<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
HAYWOOD BANCSHARES, INC.
- - ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- - ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which
transaction applies:
_________________________________________________________________
2. Aggregate number of securities to which transaction
applies:
_________________________________________________________________
3. Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (Set
forth the amount on which the filing fee is calculated and state
how it was determined):
_________________________________________________________________
4. Proposed maximum aggregate value of transaction:
_________________________________________________________________
5. Total fee paid:
_________________________________________________________________
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1. Amount Previously Paid:
____________________________________________
2. Form, Schedule or Registration Statement No.:
____________________________________________
3. Filing Party:
____________________________________________
4. Date Filed:
____________________________________________<PAGE>
<PAGE>
[HAYWOOD BANCSHARES, INC. LETTERHEAD]
March 21, 1997
Dear Fellow Stockholder:
You are cordially invited to attend the 1997 Annual Meeting
of Stockholders of Haywood Bancshares, Inc., (the "Company") to
be held at the main office of Haywood Savings Bank, Inc., SSB,
370 North Main Street, Waynesville, North Carolina, on Tuesday,
April 22, 1997 at 7:30 p.m.
The attached Notice of Annual Meeting and Proxy Statement
describe the formal business to be transacted at the meeting.
During the meeting, we will also report on the operations of the
Company. Directors and officers of the Company, as well as
representatives from the Company's auditors, KPMG Peat Marwick
LLP, will be present to respond to any questions that
stockholders may have.
Please sign, date and return the enclosed proxy card. If
you attend the Annual Meeting, you may vote in person even if you
have previously mailed a proxy card. To help us in our planning,
please check the box on the proxy card if you plan to attend the
Annual Meeting.
Sincerely,
/s/ Larry R. Ammons
Larry R. Ammons
President
<PAGE>
<PAGE>
HAYWOOD BANCSHARES, INC.
370 NORTH MAIN STREET
WAYNESVILLE, NORTH CAROLINA 28786
(704) 456-9092
_________________________________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 22, 1997
_________________________________________________________________
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stock-
holders (the "Annual Meeting") of Haywood Bancshares, Inc., (the
"Company") will be held at the main office of Haywood Savings
Bank, Inc., SSB, 370 North Main Street, Waynesville, North
Carolina, on Tuesday, April 22, 1997, at 7:30 p.m. for the
following purposes:
1. The election of directors;
2. The ratification of auditors for the 1997 fiscal year;
3. The transaction of such other business as may properly
come before the Annual Meeting or any adjournments
thereof.
NOTE: The Board of Directors is not aware of any other
business to come before the Annual Meeting.
Any action may be taken on any one of the foregoing pro-
posals at the Annual Meeting on the date specified above, or on
any date or dates to which, by original or later adjournment, the
Annual Meeting may be adjourned. Stockholders of record at the
close of business on March 14, 1997, are the stockholders
entitled to vote at the Annual Meeting and any adjournments
thereof.
A proxy statement and form of proxy accompany this notice.
You are requested to fill in and sign the enclosed form of proxy
which is solicited by the Board of Directors and to mail it
promptly in the enclosed envelope. The proxy will not be used if
you attend and vote at the Annual Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Paul W. Trantham
Paul W. Trantham
Secretary
Waynesville, North Carolina
March 21, 1997
_________________________________________________________________
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE BANK THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A
QUORUM. A PRE-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVEN-
IENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
_________________________________________________________________
<PAGE>
_________________________________________________________________
PROXY STATEMENT
OF
HAYWOOD BANCSHARES, INC.
370 NORTH MAIN STREET
WAYNESVILLE, NORTH CAROLINA 28786
ANNUAL MEETING OF STOCKHOLDERS
April 22, 1997
_________________________________________________________________
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Haywood
Bancshares, Inc., (the "Company") to be used at the 1997 Annual
Meeting of Stockholders of the Company (the "Annual Meeting")
which will be held at the main office of Haywood Savings Bank,
Inc., SSB (the "Bank"), 370 North Main Street, Waynesville, North
Carolina, on Tuesday, April 22, 1997 at 7:30 p.m. This Proxy
Statement and the accompanying Notice of Annual Meeting and form
of proxy are being first mailed to stockholders on or about March
21, 1997.
