LIFE BANCORP, INC.
109 East Main Street
Norfolk, Virginia 23510
(757) 858-1000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 24, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of Life Bancorp, Inc. (the "Company") will be held at the Norfolk
Waterside Marriott located at 235 East Main Street, Norfolk, Virginia, on
Thursday, April 24, 1997 at 10:00 a.m., Eastern Time, for the following
purposes, all of which are more completely set forth in the accompanying Proxy
Statement:
(1) To elect three directors for a three-year term expiring in 2000 or
until their successors are elected and qualified;
(2) To ratify the appointment by the Board of Directors of Edmondson,
LedBetter & Ballard, L.L.P. as the Company's independent auditor for the fiscal
year ending December 31, 1997; and
(3) To transact such other business as may properly come before the meeting
or any adjournment thereof. Except with respect to procedural matters incident
to the conduct of the meeting, management is not aware of any other such
business.
The Board of Directors has fixed March 7, 1997 as the voting record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting.
By order of the Board of Directors
/s/ Emily E. Steele
Emily E. Steele
Secretary
Norfolk, Virginia
March 17, 1997
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YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF. IF YOU ARE A STOCKHOLDER
WHOSE SHARES ARE NOT REGISTERED IN YOUR NAME, YOU WILL NEED ADDITIONAL
DOCUMENTATION FROM THE RECORD HOLDER OF YOUR SHARES TO VOTE PERSONALLY AT THE
MEETING.
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<PAGE>
================================================================================
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM AT
THE MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
================================================================================
<PAGE>
LIFE BANCORP, INC.
109 East Main Street
Norfolk, Virginia 23510
(757) 858-1000
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 24, 1997
This Proxy Statement is furnished to holders of common stock, $.01 par
value per share ("Common Stock"), of Life Bancorp, Inc. (the "Company"), the
parent holding company of Life Savings Bank, FSB ("Life Savings" or the "Bank").
Proxies are being solicited on behalf of the Board of Directors of the Company
to be used at the Annual Meeting of Stockholders ("Annual Meeting") to be held
at the Norfolk Waterside Marriott located at 235 East Main Street, Norfolk,
Virginia, on Thursday, April 24, 1997 at 10:00 a.m., Eastern Time, and at any
adjournment or postponement thereof for the purposes set forth in the Notice of
Annual Meeting of Stockholders. This Proxy Statement is first being mailed to
stockholders on or about March 17, 1997.
The proxy solicited hereby, if properly signed and returned to the
Company and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted for the nominees for director described herein, for
ratification of the appointment of Edmondson, LedBetter & Ballard, L.L.P. for
fiscal 1997, and, upon the transaction of such other business as may properly
come before the meeting, in accordance with the best judgment of the persons
appointed as proxies.
Any stockholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Secretary of the Company written
notice thereof (Emily E. Steele, Secretary, Life Bancorp, Inc.); (ii) submitting
a duly-executed proxy bearing a later date; or (iii) appearing at the Annual
Meeting and giving the Secretary notice of his or her intention to vote in
person. Proxies solicited hereby may be exercised only at the Annual Meeting and
any adjournment or postponement thereof and will not be used for any other
meeting.
VOTING
Only stockholders of record at the close of business on March 7, 1997
("Voting Record Date") will be entitled to vote at the Annual Meeting. On the
Voting Record Date, there were 9,846,840 shares of Common Stock issued and
outstanding, and the Company had no other class of equity securities
outstanding. Each share of Common Stock is entitled to one vote at the Annual
Meeting on all matters properly presented at the meeting. Directors are elected
by a plurality of the votes cast with a quorum present. Abstentions and broker
non-votes will be considered in determining the presence of a quorum but will
not affect the vote required for the election of directors or ratification of
the appointment of the independent auditor. The affirmative vote of a majority
of the total votes cast is required to ratify the appointment of the independent
auditor.
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table includes, as of the Voting Record Date, certain
information as to the Common Stock beneficially owned by (i) the only person or
entity, including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended ("1934 Act"), who or which was known
to the Company to be the beneficial owner of more than 5% of the issued and
outstanding Common Stock, (ii) the directors of the Company, (iii) certain
executive officers of the Company, and (iv) all directors and executive officers
of the Company and the Bank as a group.
<TABLE>
<CAPTION>
Common Stock Beneficially Owned
as of March 7, 1997 (1)
-----------------------------------------
Number of Shares
and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership (2) Class
- ----------------------------------- -------------------------- ------------
<S> <C> <C>
Life Bancorp, Inc. Employee Stock 573,158 (3) 5.82%
Ownership Plan Trust
109 East Main Street
Norfolk, Virginia 23510
Joseph C. Addington, Jr. 50,824 (4) 0.52%
Edward E. Cunningham 133,255 (5) 1.34%
Ralph T. Dempsey, Jr. 45,204 (6) 0.46%
Charles M. Earley, Jr., M.D. 2,000 (7) 0.02%
E. Saunders Early, Jr. 32,614 (8) 0.33%
William J. Fanney 52,614 (9) 0.53%
Donald I. Fentress 19,699 (10) 0.20%
William J. Jonak, Jr. 50,751 (11) 0.51%
Edward M. Locke 58,632 (12) 0.59%
Frederick V. Martin 46,730 (13) 0.47%
Tollie W. Rich, Jr. 93,255 (14) 0.94%
Braden Vandeventer 82,899 (15) 0.84%
All directors and executive officers of 802,875 (3) & 7.91%
the Company and the Bank as a (16)
group (16 persons)
- ---------------
<FN>
(1) For purposes of this table, pursuant to rules promulgated under the
1934 Act, an individual is considered to beneficially own shares of
Common Stock if he or she directly or indirectly has or shares (1)
voting power, which includes the power to vote or to direct the voting
of the shares; or (2) investment power, which includes the power to
dispose or direct the disposition of the shares. Unless otherwise
indicated, an individual has sole voting power and sole investment
power with respect to the indicated shares.
(2) All shares shown as beneficially owned are owned directly or held by
spouses or children of the named persons, unless otherwise indicated.
(3) Includes unallocated shares of the Life Bancorp, Inc. Employee Stock
Ownership Plan ("ESOP") Trust which was established pursuant to the
ESOP by an agreement between the Company and Messrs. Edward E.
Cunningham, Tollie W. Rich, Jr. and William J. Fanney, who act as
trustees of the plan ("Trustees"). In addition to the unallocated
shares, as of the Voting Record Date, 298,925 shares held in the ESOP
Trust had been allocated to the accounts of participating employees.
Under the terms of the ESOP, the Trustees must vote all allocated
shares held in the ESOP in accordance with the instructions of the
participating
- 2 -
<PAGE>
employees, and allocated shares for which employees do not give
instructions, and unallocated shares, will be voted in the same ratio
on any matter as to those shares for which instructions are given. The
amount of Common Stock beneficially owned by each individual trustee or
all directors and executive officers as a group does not include the
unallocated shares held by the ESOP Trust.
