[LOGO]
March 27, 1997
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of the FMS Financial
Corporation, I cordially invite you to attend the 1997 Annual Meeting of
Stockholders (the "Meeting") to be held at the Riverton Country Club, Riverton,
New Jersey at 10:00 a.m. Eastern Time on April 29, 1997. Coffee and other
refreshments will start at about 9:00 a.m. The attached Notice of Annual Meeting
and Proxy Statement describe the formal business to be transacted at the
Meeting.
Please send in your proxy card or notify your broker of your vote. YOUR
VOTE IS IMPORTANT.
We hope to make the meeting interesting and informative, and look forward
to seeing you there.
Sincerely,
FMS FINANCIAL CORPORATION
/s/Craig W. Yates
Craig W. Yates
President
<PAGE>
FMS FINANCIAL CORPORATION
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Sunset and Salem Roads
Burlington, New Jersey 08016
(609) 386-2400
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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To Be Held on April 29, 1997
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of FMS Financial Corporation (the "Corporation"), will be held at the
Riverton Country Club, Riverton, New Jersey at 10:00 a.m. Eastern Time on April
29, 1997.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of three directors of the Corporation;
2. The ratification of the appointment of Coopers & Lybrand
L.L.P. as independent auditors for the Corporation for the
1997 fiscal year; and
3. The transaction of such other matters as may properly come
before the Meeting or any adjournments thereof. The Board of
Directors is not aware of any other business to come before
the Meeting.
The Board of Directors has fixed the close of business on March 3, 1997,
as the record date for determination of stockholders entitled to notice of and
to vote at the Meeting. Only stockholders of record at the close of business on
that date will be entitled to vote at the Meeting or any adjournments thereof.
In the event there are not sufficient votes for a quorum to approve any proposal
at the time of the Meeting, the Meeting may be adjourned in order to permit
further solicitation of proxies.
You are requested to complete and sign the enclosed Proxy Card which is
solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the Meeting in
person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Thomas M. Topley
THOMAS M. TOPLEY
SECRETARY
Burlington, New Jersey
March 27, 1997
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE CORPORATION THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
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<PAGE>
PROXY STATEMENT
OF
FMS FINANCIAL CORPORATION
SUNSET AND SALEM ROADS
BURLINGTON, NEW JERSEY 08016
ANNUAL MEETING OF STOCKHOLDERS
April 29, 1997
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GENERAL
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of FMS Financial Corporation (the
"Corporation") to be used at the Annual Meeting of Stockholders of the
Corporation (the "Meeting") which will be held at the Riverton Country Club,
Riverton, New Jersey on April 29, 1997, at 10:00 a.m., Eastern Time, and any
adjournments thereof. The accompanying Notice of Meeting and this Proxy
Statement are being first mailed to stockholders on or about March 27, 1997.
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VOTING AND REVOCABILITY OF PROXIES
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Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Corporation at the address above or by the filing
of a later dated proxy prior to a vote being taken on a particular proposal at
the Meeting. A proxy will not be voted if a stockholder attends the Meeting and
votes in person. Proxies solicited by the Board of Directors of the Corporation
will be voted in accordance with the directions given therein. Where no
instructions are indicated, duly executed proxies will be voted for the nominees
for director set forth below and in favor of the other proposal set forth in
this Proxy Statement for consideration at the Meeting. The proxy confers
discretionary authority on the persons named therein to vote with respect to the
election of any person as a director where the nominee is unable to serve, or
for good cause will not serve, and matters incident to the conduct of the
Meeting.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on March 3, 1997 are
entitled to one vote for each share of Common Stock then held. As of March 3,
1997, the Corporation had 2,392,707 shares of Common Stock outstanding.
As to the election of directors (Proposal I), the proxy card being
provided by the Board of Directors enables a stockholder to vote for the
election of the nominees proposed by the Board, or to withhold authority to vote
for one or more of the nominees being proposed. Directors are elected by a
plurality of votes cast, without regard to either (i) broker non-votes, or (ii)
proxies as to which authority to vote for one or more of the nominees being
proposed is withheld.
