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
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SECURITY BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
SECURITY BANCORP, INC.
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(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transactions applies:
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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[ ] 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:
N/A
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(2) Form, schedule or registration statement no.:
N/A
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(3) Filing party:
N/A
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(4) Date filed:
N/A
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[Security Bancorp Logo]
March 13, 2001
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Security Bancorp, Inc. ("Company"), the holding company for Security Federal
Savings Bank of McMinnville, TN. The meeting will be held at the Savings
Bank's main office located at 306 West Main Street, McMinnville, Tennessee, on
Wednesday, April 18, 2001, at 2:00 p.m., Central Time.
The Notice of Annual Meeting of Stockholders and Proxy Statement
appearing on the following pages describe the formal business to be transacted
at the meeting. During the meeting, we will also report on the operations of
the Company. Directors and officers of the Company, as well as a
representative of Housholder, Artman and Associates, P.C., the Company's
independent auditors, will be present to respond to appropriate questions of
stockholders.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person and regardless of the number of shares
you own. To ensure that your shares are represented, we urge you to complete
and mail the enclosed proxy card. If you attend the meeting, you may vote in
person even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Joe H. Pugh
Joe H. Pugh
President and Chief Executive Officer
SECURITY BANCORP, INC.
306 WEST MAIN
MCMINNVILLE, TENNESSEE 37110
(931) 473-4483
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 18, 2001
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Security Bancorp, Inc. ("Company") will be held at the main office of Security
Federal Savings Bank of McMinnville, TN located at 306 West Main Street,
McMinnville, Tennessee, on Wednesday, April 18, 2001, at 2:00 p.m., Central
Time, for the following purposes:
1. To elect two directors to serve for a term of three years;
2. To approve the appointment of Housholder, Artman and Associates,
P.C. as the Company's independent auditors for the fiscal year
ending December 31, 2001; and
3. To act upon such other matters as may properly come before the
meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Any action may be taken on the foregoing proposals at the meeting on the
date specified above or on any date(s) to which, by original or later
adjournment, the meeting may be adjourned. Only stockholders of record at the
close of business on March 1, 2001 are entitled to notice of and to vote at
the meeting and any adjournments or postponements thereof.
You are requested to complete and sign the enclosed form of proxy, which
is solicited by the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend the meeting and
vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Earl H. Barr
EARL H. BARR
SECRETARY
McMinnville, Tennessee
March 13, 2001
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
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PROXY STATEMENT
OF
SECURITY BANCORP, INC.
306 WEST MAIN STREET
MCMINNVILLE, TENNESSEE 37110
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ANNUAL MEETING OF STOCKHOLDERS
APRIL 18, 2001
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Security Bancorp, Inc. ("Company"), the
holding company for Security Federal Savings Bank of McMinnville, TN ("Savings
Bank"), to be used at the Annual Meeting of Stockholders ("Meeting") of the
Company. The Meeting will be held at the Savings Bank's main office located
at 306 West Main Street, McMinnville, Tennessee, on Wednesday, April 18, 2001,
at 2:00 p.m., Central Time. This Proxy Statement and the enclosed proxy card
are being first mailed to stockholders on or about March 13, 2001.
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VOTING AND PROXY PROCEDURE
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Stockholders Entitled to Vote at Meeting. Only stockholders of record at
the close of business on March 1, 2001 ("Voting Record Date") are entitled to
vote at the Meeting and are entitled to one vote for each share of common
stock ("Common Stock") of the Company then held. As of the close of business
on the Voting Record Date, the Company had 433,925 shares of Common Stock
issued and outstanding. The Common Stock is the only outstanding class of
securities of the Company.
As provided in the Company's Charter, record holders of the Company's
Common Stock who beneficially own, either directly or indirectly, in excess of
10% of the Company's outstanding shares are not entitled to any vote in
respect of the shares held in excess of the 10% limit.