(4) Includes 3,519 shares held in the Company's Recognition and Retention
Plan ("RRP") Trust, which will vest within 60 days of the record date;
and 13,786 shares in the form of stock options which are exercisable
within 60 days of the record date.
(5) Includes 32,843 shares held in the Bank's 1982 and 1991 Deferred
Compensation Plans (the "Deferred Compensation Plans"); 8,251 shares
held in the ESOP Trust, allocated to Mr. Cunningham; 13,093 shares held
in the Company's RRP Trust, which will vest within 60 days of the
record date; 65,464 shares in the form of stock options, which are
exercisable within 60 days of the record date; and 463 shares held as
of December 31, 1996 in the Life Savings Bank, FSB Employee's Savings
and Profit Sharing Plan (the Bank's 401(k) Plan).
(6) Includes 3,209 shares held in the Deferred Compensation Plans; 6,079
shares held in the ESOP Trust, allocated to Mr. Dempsey; 3,710 shares
held in the RRP Trust, which will vest within 60 days of the record
date; 18,548 shares in the form of stock options, which are exercisable
within 60 days of the record date; 50 shares as custodian for children;
and 1,054 shares held as of December 31, 1996 in the Bank's 401(k)
Plan.
(7) Includes 2,000 shares held in the Virginia Beach Surgery Pension Plan,
Charles M. Earley, Jr., M.D., participant.
(8) Includes 4,064 shares held in the RRP Trust, which will vest within 60
days of the record date; and 13,786 shares in the form of stock
options, which are exercisable within 60 days of the record date.
(9) Includes 4,064 shares held in the RRP Trust, which will vest within 60
days of the record date; and 13,786 shares in the form of stock
options, which are exercisable within 60 days of the record date.
(10) Includes 482 shares held in the RRP Trust, which will vest within 60
days of the record date; and 13,786 shares in the form of stock
options, which are exercisable within 60 days of the record date.
(11) Includes 20,973 shares held in the Deferred Compensation Plans; 1,997
shares held by Mr. Jonak's spouse's IRA; 2,036 shares held in the RRP
Trust, which will vest within 60 days of the record date; and 13,786
shares in the form of stock options, which are exercisable within 60
days of the record date.
(12) Includes 3,934 shares held in the Deferred Compensation Plans; 6,383
shares held in the ESOP Trust, allocated to Mr. Locke; 3,710 shares
held in the RRP Trust, which will vest within 60 days of the record
date; 18,548 shares in the form of stock options, which are exercisable
within 60 days of the record date; 6,380 shares held by Mr. Locke's
spouse's IRA; and 2,048 shares held as of December 31, 1996 in the
Bank's 401(k) Plan.
(13) Includes 1,622 shares held in the RRP Trust, which will vest within 60
days of the record date; and 13,786 shares in the form of stock
options, which are exercisable within 60 days of the record date.
(14) Includes 7,659 shares held in the Deferred Compensation Plans; 7,960
shares held in the ESOP Trust, allocated to Mr. Rich; 8,728 shares held
in the RRP Trust, which will vest within 60 days of the record date;
43,642 shares in the form of stock options, which are exercisable
within 60 days of the record date; 1,600 shares held as custodian for
son; and 2,110 shares held in Mr. Rich's spouse's IRA.
(15) Includes 1,000 shares held in trust for the benefit of Mr.
Vandeventer's sister; 3,933 shares held in the RRP Trust, which will
vest within 60 days of the record date; and 13,786 shares in the form
of stock options, which are exercisable within 60 days of the record
date.
(16) Includes shares held in the following manner by executive officers, or
by the spouse of such executive officers (i) 9,008 shares held in the
Deferred Compensation Plans; (ii) 24,174 shares held in the ESOP Trust
which have been allocated; (iii) 11,555 shares held in the Company's
RRP Trust which will vest within 60 days of the record date; (iv)
57,780 shares in the form of stock options, which are exercisable
within 60 days of the record date; (v) 3,108 shares held, as of
December 31, 1996, in the Bank's 401(k) Plan; and, (vi) 1,206 shares
held in individual retirement accounts. Excludes shares held by Messrs.
Cunningham, Rich, Locke and Dempsey which are included in Notes 5, 6,
12 and 14 above.
</FN>
</TABLE>
- 3 -
<PAGE>
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
DIRECTORS WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS
Election of Directors
The Articles of Incorporation of the Company provide that the Board of
Directors shall be divided into three classes as nearly equal in number as the
then total number of directors constituting the Board of Directors permits and
that the directors shall be elected by the stockholders of the Company for
staggered terms, or until their successors are elected and qualified. A
resolution of the Board of Directors, adopted pursuant to the Bylaws and the
Articles of Incorporation of the Company, provides that the Board of Directors
shall consist of ten members.
At the Annual Meeting, stockholders of the Company will be asked to
elect one class of directors, consisting of three directors, for a three-year
term expiring in 2000 or until their successors are elected and qualified.
Each nominee currently serves as a director of the Company, and no
nominee for director is related to any other director or executive officer of
the Company by blood, marriage or adoption. No person being nominated as a
director is being nominated pursuant to any arrangements or understandings
between the Company and any person.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominees for director listed
below. If any person named as a nominee should be unable or unwilling to stand
for election at the time of the Annual Meeting, the proxies will nominate and
vote for any replacement nominee or nominees recommended by the Board of
Directors. At this time, the Board of Directors knows of no reason why any of
the nominees listed below may not be able to serve as a director if elected.
Nominees for director will be elected by a plurality of the votes cast by the
shares of Common Stock entitled to vote in the election at the Annual Meeting.
Abstentions and broker non-votes will have no effect on the vote. The following
tables present information concerning the nominees for director of the Company
and directors whose terms continue, including tenure as a director.
<TABLE>
<CAPTION>
Nominees for Director for a Three-Year Term Expiring in 2000
Principal Occupation During Director
Name Age (1) the Past Five Years Since (2)
- ---------------------- ------- ----------------------------------------------- --------
<S> <C> <C> <C>
E. Saunders Early, Jr. 72 Director; Chairman of the Board and Consultant 1962
to Robbie's Home Center, Inc., a hardware
home center located in Portsmouth, Virginia.
William J. Jonak, Jr. 67 Director; real estate appraiser and consultant, 1980
and President of Jonak & Company, a real
estate appraisal firm located in Norfolk,
Virginia.
Tollie W. Rich, Jr. 47 Director; Executive Vice President and Chief 1994
Operating Officer of the Bank since February
1995. Executive Vice President, Treasurer,
Chief Operations Officer and Chief Financial
Officer of the Bank from February 1993 to
February 1995. Formerly Senior Vice
President, Treasurer and Chief Financial
Officer. Various other positions with the Bank
since joining the Bank in 1971.
(Footnotes on page 5)
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR.
</TABLE>
- 4 -
<PAGE>
<TABLE>
<CAPTION>
Directors Continuing in Office with Terms Expiring in 1998
Principal Occupation During Director
Name Age (1) the Past Five Years Since (2)
- ---------------------- ------- ------------------------------------------------- ---------
<S> <C> <C> <C>
Edward E. Cunningham 63 Director; Chairman of the Board since April 1984
1996. Formerly Vice Chairman of the Board
from February 1994 to April 1996. President
of the Bank since February 1988 and Chief
Executive Officer since February 1991.
