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 April 27, 1999
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 Florence National Bank, 2009
Hoffmeyer Road, Florence, South Carolina at 3:00 p.m., on Tuesday, April 27,
1999, for the following purposes:
(1) To elect five directors to serve three-year terms, one director to
serve a two-year term, and one director to serve a one-year term;
(2) To vote on an amendment to the 1997 Employee Stock Option Plan to
increase the number of shares reserved for issuance under the Plan;
(3) To ratify the appointment of J. W. Hunt & Company, LLP as independent
auditors for the Company for the fiscal year ending December 31, 1999; and
(4) 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 March 17, 1999, 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, PLEASE
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
April 1, 1999
<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 April 27, 1999
-------------------------------------------------
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 Florence
National Bank, 2009 Hoffmeyer Road, Florence, South Carolina at 3:00 p.m. on
April 27, 1999, 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 ask 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 April 1, 1999.
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, 1998, including financial statements is included with this Proxy
Statement. 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, 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.
REVOCTION OF PROXY
Any record shareholder who returns 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 March
17, 1999 (the "Record Date"), the Company had issued and outstanding 3,037,288
shares of Common Stock, which were held of record by approximately 1,454
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.
<PAGE>
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
amendment of the 1997 Employee Stock Option Plan and ratification of appointment
of J. W. Hunt & Company, LLP as accountants for the fiscal year ending December
31, 1999, 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, "FOR" the
proposed amendment to the 1997 Employee Stock Option Plan, and "FOR" the
ratification of the appointment of J. W. Hunt & Company, LLP as accountants for
the fiscal year ending December 31, 1999. 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 2000 Annual Meeting of Shareholders must deliver the proposal to the
executive offices of the Company no later than February 16, 2000. 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 March 1, 1999, 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, ONB, SNB, and 79,000(1) 2.5%
FNB, Chairman and Chief
Executive Officer of CBI
Alvis J. Bynum Director CBI and SNB 30,879(2) 1.0%
Martha Rose C. Carson Director CBI and ONB 57,400 1.9%
Anna O. Dantzler Director CBI and ONB 85,000 2.7%
J. M. Guthrie Director CBI and ONB, 130,000(3) 4.2%
Chairman ONB, Chairman
Executive Committee of CBI
Richard L. Havekost Director CBI and FNB 8,000
Phil P. Leventis Director CBI and SNB, 32,609(4) 1.1%
Chairman of SNB
Jesse A. Nance Director CBI and FNB, 4,516(5)
President and Chief Executive
Officer of FNB
Donald Newnham Sr. Vice President, CBI 6,997(6)
William H. Nock Director CBI and SNB, Chief 48,297(7) 1.6%
Executive Officer and President
of SNB
Samuel F. Reid, Jr. Director CBI and ONB 41,384(8) 1.3%
William W. Traynham Director CBI, ONB, SNB and 48,604(9) 1.6%
FNB, President of CBI
J. Otto Warren, Jr. Director CBI and ONB, Vice 149,406(10) 4.8%
Chairman of CBI
Wm. Reynolds Williams Director CBI and FNB, 8,083(11)
Chairman of FNB
Michael A. Wolfe Director CBI and ONB, Chief 46,947(12) 1.5%
Executive Officer and
President of ONB
All executive officers and 777,122 25.07%
directors as a group (15 persons)
</TABLE>
- ------------------------------------
*CBI - the Company; ONB - Orangeburg National Bank; SNB - Sumter National Bank;
FNB - Florence National Bank.
**Percentages not shown are less than one percent.
(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.
3
<PAGE>
(2) Includes 5,561 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 130,000 shares owned jointly by Lou D. Guthrie, Mr. Guthrie's
wife.
(4) Includes 20,509 shares owned by the Dixie Beverage Co. of Sumter Profit
Sharing Plan; 10,000 shares owned by LPT Enterprises, a limited
partnership; and 2,100 shares owned by an IRA for the benefit of Mr.
Leventis.
(5) Includes 4,416 shares owned by an IRA for the benefit of Mr. Nance.
(6) Includes 125 shares owned by Janice C. Newnham, Mr. Newnham's wife; and 72
shares held by Mr. Newnham as custodian for his minor son.
(7) Includes 1,230 shares owned by the Nock Family Trust; 264 shares owned by
an IRA for the benefit of Linda H. Nock, Mr. Nock's wife; 35,900 shares
held by Alex Brown and Sons for benefit of Mr. Nock; 2,548 shares held by
Alex Brown & Sons for the benefit of Linda Nock; and 8,000 shares subject
to currently exercisable qualified stock options.
(8) 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.
(9) Includes 18,471 shares owned jointly with Margaret S. Traynham, Mr.
Traynham's wife; 1,826 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.
