1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement
|_| Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Union Financial Bancshares, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
N/A
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
N/A
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
- --------------------------------------------------------------------------------
(5) Total fee paid:
N/A
- --------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
N/A
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
N/A
- --------------------------------------------------------------------------------
(3) Filing Party:
N/A
- --------------------------------------------------------------------------------
(4) Date Filed:
N/A
- --------------------------------------------------------------------------------
2
December 28, 2001
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
of Union Financial Bancshares, Inc. The meeting will be held in the University
of South Carolina Auditorium, Union Campus, 401 East Main Street, Union, South
Carolina on Wednesday, January 30, 2002 at 2:00 p.m., local time.
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 Company.
Directors and officers of the Company, as well as a representative of Elliott,
Davis & Company, LLP, the Company's independent auditors, will be present to
respond to appropriate questions of stockholders.
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/ Carl L. Mason
Carl L. Mason
CHAIRMAN OF THE BOARD
3
UNION FINANCIAL BANCSHARES, INC.
203 WEST MAIN STREET
UNION, SOUTH CAROLINA 29379
(864) 427-9000
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
- --------------------------------------------------------------------------------
The annual meeting of stockholders of Union Financial Bancshares, Inc.
(the "Company") will be held in the University of South Carolina Auditorium,
Union Campus, 401 East Main Street, Union, South Carolina, on Wednesday, January
30, 2002, at 2:00 p.m., local time, for the following purposes:
1. To elect three directors of the Company;
2. To ratify the appointment of Elliott, Davis & Company, LLP as
independent auditors for the Company for the fiscal year ending
September 30, 2002; and
3. 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.
Stockholders of record at the close of business on December 14, 2001 are
entitled to receive notice of 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.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Wanda J. Wells
Wanda J. Wells
CORPORATE SECRETARY
Union, South Carolina
December 28, 2001
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
4
UNION FINANCIAL BANCSHARES, INC.
----------------------------------
PROXY STATEMENT
----------------------------------
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Union Financial Bancshares, Inc. ("Union
Financial" or the "Company") to be used at the annual meeting of stockholders of
the Company. The Company is the holding company for Provident Community Bank
("Provident"). The annual meeting will be held in the University of South
Carolina Auditorium, Union Campus, 401 East Main Street, Union, South Carolina
on Wednesday, January 30, 2002, at 2:00 p.m., local time. This proxy statement
and the enclosed proxy card are being first mailed to stockholders on or about
December 28, 2001.
VOTING AND PROXY PROCEDURE
WHO CAN VOTE AT THE MEETING
You are entitled to vote your Union Financial common stock if the
records of the Company showed that you held your shares as of the close of
business on December 14, 2001. As of the close of business on that date, a total
of 1,927,465 shares of Union Financial common stock were outstanding. Each share
of common stock has one vote. As provided in the Company's Certificate of
Incorporation, record holders of the Company's common stock who acquire
beneficial ownership in excess of 10% of the Company's outstanding shares
without the approval of two-thirds of the Board of Directors are entitled to
cast only one- hundredth of a vote of any shares held in excess of the 10%
limit.
ATTENDING THE MEETING
If you are a beneficial owner of Union 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 a
letter from a bank or broker are examples of proof of ownership. If you want to
vote your shares of Union 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 who holds your shares.
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 for
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
will 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-
5
votes will have no effect on the outcome of the election. In voting on the
ratification of the appointment of Elliott, Davis & Company, LLP as independent
auditors, you may vote in favor of the proposal, against the proposal or abstain
from voting. To be approved, this matter requires the affirmative vote of a
majority of votes cast by stockholders. Abstentions and broker non-votes will
have no effect on the outcome of the vote.
VOTING BY PROXY
This proxy statement is being sent to you by the Board of Directors of
Union Financial for the purpose of requesting that you allow your shares of
Union Financial common stock to be represented at the annual meeting by the
persons named in the enclosed proxy card. All shares of Union 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 as recommended by the Company's Board of Directors. The Board of Directors
recommends a vote "FOR" each of the nominees for director and "FOR" ratification
of the appointment of Elliott, Davis & Company, LLP as independent auditors.
If you are a participant in the Company's Dividend Reinvestment Plan,
the proxy card covers the shares in your account under the Plan, as well as
shares registered in your name.
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 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 Union 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 Company does not know of any other
matters to be presented at the meeting.
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
Company in writing before your shares have been voted at the annual meeting,
deliver 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.
