SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission on Only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
ALLEGHENY BANCSHARES, INC.
(Name of Registrant as Specified in Its Charter)
William A. Loving, Jr. , CLBB
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
2
ALLEGHENY BANCSHARES, INC.
300 NORTH MAIN STREET
P.O. BOX 487
FRANKLIN, WEST VIRGINIA 26807
(304) 358-2311
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 4, 2005
The Annual Meeting of Shareholders of Allegheny Bancshares, Inc.
("Allegheny") will be held on Monday, April 4, 2005, at the Community Center,
Franklin, West Virginia, at 12:00 p.m., local time (lunch will be provided), for
the following purposes:
1. To elect four directors to serve terms of three years each;
2. To ratify the board of directors' selection of SB Hoover & Company,
LLP, as the company's independent auditors for 2005; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Shareholders who are holders of record on March 4, 2005, may vote at the
meeting.
By Order of the Board of Directors,
William A. Loving, Jr., CLBB
Executive Vice President and
Chief Executive Officer
Franklin, West Virginia
March 11, 2005
Please vote, sign, date and return the enclosed proxy in the enclosed,
self-addressed envelope as promptly as possible, even if you plan to attend the
meeting. If you attend the meeting, you may vote your shares in person, even
though you have previously signed and returned your proxy. You may revoke your
proxy before it is voted at the meeting.
3
TABLE OF CONTENTS
Page No.
VOTING PROCEDURES AND REVOKING YOUR PROXY..............................4
VOTING FOR DIRECTORS.............................................5
VOTING FOR OTHER MATTERS.........................................5
REVOKING YOUR PROXY..............................................5
* ELECTION OF DIRECTORS (Item 1 on Proxy Card)...........................5
MEMBERS OF THE BOARD OF DIRECTORS, EXECUTIVE OFFICERS
AND MANAGEMENT NOMINEES TO ALLEGHENY'S BOARD.....................6
BOARD INFORMATION................................................7
Number of Meetings.........................................7
Board Committees...........................................7
Board Compensation........................................11
Certain Transactions With Directors and Officers and
Their Associates.......................................11
Board of Directors Report on Executive Compensation.......12
Performance Graph.........................................13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.........14
EXECUTIVE COMPENSATION AND OTHER INFORMATION....................14
Summary of Compensation...................................14
Employment and Change in Control Agreements...............15
401(k) Plan...............................................15
Security Ownership of Certain Beneficial Owners
and Management........................................15
* RATIFICATION OF AUDITORS (Item 2 on Proxy Card).......................17
ANNUAL REPORT ON FORM 10K.............................................18
OTHER INFORMATION.....................................................18
SHAREHOLDER PROPOSALS FOR 2006........................................19
* Matters to be voted upon.
4
ALLEGHENY BANCSHARES, INC.
300 NORTH MAIN STREET
P.O. BOX 487
FRANKLIN, WEST VIRGINIA 26807
(304) 358-2311
PROXY STATEMENT
Allegheny Bancshares, Inc.'s ("Allegheny") board of directors is
soliciting proxies to vote Allegheny's shares at the 2005 Annual Meeting of
Shareholders. Shareholders will meet at 12:00 p.m. on Monday, April 4, 2005, for
the purposes stated in the accompanying Notice of Annual Meeting. On or about
March 11, 2005, Allegheny began mailing this proxy statement to shareholders of
record as of March 4, 2005. Shareholders as of March 4, 2005, may vote at the
meeting.
Please read this proxy statement carefully. You will find more information
about Allegheny and Pendleton County Bank ("the bank") in our enclosed 2004
Annual Report to Shareholders and in the public documents we file with the
Securities and Exchange Commission.
Allegheny will pay for the cost of preparing, assembling, printing and
mailing of the proxy material and for the board of directors' solicitation of
proxies, and employees of the bank may follow up on this written solicitation by
telephone or other methods of communication. Directors, officers and employees
of the bank may solicit proxies personally, by telephone, telegraph and
telecopier. We will arrange with custodians, nominees and fiduciaries to forward
proxy material to the beneficial owners of stock, and upon request, Allegheny
will reimburse them for reasonable forwarding expenses.
