SUMMIT FINANCIAL CORPORATION
POST OFFICE BOX 1087
937 NORTH PLEASANTBURG DRIVE
GREENVILLE, SOUTH CAROLINA 29602
(864) 242-2265
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
SUMMIT FINANCIAL CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and
0-11.
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previously. Identify the previous filing by registration statement number, or
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SUMMIT FINANCIAL CORPORATION
March 16, 2001
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Summit Financial Corporation. The meeting will be held at The Thornblade Club,
1275 Thornblade Boulevard, Greer, South Carolina on Wednesday, April 18, 2001,
at 10:00 a.m.
The Notice of Annual Meeting and Proxy Statement appearing on the following
pages describe the formal business to be transacted at the meeting. During the
meeting, we will also report on the operations of the Corporation. Directors
and officers of the Corporation, as well as representatives of KPMG LLP, the
Corporation's independent auditors, will be present to respond to appropriate
questions from shareholders.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person and regardless of the number of shares
you own. To make sure your shares are represented, we urge you to complete and
mail the enclosed proxy card. If you attend the meeting, you may vote in person
even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
/s/ J. Randolph Potter
J. Randolph Potter
President and Chief Executive Officer
SUMMIT FINANCIAL CORPORATION
POST OFFICE BOX 1087
937 NORTH PLEASANTBURG DRIVE
GREENVILLE, SOUTH CAROLINA 29602
(864) 242-2265
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------
TO BE HELD APRIL 18, 2001
The Annual Meeting of the shareholders of SUMMIT FINANCIAL CORPORATION will
be held at The Thornblade Club, 1275 Thornblade Boulevard, Greer, South Carolina
on Wednesday, April 18, 2001, at 10:00 a.m. for the following purpose:
1) To elect six directors to the Board of Directors of Summit Financial
Corporation; and
2) To transact any other business that may properly come before the meeting.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Shareholders of record at the close of business on March 1, 2001 are
entitled to receive notice of the meeting and to vote at the meeting and any
adjournment or postponement of the meeting.
Please complete and sign the enclosed form of proxy, which is solicited by
the Board of Directors, and mail it promptly in the enclosed envelope. The
proxy will not be used if you attend the meeting and vote in person.
Also enclosed is a copy of Summit Financial Corporation's 2000 Annual
Report to Shareholders.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ J. Randolph Potter
J. RANDOLPH POTTER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
March 16, 2001
Greenville, South Carolina
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE COMPLETE
AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENVELOPE WHICH HAS BEEN PROVIDED
SO THAT YOUR VOTE MAY BE RECORDED.
SUMMIT FINANCIAL CORPORATION
POST OFFICE BOX 1087
937 NORTH PLEASANTBURG DRIVE
GREENVILLE, SOUTH CAROLINA 29602
(864) 242-2265
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
------------------------------
TO BE HELD ON APRIL 18, 2001
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Summit Financial Corporation ("Summit
Financial", "the Corporation") to be used at the Annual Meeting of Shareholders
of the Corporation. The Corporation is the parent holding company for Summit
National Bank and Freedom Finance, Inc. The Annual Meeting will be held at The
Thornblade Club, 1275 Thornblade Boulevard, Greer, South Carolina, on Wednesday,
April 18, 2001, at 10:00 a.mThe enclosed proxy is solicited BY AND ON BEHALF OF
THE CORPORATION'S BOARD OF DIRECTORS. This Proxy Statement and the enclosed
proxy card are being first mailed to shareholders on or about March 16, 2001.
VOTING AND PROXY PROCEDURE
--------------------------
WHO CAN VOTE AT THE MEETING
You are entitled to vote your Summit Financial Corporation common stock if
the records of the Corporation showed that you held your shares as of the close
of business on March 1, 2001. As of the close of business on that date, a total
of 3,598,318 shares of Summit Financial Corporation common stock were
outstanding. Each share of common stock has one vote on each matter to come
before the meeting.
VOTE REQUIRED
The Annual Meeting will be held if a majority of the outstanding shares of
common stock entitled to vote is represented at the meeting. If you return
valid proxy instructions or attend the meeting in person, your shares will be
counted for purposes of determining whether there is a quorum, even if you
abstain from voting. Broker non-votes also will be counted for purposes of
determining the existence of a quorum. A broker non-vote occurs when a broker,
bank or other nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
with respect to that item and has not received voting instructions from the
beneficial owner.
In voting on the election of directors, you may vote in favor of all
nominees, withhold votes as to all nominees, or withhold votes as to specific
nominees. There is no cumulative voting for the election of directors.
Directors must be elected by a plurality of the votes cast at the annual
meeting. This means that the nominees receiving the greatest number of votes
will be elected. Votes that are withheld and broker non-votes will have no
effect on the outcome of the election.
HOW YOU CAN VOTE
You may vote your shares in person by attending the Annual Meeting or by
completing, signing, dating and mailing the enclosed proxy card in the envelope
provided. If your Summit Financial common stock is held in "street name"
(through a broker or other nominee), you will receive instructions from your
broker or other nominee on how to vote your shares. Your broker may allow you
to deliver your voting instructions via the telephone or the Internet.
ATTENDING THE MEETING
If you are a beneficial owner of Summit Financial common stock held by a
broker, bank or other nominee (i.e., in "street name"), you will need proof of
ownership to be admitted to the meeting. A recent brokerage statement or letter
from a bank or broker are examples of proof of ownership. If you want to vote
your shares of Summit Financial common stock held in street name in person at
the meeting, you will have to get a written proxy in your name from the broker,
bank or other nominee which holds your shares.
VOTING BY PROXY
This Proxy Statement is being sent to you by the Board of Directors of
Summit Financial for the purpose of requesting that you allow your shares of
Summit Financial common stock to be represented at the Annual Meeting by the
persons named in the enclosed proxy card. All shares of Summit Financial common
stock represented at the meeting by properly executed proxies will be voted in
accordance with the instructions indicated on the proxy card. If you sign and
return a proxy card without giving voting instructions, your shares will be
voted "FOR" all nominees for Director.
If any matters not described in this proxy statement are properly presented
at the Annual Meeting, the persons named in the proxy card will use their own
judgment to determine how to vote your shares. This includes a motion to
adjourn or postpone the meeting in order to solicit additional proxies. If the
Annual Meeting is postponed or adjourned, your Summit Financial common stock
may be voted by the persons named in the proxy card on the new meeting date as
well, unless you have revoked your proxy. The Corporation does not know of any
other matters to be presented at the meeting.
