<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 [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Piedmont Bancorp, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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>
Piedmont Bancorp, Inc.
260 South Churton Street
Hillsborough, North Carolina 27278
(919) 732-2143
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on November 26, 1996.
NOTICE IS HEREBY GIVEN that the annual meeting (the "Meeting") of the
stockholders of Piedmont Bancorp, Inc. (the "Company") will be held on November
26, 1996 at 6:00 p.m., Eastern Time, at the offices of the Company at 260 South
Churton Street, Hillsborough, North Carolina 27278.
The Meeting is for the purpose of considering and voting upon the following
matters:
1. To elect (a) three persons who will serve as directors of the Company
until the 1997 Annual Meeting of Stockholders or until their successors
are duly elected and qualify, (b) three persons who will serve as
directors of the Company until the 1998 Annual Meeting of Stockholders
or until their successors are duly elected and qualify, and (c) three
persons who will serve as directors of the Company until the 1999
Annual Meeting of Stockholders or until their successors are duly
elected and qualify;
2. To ratify the selection of KPMG Peat Marwick LLP as the independent
auditor for the Bank for the fiscal year ending June 30, 1997;
3. To transact such other business as may properly come before the Meeting
or any adjournments thereof. The Board of Directors is not aware of any
other business to be considered at the Meeting.
The Board of Directors has established October 17, 1996 as the record date
for the determination of stockholders entitled to notice of and to vote at the
Meeting and at any adjournments thereof. In the event there are not sufficient
shares present in person or by proxy to constitute a quorum at the time of the
Meeting, the Meeting may be adjourned in order to permit further solicitation of
proxies by the Company.
By Order of the Board of Directors
Peggy S. Walker
Secretary
Hillsborough, North Carolina
October 28, 1996
A form of proxy is enclosed to enable you to vote your shares at the Meeting.
You are urged, regardless of the number of shares you hold, to complete, sign,
date and return the proxy promptly. A return envelope, which requires no
postage if mailed in the United States, is enclosed for your convenience.
<PAGE>
Piedmont Bancorp, Inc.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
November 26, 1996
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
General
This Proxy Statement is being furnished to stockholders of Piedmont
Bancorp, Inc. (the "Company") in connection with the solicitation by the board
of directors of the Company (the "Board of Directors") of proxies to be used at
an annual meeting of stockholders (the "Meeting") to be held on November 26,
1996, at 6:00 p.m., Eastern Time, at the offices of the Company at 260 South
Churton Street, Hillsborough, North Carolina, and at any adjournments thereof.
This Proxy Statement and the accompanying form of proxy were first mailed to
stockholders on October 28, 1996. The Company's office is located at 260 South
Churton Street, Hillsborough, North Carolina, 27278, and its telephone number is
(919) 732-2143.
Other than the matters listed on the attached Notice of 1996 Annual
Meeting of Stockholders, the Board of Directors knows of no matters that will be
presented for consideration at the Meeting. Execution of a proxy, however,
confers on the designated proxyholders discretionary authority to vote the
shares represented thereby in accordance with their best judgment on such other
business, if any, that may properly come before the Meeting or any adjournments
thereof.
Revocability of Proxy
A proxy may be revoked at any time prior to its exercise by the filing
of a written notice of revocation with the Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Meeting and voting in person. However, if you are a stockholder
whose shares are not registered in your own name, you will need appropriate
documentation from your recordholder to vote personally at the Meeting.
Solicitation
The cost of solicitation of proxies on behalf of the Board of
Directors will be borne by the Company. Proxies may be solicited personally or
by telephone by directors, officers, and regular employees of the Company and
its wholly-owned savings bank subsidiary, Hillsborough Savings Bank, Inc., SSB
(the "Bank"), without additional compensation therefor. The Company will also
request persons, firms, and corporations holding shares in their names, or in
the name of their nominees, which are beneficially owned by others, to send
proxy material to, and obtain proxies from, such beneficial owners and will
reimburse such holders, upon request, for their reasonable out-of-pocket
expenses in doing so.
Voting Securities and Vote Required for Approval
Regardless of the number of shares of the Company's common stock (the
"Common Stock") owned, it is important that stockholders be represented by proxy
or be present in person at the Meeting. Stockholders are requested to vote by
completing the enclosed form of proxy and returning it signed and dated in the
enclosed postage-paid envelope. Any stockholder may vote for, against, or
withhold authority to vote with respect to any matter to come before the
Meeting. If the enclosed proxy is properly completed, signed, dated, and
returned, and not revoked, it will be voted in accordance with the instructions
therein. If a proxy is returned and no instructions are given, the proxy will
<PAGE>
be voted FOR Proposals 1 and 2. If instructions are given with respect to one
---
but not both proposals, (i) such instructions as are given will be followed and
(ii) the proxy will be voted FOR the remaining proposal.
---
The securities which may be voted at the Meeting consist of shares of
Common Stock, with each share entitling its owner to one vote on all matters to
be voted on at the Meeting. The close of business on October 17, 1996, has been
fixed by the Board of Directors as the record date ("Record Date") for the
determination of stockholders of record entitled to notice of and to vote at the
Meeting and any adjournments thereof. The total number of shares of Common
Stock outstanding on the Record Date was 2,750,800.
