SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
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Check the appropriate box:
/ / Preliminary Proxy Statement
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(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to ss. 240.14a-12
COMMUNITY FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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COMMUNITY FINANCIAL CORPORATION
June 26, 2000
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Community Financial
Corporation, we cordially invite you to attend the annual meeting of Community
Financial Corporation stockholders. The meeting will be held at 6:30 p.m., local
time, on July 26, 2000, at our executive offices located at 38 North Central
Avenue, Staunton, Virginia 24401. The annual meeting will include management's
report to you on our fiscal year 2000 financial and operating performance.
The matters expected to be acted upon at the meeting are described in the
accompanying notice of annual meeting of stockholders and proxy statement. An
important aspect of the annual meeting process is the annual stockholder vote on
corporate business items. I urge you to exercise your rights as a stockholder to
vote and participate in this process.
Whether or not you plan to attend the annual meeting, PLEASE READ THE
ENCLOSED PROXY STATEMENT AND THEN COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT IN THE ACCOMPANYING POSTPAID RETURN ENVELOPE AS PROMPTLY AS POSSIBLE.
This will save Community Financial additional solicitation expenses and will
ensure that your shares are represented at the annual meeting.
On behalf of your Board of Directors and management, I want to thank you
for your attention to this important matter and express my appreciation for your
confidence and support.
Very truly yours,
/s/ James R. Cooke, Jr.
James R. Cooke, Jr., D.D.S.
CHAIRMAN OF THE BOARD
COMMUNITY FINANCIAL CORPORATION
38 NORTH CENTRAL AVENUE
STAUNTON, VIRGINIA 24401
(540) 886-0796
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 26, 2000
Notice is hereby given that the annual meeting of stockholders of Community
Financial Corporation will be held at our executive offices located at 38 North
Central Avenue, Staunton, Virginia 24401, on July 26, 2000, at 6:30 p.m., local
time.
At the annual meeting, stockholders will be asked to consider and vote on
the following proposals:
Proposal I. Election of three directors, each for a term of three
years; and
Proposal II. Ratification of the appointment of BDO Seidman, LLP, as
independent accountants for Community Financial
Corporation for the year ending March 31, 2001.
Stockholders also will transact any other business that may properly come before
the annual meeting and any adjournments thereof. As of the date of this proxy
statement, we are not aware of any other business to come before the annual
meeting. YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE
PROPOSALS.
The Board of Directors has fixed the close of business on May 31, 2000, as
the record date for the annual meeting. This means that stockholders of record
at the close of business on that date are entitled to receive notice of and to
vote at the annual meeting and any adjournments thereof.
Ten days before the annual meeting, a complete list of stockholders
entitled to vote at the meeting and any adjournments thereof will be available
for stockholders to inspect and copy during usual business hours at our
executive offices. The list of stockholders also will be available for
inspection at the annual meeting.
The annual report to stockholders, which is not a part of the proxy
soliciting materials, accompanies this notice of annual meeting of stockholders,
proxy statement and form of proxy, which is first being mailed to stockholders
on or about June 26, 2000. TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE
MEETING, PLEASE TAKE THE TIME TO VOTE BY SIGNING, DATING AND MAILING THE
ENCLOSED PROXY CARD WHICH IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE
PROXY WILL NOT BE USED IF YOU ATTEND AND VOTE AT THE ANNUAL MEETING IN PERSON.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS VERY IMPORTANT. PLEASE
ACT TODAY.
Thank you for your continued interest and support.
By Order of the Board of Directors
/s/ Jane C. Hickok
Jane C. Hickok
CORPORATE SECRETARY
COMMUNITY FINANCIAL CORPORATION
38 NORTH CENTRAL AVENUE
STAUNTON, VIRGINIA 24401
(540) 886-0796
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 26, 2000
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INTRODUCTION
The Community Financial Corporation Board of Directors is using this proxy
statement to solicit proxies from the holders of common stock of Community
Financial Corporation for use at Community Financial Corporation's annual
meeting of stockholders and any adjournments thereof. The notice of annual
meeting of stockholders, this proxy statement and the enclosed form of proxy are
first being mailed to our stockholders on or about June 26, 2000. References to
"Community Financial," "we," "us" and "our" refer to Community Financial
Corporation. In addition, certain of the information in this proxy statement
relates to Community Bank, a wholly-owned subsidiary of Community Financial.
INFORMATION ABOUT THE ANNUAL MEETING
TIME AND PLACE OF THE ANNUAL MEETING
Our annual meeting will be held as follows:
DATE: July 26, 2000
TIME: 6:30 p.m., local time
PLACE: Executive Offices of Community Financial
38 North Central Avenue
Staunton, Virginia 24401
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
At the annual meeting, stockholders are being asked to consider and vote on
the following proposals:
ProposalI. Election of three directors, each for a term of three
years; and
ProposalII. Ratification of the appointment of BDO Seidman, LLP, as
independent accountants for Community Financial for the
year ending March 31, 2001.
