WESTSTAR FINANCIAL SERVICES CORPORATION
79 Woodfin Place
Asheville, North Carolina 28801
(828) 252-1735
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------
To Be Held
April 19, 2005
NOTICE is hereby given that the Annual Meeting of Shareholders of Weststar
Financial Services Corporation (the "Company") will be held as follows:
Place: Renaissance Asheville Hotel
One Thomas Wolfe Plaza
Asheville, North Carolina 28801
Date: April 19, 2005
Time: 3:00 p.m.
The purposes of the meeting are:
1. To elect three (3) members of the Board of Directors for three (3)
year terms.
2. To ratify the appointment of Dixon Hughes PLLC as the Company's
independent public accountants for 2005.
3. To transact any other business that may properly come before the
meeting.
You are cordially invited to attend the meeting in person. However, even if you
expect to attend the meeting, you are requested to complete, sign and date the
enclosed appointment of proxy and return it in the envelope provided for that
purpose to ensure that a quorum is present at the meeting. The giving of an
appointment of proxy will not affect your right to revoke it or to attend the
meeting and vote in person.
By Order of the Board of Directors
/s/ Randall C. Hall
Randall C. Hall
Executive Vice President & Secretary
March 11, 2005
WESTSTAR FINANCIAL SERVICES CORPORATION
79 Woodfin Place
Asheville, North Carolina 28801
(828) 252-1735
PROXY STATEMENT
Mailing Date: On or about March 11, 2005
ANNUAL MEETING OF SHAREHOLDERS
------------------------------
To Be Held
April 19, 2005
General
This Proxy Statement is furnished in connection with the solicitation of
the enclosed appointment of proxy by the Board of Directors of Weststar
Financial Services Corporation (the "Company") for the 2005 Annual Meeting of
Shareholders of the Company (the "Annual Meeting") to be held at the Renaissance
Asheville Hotel, One Thomas Wolfe Plaza, Asheville, North Carolina, at 3:00 p.m.
on April 19, 2005, and any adjournments thereof.
Solicitation and Voting of Appointments of Proxy; Revocation
Persons named in the appointment of proxy as proxies to represent
shareholders at the Annual Meeting are W. Edward Anderson, Randall C. Hall and
Carol L. King. Shares represented by each appointment of proxy, which is
properly executed and returned, and not revoked, will be voted in accordance
with the directions contained in the appointment of proxy. If no directions are
given, each such appointment of proxy will be voted FOR the election of each of
the three (3) nominees for director named in Proposal 1 below and FOR Proposal
2. If, at or before the time of the Annual Meeting, any nominee named in
Proposal 1 has become unavailable for any reason, the proxies will have the
discretion to vote for a substitute nominee. On such other matters as may come
before the meeting, the proxies will be authorized to vote shares represented by
each appointment of proxy in accordance with their best judgment on such
matters. An appointment of proxy may be revoked by the shareholder giving it at
any time before it is exercised by filing with Randall C. Hall, Secretary of the
Company, a written instrument revoking it or a duly executed appointment of
proxy bearing a later date, or by attending the Annual Meeting and announcing
his or her intention to vote in person.
Authorization to Vote on Adjournment and Other Matters
Unless the Secretary of the Company is instructed otherwise, by signing an
appointment of proxy, shareholders will be authorizing the proxyholders to vote
in their discretion regarding any procedural motions which may come before the
Annual Meeting. For example, this authority could be used to adjourn the Annual
Meeting if the Company believes it is desirable to do so.
Adjournment or other procedural matters could be used to obtain more time before
a vote is taken in order to solicit additional appointments of proxy to
establish a quorum or to provide additional information to shareholders.
However, appointments of proxy voted against the Proposals will not be used to
adjourn the Annual Meeting. The Company does not have any plans to adjourn the
meeting at this time, but intends to do so, if needed, to promote shareholder
interests.
Expenses of Solicitation
The Company will pay the cost of preparing, assembling and mailing this
Proxy Statement and other proxy solicitation expenses. In addition to the use of
the mails, appointments of proxy may be solicited in person or by telephone,
without additional compensation, by the officers, directors and employees of the
Company and its wholly-owned subsidiary, The Bank of Asheville (the "Bank").
Record Date
The close of business on February 18, 2005 has been fixed as the record
date (the "Record Date") for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting. Only those shareholders of record
on that date will be eligible to vote on the Proposals described herein.
Voting Securities
The voting securities of the Company are the shares of its common stock,
par value $1.00 per share, of which 9,000,000 shares are authorized, and
preferred stock, no par value, of which 1,000,000 shares are authorized. At
December 31, 2004, there were 1,166,208 shares of common stock and no shares of
preferred stock outstanding. There were approximately 800 holders of record of
the Company's common stock on this date.
