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
TRIANGLE BANCORP, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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TRIANGLE BANCORP, INC.
4300 GLENWOOD AVENUE
RALEIGH, NORTH CAROLINA 27612
(919) 881-0455
------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 1999
NOTICE is hereby given that the Annual Meeting of Shareholders of Triangle
Bancorp, Inc. (the "Corporation") will be held as follows:
PLACE: North Raleigh Hilton
3415 Wake Forest Road
Raleigh, North Carolina
DATE: Tuesday, April 27, 1999
TIME: 10:00 A.M.
THE PURPOSES OF THE ANNUAL MEETING ARE:
1. To elect 8 members of the Board of Directors.
2. To consider and act upon a proposal to ratify the appointment of
PricewaterhouseCoopers LLP as independent public accountants of the
Corporation for 1999.
3. To consider and act on any other matters that may properly come before
the Annual Meeting.
The record date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting has been set as of the close of business on March
5, 1999.
EVEN IF YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE REQUESTED TO
MARK, DATE AND SIGN THE ENCLOSED APPOINTMENT OF PROXY AND RETURN IT IN THE
ENCLOSED ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR
APPOINTMENT OF PROXY AND VOTE YOUR SHARES IN PERSON.
Sincerely,
/s/ Susan C. Gilbert
---------------------------
Susan C. Gilbert, Secretary
March 18, 1999
<PAGE>
TRIANGLE BANCORP, INC.
4300 GLENWOOD AVENUE
RALEIGH, NORTH CAROLINA 27612
PROXY STATEMENT
MAILING DATE: ON OR ABOUT MARCH 22, 1999
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 1999
GENERAL
This Proxy Statement is being distributed in connection with the
solicitation by the Board of Directors of Triangle Bancorp, Inc. (the
"Corporation") of appointments of proxy in the form enclosed herewith for the
1999 Annual Meeting of Shareholders of the Corporation and any adjournments
thereof. The meeting will be held Tuesday, April 27, 1999, beginning at 10:00
A.M., at the North Raleigh Hilton, 3415 Wake Forest Road, Raleigh, North
Carolina.
VOTING OF APPOINTMENTS OF PROXIES; REVOCATION
Persons named in the enclosed appointment of proxy as proxies for
shareholders at the Annual Meeting are Steven R. Ogburn, Debra L. Lee and Edward
O. Wessell. Shares represented by each appointment of proxy which is properly
executed, returned and not revoked, will be voted in accordance with the
directions contained therein. If no directions are given, those shares will be
voted "FOR" the election of each of the 8 nominees for director named in
Proposal 1 below and "FOR" each of the other proposals described herein. If, at
or before the time of the Annual Meeting, any nominee named in Proposal 1 has
become unavailable for any reason, the proxies will be authorized to vote for a
substitute nominee. On such other matters as may properly come before the
meeting, the proxies will be authorized to vote shares represented by
appointments of proxy in accordance with their best judgment.
A shareholder may revoke an appointment of proxy at any time before the
shares represented by it have been voted by filing with Susan C. Gilbert,
Secretary of the Corporation, an instrument revoking it or a properly executed
appointment of proxy bearing a later date, or by attending the Annual Meeting
and announcing his or her intention to vote in person.
EXPENSES OF SOLICITATION
The Corporation will pay the cost of preparing, assembling and mailing
this Proxy Statement and other proxy solicitation expenses. In addition to the
use of the mail, appointments of proxy may be solicited in person or by
telephone by officers, directors or employees of the Corporation and its
subsidiaries without additional compensation.
RECORD DATE
The Board of Directors has set March 5, 1999, as the record date (the
"Record Date") for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting. Only shareholders of record on that date will be
entitled to vote at the Annual Meeting.
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VOTING SECURITIES
The voting securities of the Corporation are the shares of its no par
value common stock (the "Common Stock"), of which 50,000,000 shares were
authorized and 25,213,945 shares were outstanding on the Record Date. As of the
Record Date, there were approximately 8,000 holders of record of the
Corporation's Common Stock.
VOTING PROCEDURES; VOTES REQUIRED FOR APPROVAL
At the Annual Meeting, each shareholder will be entitled to cast one
vote for each share of Common Stock held of record on the Record Date for each
matter submitted for voting and, in the election of directors, for each director
to be elected. In accordance with North Carolina law, shareholders are not
entitled to vote cumulatively in the election of directors. In the case of all
Proposals, abstentions and broker nonvotes will have no effect as the vote is
determined only by shares actually voted, not by shares outstanding.
In the case of Proposal 1 below, the 8 directors receiving the greatest
number of votes shall be elected.
In the case of Proposal 2 below, for such proposal to be approved, the
number of votes cast for approval must exceed the number of votes cast against
the proposal.
BENEFICIAL OWNERSHIP OF VOTING SECURITIES
There are no persons who were known to management of the Corporation to
beneficially own more than 5% of the Corporation's Common Stock as of the Record
Date.
Set forth below is information as of March 2, 1999, regarding the
beneficial ownership of the Corporation's Common Stock by its current directors,
and certain named executive officers individually, and by all current directors
and executive officers of the Corporation as a group.
AMOUNT AND NATURE
NAME OF OF BENEFICIAL OWNERSHIP PERCENT OF
BENEFICIAL OWNER OF STOCK (1) CLASS (2)
- ----------------- ------------------------ --------
Carole S. Anders 45,990 0.18%
Charles H. Ashford, Jr. 41,033 0.16
John A. Barker 138,550 0.55
Edwin B. Borden 40,928 0.16
Robert E. Branch 34,666 0.14
Robert E. Bryan, Jr. 32,552 0.13
David T. Clancy 137,609 0.55
N. Leo Daughtry 99,240 0.39
Willie S. Edwards 45,862 0.18
James P. Godwin, Sr. 198,498 0.79
Robert L. Guthrie 61,210 0.24
B. W. Harris, III 75,876 0.30
John B. Harris, Jr. 55,194 0.22
George W. Holt 123,628 0.49
Earl Johnson, Jr. 76,695 0.32
Debra L. Lee 81,237 0.32
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AMOUNT AND NATURE
NAME OF OF BENEFICIAL OWNERSHIP PERCENT OF
BENEFICIAL OWNER OF STOCK (1) CLASS (2)
- ----------------- ------------------------ --------
Michael A. Maxwell 24,941 0.10
Wendell H. Murphy 60,143 0.24
Steven R. Ogburn 64,393 0.26
Michael S. Patterson 194,476 0.77
Patrick H. Pope 115,024(3) 0.46
William R. Pope 75,377 0.30
Beverly B. Poston 4,874 0.02
Edythe M. Poyner 54,969 0.22
Billy N. Quick, Sr. (4) 83,762 0.33
J. Dal Snipes 53,241 0.21
Charles J. Stewart 144,816 0.57
N. Johnson Tilghman 118,768(3) 0.47
Edward O. Wessell 44,407 0.18
Sydnor M. White, Jr. 73,243 0.29
J. Blount Williams 71,877 0.29
------- ----
All Executive Officers 2,430,890 9.48%
and Directors as a
Group (31 persons)
(1) Each director and executive officer has sole voting and investment power
over the issued and outstanding shares beneficially owned by such
individual, except for the following shares over which the directors and
executive officers indicated, and the group, share voting and/or investment
power: Ms. Anders - 1,000 shares; Dr. Ashford - 14,100 shares; Mr. Branch -
2,311 shares; Mr. Clancy - 112,720 shares; Mr. Daughtry - 600 shares; Mr.