The stockholders also will transact any other business that may properly come
before the annual meeting and any adjournments thereof. As of the date of this
proxy statement, we are not aware of any other business to be presented for
consideration at the annual meeting other than the matters described in this
proxy statement.
WHO IS ENTITLED TO VOTE?
The Board of Directors has fixed the close of business on May 31, 2000, as
the record date for the annual meeting. Only stockholders of record of Community
Financial common stock on that date are entitled to receive notice of and to
vote at the annual meeting and any adjournments thereof. Each stockholder of
record on May 31, 2000, will be entitled to one vote for each share of Community
Financial common stock held. On May 31, 2000, 2,486,776 shares of Community
Financial common stock were issued and outstanding and entitled to vote at the
annual meeting.
WHAT IF MY SHARES ARE HELD IN "STREET NAME" BY A BROKER?
If you are the beneficial owner of shares held in "street name" by a
broker, your broker, as the record holder of the shares, is required to vote the
shares in accordance with your instructions. If you do not give instructions to
your broker, your broker may nevertheless vote the shares with respect to
"discretionary" items, but will not be permitted to vote your shares with
respect to "non-discretionary" items, pursuant to current industry practice. In
the case of non-discretionary items, the shares will be treated as "broker non-
votes."
HOW WILL MY SHARES OF COMMON STOCK HELD IN COMMUNITY FINANCIAL'S EMPLOYEE STOCK
OWNERSHIP AND 401(K) PROFIT SHARING PLAN BE VOTED?
We maintain an Employee Stock Ownership and 401(k) Profit Sharing Plan (the
"Plan") which owns approximately 3.5% of Community Financial's common stock.
Employees of Community Bank participate in the Plan. Each Plan participant
instructs the trustee of the Plan how to vote the shares of Community Financial
common stock allocated to his or her account under the Plan.
If a Plan participant properly executes the voting instruction card
distributed by the Plan trustee, the Plan trustee will vote such participant's
shares in accordance with the shareholder's instructions. Where properly
executed voting instruction cards are returned to the Plan trustee with no
specific instructions as how to vote at the annual meeting, the trustee will
vote the shares "FOR" the election of each of management's director nominees and
"FOR" the ratification of the appointment of BDO Seidman, LLP, as independent
accountants for Community Financial for the year ending March 31, 2001.
In the event the Plan participant fails to give timely voting instructions
to the trustee with respect to the voting of the common stock that is allocated
to his or her Plan account, the Plan trustee shall vote such shares "FOR" each
of management's director nominees and "FOR" the ratification of the appointment
of BDO Seidman, LLP.
HOW MANY SHARES MUST BE PRESENT TO HOLD THE MEETING?
A quorum must be present at the meeting for any business to be conducted.
The presence at the meeting, in person or by proxy, of the holders of a majority
of the shares of Community Financial common stock outstanding on the record date
will constitute a quorum. Proxies received but marked as abstentions or broker
non-votes will be included in the calculation of the number of shares considered
to be present at the meeting.
WHAT IF A QUORUM IS NOT PRESENT AT THE MEETING?
If a quorum is not present at the scheduled time of the meeting, a majority
of the stockholders present or represented by proxy may adjourn the meeting
until a quorum is present. The time and place of the
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adjourned meeting will be announced at the time the adjournment is taken, and no
other notice will be given. An adjournment will have no effect on the business
that may be conducted at the meeting.
VOTE REQUIRED TO APPROVE PROPOSAL I: ELECTION OF THREE DIRECTORS
Three directors are to be elected to serve for a three-year term expiring
at the annual meeting of stockholders held in the third year following the year
of their election or until their successors are duly elected in accordance with
the Articles of Incorporation.
Directors are elected by a plurality of the votes cast, in person or by
proxy, at the annual meeting by holders of Community Financial common stock.
This means that the three director nominees with the most affirmative votes will
be elected to fill the available seats. Shares that are represented by proxy
which are not voted whether by broker non-vote or votes withheld will have no
effect on the election of directors.
If a director nominee is unable to stand for election, the Board of
Directors may either reduce the number of directors to be elected or select a
substitute nominee. If a substitute nominee is selected, the proxy holders will
vote your shares for the substitute nominee, unless you have withheld authority.