As to the ratification of auditors (Proposal II), by checking the
appropriate box, stockholders may (i) vote "FOR" the ratification; (ii) vote
"AGAINST" the ratification; or (iii) "ABSTAIN" with respect to the ratification.
Unless otherwise required by law, the ratification of independent auditors shall
be
<PAGE>
determined by a majority of the votes cast, without regard to either (a) broker
non-votes or (b) proxies marked "ABSTAIN" as to that matter.
Persons and groups owning in excess of 5% of the Corporation's Common
Stock are required to file certain reports regarding such ownership pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based upon
such reports and information provided by the Corporation's Transfer Agent, the
following table sets forth, as of March 3, 1997, certain information as to those
persons who were beneficial owners of more than 5% of the outstanding shares of
Common Stock and as to the Common Stock beneficially owned by all executive
officers and directors of the Corporation as a group. Management knows of no
person other than those set forth below who owns more than 5% of the
Corporation's outstanding shares of Common Stock at March 3, 1997.
Amount and Percent of
Nature of Shares of
Name and Address Beneficial Common Stock
of Beneficial Owner Ownership Outstanding
- ------------------- --------- -----------
Farmers and Mechanics Bank 143,697 (1) 6.01%
Employee Stock Ownership Plan ("ESOP")
P. O. Box 397
Burlington, New Jersey 08016
Charles B. Yates 308,903 (2)(3)(4)(6) 12.91
82 Library Place
Princeton, New Jersey 08540
Craig W. Yates 432,630 (2)(4)(5)(8) 18.08
227 Cliff Avenue
Edgewater Park, New Jersey 08010
Frances E. Yates 171,000 (2) 7.15
11 Norumbega Drive
Camden, Maine 04843
All Executive Officers and Directors 851,102 (7) 35.57
as a Group (11 persons)
- ------------------------
(1) The ESOP owns 143,697 shares of the Corporation's Common Stock for the
exclusive benefit of participating employees. Such shares were purchased
by the ESOP with borrowed funds. These shares are held in a suspense
account for allocation among participants on the basis of compensation as
the loan is repaid. A committee consisting of certain members of the
Corporation's Board of Directors administers the ESOP (the "ESOP
Committee"). The Board of Directors has appointed an independent trustee
(the "ESOP Trustee"). The Board of Directors may instruct the ESOP Trustee
regarding investments of funds contributed to the ESOP. The ESOP Trustee
must vote all allocated shares held in the ESOP in accordance with the
instructions of the participating employees. Allocated shares for which
employees do not give instructions will not be voted. Unallocated shares
will be voted by the ESOP Trustee as directed by the ESOP Committee.
2
<PAGE>
(Footnotes continued...)
(2) Charles B. Yates is the Chairman of the Board of the Corporation and is the
brother of Craig W. Yates who is President of the Corporation. Frances E.
Yates is the sister of Charles B. Yates and Craig W. Yates. Pursuant to
Schedules 13D filed by each individual, each disclaims beneficial ownership
of Common Stock owned by the other.
(3) Excludes 206,360 shares owned by four adult children. Charles Yates
disclaims beneficial ownership of shares held by his adult children.
(4) Under applicable OTS Regulations, any person or group acting in concert is
required to file a notice or application with the OTS prior to acquiring
more than 10% of the stock of an insured institution or its holding
company. Craig W. Yates and his brother, Charles B. Yates, collectively own
in excess of 10% of the Corporation's outstanding Common Stock. Such
parties filed a Rebuttal to the presumption that they are acting in
concert, which was accepted by the OTS. Such individuals also filed a
Change of Control Notice with the OTS pursuant to 12 CFR Section 574.3
disclosing an intention of the parties to acquire up to a maximum of 37.3%
of the Corporation's Common Stock. The OTS approved such acquisitions to be
made within one year of its letter dated August 25, 1992. The parties
authorized to purchase such stock includes Craig Yates and his five
children and Charles Yates and three of his four adult children mentioned
in the previous footnote. The group does not include the holdings of Roy D.
Yates, son of Charles Yates, and the holdings of Frances E. Yates, sister
of Charles Yates and Craig Yates.
(5) Includes 4,428 shares allocated to individual's account under the ESOP.
(6) Includes 2,002 shares allocated to individual's account under the ESOP.
