<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Virginia Commonwealth 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)(4) 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.
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<PAGE>
VIRGINIA COMMONWEALTH FINANCIAL CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 10, 2000
To Our Stockholders:
The Annual Meeting of Stockholders of Virginia Commonwealth Financial
Corporation will be held at the Lake of the Woods Clubhouse, Locust Grove,
Virginia, on Wednesday, May 10, 2000 at 3:00 p.m. for the following purposes:
1. To elect three (3) directors to serve until the 2003 Annual Meeting of
Stockholders, one (1) director to serve until the 2001 annual meeting,
one (1) director to serve until the 2002 annual meeting, or until
their successors are elected and qualified;
2. To ratify the appointment of Yount, Hyde & Barbour, P.C., as external
auditors for the fiscal year ending December 31, 2000; and
3. To transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on February 25, 2000, will
be entitled to notice of, and to vote at, the Annual Meeting and any
adjournments thereof.
By Order of the Board of Directors,
/s/ Edward V. Allison, Jr.
--------------------------
Edward V. Allison, Jr.
Secretary
February 28, 2000
Please sign, date, and mail the enclosed proxy card promptly. No postage is
required if the return envelope is used and mailed in the United States. If you
attend the meeting, you may, if you desire, revoke your proxy and vote in
person.
<PAGE>
VIRGINIA COMMONWEALTH FINANCIAL CORPORATION
102 South Main Street
Post Office Box 71
Culpeper, Virginia 22701
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PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 2000
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GENERAL INFORMATION
The enclosed proxy is solicited by the Board of Directors of Virginia
Commonwealth Financial Corporation (the "Company") for the Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held at the Lake of the
Woods Clubhouse, Locust Grove, Virginia on May 10, 2000, at 3:00 p.m., for the
purposes set forth in the accompanying Notice of Annual Meeting. The
approximate mailing date of this Proxy Statement and accompanying proxy is March
17, 2000.
Revocation and Voting of Proxies
Execution of a proxy will not affect a Stockholder's right to attend the
Annual Meeting and to vote in person. Any Stockholder who has executed and
returned a proxy may revoke it at any time before the proxy is exercised by
filing an instrument effecting such revocation or a duly exercised proxy bearing
a later date with the Company at the above address. Stockholders also may
revoke their proxies by attending the Annual Meeting and voting in person.
Proxies will extend to, and will be voted at, any adjourned session of the
Annual Meeting.
Voting Rights of Stockholders
Only stockholders of record at the close of business on February 25, 2000
are entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. As of the close of business on the record date, 2,356,730 shares of
Company common stock, par value of $2.50 per share, were outstanding and
entitled to vote at the meeting. The Company has no other class of stock
outstanding.
Each share of Company common stock is entitled to one vote for as many
persons as there are directors to be elected at the Annual Meeting and one vote
for all other matters voted on at the Annual Meeting. Shares of Company common
stock are not entitled to cumulative voting rights. The presence, in person or
by proxy, of a majority of the votes entitled to be cast will constitute a
quorum for the transaction of business at the Annual Meeting.
<PAGE>
Solicitation of Proxies
The expenses of soliciting proxies will be borne by the Company. Proxies
are being solicited by mail, and also may be solicited by directors, officers,
employees and agents of the Company in person, by telephone, or by mail.
Officers, directors and employees of the Company will not receive special
compensation for their solicitation activities. The Company may reimburse
banks, brokerage firms, and other custodians, nominees, and fiduciaries for
their reasonable expenses in sending proxy materials to beneficial owners of
Company common stock.
Principal Stockholders
As of February 25, 2000, no person was known to the Company to beneficially
own 5% or more of the outstanding shares of Company common stock.
Virginia Commonwealth Trust Company (VCTC), a wholly-owned subsidiary of
the Company, holds as trustee of various trust accounts a total of 211,438
shares (or approximately 8.9%) of Company common stock. Section 13.1-662E of
the Virginia Code prohibits VCTC from voting these shares at the Annual Meeting
unless a co-fiduciary is appointed for the sole purpose of voting such shares.
