EXHIBIT 22
Proxy Statement for the annual shareholders meeting to be held on April 9, 2002
NOTICE OF ANNUAL MEETING OF THE
SHAREHOLDERS OF
FIRST WEST VIRGINIA BANCORP, INC
Wheeling, West Virginia
March 13, 2002
TO OUR SHAREHOLDERS:
Please take notice that the Annual Meeting of Shareholders of First West
Virginia Bancorp, Inc., a West Virginia corporation, will be held at the
Warwood Office of Progressive Bank, N.A., 1701 Warwood Avenue, Wheeling, West
Virginia, at 4:00 p.m., on April 9, 2002. Shareholders of record at the close
of business on March 6, 2002 will be entitled to vote.
While the Board of Directors sincerely hopes that all of you will attend
the meeting, we nevertheless urge you to COMPLETE, DATE, SIGN AND RETURN THE
PROXY FORM, ENCLOSED, AS SOON AS POSSIBLE. A self-addressed stamped envelope is
provided for that purpose. You should return the proxy whether or not you plan
to attend the meeting in person. If you do attend the meeting, you may withdraw
the proxy and vote in person if you so desire.
The purposes of the Annual Meeting are as follows:
1. To elect two directors;
2. To transact such other business as may lawfully be brought before the
meeting.
By order of the Board of Directors.
Charles K. Graham
President and CEO
FIRST WEST VIRGINIA BANCORP, INC.
1701 Warwood Avenue, Wheeling, West Virginia 26003
PROXY STATEMENT
For Annual Meeting of Shareholders to be Held April 9, 2002
The proxy statement is furnished to the shareholders of First West
Virginia Bancorp, Inc., (the "Company"), in connection with the solicitation of
proxies for use at the Annual Meeting of Shareholders to be held April 9, 2002,
and at all adjournments thereof, for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders. This proxy statement and the enclosed
form of proxy are first being mailed to shareholders on or about March 13, 2002.
Whether or not you expect to be personally present at the meeting, you are
requested to fill in, sign, date and return the enclosed form of proxy. Any
person giving such proxy has the right to revoke it at any time before it is
voted by giving notice to the Secretary of the Company. All shares represented
by duly executed proxies in the accompanying form will be voted unless revoked
prior to the voting thereof. A proxy may be revoked at any time before it is
voted at the meeting by executing a later dated proxy, or by voting in person
at the meeting, or by filing a written revocation with the judges of election.
The presence, in person or by proxy, of a majority of the outstanding shares of
common stock is required to constitute a quorum. Assuming the presence of a
quorum, the election of directors described below will be by a majority vote.
Any other business to come before the meeting shall be determined as provided
in the Company's Articles of Incorporation.
The close of business on March 6, 2002 has been fixed as the record date
for the determination of shareholders entitled to vote at the Annual Meeting of
Shareholders. As of the record date, there were outstanding and entitled to be
voted at such meeting 1,538,443 shares of common stock. The holders of the
common stock will be entitled to one vote for each share of common stock held
of record on the record date. In the election for directors votes may be
cumulated as provided by law. Please see Voting, below.
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 2001 accompanies this proxy statement.
The solicitation of this proxy is made by the Board of Directors of the
Company. The solicitation will be by mail and the expense thereof will be paid
by the Company. In addition, solicitation of proxies may be made by telephone
or other means by directors, officers or regular employees of the Company.
I. Election of Directors
Nominees and Continuing Directors
The Board of Directors is divided into three classes, with the terms of
office of each class ending in successive years. In addition, the President
serves as a Director during the term of office as President. Two directors of
the Company are to be elected to Class I, for terms expiring at the Annual
Meeting in 2005 or until their respective successors have been elected and have
qualified. Certain information with respect to the nominees for election as
directors proposed by the Company and the other directors whose terms of office
as directors will continue after the Annual Meeting is set forth below. Should
any one or more of the nominees be unable or unwilling to serve (which is not
expected), the proxies (except proxies marked to the contrary) will be voted
for such other person or persons as the Board of Directors of the Company may
recommend.
THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE FOR EACH OF THE NOMINEES FOR DIRECTOR.
---
Shares of
the Company's
Served as Common Stock
Name, Age, Principal Occupation Director Beneficially
or Position, Other Directorships /(13)(14)/ Since /(1)/ Owned /(2)/
- ------------------------------------- --------- -------------
To be elected to Class I, to continue in office until 2005
- ----------------------------------------------------------
Laura G. Inman, 60 1993 117,500/(3)/
Chairman of the Board of the
Company; Director of Progressive Bank, N.A.
