UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Community Bankshares Incorporated
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(5) Total fee paid:
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[_] 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:
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[LOGO]
Community Bankshares Incorporated
April 25, 2001
Dear Shareholder:
You are invited to attend the Annual Meeting of Shareholders of Community
Bankshares Incorporated to be held at the Holiday Inn Select, 1021 Koger Center
Boulevard, Richmond, Virginia, on Tuesday, May 29, 2001, at 4:00 p.m.
At the meeting, you will vote on the election of three directors for a term
of three years. Your Board of Directors unanimously supports these individuals
and recommends that you VOTE FOR them as directors. We will also review the
operating results for the past year and present other information concerning
Community Bankshares Incorporated.
Whether or not you plan to attend the meeting, please complete, sign and
date the enclosed proxy card and return it promptly in the enclosed envelope.
Your vote is important regardless of the number of shares that you own. We look
forward to seeing you at the meeting.
/s/ Nathan S. Jones
Nathan S. Jones, 3/rd/
President and Chief Executive Officer
Community Bankshares Incorporated
11500 West Broad Street
Richmond, Virginia 23233
COMMUNITY BANKSHARES INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be hold on May 29, 2001, at 4:00 p.m.
The Annual Meeting of Shareholders of Community Bankshares Incorporated
will be held on Tuesday, May 29, 2001, at 4:00 p.m., at the Holiday Inn Select,
1021 Koger Center Boulevard, Richmond, Virginia, for the following purposes:
1. To elect three directors to serve for a three-year term or until their
successors are elected and qualify.
2. To transact such other business as may properly come before the
meeting or any adjournments or postponements of the meeting.
The Board of Directors has fixed April 11, 2001, as the record date for the
meeting and only holders of record of Common Stock at the close of business on
that date are entitled to receive notice of and to vote at the meeting or any
adjournments or postponements of the meeting.
By Order of the Board of Directors
/s/ Nathan S. Jones
Nathan S. Jones, 3rd
President and Chief Executive Officer
April 25, 2001
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY,
WHETHER OR NOT YOU PLAN TO ATTEND THIS ANNUAL MEETING. YOUR
VOTE IS IMPORTANT, WHETHER YOU OWN A FEW SHARES OR MANY.
COMMUNITY BANKSHARES INCORPORATED
11500 West Broad Street
Richmond, Virginia 23233
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 29, 2001
This Proxy Statement is being furnished to shareholders of Community
Bankshares Incorporated ("CBI", "Community Bankshares" or the "Company") in
connection with the solicitation of proxies by the Board of Directors of CBI for
use at the Annual Meeting of Shareholders (the "Annual Meeting") to be held at
the Holiday Inn Select, 1021 Koger Center Boulevard, Richmond, Virginia on
Tuesday, May 29, 2001 at 4:00 p.m. or any postponements or adjournments of the
Annual Meeting.
The shareholder giving a proxy may revoke it at any time before it is voted
by (i) giving notification in person or by writing to CBI, (ii) submitting to
CBI a subsequently dated proxy or (iii) attending the Annual Meeting and
withdrawing the proxy before it is voted. All shares represented by a proxy,
when executed and not so revoked, will be voted, and, if the proxy contains any
specific instructions, it will be voted in accordance with such instructions.
If no contrary instructions are given, each proxy received will be voted FOR the
slate of director nominees.
The cost of the solicitation of proxies will be borne by CBI. In addition
to solicitation by use of the mail, officers and employees of CBI (who will not
be compensated in addition to their regular salaries) may solicit proxies from
shareholders personally or by telephone. CBI will reimburse banks, brokerage
firms and other custodians, nominees and fiduciaries for reasonable expenses
incurred by them in sending proxy materials to beneficial owners of Common Stock
of CBI. This Proxy Statement and the related proxy are being mailed to
shareholders of record as of April 11, 2001 (the "Record Date") on or about
April 25, 2001.