As of February 25, 2000, the directors and executive officers of the
Company as a group beneficially owned 112,130 shares (or approximately 4.8%) of
Company common stock.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided unto three classes of
directors (Class I, Class II and Class III). In accordance with the provisions
of the Agreement and Plan of Reorganization dated September 15, 1999, between
the Company and Caroline Savings Bank, pursuant to which Caroline Savings Bank
became a wholly-owned subsidiary of the Company (the "Affiliation Agreement"),
the Board of Directors of the Company was increased from eight to ten directors
and William R. Southworth and E. Page Butler, two directors of Caroline Savings
Bank, were added as a Class II and Class I director, respectively.
The term of office for the Class III directors will expire at the Annual
Meeting. The first three persons in the table below all of whom currently serve
as directors of the Company, will be nominated to serve as Class III directors.
In addition, and in accordance with the Affiliation Agreement, Mr. Southworth
and Mr. Butler will be nominated to serve as a Class II and Class I director,
respectively. If elected, the Class III directors will serve for a term of
three years until the 2003 Annual Meeting, or until their successors are duly
elected and qualify, Mr. Southworth will serve a term of one year until the 2001
Annual Meeting, and Mr. Butler will serve a term of two years until the 2002
Annual Meeting, or until their respective successors are duly elected and
qualify.
The persons named in the proxy will vote for the election of the nominees
named below unless authority is withheld. If any of the persons named below is
unavailable to serve for any reason, an event which the Board of Directors does
not anticipate, proxies will be voted for the remaining nominees and such other
person or persons as the Board of Directors may designate. In the alternative,
the Board may reduce the size of a class of directors to the number of remaining
nominees, if any, for whom the proxies will be voted.
<PAGE>
The following table sets forth certain information concerning the nominees
for election at the Annual Meeting as directors, as well as certain information
about the remaining Class I and Class II directors, who will continue in office
after the Annual Meeting until the 2002 and 2001 Annual Meetings, respectively.
The Board of Directors recommends that the stockholders vote FOR election of the
Directors who have been nominated.
NOMINEES FOR ELECTION
CLASS III DIRECTORS
(To Serve until 2003 Annual Meeting)
<TABLE>
<CAPTION>
Director Occupation Number and Percentage of
Name and Age Since (2) Past 5 Years Shares Beneficially Owned (3)
- ------------ ------------------------- -----------------------------
<S> <C> <C> <C>
O. R. Barham, Jr. 49 1996 President and Chief Executive
Officer, Second Bank & Trust
President, Virginia
Commonwealth Fin. Corp. 4,866 (1)
Marshall D. Gayheart, Jr. 69 1971 Retired, Proprietor,
Gayheart Drug Store 30,319 (4)(1.3%)
H. Wayne Parrish 56 1988 President and General Manager,
Allmans BBQ; Real Estate Appraiser 8,386 (1)(4)
REMAINING CLASS I DIRECTORS
(Serving until 2002 Annual Meeting)
Gregory L. Fisher 50 1992 President, Eddins Ford, Inc. 466 (1)
Thomas F. Williams, Jr. 61 1988 Partner, Franklin, Williams and
Cowan, Esq. 12,855 (1)(4)
NOMINEE FOR ELECTION AS A CLASS I DIRECTOR
E. Page Butler 52 1996 Owner, Page Butler, Inc. 11,810 (1)(4)
REMAINING CLASS II DIRECTORS
(Serving until 2001 Annual Meeting)
Taylor E. Gore 61 1975 Executive Vice President &
General Manager, Culpeper
Farmers' Co-op, Inc. 6,088 (1)
W. Robert Jebson, Jr. 66 1990 President, Environmental Systems
Service, Ltd. 5,394 (1)(4)
William B. Young 61 1988 Chairman and Chief Executive Officer,
Virginia Commonwealth Fin. Corp. 12,333 (1)(4)
</TABLE>
<PAGE>
NOMINEE FOR ELECTION AS A CLASS II DIRECTOR
<TABLE>
<S> <C> <C> <C>
W.R. Southworth 63 1975 Chief Executive Officer
Caroline Savings Bank 9,520 (1)
All Directors & Executive Officers of the Company as a group (13) 112,130 (4.8%)
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</TABLE>
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(1) Represents less than 1% of the outstanding shares based upon 2,356,730
shares outstanding as of February 25, 2000.