_________________________________________________________________
VOTING AND REVOCATION OF PROXIES
_________________________________________________________________
The proxies solicited hereby will be voted in accordance
with the directions given therein. Where no instructions are
indicated, properly executed proxies which have not been revoked
will be voted for the nominees for directors set forth below and
in favor of each of the other proposals set forth in this Proxy
Statement for consideration at the Annual Meeting. The proxy
confers discretionary authority on the persons named therein to
vote with respect to the election of any person as a director
where the nominee is unable to serve or for good cause will not
serve, and with respect to matters incident to the conduct of the
Annual Meeting. If any other business is presented at the Annual
Meeting, proxies will be voted by those named therein in
accordance with the determination of a majority of the Board of
Directors. Proxies marked as abstentions will not be counted as
votes cast. In addition, shares held in street name which have
been designated by brokers on proxy cards as not voted will not
be counted as votes cast. Proxies marked as abstentions or as
broker no votes, however, will be treated as shares present for
purposes of determining whether a quorum is present.
Stockholders who execute proxies retain the right to revoke
them at any time prior to exercise. Unless so revoked, the
shares represented by such proxies will be voted at the Annual
Meeting and all adjournments thereof. Proxies may be revoked by
written notice to the Secretary of the Company or by the filing
of a later dated proxy prior to a vote being taken on a
particular proposal at the Annual Meeting. A written notice of
revocation of a proxy should be sent to the Secretary, Haywood
Bancshares, Inc., 370 North Main Street, Waynesville, North
Carolina 28786, and will be effective if received by the
Secretary prior to the Annual Meeting. A previously submitted
proxy will also be revoked if a stockholder attends the Annual
Meeting and votes in person. The presence of a stockholder at
the Annual Meeting alone will not automatically revoke such
stockholder's proxy.
_________________________________________________________________
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
_________________________________________________________________
The securities entitled to vote at the Annual Meeting
consist of shares of common stock, $1.00 par value per share, of
the Company (the "Common Stock"). Stockholders of record as of
the close of business on March 14, 1997 (the "Record Date"), are
entitled to one vote for each share then held. As of the Record
Date, the Company had 1,251,856 shares of the Common Stock issued
and outstanding. The presence, in person or by proxy, of at
least a majority of the total number of outstanding shares of the
Common Stock entitled to vote is necessary to constitute a quorum
at the Annual Meeting.
<PAGE>
<PAGE>
Persons and groups beneficially owning in excess of 5% of
the Common Stock are required to file certain reports regarding
such ownership pursuant to the Securities Exchange Act of 1934
(the "Exchange Act"). The following table sets forth, as of the
Record Date, the shares of the Common Stock beneficially owned by
all directors and executive officers as a group and by each
person who was the beneficial owner of more than 5% of the
outstanding shares of the Common Stock at the Record Date, based
on information supplied by the Company's transfer agent and
filings made by such persons pursuant to the Exchange Act as to
which the Company had information on the Record Date.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF SHARES OF
BENEFICIAL CAPITAL STOCK
OWNERSHIP(1) OUTSTANDING(2)
------------ ---------------
<S> <C> <C>
Larry R. Ammons 77,475 (3) 6.19%
Haywood Savings Bank, Inc., SSB
370 North Main Street
Waynesville, North Carolina 28786
Haywood Savings Bank, Inc., SSB 169,912 (4) 13.57%
Employee Stock Ownership Plan
370 North Main Street
Waynesville, North Carolina 28786
All Directors and Executive 290,424 (5) 23.13%
Officers as a Group (11 persons)
<FN>
______________
(1) For purposes of this table, a person is deemed to be the
beneficial owner of any shares of the Common Stock (1) over
which he or she has or shares voting or investment power, or (2)
of which he or she has the right to acquire beneficial ownership
at any time within 60 days from the Record Date. As used
herein, "voting power" is the power to vote or direct the voting
of shares and "investment power" is the power to dispose or
direct the disposition of shares.
(2) In calculating percentage ownership for a given individual or
group of individuals, the number of shares of the Common Stock
outstanding includes unissued shares subject to options
exercisable within 60 days of the Record Date held by that
individual or group.
(3) Includes 3,530 shares held in wife's Individual Retirement
Account over which shares Mr. Ammons has shared voting power.
Includes 17,325 shares allocated to Mr. Ammons' account in the
Haywood Savings Bank, Inc., SSB Employee Stock Ownership Plan
("ESOP") the voting of which Mr. Ammons has the power to direct.