(7) Includes certain shares of Common Stock owned by businesses in which the
director is an officer or major stockholder, or by spouses, or immediate
family members, or as a custodian or trustee for minor children, over which
shares the named individual or all executive officers and directors as a
group effectively exercise sole or shared voting and investment power,
unless otherwise indicated. This table includes 47,166 shares which
executive officers and directors as a group have the right to purchase
pursuant to the exercise of stock options. Does not include shares owned by
the Corporation's ESOP except for shares allocated to the accounts of
executive officers. See footnote 1 above.
(8) Excludes 70,000 shares owned by three adult children. Craig Yates disclaims
beneficial ownership of shares held by his adult children.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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The Common Stock of the Corporation is registered pursuant to Section
12(g) of the Exchange Act. The officers and directors of the Corporation and
beneficial owners of greater than 10% of the Corporation's Common Stock ("10%
beneficial owners") are required to file reports on Forms 3, 4 and 5 with the
Securities and Exchange Commission (the "SEC") disclosing changes in beneficial
ownership of the Common Stock. SEC rules require disclosure in the Corporation's
Proxy Statement and Annual Report on Form 10-K of the failure of an officer,
director or 10% beneficial owner of the Corporation's Common Stock to file a
Form 3, 4 or 5 on a timely basis. Based on the Corporation's review of such
ownership reports no officer, director or 10% beneficial owner of the
Corporation failed to file such ownership reports on a timely basis for the
fiscal year ended December 31, 1996.
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Corporation's Certificate of Incorporation requires that directors be
divided into three classes, as nearly equal in number as possible, each class to
serve for a three year period, with approximately one-third of the directors
elected each year. The Board of Directors currently consists of 8 members.
3
<PAGE>
The Board of Directors has nominated Vincent R. Farias, James C. Lignana and
Wayne H. Page, to serve as directors of the Corporation, each for a three-year
term.
It is intended that the persons named in the proxies solicited by the
Board will vote for the election of the named nominees. If any nominee is unable
to serve, the shares represented by all valid proxies will be voted for the
election of such substitute as the Board of Directors may recommend or the size
of the Board may be reduced to eliminate the vacancy. At this time, the Board
knows of no reason why any nominee might be unavailable to serve.
The following table sets forth each nominee and director, his name, age,
the year he first became a director of the Corporation or Farmers and Mechanics
Bank (the "Bank"), the wholly owned subsidiary of the Corporation, the
expiration of his term as a director, and the number and percentage of shares of
the Corporation's Common Stock beneficially owned. Each director of the
Corporation is also a member of the Board of Directors of the Bank.
<TABLE>
<CAPTION>
Age at
December Year First Current Shares of Common Percent
31, Elected or Term to Stock Beneficially of
Name 1996 Appointed Expire Owned(1)(2) Class
- ---- ------ --------- ------ ----------- -----
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2000
<S> <C> <C> <C> <C> <C>
Vincent R. Farias 50 1996 1997 1,100 .05%
James C. Lignana 54 1986 1997 34,861 (3) 1.46
Wayne H. Page 74 1954 1997 21,918 (4) .92
DIRECTORS IN OFFICE
Dominic W. Flamini 58 1986 1998 9,722 (4) .41
Charles B. Yates 57 1992 1998 308,903 (5)(6) 12.91
George J. Barber 75 1992 1998 15,111 (3) .63
Craig W. Yates 54 1990 1999 432,630 (5)(7) 18.08
Edward J. Staats, Jr. 52 1996 1999 20,000 .84
</TABLE>
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(1) As of March 3, 1997.
(2) Except as otherwise noted below, includes certain stock owned by
businesses in which the director is an officer or major stockholder or by
spouses, or immediate family members, or as a custodian or trustee for
minor children, over which shares the named individual effectively
exercises sole or shared voting and investment power, unless otherwise
indicated. Does not include 28,791 shares owned and unallocated by the
Corporation's ESOP, over which shares the ESOP Committee, consisting of
certain directors, exercises partial voting and investment power. See
"Voting Securities and Principal Holders Thereof".
(3) Includes 3,861 shares underlying options which are exercisable within 60
days of March 3, 1997.
