March 30, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of
Shareholders of James River Bankshares, Inc. that will be held at the Holiday
Inn Suffolk, 2864 Pruden Boulevard, Suffolk, Virginia 23434, at 2:00 p.m.
Eastern Time, on Thursday, April 30, 1998.
Enclosed are a Notice of the Annual Meeting, a Proxy Card, and a Proxy
Statement containing information about the matters to be acted upon at the
meeting. Directors and Officers of the Company as well as a representative of
Goodman & Company, L.L.P. will be present at the Annual Meeting to respond to
any questions our shareholders may have.
It is important that your shares be represented at the meeting.
Accordingly, we urge you to sign and date the enclosed Proxy Card and promptly
return it to us in the enclosed, self-addressed, postage-paid envelope, even if
you are planning to attend the meeting. If you attend the meeting, you may vote
in person even if you have previously returned a Proxy Card.
We look forward to the 1998 Annual Meeting of Shareholders and we hope
you will attend the meeting or be represented by proxy.
Sincerely,
G. P. JACKSON, Chairman
HAROLD U. BLYTHE, President
and Chief Executive Officer
<PAGE>
JAMES RIVER BANKSHARES, INC.
1512 Holland Road
Suffolk, Virginia 23434
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
THURSDAY, APRIL 30, 1998
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Shareholders of James
River Bankshares, Inc. will be held at the Holiday Inn Suffolk, 2864 Pruden
Boulevard, Suffolk, Virginia 23434, at 2:00 p.m. Eastern Time, on Thursday,
April 30, 1998, for the following purposes:
1. To elect ten (10) directors to hold office for a term of
one year and until their successors are elected and
qualified;
2. To act on a proposal to ratify the appointment of Goodman &
Company, L.L.P. as independent auditors for the ensuing year;
and
3. To act upon such other matters as may properly come before the
meeting or any adjournment thereof.
Information concerning the matters to be acted upon at the meeting is
set forth in the accompanying Proxy Statement. The Board of Directors has
established the close of business on March 20, 1998 as the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof.
By Order of the Board of Directors
---------------------------------
Harold U. Blythe, President and
Chief Executive Officer
Suffolk, Virginia
March 30, 1998
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY VOTE EITHER IN PERSON
OR THROUGH YOUR PROXY.
<PAGE>
PROXY STATEMENT
This Proxy Statement and the enclosed proxy card ("Proxy") are
furnished in connection with the solicitation of proxies on behalf of the Board
of Directors of James River Bankshares, Inc. (the "Company") to be voted at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held at Holiday Inn
Suffolk, 2864 Pruden Boulevard, Suffolk, Virginia 23434, at 2:00 p.m., Eastern
Time, on Thursday, April 30, 1998, and at any adjournment thereof, for the
purposes set forth in the accompanying Notice of Meeting.
Only shareholders of record at the close of business on March 20, 1998
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
This Proxy is being mailed on or about March 30, 1998.
REVOCABILITY OF PROXY
Execution of the enclosed Proxy will not affect a shareholder's right
to attend the Annual Meeting and vote in person. If your Proxy is properly
signed, received by the Company and not revoked by you, the shares to which it
pertains will be voted at the Annual Meeting in accordance with your
instructions. If a shareholder does not return a signed Proxy, his or her shares
cannot be voted by proxy.
SOLICITATION OF PROXIES
The cost of soliciting Proxies will be borne by the Company. The
Company has retained Corporate Investor Communications, Inc., 111 Commerce Road,
Carlstadt, New Jersey 07072-2586, to assist in the solicitation of Proxies from
brokers and nominees for a fee of approximately $1,500 plus out-of-pocket
expenses. First Union National Bank, First Union Customer Information Center,
Charlotte, North Carolina 28288-1153, will assist in the counting of proxies. In
addition to solicitation by mail, the Company will request banks, brokers and
other custodians, nominees and fiduciaries to send proxy material to the
beneficial owners and to secure their voting instructions if necessary. The
Company, upon request, will reimburse them for their expenses in so doing.
Officers and regular employees of the Company may solicit Proxies personally, by
telephone or by telegram from some shareholders if Proxies are not received
promptly, for which no additional compensation will be paid.
VOTING SHARES AND VOTE REQUIRED
On the Record Date, the Company had 3,680,470 shares of Common Stock
outstanding. Each share of Common Stock is entitled to one vote on each matter
presented at the Annual Meeting. Directors are elected by a plurality of votes
cast by shareholders at the Annual Meeting. A majority of votes cast is required
to ratify the appointment of auditors. Abstentions, broker non-votes, and
withheld votes will not be considered "votes cast" based on the Company's
understanding of state law requirements and the Company's Articles of
Incorporation and Bylaws.
All shareholder meeting proxies, ballots and tabulations that identify
individual shareholders are kept secret and no such document shall be available
for examination, nor shall the identity or the vote of any shareholder be
disclosed except as may be necessary to meet legal requirements and the laws of
Virginia. Votes will be counted and certified by Donald W. Fulton, Jr. and
Elizabeth T. Beale, who are employees of the Company and will serve as the Proxy
Committee at the Annual Meeting and act as the inspectors of elections.
Unless specified otherwise, the Proxy will be voted (i) FOR the
election of the ten nominees to serve as directors of the Company for a one year
term and until their successors are duly elected and qualified, and (ii) FOR the
ratification of the appointment of Goodman & Company, L.L.P. as independent
auditors for 1998. In the discretion of the Proxy holders, the Proxies will also
be voted for or against such other matters as may properly come before the
Annual Meeting. Management is not aware of any other matters to be presented for
action at the Annual Meeting.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of March 20, 1998,
relating to the beneficial ownership of the Company's Common Stock by (i) each
of the Company's directors, nominees to serve as director, and named executive
officers who own Common Stock, and (ii) all of the Company's current directors
and named executive officers as a group. Except as otherwise set forth below,
the Company is not aware of any person or group of affiliated persons who owns
more than 5% of the Common Stock of the Company. All of the Company's directors
and named executive officers receive mail at the Company's principal executive
offices at 1512 Holland Road, Suffolk, Virginia 23434.