As of February 1, 2005, the company had 2,000,000 authorized shares of
common stock with 896,596 shares issued and outstanding.
VOTING PROCEDURES AND REVOKING YOUR PROXY
If you complete, sign and return the enclosed proxy card, the persons
named in the proxy card will vote your shares as you direct. If you sign and
return the proxy card without indicating how you want to vote, the proxies will
vote your shares "FOR" the election of the four nominees as directors, and "FOR"
the ratification of the selection of SB Hoover & Company, LLP, as independent
auditors. A quorum for the meeting is present if at least a majority of the
outstanding shares is present in person or by proxy. Votes withheld and
abstentions will count in determining the presence of a quorum for the
particular matter. Those who fail to return a proxy or attend the meeting will
not count towards determining a quorum.
5
VOTING FOR DIRECTORS
Allegheny's articles of incorporation provide for a classified board of
directors. There are three classes with each being elected for a three-year
term. There are presently 11 directors on the board, four of whom are nominees
for election at the 2005 Annual Meeting. All of the nominees are non-employee
directors, except William A. Loving, Jr.
Directors are elected by a plurality of the shares voted. As required by
West Virginia law, each share is entitled to one vote per nominee, unless a
shareholder requests cumulative voting for directors at least 48 hours before
the meeting. If a shareholder properly requests cumulative voting for directors,
then each shareholder will have the right to vote the number of shares owned by
that shareholder for as many persons as there are directors to be elected, or to
cumulate such shares and give one candidate as many votes as the number of
directors multiplied by the number of shares owned shall equal, or to distribute
them on the same principle among as many candidates as the shareholder sees fit.
If any shares are voted cumulatively for the election of directors, the proxies,
unless otherwise directed, shall have full discretion and authority to cumulate
their votes and vote for less than all such nominees. For all other purposes,
each share is entitled to one vote.
The table on pages 3 and 4 of this proxy statement contains background
information on each director nominee.
VOTING FOR OTHER MATTERS
A favorable vote by a majority of shareholders of the company's common
stock represented at the Annual Meeting is required to ratify the selection of
SB Hoover & Company, LLP, as independent auditors for 2005.
REVOKING YOUR PROXY
You may revoke your proxy before it is voted at the Annual Meeting by:
o Notifying the bank in person;
o Giving written notice to the bank;
o Submitting to the bank a subsequently dated proxy; or
o Attending the meeting and withdrawing the proxy before it is voted.
ELECTION OF DIRECTORS
(Item 1 on Proxy Card)
Allegheny's bylaws provide that the board of directors can set the number
of directors but also provide that the board of directors must have no less than
three nor more than 25 directors. The board of directors has set the number of
directors to serve in 2005 at eleven, which means that four directors will be
elected at the 2005 Annual Meeting and will serve a term expiring at the 2008
Annual Meeting or until a successor is selected.
6
MEMBERS OF THE BOARD OF DIRECTORS, EXECUTIVE OFFICERS AND MANAGEMENT NOMINEES TO
ALLEGHENY'S BOARD
Term Principal Occupation
Name Age Position With Expires For Past Five Years
Allegheny
- ---------- ---- --------------- ------ -------------------
Thomas J. Bowman 80 Director of 2006 Owner of Earnest
Allegheny Since Bowman & Brother and
2002; Director of Self-Employed Farmer
Pendleton County
Bank Since 1969
*Roger D. Champ 59 Director of 2005 Self-Employed
Allegheny Since Contractor
2002; Director of
Pendleton County
Bank Since 1994
John E. Glover 62 Director of 2006 Self-Employed Dentist
Allegheny Since
2002; Director of
Pendleton County
Bank Since 1999
*Carole H. Hartman 58 Director of 2005 Owner of Pendleton
Allegheny Since County Insurance
2002; Director of Agency, Self-Employed
Pendleton County Farmer
Bank Since 1990;
Secretary of the
Bank Board
*John D. Heavner 68 Director of 2005 Self-Employed Farmer
Allegheny Since
2002; Director of
Pendleton County
Bank Since 1972
Richard W. Homan 82 Director of 2007 Banker
Allegheny since
2002; Director of