(4) Includes 7,722 shares underlying options which are exercisable within 60
days of March 3, 1997.
4
<PAGE>
(5) Charles B. Yates is the Chairman of the Board of the Corporation and is
the brother of Craig W. Yates who is President of the Corporation.
Pursuant to Schedules 13D filed by each individual, each disclaims
beneficial ownership of Common Stock owned by the other.
(6) Excludes 206,360 shares owned by four adult children. Charles Yates
disclaims beneficial ownership of shares held by his adult children.
Includes 2,002 shares allocated to individual's account under the ESOP.
(7) Includes 4,428 shares allocated to individual's account under the ESOP.
Excludes 70,000 shares owned by three adult children. Craig Yates
disclaims beneficial ownership of shares held by his adult children.
The principal occupation of each director and nominee of the Corporation
for the last five years is set forth below.
Dominic W. Flamini is the President and owner of First U.S. Corporation, a
real estate development and property management company located in Haddon
Heights, New Jersey.
Edward J. Staats, Jr. is the President of Staats Construction Co.,
Incorporated, a construction company located in Edgewater Park, New Jersey.
James C. Lignana is Vice President of the Baxter Group, a wholesale wine
and spirits dealer located in Pennsauken, New Jersey. He has been a director of
the Bank since 1986 and was elected to the Corporation's Board in June 1990.
Wayne H. Page serves as Vice Chairman of the Board. Mr. Page is the former
owner of Page Funeral Home, Burlington, New Jersey, which he sold upon his
retirement in 1986.
Craig W. Yates serves as President and Chief Executive Officer of the
Corporation. He became a director of the Bank in January 1990, a director of the
Corporation in April 1990 and President of the Corporation and the Bank on
December 31, 1990. For the previous five years, Mr. Yates was a private
investor. In his capacity as President, Mr. Yates is responsible for the
operations of the Corporation pursuant to the policies and procedures adopted by
the Board of Directors.
Charles B. Yates has been Chairman of the Board of the Corporation and the
Bank since April 1994. Mr. Yates has been a private investor for the previous
seven years.
George J. Barber serves as a director of the Corporation. Previously, he
was Chairman of the Board of the Corporation, and was President of the Bank from
1973 until his retirement in 1986.
Vincent R. Farias is the President and owner of Farias, a surf and sport
retail/rental establishment located in Edgewater Park, New Jersey with
facilities in several New Jersey coastal towns. Mr. Farias is a member of the
Burlington County Board of Freeholders.
Meetings and Committees of the Board of Directors
The Board of Directors of the Corporation conducts its business through
meetings of the Board. During the fiscal year ended December 31, 1996, the Board
of Directors held 12 meetings. No director of the Corporation attended fewer
than 75% of the total meetings of the Board of Directors and committee meetings
on which such Board member served during this period.
The Corporation's full Board of Directors acts as a nominating committee
for the annual selection of its nominees for election as directors. While the
Board of Directors will consider nominees recommended by stockholders, it has
not actively solicited recommendations from the Corporation's
5
<PAGE>
stockholders for nominees, nor, subject to the procedural requirements set forth
in the Corporation's Certificate of Incorporation and Bylaws, established any
procedures for this purpose. The Board of Directors held one meeting in 1996 in
its capacity as the nominating committee.
The Corporation has standing Stock Option and ESOP Committees. Members of
these committees consist of Directors Flamini, Staats, Page, Barber and Lignana.
The function of such committees is to administer the granting of stock options
and to direct the voting of all ESOP shares. The committees held one meeting
during the year ended December 31, 1996.
The Bank's Audit Committee consists of Directors Page, Flamini, Staats,
Barber and the Corporation's compliance and internal audit firm. This committee
selects the independent auditors and meets with the Bank's independent auditors
in connection with the Bank's annual audit. The Audit Committee held five
meetings during the year ended December 31, 1996.
The Bank's Compensation Committee, currently composed of Directors Staats,
Lignana, Flamini, Barber and Page, meets at least annually to review and
recommend salary increases and/or salary adjustments. This committee also
reviews and recommends any additional compensation to be distributed to the
Bank's staff. The Compensation Committee held one meeting during the year ended
December 31, 1996.
