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)
(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 24, 2000
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of FMS Financial
Corporation, (the "Corporation"), I cordially invite you to attend the Annual
Meeting of Stockholders to be held at the Riverton Country Club, Riverton, New
Jersey, on Thursday, April 27, 2000, at 10:00 a.m. Coffee and other refreshments
will begin at 9:30 a.m. The attached Notice of Annual Meeting and Proxy
Statement describe the formal business to be transacted at the Annual Meeting.
During the Annual Meeting, the President will report on the operations of the
Corporation. Directors and Officers of the Corporation will be present to
respond to any questions stockholders may have.
In addition to the election of directors, you will be asked to ratify
the appointment of PricewaterhouseCoopers LLP, as the Corporation's auditors for
the 2000 fiscal year. The Board of Directors has unanimously approved each of
these proposals and recommends that you vote "FOR" them.
Your vote is important, regardless of the number of shares you own and
regardless of whether you plan to attend the Annual Meeting. I encourage you to
read the enclosed proxy statement carefully and sign and return your enclosed
proxy card as promptly as possible because a failure to do so could cause a
delay in the Annual Meeting and additional expense to the Company. A
postage-paid return envelope is provided for your convenience. This will not
prevent you from voting in person, but it will assure that your vote will be
counted if you are unable to attend the Annual Meeting. If you do decide to
attend the Annual Meeting and feel for whatever reason that you want to change
your vote at that time, you will be able to do so. If you are planning to attend
the Annual Meeting, please let us know by marking the appropriate box on the
proxy card.
Sincerely,
/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 27, 2000
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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 on Thursday, April 27, 2000, at 10
a.m. for the following purposes:
1. To elect three directors; and
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
auditors for the Corporation for the 2000 fiscal year;
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,
2000 are the stockholders entitled to notice of, and to vote at, the Meeting and
any adjournments thereof.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU
OWN. WE ENCOURAGE YOU TO VOTE BY PROXY SO THAT YOUR SHARES WILL BE REPRESENTED
AND VOTED AT THE MEETING EVEN IF YOU CANNOT ATTEND. ALL STOCKHOLDERS OF RECORD
CAN VOTE BY WRITTEN PROXY CARD. 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 24, 2000
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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 27, 2000
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GENERAL
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This proxy statement and the accompanying proxy card are being mailed
to stockholders of FMS Financial Corporation (the "Corporation") on or about
March 24, 2000 in connection with the solicitation by the Corporation's Board of
Directors of proxies to be used at the Annual Meeting of Stockholders (the
"Meeting") to be held at the Riverton Country Club, Riverton, New Jersey on
Thursday, April 27, 2000 at 10:00 a.m.
All properly executed written proxies that are delivered pursuant to
this proxy statement will be voted on all matters that properly come before the
Meeting for a vote. If your signed proxy specifies instructions with respect to
matters being voted upon, your shares will be voted in accordance with your
instructions. If no instructions are specified, your shares will be voted (a)
FOR the election of directors named in Proposal 1, (b) FOR Proposal 2
(ratification of independent public accountants), and (c) in the discretion of
the proxy holders, as to any other matters that may properly come before the
Meeting. Your proxy may be revoked at any time prior to being voted by: (i)
filing with the Corporate Secretary of the Corporation (Thomas M. Topley, at 3
Sunset Road, Burlington, New Jersey 08016) written notice of such revocation,
(ii) submitting a duly executed proxy bearing a later date, or (iii) attending
the Meeting and giving the Secretary notice of your intention to vote in person.
WHETHER OR NOT YOU ATTEND THE MEETING, YOUR VOTE IS IMPORTANT.
ACCORDINGLY, REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOU ARE ASKED TO VOTE
PROMPTLY BY SIGNING AND RETURNING THE ACCOMPANYING PROXY CARD. SHARES CAN BE
VOTED AT THE MEETING ONLY IF YOU ARE REPRESENTED BY PROXY OR ARE PRESENT IN
PERSON.
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VOTING STOCK AND VOTE REQUIRED
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The Board of Directors has fixed the close of business on March 1, 2000
as the record date for the determination of stockholders who are entitled to
notice of, and to vote at, the Meeting. On the record date, there were 7,123,978
shares of the Corporation common stock outstanding (the "Common Stock"). Each
stockholder of record on the record date is entitled to one vote for each share
held.
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. With respect to any matter, any shares for which a broker
indicates on the proxy that it does not have discretionary authority as to such
shares to vote on such matter (the "Broker Non-Votes") will be considered
present for purposes of determining whether a quorum is present. 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, as set forth in Proposal 1, 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
2, 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, Proposal 2 and any 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 that matter.