Pendleton County
Bank Since 1952;
President of Bank
and CEO Prior to
October 16, 2000
*William A. Loving, Jr. 49 Director of 2005 1993-2000 Regional
Allegheny Since Vice-President With
2002; Executive Vice One Valley Bank in
President and CEO of Beckley, WV
Pendleton County
Bank Since 2000;
Executive Vice
President and CEO of
Allegheny Since 2002
William McCoy, Jr. 83 Director of 2007 Owner of Pendleton
Allegheny Since Times, Attorney
2002; Director of
Pendleton County
Bank Since 1954
* Management Nominee
7
Term Principal Occupation
Name Age Position With Expires For Past Five Years
Allegheny
Jerry D. Moore 52 Director of 2007 Self-Employed Attorney
Allegheny Since
2002; Director of
Pendleton County
Bank Since 1987
Richard C. Phares 76 Director of 2006 Owner of R.C. Phares
Allegheny Since Store, Self-Employed
2002; Director of Farmer
Pendleton County
Bank Since 1969
Dolan Irvine 57 Director of 2007 Assessor, Appraiser
Allegheny Since Pocahontas County
2003; Director of Self-Employed Farmer
Pendleton County
Bank Since 2003
L. Kirk Billingsley 44 Chief Financial -- Branch Manager, Chief
Officer of Pendleton Financial Officer
County Bank and Blue Grass Valley Bank
Allegheny
* Management Nominee
BOARD INFORMATION
While there is no such requirement, the board of directors of Pendleton
County Bank and Allegheny are, and have at all times been, identical.
Number of Meetings
The board of directors of Allegheny met ten times in 2004. The board of
directors of the bank met for 41 regular weekly meetings in 2004. Special
meetings are held from time to time as required. During 2005, the bank board has
held one regular meeting and three special meetings . During the year, each of
the directors attended at least 75% of all meetings of the boards of Allegheny
and the bank and all committees of the boards on which they served.
Board Committees
Nominating Committee - The board of directors has not established formal
nominating or compensation committees as the entire board serves in these
capacities. The board of directors of Allegheny does not maintain a separate
nominating committee, nor does it have a nominating committee charter, because
the board of directors is relatively small and vacancies are rare. Because the
full board of directors serves the function of the nominating committee, not all
directors are independent.
8
The board of directors believes that candidates for director should have
certain minimum qualifications, including:
o Directors should be of the highest ethical character.
o Directors should have excellent personal and professional
reputations in Allegheny's market area.
o Directors should be accomplished in their professions or careers.
o Directors should be able to read and understand financial statements
and either have knowledge of, or the ability and willingness to
learn, financial institution law.
o Directors should have relevant experience and expertise to evaluate
financial data and provide direction and advice to the chief
executive officer and the ability to exercise sound business
judgment.
o Directors must be willing and able to expend the time to attend
meetings of the board of directors of Allegheny and the bank and to
serve on board committees.
o The board of directors will consider whether a nominee is
independent, as legally defined. In addition, directors should avoid
the appearance of any conflict and should be independent of any
particular constituency and be able to serve all shareholders of
Allegheny.
o Because the directors of Allegheny also serve as directors of the
bank, a majority of directors must be residents of West Virginia, as
required by state banking law.
o Directors must be acceptable to Allegheny's and the bank's
regulatory agencies, including the Federal Reserve Board, the
Federal Deposit Insurance Corporation and the West Virginia Division
of Banking and must not be under any legal disability which prevents
them from serving on the board of directors or participating in the
affairs of a financial institution.
o Directors must own or acquire sufficient capital stock to satisfy
the requirements of West Virginia law and the bylaws of the bank.
o Directors must be at least 21 years of age.
The board of directors of Allegheny reserves the right to modify these
minimum qualifications from time to time, except where the qualifications are
required by the laws relating to financial institutions.