The presence, in person or by proxy, of the holders of at least the
majority of the total number of shares of Common Stock entitled to vote at the
Meeting is necessary to constitute a quorum at the Meeting. Since many of our
stockholders cannot attend the Meeting, it is necessary that a large number be
represented by proxy. Accordingly, the Board of Directors has designated
proxies to represent those stockholders who cannot be present in person and who
desire to be so represented. In the event there are not sufficient stockholders
present, in person or by proxy, to constitute a quorum or to approve any
proposal at the time of the Meeting, the Meeting may be adjourned in order to
permit the further solicitation of proxies.
A nominee need only receive a plurality of the votes cast in the
election of directors in order to be elected. As a result, those persons
nominated who receive the largest number of votes in each class will be elected
as directors. Accordingly, shares not voted for any reason respecting any one or
more nominees will not be counted as votes against such nominees.
The affirmative vote of the holders of a majority of the shares of
Common Stock present at the Meeting, in person or by proxy, and entitled to
vote, is required to constitute stockholder approval of the issues presented for
a vote.
Abstentions will be counted for purposes of determining whether a
quorum is present at the Meeting. Abstentions will not be counted in tabulating
the votes cast on any proposal submitted to the stockholders.
Proxies solicited hereby will be returned to the Board of Directors,
and will be tabulated by one or more inspectors of election designated by the
Board of Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires that any person who acquires the beneficial ownership of more than five
percent of the Common Stock of the Company notify the Securities Exchange
Commission (the "SEC") and the Company. Following is certain information, as of
the Record Date, regarding all persons or groups, as defined in the Exchange
Act, who are known to the Company to own beneficially more than five percent of
the Company's Common Stock.
<TABLE>
<CAPTION>
Amount and Percentage
Nature of of
Name and Address Beneficial Ownership Class/1/
- ----------------------------------------- -------------------- -----------
<S> <C> <C>
Hillsborough Savings Bank, Inc., SSB 211,600/2/ 7.69%
Employee Stock Ownership Plan and Trust
Post Office Box 1000
Hillsborough, North Carolina 27278
</TABLE>
- ------------------------------
/1/Based upon a total of 2,750,800 shares of Common Stock outstanding at the
Record Date
/2/The trustees for the plan, M. Marion Clark, Alfred L. Carr and William Larry
Rogers, share voting and investment power over all such shares.
2
<PAGE>
Set forth below is certain information, as of the Record Date,
regarding those shares of Common Stock owned beneficially by each of the members
of the Board of Directors of the Company, each of the members of the Board of
Directors of the Bank, each of the executive officers of the Company and the
Bank, and the directors and executive officers of the Company and the Bank as a
group.
<TABLE>
<CAPTION>
Amount and Nature Percentage
Name and Address of Beneficial Ownership/1,2/ of Class/3/
- ---------------- ---------------------------- ------------
<S> <C> <C>
M. Marion Clark 17,325/4,5/ 0.63%
Chairman of Board of Directors of
the Bank and Company
P.O. Box 185
Hillsborough, NC 27278
Robert B. Nichols, Jr. 15,434/5,6/ 0.56%
Vice Chairman of Board of Directors
of the Bank and Company
4304 NC 86 North
Hillsborough, NC 27278
Alfred L. Carr 6,534/5,7/ 0.24%
Director of the Bank and Company
P.O. Box 435
Hillsborough, NC 27278
Everett H. Kennedy 24,534/5/ 0.89%
Director of the Bank and Company
120 South Churton St.
Hillsborough, NC 27278
Donald W. Pope 9,534/5/ 0.35%
Director of the Bank and Company
7201 Efland-Cedar Grove Rd.
Cedar Grove, NC 27231
James P. Ray 31,122/5,8/ 1.13%
Director of the Bank and Company
P.O. Box 759
Hillsborough, NC 27278
William Larry Rogers 20,413/5,9/ 0.74%
Director of the Bank and Company
5500 Corbett Ridge Rd.
Mebane, NC 27302-8512
D. Tyson Clayton 38,805/10/ 1.41%
Director of Bank and Company and
President of Bank and Company
318 Crawford Rd.
Hillsborough, NC 27278
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature Percentage
Name and Address of Beneficial Ownership/1,2/ of Class/3/
- ---------------- ---------------------------- ------------
<S> <C> <C>
Peggy S. Walker 25,784/11/ 0.94%
Director of Bank and Company,
Secretary of Company, and
Executive Vice President and
Secretary of Bank
3626 NC 57
Hillsborough, NC 27278
Directors and Executive Officers 215,904 7.85%
as a Group (11 Persons)
</TABLE>
- --------------------------------------------------------------------------------
/1/ Voting and investment power is not shared unless otherwise indicated.
/2/ Unless otherwise noted, all shares directly of record by the named
individuals, by their spouses and minor children, or by other entities
controlled by the named individuals.
/3/ Based upon a total of 2,750,800 shares of Common Stock outstanding at the
Record Date.
/4/ Includes 2,620 shares held indirectly by spouse for which Mr. Clark
disclaims beneficial ownership. The number stated does not include 208,500
unallocated and 3,100 allocated shares held by the Bank's Employee Stock
Ownership Plan. Mr. Clark, Alfred L. Carr and William Larry Rogers are
trustees of such plan and share certain voting and investment power over
such shares.
/5/ Includes 4,534 shares of restricted stock awarded under the Management
Recognition Plan on August 29, 1996.