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PRINCIPAL HOLDERS
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Persons and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The following
table sets forth, as of the record date, persons or groups who own more than 5%
of the Common Stock and the ownership of all executive officers and directors of
the Corporation as a group. Other than as noted below, management knows of no
person or group that owns more than 5% of the outstanding shares of Common Stock
at the record date.
Amount and Percent of
Nature of Shares of
Name and Address Beneficial Common Stock
of Beneficial Owner Ownership Outstanding(%)
- ------------------- --------- --------------
Farmers and Mechanics Bank 362,754(1) 5.09
Employee Stock Ownership Plan ("ESOP")
3 Sunset Road
Burlington, New Jersey 08016
Charles B. Yates 894,024(2)(3) 12.55
82 Library Place
Princeton, New Jersey 08540
Craig W. Yates 1,301,807(2)(4) 18.27
227 Cliff Avenue
Edgewater Park, New Jersey 08010
Frances E. Yates 596,700(2)(5) 8.38
Edward Arthur Ackerman
11 Norumbega Drive
Camden, Maine 04843
All Executive Officers and Directors 2,519,952(6) 35.37
as a Group (13 persons)
(footnotes on next page)
2
<PAGE>
- ---------------------------------------------------
(1) The ESOP purchased such shares for the exclusive benefit of plan employee
participants with funds borrowed from the Corporation. These shares are
held in a suspense account and are allocated among ESOP participants
annually on the basis of total gross compensation as the ESOP debt is
repaid. The Board of Directors has appointed directors Barber, Lignana,
Flamini, Staats, Hall, Wells and Page to serve on the ESOP Committee (the
"ESOP Committee") and to serve as ESOP trustees (the "ESOP Trustees"). The
ESOP Trustees must vote all shares allocated to participant accounts under
the ESOP as directed by participants. Unallocated shares and shares for
which no timely voting directive is received are voted by the ESOP Trustees
as directed by the ESOP Committee. As of the record date, all 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 652,720 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) The information as to Frances E. Yates and Edward Arthur Akerman (the
"Reporting Persons) is derived from a Schedule 13D, dated March 1, 2000.
The Schedule 13D states that Frances E. Yates has sole voting and
dispositive power with respect to 388,500 shares. Edward Arthur Akerman has
sole voting and dispositive power with respect to 60,000 shares. The
Reporting Persons have shared voting and dispositive power with respect to
148,200 shares. Mr. Akerman disclaims beneficial ownership of any shares
other than the 60,000 shares he owns.
(6) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust and other indirect ownership, over which shares
the individuals effectively exercise sole voting and investment power,
unless otherwise indicated. Includes options to purchase 81,000 shares of
Common Stock that may be exercised within 60 days of the Record Date to
purchase shares of Common Stock under the 1989 stock option plan. See
"Proposal I - Election of Directors."
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the Securities and Exchange Act of 1934 , as amended,
requires the Corporation's directors and executive officers to file reports of
ownership and changes in ownership of their equity securities of the Corporation
with the Securities and Exchange Commission and to furnish the Corporation with
copies of such reports. To the best of the Corporation's knowledge, all of the
filings by the Corporation's directors and executive officers were made on a
timely basis during the 1999 fiscal year. Other than as disclosed in Principal
Holders, the Corporation is not aware of any other beneficial owners of more
than ten percent of its Common Stock.
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PROPOSAL I - ELECTION OF DIRECTORS
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The 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 ten members, each of
whom also serves as a director of Farmers and Mechanics Bank (the "Bank"). Three
directors will be elected at the Meeting, to serve for a three-year term or
until his or her successor has been elected and qualified.
Vincent R. Farias, James C. Lignana, and Wayne H. Page (the "Nominees")
have been nominated by the Board of Directors for a term of three years. The
Nominees currently serve as directors of the Corporation.
3
<PAGE>
The persons named as proxies in the enclosed proxy card intend to vote
for the election of the Nominees, unless the proxy card is marked to indicate
that such authorization is expressly withheld. Should the Nominees withdraw or
be unable to serve (which the Board of Directors does not expect) or should any
other vacancy occur in the Board of Directors, it is the intention of the
persons named in the enclosed proxy card to vote for the election of such person
as may be recommended to the Board of Directors by the Nominating Committee of
the Board. If there are no substitute nominees, the size of the Board of
Directors may be reduced.
The following table sets forth the names, ages, terms of, and length of
board service for the persons nominated for election as directors of the
Corporation at the Meeting and each other director of the Corporation who will
continue to serve as director after the Meeting. Beneficial ownership of
executive officers and directors of the Corporation, as a group, is set forth
under the caption "Principal Holders."
