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 Rule 14a-11(c) or Rule 14a-12
FMS Financial Corporation
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(Name of Registrant as Specified in Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[FMS FINANCIAL LETTERHEAD]
March 26, 1999
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of the FMS Financial
Corporation, I cordially invite you to attend the 1999 Annual Meeting of
Stockholders (the "Meeting") to be held at the Burlington Country Club, Burrs
Road, Westampton, New Jersey at 10:00 a.m. Eastern Time on April 29, 1999.
Coffee and other refreshments will start at about 9:30 a.m. The attached Notice
of Annual Meeting and Proxy Statement describe the formal business to be
transacted at the Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND DATE
THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID RETURN
ENVELOPE AS PROMPTLY AS POSSIBLE. This will not prevent you from voting in
person at the Annual Meeting, but will assure that your vote is counted if you
are unable to attend the Annual Meeting. YOUR VOTE IS VERY IMPORTANT.
Sincerely,
FMS Financial Corporation
/s/Craig W. Yates
-----------------------------------
Craig W. Yates
President
<PAGE>
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FMS FINANCIAL CORPORATION
3 SUNSET ROAD
BURLINGTON, NEW JERSEY 08016
(609) 386-2400
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 29, 1999
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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
Burlington Country Club, Burrs Road, Westampton, New Jersey on Thursday, April
29, 1999, at 10 a.m. for the following purposes:
1. The election of four directors of the Corporation;
2. The ratification of the appointment of PricewaterhouseCoopers
LLP as independent auditors for the Corporation for the 1999
fiscal year; and
all as set forth in the Proxy Statement accompanying this notice, and
to transact such other business as may properly come before the meeting and any
adjournments. The Board of Directors is not aware of any other business to come
before the Meeting. Stockholders of record at the close of business on March 1,
1999 are the stockholders entitled to vote at the Meeting and any adjournments
thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN, DATE
AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. ANY SIGNED PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED BY FILING
WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER DATE. IF YOU ARE PRESENT AT THE MEETING YOU MAY REVOKE YOUR
PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE MEETING. HOWEVER, IF
YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL
NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO VOTE PERSONALLY AT THE
MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Thomas M. Topley
------------------------------------
THOMAS M. TOPLEY
Secretary
Burlington, New Jersey
March 26, 1999
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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>
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PROXY STATEMENT
OF
FMS FINANCIAL CORPORATION
3 SUNSET ROAD
BURLINGTON, NEW JERSEY 08016
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ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1999
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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 Burlington Country Club,
Burrs Road, Westampton, New Jersey on April 29, 1999, at 10:00 a.m., Eastern
Time, and any adjournments thereof. This Proxy Statement and the accompanying
Notice of Meeting, form of proxy and Annual Report are being first mailed to
stockholders on or about March 26, 1999.
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VOTING AND REVOCABILITY OF PROXIES
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If the enclosed proxy card is properly signed and returned, your shares
will be voted on all matters that properly come before the Meeting for a vote.
If instructions are specified in your signed proxy card with respect to the
matters being voted upon, your shares will be voted in accordance with your
instructions. If no instructions are specified in you signed proxy card, your
shares will be voted (a) FOR the election of directors named in Proposal 1, (b)
FOR Proposal 2 (ratification of independent auditors), and (c) in the discretion
of the proxy holders, as to any other matters that may properly come before the
Meeting (including any adjournment). Your proxy may be revoked at any time prior
to being voted by: (i) filing with the Secretary of the Company written notice
of such revocation, (ii) submitting a duly executed proxy card bearing a later
date, or (iii) attending the Meeting and giving the Secretary notice of your
intention to vote in person.
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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 1, 1999
(the "Record Date"), are entitled to one vote for each share of Common Stock
then held. As of March 1, 1999, the Corporation had 7,231,767 shares of Common
Stock outstanding. The number of shares of common stock reflects the
three-for-one stock split paid on July 14, 1998 (the "three-for-one stock
split").
