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
COMMUNITY BANKSHARES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
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:
<PAGE>
COMMUNITY BANKSHARES, INC.
791 Broughton Street
Post Office Box 2086
Orangeburg, South Carolina 29115
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held June 29, 1998
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of the Shareholders (the
"Annual Meeting") of Community Bankshares, Inc., a South Carolina corporation
(the "Company"), will be held at the main office of Orangeburg National Bank,
1820 Columbia Road, N.E., Orangeburg, South Carolina at 3:00 p.m., Orangeburg,
South Carolina time, on Monday, June 29, 1998, for the following purposes:
(1) To elect four directors to serve three-year terms;
(2) To ratify the appointment of J. W. Hunt & Company, LLP as independent
auditors for the Company for the fiscal year ending December 31, 1998; and
(3) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only record holders of Common Stock of the Company at the close of
business on May 20, 1998, are entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof.
You are cordially invited and urged to attend the Annual Meeting in person.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE
ENCLOSED, SELF- ADDRESSED, STAMPED ENVELOPE. IF YOU NEED ASSISTANCE IN
COMPLETING YOUR PROXY, PLEASE CALL THE COMPANY AT (803) 535-1060. IF YOU ARE THE
RECORD OWNER OF YOUR SHARES AND ATTEND THE ANNUAL MEETING AND DESIRE TO REVOKE
YOUR PROXY AND VOTE IN PERSON YOU MAY DO SO. IN ANY EVENT, A PROXY MAY BE
REVOKED BY THE RECORD OWNER OF SHARES AT ANY TIME BEFORE IT IS EXERCISED.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL
OF ALL THE PROPOSALS PRESENTED.
By Order of the Board of Directors
William W. Traynham
President
Orangeburg, South Carolina
May 29, 1998
<PAGE>
Community Bankshares, Inc.
791 Broughton Street
Post Office Box 2086
Orangeburg, South Carolina 29115
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
to be Held June 29, 1998
-------------------------------------------------
This Proxy Statement is furnished to shareholders of Community Bankshares,
Inc., a South Carolina corporation (herein, unless the context otherwise
requires, together with its subsidiaries, the "Company"), in connection with the
solicitation of proxies by the Company's Board of Directors for use at the
Annual Meeting of Shareholders to be held at the main office of Orangeburg
National Bank, 1820 Columbia Road, N.E., Orangeburg, South Carolina at 3:00 p.m.
on June 29, 1998, or any adjournment thereof (the "Annual Meeting"), for the
purposes set forth in the accompanying Notice of Annual Meeting of Shareholders.
Solicitation of proxies may be made in person or by mail, telephone or
other electronic means by directors, officers and regular employees of the
Company. The Company may also request banking institutions, brokerage firms,
custodians, nominees and fiduciaries to forward solicitation materials to the
beneficial owners of Common Stock of the Company held of record by such persons,
and the Company will reimburse the reasonable forwarding expenses. The cost of
solicitation of proxies will be paid by the Company. This Proxy Statement was
first mailed to shareholders on or about May 29, 1998.
The Company's principal executive offices are located at 791 Broughton
Street, Orangeburg, South Carolina 29115. The Company's telephone number is
(803) 535-1060.
ANNUAL REPORT
The Annual Report to Shareholders covering the Company's fiscal year ended
December 31, 1997, including financial statements was sent to all shareholders
on or about April 1, 1998. Such Annual Report to Shareholders does not form any
part of the material for solicitation of proxies.
If you desire another copy of the Annual Report, or if you did not receive
one, please call the Company at 803- 535-1060 or write to the Company at Post
Office Box 2086, Orangeburg, S.C. 29116, to request a copy.
REVOCATION OF PROXY
Any record shareholder returning the accompanying proxy may revoke such
proxy at any time prior to its exercise (a) by giving written notice to the
Company of such revocation, (b) by voting in person at the meeting, or (c) by
executing and delivering to the Company a later dated proxy. Attendance at the
Annual Meeting will not in itself constitute revocation of a proxy. Any written
notice or proxy revoking a proxy should be sent to Community Bankshares, Inc.,
791 Broughton Street, Orangeburg, South Carolina 29115, Attention: William W.
Traynham, President. Written notice of revocation or delivery of a later dated
proxy will be effective upon receipt thereof by the Company.
