SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 toss.240.14a-11(c) orss.240.14a-12
BEDFORD BANCSHARES, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[BEDFORD BANCSHARES, INC. LETTERHEAD]
December 15, 2000
Dear Stockholder:
On behalf of the Board of Directors and management of Bedford
Bancshares, Inc., I cordially invite you to attend the Annual Meeting of
Stockholders to be held at the Olde Liberty Station, 515 Bedford Avenue,
Bedford, Virginia on Wednesday, January 24, 2001, at 2:00 p.m. The attached
Notice of Annual Meeting and Proxy Statement describe the formal business to be
transacted at the Meeting. During the Meeting, I will also report on the
operations of the Company. Directors and officers of the Company will be present
to respond to any questions stockholders may have. A representative of B.D.O.
Seidman, LLP, certified public accountants, will be present to respond to any
questions stockholders may have.
You will be asked to elect four directors and to ratify the appointment
of B.D.O. Seidman, LLP, as the Company's auditors for 2001. The Board of
Directors has unanimously approved each of these proposals and recommends that
you vote FOR them.
Your vote is important, regardless of the number of shares you own and
regardless of whether you plan to attend the Annual Meeting. I encourage you to
read the enclosed proxy statement carefully and sign and return your enclosed
proxy card as promptly as possible because a failure to do so could cause a
delay in the Annual Meeting and additional expense to the Company. A
postage-paid return envelope is provided for your convenience. This will not
prevent you from voting in person, but it will assure that your vote will be
counted if you are unable to attend the Annual Meeting. If you do decide to
attend the Annual Meeting and feel for whatever reason that you want to change
your vote at that time, you will be able to do so. If you are planning to attend
the Annual Meeting, please let us know by marking the appropriate box on the
proxy card.
Sincerely,
/s/Harold K. Neal
------------------------------------------
Harold K. Neal
President and Chief Executive Officer
<PAGE>
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BEDFORD BANCSHARES, INC.
125 W. MAIN STREET
BEDFORD, VIRGINIA 24523
(540) 586-2590
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 24, 2001
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Bedford Bancshares, Inc. (the "Company"), will be held at the Olde
Liberty Station, 515 Bedford Avenue, Bedford, Virginia on Wednesday, January 24,
2001, at 2:00 p.m., for the following purposes:
1. To elect four directors; and
2. To ratify the appointment of B.D.O. Seidman, LLP, as independent auditors
of the Company for the fiscal year ending September 30, 2001;
all as set forth in the proxy statement accompanying this notice, and to
transact such other business as may properly come before the Meeting and any
adjournments. The Board of Directors has set the close of business on December
5, 2000 as the record date for the determination of stockholders who are
entitled to notice of, and to vote at, the Meeting.
A copy of the Company's Annual Report for the year ended September 30,
2000 is enclosed.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU
OWN. WE ENCOURAGE YOU TO VOTE BY PROXY SO THAT YOUR SHARES WILL BE REPRESENTED
AND VOTED AT THE MEETING EVEN IF YOU CANNOT ATTEND. ALL STOCKHOLDERS OF RECORD
CAN VOTE BY WRITTEN PROXY CARD. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES
ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER TO VOTE PERSONALLY AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Nancy T. Snyder
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Nancy T. Snyder
Corporate Secretary
Bedford, Virginia
December 15, 2000
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
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<PAGE>
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PROXY STATEMENT
OF
BEDFORD BANCSHARES, INC.
125 W. MAIN STREET
BEDFORD, VIRGINIA 24523
(540) 586-2590
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ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 24, 2001
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GENERAL
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This proxy statement and the accompanying proxy card are being mailed
to stockholders of Bedford Bancshares, Inc. (the "Company") on or about December
15, 2000 in connection with the solicitation by the Company's Board of Directors
of proxies to be used at the annual meeting of stockholders (the "Meeting") to
be held at the Olde Liberty Station, 515 Bedford Avenue, Bedford, Virginia on
Wednesday, January 24, 2001, at 2:00 p.m.
All properly executed written proxies that are delivered pursuant to
this proxy statement will be voted on all matters that properly come before the
Meeting for a vote. If your signed proxy specifies instructions with respect to
matters being voted upon, your shares will be voted in accordance with your
instructions. If no instructions are specified, your shares will be voted (a)
FOR the election of directors named in Proposal 1, (b) FOR Proposal 2
(ratification of independent public accountants); and (c) in the discretion of
the proxy holders, as to any other matters that may properly come before the
Meeting. Your proxy may be revoked at any time prior to being voted by: (i)
filing with the Corporate Secretary of the Company (Nancy T. Snyder, at 125 W.