(2) The date above refers to the year in which Messrs. Barham, Gayheart,
Gore, Jebson and Fisher were first elected to the Board of Directors
of Second Bank & Trust, Messrs. Parrish, Williams and Young were first
elected to the Board of Directors of Virginia Heartland Bank, and
Messrs. Butler and Southworth were first elected to the Board of
Directors of Caroline Savings Bank.
(3) For purposes of this table, beneficial ownership has been determined
in accordance with the provisions of Rule 13d-3 of the Securities
Exchange Act of 1934 under which, in general, a person is deemed to be
the beneficial owner of a security if he or she has or shares the
power to vote or direct the voting of the security or the power to
dispose of or direct the disposition of the security, or if he or she
has the right to acquire beneficial ownership of the security within
sixty days.
(4) Includes shares held by spouses and minor children, shares held
jointly or with spouses, and shares held as custodian or trustee: Mr.
Butler, 6,111 shares; Mr. Williams, 5,520 shares; Mr. Jebson, 523
shares; Mr. Young, 9,247 shares; Mr. Gayheart, 1,000 shares; Mr.
Parrish, 230 shares; and Mr. Southworth, 444 shares.
Board of Directors and Committees
The Board of Directors of the Company met monthly in 1999. In 1999, all
directors attended at least 75% of the regular, special, or committee meetings
of the Board of Directors of the Company, which he (she) was required to attend.
There are no family relationships among any of the directors or executive
officers, and none of the directors serves as a director of any other company
with a class of securities registered under Section 12 of the Securities
Exchange Act of 1934.
The Company has a Nominating Committee comprised of Messrs. Gayheart, Gore
and Jebson. The Nominating Committee meets once a year to nominate directors and
recommend officers to serve the Company for the coming year.
The Audit Committee is comprised of Messrs. Barham, Fisher, Gore, Williams
and Young. In addition, Directors Charles K. Gyory of Second Bank & Trust and
Jerry W. Leonard of Virginia Heartland Bank serve on the Audit Committee. The
Audit Committee meets periodically to examine audit reports to determine whether
audit exceptions are being addressed by management and whether internal control
of the Company remains adequate. The Committee met 4 times in 1999.
The Company does not have a standing Personnel Committee. The Board of
Directors review employee benefit plans and ratify the actions of its affiliate
board of directors in determination of the level of compensation for each
officer and director of the affiliates.
<PAGE>
EXECUTIVE COMPENSATION
Compensation of Directors
Directors of the Company receive a monthly fee of $600.00 for serving as
Board of Directors. Directors of the Company are not paid for committee
meetings on which they serve.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as
amended (the Exchange Act), directors and executive officers of the Company are
required to file reports with the Securities and Exchange Commission indicating
their holdings of and transactions in the Company's equity securities. To the
Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, insiders of the Company complied with all filing requirements during
the fiscal year ended December 31, 1998.
Cash Compensation
The officers of the Company do not receive any compensation from the
Company, but are paid by each subsidiary Bank for their service as executive
officers of the respective Bank. During 1999, the only executive officers of the
Company who received annual compensation in excess of $100,000 were Messrs.
Edward V. Allison, Jr., O. R. Barham, Jr. and William B. Young. The following
table summarizes the cash compensation paid to these individuals.
Summary Compensation Table
Annual Compensation (5)
Name of Officer Other Annual
Principal Position Year Salary Bonus Compensation(3)
- ------------------ ---- ------ ----- ---------------
William B. Young (2) 1999 $165,000 $ -0- $ 8,298
1998 $138,800 $ -0- $ 4,342
O.R. Barham, Jr. (1) 1999 $170,000 $ -0- $29,053
1998 $146,668 $ -0- $31,733
1997 $139,800 $10,000 $28,702
Edward V. Allison, Jr. (4) 1999 $104,668 $ -0- $ 5,330
1998 $101,700 $ -0- $ 4,494
(1) Mr. Barham served as President and Chief Executive Officer of Second
National Fin. Corp. during 1997 and 1998; and President of the Company
since October, 1998.
(2) Mr. Young has served as Chairman and Chief Executive Officer of the Company
since October, 1998.