(4) The ESOP has purchased 175,000 shares of the Common Stock for
the exclusive benefit of participating employees with borrowed
funds of which 158,084 shares have been allocated to the
accounts of participants. Unallocated shares are held in a
suspense account for allocation among participants as the loan
is repaid. The trustee votes all allocated shares in accordance
with the instructions of the participating employees.
Unallocated shares are voted by the trustee at the direction of
the ESOP committee consisting of Director Dooly and three Bank
employees, provided payments on the ESOP loan are not in
default.
(5) Includes certain shares owned by spouses, or as custodian or
trustee for minor children, over which shares all directors and
executive officers as a group effectively exercise sole or
shared voting and investment power, unless otherwise indicated.
Includes options to purchase 4,000 shares exercisable by certain
executive officers and directors within 60 days of the Record
Date. Includes 28,629 shares allocated to the accounts of
certain executive officers in the ESOP, over which they have
sole voting power. Does not include 16,916 unallocated shares
of the Common Stock held by the ESOP, the voting of which shares
is directed by the ESOP committee consisting of Director Dooly
and three Bank employees. The members of the ESOP committee
disclaim beneficial ownership of such unallocated shares.
</FN>
</TABLE>
2<PAGE>
<PAGE>
_________________________________________________________________
PROPOSAL I -- ELECTION OF DIRECTORS
_________________________________________________________________
The Company's Board of Directors is currently composed of
ten members. In accordance with the Company's Articles of
Incorporation, the Board of Directors is divided into three
classes, as nearly equal as possible in size, with approximately
one-third of the directors elected each year. The Board of
Directors has nominated R. Neal Ensley, Joseph E. Taylor, Jr. and
C. Leon Turner, each of whom is currently a member of the Board
of Directors, to serve as directors for a three-year term and
until their successors are elected and qualified. Under North
Carolina law, directors are elected by a plurality of the votes
cast by the shares entitled to vote for the election of
directors. Unless otherwise specified on the proxy, it is
intended that the persons named in the proxies solicited by the
Board of Directors will vote for the Board of Directors'
nominees.
If any nominee is unable to serve, the shares represented by
all properly executed proxies will be voted for the election of
such substitute as the Board of Directors may recommend or the
Board of Directors may reduce the number of authorized directors
to eliminate the vacancy. At this time, the Board knows of no
reason why any nominee might be unavailable to serve.
The following table sets forth for each nominee such
person's name, age, principal occupation(s) during the past five
years and all positions held with the Company, the year he first
became a director of the Bank, the year his current term expires
and the number and percentage of shares of the Common Stock
beneficially owned. Each director became a director of the
Company upon its organization in 1995.
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED OR SHARES OF
APPOINTED CURRENT COMMON STOCK PERCENT
AGE DIRECTOR OF TERM TO BENEFICIALLY OF
(1) PRINCIPAL OCCUPATION(2) THE BANK EXPIRE OWNED(1)(3) CLASS(4)
--- ----------------------- ----------- ------- ----------- -------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2000
<S> <C> <C> <C> <C> <C> <C>
R. Neal Ensley 59 President of P&G Wood Erectors, 1991 1997 12,500 (5) 1.00%
Inc., a structural erector of lamin-
ated wood buildings, Waynesville,
North Carolina since 1989. Director
of Research and Development for
the Day International Division of
M.A. Hanna Company, Asheville,
North Carolina, a manufacturer of
off-set printing blankets from
from 1986 to 1989.
Joseph E.
Taylor, Jr. 53 Automobile dealer and land developer 1979 1997 41,800 (6)(7) 3.33%
in Waynesville, North Carolina;
Vice Chairman of Great Smokies
Financial Corporation, a wholly-
owned subsidiary of the Bank.
C. Leon Turner 57 Executive Director of Haywood 1985 1997 675 (8) 0.05%
County Economic Development
Commission since 1993. Formerly
President of Turner & Sons, Inc.,
a men's clothing store in
Waynesville. Director of Great
Smokies Financial Corporation, a
wholly-owned subsidiary of the Bank.
