SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] 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 Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Piedmont Bancorp, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Piedmont Bancorp, Inc.
<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 18, 1999
NOTICE IS HEREBY GIVEN that the annual meeting (the "Meeting")
of the stockholders of Piedmont Bancorp, Inc. (the "Company") will be held on
November 18, 1999 at 6:30 p.m., Eastern Time, at the office 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 three persons who will serve as directors of
the Company until the 2002 Annual Meeting of
Stockholders or until their successors are duly
elected and qualify;
2. To ratify the selection of KPMG LLP as the
independent auditor for the Bank for the fiscal year
ending June 30, 2000;
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 September 30, 1999 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
/s/Peggy S. Walker
------------------
Peggy S. Walker
Secretary
Hillsborough, North Carolina
October 11, 1999
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 18, 1999
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 18, 1999, at 6:30 p.m., Eastern Time, at the office 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 8, 1999.
Other than the matters listed on the attached Notice of 1999
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 materials 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.
<PAGE>
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 no instructions are given, the proxy will be voted FOR
the nominees for election to the Board of Directors named in this Proxy
Statement and FOR the other matters described in this Proxy Statement calling
for a vote of the shareholders. If instructions are given with respect to some
but not all proposals, such instructions as are given will be followed, but the
proxy will be voted FOR the proposals on which no instructions are given.
1
<PAGE>
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 September 30,
1999 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 2,502,700.
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.
In the election of directors, 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, including abstentions, will not be
counted as votes against such nominees. No shareholder has the right to
cumulatively vote his or her shares in the election of directors.
The proposal to ratify the appointment of the Company's
independent auditor for the fiscal year ending June 30, 2000, will be approved
if the votes cast in favor of the proposal exceed the votes cast opposing the
proposal. Shares not voted for any reason respecting the appointment of KPMG
LLP, including absentions, will not be counted as a vote against such
appointment.
Abstentions will be counted for purposes of determining
whether a quorum is present at the Meeting. Broker non-votes will not be counted
either for determining the existence of a quorum or for tabulating votes cast on
any proposal.
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 and
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.
2
<PAGE>
<TABLE>
<CAPTION>
Amount and Percentage
Nature of of
Name and Address Beneficial Ownership Class(1)
- ---------------- -------------------- --------
<S> <C> <C>
Alfred L. Carr, trustee for Employee Stock
Ownership Plan 211,600(2) 8.45%
Director of the Bank and Company
P.O. Box 435
Hillsborough, North Carolina 27278
Alfred L. Carr personally 11,068(3) 0.44%
Director of the Bank and Company
P.O. Box 435
Hillsborough, North Carolina 27278
------- ----
Total for Alfred L. Carr 222,668 8.88%
======= ====
M. Marion Clark, trustee for Employee Stock
Ownership Plan 211,600(2) 8.45%
Chairman of Board of Directors of the
Bank and Company
P.O. Box 185
Hillsborough, North Carolina 27278
M. Marion Clark personally 20,560(3,4) 0.82%
Chairman of Board of Directors of the
Bank and Company
P.O. Box 185
Hillsborough, North Carolina 27278
------- ----
Total for M. Marion Clark 232,160 9.26%
======= ====
William Larry Rogers, trustee for Employee
Stock Ownership Plan 211,600(2) 8.45%
Director of the Bank and Company
5500 Corbett Ridge Road
Mebane, North Carolina 27302-8512
William Larry Rogers personally 24,931(3) 0.99%
Director of the Bank and Company
5500 Corbett Ridge Road
Mebane, North Carolina 27302-8512
------- ----
Total for William Larry Rogers 236,531 9.43%
======= ====
</TABLE>
- --------------
<PAGE>
1 Based upon a total of 2,502,700 shares of Common Stock outstanding at the
Record Date and the shares underlying options that have vested or are
exercisable within 60 days under the Stock Option Plan in which the named
individual participates. Assumes exercise of only those options included
with respect to the designated recipients.
2 The number includes 44,315 unallocated and 167,285 allocated shares held by
the Bank's Employee Stock Ownership Plan. Alfred L. Carr, M. Marion Clark
and William Larry Rogers are trustees of such plan and share certain voting
and investment power over such shares.