Karl W. Neumann, 81 1964 46,348/(4)/
Retired Insurance Executive; Vice Chairman of
the Board and Director of Progressive Bank, N.A.
Class II Directors, to continue in office until 2003
- ----------------------------------------------------
Sylvan J. Dlesk, 63 1988 130,686/(5)/
Vice Chairman of the Board of the Company;
President and CEO of Dlesk Realty and Investments;
President of Dlesk, Inc., President of Ohio
Valley Carpeting, Inc. and President of Tri-State
Floor Installations, Inc.; Director of
Progressive Bank, N.A.
James C. Inman, Jr., 60 1993 117,500/(6)/
Retired Bank Executive; Director of
Progressive Bank, N.A.
Thomas A. Noice, 79 1988 2,812/(7)/
Trustee-Treasurer, Belmont Community Hospital,
Bellaire, Ohio; Retired Bank Executive
Class III Directors, to continue in office until 2004
- -----------------------------------------------------
R. Clark Morton, 73 1965 45,018/(8)/
Attorney-at-Law, Partner, Herndon, Morton,
Herndon & Yaeger; Chairman of the Board
and Director of Progressive Bank, N.A.
William G. Petroplus, 54 1998 7,420/(9)/
Attorney-at-Law, Partner, Petroplus &
Gaudino; Director of Progressive Bank, N.A.
Nada E. Beneke, 46 2001 68,298/(10)/
Sanitarian, Ohio County Health Department;
President of the Beneke Corporation; and
Director of Progressive Bank, N.A.
2
Shares of
the Company's
Served as Common Stock
Name, Age, Principal Occupation Director Beneficially
or Position, Other Directorships /(12)(13)/ Since /(1)/ Owned /(2)/
- ------------------------------------- ---------- -------------
Unclassified Director, to continue in office during term of office
- ------------------------------------------------------------------
Charles K. Graham, 56 2000 8,914/(11)/
President and Chief Executive Officer of the
Company; President and Director of Progressive
Bank, N.A.; Vice Chairman of the Board and Director of
Progressive Bank, N.A. - Buckhannon
Notes /(1)/ Includes service with the Company's predecessors.
/(2)/ Beneficial ownership of First West Virginia common stock is
stated as of February 8, 2002. Under rules of the Securities and
Exchange Commission, persons who have power to vote or dispose
of securities, either alone or jointly with others, are deemed
to be the beneficial owners of such securities. Shares owned
separately by spouses are included in the column totals but
are identified in the footnotes which follow. Each person
reflected in the table has both sole voting power and sole
investment power with respect to the shares included in the
table, except as described in the footnotes.
/(3)/ Includes 18,000 shares owned by James C. Inman, Jr., her husband.
/(4)/ Includes 20,145 shares owned by Elizabeth H. Neumann, his wife.
/(5)/ Includes 1,817 shares owned by Rosalie J. Dlesk, his wife, and
121,409 shares owned jointly by Sylvan J. Dlesk and Rosalie J.
Dlesk.
/(6)/ Includes 99,500 shares owned by Laura G. Inman, his wife.
/(7)/ Includes 912 shares owned jointly by Judith A. Noice, wife of
Thomas A. Noice, and Julia Vejvoda and 1,900 shares owned
jointly by Thomas A. Noice and Judith A. Noice.
/(8)/ Includes 23,085 shares owned by Patricia H. Morton, his wife,
and 11,048 shares owned jointly by R. Clark Morton and
Patricia H. Morton.
/(9)/ Includes 808 shares owned jointly by William G. Petroplus and
Sheree A. Petroplus; 403 shares owned by Sheree A. Petroplus,
his wife; 403 shares owned by Kristen G. Petroplus, his
daughter, for which William G. Petroplus acts as custodian;
and 403 shares owned jointly by Alyssa R. Petroplus, his
daughter, for which William G.Petroplus acts as custodian.
/(10)/ Includes 14,149 shares owned by the Beneke Corporation, of
which Ms. Beneke serves as President and 38,042 shares held in
the estate of George F. Beneke of which Ms. Beneke is
executrix.
/(11)/ Includes 1,726 shares owned jointly by Linda A. Graham, his
wife, and Charles J. Graham, his son; 1,747 shares owned
jointly by Linda A. Graham, his wife and Sharon A. Graham, his
daughter; 1,617 shares owned jointly by Charles J.Graham, his
son, and Charles K. Graham; 969 shares owned jointly by Sharon
A. Graham, his daughter, and Charles K. Graham; and 1,190
shares owned jointly by Charles K. Graham and Linda A. Graham.