(Footnotes on page 5)
</TABLE>
3<PAGE>
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED OR SHARES OF
APPOINTED CURRENT COMMON STOCK PERCENT
AGE DIRECTOR OF TERM TO BENEFICIALLY OF
(1) PRINCIPAL OCCUPATION(2) THE BANK EXPIRE OWNED(1)(3) CLASS(4)
--- ----------------------- ----------- ------- ----------- -------
DIRECTORS CONTINUING IN OFFICE
<S> <C> <C> <C> <C> <C> <C>
Philip S. Dooly 57 President of Haywood Builders 1982 1998 10,100 (9) 0.81%
Supply Co. in Waynesville,
North Carolina, retail building
materials company.
C. Jeff Reece, Jr. 58 President and General Manager 1979 1998 47,990 (10) 3.83%
of Reece, Noland & McElrath,
Inc., a professional engineering
firm. Vice Chairman of the Board
of Directors since June, 1996.
Chairman of the Audit Committee
of the Bank.
R. Bruce Norman 57 President and Manager of Parkway 1992 1998 16,300 (11) 1.30%
Electric and Heating, an electrical,
heating and air conditioning
contractor since 1970.
Larry R. Ammons 52 President and Managing Officer of 1976 1999 77,475 (12) 6.19%
the Company since its inception and
of the Bank since December 1987; prior
to December 1987, Executive Vice
President and Managing Officer of the
Bank; President and Director of Great
Smokies Financial Corporation, the
wholly-owned subsidiary of the Bank.
Glenn W. Brown 71 Retired Senior Partner in the law 1991 1999 7,800 0.62%
firm of Brown, Ward & Haynes, P.A.,
Waynesville, North Carolina
G.D. Stovall, Jr. 63 Chairman of the Board of Directors 1974 1999 24,580 (13) 1.96%
from September 1991 until June 1996;
prior to September 1991, Vice Chairman
of the Bank, owner of Waynesville
Candy & Specialty Co.
William P. Burgin 70 Chairman of the Board of Directors 1979 1999 29,900 (14) 2.39%
since June 1996; Vice Chairman of the
Board of Directors from September 1991
to June 1996. Retired General Manager
of Burgin Construction Co., a general
contractor in Waynesville; Chairman
of the Board of Great Smokies
Financial Corporation, a wholly-
owned subsidiary of the Bank.
(Footnotes on following page)
</TABLE>
4<PAGE>
<PAGE>
_____________
(1) As of the Record Date.
(2) Nominees and directors have held these occupations or
positions for at least five years, unless otherwise noted.
(3) For the definition of "beneficial ownership," see footnote 1
to the table in the section entitled "Voting Securities and
Principal Holders Thereof." Unless otherwise noted, all
shares are owned directly by the named individual or by
their spouses and minor children, over which shares the
named individuals exercise shared voting and investment
power.
(4) In calculating percentage ownership for a given individual,
the number of shares of the Common Stock outstanding
includes unissued shares subject to options exercisable
within 60 days of the Record Date held by that individual.
(5) Includes 1,400 shares held by wife.
(6) Includes options to purchase 4,000 shares of the Common
Stock which are exercisable within 60 days of the Record
Date.
(7) Includes 1,390 shares held in wife's Individual Retirement
Account ("IRA").
(8) Includes 350 shares held in wife's IRA.
(9) Includes 400 shares held in wife's IRA. Does not include
16,916 unallocated shares held by the ESOP, the voting of
which shares is directed by the ESOP committee on which Mr.
Dooly serves. Mr. Dooly disclaims beneficial ownership of
such shares.
(10) Includes 23,990 shares held jointly with spouse and 12,000
shares in retirement plan.
(11) Includes 1,000 shares held jointly with spouse.
(12) Includes 3,530 shares held in wife's IRA over which shares
Mr. Ammons has shared voting power. Includes 17,325 shares
of the Common Stock allocated to Mr. Ammons' account in the
ESOP as to which shares Mr. Ammons has the power to direct
the voting and 150 shares held by his children.
(13) Includes 600 shares held in wife's name.
(14) Includes 1,900 shares held in wife's name.
_________________________________________________________________
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
_________________________________________________________________
The Company's Board of Directors conducts its business
through meetings of the Board and through its committees. During
the fiscal year ended December 31, 1996, the Company's Board of
Directors held a total of eight regular and special meetings.
With the exception of Director Taylor who attended five out of
eight meetings, no director attended fewer than 75% of the total
meetings of the Company's Board of Directors and meetings of
committees on which such Board member served during the period.