QUORUM AND VOTING
The Company's only voting security is its no par value Common Stock
("Common Stock"), each share of which entitles the holder thereof to one vote on
each matter to come before the Annual Meeting. At the close of business on May
20, 1998 (the "Record Date"), the Company had issued and outstanding 2,808,493
shares of
<PAGE>
Common Stock, which were held of record by approximately 1,253 persons. Only
shareholders of record at the close of business on the Record Date are entitled
to notice of and to vote on matters that come before the Annual Meeting.
Notwithstanding the Record Date specified above, the Company's stock transfer
books will not be closed and shares of the Common Stock may be transferred
subsequent to the Record Date. However, all votes must be cast in the names of
holders of record on the Record Date.
The presence in person or by proxy of the holders of one-third of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum at the Annual Meeting. If a share is
represented for any purpose at the Annual Meeting by the presence of the
registered owner or a person holding a valid proxy for the registered owner, it
is deemed to be present for the purposes of establishing a quorum. Therefore,
valid proxies which are marked "Abstain" or "Withhold" or as to which no vote is
marked, including proxies submitted by brokers that are the record owners of
shares (so-called "broker non-votes"), will be included in determining the
number of votes present or represented at the Annual Meeting. If a quorum is not
present or represented at the meeting, the shareholders entitled to vote,
present in person or represented by proxy, have the power to adjourn the meeting
from time to time, without notice other than an announcement at the meeting,
until a quorum is present or represented. Directors, officers and regular
employees of the Company may solicit proxies for the reconvened meeting in
person or by mail, telephone or telegraph. At any such reconvened meeting at
which a quorum is present or represented, any business may be transacted that
might have been transacted at the meeting as originally noticed.
If a quorum is present at the meeting, directors will be elected by a
plurality of the votes cast by shares present and entitled to vote at the
meeting. Votes that are withheld or shares that are not voted in the election of
directors will have no effect on the outcome of election of directors.
Cumulative voting will not be permitted.
If a quorum is present, all other matters which may be considered and
acted upon by the holders of Common Stock at the Annual Meeting, including
ratification of appointment of J. W. Hunt & Company, LLP as accountants for the
fiscal year ending December 31, 1998, will be approved if the votes cast in
favor of the proposal at the Annual Meeting exceed the votes cast opposing the
proposal.
ACTIONS TO BE TAKEN BY THE PROXIES
Each proxy, unless the shareholder otherwise specifies therein, will be
voted "FOR" the election of the persons named in this Proxy Statement as the
Board of Directors' nominees for election to the Board of Directors, and "FOR"
the ratification of the appointment of J. W. Hunt & Company, LLP as accountants
for the fiscal year ending December 31, 1998. In each case where the shareholder
has appropriately specified how the proxy is to be voted, it will be voted in
accordance with his specifications. As to any other matter of business which may
be brought before the Annual Meeting, a vote may be cast pursuant to the
accompanying proxy in accordance with the best judgment of the persons voting
the same, but the Board of Directors does not know of any such other business.
STOCKHOLDER PROPOSALS
Any shareholder of the Company desiring to present a proposal for action
at the 1999 Annual Meeting of Shareholders must deliver the proposal to the
executive offices of the Company no later than January 29, 1999. Only proper
proposals that are timely received will be included in the Company's Proxy
Statement and Proxy.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 1, 1998, the number and
percentage of outstanding shares beneficially owned and owned by the spouses of
the persons named, by (i) each person known by the Company to own more than 5%
of the outstanding Common Stock, (ii) each director and director nominee of the
Company, (iii) each person named in the Summary Compensation Table, and (iv) all
executive officers and directors of the Company as a group.
