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 Sec. 240.14a-11(c) or Sec.
240.14a-12
SUMMIT 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 dat of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
SUMMIT FINANCIAL CORPORATION
POST OFFICE BOX 1087
937 NORTH PLEASANTBURG DRIVE
GREENVILLE, SOUTH CAROLINA 29602
(864) 242-2265
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 16, 1997
The Annual Meeting of the shareholders of SUMMIT FINANCIAL CORPORATION
(the "Company") will be held on Wednesday, April 16, 1997, at 10:00 a.m. at
the Greenville Chamber of Commerce Board Room, 24 Cleveland Street,
Greenville, South Carolina for the purpose of considering and voting upon the
following:
1) To elect four directors to the Board of Directors for terms of three
years and thereafter until their successors are duly elected and qualified;
2) To ratify the appointment of KPMG Peat Marwick LLP as independent
accountants for the Company for the fiscal year ending December 31, 1997; and
3) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only those holders of record of the Common Stock of the Company at the
close of business on February 24, 1997, are entitled to notice of and to vote
at the Annual Meeting or any adjournment thereof.
A Proxy Statement and a Proxy solicited by the Board of Directors are
enclosed herewith. Please sign, date and return the Proxy promptly in the
enclosed reply envelope. IF YOU ATTEND THE MEETING YOU MAY, IF YOU WISH,
WITHDRAW YOUR PROXY AND VOTE IN PERSON.
Also enclosed is a copy of the Company's 1996 Annual Report to
Shareholders.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ J. Randolph Potter
J. RANDOLPH POTTER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
March 12, 1997
Greenville, South Carolina
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE
COMPLETE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENVELOPE WHICH HAS BEEN
PROVIDED SO THAT YOUR VOTE MAY BE RECORDED.
<PAGE>
SUMMIT FINANCIAL CORPORATION
POST OFFICE BOX 1087
937 NORTH PLEASANTBURG DRIVE
GREENVILLE, SOUTH CAROLINA 29602
(864) 242-2265
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 16, 1997
I. INTRODUCTION
A. PURPOSE OF SOLICITATION - TERMS OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Directors of Summit Financial Corporation (the
"Company") for use at the Annual Meeting of Shareholders of the Company (the
"Annual Meeting") to be held on Wednesday, April 16, 1997, and any adjournment
thereof, at the Greenville Chamber of Commerce Board Room, 24 Cleveland
Street, Greenville, South Carolina, at 10:00 a.m. for the purposes set forth
in the accompanying notice of the meeting. The enclosed Proxy is solicited BY
AND ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS. The expenses of this
solicitation, including the cost of preparing and mailing this Proxy
Statement, will be paid by the Company. Copies of solicitation material may
be furnished to banks, brokerage houses and other custodians, nominees and
fiduciaries for forwarding to beneficial owners of shares of the Company's
common stock, and normal handling charges may be paid for such forwarding
service. Proxies will be solicited principally by mail, but Directors and
regular employees of the Company may solicit Proxies in person or by telephone
or telegraph. It is anticipated that this Proxy Statement and the
accompanying Proxy will first be mailed to shareholders on or about March 14,
1997.
B. REVOCATION OF PROXY
Any Proxy given pursuant to this solicitation may be revoked by any
shareholder who attends the meeting and gives verbal notice of his or her
election to vote in person, without compliance with any other formalities. In
addition, any Proxy given pursuant to this solicitation may be revoked prior
to the meeting by delivering an instrument revoking it, or a duly executed
Proxy bearing a later date, to the Secretary of the Company. If the Proxy is
properly completed and returned by the shareholder and is not revoked, it will
be voted at the meeting in the manner specified thereon. If the Proxy is
returned without any choice being specified thereon, it will be voted FOR all
the nominees named below; FOR the appointment of KPMG Peat Marwick LLP; and,
at their discretion, on any other matter that may properly come before the
meeting.
C. SHAREHOLDER PROPOSALS
From time to time, the Company's shareholders may present proposals
which may be proper subjects for inclusion in the Company's proxy statements
for consideration at the Company's annual meetings. To be considered for
inclusion, shareholder proposals must be submitted on a timely basis.
Proposals for the Company's 1998 Annual Meeting must be received by the
Company no later than November 14, 1997, and any such proposals, as well as
any questions related thereto, should be directed to the Secretary of the
Company.
