeting. At the
close of business on March 14, 1997 (the "Record Date"), the Corporation had
issued and outstanding 1,534,726 shares of Common Stock held of record by
approximately 600 persons. Only holders of record of
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<PAGE>
Common Stock at the close of business on the Record Date are entitled to notice
of and to vote on matters that come before the Annual Meeting.
The presence in person or by proxy of the holders of one third of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum at the Annual Meeting. If a share is
represented for any purpose at the Annual Meeting by the presence of the
registered owner or a person holding a valid proxy for the registered owner, it
is deemed to be present for the purposes of establishing a quorum. Therefore,
valid proxies which are marked "Abstain" or "Withhold" or as to which no vote is
marked, including proxies submitted by brokers that are the record owners of
shares (so-called "broker non-votes"), will be included in determining the
number of votes present or represented at the Annual Meeting. Once a quorum has
been established, it will not be destroyed by the departure of shares prior to
the adjournment of the meeting. If a quorum is not present or represented at the
meeting, the shareholders entitled to vote, present in person or represented by
proxy, have the power to adjourn the meeting from time to time, without notice
other than an announcement at the meeting, until a quorum is present or
represented. Directors, officers and regular employees of the Corporation may
solicit proxies for the reconvened meeting in person or by mail, telephone,
telegraph or other electronic means. At any such reconvened meeting at which a
quorum is present or represented, any business may be transacted that might have
been transacted at the meeting as originally noticed.
If a quorum is established at the meeting, directors will be elected by a
plurality of the votes cast by shares present and entitled to vote at the
meeting. Votes that are withheld or shares that are not voted in the election of
directors will have no effect on the outcome of election of directors.
Cumulative voting will not be permitted.
Ratification of J. W. Hunt and Company, LLP as the Corporation's
independent auditors for 1997, and approval of any other matters that may be
considered and acted upon by the shareholders at the meeting require that the
number of shares of Common Stock voted in favor of the proposal exceed the
number of shares of Common Stock voted against the proposal, provided a quorum
has been established. Votes that are withheld or shares that are not voted on
any such proposal will have no effect on the outcome.
ACTIONS TO BE TAKEN BY THE PROXIES
Each proxy, unless the shareholder otherwise specifies therein, will be
voted "FOR" the election of the three persons named in this Proxy Statement as
the Board of Directors' nominees for election to the Board of Directors, and
"FOR" the ratification of the appointment of J. W. Hunt and Company, LLP as
accountants for the fiscal year ending December 31, 1997. In each case where the
shareholder has appropriately specified how the proxy is to be voted, it will be
voted in accordance with such specifications. As to any other matter of business
which may properly be brought before the Annual Meeting, a vote may be cast
pursuant to the accompanying proxy in accordance with the best judgment of the
persons voting the same, but the Board of Directors does not know of any such
other business.
SHAREHOLDER PROPOSALS
Any shareholder of the Corporation desiring to present a proposal for
action at the 1998 Annual Meeting of Shareholders must deliver the proposal to
the executive offices of the Corporation no later than December 2, 1997. Only
proper proposals that are timely received will be included in the Corporation's
Proxy Statement and Proxy.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth as of March 14, 1997, the number and
percentage of outstanding shares beneficially owned by each executive officer
and director of the Corporation, by all executive officers and directors
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<PAGE>
of the Corporation as a group, and by each person known by the Corporation to
own more than 5% of the outstanding Common Stock.
Management
<TABLE>
<CAPTION>
Number of Shares Percent
Name Beneficially Owned (1)(2) of Class
<S> <C> <C> <C>
Harry R. Brown 8,978 (3) *
W. Carlyle Blakeney, Jr. 13,699 (4) *
R. Lee Burrows, Jr. 8,251 (5) *
Mason R. Chrisman 34,777 (6) 2.26
Charles R. Jackson 13,438 (7) *
J. Michael Kapp 27,607 (8) 1.77
LaVonne N. Phillips 68,897 (9) 4.49
John C.B. Smith, Jr. 49,164 (10) 3.20
Arthur M. Swanson 62,404 (11) 4.05
Arthur P. Swanson 18,298 (12) 1.19
All Directors and
Executive Officers
as a group(10 persons) 305,513 19.3
</TABLE>
* Less than one percent.
(1) Unless otherwise indicated, share amounts represent only those shares with
respect to which the named holder has sole power to vote or to direct the
vote and sole power to dispose of or to direct such disposition.
(2) Included in the Common Stock share amounts for certain individuals are
shares of Common Stock which such individuals have the right to acquire
within 60 days of March 14, 1997 pursuant to stock options as set forth in
more detail in the footnotes to this table and under the caption "Employee
Benefit Plans" appearing elsewhere herein. Consequently, the number of
shares shown in the table may not necessarily correspond with the number of
shares which may be voted by such individuals at the Annual Meeting.