/(12)/ The subsidiaries of the Company are: Progressive Bank, N.A,
Wheeling, WV and Progressive Bank, N.A. - Buckhannon,
Buckhannon, WV.
3
Notes /(13)/ Each of the nominees and continuing directors has had the same
position or other executive positions with the same employer
during the past five years with the exception of Charles K.
Graham who previously served as Executive Vice President of
the Company, President of Progressive Bank, N.A. and Director
of Progressive Bank, N.A. - Buckhannon in which positions he
served for the preceding five years. Includes 18,000 shares
owned by James C. Inman, Jr., her husband.
Certain Business Relationships
Mr. Petroplus is an attorney with Petroplus & Gaudino, attorneys-at-law,
of Wheeling, WV, which firm serves as general counsel to the Company.
Mr. Morton is an attorney with Herndon, Morton, Herndon & Yaeger, attorneys
- -at-law, of Wheeling, West Virginia, which firm serves as special counsel to the
Company.
Board of Directors and Committees
There were 12 regular meetings and five special meetings of the Board of
Directors of the Company during 2001. All directors attended at least 75
percent of such meetings, except for Karl W. Neumann who attended 59% of such
meetings and Ronald L. Solomon whose term expired in March 2001 attended none
of such meetings. Each director is compensated at the rate of $600.00 per
regular meeting and, for 2001, was compensated at the rate of $200.00 for each
special meeting. Committee members are paid $200.00 for attendance at each
committee meeting, unless a special meeting is held following a regular meeting
in which event there is no additional compensation at the special meeting. The
standing committees of the Board are: Audit Committee, Personnel and Salary
Committee, Budget and Marketing Committee, Investment Committee, Loan Review
Committee and Nominating Committee.
The functions of the Personnel and Salary Committee are to review and
recommend the salaries and annual bonuses of all executive officers; recommend
the annual contribution to the employees' profit sharing plan; and monitor the
senior management and succession plans. The Board of Directors reviews the
committee recommendations for final action thereon. Company performance is
considered in establishing the annual budget for salary increases and is the
initial part of the review process. Company performance factors, including net
income and return on equity, and individual performance are considered in
setting annual bonuses. The committee met three times during 2001. The members
of the committee consist of non-salaried directors and presently include S.J.
Dlesk, chairman, James C. Inman, Jr., R. Clark Morton, Karl W. Neumann, and
William G. Petroplus.
The functions of the Budget and Marketing Committee are to approve and
review the annual subsidiary banks' budgets and to review the marketing efforts
and strategies of the subsidiary banks. The committee met four times during
2001. The members of the committee consist of directors and presently include
Nada E. Beneke, S. J. Dlesk, Laura G. Inman, and Thomas A. Noice. Ben R.
Honecker served as Chairman until his resignation from the Board of Directors
on February 12, 2002. No successor has yet been appointed. With the exception
of Laura G. Inman, all members of this committee were non-salaried in 2001.
The functions of the Investment Committee are to approve and review the
investment policies, activities and strategies of the subsidiary banks. The
committee met two times during 2001. The members of the committee consist of
directors and presently include R. Clark Morton, chairman, S. J. Dlesk, James
C. Inman, Jr., Laura G. Inman, and Thomas A. Noice. With the exception of Laura
G. Inman, all members of this committee were non-salaried in 2001.
The functions of the Loan Review Committee are to approve and review loan
policies and loans of the subsidiary banks. The committee met two times during
2001. The members of the committee consist of directors and presently include
S. J. Dlesk, chairman, Laura G. Inman and R. Clark Morton. With the exception
of Laura G. Inman, all members of this committee were non-salaried in 2001.
4
The functions of the Nominating Committee are to recommend nominees for
election as Directors of the Company to the full Board and recommendations for
directorship of the subsidiary banks. The committee did not meet during 2001.
The members of the committee consist of directors and presently include S. J.
Dlesk, Laura G. Inman and R. Clark Morton. With the exception of Laura G.
Inman, all members of this committee were non-salaried in 2001.