3 Includes 4,534 shares of restricted stock awarded under the Management
Recognition Plan on August 29, 1996. The number stated also includes
options on 4,534 shares that vested on January 22, 1998 and January 22,
1999.
4 Includes 2,620 shares held indirectly and jointly by spouse and grandchild
for which Mr. Clark disclaims beneficial ownership.
5 Includes 3,092 shares held by spouse for which Mr. Rogers shares voting and
investment power. The number also includes 300 shares held by a grandchild
for which Mr. Rogers disclaims beneficial ownership.
3
<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, 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, trustee for Employee
Stock Ownership Plan 211,600(4) 8.45%
Chairman of Board of Directors of the
Bank and Company
P.O. Box 185
Hillsborough, North Carolina 27278
M. Marion Clark personally 20,560(5,6) 0.82%
Chairman of Board of Directors of the
Bank and Company
P.O. Box 185
Hillsborough, North Carolina 27278
------- ----
Total for M. Marion Clark 232,160 9.26%
======= ====
Robert B. Nichols, Jr. personally 19,968(5,7) 0.80%
Vice Chairman of Board of Directors
of the Bank and Company
4304 NC 86 North
Hillsborough, NC 27278
Alfred L. Carr, trustee for Employee Stock
Ownership Plan 211,600(4) 8.45%
Director of the Bank and Company
P.O. Box 435
Hillsborough, North Carolina 27278
Alfred L. Carr personally 11,068(5) 0.44%
Director of the Bank and Company
P.O. Box 435
Hillsborough, North Carolina 27278
------- ----
Total for Alfred L. Carr 222,668 8.88%
======= =====
Everett H. Kennedy personally 29,068(5) 1.16%
Director of the Bank and Company
120 South Churton St.
Hillsborough, NC 27278
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature Percentage
Name and Address of Beneficial Ownership(1,2) of Class(3)
- ---------------- ---------------------------- -----------
<S> <C> <C>
Donald W. Pope personally 14,068(5) 0.56%
Director of the Bank and Company
7201 Efland-Cedar Grove Rd.
Cedar Grove, NC 27231
James P. Ray personally 35,655(8) 1.42%
Director of the Bank and Company
P.O. Box 759
Hillsborough, NC 27278
William Larry Rogers, trustee for Employee
Stock Ownership Plan 211,600(4) 8.45%
Director of the Bank and Company
5500 Corbett Ridge Road
Mebane, North Carolina 27302-8512
William Larry Rogers personally 24,931(5,9) 0.99%
Director of the Bank and Company
5500 Corbett Ridge Road
Mebane, North Carolina 27302-8512
------ ----
Total for William Larry Rogers 236,531 9.43%
======= =====
D. Tyson Clayton personally 77,449(10) 3.07%
Director of Bank and Company and
President of Bank and Company
318 Crawford Rd.
Hillsborough, NC 27278
Peggy S. Walker personally 61,656(11) 2.45%
Director of Bank and Company,
Secretary of Company, and
Executive Vice President and
Secretary of Bank
3626 NC 57
Hillsborough, NC 27278
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature Percentage
Name and Address of Beneficial Ownership(1,2) of Class(3)
- ---------------- ---------------------------- -----------
<S> <C> <C>
Directors and Executive Officers 505,000(12) 20.18%
as a Group (12 Persons)
</TABLE>
- ------------------
1 Voting and investment power is not shared unless otherwise indicated.
2 Unless otherwise noted, all shares are owned 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 2,502,700 shares of Common Stock outstanding at the
Record Date and the shares underlying options that have vested or are
exercisable within 60 days under the Stock Option Plan in which the named
individual participates. Assumes exercise of only those options included
with respect to the designated recipients.
4 The number includes 44,315 unallocated and 167,285 allocated shares held by
the Bank's Employee Stock Ownership Plan. Alfred L. Carr, M. Marion Clark
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. The number stated also includes
options on 4,534 shares that vested on January 22, 1998 and January 22,
1999.
6 Includes 2,620 shares held indirectly and jointly by spouse and grandchild
for which Mr. Clark disclaims beneficial ownership.
7 Includes 2,500 shares held by spouse for which Mr. Nichols shares voting
and investment power.