<TABLE>
<CAPTION>
Number of Shares Percent of
Name Beneficially Owned Outstanding Shares
<S> <C>
Harold U. Blythe 36,358(1) 1.00
James E. Butler, Jr. 57,405(2) 1.56
Bruce B. Gray 97,597(3) 2.65
Elmon T. Gray 55,654(4) 1.51
Horace R. Higgins, Jr. 1,722 *
G. P. Jackson 158,205 4.30
Ben P. Kanak 75,126(5) 2.04
Glenn T. McCall 6,282(6) *
John A. Ramsey, Jr. 51,768(7) 1.41
Robert E. Spencer, Jr. 44,946(8) 1.22
E. V. Stephenson, Jr. 66,255 1.80
James C. Stewart 111,870(9) 3.01
Directors and Executive Officers as a 761,966 20.47
Group
(12 persons)
NationsBank Corporation(10) 190,196(11) 5.17
101 South Tryon Street
NationsBank Plaza
Charlotte, NC 28255
</TABLE>
* Less than 1% ownership
(1) Includes (i) 27,750 shares owned jointly by Mr. Blythe and his wife,
(ii) 75 shares owned by Mr. Blythe's wife, for which Mr. Blythe
disclaims beneficial ownership, and (iii) 1,500 shares owned by a
family trust for which Mr. Blythe has voting and investment power. Also
includes options to purchase 4,858 shares of Common Stock that are
currently exercisable, which were granted pursuant to the Company's
1996 Employee Stock Option Plan ("Option Plan").
(2) Includes 4,485 shares owned by Mr. Butler's wife, for which Mr. Butler
disclaims beneficial ownership.
(3) Includes (i) 43,707 shares owned by a family trust for which Mr. Bruce
Gray and Mr. Garland Gray, II share voting and investment power, (ii)
294 shares held by Mr. Bruce Gray as custodian for Elmon T. Gray, II,
(iii) 294 shares held by Mr. Bruce Gray as custodian for Garland Gray,
III, (iv) 1,725 shares held by Mr. Bruce Gray as custodian for Pamela
G. Herbert, (v) 1,263 shares held by Mr. Bruce Gray as custodian for
Charles C. Herbert, III, and (vi) 1,614 shares owned by a trust for
which Mr. Bruce Gray and Mr. Garland Gray, II share voting and
investment power. Does not include any shares beneficially owned or
otherwise described in this Proxy Statement by or with respect to Mr.
Elmon T. Gray or by Mr. Garland Gray, II, Mr. Bruce Gray's father and
brother, respectively. Mr. Bruce Gray disclaims beneficial ownership of
any shares other than the 97,597 shares listed above.
(4) Includes (i) 11,370 shares owned by Mr. Elmon Gray's wife, Pamela B.
Gray, and (ii) 37,323 shares owned by various family trusts for which
Mr. Elmon Gray shares voting and investment power with NationsBank.
Does not include (i) 84,721 shares owned collectively by Elizabeth Gray
Duff, Mr. Elmon Gray's sister, and her husband and various children,
(ii) 93,900 shares owned collectively by Florence Gray Tullidge, Mr.
Elmon Gray's sister, and her husband and various children, (iii) 95,902
shares owned collectively by Mary G. Stettinius, Mr. Elmon Gray's
sister, and her husband and various children, or (iv) 15,921 shares
owned collectively by Katharine T. Gray, Mr. Elmon Gray's daughter, and
her various children. Also does not include any shares beneficially
owned or otherwise described in this Proxy Statement by or with respect
to Mr. Bruce Gray or Mr. Garland Gray, II, who are both sons of Mr.
Elmon Gray. Mr. Elmon Gray disclaims beneficial ownership of any shares
other than the 6,961 shares he owns individually and the 37,323 shares
owned by family trusts as described above.
(5) Includes 2,571 shares owned by Mr. Kanak's wife, for which Mr. Kanak
disclaims beneficial ownership.
(6) Includes 5,178 shares owned jointly by Mr. McCall and his wife.
(7) Includes 36,792 shares owned jointly by Mr. Ramsey and his wife and
1,320 shares owned by Mr. Ramsey's wife. Mr. Ramsey disclaims
beneficial ownership of the 1,320 shares owned directly by his wife.
(8) Includes options to purchase 4,500 shares of Common Stock that are
currently exercisable, which were granted pursuant to the Company's
Option Plan.
(9) Includes 1,482 shares owned by Mr. Stewart's wife, for which Mr.
Stewart disclaims beneficial ownership and 2,407 shares owned jointly
by Mr. Stewart and his wife. Also includes options to acquire 32,019
shares of the Company's Common Stock. Of these options, (i) 27,519 were
formerly held by Mr. Stewart in the form of options to acquire stock of
First Colonial Bank ("FCB") that were converted into options to acquire
the Company's Common Stock in connection with the Company's acquisition
of FCB in February 1996, and (ii) 4,500 were granted pursuant to the
Company's Option Plan.
(10) Information regarding NationsBank Corporation ("NationsBank") has been
derived by the Company from a Schedule 13G filed by NationsBank with
the Securities and Exchange Commission ("Schedule 13G"). The 13G states
that NationsBank filed the 13G on behalf of NationsBank, NB Holdings
Corporation, 100 North Tryon Center, NationsBank Corporate Center,
Charlotte, NC 28255, and NationsBank, N.A., 110 South Tryon Street,
NationsBank Plaza, Charlotte, NC 28255.
(11) The Schedule 13G provides that to the extent that the reported shares
are held in various fiduciary accounts, dividends and the proceeds of
such shares are payable to other persons, including such accounts, the
beneficiaries or settlors thereof or a combination of such persons. In
certain instances, other persons (including beneficiaries and settlors)
may be deemed to have the power to direct receipt of dividends or the
proceeds of the sale of shares. The Schedule 13G also states that to
the best of NationsBank's knowledge and belief, no other person has
such an economic interest relating to more than 5% of the Company's
Common Stock.
PROPOSAL 1. ELECTION OF DIRECTORS
All directors are elected for a one year term and until their
successors are duly executed and qualified. The Board of Directors
recommends that the following ten nominees be elected as directors: Harold U.
Blythe, James E. Butler, Jr., Bruce B. Gray, Elmon T. Gray, Horace R. Higgins,
Jr., G. P. Jackson, Ben P. Kanak, John A. Ramsey, Jr., Robert E. Spencer,
Jr., and James C. Stewart. Proxies received will be voted for the election
of such nominees unless marked to the contrary. A shareholder who desires
to withhold voting of the Proxy for all or one or more of the nominees may so
indicate on the Proxy. All of the nominees except Horace R. Higgins, Jr.
are currently members of the Board of Directors and all nominees, including
Mr. Higgins, have consented to be named and have indicated their intent to
serve if elected. If any nominee becomes unable to serve, an event which is
not anticipated, the Proxy will be voted for a substitute nominee to be
designated by the Board of Directors, or the number of directors will be
reduced.
The Company's Bylaws provide that the number of directors shall be
between seven and seventeen. In two separate transactions that closed in
February 1996, the Company acquired First Colonial Bank, FSB ("FCB") in
Hopewell, Virginia ("FCB Transaction") and Bank of Isle of Wight ("BIW") in
Smithfield, Virginia ("BIW Transaction"), pursuant to which FCB and BIW became
wholly owned banking subsidiaries of the Company. In accordance with the
respective negotiated terms of the FCB Transaction and BIW Transaction, Ben P.
Kanak and James C. Stewart, directors of FCB, and John A. Ramsey, Jr. and Robert
E. Spencer, Jr., directors of BIW, were all appointed to the Company's Board of
Directors in March 1996. The separate terms of the FCB Transaction and BIW
Transaction require that Messrs. Kanak and Stewart, on the one hand, and Messrs.