Report of the Audit Committee
The Company does have an Audit Committee. The members of the committee
are considered independent and consist of non-salaried directors. The primary
function of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities by reviewing: the financial reports
and other financial information provided by the Company to the shareholders,
any governmental body, and others; the Company's systems of internal control
regarding finance, accounting, legal compliance and ethics that management and
the Board have established; and the Company's auditing accounting and financial
reporting processes. The Audit Committee's primary duties and responsibilities
are to: serve as an independent and objective monitor of the Company's
financial reporting process and internal control system; review and appraise
the audit efforts of the Company's independent accountants and internal
auditing department; and to provide an open avenue of communication among the
independent accountants, financial and senior management, the internal auditing
department, and the Board of Directors. The Company has a written charter for
the Audit Committee. A copy of the written charter is attached as an appendix
to this proxy statement. The committee met six times during 2001. The Audit
Committee reviewed and discussed the Company's annual audited financial report
with management. The Committee has also discussed with the Independent auditors
the matters required to be discussed by SAS 61 (Codification of Statements on
Auditing Standards, AU 380). The Committee also received and reviewed the
written disclosures and the letter from independent accountants required by
Independence Standards Board Standard No. 1 (Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees), as may be
modified or supplemented, and has discussed with the independent accountant the
independent accountant's independence. Additionally, the Audit Committee
reviewed reports of the internal audit director concerning the results of the
examinations of the accounting controls and procedures reviewed. The committee
also reviewed various other matters pertaining to the business and operations
of the Corporation during the year, including the scope and planning of the
audits and the internal control procedures. Based on the review and discussions
referred to above, the Audit Committee recommended to the Board of Directors
that the audited financial statements be included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2001.
The members of the Audit Committee as of December 31, 2001 are William G.
Petroplus, chairman, R. Clark Morton, and Karl W. Neumann.
II. Executive Compensation
The following table shows all compensation awarded to, earned by or paid
to the Company's President and Chief Executive Officer, Charles K. Graham and
Executive Vice President, Chief Operating Officer and Treasurer, Beverly A.
Barker for all services rendered by them in all capacities to First West
Virginia Bancorp, Inc. and its subsidiaries for 2001. No other executive
officer of First West Virginia Bancorp, Inc. had total annual salary and bonus
exceeding $100,000 for the year.
5
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation
Other All
Annual Other
Year Salary Bonus/(5)/ Compensation Compensation
Name and Position
Charles K. Graham, age 56, /(1)/ 2001 $ 99,999.96 $66,595.00 $ 0.00 $14,609.13/(4)/
President and Chief Executive
Officer of the Company;President 2000 $ 88,500.00 $68,454.00 $1,490.68/(2)/ $12,066.81/(4)/
and Chief Executive Officer of
Progressive Bank, N.A.; and Vice 1999 $ 76,200.00 $41,801.00 $2,436.64/(3)/ $11,347.20/(4)/
Chairman of Progressive Bank,
N.A. - Buckhannon.
Beverly A. Barker, age 48 /(6)/ 2001 $ 79,999.92 $53,276.00 $ 0.00 $11,613.80/(4)/
Executive Vice President, Chief
Operating Officer and Treasurer 2000 $ 70,992.00 $54,912.00 $ 0.00 $ 9,940.48/(4)/
of the Company; Executive Vice
President, Chief Operating 1999 $ 60,492.00 $33,184.00 $ 0.00 $ 8,636.01/(4)/
Officer and Cashier of
Progressive Bank,
N.A.
/(1)/ In preceding years, Mr. Graham served as Executive Vice President of the
Company, President of Progressive Bank, N.A. and Director of
Progressive Bank, N.A. - Buckhannon.
/(2)/ This amount includes the value of Mr. Graham's membership to the Wheeling
Country Club.
/(3)/ This amount includes the value of Mr. Graham's membership to the Wheeling
Country Club and Allegheny Club.
/(4)/ This amount includes contributions made to Company's Profit Sharing Plan
and 401(k) Plan.
/(5)/ This amount includes deferred compensation.
/(6)/ In preceding years, Mrs. Barker served as Senior Vice President and
Treasurer of the Company and Executive Vice President of Progressive
Bank, N.A.
Board Compensation Committee Report on Executive Compensation
The Personnel and Salary Committee ( the "Committee") has the
responsibility for recommending to the Board of Directors of the Company, and
subject to final approval by the Board of Directors of the Company, the annual
salary, raise and bonus determinations for the Executive Officers of the
Company. The Committee endeavors to determine executive compensation in a
manner designed to provide competitive compensation sufficient to retain and
attract key executives, but based primarily on the overall performance of the
Company.
Company performance is considered in establishing the annual budget for
any executive salary increase and is the initial part of the review process of
the Committee. The determination of bonuses, as detailed below, is predicated
on the Company's earnings in the previous year, the increase in corporate net
worth and individual performance. The Committee also periodically evaluates
terms and conditions of employment agreements offered to certain Executive
Officers of the Company (See, Employment Contracts) to ensure that they
continue to support the best interests of the Company's shareholders and are
consistent with the goals and objectives of the Company.