8 Includes 6,157 shares held by spouse for which Mr. Ray shares voting and
investment power.
9 Includes 3,092 shares held by spouse for which Mr. Rogers shares voting and
investment power. The number also includes 300 shares held by a grandchild
for which Mr. Rogers disclaims beneficial ownership.
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. Includes 21,201
shares allocated to Mr. Clayton under the Hillsborough Savings Bank, Inc.,
SSB Employee Stock Ownership Plan. The number stated also includes options
on 17,776 shares that vested on January 22, 1998 and January 22, 1999.
11 Includes 11,048 shares of restricted stock awarded under the Management
Recognition Plan on August 29, 1996. Includes 20,090 shares allocated to
Ms. Walker under the Hillsborough Savings Bank, Inc., SSB Employee Stock
Ownership Plan. The number stated also includes options on 15,782 shares
that vested on January 22, 1998 and January 22, 1999.
12 Includes 71,231 shares of restricted stock awarded to directors and
executive officers under the Management Recognition Plan on August 29,
1996. The number stated also includes 44,315 unallocated and 167,285
allocated shares held by the Bank's Employee Stock Ownership Plan. The
number stated also includes options on 80,930 shares that vested between
January 22, 1998 and March 10, 1999 and options on 5,634 shares that will
vest on November 12, 1999 and December 1, 1999.
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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,
1999, all of its executive officers and directors and greater than ten percent
beneficial owners complied with all applicable Section 16(a) filing
requirements.
6
<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 is
one class of directors to be elected at the Meeting for a three year term.
The Board of Directors has nominated the three persons named
below for election as directors to serve for the term specified or until their
earlier death, resignation, retirement, removal or disqualification or until
their successors shall be elected and shall qualify.
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 three 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 proxy holders 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. As a result, the three nominees who
receive the largest number of votes will be elected as directors. Accordingly,
shares not voted for any reason respecting any one or more nominees, including
absentions, will not be counted as votes against such nominees.
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 or her name, age,
principal occupation during the last five years, the year he or she was first
elected as a director and the year in which his or her existing term of office
expires.
<PAGE>
<TABLE>
<CAPTION>
Director
of the Existing
Age on Principal Occupation During Company Term
Name June 30, 1999 Last Five Years Since(1) Expires
- ---- ------------- --------------- -------- -------
<S> <C> <C> <C> <C>
Robert B. Nichols, Jr. 71 Retired, formerly a farmer 1961 1999
D. Tyson Clayton 61 President and Chief Executive Officer of Company and Bank 1990 1999
James P. Ray 58 Owner and Operator, Occoneechee Golf Club, Inc. 1982 1999
</TABLE>
(1) Includes service on the board of directors of the Bank prior to the
formation of the Company.
7
<PAGE>
The following table sets forth as to each director whose term is continuing, his
or her name, age, principal occupation during the last five years, the year he
or she was first elected as a director and the year in which his or her existing
term of office expires.
<TABLE>
<CAPTION>
Director
of the Existing
Age on Principal Occupation During Company Term
Name June 30, 1999 Last Five Years Since(1) Expires
- ---- ------------- --------------- -------- -------
<S> <C> <C> <C> <C>
Alfred L. Carr 71 Retired, formerly owner and 1972 2001
operator of Carr's Supermarket
M. Marion Clark 75 Chairman of the Board,
Retired President,
Hillsborough Savings 1961 2001
Bank, Inc., SSB
Donald W. Pope 62 Owner, Pope's Tire Service 1989 2001
Peggy S. Walker 61 Secretary of Company, 1991 2000
Executive Vice President
of Bank
William L. Rogers 55 Farmer 1981 2000
Everett H. Kennedy 72 Retired, formerly owner and 1962 2000
operator of Kennedy's Realty
</TABLE>
- -------
(1) Includes service on the board of directors of the Bank prior to the
formation of the Company.
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 Board of Directors met four times in the fiscal year ended
June 30, 1999. The Bank's board of directors has regular meetings once each
month, and held 12 regular meetings and one special meeting in the fiscal year
ended June 30, 1999. The Board of Directors has established one standing
committee--an Audit Committee. No director attended fewer than 75% of the total
number of Company and Bank board meetings, and committee meetings of the Board
of Directors on which he served, during the year ended June 30, 1999.