Formerly Executive Vice President and
Treasurer of the Bank. Various other positions
with the Bank since joining the Bank in 1958.
Donald I. Fentress 66 Director; general insurance agent and President 1993
of Bryant-Fentress Associates, Ltd., an
insurance company located in Virginia Beach,
Virginia.
Frederick V. Martin 59 Director; investment counselor and President of 1984
Virginia Investment Counselors, Inc., an
investment firm located in Norfolk, Virginia.
</TABLE>
<TABLE>
<CAPTION>
Directors Continuing in Office with Terms Expiring in 1999
Principal Occupation During Director
Name Age (1) the Past Five Years Since (2)
- ----------------------- ------- ------------------------------------------------- ---------
<S> <C> <C> <C>
Joseph C. Addington, Jr. 72 Director; retired since February 1990. 1968
Formerly Chairman of the Board of Addington-
Beaman Lumber Company, a lumber company.
Charles M. Earley, Jr. M.D. 69 Director; retired general surgeon. Formerly 1996
President of Virginia Beach Surgery, Inc.,
Virginia Beach, Virginia.
William J. Fanney 73 Director; Chairman Emeritus since April 1996. 1967
Chairman of the Board from January 1981 to
April 1996. Chief Executive Officer of the
Bank from February 1988 to February 1991.
President and Managing Officer of the Bank
from April 1968 to February 1988. Various
other positions with the Bank since joining the
Bank in 1949.
Braden Vandeventer 75 Director; retired since October 1994. Formerly 1964
a Partner, then Of Counsel, with Vandeventer,
Black, Meredith & Martin, L.L.P., the Bank's
general counsel.
- ------------------
<FN>
(1) As of March 7, 1997.
(2) Includes service as a director of the Bank.
</FN>
</TABLE>
- 5 -
<PAGE>
Committees and Meetings of the Board of the Company and the Bank
During the year ended December 31, 1996, the Board of Directors of the
Company met 12 times. No incumbent director attended fewer than 75% of the
aggregate of the total number of Board meetings and the total number of meetings
held by committees on which he served during the period. The Board of Directors
of the Company have established the following committees:
Examination and Audit Committee. The Examination and Audit Committee
reviews the records and affairs of the Company, meets with the Company's
internal and independent auditors, engages the Company's independent auditor and
reviews their reports, and reviews regulatory examination reports. During 1996,
the committee met one time. Currently, the Examination and Audit Committee
consists of Messrs. Early (Chairman), Jonak, and Fanney.
Employee Benefits and Compensation Committee. The Employee Benefits and
Compensation Committee reviews and recommends compensation and benefits for the
Company's employees. During 1996, the Employee Benefits and Compensation
Committee consisted of Messrs. Vandeventer (Chairman), Fentress and Martin.
During 1996, the committee met one time. See "Executive Compensation -
Compensation Committee Interlocks and Insider Participation" and "Executive
Compensation - Report of the Board of Directors on Executive Compensation."
Currently, the Employee Benefits and Compensation Committee consists of Messrs.
Martin (Chairman), Addington and Fentress.
Nominating and Director Vacancy Committee. On an annual basis, the Board of
Directors elects a Nominating and Director Vacancy Committee which nominates
persons to serve on the Board of Directors of the Company. The Nominating and
Director Vacancy Committee for the Annual Meeting consisted of Messrs. Jonak
(Chairman), Early and Martin. During 1996, the committee met one time.
Currently, the Nominating and Director Vacancy Committee consists of Messrs.
Addington (Chairman), Earley and Vandeventer. The Board committees meet as
required. Messrs. Cunningham and Rich are ex-officio members of all Board
committees.
The Board of Directors of the Bank meets on a semi-monthly basis and
may have additional special meetings. During the fiscal year ended December 31,
1996, the Board of Directors met 25 times. No director attended fewer than 75%
of the total number of Board meetings and committee meetings on which he served
that were held during this period. The Board of Directors of the Bank has
established the following committees:
Examination and Audit Committee. The Examination and Audit Committee
reviews the records and affairs of the Bank, meets with the Bank's internal and
independent auditors, engages the Bank's independent auditor and reviews their
reports, and reviews regulatory examination reports. The Examination and Audit
Committee met once during 1996. Currently, the Examination and Audit Committee
consists of Messrs. Early (Chairman), Jonak, and Fanney.
Employee Benefits and Compensation Committee. The Employee Benefits and
Compensation Committee reviews and recommends compensation and benefits for the
Bank's employees. During 1996, the Employee Benefits and Compensation Committee
consisted of Messrs. Vandeventer (Chairman), Fentress and Martin. During 1996,
the committee met one time. See "Executive Compensation - Compensation Committee
Interlocks and Insider Participation" and "Executive Compensation - Report of
the Board of Directors on Executive Compensation." Currently, the Employee
Benefits and Compensation Committee consists of Messrs. Martin (Chairman),
Addington and Fentress. Nominating and Director Vacancy Committee. On an annual
basis, the Board of Directors elects a Nominating and Director Vacancy Committee
which nominates persons to serve on the Board of Directors of the Bank. The
Nominating and Director Vacancy Committee for the Annual Meeting consisted of
Messrs. Jonak (Chairman), Early and Martin. During 1996, the committee met one
time. Currently, the Nominating and Director Vacancy Committee consists of
Messrs. Addington (Chairman), Earley and Vandeventer.
- 6 -
<PAGE>
In addition to the committees described above, the Bank has also
established other committees which consist of members of the Board and which
meet as required. These committees include: an Executive Committee, a Community
Reinvestment Act Committee, an Investment Policy Committee, a Corporate
Structure Committee, a Branch Office and Asset Management Committee, and a
Budget Committee. Messrs. Cunningham and Rich are ex-officio members of all
Board committees.
Executive Officers Who Are Not Directors
Set forth below is information with respect to the principal
occupations during the last five years for the six executive officers of the
Company and the Bank who do not serve as directors.
Nelson R. Arnold. Age 55. Mr. Arnold has served as Senior Vice President -
Retail Banking Division of the Bank since February 1980. He served in various
other positions since joining the Bank in 1963.
Matthew E. Brown. Age 39. Mr. Brown has served as Vice President and
Controller since January 1996. Prior thereto, he was Assistant Vice President
and Controller since February 1995 and Assistant Vice President and Assistant
Controller since February 1991. He served in various other positions since
joining the Bank in 1980.
T. Frank Clements. Age 59. Mr. Clements has served as Senior Vice President
- - Lending Division of the Bank since March 1985.
Ralph T. Dempsey, Jr. Age 47. Mr. Dempsey has served as Senior Vice
President - Loan Administration Division of the Bank since February 1992. Prior
thereto, he was Vice President since January 1983. He served in various other
positions since joining the Bank in 1973.