However, the Committee also is acutely aware that the purpose of our
Executive Officers is to generate earnings for the shareholders of the Company.
Therefore, the Committee's philosophy for its Executive Compensation Incentive
Plan does not deviate from this avowed purpose. The plan consists of two basic
steps. The first step is an earnings plateau which establishes the annual
percentage return to the Company (based on corporate net worth) which was
expected to be reached. The amount of return in excess of that expected
percentage forms the basis for the bonus pool. The philosophy underlying this
first earnings plateau is as follows.
6
Earnings to the extent of the determined percentage of corporate net worth
are intended to provide for the following purposes:
(a) Payment of income taxes thereon.
(b) Payment of regularly established quarterly dividends.
(c) Provide for increases in subsequent executive salaries attributable
to inflation.
(d) Provide for an increase to the regularly established quarterly
dividend for the next year in the same percentage as the percentage
of salary raises granted executives to compensate for inflation.
(e) Provide for growth of corporate net worth.
Earnings in excess of that percentage of corporate net worth are
available for distributions for bonuses to Executive Officers excepting any
extraordinary profits received from the sale of assets owned by the Company and
its subsidiaries, with the exception of the subsidiaries' ordinary investment
portfolio. The second basic step of the plan apportions earnings in excess of
the first plateau. The Committee has divided those excess earnings into five
incremental categories. Beginning with the first $400,000.00 of such excess and
for each increment thereafter, the Committee has determined what percentage
will be paid as executive bonuses. In addition to bonus payments, from each
such increment comes a percentage for payment of income taxes thereon, and a
payment for dividends to shareholders and to provide for growth of corporate
net worth. After the first $400,000 increment has been exhausted, the second
category consists of the next $300,000 of such excess earnings. After that has
been exhausted, the third category consists of the next $200,000 of such excess
earnings. After that has been exhausted, the fourth category consists of the
next $100,000.00 of such excess earnings. Finally, after that has been
exhausted, the fifth category consists of all excess earnings over
$1,000,000.00.
The underlying philosophy of the Committee's determinations is to provide
a strong incentive for all executives to strive to increase the annual earnings
of the Company for the benefit of the shareholders of the Company.
The compensation of Charles K. Graham, President and Chief Executive
Officer of the Company, and Beverly A. Barker, Executive Vice President, Chief
Operating Officer and Treasurer of the Company, as well as the other Executive
Officers of the Company, is comprised of a base salary which is directly
related to the responsibilities of their respective positions and a bonus which
is related to the Company's performance. Mr. Graham, and Mrs. Barker work
together as a corporate team and, as such, bear the principal burden of
corporate management decisions, with Mr. Graham, as Chief Executive Officer,
bearing final responsibility. Therefore, these two Executive Officers have
participated more heavily in the division of bonus awards. Their performance
was reflected in the increase in corporate net worth for the year ended
December 31, 2001, and was greatly appreciated by the Committee. All
compensation recommendations of the Committee for the year ended December 31,
2001, were approved by the Board of Directors of the Company.
With respect to the Executive Officers of the Company, the Committee
believes their respective compensation levels to be commensurate with those of
similarly positioned executives in similar corporations.
Members of the Committee as of the year ending December 31, 2001, were
S.J. Dlesk, chairman, James C. Inman, Jr., R. Clark Morton, Karl W. Neumann,
and William G. Petroplus.
Employment Contracts
On December 31, 2001, the Company entered into written employment
agreements with Charles K. Graham, President and Chief Executive Officer of the
Company, and Beverly A. Barker, Executive Vice President, Chief Operating
Officer and Treasurer of the Company, providing for their respective annual
base salaries plus such discretionary bonuses as may be granted by the Company,
plus eligibility to participate in any health insurance benefit, deferred
compensation benefit, accident and disability benefit or other benefits offered
to other employees of the Company during the respective terms of the
agreements. The agreements with Mr. Graham and Mrs. Barker were for three year
terms, each beginning as of January 1, 2002. In the event that any of the
agreements are terminated by the Company for any reason other than a defined
cause, the terminated employee would receive a severance benefit equal to the
annual base salary they would have received had they continued to be employed
by the Company throughout the term of the existing agreement, as well as
participation in any health, accident and disability insurance programs which
the Company may maintain for the benefit of its executive officers. These
agreements may be terminated for certain defined causes by the Company without
payment of additional minimum salary or other benefits.