CBI has 20,000,000 authorized share of Common Stock, par value $3.00 per
share. On the Record Date, there were 2,742,576 issued and outstanding shares
of Common Stock. Holders of Common Stock will vote as a single class at the
Annual Meeting. Each outstanding share of Common Stock will entitle its holder
to one vote on each matter presented at the Annual Meeting.
A shareholder may abstain or (only with respect to the election of
directors) withhold his or her vote (collectively, "Abstentions") with respect
to each item submitted for shareholder approval. Abstentions will be counted
for purposes of determining the existence of a quorum. Abstentions will not be
counted as voting in favor of the relevant item.
A broker who holds shares in "street name" has the authority to vote on
certain items when it has not received instructions from the beneficial owner.
Except for certain items for which brokers are prohibited from exercising their
discretion, a broker is entitled to vote on matters put to shareholders without
instructions from the beneficial owner. Where brokers do not have or do not
exercise such discretion, the inability or failure to vote is referred to as a
"broker non-vote." Under the circumstances where the broker is not permitted
to, or does not, exercise its discretion, assuming proper disclosure to CBI of
such inability to vote, broker non-votes will not be counted for purposes of
determining the existence of a quorum and will not be counted as not voting in
favor of the particular matter.
1
PROPOSAL I
ELECTION OF DIRECTORS
CBI's Board of Directors is divided into three classes. At the Annual
Meeting, three directors are expected to be elected to Class III to hold office
for a term of three years or until their respective successors are duly elected
and qualify. Unless authority to do so is withheld, shares represented by
properly executed proxies in the enclosed form will be voted for the election of
the three persons named below. All nominees have consented to be named and have
indicated their intent to serve if elected. If nominees become unavailable, the
Board of Directors will designate substitutes for whom the proxies in the
enclosed form are to be voted, or will reduce the size of the Board to the
number of remaining nominees for whom the proxies will be voted. At this time,
the Board knows of no reason why any of the nominees listed below may not be
able to serve as a director if elected. The proxy also confers discretionary
authority upon the persons named or their substitutes, with respect to any other
matter that may properly come before the Annual Meeting.
In the election of directors, those persons receiving the greatest number
of votes will be elected even if they do not receive a majority.
Class I (to serve until the 2004 Annual Meeting of Shareholders)
Principal Occupation or Employment Director
Name During Last Five Years Since Age
- ---- ---------------------- ----- ---
Nathan S. Jones, 3rd President and Chief Executive Officer, 1984 55
Community Bankshares Incorporated,
Richmond, Virginia; Vice Chairman,
Chief Executive Officer and Director of
Commerce Bank, Richmond, Virginia
Harold L. Vaughn President, Southern Hardware and Building 1984 70
Corporation, Incorporated, Petersburg,
Virginia; Secretary, Community Bankshares
Incorporated, Richmond, Virginia; Director of
Commerce Bank, Richmond, Virginia
Jack W. Miller, Jr. Former Chairman and Chief Executive Officer, 1997 69
Roller Bearing Industries, Incorporated; Director
of Commerce Bank, Richmond, Virginia
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE NOMINEES SET FORTH ABOVE.
2
Directors Continuing in Office
There are six directors whose present term of office will continue after
the Annual Meeting until 2002 or 2003, as indicated below, or until their
respective successors are duly elected and qualify. The remaining directors have
served continuously since the year that they joined the Board.