If your Union Financial common stock is held in street name, you will
receive instructions from your broker, bank or other nominee that you must
follow in order to have your shares voted. Your broker or bank may allow you to
deliver your voting instructions via the telephone or the Internet. Please see
the instruction form that accompanies this proxy statement. If you wish to
change your voting instructions after you have returned your voting instruction
form to your broker or bank, you must contact your broker or bank.
2
6
STOCK OWNERSHIP
The following table provides information about the shares of Union
Financial common stock that may be considered to be owned by each director or
nominee for director of the Company, by the executive officers of the Company
named in the Summary Compensation Table and by all directors and executive
officers of the Company as a group as of December 14, 2001. A person may be
considered to beneficially own any shares of common stock over which he or she
has, directly or indirectly, sole or shared voting or investment power. Unless
otherwise indicated, each of the named individuals has sole voting power and
sole investment power with respect to the shares shown.
NUMBER OF SHARES THAT
NUMBER OF MAY BE ACQUIRED PERCENT OF
SHARES OWNED WITHIN 60 DAYS BY COMMON STOCK
NAME (EXCLUDING OPTIONS) EXERCISING OPTIONS OUTSTANDING(1)
- -------------------------------------- ---------------------- ------------------------- -------------------
Mason G. Alexander 12,247(2) 3,671 *
James W. Edwards 3,757 8,921 *
Richard H. Flake 10,749(3) 38,613 2.51%
William M. Graham 15,653 8,921 1.27
Louis M. Jordan 55,991(4) 8,921 3.35
Carl L. Mason 5,548 8,921 *
John S. McMeekin 5,000 2,096 *
Dwight V. Neese 11,694 70,190 4.10
Philip C. Wilkins 5,795(5) 2,096 *
All directors and executive
officers as a group (14 persons) 150,123 161,107 14.90
- ----------------------------------------
* Less than 1% of the shares outstanding.
(1) Based on 1,927,465 shares of Union Financial common stock outstanding and
entitled to vote as of December 14, 2001, plus the number of shares that may
be acquired within 60 days by each individual (or group of individuals) by
exercising stock options.
(2) Includes 200 shares owned by the Frances & Mason Alexander Family Foundation
over which Mr. Alexander shares voting power.
(3) Includes 994 shares owned by Mr. Flake's spouse.
(4) Includes 16,953 shares owned by Mr. Jordan's spouse and 14,789 shares held
in a trust for which Mr. Jordan serves as trustee and shares voting power.
(5) Includes 97 shares held by Mr. Wilkins' spouse.
3
7
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of eight members.
Seven of them are independent directors and one is a member of management. The
Board is divided into three classes with three-year staggered terms, with
approximately one-third of the directors elected each year. Three directors will
be elected at the annual meeting to serve for a three-year term, or until their
respective successors have been elected and qualified. The nominees are Carl L.
Mason, William M. Graham and John S. McMeekin, all of whom are currently
directors of the Company and Provident.
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 would be unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL OF
THE NOMINEES.
Information regarding the nominees for election at the annual meeting,
as well as information regarding the continuing directors whose terms expire in
2003 and 2004, is provided below. Unless otherwise stated, each individual has
held his current occupation for the last five years. The age indicated in each
individual's biography is as of September 30, 2001. The indicated period for
service as a director includes service as a director of Provident.
NOMINEES FOR ELECTION OF DIRECTORS
The directors standing for election are:
CARL L. MASON. Mr. Mason is the Chairman of the Board of the Company and
Provident. He is the retired President of Cone Mills Corporation, a textile
finishing company. Age 57. Director since 1989.
WILLIAM M. GRAHAM. Mr. Graham is the sole owner and operator of Graham's
Flowers in Union, South Carolina. Age 57. Director since 1990.
JOHN S. MCMEEKIN. Mr. McMeekin is the President of Winnsboro Furniture
Company located in Winnsboro, South Carolina. Age 47. Director since 1999.
DIRECTORS CONTINUING IN OFFICE
The following directors have terms ending in 2003:
LOUIS M. JORDAN. Mr. Jordan is a major stockholder of Jordan's Ace
Hardware, Inc. located in Union South Carolina. Age 66. Director since 1971.
DWIGHT V. NEESE. Mr. Neese is the President and Chief Executive Officer
of the Company and Provident. Age 51. Director since 1995.
PHILIP C. WILKINS, DMD. Dr. Wilkins is a dentist in Winnsboro, South
Carolina. Age 45. Director since 1999.
4
8
The following directors have terms ending in 2004:
MASON G. ALEXANDER. Mr. Alexander is a director of Mid-South Management
Company, a newspaper holding company located in Spartanburg, South Carolina. Age
69. Director since 1996.
JAMES W. EDWARDS. Mr. Edwards is the Dean of Academics at the University
of South Carolina, Union Campus located in Union, South Carolina. Age 64.