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, and insuring
compliance with the Company's policies and procedures and with generally
accepted accounting principles. During the fiscal year ended June 30, 1999, the
Audit Committee met three times.
8
<PAGE>
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 Board of Directors, must
be made in writing and must be delivered to the Secretary of the Company not
less than 50 days nor more than 90 days prior to the meeting at which such
nominations will be made; provided, however, if less than 60 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 tenth 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. However, all members of
the Board of Directors are also directors of the Bank. During fiscal year 1999,
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
$15,000 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
$66,000 in the fiscal year ending June 30, 1999.
Stock Option Plan. See "Management Compensation--Stock Option
Plan" for a discussion of the stock options granted to members of the Board of
Directors under the Piedmont Bancorp, Inc. Stock Option Plan (the "Stock Option
Plan").
Management Recognition Plan. See "Management
Compensation--Management Recognition Plan" for a discussion of the restricted
stock awards made to members of the Board of Directors under the Hillsborough
Savings Bank, Inc., SSB Management Recognition Plan (the "MRP").
9
<PAGE>
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>
Employed By
Age on Positions and Occupations the Bank or the
Name June 30, 1999 During Last Five Years Company Since
- ---- ------------- ---------------------- -------------
<S> <C> <C> <C>
D. Tyson Clayton 61 President of the Company and the Bank 1972
Peggy S. Walker 61 Secretary of the Company and Bank; 1961
Executive Vice President and Secretary
of the Bank; Personnel and Operations
Manager; previously Vice President of
the Bank
Thomas W. Wayne 37 Treasurer of the Company and Bank Vice 1997
President and Chief Financial Officer;
Vice President, Commercial Loan Review
and Recovery, High Point Bank and Trust
Company, from March 1994 through
November 1997; Certified Public
Accountant with KPMG Peat Marwick LLP
from July 1989 through February 1994
Ted R. Laws 41 Vice President of the Company and Bank 1997
and Chief Lending Officer of the Bank;
Vice President, Mortgage Lending,
Guaranty State Bank, from February 1994
to March 1997; Vice President,
Commercial Lending, BB&T, from March
1993 to February 1994; Senior Vice
President, Mortgage Lending, Security
Federal, from October 1986 to March 1993
Danny C. Lloyd 35 Vice President of the Company and Bank 1997
and Operations Officer of the Bank;
Regional Operations Officer, Borg Warner
Services, from May 1995 to October 1997;
Assistant Vice President, Branch
Manager, BB&T, from March 1993 to April
1995, Vice President, Branch Manager,
Security Federal, from May 1987 to
February 1993
</TABLE>
10
<PAGE>
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 years ending June 30, 1999, 1998 and 1997, the cash compensation paid by
the Bank, as well as certain other compensation paid or accrued for those years,
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 1999
(there were none), for services in all capacities.
11
<PAGE>
<TABLE>
<CAPTION>
All Other
Annual Compensation Long Term Compensation Awards Compensation(2)
------------------- ----------------------------- ---------------
Securities Underlying
Restricted Options/Stock
Name and Other Annual Stock Appreciation Rights
Principal Position Year Salary(1) Bonus Compensation(3 Awards ("SARs") (in shares)
- ------------------ ---- --------- ----- -------------- ------ --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
D. Tyson Clayton, President 1999 $112,800 $ 6,000 0 $ 0(4) 0/0(5) $ 23,132
and Director 1998 $107,662 $ 5,125 0 $ 0(4) 0/0(5) $ 30,588
1997 $107,662 $10,250 0 $186,675(4) 44,444/0(5) $ 163,777
</TABLE>
- --------------
(1) Includes directors fees of $10,800 for each of the fiscal years ending June
30, 1999, 1998, and 1997, deferred at the election of Mr. Clayton.
(2) Includes (a) $0, $0 and $2,673 contributed to the Bank's 401(k) retirement
plan for Mr. Clayton, and (b) $23,132 , $30,588 and $161,104 contributed to
the Bank's ESOP for Mr. Clayton, during fiscal 1999, 1998 and 1997,
respectively. A total of 20,844 shares of Common Stock, with a market value
of $179,779.50 or $8.625 per share as of June 30, 1999, were allocated to
Mr. Clayton under the ESOP during fiscal 1999, 1998 and 1997.
