SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934.
(Amendment No. )
Filed by the Registrant 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 toss.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)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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 25, 2000
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 Orangeburg National Bank, 791 Broughton Street,
Orangeburg, South Carolina at 3:00 p.m., on Tuesday, April 25, 2000, 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, 2000; 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 March 15, 2000, 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, 2000
<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 25, 2000
-------------------------------------------------
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 Orangeburg National Bank, 791
Broughton Street, Orangeburg, South Carolina at 3:00 p.m. on April 25, 2000, 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, 2000.
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 on Form 10-K covering the Company's fiscal year ended
December 31, 1999, including financial statements, constitutes the Company's
Annual Report to Shareholders and is included (without exhibits) with this Proxy
Statement. Such Annual Report does not form any part of the material for
solicitation of proxies.
REVOCATION 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
15, 2000 (the "Record Date"), the Company had issued and outstanding 3,191,462
shares of Common Stock, which were held of record by approximately 1,419
<PAGE>
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, 2000, will be approved if the votes cast in
favor of the proposal at the Annual Meeting exceed the votes cast against the
proposal.
ACTIONS TO BE TAKEN BY THE PROXIES
If the shareholder appropriately specifies how the proxy is to be voted,
it will be voted in accordance with his specifications. If the shareholder does
not specify how the proxy is to be voted, the proxy 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, 2000. 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.
SHAREHOLDER PROPOSALS
Any shareholder of the Company who wishes to present a proposal for action
at the 2001 Annual Meeting of Shareholders must deliver the proposal to the
executive offices of the Company, 791 Broughton Street, Orangeburg, South
Carolina 29115, Attention: William W. Traynham, President. Any shareholder who
wishes for the Company to include any such proposal in its proxy statement and
form of proxy for the 2001 Annual Meeting of Shareholders must deliver the
2
<PAGE>
proposal to the executive offices of the Company to Mr. Traynham's attention no
later than December 4, 2000. If any shareholder proposal is not received by Mr.
Traynham by February 16, 2001, proxies solicited by management of the Company
will be voted on the proposal in the discretion of the designated proxy agents.
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, 2000, the number and
percentage of outstanding shares beneficially owned 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.
<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 FNB, Chairman and 88,830 (1) 2.78%
Chief Executive Officer of CBI
Alvis J. Bynum Director CBI and SNB 36,135 (2) 1.13%
Martha Rose C. Carson Director CBI and ONB 65,940 (3) 2.07%
Anna O. Dantzler Director CBI and ONB 94,500 (4) 2.96%
J. M. Guthrie Director CBI, Chairman of ONB, Chairman 162,750 (5) 5.10%
Post Office Box 649 Executive Committee of CBI
Orangeburg, SC 29116
Richard L. Havekost Director CBI and FNB 9,450 (6) **
Phil P. Leventis Director CBI and SNB, Chairman of SNB 37,746 (7) 1.18%
Jesse A. Nance Director CBI and FNB, President and Chief 10,052 (8) **
Executive Officer of FNB
William H. Nock Director CBI and SNB, Chief Executive Officer 56,380 (9) 1.77%
and President of SNB
Samuel F. Reid, Jr. Director CBI and ONB 48,703 (10) 1.53%
William W. Traynham Director CBI, ONB, SNB and FNB, President of 55,267 (11) 1.73%
CBI, Chief Financial Officer of CBI
J. Otto Warren, Jr. Director CBI and ONB, Vice Chairman of CBI 164,319 (12) 5.15%
Post Office Box 666
Orangeburg, SC 29116
Wm. Reynolds Williams Director CBI and FNB, 9,655 (13) **
Chairman of FNB
Michael A. Wolfe Director CBI and ONB, Chief Executive Officer 54,573 (14) 1.71%
and President of ONB
All executive officers and 908,455 (15) 27.69%
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.
3
<PAGE>
(1) Includes 1,260 shares owned by Nancy R. Ayers, Mr. Ayers' wife; 2,730
shares owned by an IRA for the benefit of Nancy R. Ayers; 2,730 shares held
by an IRA for the benefit of Mr. Ayers; and 5,250 shares subject to
currently exercisable stock options.