D. VOTING SECURITIES - RECORD DATE
Only shareholders of record at the close of business on February 24,
1997, (the "Record Date"), are entitled to vote at the Annual Meeting, or any
adjournment thereof. As of that date, the Company had outstanding and
entitled to vote 1,334,409 shares of common stock, par value $1.00 per share
(the "Common Stock"), held of record by approximately 450 persons. Each
shareholder is entitled to one vote per share that he or she owns. The number
of shareholders does not reflect the number of persons or entities who hold
their stock in nominee or "street" name through various brokerage firms.
II. ELECTION OF DIRECTORS
(ITEM 1. ON THE PROXY)
A. GENERAL INFORMATION
Pursuant to the Company's Bylaws, the Board of Directors has, by
resolution, fixed the number of Directors at twelve persons. The Company's
Bylaws provide for classification of the Directors into three classes, each
class as equal in number as possible. At the Annual Meeting, four Directors
are to be elected for a term of three years, to hold office until their
successors have been duly elected and qualified. All the nominees are
currently serving as Directors and their terms will expire at the 1997 Annual
Meeting. The nominees are as follows: C. Vincent Brown, Charles S. Houser,
John A. Kuhne, and J. Randolph Potter.
In 1996, each Director who was not an officer of the Company or of its
subsidiaries, received an attendance fee of $200 for each board meeting
attended, and $100 for each committee meeting attended, except for the
Chairman and Vice Chairman who received two times and one-and-one-half times,
respectively, the standard attendance fees. The aggregate amount of all
payments by the Company to Directors during 1996 was $30,600. In addition, as
their retainer for services and pursuant to the 1995 Summit Financial
Corporation Non-Employee Stock Option Plan ("the Plan"), on January 1, 1996,
each non-employee Director received options to purchase 10,418 (as adjusted
for all stock distributions) shares of the Company's common stock, except for
the Chairman and Vice Chairman who received options to purchase 20,837
(adjusted) and 15,628 (adjusted) shares, respectively, of the Company's common
stock. These grants were made at an option price equal to the fair market
value of the shares as of the date of grant, as determined under the Plan.
The grants made January 1, 1996 vest over nine years at a rate of 11.1% on
each of the first nine anniversaries of the date of grant. None of the
options have been exercised.
B. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and executive officers, and persons who own more than 10%
of the Company's common stock, to file with the Securities and Exchange
Commission (the "SEC") reports of ownership and changes in ownership of the
Common Stock. Officers, Directors and greater than 10% shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on a review of the copies of such reports
furnished to the Company and written representations that no other reports
were required, the Company believes that, during 1996, all filing requirements
applicable to its officers, Directors and greater than 10% beneficial owners
were complied with.
C. INFORMATION CONCERNING NOMINEES FOR DIRECTORS AND CONTINUING DIRECTORS
The Board of Directors recommends the election as Directors of the
nominees set forth in the table on the following page. All such persons are
currently serving as Directors. Unless authority to vote with respect to the
election of one or more Directors is "WITHHELD", the individuals named as
Proxies will vote to elect as Directors the nominees listed in the table
following. Directors are elected by a plurality of votes cast by the holders
of the Company's Common Stock. "Plurality" means that the individuals who
receive the largest number of votes cast are elected as directors up to the
maximum number of directors to be elected at the Annual Meeting.
Consequently, any shares not voted (whether by abstention, broker non-vote, or
otherwise) have no impact in the election except to the extent the failure to
vote for an individual results in another individual receiving a larger number
of votes. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE NOMINEES FOR
DIRECTORS.