If you are a beneficial owner of Company Common Stock held by a broker,
bank or other nominee (i.e., in "street name"), you will need proof of
ownership to be admitted to the Meeting. A recent brokerage statement or
letter from a bank or broker are examples of proof of ownership. If you want
to vote your shares of Company Common Stock held in street name in person at
the Meeting, you will have to get a written proxy in your name from the
broker, bank or other nominee who holds your shares.
Quorum Requirement. The presence, in person or by proxy, of at least a
majority of the total number of outstanding shares of Common Stock entitled to
vote is necessary to constitute a quorum at the Meeting. Abstentions and
broker non-votes will be counted as shares present and entitled to vote at the
Meeting for purposes of determining the existence of a quorum.
Proxies; Proxy Revocation Procedures. The Board of Directors solicits
proxies so that each stockholder has the opportunity to vote on the proposals
to be considered at the Meeting. When a proxy card is returned properly
signed and dated, the shares represented thereby will be voted in accordance
with the instructions on the proxy card. Where a proxy card is properly
signed and dated but no instructions are indicated, proxies will be voted FOR
the nominees for directors set forth in the following pages, and FOR the
approval of the appointment of independent auditors. If a stockholder attends
the Meeting, he or she may vote by ballot.
Stockholders who execute proxies retain the right to revoke them at any
time. Proxies may be revoked by written notice delivered in person or mailed
to the Secretary of the Company or by filing a later dated proxy before a vote
being taken on a particular proposal at the Meeting. Attendance at the
Meeting will not automatically revoke a proxy, but a stockholder in attendance
may request a ballot and vote in person, thereby revoking a prior granted
proxy.
If your Company Common Stock is held in street name, you will receive
instructions from your broker, bank or other nominee that you must follow in
order to have your shares voted. Your broker or bank may allow you to deliver
your voting instructions via the telephone or the Internet. Please see the
instruction form that accompanies this proxy statement. If you wish to change
your voting instructions after you have returned your voting instruction form
to your broker or bank, you must contact your broker or bank.
Participants in the Security Federal Savings Bank of McMinnville, TN
ESOP. If a stockholder is a participant in the Security Federal Savings Bank
of McMinnville, TN Employee Stock Ownership Plan ("ESOP"), the proxy card
represents a voting instruction to the trustees of the ESOP as to the number
of shares in the participant's plan account. Each participant in the ESOP may
direct the trustees as to the manner in which shares of Common Stock allocated
to the participant's plan account are to be voted. Unallocated shares of
Common Stock held by the ESOP and allocated shares for which no voting
instructions are received will be voted by the trustees in the same proportion
as shares for which the trustees have received voting instructions. The
deadline for returning your voting instructions to the trustees is April 16,
2001.
Vote Required. The two directors to be elected at the Meeting will be
elected by a plurality of the votes cast by stockholders present in person or
by proxy and entitled to vote. Stockholders are not permitted to cumulate
their votes for the election of directors. Votes may be cast for or withheld
from each nominee for election as directors. Votes that are withheld and
broker non-votes will have no effect on the outcome of the election because
directors will be elected by a plurality of votes cast.
With respect to the other proposal to be voted upon at the Meeting,
stockholders may vote for or against the proposal or may abstain from voting.
Approval of the appointment of independent auditors requires the affirmative
vote of a majority of the shares of Common Stock present in person or by proxy
and entitled to vote. Broker non-votes will have no effect on the outcome of
this proposal. Abstentions, however, will have the same effect as a vote
against this proposal.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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Persons and groups who beneficially own in excess of 5% of the Company's
Common Stock are required to file certain reports with the Securities and
Exchange Commission ("SEC"), and provide a copy to the Company, disclosing
such ownership pursuant to the Securities Exchange Act of 1934, as amended
("Exchange Act"). Based on such reports, the following table sets forth, as
of the close of business on the Voting Record Date, certain information as to
those persons who were beneficial owners of more than 5% of the outstanding
shares of Common Stock. Management knows of no persons other than those set
forth below who beneficially owned more than 5% of the outstanding shares of
Common Stock at the close of business on the Voting Record Date. The table
also sets forth, as of the close of business on the Voting Record Date,
certain information as to shares of Common Stock beneficially owned by the
Company's directors and "named executive officers" and all directors and
executive officers as a group.