VOTE REQUIRED TO APPROVE PROPOSAL II: RATIFICATION OF OUR INDEPENDENT
ACCOUNTANTS
Ratification of the appointment of BDO Seidman, LLP, as our independent
accountants for the fiscal year ending March 31, 2001, requires the affirmative
vote of the majority of shares cast, in person or by proxy, at the annual
meeting by holders of Community Financial common stock. Stockholder abstentions
on the proposal to ratify the appointment of BDO Seidman, LLP, as our
independent accountants will have the same effect as a vote against the
proposal, while broker non-votes will have no effect on the outcome of the vote.
THE COMMUNITY FINANCIAL BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE "FOR" ELECTION OF EACH OF MANAGEMENT'S DIRECTOR NOMINEES AND "FOR" THE
PROPOSAL TO RATIFY BDO SEIDMAN, LLP, AS OUR INDEPENDENT ACCOUNTANTS FOR THE
FISCAL YEAR ENDING MARCH 31, 2001.
HOW TO VOTE AT THE ANNUAL MEETING
You may vote in person at the annual meeting or by proxy. To ensure your
representation at the annual meeting, we recommend you vote by proxy even if you
plan to attend the annual meeting. You can always change your vote at the
meeting. See "How to Revoke Your Proxy" below.
Voting instructions are included on your proxy card. If you properly give
your proxy and submit it to us in time to vote, the persons named as your proxy
will vote your shares as you have directed. If you submit your proxy but do not
make a specific choice as to how to vote, your proxy will be voted in accordance
with the Community Financial Board's recommendation "FOR" the election of each
director nominee and "FOR" the proposal to ratify BDO Seidman, LLP, as our
independent accountants for the fiscal year ending March 31, 2001.
The persons named in the proxy will have the discretion to vote on any
other business properly presented for consideration at the annual meeting in
accordance with their best judgment. As of the date of the proxy statement, we
are not aware of any other matters to be presented at the annual meeting other
than those described in this proxy statement and the notice of annual meeting of
stockholders accompanying the proxy statement.
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You may receive more than one proxy card depending on how your shares are
held. For example, you may hold some of your shares individually, some jointly
with your spouse and some in trust for your children -- in which case you will
receive three separate proxy cards to vote. Please sign and return all proxy
cards you receive.
HOW TO REVOKE YOUR PROXY
You may revoke your proxy before it is voted by:
o submitting a new proxy with a later date,
o notifying the Corporate Secretary of Community Financial in writing
before the annual meeting that you have revoked your proxy, or
o voting in person at the annual meeting.
If you plan to attend the annual meeting and wish to vote in person, we
will give you a ballot at the annual meeting. However, if your shares are held
in the name of your broker, bank or other nominee, you must bring a letter from
the nominee indicating that you were the beneficial owner of Community Financial
common stock on May 31, 2000, the record date for voting at the annual meeting.
PROXY SOLICITATION COSTS
Community Financial will pay the costs of soliciting proxies. In addition
to this solicitation by mail, our directors, officers and employees may also
solicit proxies personally, electronically or by telephone but will not be
specially compensated for such solicitation activities. We will also reimburse
brokers and other custodians, fiduciaries and nominees for their reasonable
expenses in sending these materials to you.
STOCK OWNERSHIP OF COMMUNITY FINANCIAL CORPORATION COMMON STOCK
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table presents information regarding the beneficial ownership
of Community Financial common stock as of March 31, 2000, by:
o each director and director nominee of Community Financial;
o the "Named Executive Officers," the former Chief Executive Officer and
the current Chief Executive Officer of Community Financial named in the
"Summary Compensation Table"; and
o all of the executive officers and directors of Community Financial as a
group.
No person or entities (or group of affiliated persons or entities) are known by
management to beneficially own more than five percent of the outstanding common
stock of Community Financial.
The persons named in this table have sole voting power for all shares of
common stock shown as beneficially owned by them, subject to community property
laws where applicable and except as indicated in the footnotes to this table.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("SEC"). In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to outstanding options
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held by that person that are currently exercisable or exercisable within 60 days
after March 31, 2000 are deemed outstanding. These shares, however, are not
deemed outstanding for the purpose of computing the percentage ownership of any
other person. As of March 31, 2000, there were 2,511,526 shares of Community
Financial common stock outstanding.