Directors' Compensation
For 1996, Directors received $12,000 for serving as Director of the
Corporation and the Bank. The President, Chairman of the Board, and other
officers do not receive director fees or fees for attendance at Board or
committee meetings. In the aggregate, for the fiscal year ended December 31,
1996, the Corporation paid a total of $62,000 in directors' fees.
6
<PAGE>
Executive Compensation
The following table sets forth for the fiscal years ended December 31,
1996, 1995 and 1994, certain information as to the total remuneration received
by Craig W. Yates, the President and the Chief Executive Officer of the
Corporation and Charles B. Yates, Chairman of the Board. No other executive
officer of the Corporation who served in such capacity during such period
received total cash compensation in excess of $100,000.
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Name and Principal Other Annual All Other
Position Year Salary Bonus Compensation Compensation
- -------- ---- ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Craig W. Yates 1996 $199,039 $ 7,961 $ -- $2,824(1)
President and CEO 1995 150,000 12,000 -- 3,080
1994 141,346 5,654 -- 3,294
Charles B. Yates 1996 199,039 7,961 -- 2,824(2)
Chairman of the 1995 149,423 12,000 -- 3,080
Board 1994 81,049(3) 3,183 -- 1,855
</TABLE>
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(1) Includes 729 shares of Common Stock with a purchase price of $3.875 per
share allocated to Mr. Yates' account under the ESOP for 1996.
(2) Includes 729 shares of Common Stock with a purchase price of $3.875 per
share allocated to Mr. Yates' account under the ESOP for 1996.
(3) Reflects compensation paid for only seven months in 1994.
Compensation Committee, Interlocks and Insider Participation
The Corporation's Compensation Committee serves as the Compensation
Committee for executive officers of the Corporation and the Bank.
Report of the Compensation Committee on Executive Compensation
The Corporation's executive officers consist of Craig W. Yates (President
and Chief Executive Officer), Charles B. Yates (Chairman of the Board), Channing
L. Smith (Vice President and Chief Financial Officer), James E. Igo (Senior Vice
President and Senior Lending Officer) and Thomas M. Topley (Senior Vice
President of Operations and Corporate Secretary). The Compensation Committee of
the Corporation determines the compensation of the executive officers. This
committee meets at the end of each year to determine the level of any salary
increase to take effect as of the beginning of the following year. The committee
also approves any perquisites payable to these executive officers. All of the
directors, except Craig W. Yates and Charles B. Yates, serve on the Compensation
Committee.
The committee determines the level of salary increase, if any, to take
effect on January 1, of the following year after reviewing various published
surveys of compensation paid to executives performing similar duties for
depository institutions and their holding companies, with a particular focus on
the level of compensation paid by comparable institutions in and around the
Corporation's market area. Although the committee did not set compensation
levels for executive officers based on whether particular financial
7
<PAGE>
goals had been achieved by the Corporation, the committee did consider the
overall profitability of the Corporation when making these decisions. With
respect to each particular executive officer, his or her particular
contributions to the Corporation over the past year are also evaluated.
During the year ended December 31, 1996, Craig W. Yates, President and CEO
received an increase in salary from $150,000 to $199,039. The committee believes
that the registrant's performance in any short term period may vary greatly
depending on general economic trends and market forces beyond the reasonable
ability of any person or institution to predict or foresee. The committee does
not, therefore, attempt to follow any strict relationship between the immediate
performance of the bank and the CEO's and other officers' compensation.
Compensation Committee:
James C. Lignana
Dominic W. Flamini
George J. Barber
Wayne H. Page
Edward Staats
Vincent R. Farias
Performance Graph
The following graph compares the cumulative total shareholder return of
the Common Stock of the Corporation with that of (a) the total return index for
domestic companies listed on the Nasdaq Stock Market and (b) the total return
index for banks listed on the Nasdaq Stock Market. These total return indices of
the Nasdaq Stock Market are computed by the Center for Research in Securities
Prices ("CRSP") at the University of Chicago. All three investment comparisons
assume the investment of $100 at the market close on December 31, 1991 and the
reinvestment of dividends when paid. The graph provides comparisons at the end
of the fiscal years of the Corporation.