Voting Procedures; Quorum; Votes Required for Approval
Each shareholder is entitled to one vote for each share held of record on
the Record Date on each director to be elected and on each other matter
submitted for voting. In accordance with North Carolina law, shareholders will
not be entitled to vote cumulatively in the election of directors at the Annual
Meeting.
A majority of the shares of the Company's common stock issued and
outstanding on the Record Date must be present in person or by proxy to
constitute a quorum for the conduct of business at the Annual Meeting.
Assuming a quorum is present, in the case of Proposal 1 below, the three
(3) nominees receiving the greatest number of votes shall be elected.
2
In the case of Proposal 2, for such Proposal to be approved, the number of
votes cast for approval must exceed the number of votes cast against the
Proposal. Abstentions and broker nonvotes will have no effect.
Ownership of Voting Securities
As of December 31, 2004, no shareholder known to management owned more
than 5% of the Company's common stock. As of December 31, 2004, the beneficial
ownership of the Company's common stock, by directors and executive officers
individually, and by directors and executive officers as a group, was as
follows:
AMOUNT AND
NAME AND ADDRESS OF NATURE OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP (1)(2) OF CLASS (3)
---------------- ---------------- ------------
W. Edward Anderson 51,199 4.35
Asheville, NC
M. David Cogburn, M.D 31,197(4) 2.66
Asheville, NC
Steven D. Cogburn 4,180(5) 0.36
Asheville, NC
G. Gordon Greenwood 45,371 3.78
Asheville, NC
Patricia P. Grimes 480 0.04
Asheville, NC
Randall C. Hall 23,862 2.02
Asheville, NC
Darryl J. Hart 21,340 1.81
Asheville, NC
Carol L. King 25,393(6) 2.16
Asheville, NC
Stephen L. Pignatiello 25,051(7) 2.13
Asheville, NC
Laura A. Webb 16,703(8) 1.42
Asheville, NC
David N. Wilcox 24,173 2.05
Asheville, NC
All Directors and Executive
Officers as a Group
(11 persons) 268,949 20.89
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(1) Except as otherwise noted, to the best knowledge of the Company's
management, the above individuals and group exercise sole voting and investment
power with respect to all shares shown as beneficially owned other than the
following shares as to which such powers are shared: Dr. Cogburn - 450 shares;
Mr. Cogburn - 318 shares; and Ms. Webb - 1,306 shares.
(2) Included in the beneficial ownership tabulations are the following
options to purchase shares of common stock of the Company: Mr. Anderson - 11,325
shares; Dr. Cogburn - 6,098 shares; Mr. Greenwood - 34,847 shares; Mr. Hall -
17,530 shares; Mr. Hart - 11,325 shares; Ms. King - 11,325 shares; Mr.
Pignatiello - 11,325 shares; Ms. Webb - 6,098 shares; and Mr. Wilcox - 11,325
shares.
(3) The calculation of the percentage of class beneficially owned by each
individual and the group is based on a total of 1,166,208 shares of common stock
outstanding as of December 31, 2004 and the number of options capable of being
exercised by each person or the group before March 1, 2005.
(4) Includes 450 shares owned by Dr. Cogburn's spouse (including 318
shares as custodian for minor children).
(5) Includes 318 shares owned by Mr. Cogburn as custodian for minor
children.
(6) Includes 145 shares held by Ms. King as custodian for a minor child.
(7) Includes 8,090 shares held by Mr. Pignatiello as custodian for minor
children.
(8) Includes 1,306 shares owned by Ms. Webb's spouse.
Section 16(a) Beneficial Ownership Reporting Compliance
Directors and executive officers of the Company are required by federal
law to file reports with the Securities and Exchange Commission ("SEC")
regarding the amount of and changes in their beneficial ownership of the
Company's common stock. To the knowledge of the management of the Company based
upon information supplied to the Company by the directors and executive
officers, all required reports of directors and executive officers of the
Company have been timely filed.