Main Street, Bedford, Virginia 24523) written notice of such revocation, (ii)
submitting a duly executed proxy bearing a later date, or (iii) attending the
Meeting and giving the Secretary notice of your intention to vote in person.
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VOTING STOCK AND VOTE REQUIRED
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The Board of Directors has fixed the close of business on December 5,
2000 as the record date for the determination of stockholders who are entitled
to notice of, and to vote at, the Meeting. On the record date, there were
1,993,292 shares of the Company common stock outstanding (the "Common Stock").
Each stockholder of record on the record date is entitled to one vote for each
share held.
The Articles of Incorporation of the Company ("Articles of
Incorporation") provides that in no event shall any record owner of any
outstanding Common Stock which is beneficially owned, directly or indirectly, by
a person who beneficially owns in excess of 10% of the then outstanding shares
of Common Stock (the "Limit") be entitled or permitted to any vote with respect
to the shares held in excess of the Limit. Beneficial ownership is determined
pursuant to the definition in the Articles of Incorporation and includes shares
beneficially owned by such person or any of his or her affiliates (as such terms
are defined in the Articles of Incorporation), or which such person or any of
his or her affiliates has the right to acquire upon the exercise of conversion
rights or options and shares as to which such person or any of his or her
affiliates or associates have or share investment or voting power, but neither
any employee stock ownership or similar plan of the Company or any subsidiary,
nor any trustee with respect thereto or any affiliate of
<PAGE>
such trustee (solely by reason of such capacity of such trustee), shall be
deemed, for purposes of the Articles of Incorporation, to beneficially own any
Common Stock held under any such plan.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) is necessary to constitute a quorum at the
Meeting. With respect to any matter, any shares for which a broker indicates on
the proxy that it does not have discretionary authority as to such shares to
vote on such matter (the "Broker Non- Votes") will not be considered present for
purposes of determining whether a quorum is present. In the event there are not
sufficient votes for a quorum or to ratify any proposals at the time of the
Meeting, the Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of directors, as set forth in Proposal I, the proxy
being provided by the Board enables a stockholder to vote for the election of
the nominees proposed by the Board, or to withhold authority to vote for the
nominee being proposed. Directors are elected by a plurality of votes of the
shares present, in person or represented by proxy, at a meeting and entitled to
vote in the election of directors.
As to the ratification of independent auditors as set forth in Proposal
2, by checking the appropriate box, a stockholder may: (i) vote "FOR" the item,
(ii) vote "AGAINST" the item, or (iii) vote to "ABSTAIN" on such item. Unless
otherwise required by law, Proposal 2 and any other matters shall be determined
by a majority of votes cast affirmatively or negatively without regard to (a)
Broker Non-Votes or (b) proxies marked "ABSTAIN" as to that matter.
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PRINCIPAL HOLDERS
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Persons and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The following
table sets forth, as of the record date, persons or groups who own more than 5%
of the Common Stock and the ownership of all executive officers and directors of
the Company as a group. Other than as noted below, management knows of no person
or group that owns more than 5% of the outstanding shares of Common Stock at the
record date.
<TABLE>
<CAPTION>
Percent of Shares of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding(%)
------------------------------------ -------------------- ----------------
<S> <C> <C>
Bedford Federal Savings Bank
Employee Stock Ownership Plan Trust ("ESOP")
125 W. Main Street
Bedford, Virginia 24523 150,038(1) 7.5
Harold K. Neal
125 W. Main Street
Bedford, Virginia 24523 119,088(2) 9.5
All directors and executive officers as a group
(12 persons) 453,341(3) 20.9
</TABLE>
(footnotes begin on next page)
-2-
<PAGE>
------------------
(1) The ESOP purchased such shares for the exclusive benefit of plan
employee participants with funds borrowed from the Company. These
shares are held in a suspense account and are allocated among ESOP
participants annually on the basis of total gross compensation as the
ESOP debt is repaid. The Board of Directors has appointed directors
Bond, Cooper, Garrett, and Putney to serve on the ESOP Committee (the
"ESOP Committee") and to serve as ESOP trustees (the "ESOP Trustees").