7
Compensation Committee Interlocks and Insider Participation
As indicated, the Personnel and Salary Committee has responsibility for
annual raises and bonuses to the executive officers of the Company. The members
of the committee consist of non-salaried directors and presently include S.J.
Dlesk, chairman, James C. Inman, Jr., R. Clark Morton, Karl W. Neumann, and
William G. Petroplus. Mr. Inman was formerly an officer of Wellsburg Banking
and Trust Company, Wellsburg, West Virginia, which bank merged into Progressive
Bank, N.A., a subsidiary of the Company. The Personnel and Salary Committee
reviews the Company's overall progress and projections to year end. All actions
by the Personnel and Salary Committee are presented to the full Board of
Directors for final approval.
James C. Inman, Director of the Company and of Progressive Bank, N.A., is
a member of the Personnel and Salary Committee. Mr. Inman is the spouse of
Laura G. Inman, Chairman of the Board and Director of the Company, and also
Senior Vice President and Director of Progressive Bank, N.A. However, Mrs.
Inman has voluntarily withdrawn from participation in the Company's executive
bonus program. No other family relationships exist between the Personnel and
Salary Committee and the Company's executive officers, nor do any of the
directors of the Company serve on personnel committees of any other corporation.
Executive Officers; Additional Compensation
The subsidiary banks have paid bonuses in each of the preceding seven
years to their executive officers. Decisions as to the issuance of a bonus and
the amount paid in each year are determined by the Company's Board of
Directors. The aggregate amount of bonuses to the executive officers of the
Company accrued for 1999 and paid in 2000 was $153,009.00; accrued for 2000 and
paid in 2001 was $176,445.00 and accrued as of December 31, 2001 was
$159,828.00. The 2001 accrual for bonuses will be paid in 2002.
Other than bonuses paid to its executive officers, neither the Company nor
its existing subsidiaries has any type or plan of additional compensation that
may discriminate in scope, terms or operation in favor of the officers or
directors of the Company.
The Company does maintain a noncontributory profit-sharing plan for
employees of its existing subsidiaries who are 21 years of age or older, have
worked for the bank in excess of one year and are not parties to a collective
bargaining agreement. This plan has received a favorable determination letter
from the Internal Revenue Service. The Company makes contributions to the
profit-sharing plan based upon a discretionary contribution ranging from zero
percent to 15 percent of total compensation as fixed by appropriate action of
the banks before the close of the year. This contribution is distributed
according to a three-tiered integrated allocation formula. In the first tier,
the allocation is made by taking each participant's compensation to total
compensation percentage on a pro rata basis not to exceed the employer's
integration percentage. This amount is then distributed to the employee's
separate retirement accounts. In the second tier, any amount of the total
contribution remaining undistributed by the first tier is then allocated and
distributed by taking each participant's compensation in excess of $15,000 and
multiplying that amount by the employer's integration percentage. Any amount of
the total contribution remaining undistributed by the first and second tier is
then allocated and distributed to the employee's retirement accounts on a pro
rata basis based upon the percentage of each employee's compensation compared
to total compensation. Employees are entitled to the balances in their separate
retirement accounts at either normal retirement age, disability or death, but
the amount of such benefits cannot accurately be predicted due to the
discretionary nature of the contributions. Contributions during 1999 amounted
to $123,700.00, of which $31,536.34 accrued to the benefit of the 5 persons who
are executive officers of the Company. For 2000 the contribution was
$113,200.00, of which $32,800.62 accrued to the benefit of the 5 persons.
Contributions during 2001 amounted to $116,200.00, of which $37,432.73 accrued
to the benefit of the 5 persons.
In 1998 the Company amended its profit sharing plan to add a 401(k)
feature. That feature qualifies as a tax-deferred savings plan under Section
401(k) of the Internal Revenue Code (The "401(k) Plan") for Company employees
who are at least 21 years old and who have completed one year of service with
the bank. Under the 401(k) Plan, eligible employees may contribute up to 15% of
their gross salary to the 401(k) Plan or $10,000.00, whichever is less
($10,500.00 as of January 1, 2001). Each participating employee is fully vested
in contributions made by such employee. The bank has elected to provide a
matching contribution for participants which elect to make employee 401(k)
contributions. The matching contribution is 50% of the participant's
contribution up to 2% of the participant's covered compensation and 25% of the
participant's contribution up to the next 2% of the participant's covered
compensation. The Company's share of
8
the contribution during 2001 was $19,169.54 of which $5,131.70 was for the
benefit of the executive officers. For 2000, the Company's share of the
contribution was $19,151.01 of which $4,401.54 was for the benefit of the
executive officers of the Company. For 1999, the Company's share of the
contribution was $20,693.00 of which $4,258.47 was to the benefit of the
executive officers.