HOW YOU MAY REVOKE YOUR PROXY OR CHANGE YOUR VOTE
You may revoke your proxy at any time before the vote is taken at the
meeting. To revoke your proxy, you must either advise the Secretary of the
Corporation in writing before your shares have been voted at the Annual Meeting,
submit a later dated vote either by telephone or internet (if permitted by your
broker), or a later dated proxy, or attend the meeting and vote your shares in
person. Attendance at the Annual Meeting will not in itself constitute
revocation of your proxy.
STOCK OWNERSHIP
---------------
As of March 1, 2001, there were no persons other than Mr. Ivan E. Block,
210 League Road, Simpsonville, South Carolina 29681, specified in the following
table of Director information, known to the Corporation to be the beneficial
owner of more than 5% of the Corporation's common stock. A person may be
considered to beneficially own any share of common stock over which he or she
has, directly or indirectly, sole or shared voting or investing power.
As of March 1, 2001, Mr. Block owned 263,482 shares, or 6.6%, of the
Corporation's outstanding common stock. Mr. Block's holdings include
exercisable options to purchase 16,885 shares of the Corporation's common stock
granted under the 1995 Non-Employee Stock Option Plan.
Refer to the table in the following section which provides information
about the shares of Summit Financial Corporation common stock that may be
considered to be beneficially owned by each director or nominee for director of
the Corporation and each named executive officer, and by all directors and named
executive officers of the Corporation as a group as of March 1, 2001.
PROPOSAL 1 - ELECTION OF DIRECTORS
----------------------------------
As provided in the Corporation's Bylaws, the Board of Directors has fixed
the number of directors at thirteen. The Board is divided into three classes
with three-year staggered terms, with approximately one-third of the directors
elected each year. Six directors have been nominated for election at the Annual
Meeting to serve for various terms from one to three years, as indicated on the
following table, or until their respective successors have been elected and
qualified. The nominees are James G. Bagnal, III, Ivan E. Block, J. Earle
Furman, Jr., T. Wayne McDonald, Allen H. McIntyre, and James B. Schwiers, all of
whom are currently directors of the Corporation.
It is intended that the proxies solicited by the Board of Directors will be
voted for the election of the nominees named above. If any nominee is unable to
serve, the persons named in the proxy card would vote your shares to approve the
election of any substitute proposed by the Board of Directors. Alternatively,
the Board of Directors may adopt a resolution to reduce the size of the Board.
At this time, the Board of Directors knows of no reason why any nominee might be
unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL OF THE
NOMINEES.
Information and business experience regarding the nominees and the
directors continuing in office is provided below. Unless otherwise stated, each
individual has held his current occupation for at least the last five years.
NOMINEES FOR ELECTION AS DIRECTORS
JAMES G. BAGNAL, III joined Summit Financial Corporation as regional
president of Summit National Bank during 2000. He served as regional president
in Spartanburg, South Carolina for Regions Bank from 1998 to 2000 and president
of Spartanburg National Bank in Spartanburg, South Carolina for 10 years prior
to 1998.
IVAN E. BLOCK is chairman and CEO of the Crown Metro, Inc. group of
companies, which are engaged in the production and supply of fine organic
chemicals and specialty wood and floor coatings.
J. EARLE FURMAN, JR. is president of NAI Earle Furman, LLC, a commercial
and industrial real estate brokerage firm.
T. WAYNE MCDONALD is a physician specializing in gynecology. He is
currently associated with the Highlands Center for Women.
ALLEN H. MCINTYRE is president of ChemPro, Inc., a company in the consumer
packaged goods industry.
JAMES B. SCHWIERS is the executive vice president and chief operating
officer of Summit National Bank.
DIRECTORS CONTINUING IN OFFICE
JOHN W. HOUSER is the president of Piedmont Management of Fairforest, Inc.,
a consulting firm. He is a partner in Piedmont Brokerage and Universal
Packaging, which are involved in the manufacturing and sales of corrugated
boxes.
LARRY A. MCKINNEY is president and CEO of ElDeCo, Inc., an electrical
contracting firm.
DAVID C. POOLE is president of David C. Poole Co., Inc., a dealer in
synthetic fibers and polymers.
GEORGE O. SHORT, JR. has been a senior partner with Cherry, Bekaert &
Holland, LLP since the 1999 merger of his firm, George O. Short & Associates,
Certified Public Accountants, P.A., with Cherry, Bekaert & Holland. He has
been a practicing certified public accountant for over 30 years.
C. VINCENT BROWN is an attorney and is president of Brown, Massey, Evans,
McLeod and Haynsworth, Attorneys at Law, P.A., where he has practiced tax and
corporate law for over 30 years.
JOHN A. KUHNE served as the president of Belk-Simpson Co. Department Stores
from 1983 until its sale in 1998. He is currently a private investor.
J. RANDOLPH POTTER is president and chief executive officer of the
Corporation and its two subsidiaries, Summit National Bank, and Freedom Finance,
Inc.
The following table sets forth the names, ages and present occupations of
the nominees for director of the Corporation, the directors continuing in
office, and the named executive officers. It also sets forth the number of
shares and percentage of outstanding shares of the Corporation's common stock
beneficially owned, directly or indirectly, on March 1, 2001 by the nominees,
continuing directors, and named executive officers individually, and by
directors and named executive officers of the Corporation as a group.