Edwards - 492 shares; Mr. Guthrie - 16,908 shares; Mr. B. W. Harris, III -
29,740 shares; Mr. John B. Harris, Jr. - 2,806 shares; Mr. Holt - 43,104
shares; Mr. Johnson - 34,944 shares; Ms. Lee - 2,250 shares; Mr. Maxwell -
20,470 shares; Mr. Murphy - 42,735 shares; Mr. Patterson - 5,901 shares; Mr.
Ogburn - 2,317 shares; Mr. Patrick H. Pope - 45,968 shares; Mr. William R.
Pope - 737 shares; Ms. Poyner - 39,649 shares; Mr. Quick - 2,531 shares; Mr.
Snipes - 22,364 shares; Mr. Tilghman - 69,237 shares; Mr. Wessell - 1,621
shares; Mr. White - 38,086 shares; Mr. Williams - 41,221 shares; and members
of the group - 593,812 shares.
This column includes certain shares owned by certain related parties of
directors and executive officers as to which shares those directors and
executive officers have disclaimed beneficial ownership, as follows: Dr.
Ashford - 14,100 shares; Mr. Guthrie - 1,308 shares; Mr. Tilghman - 69,237
shares; and members of the group - 84,645 shares.
This column includes the number of shares for which the director or
executive officer indicated, and the directors and the five current
executive officers of the Corporation as a group, hold options to purchase,
pursuant to the Corporation's 1988 Qualified or Non-Qualified Stock Option
Plans and the 1998 Omnibus Stock Plan, to the extent such options are
vested, and are immediately exercisable as follows: Ms. Anders - 890 shares;
Dr. Ashford - 1,022 shares; Mr. Borden - 6,526 shares; Mr. Branch - 8,067
shares; Mr. Bryan - 4,204 shares; Mr. Clancy - 1,980 shares; Mr. Daughtry -
856 shares; Mr. Edwards - 1,301 shares; Mr. Godwin - 8,106 shares; Mr.
Guthrie - 1,477 shares; Mr. B. W. Harris, III - 9,516 shares; Mr. John B.
Harris, Jr. - 17,321 shares; Mr. Holt - 7,500 shares; Mr. Johnson - 2,245
shares; Ms. Lee - 36,177 shares; Mr. Maxwell - 1,134 shares; Mr. Murphy -
3,255 shares; Mr. Ogburn - 52,144 shares; Mr. Patterson - 116,254 shares;
Mr. Patrick H. Pope - 1,615 shares; Mr. William R. Pope - 1,195 shares; Ms.
Poston - 600 shares; Ms. Poyner - 1,226 shares; Mr. Quick - 43,027 shares;
Mr. Snipes - 8,284 shares; Mr. Stewart - 65,891 shares; Mr. Tilghman -
16,870 shares; Mr. Wessell - 26,534 shares; Mr. White - 1,627 shares; Mr.
Williams - 1,320 shares; and members of the group - 448,164 shares.
3
<PAGE>
(2) Based on a total of 25,206,030 shares actually outstanding as of March 2,
1999, and with respect to each director or executive officer, the shares
that would be outstanding if the director or executive officer exercised his
or her options to purchase shares of Common Stock of the Corporation (to the
extent vested) or, with respect to directors and the five current executive
officers of the Corporation as a group, the shares that would be outstanding
if each such individual exercised his or her options to purchase shares of
the Common Stock (to the extent vested).
(3) Included in the beneficial ownership of Mr. Patrick H. Pope and Mr. Tilghman
are 38,885 shares held by a trust in which both Mr. Pope and Mr. Tilghman
have an interest. These shares are reflected separately in the beneficial
ownership of each individual, but are included only once in the beneficial
ownership shown for the group.
(4) Mr. Quick's term as a director will end at the Annual Meeting.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Directors and executive officers of the Corporation are required by
federal law to file reports with the Securities and Exchange Commission
regarding their initial ownership and the amount of and changes in their
beneficial ownership of the Corporation's Common Stock. Based on the
Corporation's review of reports furnished to it, all such reports were timely
filed except as follows: William R. Pope inadvertently failed to report the
purchase of 100 shares on January 22, 1998 for which the required report was
filed on March 19, 1998.
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors currently consists of 27 individuals. Of those 27
individuals, three were elected to the Board in 1998 as a result of acquisitions
made by the Corporation that year. Consequently, the classes of directors no
longer are equal. Further, in accordance with the Corporation's policy,
directors who also are officers of the Corporation or its subsidiaries and who
have been elected to the Board as a result of an acquisition only serve one
term. As a result, Billy N. Quick, Sr., whose term expires at the Annual
Meeting, will not be re-nominated as a director. The Bylaws of the Corporation
provide that directors be divided into three classes, approximately equal in
number, elected to staggered three-year terms. Of the seven directors whose
terms expire at the Annual Meeting, including Mr. Quick, six have been
re-nominated to the Board for three-year terms. The Board has set the number of
directors of the Corporation at 26. In order to evenly stagger the terms among
each class of directors as required by the Bylaws, two members whose terms do
not expire until 2000 (Mr. White and Mr. Williams) have been re-nominated for
three-year terms.
DIRECTOR
NAME AND AGE SINCE (1) BUSINESS EXPERIENCE DURING PAST FIVE YEARS
------------ --------- ------------------------------------------
THREE-YEAR TERMS
----------------
David T. Clancy 1988 President, Clancy & Theys Construction
(50) Company, Raleigh, North Carolina
Willie S. Edwards 1995 Retired; formerly General Partner in L
(66) & B Associates, Rocky Mount, North
Carolina (wholesale liquor distributor)
Robert L. Guthrie 1988 President and Chief Executive Officer,
(63) Asura Corporation, Raleigh, North
Carolina (insurance agency)
John B. Harris, Jr. 1991 Retired; formerly President, Winston
(69) Hospitality, Inc. (hotel management)
since 1991; formerly Chairman of the
Board, Triangle Bank 1991 to January
1997
Earl Johnson, Jr. 1991 Chairman, Southern Industrial
(67) Constructors, Inc., Raleigh,
North Carolina
William R. Pope 1987 President and Chairman of the Board,
(63) Pope Enterprises, Inc. (operator of
True-Value Hardware and Variety Stores),
Coats, North Carolina
4
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Sydnor M. White, Jr. 1991 President, Graham Realty, Inc., Raleigh,
(50) North Carolina since 1998; previously
President, CJS, Inc. (automotive parts
distributor), Raleigh, North Carolina
J. Blount Williams 1988 President, Alfred Williams & Co.,
(45) Raleigh, North Carolina (office
furniture and supplies)
- ----------------------
(1) Refers to the year in which a person first was elected or became a
director of the Corporation or, if prior to the Corporation's holding
company reorganization in August 1992, the year in which such person
first was elected a director of Triangle Bank, the Corporation's
wholly-owned bank subsidiary.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF
THE 8 NOMINEES NAMED ABOVE.
INCUMBENT DIRECTORS
The Corporation's current Board of Directors includes the following
directors whose terms will continue after the Annual Meeting. Certain
information regarding those directors is set forth in the following table:
<TABLE>
<CAPTION>
<S> <C>
DIRECTOR TERM
NAME AND AGE SINCE (1) BUSINESS EXPERIENCE DURING PAST FIVE YEARS EXPIRES
------------ --------- ------------------------------------------ -------
John A. Barker 1998 Businessman, Rocky Mount, North Carolina; 2000
(47) previously President and Chief Executive
Officer, United Federal Savings Bank
James P. Godwin, Sr. 1995 President, Godwin Manufacturing Co., Inc., 2000
(57) Dunn, North Carolina, and Godwin and Gonzalez
Specialty Equipment, Inc., Puerto Rico (truck
body manufacturers)
B. W. Harris, III 1998 Owner, Harris Harris and Company PLLC (CPA 2000
(60) firm), Durham, North Carolina
George W. Holt 1995 Retired; Executive Vice President, Triangle 2000
(68) Bank from February 1995 to February 1998;
President, Columbus National Bank from 1973
to February 1995
Wendell H. Murphy 1993 President, Murphy Family Farms (swine 2000
(60) production) and Murphy Milling Co. (feed
production), Rose Hill, North Carolina
Michael S. Patterson 1990 Chairman of the Board, Triangle Bancorp, Inc. 2000
(52) and Triangle Bank since February 1997;
President since 1990 and Chief Executive
Officer since 1991, Triangle Bank; President
and Chief Executive Officer, Triangle
Bancorp, Inc. since August 1992; Director of
Bank of Mecklenburg since October 1997
Beverly B. Poston 1999 Executive Vice President and Chief Operating 2000
(47) Officer, Bahakel Communications, Inc.,
Charlotte, North Carolina (television and
radio stations); Director, Bank of
Mecklenburg from 1996 to 1999
J. Dal Snipes 1995 President, Snipes Insurance Service, Inc., 2000
(46) Dunn, North Carolina
5
<PAGE>
DIRECTOR TERM
NAME AND AGE SINCE (1) BUSINESS EXPERIENCE DURING PAST FIVE YEARS EXPIRES
------------ --------- ------------------------------------------ -------
Charles J. Stewart 1998 Executive Vice President, Triangle Bank since 2000
(49) April 1998; previously President and CEO,
Guaranty State Bank
N. Johnson Tilghman 1988 Attorney, Garner, North Carolina since 1998, 2000
(56) formerly partner, Tilghman & Butler, L.L.P.
(attorneys-at-law), Garner, North Carolina
from 1997 to 1998; formerly partner, Pope,
Tilghman & Tart, Dunn, North Carolina from
1972 to 1997
Carole S. Anders 1988 Civic leader, Raleigh, North Carolina 2001
(54)
Charles H. Ashford, 1993 Retired physician; formerly Vice President of 2001
Jr. Medical Affairs, Craven Regional Medical
(63) Authority from 1991 to 1996; previously
surgeon with Coastal Surgical Specialists,
P.A., New Bern, North Carolina
Edwin B. Borden 1993 President, The Borden Manufacturing Company, 2001
(65) Goldsboro, North Carolina (textile
manufacturing); Director of Carolina Power &
Light Company; Director of Jefferson-Pilot
Corporation; Director of Ruddick Corp.;
Director of Winston Hotels
Robert E. Bryan, Jr. 1993 Chairman and Partner, Prime Express, Inc., 2001
(64) Fayetteville, North Carolina (convenience
stores); President, Bryan Oil Co.
N. Leo Daughtry 1988 Attorney, Daughtry, Woodard, Lawrence & 2001
(58) Starling, L.L.P., Smithfield, North Carolina
Michael A. Maxwell 1995 Senior Scientist since November 1995, Branch 2001
(60) Chief from December 1974 to November 1995,
U.S. Environmental Protection Agency,
Research Triangle Park, North Carolina
Patrick H. Pope 1988 Partner, Pope & Tart (attorneys-at-law), 2001
(54) Dunn, North Carolina
Edythe M. Poyner 1988 President, Capital Land Investment Company, 2001
(45) Raleigh, North Carolina
</TABLE>
- ---------------------
(1) Refers to the year in which a person first was elected or became a
director of the Corporation or, if prior to the Corporation's holding
company reorganization in August 1992, the year in which such person
first was elected a director of Triangle Bank, the Corporation's
wholly-owned bank subsidiary.
DIRECTOR RELATIONSHIPS
No director or executive officer is related to another director or
executive officer of the Corporation except for Patrick H. Pope and William R.
Pope, who are third cousins, and Patrick H. Pope and N. Johnson Tilghman who are
brothers-in-law.
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Except for Mr. Borden who is a director of Carolina Power & Light
Company, Jefferson-Pilot Corporation, Winston Hotels and Ruddick Corp., no
director is a director in any company with a class of securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934 (the "Exchange
Act") or subject to the requirements of Section 15(d) of the Exchange Act, or
any company registered as an investment company under the Investment Company Act
of 1940.
DIRECTOR COMPENSATION
BOARD FEES. During 1998, directors who were not employees of the
Corporation or its subsidiaries received an annual retainer of 165 shares of
Common Stock of the Corporation, 52 shares for each Board meeting attended, 22
shares for each committee meeting attended, and each committee chairman received
an additional 15 shares for each meeting attended. In 1999, directors who are
not employees of the Corporation or its subsidiaries will receive an annual
retainer of 130 shares of Common Stock, 75 shares per Board meeting attended, 65
shares per Executive Committee meeting attended, and 45 shares for any other
committee meeting attended, and each committee chairman will receive an
additional 10 shares for each meeting attended.
DIRECTORS' DEFERRED COMPENSATION PLANS. The Corporation maintains two
deferred compensation plans for outside directors. In 1989, the Corporation
adopted a Deferred Compensation Plan (the "1989 Plan") for outside directors for
cash compensation paid to directors; the 1989 Plan was in operation through
1994. Since January 1, 1995, directors of the Corporation are paid in shares of
Common Stock. Only individuals who were members of the Board of Directors but
who were not employees of the Corporation were eligible to participate in the
1989 Plan. Directors who elected to participate in the 1989 Plan could elect to
defer a minimum of $500 of their compensation for their service as such pursuant
to the 1989 Plan during each year they participated and could elect to defer up
to the full amount of directors' compensation they would receive in $100
increments. Deferred compensation was converted into stock units by dividing the
compensation deferred under the 1989 Plan by the then current value of a share
of the Corporation's Common Stock. Dividends paid to holders of the
Corporation's Common Stock are credited to holders of stock units and are
converted into additional stock units on the same basis as compensation deferred
under the 1989 Plan. Within 60 days after the death, disability or retirement of
a director, the director or his or her estate is entitled to be issued one share
of the Corporation's Common Stock for each stock unit and cash for fractional
stock units. As of December 31, 1998, 69,051 stock units were outstanding under
the 1989 Plan.
The Corporation also maintains the 1997 Deferred Compensation Plan (the
"1997 Plan") pursuant to which directors who are not employees of the
Corporation may elect to defer all or a portion of their compensation for their
service as such during each year in which they participate in the 1997 Plan.
Directors of the Corporation are paid in shares of the Corporation's Common
Stock which, if deferred pursuant to the 1997 Plan, are credited to an account
in the director's name. Dividends paid to holders of the Corporation's Common
Stock are credited to the account of each director participating in the 1997
Plan. Within 60 days after the death, disability or retirement of a director,
the director or his or her estate is entitled to be issued the shares of Common
Stock held in his or her account and cash for any fractional shares. As of
December 31, 1998, 29,287 shares of Common Stock were credited under the 1997
Plan.
1988 NON-QUALIFIED STOCK OPTION PLAN. The Corporation has adopted and
the shareholders have approved the 1988 Non-Qualified Stock Option Plan (the
"Non-Qualified Plan") pursuant to which options on 582,003 shares of the
Corporation's Common Stock were available for issuance to members of the
Corporation's Board of Directors and to members of Boards of Directors and
members of advisory boards of directors of any subsidiary of the Corporation.
The duration of the options is ten years from the date of grant. As of December
31, 1998, after giving effect to the exercise and forfeiture of options, options
on 140,376 shares of Common Stock were issued and outstanding under the
Non-Qualified Plan. The Non-Qualified Plan expired on January 4, 1998 and no
more options may be issued pursuant to the Non-Qualified Plan.
Pursuant to the terms of the Non-Qualified Plan: (i) the option price
may not be less than the fair market value of the Corporation's Common Stock on
the date of grant of the options; and (ii) options vest 20% per year from the
date of grant and are exercisable as they vest. If the option holder ceases to
perform services as a director or advisory director of the Corporation or its
subsidiaries for any reason during the five-year period, he or she has one year
from such cessation to exercise his or her vested options.
1998 OMNIBUS STOCK PLAN. The Corporation has adopted and the
shareholders have approved the 1998 Omnibus Stock Plan (the "Omnibus Plan")
pursuant to which 1,500,000 shares of the Corporation's Common Stock
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are available for issuance in the form of stock options, restricted stock or
other awards, to members of the Corporation's Board of Directors, members of the
Boards of Directors and members of advisory boards of any subsidiary of the
Corporation, and employees of any subsidiary of the Corporation. As of December
31, 1998, after giving effect to the exercise and forfeiture of options, options
covering a total of 250,932 shares of Common Stock were issued and outstanding
with options on 49,339 shares being issued to directors of the Corporation.
Pursuant to the terms of the Omnibus Plan: (i) the option price may not be less
than the fair market value of the Corporation's Common Stock on the date of
grant of the options; and (ii) options vest 33-1/3% per year from the date of
grant and are exercisable as they vest. If the option holder ceases to perform
services as a director or advisory director of the Corporation or its
subsidiaries for any reason during the three-year period, he or she has one year
from such cessation to exercise his or her vested options. To date, options on
Common Stock are the only form of award that has been made pursuant to the
Omnibus Plan.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors of the Corporation held six regular meetings and
one special meeting during 1998. All incumbent directors attended more than 75%
of the total number of meetings of the Board of Directors and its committees
during 1998 except for Directors Ashford, Borden, Daughtry, Holt, Murphy, and
White due to other business commitments or illness.
The Board of Directors has several standing committees, including an
Audit Committee and a Compensation Committee. The voting members of these
committees are appointed by the Board of Directors annually from among its
members.
The current members of the Audit Committee are Directors Edwards, Holt,
Maxwell, Patrick H. Pope (Chairman), Poston and Tilghman. The primary functions
of the Audit Committee are to give additional assurance regarding the integrity
of financial information used by the Board of Directors and distributed to the
public by the Corporation, and to oversee and monitor the activities of the
Corporation's internal and external audit processes. The Audit Committee met
four times during 1998.
The Compensation Committee administers the Corporation's compensation
program and has responsibility for matters involving the compensation of
executive officers of the Corporation and its subsidiaries. The current members
of the Compensation Committee are Directors Bryan, Clancy, Guthrie (Chairman),
Johnson, White and Williams. The Compensation Committee met one time during
1998.
The Board of Directors does not have a standing nominating committee.
EXECUTIVE OFFICERS
The Corporation has the following executive officers:
<TABLE>
<CAPTION>
<S> <C>
POSITIONS WITH THE CORPORATION, TRIANGLE BANK
OFFICER AND BANK OF MECKLENBURG;
NAME AGE SINCE BUSINESS EXPERIENCE DURING PAST FIVE YEARS
---- --- ----- ------------------------------------------
Michael S. Patterson 52 1990 Chairman of the Board of Triangle Bancorp, Inc. and
Triangle Bank since February 1997; President since
1990 and Chief Executive Officer since 1991,
Triangle Bank; President and Chief Executive
Officer, Triangle Bancorp, Inc. since August 1992;
Director of Bank of Mecklenburg since October 1997
Robert E. Branch 39 1988 Executive Vice President, Triangle Bancorp, Inc.
and Triangle Bank since 1998; Senior Vice
President, Triangle Bank 1994 - 1998; Vice
President, Triangle Bank 1988-1994
Debra L. Lee 42 1991 Executive Vice President and Chief Financial
Officer, Triangle Bancorp, Inc. and Triangle Bank
since 1996; Senior Vice President and Chief
Financial Officer, Triangle Bancorp, Inc. and
Triangle Bank, 1992 to 1996; Director of Bank of
Mecklenburg since October 1997
8
<PAGE>
POSITIONS WITH THE CORPORATION, TRIANGLE BANK
OFFICER AND BANK OF MECKLENBURG;
NAME AGE SINCE BUSINESS EXPERIENCE DURING PAST FIVE YEARS
---- --- ----- ------------------------------------------
Steven R. Ogburn 48 1993 Executive Vice President, Triangle Bancorp, Inc.
and Triangle Bank since 1996; Senior Vice
President, Triangle Bancorp, Inc. and Senior Vice
President - Credit Administration, Triangle Bank,
1993 to 1996; Senior Vice President, Centura Bank,
1986-1993
Edward O. Wessell 57 1991 Executive Vice President, Triangle Bancorp, Inc.
and Triangle Bank since 1997; Senior Vice
President, Triangle Bank 1991-1997
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee in 1998 were David T. Clancy,
James P. Godwin, Sr., Earl Johnson (Chairman), Robert L. Guthrie, Edythe M.
Poyner, and Sydnor M. White, Jr.
Michael S. Patterson, President and Chief Executive Officer of the
Corporation, though not a member of the Compensation Committee, advised the
Compensation Committee during 1998 on the compensation to be paid to executive
officers, other than himself, and to employees of the Corporation and its
subsidiaries.
COMPENSATION COMMITTEE REPORT
It is the policy of the Compensation Committee to provide a fully
competitive, performance-based compensation program such as will enable the
Corporation and its subsidiaries to attract, motivate and retain qualified
senior officers. With regard to all senior officers' compensation, the
Compensation Committee's policy is that salary levels will be established and
increases will be given commensurate with the individual officer's level of
responsibility and performance and with the general status of the local economy,
and the overall profit performance of the Corporation and its subsidiaries as it
relates to attainment of budgeted goals for growth, stability and profitability.
The Corporation's executive compensation program includes (A) annual
compensation consisting of base salaries, (B) the potential for cash incentive
bonuses based on the Corporation's financial performance, (C) long-term
incentive compensation consisting of periodic stock options, and (D)
contributions to the individual accounts of all participating employees
(including executive officers) under the Corporation's Section 401(k) salary
deferral plan. In addition, the Corporation provides other employee benefits and
welfare plans customary for companies of its size.
The basis for the Named Executive Officer compensation reported in 1998
was the salary range of various positions initially set in conjunction with the
Performance and Compensation Management Consulting Group of KPMG Peat Marwick
LLP ("KPMG") during the fall of 1994 which reviewed comparable salaries being
paid within North Carolina and the southeastern United States based upon
comparable sized banking institutions. Salary ranges were developed and approved
for various positions with Triangle Bank, including those of the Named Executive
Officers. These salary ranges were revised in November 1997 by the Compensation
Committee in consultation with KPMG. The 1998 salary set for Mr. Patterson by
the Compensation Committee in January 1998 was at the midpoint of the range for
his salary. The 1998 salaries for the other Named Executive Officers were set by
the Compensation Committee in January 1998 within the salary ranges established
for those positions in 1997. All 1998 salaries became effective in
February 1998.
The cash incentive compensation for 1998 was based upon the formula
established within the management incentive compensation plan which plan was
approved by the Board during January 1994. Each Named Executive Officer will be
eligible to participate if the Corporation meets at least 80% of its defined
short-term goals, which goals are set annually by the Board. In addition, each
Named Executive Officer other than Mr. Patterson must attain at least 80% of his
or her personal goals for the year which goals are established by Mr. Patterson.
These personal goals are weighed at 50% and are weighted in conjunction with the
corporate goals. Mr. Patterson does not have personal goals. In 1998, the goals
were established in January by the Compensation Committee (and approved by the
Board of Directors) and were based on the Corporation's 1998 projected financial
performance, measured in terms of the Corporation's asset growth, return on
average assets, earnings per share and return on average equity. For 1998,
individual target bonuses for the Named Executive Officers, as a percentage of
annual base salary, ranged
9
<PAGE>
from a low of 40% to a high of 50%. Actual bonus amounts for the Named Executive
Officers in the short-term incentive plan may be higher or lower than their
target bonus amounts and are based upon a comparison of the Corporation's actual
performance to the designated performance measures. If the Corporation exceeds
its performance goals, each Named Executive Officer receives 1.5% additional
bonus for every 1% that the Corporation exceeded its goals. There is no maximum
limitation on the bonus any Named Executive Officer may receive. Payment of
bonuses under the short-term incentive plan are made annually generally within
60 days of the end of the fiscal year. For the year ended December 31, 1998, the
Corporation exceeded the designated performance measures by a weighted average
of 135.6% for Mr. Patterson and 149.3% for the other four Named Executive
Officers with asset growth of 36.73 % (on an unpooled basis), return on average
assets of 1.22%, earnings per share of $0.95 and return on average equity of
15.32%. The performance measures were weighted 15%, 30%, 35% and 20%,
respectively, for Mr. Patterson, and 10%, 15%, 15% and 10%, respectively, for
the other four Named Executive Officers. Consequently, after application of the
1.5% multiplier, the actual bonuses received by Mr. Patterson and by each of the
other Named Executive Officers for 1998 were equal to approximately 153.4% and
173.9%, respectively, of their respective target bonuses.
The long-term incentive compensation for 1998 was based upon the formula
established within the management incentive compensation plan which plan was
approved by the Board during January 1994. Compensation under the long-term plan
consists of stock options. Each Named Executive Officer will be eligible to
participate in the plan if the Corporation meets at least 80% of its defined
long-term goals, which goals are set annually by the Board. In 1998, these goals
were established in January by the Compensation Committee (and approved by the
Board of Directors) and were based on the Corporation's 1998 projected financial
performance, measured in terms of the Corporation's asset growth, return on
average assets, earnings per share and return on average equity. In addition,
each Named Executive Officer other than Mr. Patterson must attain at least 80%
of his or her personal goals for the year, which goals are established by Mr.
Patterson. These personal goals are weighted at 25% and are weighted in
conjunction with the corporate goals. Mr. Patterson does not have personal
goals. In November 1997, the Compensation Committee and the Board of Directors
revised certain methods for calculating long-term incentive compensation,
including that for 1998, after consultation with KPMG. The changes made to the
long-term incentive plan calculations included the use of the Black-Scholes
methodology which assigns a present (intrinsic) value to an option at the date
of grant. In 1998, Mr. Patterson was entitled to participate in the long-term
plan at 85% of his salary and the other Named Executive Officers at 67.5% of
their respective salaries. That percentage is then multiplied by the amount by
which the Corporation's 1998 performance measures were achieved to obtain the
total dollar amount to which the Black-Scholes methodology is applied to
determine the number of stock options to be awarded to a Named Executive
Officer. Actual bonus amounts for the Named Executive Officers in the long-term
incentive plan may be higher or lower than their target bonus amounts and are
based upon a comparison of the Corporation's annual performance to the
designated performance measures. If the Corporation exceeds it performance
goals, each Named Executive Officer receives 1.5% additional long-term bonus for
every 1% that the Corporation exceeded its goals. There is no maximum limitation
on the long-term bonus any Named Executive Officer may receive. For the year
ended December 31, 1998, the Corporation exceeded the designated performance
measures by a weighted average of 148.3% for Mr. Patterson and 167% for the
other four Named Executive Officers with the same actual performance measures as
listed above. The four performance measures were asset growth, return on average
assets, earnings per share and return on average equity, with the performance
measures weighted 20%, 20%, 30% and 30%, respectively, for Mr. Patterson, and
were weighted 20%, 10%, 25% and 20%, respectively, for the other four Named
Executive Officers. Consequently, after application of the 1.5% multiplier, the
actual bonuses received by Mr. Patterson and by each of the other Named
Executive Officers for 1998 were equal to 173.4% and 200.5%, respectively, of
their respective target bonuses. The options awarded for 1998 performance to all
eligible employees, including Mr. Patterson and the other four Named Executive
Officers, have an exercise price of $16.125 per share, and a term of 10 years
with a third of the options vesting on the first anniversary of the date of
grant, a third vesting on the second anniversary of the date of grant and a
third vesting on the third anniversary of the date of grant, provided the
officer is employed by the Corporation or one of its subsidiaries on the
anniversary date. The number of options awarded to Mr. Patterson and to each of
the other Named Executive Officers was based in each case upon a specified
percentage of their current base salary. These options were awarded under the
Omnibus Plan in January 1999.
In 1998, annual compensation paid to Named Executive Officers included
the Corporation's matching contributions ("Matching Contributions") to the
account of each Named Executive Officer under the 401(k) plan and the portion of
the Corporation's special discretionary contribution to the 401(k) plan
("Discretionary Contribution") allocated to the account of each Named Executive
Officer. The Matching Contributions for Mr. Patterson and the other Named
Executive Officers were based on a formula contained in the terms of the 401(k)
10
<PAGE>
plan and were not related to the Corporation's or the individual officers'
performance for the year. The Matching Contributions, under the terms of the
401(k) plan, are 100% of the officer's contribution up to a maximum of 2% of the
officer's salary and 50% of the next 4% of an officer's salary that is deferred.
Any Discretionary Contribution is entirely at the discretion of the
Corporation's Board of Directors which in 1998 voted to increase from 50% to
100% the match of the officer's contribution up to 4% of each officer's salary.
As a result, in 1998 the Corporation matched up to a maximum of 6% of a
participating executive officer's salary, the maximum amount any employee can
contribute to the plan, with a maximum allowable contribution, under current
Internal Revenue Service regulations, of $10,000. Effective January 1, 1999, the
Corporation amended the 401(k) plan to increase the Matching Contribution level
to a maximum of 6% of the officer's salary, with a maximum allowable
contribution of $10,000.
Robert E. Bryan, Jr. Earl Johnson, Jr.
David T. Clancy Sydnor M. White, Jr.
Robert L. Guthrie J. Blount Williams
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION. The table below
indicates the cash compensation paid by the Corporation as well as other
compensation paid or accrued to the President and Chief Executive Officer and
each other executive officer whose salary and bonus was in excess of $100,000
during 1998 (the "Named Executive Officers") for services rendered in all
capacities during fiscal years 1998, 1997 and 1996, respectively.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION(1) AWARDS PAYOUTS
---------------------- ------ -------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(2) ($) ($) ($) ($)(3)
- ------------------- ---- ------ ----- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael S. Patterson, 1998 293,000 200,115 -0- -0- 47,110 -0- 31,604
President and Chief 1997 220,000 188,408 -0- -0- 54,637 -0- 29,907
Executive Officer 1996 199,799 132,440 -0- -0- 16,044 -0- 28,740
Robert E. Branch, 1998 108,000 44,935 -0- -0- 12,191 -0- 8,352
Executive 1997 84,643 26,020 -0- -0- 8,730 -0- 7,050
Vice President 1996 74,602 29,323 -0- -0- 4,202 -0- 5,209
Debra L. Lee, 1998 132,000 62,399 -0- -0- 16,480 -0- 10,128
Executive Vice 1997 103,800 67,827 -0- -0- 19,525 -0- 9,111
President and Chief 1996 102,925 47,481 -0- -0- 7,190 -0- 7,148
Financial Officer
Steven R. Ogburn, 1998 123,000 65,705 -0- -0- 16,034 -0- 10,435
Executive Vice 1997 99,000 67,827 -0- -0- 19,525 -0- 8,904
President 1996 98,857 47,481 -0- -0- 7,190 -0- 5,553
Edward O. Wessell, 1998 122,000 56,053 -0- 0- 15,090 -0- 11,125
Executive Vice 1997 97,990 50,655 -0- -0- 13,254 -0- 7,895
President 1996 90,835 28,899 -0- -0- 4,321 -0- 7,991
H. Leigh Ballance, 1998 122,000 -0- -0- -0- -0- -0- 7,565
Jr., Executive 1997 122,000 83,585 -0- -0- 8,931 -0- 10,940
Vice President (4) 1996 121,504 58,982 -0- -0- 9,256 -0- 10,629
</TABLE>
- ----------------------
(1) Amounts shown in the table include amounts paid to the Named Executive
Officers as executive officers of Triangle Bank. Triangle Bank was
reorganized as a wholly-owned subsidiary of the Corporation in August 1992.
Also includes amounts deferred at the election of the Named Executive
Officers under Section 401(k) of the Internal Revenue Code and under
existing deferred compensation agreements between the Named Executive
Officer and the Corporation. The amount of compensation for the Named
Executive Officers for 1996, 1997 and 1998 deferred under the 401(k) plan
was based on a formula contained in the terms of that plan and was not
related to the Corporation's or the officer's performance for the year.
(2) Perquisites and personal benefits awarded to each Named Executive Officer
did not exceed 10% of the officer's total annual salary and bonus in any
year reported.
(3) The amounts disclosed represent the Corporation's annual contribution on
behalf of the Named Executive Officer to match pre-tax elective deferral
contributions (included under Salary) made by the Named Executive Officer
under Section 401(k) of the Internal Revenue Code, life insurance premiums
paid on behalf of the Named Executive Officer, and the value of the
split-dollar arrangement between the Corporation and Mr. Patterson in the
amount of $22,651 in 1998, $21,454 in 1997 and $20,287 in 1996.
(4) Mr. Ballance resigned as an Executive Vice President of the Corporation and
Triangle Bank effective May 1, 1998, and therefore ceased to be a member of
the Corporation's executive management team.
STOCK OPTIONS. The following table sets forth information with regard to
grants of stock options for the fiscal year ended December 31, 1998 to the Named
Executive Officers. All such grants were made under the Omnibus Plan.
11
<PAGE>
STOCK OPTION GRANTS IN 1998
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
% OF
TOTAL
NUMBER OF OPTIONS POTENTIAL REALIZABLE
SECURITIES GRANTED TO VALUE (2) AT ASSUMED
UNDERLYING EMPLOYEES EXERCISE OR ANNUAL RATES OF STOCK
OPTIONS IN FISCAL BASE PRICE EXPIRATION PRICE APPRECIATION FOR
NAME GRANTED(#)(1) YEAR ($)PER SHARE DATE OPTION TERM ($)(AT)
---- ------------- ---------- ------------ ---------- ----------------------
5% 10%
--------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael S. Patterson 47,110 19.2 16.125 1/26/09 477,739 1,210,684
Robert E. Branch 12,191 5.0 16.125 1/26/09 123,628 313,298
Debra L. Lee 16,480 6.7 16.125 1/26/09 167,143 423,573
Steven R. Ogburn 16,034 6.5 16.125 1/26/09 162,600 412,059
Edward O. Wessell 15,090 6.1 16.125 1/26/09 153,027 387,799
H. Leigh Ballance, Jr. -0- - - - -0- -0-
</TABLE>
- ------------------
(1) The options vest and become exercisable at the rate of 33-1/3 per year
beginning January 26, 2000, assuming the Named Executive Officer remains
employed by one of the Corporation's subsidiaries. If the Named Executive
Officer's employment terminates before the end of the vesting period, the
Named Executive Officer may exercise vested options for varying periods
after termination (depending on the manner of termination) in accordance
with the plan.
(2) Potential Realizable Value represents the difference between an assumed
stock price and the exercise price for the number of options granted. The
assumed stock price equals the market value of the stock on the grant date
appreciating at the indicated rate over the term of the options.
The following table sets forth information with regard to exercises of
stock options during the fiscal year ended December 31, 1998, by the Named
Executive Officers and the 1998 fiscal year-end value of all unexercised options
held by them.
AGGREGATED OPTION EXERCISES IN FISCAL 1998
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES ACQUIRED VALUE REALIZED NUMBER OF UNEXERCISED IN-THE MONEY OPTIONS
NAME ON EXERCISE(#) ($) OPTIONS AT FY-END(#) AT FY-END($)(1)
---- --------------- -------------- --------------------- -------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael S. Patterson 24,127 277,938 107,763 97,425 1,101,634 242,133
Robert E. Branch 12,127 188,575 16,425 14,972 172,198 26,272
Debra L. Lee 19,001 210,672 41,395 40,509 397,755 123,555
Steven R. Ogburn -0- -0- 35,206 43,976 319,029 157,208
Edward O. Wessell -0- -0- 17,663 25,814 163,003 73,091
H. Leigh Ballance, Jr. 21,732 264,269 9,955 18,093 67,912 103,119
</TABLE>
- -------------------
(1) Closing price of the Corporation's Common Stock at December 31, 1998
was $15.81.
EXECUTIVE DEFERRED COMPENSATION AGREEMENTS. Michael S. Patterson,
President and Chief Executive Officer of the Corporation, entered into a
Deferred Compensation Agreement dated March 1, 1992, with the Corporation's
subsidiary, Triangle Bank, pursuant to which Mr. Patterson may elect annually to
defer up to $30,000 of compensation, to be recorded in an interest-bearing
deferred compensation account maintained in his name. Such account shall be paid
to Mr. Patterson in approximately equal installments over a ten-year period,
with the first installment to be made on or before 30 days following June 30,
2002. Under certain circumstances, Mr. Patterson may elect to postpone such
first installment payment until a subsequent date. Triangle Bank may terminate
such deferred compensation plan for Mr. Patterson at any time.
Debra L. Lee, Executive Vice President of the Corporation, entered into
a Deferred Compensation Agreement dated June 9, 1994, with the Corporation's
subsidiary, Triangle Bank, pursuant to which Ms. Lee may elect annually to defer
up to $30,000 of compensation, to be recorded in an interest-bearing deferred
compensation account maintained in her name. Such account shall be paid to Ms.
Lee, at her discretion, upon her voluntary termination of employment or her
retirement either in one lump sum after such termination or retirement or in
approximately equal installments over a ten-year period, with the first
installment to be made on or before 30 days following June 30, 2012. Under
certain circumstances, Ms. Lee may elect to postpone such first installment
12
<PAGE>
payment until a subsequent date, provided that Triangle Bank concurs in such
postponement. Triangle Bank may terminate such deferred compensation plan for
Ms. Lee at any time.
Triangle Bank has established a trust to administer and fund the
deferred compensation plans for Mr. Patterson and Ms. Lee, and, accordingly,
contributes periodically to the trust to fund the plans.
SUPPLEMENTAL EARLY RETIREMENT PLANS. In January 1996, a Deferred
Compensation Agreement (the "Agreement") was approved by the Board of Directors
of the Corporation for the benefit of Michael S. Patterson, President and Chief
Executive Officer of the Corporation. The 1996 Agreement is a benefit plan which
is intended to provide equivalent retirement income for Mr. Patterson, in
conjunction with the Corporation's 401(k) plan and Social Security benefits, at
an amount equal to 60% of his projected final pay at retirement. The 1996
Agreement took into consideration the five years of service completed by Mr.
Patterson on the date of the 1996 Agreement's implementation, so upon
implementation Mr. Patterson immediately was vested in 50% of the 1996 Agreement
benefit. If Mr. Patterson completes four additional years of service with the
Corporation (from January 1, 1996), he will be eligible to receive the full
benefits of the 1996 Agreement, even if his employment is terminated prior to
his retirement. If Mr. Patterson's employment is terminated before completion of
the four additional years of service due to a change in control of the
Corporation, he automatically will become fully vested in 100% of the 1996
Agreement benefit.
Effective January 1, 1998, the Corporation implemented a Supplemental
Early Retirement Plan for four of the Corporation's five executive officers
(each plan collectively referred to herein as a "SERP"), Michael S. Patterson,
Steven R. Ogburn, Debra L. Lee, and Edward O. Wessell. Robert E. Branch, the
fifth executive officer of the Corporation, began participating in a SERP on
January 1, 1999. Each SERP is an unfunded obligation of the Corporation to pay
each individual $50,000 ($66,666 in the case of Mr. Patterson) annually for 15
years after the officer's retirement at age 65, his or her disability or upon a
change of control of the Corporation. In the event of the officer's early
retirement after age 55 but before age 65, the Corporation will be obligated to
pay the officer a percentage (beginning at 72%) of the retirement benefit for 15
years, depending on the officer's age at early retirement. Retirement benefits
vest 10% per year such that each officer shall be fully vested on December 31,
2007 (December 31, 2008 in the case of Mr. Branch), or upon attainment of age
65, whichever date is earlier. In the event of the officer's disability or a
change in control of the Corporation, the officer shall be fully vested. In the
event of an officer's death, the retirement benefit shall be paid to the
officer's spouse, if living.
SPLIT DOLLAR LIFE INSURANCE AGREEMENT. In January 1996, the Corporation
adopted a Split Dollar Life Insurance Plan pursuant to which it entered into a
Split Dollar Insurance Agreement with Michael S. Patterson. The Corporation has
purchased a life insurance policy which insures and is owned by Mr. Patterson,
subject to a collateral assignment to the Corporation to secure repayment of its
interest in the policy. The split dollar policy also provides the Corporation at
least $1 million in key man coverage on Mr. Patterson's life. The portion of the
amount of the 1998, 1997 and 1996 premiums paid for the insurance policy that is
considered compensation for Mr. Patterson is included in the Summary
Compensation Table.
EXECUTIVE EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL AGREEMENTS. Mr.
Patterson, the Corporation's President and Chief Executive Officer, entered into
an employment agreement with the Corporation and Triangle Bank in December 1993.
The agreement continues until December 31, 1999, and provides for a base monthly
salary as is determined from time to time by Triangle Bank but not less than
$10,479, together with certain fringe benefits. In the event of the involuntary
termination of his employment by the Corporation without cause, Mr. Patterson is
entitled to continue to receive, on a monthly basis for the remainder of the
term of the Agreement or 12 months after the date of such termination, whichever
is longer, his then current base monthly salary, all fringe benefits, and an
amount equal to the average bonus paid to Mr. Patterson over the prior three
years. Triangle Bank's obligation to make such salary payments and to provide
such fringe benefits terminates upon Mr. Patterson's death or disability. Mr.
Patterson's employment agreement provides for certain payments to him in the
event there is a change in control of the Corporation. Specifically, upon a
change in control, the term of the agreement is set at three years from the date
of the change in control. Further, Mr. Patterson may terminate the agreement
upon a change in control of the Corporation if, after one year from the date of
such change in control, he determines that he has not been assigned duties
commensurate with his duties prior to the change in control under terms or
conditions satisfactory to him. If Mr. Patterson so terminates the agreement,
the agreement provides that the Corporation will pay to him for the remainder of
the term of the agreement an amount equal to 100% of his then base monthly
salary, fringe benefits, and an annual amount equal to the average of the bonus
paid to Mr. Patterson over the prior three years. The agreement further provides
that, unless terminated by the other
13
<PAGE>
party, the term automatically is extended for an additional year on the same
terms and conditions set forth in the agreement.
Steven R. Ogburn, an Executive Vice President of the Corporation, and
Debra L. Lee, Executive Vice President and Chief Financial Officer of the
Corporation, each entered into a Change of Control Agreement with the
Corporation and Triangle Bank on June 18, 1996; Edward O. Wessell, and Robert E.
Branch, each an Executive Vice President of the Corporation, entered into a
Change of Control Agreement with the Corporation and Triangle Bank on January 1,
1998, and April 1, 1998, respectively. Mr. Ogburn's and Ms. Lee's agreements
continue until June 18, 2000, Mr. Wessell's agreement continues until January 1,
2000 and Mr. Branch's agreement continues until April 1, 2000. Each agreement
provides that in the event of a termination of the officer's employment in
connection with, or within 24 months after, a change of control of the
Corporation or Triangle Bank, for reasons other than cause, the officer shall
receive an amount equal to two times (i) his or her then current salary plus
(ii) the average of the cash bonus paid to the officer by Triangle Bank under
Triangle Bank's cash bonus plan during the immediately preceding two years.
Further, in such event, the officer shall continue to receive for a period of
two years after his or her termination all benefits the officer was receiving
and entitled to on his or her termination date, or the officer may elect to
receive the dollar equivalent of such benefits. The officer may elect to receive
all such payments either in one lump sum or in 24 equal monthly payments. In
addition, the officer may terminate the agreement upon a change of control of
the Corporation if, within 24 months of such change of control, the officer is
assigned duties inconsistent with his or her duties at the time of the change of
control, his or her annual base salary is reduced below the amount in effect
prior to the change of control, the officer's benefits are reduced below the
level prior to the change of control (unless benefits are reduced for all
employees), or the officer is transferred to a location more than 50 miles from
Raleigh without the officer's consent. Each agreement further provides that,
unless terminated by the Corporation and Triangle Bank, notice of which must be
given at least 13 months prior to the next anniversary date, the term
automatically is extended for an additional two years on the same terms and
conditions set forth in the agreement.
PERFORMANCE GRAPH
The following line graph illustrates the cumulative total shareholder
return on the Corporation's Common Stock over the five-year period ended
December 31, 1998 and the cumulative total return over the same period of the
indexes listed below. Each graph assumes $100 originally invested on December
31, 1993. The Corporation paid a quarterly cash dividend of $.027 per share from
the third quarter of 1994 through the second quarter of 1995, a quarterly cash
dividend of $.04 per share in the third and fourth quarters of 1995, a quarterly
cash dividend of $.047 in the first quarter of 1996, a quarterly cash dividend
of $.053 in the second and third quarters of 1996, a quarterly cash dividend of
$.067 in the fourth quarter of 1996 and the first quarter of 1997, a quarterly
cash dividend of $.073 in the second quarter of 1997, a quarterly cash dividend
of $.08 in the third and fourth quarters of 1997 and in the first quarter of
1998, and a quarterly cash dividend of $.09 in the second, third and fourth
quarters of 1998. The numbers in the graph assume that all cash dividends were
reinvested.
The graph reflects the Nasdaq U.S. Index, the Standard & Poors 500 Index
and a regional peer group index based on the common equity securities of a group
of financial institutions in the southeastern United States, which index was
prepared by an entity not affiliated with the Corporation.
14
<PAGE>
TRIANGLE BANCORP, INC.
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
TRIANGLE BANCORP, INC. 100 126 182 214 471 322
NASDAQ INDEX 100 95 149 204 307 338
S & P 500 INDEX 100 101 139 171 229 294
REGIONAL PEER GROUP 100 115 157 193 286 285
INDEX(1)
</TABLE>
- --------------
(1) Includes the following financial institutions: Bank of Granite Corporation,
Carolina First Corporation, CCB Financial Corporation, Centura Banks, Inc.,
Century South Banks, Inc., F & M National Corporation, First Bancorp, First
Charter Corporation, and LSB Bancshares, Inc. MainStreet BankGroup, Inc. has
been removed from the group as it has been acquired. Sources: FactSet Data
Systems, Inc.
15
<PAGE>
INDEBTEDNESS OF MANAGEMENT
The Corporation has had, and expects to have in the future, banking
transactions, including loans, in the ordinary course of business with its and
its bank subsidiaries' directors, executive officers and their associates. In
the opinion of management of the Corporation, the outstanding indebtedness and
commitments to such individuals were made in the ordinary course of business and
on substantially the same terms, including interest rates, collateral, and
payment terms, as those prevailing at the same time for comparable transactions
with other persons, and do not involve more than the normal risk of
collectability or present other unfavorable features. At December 31, 1998,
indebtedness of directors and executive officers of the Corporation to its bank
subsidiaries, Triangle Bank and Bank of Mecklenburg, totaled an aggregate of
approximately $6.6 million or 4.1% of shareholders' equity.
TRANSACTIONS WITH MANAGEMENT
In 1998, the Corporation purchased insurance through Asura Corporation
("Asura") as an agent. Robert L. Guthrie, a director of the Corporation, is the
President and Chief Executive Officer of Asura. The Corporation paid insurance
premiums, commissions and consulting fees to Asura in 1998 in the aggregate
amount of $267,380. Office furniture for various of Triangle Bank's offices and
the Corporation's headquarters building and operations center were purchased
from Alfred Williams & Co. for an aggregate price of $384,760 in 1998. J. Blount
Williams, a director of the Corporation, is President of Alfred Williams & Co.
Management of the Corporation believes that the terms of these
transactions were at least as favorable to the Corporation as those available
from other sources.
PROPOSAL 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP, Certified Public Accountants,
has been appointed by the Board of Directors to serve as the Corporation's
independent accountants for 1999, and a proposal to ratify that appointment will
be introduced at the Annual Meeting. If shareholders do not approve this
proposal, the Board of Directors will reconsider the appointment. If
shareholders do approve this Proposal, the Board of Directors retains the
ability to change independent accountants during 1999.
Representatives of PricewaterhouseCoopers are expected to be present at
the Annual Meeting and will have an opportunity to make a statement if they
desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 2.
PROPOSALS OF SHAREHOLDERS
It currently is expected that the 2000 Annual Meeting will be held
during April 2000. Any proposal of a shareholder which is intended to be
presented at the 2000 Annual Meeting must be received by the Corporation at its
principal executive office in Raleigh, North Carolina, not later than November
30, 1999 in order to be included in the Corporation's proxy statement and form
of appointment of proxy to be issued in connection with that meeting.
March 18, 1999
16
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APPENDIX
REVOCABLE PROXY
TRIANGLE BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 1999
Appointment of Proxy Solicited by Board of Directors
The undersigned hereby appoints Steven R. Ogburn, Debra L. Lee and Edward O.
Wessell, or any of them, with full powers of substitution, to act as attorneys
and proxies to vote all shares of common stock of Triangle Bancorp, Inc. (the
"Corporation") held of record by the undersigned on March 5, 1999 at the Annual
Meeting of Shareholders to be held at the North Raleigh Hilton, 3415 Wake Forest
Road, Raleigh, North Carolina, on Tuesday, April 27, 1999, at 10:00 A.M., and at
any adjournments thereof, as follows:
1. Election of directors:
FOR all nominees [ ] WITHOLD authority to vote [ ]
for all nominess
listed below
For Three-Year Terms: David T. Clancy, Willie S. Edwards, Robert L.
Guthrie, John B. Harris, Jr., Earl Johnson, Jr., William R. Pope, Sydnor
M. White, Jr. and J. Blount Williams.
Instruction: To withhold your vote for one or more nominees, write the
name(s) of such nominee(s) on the line below.
2. Ratification of appointment of PricewaterhouseCoopers LLP, as
independent public accountants for fiscal 1999:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Transaction of any other business that may properly come before the
meeting.
The Board of Directors recommends a vote FOR each of the listed proposals.
THIS APPOINTMENT OF PROXY WILL BE VOTED AS DIRECTED. IF NO INSTRUCTIONS ARE
GIVEN, THIS APPOINTMENT OF PROXY WILL BE VOTED FOR PROPOSAL 2 AND, IN THE
ELECTION OF DIRECTORS, BY CASTING AN EQUAL NUMBER OF VOTES FOR EACH NOMINEE
LISTED UNDER PROPOSAL 1. IF, AT OR BEFORE THE TIME OF THE MEETING, ANY NOMINEE
LISTED UNDER PROPOSAL 1 HAS BECOME UNAVAILABLE FOR ANY REASON, THE PROXIES HAVE
THE DISCRETION TO VOTE FOR A SUBSTITUTE NOMINEE.
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This appointment of proxy may be revoked at any time before it is exercised by
filing with the Secretary of the Corporation either an instrument revoking it or
a duly executed appointment of proxy bearing a subsequent date or by attending
the Annual Meeting and voting in person.
The undersigned acknowledges receipt from the Corporation, prior to the
execution of this appointment of proxy, of the Notice of Annual Meeting, a Proxy
Statement dated March 18, 1999, and the 1998 Annual Report to Shareholders.
Dated:
---------------------------
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Print Name of Shareholder
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Signature of Shareholder
Please date and sign your name exactly as your name appears on this appointment
of proxy. If shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title.
If shareholder is a corporation, please sign in full corporate name by the
president or other authorized officer. If shareholder is a partnership, please
sign in partnership name by authorized person.
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PLEASE COMPLETE, DATE, SIGN AND MAIL THIS APPOINTMENT OF PROXY
IN THE ENCLOSED POSTAGE PREPAID ENVELOPE
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