/6/ Includes 2,500 shares held by spouse for which Mr. Nichols shares voting
and investment power.
/7/ The number stated does not include 208,500 unallocated and 3,100 allocated
shares held by the Bank's Employee Stock Ownership Plan. Mr. Carr, M.
Marion Clark and William Larry Rogers are trustees of such plan and share
certain voting and investment power over such shares.
/8/ Includes 6,157 shares held by spouse for which Mr. Ray shares voting and
investment power.
/9/ Includes 300 shares of Common Stock owned by Mr. Rogers' daughter for which
Mr. Rogers disclaims beneficial ownership and 3,011 shares held by spouse
for which Mr. Rogers shares voting and investment power. The number stated
does not include 208,500 unallocated and 3,100 allocated shares held by the
Bank's Employee Stock Ownership Plan. Mr. Rogers, Alfred L. Carr and M.
Marion Clark are trustees of such plan and share certain voting and
investment power over such shares.
/10/ Includes 1,306 shares held by spouse for which Mr. Clayton shares voting
and investment power. Includes 12,445 shares of restricted stock awarded
under the Management Recognition Plan on August 29, 1996.
/11/ Includes 11,048 shares of restricted stock awarded under the Management
Recognition Plan on August 29, 1996.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than ten percent of the Common
Stock, to file reports of ownership and changes in ownership with the SEC.
Executive officers, directors and greater than ten percent beneficial owners are
required by SEC regulations 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 and written representations from the Company's executive officers and
directors, the Company believes that during the fiscal year ended June 30, 1996,
all but three of its executive officers and directors and greater than ten
percent beneficial owners complied with all applicable Section 16(a) filing
requirements. Mr. Clark, Mr. Clayton and Mr. Rogers have filed a late Form 5,
for the fiscal year ended June 30, 1996, reflecting purchases of common stock
made through individual retirement account dividend reinvestments. Mr. Clark
failed to timely report one such transaction and Mr. Clayton and Mr. Rogers each
failed to report two such transactions.
4
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Articles of Incorporation of the Bank provide that the number of
directors of the Bank shall not be less than five nor more than fifteen. The
exact number of directors shall be fixed or changed from time to time by the
Board of Directors. The Board of Directors has currently fixed the size of the
Board at nine members.
So long as the total number of directors is nine or more, the
directors shall be divided into three classes, as nearly equal as possible in
number as may be to serve in the first instance for terms of one, two and three
years, respectively, from the date such class of directors takes office or until
their earlier death, resignation, retirement, removal or disqualification or
until their successors shall be elected and shall qualify. As a result, there
are three classes of directors to be elected at the Meeting--for one, two and
three year terms. Thereafter, the successors in each class of directors shall
be elected for terms of three years each, or until their earlier death,
resignation, retirement, removal, or disqualification or until their successors
shall be elected and shall qualify.
The Board of Directors has nominated the nine persons named below for
election as directors to serve for the terms specified or until their earlier
death, resignation, retirement, removal or disqualification or until their
successors shall be elected and shall qualify. Any other persons nominated must
be nominated for either a one, two or three year term.
The persons named in the accompanying form of proxy intend to vote any
shares of Common Stock represented by valid proxies received by them to elect
the nine nominees listed below as directors for the terms specified, unless
authority to vote is withheld or such proxies are revoked. Each of the nominees
for election is currently a member of the Board of Directors. In the event that
any of the nominees should become unavailable to accept nomination or election,
it is intended that the proxyholders will vote to elect in his stead such other
person as the present Board of Directors may recommend. The present Board of
Directors has no reason to believe that any of the nominees named herein will be
unable to serve if elected to office. In order to be elected as a director, a
nominee need only receive a plurality of the votes cast. Votes will be
separately cast and tabulated for persons nominated in each of the three classes
of directors for the terms specified. As a result, those three nominees for
terms expiring at the 1997 Annual Meeting who receive the largest number of
votes will be elected as directors for that term; those three nominees for terms
expiring at the 1998 Annual Meeting who receive the largest number of votes will
be elected for that term and those three nominees for terms expiring at the 1999
Annual Meeting who receive the largest number of votes will be elected for that
term. Accordingly, shares not voted for any reason respecting any one or more
nominees will not be counted as votes against such nominees. No stockholder has
the right to cumulatively vote his or her shares in the election of directors.
The Board of Directors recommends a vote FOR all of the following
---
nominees for election as directors.
The following table sets forth as to each nominee, his name, age,
principal occupation during the last five years, the term for which he has been
nominated, and the year he was first elected as a director.
5
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation Director
Age on During of the Bank
Name June 30, 1996 Last Five Years Since
- ---- ------------- ----------------------- -----------
Class I - Term Ending as
of 1997 Annual Meeting
<S> <C> <C> <C>
Everett H. Kennedy 66 Retired, formerly 1962
owner and operator of
Kennedy's Realty
William L. Rogers 52 Farmer 1981
Peggy S. Walker 58 Executive Vice 1991
President and
Secretary of the Bank
Class II - Term Ending as
of 1998 Annual Meeting
M. Marion Clark 72 Retired, formerly 1961
managing officer of
the Bank
Alfred L. Carr 68 Retired, formerly 1972
owner and operator of
Carr's Supermarket
Donald W. Pope 59 Farmer, owner of 1989
Pope's Tire Service
Class III - Term Ending as
of 1999 Annual Meeting
Robert B. Nichols 68 Retired, formerly a 1961
farmer
James P. Ray 55 Owner and operator of 1982
Occoneechee Golf Club,
Inc.