Director since 1996.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business of the Company and Provident is conducted through meetings
and activities of their Boards of Directors and their committees. During the
fiscal year ended September 30, 2001, the Board of Directors of the Company held
12 meetings and the Board of Directors of Provident held 13 meetings. No
director attended fewer than 75% of the total meetings of the Boards of
Directors and committees on which such director served.
The Audit/Compliance Committee, consisting of Directors McMeekin
(Chairman), Edwards and Graham, meets as needed to select and review the work
performed by the independent auditors and to monitor the Company's internal
audit function and internal control system. This committee met five times during
the year ended September 30, 2001.
The Human Resources Committee, composed of Directors Alexander
(Chairman), Mason and Wilkins meets as needed to review the employee wage and
benefit packages, hear employee grievances and prepare employee job
descriptions. This committee met two times during the year ended September 30,
2001.
The Company's Governance Committee, composed of Directors Mason
(Chairman), Jordan, Alexander and Neese (ex-officio) selects nominees for
election as directors. The Company's Certificate of Incorporation provides for
stockholder nominations of directors. These provisions require that nominations
be made pursuant to timely written notice to the secretary. The stockholder's
notice must contain all information relating to the nominee which is required to
be disclosed by the Company's Certificate of Incorporation and the Securities
Exchange Act of 1934. See "STOCKHOLDER PROPOSALS." This committee met one time
during the year ended September 30, 2001.
The Company and Provident also maintain Loan, Asset/Liability,
Investment and Strategic Planning Committees.
DIRECTORS' COMPENSATION
The members of the Company's Board of Directors are the same individuals
who serve on Provident's Board of Directors. Non-employee members of the Board
of Directors of Provident receive a monthly fee of $900. The Chairman of the
Board of Directors receives an additional monthly fee of $300. Committee members
do not receive additional fees for committee meetings attended.
During the year ended September 30, 2001, each non-employee director
received options to acquire 3,175 shares of Union Financial common stock. The
options vest in three approximately equal installments beginning on the date of
grant.
5
9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following information is furnished for Messrs. Neese and Flake. No
other executive officer of Union Financial received salary and bonus of $100,000
or more during the year ended September 30, 2001.
LONG-TERM
COMPENSATION
-----------------------------
ANNUAL COMPENSATION AWARDS
------------------------------------- -----------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL COMPENSATION AWARDS OPTIONS COMPENSATION
POSITIONS YEAR SALARY($) BONUS($) ($)(1) ($) (#) ($)
- -------------------------------- ------ --------- --------- -------------- ------------ ------------ --------------
Dwight V. Neese 2001 $137,000 $50,778 $ -- $-- 5,000 $18,390(2)
President and Chief Executive 2000 131,040 50,400 -- -- -- 21,442
Officer 1999 126,000 58,000 -- -- -- 21,780
Richard H. Flake 2001 $ 87,100 $23,506 $ -- $-- 3,200 $11,294(3)
Executive Vice President 2000 83,760 28,175 -- -- -- 14,756
and Chief Financial Officer 1999 80,500 32,125 -- -- -- 13,473
- ---------------------------------
(1) Does not include the aggregate amount of perquisites and other personal
benefits, which was less than 10% of the total annual salary and bonus
reported.
(2) Consists of employer contribution to Provident's 401(k) plan of $8,500 and
contribution to money purchase pension plan of $9,890.
(3) Consists of employer contribution to Provident's 401(k) plan of $6,394 and
contribution to money purchase pension plan of $4,900.
OPTION GRANTS IN LAST FISCAL YEAR
The following table lists all grants of options to the Messrs. Neese and
Flake in fiscal year 2001.
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED (#)(1) FISCAL YEAR PER SHARE DATE
- ----------------------------------- ------------ ---------------- --------- -----------------
Dwight V. Neese.................... 5,000 15.9% $9.0625 January 31, 2011
Richard H. Flake................... 1,200 3.8 $8.7500 October 27, 2010
Richard H. Flake................... 2,000 6.4 $9.0625 January 31, 2011
- --------------------------------------
(1) Options become exercisable in three approximately equal annual installments
commencing on the date of grant; provided, however, options will be
immediately exercisable in the event the optionee terminates employment
following a change in control of the Company of Provident or due to death or
disability.