(3) Includes for 2000: $20,553 accrued on behalf of Mr. Barham under the Second
Bank & Trust Profit Sharing, 401k Savings and Employee Stock Ownership
Plans and $8,500 accrued to Mr. Barham under the Second Bank & Trust
Deferred Compensation Plan; includes $5,934 and $3,761 accrued to Mr. Young
and Mr. Allison under the Virginia Heartland Bank Profit Sharing Thrift
Plan.
(4) Mr. Allison has served as Secretary since October, 1998.
(5) No long-term compensation was accrued to these officers in 1999, 1998 or
1997.
<PAGE>
Employment Agreements
Mr. Barham entered into an employment agreement with the Company effective
January 1, 1997. The agreement is general in nature and has few conditions
relative to current or ongoing employment conditions. Mr. Barham's base
compensation under this agreement is determined at the sole discretion of the
Board of Directors, but does include minimum thresholds for each year of the
agreement. The agreement provides that in the event the Company, acting either
through its stockholders or its Directors, approves a change in control event as
defined, Mr. Barham will be entitled to receive from the Company base
compensation and accrued benefits for a twenty-four month period, regardless of
consideration of future employment. In the event the Company terminates Mr.
Barham's employment without cause, or Mr. Barham terminates his employment for
good reason as defined, the Company will pay to Mr. Barham a lump sum within
thirty days of employment termination equal to base compensation for a period of
eighteen months from the date of termination.
As incentive for Mr. Barham to remain in the employ of the Company and as
protection for the Company from Mr. Barham leaving the Company's employ, absent
a sale of the Company as defined, the agreement provides that if the officer
voluntarily leaves the employ of the Bank without there being any such change in
control of the Company, he may not be employed with or work in any office of any
company as an officer, director, employee or partner within a 50 mile radius of
any branch office of the Company without written consent of the Board of
Directors for a period of two years after Mr. Barham's employment. Failure to
comply will result in termination of all benefits remaining to be paid as part
of the agreement.
Mr. Young entered into a two year agreement effective October, 1998 which
provides that while Mr. Young is Chairman of the Company, his combined salary
for service to the Company and Virginia Heartland Bank will be $165,000 per
year. Following such term, Mr. Young will be offered a non-employee consulting
position at $75,000 per year for a two-year period.
If Mr. Young's employment contract is terminated without "cause," as
defined in the contract, Virginia Heartland Bank must pay all compensation
(which includes salary and/or consulting fee, as applicable) due under the
terminated contract for a period not to exceed one year following the
termination. The employment contracts also contain a provision that any
successor to all or substantially all of the business and/or assets of the
Company expressly assume this employment contract. Mr. Young's annual salary and
subsequent consulting fee is fixed. In addition, Mr. Young is not eligible for
merit raises, participation in stock option plans or bonus plans given or
maintained by the Company or either Virginia Heartland or Second Bank & Trust.
The contract provides that if Mr. Young voluntarily terminates the contract, he
shall not directly or indirectly become affiliated with another financial
institution within the Commonwealth of Virginia for a period of two years.
Mr. Allison, as President of Virginia Heartland Bank, and Senior Vice
President and Secretary of the Company, entered into a five year agreement
effective October, 1998. Mr. Allison receives an annual salary subject to annual
review and adjustment by the Board of Directors. If Mr. Allison's employment
contract is terminated without "cause," as defined in the contract, Virginia
Heartland Bank must pay annual salary for a period not to exceed one year
following the termination. The employment contracts also contain a provision
that any successor to all or substantially all of the business and/or assets of
the Company expressly assume this employment contract. The contract provides
that if Mr. Allison voluntarily terminates the contract, he shall not directly
or indirectly become affiliated with another financial institution within the
Commonwealth of Virginia for a period of two years.
William R. Southworth, a nominee for director, serves as President and
Chief Executive Officer of Caroline Savings Bank pursuant to an employment and
consultation agreement, which provides for him receiving a salary of $85,000
through June 30, 2001.
<PAGE>
Employee Benefit Plans
The Company and its two banking subsidiaries, Second Bank & Trust and
Virginia Heartland Bank, maintain several tax qualified and non-qualified
employee benefit plans for employees of the two Banks, which benefit plans are
described below.