The process of the board of directors for identifying and evaluating
nominees is as follows: In the case of incumbent directors whose terms are set
to expire, the board of directors considers the directors' overall service to
Allegheny during their term, including such factors as the number of meetings
attended, the level of participation, quality of performance and any
transactions between such directors and Allegheny and the bank. The board of
directors also reviews the payment history of loans, if any, made to such
directors by the bank to ensure that the directors are not chronically
delinquent and in default. The board considers whether any transactions between
the directors and the bank have been criticized by any banking regulatory agency
or the bank's external auditors and whether corrective action, if required, has
been taken and was sufficient. The board of directors also confirms that such
directors remain eligible to serve on the board of directors of a financial
institution under federal and state law. For new director candidates, the board
of directors uses its network of contacts in Allegheny's market area to compile
a list of potential candidates. The board of directors then meets to discuss
each candidate and whether he or she meets the criteria set forth above. The
board of directors then discusses each candidate's qualifications and chooses a
candidate by majority vote.
9
The board of directors will consider director candidates recommended by
stockholders, provided that the recommendations are received at least 120 days
before the next annual meeting of shareholders. In addition, the procedures set
forth below are followed by stockholders for submitting nominations. The board
of directors does not intend to alter the manner in which it evaluates
candidates, regardless of whether or not the candidate was recommended or
nominated by a shareholder.
Allegheny's bylaws provide that nominations for election to the board of
directors, other than those made by or on behalf of Allegheny's existing
management, must be made by a shareholder in writing delivered or mailed to the
CEO not less than 14 days nor more than 50 days prior to the meeting called for
the election of directors; provided, however, that if less than 21 days' notice
of the meeting is given to shareholders, the nominations must be mailed or
delivered to the CEO not later than the close of business on the seventh day
following the day on which the notice of meeting was mailed. The notice of
nomination must contain the following information, to the extent known:
o Name and address of proposed nominee(s);
o Principal occupation of nominee(s);
o Total shares to be voted for each nominee;
o Name and address of notifying shareholder; and
o Number of shares owned by notifying shareholder.
Nominations not made in accordance with these requirements may be
disregarded by the chairman of the meeting and in such case the votes cast for
each such nominee will likewise be disregarded. All nominees for election at the
meeting are incumbent directors. No shareholder recommendations or nominations
have been made.
Audit Committee - The joint audit committee of Allegheny and the bank was
formed in January, 2002, and is composed of the following non-management
directors: Dr. John Glover, Roger Champ, and T.J. Bowman. The functions
performed by the committee are set forth in the "Report of the Audit Committee,"
included in this proxy statement. The audit committee of the bank is governed by
a written charter approved by the board of directors of the bank in January
2002, and by Allegheny in May 2003.
It is difficult for a community bank to find a single individual that has
every one of the Securities and Exchange Commission's qualifications of an audit
committee financial expert; Allegheny believes that having only one individual
with financial expertise designation would cause the remaining members to
believe that their oversight responsibility had been diminished. Allegheny
believes that each member of the audit committee has sufficient knowledge in
financial and auditing matters to serve on the committee. As such, the board
does not believe that it is necessary to actively search for an outside person
to serve on the board to qualify as an audit committee financial expert. The
committee has authority to engage legal counsel, other experts or consultants as
it deems appropriate to carry out its responsibilities. The audit committee is
responsible for the appointment, replacement, compensation and oversight of the
independent auditor engaged to prepare or issue audit reports on our financial
statements. As a result, Allegheny has not designated one individual as an
"audit committee financial expert."
10
Report of the Audit Committee - The audit committee oversees the financial
reporting process of Allegheny and the bank on behalf of the board of directors.
The audit committee relies on the expertise and knowledge of management, its
internal auditors and the independent auditors in carrying out its oversight
responsibilities. The specific responsibilities in carrying out the audit
committee's oversight role are set forth in the company's audit committee
charter. This charter is reviewed annually and as may be required due to changes
in industry accounting practices or the promulgation of new rules or guidance
documents. In fulfilling its oversight responsibilities, the committee reviewed
the audited financial statements in the annual report with management, including
a discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments and the clarity and
disclosures in the financial statements.
The committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality, not just the acceptability, of the bank's accounting principles and
such other matters as are required to be discussed with the committee under
generally accepted auditing standards. In addition, the committee has discussed
with the independent auditors the auditors' independence from management,
Allegheny and the bank, including the matters in the written disclosures
required by the independent standards board and considered the compatibility of
non-audit services with the auditors' independence.