Each director of the Company also serves on the Bank's Board of
Directors which held a total of 24 meetings during the last
fiscal year. No director attended fewer than 75% of the total
meetings of the Bank's Board of Directors and meetings of
committees on which such director served during this period. The
Board of Directors has not established audit or compensation
committees at the holding company level. These functions are
performed by committees of the Board of Directors of the Bank.
The Bank's audit committee consists of Directors Reece,
Ensley and Dooly. The committee evaluates policies and
procedures relating to internal auditing functions and controls
and coordinates with the Bank's outside auditors with regard to
the annual audit of the Bank. During the fiscal year ended
December 31, 1996, this committee held five meetings.
The Bank's personnel committee functions as the compensation
committee and consists of Directors Burgin, Turner and Taylor.
This committee meets at least once annually to review the
compensation of officers and makes recommendations to the Board
of Directors as to the compensation level to be established for
these individuals. During the fiscal year ended December 31,
1996, this committee held two meetings.
The Board of Directors also serves as a nominating committee
for selecting the management nominees for election as directors.
While the Board of Directors will consider nominees recommended
by stockholders, it has not established any procedures for this
purpose. The Board of Directors held one meeting in its capacity
as the nominating committee during the fiscal year ended December
31, 1996.
5<PAGE>
<PAGE>
_________________________________________________________________
DIRECTOR COMPENSATION
_________________________________________________________________
DIRECTOR FEES. Directors do not receive separate fees for
their service on the Company's Board of Directors or its
committees. Directors currently receive fees of $445 per Bank
Board of Directors meeting attended. Directors receive no fees
for committee meetings attended. However, directors serving on
the Bank's Appraisal Committee receive $50 for visiting
properties being appraised and $30 per each inspection of
construction projects. In addition, the Chairman of the Board
received a fee of $4,500 during fiscal year 1996. Certain
directors, including Mr. Ammons, have entered into agreements
with the Bank providing for the waiver of their director fees for
a period of five years in return for monthly payments for a 10
year period beginning at age 65.
DIRECTOR RETIREMENT PLAN. Effective January 1, 1994, the
Bank's Board of Directors adopted the Haywood Savings Bank, Inc.,
SSB Retirement Plan for Non-Employee Directors (the "Directors'
Plan") for its directors, each of whom is also a director of the
Company. Under the Directors' Plan, each non-employee director
will receive an annual payment for a number of years equal to the
director's years of service on the Board of Directors (whether
before or after the Effective Date of the Directors' Plan) up to
a maximum of 10 years. For purposes of computing a director's
years of service, no credit is given for periods when a director
is also an employee of the Bank. The annual payment to be
received by a non-employee director pursuant to the Directors'
Plan will be equal to the product of his or her "Vested
Percentage" and the sum of the fees paid to the directors for
service as a director during the 12 calendar months immediately
preceding the date on which the director terminates service on
the Board of Directors. A director's "Vested Percentage" is
based on his or her overall years of service on the Board of
Directors of the Bank, and increases in increments of 20% from 0%
for less than four years of service to 100% for more than 10
years of service. However, in the event a director terminates
service on the Board of Directors due to death, retirement after
attaining age 65 or disability (as determined by the Board of
Directors in its sole discretion), the director's Vested
Percentage automatically increases to 100%. In the event of a
"change in control" (as such term is defined in the Directors'
Plan), the participant's Vested Percentage become 100% and is
credited with at least 10 years of service regardless of his or
her actual years of service and each non-employee director is
entitled to receive a lump sum cash payment in an amount equal to
the present value of the benefits that the director would have
received had he or she terminated service on the date of the
change in control. In the event of the death of a director
before collecting any or all of the benefits payable under the
Directors' Plan, such payments will be made to the estate of the
deceased director. All benefits paid under the Directors' Plan
will be paid from the Bank's general assets which are subject to
the claim of the Bank's creditors.
_________________________________________________________________
EXECUTIVE COMPENSATION
_________________________________________________________________
SUMMARY COMPENSATION TABLE. The following table sets forth
the cash and noncash compensation for each of the last three
fiscal years awarded to or earned by the Chief Executive Officer.
No other executive officer of the Company earned salary and bonus
during 1996 exceeding $100,000 for services rendered in all
capacities to the Company.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------
NAME AND FISCAL OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) COMPENSATION
- - ----------------- ---- ------ ----- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Larry R. Ammons 1996 $110,000 $ -- $ -- $ 23,895 (2)
President 1995 99,000 -- -- 15,596
1994 95,000 -- -- 9,078
<FN>
____________
(1) Does not include perquisites and other personal benefits,
the aggregate amount of which is the lesser of either
$50,000 or 10% of the salary and bonus.