SHARES OF COMMON
STOCK BENEFICIALLY
OWNED;
PRINCIPAL OCCUPATIONS; PERCENTAGE OF
POSITIONS WITH THE DIRECTOR COMMON STOCK
NAME [AGE] CORPORATION SINCE OUTSTANDING
- -------------------------- ----------------------------------------------------- ------- -----------------
(1) (2)
NOMINEES FOR ELECTION AS DIRECTORS
FOR THREE YEAR TERMS EXPIRING IN 2004
---------------------------------------------------------
James G. Bagnal, III [56] Regional President, Summit National Bank; Greenville, SC 2000 10,634 *
Ivan E. Block [55] Chairman & CEO, Crown Metro, Inc.; Greenville, SC 1989 263,482 6.6% (3)
J. Earle Furman, Jr. [53] President, NAI Earle Furman, LLC; Greenville, SC 1989 76,329 1.9% (3)
T. Wayne McDonald [61] Physician, Highlands Center for Women; Greenville, SC 1989 78,933 2.0% (3)
FOR TWO YEAR TERM EXPIRING IN 2003
---------------------------------------------------------
Allen H. McIntrye [44] President, ChemPro, Inc.; Spartanburg, SC 2000 3,520 *
FOR ONE YEAR TERM EXPIRING IN 2002
---------------------------------------------------------
James B. Schwiers [42] Executive Vice President & COO,
Summit National Bank; Greenville, SC 2000 122,378 3.1% (4)
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING IN 2002
---------------------------------------------------------
John W. Houser [57] President, Piedmont Management of Fairforest, Inc.;
Duncan, SC 1989 78,821 2.0% (3)
Larry A. McKinney [59] President & CEO, ElDeCo, Inc.; Greenville, SC 1993 112,559 2.8% (3)
David C. Poole [62] President, David C. Poole Co., Inc.; Greenville, SC
Secretary, Summit Financial Corporation 1989 166,025 4.2% (3)
George O. Short, Jr. [68] Partner, Cherry, Bekaert & Holland LLP; Greenville, SC 1989 73,932 1.9% (3)
TERMS EXPIRING IN 2003
---------------------------------------------------------
C. Vincent Brown [61] President, Brown, Massey, Evans, McLeod & Haynsworth,
Attorneys at Law, P.A.; Greenville, SC
Chairman, Summit Financial Corporation 1989 192,237 4.8% (5)
John A. Kuhne [56] Private Investor; Greenville, SC
Vice Chairman, Summit Financial Corporation 1989 68,810 1.7% (6)
J. Randolph Potter [54] President & CEO, Summit Financial Corporation;
Greenville, SC 1989 159,005 4.0% (7)
NAMED EXECUTIVE OFFICER (10)
Blaise B. Bettendorf [38] Senior Vice President & CFO, Summit Financial
Corporation; Greenville, SC N.A. 105,730 2.7% (8)
All Directors and named executive officers
as a group (14 persons) 1,512,395 38.1% (9)
<FN>
FOOTNOTES TO PRECEDING TABLE:
* - Less than 1% beneficial ownership.
(1) - Pursuant to Rule 13d-3 under the Exchange Act, a person is deemed to be the beneficial owner, for
purposes of this table, of any shares of the Corporation's common stock if he or she has voting and/or investment
power with respect to such security or has a right to acquire, through the exercise of outstanding options or
otherwise, beneficial ownership at any time within 60 days from March 1, 2001. The table includes certain shares
owned by spouses, other immediate family members, closely-held corporations, shares held in retirement accounts for
the benefit of the named individuals, and other forms of ownership, over which the named persons possess sole or
shared voting and/or investment power.
(2) - Based on 3,598,318 shares of common stock of the Corporation outstanding and entitled to vote at the
meeting, plus the number of shares that may be acquired within 60 days by each individual (or group of individuals)
by exercising options.
(3) - Includes exercisable options to purchase 16,885 shares of common stock at from $4.18 - $5.60 granted
under the 1995 Non-Employee Stock Option Plan.
(4) - Includes exercisable options to purchase 68,983 shares of common stock at from $4.18 - $6.17 granted
under the Incentive Stock Option Plan.
(5) - Includes exercisable options to purchase 33,770 shares of common stock at from $4.18 - $5.60 granted
under the 1995 Non-Employee Stock Option Plan.
(6) - Includes exercisable options to purchase 25,328 shares of common stock at from $4.18 - $5.60 granted
under the 1995 Non-Employee Stock Option Plan.
(7) - Includes exercisable options to purchase 68,983 shares of common stock at from $4.18 - $6.17 granted
under the Incentive Stock Option Plan. Does not include 1,543 shares held by a related party to which Mr. Potter
disclaims beneficial ownership.
(8) - Includes exercisable options to purchase 58,773 shares of common stock at from $4.18 - $6.17 granted
under the Incentive Stock Option Plan.
(9) - Includes 374,034 shares of common stock subject to stock options exercisable within 60 days from March 1,
2001 held by the Directors and named executive officers of the Corporation as a group.
(10) - Under the Securities and Exchange Commission regulation, the term "named executive officer" is defined
to include the "chief executive officer" regardless of compensation level, and the four most highly compensated
executive officers (as defined), other than the chief executive officer, whose total annual salary and bonus for
the last completed fiscal year exceeded $100,000.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Boards of Directors of the Corporation and Summit National Bank conduct
their business through meetings of the Boards and through their committees.
During the year ended December 31, 2000, the Board of Directors of the
Corporation held four meetings and the Board of Summit National Bank held 12
meetings. No director of the Corporation attended fewer than 75% of the total
meetings of the Board and committees on which such Board member served during
this period.
The Executive Committee of the Board of Directors, consisting of Directors
Brown, Kuhne, Poole, Potter, and McKinney met 11 times during 2000. The
Executive Committee, exclusive of Mr. Potter, serves as the Compensation
Committee. In its capacity as Compensation Committee, the Executive Committee
is responsible for approval of remuneration arrangements of senior management,
adoption of compensation plans, and granting options or other benefits under
compensation plans.
The Board of Directors of the Corporation has an Audit Committee,
consisting of Directors Furman, McDonald, McKinney, and Short, which is
responsible for developing and monitoring the Corporation's audit program. The
Audit Committee selects the Corporation's outside auditors and meets with them
to discuss the results of the annual audit and any related matters. The Audit
Committee receives and reviews the reports and findings and other information
presented to them by the internal auditor of the Bank regarding financial
reporting policies and practices. The Audit Committee also engages in the
activities described in the Audit Committee report. The Audit Committee met
three times during the year ended December 31, 2000.
The Board of Directors of the Corporation acts as a nominating committee
for selecting the nominees for election as directors. The Board of Directors
met three times in its capacity as the nominating committee during the year
ended December 31, 2000. The Corporation's Bylaws provide for shareholder
nomination of directors.
DIRECTORS' COMPENSATION
During 2000, members of the Board of Directors of Summit Financial, who are
not officers of the Corporation or of its subsidiaries, received a fee of $800
for each board meeting attended, and $150 for each committee meeting attended,
except for the Chairman and Vice Chairman who received two times and
one-and-one-half times, respectively, the standard attendance fees. Total fees
paid to Directors of Summit Financial Corporation during 2000 was $99,200.
There were no stock options granted to Directors during 2000 under the 1995
Summit Financial Corporation Non-Employee Stock Option Plan.
EXECUTIVE OFFICERS AND COMPENSATION
-----------------------------------
Set forth below are the names, ages, titles, and descriptions of business
experience of the named executive officers of the Company and its subsidiaries.