Emory J. Dunning, Jr. Age 49. Mr. Dunning has served as Senior Vice
President, Treasurer and Chief Financial Officer since February 1995. Prior
thereto, he was Vice President and Controller since February 1980. He served in
various other positions since joining the Bank in 1973.
Edward M. Locke. Age 63. Mr. Locke has served as Senior Vice President -
Administrative Services Division of the Bank since February 1980. He served in
various other positions since joining the Bank in 1961.
Compliance with Section 16(a) of the 1934 Act
Section 16(a) of the 1934 Act requires the officers and directors, and
persons who own more than 10% of the Company's Common Stock to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and the National Association of Securities Dealers, Inc. Officers,
directors and greater than 10% stockholders are required by regulation to
furnish the Company with copies of all Section 16(a) forms they file. The
Company knows of no person who owns 10% or more of the Company's Common Stock.
Based solely on review of the copies of such forms furnished to the
Company, or written representations from its officers and directors, the Company
believes that during, and with respect to, 1996, the Company's officers and
directors complied in all respects with the reporting requirements promulgated
under Section 16(a) of the 1934 Act.
- 7 -
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The Company has not yet paid separate compensation to its officers. The
following table sets forth a summary of certain information concerning the
compensation paid by the Bank for services rendered in all capacities during the
years ended December 31, 1996, 1995 and 1994 to the President and Chief
Executive Officer of the Bank and the other executive officers of the Bank and
its subsidiaries whose salaries and bonuses during the fiscal year exceeded
$100,000.
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
----------------------------------------- -----------------------
# Shares of
Other Securities
Name and Annual Restricted Underlying All Other
Principal Position Year Salary Bonus Compensation (2) Stock Options (8) Compensation
-------------------- ------ -------- ---------- ---------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Edward E. Cunningham 1996 $277,500 $25,000 $23,200 (3) $ -- -- $110,601 (9)
President and Chief 1995 257,500 12,000 (1) 21,000 (3) 908,313(4) 163,660 106,493 (10)
Executive Officer 1994 223,500 25,000 (1) 19,000 (3) -- -- 199,375 (11)
Tollie W. Rich, Jr. 1996 $162,000 $16,500 -- $ -- -- $ 66,459 (9)
Executive Vice President 1995 150,000 6,000 (1) -- 605,533(5) 109,105 60,798 (10)
and Chief Operating 1994 125,297 13,800 (1) -- -- -- 41,049 (11)
Officer
Edward M. Locke 1996 $ 98,000 $ 7,000 -- $ -- -- $ 60,606 (9)
Senior Vice President 1995 93,700 3,000 -- 257,354(6) 46,370 42,739 (10)
Administrative Services 1994 89,500 5,500 -- -- -- 27,741 (11)
Division
Ralph T. Dempsey, Jr. 1996 $ 93,000 $ 8,500 -- $ -- -- $ 59,642 (9)
Senior Vice President, 1995 88,000 3,000 -- 257,354(7) 46,370 39,601 (10)
Loan Administration 1994 82,000 5,500 -- -- -- 25,407 (11)
Division
<FN>
- ---------------
(1) Reflects bonuses deferred pursuant to the Bank's 1982 Deferred
Compensation Plan.
(2) Does not include amounts attributable to miscellaneous benefits
received by the named executive officers, including the use of
Company-owned automobiles and payment of club dues. In the opinion of
management of the Company, the costs to the Company of providing such
benefits to any individual named executive officer during the
indicated periods did not exceed the lesser of $50,000 or 10% of the
total of annual salary and bonus reported for the individual.
(3) Consists of director's fees.
(4) Represents the grant of restricted Common Stock to Mr. Cunningham,
pursuant to the Company's RRP, which were deemed to have had the
indicated value at the time of the grant. The awards vest 20% per year
over a five-year period commencing on the first anniversary of the
date of the grant and may vest earlier upon a "change in control" as
defined in the Company's RRP, or upon the grantees' disability or
death. Mr. Cunningham became vested in 13,092 shares in April 1996 and
has received a distribution of those shares; 52,372 shares, having a
fair market value of $942,696 at December 31, 1996, remain in the RRP
Trust. (5) Represents the grant of restricted Common Stock to Mr.
Rich, pursuant to the Company's RRP, which were deemed to have had the
indicated value at the time of the grant. The awards vest 20% per year
over a five-year period commencing on the first anniversary of the
date of the grant and may vest earlier upon a "change in control" as
defined in the Company's RRP, or upon a grantee's disability or death.
Mr. Rich
- 8 -
<PAGE>
became vested in 8,728 shares in April 1996 and has received a
distribution of those shares; 34,914 shares, having a fair market
value of $628,452 at December 31, 1996, remain in the RRP Trust.
(6) Represents the grant of restricted Common Stock to Mr. Locke, pursuant
to the Company's RRP, which were deemed to have had the indicated
value at the time of the grant. The awards vest 20% per year over a
five-year period commencing on the first anniversary of the date of
the grant and may vest earlier upon a "change in control" as defined
in the Company's RRP, or upon the grantees' disability or death. Mr.
Locke became vested in 3,709 shares in April 1996 and has received a
distribution of those shares; 14,839 shares, having a fair market
value of $267,102 at December 31, 1996, remain in the RRP Trust.
(7) Represents the grant of restricted Common Stock to Mr. Dempsey,
pursuant to the Company's RRP, which were deemed to have had the
indicated value at the time of the grant. The awards vest 20% per year
over a five-year period commencing on the first anniversary of the
date of the grant and may vest earlier upon a "change in control" as
defined in the Company's RRP, or upon a grantee's disability or death.
Mr. Dempsey became vested in 3,709 shares in April 1996 and has
received a distribution of those shares; 14,839 shares, having a fair
market value of $267,102 at December 31, 1996, remain in the RRP
Trust.
(8) Consists of awards granted pursuant to the Company's 1995 Stock Option
Plan ("Stock Option Plan") which options vest and are exercisable at
the rate of 20% per year over a five-year period commencing on the
first anniversary of the date of the grant and may vest earlier upon a
"change in control" as defined in the Company's Stock Option Plan, or
upon a grantee's disability or death.
(9) Consists of amounts allocated, accrued or paid by the Company during
the year ended December 31, 1996 (i) to the Company's ESOP on behalf
of Mr. Cunningham - $62,661, Mr. Rich - $61,884, Mr. Locke - $57,666
and Mr. Dempsey - $56,852; (ii) to the Bank's 401(k) Plan on behalf of
Mr. Cunningham - $4,750, Mr. Rich - $4,575, Mr. Locke - $2,940 and Mr.
Dempsey - $2,790; and (iii) on behalf of Mr. Cunningham, an
actuarially determined amount of $43,190 directed to the Bank's 1991
Deferred Compensation Plan to offset the loss of defined pension
benefits incurred as a result of the capping, under the Internal
Revenue Code of 1986, as amended ("Code"), of base compensation
consideration at $150,000.