6
10
OPTION VALUE AT FISCAL YEAR END
The following table provides information regarding unexercised stock
options for Messrs. Neese and Flake as of September 30, 2001.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)
NAME -------------------------- ---------------------------
- ---------------------------------------- EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
Dwight V. Neese......................... 68,540 4,873 $245,025 $2,471
Richard H. Flake........................ 37,473 3,475 133,118 1,260
- ------------------------
(1) Value of unexercised in-the-money stock options equals the market value of
shares covered by in-the-money options on September 30, 2001 less the option
exercise price. Options are in-the-money if the market value of shares
covered by the options is greater than the exercise price.
EMPLOYMENT AGREEMENTS
The Company and Provident maintain three-year employment agreements with
Dwight V. Neese, President and Chief Executive Officer, and Richard H. Flake,
Executive Vice President and Chief Financial Officer. The terms of the
agreements may be extended for an additional year by action of the Board of
Directors on the anniversary date of the agreements. Mr. Neese's base salary for
the 2002 calendar year is $142,480. Mr. Flake's base salary for the 2002
calendar year is $94,000. The agreements may be terminated at any time by the
Board of Directors for "cause," as defined in the agreements. If the executive's
employment is terminated for cause, the agreements provide that the executive
will not receive any salary or benefits for any period after the termination for
cause. The agreements provide for severance payments if employment is terminated
following a change in control (as defined in the agreements), equal to 2.99
times the average annual compensation paid to the executive during the five
years immediately preceding the change in control and continuation of other
employee benefits for three years. The sum would be paid promptly within ten
days after termination following any change in control. Section 280G of the
Internal Revenue Code states that severance payments that equal or exceed three
times the base amount compensation of the individual are deemed to be "excess
parachute payments" if they are contingent upon a change in control. Individuals
receiving excess parachute payments are subject to a 20% excise tax on the
amount of the payments in excess of their base amount compensation, and the
Company is not entitled to deduct such amounts.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is responsible for
providing independent, objective oversight of Union Financial's independent
auditors, accounting functions and internal controls. The Audit Committee is
comprised of three 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.
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 generally accepted accounting
principles. The Audit Committee also received and reviewed written disclosures
and a letter from the accountants concerning
7
11
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
discussions, the Audit Committee recommended that the Board of Directors include
the audited consolidated financial statements in Union Financial's Annual Report
on Form 10-KSB for the year ended September 30, 2001 for filing with the
Securities and Exchange Commission.
John S. McMeekin (Chairman)
James W. Edwards
William M. Graham
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10% of
any registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Executive officers, directors and greater than 10% stockholders are required by
regulation to furnish the Company with copies of all Section 16(a) reports they
file.
Based solely on its review of the copies of the reports it has received
and written representations provided to the Company from the individuals
required to file the reports, the Company believes that each of the Company's
executive officers and directors has complied with applicable reporting
requirements for transactions in Union Financial common stock during the fiscal
year ended September 30, 2001.
TRANSACTIONS WITH MANAGEMENT
Federal regulations require that all loans or extensions of credit to
executive officers and directors of insured financial institutions must be made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons,
except for loans made pursuant to programs generally available to all employees,
and must not involve more than the normal risk of repayment or present other
unfavorable features. Provident is therefore prohibited from making any new
loans or extensions of credit to executive officers and directors at different
rates or terms than those offered to the general public, except for loans made
pursuant to programs generally available to all employees, and has adopted a
policy to this effect. In addition, loans made to a director or executive
officer in an amount that, when aggregated with the amount of all other loans to
such person and his or her related interests, are in excess of the greater of
$25,000 or 5% of the institution's capital and surplus (up to a maximum of
$500,000) must be approved in advance by a majority of the disinterested members
of the Board of Directors. Provident's policy is to not make any new loans or
extensions of credit to executive officers and directors at different rates or
terms than those offered to the general public and to have the Board of
Directors approve all loans to executive officers and directors. The aggregate
outstanding balance of loans made by Provident to its directors and executive
officers was approximately $1.1 million at September 30, 2001.
8
12
PROPOSAL 2 -- RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Elliott, Davis & Company, LLP to be
its auditors for the 2002 fiscal year, subject to the ratification by
stockholders. A representative of Elliott, Davis & Company, LLP is expected to
be present at the annual meeting to respond to appropriate questions from
stockholders and will have the opportunity to make a statement should he or she
desire to do so.
If the ratification of the appointment of the auditors is not approved
by a majority of the votes cast by stockholders at the annual meeting, other
independent public accountants will be considered by the Board of Directors. THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF AUDITORS.
The following table sets forth the fees billed to the Company for the
fiscal year ending September 30, 2001 by Elliott, Davis & Company, LLP:
Audit Fees............................ $30,660
Financial information and systems
design and implementation fees...... --
All other fees*....................... 19,344
---------------------
*Includes fees for reviews of internal controls and procedures.