D. Tyson Clayton 58 President of the Bank 1990
</TABLE>
Board of Directors of the Bank
The Bank currently has a nine-member board of directors which is
composed of the same persons who are now directors of the Company.
Board Meetings and Committees
The Company's Board of Directors met nine times in the fiscal year
ended June 30, 1996. The Bank's board of directors has regular meetings twice
each month, and held 27 regular and special meetings in the fiscal year ended
June 30, 1996. The Company's Board of Directors has also established one
standing committee--an Audit Committee. No director attended fewer than 75% of
the total number of Company or Bank board meetings, and committee meetings of
the Company's Board of Directors on which he served, during the year ended June
30, 1996.
The Company's Audit Committee is composed of directors Kennedy, Pope
and Carr. This committee is responsible for retaining internal and independent
auditors, overseeing the adequacy of internal control, insuring compliance with
the Company's policies and procedures and with generally accepted accounting
principles. During the fiscal year ended June 30, 1996, the Audit Committee met
one time.
6
<PAGE>
In addition, the full Board of Directors acts as a nominating
committee each year prior to the annual meeting of stockholders to nominate
persons for election to the Board of Directors. The Company's Bylaws provide
that, in order to be eligible for consideration at the annual meeting of
stockholders, all nominations of directors, other than those made by the
Company's Board of Directors, must be made in writing and must be delivered to
the Secretary of the Company not less than 30 days nor more than 50 days prior
to the meeting at which such nominations will be made; provided, however, if
less than 21 days notice of the meeting is given to stockholders, such
nominations must be delivered to the Secretary of the Company not later than the
close of business on the seventh day following the day on which the notice of
meeting was mailed.
The Bank's board of directors has appointed five other standing
committees to which certain responsibilities have been delegated--the Loan
Committee, the Community Reinvestment Act Committee, the Personnel Committee,
the Environmental Committee and the Business Plan Committee. The Board of
Directors and the Bank's board of directors appoint other committees of its
members to perform certain more limited functions from time to time and have
appointed committees to administer the various employee and director benefit
plans which have been established by the Company and the Bank.
Director Compensation
Board Fees. Members of the Board of Directors receive no fees or
compensation for serving on the Board of Directors of the Company. However, all
members of the Company's Board of Directors are also directors of the Bank.
During fiscal year 1996, each member of the Bank's board of directors received
directors' fees of $900 per month, and an additional fee of $450 for each
special meeting attended. In addition, all non-employee directors who serve on
the Bank's Audit Committee received $25 per hour for their service. In addition
to his Bank board fees, M. Marion Clark, Chairman of the Bank's and Company's
Board of Directors, was paid $9,360 for his services to the Bank, including his
services as a member of the Bank's Loan Committee.
Deferred Compensation Agreements. The Bank has entered into deferred
compensation agreements with several of its directors. Under such arrangements,
the directors waived immediate receipt of their directors' fees for various
periods of time in exchange for the Bank's agreement to pay to the directors
amounts over a specified period of time upon the directors reaching an age set
forth in the agreement. Benefits are also payable to a director or to his
designated beneficiary upon the director's death (either before or after normal
deferred payments have begun) or upon termination of service as a director. The
Bank has purchased life insurance policies of which it is the beneficiary in
order to fund the deferred compensation benefits. The total expense related to
the deferred compensation arrangements was approximately $89,000 in the fiscal
year ending June 30, 1996.
Stock Option Plan. On June 11, 1996, the stockholders of the Company
approved the Piedmont Bancorp, Inc. Stock Option Plan (the "Stock Option Plan").
To date, no options to purchase shares of the Common Stock have been granted
under the Stock Option Plan. The Company anticipates that 264,500 options to
purchase shares of the Common Stock will be granted under the Stock Option Plan
sometime during the fiscal year ending June 30, 1997.
The Stock Option Plan will be administered by a committee of the
Company's Board of Directors (the "Stock Option Plan Committee"). No cash
consideration will be paid for the options. In lieu of issuing reserved
unissued shares upon the exercise of options, the Company may elect to purchase
shares in the open market to fund exercises of options. The exercise price may
be paid in cash or by delivery of shares of Common Stock with a market value
equal to the exercise price.
The options would have an option exercise price of not less than the
fair market value of the Common Stock on the date of grant. However, the Stock
Option Plan provides for the proportionate adjustment of the option exercise
price in the event of the declaration of a special dividend or a return of
capital in an amount per share which exceeds 10% of the market value of a share
of Common Stock as of the date of declaration, unless such adjustment is
prohibited by applicable regulatory requirements. The Board of Directors has
made no decision about whether any special
7
<PAGE>
dividend will be paid or return of capital will be made. No representation is
made concerning whether any such payments will be made. Although the Board of
Directors has made no decision about the payment of a special dividend or a
return of capital, the Board of Directors intends to consider such payments in
the future.
Options granted under the Stock Option Plan will have a term of ten
years, will not be transferable except upon death and will continue to be
exercisable upon retirement. Such options will vest at the rate of 20% on the
first anniversary of the effective date of the establishment of the Stock Option
Plan and 20% on each subsequent anniversary date, so that the options would be
completely vested at the end of five years after the date of the grant. Full
vesting would occur upon death or disability.