2
<PAGE>
<TABLE>
<CAPTION>
Number of % of
Shares Common
Name (and Address Position in the Company Beneficially Stock
of 5% Shareholders) and the Banks* Owned Ownership
- ------------------- -------------- ------------ ---------
<S> <C> <C> <C>
E. J. Ayers, Jr. Director CBI and ONB 77,600(1) 2.7%
Alvis J. Bynum Director CBI and SNB 30,258(2) 1.1%
Martha Rose C. Carson Director CBI and ONB 56,400 2.0%
Anna O. Dantzler Director CBI and ONB 85,000 3.0%
J. M. Guthrie Director CBI and Chairman 126,172(3) 4.4%
ONB, Chairman of Executive
Committee of CBI
Phil P. Leventis Director CBI and SNB, 35,195(4) 1.2%
Chairman of SNB
William H. Nock Director CBI and SNB, Chief 47,929(5) 1.7%
Executive Officer and President
of SNB
Samuel F. Reid, Jr. Director CBI and ONB 41,384(6) 1.4%
Hugo S. Sims, Jr. Director CBI and ONB, 188,000(7) 6.5%
1158 Moore Road Chairman, Chief Executive
Orangeburg, S.C. 29118 Officer of CBI
William W. Traynham Director CBI and ONB, 48,596(8) 1.7%
President of CBI
J. Otto Warren, Jr. Director CBI and ONB, Vice 141,574(9) 4.9%
Chairman of CBI
Michael A. Wolfe Director CBI and ONB, Chief 46,937(10) 1.67%
Executive Officer and
President of ONB
Russell S. Wolfe, II Director CBI and ONB 59,483(11) 2.1%
All executive officers and 984,528 34.3%
directors as a group (13 persons)
- ------------------------------------
</TABLE>
*CBI - the Company; ONB - Orangeburg National Bank; SNB - Sumter National Bank
(1) Includes 1,200 shares owned by Nancy R. Ayers, Mr. Ayers' wife; 2,600
shares owned by an IRA for the benefit of Nancy R. Ayers; and 2,600 shares
held by Mr. Ayers in an IRA.
(2) Includes 5,530 shares owned by Marjorie F. Bynum, Mr. Bynum's wife; and
9,000 shares held by Mr. Bynum as trustee for his grandnephews.
(3) Includes 453 shares owned by Lou D. Guthrie, Mr. Guthrie's wife.
(4) Includes 2,700 shares held by Ellen L. Leventis, Mr. Leventis' wife; 20,395
shares owned by the Dixie Beverage Co. of Sumter Profit Sharing Plan; and
10,000 shares owned by LPT Enterprises, a limited partnership.
(5) Includes 1,224 shares owned by the Nock Family Trust; 263 shares owned by
an IRA for the benefit of Linda H. Nock, Mr. Nock's wife; 38,247 shares
held by Alex Brown & Co., for benefit of Mr. Nock; and 8,000 shares subject
to currently exercisable qualified stock options.
3
<PAGE>
(6) Includes 13,384 shares held by Mr. Reid as trustee for his minor children;
and 16,000 shares owned by Rosa G. Reid, Mr. Reid's wife.
(7) Includes 50,000 shares owned by Virginia B. Sims, Mr. Sims' wife; and 8,000
shares subject to currently exercisable qualified stock options.
(8) Includes 18,560 shares owned jointly with Margaret S. Traynham, Mr.
Traynham's wife; 1,836 shares owned jointly with minor children; 20,000
shares subject to currently exercisable nonqualified stock options; and
8,000 shares subject to currently exercisable qualified stock options.
(9) Includes 41,288 shares owned by Mildred J. Warren, Mr. Warren's wife.
(10) Includes 1,937 shares owned by Joye McGrady Wolfe as custodian for minor
children; 20,000 shares subject to currently exercisable nonqualified stock
options; and 8,000 shares subject to currently exercisable qualified stock
options.
(11) Includes 5,098 shares owned by Mary F. Wolfe, Mr. Wolfe's wife.
ELECTION OF DIRECTORS
The Bylaws of the Company provide for a Board of Directors consisting of
not less than nine nor more than twenty-four directors divided into three
classes each serving three-year staggered terms. The number of directors is
currently fixed by the Board at thirteen. Four directors have been nominated for
re-election by the shareholders at the 1998 Annual Meeting to serve for
three-year terms. All directors serve until their successors are elected and
qualified to serve. All of the nominees are presently directors of the Company
and have served continuously since first becoming directors.
Should any of the nominees become unable or unwilling to accept nomination
or election, it is intended that the persons acting under the proxy will vote
for the election, in his or her stead, of such other person or persons as the
Board of Directors of the Company may recommend. The Board of Directors has no
reason to believe that any of the proposed directors will be unable or unwilling
to serve if elected.