Percentage calculations for these individuals assume that all of their
respective stock options have been exercised.
(3) Includes 4,400 shares subject to acquisition pursuant to exercise of stock
options.
(4) Includes 1,100 shares subject to acquisition pursuant to exercise of stock
options and 1,100 shares held as custodian for members of Mr. Blakeney's
family.
(5) Includes 62 shares held by spouse, and 468 shares subject to acquisition
pursuant to exercise of stock options.
(6) Includes 779 shares subject to acquisition pursuant to exercise of stock
options and 2,226 shares owned by Mr. Chrisman's wife.
(7) Includes 9,817 shares owned by two corporations in which Mr. Jackson is a
principal and 1,541 shares subject to acquisition pursuant to exercise of
stock options.
(8) Includes 24,445 shares subject to acquisition pursuant to exercise of stock
options.
(9) Includes 1,238 shares subject to acquisition pursuant to exercise of stock
options, but does not include 13,825 shares held in a trust of which Mrs.
Phillips is a beneficiary but as to which she does not have the power to
vote, direct the vote, dispose of or direct the disposition of.
(10) Includes 18,780 shares held by Mr. Smith as custodian for members of his
family, 1,706 shares subject to acquisition pursuant to exercise of stock
options, and 3,162 shares owned by Mr. Smith's spouse.
(11) Includes 2,873 shares owned by Mr. Swanson's spouse and 7,700 shares
subject to acquisition pursuant to exercise of stock options.
(12) Includes 6,600 shares subject to acquisition pursuant to exercise of stock
options.
3
<PAGE>
Five Percent Shareholders
The following table sets forth information regarding persons or groups
that beneficially own five percent or more of the Corporation's stock. The
information presented is derived from Schedules 13D provided to the Corporation
pursuant to the regulations of the Securities and Exchange Commission. The
information has not been verified by the Corporation.
Number of Shares Percent
Name and Address Beneficially Owned of Class
Mid-Atlantic Investors (1) 100,540 6.6
Post Office Box 7574
Columbia, SC 29202
Jerry Shearer (1) 118,823 7.7
289 Hunters Blind Drive
Columbia, SC 29212
Jerry Zucker (1) 100,540 6.6
16 Buckingham Drive
Charleston, SC 29407
A group comprised of 116,009 7.6
James E. Finley, Carl H.
Almond, Gail Jordan,
R. Phil Roof, Oscar Wooten
and Carroll McGee,
c/o David R. Evans
Chambliss & Bahner
1000 Tallon Bldg., 2 Union Square
Chattanooga, TN 37402
(1) Messrs. Shearer and Zucker are the partners of Mid-Atlantic Investors.
Messrs. Shearer and Zucker have shared voting power over 100,540 shares
owned by Mid-Atlantic. Mr. Shearer has sole voting power over 16,995 shares
and holds options to acquire 303 shares. Also included are 23 shares held
by Mr. Shearer as custodian for members of his family and 1,265 shares
owned by his wife. Mr. Shearer is employed by the Corporation on a part
time basis to provide additional support as the Manager of Financial and
Regulatory Affairs.
ELECTION OF DIRECTORS
The Articles of Incorporation and Bylaws of the Corporation provide for a
Board of Directors consisting of not less than nine nor more than twelve
directors divided into three classes serving staggered three year terms. The
exact number of directors who shall comprise the Board of Directors within the
range is to be fixed by the Board of Directors. The Board of Directors has, by
resolution, fixed the number of directors at nine, and three directors will be
elected at the Annual Meeting to serve for three-year terms until the annual
meeting of shareholders in 2000 or until their respective successors have been
elected and qualified.
The Board of Directors has nominated LaVonne N. Phillips, W. Carlyle
Blakeney, Jr. and Arthur P. Swanson for election to the Board of Directors to
serve for three-year terms ending in 2000. Each nominee is presently a director
of the Corporation and has served continuously since first becoming a director.
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<PAGE>
In accordance with the Bylaws of the Corporation, if a quorum is present
at the Annual Meeting, the persons receiving the greatest number of votes at the
Annual Meeting will be elected as directors of the Corporation. The current
officers and directors of the Corporation, who together control approximately
19.3 percent of the votes which may be cast at the Annual Meeting with respect
to the election of directors, intend to vote in favor of each of the nominees
listed above.