The committee discussed with Allegheny's internal and independent auditors
the overall scope and plans for their respective audits. The committee met with
the internal and independent auditors, with and without management present, and
discussed the results of their examinations, their evaluation of the company's
internal controls, and the overall quality of the company's financial reporting.
The committee held six meetings in 2004.
In reliance on the reviews and discussions referred to above, the
committee recommended to the board of directors (and the board has approved)
that the audited financial statements be included in the Annual Report on Form
10K for the year ended December 31, 2004, for filing with the Securities and
Exchange Commission. The committee and the board have also approved the
selection of Allegheny's independent auditors.
11
Based upon the review and discussions referred to above, the board of
directors recommends that the audited financial statements for the year ended
December 31, 2004, be included in the bank's Annual Report on Form 10K and filed
with the Securities and Exchange Commission.
February 16, 2005 Dr. John Glover
Roger Champ
T.J. Bowman
This report shall not be deemed to be incorporated by reference into any
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, unless the bank specifically incorporates this report
by reference. They will not otherwise be filed under such Acts.
Board Compensation
Directors received $500 for each board meeting and $250 for each board
committee meeting of the bank that they attended. Directors do not receive fees
for meetings of Allegheny's board. In 2004, the board of directors of Allegheny
and the bank received $181,350, in the aggregate, for all board of directors'
meetings attended and all fees paid for Allegheny and the bank.
Certain Transactions With Directors and Officers and Their Associates
The bank has had and intends to continue to have banking and financial
transactions in the ordinary course of business with directors and executive
officers of Allegheny and the bank and their associates. Total loans outstanding
from the bank at December 31, 2004, to the bank's and Allegheny's officers and
directors as a group and members of their immediate families and companies in
which they had an ownership interest of 10% or more totaled $1,369,308, or
approximately 5.69% of the bank's total equity capital. These extensions of
credit are made at the same terms and conditions of other non-director
borrowings. They do not involve more than the normal risk of collectibility or
present other unfavorable features.
Director Moore provides legal services for the bank and Allegheny. Based
on information provided by him, payments made by the bank and Allegheny to him
for legal services were less than five percent of his gross revenue.
The bank purchases property insurance coverage from Pendleton County
Insurance Agency of which Director Hartman is an owner. The terms of and
premiums for this insurance are as favorable to the bank as they would have been
with third parties not otherwise affiliated with the bank.
12
Board of Directors Report on Executive Compensation
The board of directors establishes compensation policies, plans and
programs to accomplish three objectives:
o To attract and retain highly capable and well-qualified executives;
o To focus executives' efforts on increasing long-term shareholder
value; and
o To reward executives at levels which are competitive with the
marketplace for similar positions and consistent with the performance
of each executive and of Allegheny.
The board meets at least annually, and otherwise when necessary, with the
chief executive officer to review and approve the compensation programs for
executives. In determining the salary budget for 2004, and in fixing levels of
executive compensation, the committee considered:
o The bank's performance relative to its long-range goals and its
peers; and
o The relative individual performances of each executive.
The compensation committee has determined that the bank's compensation is
competitive with peer banks in its geographical area.
During 2003, the chief executive officer's base compensation was set
pursuant to an employment agreement, which is discussed elsewhere in this proxy
statement. The board of directors arrived at the amounts in the employment
agreement basically the same way as for other executives, recognizing that the
chief executive officer has overall responsibility for the performance of the
bank.
The bonus for the Chief Executive Officer is calculated using a formula
established by Allegheny and the bank, based on the weighted average of nine
factors. The factors include earnings per share, return on equity, return on
assets, loan growth, deposit growth, efficiency ratio, loan delinquency ratio,
and the rate of net charge-offs of loans and the performance evaluation of the
board of directors
This report shall not be deemed to be incorporated by reference into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934,
unless the bank specifically incorporates this report by reference. It will not
otherwise be filed under such Acts.
13
The report is submitted by the board of directors, which consists of the
following individuals:
Thomas J. Bowman Richard W. Homan
Roger D. Champ William McCoy, Jr.