(10) Consists of amounts allocated, accrued or paid by the Company during
the year ended December 31, 1995 (i) to the Company's ESOP on behalf
of Mr. Cunningham - $60,334, Mr. Rich - $58,423, Mr. Locke - $40,318
and Mr. Dempsey - $37,108; (ii) to the Bank's 401(k) Plan on behalf of
Mr. Cunningham - $2,969, Mr. Rich - $2,375, Mr. Locke - $2,421 and Mr.
Dempsey - $2,493; and (iii) on behalf of Mr. Cunningham, an
actuarially determined amount of $43,190 directed to the Bank's 1991
Deferred Compensation Plan to offset the loss of defined pension
benefits incurred as a result of the capping, under the Code, of base
compensation consideration at $150,000.
(11) Consists of amounts allocated, accrued or paid by the Company during
the year ended December 31, 1994 (i) to the Company's ESOP on behalf
of Mr. Cunningham - $6,735, Mr. Rich - $5,626, Mr. Locke - $4,431 and
Mr. Dempsey - $4,024; (ii) to the Bank's 401(k) Plan on behalf of Mr.
Cunningham - $4,482, Mr. Rich - $3,320, Mr. Locke - $2,656 and Mr.
Dempsey - $2,460; (iii) a one-time payment upon amendment of the
Bank's vacation policy in order to limit the accrual of excess accrued
vacation amounts on behalf of Mr. Cunningham - $58,158, Mr. Rich -
$32,103, Mr. Locke - $20,654 and Mr. Dempsey - $18,923; and (iv) on
behalf of Mr. Cunningham, an actuarially determined amount of $130,000
directed to the Bank's 1991 Deferred Compensation Plan to offset the
loss of defined pension benefits incurred as a result of the capping,
under the Code, of base compensation consideration at $150,000.
</FN>
</TABLE>
- 9 -
<PAGE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table provides information on the total options exercised
during the year ended December 31, 1996 and the total options held at year-end
by the Chief Executive Officer and named executives:
<TABLE>
<CAPTION>
Number of Number of Options at Value of Options at
Shares December 31, 1996 December 31, 1996 (1)
Name and Acquired On Value --------------------------- -----------------------------
Principal Position Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edward E. Cunningham -- -- 32,732 130,928 $135,020 $540,078
President and Chief
Executive Officer
Tollie W. Rich, Jr. -- -- 21,821 87,284 $ 90,012 $360,047
Executive Vice President
and Chief Operating
Officer
Edward M. Locke -- -- 9,274 37,096 $ 38,255 $153,021
Senior Vice President
Administrative Services
Division
Ralph T. Dempsey, Jr. -- -- 9,274 37,096 $ 38,255 $153,021
Senior Vice President
Loan Administration
Division
<FN>
- ---------------
(1) The market value of Common Stock, based on the last known trade price, on December 31, 1996 was
$18.00 per share, and the exercise price is $13.875 per share.
</FN>
</TABLE>
Directors' Compensation
It is the intent of the Bank that members of its Board of Directors be
compensated in a fair and equitable manner consistent with general practices
existing in the financial services industry. Such practices include
consideration of compensation for individual time allocations for fulfillment of
designated responsibilities; oversight of the performance of the Bank and its
management in keeping with pre-established criteria; the assumption of fiduciary
risk associated with directorship of a financial institution; serving as
representatives of the Bank in civic, cultural and business affairs; and the
generation of new business and the retention of existing business for the Bank.
Effective July 1, 1995, and extending through calendar year 1996, the
annual retainer for members of the Board of Directors of the Bank (excluding Mr.
Rich) was $10,000.
From January 1, 1996 to June 30, 1996, Directors also received $500 for
each Board meeting attended ($600 for Mr. Fanney and excluding Mr. Cunningham
and Mr. Rich) which was increased to $600 effective July 1, 1996. During such
period, Mr. Cunningham received $12,000 as an annual Board compensation fee,
which was not based on attendance at Board meetings and which was increased to
$14,400 on an annual basis effective July 1, 1996. In 1996, members of the Board
(excluding ex-officio members Messrs. Fanney, Cunningham and Rich) serving on
committees received $500 per meeting attended.
On July 1, 1994, the Bank entered into an agreement with Mr. Fanney,
the immediate past Chief Executive Officer, pursuant to which he will provide
consulting services to the Bank for three years at an annual fee of $35,000.
Such services will include consultation with the President and Chairman,
participating and attending, as
- 10 -
<PAGE>
an ex-officio member, certain management committee meetings and committee
meetings of the Board, and for rendering continuing advice as Chairman Emeritus
and immediate past Chairman.
Compensation of the members of the Board of Directors of the Bank,
determined consistent with the before mentioned considerations, was based on an
examination of two peer group comparisons relative to compensation of members of
boards of directors of financial institutions. They included The Bank Key
Executive Compensation Survey (1996) of the BAI Foundation and the 1995
Compensation Survey for Savings Institutions, published by America's Community
Bankers.
Employment Agreements
Effective July 1, 1994, the Company and the Bank (collectively the
"Employers") entered into employment agreements with each of Messrs. Cunningham
and Rich for a term of three years in their current respective positions. The
term of each employment agreement shall be extended each year for a successive
additional one-year period unless, not less than 30 days prior to the annual
anniversary date, the Employers or the officer elect not to extend the
employment term.
The employment agreements are terminable with or without cause by the
Employers. The officer shall have no right to compensation or other benefits
pursuant to the employment agreement for any period after voluntary termination
or termination by the Employers for cause, disability, retirement or death,
provided, however, that (i) in the event that the officer terminates his
employment because of failure of the Employers to comply with any material
provision of the employment agreement or (ii) the employment agreement is
terminated by the Employers other than for cause, disability, retirement or
death or by the officer as a result of certain adverse actions which are taken
with respect to the officer's employment following a Change in Control of the
Company, as defined, Messrs. Cunningham and Rich will be entitled to a cash
severance amount equal to 2.99 times their base salary. Based on the salary
levels at December 31, 1996 of $290,000 for Mr Cunningham and $162,000 for Mr.
Rich, and assuming they were terminated on such date, the aggregate cash
severance amount would be $867,100 and $484,380, respectively. In addition,
Messrs. Cunningham and Rich will be entitled to a continuation of benefits
similar to those they are receiving at the time of such termination for the
remaining term of the agreement or until the officer obtains full-time
employment with similar benefits with another employer.
A Change in Control is generally defined in the employment agreement to
include any change in control required to be reported under the federal
securities laws, as well as (i) the acquisition by any person of 25% or more of
the Company's outstanding voting securities and (ii) a change in a majority of
the directors of the Company during any two-year period without the approval of
at least two-thirds of the persons who were directors of the Company at the
beginning of such period.