The Company also has a non-qualified deferred compensation plan for its
executive officers. Under the plan, each executive officer may elect to defer
up to 50 percent of their bonus. The executive officers are generally entitled
to the balances in their separate deferred compensation accounts at either
normal retirement age, disability or death, or other termination of employment.
The amount of such benefits cannot be accurately predicted due to the
discretionary nature of the underlying bonus and the deferral percentage.
Shareholder Performance Graph
Set forth below is a line graph prepared by SNL Securities L.C. ("SNL"),
which compares the percentage change in the cumulative total shareholder return
on the Company's common stock against the cumulative total shareholder return
on stocks included on the Standard & Poor's (S&P) 500 Index, the SNL Index for
banks with assets under $250 million and under 500 million for the period
December 31, 1996 through December 31, 2001. An initial investment of $100.00
(Index value equals $100.00) and ongoing dividend reinvestment is assumed
throughout.
Period Ending
- --------------------------------------------------------------------------------------------------------
Index 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
- --------------------------------------------------------------------------------------------------------
First West Virginia
Bancorp, Inc. 100.00 157.34 179.86 139.15 117.38 171.13
S&P 500 100.00 133.37 171.44 207.52 188.62 166.24
SNL *250M Bank Asset-Size Index 100.00 163.18 155.12 136.21 134.86 168.15
SNL *500M Bank Asset-Size Index 100.00 170.47 155.65 144.08 138.99 192.27
* represents less than
9
III. Security Ownership of Management and Certain Beneficial Owners
Security Ownership of Management
The following table sets forth, as of February 8, 2002, the name and
address of each director and nominee who owns of record to be the beneficial
owner of more than 5 percent of the Company's 1,538,443 issued and outstanding
shares of stock, the number of shares beneficially owned, the percentage of
stock so owned, and the percent of stock beneficially owned by all directors
and executive officers of the Company as a group. The "beneficial ownership" of
a security by an individual is determined in accordance with the rules of the
Securities and Exchange Commission. Unless otherwise noted, sole voting power
and sole investment power with respect to the shares shown in the table below
are held either by each individual listed or by such individual together with
their spouse.
Name & Shares of Stock Percent
Address Beneficially Owned of Total
- ------- ------------------ --------
Sylvan J. Dlesk 130,686/(1)/ 8.49%
Highland Park
Wheeling, WV 26003
James C. Inman, Jr. 117,500/(2)/ 7.64%
R.D. 1
Wellsburg, WV 26070
Laura G. Inman 117,500/(3)/ 7.64%
R.D. 1
Wellsburg, WV 26070
Officers and Directors 433,119 28.15%
as a Group (13 persons)
Notes /(1)/ Includes 1,817 shares owned by Rosalie J. Dlesk, his wife, and
121,409 shares owned jointly by Sylvan J. Desk and Rosalie J.
Dlesk.
/(2)/ Includes 99,500 shares owned by Laura G. Inman, his wife.
/(3)/ Includes 18,000 shares owned by James C. Inman, Jr., her husband.
Other than those individuals listed above, as of February 8, 2002, no
person was known by the Company to be the beneficial owner of more than 5
percent of the Company's stock.
V. Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers, and beneficial owners of more than 10
percent of the common stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (SEC). Reporting persons
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms filed by them. Based on a review of the copies of Section
16(a) forms received by the Company, and on written representations from
reporting persons concerning the necessity of filing a Form 5 - Annual
Statement of Changes in Beneficial Ownership, the Company believes that all
filing requirements applicable to reporting persons were met except that 1)
Nada E. Beneke, who was a director of the Company during 2001, filed a report
involving one transaction on Form 5 one hundred seventeen (117) days late, and
2) Sylvan J. Dlesk who was a director of the Company during 2001, filed a
report involving one transaction on Form 4 seventeen (17) days late.
10
VI. Transactions with Management and Others
Management personnel of the Company and its subsidiary banks have had and
expect to continue to have banking transactions with the banks in the ordinary
course of business. Extensions of credit to such persons are made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons.
Management believes that these transactions do not involve more than a normal
risk of collectibility or present other unfavorable features.