(2) Includes 5,874 shares owned by Marjorie F. Bynum, Mr. Bynum's wife; 9,450
shares held by Mr. Bynum as trustee for his grandnephews; and 3,150 shares
subject to currently exercisable options.
(3) Includes 5,250 shares subject to currently exercisable options.
(4) Includes 5,250 shares subject to currently exercisable options.
(5) Includes 157,500 shares owned jointly with Lou D. Guthrie, Mr. Guthrie's
wife; and 5,250 shares subject to currently exercisable options.
(6) Includes 1,050 shares subject to currently exercisable options.
(7) Includes 21,835 shares owned by the Dixie Beverage Co. of Sumter Profit
Sharing Plan; 10,500 shares owned by LPT Enterprises, a limited
partnership; 2,260 shares owned by an IRA for the benefit of Mr. Leventis;
and 3,150 shares subject to currently exercisable options.
(8) Includes 4,695 shares owned by an IRA for the benefit of Mr. Nance, and
5,250 shares subject to currently exercisable options.
(9) Includes 1,309 shares owned by the Nock Family Trust; 277 shares owned by
an IRA for the benefit of Linda H. Nock, Mr. Nock's wife; 38,251 shares
held by Alex Brown and Sons for benefit of Mr. Nock; 2,675 shares held by
Alex Brown & Sons for the benefit of Linda Nock; and 13,650 shares subject
to currently exercisable incentive stock options.
(10) Includes 14,053 shares held by Mr. Reid as trustee for his minor children;
16,800 shares owned by Rosa G. Reid, Mr. Reid's wife; and 5,250 shares
subject to currently exercisable options.
(11) Includes 18,436 shares owned jointly with Margaret S. Traynham, Mr.
Traynham's wife; 1,963 shares owned jointly with minor children; and 13,650
shares subject to currently exercisable incentive stock options.
(12) Includes 51,698 shares owned by Mildred J. Warren, Mr. Warren's wife; and
5,250 shares subject to currently exercisable options.
(13) Shares owned jointly with Mary T. Williams, Mr. Williams' wife; and 1,050
shares subject to currently exercisable options.
(14) Includes 2,073 shares owned by Joye McGrady Wolfe as custodian for minor
children; and 13,650 shares subject to currently exercisable incentive
stock options.
(15) Includes 86,512 shares subject to currently exercisable 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 2000 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
Directors
The table below sets forth the age, business experience for the past five
years, and term in office for each of the directors of the Company. Each of the
directors of the Company is also a director of one or more of the subsidiary
banks. There are no family relationships among any of the directors or executive
officers of the Company.
4
<PAGE>
<TABLE>
<CAPTION>
Name, Address (and age) Director Since Business Experience During the Past 5 Years
- ----------------------- --------------- -------------------------------------------
Nominees for Election to Serve until 2003
<S> <C> <C>
E. J. Ayers, Jr. (67) 1987* Chairman of the Board of Directors and Chief Executive
Orangeburg, S.C. Officer of the Company since January, 1999; retired
President, C.M. Dukes Oil Co., oil distributor and auto
parts supplier
Alvis J. Bynum (62) 1996 Retired President, Cities Supply Co., waterwork supplies
Sumter, S.C. distributor
J. Otto Warren, Jr. (72) 1987* President, Warren and Griffin Lumber Co., Inc. and Home
Orangeburg, S.C. Builder's Supply Co., Inc., builders' supply and lumber
manufacturer
Jesse A. Nance (46) 1998 President and Chief Executive Officer of Florence National
Florence S.C. Bank since July, 1998; Vice President of the Company from
June 1997 to July 1998; Vice President of First Union
National Bank of South Carolina from November 1989 to
June 1997
Current Directors Whose Terms Expire in 2002
Martha Rose C. Carson (64) 1987* President, Marty Rae, Inc., apparel and furniture
Orangeburg, S.C. retailers
J. M. Guthrie (72) 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 (53) 1996 President and Chief Executive Officer, Dixie Beverage
Sumter, S.C. 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 (53) 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 (42) 1992* President of Orangeburg National Bank since 1992,
Orangeburg, S.C. Chief Executive Officer of Orangeburg National Bank since
June 1996
Current Directors whose Terms Expire in 2001
Anna O. Dantzler (60) 1994 Retired since 1989; former customer service representative
Orangeburg, S.C. for Orangeburg National Bank
Richard L. Havekost (59) 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)
William H. Nock (54) 1996 President and Chief Executive Officer, Sumter National Bank
Sumter, S.C. since June 1996; Vice President of the Company from August,
1995 - 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. (51) 1994 Attorney, Horger, Barnwell & Reid
Orangeburg, S.C.