The Stock Option Plan cannot be terminated upon an acquisition or
merger of the Company or the Bank unless the acquiror provides for an equivalent
benefit for all then current option holders. The Stock Option Plan may be
amended by the Board of Directors of the Company at any time. However,
stockholder approval of certain amendments may be necessary in order for the
Stock Option Plan to satisfy the requirements of Rule 16b-3 promulgated under
the Exchange Act. Certain Stock Option Plan provisions, including the number of
options to be initially granted, may not be amended more than once every six
months, except under very limited circumstances.
All directors, officers and employees of the Company and the Bank are
eligible for participation in the Stock Option Plan. The Stock Option Plan
Committee, in its sole discretion, will determine those who may participate
after taking into consideration the nature of services rendered, the
contribution to the success of the Company and the Bank made and to be made by
the employee or director, and such other factors as the Stock Option Plan
Committee deems relevant. All options authorized under the Stock Option Plan
will be allocated pursuant to the plan. Therefore, only forfeited options would
be subject to allocation later, unless the Stock Option Plan is amended. At
this time, approximately 38 directors, officers, and employees of the Company
and the Bank would be eligible to participate under the Stock Option Plan.
Management Recognition Plan. On June 11, 1996, the stockholders of
the Company approved the Hillsborough Savings Bank, Inc., SSB Management
Recognition Plan (the "MRP"). Effective August 29, 1996, restricted stock
awards of 105,800 shares of the Common Stock were made to 38 directors, officers
and employees of the Bank.
The MRP serves as a means of providing the directors, officers, and
employees with an ownership interest in the Company in a manner designed to
encourage such persons to continue their service to the Company and the Bank and
to provide performance incentives. The MRP is administered by a committee of
the Bank's Board of Directors (the "MRP Committee"). All directors, officers,
and employees of the Company and the Bank are eligible for participation in the
MRP. Except with regard to the initial awards made on August 29, 1996, the MRP
Committee, in its sole discretion, will determine who will participate in the
MRP. All shares authorized under the MRP have been allocated pursuant to the
plan. Therefore, only forfeited shares would be subject to allocation later,
unless the plan is amended. At this time, 38 directors, officers, and employees
are eligible to participate in the MRP.
The shares awarded under the MRP were issued from authorized but
unissued shares of Common Stock. Shares issued under the MRP were issued at no
cost to recipients.
Recipients are entitled to vote MRP shares and receive all dividends
and cash distributions with respect thereto. The shares granted vest at a rate
of 20% on the first anniversary of the effective date of the award of shares
under the MRP, and 20% on each subsequent anniversary date, so that the shares
would be completely vested at the end of five years after the date of award.
Awards of Common Stock under the MRP would immediately vest upon the disability
or death of a recipient. The MRP cannot be terminated upon an acquisition or
merger of the Company or the Bank unless the acquiror provides for an equivalent
benefit for all then current MRP participants. The awards are not forfeitable
upon vesting.
8
<PAGE>
The MRP may be amended by the Board of Directors of the Bank at any
time. However, stockholder approval of certain amendments may be necessary in
order for the MRP to satisfy the requirements of Rule 16b-3 promulgated under
the Exchange Act. Certain MRP provisions, including the number of shares of
Common Stock to be awarded initially, may not be amended more than once every
six months, except under very limited circumstances.
Executive Officers
The following table sets forth certain information with respect to the
persons who are executive officers of either the Company or the Bank or both.
<TABLE>
<CAPTION>
Positions and
Occupations Employed By
Age on During Last Five the Bank or the
Name June 30, 1996 Years Company Since
- ---- ------------- ------------------- ---------------
<S> <C> <C> <C>
D. Tyson Clayton 58 President of the 1972
Company and the
Bank
Peggy S. Walker 58 Secretary of the 1961
Company and Bank
Executive Vice
President and
Secretary;
Personnel and
Operations
Manager;
previously Vice
President
Robert L. Pearson 51 Vice President of 1983
the Bank
Gina B. Riggins 34 Treasurer of the 1989
Company and Bank
Vice President and
Treasurer
</TABLE>
Management Compensation
Summary Compensation Table. The executive officers of the Company are
not paid any cash compensation by the Company. However, the executive officers
of the Company are also executive officers of the Bank and receive cash
compensation from the Bank. The following table shows, for the fiscal year
ending June 30, 1996, the cash compensation paid by the Bank, as well as certain
other compensation paid or accrued for that year, to (i) the Chief Executive
Officer of the Bank and (ii) all other executive officers of the Bank whose cash
compensation exceeded $100,000 in fiscal 1996 (there were none), for services in
all capacities.
<TABLE>
<CAPTION>
Other Annual
Name and Compensation All Other
Principal Position Salary Bonus ($)/1/ Compensation
- -------------------- ------- ------- ------------ ------------
<S> <C> <C> <C> <C>
D. Tyson Clayton, $91,905 $10,000 $ --- $20,484/2/
President and
Director
</TABLE>
- ---------------------------
/1/ Perquisites on other personal benefits, securities, or property for the
fiscal year ended June 30, 1996, did not exceed the lesser of $50,000 or
10% of total salary and bonus as reported for Mr. Clayton.