AMOUNT AND NATURE OF
COMMON STOCK
BENEFICIALLY OWNED
---------------------------------
NUMBER OF
SHARES PERCENT
BENEFICIALLY OF
NAME AND BUSINESS ADDRESS OF BENEFICIAL OWNER(1) OWNED CLASS
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P. Douglas Richard, PRESIDENT AND CHIEF EXECUTIVE OFFICER AND 21,198 *
DIRECTOR NOMINEE(2)(3)
Thomas W. Winfree, FORMER PRESIDENT, CHIEF EXECUTIVE OFFICER AND 87,617 3.43%
DIRECTOR(2)(3)(4)
James R. Cooke, Jr., D.D.S., CHAIRMAN OF THE BOARD AND DIRECTOR 94,500 3.75%
NOMINEE (2)(5)
Jane C. Hickok, VICE CHAIRMAN OF THE BOARD AND SECRETARY(2) 90,441 3.59%
Charles F. Andersen, DIRECTOR(2) 45,740 1.82%
Charles W. Fairchilds, DIRECTOR(2) 9,110 *
Dale C. Smith, DIRECTOR(2) 43,600 1.71%
Kenneth L. Elmore, DIRECTOR(2)(4) 52,700 2.09%
Morgan N. Trimyer, Jr., DIRECTOR NOMINEE(2) 3,250 *
All directors and executive officers of Community Financial 444,906 16.64%
as a group (13 persons)(6)
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(*) Represents less than 1% of the outstanding Community Financial common
stock.
(1) The business address of each beneficial owner is c/o Community Financial
Corporation, 38 North Central Avenue, Staunton, VA 24401.
(2) Includes shares of common stock as to which the named individual has the
right to acquire beneficial ownership, currently or within 60 days after
March 31, 2000, pursuant to the exercise of stock options, as follows:
Mr. Richard 18,000 shares Mr. Fairchilds 8,000 shares
Mr. Winfree 46,000 shares Mr. Smith 7,000 shares
Dr. Cooke 8,000 shares Mr. Elmore 8,000 shares
Ms. Hickok 8,000 shares Mr. Trimyer 2,500 shares
Mr. Andersen 8,000 shares
(3) Includes shares of common stock held by the Employee Stock Ownership and
401(k) Profit Sharing Plan (the "Plan") that have been allocated to
accounts of participants. Pursuant to the terms of the Plan, each Plan
participant has the right to direct the voting of shares of common stock
allocated to his or her account. As of March 31, 2000, the number of shares
of common stock allocated to the Plan accounts of the directors and
executive officers in the table were:
Mr. Richard 898 shares
Mr. Winfree 4,155 shares
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(4) Mr. Winfree resigned as President and Chief Executive Officer of Community
Financial on January 12, 2000, and as a director on April 12, 2000. Mr.
Elmore is retiring as a director at the July 26, 2000, annual meeting.
(5) As part of a Separation and Settlement Agreement, dated March 16, 2000 (the
"Agreement"), and finalized May 5, 2000, Mr. Cooke received an irrevocable
proxy to vote 50,000 shares of Community Financial common stock. Thus, Mr.
Cooke may be deemed to have sole voting power but no investment power with
respect to the 50,000 shares of Community Financial common stock covered by
the irrevocable proxy.
(6) Includes shares of Community Financial common stock held directly, as well
as shares held jointly with family members, shares held in retirement
accounts, held in a fiduciary capacity, held by certain of the group
members' families, or held by trusts of which the group member is a trustee
or substantial beneficiary, with respect to which shares of common stock
the group member may be deemed to have sole or shared voting and/or
investment powers. This amount also includes 162,600 shares of common stock
issuable upon exercise of the directors' and executive officers' stock
options.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Community
Financial's directors and executive officers, and persons who own more than 10%
of Community Financial's common stock to report their initial ownership of
Community Financial's common stock and any subsequent changes in that ownership
to the SEC. Specific due dates for these reports have been established by the
SEC and Community Financial is required to disclose in this proxy statement any
late filings or failures to file.
Community Financial believes, based solely on a review of the copies of
such reports furnished to us and written representations that no other reports
were required during the fiscal year ended March 31, 2000, all Section 16(a)
filing requirements applicable to our executive officers, directors and greater
than 10% beneficial owners were complied with.
PROPOSAL I - ELECTION OF DIRECTORS
Our Board of Directors consists of seven members. Approximately one-third
of the directors are elected annually to serve for a three-year period or until
their respective successors are elected and qualified.
The table below sets forth information regarding our Board of Directors,
including their age, position with Community Financial and term of office. The
"Director Since" column includes service on the Board of Directors of Community
Bank as well as service on Community Financial's Board of Directors.
The Board of Directors selects nominees for election as directors. Each
nominee has consented to being named in this proxy statement and has agreed to
serve if elected. If a nominee is unable to stand for election, the Board of
Directors may either reduce the number of directors to be elected or select a
substitute nominee.
If a substitute nominee is selected, the proxy holders will vote your
shares for the substitute nominee, unless you have withheld authority. At this
time, we are not aware of any reason why a nominee might be unable to serve if
elected.
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Except as disclosed in this proxy statement, there are no arrangements or
understandings between any nominee and any other person pursuant to which such
nominee was selected. THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" EACH OF
THE DIRECTOR NOMINEES.
