<PAGE>
<PAGE>
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
[x] Definitive Proxy Statement Use of the
[ ] Definitive Additional Materials Commission Only
[ ] Soliciting Material Pursuant to (as permitted by
Rule 14a-11(c) or Rule 14a-12 Rule 4a-6(e)(2))
COOPERATIVE 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 trans-
action computed pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is
calculated and state how it was determined):
------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
------------------------------------------------------
5. Total Fee Paid:
------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1. Amount Previously Paid:
------------------------------------------------------
2. Form, Schedule or Registration Statement No.:
------------------------------------------------------
3 Filing Party:
------------------------------------------------------
4. Date Filed:
------------------------------------------------------<PAGE>
<PAGE>
March 22, 1999
Dear Stockholder:
We invite you to attend the Annual Meeting of Stockholders
of Cooperative Bankshares, Inc. (the "Company") to be held at
The Howard Johnson Plaza Hotel, 5032 Market Street, Wilmington,
North Carolina, on Friday, April 30, 1999 at 11:00 a.m.
The attached Notice of Annual Meeting and Proxy Statement
describe the formal business to be transacted at the meeting.
During the meeting, we will also report on the operations of the
Company. Directors and officers of the Company as well as
representatives of PriceWaterhouseCoopers L.L.P., the Company's
independent auditors, will be present to respond to any
questions the stockholders may have.
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE EVEN
IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING. This will
not prevent you from voting in person but will assure that your
vote is counted if you are unable to attend the meeting. Your
vote is important, regardless of the number of shares you own.
Sincerely,
/s/ Frederick Willetts, III
Frederick Willetts, III
President and Chief
Executive Officer<PAGE>
<PAGE>
- ----------------------------------------------------------------
COOPERATIVE BANKSHARES, INC.
201 MARKET STREET
WILMINGTON, NORTH CAROLINA 28401
(910) 343-0181
- ----------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 30, 1999
- ----------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders (the "Meeting") of Cooperative Bankshares, Inc.
(the "Company") will be held at The Howard Johnson Plaza Hotel,
5032 Market Street, Wilmington, North Carolina, on Friday, April
30, 1999 at 11:00 a.m.
A Proxy Card and a Proxy Statement for the Meeting are
enclosed.
The Meeting is for the purpose of considering and acting
upon:
1. The election of three directors of the Company
for three year terms; and
2. The transaction of such other matters as may
properly come before the Meeting or any
adjournments thereof.
The Board of Directors is not aware of any other business
to come before the Meeting.
Any action may be taken on any of the foregoing proposals
at the Meeting on the date specified above or on any date or
dates to which, by original or later adjournment, the Meeting
may be adjourned. Stockholders of record at the close of
business on March 10, 1999 are the stockholders entitled to vote
at the Meeting and any adjournments thereof.
You are requested to fill in and sign the enclosed form of
proxy which is solicited by the Board of Directors and to mail
it promptly in the enclosed envelope. The proxy will not be
used if you attend and vote at the Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Daniel W. Eller
Daniel W. Eller
Secretary
Wilmington, North Carolina
March 22, 1999
- ----------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY
THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A
QUORUM. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
- ----------------------------------------------------------------<PAGE>
<PAGE>
- ----------------------------------------------------------------
PROXY STATEMENT
OF
COOPERATIVE BANKSHARES, INC.
201 MARKET STREET
WILMINGTON, NORTH CAROLINA 28401
ANNUAL MEETING OF STOCKHOLDERS
APRIL 30, 1999
- ----------------------------------------------------------------
- ----------------------------------------------------------------
GENERAL
- ----------------------------------------------------------------
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Cooperative
Bankshares, Inc. (the "Company"), holding company for
Cooperative Bank for Savings, Inc., SSB ("Cooperative Bank") to
be used at the Annual Meeting of Stockholders of the Company
(the "Meeting") which will be held at The Howard Johnson Plaza
Hotel, 5032 Market Street, Wilmington, North Carolina, on
Friday, April 30, 1999 at 11:00 a.m.
The accompanying Notice of Annual Meeting and this Proxy
Statement are being first mailed to
stockholders on or about March 22, 1999.
- ----------------------------------------------------------------
VOTING AND REVOCABILITY OF PROXIES
- ----------------------------------------------------------------
Proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein.
WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED FOR
THE NOMINEES FOR DIRECTORS SET FORTH BELOW. The Bylaws of the
Company provide that in the absence of stockholder direction, a
stockholder's proxy shall be voted as determined by a majority
of the Board of Directors. The proxy confers discretionary
authority on the persons named therein to vote with respect to
the election of any person as a director where the nominee is
unable to serve or for good cause will not serve, and matters
incident to the conduct of the Meeting.