Ramsey and Spencer, on the other hand, be nominated for election as directors at
the Annual Meeting to serve a one year term.
The following information relates to the ten director-nominees. There
are no family relationships among any of the director-nominees, except that Mr.
Elmon Gray is the father of Mr. Bruce Gray, nor is there any arrangement or
understanding between any director-nominee and any other person pursuant to
which the director-nominee was selected, except as otherwise described above
with respect to Messrs. Kanak, Stewart, Ramsey and Spencer.
Nominees to Serve as Directors
Harold U. Blythe, 55, the Company's President and Chief Executive
Officer, has been an executive officer and director of the Company since it was
initially organized in December 1994. From 1989 until 1997, Mr. Blythe was
President and Chief Executive Officer of Bank of Suffolk ("BOS"), one of the
Company's wholly owned banking subsidiaries. Mr. Blythe also served as a
director of BOS from 1989 until 1997. Mr. Blythe is Chairman of the Board of
James River Support, Inc., the Company's non-banking operations subsidiary
("James River Support"), and is a director of Community Bankers Bank, Richmond,
Virginia.
James E. Butler, Jr., 72, has been a director of the Company since
December 1994 and a director of BOS since 1973. Mr. Butler is the President of
Butler Paper Company.
Bruce B. Gray, 44, the Company's Vice-Chairman, has been a director
of the Company since December 1994, Chairman of the Board of James River Bank
("JRB"), one of the Company's wholly owned banking subsidiaries, since 1993
and has been a director of JRB since 1977. Mr. Bruce Gray is Vice-President
of Gray Lumber Co., Gray Land & Timber Co. and Gray Co. Mr. Bruce Gray is a
partner of Grayland Co. and Gray Loblolly Co.
Elmon T. Gray, 72, has been a director of the Company since December
1994, and served as the Company's Chairman of the Board from 1994 until 1997.
Mr. Elmon Gray was a director of JRB from 1949 until 1996, serving as
Chairman of the Board from 1977 to 1993. Mr. Elmon Gray is President of Gray
Lumber Co. and Gray Co. He was President of Gray Land & Timber Co. from 1992
until 1993. Mr. Gray is a partner of Grayland Co. and Gray Loblolly Co.
Horace R. Higgins, Jr., 50, has been President of Higgins
Trucking Company for over 25 years. Mr. Higgins has also served as a director
of JRB since 1984.
G. P. Jackson, 71, the Company's Chairman of the Board, has been
a director of the Company since December 1994. Mr. Jackson also is
currently the Chairman of the Board of BOS and has been a director of BOS
since 1967. Mr. Jackson is engaged in real estate rentals and
contracting, and serves as President of G. P. Jackson, Inc., Jackson &
Jackson Bros., Inc., Holland & Jackson, Inc. and Suffolk Glass, Inc.
Ben P. Kanak, 75, was appointed to the Board of Directors in March 1996
after consummation of the FCB Transaction as described above. Mr. Kanak is
currently Chairman of the Board of Directors of FCB, a position he has held
since 1982. Mr. Kanak has been a director of FCB since FCB was formed in 1972.
Mr. Kanak also serves as a member of the Board of Directors of Plant Foods
Products, Inc. Mr. Kanak has been an independent farmer since 1942.
John A. Ramsey, Jr., 68, was appointed to the Board of Directors in
March 1996 after consummation of the BIW Transaction as described above. Mr.
Ramsey has been Chairman of the Board of Directors of BIW since 1991, and is a
charter director of BIW, having served as a director since 1971. Mr. Ramsey is a
farmer, and is President of Ramsey Brothers, Inc., which farms numerous
properties in and around Isle of Wight County, Virginia. He is also president of
Prescription Fertilizer, Inc.
Robert E. Spencer, Jr., 56, was appointed to the Board of Directors in
March 1996 after consummation of the BIW Transaction. Mr. Spencer is a Senior
Vice President of the Company and is responsible for bank investments and
asset/liability management, a position to which he was appointed in 1997. Mr.
Spencer served BIW as a director and President and Chief Executive Officer from
1986 until 1997. He is also a director and president of BIW Services
Corporation, one of the Company's wholly owned subsidiaries.
James C. Stewart, 59, was appointed to the Board of Directors in March
1996 after the consummation of the FCB Transaction. Mr. Stewart is currently a
director, President and Chief Executive Officer of FCB, a position he has held
since 1973.
Meetings and Committees of the Board of Directors
The business of the Company is managed under the direction of the Board
of Directors. The Board of Directors meets on a regularly scheduled basis during
the year to review significant developments affecting the Company and to act on
matters requiring approval by the Board of Directors. It also holds special
meetings when an important matter requires action by the Board of Directors
between scheduled meetings. The Board of Directors held 12 meetings during 1997.
In accordance with the Rules of the NASDAQ National Market System, the
interdealer quotation system on which the Company's Common Stock trades, Messrs.
Butler, Bruce Gray, Elmon Gray, Jackson, Kanak and Ramsey are independent
directors. If elected, Mr. Higgins will also be an independent director. During
1997, each member of the Board of Directors participated in at least 75% of all
meetings of the Board of Directors and at least 75% of all meetings of the
applicable committees during the period for which he was a director.
The Board of Directors has established Executive, Audit and
Compensation Committees. Messrs. Blythe, Bruce Gray, Jackson, McCall,
Spencer and Stewart currently serve on the Executive Committee. Mr. Spencer and
Mr. Stewart were appointed to the Executive Committee in accordance with the
negotiated terms of the FCB Transaction and BIW Transaction, respectively.
Messrs. Butler, Elmon Gray and Jackson serve on the Compensation Committee.
Messrs. Butler, Bruce Gray and Stephenson serve on the Audit Committee. One
member of the Board of Directors of each of the Company's subsidiary banks
serves the Audit Committee in an advisory capacity. After the Annual
Meeting, the Board of Directors will designate replacements for Mr. McCall
and Mr. Stephenson, neither of whom are standing for reelection as directors,
on the Executive Committee and Audit Committee, respectively.
The Executive Committee is delegated the power, with certain
exceptions, of the Board of Directors to act in place of the full Board during
all periods between regular meetings of the Board. The Executive Committee met
10 times in 1997. The Audit Committee is empowered by the Board of Directors to,
among other things, recommend the firm to be employed by the Company as its
independent auditor and to consult with such auditor regarding audits and the
adequacy of internal accounting controls. The Audit Committee met 3 times in
1997. The Compensation Committee makes recommendations to the Board of Directors
regarding, among other things, (i) the compensation of the Chief Executive
Officer, each officer who is also a director of the Company and designated other
members of senior management, and (ii) new compensation and stock plans. The
Compensation Committee met 6 times in 1997.