/2/ Includes (a) directors' fees of $12,150; (b) $692 contributed to the Bank's
defined contribution retirement plan for Mr. Clayton during fiscal 1996;
(c) $2,958 contributed to the Bank's 401(k) retirement plan for Mr. Clayton
during fiscal 1996; and (d) $4,684 contributed to the Bank's ESOP for Mr.
Clayton during fiscal 1996.
9
<PAGE>
Bonus Compensation. For many years, the Bank has paid bonuses to its
employees in amounts determined in the discretion of the Board of Directors.
The Bank anticipates that discretionary bonuses will continue to be paid to its
employees in the future.
Retirement Plan. Until July 31, 1995, the Bank maintained a defined
contribution, money purchase pension plan for the benefit of all of its
employees. Under the plan, the Bank contributed an amount equal to 10% of each
participant's compensation during the plan year. For purposes of the plan,
compensation means a participant's basic rate of annual compensation for the
current calendar year, including commissions, overtime pay, bonuses and other
extra compensation. The total amount contributed by the Bank to this retirement
plan during fiscal 1996 was approximately $9,000.
As a result of the establishment of the ESOP, this defined
contribution retirement plan was terminated effective July 31, 1995 and the plan
assets were distributed to the plan participants.
401(k) Profit Sharing Plan. The Bank has established a contributory
savings plan for its employees, which meets the requirements of section 401(k)
of the Code. All employees who have completed one year of service may elect to
contribute a percentage of their compensation to the plan each year, subject to
certain maximums imposed by federal law. The Bank will match 50% of each
participant's contribution, up to a maximum employer contribution of 3% of the
participant's compensation. For purposes of the 401(k) plan, compensation means
a participant's total compensation received from the employer.
Participants are fully vested in amounts they contribute to the plan.
Participants are fully vested in amounts contributed to the plan on their behalf
by the Bank as employer matching contributions and as profit sharing
contributions after seven years of service as follows: one year, 0%; two years,
0%; three years, 20%; four years, 40%; five years, 60%; six years, 80%; seven or
more years, 100%.
Benefits under the plan are payable in the event of the participant's
retirement, death, disability or termination of employment. Normal retirement
age under the plan is 65 years of age. The total amount contributed by the Bank
to the 401(k) plan during fiscal 1996 was approximately $16,000.
Other Benefits. The Bank provides its employees with group medical,
dental, life and disability insurance benefits. Employees are also provided
with vacation, holiday and sick leave.
Employment Agreements. The Bank has entered into employment
agreements with D. Tyson Clayton, President, Peggy S. Walker, Executive Vice
President and Secretary, Robert L. Pearson, Vice President and Gina B. Riggins,
Vice President, Treasurer and Controller. The agreements provide for initial
annual base salaries of $92,250, $68,350, $53,325 and $37,500, respectively.
The agreements provide for an initial term of employment of three years.
Commencing on the first anniversary date and continuing on each anniversary date
thereafter, following a performance evaluation of the employee, the agreement
may be extended for an additional year so that the remaining term shall be three
years unless written notice of non-renewal is given by the Board of Directors.
The agreements also provide that base salary shall be reviewed by the Board of
Directors not less often than annually. In the event of a change in control (as
defined below), the employee's base salary shall be increased by at least 6%
annually. In addition, the employment agreements provide for profitability and
discretionary bonuses and participation in all other pension, profit-sharing or
retirement plans maintained by the Bank or by the Company for employees of the
Bank, as well as fringe benefits normally associated with such employee's
office. The employment agreements provide that they may be terminated by the
Bank for cause, as defined in the agreement, and that they may otherwise be
terminated by the Bank (subject to vested rights) or by the employee. Ms.
Riggins' agreement allows her to work a reduced number of hours.
All of the employment agreements provide that the nature of the
employee's compensation, duties or benefits cannot be diminished following a
change in control of the Bank or the Company. For purposes of the employment
agreement, a change in control generally will occur if (i) after the effective
date of the employment agreement, any
10
<PAGE>
"person" (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act) directly or indirectly, acquires beneficial ownership of voting
stock, or acquires irrevocable proxies or any combination of voting stock and
irrevocable proxies, representing 25% or more of any class of voting securities
of either the Company or the Bank, or acquires in any manner control of the
election of a majority of the directors of either the Company or the Bank, (ii)
either the Company or the Bank consolidates or merges with or into another
corporation, association or entity, or is otherwise reorganized, where neither
the Company nor the Bank is the surviving corporation in such transaction, or
(iii) all or substantially all of the assets of either the Company or the Bank
are sold or otherwise transferred to, or are acquired by, any other entity or
group.
Severance Plan. The Bank has adopted a Severance Plan for the benefit
of its employees. The Severance Plan provides that in the event there is a
"change in control" of the Bank or the Company (as defined in the Severance
Plan) and (i) the Bank or any successor of the Bank terminates the employment of
any full time employee of the Bank in connection with, or within 24 months after
the change in control, other than for "cause" (as defined in the Severance
Plan), or (ii) an employee terminates his or her employment with the Bank or any
successor following a decrease in the level of such employee's annual base
salary rate or a transfer of such employee to a location outside of Orange
County, North Carolina within 24 months after a change in control, the employee
shall be entitled to a severance benefit equal to the greater of (a) an amount
equal to two weeks' salary at the employee's existing salary rate multiplied
times the employee's number of complete years of service as the Bank's employee
or (b) the amount of one month's salary at the employee's salary rate at the
time of termination, subject to a maximum payment equal to two times an
employee's annual salary. Officers of the Bank who, at the time of a "change in
control," are parties to employment agreements having a remaining term of more
than two years are not covered by the Severance Plan.