(3) Perquisites on other personal benefits, securities, or property for the
fiscal years ended June 30, 1999, 1998 and 1997, did not exceed the lesser
of $50,000 or 10% of total salary and bonus as reported for Mr. Clayton.
(4) Pursuant to the Bank's Management Recognition Plan, Mr. Clayton was awarded
12,445 shares of the Common Stock which had a market value of $15.00 per
share on the date of grant (August 29, 1996). These shares vested 20% on
August 29, 1997, 20% on August 29, 1998, 20% on August 29, 1999, and will
vest 20% each year thereafter until all such shares are vested on August
29, 2001. Mr. Clayton has all rights of ownership with respect to such
shares, including the right to receive dividends. On June 30, 1999, the
12,445 restricted shares of Common Stock had a value of $8.625 per share,
or a total value of $107,338.12.
(5) These options, granted pursuant to the Company's Stock Option Plan, entitle
Mr. Clayton to purchase, at any time after vesting and before January 22,
2007, shares of the Common Stock in exchange for an exercise price of $9.25
per share, which was the fair market value of the shares on the date of
grant. These shares vested 20% on January 22, 1998, 20% on January 22,
1999, and will vest 20% each year thereafter until all such options are
vested on January 22, 2002. Options become 100% vested upon death or
disability.
12
<PAGE>
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 1999 was approximately $17,000.
Employment Agreements. The Bank has entered into employment
agreements with D. Tyson Clayton, President, Peggy S. Walker, Executive Vice
President and Secretary, Ted R. Laws, Vice President, Thomas W. Wayne, Vice
President, Treasurer and Chief Financial Officer, and Danny C. Lloyd, Vice
President. The agreements provide for current annual base salaries of $96,862,
$71,768, $56,500, $59,000, and $48,400, 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.
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 "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
<PAGE>
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.
13
<PAGE>
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 211,600 shares of
Common Stock.
Collateral for the Company's loan to the ESOP are the shares
of Common Stock purchased by the ESOP. It is expected that the loan will be
repaid within four years principally from the Bank's discretionary contributions
to the ESOP. Dividends, if any, paid on shares held by the ESOP may be and have
been used to reduce the loan. Dividends of $28,000, $33,000 and $1.5 million
were used to pay down the loan in the fiscal years ended June 30, 1999, 1998 and
1997, respectively. 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 immediately
vest upon death or disability.
The Bank's contributions to the ESOP are not fixed, so
benefits payable under the ESOP cannot be estimated. Principal and interest
payments totaling $279,998, $305,637, $1,978,836 were made on the loan from the
Company to the ESOP in the fiscal years ended June 30, 1999, 1998 and 1997,
respectively. During that same period, 18,448, 19,918 and 128,919 shares, with
market values of $159,114, $171,793 and $1,085,189, respectively, ($8.625 per
share) at June 30, 1999, were allocated to participants in the ESOP.
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.
<PAGE>
Stock Option Plan. The Stock Option Plan is administered by a
committee of the Board of Directors (the "Stock Option Plan Committee"). The
Company has reserved 264,500 shares of the Common Stock for issuance upon the
exercise of options which have been granted under the Stock Option Plan. All
directors, officers and employees of the Company, the Bank, and any of the
Bank's subsidiaries are eligible for participation in the Stock Option Plan. The
Stock Option Plan Committee, in its sole discretion, determines who will
participate in the Stock Option Plan. Options to purchase 27,172 shares of the
Common Stock were granted on January 22, 1997. No options to purchase shares of
the Common Stock were granted during fiscal year 1999.
The following table shows the fiscal year-end value of
unexercised options for the Chief Executive Officer of the Bank. Mr. Clayton did
not exercise any options during the fiscal year ended June 30, 1999.