The following table sets forth the names, ages and present occupations of
the nominees for Director of the Company and the Directors continuing in
office. It also sets forth the number of shares and percentage of outstanding
shares of the Company's Common Stock beneficially owned, directly or
indirectly, as of February 24, 1997 by such nominees and continuing Directors
individually, and by such nominees, continuing Directors, and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
NAME [AGE] PRINCIPAL OCCUPATIONS; DIRECTOR TERM SHARES OF Percent-
POSITIONS WITH THE SINCE EXPIRES COMMON age of
COMPANY STOCK Class
BENEFICIALLY
OWNED
(1)
-------------
<S> <C> <C> <C> <C> <C> <C>
C. Vincent Brown [57] * President, Brown, Massey, Evans & 1989 1997 67,638 4.8% (2)
McLeod, Attorneys at Law, P.A.;
Greenville, SC; Chairman,
Summit Financial Corporation
Charles S. Houser [53] * Managing Director, Seruus Capital 1989 1997 27,757 2.0% (3)
Partners, LLC; Greenville, SC
John A. Kuhne [52] * President, Belk-Simpson Co. 1989 1997 22,617 1.6% (4)
Department Stores; Greenville, SC
Vice Chairman,
Summit Financial Corporation
J. Randolph Potter [50] * President & CEO, Summit 1989 1997 47,065 3.3% (5)
Financial Corporation;
Greenville, SC
Ivan E. Block [51] Chairman & CEO, Crown 1989 1998 113,748 8.1% (3)
Metro, Inc.; Greenville, SC
John A. Burgess [56] President & CEO, Southeastern 1993 1998 29,145 2.1% (3)
Products, Inc.; Greenville, SC
J. Earle Furman, Jr. [49] President, Earle Furman & 1989 1998 26,770 1.9% (3)
Associates, Inc.; Greenville, SC
T. Wayne McDonald [57] Physician, Highlands Center for 1989 1998 28,995 2.0% (3)
Women PA; Greenville, SC
John W. Houser [53] President, Piedmont Management of 1989 1999 24,582 1.8% (6)
Fairforest, Inc.; Duncan, SC
Larry A. McKinney [55] President & CEO, ElDeCo, Inc.; 1993 1999 37,687 2.7% (3)
Greenville, SC
David C. Poole [58] President, David C. Poole Co., Inc.; 1989 1999 67,537 4.8% (7)
Greenville, SC
Secretary, Summit Financial
Corporation
George O. Short, Jr. [64] President, George O. Short & 1989 1999 25,839 1.8% (3)
Associates, CPA, PA; Greenville, SC
All Directors and 539,688 38.2% (8)
Executive officers as a
Group (13 persons)
<FN>
* - Nominee for election to Board of Directors for three-year terms expiring in 2000.
(1) - Beneficial owners have sole voting and investment powers with respect to the shares of stock included in the
foregoing table. Certain of these shares are held by corporations or retirement accounts controlled by the
individual reporting.
(2) - Includes exercisable options to purchase 4,630 shares of common stock at from $10.15 - $13.61 granted under
the 1995 Non-Employee Stock Option Plan.
(3) -Includes exercisable options to purchase 2,314 shares of common stock at from $10.15 - $13.61 granted under
the 1995 Non-Employee Stock Option Plan.
(4) - Includes exercisable options to purchase 3,474 shares of common stock at from $10.15 - $13.61 granted under
the 1995 Non-Employee Stock Option Plan. Does not include 23,700 shares held by a related corporation to which Mr.
Kuhne disclaims beneficial ownership.
(5) - Includes exercisable options to purchase 30,156 shares of common stock at from $6.07 - $10.05 granted under
the Incentive Stock Option Plan. Does not include 636 shares held by a related party to which Mr. Potter disclaims
beneficial ownership.
(6) - Includes exercisable options to purchase 2,314 shares of common stock at from $10.15 - $13.61 granted under
the 1995 Non-Employee Stock Option Plan. Does not include 1,004 shares held by related parties to which Mr. John
Houser disclaims beneficial ownership.
(7) - Includes exercisable options to purchase 2,314 shares of common stock at from $10.15 - $13.61 granted under
the 1995 Non-Employee Stock Option Plan. Does not include 254 shares held by a related party to which Mr. Poole
disclaims beneficial ownership.
(8) - Includes exercisable options to purchase 76,485 shares of common stock held by the Directors and executive
officers of the Company.
</TABLE>
As of February 24, 1997, there were no persons (as that term is defined
by the Securities and Exchange Commission), other than Mr. Ivan E. Block, P.O.
Box 5857, Greenville, South Carolina 29606, specified in the foregoing table
of Director information, who are known to the Company to be the beneficial
owners of more than 5% of the Company's common stock.