Class II (to serve until the 2002 Annual Meeting of Shareholders)
Principal Occupation or Employment Director
Name During Last Five Years Since Age
- ---- ---------------------- ----- ---
Sam T. Beale Lawyer - Beale, Balfour, Davidson & 1996 63
Etherington, P.C., Richmond, Virginia;
Chairman, Community Bankshares
Incorporated, Richmond, Virginia;
Director of Commerce Bank,
Richmond, Virginia
Richard C. Huffman Former President and Chief Executive 1996 61
Officer, Commerce Bank of Virginia,
Richmond, Virginia; Director of
Commerce Bank, Richmond, Virginia
Vernon E. LaPrade, Jr. President, Model Realty, Inc., Midlothian, 1997 68
Virginia; Vice Chairman, Community
Bankshares Incorporated, Richmond, Virginia;
Chairman, Commerce Bank,
Richmond, Virginia
Class III (to serve until the 2003 Annual Meeting of Shareholders)
Principal Occupation or Employment Director
Name During Last Five Years Since Age
- ---- ---------------------- ----- ---
David E. Hudgins David E. Hudgins and Associates, Inc. - 1996 68
Insurance and Real Estate Appraiser;
Director of Commerce Bank, Richmond,
Virginia
H.E. Richeson President and Chief Administrative Officer, 1997 59
Director of Commerce Bank, Richmond,
Virginia
Alvin L. Sheffield Former President, L.A. Sheffield Transfer 1984 69
and Storage, Incorporated, Petersburg,
Virginia; Director of Commerce Bank,
Richmond, Virginia
3
Board of Directors and Certain Committees
Attendance. The Board held eight meetings in 2000. Each director attended
more than 75% of the meetings of the Board and the relevant committees.
Audit Committee. The Audit Committee met four times in 2000. This Committee
operates pursuant to a written charter adopted by the Board. A copy of the
charter is attached to this proxy statement as Appendix A. As set forth in the
charter, the Committee's principal responsibilities are to assist the Board in
overseeing, and receiving objective information regarding, our policies,
procedures and activities with respect to auditing, accounting, internal
accounting controls, financial reporting, regulatory matters, and auditor
independence. The following directors are the current members of the Committee:
Miller (Chairman), Hudgins and Vaughn. The Board, in its business judgement, has
determined that all of the members of the Committee are "independent", in
accordance with the applicable sections of the Nasdaq Stock Market Inc.'s
listing standards.
Audit Committee Report
In accordance with our written charter which was approved in its current
form by the Board of Directors in May, 2000, the Audit Committee assists the
Board in the overseeing and monitoring of the accounting, auditing and financial
reporting practices of Community Bankshares Incorporated.
In the performance of its oversight function and in accordance with its
responsibilities under its charter, the Committee has met and held discussions
with management and the Company's outside auditors. Management represented to us
that the consolidated financial statements were prepared in accordance with
generally accepted accounting principles, and we, accordingly, reviewed and
discussed the audited financial statements with management and our independent
auditors. We also discussed with our independent auditors matters required to be
discussed as described in Statement on Auditing Standards, No. 61, Communication
with Audit Committees, and with and without management present, discussed and
reviewed the results of the independent auditors' examination of the financial
statements. Finally, we obtained from the independent auditors a formal
statement that all relationships between the auditors and the Company, were in
fact independent and the Committee was satisfied as to the auditors'
independence.
As a result of these reviews and discussions, we recommended to the Board
of Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2000, to be filed
with the Securities and Exchange Commission.
Jack W. Miller, Jr., Chairman
David E. Hudgins
Harold L. Vaughn
4
Director Compensation
Directors of CBI receive a monthly retainer of $500, plus $250 for each
meeting of the board attended and $200 for each called committee meeting
attended. Directors' fees totaling $53,250 were paid to directors in 2000.
Security Ownership of Certain Beneficial Owners and Management
The table below presents certain information as of April 11, 2001,
regarding beneficial ownership of shares of Common Stock by all directors and
nominees for director, by each of the executive officers named in the "Summary
Compensation Table", by all directors and executive officers as a group. For the
purposes of this table, beneficial ownership has been determined in accordance
with the provisions of Rule 13d-3 under the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), under which, in general, a person is deemed to
be a beneficial owner of a security if he has or shares the power to vote or
direct the voting of the security or the power to dispose of to direct
disposition of the security, or if he has the right to acquire beneficial
ownership of the security within 60 days.