<TABLE>
<CAPTION>
Shares of Common
Age Stock Beneficially
at Year First Current Owned as of
December 31, Elected or Term to March 1, Percent of
Name 1999 Appointed Expire 2000(1) Class (%)
- ---- ---- --------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2003
Vincent R. Farias 53 1996 2000 4,525 --(5)
James C. Lignana 57 1986 2000 96,500 1.35
Wayne H. Page 77 1954 2000 42,588 --(5)
DIRECTORS CONTINUING IN OFFICE
George J. Barber 78 1973 2001 37,333 --(5)
Dominic W. Flamini 61 1986 2001 25,666 --(5)
Charles B. Yates 60 1992 2001 894,024(2)(4) 12.55
Rupert A. Hall, Jr. 44 1998 2002 100 --(5)
Edward J. Staats, Jr. 55 1996 2002 30,000 --(5)
Mary Wells 57 1998 2002 325 --(5)
Craig W. Yates 57 1990 2002 1,301,807(3) 18.27
</TABLE>
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(1) 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.
(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.
Pursuant to Schedules 13D filed by each individual, each disclaims
beneficial ownership of Common Stock owned by the other.
(3) Includes 16,601 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.
(4) Excludes 652,720 shares owned by his children and grandchildren.
Charles B. Yates disclaims beneficial ownership of shares held by his
children and grandchildren. Includes 9,324 shares allocated to
individual's account under the ESOP.
(5) Less than 1% of Common Stock outstanding.
4
<PAGE>
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 Surf and Sport,
a 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.
Dominic W. Flamini is the President and owner of First U.S.
Corporation, a real estate development and property management Corporation
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 Corporation 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 and the Bank. 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, 1999, 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
5
<PAGE>
least 30 days nor more than 60 days prior to the date of the
annual meeting. However, if less than 31 days notice of the meeting is given to
stockholders, such written notice shall be delivered or mailed to the Secretary
of the Corporation not later than the close of the tenth day following the day
on which notice of the meeting was mailed to stockholders. Notice to the
Corporation of such nominations must include certain information required
pursuant to the 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. The Nominating Committee, which is not a standing
committee, met once during the year ended December 31, 1999.
The 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 the independent auditors and meets with the
Corporation's independent auditors in connection with its annual audit. The
Audit Committee met three times during the year ended December 31, 1999.
The 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. The
Compensation Committee met once during the year ended December 31, 1999.
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DIRECTORS AND EXECUTIVE OFFICER COMPENSATION
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Directors' Compensation
For 1999, Directors received $12,000 for serving as Directors of the
Corporation and the Bank. The President and Chairman of the Board 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, 1999 were $96,000.
Executive Compensation
The following table sets forth the cash and non-cash compensation
awarded to the named executive officers for each of the three years ended
December 31, 1999. No other executive officer of the Corporation who served in
such capacity during such period received total cash compensation in excess of
$100,000.
Annual Compensation
------------------- All Other
Name and Principal Position Year Salary ($) Bonus ($) Compensation ($)
- --------------------------- ---- ---------- --------- ----------------
Craig W. Yates 1999 203,029 10,000 160(1)
President and CEO 1998 200,000 10,000 1,044
1997 203,846 10,000 2,770
Charles B. Yates 1999 204,585 10,000 160(1)
Chairman of the Board 1998 200,000 10,000 1,044
1997 203,846 10,000 2,770
- -----------------
(1) For each named executive officer includes the value of 124 shares of
Common Stock allocated under the ESOP. At December 31, 1999, such
shares had a market value of $1,178.
6
<PAGE>
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 1999, an executive officer of another
Corporation 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 1999, a member of a comparable compensation
committee of a Corporation 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 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 Corporation'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 Chief
Executive Officer'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
7
<PAGE>
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, 1994 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.
[GRAPHICS OMITTED]
-----------------
<TABLE>
<CAPTION>
================================ ============ ============ ============ ============ ============ =============
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- -------------------------------- ------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
CRSP Nasdaq U.S. Index $100 $141 $174 $212 $300 $542
- -------------------------------- ------------ ------------ ------------ ------------ ------------ -------------
CRSP Nasdaq Bank Index 100 149 197 328 327 314
- -------------------------------- ------------ ------------ ------------ ------------ ------------ -------------
FMS Financial 100 153 166 327 254 268
================================ ============ ============ ============ ============ ============ =============
</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
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<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. Participants benefits become 100% vested upon
completion of five years of service with the Corporation. As of December 31,
1999, Craig W. Yates and Charles B. Yates, had 9 years and 5 years,
respectively, of service credited under the Pension Plan.
The following table illustrates the annual pension benefits (assuming
normal retirement during 1999) 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 1999, the maximum benefit payable
under the Pension Plan was $130,000.