Each employment agreement provides that in the event that any of the
payments to be made thereunder or otherwise upon termination of employment are
deemed to constitute "excess parachute payments" within the meaning of Section
280G of the Code, then such payments and benefits received thereunder shall be
reduced, in the manner determined by the employee, by the amount, if any, which
is the minimum necessary to result in no portion of the payments and benefits
being non-deductible by the Employers for federal income tax purposes. Excess
parachute payments generally are payments in excess of three times the base
amount, which is defined to mean the recipient's average annual compensation
from the employer includable in the recipient's gross income during the most
recent five taxable years ending before the date on which a change in control of
the employer occurred. Recipients of excess parachute payments are subject to a
20% excise tax on the amount by which such payments exceed the base amount, in
addition to regular income taxes, and payments in excess of the base amount are
not deductible by the employer for federal and Virginia income tax purposes.
Although the above-described employment agreements could increase the
cost of any acquisition of control of the Company, management of the Company
does not believe that the terms thereof would have a significant anti-takeover
effect.
- 11 -
<PAGE>
Severance Agreements
The Company and the Bank have entered into severance agreements with
certain of its other executive officers, including Messrs. Locke and Dempsey,
pursuant to which these officers would receive specified benefits in the event
that their employment was terminated by the Company and the Bank other than for
cause, disability, retirement or death following a Change in Control of the
Company, as defined, or the officers terminated their employment under such
circumstances for "good reason," as defined. The benefits payable under such
circumstances generally would amount to one times the officer's highest level of
base compensation paid to the officer by the Company and the Bank during any of
the three calendar years ending during the calendar year in which employment
ceases. Based on December 31, 1996 base compensation, of $98,000 for Mr. Locke
and $93,000 for Mr. Dempsey, and assuming they were terminated on such date, the
aggregate cash severance amount would be $98,000 for Mr. Locke and $93,000 for
Mr. Dempsey. The total cash severance under all of the severance agreements
would be approximately $457,500. In addition, the executive officer will be
entitled to a continuation of benefits similar to those he is receiving at the
time of such termination for the remaining term of the agreement or until the
officer obtains full-time employment with similar benefits with another
employer.
Each severance agreement provides that in the event that any of the
payments to be made thereunder or otherwise upon termination of employment are
deemed to constitute "excess parachute payments" within the meaning of Section
280G of the Code, then such payments and benefits received thereunder shall be
reduced, in the manner determined by the employee, by the amount, if any, which
is the minimum necessary to result in no portion of the payments and benefits
being non-deductible by the Employers for federal income tax purposes. Excess
parachute payments generally are payments in excess of three times the base
amount, which is defined to mean the recipient's average annual compensation
from the employer includable in the recipient's gross income during the most
recent five taxable years ending before the date on which a change in control of
the employer occurred. Recipients of excess parachute payments are subject to a
20% excise tax on the amount by which such payments exceed the base amount, in
addition to regular income taxes, and payments in excess of the base amount are
not deductible by the employer for federal and Virginia income tax purposes.
Although the above-described severance agreements could increase the
cost of any acquisition of control of the Company, management of the Company
does not believe that the terms thereof would have a significant anti-takeover
effect.
Benefits
Retirement Plan. The Bank has a defined benefit pension plan
("Retirement Plan") for all full-time employees who have attained the age of 21
years and have completed one year of service with the Bank. In general, the
Retirement Plan provides a benefit at an employee's "Normal Retirement Age" (age
65) according to the following formula: (a) 1% of Final Average Compensation
times years of Credited Service, plus (b) 0.6% of Final Average Compensation in
excess of Covered Compensation, times years of Credited Service up to 35 years.
"Final Average Compensation" equals the highest average of an employee's basic
rate of compensation for any 60 consecutive months preceding retirement.
"Covered Compensation" is the average annual compensation with respect to which
Social Security retirement benefits would be provided at Social Security
retirement age. "Covered Compensation" for those attaining Social Security
retirement age in 1996 is $27,576.
During the year ended December 31, 1996, the Company did not make a
contribution to the Retirement Plan, as the plan was adequately funded and
subject to the Internal Revenue Service ("IRS") "Full Funding Limitation." When
subject to the Full Funding Limitation, no contribution is either required or
deductible.
- 12 -
<PAGE>
The following table illustrates annual pension benefits for retirement
at age 65 under various levels of compensation and years of Credited Service.
<TABLE>
<CAPTION>
Years of Credited Service
---------------------------------------------------------------------------------------
Final Average
Compensation 15 20 25 30 35 40 45
- ------------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 80,000 $16,700 $22,300 $27,900 $33,400 $39,000 $45,400 $51,800
90,000 19,100 25,500 31,900 38,200 44,600 51,800 59,000
100,000 21,500 28,700 35,900 43,000 50,200 58,200 66,200
110,000 23,900 31,000 39,900 47,800 55,800 64,600 73,400
120,000 26,300 35,100 43,900 52,600 61,400 71,000 80,600
140,000 31,100 41,500 51,900 62,200 72,600 83,800 95,000
160,000 35,900 47,900 59,900 71,800 83,800 96,600 109,400
180,000 40,700 54,300 67,900 81,400 95,000 109,400 123,800
200,000 45,500 60,700 75,900 91,000 106,200 122,200 138,200
220,000 50,300 67,100 83,900 100,600 117,400 135,000 152,600
240,000 55,100 73,500 91,900 110,200 128,600 147,800 167,000
260,000 59,900 79,900 99,900 119,800 139,800 160,600 181,400
280,000 64,700 86,300 107,900 129,400 151,000 173,400 195,800
300,000 69,500 92,700 115,900 139,000 162,200 186,200 210,200
</TABLE>
The figures in the above table assume that the Retirement Plan
continues in its present form and that the participants elect a 10-year certain
and life annuity form of benefit.
At December 31, 1996, the maximum annual compensation which may be
taken into account under the Code (as adjusted from time to time by the IRS) for
calculating benefits and contributions under qualified defined benefit plans was
$150,000 and the maximum annual benefit permitted under such plans was $120,000.
The amount of compensation covered by the Retirement Plan for Messrs. Cunningham
and Rich for the year ended December 31, 1996 was $150,000, for Mr. Locke,
$98,000 and for Mr. Dempsey, $93,000. In 1996, Mr. Cunningham's salary and bonus
was $302,500, Mr. Rich's was $178,500, Mr. Locke's was $105,000 and Mr.
Dempsey's was $101,500.
The pension benefits listed in the table are not subject to any
deduction for Social Security or other offset amounts.
At December 31, 1996, the years of credited service under the
Retirement Plan for the named executives were as follows: Mr. Cunningham - 38
years, Mr. Rich - 25 years, Mr. Locke - 35 years and Mr. Dempsey - 23 years.
Directors' Retirement Plan. The Bank has in place a retirement plan
("Directors' Retirement Plan") for all non-employee directors. The Directors'
Retirement Plan provides for 120 monthly payments of amounts ranging between
$2,000 and $16,500 annually, depending upon whether a non-employee director has
served as a director for a minimum of three years, or a maximum of 30 years or
more, commencing the month following the date a director has both ceased to be a
director, and attained the age of 70. During the year ended December 31, 1996,
the Bank's actuarial expense recognition for the Directors' Retirement Plan
amounted to $90,000. The expense and funding requirements of the Directors'
Retirement Plan is, for the most part, offset through the purchase of life
insurance policies for certain directors of which the Bank has been named as
beneficiary.