Company Plans
The Company has a noncontributory pension plan which conforms to the
Employee Retirement Income Security Act of 1974 (ERISA). The amount of benefits
payable under the plan is determined by an employee's period of credited
service. The amount of normal retirement benefit will be determined based on a
Pension Equity Credit formula. The employee receives credits based on their age
and years of service. The plan provides for early retirement for participants
with five years of service and the attainment of age 55. A participant who
terminates employment with 2 or more years of service will be entitled to a
benefit. The benefits are payable in single or joint/survivor annuities as well
as a lump sum payment upon retirement or separation of service.
The following table shows the estimated annual benefits payable upon
retirement based on specified remuneration and years of credited service
classifications, assuming continuation of the present plan and retirement on
January 1, 2000, at age 65 (normal retirement date):
ESTIMATED ANNUAL PENSION BASED ON AVERAGE COMPENSATION
AVERAGE 10 YEARS 15 YEARS 20 YEARS 25 YEARS
COMPENSATION OF SERVICE OF SERVICE OF SERVICE OF SERVICE
------------ ---------- ---------- ---------- ----------
$ 10,000 $ 1,000 $ 1,500 $ 2,000 $ 2,500
25,000 3,625 5,438 7,250 9,063
50,000 8,000 12,000 16,000 20,000
75,000 12,375 18,563 24,750 30,938
100,000 16,750 25,125 33,500 41,875
125,000 21,125 31,688 42,250 52,813
150,000 25,500 38,250 51,000 63,375
175,000 29,875 44,813 59,750 74,688
200,000 34,250 51,375 68,500 85,625
Mr. Barham will have an estimated 24 years of credited service at normal
retirement age.
The Company has established a 401(k) Savings Plan for all affiliates
effective January 1, 2000. The plan's primary purpose is to allow employees to
save for retirement on a pre-tax basis. The plan provides for matching
contributions by the Bank equal to 50% of the first 6% of salary reduction
contributions made by the employee. Second Bank & Trust made a matched
contribution of $ 62,973; and Virginia Heartland Bank made a matched
contribution of $13,774 and discretionary contribution of $47,000 to their
respective individual plans in 1999. The plan also provides for discretionary
contributions to be made by the Company and allocated to participant accounts in
proportion to the participant's compensation.
Second Bank & Trust Plans
Second Bank & Trust has a split dollar life insurance plan that is offered
to certain bank officers. The Bank advances a portion of the premium, which will
be reimbursed by the insured officer upon the termination of his employment or
death. In 1999, $1,931 was advanced to Mr. Barham under this plan.
<PAGE>
The Bank established an Employee Stock Ownership Plan ("ESOP") under
section 401(e) of the Internal Revenue Code as of January 1, 1984. The plan's
primary purpose is to enable participating employees to share in the growth and
prosperity of the Bank and the Company by allowing employees to acquire Company
common stock. The Bank contributed $58,338 to the plan in 1999. Funds
contributed by the Bank to the plan are allocated to participants in the plan in
the ratio which the compensation of each participant bears to the total
compensation of all the participants. Effective January 1, 2000 the ESOP plan
assets were frozen and no future Company contributions are anticipated.
Effective January 1, 1997, Second Bank & Trust adopted a non-qualified
Executive Deferred Compensation Plan. Pursuant to the plan, Mr. Barham and any
other employees of the Bank selected by the Board of Directors may defer receipt
of a certain amount of pre-tax income and cash incentive compensation, plus a
Bank percentage matching contribution of the deferred amount, for a period of no
less than three years or until retirement, subject to termination of employment
or certain other events, including an imminent change in control. The Bank's
matching contribution for Mr. Barham is 5% of his base salary and as determined
from time to time by the Board for other executives. The participants must pay
taxes on the deferred payments when received.
The Bank has a profit sharing plan under which employees of the Bank
receive compensation directly related to the profitability of the Bank.
Compensation under the plan is calculated and approved by the Board of Directors
of the Bank. In 1999, the Bank contributed $219,000 to the plan.