Employee Stock Ownership Plan. The Bank has established an Employee
Stock Ownership Plan (the "ESOP") for its eligible employees. Employees with
one year of service with the Bank are eligible to participate. The ESOP borrowed
funds from the Company and used the funds to purchase 8% of the shares of Common
Stock issued in connection with the Bank's conversion from a North Carolina-
chartered mutual savings bank to a North Carolina-chartered stock savings bank
(the "Conversion"), or 211,600 shares.
Collateral for the Company's loan to the ESOP is the Common Stock
purchased by the ESOP. It is expected that the loan will be repaid within 15
years principally from the Bank's discretionary contributions to the ESOP.
Dividends, if any, paid on shares held by the ESOP may also be used to reduce
the loan. The loan is not guaranteed by the Bank. Shares purchased by the ESOP
and pledged as security for the loan are held in a suspense account for
allocation among participants as the loan is repaid.
Contributions to the ESOP and shares released from the suspense
account in an amount proportional to the repayment of the ESOP loan are
allocated among ESOP participants on the basis of relative compensation in the
year of allocation. Benefits will vest in full upon five years of service with
credit given for years of service prior to the Conversion. Benefits are payable
upon death or disability. On December 31, 1995, the Bank made a $40,000
contribution to the ESOP which resulted in the allocation of 3,100 shares of
Common Stock to the ESOP participants.
The Bank has established a committee of the Board of Directors to
administer the ESOP. The Trustees for the ESOP are M. Marion Clark, Alfred L.
Carr and William Larry Rogers. The ESOP committee may instruct the trustees
regarding investment of funds contributed to the ESOP. Participating employees
shall instruct the trustees as to the voting of all shares allocated to their
respective accounts and held in the ESOP. The unallocated shares held in the
suspense account, and all allocated shares for which voting instructions are not
received, will be voted by the trustees in their discretion subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended.
Stock Option Plan and Management Recognition Plan. See "Director
Compensation--Stock Option Plan" and "--Management Recognition Plan" for a
discussion of the executive officers' benefits under those plans.
11
<PAGE>
Compensation Committee Interlocks and Insider Participation. The
Personnel Committee of the Bank's board of directors serves the role of the
compensation committee. The Personnel Committee determines the compensation of
the executive officers and the Bank's other employees. During the fiscal year
ended June 30, 1996, the Personnel Committee consisted of directors Carr,
Nichols, Ray and Rogers.
Report of Compensation Committee on Executive Compensation. It is the
responsibility of the Bank's Personnel Committee to review and evaluate
performance of the Bank's executive officers. The salary of each executive
officer, including Mr. Clayton, the Chief Executive Officer, is determined based
upon the executive officer's contributions to the Bank's overall profitability,
maintenance of regulatory compliance standards, professional leadership, and
management effectiveness in meeting the needs of day to day operations. In
addition, the executive officers of the Bank are eligible to receive
discretionary bonuses based on profit--as are all other employees -- declared by
the Bank's board of directors based upon after-tax net income of the Bank.
Alfred L. Carr
Robert B. Nichols, Jr.
James P. Ray
William Larry Rogers
12
<PAGE>
Performance Graph
The following graph compares the Company's cumulative shareholder
return on the Common Stock with a AMEX (U.S. companies) index and with a savings
institution peer group whose stock is quoted on AMEX. The graph was prepared
using data through June 28, 1996.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
Performance Graph for
Piedmont Bancorp, Inc.
Prepared by the Center for Research in Security Prices
Produced on 10/08/96 including data to 06/28/96
<TABLE>
<CAPTION>
Date Company Index Market Index Peer Index
- ---------- ------------- ------------ ----------
<S> <C> <C> <C>
12/08/95 100.000 100.000 100.000
12/29/95 98.039 102.232 99.360
01/31/96 95.098 102.233 106.994
02/29/96 100.000 103.901 110.988
03/29/96 104.737 104.905 110.480
04/30/96 106.713 108.534 108.599
05/31/96 104.737 112.046 107.000
06/28/96 104.697 105.877 108.059
</TABLE>
LEGEND
<TABLE>
<CAPTION>
CRSP Total
Returns
Symbol Index for: 12/08/95 12/29/95 03/29/96 06/28/96
- ------ ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
______ Piedmont Bancorp, 100.0 98.0 104.7 104.7
Inc.
... ___ . AMEX Stock Market (US 100.0 102.2 104.9 105.9
Companies)
- --------- AMEX Stocks (SIC 100.0 99.4 110.5 108.1
6030-6039 US Companies)
Savings Institutions
</TABLE>
Notes:
A. The lines represent monthly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/08/95.
13
<PAGE>
Certain Indebtedness and Transactions of Management
The Bank makes loans to executive officers and directors of the Bank
in the ordinary course of its business. These loans are made on the same terms,
including interest rates and collateral, as those then prevailing for comparable
transactions with nonaffiliated persons, and do not involve more than the normal
risk of collectibility or present any other unfavorable features. Applicable
regulations prohibit the Bank from making loans to executive officers and
directors of the Bank on terms more favorable than could be obtained by persons
not affiliated with the Bank. The Bank's policy concerning loans to executive
officers and directors complies with such regulations.