D. BUSINESS EXPERIENCE OF NOMINEES AND CONTINUING DIRECTORS
C. VINCENT BROWN is an attorney and is president of Brown, Massey, Evans
and McLeod, Attorneys at Law, P.A., in Greenville, South Carolina where he has
practiced tax and corporate law for over 30 years.
CHARLES S. HOUSER is currently Managing Director of Seruus Capital
Partners, LLC. He served as Senior Vice President of LCI International, a
long-distance company, from September 18, 1995 until May 31, 1996. Prior to
that date, he was Chairman and CEO of Corporate Telemanagement Group from its
inception in November 1989 until its sale to LCI International in September
1995.
JOHN A. KUHNE has been with Belk-Simpson Co. Department Stores since
1966. He served as vice president of Belk-Simpson from 1969 until 1983 and
was named its president in 1983.
J. RANDOLPH POTTER is president and chief executive officer of the
Company, Summit National Bank, and Freedom Finance, Inc., both wholly-owned
subsidiaries of the Company. Prior to his joining the Company at its
inception in May 1989, he had 11 years of banking experience with Southern
Bank and Trust Company in Greenville, South Carolina.
IVAN E. BLOCK has been chairman and CEO of the Crown Metro, Inc. group of
companies, which are engaged in the production and supply of fine organic
chemicals and specialty wood coatings, for over 17 years. Mr. Block is also
president of AXON Aerospace Coatings, Inc.
JOHN A. BURGESS has been president and CEO of Southeastern Products,
Inc., a designer and manufacturer of custom displays and fixtures, since he
founded that company in 1978.
J. EARLE FURMAN, JR. has been a realtor in Greenville, South Carolina,
for over 25 years. He is president of Earle Furman & Associates, Inc., a
commercial and industrial real estate brokerage firm which he formed in 1986.
T. WAYNE MCDONALD is a physician specializing in obstetrics and
gynecology since 1970 in Greenville, South Carolina. He is currently
associated with the Highlands Center for Women, P.A.
JOHN W. HOUSER has been the president of Piedmont Management of
Fairforest, Inc., a consulting firm, since 1981. He is a partner in Piedmont
Brokerage and a partner in Universal Packaging. Both of these companies are
involved in the manufacturing and sales of corrugated boxes.
LARRY A. MCKINNEY is president and CEO of ElDeCo, Inc., an electrical
contracting firm. Mr. McKinney founded the company in 1972.
DAVID C. POOLE has been president of David C. Poole Co., Inc., a dealer
in synthetic fibers and polymers, since 1973.
GEORGE O. SHORT, JR. is president of George O. Short & Associates,
Certified Public Accountants, P.A. and has been active in this practice for
over 30 years.
E. MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held four meetings during 1996.
Each Director attended at least 75% of the Board and Committee meetings held
by the Company except Mr. John A. Burgess, Mr. John W. Houser, and Mr. Charles
S. Houser.
The Board of Directors has a standing Audit Committee comprised of
George O. Short, Jr. (Chairman), John A. Burgess, Charles S. Houser, and John
W. Houser. The Audit Committee has the primary responsibility of (1)
reviewing the audit plan and results of the audit engagement of the
independent public accountants; (2) reviewing the scope and the results of the
Company's procedures relating to internal controls and compliance reviews; (3)
reviewing the Company's consolidated financial statements, reports from
regulatory authorities on their examinations, and reports from external
consultants on various work performed; and (4) recommending the appointment of
the independent accountants. The Audit Committee reports its findings
directly to the Board of Directors. The Audit Committee met three times
during 1996.
The Executive Committee is comprised of C. Vincent Brown (Chairman),
John A. Kuhne (Vice Chairman), David C. Poole (Secretary), J. Randolph Potter
and one additional Director who rotates on a six-month term. During 1996, Mr.
George O. Short, Jr. and Dr. T. Wayne McDonald sat on the Committee for the
six-month positions. The Executive Committee met 21 times during 1996.
At the present time, the Company does not have standing nominating or
compensation committees of the Board of Directors. However, the Executive
Committee performs the functions of the nominating committee and the Executive
Committee, exclusive of Mr. Potter, performs the functions of the Compensation
Committee.
In its capacity as nominating committee, the Executive Committee
oversees the nominations for annual election of Directors. The Bylaws of the
Company provide that any shareholder entitled to vote for the election of
Directors may make nominations for the election of Directors only by giving
written notice to the Company of such nominations at least 30 days prior to
the meeting at which Directors are to be elected.