Transactions With Certain Related Persons
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
requires that all loans or extensions of credit to executive officers and
directors must be made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
the general public and must not involve more than the normal risk of repayment
or present other unfavorable features.
- 13 -
<PAGE>
The Bank's policy provides that all loans made by the Bank to its
directors and officers are made in the ordinary course of business, are made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and do not
involve more than the normal risk of collectibility or present other unfavorable
features. All such loans were made by the Bank in the ordinary course of
business and were not made with favorable terms nor did they involve more than
the normal risk of collectibility.
Compensation Committee Interlocks and Insider Participation
The Employee Benefits and Compensation Committee recommends to the
Board of Directors of the Bank the annual compensation of the Bank's executive
officers and reviews management's recommendation for compensation of the Bank's
employees. The members of this committee are Messrs. Vandeventer (Chairman),
Fentress, and Martin.
Until his retirement in October 1994, Mr. Vandeventer was of counsel to
the firm of Vandeventer, Black, Meredith & Martin, L.L.P., general counsel to
the Bank.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1993, as amended, or the
1934 Act, that might incorporate future filings, including this Proxy Statement,
in whole or in part, the following report and Performance Graph shall not be
incorporated by reference into any such filings. SEC rules provide that the
compensation committee report and the stock performance graph are not deemed to
constitute "soliciting material" or to be "filed" with the SEC, and are not
subject to SEC Regulations 14A or 14C, except as provided in SEC regulations, or
to the liabilities under Section 18 of the 1934 Act.
Report of the Employee Benefits and Compensation Committee on Executive
Compensation
The purpose of the Committee is to assist the Board of Directors of the
Company, the Bank and its subsidiaries in attracting and retaining qualified,
competent management; motivating executives to achieve a range of performance
goals consistent with a business plan approved by the Board of Directors; and
insuring that the financial costs of current or proposed compensation and
benefit programs are reasonable and consistent with industry standards,
management performance and shareholders' interests.
The Committee considers the following criteria in recommending to the
Board the compensation of the Chief Executive Officer as well as the approval of
compensation of other executive officers of the Company and the Bank:
1. The overall financial, market and competitive performance of
the Company and the Bank during the fiscal year under
consideration after adjusting for economic conditions
occurring during the year.
2. The level of and/or increases in return on assets and return
on equity without encouraging short-term profitability through
unreasonable risk-taking or a deterioration of long-term asset
quality.
3. Consideration of individual as well as combined measures of
progress of the Company and the Bank including the quality of
the loan and investment portfolio, desirable changes in
capital ratios, the overall growth of the Bank, the
improvement in market share, the improvement in book value per
share, the improvement in earnings per share, the level of
non-performing loans and real estate owned, efficiency ratio
levels as compared to peer groups and other objectives as may
be established by the Board of Directors.
4. The Office of Thrift Supervision's CRA and CAMEL ratings.
- 14 -
<PAGE>
5. The individual commitment of the Chief Executive Officer
relative to overall management efficiency, inspirational
leadership, professional involvement, civic activities and the
maintenance of corporate stature enhancing the image of the
Bank in its market place.
6. The compensation and benefit levels of comparable positions to
peer group institutions within the financial services
industry, and similar asset and operating characteristics with
a concentration on those institutions operating within the
South Atlantic region.
The compensation arrangements and recommendations of the Committee
include a base salary and a bonus component if the Executive's performance is
judged to warrant such a bonus.
The base compensation of Edward E. Cunningham, Chief Executive Officer
(CEO), was established at $290,000 on July 1, 1996, and was based on a personal
evaluation for fiscal year 1995 as well as the first six months of 1996. This
level of compensation represented a 9.43% increase over the CEO's previous base
compensation which had been established on July 1, 1995. Mr. Cunningham's
compensation level, determined consistent with the aforementioned criteria, was
based on an examination of three peer group comparisons relative to salary and
bonus compensation for Chief Executive Officers. They included The Bank Cash
Compensation Survey (1996) of the BAI Foundation, the 1995 Compensation Survey
for Savings Institutions as published by America's Community Bankers and the
1995 CEO Report as published by Ben S. Cole Financial, Inc.. Mr. Cunningham's
performance is measured by the profit, capital position, asset quality and the
low ratio of operating expenses of the Company and the Bank as well as the other
measures of intangible qualities so noted in determining his specific
compensation. Mr. Cunningham was given a bonus of $25,000 for his service during
1996 based on his overall performance including his added effort and time
expended in managing the institution as a public company as well as acquisition
activities which ensued during the course of the year.
With respect to the Bank's other executive officers, the Committee
considered salary and bonus recommendations prepared by the Chief Executive
Officer to establish 1996 compensation. The salary adjustment recommendation and
bonus was based on the Company's overall performance in the past year as well as
an analysis of competitive compensation levels necessary to maintain and attract
quality personnel.
Following extensive review and approval by the Committee, all issues
pertaining to executive compensation were submitted to the full Board of
Directors for their approval. Mr. Cunningham does not participate in the review
of his compensation.
EMPLOYEE BENEFITS AND COMPENSATION COMMITTEE
Braden Vandeventer, Chairman
Donald I. Fentress
Frederick V. Martin
- 15 -
<PAGE>
Performance Graph
The following graph compares the Company's yearly cumulative total
stockholder return on its Common Stock for the period beginning October 11,
1994, the date the Company converted to a stock company and its stock began
trading. The Company's stock performance is compared to:
(1) The Center for Research in Securities Prices ("CRSP") Total Return
Index for the Nasdaq Stock Market (US) which is a broad market equity
index calculated by the CRSP at the University of Chicago and comprises
all domestic common shares traded on the Nasdaq National Market and the
Nasdaq Small-Cap Market; and
(2)The CRSP Total Return Index for Bank Stocks (SIC codes 602 and 671).
The cumulative returns are derived from compounded daily returns
assuming the reinvestment of dividends. It should be noted that in light of the
short period of time reflected by the graph, there is no reason to assume that
the performance of the Company's Common Stock for the period shown on the graph
will be reflective of long-term performance.
[GRAPHIC OMITTED]
In the original document, there follows a line graph depicting the
Company's performance comparative to the CRSP Total Return Index and the Nasdaq
Stock Market (US) Index. The following table is the data points for the graph.
<TABLE>
Life Bancorp, Inc.
Comparative Performance Graph
<CAPTION>
Oct. 11, 1994 Dec. 30, 1994 Dec. 29, 1995 Dec. 31, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Nasdaq - US $100.00 $98.61 $139.45 $171.53
Bank Stocks $100.00 $94.00 $140.00 $185.04
Life Bancorp, Inc. $100.00 $92.50 $154.79 $191.08
</TABLE>
- 16 -
<PAGE>
RATIFICATION OF APPOINTMENT OF AUDITOR
The Board of Directors of the Company has appointed Edmondson,
LedBetter & Ballard, L.L.P., independent auditor, to perform the audit of the
Company's financial statements for the year ending December 31, 1997, and
further directed that the selection of auditor be submitted for ratification by
the stockholders at the Annual Meeting.