The Company does not currently have a Nominating Committee. The
functions customarily attributable to such a committee are performed by the
Board of Directors as a whole. The Company will consider director-nominees
recommended by shareholders, although it has not actively solicited
recommendations from shareholders for nominees nor has it established any
procedure for this purpose for the Annual Meeting other than as set forth in the
Company's Articles of Incorporation ("Articles"). Article IV(c)(iii) of the
Articles provides that in the case of a nomination to be made by a shareholder
of the Company at an annual or special meeting of shareholders, except in the
case of a nomination by which proxies are being solicited under applicable
regulations of the Securities and Exchange Commission ("SEC"), written notice of
the shareholders' intent to make a nomination at a meeting of shareholders must
be filed with the Secretary of the Company not later than ten (10) calendar days
after the notice to shareholders for the meeting is sent to shareholders, or at
least twenty-one (21) calendar days prior to the date fixed for holding the
meeting at which the nomination is intended to be made, whichever is later. Any
such notice of an intent to nominate must contain or be accompanied by the
following information: (i) the name and residence of the shareholder of the
Company who intends to make the nomination; (ii) a representation that the
shareholder is a holder of record of Common Stock of the Company entitled to
vote and that the shareholder intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice; (iii) such
information regarding each nominee as would have been required to be included in
a proxy statement filed under the applicable regulations of the SEC had the
Board of Directors of the Company nominated or intended to nominate such
nominee, which information must include such nominees' name and address; (iv) a
description of all arrangements or understandings among the nominating
shareholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the shareholder; and (v) the consent of each nominee to serve as a director of
the Company if so elected. If the Company's Chairman of the meeting at which
directors are to be elected determines that a nomination by a shareholder was
not made in accordance with the procedure set forth above, the nomination will
be declared void.
EXECUTIVE COMPENSATION
Summary Executive Compensation Table
The following table presents an overview of executive compensation paid
by the Company and its subsidiaries during 1997, 1996 and 1995 to Harold U.
Blythe, President and Chief Executive Officer of the Company and to the three
other executive officers of the Company whose combined salary and bonus exceeded
$100,000 in 1997 (collectively the "Named Executive Officers"). Because the
Company did not commence operations until June 1, 1995, information presented
for 1995 includes compensation paid to Messrs. Blythe and McCall by BOS and JRB,
respectively, solely in their capacities as executive officers of those
institutions. Compensation information for Mr. Spencer and Mr. Stewart includes
amounts paid by BIW and FCB, respectively, both of which were acquired by the
Company in February 1996. No other executive officer of the Company or any
banking subsidiary received combined salary and bonus in excess of $100,000
during 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
-------------------------------- -------------
Name and principal position Securities
Underlying All Other
Year Salary($) Bonus($) Options(#) Compensation($)
<S> <C> ---- --------- --------- ----------- ---------------
Harold U. Blythe, President and CEO 1997 $136,224 $13,622 0 $14,701(1)
of the Company 1996 132,000(2) 6,600 37,500(3) 18,882(4)
1995 111,156 1,500 0 2,314(4)
Glenn T. McCall, Former Senior Vice- 1997 112,488 11,249 0 12,374(1)
President and Chief Financial Officer 1996 114,030(5) 4,400 22,500(3) 28,586(6)
1995 93,252 5,022 0 12,765(6)
Robert E. Spencer, Jr., Senior Vice- 1997 104,425(7) 16,082 0 9,002(1)
President - Bank Investments and 1996 95,656 4,963 22,500(3) 6,192(1)
Asset/Liability Management 1995 76,236 9,603 0 7,826(1)
James C. Stewart, President 1997 134,671(8) 32,179(9) 0 11,974(1)
of FCB 1996 126,960(10) 0 22,500(3) 22,191(11)
1995 111,175 7,442 0 20,237(11)
</TABLE>
- -----------------
(1) Consists of Company contributions to 401(k) and Profit Sharing Plan.
(2) Includes $22,800 of director fees paid by the Company and BOS.
(3) Options granted pursuant to the 1996 Employee Stock Option Plan.
(4) Consists of premiums paid for life insurance policies and contributions
to 401(k) Plan.
(5) Includes $25,200 of director fees paid by the Company and JRB.
(6) Consists of premiums paid for life insurance policies and contributions
to 401(k) Plan.
(7) Includes $24,012 of director fees paid by the Company and BIW.
(8) Includes $25,500 of director fees paid by the Company, FCB and FCB's
subsidiaries.
(9) Consists of (i) $10,519 bonus for 1996 paid in January 1997 and
(ii) $21,660 bonus for 1997 paid in December 1997.
(10) Includes $23,500 of director fees paid by the Company and FCB.
(11) Consists of funding of FCB's ESOP and life insurance premiums paid by
FCB to fund Mr. Stewart's supplemental income plan. For 1996, includes
contributions to 401(k) Plan.
Fiscal Year End Options Table
No stock options were granted to the Named Executive Officers during
the fiscal year ended December 31, 1997, nor were any stock options exercised in
1997 by the Named Executive Officers. The table below sets forth information
regarding exercisable and unexercisable stock options held as of December 31,
1997, by the Named Executive Officers, all of which were granted pursuant to the
Company's 1996 Employee Stock Option Plan except as otherwise indicated.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised
Options Value of Unexercised In-The-Money
Shares at Fiscal Year-End (#) Options at Fiscal Year-End ($)(1)
Acquired --------------------------- ----------------------------------
Upon Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- -------- ------------ --------- ------------ ------------- ----------- -------------
<S> <C>
Harold U. Blythe 0(2) 0 7,500(2) 30,000 $57,675(3) $230,700(3)
Glenn T. McCall 0(4) 0 4,500(4) 18,000 $34,605(3) $138,420(3)
Robert E. Spencer, Jr. 0 0 4,500 18,000 $34,605(3) $138,420(3)
James C. Stewart 0 0 32,019(5) 18,000 $423,999(5) $138,420(3)
</TABLE>
(1) The closing sale price of the Company's Common Stock on NASDAQ/NMS
on December 31, 1997 was $21.25 per share.
(2) Mr. Blythe exercised options to purchase 2,642 shares of Common Stock
in March 1998 at an exercise price of $13.56 per share.
(3) The exercise price of these options is $13.56 per share.
(4) Mr. McCall exercised options to purchase 4,500 shares of Common
Stock in February 1998 at an exercise price of $13.56 per share.
(5) Includes 27,519 options which were originally granted by FCB and were
converted into options to buy the Company's Common Stock when the
Company acquired FCB in February 1996. The exercise price of these
options is $7.10 per share. Also includes 4,500 options granted
pursuant to the Company's 1996 Employee Stock Option Plan, the exercise
price of which is $13.56 per share.