Stockholders who execute proxies retain the right to revoke
them at any time. Unless so revoked, the shares represented by
such proxies will be voted at the Meeting and all adjournments
thereof. Proxies may be revoked by written notice to Daniel W.
Eller, Secretary of the Company, at the address shown above, by
filing of a later dated proxy prior to a vote being taken on a
particular proposal at the Meeting, or by attending the Meeting
and voting in person.
- ----------------------------------------------------------------
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
- ----------------------------------------------------------------
The securities entitled to vote at the Meeting consist of
the Company's common stock, par value $1.00 per share (the
"Common Stock"). Stockholders of record as of the close of
business on March 10, 1999 (the "Record Date") are entitled to
one vote for each share of Common Stock then held. As of the
Record Date, the Company had 3,050,996 shares of Common Stock
issued and outstanding. The presence, in person or by proxy, of
at least a majority of the total number of shares of Common
Stock outstanding and entitled to vote will be necessary to
constitute a quorum at the Meeting.
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, certain information as to the Common Stock
beneficially owned by persons owning in excess of 5% of the
Common Stock, by each of the executive officers named in the
Summary Compensation Table on page 7, and by all executive
officers and directors of the Company as a group. Management
knows of no person,
<PAGE>
<PAGE>
except as listed below, who owned more than 5% of the Company's
outstanding shares of the Common Stock as of the Record Date.
<TABLE>
<CAPTION>
Amount and Percent of
Nature of Shares of
Name and Address Beneficial Common Stock
of Beneficial Owner Ownership (1) Outstanding
- -------------------- ------------- -------------
<S> <C> <C>
Frederick Willetts, III
201 Market Street
Wilmington, North Carolina 28401 259,190 (2) 8.50%
O.C. Burrell, Jr.
201 Market Street
Wilmington, North Carolina 28401 23,334 (3) .76%
Edward E. Maready
201 Market Street
Wilmington, North Carolina 28401 44,953 (4) 1.47%
All executive officers and
directors as a group (12 persons) 551,419 (5) 18.09%
<FN>
________________
(1) Includes stock held in joint tenancy; stock owned as
tenants in common; stock owned or held by a spouse or other
member of the individual's household; stock allocated
through an employee benefit plan of the Company; stock
subject to options exercisable within 60 days; and stock
owned by businesses in which the officer or director is an
officer or major stockholder, or as a custodian or trustee,
or by spouses as a custodian or trustee, over which shares
such officer or director effectively exercises sole or
shared voting and/or investment power, unless otherwise
indicated.
(2) Includes 71,414 shares which Mr. Willetts has the right to
purchase pursuant to the exercise of stock options under
the 1990 Option Plan and 12,386 shares allocated to Mr.
Willetts' account under the Cooperative Bank for Savings,
Inc., SSB Employee Stock Ownership - 401(k) Savings Plan
(the "KSOP"). Also includes shares of Common Stock owned by
Mr. Willetts' spouse and minor children. Includes 129,770
shares in the estate of Frederick Willetts, Jr. of which he
is co-executor and trustee.
(3) Includes 14,204 shares which Mr. Burrell has the right to
purchase pursuant to the exercise of stock options under
the 1990 Option Plan and 5,160 shares allocated to Mr.
Burrell's account under the KSOP.
(4) Includes 30,744 shares which Mr. Maready has the right to
purchase pursuant to the exercise of stock options under
the 1990 Option Plan and 8,317 shares allocated to Mr.
Maready's account under the KSOP.
(5) Includes 203,786 shares which officers and directors as a
group have the right to purchase pursuant to the exercise
of stock options under the 1990 Option Plan and 38,711
shares allocated to executive officers under the KSOP.
Shares held by the KSOP have been counted only once in the
computation of ownership by all officers and directors as a
group.
</FN>
</TABLE>
2<PAGE>
<PAGE>
- ----------------------------------------------------------------
PROPOSAL I -- ELECTION OF DIRECTORS
- ----------------------------------------------------------------
The Company's Board of Directors is currently composed of
eight members. Pursuant to the Company's Articles of
Incorporation, the Board of Directors is divided into three
classes which shall be as nearly equal in number as possible.
The terms of only one class of directors expires at each annual
meeting. The Company's Articles of Incorporation generally
provide that directors are to be elected for terms of three
years and until their successors are elected and qualified.
Three directors will be elected at the Meeting to serve for
a three-year period, and until their respective successors have
been elected and qualified. The Board of Directors has
nominated to serve as directors Paul G. Burton, H. Thompson
King, III and R. Allen Rippy for three year terms. Each of
these nominees is currently a member of the Board. It is
intended that the persons named in the proxies solicited by the
Board will vote for the election of the named nominees. If any
nominee is unable to serve, the shares represented by all valid
proxies which have not been revoked will be voted for the
election of such substitute as the Board of Directors may
recommend. At this time, the Board knows of no reason why any
nominee might be unavailable to serve.