John E. Glover Jerry D. Moore
Carole H. Hartman Richard C. Phares
John D. Heavner William A. Loving, Jr.
Dolan Irvine
Performance Graph
The following graph (under separate file) compares the yearly percentage
change in Allegheny's cumulative total shareholder return on common stock for
the five-year period ending December 31, 2004, with the cumulative total return
of the CoreData Index (SIC Code Index 6712-Bank Holding Companies). Because
Allegheny was not formed until 2002, information regarding the bank is used to
complete the five-year period. Shareholders may obtain a copy of the index by
calling CoreData, Inc., at telephone number (800) 775-8118. There is no
assurance that the bank's stock performance will continue in the future with the
same or similar trends as depicted in the graph.
The information used to determine Allegheny's cumulative total shareholder
return on its common stock is based upon information furnished to Allegheny by
one or more parties involved in purchases or sales of Allegheny's common stock.
There is no public market for the common stock and share prices used to
determine the cumulative shareholder return are based upon sporadic trading
activity in privately negotiated transactions. We have not attempted to verify
or determine the accuracy of the representations made to us.
14
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Allegheny's
directors and executive officers, and persons who own more than 10% of the
registered class of the bank's equity securities, to make stock ownership and
transaction filings with the Securities and Exchange Commission and to provide
copies to Allegheny. Based solely on a review of the reports furnished to
Allegheny and written statements that no other reports were required, all
Section 16(a) filing requirements applicable to its officers and directors were
met. Allegheny is required to report late filings.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Compensation
Allegheny's officers did not receive compensation as such during 2004. The
table below reflects information concerning the annual compensation for services
in all capacities to the bank for the fiscal years ended December 31, 2004, 2003
and 2002, for any executive officer whose annual salary and bonus exceeded
$100,000.
SUMMARY COMPENSATION TABLE
Annual Compensation (1)
-------------------------------
Other
Annual
Name and Principal Position Year Salary Bonus Compensation
William A. Loving, Jr., Executive Vice 2004 $132,500 $16,695 (2) $ 0
President and Chief Executive Officer 2003 $125,000 $14,900 (3) $ 0
2002 $122,134 $10,585 (4) $ 0
(1) Does not include perquisites and other personal benefits, including personal
use of an automobile valued at $1,671 in 2004 and the cost of group-term
life insurance coverage over $50,000 which was $360 in 2004.
(2) Paid in 2005.
(3) Paid in 2004.
(4) Paid in 2003.
The company does not maintain any form of stock option, stock appreciation
rights, or other long-term compensation plans.
15
Employment and Change in Control Agreements
The bank entered into a three-year employment agreement with William A.
Loving, Jr. effective September 30, 2003, in which Mr. Loving agreed to serve as
the bank's chief executive officer. This agreement is automatically renewable
for additional three-year terms, unless terminated earlier or unless one of the
parties elects not to renew the agreement at least 90 days prior to the end of
the term. Under the employment agreement, the bank may terminate Mr. Loving's
employment prior to the expiration of the term of employment with or without
cause; provided, however, in the event the bank terminates his employment
without cause (as defined in the employment agreement), he will be entitled to
severance equal to the sum of his base annual compensation for the greater of
(i) the remainder of the term of the employment agreement (had it not been
terminated) or (ii) 12 months. Under the employment agreement, Mr. Loving is
entitled to annual compensation of $125,000, which may be adjusted upward by the
board of directors of the bank, plus any bonus resulting from any subsequently
adopted bonus plan. The employment agreement also contains a provision regarding
non-competition, which effectively restricts Mr. Loving's ability to work in a
similar capacity within the Counties of Pendleton, Grant and Hardy, West
Virginia, for a period of two years following termination of employment with the
bank.
At the same time as the execution of the employment agreement by the bank
and Mr. Loving, the parties also entered into an executive severance agreement
effective for a period ending on December 31, 2003 (but subject to annual
renewals thereafter unless either party objects). This agreement provides that
upon a change in control (as defined in the agreement) and for a period of two
years thereafter, if Mr. Loving's employment is terminated involuntarily by the
bank (or its successor) without cause, Mr. Loving shall be entitled to a
severance payment in the amount equal to 2 1/2 times his annual base salary (in
effect at termination of employment or change in control, whichever is greater),
plus benefits. In addition, the bank, or its successor, shall be obligated to
provide Mr. Loving health insurance coverage comparable to that received
immediately prior to termination of employment.