A shareholder executing the enclosed proxy may vote for any or all of the
nominees or may withhold such vote from any or all nominees. Unless otherwise
instructed or unless authority to vote is withheld, the enclosed proxy will be
voted for the election of the nominees listed above. Shareholders are not
entitled to cumulate their votes in the election of directors. Should any
nominee named herein for the office of director become unable or unwilling to
accept nomination or election, it is intended that the persons acting under the
proxy will vote for the election, in his stead, of such other eligible persons
as the Board of Directors of the Corporation may recommend. The Board of
Directors has no reason to believe that any nominee named above will be unable
or unwilling to serve if elected.
The following table sets forth certain information with respect to
executive officers, nominees for director and persons who will continue to serve
as directors of the Corporation after the Annual Meeting.
Directors
<TABLE>
<CAPTION>
Principal Occupation for
Director of the the Past Five Years and
Name and (Age) Corporation Since Current Directorships
Director Nominees for Terms Expiring in 2000
<S> <C> <C>
Arthur P. Swanson 1994 Director, President and Chief Executive Officer of the Bank
(45) of Charleston, N.A. (the "Charleston Bank") since 1994;
Director, Executive Vice President of Lending and
Organizer of the Charleston Bank 1988 - 1993.
LaVonne N. Phillips<F1> 1989 Director of the Charleston Bank since 1990; Director,
(59) Historic Charleston Foundation since 1981; Director, Roper
Hospital Foundation
since 1987.
W. Carlyle Blakeney, Jr.<F2> 1991 Director of the Charleston Bank since 1990; Partner,
(52) Palmetto Commercial Properties, Inc., (real estate broker)
since 1996; The Brumley Company, Charleston, South Carolina,
(commercial real estate brokerage firm) 1987 - 1996; Vice
President, National Audubon Society 1972- 1987.
<CAPTION>
Current Directors Whose Terms Expire in 1999
<S> <C> <C>
Mason R. Chrisman<F3> 1989 Chairman, ComSouth Bankshares, Inc., since 1992;
(59) Director of the Charleston Bank since 1990; Chairman,
Harbor Equities, Inc. of Charleston (venture capital
investments) since 1986; and Vice Chairman and Director,
System Associates, Inc. (health care computer systems)
1966-1986.
John C.B. Smith, Jr.<F4> 1988 Chairman, Bank of Columbia, N.A. since 1993; Director of
(52) Bank of Columbia, N.A. (the "Columbia Bank") since
1988; Attorney, Nexsen, Pruet, Jacobs & Pollard,
Columbia, South Carolina, since 1974.
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<PAGE>
Arthur M. Swanson<F5> 1988 President and Chief Executive Officer of the Corporation
(74) from 1992-present; Director, President and Chief Executive
Officer of the Charleston Bank from 1988-1994; Chairman of
the Charleston Bank since 1994; Director Emeritus, South
Carolina National Corporation (bank holding company),
1985-1988; President, The South Carolina National Bank,
1985; Vice Chairman and Executive Vice President, First
National Bank of South Carolina, 1950-1985.
<CAPTION>
Current Directors Whose Terms Expire in 1998
<S> <C> <C>
R. Lee Burrows, Jr.<F6> 1992 Director of the Columbia Bank 1988-1996; Managing
(38) Director of Trident Financial Corporation, Raleigh, North
Carolina since January 1992; Senior Vice President of
Trident Financial Corporation 1988-1992; Vice President of
Trident Financial Corporation 1985-1988; Vice President of
the C. Felix Harvey Foundation, Director of Stackhouse,
Inc. of Goldsboro, North Carolina since 1991.
Charles R. Jackson<F7> 1990 Director of the Columbia Bank since 1989; President of
(53) C.R. Jackson, Inc., Columbia, South Carolina, (grading
and utility contractor) since 1972.
J. Michael Kapp 1994 Director, President and Chief Executive Officer of the Bank
(47) of Columbia since 1993; Senior Vice President and District
Manager, South Carolina National Bank 1991 - 1992; Senior
Vice President and Columbia City Executive, South Carolina
National Bank 1986-1990.
- ------------------
<FN>
<F1> Committees: Nominating, compensation and executive
<F2> Committees: Audit and compensation
<F3> Committees: Nominating, audit, compensation and executive
<F4> Committees: Nominating, compensation and executive
<F5> Committees: Nominating and executive
<F6> Committees: Audit
<F7> Committees: Audit and compensation
</FN>
</TABLE>
Arthur M. Swanson is the father of Arthur P. Swanson. No other immediate
family relationships exist among the above-named directors or the executive
officers of the Corporation.
Meetings of the Board of Directors and Committees.
The Board of Directors of the Corporation held four meetings in 1996. Each
director except Mr. Burrows attended at least 75% of the aggregate of (a) the
total number of meetings of the Board of Directors held during the period for
which he served as a director and (b) the total number of meetings held by all
committees of the Board of Directors on which he served.