(2) Includes director's fees of $10,200 and the value of shares
of Common Stock of $13,695 allocated to Mr. Ammons' account
in the ESOP.
</FN>
</TABLE>
6<PAGE>
<PAGE>
OPTION YEAR-END VALUE TABLE. The following table sets forth
information concerning the value of options and SARs held by the
Chief Executive Officer at the end of the fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF SECURITIES
UNDERLYING UNEXERCISED UNDERLYING UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/
FISCAL YEAR-END SARS AT FISCAL YEAR-END (1)
-------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Larry R. Ammons 20,000 -- $257,500 --
<FN>
___________
(1) Based on aggregate fair market value of the shares of
Common Stock underlying the options at December 31, 1996
less aggregate exercise price. For purposes of this
calculation, the fair market value of the Common Stock at
December 31, 1996 is assumed to be equal to the closing
market price of $18.50 per share. All options granted to
Mr. Ammons were granted at an exercise price of $5.625 per
share.
</FN>
</TABLE>
EMPLOYMENT AGREEMENT. The Company and the Bank have entered
into an employment agreement with President and Managing Officer
Larry R. Ammons. This agreement initially provided for a five-
year term from January 1, 1995, at a minimum annual salary of
$110,000. The agreement provides for an automatic annual
extension of the term of employment for an additional one-year
period beyond the then effective expiration date unless either
the Company or the Bank or the employee gives written notice
prior to January 1 of each year that the agreement will not be
extended further. No such notice has been given. The agreement
provides for annual salary review by the Board of Directors, as
well as inclusion of Mr. Ammons in any contingent compensation
plans, customary fringe benefits, vacation and sick leave. If
the Bank terminates the employment of Mr. Ammons for a reason
other than "cause" as defined in the agreements or for
retirement, Mr. Ammons or his beneficiaries is entitled to a
monthly payment equal to the highest monthly rate of salary paid
to him under the agreement for the remaining term of the
agreement.
The employment agreement contains a provision stating that
in the event of the termination of employment for any reason
other than cause or retirement after any change in control of the
Company or the Bank or a change in the capacity or circumstances
in which the employee is employed as contemplated by the
agreement, Mr. Ammons or his beneficiary will be promptly paid a
sum equal to 2.99 times the average annual compensation he
received during the five-year period immediately prior to the
date of change of control. "Control" generally refers to the
acquisition by any person or entity of the ownership or power to
vote more than 25% of the voting securities of the Company or the
Bank. In the event of termination of employment resulting from a
change in control which would activate such severance payment
provisions, the estimated amounts payable to Mr. Ammons would be
$286,442, based upon his average annual salary for the five-year
period ended December 31, 1996.
SUPPLEMENTAL INCOME AGREEMENTS. The Bank has entered into
Retirement Payment Agreements with Mr. Ammons and certain other
executive officers pursuant to which such officers may accrue
additional retirement benefits. The Retirement Payment
Agreements are intended to compensate Mr. Ammons and the other
executive officers for reductions in their benefits under the
Haywood Savings and Loan Association Employees' Retirement Plan
resulting from changes in the assumptions used by the U.S.
Government for calculating the maximum permissible benefits under
tax qualified pension plans. Each of the agreements provide for
monthly payments to the officer or his beneficiary in specified
amounts for a period of fifteen years commencing at age 65. Such
monthly payments are increased by 5% for each full year of
service after the first year of service under the agreements
except that there will be no increases in benefits after the
attainment of age 65. During the period benefits are paid under
the agreements, the officers have agreed to remain available to
render consulting services to the Bank. Benefits may be
terminated if the officer engages in business activities in
competition with the Bank.
7<PAGE>
<PAGE>
_________________________________________________________________
CERTAIN TRANSACTIONS
_________________________________________________________________
Prior to 1989, the Bank had followed the policy of offering
mortgage loans to its officers, directors and employees in the
ordinary course of business on substantially the same terms and
collateral as those of comparable transactions prevailing at the
time, except that the Bank provided a one percentage point
reduction in the rate of interest charged to officers, directors
and employees as long as the relationship as officer, director or
employee remains unchanged. It is the view of management that
these loans did not involve more than the normal risk of
collectibility or present other unfavorable features.