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Meeting. For purposes of determining the votes cast with respect
to any matter presented for consideration at the Meeting only those votes cast
"FOR" or "AGAINST" are included. Abstentions and broker non-votes (i.e., shares
held by brokers on behalf of their customers, which may not be voted on certain
matters because the brokers have not received specific voting instructions from
their customers with respect to such matters) will be counted solely for the
purpose of determining whether a quorum is present, except as otherwise noted
below. In the event there are not sufficient votes for a quorum or to ratify any
proposals at the time of the Meeting, the Meeting may be adjourned in order to
permit the further solicitation of proxies.
<PAGE>
As to the election of directors (Proposal I), the proxy being provided
by the Board enables a stockholder to vote for the election of the nominees
proposed by the Board, or to withhold authority to vote for the nominees being
proposed. Directors are elected by a plurality of votes of the shares present in
person or represented by proxy at a meeting and entitled to vote in the election
of directors.
As to the ratification of independent auditors as set forth in Proposal
II, by checking the appropriate box, a stockholder may: (i) vote "FOR" the item,
(ii) vote "AGAINST" the item, or (iii) vote to "ABSTAIN" on such item. Unless
otherwise required by law, such Proposal II shall be determined by a majority of
the total votes cast affirmatively or negatively without regard to (a) broker
non-votes or (b) proxies for which the "ABSTAIN" box is selected as to the
matter.
Unless otherwise required by law, all other matters shall be determined
by a majority of votes cast affirmatively or negatively without regard to (a)
broker non-votes or (b) proxies marked "ABSTAIN" as to the 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 1, 1999, 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 1, 1999.
2
<PAGE>
Amount and Percent of
Nature of Shares of
Name and Address Beneficial Common Stock
of Beneficial Owner Ownership Outstanding
- ------------------- --------- -----------
Farmers and Mechanics Bank 394,128(1) 5.45%
Employee Stock Ownership Plan ("ESOP")
3 Sunset Road
Burlington, New Jersey 08016
Charles B. Yates 908,900(2)(3) 12.57%
82 Library Place
Princeton, New Jersey 08540
Craig W. Yates 1,301,682(2)(4) 17.99%
227 Cliff Avenue
Edgewater Park, New Jersey 08010
Frances E. Yates 513,000(2) 7.09%
11 Norumbega Drive
Camden, Maine 04843
All Executive Officers and Directors 2,583,178(5) 35.72%
as a Group (13 persons)
- ------------------------
(1) The ESOP purchased 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. As of the Record Date, 374,128 shares have
been allocated under the ESOP to participant accounts.
(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 635,720 shares owned by children and grandchildren. Charles B.
Yates disclaims beneficial ownership of shares held by his children and
grandchildren.
(4) Excludes 210,000 shares owned by adult children. Craig W. Yates disclaims
beneficial ownership of shares held by his adult children.
(5) 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 does not include shares owned by the
Corporation's ESOP except for shares allocated to the accounts of executive
officers. See Proposal I - Information with Respect to Nominees for
Director, Directors Continuing in Office, and Executive Officers.
3
<PAGE>
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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 of beneficial ownership and
changes in beneficial ownership of the Common Stock with the Commission. Based
upon a review of the copies of the forms furnished to the Corporation, or
written representations from certain reporting persons that no Forms 5 were
required, the Corporation believes that all Section 16(a) filing requirements
applicable to its officers and directors were complied with during the 1998
fiscal year. However, due to an administrative error, one director was eight
days late in filing a Form 4 in connection with three stock transactions.
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PROPOSAL I -- INFORMATION WITH RESPECT TO NOMINEES FOR
DIRECTOR, DIRECTORS CONTINUING IN OFFICE, AND EXECUTIVE OFFICERS
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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 10 members. The
Board of Directors has nominated Craig W. Yates, Edward J. Staats, Jr., Rupert
A. Hall, Jr. and Mary Wells to serve as directors of the Corporation, each for a
three-year term. Mr. Hall and Ms. Wells were appointed to the Board of Directors
in 1998.
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. Beneficial
ownership of executive officers and directors of the Corporation, as a group, is
shown in the table under "Voting Securities and Principal Holders Thereof."