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PROPOSAL 1: ELECTION OF DIRECTORS
The Bylaws of the Company provide that its Board of Directors shall
consist of between eight (8) and twelve (12) members, as determined by the Board
of Directors or the shareholders, and, if there are nine (9) or more directors,
that they shall be classified into three groups with staggered terms of three
(3) years in as equal numbers as possible. The Board of Directors has set the
number of directors of the Company at ten (10). The following directors whose
terms expire at the Annual Meeting have been renominated to three-year terms by
the Nominating Committee of the Board of Directors:
Position(s) Director Principal Occupation
Name and Age Held Since and Business Experience During Past Five Years
------------ ---- ----- ----------------------------------------------
Patricia P. Grimes Director 2003 General Manager, Harry's Cadillac Pontiac GMC,
(52) Asheville, NC
Carol L. King Director 1997 CPA and President, Carol L. King & Associates, P.A.,
(59) Asheville, NC
David N. Wilcox Director 1997 Financial Consultant, Hilliard Lyons, Inc., Asheville, NC;
(44) Partner, Reservation Management Services, Asheville, NC,
1990-Present; Vice President, Wilcox Travel Agency, Inc.,
Asheville, NC, 1984-2004
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF THE
THREE NOMINEES FOR DIRECTOR OF THE COMPANY FOR TERMS OF THREE YEARS.
Incumbent Directors
The Company's Board of Directors includes the following directors whose
terms will continue after the Annual Meeting. Each of the three (3) nominees
listed above and the incumbent directors listed below also serve as directors of
the Bank:
Director Term Principal Occupation
Name and Age Since Expires and Business Experience During Past Five Years
------------ ----- ------- ----------------------------------------------
W. Edward Anderson 1997 2007 Retired Plant Manager, Continental Teves, Asheville, NC
(65)
G. Gordon Greenwood 2000 2007 President and Chief Executive Officer of the Company and the
(58) Bank, January, 2000-Present; Regional Market Manager, RBC
Centura Bank, Asheville, NC, 1996-2000
Darryl J. Hart 1997 2007 Vice President & General Manager, Hart Funeral Services,
(43) Inc., Asheville, NC
M. David Cogburn, M.D. 1999 2006 President, Carolina Mountain Dermatology, P.A., Arden, NC
(49)
5
Director Term Principal Occupation
Name and Age Since Expires and Business Experience During Past Five Years
- ------------ ----- ------- ----------------------------------------------
Steven D. Cogburn 2003 2006 Attorney and Partner, Cogburn, Goosman, Brazil and Rose, P.A,
(48) Asheville, NC
Steven L. Pignatiello 1997 2006 President, P. Comms International, LLC, Asheville, NC (Wine
(45) Importer)
Laura A. Webb 1999 2006 President, Webb Investment Services, Inc, Asheville, NC, Vice
(45) President, R. Stanford Webb Agency, Asheville, NC
Director Relationships
One family relationship on the Board of Directors exists. M. David
Cogburn, M.D. and Steven D. Cogburn are brothers. No director is a director of
any corporation with a class of securities registered pursuant to Section 12 of
the Securities Exchange Act of 1934 (the "Exchange Act") or subject to the
requirements of Section 15(d) of the Exchange Act, or any company registered as
an investment company under the Investment Company Act of 1940.
Meetings and Committees of the Board of Directors
The Company's Board of Directors held twelve (12) regular meetings in
2004. All directors attended 75% or more of the aggregate number of meetings of
the Board of Directors and any committees on which he or she served. The Board
of Directors intends to meet monthly in 2005.
It is the policy of the Company that directors attend each annual meeting
and any special meetings of the Company's shareholders. Nine (9) of the
Company's ten (10) directors attended the 2004 Annual Meeting of Shareholders.
The Board of Directors has appointed several standing committees including
an Audit Committee, Compensation/Nominating Committee and Executive Committee.
Those committees will also meet on a regular basis in 2005. The composition of
each committee is as follows:
Compensation/Nominating
Audit Committee Committee Executive Committee
--------------- --------- -------------------
W. Edward Anderson W. Edward Anderson W. Edward Anderson
M. David Cogburn, M.D. M. David Cogburn, M.D. M. David Cogburn, M.D.
Patricia P. Grimes G. Gordon Greenwood* G. Gordon Greenwood
Darryl J. Hart Carol L. King Carol L. King
Carol L. King David N. Wilcox David N. Wilcox
Laura A. Webb
* Non-voting advisory member
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Nominating Committee
The Company's standing Compensation/Nominating Committee fulfills the
duties of the Nominating Committee. The duties of the Nominating Committee are:
(i) to assist the Board, on an annual basis, by identifying individuals
qualified to become Board members, and to recommend to the Board the director
nominees for the next annual meeting of shareholders; (ii) to assist the Board
in the event of any vacancy on the Board by identifying individuals qualified to
become Board members, and to recommend to the Board qualified individuals to
fill any such vacancy; and (iii) to recommend to the Board, on an annual basis,
director nominees for each committee of the Board.