Name of Beneficial Owner
- ------------------------ Amount and Nature of
Directors and Executive Officers Beneficial Ownership (1) Percent of Class (2)
- -------------------------------- ------------------------ --------------------
Sam T. Beale 115,439 4.2
David E. Hudgins 32,500 1.2
Richard C. Huffman 57,069 2.1
Nathan S. Jones, 3/rd/ 140,360 5.1
Vernon E. LaPrade, Jr. 42,961 1.6
Jack W. Miller, Jr. 16,880 0.6
H.E. Richeson 39,542 1.4
Alvin L. Sheffield 54,540 2.0
Harold L. Vaughn 30,684 1.1
All executive officers and 529,975 19.3
directors as a group (9 persons)
Other
- -----
Community Bankshares Incorporated 238,258 8.7
Employee Stock Ownership Plan
P.O. Box 2166
Petersburg, VA 23804
_______________________________
(1) Includes presently exercisable options to purchase Common Stock granted in
1993 to the directors of Commerce Bank (formerly The Community Bank) under
CBI's Incentive Stock Option and Nonstatutory Stock Option Plan and in 1994
and 1996 to the directors of Commerce Bank (formerly the County Bank of
Chesterfield).
(2) Based on 2,742,576 shares of Common Stock issued and outstanding as of April
11, 2001 and assumes the exercise of options to purchase shares of Common
Stock.
(3) Does not include unallocated shares held in trust pursuant to CBI's Employee
Stock Ownership Plan by Mr. Jones as trustee. Shares that have not been
allocated to participants are voted by the trustees.
5
Executive Officer Compensation
The following table sets forth the annual compensation paid or accrued by
CBI and its subsidiary to Nathan S. Jones, 3rd, President and Chief Executive
Officer of CBI; and Vice Chairman and Chief Executive Officer of Commerce Bank,
to H.E. Richeson, President and Chief Administrative Officer of Commerce Bank
for the three fiscal years ended December 31, 2000, 1999 and 1998.
Summary Compensation Table
Long Term
Compen-sation
-------------
Annual Compensation Securities All Other
-------------------
Name and Other Annual Underlying Compensation
Principal Position Year Salary(1) Bonus Compensation Options (3)(4)
- ------------------ ---- -------- ----- ------------ ---------- -------
Nathan S. Jones, 3/rd/ 2000 $181,250 $39,000 (2) -0- $14,959
President and Chief 1999 $174,051 $30,360 (2) -0- $14,525
Executive Officer, 1998 $168,006 $27,846 (2) -0- $18,370
CBI; Vice Chairman
and Chief Executive
Officer, Commerce Bank
H. E. Richeson 2000 $157,750 $33,500 (2) -0- $25,961
President and Chief 1999 $153,500 $35,000 (2) -0- $93,518
Administrative Officer, 1998 $147,500 $20,000 (2) -0- $26,185
Commerce Bank
______________________________
(1) Includes directors' fees.
(2) The value of perquisites and other personal benefits did not exceed the
lessor of $50,000 or ten percent of total annual salary and bonus.
(3) For Mr. Jones includes: (i) $13,556, $13,350 and $16,839 in contributions
to the Company's ESOP and 401-K Plans, and (ii) $1,404, $1,175 and $1,531
paid for term life insurance, in each of 2000, 1999 and 1998, respectively.
(4) For Mr. Richeson includes: (i)$11,993, $78,165 and $26,185 in contributions
by Commerce Bank for a Non-Qualified Deferred Compensation Plan (the
"Plan") in each of 2000, 1999 and 1998, respectively, (ii) for 2000 and
1999, respectively, contributions by the Company to its ESOP and 401-K
Plans - $11,981 and $12,734, and (iii) $1,404 and $2,619 for term life
insurance.
Employment Contracts
CBI and Mr. Jones are parties to an employment contract for a term
beginning July 1, 1995 and ending June 30, 1998, with automatic renewals at the
ending date for successive terms of one year, which provides for his employment
as President and Chief Executive Officer. Under the contract Mr. Jones is
entitled to annual base compensation of $112,500. Any increases in base
compensation are at the discretion of the Board of Directors of Commerce Bank.