William W. Traynham (44) 1992* President and Chief Financial Officer of the Company
Orangeburg, S.C.
</TABLE>
- --------------------
* Includes service as Director of Orangeburg National Bank prior to formation of
the Company in 1992.
5
<PAGE>
Executive Officers
Information about Mr. Ayers, the Chief Executive Officer of the Company,
and Mr. Traynham, the President and Chief Financial Officer of the Company, is
set forth above under "--Directors." Donald Newnham, age 62, is Senior Vice
President, Operations, of the Company. Mr. Newnham has been employed by the
Company since March 1998. Prior to that time, from 1981 to 1998, Mr. Newnham was
Senior Vice President and Operations Administrator of First National Bank,
Orangeburg, South Carolina.
Meetings of the Board of Directors and Committees
The Board of Directors of the Company held 12 meetings during 1999. 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 during the period in
1999 for which he served as director.
The Company has an Audit Committee comprised of Alvis J. Bynum (chairman),
Martha Rose C. Carson, Anna O. Dantzler, Richard L. Havekost, Samuel F. Reid,
Jr. and J. Otto Warren, Jr., all of whom are non-employee directors. The Audit
Committee oversees the internal and external audit function. The Audit Committee
met once in 1999.
A sub-committee of the Company's Executive Committee of the Board of
Directors performs the duties of a Compensation Committee for the Company. The
members of this Committee during 1999 were E. J. Ayers, J. M. Guthrie, Phil P.
Leventis and Wm. Reynolds Williams. The Compensation Committee assists the Board
in setting compensation for the executive officers of the Company. The Committee
met once in 1999.
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, 1999,
1998 and 1997 the 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 1999.
6
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Awards
Compensation Securities All Other
------------ Underlying
Year Salary Bonus Options(2) Compensation (3)
---- ------ ----- ------------- ----------------
<S> <C> <C> <C> <C> <C>
E. J. Ayers, Jr.(1) 1999 $ 82,000 - 5,250 $8,200
Chairman and Chief Executive Officer of
the Company
William W. Traynham 1999 $137,500 $9,100 5,250 $13,750
President of the Company 1998 124,092 - - 11,674
1997 113,632 - 8,400 10,227
Michael A. Wolfe 1999 $137,500 $9,100 5,250 $13,750
President and Chief Executive Officer 1998 126,929 - - 11,565
of Orangeburg National Bank 1997 115,410 - 8,400 10,075
William H. Nock 1999 $130,000 13,000 5,250 $3,900
President and Chief Executive Officer 1998 115,382 - - 3,540
of Sumter National Bank 1997 101,644 - 8,400 3,049
Jesse A. Nance(4) 1999 $101,840 - 5,250 3,055
President and Chief Executive Officer 1998 94,741 - - 2,842
of Florence National Bank 1997 41,732 - - -
</TABLE>
- ------------------
(1) Mr. Ayers has only served as an employee of the Company since January 1999.
(2) Adjusted to reflect the 5% stock dividend issued January 31, 2000.
(3) This column sets forth Company contributions to the 401(K) plan on behalf
of the named executive officers.
(4) Mr. Nance became President of Florence National Bank in July 1998. From
June 1997 to July 1998, Mr. Nance served as Vice President of the Company
while assisting with organization of Florence National Bank.
Option Grants in Last Fiscal Year
The following table sets forth information about options granted to the
executive officers listed in the Summary Compensation Table in 1999. The amounts
in the table have been adjusted to reflect the 5% stock dividend issued January
31, 2000.
<TABLE>
<CAPTION>
Individual Grants(1)
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
Granted in 1999 (per share) Date Option Term(2)
------- ------- ----------- ---- --------------
5% 10%
------ -------
<S> <C> <C> <C> <C> <C> <C>
E. J. Ayers, Jr. 5,250 3% $12.83 2/15/09 $42,361 $107,351
William W. Traynham 5,250 3% $12.83 2/15/09 42,361 107,351
Michael A Wolfe 5,250 3% $12.83 2/15/09 42,361 107,351
Jesse A. Nance 5,250 3% $12.83 2/15/09 42,361 107,351
William H. Nock 5,250 3% $12.83 2/15/09 42,361 107,351
- --------------------
</TABLE>
(1) These options were granted on February 17, 1999 and became exercisable on
February 17, 2000.