Under the Company's Bylaws, directors shall be elected by a
majority of those votes cast by stockholders at the Meeting.
Votes which are not cast at the Meeting, either because of
abstentions or broker non-votes, are not considered in
determining the number of votes which have been cast for or
against the election of a nominee.
The following table sets forth the names of the Board of
Directors' nominees for election as directors and of those
directors who will continue to serve as such after the Meeting.
Also set forth is certain other information with respect to each
person's age, the year he first became a director of Cooperative
Bank, the expiration of his term as a director, and the number
and percentage of shares of the Common Stock beneficially owned.
With the exception of Mr. Rippy, who was appointed in 1997, all
of the individuals were initially appointed as directors of the
Company in connection with the Company's incorporation in April
1994.
<TABLE>
<CAPTION>
Shares of
Year First Common Stock
Age at Elected as Current Beneficially
December 31, Director of Term Owned at Percent
Name 1998 Cooperative Bank to Expire February 9, 1999(1) of Class
- ---- ------------ ---------------- --------- ------------------- --------
<S> <C> <C> <C> <C> <C>
BOARD NOMINEES FOR TERM TO EXPIRE IN 2002
Paul G. Burton 63 1992 1999 11,480 (2) .37%
H. Thompson King, III 56 1990 1999 13,118 (2) .43%
R. Allen Rippy 47 1997 1999 10,524 (2) .34%
DIRECTORS CONTINUING IN OFFICE
Frederick Willetts, III 49 1976 2000 259,190 (3) 8.50%
F. Peter Fensel, Jr. 49 1990 2000 14,248 (2) .46%
William H. Wagoner 71 1968 2000 8,546 (2) .28%
James D. Hundley, M.D. 57 1990 2001 29,914 (2) .98%
O. Richard Wright, Jr. 54 1992 2001 53,048 (2) 1.74%
</TABLE>
(Footnotes on following page)
3<PAGE>
<PAGE>
_______________
(1) Includes stock held in joint tenancy; stock owned as tenants
in common; stock owned or held by a spouse or other member
of the individual's household; stock allocated through an
employee benefit plan of the Company; stock subject to
options exercisable within 60 days; and stock owned by
businesses in which the director is an officer or major
stockholder, or as a custodian or trustee, or by spouses as
a custodian or trustee, over which shares the director
effectively exercises sole or shared voting and/or
investment power, unless otherwise indicated.
(2) Includes 1,824, 3,424, 4,924, 4,424, 5,424, 3,924 and 5,736
shares which Messrs. Hundley, Wright, Burton, King, Rippy,
Fensel and Wagoner have the right to purchase pursuant to
the exercise of stock options under the 1990 Option Plan.
(3) Includes 71,414 shares which Mr. Willetts has the right to
purchase pursuant to the exercise of stock options under the
1990 Option Plan and 12,386 shares allocated to Mr. Willetts'
account under the KSOP. Also includes shares of Common
Stock owned by Mr. Willetts' spouse and minor children.
Includes 129,770 shares in the estate of Frederick Willetts,
Jr., of which he is co-executor and trustee.
The principal occupation of each director of the Company for
the last five years is set forth below.
PAUL G. BURTON is President of Burton Steel Company of
Wilmington, North Carolina. He is a native of Wilmington and a
graduate of North Carolina State University. Mr. Burton is
active in the National Society of Professional Engineers and is
a Director of the Wilmington Industrial Development Commission.
He is a past President of the North Carolina Azalea Festival.
He has served on the Governor's Board for Travel and Tourism,
the Mayor's Task Force on Economic Development and the North
Carolina Ports Railway Commission.
F. PETER FENSEL, JR. is President of F. P. Fensel Supply
Company in Wilmington, North Carolina. He has served as
President of the North Carolina Azalea Festival, the Cape Fear
Sertoma Club, Wilmington Industrial Development and the Brigade
Boys Club. He was Vice President of the Greater Wilmington
Chamber of Commerce and has served as a board member of
Plantation Village and the Cape Fear Area United Way. He
currently serves as a board member of the Historic Wilmington
Foundation and the Foundation of the University of North
Carolina at Wilmington.
JAMES D. HUNDLEY, M.D. is the President of the Wilmington
Orthopaedic Group, P.A.; past President of the North Carolina
Orthopaedic Association, the New Hanover-Pender Medical Society,
the Cape Fear Academy Board of Trustees, and the Wilmington
Rotary Club; past Chief of Staff of the New Hanover Regional
Medical Center; past chairman of the New Hanover Public Library
Advisory Board; and was Athletic Team Physician for the
University of North Carolina at Wilmington for over twenty
years. He is the director of the Rotary/Orthopaedic Crippled
Children's Clinic and a member of the National Board for
Certification of Orthopaedic Physicians' Assistants. He is
President of the UNC Medical Alumni Association; Clinical
Assistant Professor in the Department of Surgery at UNC
Hospitals in Chapel Hill, and adjunct professor at UNC-
Wilmington. Dr. Hundley is a member of the Governor's
Osteoporosis Task Force and was listed in the BEST DOCTORS IN
AMERICA, SOUTHEAST REGION (1996-1997 and 1998-1999).