The Corporation's Audit Committee held one meeting in 1996. The Audit
Committee recommends to the Board of Directors the appointment of the
Corporation's independent auditors and reviews the scope and the results
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<PAGE>
of the audit by the Corporation's independent auditors. This committee also
reviews the scope and the results of the audits of the Corporation's internal
audit department and other matters pertaining to the Corporation's accounting
and financial reporting functions.
The Corporation's Executive Committee did not meet in 1996. The Executive
Committee makes recommendations to the Board of Directors and takes such action
as may be delegated to the committee from time to time by the Board of
Directors.
The Corporation's Compensation Committee held one meeting in 1996. The
Compensation Committee reviews the performance of executive officers of the
Corporation and the banks and makes salary and bonus recommendations to the
Board with respect to such persons.
The Corporation's Nominating Committee held one meeting in 1996. The
Nominating Committee recommends to the Board nominees for election to the Board.
Although it has no established procedure for considering shareholder
nominations, the Nominating Committee will consider such nominations made in
writing and in accordance with the Corporation's articles of incorporation.
Director Compensation
At the November 30, 1995 Board of Directors meeting, the Board approved and
implemented the payment of directors' fees for directors of the Corporation.
Fees are paid at the rate of $75.00 for each committee meeting and $500.00 for
attendance at each board meeting. Members of the Charleston Bank and the
Columbia Bank Boards of Directors, except those who are salaried officers of the
Banks, also receive directors' fees at the rate of $200 per board meeting and
$100 per committee meeting.
The list below details the total compensation paid to each director of the
Corporation for services rendered as a director or committee member of the
Corporation and as a director or committee member of the Charleston Bank or
Columbia Bank during 1996.
<TABLE>
<CAPTION>
Capacities in Cash
Name of Individual which Payment Received Compensation
<S> <C> <C>
W. Carlyle Blakeney, Jr. ComSouth Bankshares, Inc. and Bank of Charleston Director $3,380.00
R. Lee Burrows, Jr. ComSouth Bankshares, Inc. and Bank of Columbia Director 530.00
Mason R. Chrisman ComSouth Bankshares, Inc. and Bank of Charleston Director 3,220.00
Charles R. Jackson ComSouth Bankshares, Inc. and Bank of Columbia Director 3,420.00
LaVonne N. Phillips ComSouth Bankshares, Inc. and Bank of Charleston Director 2,630.00
John C. B. Smith, Jr. ComSouth Bankshares, Inc. and Bank of Columbia Director 3,530.00
</TABLE>
Executive Officers
Arthur M. Swanson and Harry R. Brown are the only executive officers of the
Corporation. Each also serves as an executive officer of one or both of the
subsidiary banks. Officers of the Corporation, the Columbia Bank and the
Charleston Bank serve at the pleasure of, and are appointed by, the respective
Boards of Directors of the Corporation and each bank.
Since January, 1992, Mr. Brown has served as Chief Financial Officer, Chief
Operating Officer, Secretary and Treasurer of the Corporation; Executive Vice
President, Chief Financial Officer and Cashier of the Charleston Bank; and Chief
Financial Officer, Cashier and Secretary of the Columbia Bank. Prior to his
employment with the Corporation, Mr. Brown was Vice President with The South
Carolina National Bank. Mr. Brown is 52 years old. Information about Mr. Swanson
is set forth above under "- Directors."
7
<PAGE>
REMUNERATION AND OTHER TRANSACTIONS WITH MANAGEMENT
The compensation for 1996, 1995 and 1994 of the Chief Executive Officer of
the Corporation is set forth below. The Corporation does not presently have any
executive officers whose compensation for 1996 exceeded $100,000. Mr. Kapp is
Chief Executive Officer and President of the Bank of Columbia and Mr. Arthur P.
Swanson is Chief Executive Officer and President of the Bank of Charleston. The
Bank of Columbia and the Bank of Charleston are wholly owned subsidiaries of the
Corporation.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
Awards
Other Number of All
Annual Securities Other
Annual Compensation Compen- Underlying Compen-
Name and Principal Position Year Salary Bonus sation Options sation
- --------------------------- ---- ------ ----- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Arthur M. Swanson 1996 $85,000 - $ 9,228<F1> -0- $ 7,059<F4>
President, Chief Executive Officer 1995 82,000 - 10,950<F1> 7,700 3,456<F4>
of the Corporation (July 28, 1992 - 1994 82,000 - 9,048<F1> -0- 1,995<F4>
Present) and the Bank of Charleston
1988 - December 1994.