Compensation of Directors
Other than Mr. Stewart, directors of the Company who are also employees
of the Company or its subsidiaries do not receive director fees. Mr. Stewart and
the non-employee directors who serve on the Executive Committee are paid a fee
of $1,500 per month and non-employee directors who do not serve on the Executive
Committee are paid a fee of $1,000 per month. The Chairman of the Board of the
Company, who serves on the Executive Committee, is paid a fee of $1,700 per
month. Directors also receive annual retainers and monthly fees for serving on
the Boards of the Company's subsidiary banks. The fees are based on the asset
sizes of those banks and are payable in accordance with the following schedule:
<TABLE>
<CAPTION>
<S> <C>
ASSETS: $0-50 $51-100 $101-150 $151-200
---------------- ---------------- ----------------- ----------------
(dollars in millions)
FEES:
--------------------------------------------------------------------
Annual retainer payable monthly $2,400 $3,000 $3,600 $4,200
Monthly board meeting: 100 150 200 250
Board chairman per board meeting 150 200 250 300
Committee meeting 50 75 100 125
</TABLE>
In addition to the fees payable above, Mr. Jackson also receives $600
per month from BOS, of which he is Chairman of the Board, for appraisal review
services. Directors of the Company currently have the option of receiving
registered shares of Common Stock of the Company in lieu of receiving cash
payments for director fees.
Executive Officer Employment Agreements
Harold U. Blythe, a director and the President and Chief Executive
Officer of the Company, is currently compensated pursuant to an Employment
Agreement ("Blythe Employment Agreement") that was entered into in June 1995 in
connection with the capitalization and formation of the Company by BOS and JRB.
The Blythe Employment Agreement has a term of seven years, commencing on July 1,
1995. In 1995, the Compensation Committee of the Board of Directors
("Compensation Committee") established an initial annual salary of $109,200
under the Blythe Employment Agreement which can be adjusted periodically,
provided that no adjustment can be made that would provide for a salary lower
than the initial annual salary of $109,200. Mr. Blythe's current annual salary
under the Blythe Employment Agreement is $140,814, which includes amounts
formerly payable to Mr. Blythe as director fees that are now paid as salary. The
Blythe Employment Agreement provides that in the event of a change of control of
the Company following which Mr. Blythe is not given reasonably equivalent,
acceptable duties and responsibilities as he had prior to the change of control,
Mr. Blythe may be terminated or resign, and, in either such case, Mr. Blythe is
entitled to receive 2.99 times his annual base compensation then being paid to
him pursuant to the Blythe Employment Agreement. In the event the Company
terminates Mr. Blythe's employment without cause, and provided that Mr. Blythe
does not thereafter compete with the Company, the Blythe Employment Agreement
provides that Mr. Blythe will receive his regular compensation for a period of
one year following termination, or during the remaining term of the agreement,
whichever is less.
Effective May 1, 1996, the Company and Mr. Blythe entered into a
deferred compensation agreement ("Blythe Deferred Agreement"). The Blythe
Deferred Agreement provides for the payment of certain retirement, death and
disability benefits provided that Mr. Blythe is employed by the Company until
May 1, 1998, unless employment is sooner terminated as a result of death or
disability. The retirement benefit is payable if Mr. Blythe retires at any time
after the age of 60. Thereafter, the Company will pay Mr. Blythe or his
beneficiaries a base monthly benefit of $2,000 per month for 120 consecutive
months. The monthly payment is subject to upward or downward adjustment based on
cost of living increases or decreases. In the event that Mr. Blythe dies before
his retirement date, the Company will pay $5,000 per month for 120 consecutive
months to Mr. Blythe's designated beneficiary. In the event Mr. Blythe's
employment with the Company terminates prior to retirement as a result of
disability, the Company will pay Mr. Blythe a disability benefit of $3,166 per
month. The disability benefit will continue throughout the period of disability
or until Mr. Blythe reaches age 60, at which time Mr. Blythe will commence
receiving the retirement benefit described above. Finally, in the event Mr.
Blythe terminates his employment with the Company for any reason other than
death or disability after May 1, 1998, but prior to attaining age 60, the
Company will pay Mr. Blythe a lump sum termination benefit. Commencing May 1,
1998, the termination benefit is $25,000 and increases by $25,000 on May 1 of
each year thereafter for a total of a $100,000 termination benefit should Mr.
Blythe terminate employment under the conditions described in the preceding
sentence between May 1, 2001 and April 30, 2002. After May 1, 2002, Mr. Blythe
is eligible for full retirement benefits. Mr. Blythe's deferred compensation
arrangement is funded by a life insurance policy on the life of Mr. Blythe for
which the Company pays premiums and is the beneficiary.
Glenn T. McCall, a director of the Company and the Company's Senior
Vice- President and Chief Financial Officer until January 1998, is also
currently compensated pursuant to an employment agreement ("McCall Employment
Agreement") that was entered into in June 1995 in connection with the
capitalization and formation of the Company. The terms of the McCall Employment
Agreement are the same as the terms of the Blythe Employment Agreement, except
that the McCall Employment Agreement has a five year term commencing July 1,
1995 and the Compensation Committee established an initial salary of $83,800,
subject to adjustment on the same general terms under which the Blythe
Employment Agreement can be adjusted. Mr. McCall's current annual salary under
the McCall Employment Agreement is $115,752, which includes amounts formerly
payable to Mr. McCall as director fees that are now paid as salary. Mr. McCall
has informed the Company that he intends to retire effective April 30, 1998. Mr.
McCall is not standing for re-election as a director.
Mr. McCall and JRB also entered into a deferred compensation agreement
("McCall Deferred Agreement") in January 1989, pursuant to which he will receive
a benefit of $1,000 per month in each of the ten years following his retirement.
The arrangement is funded by a life insurance policy on the life of Mr. McCall,
for which JRB pays premiums and is the beneficiary. Pursuant to the McCall
Deferred Agreement, a percentage of Mr. McCall's retirement benefit vests each
month.
As described in this Proxy Statement under the heading "Proposal 1.
Election of Directors" above, in February 1996 the Company acquired FCB and BIW
in the FCB Transaction and BIW Transaction, respectively. Pursuant to the
negotiated terms of the FCB Transaction, James C. Stewart is compensated as
President and Chief Executive Officer of FCB under an employment agreement with
FCB ("Stewart Employment Agreement"). The Stewart Employment Agreement is for an
initial term of three years commencing March 1, 1996, renewable annually
thereafter, and provides that Mr. Stewart will receive compensation at least
equal to the compensation he received from FCB prior to the FCB Transaction. FCB
is currently paying Mr. Stewart a base salary of $111,241. The Stewart
Employment Agreement also contains a change of control provision that is the
same as that provided for in the Blythe Employment Agreement and the McCall
Employment Agreement. In the event FCB terminates Mr. Stewart's employment
without cause, and provided that Mr. Stewart does not thereafter compete with
the Company, the Stewart Employment Agreement provides that Mr. Stewart will
continue to receive his salary for the lesser of (i) the remaining term of the
Stewart Employment Agreement, or (ii) a period of one year following
termination.