J. RANDOLPH POTTER, age 54, has been President and Chief Executive Officer
of the Corporation since its incorporation in May 1989.
JAMES B. SCHWIERS, age 42, was promoted to Chief Operating Officer of
Summit National Bank, a wholly-owned subsidiary of the Corporation in 1997. He
has been Executive Vice President of Summit since March 1990.
BLAISE B. BETTENDORF, age 38, is a certified public accountant and has been
Senior Vice President/Chief Financial Officer and Assistant Secretary/Treasurer
for the Corporation since February 1990.
JAMES G. BAGNAL, III, age 56, has been Regional President of Summit
National Bank since joining the Corporation in April 2000. He served as
regional president in Spartanburg, South Carolina for Regions Bank from 1998 to
2000 and president of Spartanburg National Bank in Spartanburg, South Carolina
for 10 years prior to 1998.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth, for the years ended December 31, 2000, 1999
and 1998, the cash compensation paid by the Corporation and its subsidiaries, as
well as other compensation paid or accrued for each of these years, to the chief
executive officer and to each of the other most highly compensated executive
officers (collectively the "Named Executive Officers") for services rendered in
all capacities to the Corporation and its subsidiaries.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------- -------------------------------------------
OTHER AWARDS AWARDS
ANNUAL RESTRICTED SECURITIES ALL OTHER
NAME AND COMPEN- STOCK UNDERLYING COMPEN-
PRINCIPAL POSITION YEAR SALARY ($) (1) BONUS ($) (2) SATION ($) AWARDS ($) OPTIONS/SARS (#) SATION ($)
J. Randolph Potter, 2000 $ 220,000 $ 66,000 (3) $22,240 (4) - $82,964 (5)
President/CEO 1999 $ 204,000 $ 61,000 (3) - - $ 46,928
1998 $ 190,000 $ 50,000 (3) - - $ 87,022
James B. Schwiers, 2000 $ 151,000 $ 52,000 (3) $22,240 (6) - $15,767 (7)
Executive Vice 1999 $ 140,000 $ 40,000 (3) - - $ 15,466
President/COO 1998 $ 129,600 $ 38,000 (3) - - $ 15,745
Blaise B. Bettendorf, 2000 $ 125,000 $ 37,000 (3) $22,240 (8) - $13,847 (9)
Senior Vice 1999 $ 114,000 $ 34,000 (3) - - $ 13,646
President/CFO 1998 $ 105,000 $ 30,000 (3) - - $ 13,475
James G. Bagnal, III 2000 $ 94,000
Regional President (10) (10) (10) - (3) - 52,500 $6,170 (11)
<FN>
FOOTNOTES TO PRECEDING TABLE:
(1) - All compensation, including fringe benefits, is paid by Summit National Bank.
(2) - Reflects bonuses awarded for the current year which were paid in the subsequent year.
(3) - Certain amounts may have been expended by the Company which may have had value as a personal benefit to the
executive officer. However, the total value of such benefits for any year presented did not exceed, in the aggregate, the
lesser of $50,000 or 10% of the annual salary and bonus of such executive officer.
(4) - Pursuant to the Corporation's Restricted Stock Plan, in 2000 Mr. Potter was awarded 2,100 shares (adjusted for
stock dividends) of the Corporations's common stock. This award was granted for nominal consideration and restrictions
lapse 20% each year over a period of 5 years from the date of the award. At December 31, 2000, Mr. Potter held 21,548
shares of restricted stock, the market value of which was approximately $199,000. As of December 31, 2000, restrictions
on 11,669 shares of the restricted stock had lapsed. Dividends are payable on the restricted stock to the extent paid on
the Corporation's common stock generally.
(5) - The amount for 2000 is comprised of (i) $10,400 contributed by the Corporation to the Summit Financial
Corporation 401(k) Plan to match fiscal 2000 pre-tax deferral contributions, all of which was vested; (ii) approximately
$7,200 of insurance premiums paid by the Corporation on behalf of Mr. Potter; and (iii) $65,364 which represents the
accrued vested benefit to Mr. Potter of retirement benefits pursuant to a nonqualified salary continuation agreement.
(6) - Pursuant to the Corporation's Restricted Stock Plan, in 2000 Mr. Schwiers was awarded 2,100 shares (adjusted for
stock dividends) of the Corporations's common stock. This award was granted for nominal consideration and restrictions
lapse 20% each year over a period of 5 years from the date of the award. At December 31, 2000, Mr. Schwiers held 16,686
shares of restricted stock, the market value of which was approximately $154,000. As of December 31, 2000, restrictions
on 9,172 shares of the restricted stock had lapsed. Dividends are payable on the restricted stock to the extent paid on
the Corporation's common stock generally.
(7) - The amount for 2000 is comprised of (i) $10,500 contributed by the Corporation to the Summit Financial
Corporation 401(k) Plan to match fiscal 2000 pre-tax deferral contributions, all of which was vested; (ii) approximately
$4,000 in insurance premiums paid by the Corporation on behalf of Mr. Schwiers; and (iii) $1,267 which represents the
accrued vested benefit to Mr. Schwiers of retirement benefits pursuant to a nonqualified salary continuation agreement.
(8) - Pursuant to the Corporation's Restricted Stock Plan, in 2000 Ms. Bettendorf was awarded 2,100 shares (adjusted
for stock dividends) of the Corporations's common stock. This award was granted for nominal consideration and
restrictions lapse 20% each year over a period of 5 years from the date of the award. At December 31, 2000, Ms.
Bettendorf held 14,255 shares of restricted stock, the market value of which was approximately $132,000. As of December
31, 2000, restrictions on 7,713 shares of the restricted stock had lapsed. Dividends are payable on the restricted stock
to the extent paid on the Corporation's common stock generally.
(9) - The amount for 2000 is comprised of (i) $7,398 contributed by the Corporation to the Summit Financial
Corporation 401(k) Plan to match fiscal 2000 pre-tax deferral contributions, all of which was vested; (ii) approximately
$6,000 in insurance premiums paid by the Corporation on behalf of Ms. Bettendorf; and (iii) $449 which represents the
accrued vested benefit to Ms. Bettendorf of retirement benefits pursuant to a nonqualified salary continuation agreement.
(10) - Mr. Bagnal joined the Corporation in April 2000. Compensation received by Mr. Bagnal as reported is related to
the partial year based on an annual salary of $130,000.