The contract will renew for successive terms of one year each if it is not
expressly terminated by Mr. Jones or CBI. If during the term of the contract,
CBI terminates Mr. Jones' employment without cause, CBI must continue Mr. Jones'
salary and benefits for six months. The contract provides for increased
severance pay if Mr. Jones' employment terminates within three years after a
change of control of CBI. In that case, Mr. Jones is entitled to a payment equal
to 2.99 times his
6
cash compensation for the twelve months that precede the termination of his
employment and a continuation of fringe benefits. However, the payments to Mr.
Jones under the contract following a change of control will be reduced, if
necessary so that no such payments would constitute an "excess parachute
payment" under Section 280G of the Internal Revenue Code. As of January 1, 2001,
the cash amount payable to Mr. Jones if his employment is terminated after a
change of control would be $620,425.
CBI and Mr. Richeson are parties to an employment contract for a term
beginning June 1, 1994 and ending June 1, 1998, with automatic renewals at the
ending date for successive terms of one year, which provides for his employment
as President and Chief Executive Officer of Commerce Bank. Under the contract,
Mr. Richeson is entitled to annual base compensation of $92,500. Any increases
in base compensation are at the discretion of the Board of Directors of Commerce
Bank. The contract will continue to renew for successive terms of one year each
if it is not expressly terminated by Mr. Richeson or Commerce Bank. If, during
the term of the contract, Commerce Bank terminates Mr. Richeson's employment
without cause, it must continue Mr. Richeson's salary and benefits for six
months. The contract provides for increased severance pay if Mr. Richeson
resigns for good reason (as defined in his agreement) or Mr. Richeson's
employment terminates within one year after a change of control of CBI. In such
case, Mr. Richeson is entitled to a payment equal to 2.99 times his cash
compensation for the twelve months that precede the termination of his
employment and a continuation of fringe benefits. Mr. Richeson's employment
contract also provides for deferred compensation of $5,000 per month for a
period of five years, beginning at age 65. As of January 1, 2001, the cash
amount payable to Mr. Richeson if his employment is terminated after a change of
control would be $533,715.
Option Exercises and Holdings
All options held by the named executive officers at December 31, 2000 were
exercisable. The following tables set forth information with respect to
exercised and unexercised options held by such officers as of the end of the
fiscal year.
Fiscal Year-End Option Values
Number of Securities Underlying Value of Unexercised
Unexercised Options on In-The-Money Options on
December 31, 2000 December 31, 2000 (1)
----------------- ---------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------
Nathan S. Jones,/3rd/ 2,000 $25,156 17,000 -0- $193,375 -0-
H.E. Richeson -0- -0- 33,162 -0- $285,691 -0-
- ----------------------------
(1) The value of unexercised in-the-money options at fiscal year end was
calculated by determining the difference between the market value per share
of Common Stock at December 31, 2000 ($17.625) and the per share exercise
price of the option.
Interest of Management in Certain Transactions
Certain directors and officers and their associates were customers of and
had transactions with CBI and its subsidiary during 2000 and up to the present
time. All loans and commitments to loan by CBI and its subsidiary to directors
and officers were made in the ordinary course of business and on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons and did not involve more
than the normal risk of collectibility or present other unfavorable features.
CBI expects to have, in the future, similar banking transactions with directors
and officers. The aggregate balance of loans outstanding to directors and
officers of CBI and its subsidiary and their associates was $5.2 million,
or13.3 % of Stockholders' Equity on December 31, 2000.
7
In addition, the real property at the location of Commerce Bank's Hanover
County branch is owned by The Atlee Station Co., of which Sam T. Beale, a
director of CBI, is the principal shareholder. This lease has a term of ten
years and expires on December 31, 2005. The lease provides for rent in the
amount of $3,607 per month as of January 1, 2001, with an annual increase of
three percent through the end of the term.