The Company is not the member of any securities exchange, however, the
Nominating Committee members are "independent" as defined by Nasdaq listing
standards. The bylaws of the Company state that candidates may be nominated for
election to the Board of Directors by the Nominating Committee or by any
shareholder of the Company's common stock. It is the policy of the Nominating
Committee to consider all shareholder nominations. Shareholder nominations must
be submitted to the Nominating Committee in writing on or before September 30th
of the year preceding the Annual Meeting at which the nominee would stand for
election to the Board of Directors and must be accompanied by each nominee's
written consent to serve as a director of the Company if elected. The bylaws of
the Company require that all nominees for director, including shareholder
nominees, have business, economic or residential ties to the Company's market
area and have owned at least 1,000 shares of the Company's common stock for a
period of twelve (12) months preceding the date of the nomination. In evaluating
nominees for director, the Nominating Committee values community involvement and
experience in finance or banking including prior service as an officer or
director of an entity engaged in the financial services business, although such
experience is not a prerequisite for nomination. The Nominating Committee has
adopted a formal written charter, which is available at
http://www.bankofasheville.com.
Report of Audit Committee
The Company has a standing Audit Committee. The Audit Committee is
responsible for receiving and reviewing the annual audit report of the Company's
independent auditors and reports of examinations by bank regulatory agencies,
and helps formulate, implement, and review the internal audit programs of the
Company and the Bank. The Audit Committee assesses the performance and
independence of the Company's independent auditors and recommends their
appointment and retention. The Audit Committee has in place pre-approval
policies and procedures that involve assessment of the performance and
independence of the Company's independent auditors, evaluation of any conflicts
of interest that may impair the independence of the independent auditors and
pre-approval of an engagement letter that outlines all services to be rendered
by the independent auditors.
During the course of its examination of the Company's audit process in
2004, the Audit Committee reviewed and discussed the audited financial
statements with management. The Audit Committee also discussed with the
independent auditors, Dixon Hughes PLLC, all matters required to be discussed by
the Statement of Auditing Standards No. 61, as amended.
7
Furthermore, the Audit Committee received from Dixon Hughes PLLC disclosures
regarding their independence required by the Independence Standards Board
Standard No. 1, as amended and discussed with Dixon Hughes PLLC their
independence.
Based on the review and discussions above, the Audit Committee: (i)
recommended to the Board that the audited financial statements be included in
the Company's annual report on Form 10-KSB for the year ended December 31, 2004
for filing with the SEC; and (ii) recommended that shareholders ratify the
appointment of Dixon Hughes PLLC as auditors for 2005.
The Audit Committee has a written charter, which is reviewed by the
Committee for adequacy on an annual basis. A copy of the Audit Committee Charter
is attached as Exhibit A.
The Audit Committee members are "independent" and "financially literate"
as defined by the Nasdaq listing standards. The Board of Directors has
determined that Carol L. King, a member of the Audit Committee, meets the SEC
requirements for qualification as an "audit committee financial expert." An
audit committee financial expert is defined as a person who has the following
attributes: (i) an understanding of generally accepted accounting principles and
financial statements; (ii) the ability to assess the general application of
generally accepted accounting principles in connection with the accounting for
estimates, accruals and reserves; (iii) experience preparing, auditing,
analyzing or evaluating financial statements that are of the same level of
complexity that can be expected in the registrant's financial statements, or
experience supervising people engaged in such activities; (iv) an understanding
of internal controls and procedures for financial reporting; and (v) an
understanding of audit committee functions.
Audit Fees
The aggregate fees billed by Dixon Hughes PLLC for professional services
rendered for the audit of the Company's annual financial statements for the
fiscal year ended December 31, 2004 and for the review of the financial
statements included in the Company's Quarterly Reports on Form 10-QSB during the
fiscal year ended December 31, 2004 were $32,800. The aggregate fees billed by
Dixon Hughes PLLC for professional services rendered for the audit of the
Company's annual financial statements for the fiscal year ended December 31,
2003 and for the review of the financial statements included in the Company's
Quarterly Reports on Form 10-QSB during the fiscal year ended December 31, 2003
were $32,600. All such services rendered by Dixon Hughes PLLC were subject to
pre-approval by the Audit Committee and no such pre-approvals were waived.
Audit-Related Fees
The aggregate fees billed by Dixon Hughes PLLC during the fiscal years
ended December 31, 2004 and 2003, for assurance and related services that are
reasonably related to the performance of the audit of the Company's financial
statements, but which are not included in audit fees disclosed above, were
$3,200 and $340, respectively. Such fees were for routine
8
accounting consultations. All such services rendered by Dixon Hughes PLLC were
subject to pre-approval by the Audit Committee and no such pre-approvals were
waived.
Tax Fees
The aggregate fees billed by Dixon Hughes PLLC for tax compliance, tax
advice and tax planning during the fiscal years ended December 31, 2004 and 2003
were $5,000 and $4,185, respectively.