Pursuant to the terms of the BIW Transaction, Robert E. Spencer, Jr.,
currently the Company's Senior Vice-President - Bank Investments and
Asset/Liability Management and the former President and Chief Executive Officer
of BIW, is subject to an employment agreement with BIW ("Spencer Employment
Agreement"). The Spencer Employment Agreement has terms substantially the same
as those of Mr. Stewart, except that the initial term of the Spencer Employment
Agreement is five years and Mr. Stewart would receive his salary for a period of
one year following a termination of employment without cause. In 1997, Mr.
Spencer was appointed the Company's Senior Vice-President - Bank Investments and
Asset/Liability Management. Accordingly, Mr. Spencer is now an employee of the
Company and is no longer an employee of BIW. The Company anticipates amending
the Spencer Employment Agreement to reflect his status and compensation as an
employee of the Company. The Company does not anticipate that the Spencer
Employment Agreement will be amended in any other material respect. The Company
is currently paying Mr. Spencer a base salary of $106,980.
In addition to the Named Executive Officers, the Company has entered
into employment agreements with certain other executive officers of the Company
and its subsidiaries, including Donald W. Fulton, Jr., who became the Company's
Senior Vice-President and Chief Financial Officer in January 1998. See
"Compensation Committee Report Concerning Compensation of Certain Executive
Officers - Employment Agreements" below.
Compensation Committee Interlocks and Insider Participation
No member of the Company's Compensation Committee was an officer or
employee of the Company during 1997. During 1997, no executive officer of the
Company served as a member of the Compensation Committee of another entity, nor
did any executive officer of the Company serve as a director of another entity,
one of whose executive officers served on the Company's Compensation Committee.
Two members of the Compensation Committee, Messrs. Jackson and Butler, have
outstanding loans with certain of the Company's banking subsidiaries. Each of
these loans was made in the ordinary course of business on substantially the
same terms, including interest rates, collateral and repayment terms, as those
prevailing at the time for comparable transactions with unrelated parties and
did not involve more than the normal risk of collectibility or present other
unfavorable features. See " - Certain Relationships and Related Transactions"
below.
Compensation Committee Report Concerning Compensation of Certain Executive
Officers
This report describes the Company's executive officer compensation
strategy, the components of the compensation program and the manner in which the
1997 compensation determinations were made for the Company's President and Chief
Executive Officer, Harold U. Blythe, and the Company's other executive officers
(collectively "Executive Officers").
In addition to the information set forth above under "Executive
Compensation," the Compensation Committee is required to provide shareholders a
report explaining the rationale and considerations that led to the fundamental
executive compensation decisions affecting the Company's Executive Officers. In
fulfillment of this requirement, the Compensation Committee, at the direction of
the Company's Board of Directors, has prepared the following report for
inclusion in this Proxy Statement. None of the members of the Compensation
Committee are executive officers or employees of the Company.
Compensation Philosophy
The compensation of the Company's Executive Officers is designed to
attract, retain, motivate and reward qualified, dedicated executives, and to
directly link compensation with (i) the Executive Officer's previous and
anticipated performance, (ii) the contributions and responsibilities of the
Executive Officer to the Company and (iii) the Company's profitability. None of
these three factors is given more relative consideration than any other. The
principal components of an Executive Officer's compensation package in 1997 were
(i) a base salary at a stated annual rate, together with certain other benefits
as may be provided from time to time, and (ii) discretionary cash bonuses. See "
- - Bonus Program" below. In 1996, stock option awards were made to the Company's
Executive Officers pursuant to the Company's 1996 Employee Stock Option Plan.
The Compensation Committee did not make any stock option awards in 1997, but
recently granted certain stock options as described in " - 1996 Employee Stock
Option Plan" below.
Employment Agreements
The Company has entered into Employment Agreements with certain
Executive Officers as described below. The Compensation Committee believes that
written employment agreements are necessary to attract and retain a quality
management team and are consistent with the Company's compensation philosophy.
Chief Executive Officer and Chief Financial Officer Employment
Agreements. Harold U. Blythe, the Company's current President and Chief
Executive Officer and Glenn T. McCall, the Company's Senior Vice-President and
Chief Financial Officer until January 1998, are both employed pursuant to
employment agreements with the Company. The specific terms of Mr. Blythe's and
Mr. McCall's Employment Agreements are set forth in this Proxy Statement under
the heading "- Executive Officer Employment Agreements" above. The forms of both
employment agreements were negotiated and agreed upon by BOS and JRB in
connection with the capitalization and formation of the Company in June 1995.
However, the forms of the employment agreements did not provide a specific
salary. During 1997, Mr. Blythe's and Mr. McCall's base salaries under their
employment agreements were $136,224 and $112,488, respectively. The Compensation
Committee has established a base salary of $140,814 for Mr. Blythe for 1998. The
Compensation Committee has established Mr. Blythe's base salary based on his
employment duties and responsibilities and the relative contributions he is
anticipated to make to the Company. Mr. McCall has informed the Company that he
intends to retire effective April 30, 1998.
As also described above in this Proxy Statement under the heading "-
Executive Officer Employment Agreements," Mr. Blythe and the Company, and Mr.
McCall and JRB, have entered into deferred compensation agreements. The
Compensation Committee believes that the deferred compensation arrangement for
Mr. Blythe is consistent with the Company's compensation philosophy. Mr.
McCall's agreement was entered into in 1989 and therefore was not negotiated by
either the Company's Board of Directors or the Compensation Committee. However,
the Compensation Committee believes that Mr. McCall's deferred compensation
agreement also is consistent with the Company's compensation philosophy.
The Company entered into an employment agreement dated January 1, 1998
with Donald W. Fulton, Jr. ("Fulton Employment Agreement"), pursuant to which
Mr. Fulton serves as the Company's Senior Vice-President and Chief Financial
Officer. The term of the Fulton Employment Agreement is one year with successive
one year renewals upon the mutual agreement of the Company and Mr. Fulton. Under
the Fulton Employment Agreement, Mr. Fulton's base annual salary is $102,000.
The Fulton Employment Agreement also requires the Company, on or before June 30,
1998, (i) to recommend to the Board of Directors that Mr. Fulton receive options
to purchase 22,500 shares of Company Common Stock and (ii) to offer Mr. Fulton a
deferred compensation agreement providing for not less than $2,000 per month of
deferred compensation to Mr. Fulton or his estate for a period of not less than
ten years. The Compensation Committee awarded Mr. Fulton options to purchase
22,500 shares of Company Common Stock on February 26, 1998, as described below
in " - 1996 Employee Stock Option Plan." The Fulton Employment Agreement
contains termination of employment and change of control provisions similar to
those contained in Mr. Blythe's and Mr. McCall's employment agreements.