III. EXECUTIVE OFFICERS AND COMPENSATION
A. EXECUTIVE OFFICERS
Set forth below are the names, ages, titles, and descriptions of business
experience of the executive officers of the Company.
J. RANDOLPH POTTER, age 50, has been President and Chief Executive
Officer of the Company since its incorporation in May 1989. From June 1986
until May 1989, Mr. Potter was vice president of administration and marketing
for IH Services, Inc., a Greenville, South Carolina firm specializing in
industrial maintenance. He served as executive vice president of Southern
Bank and Trust Company in Greenville, South Carolina from 1985 to 1986. Prior
to 1985, he held similar executive positions with Southern Bank and Trust
Company.
BLAISE B. BETTENDORF, age 34, joined the Company in February 1990 as
Chief Financial Officer and Assistant Secretary/Treasurer. Prior to that, she
was with the Greenville, South Carolina office of Price Waterhouse for six
years and held the position of audit manager.
B. REMUNERATION OF EXECUTIVE OFFICERS
The following table sets forth, for the years ended December 31, 1996,
1995 and 1994, the cash compensation paid by the Company and its subsidiaries,
as well as other compensation paid or accrued for each of these years, to the
chief executive officer. Disclosure of compensation information for the other
executive officer is not required.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPEN- COMPENSA-
SATION TION
-------- -----------
NAME AND YEAR SALARY BONUS OTHER (2) (3)
PRINCIPAL POSITION ANNUAL AWARDS ALL OTHER
COMPEN- SECURITIES COMPEN-
SATION UNDERLYING SATION
OPTIONS/
SARS (#)
<S> <C> <C> <C> <C> <C> <C>
J. Randolph Potter, 1996 $165,000 - (1) 21,000 $ 8,656
President/CEO
1995 $152,600 $ 10,000 (1) - $ 2,934
1994 $131,200 $ 20,000 (1) 11,576 $ 2,134
<FN>
(1) - Includes personal use of Company vehicle and other perquisites. Other
annual compensation for all years presented amounted to less than 10% of the
total salary and bonus in any year included above.
(2) - As adjusted for all 5% stock distributions.
(3) - Included in All Other Compensation for 1996 is (i) $7,024 contributed
to the Company 401(k) Plan by the Company on behalf of Mr. Potter to match fiscal
1996 pre-tax deferral contributions; and (ii) $1,632 in premiums paid by the
Company on behalf of Mr. Potter with respect to insurance not generally available
to all Company employees.
</TABLE>
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL POTENTIAL REALIZABLE
GRANTS VALUE AT
ASSUMED
ANNUAL RATES
OF STOCK PRICE
APPRECIATION
FOR OPTION
TERM
NAME AND NUMBER OF % OF TOTAL EXERCISE EXPIRATION 5% ($) 10% ($)
PRINCIPAL POSITION SECURITIES OPTION/SARS OR BASE DATE
UNDERLYING GRANTED TO PRICE
OPTIONS/SARS EMPLOYEES IN ($/SHARE)
GRANTED (#) FISCAL YEAR
<S> <C> <C> <C> <C> <C> <C>
J. Randolph Potter,
President/CEO 21,000 24.6% $ 15.00 12/16/2006 $ 198,000 $ 502,000
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NAME AND NUMBER OF SECURITIES VALUE OF
PRINCIPAL POSITION UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#) FY-END ($) (1)
EXERCISABLE/ EXERCISABLE/
UNEXERCISABLE UNEXERCISABLE
<S> <C> <C>
J. Randolph Potter,
President/CEO 30,157 / 27,945 $ 250,900 / $335,500
<FN>
(1) - "Value" is calculated as the market price of the underlying
securities on December 31, 1996 minus the grant price which ranges from $6.07
- - $15.00 (as adjusted for all 5% stock distributions). The market price has
been determined as the average of the bid and ask price of the Company's stock
as quoted on the NASDAQ Small Cap Market, which was equal to $15.00 as
adjusted for the stock distribution issued February 3, 1997.