(11) - The amount for 2000 is comprised of (i) $2,100 contributed by the Corporation to the Summit Financial
Corporation 401(k) Plan to match fiscal 2000 pre-tax deferral contributions, which was partially vested; and (ii) $4,070
in insurance premiums paid by the Corporation and imputed income on the term portion of split dollar life insurance
coverage paid by the Corporation on behalf of Mr. Bagnal.
OPTION/SAR GRANTS TABLE
The following table sets forth the qualified stock options granted under
the 1999 Incentive Stock Option Plan to any of the individuals named in the
Summary Compensation Table during 2000. Also listed is the estimated present
value of the grants.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
GRANT DATE
INDIVIDUAL GRANTS VALUE
------------------------------------------------------ ------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE ($)
James G. Bagnal, III 52,500 36.5% $ 9.05 (1) 04/20/10 $ 279,300
<FN>
(1) - The exercise price was equal to the market price of the underlying security on the
date of grant.
(2) - The grant date present values are estimates only, arrived at using the Black-Scholes
option pricing model with the following weighted average assumptions as of the December 2000
grant date: risk-free interest rate of 4.95%, expected life of option of 4.9 years, and
expected stock volatility of 63.5%. No cash dividends have been paid by the Corporation.
OPTION EXERCISE TABLE
The following table shows stock option exercises by the individuals named
in the Summary Compensation Table during the year ended December 31, 2000. In
addition, this table includes the number of shares (adjusted for stock
dividends) covered by both exercisable and non-exercisable options as of
December 31, 2000. Also reported are the values for "in-the-money" options,
which represent the positive spread between the exercise price of any such
existing options and the year end market price of Summit Financial Corporation
common stock.
AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS
OPTIONS/SARS AT FY-END($)
AT FY-END(#) (1)
NUMBER OF
SHARES
ACQUIRED $ VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
J. Randolph Potter 60,268 $488,200 68,983 / 10,210 $268,600 / $31,500
James B. Schwiers 29,976 $267,700 68,982 / 10,210 $268,600 / $31,500
Blaise B. Bettendorf 30,134 $244,100 58,772 / 7,658 $237,100 / $23,600
James G. Bagnal, III - - -0- / 52,500 $ 0 / $10,500
<FN>
(1) - The market price was $9.25 on December 31, 2000 based on the closing
price of the Corporation's stock as quoted on the NASDAQ Small Cap Market.
EMPLOYEE AGREEMENTS
The Corporation has entered into substantially similar noncompetition,
severance, and employment agreements (the "Agreement" individually) with J.
Randolph Potter, James B. Schwiers, Blaise B. Bettendorf, and James G. Bagnal,
III (each an "Executive"). The Agreement is summarized below. However, this
summary is qualified in its entirety by reference to the Agreement itself.
Under the Agreement, the Executive is given duties and authority typical of
similar executives and the Corporation is obligated to pay the Executive an
annual salary determined by the Board, such incentive compensation as may become
payable to the Executive under the Corporation's bonus plans, and certain other
typical executive benefits. The provisions of the Agreement are to continue
until such time as the Executive's employment is terminated as provided for in
the Agreement. In the event the Executive voluntarily terminates his employment
with the Corporation, the Corporation's obligations under the Agreement cease as
of the date of such termination and the Executive is subject to a 12 month
non-competition provision as defined in the Agreement. In the event that the
Corporation shall terminate the Executive's employment without cause (as defined
in the Agreement), the Corporation is obligated to continue monthly salary
payments for a minimum period of 1 year up to a maximum of 3 years. The
Executive is subject to a non-competition provision as defined in the Agreement
for the entire period severance payments are made. In the event of a change in
control as defined by the Agreement, the Executive is entitled to an amount
equal to 3 times his annual base pay amount computed and paid over a three-year
period as provided for in the Agreement. The Executive is subject to a
non-competition provision as defined in the Agreement for a period of up to 3
years while the Executive is receiving payments following a change in control.
In addition, during 1998, the Corporation established a salary continuation
plan pursuant to agreements with certain executives of the Corporation and its
bank subsidiary. Under the Salary Continuation Agreements, an executive will be
entitled to a stated annual benefit for a period of 20 years upon retirement
from the Corporation after attaining the age of 65, or upon the executive's
death or disability, in which case the benefits would be payable immediately to
the executive's beneficiary. If the executive's employment is terminated
voluntarily or is terminated as a result of a change in control of the
Corporation as defined in the agreement, a reduced annual benefit will be
payable at the age of 65 pursuant to the early termination terms of the
agreement. Mr. Potter, Mr. Schwiers and Ms. Bettendorf have entered into Salary
Continuation Agreements with the Corporation that currently provide annual
benefits at age 65 of $113,200, $29,562, and $21,624, respectively.
Mr. Bagnal has a Split Dollar Agreement with the Corporation whereby the
Corporation pays the annual premiums on a split dollar life insurance policies
on the life of Mr. Bagnal. Premiums paid by the Corporation will be repaid from
the death benefit and the balance will be paid to Mr. Bagnal's beneficiaries.
In the event of termination of employment, other than on death, Mr. Bagnal has
the right to purchase the policy from the Corporation for the an amount equal to
the cumulative premiums on the policy paid by the Corporation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2000, the following persons served on the Executive Committee in its
capacity as Compensation Committee: Mr. C. Vincent Brown (Chairman), Mr. John
A. Kuhne (Vice Chairman), Mr. David C. Poole (Secretary), and Mr. Larry A.
McKinney. Mr. Brown is a member of the law firm of Brown, Massey, Evans,
McLeod, and Haynsworth, Attorneys at Law, P.A. This firm serves as general
counsel for the Corporation and its subsidiaries. This firm receives payment
for legal services provided in the normal course of business.
Certain of the Directors who are members of the Compensation Committee, and
members of the immediate family and affiliates of such Directors, have from time
to time engaged in banking transactions with the Corporation's subsidiary bank
and are expected to continue such relationships in the future. All loans or
other extensions of credit made by the Corporation's subsidiary bank to such
individuals were made in the ordinary course of business on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with unaffiliated third parties and did not
involve more than the normal risk of collectability or present other unfavorable
features.
COMPENSATION COMMITTEE REPORT
-----------------------------
The Executive Committee, exclusive of Mr. Potter, functions as the
Compensation Committee of the Board of Directors of the Corporation. The
Compensation Committee is responsible for establishing, implementing and
monitoring all compensation policies of the Corporation and its primary
operating subsidiary, Summit National Bank. The Committee is also responsible
for evaluating the performance of the Chief Executive Officer of the Corporation
and recommending appropriate compensation levels. The Chief Executive Officer
evaluates the performance of executive officers of the Corporation and
recommends individual compensation levels to the Compensation Committee for
their approval.