(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 ten-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.
7
<PAGE>
Aggregated Option Exercises in 1999 and 1999 Year End Option Values
The following table sets forth information about stock options
exercised during 1999 and held at December 31, 1999 by the executive officers
listed in the Summary Compensation Table.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options 12/31/99 Options 12/31/99
Shares Acquired Value
Name on Exercise Realized(1) Exercisable Unexercisable Exercisable(2) Unexercisable
- ---- ----------- ----------- ----------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
E. J. Ayers - - 5,250 - $ 237 -
Jesse A. Nance - - 5,250 - 237 -
William H. Nock - - 13,650 - 44,379 -
William W. Traynham - - 13,650 - 44,379 -
Michael A. Wolfe 21,000 $189,500 13,650 - 44,379 -
</TABLE>
(1) The difference between the exercise price of $3.09 per share and
$13.375 per share, the closing price on the date of exercise, adjusted
for a 5% stock dividend on January 31,2000.
(2) Based on a fair value of $12.875 per share, the closing price on
December 31, 1999. Each of the above persons holds options for 5,250
shares at an exercise price per share of $12.83. Messrs. Nock, Traynham
and Wolfe also each have options for 8,400 shares at an exercise price
per share of $7.62.
Compensation Committee Interlocks And Insider Participation
A sub-committee of the Executive Committee of the Board performed the
duties of the Compensation Committee for the year ended December 31, 1999. The
sub-committee was comprised of E. J. Ayers, J. M. Guthrie, Phil P. Leventis and
Wm. Reynolds Williams. Mr. Ayers has served as Chairman and Chief Executive
Officer of the Company since January 1, 1999. Mr. Ayers excluded himself from
any Compensation Committee discussions concerning his own compensation. However,
he did participate in discussions concerning the compensation of other senior
executive officers.
The law firm of Willcox, Buyck and Williams, P.A. in which Wm. Reynolds
Williams, a director of the Company, is a member provided legal services to the
Company in 1999, and is continuing to provide legal services to the Company in
2000.
Board Report On Executive Officer Compensation
The Compensation Committee is required to provide the shareholders a
report discussing the basis for the Compensation Committee's action in
establishing compensation for the Company's and the Banks' executive officers.
The report is also required to discuss the relationship, if any, between the
Company's performance and executive officer compensation. Finally, the report
must specifically discuss the factors upon which the compensation paid the
Company's Chief Executive Officer was based.
The philosophy of the Company's compensation program is to offer
competitive compensation opportunities for executive officers of the Company and
its Banks, which are based on the individual's contribution and on the Company's
performance. The compensation paid is designed to retain and reward executive
officers that are capable of leading the Company in achieving its business
objectives in an industry characterized by complexity, competitiveness and
change. The compensation of the Company's and the Banks' executive officers is
reviewed and approved annually by the Compensation Committee.
Annual compensation for the Company's Chief Executive Officer and other
senior executive officers consists of three elements.
8
<PAGE>
-A base salary that is determined by individual contribution and
performance, and which is designed to provide a base level of compensation
comparable to that provided key executives of other financial institutions
of similar size and performance.
-A short-term cash incentive program that is directly linked to individual
performance and indirectly linked to the Company's performance.
-A long-term incentive program that provides from time to time stock
options to executive officers. Stock option grants provide an incentive
that focuses the executive's attention on managing the Company from the
perspective of a stockholder with an equity stake in the business. The
economic value of any stock option granted is directly tied to the future
performance of the Company's stock and will provide value to the recipient
only when the price of the Company's stock increases over the option grant
price.
For the Company's key executives, base salary is targeted to approximate
average salaries for individuals in similar positions with similar levels of
responsibilities who are employed by other banking organizations of similar size
and financial performance. During 1999, the Company set the Chief Executive
Officer's base salary at $82,000. This was Mr. Ayers' first year in the
position, and the Committee anticipated that the position would be part-time.