There can be no assurance that the Corporation's stock performance will
continue into the future with the same or similar trends depicted in the graph
below. The Corporation will not make nor endorse any predictions as to future
stock performance.
8
<PAGE>
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
============================================================================================
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Nasdaq Stock Market $100 $116 $134 $131 $185 $227
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Nasdaq Bank 100 146 166 165 246 326
- --------------------------------------------------------------------------------------------
FMS Financial 100 287 484 474 722 784
============================================================================================
</TABLE>
Other Benefits
Health and Life Insurance. The Corporation's employees are provided with
health care, life insurance and long-term disability policies under group plans
available generally and on the same basis to all full-time employees.
Hospitalization, medical and major medical plans are subject to employee
contribution provisions for coverage. The Corporation provides coverage for
employees who work over 30 hours a week. Directors receive health insurance if
they are not otherwise covered under another plan.
Retirement Plans. The Corporation, through the Bank, sponsors a
non-contributory pension plan (the "Pension Plan") for all full-time employees
who have completed one year of service and have attained the age of 21. The
Pension Plan is a defined benefit plan which provides for monthly payments to,
or on behalf of, each covered employee, based upon the employee's average
monthly earnings for the participant's three highest consecutive years ("average
compensation"). Benefits are payable at the employee's Normal Retirement Date.
Benefits are reduced for participants who have less than 35 years of service at
their Normal Retirement Date. The amount of a participant's monthly normal
retirement benefit is equal to 65% of the participant's average monthly
compensation plus 22.5% of such monthly
9
<PAGE>
earnings in excess of his level of social security covered compensation. Under
the Pension Plan, the Bank makes annual contributions to fund the benefits
computed on an actuarial basis. The total pension expense for the year ended
December 31, 1996 was approximately $400,000. Participants benefits become 100%
vested upon completion of five years of service with the Corporation. As of
December 31, 1996, Craig W. Yates and Charles B. Yates, had 6 years and 2 years,
respectively, of service credited under the Pension Plan.
The following table illustrates the annual pension benefits (assuming
normal retirement during 1996) at age 65 under the Pension Plan at various
levels of compensation and years of service. Such amounts are in addition to
benefits payable under Social Security. For 1996, the maximum benefit payable
was $120,000.
<TABLE>
<CAPTION>
Benefits Based on 35 Year Service Requirement
and Normal Retirement During 1996
---------------------------------
Final Average Years of Service at Normal Retirement Date
------------------------------------------
Compensation 5 10 15 20 25 30 35
--- ---- ---- ---- ---- ---- ---
<C> <C> <C> <C> <C> <C> <C> <C>
$50,000 $5,382 $10,764 $16,146 $21,529 $26,911 $32,293 $ 37,675
75,000 8,507 17,014 25,521 34,029 42,536 51,043 59,550
100,000 11,632 23,264 34,896 46,529 58,161 69,793 81,425
125,000 14,757 29,514 44,271 59,029 73,786 88,543 103,300
150,000 17,882 35,764 53,646 71,529 89,411 107,293 120,000
175,000 17,882 35,764 53,646 71,529 89,411 107,293 120,000
200,000 17,882 35,764 53,646 71,529 89,411 107,293 120,000
</TABLE>
Stock Option and Incentive Plan. In connection with the Corporation's
initial stock offering in 1988, the Corporation's Board of Directors adopted the
FMS Financial Corporation 1988 Stock Option and Incentive Plan (the "Option
Plan") which was ratified by stockholders at the Corporation's 1989 Annual
Meeting of Stockholders. Pursuant to the Option Plan, 111,642 shares of common
stock at December 31, 1996 have been reserved for future issuance by the
Corporation upon exercise of stock options to be granted to officers, directors
and key employees of the Corporation and its subsidiaries from time to time
under the Option Plan.
The Option Plan is being administered by a committee designated by the
Board of Directors (the "Committee") consisting of Directors Flamini, Staats,
Farias, Page, Lignana, Barber, Craig Yates, and Charles Yates. The Committee
will select the persons to whom options are to be granted and the number of
options to be granted. The Option Plan also contains provisions authorizing the
Committee to provide for the exercise of stock options in the form of stock
appreciation rights ("SARs"). These SARs, which are exercisable only upon
specific authorization by the Committee, permit an optionee to surrender his
option for cancellation and receive cash or Common Stock equal to the difference
between the exercise price and the then fair market value of the shares of
common stock subject to the option.