MANAGEMENT
The table below sets forth the age, business experience for the past five
years, and term in office for each of the directors and executive officers of
the Company. Each of the directors of the Company, except Messrs. Bynum,
Leventis and Nock, is also a director of Orangeburg National Bank. Messrs.
Bynum, Leventis and Nock are also directors of Sumter National Bank.
4
<PAGE>
<TABLE>
<CAPTION>
Director Business experience
Name, Address (and age) Since during the past 5 years
- ----------------------- -------- -----------------------
Nominees for Election to Serve until 2001
<S> <C> <C>
Anna O. Dantzler (58) 1994* Retired since 1989; former customer service
Orangeburg, S.C. representative for Orangeburg National Bank
William H. Nock (52) 1996 President and Chief Executive Officer, Sumter
Sumter, S.C. National Bank since June 1996; Senior Vice President,
Finance, Carolina First Bank, April, 1995 -July, 1995;
President and Chief Executive Officer, Aiken County
National Bank, 1992 - April, 1995
Samuel F. Reid, Jr. (48) 1994* Attorney, Horger, Barnwell & Reid
Orangeburg, S.C.
William W. Traynham (42) 1992* President of the Company
Orangeburg, S.C.
<CAPTION>
Current Directors Whose Terms Expire in 2000
<S> <C> <C>
E. J. Ayers, Jr. (65) 1987* President, C. M. Dukes Oil Co., oil distributor
Orangeburg, S.C. and auto parts supplier; farmer
Alvis J. Bynum (60) 1996 President, Cities Supply Co., waterwork supplies
Sumter, S.C. distributor
Hugo S. Sims, Jr. (76) 1987* Chairman of the Board of Directors and Chief
Orangeburg, S.C Executive Officer of the Company
J. Otto Warren, Jr. (70) 1987* President, Warren and Griffin Lumber Co., Inc.
Orangeburg, S.C. and Home Builder's Supply Co., Inc., builders'
supply and lumber manufacturer
<CAPTION>
Current Directors Whose Terms Expire in 1999
<S> <C> <C>
Martha Rose C. Carson (62) 1987* President, Marty Rae, Inc., apparel and
Orangeburg, S.C. furniture retailers
J. M. Guthrie (70) 1987* President, Superior Motors, Inc., car dealership; Chairman
Orangeburg, S.C. of the Board of Directors of Orangeburg National Bank
since March 1998
Phil P. Leventis (51) 1996 President and Chief Executive Officer, Dixie
Sumter, S.C. Beverage Company, wholesale beer distributor; member of
the South Carolina State Senate; Chairman of the Board of
Directors of Sumter National Bank since June 1996
Michael A. Wolfe (41) 1992* President of Orangeburg National Bank since 1992,
Orangeburg, S.C. Chief Executive Officer of Orangeburg National Bank since
June 1996
Russell S. Wolfe, II (79) 1987* Secretary, Lenaire F. Wolfe Co., heating and air
Orangeburg, S.C. conditioning; former Chairman of the Board of Directors of
Orangeburg National Bank
</TABLE>
- --------------------
* Includes service as Director of Orangeburg National Bank prior to formation of
the Company in 1992.
There are no family relationships among any of the directors and executive
officers of the Company.
5
<PAGE>
Meetings of the Board of Directors and Committees
The Board of Directors of the Company held 13 meetings during 1997. Each
director attended at least 75% of the total number of meetings of the Board of
Directors and meetings of committees on which he served held during the period
for which he served as director with the exception of Martha Rose Carson, who
attended 7 of the 13 meetings of the Board of Directors.
The Company has an Audit Committee consisting of J. Otto Warren, Jr.,
Martha Rose C. Carson, E. J. Ayers, Jr. (chairman), Alvis J. Bynum, and Samuel
F. Reid, Jr. The Audit Committee oversees the internal and external audit
function. It is composed entirely of non-employee directors. The Audit Committee
met once in 1997.
The Company has a Personnel Committee consisting of Hugo S. Sims, Jr.,
William W. Traynham, J. M. Guthrie, Samuel F. Reid, Jr. (chairman), and Anna O.
Dantzler. The Personnel Committee oversees personnel and compensation related
matters. The Personnel Committee met once in 1997.