The Board of Directors also appointed Mr. Neal and Ms. Snyder to serve
on the ESOP Committee. The ESOP Trustees must vote all shares allocated
to participant accounts under the ESOP as directed by participants.
Unallocated shares and shares for which no timely voting directive is
received are voted by the ESOP Trustees as directed by the ESOP
Committee. As of the record date, 88,704 shares have been allocated
under the ESOP to participant accounts.
(2) The shares include 62,818 shares of Common Stock that Mr. Neal may
acquire through the exercise of stock options within 60 days of the
record date. Excludes 61,334 unallocated shares held by the ESOP for
which he serves as a member of the ESOP Committee.
(3) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust and other indirect ownership, over which
shares the individuals effectively exercise sole voting and investment
power, unless otherwise indicated. Includes options to purchase 174,122
shares of Common Stock that may be exercised within 60 days of the
record date to purchase shares of Common Stock under the 1994 stock
option plan. Excludes 61,334 unallocated common shares held by the ESOP
over which certain directors and executive officers, by their position
as either a member of the ESOP Trustees and/or ESOP Committee exercise
shared voting and investment power. Such individuals, as either a
member of the ESOP Trustees or ESOP Committee, disclaim beneficial
ownership with respect to the ESOP shares. "See Proposal I - Election
of Directors."
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the 1934 Act, requires the Company's directors and
executive officers to file reports of ownership and changes in ownership of
their equity securities of the Company with the Securities and Exchange
Commission and to furnish the Company with copies of such reports. To the best
of the Company's knowledge, all of the filings by the Company's directors and
executive officers were made on a timely basis during the 2000 fiscal year. The
Company is not aware of any beneficial owners of more than ten percent of its
Common Stock.
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PROPOSAL I - ELECTION OF DIRECTORS
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The Articles of Incorporation require that directors be divided into
three classes, as nearly equal in number as possible, each class to serve for a
three year period, with approximately one-third of the directors elected each
year. The Board of Directors currently consists of eight members, each of whom
also serves as a director of Bedford Federal Savings Bank (the "Savings Bank").
On September 20, 2000, W. Henry Walton, Jr., retired from the Board of Directors
and became a Director Emeritus. Jennie T. Allman was appointed to the Board of
Directors to fill the vacancy created by Mr. Walton. Four directors will be
elected at the Meeting.
Jennie T. Allman has been nominated by the Board of Directors for a
term of two years and Hugh H. Bond, William T. Powell, and Macon C. Putney have
been nominated by the Board of Directors for a term of three years
(collectively, the "Nominees"). The Nominees currently serve as directors of the
Company. The Nominees will serve for their respective terms or until his or her
successor has been elected and qualified.
The persons named as proxies in the enclosed proxy card intend to vote
for the election of the Nominees, unless the proxy card is marked to indicate
that such authorization is expressly withheld. Should the Nominees withdraw or
be unable to serve (which the Board of Directors does not expect) or
-3-
<PAGE>
should any other vacancy occur in the Board of Directors, it is the intention of
the persons named in the enclosed proxy card to vote for the election of such
person as may be recommended to the Board of Directors by the Nominating
Committee of the Board. If there are no substitute nominees, the size of the
Board of Directors may be reduced.
The following table sets forth the names, ages, terms of, and length of
board service for the persons nominated for election as directors of the Company
at the Meeting and each other director of the Company who will continue to serve
as director after the Meeting. Beneficial ownership of executive officers and
directors of the Company, as a group, is set forth under the caption "Principal
Holders."
<TABLE>
<CAPTION>
Common Stock
Year First Current Beneficially Owned Percent
Elected or Term to As of of Class
Name Age(1) Appointed(2) Expire December 5, 2000(3) (%)
---- ------ ------------ ------- ------------------- --------
<S> <C> <C> <C> <C> <C>
Board Nominee for Term to Expire in 2003
Jennie T. Allman 55 2000 2001 400 -- (5)
Board Nominees for Terms to Expire in 2004
Hugh H. Bond 68 1963 2001 32,063(4) 1.6
William T. Powell 69 1996 2001 400 -- (5)
Macon C. Putney 65 1977 2001 45,074(4) 2.2
Directors Continuing In Office
Harry W. Garrett, Jr. 64 1970 2002 40,384(4) 2.0
Harold K. Neal 63 1972 2002 119,088(4) 9.5
George N. Cooper 72 1988 2003 45,074(4) 2.2
William P. Pickett 67 1986 2003 43,973 2.2
</TABLE>
--------------------------
(1) At September 30, 2000.
(2) Refers to the year the individual first became a director of the Savings
Bank. All directors of the Savings Bank (except Ms. Allman and Mr. Powell)
became directors of the Company when it was incorporated in March 1994.
(3) The share amounts include 10,768 shares of Common Stock that such
individuals (except Ms. Allman and Messrs. Powell, Garrett and Neal) may
acquire through the exercise of stock options within 60 days of the record
date. For Messrs. Garrett and Neal, includes 7,768 and 62,818 shares,
respectively. Ms. Allman and Mr. Powell shares include no shares that may
be acquired by stock options.
(4) Excludes 61,334 unallocated shares of Common Stock held by the ESOP of the
Savings Bank for which such individuals serve as either a member of the
ESOP Committee and/or as an ESOP Trustee and exercise shared voting and
investment power. All such individuals disclaim beneficial ownership with
respect to such shares held in a fiduciary capacity.
(5) Less than 1% of outstanding shares of Common Stock.
Executive Officers of the Company
The following table sets forth information with respect to the
executive officers of the Company.
-4-
<PAGE>
<TABLE>
<CAPTION>
Age at
September 30,
Name 2000 Position
---- ---- --------
<S> <C> <C>
Harold K. Neal 63 President and Chief Executive Officer
Russell E. Millner 58 Vice President
James W. Smith 55 Vice President, Treasurer and Comptroller
Nancy T. Snyder 38 Corporate Secretary and Vice President
Michael G. Trussell 51 Vice President
</TABLE>
Biographical Information
Set forth below is certain information with respect to the directors
including each director, nominees and executive officers of the Company. All
directors and executive officers have held their present positions for five
years except Mr. Powell and Ms. Allman, who were appointed to the board in 1996
and 2000, respectively.
Nominees:
Jennie T. Allman is President of Ivy Hill Golf Club, Inc. Prior to this
position, Mrs. Allman was a high school teacher in Bedford County. She was later
employed by IBM and Norfolk Southern. She has served as chairman of the Bedford
County School Board and is currently serving on the Business Industry Council at
Radford University.
Hugh H. Bond served as President of the Savings Bank from 1970 to 1996.
On October 16, 1996, Mr. Bond was appointed Chairman of the Board. Mr. Bond has
been associated with Scott & Bond, Inc., an independent insurance and real
estate firm for over forty years and served as the firm's President and CEO
until September 1994, at which time he sold his interest in the corporation. Mr.
Bond currently serves as an Associate Real Estate Broker with Scott & Bond, Inc.
William T. Powell, CPA, retired in 1997 as a CPA and a partner in the
Lynchburg office of Cherry, Bekaert & Holland, L.L.P., a regional firm of public
accountants and consultants, where he had worked principally with financial
institutions. He is a member of various state and national professional
associations, with five years service on the American Institute of CPA's
Committee on Savings and Loan Accounting and Auditing. He is a past president of
the Virginia society for CPA's Committee on Financial Institutions, the
Lynchburg Chapter of the Institute of Management Accountants, and the Lynchburg
Host Lions Club.
Macon C. Putney is an attorney and has been engaged in general practice
with the law firm of Putney & Putney since 1962. He is a member of the Bedford
County and Virginia State Bar Associations. Mr. Putney is active in the Bedford
Baptist Church and is a former member of the Zoning Appeals Board for the City
of Bedford.
Continuing Directors:
Harry W. Garrett, Jr. is an attorney with the law firm of Garrett &
Garrett. He was admitted to the Bar in 1961 at which time he began to practice
in Bedford, Virginia. He is currently a member and
-5-
<PAGE>
past President of the Bedford County Bar Association and a member of the
Virginia and American Bar Associations, Virginia Trial Lawyers Association and
American Board of Trial Advocates. Mr. Garrett served as Commonwealth's Attorney
for Bedford County from 1968-1979. He has been active in community and civic
organizations and is a past President of the Bedford Lions Club.
Harold K. Neal was employed by the Savings Bank in 1971 as Executive
Vice President and Chief Executive Officer. Mr. Neal became President on October
16, 1996. Prior to joining Bedford Federal, Mr. Neal was employed with First
Federal Savings Bank in Lynchburg, Virginia for 13 years. He is a past Chairman
of the Board of Governors of the Virginia League of Savings Institutions and has
served three terms on the board of directors and the executive committee of the
America's Community Bankers. He is past member of the board of directors and
executive committee of the Virginia Bankers Association. Mr. Neal is active in
various community and civic affairs. Past directorships include the Bedford Area
YMCA, which he helped organize, Bedford Memorial Hospital, Bedford Centertown
Association, Bedford Country Club and the Lynchburg Home Builders Association.
He currently serves on the Boards of the Bedford Chapter of the American Heart
Association, and the Bedford Community Health Foundation.
George N. Cooper retired as an insurance agent of State Farm Insurance
Companies in January 1994 after 38 years of service. Currently, Mr. Cooper is
President and a stockholder of Montvale Car Wash, Inc. Mr. Cooper, a Shriner and
past Master of the Bedford Masonic Lodge in Moneta, Virginia, is involved in
many community and civic activities. He is a former Chairman of the Bedford
County Industrial Development Authority and currently serves as Vice Chairman of
the board of directors of the Moneta Medical Center.
William P. Pickett has been the Executive Director of the Elks National
Home since 1985. Mr. Pickett is a Past President of the Bedford Chapter of the
American Red Cross and a past member of the boards of directors of the Bedford
Area Chamber of Commerce, Bedford Main Street, Inc., the Library Advisory
Council and was a member of the Governor's Task Force regarding Homes for Adults
Legislation. He currently serves on the Board of Directors of Carilion Bedford
Memorial Hospital and the Bedford Life Saving Crew. He is also a member of the
Advisory Committee of the Bedford County School of Practical Nursing and the
City Industrial Development Authority.
Executive Officers Who Are Not Directors:
Russell E. Millner was employed by the Savings Bank in 1977 as Vice
President. Mr. Millner has served as Vice President of the Company since its
formation in 1994. Prior to joining the Savings Bank, Mr. Millner was Vice
President of Liberty Bank of Bedford. Mr. Millner's current responsibilities
include overseeing the Savings Bank's lending departments and branch operations.
James W. Smith was employed by the Savings Bank in 1979 as Comptroller.
Prior to joining the Savings Bank, Mr. Smith was Regional Accounting Manager for
Macke Company and served as a staff accountant with two regional CPA firms. He
received his Public Accounting Certification in 1975. He was elected Treasurer
of Bedford Federal in 1987 and Vice President/Treasurer in 1992 and is currently
the Savings Bank's Chief Financial Officer. Mr. Smith has served as Vice
President of the Company since its formation in 1994.
Nancy T. Snyder was employed by the Savings Bank in 1987 as Executive
Secretary and was promoted to Administrative Assistant in 1993. Ms. Snyder
became Corporate Secretary of the Company on January 1, 1995 and became Vice
President of the Company and Savings Bank in September 1999. Ms. Snyder is a
past President and Treasurer of the Bedford Junior Women's Club, past president
of the local chapter of the Institute for Financial Education, and is active in
the Bedford Area Chamber of Commerce.
-6-
<PAGE>
Michael G. Trussell was employed by the Savings Bank in 1996 and was
promoted to Vice President of the Savings Bank and the Company in 1997. Prior to
joining the Savings Bank, Mr. Trussell served as Vice President and Assistant
Director of Investor Relations for a regional bank holding company. His current
responsibilities include management and regulatory reporting, information
technology and other duties related to the Savings Bank's operations. Mr.
Trussell serves on the board of directors of the Bedford Area Chamber of
Commerce and is active in various community organizations.
Meetings and Committees of the Board of Directors
The Board of Directors of the Company conducts its business through
meetings of the Board of Directors and through activities of its committees. All
committees act for both the Company and Savings Bank. During the fiscal year
ended September 30, 2000, the Board of Directors held a total of 14 meetings. No
director attended fewer than 75% of the total meetings of the Board of Directors
and committees during the period of his service. In addition to other
committees, as of September 30, 2000, the Board of Directors had a Nominating
Committee, a Personnel Committee, and an Audit Committee.
The Nominating Committee consists of the Board of Directors.
Nominations to the Board of Directors made by stockholders must be made in
writing to the Secretary and received by the Company not less than 14 days nor
more than 60 days prior to any meeting of the stockholders called for the
election of directors; provided, however, that if fewer than 21 days notice of
the meeting is given to stockholders, such written notice shall be received not
later than the tenth day following the day on which notice of the meeting was
mailed to stockholders. In addition, stockholder nominations must meet other
applicable criteria as set forth in the Articles of Incorporation. The
Nominating Committee, which is not a standing committee, met once during the
2000 fiscal year.
The Personnel Committee is comprised of directors Powell, Garrett,
Putney and Cooper. This standing committee establishes the Savings Bank's salary
budget, director and committee member fees, and employee benefits provided by
the Savings Bank for approval by the Board. The Personnel Committee met once
during the 2000 fiscal year.
The Audit Committee is comprised of directors Bond, Cooper, Pickett and
Putney. The Audit Committee meets with the Savings Bank's outside auditors to
discuss the results of the annual audit and any related matters. The Board of
Directors has determined that each of the members of the Audit Committee is
independent in accordance with the small business issuer rules of the Nasdaq.
The Audit Committee is a standing committee and responsible for developing and
maintaining the Company's audit program. The Audit Committee met once during the
2000 fiscal year. In addition to one regularly scheduled meeting annually, the
Audit committee is available either as a group or individually to discuss any
matters that might affect the financial statements, internal controls or other
financial aspects of the operations of the Company.
The Board of Directors has reviewed, assessed the adequacy of and
approved a formal written charter for the Audit Committee. The full text of the
Charter of the Audit Committee appears as an Appendix to this Proxy Statement.
-7-
<PAGE>
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
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Director Compensation
The Company does not presently compensate its directors for meetings
held immediately preceding or following a Board of Directors meeting of the
Savings Bank. Directors are paid $250 per meeting attended for meetings held on
days that the Savings Bank's board does not meet. Chairman Bond is paid $800 per
meeting of the Board of Directors of the Savings Bank attended and all other
directors are paid $600 per meeting attended. Non-employee committee members are
paid $100 per meeting attended. Aggregate director fees paid during fiscal 2000
totaled $72,400.
Executive Officer Compensation
Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by the Chief Executive Officer of the
Savings Bank for the three years ended September 30, 2000. No other executive
officer of the Savings Bank had a salary and bonus during such periods that
exceeded $100,000 for services rendered in all capacities to the Savings Bank or
the Company in the aggregate.
<TABLE>
<CAPTION>
Annual Compensation
-------------------------------------------
Name and Other Annual All Other
Principal Position Year Salary($) Bonus ($) Compensation($)(1) Compensation($)
------------------- ------ --------- --------- ------------------ ----------------
<S> <C> <C> <C> <C> <C>
Harold K. Neal 2000 126,000 750 8,700 32,662 (2)
President and Chief 1999 119,000 1,000 7,950 31,007
Executive Officer 1998 112,000 500 8,400 29,544
</TABLE>
-----------------------------------
(1) Consist of board of directors fees.
(2) Represents employer contributions to the Savings Bank's 401(k) Savings
Plan and Money Purchase Plan of $2,530 and $9,022, respectively. Also
includes 2,110 shares of Common Stock allocated under the ESOP at $10
per share ($21,110). At September 30, 2000, such shares also had a fair
market value of $21,110.
Employment Agreement. The Savings Bank has entered into an employment
agreement with Harold K. Neal, President and Chief Executive Officer. The
employment agreement has a term of three years. The agreement may be terminable
by the Savings Bank for "just cause" as defined in the agreement. If the Savings
Bank terminates Mr. Neal without just cause, Mr. Neal will be entitled to a
continuation of his salary from the date of termination through the remaining
term of the agreement. In the event of involuntary termination of employment in
connection with, or within one year after, any change in control of the Savings
Bank, Mr. Neal will be paid in a lump sum an amount equal to 2.99 times Mr.
Neal's prior five year taxable compensation. In the event of a change in control
at September 30, 2000, Mr. Neal would have been entitled to a lump sum payment
of approximately $338,000.
Stock Awards
The following table sets forth information with respect to options to
purchase the Common Stock granted in 1995 to Mr. Neal and held by him as of
September 30, 2000.
-8-
<PAGE>
<TABLE>
<CAPTION>
Option/SAR Exercises and Fiscal Year End Value Table
----------------------------------------------------
Number of Securities
Underlying Value of Unexercised
Unexercised Options/ In-the-Money Options
Shares Acquired Value SARs at FY-End(#)(1) at FY-End ($)(1)
Name on Exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
---- -------------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Harold K. Neal -- -- 62,818 / 0 282,681 / 0
</TABLE>
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(1) Based upon an exercise price of $5.50 per share and an estimated price of
$10.00 of September 30, 2000.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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The Savings Bank, like many financial institutions, has followed a
policy of granting various types of loans to officers and directors. The loans
have been made in the ordinary course of business and on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with the Savings Bank's other customers, and do not
involve more than the normal risk of collectibility, or present other
unfavorable features.
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PROPOSAL II - RATIFICATION OF APPOINTMENT OF AUDITORS
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B.D.O. Seidman, LLP, Richmond, Virginia, was the Company's independent
public accountant for the 2000 fiscal year. The Board of Directors has appointed
B.D.O. Seidman, LLP to be its auditors for the fiscal year ending September 30,
2001, subject to ratification by the Company's stockholders. A representative of
B.D.O. Seidman, LLP is expected to be present at the Meeting to respond to
stockholders' questions and will have the opportunity to make a statement if the
representative so desires.
Ratification of the appointment of the auditors requires the
affirmative vote of a majority of the votes cast by the stockholders of the
Company at the Meeting. The Board of Directors recommends that stockholders vote
"FOR" the ratification of the appointment of B.D.O. Seidman, LLP as the
Company's auditors for the 2001 fiscal year.
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2002 ANNUAL MEETING STOCKHOLDER PROPOSALS
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In order to be considered for inclusion in the Company's proxy
statement for the annual meeting of stockholders to be held in 2002, all
stockholder proposals must be submitted to the Secretary of the Company at its
offices at 125 W. Main Street, Bedford, Virginia 24523, on or before August 17,
2001. Under the Company's Articles of Incorporation, stockholder proposals not
included in the Company's 2002 proxy statement, in order to be considered for
possible action by stockholders at the 2002 annual meeting of stockholders, must
be submitted to the Secretary of the Company, at the address set forth above by
November 24, 2001. In addition, stockholder proposals must meet other applicable
criteria set forth in the Articles of Incorporation of the Company in order to
be considered at the 2002 annual meeting.
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OTHER MATTERS
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The Board of Directors does not know of any other matters that are
likely to be brought before the Meeting. If any other matters, not now known,
properly come before the Meeting or any adjournments, the persons named in the
enclosed proxy card, or their substitutes, will vote the proxy in accordance
with their judgment on such matters.
-9-
<PAGE>
The cost of soliciting proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers, and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
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FORM 10-KSB
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A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 2000 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE
RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, BEDFORD BANCSHARES, INC., 125
W. MAIN STREET, BEDFORD, VIRGINIA 24523.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Nancy T. Snyder
-------------------------------------
Nancy T. Snyder
Corporate Secretary
Bedford, Virginia
December 15, 2000
-10-
<PAGE>
Appendix
BEDFORD BANCSHARES, INC.
AUDIT COMMITTEE CHARTER
Purpose
The Audit Committee of the Board of Directors of Bedford Bancshares,
Inc. (the "Company") shall be a standing committee and is responsible for
oversight of the Company's financial reporting and internal controls. The Audit
Committee (the "Committee") reports to the Board of Directors (the "Board") and
its primary function is to assist the Board in fulfilling its responsibility to
shareholders related to financial accounting and reporting, the system of
internal controls established by management and the adequacy of auditing
relative to these activities. The Committee is granted the authority to
investigate any activity of the Company and it is empowered to retain persons
having special competence as necessary to assist the Committee in fulfilling its
responsibilities.
While the Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
or are in accordance with generally accepted accounting principles. The
responsibility to plan and conduct audits is that of the Company's independent
accountants. The Company's management has the responsibility to determine that
the Company's financial statements are complete and accurate and in accordance
with generally accepted accounting principles. Nor is it the duty of the
Committee to assure the Company's compliance with laws and regulations. The
primary responsibility for these matters also rests with the Company's
management.