Section 16 (a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Exchange Act, directors and executive officers
of CBI are required to file reports with the Securities and Exchange Commission
and CBI of their beneficial ownership and changes in ownership of Common Stock.
Based on a review of the forms that were filed and representations of the
directors and executive officers, CBI believes that all required forms were
timely filed for the year ended December 31, 2000.
RELATIONSHIP WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The accounting firm of Mitchell, Wiggins and Company LLP is anticipated to
be appointed as our auditors for the year 2001. The firm has been the Company's
auditor since 1984.
Mitchell, Wiggins and Company LLP were our auditors for the year ended
December 31, 2000, and a representative of the firm is expected to attend the
meeting and to respond to appropriate questions.
Set forth below is information relating to the aggregate Mitchell, Wiggins
and Company LLP fees for professional services rendered for the fiscal year
ended December 31, 2000.
Audit Fees
The aggregate amount of fees billed to CBI by Mitchell, Wiggins and Company
LLP for professional services rendered in connection with the audit of CBI's
annual financial statements for the fiscal year ended December 31, 2000, and for
the review of CBI's interim financial statements included in CBI's quarterly
reports on Form10-Q for the fiscal year, was $81,250, to include the audit fees
of CBI's ESOP.
Financial Information System Design and Implementation Fees
There were no professional services rendered to CBI by Mitchell, Wiggins
and Company LLP for the design and implementation of financial information
systems for the fiscal year ended December 31, 2000.
All Other Fees
The aggregate amount of fees billed to CBI by Mitchell, Wiggins and Company
LLP for all other non-audit services rendered to CBI for the fiscal year ended
December 31, 2000 was $22,405.
8
SHAREHOLDER NOMINATIONS AND PROPOSALS
The Bylaws of CBI permit any shareholder entitled to vote to submit
nominations for directors and proposals for business at annual meetings. Such
nominations and proposals must be made in writing and must be mailed or
delivered to the Secretary of CBI not less than 60 days, no more than 90 days
prior to the annual meeting of shareholders. A written notice of nomination
must include (a) the nominee's name, age, business address and residence
address, (b) the nominee's principal occupation and (c) the number of shares of
CBI that the nominee owns. A written notice of nomination must also include the
name and address of the nominating shareholder and the number of shares of CBI
that the nominating shareholder owns. Nominations not made in accordance with
the above procedure may, in the sole discretion of the chairman of the meeting,
be disregarded.
A written notice of proposal for business must include (a) a brief
description of the business desired to be brought at the meeting and the reasons
for conducting such business at the meeting, (b) the name and address of the
proposing shareholder, (c) the number of shares of CBI that the proposing
shareholder owns, and (d) any material interest of the shareholder in the
proposal. Proposals not made in accordance with the above procedure may, in the
sole discretion of the chairman of the meeting, be disregarded.
Shareholders having director nominations or other proposals which they
desire to present at next year's annual meeting should, if they desire that such
proposals be included in the Board of Director's proxy statement relating to
such meeting, submit such proposals in time to be received by CBI at the
Company's office located at 200 North Sycamore Street, Petersburg, Virginia
23803 not later than January 7, 2002. All such submissions must comply with the
requirements of Rule 14(a)-8 of the Securities and Exchange Commission under the
Exchange Act, and the Board of Directors directs the attention of interested
shareholders to that Rule.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of CBI's Annual Report to Shareholders for the year ended December
31, 2000 accompanies this Proxy Statement. The Annual Report includes
consolidated financial statements as of and for the three years ended December
31, 2000, 1999 and 1998, together with related notes, and the report of
Mitchell, Wiggins and Company LLP, independent certified public accountant for
such years. Additional copies may be obtained by written request to the Chief
Financial Officer of CBI at the address indicated below. Such Annual Report is
not a part of the proxy solicitation materials.