14
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
Value of
Number of Securities Unexercised
Underlying Unexercised in-the-Money
Shares Acquired Value Options/SARs at Options/SARs at
Name on Exercise Realized Fiscal Year End(1) Fiscal Year End(2)
---- ----------- -------- ------------------ ------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
D. Tyson Clayton 0 $ 0 17,776/0 26,667/0 $ 0/0 $0/0
</TABLE>
- ---------
(1) All stock options were granted as of January 22, 1997. 20% of the options
granted vested on January 22, 1998 and 20% each year thereafter until all
such options are vested on January 22, 2002.
(2) The exercise price of the stock options is $9.25. On June 30, 1999, the
closing market price per share for the Common Stock as reported on the
American Stock Exchange was $8.625.
15
<PAGE>
Options granted under the Stock Option Plan have a vesting
schedule which provides that 20% of the options granted vest on the first
anniversary of the date of grant, and 20% will vest on each subsequent
anniversary date, so that the options would be completely vested on the fifth
anniversary of the date of grant. Options become 100% vested upon death or
disability, if earlier.
Although both incentive and non-qualified options have been
granted under the Stock Option Plan, all of the stock options granted to
employees are intended to be incentive stock options. In the case of an
incentive stock option, an optionee is not deemed to have received taxable
income upon the grant or exercise of the stock option, provided the shares are
not disposed of by the optionee for at least one year after the date of exercise
and two years after the date of grant. No compensation deduction may be taken by
the Company at the time of the grant or exercise of an incentive option,
assuming these holding periods are satisfied. In the case of a non-qualified
stock option, an optionee is deemed to receive ordinary income upon exercise of
the stock option in an amount equal to the amount by which the exercise price is
exceeded by the fair market value of the stock. The amount of any ordinary
income deemed to be received by the optionee upon the exercise of a
non-qualified stock option is a deductible expense of the Company for tax
purposes.
No cash consideration was paid for the options. Options have
an option exercise price of $9.25, the fair market value of the Common Stock on
the date of grant (January 22, 1997). 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. Based upon the closing market price per share paid on September 1, 1999,
the per share market value of the Common Stock underlying the options would be
$8.75.
Options granted under the Stock Option Plan have a term of ten
years, are not transferable except upon death and continue to be exercisable
upon retirement.
The Stock Option Plan places certain limitations on
termination and amendment of the Stock Option Plan. It provides that 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. It provides that the Stock Option Plan may be amended by
the Board of Directors of the Company at any time. It states, however, that
stockholder approval of certain amendments may be necessary in order for the
Stock Option Plan to satisfy the requirements of SEC Rule 16b-3. It provides
that 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.
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.
<PAGE>
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. Initially, all shares authorized under the MRP were
allocated pursuant to the plan. Therefore, only forfeited shares are subject to
allocation later, unless the plan is amended. During the fiscal year ended June
30, 1999, 1,719 MRP shares were forfeited. No shares were reallocated to new
participants during the fiscal year ended June 30, 1999.
The shares awarded under the MRP were issued from authorized
but unissued shares of Common Stock. Shares issued under the MRP are issued at
no cost to recipients.
16
<PAGE>
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.
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.
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, 1999, 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, as well as all other employees,
are eligible to receive discretionary bonuses based on profit 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
17
<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 30, 1999.
[GRAPHIC-GRAPH PLOTTED TO POINTS LISTED BELOW]
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
Performance Report for
Piedmont Bancorp, Inc.