Under the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 ("FIRREA"), the Bank's loans to directors
and executive officers must be made on substantially the same
terms, including interest rates, as those prevailing for
comparable transactions and must not involve more than the normal
risk of repayment or present other unfavorable features.
Furthermore, loans above the greater of $25,000 or 5% of the
Bank's capital and surplus (up to $500,000) to such person must
be approved in advance by a disinterested majority of the Board
of Directors. As a result of FIRREA, the Bank does not offer
favorable terms on loans to directors or executive officers.
Set forth below is certain information relating to all
indebtedness to the Bank of all executive officers and directors,
and their immediate families and their affiliates whose aggregate
indebtedness exceeded $60,000 during fiscal year 1996 and who had
any indebtedness to the Bank which was originally made on terms
that were not the same as those prevailing at the time for
comparable transactions. Except as disclosed below, all loans to
executive officers and directors whose aggregate indebtedness
exceeded $60,000 at any time during the last fiscal year were
made by the Bank in the ordinary course of business on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more than the
normal risk of collectibility or present other unfavorable
features.
<TABLE>
<CAPTION>
LARGEST
AMOUNT OUTSTANDING
OUTSTANDING BALANCE AT
NAME AND DATE OF TYPE OF INTEREST DURING FISCAL DECEMBER
RELATIONSHIP LOAN LOAN RATE PAID YEAR 1996 31, 1996
- - ------------ ------- -------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
William P. Burgin 05/30/85 Mortgage 7.75% $85,938 $81,552
Vice Chairman and 12/23/93 Equity Line(1) Prime+1% 18,263 --
Director
Philip S. Dooly 08/24/88 Mortgage 6.25% 39,319 36,682
Director 08/09/94 Equity Line(1) Prime+1% 25,274 21,297
<FN>
___________
(1) This loan was made on the same terms as those prevailing at
the time for comparable transactions.
</FN>
</TABLE>
_________________________________________________________________
PROPOSAL II -- RATIFICATION OF APPOINTMENT OF AUDITORS
_________________________________________________________________
The Board of Directors has heretofore renewed the Company's
arrangements with KPMG Peat Marwick LLP, independent public
accountants, to be its auditors for the 1997 fiscal year, subject
to ratification by the Bank's stockholders. KPMG Peat Marwick
LLP served as the Company's independent auditors for the 1996
fiscal year. A representative of KPMG Peat Marwick LLP is
expected to be present at the Annual Meeting, will have the
opportunity to make a statement if he desires to do so, and will
be available to respond to appropriate questions. THE BOARD OF
DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION OF
THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S
AUDITORS FOR THE 1997 FISCAL YEAR.
8<PAGE>
<PAGE>
_________________________________________________________________
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
_________________________________________________________________
Pursuant to regulations promulgated under the Exchange Act,
the Company's officers and directors and all persons who
beneficially own more than ten percent of the Common Stock
("Reporting Persons") are required to file reports detailing
their ownership and changes of ownership in the Common Stock and
to furnish the Company with copies of all such ownership reports
that are filed. Based solely on the Company's review of the
copies of such ownership reports which is has received in the
past fiscal year or with respect to the past fiscal year, or
written representations from the Reporting Person that no annual
report of changes in beneficial ownership were required, the
Company believes that during fiscal year 1996 and prior fiscal
years all Reporting Persons have complied with these reporting
requirements with the exception of Directors Burgin, Stovall and
Turner who each failed to file a Form 4. All such transactions
were subsequently reported on a Form 4 or Form 5.
_________________________________________________________________
OTHER MATTERS
_________________________________________________________________
The Board of Directors is not aware of any business to come
before the Annual Meeting other than those matters described
above in this Proxy Statement and matters incident to the conduct
of the Annual Meeting. However, if any other matters should pro-
perly come before the Annual Meeting, it is intended that
properly executed proxies in the accompanying form will be voted
in respect thereof in accordance with the determination of a
majority of the Board of Directors.
_________________________________________________________________
MISCELLANEOUS
_________________________________________________________________
The cost of solicitation of proxies will be borne by the
Company. In addition to solicitations by mail, directors,
officers, and regular employees of the Company may solicit
proxies personally or by telegraph or telephone without
additional compensation.