2
Number of Shares Percent of Shares
Name Beneficially Owned(1) Outstanding
Beneficial Owners of More Than 5%
Security Federal Savings Bank of McMinnville, TN 22,695 (2) 5.23%
Employee Stock Ownership Plan Trust
306 West Main Street
McMinnville, Tennessee 37110
Salem Investment Counselors, Inc.(3) 23,800 5.48
P.O. Box 25427
Winston-Salem, North Carolina 27114-5427
Directors
Earl H. Barr 16,838 3.88
Robert W. Newman 16,348 3.77
Dr. R. Neil Schultz 18,073 4.17
Dr. John T. Mason, III 4,348 1.00
Donald R. Collette 6,248 1.44
Dr. Franklin J. Noblin 12,014 2.77
Named Executive Officer(4)
Joe H. Pugh(5) 20,826 4.80
All Executive Officers and
Directors as a Group (12 persons) 109,272 25.18
_______________
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed
to be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he or she has voting or investment power with respect to
such security. The table includes shares owned by spouses, other
immediate family members in trust, shares held in retirement accounts or
funds for the benefit of the named individuals, and other forms of
ownership, over which shares the persons named in the table may possess
voting and/or investment power. Shares held in accounts under the
Savings Bank's ESOP, as to which the holders have voting power but not
investment power, are included as follows: Mr. Pugh, 2,344 shares, and
all executive officers and directors as a group, 7,189 shares. Shares of
restricted stock granted under the Company's Management Recognition and
Development Plan, as to which the holders have voting power but not
investment power, are included as follows: Mr. Barr, 525 shares; Mr.
Newman, 525 shares; Dr. Schultz, 525 shares; Dr. Mason, 525 shares; Mr.
Collette 525 shares; Dr. Noblin, 525 shares; and Mr. Pugh, 2,620 shares;
all executive officers and directors as a group, 10,665 shares. The
amounts shown also include the following amounts of Common Stock which
the indicated individuals have the right to acquire within 60 days of the
Voting Record Date through the exercise of stock options granted pursuant
to the Company's stock option plans: Mr. Barr, 872 shares; Mr. Newman,
872 shares; Dr. Schultz, 872 shares; Dr. Mason, 872 shares; Mr. Collette
872 shares; Dr. Noblin, 872 shares; and Mr. Pugh, 4,634 shares; all
executive officers and directors as a group, 14,832 shares.
(2) Under the terms of the ESOP, the trustees will vote unallocated shares
and allocated shares for which no voting instructions are received in the
same proportion as shares for which the trustees have received voting
instructions from participants. As of the Voting Record Date, 12,219
shares have been allocated to participants' accounts. The trustees of the
ESOP are Messrs. Pugh, Collette and Newman.
(table continued on following page)
3
(3) Based on information disclosed in a Schedule 13G, dated February 18,
2000, filed with the SEC.
(4) SEC regulations define the term "named executive officer" to include the
chief executive officer, regardless of compensation level, and the four
most highly compensated executive officers, other than the chief
executive officer, whose total annual salary and bonus for the last
completed fiscal year exceeded $100,000. Mr. Pugh is the Company's only
"named executive officer" for the fiscal year ended December 31, 2000.
(5) Mr. Pugh is also a director of the Company.
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Company's Board of Directors consists of seven members as required by
the Company's Bylaws. In accordance with the Company's Charter, the Board of
Directors is divided into three classes with three-year staggered terms, with
approximately one-third of the directors elected each year. Two directors
will be elected at the Meeting to serve for the respective term set forth in
the following table, or until their respective successors have been elected
and qualified. The nominees for election this year are Joe H. Pugh and Dr. R.
Neil Schultz, each of whom is a current member of the Board of Directors of
the Company and of the Savings Bank.
It is intended that the proxies solicited by the Company's Board of
Directors will be voted for the election of the above named nominees. If any
nominee is unable to serve, the shares represented by all valid proxies will
be voted for the election of such substitute nominee as the Board of Directors
may recommend, or the Board of Directors may adopt a resolution to amend the
Bylaws and reduce the size of the Board. At this time the Board of Directors
knows of no reason why any nominee might be unavailable to serve.
