<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>
[HAYWOOD BANCSHARES, INC. LETTERHEAD]
March 27, 1998
Dear Fellow Stockholder:
You are cordially invited to attend the 1998 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 28, 1998 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
(828) 456-9092
________________________________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 28, 1998
________________________________________________________________
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders (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 28, 1998, at 7:30 p.m. for the
following purposes:
1. The election of directors;
2. The ratification of auditors for the 1998
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
proposals 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 20, 1998, 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 27, 1998
________________________________________________________________
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
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
________________________________________________________________
<PAGE>
<PAGE>
________________________________________________________________
PROXY STATEMENT
OF
HAYWOOD BANCSHARES, INC.
370 NORTH MAIN STREET
WAYNESVILLE, NORTH CAROLINA 28786
ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1998
________________________________________________________________
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 1998 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 28, 1998 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 27, 1998.
________________________________________________________________
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 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 20, 1998 (the "Record Date"), are
entitled to one vote for each share then held. As of the Record
Date, the Company had 1,250,356 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 79,314 (3) 6.34%
Haywood Savings Bank, Inc., SSB
370 North Main Street
Waynesville, North Carolina 28786
Haywood Savings Bank, Inc., SSB 143,367 (4) 11.47%
Employee Stock Ownership Plan
370 North Main Street
Waynesville, North Carolina 28786
All Directors and Executive 283,636 (5) 22.68%
Officers as a Group (11 persons)
</TABLE>
[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 he 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 33,300 shares held jointly with spouse, 10,000
shares held by wife, 2,270 shares held in his IRA account,
and 3,630 shares held in wife's Individual Retirement
Account ("IRA") over which shares Mr. Ammons has shared
voting power. Includes 18,964 shares of the Common Stock
allocated to Mr. Ammons' account in the Haywood Savings
Bank, Inc., SSB Employee Stock Ownership Plan ("ESOP") as
to which shares Mr. Ammons has the power to direct the
voting and 150 shares held by his children.
(4) The ESOP has purchased 175,000 shares of the Common Stock
for the exclusive benefit of participating employees with
borrowed funds of which 170,618 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 31,298 shares
allocated to the accounts of certain executive officers in
the ESOP, over which they have sole voting power. Does not
include 4,382 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>
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 Philip S. Dooly, C. Jeff Reece, Jr. and
R. Bruce Norman, each of whom is currently a member of the Board
of Directors, to serve as directors for an additional 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 2001
<S> <C> <C> <C> <C> <C> <C>
Philip S. Dooly 58 President of Haywood Builders 1982 1998 10,100 (5) 0.81%
Supply Co. in Waynesville,
North Carolina, retail building
materials company.
C. Jeff Reece, Jr. 62 President and General Manager 1979 1998 47,990 (6) 3.84%
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 58 President and Manager of Parkway 1992 1998 16,300 (7) 1.30%
Electric and Heating, an electrical,
heating and air conditioning
contractor since 1970.
</TABLE>
(Footnotes on page 5)
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>
Larry R. Ammons 53 President and Managing Officer 1976 1999 79,314 (8) 6.34%
of 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 72 Retired Senior Partner in the 1991 1999 7,800 0.62%
law firm of Brown, Ward & Haynes,
P.A., Waynesville, North Carolina
G.D. Stovall, Jr. 64 Chairman of the Board of Directors 1974 1999 24,380 (9) 1.95%
from September 1991 until June 1996;
prior to September 1991, Vice Chairman
of the Bank, owner of Waynesville
Candy & Specialty Co.
William P. Burgin 71 Chairman of the Board of Directors 1979 1999 30,300 (10) 2.42%
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.
R. Neal Ensley 60 President of Arrowhead Engineering 1991 2000 12,500 (11) 1.00%
and Surveying since 1997. Formerly
President of P&G Wood Erectors, Inc.,
a structural erector of laminated
wood buildings, Waynesville, North
Carolina since 1989.
Joseph E. Taylor, Jr. 54 Automobile dealer and land developer 1979 2000 42,258 (12) 3.38%
in Waynesville, North Carolina;
Vice Chairman of Great Smokies
Financial Corporation, a wholly-owned
subsidiary of the Bank.
C. Leon Turner 58 Executive Director of Economic 1985 2000 360 (14) 0.03%
Development Commission. Executive
Director of Haywood County Economic
Development Commission from 1993
through 1997. Director of Great
Smokies Financial Corporation, a
wholly-owned subsidiary of the Bank.
</TABLE>
(Footnotes on following page)
4<PAGE>
<PAGE>
[FN]
__________
(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 400 shares held in wife's IRA. Does not include
4,382 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.