AGE AS TERM
OF THE DIRECTOR CURRENTLY
NAME RECORD DATE POSITION(S) HELD SINCE EXPIRES
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DIRECTOR NOMINEES FOR TERMS TO
EXPIRE AT THE 2003 ANNUAL MEETING
P. Douglas Richard 56 President, Chief Executive 2000* N/A
Officer
James R. Cooke, Jr., 62 Chairman of the Board 1984 2000
D.D.S.
Morgan N. Trimyer, Jr. 57 N/A N/A N/A
DIRECTORS CONTINUING IN OFFICE
Jane C. Hickok 63 Vice Chairman of the Board 1983 2001
and Secretary
Dale C. Smith 61 Director 1980 2001
Charles F. Andersen, MD 58 Director 1990 2002
Charles W. Fairchilds 52 Director 1996 2002
----------------------
* Mr. Richard was appointed to the Board of Directors of Community
Financial on April 26, 2000.
SET FORTH BELOW IS THE PRINCIPAL OCCUPATION OF EACH DIRECTOR OF COMMUNITY
FINANCIAL AND OF EACH OF THE NOMINEES FOR DIRECTOR. ALL DIRECTORS AND NOMINEES
HAVE HELD THEIR PRESENT POSITIONS FOR AT LEAST FIVE YEARS UNLESS OTHERWISE
INDICATED.
P. DOUGLAS RICHARD. Mr. Richard was appointed the Acting President and
Chief Executive Officer of Community Financial and Community Bank on January 12,
2000, and became the President and Chief Executive Officer of Community
Financial and Community Bank on April 26, 2000. He was appointed to the Board of
Directors of Community Financial on April 26, 2000. From January 1, 1997, to
January 12, 2000, Mr. Richard was a Senior Vice President of Community Bank.
From December 1993 to January 1996, he was President and Chief Executive Officer
of Seaboard Bancorp.
JAMES R. COOKE, JR., D.D.S. Dr. Cooke has been a practicing dentist in
Staunton, Virginia since 1965.
MORGAN N. TRIMYER, JR. Mr. Trimyer has served as Vice President and Partner
of Welton, Duke & Hawks, Inc., an insurance company headquartered in Portsmouth,
Virginia, since 1984. He is also a Vice
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President with Valley Insurance Agency, Inc. located in Lexington, Virginia, and
has 30 years of experience in the insurance industry in Virginia.
JANE C. HICKOK. Mrs. Hickok was elected Vice Chairman of the Board in
October 1994 and Secretary of Community Financial in October 1998. She had
previously retired as President and Chief Executive Officer of Community Bank in
October 1994 after serving since 1984. Mrs. Hickok had also retired as President
and Chief Executive Officer of Community Financial in January 1995, but
continues to serve as a director of Community Financial and Community Bank. Mrs.
Hickok was elected as a director of Community Bank in 1983 and as a director of
Community Financial in 1990 when it became the holding company of Community
Bank.
DALE C. SMITH. Mr. Smith is the General Manager and Chief Executive Officer
of Augusta Cooperative Farm Bureau, a farm supply and retail store.
CHARLES F. ANDERSEN, M.D. Dr. Andersen is an orthopedic surgeon in private
practice in Waynesboro, Virginia.
CHARLES W. FAIRCHILDS. Mr. Fairchilds has been the President of Allied
Ready Mix Co., a concrete company located in Waynesboro, Virginia since 1987.
MEETINGS AND COMMITTEES
MEETINGS
Meetings of the Board of Directors of Community Financial are generally
held on a monthly basis. Meetings of the Board of Directors of Community Bank,
Community Financial's wholly-owned operating subsidiary, also are generally held
once per month. The Community Financial Board of Directors conducted 12 regular
meetings and no special meetings during fiscal 2000. The Board of Directors of
Community Bank conducted 12 regular meetings and two special meetings during
fiscal 2000. Each director attended at least 75% of (i) Community Financial's
Board meetings and any committees on which he or she served and (ii) Community
Bank's Board meetings and any committees on which he or she served.
COMMITTEES
The Board of Directors of Community Financial has three standing
committees: the Audit Committee, the Executive and Long-Range Planning
Committee, and the Stock Option Committee.
Community Financial's Audit Committee currently consists of the seven
directors who comprise its Board. As of the date of this proxy statement, six of
the seven Audit Committee members were "independent directors" as defined in the
Nasdaq Stock Market rules. In addition, Community Financial's Board as currently
constituted meets the audit committee composition Exception for Small Business
Filers in the Nasdaq Stock Market rules, which requires Small Business Filers to
establish and maintain an audit committee of at least two members, a majority of
the members of which shall be "independent directors."