The Compensation Committee believes that a compensation plan for executive
officers should take into account management skills, long-term performance
results and shareholder returns. Compensation policies must be maintained to
promote: 1) the attraction and retention of highly qualified executives; 2)
motivation of executives that is related to the performance of the individual
and the Corporation; 3) current and long-term performance; and 4) a financial
interest in the success of the Corporation similar to the interest of its
shareholders.
The Corporation's current compensation plan involves a combination of
salary and bonus to reward short-term performance; grants of stock options or
restricted stock, both of which generally vest over five-year periods, to
encourage long-term performance; and retirement benefits pursuant to salary
continuation agreements with certain officers.
The base salary levels of the executive officers are designed to be
competitive within the financial services industry and are intended to reflect
individual performance and responsibility. Awards of stock options or
restricted stock are intended to provide executives with increased motivation
and incentive to exert their best efforts on behalf of the Corporation by
enlarging their personal stake in its success through the opportunity to
increase their stock ownership in the Corporation. The Committee believes that
stock ownership by management and stock-based performance compensation
arrangements are beneficial in aligning managements' and shareholders' interest
in the enhancement of shareholder value.
Compensation Paid in 2000
- ----------------------------
The Corporation's policy as to compensation of its executive officers,
including the CEO, has to date been based upon level of performance in relation
to the responsibilities and accomplishments incident to the individual's job
description. In determining compensation, the Committee considers the progress
made by the Corporation in laying a foundation for future revenue enhancements,
income improvements, growth of the Corporation, quality of the loan portfolio,
and growth of shareholder value.
Compensation paid J. Randolph Potter, Chief Executive Officer and President
of the Corporation, and the other named executive officers in 2000 consisted of
the following elements: (1) a base salary; (2) a cash bonus; (3) restricted
stock grants for Mr. Potter, Mr. Schwiers and Ms. Bettendorf; (4) stock option
grants for Mr. Bagnal; (5) certain perquisites, the total of all which did not
exceed 10% of base salary and bonus amounts; (6) premiums paid by the
Corporation on behalf of the executives with respect to insurance not generally
available to all employees; (7) vested amounts of retirement benefits pursuant
to the nonqualified salary continuation agreement for certain officers; and (8)
the various forms of other compensation set forth in the Summary Compensation
Table above which were generally available to all employees.
During 2000, total assets of the Corporation grew 31%, average earning
assets grew 19%, net income increased 10% and return on average assets and
average equity were reported at 1.25% and 13.57%, respectively. The
Corporation's nonperforming assets, past due loans, and net charge-off ratios
all remained low in 2000 in comparison to peers as management continued to
maintain high loan quality while achieving growth goals.
During the year 2000, the base compensation for Mr. Potter was $220,000.
For 2001, Mr. Potter's base compensation was increased 6.8% to $235,000. Mr.
Potter was also awarded a cash bonus (determined on a subjective basis) of
$66,000 for the year ended 2000 based on the Corporation's performance in 2000
when record earnings were reported. Mr. Potter was also granted restricted
stock options in 2000 which vest over a five year period to provide additional
incentive for continuing increasing trends in growth and profitability. The
Committee assessed that Mr. Potter continues to provide the Corporation with
strong leadership in overseeing growth and expansion for both Summit National
Bank and Freedom Finance, Inc. in 1999 and 2000. This growth has positioned the
Corporation for continued increases in profitability measures as discussed
above.
Based upon the factors discussed above, the Compensation Committee
continues to believe that Mr. Potter's compensation package as Chief Executive
Officer and President of the Corporation appropriately reflects the
Corporation's short-term and long-term performance goals.
COMPENSATION COMMITTEE:
C. Vincent Brown David C. Poole
John A. Kuhne Larry A. McKinney
STOCK PERFORMANCE GRAPH
-----------------------
The following chart provides a graphic comparison of the cumulative total
shareholder return (calculated based upon the stock appreciation) on the common
stock of the Corporation for the five year period from December 31, 1995 through
December 31, 2000, as compared with the cumulative total return on the NASDAQ
Market Index and the peer group selected by the Corporation over the same
period. All cumulative returns assume an initial investment of $100 in each of
the Corporation's shares, the NASDAQ Market Index and the peer group and the
reinvestment of all dividends.
COMPANY 1995 1996 1997 1998 1999 2000
Summit Financial
Corporation 100.00 114.45 204.89 252.18 219.22 177.51
Peer Group Index 100.00 118.77 195.84 192.00 151.14 159.96
Nasdaq Market Index 100.00 124.27 152.00 214.39 378.12 237.66
<FN>
Note regarding the preceding graph:
- --------------------------------------
The data included in the foregoing graph was prepared by Media General Financial
Services. The peer group selected for the cumulative returns comparison is
publicly traded Southeastern and Mid-Atlantic banks with total assets less
than $250 million.
The following companies included in the comparative data for 2000
which have previously been in the peer group are: Abigail Adams National
Bancorporation; Annapolis National Bancorporation; Bank of South Carolina;
Capital Bank Corporation; Carolina Southern Bank; Central Virginia Bankshares;
Century Bancshares, Inc.; Community Bankshares; Community Financial Corporation;
Cowlitz Bancorporation; Dearborn Bancorp Inc.; ECB Bancorp Inc.; First Georgia
Holdings; First West Virginia Bancorporation; Golden Isles Financial Holdings;
Great Pee Dee Bancorporation; Premier Community Bankshares (formerly Marathon
Financial Corporation); Shore Financial Corporation; Southwest Georgia Financial
Corporation; and Union Community Bancorporation.
Companies which meet the criteria to be included in the peer group for the first
time in 2000 are: Eagle Bancorporation, Inc.; and First Community Financial
Corporation. The following institutions which were previously in the peer
group, no longer meet the criteria for inclusion: Heritage Bancorp, Inc.; and
Suburban Bancshares, Inc.