All Other Fees
There were no additional fees billed by Dixon Hughes PLLC during the
fiscal year ended December 31, 2004 or the fiscal year ended December 31, 2003.
This report is submitted by the Audit Committee: W. Edward Anderson, M.
David Cogburn, M.D., Patricia P. Grimes, Darryl J. Hart, Carol L. King and Laura
A. Webb.
Director Compensation
Directors received compensation of $100 for every meeting attended during
the fiscal year ended December 31, 2004.
The shareholders of the Company ratified the Weststar Financial Services
Corporation 2001 Nonqualified Stock Option Plan (the "Nonqualified Option Plan")
at the 2001 Annual Meeting of shareholders pursuant to which options on 68,821
shares (as adjusted) of the Company's common stock were made available for
issuance to members of the Company's Board of Directors. During 2001, options to
purchase up to 68,821 shares (as adjusted) of the Company's common stock were
granted under the Nonqualified Option Plan, all of which have either been
exercised or currently remain outstanding. No options were granted under the
Nonqualified Option Plan during the fiscal year ended December 31, 2004.
Executive Officers
Set forth below is certain information regarding the Company's
executive officers.
Position with
Name Age Company Business Experience
- ---- --- ------- -------------------
G. Gordon Greenwood 58 Director, President and Chief Executive Officer of the Company and
President and the Bank; Regional Market Manager, RBC Centura Bank,
Chief Executive Asheville, 1996-2000.
Officer
Randall C. Hall 39 Executive Vice Executive Vice President, Secretary, and Chief Financial
President, Officer of the Company and the Bank, 1997- Present; Vice
Secretary, and President, Secretary and Chief Financial Officer of Bank
Chief Financial of Granite Corp and Bank of Granite, 1988-1997.
Officer
9
Board Report on Executive Compensation
The Bank has entered into an employment and change of control agreement
with G. Gordon Greenwood (dated February 9, 2000) as its President and Chief
Executive Officer to establish his duties and compensation and to provide for
his continued employment with the Bank. The employment agreement provides for an
initial term of five (5) years with renewal at the end of the third year and on
each anniversary thereafter for an additional one-year term provided there is an
affirmative decision to renew by the Board of Directors. The employment
agreement provides for an annual base salary and for participation in other
pension and profit-sharing retirement plans maintained by the Bank on behalf of
its employees, as well as fringe benefits normally associated with Mr.
Greenwood's position or made available to all other employees. Additionally, at
the sooner to occur of (i) a "change in control" of the Bank, or (ii) the end of
the initial five-year term, Mr. Greenwood is to receive a 10-year annuity of
$40,000 per year. The employment agreement provides that Mr. Greenwood may be
terminated for "cause" as defined in the employment agreement, and that the
employment agreement may otherwise be terminated, in some cases with certain
financial consequences incurred by the Bank or Mr. Greenwood. The employment
agreement provides that should the Bank terminate the employment agreement other
than for cause or disability within 24 months after a "change in control," or
should Mr. Greenwood terminate the agreement within such 24 months during which
his compensation or responsibilities have been reduced, or his workplace
location is moved outside of Asheville, North Carolina, then he shall receive a
lump sum equal to two hundred ninety-nine percent (299%) of his "base amount" as
determined by Section 280G of the Internal Revenue Code of 1986. A "change in
control" shall be deemed to have occurred upon (i) any person becoming the
beneficial owner or otherwise acquiring control, directly or indirectly, of
securities of the Bank representing thirty-five percent (35%) or more of the
voting power of the Bank's now outstanding securities; (ii) the acquisition by
any person in any manner of the ability to elect, or to control the election of,
a majority of the directors of the Bank; (iii) the merger of the Bank into
another entity or the merger of any entity into the Bank without the Bank being
the survivor; or (iv) the acquisition of substantially all of the assets of the
Bank by another corporation.
SUMMARY COMPENSATION TABLE
Annual Other
Compensation Compensation
------------ ------------
All
Other
Name and Principal Position Year Salary Bonus Compensation(1)
--------------------------- ---- ------ ----- ---------------
G. Gordon Greenwood 2004 $154,056 $ 0 $ 7,506
President and Chief Executive Officer 2003 139,911 0 7,471
2002 135,694 7,850 6,376
Randall C. Hall 2004 $114,908 $ 0 $ 5,780
Executive Vice President and Secretary 2003 94,426 0 5,768
2002 88,962 8,300 5,446
(1) Includes taxable benefit on group term insurance and 401(k)
contributions.