Virginia Heartland Plans
Virginia Heartland Bank has entered into supplemental retirement agreements
with the Bank's Chairman and President which provide benefits payable over
fifteen years to begin at age sixty and sixty-five, respectively. The agreement
with Mr. Young and Mr. Allison calls for Virginia Heartland Bank to pay each
$45,000 for fifteen years upon retirement. At December 31, 1999, $552,967 has
been accrued under these contracts, and this liability is reflected in the
consolidated financial statements. In 1999, $39,048 was accrued to Messrs. Young
and Allison under this plan.
The Bank is the owner and beneficiary of whole life insurance policies on
the lives of Messrs. Young and Allison. If the Chairman or President decease
during their employment, the Bank shall pay to their designated beneficiaries or
estate $75,000 and $60,000, respectively, per year till retirement date, and
thereafter $45,000 for both Messrs. Young and Allison for a period of fifteen
years. In the event that this death benefit should become payable, such benefit
shall be in lieu of all supplemental retirement accruals provided to the date of
death.
Transactions with Directors and Officers
As of December 31, 1999, borrowing from the Company by all policy-making
officers, directors, their immediate families, and affiliated companies in which
they are Stockholders amounted to approximately $7.014 million. This amount
represented 16.8% of the total equity capital and 1.9% of the total assets of
the Company as of December 31, 1999. These loans were made in the ordinary
course of the Company's business, on the same terms, including interest rates
and collateral, as those prevailing at the same time for comparable transactions
with others, and do not involve greater than normal risks of collectibility. The
Company expects to have similar banking transactions with directors, officers,
principal Stockholders and their associates in the future.
<PAGE>
Report on Executive Compensation
The Board of Directors of each respective subsidiary bank has furnished the
following report on executive compensation.
The Board of Directors has developed and implemented compensation policies
and plans which seek to enhance the profitability of the Company and maximize
stockholder value by aligning closely the financial interests of its senior
officers with those of its stockholders. The policies are designed to provide
competitive levels of compensation to attract and retain corporate officers and
key employees with outstanding abilities and to motivate them to perform to the
full extent of their abilities. The policies provide for both annual salaries
and participation in an incentive compensation plan with all other employees of
the Company.
The Board of Directors approves base salaries at levels competitive with
amounts paid to senior executives with comparable qualifications, experience and
responsibilities after comparing salary ranges of similar sized banks as
provided by the VBA Salary Survey of Virginia Banks and other compensation
surveys. The annual and incentive compensation is also closely tied to the
Company's success in achieving significant financial performance goals.
The Board of Directors approves the Chief Executive's annual salary based
on the compensation data from selected peer banks, their assessment of past
performance and its expectation as to future contributions in leading the
Company. In addition to the internal measures above, the Board of Directors also
reviews the financial performance of the Company in relation to peer group
averages and predetermined goals set by the Board of Directors. A subjective
approach is used in its evaluation of these factors and therefore does not rely
on a formula or weights of specific factors.
The incentive compensation plan, which includes all employees of the
Company, stresses rewards for achievement of financial goals set each year. This
program rewards employees for producing higher income, reducing costs and
providing customers with excellent service. The formula for 1999 as adopted by
the Board of Directors calls for an incentive of an increasing percentage based
on achievement of specified levels of return on assets. The formula defines the
incentive fund available for distribution for the year. The incentive funds are
allocated prorata to all employees based on their salary.
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the Company's Stockholder return with the
return of certain indices for the period beginning December 31, 1994 and for
following five years ending December 31. The Company's stock performance is
compared to the NASDAQ Stock Index and the Carson Medlin Independent Bank Index.
[GRAPH HERE]
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
VIRGINIA COMMONWEALTH
FINANCIAL CORPORATION 100 104 114 194 202 153
INDEPENDENT BANK INDEX 100 122 155 235 246 222
NASDAQ INDEX 100 141 174 213 300 542
During the years 1994-1996, and for the first six months of 1997, shares of
Company Common Stock were not traded on any national or regional exchange, and
trading was generally as a result of private negotiation. Accordingly, this
graph is not necessarily indicative of how the Company's stock would have
performed if it had traded on an exchange for the entire period. On July 14,
1997, the Company's stock began trading on the Nasdaq Small Cap Market, and
currently trades under the trading symbol VCFC. The Nasdaq is operated by The
Nasdaq Stock Market, Inc., a wholly-owned subsidiary of the National Association
of Securities Dealers, Inc.