The functions of the Audit Committee in connection with the annual audit
matters are as follows:
o review significant financial information for the purpose of giving
added assurance that the information is accurate and timely and that it
includes all appropriate financial statement disclosures;
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o ascertain the existence of effective accounting and internal control
systems; and
o oversee the entire audit function, both internal and with the
independent accountants.
The Audit Committee met one time during fiscal 2000 to discuss the annual
audit.
The Executive and Long-Range Planning Committee is responsible for
formulating future plans and discussing objectives and corporate goals of
Community Financial. Directors Andersen, Cooke, Fairchilds and Hickok currently
serve on this committee. This committee met four times during fiscal 2000.
The Stock Option Committee is responsible for administering Community
Financial's Stock Option and Incentive Plan. Directors Cooke and Smith serve on
this committee which met one time during fiscal 2000.
Community Financial has not paid any compensation to its officers or
directors since its formation. Accordingly, all compensation matters are
addressed by Community Bank's Compensation and Benefits Committee, in
consultation with Community Bank's Board of Directors. The Compensation and
Benefits Committee is responsible for:
o reviewing our compensation policies, and establishing the ranges of
compensation paid to officers and employees;
o determining salaries to be paid to our officers and employees, based on
recommendations from supervisors, including the President and Chief
Executive Officer, who yearly evaluate the officers and employees they
supervise. Based on that evaluation, the supervisors make a
recommendation to the President and Chief Executive Officer of
Community Bank on the amount of salary and bonus to be paid. The
President and Chief Executive Officer of Community Bank either adopts
the recommendation or modifies the supervisor's recommendation.
Finally, the recommendation is presented to the Board of Directors for
their review. The Board determines whether to ratify, modify or reject
the recommendation; and
o overseeing the administration of our employee benefit plans covering
employees generally.
Directors Richard, Cooke, Hickok, Smith and Fairchilds serve on this
committee. The Compensation and Benefits Committee met one time during fiscal
2000 to discuss compensation matters.
DIRECTOR COMPENSATION
Directors are not paid for services on the Board of Directors of Community
Financial. We may, if we believe it is necessary to attract or retain qualified
directors or if it is otherwise beneficial to Community Financial, adopt a
policy of paying directors for service on the Community Financial Board.
Community Bank employees receive no extra pay for services as directors.
Non-employee directors of Community Bank, other than the Chairman of the Board,
receive a director's retainer fee of $800 per month and meeting fee of $100 for
each committee meeting attended. The Chairman of the Board receives a chairman's
retainer fee of $1,600 per month. The Chairman of the Board receives no
additional compensation for attending committee meetings.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth summary information concerning compensation
awarded to, earned by or paid to our chief executive officer and our former
chief executive officer for the fiscal year ended March 31, 2000. Each of these
officers received perquisites and other personal benefits in addition to salary
and bonus during the periods stated. The aggregate amount of these perquisites
and other personal benefits, however, did not exceed the lesser of $50,000 or
10% of the total of their annual salary and bonus and, therefore, has been
omitted as permitted by the rules of the SEC. The term "Named Executive
Officers" in this proxy statement refers to the officers listed in the table
below.
LONG TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
------------------
SECURITIES
UNDERLYING ALL OTHER
FISCAL SALARY(1) BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
----------------------------- ------ ----- ----- ----- ----
P. DOUGLAS RICHARD(2) 2000 $ 78,375 $12,500 5,000 $ 4,846(3)
PRESIDENT AND CHIEF
EXECUTIVE OFFICER of Community
Financial and Community Bank
THOMAS W. WINFREE(4) 2000 136,500 0 0 245,263(5)
FORMER PRESIDENT, CHIEF EXECUTIVE
OFFICER AND DIRECTOR of Community
Financial and Community Bank
1999 130,000 7,800 6,000 4,214
1998 115,500 12,000 8,000 3,368
----------------------
(1) Salary includes amounts deferred at the election of the Named Executive
Officer through the 401(k) feature of the Community Financial Employee
Stock Ownership and 401(k) Profit Sharing Plan (the "Plan").
(2) Mr. Richard was named acting President and Chief Executive Officer of
Community Financial on January 12, 2000. On April 26, 2000, he was
named President and Chief Executive Officer and appointed a director of
Community Financial.
(3) Represents payments on behalf of the executive, as follows: $4,702 to
Community Financial's 401(k) feature of the Plan and $144 in premiums
for a term life insurance policy.
(4) Mr. Winfree resigned as President and Chief Executive Officer of
Community Financial on January 12, 2000, and resigned as a director of
Community Financial on April 12, 2000.
(5) Represents payments on behalf of the executive, as follows: $5,119 to
Community Financial's 401(k) feature of the Plan and $144 in premiums
for a term life insurance policy. Also includes $240,000 paid on April
13, 2000, as a termination payment pursuant to Mr. Winfree's employment
agreement with Community Bank. Mr. Winfree has a supplemental
retirement agreement with Community Bank. Under this agreement, if Mr.