Committee Responsibilities
The following responsibilities are set forth as a guide with the
understanding that the Committee may diverge from this guide, as appropriate,
given the circumstances.
o Provide for an open avenue of communications between the
independent accountants and the Board and, at least once
annually, meet with the independent accountants in private
session.
o Review the qualifications and evaluate the performance of the
independent accountants and make recommendations to the Board
regarding the selection, appointment or termination of the
independent accountants. The independent accountants shall be
ultimately accountable to the Board and the Committee, as
representatives of shareholders.
o Receive on an annual basis a written statement from the
independent accountant detailing all relationships between the
independent accountant and the Company consistent with
requirements of the Independence Standards Board Standard 1, as
may be modified or supplemented. The Committee shall actively
engage in a dialogue with the independent accountants with
respect to any disclosed relationships or services that may
impact objectivity and independence of the independent
accountants, and take, or recommend that the full Board take,
appropriate action to oversee the independence of the independent
accountants.
o Review and discuss with management the audited financial
statements.
A-1
<PAGE>
o Review and discuss with the independent accountants (1) the
proposed scope of their examination with emphasis on accounting
and financial areas where the Committee, the independent
accountants or management believe special attention should be
directed, (2) results of their audit, (3) their evaluation of the
adequacy of the system of internal controls, (4) significant
disputes, if any, with management and (5) cooperation received
from management in the conduct of the audit.
o As a whole, or through the Committee Chair, review interim
results with the Company's financial officer and the independent
accountants prior to the public announcement of financial results
and the filing of the Form 10-QSB.
o Discuss with management and the independent accountants, any
issues regarding significant risks or exposures and assess the
steps management has taken to minimize such risk.
o Discuss with the independent accountants SAS 61 matters, as may
be, modified or supplemented.
o Make a recommendation to the Board as to whether the financial
statements should be included in the Company's Annual Report on
Form 10-KSB.
o Perform such other functions as assigned by law, the Company's
bylaws or as the Board deems necessary and appropriate.
Committee Membership
The membership of the Committee shall be:
o appointed by the Board,
o comprised of independent directors as defined by the Nasdaq, and
o comprised of at least two members.
Committee Meetings
Meetings will be held as required, but no less than once a year.
Minutes will be recorded and reports of committee meetings will be presented at
the next Board meeting.
Committee Charter Review and Approval
This Audit Committee Charter shall be reviewed, reassessed, and
approved by the Board annually and shall be included in the proxy at least every
three years.
A-2
<PAGE>
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BEDFORD BANCSHARES, INC.
125 W. MAIN STREET
BEDFORD, VIRGINIA 24523
(540) 586-2590
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ANNUAL MEETING OF STOCKHOLDERS
JANUARY 24, 2001
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The undersigned hereby appoints the Board of Directors of Bedford
Bancshares, Inc. ("Corporation"), or its designee, with full powers of
substitution, to act as attorneys and proxies for the undersigned, to vote all
shares of Common Stock of the Corporation which the undersigned is entitled to
vote at the Annual Meeting of Stockholders ("Meeting"), to be held at the Olde
Liberty Station, 515 Bedford, Avenue, Bedford, Virginia 24523 on Wednesday,
January 24, 2001, at 2:00 p.m. and at any and all adjournments thereof, as
follows:
FOR WITHHELD
--- --------
1. The election as director of the nominees,
listed below with terms to expire during
the year listed: |_| |_|
Jennie T. Allman (2003)
Hugh H. Bond (2004)
William T. Powell (2004)
Macon C. Putney (2004)
INSTRUCTIONS: To withhold your vote for any individual nominee, insert the
nominee's name on the line provided below.
----------------------------------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of B.D.O. Seidman, LLP
as independent auditors of Bedford Bancshares,
Inc. for the fiscal year ending September 30, 2001. |_| |_| |_|
The Board of Directors recommends a vote "FOR" the above propositions.
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THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
SIGNED PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
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<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elects to vote at the Meeting,
or at any adjournments thereof, and after notification to the Secretary of the
Corporation at the Meeting of the stockholder's decision to terminate this
proxy, the power of said attorneys and proxies shall be deemed terminated and of
no further force and effect. The undersigned may also revoke this proxy by
filing a subsequently dated proxy or by notifying the Secretary of the
Corporation of his or her decision to terminate this proxy.
Prior to the execution of this proxy, the undersigned acknowledges
receipt from the Corporation of a Notice of the Meeting, a Proxy Statement dated
December 15, 2000, and a 2000 Annual Report.
Dated: ______________, ____ |_| Please check here if you plan to attend the
Meeting.
------------------------------------- ---------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
------------------------------------- ---------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this Proxy card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
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PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
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