The Board of Directors recommends a vote "FOR" the election of Messrs.
Pugh and Schultz.
The following table sets forth certain information regarding the nominees
for election at the Meeting as well as information regarding those directors
continuing in office after the Meeting.
Year First Elected Term to
Name Age (1) Director (2) Expire
---- ------- ------------ ------
BOARD NOMINEES
Joe H. Pugh 44 1992 2004(3)
Dr. R. Neil Schultz 64 1992 2004(3)
DIRECTORS WHOSE TERM CONTINUES
Robert W. Newman 49 1992 2002
Donald R. Collette 64 1994 2002
Dr. Franklin J. Noblin 62 1993 2002
Earl H. Barr 63 1992 2003
Dr. John T. Mason, III 62 1986 2003
______________
(1) As of December 31, 2000.
(2) Includes prior service on the Board of Directors of the Savings Bank.
(3) Assuming the individual is elected.
The present principal occupation and other business experience during the
last five years of each nominee for election and for each continuing director
is set forth below:
4
Joe H. Pugh has been employed by the Savings Bank since 1978. Mr. Pugh
has served as President and Chief Executive Officer of the Savings Bank since
1993 and President and Chief Executive Officer of the Company since its
inception in 1997. He is a past member of the McMinnville Chamber of Commerce
Board, and a member of the McMinnville Noon Rotary Club and the Community
Advisory Board of Bridgestone/Firestone. Mr. Pugh also serves as a trustee of
the Motlow State Community College.
Dr. R. Neil Schultz, a retired orthodontist, is a member of the
McMinnville Noon Rotary Club and past president of the Tennessee Association
of Orthodontists. Dr. Schultz serves as the Chairman of the Board of the
Directors of the Company and the Savings Bank.
Robert W. Newman is a partner with the law firm Galligan & Newman in
McMinnville, Tennessee. He also is a member of the McMinnville Breakfast
Rotary Club.
Donald R. Collette is a retired General Manager of McMinnville Electric
System in McMinnville, Tennessee. He is past president of the McMinnville
Chamber of Commerce and a member of the McMinnville Economic Development
Committee and the McMinnville Noon Rotary Club.
Dr. Franklin J. Noblin, is a retired general dentist, and a retired
Colonel in the United States Army Reserve-Chief of Professional Services and
Brigade Dental Surgeon. He also is a member of the McMinnville Breakfast
Rotary Club.
Earl H. Barr is the owner and manager of Barr's Inc., a retail furniture
store, in McMinnville, Tennessee. He is the past Chairman of, and currently
serves as a director of, the Board of the McMinnville Chamber of Commerce, and
is a member of the Board of the McMinnville Housing Authority. Mr. Barr is a
past director of the American Heart Association Board, and a member of the
McMinnville Noon Rotary Club, the Warren County Homebuilders Association and
the Community Advisory Board of Bridgestone/Firestone.
Dr. John T. Mason, III is a retired Professor of Chemical Engineering at
Tennessee Tech University.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Boards of Directors of the Company and the Savings Bank conduct their
business through meetings of the Boards and through their committees. During
the fiscal year ended December 31, 2000, the Board of Directors of the Company
held 12 meetings, and the Board of Directors of the Savings Bank held 12
meetings. No director of the Company or the Savings Bank attended fewer than
75% of the total meetings of the Boards and committees on which such person
served during the 2000 fiscal year.
Committees of the Company's Board. The Company's Board of Directors has
established Executive, Audit and Nominating Committees, among others.
The Company's Executive Committee, consisting of Directors Mason, Pugh,
Collette, Barr and Schultz, acts on behalf of the full Board of Directors in
its absence. The Committee has the same authority as the full Board of
Directors. This Committee did not meet during the 2000 fiscal year.