Prior to 1991, as an employee benefit, the Bank made loans to its
employees, directors and officers at interest rates 1% below rates offered to
the general public. Pursuant to that policy, in 1985 the Bank made an
adjustable rate mortgage loan to Peggy S. Walker, a director and executive
officer, at an interest rate which floats at 1% below the adjusted market rate.
The largest amount outstanding under this loan since July 1, 1994 was $74,585
and the amount outstanding on June 30, 1996 was $65,963.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
KPMG Peat Marwick LLP was the Company's independent auditor for the
year ended June 30, 1996 and has been selected as the Company's independent
auditor for the year ending June 30, 1997. Such selection is being submitted to
the Company's stockholders for ratification. Representatives of KPMG Peat
Marwick LLP are expected to attend the Meeting and will be afforded an
opportunity to make a statement, if they so desire, and to respond to
appropriate questions from stockholders.
The Board of Directors recommends that the stockholders vote FOR
---
ratification of the selection of KPMG Peat Marwick LLP as independent auditor
for the Company for the 1997 fiscal year.
DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS
It is presently anticipated that the 1997 Annual Meeting of
Stockholders will be held on or about November 12, 1997. In order for
stockholder proposals to be included in the proxy material for that meeting,
such proposals must be received by the Secretary of the Company at the Company's
principal executive office not later than July 16, 1997, and meet all other
applicable requirements for inclusion therein.
OTHER MATTERS
Management knows of no other matters to be presented for consideration
at the Meeting or any adjournments thereof. If any other matters shall properly
come before the Meeting, it is intended that the proxyholders named in the
enclosed form of proxy will vote the shares represented thereby in accordance
with their judgment, pursuant to the discretionary authority granted therein.
14
<PAGE>
MISCELLANEOUS
The Annual Report of the Company for the year ended June 30, 1996,
which includes financial statements audited and reported upon by the Company's
independent auditor, is being mailed along with this Proxy Statement; however,
it is not intended that the Annual Report be deemed a part of this Proxy
Statement or a solicitation of proxies.
THE FORM 10-K/A FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, WILL BE
PROVIDED FREE OF CHARGE UPON WRITTEN REQUEST DIRECTED TO: PIEDMONT BANCORP,
INC., POST OFFICE BOX 1000, 260 SOUTH CHURTON STREET, HILLSBOROUGH, NORTH
CAROLINA 27278, ATTENTION: D. TYSON CLAYTON.
By Order of the Board of Directors
Peggy S. Walker
Secretary
Hillsborough, North Carolina
October 28, 1996
15
<PAGE>
[X] PLEASE MARK VOTES REVOCABLE PROXY ++++
AS IN THIS EXAMPLE PIEDMONT BANCORP, INC. +
+
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 26, 1996
6:00 p.m.
The undersigned hereby appoints the official proxy committee consisting of
all the members of the Board of Directors of Piedmont Bancorp, Inc. (the
"Company"), each with full power of substitution, to act as attorneys and
proxies for the undersigned, and to vote all shares of Common Stock of the
Company which the undersigned is entitled to vote only at the Annual Meeting of
Stockholders, to be held at the offices of the Company, 260 South Churton
Street, Hillsborough, North Carolina, on November 26, 1995, at 6:00 p.m. and at
any and all adjournments thereof, as follows:
----------------------------
Please be sure to sign and date Date
this Proxy in the box below.
- -------------------------------------------------------------------
- ---Stockholder sign above--------Co-holder (if any) sign above------
With- For All
For hold Except
1. The approval of the election of the [_] [_] [_]
following named directors:
(a) Everett H. Kennedy, William L. Rogers and Peggy S. Walker who will serve as
directors of the Company until the 1997 Annual Meeting of Stockholders or
until their successors are duly elected and qualify.
(b) M. Marion Clark, Alfred L. Carr and Donald W. Pope who will serve as
directors of the Company until the 1998 Annual Meeting of Stockholders or
until their successors are duly elected and qualify, and
(c) Robert B. Nichols, James P. Ray and D. Tyson Clayton who will serve as
directors of the Company until the 1999 Annual Meeting of Stockholders or
until their successors are duly elected and qualify.
INSTRUCTION: To withhold authority to vote for any individual nominee mark "For
All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
For Against Abstain
2. The ratification of KPMG Peat
Marwick LLP as the independent [_] [_] [_]
auditors of the Company for the year
ending June 30, 1997.
PLEASE CHECK BOX IF YOU PLAN TO ATTEND ---------------------- [_]
THE ANNUAL MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
If no instructions are given, the proxy will be voted for the nominees for
---
election to the Board of Directors named in this Revocable Proxy and for the
---
ratification of the selection of KPMG Peat Marwick LLP as the Independent
auditors for the Company for the 1997 fiscal year. If instructions are given
with respect to one but not both proposals, such instructions as are given will
be followed and the proxy will be voted for the proposal on which no
---
instructions are given.
+ +
- -------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
PIEDMONT BANCORP, INC.
- -------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The above signed acknowledges receipt from the Company, prior to the
execution of this Proxy of a Notice of Annual Meeting and a Proxy Statement
dated October 28, 1996.
Please sign exactly as your name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
shares are held jointly, each holder may sign, but only one signature is
required.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
- -------------------------------------------------------------------------------