J. Michael Kapp 1996 $120,000 $12,000 $10,740<F2> -0- $ 7,560<F5>
President, Chief Executive Officer 1995 120,000 7,500 10,500<F2> -0- 20,076<F5>
of the Bank of Columbia since 1994 120,000 - 10,500<F2> -0- 18,000<F5>
January 1993.
Arthur P. Swanson 1996 $110,550 $12,000 $7,026<F3> -0- 334<F6>
President, Chief Executive Officer 1995 102,582 7,500 3,000<F3> 6,600 310<F6>
of the Bank of Charleston since 1994 94,442 - 3,000<F3> 290<F6>
December 1994.
- -----------------
<FN>
<F1> Includes $3,228, $4,950 and $3,048 paid for club dues in 1996, 1995 and
1994, respectively, and an automobile allowance of $6,000 in each of 1996,
1995 and 1994.
<F2> Includes $2,340 for club dues in 1996 and $2,100 for club dues in each of
1995 and 1994; and automobile allowance of $8,400 for each of 1996, 1995
and 1994.
<F3> Includes $2,826 for club dues in 1996; and automobile allowance for 1996,
1995 and 1994 of $4,200, $3,000 and $3,000, respectively.
<F4> Includes contribution by the Company of $1,461 in 1995 and $5,064 in 1996
to the Company's 401K Plan; and $1,995 in life insurance premiums paid by
the Company in each of 1996, 1995 and 1994.
<F5> Includes amount included in Mr. Kapp's salary for 1995 and 1994 to reflect
the net impact of the estimated fair market value over the grant price on
unexercised in-the-money options that vested during 1995 and 1994 (see
"Employee Benefit Plans"); and contribution by the Company of $7,560 in
1996 and of $2,076 in 1995 to the Company's 401K Plan.
<F6> Life insurance premiums paid by the Company in 1996, 1995 and 1994,
respectively.
</FN>
</TABLE>
Employment Agreement
The Corporation and Bank of Columbia have entered into an employment
agreement with J. Michael Kapp, President of the Bank of Columbia. The agreement
provides for a base annual salary of $120,000, plus payment of club dues and an
automobile allowance of $700 per month. The agreement provides for life
insurance, health insurance and disability insurance, but these are provided on
the same terms as those provided for all employees. The agreement requires
election of Mr. Kapp to the Board of Directors of the Columbia Bank. The
agreement
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prohibits Mr. Kapp from soliciting employment of any employee of the Corporation
or its subsidiaries for a period of two years after termination of his
employment.
Mr. Kapp may be terminated for cause, as defined by the agreement. If he is
so terminated, all compensation to which he would otherwise be entitled will be
discontinued and forfeited as of the effective date of termination. Mr. Kapp may
also be terminated without cause upon 30 days prior written notice. In the event
of Mr. Kapp's termination by Bank of Columbia without cause, all compensation to
which he would otherwise be entitled will be discontinued and forfeited as of
the effective date of termination. In lieu thereof, Mr. Kapp will be paid a lump
sum equal to one year's base salary, and will receive from the Bank of Columbia,
at his own expense, life, health and disability insurance for a period of one
year. In the event of a change of ownership of the Corporation, including
acquisition by any person or group of 50% or more of the Corporation's
outstanding voting stock or of the Bank of Columbia's outstanding voting stock,
or acquisition of sale of all or substantially all of the assets of the Bank of
Columbia, except to an affiliate thereof, Mr. Kapp shall be entitled, at his
option, either (i) to extend the term of the agreement for an additional three
years on the same compensation terms, or (ii) to receive a lump sum equal to
three times his base salary, and will receive from the Bank of Columbia, at his
own expense, health, life and disability insurance for a period of three years.
Furthermore, if the agreement is terminated without cause and within one year
thereafter a change in ownership occurs or a legally binding agreement therefor
is entered into, Mr. Kapp shall be paid, in addition to the compensation
provided for above in the event of termination without cause, a lump sum equal
to two times his base salary, and will receive from the Bank of Columbia, at his
own expense, life, health and disability insurance for a period of two years.
Mr. Kapp may terminate the agreement on thirty days prior written notice and his
rights to compensation will be discontinued and forfeited as of the effective
date of termination. The agreement also provides for stock options as discussed
below under "Employee Benefit Plans."
The foregoing is a summary of Mr. Kapp's employment agreement and is
qualified in its entirety by reference to such agreement.
Employee Benefit Plans
The Corporation has adopted an Incentive Stock Option Plan (the "Qualified
Plan"), which authorizes stock options intended to qualify as incentive stock
options under Section 422A of the Internal Revenue Code (the "Code") for up to
50,600 shares for issuance to key employees of the Corporation or any
subsidiaries of the Corporation. The Qualified Plan is intended to attract and
induce continued employment of key employees and to provide additional incentive
by offering an opportunity to acquire a proprietary interest in the Corporation.