TRANSACTIONS WITH MANAGEMENT
----------------------------
Certain of the executive officers and Directors of the Corporation, and
members of the immediate family and affiliates of such persons, have from time
to time engaged in banking transactions with the Corporation's subsidiary bank
and are expected to continue such relationships in the future. All loans or
other extensions of credit made by the Corporation's subsidiary bank to such
individuals were made in the ordinary course of business on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with unaffiliated third parties and did not
involve more than the normal risk of collectability or present other unfavorable
features.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
-------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's Directors and executive officers, and persons who own more than
10% of the Corporation's common stock, to file with the Securities and Exchange
Commission (the "SEC") reports of ownership and changes in ownership of the
common stock. Officers, Directors and greater than 10% shareholders are
required by SEC regulation to furnish the Corporation with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of the reports it received and
written representations provided to the Corporation from the individuals
required to file the reports, the Corporation believes that, for the year ended
December 31, 2000, each of the Corporation's executive officers and Directors
has complied with applicable reporting requirements for transactions in Summit
Financial Corporation common stock, except that Mr. Schwiers filed late one
report covering one transaction.
INDEPENDENT PUBLIC ACCOUNTANTS
------------------------------
KPMG LLP has served as the independent accountants of the Corporation since
its organization in 1989. Representatives of KPMG LLP are expected to be present
at the Annual Meeting and will be available to respond to appropriate questions
and will have the opportunity to make a statement if they desire to do so. The
Board of Directors has selected KPMG LLP as the independent public accountants
for the Corporation for the year ending December 31, 2001.
AUDIT FEES
Aggregate fees paid to KPMG LLP for the 2000 audit and related quarterly
reviews totaled $34,500. There were no out-of-pocket expenses incurred related
to the 2000 audit. KPMG LLP did not perform any other services for the
Corporation during the year ended December 31, 2000 and the Corporation did not
pay any other fees to KPMG. The Audit Committee considers KPMG LLP to be
independent with regard to the audit services provided to the Corporation during
the year.
SHAREHOLDER PROPOSALS AND NOMINATIONS
-------------------------------------
The 2002 Annual Meeting is expected to be held on April 17, 2002.
Proposals that shareholders seek to have included in the proxy statement for the
Corporation's next annual meeting must be received by the Corporation no later
than November 16, 2001. Any such proposals will be subject to the requirements
of the proxy rules adopted by the Securities and Exchange Commission. If any
shareholder proposal is received after February 2, 2002, the Corporation's
proxies for the 2002 Annual Meeting may exercise discretionary authority with
respect to such proposal at the 2002 Annual Meeting without any reference to
such proposal being made in the proxy statement for that meeting.
AUDIT COMMITTEE REPORT
----------------------
The Audit Committee of the Board of Directors is responsible for providing
independent, objective oversight of Summit Financial's independent auditors,
accounting functions and internal controls. The Audit Committee is composed of
four directors, each of whom is independent under the National Association of
Securities Dealers' listing standards. The Audit Committee acts under a written
charter adopted by the Board of Directors, a copy of which is attached to this
proxy statement as Appendix A.
The Audit Committee reviewed and discussed the annual financial statements
with management and the independent accountants. As part of this process,
management represented to the Audit Committee that the financial statements were
prepared in accordance with accounting principles generally accepted in the
United States of America. The Audit Committee also received and reviewed
written disclosures and a letter from the accountants concerning their
independence as required under applicable standards for auditors of public
companies. The Audit Committee discussed with the accountants the contents of
such materials, the accountant's independence and the additional matters
required under Statement on Auditing Standards No. 61. Based on such review and
discussion, the Audit Committee recommended that the Board of Directors include
the audited consolidated financial statements in Summit Financial's Annual
Report on Form 10-K for the year ended December 31, 2000 for filing with the
Securities and Exchange Commission.
AUDIT COMMITTEE:
J. Earle Furman, Jr. (Chairman) T. Wayne McDonald
Larry A. McKinney George O. Short, Jr.
OTHER MATTERS
-------------
The Board of Directors and management of the Corporation knows of no
matters other than those stated above that are to be brought before the 2001
Annual Meeting. However, if any other matter should be presented for
consideration and voting at the 2001 Annual Meeting, it is the intention of the
persons named in the enclosed form of proxy to vote the proxy in accordance with
their judgment of what is in the best interest of the Corporation.
The Corporation will pay the cost of this proxy solicitation. The
Corporation will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Summit Financial Corporation common stock. In
addition to soliciting proxies by mail, directors, officers and regular
employees of the Corporation may solicit proxies personally or by telephone.
None of these persons will receive additional compensation for these activities.
The Corporation's Annual Report to Shareholders is included with this proxy
statement and is being mailed to shareholders of record as of the close of
business on March 1, 2001. Any shareholder who has not received a copy of the
Annual Report may obtain a copy by writing to the Secretary of the Corporation.
A copy of the Corporation's Form 10-K, without exhibits, for the year ended
December 31, 2000, as filed with the Securities and Exchange Commission, will be
furnished without charge to shareholders of record as of the close of business
on March 1, 2001 upon written request to Corporate Secretary, Summit Financial
Corporation, Post Office Box 1087, Greenville, South Carolina, 29602.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ J. Randolph Potter
J. RANDOLPH POTTER
PRESIDENT & CHIEF EXECUTIVE OFFICER
March 16, 2001
Greenville, South Carolina
APPENDIX A
----------
SUMMIT FINANCIAL CORPORATION
AUDIT COMMITTEE CHARTER
ADOPTED BY THE BOARD OF DIRECTORS ON MARCH 20, 2000
I. AUDIT COMMITTEE PURPOSE
The Audit Committee of Summit Financial Corporation (the "Company") is appointed
by the Board of Directors to assist the Board in fulfilling its oversight
responsibilities. The Audit Committee's primary duties and responsibilities are
to:
Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting, and legal
compliance.
Monitor the independence and performance of the Company's independent
auditors and Internal Auditing Department.
Provide an avenue of communication among the independent auditors,
management, the Internal Auditing Department, and the Board of Directors.
The Audit Committee has the authority to conduct any investigation appropriate
to fulfilling its responsibilities, and it has direct access to the independent
auditors as well as anyone in the organization. The Audit Committee has the
ability to retain, at the company's expense, special legal, accounting, or other
consultants or experts it deems necessary in the performance of its duties.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit Committee members shall meet the requirements of the NASDAQ Stock Market.
The Audit Committee shall be comprised of at least four directors, each of whom
shall be independent non-executive directors, free from any relationship that
would interfere with the exercise of his or her independent judgement. All
members of the Committee shall have a basic understanding of finance and
accounting and be able to read and understand fundamental financial statements,
and at least one member of the Committee shall have accounting or related
financial management expertise.