10
Stock Options
At the Company's 2001 Annual Meeting, the shareholders approved the
adoption of the Weststar Financial Services Corporation 2001 Incentive Stock
Option Plan, which provides for the issuance of incentive stock options to
purchase up to 91,436 shares (as adjusted) of the Company's common stock. There
were no grants of Incentive Stock Options during the fiscal year ended December
31, 2004.
The following table sets forth information regarding option exercises and
option values as of December 31, 2004:
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2004
AND FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
Shares December 31, 2004 (1) December 31, 2004 (1)(2)
Acquired Value ------------------------- -------------------------
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ----------- -------- ------------------------- -------------------------
G. Gordon Greenwood 0 0 34,847 / 8,712 $284,111 / $62,029
Randall C. Hall 0 0 17,530 / 4,645 $124,814 / $33,072
(1) Adjusted for stock dividends.
(2) The Company's stock price on December 31, 2004 was $13.00 per share.
401(k) Savings Plan
The Company has no employees who are not also employees of the Bank.
Hence, the 401(k) Savings Plan of the Bank covers all employees of the Company.
In 1998, the Bank adopted a tax-qualified savings plan (the "Savings Plan"),
which covers all current full-time employees and any new full-time employees who
have completed 1,000 hours of service for the employer. Under the savings plan,
a participating employee may contribute up to $13,000 of his or her base salary
on a tax-deferred basis through salary reduction as permitted under Section
401(k) of the Internal Revenue Code of 1986 (the "Code"), as amended. The Bank
makes a minimum contribution equal to 3% of the participating employee's pre-tax
base salary with additional matching contributions equal to 50% of amounts over
the initial 3% of pre-tax base salary contributed by the employee. The Bank's
total contribution is capped at 4% of the employee's pre-tax base salary. A
participant's contributions and the Bank's matching contributions under the
savings plan are held in trust accounts for the benefit of participants. A
participant is at all times 100% vested with respect to his or her own
contributions under the savings plan, and becomes 100% vested in the account for
the Bank's matching contributions after completing five years of service with
the employer. The value of a participant's accounts under the savings plan
becomes payable to him or her in full upon retirement, total or permanent
disability or termination of employment for any reason, or becomes payable to a
designated beneficiary upon a participant's death. The savings plan also will
contain provisions or withdrawals in the event of certain hardships. A
participant's contributions, vested
11
matching and profit sharing contributions of the employer, and any income
accrued on such contributions, are not subject to federal or state taxes until
such time as they are withdrawn by the participant.
Indebtedness of and Transactions with Management
The Bank has had, and expects to have in the future, banking transactions
in the ordinary course of business with certain of its current directors,
nominees for director, executive officers and their associates. All loans
included in such transactions were made on substantially the same terms,
including interest rates, repayment terms and collateral, as those prevailing at
the time such loans were made for comparable transactions with other persons,
and do not involve more than the normal risk of collectibility or present other
unfavorable features.
Loans made by the Bank to directors and executive officers are subject to
the requirements of Regulation O of the Board of Governors of the Federal
Reserve System. Regulation O requires, among other things, prior approval of the
Board of Directors with any "interested director" not participating, dollar
limitations on amounts of certain loans and prohibits any favorable treatment
being extended to any director or executive officer in any of the Bank's lending
matters. To the best knowledge of the management of the Company and the Bank,
Regulation O has been complied with in its entirety.
PROPOSAL 2: RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has appointed the firm of
Dixon Hughes PLLC as the Company's independent public accountants for 2005. A
representative of Dixon Hughes PLLC is expected to be present at the Annual
Meeting and available to respond to appropriate questions, and will have the
opportunity to make a statement if he or she desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF DIXON HUGHES PLLC AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR 2005.
OTHER MATTERS
The Board of Directors knows of no other business that will be brought
before the Annual Meeting. Should other matters properly come before the
meeting, the proxies will be authorized to vote shares represented by each
appointment of proxy in accordance with their best judgment on such matters.
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PROPOSALS FOR 2006 ANNUAL MEETING
It is anticipated that the 2006 Annual Meeting will be held on a date
during April 2006. Any Proposal of a shareholder which is intended to be
presented at the 2006 Annual Meeting must be received by the Company at its main
office in Asheville, North Carolina no later than November 15, 2005, in order
that such Proposal be timely received for inclusion in the proxy statement and
appointment of proxy to be issued in connection with that meeting. If a Proposal
for the 2006 Annual Meeting is not expected to be included in the proxy
statement for that meeting, the Proposal must be received by the Company by
February 15, 2006 for it to be timely received for consideration. The Company
will use its discretionary authority for any Proposals received thereafter.