The number of shares available pursuant to the Qualified Plan is subject to
adjustment for stock splits, stock dividends, and similar events. Options
granted under the Qualified Plan will be exercisable for a period of not more
than ten years from the date of the grant. The option price is specified as the
fair market value on the date of the grant. The Qualified Plan is administered
by the Board of Directors with the discretionary power to select the grantees of
options, but only key employees who hold executive or other similar positions
will be eligible for options under the Qualified Plan. The aggregate fair market
value of the common stock for which any eligible employee may be granted options
in any calendar year may not exceed $100,000 plus any unused carryover from
prior years. The Qualified Plan may be amended by the Board of Directors. At
December 31, 1996, options to purchase 22,578 shares were outstanding under the
Qualified Plan, all of which are presently exercisable, and 2,942 shares were
available for grant pursuant to options. These options have exercise prices
ranging from $5.34 per share to $7.90 per share and expire between April 27,
1997 and December 31, 2000.
The Corporation has also adopted a NonQualified Stock Option Plan (the
"NonQualified Plan") and has reserved an additional 50,600 shares for grant upon
exercise of options pursuant to such plan. Options may be granted under the
NonQualified Plan to key employees, officers, directors and Advisory Board
numbers. The NonQualified Plan is not intended to qualify under the Code for
more favorable or deferred tax treatment. At December 31, 1996, options to
purchase 34,443 shares were outstanding under the NonQualified Plan, all of
which are presently exercisable, and 4,510 shares were available for grant
pursuant to options. These options have exercise prices ranging from $5.34 to
$7.90 per share and expire between April 27, 1997 and December 31, 2000.
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No options were granted under either the Qualified Plan or the NonQualified
Plan in 1996.
As an inducement to Mr. Kapp (President of Bank of Columbia) to enter into
an employment agreement with the Corporation, the Corporation granted Mr. Kapp
total stock options for 24,445 shares of stock at a purchase price of $3.63
each. Such options vested in nearly equal increments in January of each of 1993,
1994 and 1995, and are all presently exercisable. The Corporation accrued
compensation expenses of $8,800 in 1994 and $44,000 during 1993 since in
management's opinion the options were granted at a price below fair market
value. No such expenses were accrued in 1995 or 1996. Any unexercised options
expire upon termination of Mr. Kapp's employment.
1995 Stock Option Plan
At the Annual Meeting of Shareholders in 1995, the shareholders of the
Corporation approved the 1995 Stock Option Plan, which reserves 110,000 shares
of Common Stock for issuance pursuant to the exercise of options which may be
granted pursuant to the 1995 Stock Option Plan. At December 31, 1996, options to
purchase 50,746 shares were outstanding under the 1995 Plan, all of which are
presently exercisable, and 59,254 shares were available for grant pursuant to
exercise of options. The options have exercise prices ranging from $7.72 per
share to $12.27 per share and expire between November 30, 2000 and April 30,
2006. Options under the 1995 Stock Option Plan are nonqualified stock options
and may be granted to persons who are directors or employees of the Corporation
or any subsidiary (including officers and directors who are employees) at the
time of grant. The Corporation presently has nine directors and 58 employees.
The Plan provides for discretionary grants of options to employees
(including officers and directors who are employees) and for nondiscretionary
grants of options pursuant to a set formula to non-employee directors. Pursuant
to the discretionary portion of the 1995 Stock Option Plan, the employees to
receive grants, the number of shares covered, and other terms of options granted
to employees shall be determined by the Board or a committee of the Board. Such
options will become exercisable no earlier than six months after grant and
expire no later than ten years after grant.
Pursuant to the non-discretionary portion of the 1995 Stock Option Plan,
each year, on the last Friday preceding the Company's Annual Meeting of
Shareholders, each person who has served as a non-employee director of the
Company or any of its bank subsidiaries during any period since the most recent
prior Annual Meeting of Shareholders of the Company (the "Prior Annual Meeting")
will automatically receive nonqualified options pursuant to the 1995 Stock
Option Plan to purchase an aggregate number of shares of the Company's Common
Stock equal to the product of 25 multiplied by the number of Board meetings of
the Company and Board meetings of the Company's banking subsidiaries attended by
such non-employee director since the Prior Annual Meeting. Such options become
exercisable six months after grant and expire at the earlier of termination of
the optionee's status as director or ten years after grant.