H. THOMPSON KING, III was named President of Hanover Iron
Works, Inc. in 1982. He joined the firm in 1973, representing a
fourth generation succession of the founders of the company. He
holds an undergraduate degree in Economics from North Carolina
State University and a Masters Business Administration degree
from the University of North Carolina at Chapel Hill. Hanover
Iron Works, Inc. specializes in metal fabrication, roofing,
heating and air conditioning. Mr. King is a native of
Wilmington, North Carolina. He is a member of the Wilmington
Rotary Club. He has served as President of Carolina Roofing and
Sheet Metal Contractors Association, the New Hanover County
Airport Authority and was Vice President of the Wilmington
Chamber of Commerce.
R. ALLEN RIPPY is Vice President of Rippy Cadillac
Oldsmobile, Inc. He joined the family business in 1973 after
graduating from the University of North Carolina at Chapel Hill.
Mr. Rippy is a native of Wilmington. He has served on the Board
of the North Carolina Automobile Dealers Association for six
years, the Wilmington YMCA and the Cape Fear Academy. He has
been very active with many charitable organizations in the
Wilmington area through his business' "Caring and Sharing"
Program which he founded. He has for many years been extremely
active with the youth programs of his church.
4
<PAGE>
<PAGE>
WILLIAM H. WAGONER was the Chancellor of the University of
North Carolina at Wilmington from 1969 to 1990. Dr. Wagoner was
past Chairman of the Board of Directors of the Area Health
Education Center and is Trustee Emeritus of the Board of
Trustees of Cape Fear Memorial Hospital. He was named
Chancellor Emeritus by the University of North Carolina Board of
Governors at his retirement.
FREDERICK WILLETTS, III has been employed by the Bank since
1972 and has served as the Chief Executive Officer and President
since June 1, 1991. He was named to the additional position of
Chairman of the Board during 1998. Mr. Willetts currently
serves as Chairman of the North Carolina Bankers Association and
is on the Board of Directors of America's Community Bankers. He
has served on the Thrift Institutions Advisory Council to the
Federal Reserve Board, as President of the Southeastern
Conference of the U.S. Savings and Loan League, the Greater
Wilmington Chamber of Commerce, the Foundation of the Episcopal
Diocese of East Carolina and Vice Chairman of the Foundation of
the University of North Carolina at Wilmington. He also
currently serves as President of Wilmington Industrial
Development (Committee of 100) and is on the Vestry of St. James
Church. Mr. Willetts was the recipient of the New Hanover
Distinguished Service Award in 1987, the "Five Outstanding Young
North Carolinians" Award in 1988, the Glen Troop Award for
outstanding public service to the thrift industry in 1990 and
the Wilmington Good Citizenship Award in 1994.
O. RICHARD WRIGHT, JR. is the senior partner in the law firm
of McGougan, Wright, Worley & Harper, established in Tabor City,
North Carolina in 1932, and has been associated with the firm
since 1971. Mr. Wright is the owner of Flat Bay Farms and is
co-owner of residential and commercial rental property firms
known as WSIC and FBIC. He and his wife, Jenny McKinnon Wright,
also own the River Inn located at 314 South Front Street in
Wilmington. Mr. Wright served in the North Carolina House of
Representatives for seven terms during the years 1974 to 1988.
He serves on the Board of Directors of a number of civic and
community organizations including the Tabor City Committee of
100, the Southeastern Community College Foundation, the Lewis A.
Sikes Foundation, the Olive Battle Wright Scholarship
Foundation, the Columbus County Committee of 100, the North
Carolina Retail Merchants Association, the University of North
Carolina General Alumni Association and the Cape Fear Council
Boy Scouts of America. Mr. Wright has just served his term as
President of the Law Alumni Association of the University of
North Carolina at Chapel Hill. He has just been elected as
President of the Tabor City Civitan Club, as President of the
Southeastern Genealogical Society and Vice-President of the
Southeastern Community College Foundation.
- ----------------------------------------------------------------
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
- ----------------------------------------------------------------
The Board of Directors of the Company conducts business
through meetings of the Board and of its committees. During the
fiscal year ended December 31, 1998, the Board of Directors held
13 meetings. No director attended fewer than 75% of the total
meetings of the Board of Directors and committee meetings on
which such Board member served during this period.