The Company has been advised by Edmondson, LedBetter & Ballard, L.L.P.
that neither that firm nor any of its associates has any relationship with the
Company or its subsidiaries other than the usual relationship that exists
between independent auditor and clients. Edmondson, LedBetter & Ballard, L.L.P.
will have one or more representatives at the Annual Meeting who will have an
opportunity to make a statement, if they so desire, and will be available to
respond to appropriate questions. The affirmative vote of the holders of a
majority of the total votes cast at the Annual Meeting is required to ratify
Edmondson, LedBetter & Ballard, L.L.P. as the independent auditor of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR THE RATIFICATION OF THE APPOINTMENT OF
EDMONDSON, LEDBETTER & BALLARD, L.L.P.
AS INDEPENDENT AUDITOR
FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which is scheduled to be held in April 1998, must be received at
the principal executive offices of the Company, 109 East Main Street, Norfolk,
Virginia 23510, Attention: Emily E. Steele, Secretary, no later than November
17, 1997. If such proposal is in compliance with all of the requirements of Rule
14a-8 under the 1934 Act, it will be included in the proxy statement and set
forth on the form of proxy issued for such annual meeting of stockholders. It is
urged that any such proposals be sent certified mail, return receipt requested.
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the 1934 Act may be
brought before an annual meeting pursuant to Article 9B of the Company's
Articles of Incorporation, which provides that business at an annual meeting of
stockholders must be (a) properly brought before the meeting by, or at the
direction of, the Board of Directors, or (b) otherwise properly brought before
the meeting by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Company. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
principal executive office of the Company not less than 60 days prior to the
anniversary date of the immediately preceding annual meeting. A stockholder's
notice must set forth as to each matter the stockholder proposes to bring before
an annual meeting (a) a brief description of the proposal desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (b) the name and address, as they appear on the Company's books,
of the stockholder proposing such business and, to the extent known, any other
stockholders known by such stockholder to be supporting such proposal, (c) the
class and number of shares of Common Stock of the Company which are beneficially
owned by the stockholder and, to the extent known, by any other stockholders
known by such stockholder to be supporting such proposal, and (d) any financial
interest of the stockholder in such proposal (other than interests which all
stockholders would have).
Stockholders are also permitted to submit nominations of candidates for
the Board of Directors. Article 7.D. of the Company's Articles of Incorporation
governs nominations for election to the Board of Directors and requires all such
nominations, other than those made by the Board, to be made at a meeting of
stockholders called
- 17 -
<PAGE>
for the election of directors, and only by a stockholder who has complied with
the notice provisions in that section. Stockholder nominations must be made
pursuant to timely notice in writing to the Secretary of the Company. To be
timely, a stockholder's notice must be delivered to, or mailed and received at,
the principal executive offices of the Company not later than 60 days prior to
the anniversary date of the immediately preceding annual meeting.
Each written notice of a stockholder nomination shall set forth: (a) as
to each person whom the stockholder proposes to nominate for election or
re-election as a director and as to the stockholder giving the notice (i) the
name, age, business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the class and number of
shares of Company stock which are beneficially owned by such person on the date
of such stockholder notice, and (iv) any other information relating to such
person that is required to be disclosed in solicitations of proxies with respect
to nominees for election as directors, pursuant to the proxy rules under the
1934 Act; and (b) as to the stockholder giving the notice (i) the name and
address, as they appear on the Company's books, of such stockholder and any
other stockholders known by such stockholder to be supporting such nominees and
(ii) the class and number of shares of Company stock which are beneficially
owned by such stockholder on the date of such stockholder notice and, to the
extent known, by any other stockholders known by such stockholder to be
supporting such nominees on the date of such stockholder notice. The presiding
officer of the meeting may refuse to acknowledge the nomination of any person
not made in compliance with the foregoing procedures.
OTHER MATTERS
Management is not aware of any business to come before the Annual
Meeting other than the matters described above in this Proxy Statement. However,
if any other matters should properly come before the meeting, it is intended
that the proxies solicited hereby will be voted with respect to those other
matters in accordance with the judgment of the persons voting the proxies.
The cost of the solicitation of 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 the proxy
materials to the beneficial owners of the Company's Common Stock. In addition to
solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year
ended December 31, 1996 accompanies this Proxy Statement. Such annual report is
not part of the proxy solicitation materials.
A copy of the Company's Annual Report on Form 10-K, without exhibits,
as filed with the SEC is available without charge to stockholders upon written
request. Requests for this or other financial information about Life Bancorp,
Inc. or Life Savings Bank, FSB, should be directed to Clarence W. Keel, Vice
President of Investor Relations, Life Bancorp, Inc., 109 East Main Street,
Norfolk, Virginia, 23510, telephone (757) 858-1136.
By order of the Board of Directors
/s/ Emily E. Steele
Emily E. Steele
Secretary
Norfolk, Virginia
March 17, 1997
- 18 -
<PAGE>
REVOCABLE PROXY
LIFE BANCORP, INC.
The undersigned, being a stockholder of the Company as of March 7, 1997,
hereby authorizes the Board of Directors of the Company or any successors
thereto as proxies with full powers of substitution, to represent the
undersigned at the Annual Meeting of Stockholders of the Company to be held at
the Norfolk Waterside Marriott located at 235 East Main Street, Norfolk,
Virginia, on Thursday, April 24, 1997 at 10:00 a.m., Eastern Time, and at any
adjournment of said meeting, and thereat to act with respect to all votes that
the undersigned would be entitled to cast, if then personally present, as
follows:
SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED.
IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE BOARD OF DIRECTORS' NOMINEES TO THE BOARD OF
DIRECTORS, FOR PROPOSAL 2, AND OTHERWISE AT THE DISCRETION OF THE
PROXIES. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE TIME
IT IS VOTED AT THE ANNUAL MEETING.
(Continued and to be signed on reverse side)
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF LIFE BANCORP, INC. ("COMPANY") FOR USE AT THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 24, 1997 AND AT
ANY ADJOURNMENT THEREOF.
Please mark
your vote as [ X ]
indicated in
this example
1.ELECTION OF DIRECTORS
[ ] FOR all nominees listed NOMINEES FOR THREE-YEAR TERM: E. Saunders
(Unless otherwise directed Early, Jr., William J. Jonak, Jr. and
to the right) Tollie W. Rich, Jr.
(INSTRUCTIONS: To withhold authority to vote
[ ] WITHHOLD AUTHORITY for any individual nominee, write the name
to vote for all nominees of the nominee in the space provided
below.)
2.PROPOSAL to ratify the appointment of Edmondson, LedBetter & Ballard, L.L.P.
as the Company's independent auditor for the fiscal year ending December 31,
1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3.In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Dated: , 1997
Signature(s)
Please sign this exactly as your name(s) appear(s) on this
proxy. When signing in a representative capacity, please
give title. When shares are held jointly, only one holder
need sign.
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