Other Employment Agreements. As described above in "- Executive Officer
Employment Agreements," James C. Stewart is compensated as President and Chief
Executive Officer of FCB pursuant to an employment agreement with FCB. The form
of this employment agreement was negotiated by the Company as part of the FCB
Transaction. Accordingly, the Compensation Committee did not directly determine
the initial compensation arrangements for Mr. Stewart and under current Company
policy the board of directors of FCB reviews the salary payable to Mr. Stewart
under his employment agreement. The Compensation Committee believes that the
compensation currently payable to Mr. Stewart is consistent with the Company's
compensation philosophy.
As also described above in " - Executive Officer Employment
Agreements," Mr. Spencer is currently party to an employment agreement with BIW
that the Company anticipates amending as a result of Mr. Spencer's appointment
as Senior Vice-President - Bank Investments and Asset/Liability Management. The
form of this employment agreement was negotiated in connection with the BIW
Transaction and the Compensation Committee therefore did not directly determine
the initial compensation arrangements for Mr. Spencer. The Compensation
Committee believes that the compensation currently payable to Mr. Spencer is
consistent with the Company's compensation philosophy.
In addition to Executive Officers identified above, the Company has
entered into employment agreements with certain other executive officers of the
Company's subsidiaries. The Company does not currently award employment
agreements to executive officers of subsidiaries below the Chief Executive
Officer level.
Bonus Program
In 1997, the Compensation Committee adopted specific criteria and
parameters for awards of cash bonuses to Executive Officers, including certain
executive officers of the Company's subsidiaries. Under the Company's cash bonus
program ("Bonus Program"), bonuses are paid as a percentage of base salary. The
percentage of salary awarded as a bonus is in turn based on the Company's or a
particular subsidiary's net after tax income. Additional bonus awards are
payable based on the Company's or a particular subsidiary's return on assets and
return on equity. Executive Officers of the Company receive bonuses based solely
on the Company's overall financial performance. Executive Officers of
subsidiaries who are not also Executive Officers of the Company receive bonuses
based solely on the financial performance of the subsidiaries by which they are
employed.
The Bonus Program currently provides that, absent special
circumstances, annual salary adjustments will be limited to cost of living
increases. In addition, the maximum bonus under the Bonus Program is 20% of base
salary. The specific criteria, terms and conditions of the Bonus Program are
subject to adjustment at any time by the Compensation Committee. For 1997, a
total of $172,218 in cash bonuses was awarded under the Bonus Program. The chart
below sets forth information regarding the cash bonuses for 1997 received by the
Named Executive Officers:
Name Bonus % of 1997 Base Salary(1)
- ----- ------- ------------------------
Harold U. Blythe $13,622 10%
Glenn T. McCall $11,249 10%
Robert E. Spencer, Jr. $16,082 20%
James C. Stewart $21,660 20%
(1) Percentages relate to 1997 base salary exclusive of director
fees that are included in the Named Executive Officers' salary for
purposes of the Summary Executive Compensation Table. See " -
Summary Executive Compensation Table."
1996 Employee Stock Option Plan
During 1995, the Board and the Compensation Committee studied and
considered means by which the Company could award and compensate key employees
of the Company in a manner that would align closely the interests of such key
employees with the interests of the Company's shareholders. In furtherance of
this goal, the Board adopted the 1996 Employee Stock Option Plan ("Option
Plan"), which was approved by the Company's shareholders at the 1996 Annual
Meeting. The purpose of the Option Plan is to support the business goals of the
Company and to attract, retain and motivate management officials of high caliber
by providing incentives that will, through the award of options to acquire the
Company's Common Stock, associate more closely the interests of Executive
Officers and key employees of the Company with the interests of the Company's
shareholders. Participation is limited to Executive Officers and other key
employees of the Company who are in positions in which their decisions, actions
and efforts significantly contribute to the success of the Company.
The Compensation Committee did not grant any stock options pursuant to
the Option Plan in 1997. However, in February 1998, the Compensation Committee
awarded options to purchase 37,500 shares of the Company's Common Stock to
eligible employees, including 22,500 to Donald W. Fulton, Jr., the Company's
recently appointed Senior Vice-President and Chief Financial Officer.
Limitation on Deductibility of Certain Compensation for Federal Income Tax
Purposes
Section 162(m) of the Internal Revenue Code ("162(m)") precludes the
Company from taking a deduction for compensation in excess of $1 million for the
Chief Executive Officer or certain of its other highest paid officers. Certain
performance based compensation, however, is specifically exempt from the
deduction limit. The Compensation Committee has considered 162(m) and has
determined that 162(m) will not impact the Company in 1998 because it is not
anticipated that compensation in excess of $1 million will be paid to any
employee of the Company. However, in adopting the Option Plan, the Board and
Compensation Committee duly considered Section 162(m) and structured it to
satisfy the performance based compensation exemptions under 162(m).
- James E. Butler, Jr.
- Elmon T. Gray
- G. P. Jackson
THE PRECEDING "COMPENSATION COMMITTEE REPORT CONCERNING COMPENSATION OF
CERTAIN EXECUTIVE OFFICERS," AND THE STOCK PERFORMANCE GRAPH BELOW, SHALL NOT BE
DEEMED TO BE SOLICITING MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, OR INCORPORATED BY REFERENCE IN ANY DOCUMENTS
SO FILED.
Company Stock Price Performance
The following graph shows a comparison of cumulative total shareholder
returns for (i) the Company, (ii) the S & P 500 Stock Index, (iii) an industry
peer group constructed by the Company (iv) the NASDAQ Stock Market (US) and (v)
NASDAQ Bank Stocks from the period June 29, 1995, the date the Company became
subject to the reporting requirements of the Securities Exchange Act of 1934,
through December 31, 1997. The industry peer group consists of the Company and
the following companies: Main Street Bankgroup, Inc., Union Bank & Trust
Company, George Mason Bankshares, Inc., and F&M National Corporation. Two of the
financial institutions included in the peer group for the Company's 1997 proxy
statement have been acquired and are therefore not included in the peer group
index for this Proxy Statement. In addition, George Mason Bankshares, Inc.
("George Mason") has announced that it will be acquired by another financial
institution, and George Mason's shareholder returns include the premium being
paid for George Mason's stock in connection with the acquisition. In future
proxy statements, the Company intends to compare shareholder returns for the
Company to those of only the NASDAQ Stock Market (US) and NASDAQ Bank Stocks.
The total shareholder return assumes $100 invested at the beginning of the
period in the Company's Common Stock, the S & P 500 Stock Index, the peer group
index, the NASDAQ Stock Market (US) and NASDAQ Bank Stocks. In developing the
industry peer group index, the returns of the companies were weighted according
to stock market capitalization at the beginning of each period for which a
return is indicated.