<TABLE>
<CAPTION>
Benefits Based on 35 Year Service Requirement
and Normal Retirement During 1999
-------------------------------------------------------------------------------------
Final Average Years of Service at Normal Retirement Date
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Compensation 5 10 15 20 25 30 35
- ------------ -------- -------- ------- -------- -------- -------- --------
$ 50,000 $ 5,189 $10,379 $15,568 $20,757 $25,946 $ 31,136 $ 36,325
75,000 8,314 16,629 24,943 33,257 41,571 49,886 58,200
100,000 11,439 22,879 34,318 45,757 57,196 68,636 80,075
125,000 14,564 29,129 43,693 58,257 72,821 87,386 101,950
150,000 17,689 35,379 53,068 70,757 88,446 106,136 123,825
175,000 18,939 37,879 56,818 75,757 94,696 113,636 130,000
200,000 18,939 37,879 56,818 75,757 94,696 113,636 130,000
</TABLE>
Transactions with Management
The Bank, like many financial institutions, grants loans to its
officers and directors. All loans by the Bank to its directors and executive
officers are subject to OTS regulations restricting loans and other transactions
with affiliated persons of the Corporation. Savings institutions are permitted
to make loans to executive officers, directors and principal shareholders
("insiders") on preferential terms, provided the extension of credit is made
pursuant to a benefit or compensation program of the Bank that is widely
available to employees of the Bank or its affiliates and does not give
preference to any insider over other employees of the Bank or affiliate. The
Bank maintains a benefits program whereby mortgage loans are offered to all
employees and directors at a discount of the then-prevailing rate at the time of
grant. This rate is only available during the term of the employee's employment
or the director's board membership. Upon termination, resignation or retirement,
the rate reverts to the market rate that existed at the time the loan is
granted. All other loans to insiders have been made in the ordinary course of
business, and on substantially the same terms and conditions, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with the Bank's other customers, and do not involve more than the
normal risk of collectibility, nor present other unfavorable features.
Set forth below is certain information relating to loans made on
preferential terms 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, 1999.
9
<PAGE>
<TABLE>
<CAPTION>
Highest Prevailing
Unpaid Market
Balance Balance Interest Interest
Date Original Loan Since at Rate Rate at Date
Name and Position Loan Type Originated Amount 12/31/98 12/31/99 Paid % Originated (%)
- ----------------- --------- ---------- ------------- --------- ---------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles B. Yates First Mortgage on primary
Chairman residence 11/27/98 670,000 667,647 638,133 5.750 6.750
Dominic W. Flamini First Mortgage on primary
Director residence 1/06/88 400,000 337,934 328,690 7.500 10.500
George J. Barber First mortgage on primary
Director residence 12/07/88 257,000 223,714 218,428 7.000 8.250
James E. Igo (a) First mortgage on primary
Senior Vice President residence 11/14/91 120,000 109,753 107,630 6.625 7.625
(b) Installment Loan 8/11/97 18,000 13,785 10,355 6.750 7.750
</TABLE>
- --------------------------------------------------------------------------------
PROPOSAL II -- RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
PricewaterhouseCoopers LLP was the Corporation's independent public
accountant for the 1999 fiscal year. The Board of Directors has appointed
PricewaterhouseCoopers LLP to be its auditors for the fiscal year ending
December 31, 2000, subject to ratification by the Corporation's stockholders. A
representative of PricewaterhouseCoopers LLP is expected to be present at the
Meeting to respond to stockholders' questions and will have the opportunity to
make a statement if the representative so desires.
Ratification of the appointment of the auditors requires the affirmative
vote of 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 PricewaterhouseCoopers LLP as the
Corporation's auditors for the 2000 fiscal year.
- --------------------------------------------------------------------------------
2001 ANNUAL MEETING STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be considered for inclusion in the Corporation's proxy
statement for the annual meeting of stockholders to be held in 2001, 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 23, 2000. Under the Certificate of Incorporation, stockholder
proposals not included in the Corporation's 2001 proxy statement, in order to be
considered for possible action by stockholders at the 2001 annual meeting of
stockholders, must be submitted to the Secretary of the Corporation, at the
address set forth above by March 27, 2001. In addition, stockholder proposals
must meet other applicable criteria set forth in the Certificate of
Incorporation of the Corporation in order to be considered at the 2001 annual
meeting.
10
<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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
FORM 10K
- --------------------------------------------------------------------------------
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1999, 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
THOMAS M. TOPLEY
Secretary
Burlington, New Jersey
March 24, 2000
11
<PAGE>
- --------------------------------------------------------------------------------
FMS FINANCIAL CORPORATION
3 SUNSET ROAD
BURLINGTON, NEW JERSEY 08016
(609) 386-2400
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
April 27, 2000
- --------------------------------------------------------------------------------
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 Thursday, April 27, 2000, at
10:00 a.m., and at any and all adjournments thereof, as follows:
VOTE VOTE
FOR WITHHELD
---- --------
1. To elect as directors 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. To ratify the appointment of
PricewaterhouseCoopers LLP as auditors for
the Corporation for the 2000 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
24, 2000, and a 1999 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.
- --------------------------------------------------------------------------------