(6) Includes 23,990 shares held jointly with spouse and 24,000
shares in retirement plan.
(7) Includes 1,390 shares held jointly with spouse.
(8) Includes 33,300 shares held jointly with spouse, 10,000
shares held by wife, 2,270 shares held in his IRA account,
and 3,630 shares held in wife's IRA over which shares Mr.
Ammons has shared voting power. Includes 18,964 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.
(9) Includes 23,780 shares held jointly with spouse and 600
shares held in wife's name.
(10) Includes 28,400 shares held jointly with spouse and 1,900
shares held in wife's name.
(11) Includes 1,400 shares held by wife.
(12) Includes 40,635 shares held jointly with spouse and 1,623
shares held in wife's IRA.
(13) Includes 350 shares held in wife's IRA.
</FN>
________________________________________________________________
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, 1997, the Company's
Board of Directors held a total of four regular and special
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 25 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, 1997, this committee held four meetings.
The Bank's personnel committee functions as the
compensation committee and consists of Directors Reece, 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, 1997, 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, 1997.
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 $460 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 $4,800 during fiscal year 1997. 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 1997 exceeding $100,000 for services
rendered in all capacities to the Company.<PAGE>
<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 1997 $ 114,500 $ -- $ -- $ 46,511 (2)
President 1996 110,000 -- -- 23,895
1995 99,000 -- -- 15,596
</TABLE>
[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 $10,680 and the value of shares
of Common Stock of $35,831 allocated to Mr. Ammons' account
in the ESOP.
</FN>
6<PAGE>
<PAGE>
OPTION EXERCISES TABLE. The following table sets forth
information concerning the exercise of options by the Chief
Executive Officer during fiscal year 1997. Mr. Ammons did not
hold any unexercised options at fiscal year end.
<TABLE>
<CAPTION>
Shares Acquired Value
Name on Exercise Realized(1)
---- --------------- -----------
<S> <C> <C>
Larry R. Ammons 20,000 $230,000
</TABLE>
[FN]
__________
(1) Based on aggregate fair market value of the shares of Common
Stock underlying the options at March 13, 1997 less
aggregate exercise price. For purposes of this calculation,
the fair market value of the Common Stock at March 13, 1997
is assumed to be equal to the closing market price of
$17.125 per share. All options granted to Mr. Ammons were
granted at an exercise price of $5.625 per share.
</FN>
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 $321,425, based upon his average annual salary for the
five-year period ended December 31, 1997.
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
1997 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 1997 31, 1997
- ------------ ------- -------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
William P. Burgin 05/30/85 Mortgage 6.375% $ 81,173 $ 76,874
Chairman and Director 12/23/93 Equity Line (1) Prime+1% 23,000 8,917
</TABLE>
[FN]
__________
(1) This loan was made on the same terms as those prevailing at
the time for comparable transactions.
</FN>
________________________________________________________________
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 1998 fiscal year,
subject to ratification by the Bank's stockholders. KPMG Peat
Marwick LLP served as the Company's independent auditors for the
1997 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 1998 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 all Reporting Persons have timely filed
all reports required to be filed during fiscal year 1997 or
prior fiscal years with the exception of Director Taylor who
failed to timely file a Form 4 with respect to the acquisition
of shares in 1996.
________________________________________________________________
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 properly 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 1997 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. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 WILL BE FURNISHED
WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON
WRITTEN REQUEST TO THE SECRETARY, HAYWOOD BANCSHARES, INC., 370
NORTH MAIN STREET, WAYNESVILLE, NORTH CAROLINA 28786.
________________________________________________________________
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 27, 1998. 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 27, 1998
9<PAGE>
<PAGE>
REVOCABLE PROXY
HAYWOOD BANCSHARES, INC.
________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1998
________________________________________________________________
The undersigned hereby appoints Larry R. Ammons and
William P. Burgin 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 1998 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 28, 1998 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). [ ] [ ]
Philip S. Dooly
C. Jeff Reece, Jr.
R. Bruce Norman
INSTRUCTION: TO WITHHOLD YOUR VOTE
FOR ANY INDIVIDUAL NOMINEE, WRITE
THE NOMINEE'S NAME ON THE LINE BELOW.
_________________________________
FOR AGAINST ABSTAIN
II. The approval of the appointment of
KPMG Peat Marwick LLP as the
Company's independent auditors
for the fiscal year ending
December 31, 1998. [ ] [ ] [ ]
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
notification 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 1998 Annual
Meeting, the Proxy Statement for the 1998 Annual Meeting and the
1997 Annual Report to Stockholders.
Dated: __________________, 1998
__________________________ _________________________
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.
________________________________________________________________