The Company's Audit Committee consists of Directors Rippy,
King and Fensel. This committee meets periodically on call by
the Internal Auditor for the purpose of reviewing the activities
and findings of the Internal Audit Department. The Audit
Committee met three times during the fiscal year ended December
31, 1998.
The Personnel Committee, composed of Directors Wagoner,
Hundley, Wright and Burton, meets periodically for the purpose
of reviewing compensation of all employees and officers and met
three times during the fiscal year ended December 31, 1998 for
this purpose.
The full Board of Directors selects nominees for election as
directors. The Company does not have a standing nominating
committee.
5<PAGE>
<PAGE>
- ----------------------------------------------------------------
EXECUTIVE COMPENSATION
- ----------------------------------------------------------------
BOARD PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL. The function of administering the Company's
executive compensation policies is currently performed by the
Personnel Committee of the Board of Directors of Cooperative
Bank (the "Committee"), which is composed entirely of outside
directors. The Committee is responsible for developing and
making recommendations to the Board concerning compensation paid
to the Chief Executive Officer and each of the other executive
officers, and for administering all aspects of the Company's
executive compensation program, including employee benefit
plans.
The Committee makes its recommendations to the Board
concerning executive compensation on the basis of its annual
review and evaluation of the Company and Cooperative Bank's
corporate performance and the compensation of its executive
officers as compared with other companies similar in size and
market capitalization.
EXECUTIVE COMPENSATION PROGRAM. The Company's executive
compensation program, which was developed with the objective of
attracting and retaining highly qualified and motivated
executives, and recognizing and rewarding outstanding
performance, has the following components: (i) base salaries
(subject to the terms of existing employment agreements), (ii)
stock options, and (iii) miscellaneous other fringe benefits.
Base salary increases are determined on the basis of a
combination of cost of living and individual and corporate
performance. During the year ended December 31, 1998, base
salaries of executive officers were determined by a review of
peer group compensation. The compensation survey results of the
Savings and Community Bankers of America, survey results of the
North Carolina Community Bankers Association and SNL Securities
Executive Compensation Review were compared to salaries of the
Company's executive officers. Peer groups were compared to the
Company by asset range and geographic region. By comparison,
salaries for the Bank's executive officers were on the low to
average end of the range for comparable peer groups.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The base
salary of the Chief Executive Officer is established by the
terms of the employment agreement entered into between Mr.
Willetts and Cooperative Bank in 1991 (see "Employment and
Severance Agreements" below). The Chief Executive Officer's
base salary under the agreement was determined on the basis of
the Committee's review and evaluation of the compensation of
chief executives of other thrift companies similar in size and
market capitalization to Cooperative Bank. The chief executive
officer's salary is compared to the same survey results as those
of the other executive officers. The geographic regions used
for the surveys were North Carolina financial institutions and
the South Atlantic states financial institutions. The survey
asset range used by the Savings and Community Bankers of America
was $300 to $500 million and the asset range used by the North
Carolina Bankers Association was $200,000,000 - above. The
asset range for the SNL Securities Executive Compensation Review
was $250,000,000 to $500,000,000 with 81 institutions reporting
and 10 reporting from the Southeast region. The number of
institutions reporting data for the Savings and Community
Bankers survey in the $300 to $500 million asset group was 55
and the number reporting for the South Atlantic region was 57
The number of institutions reporting for the North Carolina
Community Bankers Association by assets in excess of $200
million was 14.
PERSONNEL COMMITTEE OF THE BOARD OF DIRECTORS
Paul G. Burton
James D. Hundley, M.D.
William H. Wagoner
O. Richard Wright, Jr.
6
<PAGE>
<PAGE>
SUMMARY COMPENSATION TABLE. The following table sets forth
the cash and noncash compensation for each of the last three
fiscal years awarded to or earned by the Chief Executive Officer
and the Chief Operating Officer. Except as set forth below, no
other executive officer received salary and bonuses in excess of
$100,000 during the year ended December 31, 1998.
<TABLE>
<CAPTION>
Long-Term Compensation
Awards
Annual Compensation ---------------------
Name and Principal ------------------- Securities All Other
Position Year Salary Bonus Underlying Options Compensation
- ------------------ ---- ------ ----- --------------------- ------------
<S> <C> <C> <C> <C> <C>
Frederick Willetts, III 1998 $180,000 $ 20,000 -- $20,200 (1)
Chairman, President 1997 180,000 20,000 -- 13,200 (1)
and Chief Executive 1996 180,000 -- -- 13,200 (1)
Officer
O.C. Burrell, Jr. 1998 110,000 15,000 --
Chief Operating 1997 97,333 -- 4,204 --
Officer 1996 84,500 -- -- --
Edward E. Maready 1998 102,000 -- -- --
Sr. Vice President 1997 90,000 -- -- --
Treasurer 1996 81,000 -- -- --
<FN>
___________
(1) Represents directors' fees.