Prepared by the Center for Research in Security Prices
Produced on 10/05/99 including data to 6/30/99
Date Company Index Market Index Peer Index
---- ------------- ------------ ----------
12/08/95 100.000 100.000 100.000
12/29/95 98.039 102.206 99.360
01/31/96 95.098 102.301 106.994
02/29/96 100.000 103.982 110.988
03/29/96 104.737 104.942 110.480
04/30/96 106.713 108.584 108.599
05/31/96 104.737 112.188 107.000
06/28/96 104.697 105.944 108.059
07/31/96 104.697 97.697 105.770
08/30/96 120.651 100.558 112.339
09/30/96 124.584 103.310 115.789
10/31/96 126.594 101.253 115.601
11/29/96 144.679 105.429 118.778
12/31/96 142.700 103.836 117.488
01/31/97 147.796 106.255 127.925
02/28/97 144.399 108.202 141.404
03/31/97 149.171 102.903 134.835
04/30/97 145.742 99.869 136.788
05/30/97 146.171 109.908 140.134
06/30/97 141.962 113.715 151.962
07/31/97 152.349 118.538 162.297
08/29/97 147.155 119.871 168.193
09/30/97 152.003 129.545 178.400
10/31/97 153.750 125.032 178.841
11/28/97 145.014 124.915 187.386
12/31/97 153.450 129.844 198.886
01/30/98 158.742 127.567 187.889
02/27/98 149.923 135.446 187.241
03/31/98 153.114 142.552 190.856
04/30/98 149.553 146.917 183.563
<PAGE>
05/29/98 142.432 141.919 181.538
06/30/98 143.262 150.528 181.117
07/31/98 138.757 139.888 171.745
08/31/98 142.361 112.260 136.763
09/30/98 141.399 120.741 135.310
10/30/98 133.189 126.462 137.761
11/30/98 135.013 131.010 144.110
12/31/98 133.140 138.690 140.138
01/29/99 134.065 144.846 143.482
02/26/99 132.216 141.720 145.108
03/31/99 127.444 141.639 138.836
04/30/99 120.884 154.044 142.185
05/28/99 131.192 156.470 145.182
06/30/99 131.091 159.970 145.757
<TABLE>
<CAPTION>
LEGEND
CRSP Total Returns Index for: 06/1994 06/1995 06/1996 06/1997 06/1998 06/1999
- ----------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Piedmont Bancorp, Inc. 104.7 142.0 143.3 131.1
AMEX Stock Market (US Companies) 75.9 92.1 105.9 113.7 142.0 160.0
AMEX Stocks (SIC 6030-6039 US Companies) 72.0 77.1 108.1 152.0 180.7 145.8
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.
18
<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.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
KPMG LLP was the Company's independent auditor for the year
ended June 30, 1999 and has been selected as the Company's independent auditor
for the year ending June 30, 2000. Such selection is being submitted to the
Company's stockholders for ratification. Representatives of KPMG 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 LLP as independent auditor for the
Company for the 2000 fiscal year.
DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS
It is presently anticipated that the 2000 Annual Meeting of
Stockholders will be held in November 2000. 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 June 10, 2000, and meet all other applicable requirements
for inclusion therein.
In the alternative, if a stockholder follows the Securities
and Exchange Commission's proxy solicitation rules, the stockholder may commence
his own proxy solicitation and present a proposal from the floor at the 2000
Annual Meeting of Stockholders of the Bank. In order to do so, the stockholder
must notify the Secretary of the Bank in writing, at the Bank's principal
executive office no later than August 24, 2000, of his proposal. If the
stockholder does not notify the Secretary of the Bank by August 24, 2000, the
Bank may vote proxies under the discretionary authority granted by the proxies
solicited by the Board of Directors for such Annual Meeting.
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.
<PAGE>
MISCELLANEOUS
The Annual Report of the Company for the year ended June 30,
1999, 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.
19
<PAGE>
THE FORM 10-K 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., 260 SOUTH CHURTON STREET, HILLSBOROUGH, NORTH CAROLINA 27278,
ATTENTION: D. TYSON CLAYTON.
By Order of the Board of Directors
/s/Peggy S. Walker
------------------
Peggy S. Walker
Secretary
Hillsborough, North Carolina
October 11, 1999
20
<PAGE>
REVOCABLE PROXY
PIEDMONT BANCORP, INC.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 18, 1999
6:30 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 18, 1999, at 6:30 p.m. and at any and all
adjournments thereof, as follows:
1. The approval of the election of the following named directors:
Robert B. Nichols, Jr., D. Tyson Clayton and James P. Ray
[ ] For [ ] Withhold [ ] For All Except
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.
- --------------------------------------------------------------------------------
2. The ratification of KPMG LLP as the independent auditors of the Company for
the year ending June 30, 2000.
[ ] For [ ] Against [ ] Abstain
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 LLP as the independent auditors for the
Company for the 2000 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.
<PAGE>
Please be sure to sign and date
this Proxy in the box below.
----------------------------------
Date
----------------------------------
Stockholder sign above
----------------------------------
Co-holder (if any) sign above
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 aNotice of Annual Meeting and a Proxy Statement dated October
11, 1999.
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