(10) Includes 48,558 shares owned by Mildred J. Warren, Mr. Warren's wife. (11)
Shares owned jointly with Mary T. Williams, Mr. Williams' wife.
(12) Includes 1,947 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.
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 fourteen. Four directors have been nominated for
re-election by the shareholders at the 1999 Annual Meeting to serve for
three-year terms. In addition, three directors of Florence National Bank who
were elected to the Board of the Company by the Directors in July, 1998, have
been nominated for election by the shareholders at the 1999 Annual Meeting. To
keep the number of directors in each class as nearly equal as possible, one of
the Florence directors has been nominated to serve until 2000, one has been
nominated to serve until 2001, and one has been nominated to serve until 2002.
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 is also a director of one or
more of the subsidiary banks.
4
<PAGE>
<TABLE>
<CAPTION>
Director Business experience
Name, Address (and age) Since during the past 5 years
- ----------------------- -------- -----------------------
Nominees for Election to Serve until 2002
<S> <C> <C>
Martha Rose C. Carson (63) 1987* President, Marty Rae, Inc., apparel and
Orangeburg, S.C. furniture retailers
J. M. Guthrie (71) 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 (52) 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
Wm. Reynolds Williams (52) 1998 Attorney, Managing Partner, Willcox, Buyck & Williams,
Florence, S.C. P.A.; Chairman of the Board of Directors of Florence
National Bank since July 1998.
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
<CAPTION>
Current Directors whose Terms Expire in 2001
<S> <C> <C>
Anna O. Dantzler (59) 1994* Retired since 1989; former customer service
Orangeburg, S.C. representative for Orangeburg National Bank
William H. Nock (53) 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. (50) 1994* Attorney, Horger, Barnwell & Reid
Orangeburg, S.C.
William W. Traynham (43) 1992* President of the Company
Orangeburg, S.C.
<CAPTION>
Current Directors Whose Terms Expire in 2000
<S> <C> <C>
E. J. Ayers, Jr. (66) 1987* Chairman of the Board of Directors and Chief Executive
Orangeburg, S.C. Officer of the Company since January, 1999; President, C.
M. Dukes Oil Co., oil distributor and auto parts supplier;
farmer
Alvis J. Bynum (61) 1996 Retired President, Cities Supply Co., waterwork supplies
Sumter, S.C. distributor
5
<PAGE>
J. Otto Warren, Jr. (71) 1987* President, Warren and Griffin Lumber Co., Inc.
Orangeburg, S.C. and Home Builder's Supply Co., Inc., builders'
supply and lumber manufacturer
<CAPTION>
Nominee for Election to Serve until 2000
<S> <C> <C>
Jesse A. Nance (45) 1998 President and Chief Executive Officer of Florence National
Florence S.C. Bank since July, 1998; Vice President of CBI from June
1997 to July, 1998; Vice President First Union National
Bank of South Carolina from November 1989 to June 1997
<CAPTION>
Nominee for Election to Serve until 2001
<S> <C> <C>
Richard L. Havekost (58) 1998 Licensed professional engineer; Principal in Raldex, Inc.
Florence S.C. (investor in motel properties); 1967-1993, employed by
Nucor Corp. in various capacities, including Vice President
of Nucor Corp. and General Manager of the Florence, South
Carolina Division of Nucor; Principal and Secretary of
RDBP, Inc. (retail beverage store)
</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.
Meetings of the Board of Directors and Committees
The Board of Directors of the Company held 12 meetings during 1998.
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.
The Company has an Audit Committee consisting of Alvis J. Bynum
(chairman), Martha Rose C. Carson, Anna O. Dantzler, Richard L. Havekost, Samuel
F. Reid, Jr. and J. Otto Warren, 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 1998.
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.
6
<PAGE>
MANAGEMENT COMPENSATION
Executive Officer Compensation
The following table summarizes for the years ended December 31, 1998,
1997 and 1996 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 1998.
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. 1998 $ 68,173 - $ 5,959
Chairman and Chief Executive Officer of 1997 55,587 8,000 5,003
the Company(1) 1996 40,939 - -
William W. Traynham 1998 $124,092 - $11,674
President of the Company 1997 113,632 8,000 10,227
1996 104,014 - 9,361
Michael A. Wolfe 1998 $126,929 - $11,565
President of Orangeburg National Bank 1997 115,410 8,000 10,075
1996 104,583 - 9,412
William H. Nock 1998 $115,382 - $3,540
President of Sumter National Bank 1997 101,644 8,000 3,049
1996 96,154 - -
</TABLE>
- -----------------
(1) Mr. Sims was appointed Chief Executive Officer in March 1992. He functioned
in this capacity on a part time basis until he retired December 31, 1998.