</FN>
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-
END VALUE TABLE. The following table sets forth information
concerning the value of options held by Messrs. Willetts, III,
Burrell, Jr. and Maready as of December 31, 1998. Neither
individual exercised stock options during fiscal year 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Options In-the-Money Options
at Fiscal Year-End at Fiscal Year-End
Name (All Immediately Exercisable) (All Immediately Exercisable)(1)
---- ----------------------------- --------------------------------
<S> <C> <C>
Frederick Willetts, III 71,414 $ 721,282
O.C. Burrell, Jr. 14,204 11,964
Edward E. Maready 30,774 310,817
<FN>
___________
(1) Difference between fair market value of underlying Common Stock at fiscal year-end
($11.875 per share) and the exercise price, as adjusted.
</FN>
</TABLE>
7
<PAGE>
<PAGE>
PENSION PLAN. The following table shows the estimated
annual benefits payable under the Pension Plan (ten year certain
and life) based on an employee's years of service and
compensation, as calculated under the plan. Under the Internal
Revenue Code of 1986, as amended (the "Code"), benefits under
the plan are currently limited to $120,000 per year.
Alternatively, the Pension Plan provides that payment of
benefits may be made in the form of a lump sum payment equal to
the present value of such benefits.
<TABLE>
<CAPTION>
Years of Service
---------------------------------------------------------------
Remuneration 5 10 15 20 25 30 35
- ------------ ---- -------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 10,000 $ 3,800 $ 4,200 $ 4,500 $ 4,900 $ 5,300 $ 5,700 $ 6,100
30,000 11,600 13,000 14,300 15,700 17,100 18,500 19,900
60,000 23,300 26,200 29,000 31,900 34,800 37,700 40,600
90,000 35,000 39,400 43,700 48,100 52,500 56,900 61,300
120,000 46,700 52,600 58,400 64,300 70,200 76,100 82,000
150,000 58,400 65,800 73,100 80,500 87,900 95,300 102,700
160,000 62,300 70,200 78,000 85,900 93,800 101,700 109,600
170,000 66,200 74,600 82,900 91,300 99,700 108,100 116,500
200,000 77,900 87,800 97,600 107,500 117,400 127,300 137,200
230,000 89,600 101,000 112,300 123,700 135,100 146,500 157,900
</TABLE>
As of December 31, 1998, Messrs. Willetts, III, Burrell,
Jr., and Maready had twenty-six, six, and twenty-one years,
respectively, of service under the Pension Plan.
EMPLOYMENT AND SEVERANCE AGREEMENTS. Cooperative Bank
maintains an employment agreement with Frederick Willetts, III,
Chairman, President and Chief Executive Officer. The agreement
has a term of five years, and provides for a current annual base
salary of $180,000. The employment agreement provides for a
salary review by the Board of Directors not less often than
annually with increases to be made in the Board's sole
discretion, and also provides for inclusion in any customary
fringe benefits and vacation and sick leave. The agreement is
terminable upon death, and is terminable by Cooperative Bank for
"just cause" as defined in the agreement. If Cooperative Bank
terminates Mr. Willetts' employment without just cause, he will
be entitled to a continuation of his salary and other benefits
from the date of termination through the remaining term of the
agreement. Mr. Willetts is able to terminate his agreement by
providing written notice to the Board of Directors.
Mr. Willetts' employment agreement contains a provision
stating that in the event of the voluntary or involuntary
termination of employment in connection with, or within one year
after, any change in control of the Company or Cooperative Bank,
Mr. Willetts will be paid a sum equal to 2.99 times the average
annual compensation he received during the five taxable years
immediately prior to the date of change in control. "Control"
generally refers to the ownership, holding or power to vote more
than 25% of the Company's or Cooperative Bank's voting stock,
the control of the election of a majority of directors or the
exercise of a controlling influence over the management or
policies of the Company or Cooperative Bank by any person or
group.
The Bank also maintains severance agreements with O.C.
Burrell, Jr., Chief Operating Officer of the Bank and Edward E.
Maready, Senior Vice President and Treasurer of the Bank. Each
agreement provides that in the event of the involuntary
termination of the respective officer's employment with the Bank
in connection with, or within one year after, any change in
control of the Bank, he shall be paid an amount equal to, in the
case of Mr. Burrell, 2.99 times the total cash compensation paid
to him during the 12 month period preceding such termination and
in the case of Mr. Maready, one times the total cash
compensation paid to him during the 12 month period preceding
such termination, but in no event more than the product of 2.99
and the average annual compensation he received during the five
taxable years immediately prior to the change in control.