The per share exercise price of all options granted pursuant to the Plan is
to be determined as follows: (i) if the Common Stock is not traded on any
exchange or on the NASDAQ National Market System, the per share exercise price
shall be the most frequently paid per share price in arm's length transactions
in the Common Stock between unrelated parties during the most recent quarter
prior to the date of grant in which there have been transactions in the Common
Stock as determined by a licensed stock broker who has no affiliation with the
Company; or (ii) if the Common Stock is traded on any exchange or on the NASDAQ
National Market System, the per share exercise price shall be the average of the
high and low prices at which the Common Stock traded on such exchange or market
system during the 30 days immediately preceding the date of grant. The Common
Stock of ComSouth Bankshares, Inc. is currently traded on the American Stock
Exchange (AMEX) under the ticker symbol CSB.
Options may not be transferred except by will or the laws of descent and
distribution. Adjustments in the number of shares subject to the Plan and the
number of shares subject to option, option price and exercise date thereof may
be made in certain events, including stock dividends, stock splits,
recapitalization, combination or
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exchange of shares, merger, consolidation, reorganization or liquidation of the
Company. The 1995 Stock Option Plan will terminate on April 25, 2005, and no
options will be granted thereunder after that date.
The following table presents information about options exercised by persons
named in the Summary Compensation Table during the year ended December 31, 1996,
and about options held by such persons at December 31, 1996. No options were
granted to the named executive officers in 1996.
<TABLE>
<CAPTION>
Aggregated Option Exercises in 1996 and 1996 Year End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Acquired Value Options 12/31/96 Options 12/31/96
Name on Exercise Realized* Exercisable Unexercisable Exercisable* Unexercisable
- ---- --------------- --------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Arthur M. Swanson - - 7,700 0 $ 53,074 0
J. Michael Kapp - - 24,445 0 268,498 0
Arthur P. Swanson 1,100 $9,132 6,600 0 45,492 0
</TABLE>
*The fair value of the stock has been estimated at $14.62 per share, which was
the closing price of the stock on December 31, 1996. All stock option data has
been adjusted to reflect the ten percent stock dividend paid by the Corporation
on December 2, 1996.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1996, the Columbia Bank and the Charleston Bank had loan and deposit
relationships with some of the directors and executive officers of the
Corporation and the banks and their families and affiliates. All such loan and
deposit relationships were in the ordinary course of business, were on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and did
not involve more than the normal risk of collectability or present other
unfavorable features. Loans and unused portions of lines of credit outstanding
to these parties at December 31, 1996 totalled $5,173,143.
The banks expect to continue to enter into transactions in the ordinary
course of business on similar terms with such persons.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
As required by Section 16(a) of the Securities Exchange Act of 1934, the
Corporation's directors, its executive officers and certain individuals are
required to report periodically to the Securities and Exchange Commission their
ownership of the Corporation's Common Stock and any changes in ownership. Based
on a review of Forms 3, 4 and 5 filed with the Securities and Exchange
Commission and provided to the Corporation and written representations made to
the Company, it does not appear that any of such persons failed to make any
filing required by Section 16(a) in 1996.
SHAREHOLDER LAWSUIT
On January 24, 1994, Carl H. Almond, a former director of the Corporation
and the Bank of Columbia and a current shareholder of the Corporation, brought
suit in the Court of Common Pleas for Richland County, South Carolina against
the Corporation and eight of its directors and former directors, including Mrs.
Phillips and Mr. Blakeney who are nominees for reelection to the Board of
Directors, alleging that the defendant directors had breached their fiduciary
duties in not pursuing proposals by third parties to acquire the Corporation in
1992. The Corporation is named as a defendant because the plaintiff asserts that
the suit is, in part, a derivative action, which is a claim brought by a
shareholder that belongs to the Corporation against officers and directors of
the Corporation. On October 8, 1996, the judge handling the shareholder
litigation by the former director of the Corporation and the
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Bank of Columbia against the Corporation and eight of its present and former
directors ruled that the plaintiff could not maintain the suit as a class action
or as a derivative suit. Only the individual claims of the named plaintiff will
be covered by the suit. Those claims will continue to be vigorously defended.
Plaintiff has appealed this ruling.
Beginning on or about November 5, 1996, through February 24, 1997, twelve
other shareholders or former shareholders of the Corporation instituted nearly
identical suits against the Corporation and the same directors and former
directors of the Corporation who are defendants in the suit referenced above.
The suits were instituted in the Court of Common Pleas for Richland County,
South Carolina and make essentially the same allegations as the above lawsuit
and seek damages on account of the alleged activities of the defendant
directors. The plaintiffs do not seek to recover any damages from the
Corporation but the Corporation may, nevertheless, incur significant expenses to
indemnify the defendant directors pursuant to applicable law. The Corporation
has advanced expenses for the defense of the defendant directors and former
directors as permitted by South Carolina law.