UPON RECEIPT OF A WRITTEN REQUEST OF ANY PERSON, WHO, ON THE RECORD DATE,
WAS RECORD OWNER OF COMMON STOCK OR WHO REPRESENTS IN GOOD FAITH THAT HE OR SHE
WAS ON SUCH DATE THE BENEFICIAL OWNER OF SUCH STOCK ENTITLED TO VOTE AT THE
ANNUAL MEETING OF SHAREHOLDERS, CBI WILL FURNISH TO SUCH PERSON, WITHOUT CHARGE,
A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
2000 AND THE EXHIBITS REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE EXCHANGE ACT. ANY SUCH REQUEST SHOULD BE MADE IN WRITING
TO, RAY A. FLEMING, CHIEF FINANCIAL OFFICER, COMMUNITY BANKSHARES INCORPORATED,
11500 WEST BROAD STREET, RICHMOND, VIRGINIA 23242-0569. THE FORM 10-K IS NOT A
PART OF THE PROXY SOLICITATION MATERIALS.
9
OTHER MATTERS
At the date of this Proxy Statement, the Board of Directors knows of no
matter to come before the meeting other than those stated in the notice of the
meeting. As to other matters, if any, that may properly come before the
meeting, it is intended that proxies in the accompanying form will be voted in
accordance with the best judgment of the person or persons named in the proxy.
We hope that you will be able to attend this meeting. If you cannot be
present, please execute the enclosed proxy and return it in the accompanying
envelope as promptly as possible.
By Order of the Board of Directors
/s/ Nathan S. Jones
Nathan S. Jones, 3/rd/
President and Chief Executive Officer
April 25, 2001
10
Appendix A
Community Bankshares Incorporated
Audit Committee Charter
Organization
The Audit Committee shall be appointed by the Board of Directors and shall
consist of at least three directors, all of whom are independent of management
and of the Company. Members of the committee shall be considered independent if
they have no relationship to the Company that may interfere with the exercise of
their independence from management and from the Company. All committee members
shall be financially literate, or shall become financially literate within a
reasonable period of time after appointment to the committee, and at least one
member shall have accounting or related financial management expertise.
Statement of Policy
The Audit Committee shall assist the Board of Directors in fulfilling the
Board's oversight responsibility to the stockholders relating to (A) the
Company's financial reporting process, systems of internal accounting and
financial controls, and Internal Audit function and (B) the annual independent
audit of the Company's financial statements. In so doing, the committee will
benefit from free and open communication between the committee, the directors,
the independent accountants, the Internal Auditor, and the financial management
of the Company. The committee may adopt such policies and procedures as it may
deem necessary or appropriate to carry out its responsibilities under this
charter. The committee's policies and procedures should be flexible in order to
best react to changing conditions and circumstances.
Processes
The following shall be the recurring processes of the Audit Committee in
carrying out its oversight function. The committee may supplement these
processes as appropriate:
. The committee shall review and reassess the Audit Committee charter at least
annually and the charter shall be approved by the Board of Directors. The
Company shall include a copy of the charter in its proxy statement at least
triennially or the year after any significant amendment to the charter and
shall disclose in all proxy statements whether committee members are
independent. Approximately once a year and, with respect to any changes in
the composition of the committee, the Company must provide The Nasdaq Stock
Market, Inc. written confirmation regarding the Board's determination of
committee members' independence, the financial literacy of committee members,
the determination that at least one member of the committee has accounting or
related financial management expertise, and the annual review and
reassessment of the adequacy of the charter.
. The committee shall have a clear understanding with management and the
independent accountants that the independent accounts are ultimately
accountable to the Board and to the committee, both of which are
representatives of the Company's stockholders. The committee and the Board
shall have the ultimate authority and responsibility to engage, evaluate,
and, where appropriate, replace the independent accountants. The committee
shall discuss with the accountants their independence from management and
from the Company and shall discuss all relationships between the accountants
and their related entities and the Company and its related entities that may
reasonably be thought to bear on the accountant's independence. The
independent accountants shall confirm that, in their view, they are
independent of the Company. In this regard, the committee shall obtain a
formal written statement from the independent accountants delineating all
relationships between the accountants and the Company and shall, when
necessary, recommend that the Board take any appropriate action to satisfy
itself of the accountants' independence.