At December 31, 1996, there were options to purchase an aggregate of
82,151 shares of the Corporation Common Stock outstanding at an exercise price
equal to the fair market value of the Common Stock on the date of grant of such
options. Of such options, executive officers as a group (3 persons) held options
to purchase 24,000 shares at an average price of $7.92 per share. Craig W.
10
<PAGE>
Yates, President and Charles B. Yates, Chairman, held no stock options as of
December 31, 1996. No SARs are presently outstanding.
Employee Stock Ownership Plan. The Corporation maintains an Employee Stock
Ownership Plan for the exclusive benefit of participating employees.
Participating employees must have completed 1,000 hours of service with the
Bank. The ESOP is to be funded by contributions made by the Corporation in cash
or Common Stock. Benefits may be paid either in shares of Common Stock or in
cash. In December 1988, the ESOP borrowed approximately $660,000 from an
unrelated third party lender to purchase 85,137 shares of the Common Stock. As a
result of the two-for-one stock split declared on November 28, 1995 and paid on
January 12, 1996, the ESOP held 141,380 shares of Common Stock at December 31,
1996. This loan is secured by the Common Stock purchased with the proceeds, and
will be repaid by the ESOP with funds from the Corporation's contributions and
earnings on ESOP assets. Common Stock purchased with such loan proceeds will be
held in a suspense account for allocation among participants on the basis of
compensation as the loan is repaid. During the year ended December 31, 1996, the
Corporation contributed $75,981 to fund the ESOP debt.
The Board of Directors has appointed a committee consisting of Directors
Flamini, Staats, Page, Lignana and Barber (the "ESOP Committee"). The Board has
appointed an independent trustee for the ESOP. The ESOP Trustee must vote all
allocated shares held in the ESOP in accordance with the instructions of the
participating employees. Allocated shares for which employees do not give
instructions will not be voted. Unallocated shares will be voted by the ESOP
Trustee as directed by the ESOP Committee.
Transactions with Management
Regulation O provides that all loans to executive officers and directors
be made on substantially the same terms and conditions as are available to the
general public. On November 11, 1996, Regulation O was amended to allow
executive officers to participate in any employee loan rate discount benefit
program available to all full-time employees. Since the Bank offers such an
employee benefit program, the policy governing loans to executive officers was
amended to allow the executive officers to participate in this loan program and
thereby receive rate discounts. These changes went into effect on January 1,
1997. The rate discounts are available to employees as long as they are employed
at the Bank. If employment is terminated, the rate discount ceases from the date
of termination.
Set forth below is certain information relating to loans made to executive
officers and directors of the Corporation and its subsidiaries whose total
aggregate loan balances exceeded $60,000 at any time during the year ended
December 31, 1996.
11
<PAGE>
<TABLE>
<CAPTION>
Highest Prevailing
Unpaid Market
Original Balance Interest Interest Rate
Date Loan Since Balance at Rate at Date
Name and Position Loan Type Originated Amount 12/31/95 12/31/96 Paid Originated
- ----------------- --------- ---------- ------ -------- -------- ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Dominic W. Flamini First mortgage
Director on primary 01/06/88 $400,000 $361,649 $354,984 7.500% 10.500%
residence
James C. Lignana First mortgage
Director on primary 04/30/87 130,000 72,820 62,751 7.250% 8.500%
residence
James E. Igo First mortgage
Senior Vice on primary 11/14/91 120,000 115,503 113,963 7.625% 9.00%
President residence
</TABLE>
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PROPOSAL II -- RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors has approved to continue Coopers & Lybrand L.L.P.,
independent public accountants to serve as the auditors of the Corporation and
the Bank for the 1997 fiscal year, subject to ratification by the Corporation's
stockholders. A representative of Coopers & Lybrand L.L.P. is expected to be
present at the Meeting to respond to appropriate questions and to make a
statement, if so desired.