Audit Committee members shall be appointed by the Board on recommendation of the
Executive Committee. The Audit Committee Chairman will be designated; however,
if the Chairman is not present at a meeting, the members of the Committee may
designate a Chairman by majority vote of the Committee membership.
The Committee shall meet at least three times annually, or more frequently as
circumstances dictate. The Audit Committee Chairman shall prepare and/or approve
an agenda in advance of each meeting. The Committee should meet privately in
executive session at least annually with management, the director of the
internal auditing department, the independent auditors, and as a committee to
discuss any matters that the Committee or each of these groups believe should be
discussed. In addition, the Committee, or at least its Chairman, should
communicate with management and the independent auditors quarterly to review the
Company's financial statements and significant findings based upon the auditors
limited review procedures.
III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
Review Procedures
- ------------------
1. Review and reassess the adequacy of this Charter at least annually.
Submit the charter to the Board of Directors for approval and have the document
published at least every three years in accordance with SEC regulations.
2. Review the Company's annual audited financial statements prior to filing
or distribution. Review should include discussion with management and the
independent auditors of significant issues regarding accounting principles,
practices, and judgements.
3. In consultation with the management, the independent auditors, and the
internal auditor, consider the integrity of the Company's financial reporting
processes and controls. Discuss significant financial risk exposures and the
steps management has taken to monitor, control, and report such exposures.
Review significant findings prepared by the independent auditors and the
internal auditing department together with management's responses.
4. Review with financial management and the independent auditors the
Company's quarterly financial results prior to the release of earnings and/or
the company's quarterly financial statements prior to filing or distribution.
Discuss any significant changes to the Company's accounting principles and any
items required to be communicated by the independent auditors in accordance with
SAS 61. The Chairman of the Committee may represent the entire Audit Committee
for purposes of this review.
Independent Auditors
- ---------------------
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall review the
independence and performance of the auditors and annually recommend to the Board
of Directors the appointment of the independent auditors or approve any
discharge of auditors when circumstances warrant.
6. Approve the fees and other significant compensation to be paid to the
independent auditors.
7. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with the Company
that could impair the auditors' independence.
8. Review the independent auditors audit plan - discuss scope, staffing,
locations, reliance upon management, and internal audit and general audit
approach.
9. Prior to releasing the year-end earnings, discuss the results of the
audit with the independent auditors. Discuss certain matters required to be
communicated to the audit committee in accordance with AICPA SAS 61.
10. Consider the independent auditors' judgements about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
Internal Audit Department and Legal Compliance
- ---------------------------------------------------
11. Review the budget, plan, changes in plan, activities, organizational
structure, and qualifications of the internal audit department, as needed.
12. Review the appointment, performance, and replacement of the senior
internal audit executive.
13. Review significant reports prepared by the Internal Audit Department
together with management's response and follow-up to these reports.
14. On at least an annual basis, review with the Company's counsel, any
legal matters that could have a significant impact on the organization's
financial statements, the Company's compliance with applicable laws and
regulations, and inquires received from regulators or government agencies.
Other Audit Committee Responsibilities
- -----------------------------------------
15. Annually prepare a report to shareholders as required by the Securities
and Exchange Commission. The report should be included in the Company's annual
proxy statement.
16. Perform any other activities consistent with this Charter, the Company's
bylaws, and governing law, as the Committee or the Board deems necessary or
appropriate.
17. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
While the Audit Committee has the responsibilities and powers set forth in the
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete, accurate and
in accordance with accounting principles generally accepted in the United States
of America. This is the responsibility of management and the independent
auditor. Nor is it the duty of the Audit Committee to conduct investigations,
to resolve disagreements, if any, between management and the independent auditor
or to assure compliance with laws and regulations.
APPENDIX B - FORM OF PROXY
-------------------------------
PROXY
SUMMIT FINANCIAL CORPORATION
POST OFFICE BOX 1087
937 NORTH PLEASANTBURG DRIVE
GREENVILLE, SOUTH CAROLINA 29602
(864) 242-2265
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS in connection with the Annual
Meeting of the shareholders of SUMMIT FINANCIAL CORPORATION (the "Company").
The undersigned hereby appoints Blaise B. Bettendorf and James B. Schwiers, or
either of them, as Proxies of the undersigned, with full power of substitution
to vote, as designated on the reverse side of this proxy, the number of shares
of common stock of the Company held of record by the undersigned on March 1,
2001 on the proposals set forth on the reverse and described in the accompanying
proxy statement at the Annual Meeting of Shareholders of the Company to be
held on Wednesday, April 18, 2001, at 10:00 a.m. at The Thornblade Club, 1275
Thornblade Boulevard, Greer, South Carolina
THIS PROXY WILL BE VOTED AS DIRECTED. IF YOU EXECUTE AND RETURN THIS PROXY
BUT DO NOT SPECIFY OTHERWISE, THIS PROXY WILL BE VOTED FOR ALL OF THE NOMINEES
LISTED ON THE REVERSE, AND, IN THE PROXIES' DISCRETION, ON ANY OTHER MATTER
THAT MAY PROPERLY COME BEFORE THE MEETING.
THIS PROXY IS REVOCABLE PRIOR TO ITS EXERCISE.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
1. To elect six directors to the Board of Directors for terms specified at
right and thereafter until their successors are duly elected and qualified.
FOR ALL OF THE WITHHOLD
NOMINEES AUTHORITY
(except as indicated to to vote for nominees
the contrary below) listed
________ ________
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that person's name below.)
_________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES.
NOMINEES:
FOR THREE YEAR TERMS:
Ivan E. Block; J. Earle Furman, Jr.; T. Wayne McDonald; James G. Bagnal, III
FOR TWO YEAR TERM:
Allen H. McIntyre
FOR ONE YEAR TERM:
James B. Schwiers
2. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only those holders of record of the Common Stock of the Company at the close of
business on March 1, 2001 are entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof.
A Proxy Statement is enclosed herewith. Please sign, date and return this Proxy
promptly in the enclosed envelope. IF YOU ATTEND THE MEETING YOU MAY, IF YOU
WISH, WITHDRAW YOUR PROXY AND VOTE IN PERSON.
SIGNATURE_____________________________ DATE_________
SIGNATURE____________________________ DATE__________
(Signature if held jointly)
NOTE: Your signature should correspond with your name as it appears hereon.
Joint owners should each sign. When signing for a corporation or partnership or
as agent, attorney, executor, administrator, trustee, or guardian, please set
forth full title as it appears hereon.