Nomination of Directors
The Company's Articles of Incorporation provide that no person shall be
eligible to be elected a director at a meeting of shareholders unless that
person has been nominated by a shareholder entitled to vote at the meeting by
giving written notice of such nomination to the Secretary of the Company at
least 30 days prior to the date of the meeting.
The Board of Directors acts as a nominating committee and will consider
recommendations by shareholders of persons to be included as management nominees
for directors if the following procedures are met. Recommendations shall be in
writing and be delivered or mailed to the president of the company not less than
30 days or more than 50 days prior to any meeting of shareholders called for the
election of directors. Such recommendations shall contain the following
information to the extent known by the shareholder making the recommendation:
(1) the name and address of each proposed nominee; (2) the principal occupation
of each proposed nominee; (3) the total number of shares that will be voted for
each proposed nominee; (4) the name and residence address of the shareholder
making the recommendation; and (5) the number of shares owned by the shareholder
making the recommendation.
MANAGEMENT COMPENSATION
Executive Officer Compensation
The following table summarizes for the years ended December 31, 1997, 1996
and 1995 the executive compensation paid to the Chairman and Chief Executive
Officer of the Company and to executive officers of the Company or its
subsidiaries who received compensation greater than $100,000 in 1997.
6
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual Securities
Compensation Underlying All Other
Year Salary Options Compensation (2)
---- ------ ------- ----------------
<S> <C> <C> <C> <C>
Hugo S. Sims, Jr. 1997 $ 55,587 8,000 $ 5,003
Chairman and Chief Executive Officer of 1996 40,939 - -
the Company(1) 1995 33,939 - -
William W. Traynham 1997 $113,632 8,000 $10,227
President of the Company 1996 104,014 - 9,361
1995 93,856 - 8,447
Michael A. Wolfe 1997 $115,410 8,000 $10,075
President of Orangeburg National Bank 1996 104,583 - 9,412
1995 93,856 - 8,447
William H. Nock 1997 $101,644 8,000 $ 3,049
President of Sumter National Bank 1996 96,154 - -
1995 37,542 - -
</TABLE>
- ------------------
(1) Mr. Sims was appointed Chief Executive Officer in March 1992. He functions
in this capacity on a part time basis. (2) This column sets forth company
contributions to the 401(K) plan on behalf of the named executive officers.
The Company does not have employment contracts with any of its executive
officers. The Company does not presently pay bonuses to its executive officers
and offers no perquisites to its executive officers that are not available to
all employees.
The following table sets forth information about stock options held at
December 31, 1997 by the executive officers listed in the Summary Compensation
Table.
Aggregated Option Exercises in 1997 and 1997 Year End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Acquired Value Options 12/31/97 Options 12/31/97
Name on Exercise Realized Exercisable Unexercisable Exercisable* Unexercisable
- ---- --------------- -------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
William W. Traynham - - 20,000 8,000 $197,000 $46,000
Michael A. Wolfe - - 20,000 8,000 $197,000 $46,000
Hugo S. Sims - - 0 8,000 $0 $46,000
William H. Nock - - 0 8,000 $0 $46,000
</TABLE>
*The fair value of the stock has been estimated at $13.75 per share, which was
the closing price of the stock on December 31, 1997. The exercise price of the
options is $3.90 per share and they expire in 2000.
7
<PAGE>
The following table sets forth information about stock options granted
during 1997 to the executive officers listed in the Summary Compensation Table.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
Number of % of Total
Securities Options Potential Realizable Value at
Underlying Granted to Exercise Assumed Annual Rates of Stock
Options Employees Price Expiration Price Appreciation for 10-Year
Name Granted(1) in 1997 (per share) Date Option Term(2)
- ---------------------- ---------- --------- ----------- ------ ---------------
5% 10%
---- ----
<S> <C> <C> <C> <C> <C> <C>
Hugo S. Sims, Jr. 8,000 100% $8.00 4-21-07 $40,249 $102,000
William W. Traynham 8,000 100% $8.00 4-21-07 $40,249 $102,000
Michael A. Wolfe 8,000 100% $8.00 4-21-07 $40,249 $102,000
William H. Nock 8,000 100% $8.00 4-21-07 $40,249 $102,000
</TABLE>
- --------------------
(1) These options were granted on April 21, 1997 and became exercisable on
April 21, 1998.