During 1999 the Committee set the base salary for each of Mr. Wolfe, President
of Orangeburg National Bank, Mr. Nock, President of Sumter National Bank, and
Mr. Traynham, President of Community Bankshares at $130,000. The base salary for
Mr. Nance, President of Florence National Bank, was set at $103,000 because the
bank was in its early stage of operation and was not yet profitable.
The Compensation Committee annually reviews national, regional, statewide
and local peer group salary data (to the extent available) to assist it in
setting appropriate levels of the Chief Executive Officer's and other executive
officers' base salaries. A second factor considered by the Compensation
Committee in setting and adjusting base salary was the Company's 1999 financial
performance, an 11.12% return on equity. This performance indicator is updated
annually, where needed, to help determine any adjustment in the Company's key
executives' salary.
For the Company's key executives, the Compensation Committee approved
annual cash incentive bonuses based on 1999 results payable in 2000 that ranged
from 0% to 10% of base salary. For purposes of determining the cash incentive
bonus payable during 2000 for 1999, the Company considered actual operating
results and individual performances of the involved officers. Mr. Wolfe and Mr.
Traynham were each approved for a seven-percent of 1999 base salary incentive
bonus. Mr. Nock was approved for a ten- percent of 1999 base salary incentive
bonus. Mr. Nance did not receive an incentive bonus because of the early
development stage of his bank. The Company also made seven-percent profit
sharing contributions to Messrs. Ayers', Traynham's and Wolfe's 401(K) accounts.
Mr. Nock's bank does not currently make profit sharing contributions to the
401(K) plan.
For the Company's key executives, the long-term stock option plan awards
during 1999 were designed to provide economic value to executives directly
linked to increases in shareholder value. The number of options granted was
determined in the sole discretion of the Board at 5,250 shares each. The
economic value of these awards will fluctuate from year to year, based on
changes in the Company's stock price.
This report is provided as a summary of current Board practice with regard
to annual compensation review and authorization of executive officer
compensation and with respect to specific action taken for the Chief Executive
Officer.
E. J. Ayers
J. M. Guthrie
Phil P. Leventis
Wm. Reynolds Williams
9
<PAGE>
Shareholder Performance Graph
The Company is required to provide its shareholders with a line graph
comparing the Company's cumulative total shareholder return with a performance
indicator of the overall stock market and either a published industry index or a
Company-determined peer comparison. Shareholder return (measured through
increases in stock price and payment of dividends) is often a benchmark used in
assessing corporate performance and the reasonableness of compensation paid
executive officers.
The performance graph below compares the Company's cumulative total return
over the most recent five year period with the Russell 2000 Index (reflecting
overall stock market performance for small cap stocks) and the SNL Southeast
Bank Index (reflecting changes in banking industry stocks in the southeastern U.
S.), and a peer group index consisting of all the publicly traded banks and
thrifts in South Carolina. Returns are shown on a total return basis, assuming
the reinvestment of dividends and a beginning stock index price of $100 per
share. Prior to November 20, 1996 the common shares of the Company were not
listed on any national stock exchange, consequently the values presented below
for prior periods are based on the limited information available to management
at that time. Values presented subsequent to that date are based on transactions
as reported through the American Stock Exchange.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Period Ending
------------------------------------------------------------------------
Index 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Community Bankshares, Inc. $100.00 $131.67 $165.62 $377.79 $390.49 $366.32
Russell 2000 100.00 128.45 149.64 183.10 178.44 216.37
SNL Southeast Bank Index 100.00 149.98 205.88 312.10 332.25 261.46
Publicly Traded Banks & Thrifts in SC 100.00 135.04 172.45 293.17 292.83 239.58
</TABLE>
Change of Control Agreements
In 1999, the Company entered into Change of Control Agreements with Messrs.