401(k) Plan
The bank maintains a 401(k) profit sharing plan that generally covers all
employees who have completed one year of service. Contributions to the plan are
based on a percentage of each employee's salary plus matching contributions. The
payment of benefits to participants is made at death, disability, termination or
retirement. Contributions to the plan for all employees charged to operations
during 2004 amounted to $77,116.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of February 1, 2005,
relating to the beneficial ownership of the common stock by (a) each person or
group known by the company to own beneficially more than 5% of the outstanding
common stock; (b) each of the directors of the company; and (c) all directors
and executive officers of the company as a group. Ownership includes direct and
indirect (beneficial) ownership as defined by SEC rules. Share totals include
500 directors' qualifying shares, which the bank's bylaws require each director
to own.
16
Amount and Nature of
Name and Address Beneficial Ownership (1)(2) Percent of Class
---------------- -------------------- ----------------
T.J. Bowman 1,752 Direct 1.48%
11,555 Indirect
Roger Champ 4,140 Direct *
480 Indirect
John E. Glover 5,675 Direct 1.50%
7,755 Indirect
Carole H. Hartman 2,555 Direct *
John D. Heavner 2,400 Direct *
1,200 Indirect
Richard Homan 600 Direct
P.O. Box 550 69,900 Indirect (3) 7.86%
Franklin, WV 26807-0550
William McCoy, Jr. 15,976 Direct
12,000 Indirect 3.12%
Jerry Moore 10,060 Direct
300 Indirect 1.16%
Richard C. Phares 17,827 Direct 1.99%
William A. Loving, Jr. 719 Direct
209 Indirect *
Dolan Irvine 1,038 Direct *
All Directors and 166,141 17.10%
Executive Officers As a
Group
(1) For purposes of this table, beneficial ownership has been determined in
accordance with the provisions of Rule 13d-3 of the Securities Exchange Act
of 1934 under which, in general, a person is deemed to be the 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 or direct the disposition
of the security, or if he has the right to acquire beneficial ownership of
the security within 60 days. Shares of common stock which are subject to
stock options are deemed to be outstanding for the purpose of computing the
percentage of outstanding common stock owned by such person or group but not
deemed outstanding for the purpose of computing the percentage of common
stock owned by any other person or group.
(2) Includes qualifying shares of 500 as required by the Company's bylaws.
(3) Consists of 33,400 held in the Richard Homan Trust and the Jean Ann Homan
Trust of which Mr. Homan is Trustee. Also includes 36,500 shares owned by
Captaur Limited Liability Company in which Mr. Homan owns a 50% interest
and serves as Member/Manager.
(4) (*) Less than 1%.
17
RATIFICATION OF AUDITORS
(Item 2 on Proxy Card)
The audit committee of the board of directors has selected the firm of SB
Hoover & Company, LLP, to serve as the independent auditors for 2005. Although
the selection of auditors does not require shareholder ratification, the board
of directors has submitted the appointment of SB Hoover & Company, LLP, to the
shareholders for ratification. If the shareholders do not ratify the appointment
of SB Hoover & Company, LLP, the board of directors will consider the
appointment of other independent auditors.
SB Hoover & Company, LLP, advised Allegheny that no member of that
accounting firm has any direct or indirect material interest in Allegheny. A
representative of SB Hoover & Company, LLP, will be present at the Annual
Meeting, will have the opportunity to make a statement and will respond to
appropriate questions. The proxies will vote your proxy "FOR" the ratification
of the selection of SB Hoover & Company, LLP, unless otherwise directed.