(2) The amounts in these columns are the result of calculations based on the
assumption that the market price of the Common Stock will appreciate in
value from the date of grant to the end of the one-year option term at
rates of 5% and 10% per year. The 5% and 10% annual appreciation
assumptions are required by the Securities and Exchange Commission; they
are not intended to forecast possible future appreciation, if any, of the
Company's stock price.
Director Compensation
The Company pays directors who are not employees of the Company or its
subsidiaries $200 per month for service as directors. In addition, Orangeburg
National Bank pays monthly fees of $600 to its non-employee directors. Sumter
National Bank did not pay director fees in 1997, but began paying monthly fees
of $300 to its directors in January 1998. Director fees paid by the Company in
1997 totalled $21,600 and director fees paid by Orangeburg National Bank in 1997
totalled $50,400.
Employee Benefit Plans
401(K) Plan
Effective January 1, 1990, Orangeburg National Bank established a defined
contribution plan pursuant to Internal Revenue Code Section 401(k). The Plan was
assumed by the Company upon acquisition of Orangeburg National Bank. All
employees who have completed 500 hours of service during a six-month period and
have attained age 18 will participate as of the January 1 or July 1 closest to
the date on which the employee meets the eligibility requirements.
A participant may elect to make tax deferred contributions up to a maximum
of 12% of eligible compensation. The Company will make a matching contribution
on behalf of each participant in the amount of 100% of the deferral, not
exceeding 3% of the participant's compensation. The Company may also make
elective contributions determined at the discretion of the Board of Directors.
The Company's contributions for the years ended December 31, 1997 and 1996, were
$122,000 and $90,000, respectively.
8
<PAGE>
1997 Employee Stock Option Plan
At the 1997 Annual Meeting of Shareholders, the shareholders approved the
1997 Employee Stock Option Plan, which reserved 106,000 shares of Common Stock
for issuance pursuant to the exercise of options granted pursuant to the plan.
Of the 106,000 shares reserved for issuance under the plan, 30,000 shares were
reserved for issuance pursuant to exercise of non-qualified stock options and
the remainder were reserved for issuance upon the exercise of "incentive stock
options" within the meaning of the Internal Revenue Code. Options may be granted
pursuant to the plan to persons who are employees of the Company or any
subsidiary (including officers and directors who are employees) at the time of
grant. All incentive stock options must have an exercise price not less than the
fair market value of the Common Stock at the date grant, as determined by the
Board of Directors. Non-qualified options will have such exercise prices as may
be determined by the Board of Directors at the time of grant, and such exercise
prices may be less than fair market value. The Board of Directors may set other
terms for the exercise of the options but may not grant to any one holder more
than $100,000 of incentive stock options (based on the fair market value of the
optioned shares on the date of the grant of the option) which first become
exercisable in any calendar year. The Board of Directors also selects the
employees to receive grants under the plan and determines the number of shares
covered by options granted under the plan. No options may be exercised after ten
years from the date of grant, options may not be transferred except by will or
the laws of descent and distribution, and options may be exercised only while
the optionee is an employee of the Company, within three months after the date
of termination of employment, or within twelve months of death or disability.
The plan will terminate on March 16, 2007, and no options will be granted
thereunder after that date.
In April, 1997, 75,800 incentive stock options were granted to employees of
the Corporation at the then current market price of $8.00. These options became
exercisable in April 1998, and they expire in April 2007.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Orangeburg National Bank has loan and deposit relationships with some of
the directors of the Company and Orangeburg National Bank and with companies
with which the directors are associated as well as members of the immediate
families of the directors ("Affiliated Persons"). (The term `members of the
immediate families' for purposes of this paragraph includes each person's
spouse, parents, children, siblings, mothers and fathers-in-law, sons and
daughters-in-law, and brothers and sisters-in-law.) The total loans outstanding
to these parties at December 31, 1997, were $2,959,000. Loans to Affiliated
Persons were made in the ordinary course of business, were made on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons, and did not, at the
time they were made involve more than the normal risk of collectibility or
present other unfavorable features.
The law firm of Horger, Barnwell and Reid, in which Samuel F. Reid, a
director of the Company, is a partner, provided legal services to the Company in
1997, and such firm is continuing to provide legal services to the Company in
1998.