Ayers, Traynham, Wolfe, Nock and Nance. The principal purpose of the agreements
is to protect these executives against a change in control of the Company. The
agreements provide that, if within five years after the date of the agreements,
any change of control of the Company is effected, then the executive will be
entitled to certain benefits. A change of control of the Company will be deemed
to have been effected for purposes of the Agreement if: (i) voting control of
the Company is acquired, directly or indirectly, by any person or group acting
in concert, (ii) the Company is merged with or into any other entity and the
Company is not the surviving entity of the merger, (iii) voting control of any
subsidiary of the Company by which the executive is principally employed is
acquired, directly or indirectly, by any person or group acting in concert, or
(iv) any subsidiary of the Company by which the executive is principally
employed is merged with or into another entity that is not also a subsidiary of
the Company and such subsidiary is not the surviving entity of the merger. If
the executive terminates his employment with the Company or his employment is
terminated by the Company at any time within six months following the effective
date of a change in control, the executive will be entitled to a lump sum
payment equal to twice his annual salary in effect at the date of termination.
The Agreement requires certain adjustments in the event that the lump sum
payment exceeds the amount prescribed by Section 280G of the Internal Revenue
Code. The term of the Agreement extends automatically for an additional year on
each annual anniversary thereof, unless the Company gives 30 days prior notice
to the executive that the term will not be extended.
The foregoing description of the Change of Control Agreements is merely a
summary of such agreements and is qualified in its entirety by reference to the
agreements, the form of which is filed as an exhibit to the Company's Form
10-QSB for the quarter ended June 30, 1999.
10
<PAGE>
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 1999 totaled $121,000. Director fees paid by Orangeburg National
Bank in 1999 totaled $71,000. Director fees paid by Sumter National Bank in 1999
totaled $29,000. Florence National Bank paid no director fees in 1999.
In February 1999, the Company also granted a total of 64,050 non-qualified
stock options to non-employee directors. Each non-employee director was granted
non-qualified options to purchase 1,050 shares for each year, or fraction of a
year, during which he or she had served as a director, up to a maximum of 5
years (a maximum of 5,250 options to purchase shares). The options were granted
at an exercise price of $12.83 per share, which was equal to the fair market
value of the Company's common stock on the date of grant. All options became
exercisable in February, 2000 and expire in February, 2009. The foregoing
numbers of options granted and exercise prices have been adjusted to reflect the
5% stock dividend issued on January 31, 2000.
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, 1999 and 1998, were
$149,000 and $140,000, respectively.
1997 Employee Stock Option Plan
The 1997 Employee Stock Option Plan, as amended, reserves 285,600 shares of
Common Stock for issuance pursuant to the exercise of options granted pursuant
to the plan. Of the 285,600 shares reserved for issuance under the plan, 95,550
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 February, 1999, 109,410 incentive stock options were granted to
employees of the Company under the 1997 Plan. All of the options were granted at
an exercise price equal to the then current market price of $12.83 per share,
and became exercisable in February, 2000. The incentive stock options expire in
February, 2008. The foregoing numbers of shares, options and option prices have
been adjusted to reflect the 5% stock dividend issued January 31, 2000.
11
<PAGE>
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, 1999, were $7,581,000. 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
1999, and is continuing to provide legal services to the Company in 2000. 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 1999, and is continuing to provide legal services to the Company in 2000.
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 1999, except that the Company inadvertently failed to file for each
non-employee director a Form 5 for the year ended December 31, 1999 with respect
to the grant of options in February, 1999. It is the Company's practice to
assist directors with filing of Section 16(a) reports.
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, 2000, subject to ratification by the
shareholders. A representative of J. W. Hunt & Company, LLP is expected to be
present at the 2000 Annual Meeting and will be given the opportunity to make a
statement on behalf of the firm if he or she so desires, and will respond to
appropriate questions from shareholders.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K, including financial
statements (but not including exhibits), is being provided free of charge with
this Proxy Statement to each shareholder of record. Copies of exhibits to the
Form 10-K will be provided upon written request to William W. Traynham,
President, Community Bankshares, Inc., Post Office Box 2086, Orangeburg, South
Carolina 29116, at a charge of 20(cent) per page. Copies of the Form 10-K and
exhibits may also be downloaded from the Securities and Exchange Commission
website at http://www.sec.gov.
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, 2000
12
<PAGE>
PROXY
COMMUNITY BANKSHARES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS - TUESDAY - APRIL 25, 2000
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 25, 2000, 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: Three Year Terms: E. J. Ayers, Jr., Alvis J. Bynum, J. Otto Warren,
Jr. and Jesse A. Nance
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, 2000.
[ ] 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:_____________, 2000 ________________________________________
________________________________________