Winfree reaches age 65, he will receive a monthly benefit payment of
$120 for 20 years.
10
OPTION GRANTS IN FISCAL YEAR 2000
The following table shows information with respect to grants of options to
the Named Executive Officers for the fiscal year ended March 31, 2000. The
options were granted under the Company's Stock Option and Incentive Plan.
INDIVIDUAL GRANTS
----------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANTED TO
UNDERLYING EMPLOYEES EXERCISE PRICE EXPIRATION
NAME OPTIONS GRANTED (#) IN FISCAL YEAR ($/SHARE) DATE
---- ------------------- -------------- --------- ----
P. Douglas Richard 5,000(1) 18.2 % $9.75 3/2/10
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(1) Options are granted at the fair market value on the date of grant. Options
vest immediately and expire 10 years after the date of grant.
2000 FISCAL YEAR-END OPTION VALUES
The following table summarizes certain information relating to stock
options held by Messrs. Richard and Winfree during the fiscal year ended March
31, 2000 and the value of such options at March 31, 2000. Value realized upon
exercise is the difference between the fair market value of the underlying stock
on the exercise date and the exercise price of the option. The value of an
unexercised, in-the-money option at fiscal year-end is the difference between
its exercise price and the fair market value of the underlying stock on March
31, 2000, which was $9.63 per share, based on the closing price of Community
Financial common stock as reported on the Nasdaq Small Cap Market. These values
have not been, and may never be, realized. These options have not been, and may
not ever be, exercised. Actual gains, if any, on exercise will depend on the
value of Community Financial common stock on the date of exercise. Unexercisable
options are those which have not yet vested.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR-END ($)
------------------- -------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
P. Douglas Richard 18,000 0 0 0
Thomas W. Winfree 46,000 3,000 $30,000 0
11
EMPLOYMENT AGREEMENT WITH P. DOUGLAS RICHARD
Community Bank currently has an employment agreement with President Richard
for his services as Vice President of Community Bank. The agreement became
effective April 1, 1999, for a minimum annual base salary of $78,375 and an
initial term of one year. The agreement provides for one year extensions, in
addition to the then-remaining term under the agreement, on each anniversary of
the effective date of the contract, subject to a review of Mr. Richard's
performance by the Board of Directors of Community Bank. Mr. Richard's salary
may be increased, but not decreased, at the sole and absolute discretion of
Community Bank's Board of Directors. The agreement further provides for
termination upon Mr. Richard's death, for cause or in certain events specified
by the Office of Thrift Supervision regulations.
Upon the terms of the employment agreement, if Mr. Richard's employment
with Community Bank is terminated for any reason following a "change in control"
(as defined in the agreement), other than for cause or as a result of Mr.
Richard's death, then Community Bank will pay to Mr. Richard, in addition to all
other payments and benefits to which he is entitled under any other contract, an
amount equal to 1.5 times the total of his salary and bonus received during the
12 months ending with the termination of his employment. Accordingly, if Mr.
Richard was terminated as of March 31, 2000, he would have been entitled to
receive approximately $117,562 pursuant to this provision.
PROPOSAL II - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Community Financial Board of Directors has renewed arrangement's for
BDO Seidman, LLP, to be its independent accountants for the fiscal year ending
March 31, 2001, subject to ratification of the appointment by stockholders. A
representative of BDO Seidman, LLP, is expected to attend the meeting to respond
to appropriate questions and will have an opportunity to make a statement if he
or she so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF BDO SEIDMAN, LLP, AS COMMUNITY FINANCIAL'S
INDEPENDENT ACCOUNTANTS FOR THE YEAR ENDING MARCH 31, 2001.
CERTAIN TRANSACTIONS
Community Bank has followed a policy of granting loans to officers and
directors. Loans to directors and executive officers are made in the ordinary
course of business and on the same terms and conditions as those of comparable
transactions with the general public prevailing at the time, in accordance with
our underwriting guidelines, and do not involve more than the normal risk of
collectibility or present other unfavorable features.
All loans made by Community Bank to its directors and executive officers
are subject to the Office of Thrift Supervision regulations restricting loan and
other transactions with affiliated persons of Community Financial. All loans to
directors and executive officers were performing in accordance with their terms
at March 31, 2000.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in next year's proxy materials for
the annual meeting of stockholders, any stockholder proposal to take action at
such meeting must be received at our main office located at 38 North Central
Avenue, Staunton, Virginia 24401, on or before March 1, 2001. To be considered
for presentation at next year's annual meeting, although not included in the
proxy statement, any
12
stockholder proposal must be received at our main office not less than 20 days
prior to the annual meeting; provided, however, if less than 30 days notice of
the date of next year's annual meeting is given to stockholders, the stockholder
proposal must be received on or before the close of business on the 10th day
following the day on which the notice of the date of the annual meeting was
mailed.