In 1997, Martha Rose C. Carson, a director of the Company provided interior
decorating services to Sumter National Bank and Orangeburg National Bank. The
fees for such services totaled $30,609. In the opinion of the Company, these
fees were reasonable in relation to the services provided.
During the year ended December 31, 1997, Orangeburg National Bank had
outstanding a loan to Edisto Aquatic, a partnership in which two of the five
partners are sons of Hugo S. Sims, Jr., Chairman of the Board and Chief
Executive Officer of the Company. The original principal amount of the loan was
$349,951 at a floating interest rate equal to prime. The loan was made in June
1990 and was initially unsecured, but was subsequently secured with several
pieces of real estate. The loan matured in 1993 and was renewed until October
1996. In January 1995, this loan was placed on nonaccrual status and has been
turned over to attorneys for collection. In June 1997 this loan was paid off and
all accrued interest was also paid. The balance of the loan at December 31,
1997, was $0. The bank did not incur any loss on this loan.
9
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
As required by Section 16(a) of the Securities Exchange Act of 1934, the
Company's directors, its executive officers and certain individuals are required
to report periodically their ownership of the Company's Common Stock and any
changes in ownership to the Securities and Exchange Commission. Based on a
review of Forms 3, 4 and 5 and written representations made to the Company, it
appears that all such reports for these persons were filed in a timely fashion
during 1997.
INDEPENDENT ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed J. W. Hunt & Company, LLP, independent certified public accountants,
as independent auditors for the Company and its subsidiaries for the current
fiscal year ending December 31, 1998, subject to ratification by the
shareholders. A representative of J. W. Hunt & Company, LLP is expected to be
present at the 1998 Annual Meeting and will be given the opportunity to make a
statement on behalf of the firm if he so desires, and will respond to
appropriate questions from shareholders.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-KSB
A copy of the Company's Annual Report on Form 10-KSB, including financial
statements, is available free of charge to each shareholder of record upon
written request to William W. Traynham, President, Community Bankshares, Inc.,
Post Office Box 2086, Orangeburg, South Carolina 29116. Copies of exhibits to
the Form 10-KSB will be provided upon written request to Mr. Traynham at a
charge of 20(cent) per page.
OTHER BUSINESS
The Board of Directors of the Company does not know of any other business
to be presented at the Annual Meeting. If any other matters are properly brought
before the Annual Meeting, however, it is the intention of the persons named in
the accompanying proxy to vote such proxy in accordance with their best
judgment.
By Order of the Board of Directors
William W. Traynham
President
Orangeburg, South Carolina
May 29, 1998
10
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PROXY
COMMUNITY BANKSHARES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS - MONDAY, JUNE 29, 1998
J. Steve Summers and Jerry V. Lewis, or either of them, with full power of
substitution, are hereby appointed as agent(s) of the undersigned to vote as
proxies all of the shares of Common Stock of Community Bankshares, Inc. held of
record by the undersigned on the Record Date at the Annual Meeting of
Shareholders to be held on June 29, 1998, and at any adjournment thereof, as
follows:
1. ELECTION OF [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
DIRECTORS. below to vote for all nominees
listed below
[ ] WITHHOLD AUTHORITY only on the following
nominees:
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL(S), WRITE
THE NOMINEE'S(S') NAME(S) ON THE LINE ABOVE.
NOMINEES: Anna O. Dantzler, William H. Nock, Samuel F. Reid, Jr., William W.
Traynham
2. PROPOSAL TO RATIFY APPOINTMENT OF J. W. HUNT & COMPANY, LLP, CERTIFIED
PUBLIC ACCOUNTANTS, AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. And, in the discretion of said agents, upon such other business as may
properly come before the meeting, and matters incidental to the conduct of
the meeting. (Management at present knows of no other business to be
brought before the meeting.)
THE PROXIES WILL BE VOTED AS INSTRUCTED. IF NO CHOICE IS INDICATED WITH RESPECT
TO A MATTER WHERE A CHOICE IS PROVIDED, THIS PROXY WILL BE VOTED "FOR" SUCH
MATTER.
Please sign exactly as name appears below. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title. If more than one
trustee, all should sign. All joint owners must sign.
Dated:-------------------, 1998 -----------------------------------
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