<PAGE>
PROPOSAL TWO
RATIFICATION OF SELECTION OF ACCOUNTANTS
The Board of Directors has appointed Yount, Hyde & Barbour, P.C., as the
external auditors for the Company for the fiscal year ending December 31, 2000.
Yount, Hyde & Barbour, P.C. rendered audit services to the Company during 1999.
These services consisted primarily of the examination and audit of the financial
statements of the Company, tax reporting assistance, and other audit and
accounting matters. Representatives of Yount, Hyde & Barbour, P.C. will have the
opportunity to make a statement and to answer questions at the Annual Meeting if
they desire to do so. The Board of Directors recommends that the Stockholders
vote FOR the appointment of Yount, Hyde & Barbour, P.C.
2001 ANNUAL MEETING OF STOCKHOLDERS
The Board of Directors need not include an otherwise appropriate
stockholder proposal in its proxy statement or form of proxy for that meeting
unless the proposal is received by the Company at its main office on or before
December 15, 2000.
ANNUAL REPORTS TO STOCKHOLDERS
The Company's Annual Report for the year ended December 31, 1999, which
includes audited financial statements of the Company prepared in conformity with
generally accepted accounting principles, will be delivered under a separate
mailing. A copy of the Annual Report will be sent to any stockholder upon
request. Requests for additional copies of the Annual Report should be directed
to Jeffrey W. Farrar, CPA, Executive Vice President & Chief Financial Officer,
at 102 South Main Street, P. O. Box 71, Culpeper, Virginia 22701.
OTHER MATTERS
Management knows of no other business to be brought before the Annual
Meeting. Should any other business properly be presented for action at the
meeting, the shares represented by the enclosed proxy will be voted by the
persons named therein in accordance with their best judgment and in the best
interests of the Company.
<PAGE>
REVOCABLE PROXY
VIRGINIA COMMONWEALTH FINANCIAL CORPORATION
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2000
The undersigned Stockholder(s) of Virginia Commonwealth Financial Corporation
(the "Holding Company") hereby appoints Thomas F. Williams, Jr., William B.
Young and Taylor E. Gore, with full power to act alone and full power of
substitution each, as proxies of the undersigned with authority to vote in the
name and on behalf of the undersigned at the Annual Meeting of Stockholders of
the Holding Company to be held at the Lake of the Woods Clubhouse, Locust Grove,
Virginia, on Wednesday, May 10, 2000 at 3:00 p.m., or at any adjournment
thereof, on the following matters:
With- For All
For hold Except
1. To elect three (3) directors to serve
until the 2003 Annual Meeting of [_] [_] [_]
Stockholders, one (1) director to serve
until the 2001 Annual Meeting and one (1) director to serve until the
2002 Annual Meeting or until their successors are elected and qualified.
(CUMULATIVE VOTING IS NOT PERMITTED)
O.R. Barham, Jr. H. Wayne Parrish
E. Page Butler W.R. Southworth
Marshall D. Gayheart, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
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For Against Abstain
2. To ratify the appointment of Yount,
Hyde & Barbour, P.C. as external [_] [_] [_]
auditors for the fiscal year ending
December 31, 2000.
3. To transact such other business as may properly come before the meeting.
When properly signed proxy will be voted in the manner directed by the
undersigned. If no direction is given, this proxy will be voted FOR Items (1)
and (2).
PLEASE CHECK BOX IF YOU PLAN TO ATTEND ------------------------------ [_]
THE MEETING.
Please be sure to sign and date --------------------------------------------
this Proxy in the box below. Date
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- -------Stockholder sign above----------------Co-holder (if any) sign above------
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Detach above card, sign, date and mail in postage paid envelope provided.
VIRGINIA COMMONWEALTH FINANCIAL CORPORATION
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By signing this proxy, the undersigned acknowledges that he or she has
received the Holding Company's Proxy Statement dated February 28, 2000.
NOTE: Joint owners should each sign. When signing as attorney, executor,
administrator or guardian, please give full title as such. If signer is a
corporation, please sign with the full corporate name by duly authorized
officer.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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