SHAREHOLDER COMMUNICATIONS
The Company does not currently have a formal policy regarding shareholder
communications with the Board of Directors, however, any shareholder may submit
written communications to Randall C. Hall, Corporate Secretary, Weststar
Financial Services Corporation, 79 Woodfin Place, Asheville, North Carolina
28801 whereupon such communications will be forwarded to the Board of Directors
if addressed to the Board of Directors as a group or to the individual director
or directors addressed.
ADDITIONAL INFORMATION
A COPY OF THE COMPANY'S 2004 ANNUAL REPORT ON FORM 10-KSB WILL BE PROVIDED
WITHOUT CHARGE TO ANY SHAREHOLDER ENTITLED TO VOTE AT THE ANNUAL MEETING UPON
THAT SHAREHOLDER'S WRITTEN REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO
RANDALL C. HALL, CORPORATE SECRETARY, WESTSTAR FINANCIAL SERVICES CORPORATION,
79 WOODFIN PLACE, ASHEVILLE, NORTH CAROLINA 28801.
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Exhibit A
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AUDIT COMMITTEE CHARTER
Organization: The Audit Committee of the Board of Directors of Weststar
Financial Services Corporation (the "Company") and its subsidiaries, The Bank of
Asheville (the "Bank") and Weststar Financial Services Corporation Trust I (the
"Trust") shall be a permanent committee consisting of at least three independent
members of the Board. All members of the Audit Committee must be financially
literate, and at least one member must have accounting or financial management
expertise, as determined by the Board. The members of the Audit Committee shall
be appointed by the chair of the Company recognizing the need for continuity for
membership from year to year.
Purpose: The Audit Committee is to assist the Board in discharging their
oversight responsibilities by:
o Promoting the development of an effective and continuously improving
control environment, in concert with the management, to achieve the
bank's objectives through an appropriate system of risk assessment
and internal controls;
o Overseeing the Company's integrated framework of internal controls
and risk assessment practices
o Serving as informed, vigilant and effective overseers of the
financial reporting process
o Serving as an informed voice on the Board and other standing
committees by relaying the audit perspective when related issues are
brought before those committees; and
o Providing a direct channel of communication to the Board for the
independent public and internal auditors.
Duties: Specific duties to the Audit Committee include the following:
o Nomination of Public Accountant. To recommend a contract with
independent public accountants for the annual audit of the Bank. The
nomination of public accountant shall be approved by the Board. The
public accountants report directly to the Board through the Audit
Committee.
o Audit Plans. To review the annual audit plan of the internal audit
department and the independent public accountants, including the
degree of coordination. The committee may request the supplemental
reviews or other audit procedures.
o Annual Review of Public Accountant. To meet with the independent
public accountant and internal auditor to review the results of
their annual work. This should include:
o A review of the auditor's independence as the bank's independent
public accountant. Both the audit committee and management should
assist the public accountant in preserving the auditor's
independence;
o A review of the formats and wordings of the annual financial report,
including the financial statements, footnotes and statistics;
o A timely review of the disposition of previously issued
recommendations; and
o A meeting with the internal auditor and independent public
accountant, without any representatives from management present,
when deemed necessary
o Report to the full Board the results of the committee's activities.
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STATEMENT OF INTENT
In compliance with the FDIC's ss.364.101 Standards for safety and soundness; II
Operational and Managerial Standards, B. Internal audit system, "An institution
should have an internal audit system that is appropriate to the size of the
institution and the nature and scope of its activities and that provides for:
1. Adequate monitoring of the system of internal controls through an
internal audit function. For an institution whose size, complexity
or scope of operations does not warrant a full scale internal audit
function, a system of independent reviews of key internal controls
may be used;
2. Independence and objectivity;
3. Qualified persons;
4. Adequate testing and review of information systems;
5. Adequate documentation of tests and findings and any corrective
actions;
6. Verification and review of management actions to address material
weaknesses; and
7. Review by the institution's audit committee or board of directors of
the effectiveness of the internal audit systems."
The Company has established the following audit policy and plan.
The Bank has engaged the services of an independent accounting firm to perform
an annual audit. Their audit is "conducted in accordance with generally accepted
auditing standards. Those standards require that [they] plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation."
The following applications will be subject to procedures on an annual basis as
part of the Bank's independent certified public accountants' audit of the
financial statements: loan accounting system, which encompasses commercial,
consumer and home equity loans; the investment accounting system, and the
deposit accounting systems including demand deposits, NOW accounts, money market
demand deposits, certificates of deposit and savings accounts. Both the CFO and
Senior Accounting Officer will assist in the audit conducted by the independent
accounting firm.