</TABLE>
The Company has had its incentive stock option plan in place since 1989
for executive officers and eligible employees. Under the terms of the stock
option plan, options are granted to employees at a price not less than the
fair market value of the shares at the date of grant. Options granted are
exercisable for a period of ten years from the date of grant and become
exercisable at a rate of 20% each year on the first five anniversaries of the
date of grant.
C. EMPLOYEE AGREEMENTS
Mr. Potter has entered into an Employment Agreement (the "Agreement")
with the Company as of his date of hire. The agreement provides for a base
salary, which is subject to annual adjustment. The provisions of the Agreement
are to continue until such time as the officer's employment is terminated as
provided for in the Agreement. The Agreement includes non-compete covenants
following termination and severance payments for a period of three years in
the event employment is terminated following a change in control as defined in
the Agreement. The payments under the severance arrangement would equal three
times Mr. Potter's annual base pay amount (calculated as the average of the
most recent five years annual cash salary and bonus income) to be paid in
three equal annual installments.
D. COMPENSATION COMMITTEE REPORT
Decisions with respect to the compensation of the Company's executive
officers are made by the Executive Committee in its capacity as Compensation
Committee (the "Committee"). During 1996, the following non-employee
Directors served on the Committee: Mr. C. Vincent Brown, Mr. John A. Kuhne,
Dr. T. Wayne McDonald, Mr. David C. Poole, and Mr. George O. Short, JrThe
report of the Committee is presented below.
GENERAL COMPENSATION POLICIES
The Company has no formalized executive compensation policies. However,
in general, the Committee seeks to establish compensation plans and programs
to provide competitive levels of compensation that integrates pay with the
Company's annual and long-term performance goals; rewards above-average
corporate performance; recognizes individual initiative, responsibility and
achievements; and assists the Company in attracting and retaining qualified
executives. The Committee believes that stock ownership by management and
stock-based performance compensation arrangements are beneficial in aligning
managements' and shareholders' interest in the enhancement of shareholder
value.
Senior executives' overall compensation is intended to be consistent with
the compensation paid to executives of financial institutions similar in size
and character to the Company, provided that the Company's performance warrants
the compensation being paid. The Committee has established a compensation
scheme consisting of base salary, short-term incentive compensation in the
form of cash bonuses based on the performance of the Company, and long-term
incentive compensation in the form of stock options that vest over a five-year
period.
EXECUTIVE COMPENSATION
The Company's policy as to compensation of its executive officers,
including the CEO, has to date been based upon level of performance in
relation to the responsibilities and accomplishments incident to the
individual's job description. In determining compensation, the Committee
considered the progress made by the Company in laying a foundation for future
revenue enhancements, the significant income improvements, growth of the
Company, and the continued strong quality of the loan portfolio.
Mr. Potter's 1996 compensation as Chief Executive Officer consisted of a
base salary, stock option grants, and matching contributions paid under the
Company's 401(k) plan which are made to all employees on a non-discriminatory
basis. Mr. Potter's base salary was determined at the beginning of the 1996
year and was based in large part on the Company's overall growth and strong
performance during 1995. His salary increased 8.1% from 1995 based on a
subjective determination. Mr. Potter's base salary increase, effective at the
beginning of 1996, was not tied to any specific quantitative or qualitative
measure of the Company's performance, but was based generally on all aspects
of the Company's performance in 1995. The Committee assessed that Mr. Potter
had provided the Company with continued strong leadership in overseeing
corporate expansion for both Summit National Bank, in the form of a new branch
location, and Freedom Finance Inc. with its addition of three new branches.
These moves left the Company well positioned in 1996 for significant increases
in profitability measures. Other performance factors of particular
significance to the Committee in determining Mr. Potter's 1996 salary increase
were the Company's increase in total loans, deposits, and assets of 26%, 47%,
and 38%, respectively, during 1995 and the continued low percentage of
nonperforming assets.
The Committee granted Mr. Potter options to purchase 21,000 shares of the
Company's common stock in December 1996. The granting of these options was
based primarily on the Company's strong performance during 1996 when record
earnings were reported. Net income for 1996 increased 89% from 1995 to exceed
$1 million. Further, during 1996, earning assets increased 18% to leave the
Company well positioned for future increases in net income. Other performance
factors considered in 1996 related to the granting of stock options to Mr.