The Company's Audit Committee, consisting of Directors Newman, Collette
and Barr, is responsible for reviewing the internal auditors' reports and
results of their examination prior to review by and with the entire Board of
Directors and retains and establishes the scope of engagement of the Company's
independent auditors. This Committee did not meet during the 2000 fiscal
year.
5
The Company's Nominating Committee, consisting of the full Board of
Directors is responsible for the annual selection of nominees for election as
directors of the Company. The full Board of Directors met once in its
capacity as Nominating Committee during the 2000 fiscal year.
Committees of the Savings Bank's Board. The Savings Bank's Board of
Directors has established Executive, Personnel and Nominating Committees,
among others.
The Executive Committee consists of Directors Collette, Mason, Schultz,
Barr and Pugh. This Committee meets on an as-needed basis and acts on behalf
of the full Board of Directors in its absence. This Committee has the same
authority as the full Board of Directors. This Committee met four times
during the 2000 fiscal year.
The Personnel Committee (which also serves as a Compensation Committee)
consists of Directors Newman, Collette and Pugh. This Committee meets on an
as-needed basis and is responsible for reviewing the Savings Bank's personnel
to determine if and when additional personnel are needed. The Committee is
also involved in the interview process for new personnel. This Committee met
nine times during the 2000 fiscal year.
The full Board of Directors acts as a Nominating Committee for the annual
selection of nominees for election as directors of the Savings Bank. The full
Board of Directors met once in its capacity as Nominating Committee during the
2000 fiscal year.
Audit Committee Matters
Audit Committee Report. The Company's Audit Committee has issued the
following report with respect to the audited financial statements of the
Company for the fiscal year ended December 31, 2000:
. The Audit Committee has reviewed and discussed with the Company's
management the Company's fiscal 2000 audited financial statements;
. The Audit Committee has discussed with the Company's independent
auditors (Housholder, Artman and Associates, P.C.) the matters
required to be discussed by Statement on Auditing Standards No. 61;
. The Audit Committee has received the written disclosures and letter
from the independent auditors required by Independence Standards
Board No. 1 (which relates to the auditors' independence from the
Company and its related entities) and has discussed with the
auditors their independence from the Company; and
. Based on the review and discussions referred to in the three items
above, the Audit Committee recommended to the Board of Directors
that the fiscal 2000 audited financial statements be included in
the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2000.
Submitted by the Audit Committee of the Company's Board of Directors:
/s/Robert W. Newman
/s/Donald R. Collette
/s/Earl H. Barr
6
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DIRECTORS' COMPENSATION
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Members of the Savings Bank's Board of Directors receive fees of $500 per
Board meeting attended, except for the Chairman of the Board who receives a
fee of $600 per Board meeting attended. Outside directors receive $100 per
committee meeting attended and committee chairmans receive an annual $300
committee chairman fee. Outside directors also receive a $1,200 annual
retainer fee. Total fees paid to directors during the year ended December 31,
2000 were $66,000. No separate fees are paid for service on the Company's
Board of Directors.
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EXECUTIVE COMPENSATION
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Summary Compensation Table
The following information is presented for Mr. Pugh.
Long-term Compensation
Annual Compensation(1) Awards
------------------------------------------ ----------------------
Other Restricted Number All
Name and Annual Stock of Other Annual
Position Year Salary Bonus Compensation(2) Awards(3) Options(4) Compensation(5)
- -------- ---- ------ ----- --------------- --------- ---------- ---------------
Joe H. Pugh 2000 $94,500 $8,950 $6,000 $ -- -- $4,740
President 1999 89,500 7,750 6,000 -- -- 4,452
1998 77,500 9,000 6,000 75,279 10,911 3,555
_______________
(1) All compensation is paid by the Savings Bank.
(2) Consists of directors' fees. The aggregate amount of perquisites and other personal benefits was
less than 10% of the total annual salary and bonus reported.
(3) Represents the value of the award of 4,364 shares of restricted stock awards on July 1, 1998, the
date of grant, pursuant to the Management Recognition and Development Plan. Dividends are paid
on such awards if and when declared and paid by the Company on the Common Stock. At December 31,
2000, the value of the unvested awards (which vest pro rata over the remaining three year period)
was approximately $35,698 (2,620 shares at $13.625 per share).