The Company's 1996 Annual Report to Stockholders has been
mailed to all stockholders of record as of the close of business
on the Record Date. Any stockholder who has not received a copy
of such Annual Report may obtain a copy by writing the Company.
Such Annual Report is not to be treated as a part of the proxy
solicitation material nor as having been incorporated herein by
reference.
9<PAGE>
<PAGE>
_________________________________________________________________
STOCKHOLDER PROPOSALS
_________________________________________________________________
In order to be eligible for inclusion in the Company's proxy
materials for next year's Annual Meeting of Stockholders, any
stockholder proposal to take action at such meeting must be
received at the Company's main office at 370 North Main Street,
Waynesville, North Carolina 28786, addressed to Paul W. Trantham,
Secretary, no later than November 21, 1997. Any such proposals
shall be subject to the requirements of the proxy rules adopted
under the Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Paul W. Trantham
Paul W. Trantham
Secretary
Waynesville, North Carolina
March 21, 1997
_________________________________________________________________
ANNUAL REPORT ON FORM 10-K
_________________________________________________________________
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1996 WILL BE FURNISHED WITHOUT CHARGE TO
STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN REQUEST TO THE
ASSISTANT SECRETARY, HAYWOOD BANCSHARES, INC., 370 NORTH MAIN
STREET, WAYNESVILLE, NORTH CAROLINA 28786.
_________________________________________________________________
10<PAGE>
<PAGE>
REVOCABLE PROXY
HAYWOOD BANCSHARES, INC.
_________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 1997
_________________________________________________________________
The undersigned hereby appoints Larry R. Ammons and Jack T.
Nichols with full powers of substitution in each, to act as
attorneys and proxies for the undersigned, to vote all shares of
common stock of Haywood Bancshares, Inc., which the undersigned
is entitled to vote at the 1997 Annual Meeting of Stockholders,
to be held at the main office of Haywood Savings Bank, Inc., SSB,
370 North Main Street, Waynesville, North Carolina, on Tuesday,
April 22, 1997 at 7:30 p.m. and at any and all adjournments
thereof, as indicated below and as determined by the majority of
the Board of Directors with respect to other matters which may be
presented.
VOTE
FOR WITHHELD
--- --------
I. The election as directors of the
nominees listed below (except as
marked to the contrary below). [ ] [ ]
R. Neal Ensley
Joseph E. Taylor, Jr.
C. Leon Turner
INSTRUCTION: To withhold your vote for
any individual nominee, write the nominee's
name on the line below.
____________________________________
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- -------- -------
<S> <C> <C> <C>
II. The approval of the appointment of
KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal
year ending December 31, 1997. [ ] [ ] [ ]
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
LISTED PROPOSITIONS.
_________________________________________________________________
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES
NAMED AND PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT THE ANNUAL MEETING, THIS PROXY WILL BE VOTED AS
DETERMINED BY A MAJORITY OF THE BOARD OF DIRECTORS. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS
TO BE PRESENTED AT THE ANNUAL MEETING. THIS PROXY ALSO CONFERS
DISCRETIONARY AUTHORITY TO VOTE WITH RESPECT TO APPROVAL OF THE
MINUTES OF THE PRIOR ANNUAL MEETING OF STOCKHOLDERS, THE ELECTION
OF ANY PERSON AS DIRECTOR WHERE THE NOMINEE IS UNABLE TO SERVE OR
FOR GOOD CAUSE WILL NOT SERVE, AND MATTERS INCIDENT TO THE
CONDUCT OF THE ANNUAL MEETING.
_________________________________________________________________<PAGE>
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Annual Meeting or at any adjournment thereof and after notifica-
tion to the Secretary of the Company at the Annual Meeting of the
stockholder's decision to terminate this proxy, then the power of
said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned hereby revokes any and
all proxies heretofore given with respect to the undersigned's
shares of the Common Stock.
The undersigned acknowledges receipt from the Company prior
to the execution of this proxy of the Notice of the 1997 Annual
Meeting, the Proxy Statement for the 1997 Annual Meeting and the
1996 Annual Report to Stockholders.
Dated: _______________________, 1997
__________________________ __________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
__________________________ __________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the enclosed card.
When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held
jointly, each holder should sign.
[ ] Please check here if you plan
to attend the Annual Meeting.
_________________________________________________________________
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID, PRE-ADDRESSED ENVELOPE.
_________________________________________________________________