4
<PAGE>
<TABLE>
<CAPTION>
Age at
December Year First Current Shares of Common Percent
31, Elected or Term to Stock Beneficially of
Name 1998 Appointed Expire Owned(1)(2)(3) Class %
- ---- ------ --------- ------ -------------- -------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2002
<S> <C> <C> <C> <C> <C>
Rupert A. Hall, Jr. 43 1998 1999 100 --(7)
Edward J. Staats, Jr. 54 1996 1999 60,200 --(7)
Mary Wells 56 1998 1999 200 --(7)
Craig W. Yates 56 1990 1999 1,301,682(4)(5) 17.99
DIRECTORS CONTINUING IN OFFICE
Vincent R. Farias 52 1996 2000 4,525 --(7)
James C. Lignana 56 1986 2000 103,500 1.43
Wayne H. Page 76 1954 2000 42,588 --(7)
George J. Barber 77 1973 2001 45,333 --(7)
Dominic W. Flamini 60 1986 2001 25,666 --(7)
Charles B. Yates 59 1992 2001 908,900(4)(6) 12.57
</TABLE>
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(1) As of March 1, 1999
(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.
(3) As adjusted for the three-for-one stock split.
(4) 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.
(5) Includes 16,476 shares allocated to individual's account under the ESOP.
Excludes 210,000 shares owned by adult children. Craig W. Yates disclaims
beneficial ownership of shares held by his adult children.
(6) Excludes 635,720 shares owned by his children and grandchildren. Charles B.
Yates disclaims beneficial ownership of shares held by his children and
grandchildren. Includes 9,200 shares allocated to individual's account
under the ESOP.
(7) Less than 1% of Common Stock outstanding.
Biographical Information
The principal occupation of each director and nominee of the Corporation
for the last five years is set forth below.
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.
5
<PAGE>
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.
Rupert A. Hall, Jr. is an attorney with the firm Hall & Thompson, P.C.
located in Moorestown, New Jersey.
James C. Lignana is Vice President of the Allied Beverage Group LLC, 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.
Edward J. Staats, Jr. is the President of Staats Construction Co.,
Incorporated, a construction company located in Edgewater Park, New Jersey.
Mary Wells is the President and Chief Executive Officer of Family Service
of Burlington County.
Charles B. Yates has been Chairman of the Board of the Corporation and the
Bank since April 1994. Mr. Yates had been a private investor for the previous
eight years.
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 prior 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.
Meetings and Committees of the Board of Directors
The Corporation is governed by a Board of Directors and various committees
of the Board which meet regularly throughout the year. During the fiscal year
ended December 31, 1998, 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. In order for
nominations by stockholders to be voted upon at an annual meeting, the
nomination(s) must be in writing and delivered to the secretary of the
Corporation at least 30 days prior to the date of the annual meeting. Notice to
the Corporation of such nominations must include certain information required
pursuant to the Corporation's Certificate of Incorporation. If the Nominating
Committee fails or refuses to act at least 20 days prior to the annual meeting,
nominations for directors may be made at the annual meeting by any stockholder
entitled to vote at the annual meeting. In its capacity as a Nominating
Committee, which is not a standing committee, the Board of Directors met once
during the year ended December 31, 1998.
The Bank's Audit Committee consists of Directors Staats, Hall, Wells,
Farias, Lignana, Page, Flamini and Barber and the Corporation's compliance and
internal audit firm. This committee selects
6
<PAGE>
the independent auditors and meets with the Bank's independent auditors in
connection with the Bank's annual audit. The Audit Committee met four times
during the year ended December 31, 1998.
The Bank's Compensation Committee, currently composed of Directors
Staats, Hall, Wells, Farias, Lignana, Page, Flamini and Barber, 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 met once during the
year ended December 31, 1998.
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DIRECTORS AND EXECUTIVE OFFICER COMPENSATION
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Directors' Compensation
For 1998, 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. Total fees paid to directors for the fiscal year ended
December 31, 1998, were $79,000.
Pursuant to a stock option and incentive plan (the "Option Plan") for
officers, outside directors, and key employees, under which grants could be made
until October 23, 1998 (the "Expiration Date"), certain outside directors were
awarded stock options to purchase shares of Common Stock. The stock options have
an exercise price equal to the fair market value of the Common Stock on the date
of grant, a term of ten years, and are exercisable upon grant. The Option Plan
also contains provisions that provide for the exercise of stock options in the
form of stock appreciation rights ("SARs"). The SARs, which are exercisable only
upon authorization by the option committee, permit an optionee to surrender his
stock 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 stock option.