(4) Represents the number of options granted on July 1, 1998, which vest at a rate of 20% per year
over a five year period. At December 31, 2000, a total of 6,547 options remain unvested.
(5) Consists of employer 401(k) plan contributions.
Option Exercise/Value Table. The following information is provided for Mr. Pugh.
Number of
Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Shares at Fiscal Year End(#) at Fiscal Year End($)(1)
Acquired on Value --------------------- ------------------------
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----------- ----------- ------------- ----------- -------------
Joe H. Pugh -- -- 4,364 6,547 -- --
_______________________
(1) Value of unexercised in-the-money stock options equals the market value of shares covered by
in-the-money options on December 31, 2000 less the option exercise price. Options are
in-the-money if the market value of shares covered by the options is greater than the exercise
price. The exercise price on the option grant date was $17.25. The price of the Common Stock at
December 31, 2000 was $13.625.
7
Employment and Severance Agreements
The Company and the Savings Bank (collectively, the "Employers") have
entered into a three-year employment agreement ("Employment Agreement" or
"Agreement") with Mr. Pugh. Under the Employment Agreement, the current base
salary for Mr. Pugh is $94,500, which is paid by the Savings Bank and may be
increased at the discretion of the Board of Directors or an authorized
committee of the Board of Directors of the Savings Bank. Mr. Pugh's salary
may not be decreased during the term of the Employment Agreement without his
prior written consent. On the anniversary of the commencement date of the
Agreement, the term of the Agreement may be extended by the Board of Directors
for an additional year unless a termination notice is given by Mr. Pugh. The
Agreement is terminable by the Employers for just cause at any time or in
certain events specified by federal regulations.
The Agreement provides for a severance payment and other benefits if
employment is terminated following a change in control. This severance
payment and benefits, which will be made promptly after any change in control,
will have a value equal to 2.99 times the average annual compensation paid to
Mr. Pugh during the five years immediately preceding the change in control.
Under the Agreement, a "change in control" is deemed to occur if, at anytime
during the term of the Agreement, a person other than the Company purchases
shares of common stock pursuant to a tender or exchange offer for such shares,
any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act) is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 25% or more of the combined voting
power of the Company's then outstanding securities, the membership of the
Board of Directors changes as the result of a contested election, or
stockholders of the Company approve a merger, consolidation, sale or
disposition of all or substantially all of the Company's assets, or a plan of
partial or complete liquidation has occurred. Assuming that a change in
control had occurred at December 31, 2000, Mr. Pugh would be entitled to a
severance payment and benefits with a value of approximately $278,000.
The Employers have also entered into employment and severance agreements
with other senior officers of the Company and/or the Savings Bank on
substantially similar terms.
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COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
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Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than 10% of any registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the SEC. Executive officers, directors and greater
than 10% stockholders are required by regulation to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms it has received
and written representations provided to the Company by the above referenced
persons, the Company believes that, during the fiscal year ended December 31,
2000, all filing requirements applicable to its reporting officers, directors
and greater than 10% stockholders were properly and timely complied with.
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TRANSACTIONS WITH MANAGEMENT
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Federal regulations require that all loans or extensions of credit to
executive officers and directors must be made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons (unless the loan or extension of
credit is made under a benefit program generally available to all other
employees and does not give preference to any insider over any other employee)
and does not involve more than the normal risk of repayment or present other
unfavorable features. The Savings Bank is therefore prohibited from making
any new loans or extensions of credit to the Savings Bank's executive officers
and directors and at different rates or terms than those offered to the
general public and has adopted a policy to this effect. The aggregate amount
of loans by the Savings Bank to its executive officers and directors was
approximately $1.1 million at December 31, 2000. Such loans (i) were made in
the ordinary course of business, (ii) were made on
8
substantially the same terms and conditions, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
the Savings Bank's other customers, and (iii) did not involve more than the
normal risk of collectibility or present other unfavorable features when made.