(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, 1998 by the executive officers listed in the Summary Compensation
Table.
7
<PAGE>
Aggregated Option Exercises in 1998 and 1998 Year End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Acquired Value Options 12/31/98 Options 12/31/98
Name on Exercise Realized(1) Exercisable Unexercisable Exercisable(2) Unexercisable
- ---- --------------- ----------- ----------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
William W. Traynham 20,000 $182,000 8,000 - $ 48,480 -
Michael A. Wolfe - - 28,000 - 251,680 -
Hugo S. Sims - - 8000 - 48,480 -
William H. Nock - - 8000 - 48,480 -
</TABLE>
(1) The difference between the exercise price of $3.90 per share and $13.00 per
share, the closing price on the date of exercise.
(2) Based on a fair value of $14.06 per share, the closing price of the stock
on December 31, 1998. The exercise price of the options held by Messrs.
Traynham, Sims and Nock was $8.00 per share. The exercise price of the
options held by Mr. Wolfe was $8.00 per share for 8,000 shares and $3.90
per share for 20,000 shares.
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 pays monthly fees of $300 to its directors. Director fees paid by
the Company in 1998 totalled $25,600. Director fees paid by Orangeburg National
Bank in 1998 totalled $68,400. Director fees paid by Sumter National Bank in
1998 totalled $32,400. Florence National Bank paid no director fees in 1998.
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, 1998 and
1997, were $140,000 and $122,000, respectively.
1997 Employee Stock Option Plan
For information about the 1997 Employee Stock Option Plan, see
"AMENDMENT TO THE 1997 EMPLOYEE STOCK OPTION PLAN" below.
AMENDMENT TO THE 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.
8
<PAGE>
At the 1999 Annual Meeting, shareholders will be asked to vote on an
amendment to the 1997 Employee Stock Option Plan for the purpose of increasing
the number of shares reserved for issuance under the Plan from 106,000 to
272,000. Of the additional shares, 105,000 will be reserved for issuance
pursuant to qualified stock options and 61,000 will be reserved for issuance
pursuant to the exercise of non-qualified stock options.
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 February, 1999, 104,200 incentive stock options were granted to
employees of the Corporation and 61,000 nonqualified stock options were granted
to outside directors of the Corporation. All of the options were granted at an
exercise price equal to the then current market price of $13.50 per share, and
become exercisable in February, 2000. The incentive stock options expire in
February, 2008, and the nonqualified options will expire in February, 2009.
The Board of directors recommends a vote "FOR" approval of the
amendment to the 1997 Employee Stock Option Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The banks have loan and deposit relationships with some of the
directors of the Company and some of the directors of the subsidiaries of the
Company 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, 1998, were $6,595,000. 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
1998, and is continuing to provide legal services to the Company in 1999. The
law firm of Willcox, Buyck and Williams, P.A. in which Wm. Reynolds Williams, a
director of the Company, is a member also provided legal services to the Company
in 1998, and is continuing to provide legal services to the Company in 1999.
In 1998, Martha Rose C. Carson, a director of the Company provided
interior decorating services to Florence National Bank. The fees for such
services totaled $89,119, and covered furniture, fixtures, wallpaper and
decorating services. In the opinion of the Company, these fees were reasonable
in relation to the services and goods provided.
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 1998, except as follows: each of Messrs. J. M. Guthrie, William H. Nock,
Alvis J. Bynum and Phil P. Leventis failed to file one Form 5 with respect to
one transaction. It is the Company's practice to assist directors with filing of
Section 16(a) reports. As a result of administrative oversight, the Company
failed to file these Forms 5 on a timely basis.
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, 1999, subject to ratification by the
shareholders. A representative of J. W. Hunt & Company, LLP is expected to be
present at the 1999 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
April 1, 1999
10
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PROXY
COMMUNITY BANKSHARES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS - TUESDAY - APRIL 27, 1999
Anna O. Dantzler and Samuel F. Reid, Jr., 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 April 27, 1999, and at any adjournment thereof, as
follows:
1. Election of FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT [ ]
Directors.
NOMINEES:
Three Year Terms: Martha Rose C. Carson, J. M. Guthrie, Phil P.
Leventis, Wm. Reynolds Williams, Michael A. Wolfe
Two Year Term: Richard L. Havekost
One Year Term: Jesse A. Nance
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
________________________________________________________________________________
2. Amendment to 1997 Employee Stock Option Plan to increase from 106,000 to
272,000 the number of shares reserved for issuance upon exercise of
options.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. 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, 1999.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. 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 your name appears below. When signing as attorney,
executor, administrator, trustee, or guardian, please give your full title. If
more than one trustee, all should sign. All joint owners must sign.
Dated: , 1999 -------------------------------------
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PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