7
<PAGE>
Executive Compensation
The following table sets forth for the fiscal years ended December 31,
1998, 1997 and 1996, 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.
Annual Compensation
-------------------------------------------
Name and Principal Other Annual All Other
Position Year Salary Bonus Compensation(1) Compensation(3)
- -------- ---- ------ ----- ------------ ------------
Craig W. Yates 1998 $200,000 $10,000 $-- $ 1,044
President and CEO 1997 203,846(2) 10,000 -- 2,770
1996 199,039 7,961 -- 2,824
Charles B. Yates 1998 $200,000 $10,000 $-- $ 1,044
Chairman of the 1997 203,846(2) 10,000 -- 2,770
Board 1996 199,039 7,961 -- 2,824
- -----------------
(1) For perquisites and other personal benefits, aggregate value does not
exceed the lesser of $50,000 or 10% of the named executive officer's total
salary and bonuses for the year. For the periods presented, there were no:
(a) payments of above market preferential earnings on deferred
compensation; (b) payments of earnings with respect to long term incentive
plans prior to settlement or maturity; (c) tax payment reimbursements; or
(d) preferential discounts on stock.
(2) Reflects compensation paid for 53 weeks in 1997.
(3) For each named executive officer includes the value of 808, 2,148, and
2,187 shares of Common Stock allocated under the ESOP. At December 31,
1998, 1997, and 1996, such shares had a market value of $5,958, $25,411,
and $13,297, respectively.
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. No member of
the Committee is, or was during 1998, an executive officer of another company
whose board of directors has a comparable committee on which one of the
Corporation's executive officers serves. None of the executive officers of the
Corporation is, or was during 1998, a member of a comparable compensation
committee of a company of which any of the directors of the Corporation is an
executive officer.
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
8
<PAGE>
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 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.
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
Rupert A. Hall, Jr.
Mary Wells
Stock 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, 1993 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.
9
<PAGE>
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
=======================================================================================
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CRSP Nasdaq U.S. Index $100 $ 98 $138 $170 $209 $293
- ---------------------------------------------------------------------------------------
CRSP Nasdaq Bank Index 100 100 148 196 328 325
- ---------------------------------------------------------------------------------------
FMS Financial 100 98 150 163 320 247
=======================================================================================
</TABLE>
Benefits
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 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.
Participants benefits become 100% vested upon completion of five years of
service with the Corporation. As of December 31, 1998, Craig W. Yates and
Charles B. Yates, had 8 years and 4 years, respectively, of service credited
under the Pension Plan.
10
<PAGE>
The following table illustrates the annual pension benefits (assuming
normal retirement during 1998) 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 1998, the maximum benefit payable
under the Pension Plan was $130,000.
<TABLE>
<CAPTION>
Benefits Based on 35 Year Service Requirement
and Normal Retirement During 1998
Final Average Years of Service at Normal Retirement Date
Compensation ---------------------------------------------------------------------------------
- ------------ 5 10 15 20 25 30 35
---------- ---------- ---------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 5,286 $10,571 $15,857 $21,143 $26,429 $ 31,714 $ 37,000
75,000 8,411 16,821 25,232 33,643 42,054 50,464 58,875
100,000 11,536 23,071 34,607 46,143 57,679 69,214 80,750
125,000 14,661 29,321 43,982 58,643 73,304 87,964 102,625
150,000 17,786 35,571 53,357 71,143 88,929 106,714 124,500
175,000 19,036 38,071 57,107 76,143 95,179 114,214 130,000
200,000 19,036 38,071 57,107 76,143 95,179 114,214 130,000
</TABLE>
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, 1998.