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG THE COMPANY,
S & P 500 STOCK INDEX, PEER GROUP INDEX*, NASDAQ
STOCK MARKET (US), AND NASDAQ BANK STOCKS
<TABLE>
<CAPTION>
Base Period Return Return Return
June 29, 1995 December 1995 December 1996 December 1997
<S> <C>
- ---S & P 500 Index 100 117.10 143.99 192.03
- ---James River Bankshares, Inc. 100 119.03 107.25 173.88
- ---Peer Group 100 120.60 140.95 231.50
- ---NASDAQ Stock Market (US) 100 113.41 139.49 171.17
- ---NASDAQ Bank Stocks 100 123.20 162.66 274.80
</TABLE>
- --------------------
*$100 invested on 6/29/95 in stock or index, including reinvestment of
dividends.
<PAGE>
Certain Relationships and Related Transactions
The directors and executive officers of the Company and its banking
subsidiaries, and their family members and certain business organizations and
individuals associated with each of them, have been customers of the Company's
various subsidiary financial institutions with which they are affiliated, have
had normal banking transactions, including loans, with them, and are expected to
continue to do so in the future. As of December 31, 1997, the Company's banking
subsidiaries had aggregate direct and indirect loans to the directors and
executive officers of the Company and its banking subsidiaries totaling
approximately $8.68 million, which represented approximately 21.5% of the
Company's shareholders' equity as of that date. Except as set forth below with
respect to Mr. Stewart, each of these transactions was made in the ordinary
course of business on substantially the same terms, including interest rates,
collateral and repayment terms, as those prevailing at the time for comparable
transactions with unrelated parties and did not involve more than the normal
risk of collectibility or present other unfavorable features.
James C. Stewart, President and Chief Executive Officer of FCB and a
Named Executive Officer, currently has two loans outstanding with FCB with an
aggregate principal balance of $127,361. These loans were made in 1987 and 1988
under then existing FCB loan policies that allowed FCB to make loans to its
employees at an interest rate equal to FCB's cost of funds adjusted annually.
Under these terms, the current interest rates of Mr. Stewart's loans are 4.95%
and 5.03%, respectively. Both of Mr. Stewart's loans are current with no history
of payment default and are secured by real property. FCB discontinued the policy
of making below market rate loans to its employees in 1989.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires directors, officers and persons who beneficially own more than 10% of a
registered class of equity securities of the Company to file initial reports of
ownership (Forms 3) and reports of changes in beneficial ownership (Forms 4 and
5) with the SEC and NASDAQ. Such persons are also required under the rules and
regulations promulgated by the SEC to furnish the Company with copies of all
Section 16(a) forms they file. Based solely on a review of the copies of such
forms furnished to the Company, the Company believes that all reporting
requirements under Section 16(a) for 1997 were met in a timely manner by its
directors, officers and greater than 10% beneficial owners, except that two
separate purchases of 500 shares of Common Stock by Elmon Gray, a director, in
May 1997 were not reported on a Form 4 until August 1997.
PROPOSAL 2. RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has selected and approved Goodman & Company,
L.L.P. ("Goodman & Company") as the firm of independent certified public
accountants to audit the financial statements of the Company for the fiscal year
ending December 31, 1998, and the Board of Directors desires that such
appointment be ratified by the Company's shareholders. Goodman & Company also
audited the Company's financial statements for the fiscal years ended December
31, 1996 and 1997.
A representative of Goodman & Company will be present at the Annual
Meeting, will have the opportunity to make a statement if he or she desires, and
will be available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors does not know of any matters that will be
presented for action at the Annual Meeting other than those described above or
matters incident to the conduct of the Annual Meeting. If, however, any other
matters not presently known to management should come before the Annual Meeting,
it is intended that the shares represented by the Proxy will be voted on such
matters in accordance with the discretion of the holders of such Proxy.
SUBMISSION OF PROPOSALS FOR 1999
The next Annual Meeting of Shareholders will be held on or about April
22, 1999. Any shareholder who wishes to submit a proposal for consideration at
that meeting, and who wishes to have such proposal included in the Company's
proxy statement for that meeting, must submit the proposal in writing to Harold
U. Blythe, President and Chief Executive Officer, at 1512 Holland Road, Suffolk,
Virginia 23434, no later than November 30, 1998.
GENERAL
The Company's 1997 Annual Report to Shareholders accompanies this Proxy
Statement. The 1997 Annual Report to Shareholders does not form any part of the
material for the solicitation of proxies. Upon written request, the Company will
provide shareholders with a copy of its Annual Report on Form 10-K for the year
ended December 31, 1997 (the "Form 10-K"), as filed with the Securities and
Exchange Commission, without charge. Please direct written requests for a copy
of the Form 10-K to: Harold U. Blythe, President and Chief Executive Officer, at
1512 Holland Road, Suffolk, Virginia 23434.
<PAGE>
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY
By Order of the Board of Directors
March 30, 1998
<PAGE>
JAMES RIVER BANKSHARES, INC.
Proxy Solicited on Behalf of the
Board of Directors for
Annual Meeting of Shareholders
to be Held April 30, 1998
The undersigned, having received the Annual Report to Shareholders and
the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement
dated March 30, 1998, hereby appoints G. P. Jackson and Harold U. Blythe (each
with power to act alone) as proxies, with full power of substitution, and hereby
authorizes them to represent and vote, as directed below, all the shares of the
Common Stock of James River Bankshares, Inc. held of record by the undersigned
on March 20, 1998, at the Annual Meeting of Shareholders to be held on April 30,
1998, and any adjournment thereof.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR"
PROPOSALS 1 AND 2
1. ELECTION OF DIRECTORS
FOR all nominees listed (except as indicated to the contrary) |_|
WITHHOLD AUTHORITY to vote for all nominees listed |_|
Harold U. Blythe G. P. Jackson
James E. Butler, Jr. Ben P. Kanak
Bruce B. Gray John A. Ramsey, Jr.
Elmon T. Gray Robert E. Spencer, Jr.
Horace R. Higgins, Jr. James C. Stewart
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee write the nominee's name on the line provided below.)
---------------------------------------------------
2. TO RATIFY the appointment by the Board of Directors of Goodman &
Company, L.L.P. as the Company's independent auditors for the year
ending December 31, 1998.
|_| FOR |_| AGAINST |_| ABSTAIN
3. IN THEIR DISCRETION, on such other matters as may properly come before
the meeting, or, if any nominee listed in Proposal 1 above is unable to
serve for any reason, to vote or refrain from voting for a substitute
nominee or nominees.
This proxy is revocable at any time prior to its exercise. This proxy,
when properly executed, will be voted as directed. Where no direction
is given, this proxy will be voted for Proposals 1 and 2.
<PAGE>
Please sign your name(s) exactly
as they appear hereon. If signer is a
corporation, please sign the full
corporate name by duly authorized
officer. If any attorney, guardian,
administrator, executor, or trustee,
please give full title as such. If a
limited liability company or partnership,
sign in limited liability company or
partnership name by authorized person.
Date: __________________, 1998
------------------------------
------------------------------
Please complete, date, sign and return
this proxy promptly in the accompanying
envelope.