Potter, were the Company's increase in total loans, deposits, and assets of
36%, 17%, and 17%, respectively, during 1996; the continued high asset quality
as determined by all loan loss and nonperforming asset measures; and the
continued growth and improved profitability of the Company's consumer finance
subsidiary which added two branches in 1996 to end the year with 10 locations.
COMPENSATION COMMITTEE:
C. Vincent Brown
David C. Poole
John A. Kuhne
George O. Short, Jr.
T. Wayne McDonald
E. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, the following persons served on the Compensation Committee:
Mr. C. Vincent Brown, Mr. John A. Kuhne, Dr. T. Wayne McDonald, Mr. David C.
Poole, and Mr. George O. Short, JrMr. Brown, Chairman of the Board, is a
member of the law firm of Brown, Massey, Evans and McLeod, Attorneys at Law,
P.AThis firm serves as general counsel for the Company and its subsidiaries.
This firm receives payment for legal services provided in the normal course of
business.
F. STOCK PERFORMANCE GRAPH
The following table provides the data points for a graphic comparison of
the cumulative total shareholder return (calculated based upon the stock
appreciation) on the Common Stock of the Company for the five year period from
December 31, 1991 through December 31, 1996, as compared with the cumulative
total return on the NASDAQ Market Index and a Company selected peer group over
the same period. All cumulative returns assume an initial investment of $100
in each of the Company's shares, the NASDAQ Market Index and the peer group
and the reinvestment of all dividends.
For informational purposes, a copy of the actual graph was provided to
Assistant Director for Banking at the Securities and Exchange Commission. A
copy of the graph will be provided upon written request to the Company address
included in Section VI below.
<TABLE>
<CAPTION>
Company 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Summit Financial Corp. 100 117.31 161.60 212.19 237.65 271.92
Peer Group Index 100 111.49 137.12 163.65 239.09 282.79
NASDAQ Market Index 100 100.98 121.13 127.17 164.96 204.98
</TABLE>
Note regarding the preceding graph:
The data included in the foregoing graph was prepared by Media General
Financial Services. The peer group selected for the cumulative returns
comparison is publicly traded South Atlantic banks with total assets < $250
million. The following companies included in the comparative data for 1996
which have previously been in the peer group are: Bank of South Carolina;
Bedford Bancshares, Inc.; Carolina Southern Bank; Central & Southern Holdings;
Central Virginia Bankshares; Community Financial Corporation; First Georgia
Holdings; First Patriot Bankshares; James River Bankshares; KS Bancorporation
Inc.; Peoples Bank of North Carolina; Savannah Bancorporation, Inc.; Suburban
Bancshares, Inc.; and West Coast Bancorporation of Florida. Companies which
are new to the peer group in 1996 are: County Bank Chesterfield; First
Bankshares Inc., GA; First Community Banking Services, Inc.; First United
Bancorporation; First West Virginia Bancorporation; FNB Financial Service NC;
Habersham Bancorp.; Merit Holding Corp.; Mid-Atlantic Community Bankgroup;
Piedmont Bancorp, Inc.; and Union Bankshares CorpThe following institutions
which were prevoiusly in the peer group are no longer includable: First
Financial Bancorporation Inc.; FB&T Financial Corporation; and First Family
Financial Corporation.
IV. CERTAIN TRANSACTIONS
Certain of the executive officers, Directors and principal shareholders
of the Company, and members of the immediate family and affiliates of such
persons, have from time to time engaged in banking transactions with the
Company's subsidiary bank and are expected to continue such relationships in
the future. All loans or other extensions of credit made by the Company's
subsidiary bank to such individuals were made in the ordinary course of
business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
unaffiliated third parties and did not involve more than the normal risk of
collectability or present other unfavorable features.
V. INDEPENDENT PUBLIC ACCOUNTANTS
(ITEM 2. ON THE PROXY)
KPMG Peat Marwick LLP has served as the independent accountants of the
Company since its organization in 1989. The Board of Directors of the Company
recommends that the shareholders of the Company ratify the appointment of KPMG
Peat Marwick LLP as the Company's independent accountants for the fiscal year
ending December 31, 1997. Representatives of KPMG Peat Marwick LLP are
expected to be present at the Annual Meeting and will be available to respond
to appropriate questions and will have the opportunity to make a statement if
they desire to do so. Approval of this proposal requires the affirmative vote
of a majority of the shares present or represented at the Annual Meeting.