Director Earl H. Barr owns and manages Barr's, Inc., a retail furniture
store, from which the Savings Bank has purchased furniture at a price
generally equal to 10% above cost. The Savings Bank purchased an immaterial
dollar amount of furniture during the year ended December 31, 2000.
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PROPOSAL II -- APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
- -----------------------------------------------------------------------------
Housholder, Artman and Associates, P.C. was the Company's independent
auditors for the fiscal year ended December 31, 2000. The Board of Directors
has appointed Housholder, Artman and Associates, P.C. as independent auditors
for the fiscal year ending December 31, 2001, subject to approval by
stockholders. A representative of Housholder, Artman and Associates, P.C. is
expected to be present at the Meeting to respond to stockholders' questions
and will have the opportunity to make a statement if he so desires.
Audit Fees
The aggregate fees billed to the Company by Housholder, Artman and
Associates, P.C. for professional services rendered for the audit of the
Company's financial statements for fiscal 2000 and the reviews of the
financial statements included in the Company Forms 10-QSB for that year were
$24,500.
Financial Information Systems Design and Implementation Fees
Housholder, Artman and Associates, P.C. performed no financial
information system design or implementation work for the Company during the
fiscal year ended December 31, 2000.
All Other Fees
Other than audit fees, the aggregate fees billed to the Company by
Housholder, Artman and Associates, P.C. for fiscal 2000, none of which were
financial information systems design and implementation fees, were $13,315.
The Audit Committee of the Board of Directors determined that the services
performed by Housholder, Artman and Associates, P.C. other than audit services
are not incompatible with Housholder, Artman and Associates, P.C. maintaining
its independence.
If the ratification of the appointment of the auditors is not approved by
a majority of the votes cast by shareholders at the annual meeting, other
independent public accountants will be considered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE APPOINTMENT OF HOUSHOLDER, ARTMAN AND ASSOCIATES, P.C. AS
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31,
2001.
- -----------------------------------------------------------------------------
OTHER MATTERS
- -----------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form, that are properly executed and
dated, will be voted in respect thereof in accordance with the judgment of the
person or persons voting the proxies.
9
- -----------------------------------------------------------------------------
MISCELLANEOUS
- -----------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in mailing proxy
solicitation materials to beneficial owners of the Common Stock. In addition
to solicitations by mail, directors, officers and regular employees of the
Company may solicit proxies personally or by telecopier or telephone without
additional compensation.
The Company's 2000 Annual Report to Stockholders, including consolidated
financial statements, has been mailed to all stockholders of record at the
close of business on the Voting Record Date. Any stockholder who has not
received a copy of such annual report may obtain a copy by writing to the
Company. The Annual Report is not to be treated as part of the proxy
solicitation material or having been incorporated herein by reference.
A copy of the Company's Form 10-KSB for the fiscal year ended December
31, 2000, as filed with the SEC, will be furnished without charge to
stockholders of record as of the close of business on the Voting Record Date
upon written request to Mr. Earl H. Barr, Corporate Secretary, Security
Bancorp, Inc., P.O. Box 7027, McMinnville, Tennessee 37111.
- -----------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- -----------------------------------------------------------------------------
Proposals of stockholders intended to be presented at the Company's
annual meeting next year must be received by the Company no later than
November 14, 2001 to be considered for inclusion in the proxy solicitation
materials and form of proxy relating to such meeting. Any such proposals
shall be subject to the requirements of the proxy solicitation rules adopted
under the Exchange Act.
The Company's Charter provides that in order for a stockholder to make
nominations for the election of directors or proposals for business to be
brought before a meeting of stockholders, a stockholder must deliver written
notice of such nominations and/or proposals to the Secretary not less than 30
nor more than 60 days prior to the date of the meeting; provided that if less
than 40 days' notice of the meeting is given to stockholders, such notice must
be delivered not later than the close of the tenth day following the day on
which notice of the meeting was mailed to stockholders. As specified in the
Charter, the written notice with respect to nominations for election of
directors must set forth certain information regarding each nominee for
election as a director, including such person's written consent to being named
in the proxy statement as a nominee and to serving as a director, if elected,
and certain information regarding the stockholder giving such notice. The
notice with respect to business proposals to be brought before the Meeting
must state the stockholder's name, address and number of shares of Common
Stock held, and briefly discuss the business to be brought before the Meeting,
the reasons for conducting such business at the Meeting and any interest of
the stockholder in the proposal. A copy of the Charter may be obtained from
the Company.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ EARL H. BARR
EARL H. BARR
SECRETARY
McMinnville, Tennessee
March 13, 2001
10
[x] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS SAMPLE SECURITY BANCORP, INC.