The Audit Committee believes that the provision of non-audit services by
Elliott, Davis & Company, LLP are compatible with maintaining Elliott, Davis &
Company, LLP's independence.
MISCELLANEOUS
The Company will pay the cost of this proxy solicitation. The Company
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 Union Financial common stock. In addition to soliciting
proxies by mail, directors, officers and regular employees of the Company may
solicit proxies personally or by telephone. None of these persons will receive
additional compensation for these activities.
The Company's Annual Report to Stockholders has been mailed to all
persons who were stockholders as of the close of business on December 14, 2001.
Any stockholder who has not received a copy of the Annual Report may obtain a
copy by writing to the Secretary of the Company. The Annual Report is not to be
treated as part of the proxy solicitation material or as having been
incorporated herein by reference.
A COPY OF THE COMPANY'S FORM 10-KSB FOR THE FISCAL YEAR ENDED SEPTEMBER
30, 2001, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
FURNISHED WITHOUT CHARGE TO ALL PERSONS WHO WERE STOCKHOLDERS AS OF THE CLOSE OF
BUSINESS ON DECEMBER 14, 2001 UPON WRITTEN REQUEST TO CORPORATE SECRETARY, UNION
FINANCIAL BANCSHARES, INC., 203 WEST MAIN STREET, UNION, SOUTH CAROLINA 29379.
9
13
STOCKHOLDER PROPOSALS
Proposals that stockholders seek to have included in the proxy statement
for the Company's next annual meeting must be received by the Company no later
than August 30, 2002. However, if the annual meeting is held more than 30
calendar days from January 30, 2003, a stockholder proposal must be received by
a reasonable time before the proxy solicitation materials are mailed to be
included in the proxy statement. Any such proposals will be subject to the
requirements of the proxy rules adopted by the Securities and Exchange
Commission.
The Company's Certificate of Incorporation provides that in order for a
stockholder to make nominations for the election of directors or proposals for
business to be brought before the annual meeting, a stockholder must deliver
notice of such nominations and/or proposals to the Secretary not less than 30
nor more than 60 days prior to the date of the annual meeting; provided that if
less than 31 days' notice of the annual meeting is given to stockholders, such
notice must be delivered not later than the close of the tenth day following the
day on which notice of the annual meeting was mailed to stockholders. A copy of
the Certificate of Incorporation may be obtained from the Company.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Wanda J. Wells
Wanda J. Wells
CORPORATE SECRETARY
Union, South Carolina
December 28, 2001
10
14
UNION FINANCIAL BANCSHARES, INC.
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 30, 2002
-------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the Board of Directors, with full power
of substitution, to act as proxy for the undersigned, and to vote all shares of
common stock of Union Financial Bancshares, Inc. (the "Company") owned of record
by the undersigned at the Annual Meeting of Stockholders, to be held on January
30, 2002 at 2:00 p.m., local time, in the University of South Carolina
Auditorium, Union Campus, 401 East Main Street, Union, South Carolina, and at
any and all adjournments thereof, as designated below with respect to the
matters set forth below and described in the accompanying Proxy Statement and,
in their discretion, for the election of a person to the Board of Directors if
any nominee named herein becomes unable to serve or for good cause will not
serve and with respect to any other business that may properly come before the
meeting. Any prior proxy or voting instructions are hereby revoked.
1. The election as directors of all nominees listed (except as
marked to the contrary below).
Carl L. Mason William M. Graham John S. McMeekin
FOR ALL
FOR VOTE WITHHELD EXCEPT
--- ------------- ------
|_| |_| |_|
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. The ratification of the appointment of Elliott, Davis & Company,
LLP as independent auditors for the Company for the fiscal year
ending September 30, 2002.
FOR AGAINST ABSTAIN
--- ------- -------
|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE LISTED PROPOSALS.
15
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED "FOR" EACH OF THE PROPOSALS LISTED. IF ANY
OTHER BUSINESS IS PRESENTED AT THE MEETING, INCLUDING WHETHER OR NOT TO ADJOURN
THE MEETING, THIS PROXY WILL BE VOTED BY THE PROXIES IN THEIR BEST JUDGMENT. AT
THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE
PRESENTED AT THE ANNUAL MEETING.
The above-signed acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders, a Proxy
Statement dated December 28, 2001 and the Annual Report to Stockholders.
Please sign exactly as your name appears on this card. 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.
Dated:___________________________
---------------------------------
STOCKHOLDER SIGN ABOVE
---------------------------------
CO-HOLDER (IF ANY) SIGN ABOVE
-----------------------------
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
A-2