The following fees were paid by Allegheny and the bank to SB Hoover &
Company, LLP:
2003 2004
------ ------
Audit Fees $34,200 $55,093
Tax Fees 1,000 1,000
All Other Fees 22,838 18,000
The Audit Committee has considered whether SB Hoover & Company, LLP, has
maintained its independence during the fiscal year ended December 31, 2004. The
Audit Committee Charter requires that the Audit Committee pre-approve all audit
and non-audit services to be provided to the company by the independent
accountants; provided, however, that the Audit Committee may specifically
authorize its Chairman to pre-approve the provision of any non-audit service to
the company. Further, the foregoing pre-approval policies may be waived, with
respect to the provision of any non-audit services, consistent with the
exceptions for federal securities laws. All of the services described above for
which SB Hoover & Company, LLP, billed the company for the fiscal year ended
December 31, 2004, were pre-approved by the company's Audit Committee. For the
fiscal year ended December 31, 2004, the company's Audit Committee did not waive
the pre-approval requirement of any non-audit services to be provided to
Allegheny by SB Hoover & Company, LLP.
18
ANNUAL REPORT ON FORM 10-K
You may obtain a copy of the Annual Report on Form 10-K, as filed by the
bank with the FDIC, by contacting William A. Loving, Jr., Executive Vice
President and Chief Executive Officer, Allegheny Bancshares, Inc., 300 North
Main Street, P.O. Box 487, Franklin, West Virginia 26807, (304) 358-2311.
OTHER INFORMATION
If any of the nominees for election as directors is unable to serve due to
death or other unexpected occurrence, your proxies will be voted for a
substitute nominee or nominees designated by the board of the company, or the
board of directors may adopt a resolution to reduce the number of directors to
be elected. The board of directors is unaware of any other matters to be
considered at the Annual Meeting. If any other matters properly come before the
meeting, persons named in the accompanying proxy will vote your shares in
accordance with the direction of the board of directors.
19
SHAREHOLDER PROPOSALS FOR 2006
Any shareholder who wishes to have a proposal placed before the 2006
Annual Meeting of Shareholders must submit the proposal to the secretary of the
bank, at its executive offices, no later than December 15, 2005 (which is 120
days prior to the 2006 Annual Meeting) to have it considered for inclusion in
the proxy statement of that Annual Meeting.
William A. Loving, Jr.
Executive Vice President and
Chief Executive Officer
20
ALLEGHENY BANCSHARES, INC.
300 NORTH MAIN STREET
P.O. BOX 487
FRANKLIN, WEST VIRGINIA 26807
(304) 358-2311
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS, APRIL 4, 2005
Richard W. Homan, John E. Glover and Jerry D. Moore, or any one of them,
with full power to act alone and with full power of substitution, are hereby
authorized to represent and to vote stock of the undersigned in Allegheny
Bancshares, Inc., at the Annual Meeting of Shareholders to be held April 4,
2005, and any adjournment thereof.
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT*
(Except Nominee(s) Written Below)
1. Election of directors for the
terms specified in the proxy
statement:
Roger D. Champ
Carole H. Hartman
John D. Heavner
William A. Loving, Jr.
----------------------------------------
* (Except Nominee(s) written above.)
FOR AGAINST ABSTAIN
2. Ratify the selection of
SB Hoover & Company, LLP,
as independent auditors
for 2005:
3. To transact such other business
as may properly come before
the meeting or
any adjournments thereof:
This proxy when properly executed will be voted in the manner directed
herein by the undersigned. If no specification is made, the shares represented
by this proxy will be voted "FOR" the election of all director nominees. Each
share is entitled to one vote per nominee, unless a shareholder requests
cumulative voting for directors at least 48 hours before the meeting. If
cumulative voting for the election of directors is requested, the proxies,
unless otherwise directed, shall have full discretion and authority to cumulate
their votes and vote for less than all such nominees. If any other business is
presented at the annual meeting, this proxy shall be voted in accordance with
the recommendation of the board of directors.
The board of directors recommends a vote "FOR" the listed proposals.
Date: , 2005
------------------------
Number of Persons Who Will Attend the
Luncheon and Annual Meeting on Monday,
April 4, starting at noon:
-----------------------------------
(Signature of Shareholder)
-----------------------------------
(Signature of Shareholder)
When signing as attorney, executor,
administrator, trustee or guardian,
please sign full title. If more than
one trustee, all should sign. ALL
JOINT OWNERS MUST SIGN as
printed on label to your left.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD
PROMPTLY USING THE ENCOSED ENVELOPE.