With For All
For hold Except
1. The election as
ANNUAL MEETING OF STOCKHOLDERS director of the [ ] [ ] [ ]
APRIL 18, 2001 nominees listed
(except as marked
The undersigned hereby appoints the to the contrary
official Proxy Committee of the Board below):
of Directors of Security Bancorp, Inc.
("Company"), consisting of Donald R. Joe H. Pugh
Collette, with full powers of Dr. R. Neil Schultz
substitution to act as attorney
and proxy for the undersigned, to vote INSTRUCTIONS: To withhold
all shares of Common Stock of the Company authority to vote for any
which the undersigned is entitled to vote individual nominee, mark 'For
at the Annual Meeting of Stockholders All Except' and write that
("Meeting"), to be held at the main nominee's name in the space
office of Security Federal Savings Bank provided below.
of McMinnville, TN, located at 306 West
Main Street, McMinnville, Tennessee, ------------------------------
on Wednesday, April 18, 2001, at For Against Abstain
2:00 p.m., Central Time, and at any 2. The approval [ ] [ ] [ ]
and all adjournments thereof, as set of the appoint-
forth to the right: ment of Hous-
holder, Artman
and Associates,
P.C. as indepen-
dent auditors
for the fiscal
year ending
December 31, 2001.
3. In their discretion, upon such
other matters as may properly
come before the meeting.
-----------
Please be sure to sign and Date The Board of Directors recommends a
date this Proxy in the Vote 'FOR' the listed proposals.
box below.
- ---------------------------------------- THIS PROXY, PROPERLY SIGNED AND
DATED, WILL BE VOTED AS DIRECTED, BUT
IF NO INSTRUCTIONS ARE SPECIFIED THIS
- ---------------------------------------- PROXY WILL BE VOTED FOR THE PROPOSALS
Stockholder sign Co-holder (if any) STATED. IF ANY OTHER BUSINESS IS PRE-
above sign above AT SUCH MEETING, THIS PROXY WILL BE
VOTED BY THE PROXY COMMITTEE OF THE
BOARD OF DIRECTORS IN ITS BEST JUDG-
MENT. PRESENTLY, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS
TO BE PRESENTED AT THE MEETING. THIS
PROXY ALSO CONFERS DISCRETIONARY
AUTHORITY ON THE BOARD OF DIRECTORS
TO VOTE WITH RESPECT TO THE ELECTION
OF ANY PERSON AS DIRECTOR WHERE THE
NOMINEES ARE UNABLE TO SERVE OR FOR
GOOD CAUSE WILL NOT SERVE AND MATTERS
INCIDENT TO THE CONDUCT OF THE
MEETING.
- ------------------------------------------------------------------------------
Detach above card, sign, date and mail in
postage paid envelope provided.
SECURITY BANCORP, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote in person at the
Meeting or at any adjournment thereof and after notification to the Secretary
of the Company at the Meeting of the stockholder's decision to terminate this
proxy, then the power of said attorneys and proxies shall be deemed terminated
and of no further force and effect.
The above signed acknowledges receipt from the Company prior to the
execution of this proxy of the Notice of Annual Meeting of Stockholders, a
Proxy Statement for the Annual Meeting of Stockholders, and the 2000 Annual
Report to Stockholders.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, indicate your full
title. If shares are held jointly, only one registered holder need sign but
both holders should sign, if possible.
PLEASE ACT PROMPTLY
SIGN, DATE AND MAIL YOUR PROXY CARD TODAY