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 12/31/97 12/31/98 Paid Originated
- ----------------- --------- ---------- ------ -------- -------- ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles B. Yates First Mortgage on
Chairman primary residence 11/27/98 $670,000 $670,000 $667,647 5.150% 6.750%
James C. Lignana (a) First
Director Mortgage on 04/30/87 130,000 53,595 42,888 7.250% 8.500%
primary residence
(b) Commercial 09/22/98 115,000 115,000 115,000 8.000% 8.000%
Loan
Dominic W. Flamini First mortgage on
Director primary residence 01/06/88 400,000 347,803 337,934 7.500% 10.500%
George J. Barber First mortgage on
Director primary residence 12/07/88 257,000 228,639 223,714 7.000% 8.250%
James E. Igo (a) First mortgage
Senior Vice on primary 11/14/91 120,000 111,741 109,753 6.625% 7.625%
President residence
(b) Installment 8/11/97 18,000 16,996 13,785 6.750% 7.750%
Loan
</TABLE>
- --------------------------------------------------------------------------------
PROPOSAL II -- RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors has approved to continue PricewaterhouseCoopers LLP,
independent public accountants to serve as the auditors of the Corporation and
the Bank for the 1999 fiscal year, subject to ratification by the Corporation's
stockholders. A representative of PricewaterhouseCoopers LLP 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.
12
<PAGE>
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors does not know of any other matters that are likely
to be brought before the Annual Meeting. If any other matters, not now known,
properly come before the meeting or any adjournments, the persons named in the
enclosed proxy card, or their substitutes, will vote the proxy in accordance
with their judgment on such matters. Under the Articles of Incorporation of the
Corporation, no new business or proposals submitted by stockholders shall be
acted upon at the Annual Meeting unless such business or proposal was stated in
writing and filed with the Secretary of the Corporation not earlier than
February 28, 1999 nor later than March 30, 1999.
- --------------------------------------------------------------------------------
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 facsimile or telephone without additional compensation.
The Corporation's Annual Report to Stockholders for the year ended December
31, 1998, including financial statements, will be mailed to all stockholders of
record as of the close of business on March 26, 1999. Any stockholder who has
not received a copy of such Annual Report may obtain a copy by writing to the
Secretary of the Company. Such Annual Report is not to be treated as a part of
the proxy solicitation material or as having been incorporated herein by
reference.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be considered for inclusion in Corporation's proxy statement
for the annual meeting of stockholders to be held in the year 2000, all
stockholder proposals must be submitted to the Secretary of the Corporation at
its offices at 3 Sunset Road, P.O. Box 397, Burlington, New Jersey 08016, on or
before November 27, 1999. Under the Corporation's Articles of Incorporation,
stockholder nominations for director and stockholder proposals not included in
the Corporation's proxy statement for the year 2000, in order to be considered
for possible action by stockholders at the 2000 annual meeting of stockholders,
must be submitted to the Secretary of the Corporation, at the address set forth
above, no earlier than February 27, 2000 nor later than March 28, 2000. If less
than 31 days notice is given to stockholders for the 2000 annual meeting,
stockholder nominations for directors and stockholders proposals must be
received not later than the close of the tenth day following the day on which
the notice of the meeting was mailed to shareholders. In addition, stockholder
nominations and stockholder proposals must meet other applicable criteria set
forth in the Corporation's Articles of Incorporation in order to be considered
at the Corporation's 2000 annual meeting of Stockholders.
13
<PAGE>
- --------------------------------------------------------------------------------
FORM 10K
- --------------------------------------------------------------------------------
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1998, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
FURNISHED WITHOUT CHARGE (EXCLUDING EXHIBITS) TO STOCKHOLDERS AS OF THE RECORD
DATE UPON WRITTEN REQUEST TO THE SECRETARY, FMS FINANCIAL CORPORATION, 3 SUNSET
ROAD, BURLINGTON, NEW JERSEY 08016.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Thomas M. Topley
----------------------------------------
THOMAS M. TOPLEY
Secretary
Burlington, New Jersey
March 26, 1999
14
<PAGE>
APPENDIX A
- --------------------------------------------------------------------------------
FMS FINANCIAL CORPORATION
3 SUNSET ROAD
BURLINGTON, NEW JERSEY 08016
(609) 386-2400
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1999
- --------------------------------------------------------------------------------
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 Burlington
Country Club, Burrs Road, Westampton, New Jersey, on April 29, 1999, 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).
| | | |
Rupert A. Hall, Jr.
Edward J. Staats, Jr.
Mary Wells
Craig W. Yates
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
PricewaterhouseCoopers LLP as auditors for
the Corporation for the 1999 fiscal year.
| | | | | |
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>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned acknowledges receipt from the Corporation prior to the
execution of this proxy of Notice of the Meeting, a Proxy Statement dated March
26, 1999, and a 1998 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.
- --------------------------------------------------------------------------------