All stockholder proposals for inclusion in Community Financial's proxy
materials may be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act 1934 and, as with any stockholder proposal,
regardless of whether it is included in our proxy materials, Community
Financial's certificate of incorporation and bylaws and Virginia law.
ANNUAL REPORTS
Stockholders of record on May 31, 2000, should have received a copy of our
2000 annual report to stockholders either with this proxy statement or prior to
its receipt. If, upon receipt of this proxy material, you have not received the
annual report to stockholders, please write to the Corporate Secretary at the
address below and a copy will be sent to you. Although the annual report is
being mailed to stockholders with this proxy statement, it does not constitute a
part of the proxy solicitation materials and is not incorporated herein by
reference.
IN ADDITION, A COPY OF COMMUNITY FINANCIAL'S ANNUAL REPORT ON FORM 10-KSB
FOR THE FISCAL YEAR ENDED MARCH 31, 2000, IS AVAILABLE TO EACH RECORD AND
BENEFICIAL OWNER OF COMMUNITY FINANCIAL'S COMMON STOCK WITHOUT CHARGE UPON
WRITTEN REQUEST TO THE CORPORATE SECRETARY, COMMUNITY FINANCIAL CORPORATION, 38
NORTH CENTRAL AVENUE, STAUNTON, VIRGINIA 24401.
OTHER MATTERS
We are not aware of any business to come before the annual meeting other
than the matters described above in this proxy statement. However, if any other
matters should properly come before the meeting, it is intended that holders of
the proxies will act in accordance with their best judgment.
13
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REVOCABLE PROXY COMMUNITY FINANCIAL CORPORATION July 26, 2000
ANNUAL MEETING OF STOCKHOLDERS
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The undersigned hereby appoints the members of the Board of Directors of
Community Financial Corporation, and the survivors of them, with full power of
substitution, to act as attorneys and proxies for the undersigned to vote all
shares of common stock of Community Financial which the undersigned is entitled
to vote at the annual meeting of stockholders, to be held on Wednesday, July 26,
2000, at 6:30 p.m., local time, and at any and all adjournments thereof, as
follows:
I. The election as directors of all nominees listed below for three-year
terms to expire in the year 2003 (except as marked to the contrary).
FOR / / VOTE WITHHELD / / FOR ALL EXCEPT / /
INSTRUCTIONS: TO VOTE FOR ALL NOMINEES MARK THE BOX "FOR" WITH AN "X". TO
WITHHOLD YOUR VOTE FOR ALL NOMINEES MARK THE BOX "VOTE WITHHELD" WITH AN "X". TO
WITHHOLD YOUR VOTE FOR AN INDIVIDUAL NOMINEE MARK THE BOX "FOR ALL EXCEPT" WITH
AN "X" AND STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW FOR WHOM
YOU WISH YOUR VOTE WITHHELD.
P. DOUGLAS RICHARD JAMES R. COOKE, JR., D.D.S. MORGAN N. TRIMYER, JR.
II. Ratification of the appointment of BDO Seidman, LLP, as Community
Financial's independent accountants for the fiscal year ending March 31,
2001.
FOR / / AGAINST / / ABSTAIN / /
In their discretion,the proxies are authorized to vote on any other
business that may properly come before the annual meeting and any
adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSALS.
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED "FOR" THE PROPOSALS STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
- --------------------------------------------------------------------------------
IMPORTANT! PLEASE SIGN AND DATE ON REVERSE SIDE!
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
This proxy may be revoked at any time before it is voted by: (i) filing
with the Secretary of Community Financial at or before the annual meeting a
written notice of revocation bearing a later date than the proxy; (ii) duly
executing a subsequent proxy relating to the same shares and delivering it to
the Secretary of Community Financial at or before the annual meeting; or (iii)
attending the annual meeting and voting in person. Attendance at the annual
meeting will not in and of itself constitute revocation of a proxy. If this
proxy is properly revoked as described above, then the power of such attorneys
and proxies shall be deemed terminated and of no further force and effect.
The undersigned acknowledges receipt from Community Financial, prior to
the execution of this proxy, of the Notice of the Annual Meeting, a Proxy
Statement dated June 26, 2000 and an Annual Report to Stockholders.
Dated: _________________________, 2000
--------------------------------------------------
SIGNATURE OF STOCKHOLDER
--------------------------------------------------
SIGNATURE OF STOCKHOLDER
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 SHOULD SIGN.
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PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
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