"Control" is defined in the same way as under Mr. Willetts'
employment agreement. Each officer may also be entitled to
receive the foregoing termination payment in the event of his
voluntary termination of employment in connection with a change
of control under the following circumstances:
8<PAGE>
<PAGE>
(1) if he would be required to relocate outside the metropolitan
area of Wilmington, North Carolina, (2) if in the organizational
structure of the Bank he would be required to report to persons
other than the President (or the Executive Vice President in the
case of Mr. Maready), (3) if the Bank fails to maintain employee
benefit plans at pre-change in control levels, (4) if the
officer would be assigned duties and responsibilities other than
those normally associated with his position as, in the instance
of Mr. Burrell, Executive Vice President and Chief Operating
Officer and, in the instance of Mr. Maready, Senior Vice
President, Treasurer and Controller, and (5) if the officer's
responsibilities or authority have in any way been diminished.
The aggregate payment to Messrs. Willetts, Burrell and
Maready, assuming the termination of employment or other
triggering events under the foregoing circumstances at December
31, 1998, would be approximately $530,725, $328,900 and
$102,000, respectively.
The provisions of these agreements may have the effect of
discouraging a future takeover attempt in which stockholders of
the Company otherwise might receive a premium for their shares
over then-current market prices.
- ----------------------------------------------------------------
DIRECTORS' COMPENSATION
- ----------------------------------------------------------------
Members of the Board of Directors and committees of the
Board of Directors receive $1,100 per month. No additional fees
are paid for committee membership or meetings. The Chairman of
the Board receives an additional fee of $1,000 per month.
Directors are also eligible to receive stock options under the
1990 Option Plan and the 1998 Stock Option and Incentive Plan.
Each non-employee director who joins the Board of Directors
receives options to purchase 2.50% of the shares of Common Stock
reserved for issuance under the 1990 Option Plan at an exercise
price equal to the fair market value of the Common Stock on the
date of grant.
9
<PAGE>
<PAGE>
- ----------------------------------------------------------------
COMPARATIVE STOCK PERFORMANCE GRAPH
- ----------------------------------------------------------------
The graph and table which follow show the cumulative total
return on the Common Stock of the Company (and its predecessor,
Cooperative Bank) for the five years ended December 31, 1998,
compared with the cumulative total return of the NASDAQ Stock
Market Index for U.S. Companies and the NASDAQ Bank Stocks Index
over the same period. Cumulative total return on the stock or
the index equals the total increase in value since January 1,
1994 assuming reinvestment of all dividends paid into the stock
or the index, respectively.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL SHAREHOLDER
RETURN FOR THE COMPANY AND SELECTED INDICES
[Line graph appears here depicting the cumulative total
shareholder return of $100 invested in the Common Stock as
compared to $100 invested in all companies whose equity
securities are traded on the NASDAQ Stock Market and banking
companies traded on the NASDAQ market. Line graph plots the
cumulative total return from March 1994 to December 1998. Plot
points are provided below.]
<TABLE>
<CAPTION>
3/94 12/94 12/95 12/96 12/97 12/98
--------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Company 100 97 137 135 327 158
NASDAQ Stock Market Index 100 102 144 177 218 306
NASDAQ Bank Stocks Index 100 101 150 198 332 329
</TABLE>
Source: Research Data Group, Inc.
10
<PAGE>
<PAGE>
- ----------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT
- ----------------------------------------------------------------
All of the Company's loans to directors and executive
officers are currently made in the ordinary course of business
on substantially the same terms as those of comparable
transactions prevailing at the time and do not involve more than
the normal risk of collectibility or contain other unfavorable
features.
- ----------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- ----------------------------------------------------------------
Pursuant to regulations promulgated under the 1934 Act, the
Company's officers, directors and persons who own more than ten
percent of the outstanding Common Stock are required to file
reports detailing their ownership and changes of ownership in
such Common Stock, and to furnish the Company with copies of all
such reports. Based solely on its review of the copies of such
reports received during or with respect to the fiscal year ended
December 31, 1998, the Company believes that during the year
ended December 31, 1998, all of its officers, directors and
stockholders owning in excess of ten percent of the Company's
outstanding Common Stock have complied with the reporting
requirements.
- ----------------------------------------------------------------
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
- ----------------------------------------------------------------
Coopers & Lybrand L.L.P. served as the Company's independent
certified public accountants for the fiscal year ended December
31, 1998. A representative of PriceWaterhouseCoopers L.L.P. is
expected to be present at the Meeting to respond to appropriate
questions and to make a statement, if so desired.
- ----------------------------------------------------------------
OTHER MATTERS
- ----------------------------------------------------------------
The Board of Directors is not aware of any business to come
before the Meeting other than those matters described above in
this Proxy Statement. However, if any other matters should
properly come before the Meeting, it is intended that proxies in
the accompanying form will be voted in respect thereof in
accordance with the judgment of the person or persons voting the
proxies.