INDEPENDENT ACCOUNTANTS
On February 21, 1995, the management of the Corporation, after receiving
approval of members of the Corporation's Audit Committee and Board of Directors,
informed its independent accountants, Price Waterhouse LLP (the "Prior
Accountants"), that such accounting firm would not be retained for the fiscal
year ending December 31, 1995. On January 26, 1995, the Board of Directors,
after receiving proposals from other accounting firms, formally elected to
engage J. W. Hunt and Company, LLP to serve as independent accountants for the
year ending December 31, 1995. Prior to their engagement on February 21, 1995,
the firm of J. W. Hunt and Company, LLP was not consulted by the Corporation for
any financial or accounting matters. Additionally, J. W. Hunt and Company, LLP
was appointed by the Board of Directors and ratified by the shareholders at the
Annual Meeting on April 30, 1996 to serve as independent auditors for the year
ending December 31, 1996.
In connection with the audit of the Corporation's consolidated financial
statements for the year ended December 31, 1994, and any subsequent interim
period preceding the dismissal of the Prior Accountants and the engagement of
the new accountants, there were no disagreements with the Prior Accountants on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of the Prior Accountants would have caused them to make
reference in connection with their report to the subject matter of the
disagreements.
The audit report of the Prior Accountants on the Corporation's consolidated
financial statements for the year ended December 31, 1994 was unqualified. There
have not been any adverse, disclaimer or modified opinions issued by the Prior
Accountants, except as to inclusion of an "emphasis of a matter" paragraph
included in their reports addressing uncertainties related to a Formal Agreement
entered into with the Comptroller of the Currency with respect to their 1992 and
1993 report, the filing of a notice of intent to effect a change in the
composition of the Board of Directors with respect to their 1992 report, and the
filing of a shareholder lawsuit against certain members of the Board of
Directors with respect to their 1993 report.
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed J. W. Hunt and Company, LLP, independent certified public accountants,
as independent auditors for the Corporation and its subsidiaries for the current
fiscal year ending December 31, 1997, subject to ratification by the
shareholders. J. W. Hunt and Company, LLP has advised the Corporation that
neither the firm nor any of its partners has any direct or indirect material
interest in the Corporation and its subsidiaries except as auditors and
independent certified public accountants of the Corporation and its
subsidiaries. Representatives of J. W. Hunt and Company, LLP will be present at
the 1997 Annual Meeting and available to answer appropriate questions, and will
be given the opportunity to make a statement on behalf of their firm if they
desire to do so.
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All shares represented by valid Proxies received pursuant to this
solicitation and not revoked before they are exercised will be voted in the
manner specified therein. If no specification is made, the Proxies will be voted
FOR the ratification of the appointment of J. W. Hunt and Company, LLP for the
fiscal year ending December 31, 1997.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
The Corporation has filed with the Securities and Exchange Commission its
annual report on Form 10-K for the fiscal year ended December 31, 1996. A copy
of the Form 10-K will be provided without charge to each shareholder to whom
this Proxy Statement is delivered upon the receipt by the Corporation of the
written request of such shareholder. The exhibits to the Form 10-K will also be
provided upon request and payment of copying charges. Requests for the Form 10-K
should be directed to the Office of the Secretary, ComSouth Bankshares, Inc.,
Post Office Box 11671, Columbia, South Carolina 29211-1671.
OTHER BUSINESS
The Board of Directors of the Corporation does not know of any other
business to be presented at the Annual Meeting. If any other matters are
properly brought before the Annual Meeting, however, it is the intention of the
persons named in the accompanying proxy to vote such proxy in accordance with
their best judgment.
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APPENDIX - FORM OF PROXY
REVOCABLE PROXY
COMSOUTH BANKSHARES, INC.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
PROXY SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
Harry R. Brown, and J. Michael Kapp or either of them, with full power of
substitution, are hereby appointed as agent(s) of the undersigned to vote as
proxies for the undersigned at the 1997 Annual Meeting of Shareholders to be
held on April 29, 1997 and at any adjournment thereof, as follows:
1. ELECTION OF DIRECTORS
[ ] FOR ALL NOMINEES [ ] WITHHOLD ON ALL NOMINEES [ ] FOR ALL EXCEPT
NOMINEES: LaVonne N. Phillips, W. Carlyle Blakeney, Jr., Arthur P. Swanson
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write the nominee's(s') name in the space provided
below.
2. PROPOSAL TO RATIFY SELECTION OF J.W. HUNT AND COMPANY, LLP, as independent
public accountants for the Corporation for the year ending December 31,
1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2.
Please sign exactly as name appears hereon. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If more
than one trustee, all should sign. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person. All joint owners should
sign.
Please be sure to sign and date this Proxy in the space below.
Date
Stockholder sign above
Co-holder (if any) sign above
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