The appointment of the auditors must be approved by a majority of the
votes cast by the stockholders of the Corporation at the Meeting. The Board of
Directors recommends that stockholders vote "FOR" the ratification of the
appointment of auditors.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting such proxies.
12
<PAGE>
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MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of soliciting proxies will be borne by the Corporation. The
Corporation will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Corporation may solicit proxies
personally or by telegraph or telephone without additional compensation.
The Corporation's 1996 Annual Report to Stockholders, including financial
statements, has been mailed to all stockholders of record as of the close of
business on March 3, 1997. Any stockholder who has not received a copy of such
Annual Report may obtain a copy by writing to the Secretary of the Corporation.
Such Annual Report is not to be treated as a part of the proxy solicitation
material or as having been incorporated herein by reference.
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN
REQUEST TO THE SECRETARY, FMS FINANCIAL CORPORATION, P. O. BOX 397, BURLINGTON,
NEW JERSEY 08016.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the Corporation's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Corporation's executive office at
Sunset and Salem Roads, P. O. Box 397, Burlington, New Jersey 08016, no later
than November 28, 1997. Any such proposals shall be subject to the requirements
of the proxy rules adopted under the Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Thomas M. Topley
THOMAS M. TOPLEY
SECRETARY
Burlington, New Jersey
March 27, 1997
13
<PAGE>
FMS FINANCIAL CORPORATION
Sunset and Salem Roads
Burlington, New Jersey 08016
(609) 386-2400
ANNUAL MEETING OF STOCKHOLDERS
April 29, 1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors of the Corporation,
or its designee, with full powers of substitution, to act as attorneys and
proxies for the undersigned, to vote all shares of Common Stock of FMS Financial
Corporation (the "Corporation") which the undersigned is entitled to vote at the
Annual Meeting of Stockholders (the "Meeting"), to be held at the Riverton
Country Club, Riverton, New Jersey, on April 29, 1997, at 10:00 a.m. Eastern
Time, and at any and all adjournments thereof, as follows:
VOTE VOTE
FOR WITHHELD
--- --------
1. The election as director of all nominees
listed below for three-year terms
(except as marked to the contrary). |_| |_|
Vincent R. Farias
James C. Lignana
Wayne H. Page
INSTRUCTIONS: To withhold your vote for any individual nominee, insert that
nominee's name on the line provided below.
--------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of the appointment of
Coopers & Lybrand L.L.P. as auditors for
the Corporation for the 1997 fiscal year. |_| |_| |_|
3. In their discretion, such attorneys and proxies are authorized to vote on
any other business that may properly come before the Meeting or any adjournments
thereof.
The Board of Directors recommends a vote "FOR" each of the listed proposals.
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY, IF EXECUTED, WILL BE VOTED FOR EACH OF THE PROPOSALS STATED. IF ANY OTHER
BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN
THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------
<PAGE>
Should the undersigned be present and elects to vote at the Meeting, or at
any adjournments thereof, and after notification to the Secretary of the
Corporation at the Meeting of the stockholder's decision to terminate this
proxy, then the power of said attorneys and proxies shall be deemed terminated
and of no further force and effect. The undersigned may also revoke this proxy
by filing a subsequently dated proxy or by notifying the Secretary of the
Corporation of his or her decision to terminate this proxy.
The undersigned acknowledges receipt from the Corporation prior to the
execution of this proxy of Notice of the Meeting, a Proxy Statement dated March
27, 1997, and a 1996 Annual Report.
Please sign exactly as your name appears on the envelope in which this
Proxy Card was mailed. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title. If shares are held by joint
tenants, both 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.
Please check box if you are planning to attend Meeting |_|
NOTE: IF YOU RECEIVE MORE THAN ONE PROXY CARD, PLEASE SIGN AND RETURN ALL
CARDS IN THE ACCOMPANYING ENVELOPE.
--------------------------------------
PRINT NAME OF STOCKHOLDER
--------------------------------------
SIGNATURE OF STOCKHOLDER
--------------------------------------
PRINT NAME OF STOCKHOLDER
--------------------------------------
SIGNATURE OF STOCKHOLDER
Date:
------------------------------
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (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 Section 240.14a-11(c) or Section 240.14a-12
FMS Financial Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