Following the close of the audit, the independent accounting firm will issue an
opinion on the financial statements and prepare a report to management, which
discusses their findings and recommendations for internal controls. A
representative from the independent accounting firm will meet with the Audit
Committee on an annual basis to review the letter to management and the basis
for their opinion on the financial statements.
The Company will also may engage the services of an independent third party to
perform internal audit and compliance reviews. Following the review, a report to
management will be issued which details an assessment of the Company's
performance relative to various laws and regulations. Management will prepare a
response to the findings, and review both the report and corrective actions
taken or to be taken with the Audit Committee.
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REVOCABLE PROXY
WESTSTAR FINANCIAL SERVICES CORPORATION
79 Woodfin Place
Asheville, North Carolina 28801
APPOINTMENT OF PROXY
SOLICITED BY BOARD OF DIRECTORS
The undersigned hereby appoints W. Edward Anderson, Randall C. Hall and Carol L.
King (the "Proxies"), or any of them, as attorneys and proxies, with full power
of substitution, to vote all shares of the common stock of Weststar Financial
Services Corporation (the "Company") held of record by the undersigned on
February 18, 2005, at the Annual Meeting of Shareholders of the Company to be
held at the Renaissance Asheville Hotel, One Thomas Wolfe Plaza, Asheville,
North Carolina, at 3:00 p.m. on April 19, 2005, and at any adjournments thereof.
The undersigned hereby directs that the shares represented by this Appointment
of Proxy be voted as follows on the proposals listed below:
1. ELECTION OF DIRECTORS: Proposal to elect three (3) directors of the Company
for three-year terms or until their successors are duly elected and qualified.
____ FOR all nominees listed below ____ WITHHOLD AUTHORITY
(except as indicated otherwise below). to vote for all nominees listed below.
NOMINEES:
Three-Year Terms
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Patricia P. Grimes
Carol L. King
David N. Wilcox
Instruction: To withhold authority to vote for one or more nominees, write
that nominee's name on the line below.
__________________________________________________________________________
2. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS: Proposal to ratify the
appointment of Dixon Hughes PLLC as the Company's independent accountants for
2005.
____ FOR ____ AGAINST ____ ABSTAIN
3. OTHER BUSINESS: On such other matters as may properly come before the Annual
Meeting, the proxies are authorized to vote the shares represented by this
Appointment of Proxy in accordance with their best judgment.
PLEASE DATE AND SIGN THIS APPOINTMENT OF PROXY ON THE REVERSE SIDE AND RETURN TO
WESTSTAR FINANCIAL SERVICES CORPORATION.
THE SHARES REPRESENTED BY THIS APPOINTMENT OF PROXY WILL BE VOTED AS DIRECTED
ABOVE. IN THE ABSENCE OF ANY DIRECTION, SUCH SHARES WILL BE VOTED FOR THE
ELECTION OF EACH OF THE NOMINEES LISTED IN PROPOSAL 1 BY CASTING AN EQUAL NUMBER
OF VOTES FOR EACH SUCH NOMINEE, AND FOR PROPOSAL 2. IF, AT OR BEFORE THE TIME OF
THE MEETING, ANY NOMINEE LISTED IN PROPOSAL 1 HAS BECOME UNAVAILABLE FOR ANY
REASON, THE PROXIES ARE AUTHORIZED TO VOTE FOR A SUBSTITUTE NOMINEE. THIS
APPOINTMENT OF PROXY MAY BE REVOKED BY THE HOLDER OF THE SHARES TO WHICH IT
RELATES AT ANY TIME BEFORE IT IS EXERCISED BY FILING WITH THE SECRETARY OF THE
COMPANY A WRITTEN INSTRUMENT REVOKING IT OR DULY EXECUTED APPOINTMENT OF PROXY
BEARING A LATER DATE OR BY ATTENDING THE ANNUAL MEETING AND ANNOUNCING HIS OR
HER INTENTION TO VOTE IN PERSON.
Date:__________________________________, 2005
_______________________________________(SEAL)
(Signature)
_______________________________________(SEAL)
(Signature, if shares held jointly)
Instruction: Please sign above exactly as
your name appears on this appointment of
proxy. Joint owners of shares should both
sign. Fiduciaries or other persons signing in
a representative capacity should indicate the
capacity in which they are signing.
IMPORTANT: TO INSURE THAT A QUORUM IS PRESENT, PLEASE SEND IN YOUR APPOINTMENT
OF PROXY WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. EVEN IF YOU SEND
IN YOUR APPOINTMENT OF PROXY YOU WILL BE ABLE TO VOTE IN PERSON AT THE MEETING
IF YOU SO DESIRE.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD
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IN THE ENCLOSED ENVELOPE
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