. The committee shall discuss with the Internal Auditor and the independent
accountants the overall scope
11
and plans for their respective audits. Also, the committee shall discuss with
management, the Internal Auditor, and the independent accounts the adequacy
and effectiveness of the accounting and financial controls and may elicit any
recommendations for the improvement of such internal controls or particular
areas where new or more detailed controls or procedures are desirable.
Further, the committee shall meet separately with the Internal Auditor and
the independent accounts, with and without management present, to discuss the
results of its examinations.
. The committee shall review interim financial statements with management and
the independent accountants prior to the filing of the Company's Quarterly
Report on Form 10-Q. The committee shall discuss the results of the quarterly
review and any other matters required under generally accepted auditing
standards to be communicated to the committee by the independent accountants.
The chairman of the committee may represent the entire committee for the
purposes of this review.
. The committee shall review with management and the independent accountants
the financial statements to be included in the Company's Annual Report on
Form 10-K (or the annual report to stockholders if distributed prior to the
filing of the Form 10-K). The independent accountants shall provide their
judgement about the quality, not merely the acceptability, of accounting
principles, the reasonableness of any significant judgements, and the clarity
of disclosures in the financial statements as part of such review. The
committee shall also discuss the results of the annual audit and any other
matters required under generally accepted auditing standards to be
communicated to the committee by the independent accountants.
. In discharging its role, the committee is free to consider an investigation
into any matter brought to its attention and shall have both full access to
all books, records, facilities, and personnel of the Company and the power to
retain outside counsel or other experts for this purpose if, in its
judgement, that is appropriate, without obtaining the prior permission of the
Board of Directors.
This charter shall not be construed in a manner that imposes upon the Audit
Committee a higher standard of care than that imposed upon committees of boards
of directors generally, pursuant to applicable law. It is not the duty of the
committee to plan or conduct audits or to determine that the Company's financial
statements are complete or accurate or are in accordance with generally accepted
accounting principles. These are the collective responsibilities of management
and the independent accountants. Nor is it the duty of the committee to resolve
disagreements, if any, between management and the independent accountants or to
assure compliance with laws or regulations or the Company's compliance policies
and programs.
Adopted by Board of Directors, May 2000.
12
Community Bankshares Incorporated
Proxy Solicited on Behalf of the Board of Directors
The undersigned appoints Sam T. Beale, Richard C. Huffman and Vernon E.
LaPrade, Jr. jointly and severally, proxies, with full power to act alone, and
with full power of substitution, to represent the undersigned and to vote, as
designated below and upon all other matters that may properly be brought before
the Annual Meeting of Shareholders of Community Bankshares Incorporated ("CBI"),
all shares of Common Stock which the undersigned would be entitled to vote at
such meeting to be held at the Holiday Inn Select, 1021 Koger Center Boulevard,
Richmond, Virginia, on Tuesday, May 29, 2000 at 4:00 p.m., local time, or any
adjournment, for the following purposes:
1. To elect as directors the three nominees listed below.
[ ] FOR nominees listed below [ ] WITHHOLD AUTHORITY to
(except as written on the line vote for all nominees listed
below) below
Nathan S. Jones, 3rd
Harold L. Vaughn
Jack W. Miller, Jr.
(INSTRUCTION: To withhold authority to vote for any individual nominee listed
above, write that nominee's name on the space provided below.)
___________________________________________________________
2. In their discretion, the proxies are authorized to vote upon any other
business that may properly come before the meeting or any adjournment of
the meeting.
THE PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED IN THIS PROXY BY THE SHAREHOLDER. IF NO DIRECTION IS GIVE,
THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ABOVE.
______________________________________________________
Signature
______________________________________________________
Signature
Date: _______________________________________________
(If signing as an Attorney, Administrator, Executor or
Trustee, please include your title.)
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY