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:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
AUBURN NATIONAL BANCOR
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No filing 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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(4) Proposed maximum aggregate value of transaction:
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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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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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Notes:
April 17, 1998
TO OUR SHAREHOLDERS:
You are cordially invited to attend the 1998 Annual Meeting of
Shareholders of Auburn National Bancorporation, Inc., to be held at the
AuburnBank Center, 132 North Gay Street, Auburn, Alabama, on Tuesday, May 12,
1998, at 3:00 p.m., Local Time (the "Meeting").
The Notice of Meeting, Proxy Statement, Proxy, and 1997 Annual Report
are enclosed. We hope you can attend the Meeting and vote your shares in
person. In any case, we will appreciate your completing the enclosed Proxy and
returning it to us. This action will ensure that your preferences will be
expressed on the matters that are being considered. If you are able to attend
the Meeting, you may vote your shares in person even if you have previously
returned your Proxy.
Prior to the meeting, a reception will be held from 2:30 p.m. until
3:00 p.m. in the AuburnBank Center. We hope you can join us!
We want to thank you for your support this past year, and encourage
you to review our Annual Report. If you have any questions about the Proxy
Statement or the Annual Report, please call or write us.
Sincerely,
E. L. Spencer, Jr.
Chairman of the Board
and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 12, 1998
Notice is hereby given that the 1998 Annual Meeting of Shareholders of
Auburn National Bancorporation, Inc. ("the Company") will be held at the
AuburnBank Center, 132 North Gay Street, Auburn, Alabama, on Tuesday, May 12,
1998, at 3:00 p.m., Local Time (collectively, with any adjournments or
postponements thereof, the "Meeting"), for the following purposes:
1. To elect five directors to the Board of Directors, who shall serve until
the next annual meeting and until their successors have been elected and
qualified;
2. To consider and vote upon an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of the Company's
Common Stock from 2,500,000 to 8,500,000 shares;
3. To consider and vote upon the ratification of the appointment of KPMG Peat
Marwick LLP as independent auditors for the Company for the fiscal year
ending December 31, 1998; and
4. To transact such other business as may properly come before the Meeting.
Only shareholders of record at the close of business on February 27, 1998,
are entitled to notice of and to vote at the Meeting. All shareholders, whether
or not they expect to attend the Meeting in person, are requested to complete,
date, sign and return the enclosed Proxy in the accompanying envelope.
Also enclosed is a copy of the Company's 1997 Annual Report.
By Order of the Board of Directors
Linda D. Fucci
Secretary
April 17, 1998
PLEASE COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY TO
THE COMPANY IN THE ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON BY
WRITTEN BALLOT IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 12, 1998
INTRODUCTION
GENERAL
This Proxy Statement is being furnished to the shareholders of Auburn
National Bancorporation, Inc. (the "Company"), a Delaware corporation registered
as a bank holding company under the Bank Holding Company Act of 1956, as amended
(the "BHC Act"), in connection with the solicitation of proxies by the Company's
Board of Directors from holders of the outstanding shares of the Company's $.01
par value Common Stock ("Common Stock") for the 1998 Annual Meeting of
Shareholders of the Company (collectively, with any adjournments or
postponements thereof, the "Meeting"). Unless the context otherwise requires,
the term "Company" shall include the Company's subsidiary, AuburnBank (the
"Bank").
The Meeting is being held to consider and vote upon: (i) the election of
five directors to the Board of Directors, who shall serve until the next annual
meeting and until their successors are elected and qualified; (ii) an amendment
to the Company's Certificate of Incorporation to increase the number of
authorized shares of the Company's Common Stock from 2,500,000 to 8,500,000
shares; (iii) the ratification of the appointment of KPMG Peat Marwick, LLP
("KPMG Peat Marwick") as independent auditors for the Company for the fiscal
year ending December 31, 1998; and (iv) such other matters as may properly come
before the Meeting.
The Company's Board of Directors knows of no business that will be
presented for consideration at the Meeting other than the matters described in
this Proxy Statement.
The Proxy Statement and Proxy are first being mailed on or about April 17,
1998, to Company shareholders of record as of the close of business on February
27, 1998 (the "Record Date"). The 1997 Annual Report (the "Annual Report"),
including financial statements for the fiscal year ended December 31, 1997,
accompanies this Proxy Statement.
Each shareholder is entitled to one vote on each proposal per share of
Common Stock held as of the Record Date. In determining whether a quorum exists
at the Meeting for purposes of all matters to be voted on, all votes "for" or
"against," as well as all abstentions (including votes to withhold authority to
vote in certain cases), with respect to the proposal receiving the most such
votes, will be counted. Under Delaware law, the vote required for the election
of directors is a plurality of the votes cast by the shares present in person or
represented by proxy at the Meeting and entitled to vote for the election,
provided a quorum is present. Consequently, with respect to the election of
directors, abstentions and broker non-votes will not be counted in the base
number of votes to be used in determining whether the proposal has received the
requisite number of votes for approval. The proposal to amend the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock requires the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock. Consequently, with respect to this
proposal, abstentions and broker non-votes will be counted in the base number of
votes to be used in determining whether the proposal has received the requisite
number of votes for approval and will count as votes against the proposal. The
ratification of the appointment of KPMG Peat Marwick as independent auditors
requires the affirmative vote of the holders of a majority of the shares of
Common Stock present in person or represented by proxy and entitled to vote at
the Meeting, provided a quorum is present. Consequently, with respect to this
proposal, abstentions and broker non-votes will be counted in the base number of
votes to be used in determining whether the proposal has received the requisite
number of votes for approval and will count as votes against the proposal.
The Company's principal executive offices are located at 165 E. Magnolia
Avenue, Auburn, Alabama 36830. The Company's telephone number at such offices
is (334) 821-9200.
RECORD DATE, SOLICITATION AND REVOCABILITY OF PROXIES
The Record Date for the Meeting has been set as the close of business on
February 27, 1998. Accordingly, only holders of record of shares of Common
Stock on the Record Date will be entitled to vote at the Meeting. At the close
of business on such date, there were approximately 1,308,191 shares of Common
Stock issued and outstanding, which were held by approximately 449 shareholders
of record. See "Principal Shareholders."
Shares of Common Stock represented by a properly executed Proxy, if such
Proxy is received in time and is not revoked, will be voted at the Meeting in
accordance with the instructions indicated in such Proxy. IF NO INSTRUCTIONS
ARE INDICATED, SUCH SHARES OF COMMON STOCK WILL BE VOTED "FOR" THE ELECTION OF
ALL NOMINEES FOR DIRECTOR NAMED IN THE PROXY, "FOR" THE APPROVAL OF THE INCREASE
IN AUTHORIZED SHARES OF COMMON STOCK, "FOR" THE RATIFICATION OF THE APPOINTMENT
OF KPMG PEAT MARWICK AS THE COMPANY'S INDEPENDENT AUDITORS, AND IN THE JUDGMENT
OF THE PROXIES NAMED ON THE PROXY WITH RESPECT TO ALL PROPER MATTERS THAT MAY
COME BEFORE THE MEETING.
A shareholder who has given a Proxy may revoke it at any time prior to its
exercise at the Meeting by either (i) giving written notice of revocation to the
Company's Secretary, (ii) properly submitting to the Company a duly executed
Proxy bearing a later date, or (iii) appearing in person at the Meeting and
voting in person by written ballot. All written notices of revocation or other
communications with respect to revocation of Proxies should be addressed as
follows: Auburn National Bancorporation, Inc., P.O. Box 3110, Auburn, Alabama
36831-3110, Attention: Linda D. Fucci, Secretary.
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
The Meeting is being held to elect five directors to serve one-year terms
of office expiring at the Company's 1999 Annual Meeting of Shareholders and
until their successors have been elected and qualified. All nominees presently
serve as directors of the Bank. Proxies cannot be voted for a greater number of
persons than the number of nominees specified herein (5 persons). Cumulative
voting for directors is not permitted.
All shares represented by valid Proxies received and not revoked before
they are exercised will be voted in the manner specified therein. If no
specification is made, the Proxies will be voted for the election of the five
nominees listed below. In the unanticipated event that any nominee is unable to
serve, the persons designated as Proxies will cast votes for the remaining
nominees and for such other replacements as may be nominated by the Company's
Board of Directors.
The affirmative vote of the holders of shares of Common Stock representing
a plurality of the votes cast by the shares entitled to vote in the election at
the Meeting, at which a quorum is present, is required for the election of the
directors listed below.
THE NOMINEES HAVE BEEN NOMINATED BY THE COMPANY'S BOARD OF DIRECTORS, AND
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL FIVE NOMINEES
LISTED BELOW.
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INFORMATION ABOUT NOMINEES FOR DIRECTOR
The following information relating to age, as of February 27, 1998, and
directorships in other companies, positions with the Company and the Bank,
principal employment, and Common Stock owned beneficially, as of February 27,
1998, has been furnished by the respective nominees. Except as otherwise
indicated, each nominee has been or was engaged in his or her present or last
principal employment, in the same or a similar position, for more than five
years.
NOMINEE, AGE, AND YEAR FIRST INFORMATION ABOUT SHARES OF COMMON
ELECTED AS A DIRECTOR NOMINEE STOCK BENEFICIALLY
OWNED AND PERCENTAGE
OF COMMON STOCK
OUTSTANDING (1)
E. L. Spencer, Jr. (67) Director of the Company 253,370(2)
Elected to Bank Board: 1975 and the Bank; Chairman 19.37%
Elected to Company Board: of the Company's and
1984 Bank's Board of
Directors since 1984
and 1980, respectively;
President and Chief
Executive Officer of
the Bank and the
Company since 1990;
President of Spencer
Lumber Company since
1970; Director of
National Screenprinters
and East Alabama
Medical Center.
Emil F. Wright, Jr. (61) Director of the Company 142,260(3)
Elected to Bank Board: 1973 and the Bank; Vice 10.87%
Elected to Company Board: Chairman of the Company
1984 and the Bank since
1991; practicing law
clerk 1998; formerly
Ophthalmologist
practicing with the
Medical Arts Eye Clinic
1971-1997; Director of
National Screenprinters.
Terry W. Andrus (46) Director of the Bank; 300
Elected to Bank Board: 1991 President and CEO of 0.02%
the East Alabama
Medical Center since
1984.
J.E. Evans (56) Director of the Company 6,000
Elected to Bank Board: 1986 and the Bank; Owner of 0.46%
Elected to Company Board: Evans Realty since
1997 1970.
Anne M. May (47) Director of the Company 73,084 (4)
Elected to Bank Board: 1982 and the Bank; Partner, 5.59%
Elected to Company Board: Machen, McChesney &
1990 Chastain, Certified
Public Accountants,
since 1973.
All Executive Officers and 455,620 (5)
Directors as a Group (16 persons) 34.83%
____________________________
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(1) Information relating to beneficial ownership of Common Stock by directors
is based upon information furnished by each person using "beneficial
ownership" concepts set forth in rules of the Securities and Exchange
Commission (the "SEC") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Under such rules, a person is deemed to be a
"beneficial owner" of a security if that person has or shares "voting
power," which includes the power to vote or direct the voting of such
security, or "investment power," which includes the power to dispose of or
to direct the disposition of such security. The person is also deemed to
be a beneficial owner of any security of which that person has a right to
acquire beneficial ownership within 60 days. Under such rules, more than
one person may be deemed to be a beneficial owner of the same securities,
and a person may be deemed to be a beneficial owner of securities as to
which he or she may disclaim any beneficial ownership. Accordingly,
nominees are named as beneficial owners of shares as to which they may
disclaim any beneficial interest. Except as indicated in other notes to
this table describing special relationships with other persons and
specifying shared voting or investment power, directors possess sole voting
and investment power with respect to all shares of Common Stock set forth
opposite their names.
(2) Includes 64,726 shares held by the Auburn National Bancorporation, Inc.
401(k) and Employee Stock Ownership Plan (the "401(k) Plan"), of which Mr.
Spencer is a co-trustee, as to which Mr. Spencer may be deemed to have
shared voting and investment power with Linda D. Fucci and Anne M. May, as
co-trustees of the 401(k) Plan, and as to which Mr. Spencer disclaims
beneficial ownership of 61,254 Shares. The remaining 3,472 shares are held
by the 401(k) Plan trustees for the benefit of Mr. Spencer. Also includes
24,900 shares held in the Trust of E.L. Spencer, Sr., of which Mr. Spencer
serves as trustee, and 5,000 shares held by Mr. Spencer's wife, as to which
Mr. Spencer may be deemed to have shared voting and investment power.
(3) Includes 9,800 shares held by DTS, a company in which Mr. Wright is a
partner, as to which Mr. Wright may be deemed to have shared voting and
investment power, and as to which Mr. Wright disclaims beneficial ownership
of 9,702 shares. Also includes 1,500 shares held for the benefit of Mr.
Wright by Medical Arts Eye Clinic, PC Money Purchase Pension Plan.
(4) Includes 64,726 shares held by the 401(k) Plan, of which Ms. May is a co-
trustee, as to which Ms. May may be deemed to have shared voting and
investment power with E.L. Spencer, Jr. and Linda D. Fucci, as co-trustees
of the 401(k) Plan, and as to which Ms. May disclaims beneficial ownership.
Also includes 149 shares held by Ms. May's daughter, as to which Ms. May
may be deemed to have shared voting and investment power.
(5) Includes Company and Bank directors and Executive Officers of the Bank.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors held six meetings during 1997 and has five
standing committees: the Executive Committee, the Proxy Committee, the Personnel
and Salary Committee, the Audit and Compliance Committee, and the Strategic
Planning Committee. The Bank's Board of Directors held 12 meetings during 1997
and has the following standing committees separate from the Company: the Audit
and Compliance Committee, the Property Committee, the Executive Committee, the
Loan Committee, the Asset Liability Committee, the Personnel and Salary
Committee, and the Strategic Planning Committee. All directors attended at
least 75% of all meetings of the Company's and the Bank's Board and each
committee on which they served.
The Company's Executive Committee is authorized to act in the absence of
the Board of Directors on certain matters that require Board approval. E. L.
Spencer, Jr., Anne M. May, and Emil F. Wright, Jr. constitute the members of
this committee. This committee held four meetings during 1997.
4
The Proxy Committee is authorized to act on behalf of Company shareholders
when authorized by Proxy. E.L. Spencer, Jr., Emil F. Wright, Jr., and Winifred
H. Boyd constitute the members of this committee. This committee held one
meeting during 1997.
The Personnel and Salary Committee makes recommendations to the Board of
Directors with respect to the compensation of executive officers and employees
of the Company and the Bank. Anne M. May (Chairman), Emil F. Wright, Jr.,
Winifred H. Boyd, and Bank Director Terry Andrus constitute the members of this
committee. This committee met three times during 1997.
The Strategic Planning Committee evaluates potential acquisitions and the
Company's long range goals and oversees the planning process for the officers
and directors strategic planning sessions. E.L. Spencer, Jr., Anne M. May, and
Linda D. Fucci constitute the members of this committee. This committee met
once during 1997.
The Audit and Compliance Committee, which is composed of at least three
Directors that are not serving as officers of the Company or the Bank, is
authorized to make an examination of the affairs of the Company and the Bank and
to report such examinations to the Board of Directors. This committee is
responsible for reviewing the reports of any independent certified public
accountants' examinations and reporting to the Board on such examinations. Anne
M. May (Chairman), Emil F. Wright, Jr., Winifred H. Boyd, and Bank Directors
Terry W. Andrus, C. Wayne Alderman, and E.L. Spencer, III constitute the members
of this committee. This committee met 12 times in 1997.
The entire Board of Directors serves as the Nominating Committee for the
purpose of nominating persons to serve on the Board of Directors and held one
meeting in such capacity in 1997. Shareholders entitled to vote for the
election of directors may also nominate candidates for the Board, provided they
comply with the nomination procedures set forth in the Company's Certificate of
Incorporation.
Members of the Boards of Directors that are not Company or Bank executives
are paid $300 for each Board meeting attended. For his services as such, the
Chairman of the Company's and the Bank's Board of Directors is paid $600 for
each Board meeting attended. In addition to Board meeting fees, members of the
Loan Committee and members of the Audit and Compliance Committee receive $900
per year for serving on each of these committees, and members of the Personnel
and Salary Committee receive $75 per meeting held. Members of the Asset
Liability Committee receive $75 per meeting attended. The Chairman of the Audit
and Compliance Committee receives $1,800 per year, and the Chairman of the
Personnel and Salary Committee received $450 during 1997. Total directors' fees
and bonuses of $103,875 were paid during 1997.
EXECUTIVE OFFICERS
GENERAL
The following lists the executive officers of the Company and the Bank,
their ages as of February 27, 1998, and respective offices held by them, the
period each such position has been held, and a brief account of their business
experience for the past five years. Executive officers are appointed annually
at a meeting of the respective Boards of Directors of the Company and the Bank
in January to serve for one year and until successors are chosen and qualified.
NAME AND AGE OF EXECUTIVE OFFICERS OF INFORMATION ABOUT EXECUTIVE OFFICERS
THE COMPANY AND THE BANK
E.L. Spencer, Jr. (67) Director of the Company and the
Bank; Chairman of the Company's and
Bank's Board of Directors since 1984
and 1980, respectively; President
and Chief Executive Officer of the
Bank and Company since 1990;
President of Spencer Lumber Company
since 1970.
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O.D. Alsobrook, III (46) City President, Opelika Branch, and
Senior Vice President of the Bank
since 1990.
Terrell E. Bishop (61) Senior Vice President (Mortgage
Lending) of the Bank since 1991.
Robert W. Dumas (44) Senior Vice President (Commercial
and Consumer Lending) of the Bank
since 1988; employed by the Bank
since 1984.
Linda D. Fucci (50) Chief Financial Officer, Secretary
and Treasurer of the Company since
1984; Chief Financial Officer and
Senior Vice President of the Bank
since 1988; various other positions
with the Bank since 1972.
Jo Ann Hall (48) Senior Vice President (Operations)
of the Bank since 1994; various
other positions with the Bank since
1974.
SUMMARY COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information regarding compensation
paid or to be paid by the Company or the Bank during 1997, 1996, and 1995 to E.
L. Spencer, Jr., as the Company's and the Bank's Chief Executive Officer, and
during 1997 to Robert W. Dumas, a Bank Senior Vice President. No other
executive officer's aggregate salary and bonuses in 1997 exceeded $100,000. The
Company has not granted any stock options or stock appreciation rights and has
not made any payouts under any long-term incentive plan.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION (1)
Name and Other Annual All Other
Principal Position Year Salary Bonus Compensation Compensation
- ------------------ -------- ------ ----- ------------- -------------
($) ($) ($) ($)
(a) (b) (c) (d) (e) (i)
E.L. Spencer, Jr., 1997 176,000 35,000 -0- 26,389(2)
Chairman, CEO and Director 1996 168,000 30,000 -0- 44,319(2)
of the Company and the Bank 1995 159,148 21,000 -0- 40,630(2)
Robert W. Dumas, 1997 83,738 18,500 -0- 5,319(4)
Senior Vice President of the 1996(3)
Bank 1995(3)
- ----------
(1) Excludes certain personal benefits, the total value of which did not exceed
the lesser of $50,000 or 10% of the total annual salary and bonus for Mr.
Spencer or Mr. Dumas, respectively.
(2) Includes Company contributions or other allocations to the 401(k) Plan of
$8,289, $7,319, and $9,530; and Board of Directors and Board committee fees
of $18,100, $17,000, and $11,100, respectively, for the years 1997, 1996,
and 1995. Includes premiums paid on a split-dollar whole life insurance
policy of $20,000 for the years 1996 and 1995. The Company purchased the
split-dollar whole life insurance policy in 1990. Through 1996, premiums
paid totaled
6
$120,000. In 1997, the Company elected to reduce the base face amount to
$208,530 and to use a portion of the cash value to purchase the paid up
value of $42,357. Beginning in 1997, dividends earned by the policy will
be used to pay annual premiums of $8,777 or to purchase additional
insurance. Should the dividends be insufficient to pay annual premiums,
the Company will either make a payment of the difference or reduce the face
amount of insurance accordingly. Upon the Chairman's death, the Company
will receive a return of all premiums paid, and the Chairman's spouse will
receive the remaining benefits in trust. If the policy is surrendered, the
Company will receive the cash surrender value. The policy is reevaluated
on an annual basis by the Personnel and Salary Committee.
(3) Reporting not required for 1996 and 1995 since the aggregate salary and
bonuses did not exceed $100,000.
(4) Includes Company contributions or other allocations to the 401(k) Plan of
$5,319.
CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
Various Company and Bank directors, officers, and their affiliates,
including corporations and firms of which they are officers or in which they
and/or their families have an ownership interest, are customers of the Company
and the Bank. These persons, corporations, and firms have had transactions in
the ordinary course of business with the Company and the Bank, including
borrowings, all of which, in the opinion of management, were on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with unaffiliated persons and did not
involve more than the normal risk of collectability or present other unfavorable
features. The Company and the Bank expect to have such transactions, on similar
terms, with its directors, officers, and their affiliates in the future. The
aggregate amount of loans outstanding by the Bank to directors, executive
officers, and related parties of the Company or the Bank as of December 31, 1997
was approximately $7,072,874, which represented approximately 27.15% of the
Company's consolidated shareholders' equity on that date.
None of the directors of the Company serves as an executive officer of, or
owns, or during 1997 owned, of record or beneficially, in excess of 10% equity
interest in any business or professional entity that has made during 1997, or
proposes to make in 1998, payments to the Company or the Bank for property or
services in excess of 5% of the Company's consolidated gross revenues for 1997,
or in excess of 5% of such other business or professional entity's consolidated
gross revenues for 1997.
PROPOSAL TWO
INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors believes that it is in the Company's best interests
to increase the number of authorized shares of Common Stock by 6,000,000 shares
to 8,500,000 shares in order to have additional authorized but unissued shares
available for issuance to meet business demands as they may arise. The Board of
Directors believes that such additional shares will provide the Company with the
flexibility to issue Common Stock for possible future stock dividends or splits,
acquisitions, stock option plans, possible future financings or other corporate
purposes which may be identified in the future by the Board of Directors,
without the possible expense and delay of a special shareholders' meeting.
The authorized shares of Common Stock in excess of those issued will be
available for issuance at such times and for such corporate purposes as the
Board of Directors may deem advisable, without further action by the Company's
stockholders, except as may be required by applicable law or by the rules of the
Nasdaq SmallCap Market or any other stock exchange or national securities
association trading system on which the securities may be listed or traded.
Upon issuance, such shares will have the same rights as the outstanding shares
of Common Stock. Holders of Common Stock have no preemptive rights.
The Company has no arrangements, agreements, or understandings at the
present time for the issuance or use of the additional shares of Common Stock
proposed to be authorized, except that the Company has a dividend reinvestment
plan under which it may issue such additional shares of Common Stock and is
considering a possible stock split or dividend. The issuance of additional
shares of Common Stock may have a dilutive effect on earnings per share and, for
persons who
7
do not purchase additional shares to maintain their pro rata interest in the
Company, on such stockholders' percentage voting power.
Although the Company has no present intention to issue shares of Common
Stock to make acquisitions of control of the Company more difficult and is
unaware of any pending proposals to acquire the Company, future issuances of
Common Stock could have that effect. For example, the acquisition of shares of
the Company's Common Stock by an entity seeking to acquire control of the
Company might be discouraged through the public or private issuance of
additional shares of Common Stock, since cush issuance would dilute the stock
ownership of the acquiring entity. Common Stock could also be issued to
existing stockholders as a dividend or privately placed with purchasers who
might side with the Board in opposing a takeover bid, thus discouraging such a
bid.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF AN AMENDMENT TO
THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF THE COMPANY'S COMMON STOCK FROM 2,500,000 TO 8,500,000 SHARES, AND THE
ENCLOSED PROXY, IF PROPERLY COMPLETED AND RETURNED, WILL BE SO VOTED UNLESS A
SHAREHOLDER EXECUTING THE PROXY SPECIFICALLY VOTES AGAINST THIS PROPOSAL OR
ABSTAINS FROM VOTING BY MARKING THE APPROPRIATELY DESIGNATED BLOCK ON THE PROXY.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG Peat Marwick, LLP, independent
certified public accountants, as independent auditors for the Company and its
subsidiary for the current fiscal year ending December 31, 1998, subject to
ratification by the shareholders. KPMG Peat Marwick has served as independent
auditors for the Company, its predecessor, and its subsidiary since 1985 and has
advised the Company that neither the firm nor any of its partners has any direct
or material interest in the Company and its subsidiaries except as auditors and
independent certified public accountants of the Company.
A representative of KPMG Peat Marwick will be present at the Meeting, will
be given the opportunity to make a statement on behalf of the firm if he so
desires and will be available to respond to appropriate questions from
shareholders.
The appointment of KPMG Peat Marwick will be ratified by the shareholders
if the votes cast by the holders of the shares of Common Stock having voting
power represented at the meeting and entitled to vote on the matter favoring the
action exceed the votes cast in opposition to thereto.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK, LLP AS INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 1998, AND THE ENCLOSED PROXY, IF PROPERLY COMPLETED AND
RETURNED, WILL BE SO VOTED UNLESS A SHAREHOLDER EXECUTING THE PROXY SPECIFICALLY
VOTES AGAINST THIS PROPOSAL OR ABSTAINS FROM VOTING BY MARKING THE APPROPRIATELY
DESIGNATED BLOCK ON THE PROXY.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information concerning the only
"persons" (as that term is defined by the Securities Exchange Commission, "the
SEC") who are known by the Company to be the beneficial owners of more than 5%
of the Common Stock, the Company's only class of voting securities, as of
February 27, 1998, and the ownership of the Common Stock as of that date by the
Company's Chief Executive Officer and the Company's and Bank's executive
officers and directors as a group. Positions listed are with the Company,
unless otherwise indicated.
8
NAME OF BENEFICIAL OWNERS NUMBER AND PERCENT
OF COMMON STOCK
BENEFICIALLY OWNED
E. L. Spencer, Jr. 253,370(1)
Chairman and Chief Executive Officer 19.37%
Emil F. Wright, Jr. 142,260(2)
Vice Chairman 10.92%
All Executive Officers and Directors 455,620(3)
as a Group (16 persons) 34.83%
(1) Includes 64,726 shares held by the 401(k) Plan, of which Mr. Spencer is a
co-trustee, as to which Mr. Spencer may be deemed to have shared voting and
investment power with Linda D. Fucci and Anne M. May, as co-trustees of the
401(k) Plan, and as to which Mr. Spencer disclaims beneficial ownership of
61,254 shares. The remaining 3,472 shares are held by the 401(k) Plan
trustees for the benefit of Mr. Spencer. Also includes 24,900 shares held
in the Trust of E. L. Spencer, Sr., of which Mr. Spencer serves as trustee,
and 5,000 shares held by Mr. Spencer's wife, as to which Mr. Spencer may be
deemed to have shared voting and investment power.
(2) Includes 9,800 shares held by DTS, a company in which Mr. Wright is a
partner, as to which Mr. Wright may be deemed to have shared voting and
investment power, and as to which Mr. Wright disclaims beneficial ownership
of 9,702 shares. Also includes 1,500 shares held for the benefit of Mr.
Wright by the Medical Arts Eye Clinic, PC Money Purchase Pension Plan.
(3) Includes Bank and Company Directors and Executive Officers of the Bank.
RETIREMENT PLAN
The Company has established the 401(k) Plan which covers substantially all
employees. Participants become 20% vested in their accounts after two years of
service with an additional 20% vesting each year until the participant is 100%
vested after six years of service. Contributions to the 401(k) Plan are
determined by the Board of Directors based principally on the Company's
earnings. Company contributions to the 401(k) Plan amounted to $117,863 and
$111,185 in 1997 and 1996, respectively.
The Company previously sponsored two retirement plans, the Auburn National
Bancorporation, Inc. Employee Incentive Plan and the Auburn National
Bancorporation, Inc. Employee Stock Ownership Plan (the "ESOP"). In January
1994, the two plans were merged to form the 401(k) Plan. During 1989, the ESOP
borrowed $570,062 from an unrelated financial institution to purchase 63,060
shares of common stock of Auburn National Bancorporation, as restated for stock
dividends. The note is payable in annual principal installments of $57,006 and
quarterly interest payments until December 31, 1998. The note bears interest at
82% of the lender's prime rate and is guaranteed by the Company.
OTHER MATTERS
The Company knows of no other matters to be brought before the Meeting.
However, if any other proper matter is presented, the persons named in the
enclosed form of Proxy intend to vote the Proxy in accordance with their
judgment of what is in the best interest of the Company.
9
AVAILABILITY OF ANNUAL REPORT
Copies of the Company's Annual Report for the year ended December 31, 1997,
have been provided to each shareholder. Upon the written request of any person
whose Proxy is solicited by this Proxy Statement, the Company will furnish to
such person without charge (other than for exhibits) a copy of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997,
including financial statements and schedules thereto, as filed with the SEC.
Such requests should be directed to Daria S. Story, Assistant
Secretary/Shareholder Relations, Auburn National Bancorporation, Inc., P.O. Box
3110, Auburn, Alabama, 36831-3110.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of shareholders intended to be presented at the Company's 1999
annual meeting must be received by the Company by December 28, 1998, in order to
be eligible for inclusion in the Company's proxy statement and form of proxy for
that meeting.
OTHER INFORMATION
PROXY SOLICITATION COSTS
The cost of soliciting Proxies for the Meeting will be paid by the Company.
In addition to the solicitation of shareholders of record by mail, telephone,
facsimile, or personal contact, the Company will contact brokers, dealers,
banks, or voting trustees or their nominees who can be identified as record
holders of Common Stock; such holders, after inquiry by the Company, will
provide information concerning quantities of proxy materials and 1997 Annual
Reports needed to supply such information to beneficial owners, and the Company
will reimburse such persons for the reasonable expenses of mailing proxy
materials and 1997 Annual Reports to such persons.
By Order of the Board of Directors
Linda D. Fucci
Secretary
April 17, 1998
10
AUBURN NATIONAL BANCORPORATION, INC. PROXY
1998 ANNUAL MEETING OF SHAREHOLDERS
KNOW BY ALL MEN BY THESE PRESENTS, that the undersigned shareholder of Auburn
National Bancorporation, Inc., Auburn, Alabama (the "Company"), hereby revoking
any proxy heretofore given, does hereby nominate, constitute, and appoint E.L.
Spencer, Jr., Emil F. Wright, Jr., and Winifred H. Boyd or either one of them,
the true and lawful attorneys and proxies of the undersigned, with full power of
substitution, for the undersigned and in the undersigned's name, place, and
stead, to vote all of the shares of common stock of the Company standing in the
undersigned's name, on its books on February 27, 1998, and that the undersigned
may be entitled to vote at the Annual Meeting of Shareholders to be held at the
AuburnBank Center, 132 N Gay Street, Auburn, Alabama at 3:00 p.m. local time, on
Tuesday, May 12, 1998, and at any adjournments thereof (the "Meeting"), with all
the powers the undersigned would possess if personally present as follows:
SAID PROXIES WILL VOTE ON THE PROPOSALS SET FORTH IN THE NOTICE OF ANNUAL
MEETING AS SPECIFIED ON THIS PROXY CARD AND ARE AUTHORIZED TO VOTE IN THEIR
DISCRETION AS TO ANY OTHER BUSINESS THAT MAY COME PROPERLY BEFORE THE MEETING.
IF NO VOTE IS SPECIFIED, SAID PROXIES WILL VOTE IN FAVOR OF THE FOLLOWING
PROPOSALS:
1. ELECTION OF DIRECTORS: [_] FOR all nominees for director
listed below. (Except as marked
to the contrary below)
[_] WITHHOLD AUTHORITY
(to vote for all nominees listed)
(INSTRUCTION: To withhold authority to vote for any individual
nominee, mark a line through the nominee's name in the
list below.)
E.L. Spencer, Jr., Terry W. Andrus, J.E. Evans, Anne M. May,
Emil F. Wright
2. To amend the Company's Certificate of Incorporation to INCREASE THE NUMBER
OF AUTHORIZED SHARES of the Company's Common Stock from 2,500,000 to
8,500,000.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To RATIFY THE APPOINTMENT OF KPMG Peat Marwick LLP as independent auditors
for the Company for the fiscal year ending December 31, 1998.
[_] FOR [_] AGAINST [_] ABSTAIN
4. In the discretion of the proxies on such other matters as may properly
come before the meeting or any adjournments thereof.
[_] AUTHORIZED [_] WITHHOLD AUTHORITY
Please date and sign this Proxy exactly as the names appear heron. NOTE: When
signing as attorney, executor, trustee, administrator or guardian, please give
full title as such. If more than one trustee, all should sign. In the case of
joint tenants, each joint owner must sign. If a corporation, please sign in
full corporate name by president or other unauthorized officer. If a
partnership, please sign in partnership name by authorized person.
DATED: ______________________, 1998 _________________________________________
Signature
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE. THE _________________________________________
PROXY MAY BE REVOKED BY THE Signature, if held jointly
SHAREHOLDER PRIOR TO ITS EXERCISE.
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