Consequently, abstentions (whether by broker non-vote or otherwise) on the
proposal will have the same effect as a negative vote. If the shareholders do
not ratify the appointment of KPMG Peat Marwick, the Board of Directors will
consider a change in auditors for 1998. THE BOARD UNANIMOUSLY RECOMMENDS A
VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP.
VI. FINANCIAL INFORMATION
A copy of the Company's 1996 Annual Report to Shareholders is enclosed
with this Proxy Statement. SHAREHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF
THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION (FORM
10-K) BY SUBMITTING A WRITTEN REQUEST TO: Summit Financial Corporation, Blaise
B. Bettendorf, Chief Financial Office, Post Office Box 1087, Greenville, South
Carolina 29602
VII. OTHER MATTERS
The Board of Directors and management of the Company knows of no matters
other than those stated above that are to be brought before the 1997 Annual
Meeting. However, if any other matter should be presented for consideration
and voting at the 1997 Annual Meeting, it is the intention of the persons
named in the enclosed form of Proxy to vote the Proxy in accordance with their
judgment of what is in the best interest of the Company.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ J. Randolph Potter
J. RANDOLPH POTTER
PRESIDENT & CHIEF EXECUTIVE OFFICER
March 12, 1997
Greenville, South Carolina
<PAGE>
APPENDIX -- FORM OF PROXY
PROXY
SUMMIT FINANCIAL CORPORATION
937 No. Pleasantburg Drive
Post Office Box 1087
Greenville, South Carolina 29602
(864) 242-2265
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS IN CONNECTION WITH the
Annual Meeting of the Shareholders of SUMMIT FINANCIAL CORPORATION (the
"Company"). The undersigned hereby appoints Blaise B. Bettendorf and James B.
Schwiers, or either of them, as Proxies of the undersigned, with full power of
substitution to vote, as designated on the reverse side of this proxy, the
number of shares of common stock of the Company held of record by the
undersigned on February 24, 1997 on the proposals set forth on the reverse and
described in the accompanying proxy statement at the Annual Meeting of
Shareholders of the Company to be held on Wednesday, April 16, 1997, at 10:00
a.m. at the Greenville Chamber of Commerce Board Room, 24 Cleveland Street,
Greenville, South Carolina.
THIS PROXY WILL BE VOTED AS DIRECTED. IF YOU EXECUTE AND RETURN THIS PROXY
BUT DO NOT SPECIFY OTHERWISE, THIS PROXY WILL BE VOTED FOR ALL OF THE
NOMINEES, FOR PROPOSAL 2 LISTED ON THE REVERSE, AND ON ANY OTHER MATTER THAT
MAY PROPERLY COME BEFORE THE MEETING. THIS PROXY IS REVOCABLE PRIOR TO ITS
EXERCISE.
_
___________________
(1) To elect four directors to the Board of Directors for terms of three
years and thereafter until their successors are duly elected and qualified;
FOR ALL NOMINEES (except as indicated to the contrary below) [ ]
WITHHOLD AUTHORITY to vote for nominees listed below [ ]
NOMINEES: C. Vincent Brown, Charles S. Houser, John A. Kuhne, J. Randolph
Potter
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that person's name(s) below.
(2) To ratify the appointment of KPMG Peat Marwick LLP as independent
accountants for the Company for the fiscal year ending December 31, 1997;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) To transact such other business as may properly come before the Annual
Meeting of any adjournment thereof.
Only those holders of record of the Common Stock of the Company at the close
of business on February 24, 1997, are entitled to notice of and the vote at
the Annual Meeting or any adjournment thereof.
A Proxy Statement is enclosed herewith. Please sign, date and return this
Proxy promptly in the enclosed envelope. IF YOU ATTEND THE MEETING YOU MAY,
IF YOU WISH, WITHDRAW YOUR PROXY AND VOTE IN PERSON.
Signature: Date:
Signature (if held jointly): Date:
NOTE: Your signature should correspond with your name as it appears hereon.
Joint owners should each sign. When signing for a corporation or partnership
or an agent, attorney, executor, administrator, trustee, or guardian, please
set forth full title as it appears hereon.