- ----------------------------------------------------------------
MISCELLANEOUS
- ----------------------------------------------------------------
The cost of soliciting proxies will be borne by the Company.
In addition to the solicitation of proxies by mail, Morrow &
Co., a proxy soliciting firm, will assist the Company in
soliciting proxies for the meeting and will be paid a fee of
approximately $3,500, plus reimbursement for out-of-pocket
expenses. Proxies may also be solicited personally or by
telephone or telegraph by directors, officers and regular
employees of the Company and the Bank, without additional
compensation therefor. The Company will also request persons,
firms and corporations holding shares in their names, or in the
name of their nominees, which are beneficially owned by others,
to send proxy materials to and obtain proxies from such
beneficial owners, and will reimburse such holders for their
reasonable expenses in doing so.
The Company's Annual Report to Stockholders for the year
ended December 31, 1998, including financial statements, is
being mailed to all stockholders of record as of the close of
business on March 10, 1999. Any stockholder who has not
received a copy of such Annual Report may obtain a copy by
writing to the Secretary of the Company. Such Annual Report is
not to be treated as a part of the proxy solicitation material
nor as having been incorporated herein by reference.
11
<PAGE>
<PAGE>
- ----------------------------------------------------------------
STOCKHOLDER PROPOSALS
- ----------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy
materials for next year's Annual Meeting of Stockholders, any
stockholder proposal to take action at such meeting must be
received at the Company's main office at 201 Market Street,
Wilmington, North Carolina 28401, no later than November 22,
1999. Any such proposal shall be subject to the requirements of
the proxy rules adopted under the 1934 Act.
Stockholder proposals to be considered at the Annual
Meeting, other than those submitted pursuant to the Exchange
Act, must be stated in writing and filed with the Secretary of
the Company, not less than twenty days prior to the date of the
Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Daniel W. Eller
Daniel W. Eller
Secretary
Wilmington, North Carolina
March 22, 1999
- ----------------------------------------------------------------
ANNUAL REPORT ON FORM 10-K
- ----------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1998 AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT
CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN
REQUEST TO THE SECRETARY, COOPERATIVE BANKSHARES, INC., 201
MARKET STREET, WILMINGTON, NORTH CAROLINA 28401.
12
<PAGE>
<PAGE>
REVOCABLE PROXY
COOPERATIVE BANKSHARES, INC.
WILMINGTON, NORTH CAROLINA
- ----------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 30, 1999
- ----------------------------------------------------------------
The undersigned hereby appoints F. Peter Fensel, James D.
Hundley and O. Richard Wright, Jr. of Cooperative Bankshares,
Inc. (the "Company") with full powers of substitution, to act as
proxies for the undersigned to vote all shares of the Company's
common stock, $1.00 par value, which the undersigned is entitled
to vote at the Annual Meeting of Stockholders to be held at The
Howard Johnson Plaza Hotel, 5032 Market Street, Wilmington,
North Carolina, on Friday, April 30, 1999 at 11:00 a.m., and at
any and all adjournments thereof, as follows:
VOTE
FOR WITHHELD
--- --------
1. The election as directors of the
nominees listed below (except as
marked to the contrary below). [ ] [ ]
Paul G. Burton
H. Thompson King, III
R. Allen Rippy
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL
NOMINEE, INSERT THAT NOMINEE'S NAME ON THE LINE PROVIDED
BELOW.
----------------
The Board of Directors recommends a vote "FOR" nominees
listed above.
________________________________________________________________
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY SHALL BE VOTED FOR EACH OF THE NOMINEES
LISTED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
AS DETERMINED BY A MAJORITY OF THE BOARD OF DIRECTORS. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS
TO BE PRESENTED AT THE MEETING. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY ON THE HOLDERS THEREOF TO VOTE WITH
RESPECT TO THE ELECTION OF ANY PERSON AS DIRECTOR WHERE THE
NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE AND
MATTERS INCIDENT TO THE CONDUCT OF THE 1998 ANNUAL MEETING.
________________________________________________________________
<PAGE>
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Meeting or at any adjournment thereof and after notification to
the Secretary of the Company at the Meeting of the stockholder's
decision to terminate this proxy, then the power of said
attorneys and proxies shall be deemed terminated and of no
further force and effect.
The undersigned acknowledges receipt from the Company prior
to the execution of this proxy of the Notice of Annual Meeting,
the Proxy Statement, and the Company's Annual Report to Stock-
holders for the Fiscal Year Ended December 31, 1998. The
undersigned hereby revokes any and all proxies heretofore given
with respect to the undersigned's shares of the Company's Common
Stock.
Dated: ______________________, 1999
__________________________ __________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
__________________________ __________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in
which this card was mailed. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title.
If shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.