None of the directors, executive officers, beneficial owners or immediate
family members have an interest or are involved in any transactions with the
Company or its banks in which the amount involved exceeds $60,000.00, or was
not subject to the usual terms and conditions, or was not determined by
competitive bids. Similarly, no director, executive officer or beneficial owner
has an equity interest in excess of 10 percent in a business or professional
entity that has made payments to or received payments from the Company or its
banks in 1999, 2000 or 2001 which exceed 5 percent of either party's gross
revenue for those periods, respectively.
VII. Voting
The affirmative vote of the holders of a majority of the shares entitled
to vote which are present in person or represented by proxy at the 2002 Annual
Meeting is required to elect directors and to act on any other matters properly
brought before the meeting. Shares represented by proxies which are marked
"withhold authority" with respect to the election of any one or more nominees
for election as directors and proxies which are marked to deny discretionary
authority on other matters will be counted for the purpose of determining the
number of shares represented by proxy at the meeting. Such proxies will thus
have the same effect as if the shares represented thereby were voted against
such nominee or nominees or against such other matters. If a broker indicates
on a proxy that the broker does not have discretionary authority as to certain
shares to vote on a particular matter, those shares will not be considered as
present and entitled to vote with respect to that matter.
In the election for directors every shareholder entitled to vote shall
have the right to vote, in person or by proxy, the number of shares owned by
him or her for as many persons as there are directors to be elected and for
whose election he or she has a right to vote, or to cumulate his or her votes
by giving one candidate as many votes as the number of such directors
multiplied by the number of his or her shares shall equal, or by distributing
such votes on the same principal among any number of such candidates. Such
rights may be exercised by a clear indication of the shareholder's intent on
the form of proxy. Under applicable law, there are no dissenter's rights of
appraisal as to the election of directors.
VIII. Independent Auditors
S.R. Snodgrass, A.C. were the auditors for the year ended December 31,
2001, and the Audit Committee has selected them as auditors for the year ending
December 31, 2002. Shareholder ratification of this selection is not required.
A representative of S.R. Snodgrass, A.C. will be present at the meeting with
the opportunity to make a statement and/or to respond to appropriate questions
from shareholders. The aggregate fees for professional services rendered by
S.R. Snodgrass A.C. for the year ended December 31, 2001 were as follows: Audit
Fees $26,184.00; Financial Information Systems Design and Implementation $-0-;
and All Other $47,809.76.
IX. Shareholder Proposals
Proposals of shareholders intended to be presented at the 2003 Annual
Meeting scheduled to be held on April 8, 2003 must be received by the Company
by November 18, 2002 for inclusion in the Company's proxy statement and proxy
relating to that meeting. Upon receipt of any such proposal, the Company will
determine whether or not to include such proposal in the proxy statement and
proxy in accordance with regulations governing the solicitation of proxies.
11
In order for a shareholder to nominate a candidate for director, under
the Company's Bylaws nominations must be made in writing and shall be delivered
or mailed to the president of the Company or to the chairman of the Board not
less than 14 days nor more than 40 days prior to any meeting of shareholders
called for the election of directors, provided, however, that if less than 21
days' notice of the meeting is given to shareholders, such nominations shall be
mailed or delivered to the president of the Company or the chairman of the
Board not later than the close of business on the seventh day following the day
on which the notice of the meeting was mailed. Such notification shall contain
the following information to the extent known to the notifying shareholder: (a)
the name and address of each proposed nominee; (b) the principal occupation of
each proposed nominee; (c) the total number of shares of stock of the Company
that will be voted by him or her for each proposed nominee; (d) the name and
residence address of the notifying shareholder; and (e) the number of shares of
stock of the Company owned by the notifying shareholder. Nominations not made
in accordance with such procedure may, in the discretion of the presiding
officer, be disregarded, and upon the presiding officer's instructions, the
vote teller shall disregard all votes cast for each such nominee.
In order for a shareholder to bring other business before a shareholder
meeting, timely notice must be received by the Company. Such notice must
include a description of the proposed business, the reasons therefore, and
other specified matters. These requirements are separate from and in addition
to the requirements a shareholder must meet to have a proposal included in the
Company's proxy statement.
In each case the notice must be given to the Secretary of the Company,
whose address is 1701 Warwood Avenue, Wheeling, West Virginia 26003. Any
shareholder desiring a copy of the Company's Bylaws will be furnished one
without charge upon written request to the Secretary.
X. Legal Proceedings
The Company is unaware of any litigation other than ordinary routine
litigation incident to the business of the Company, to which it or any of its
subsidiaries is a party or of which any of their property is the subject.
XI. Other Matters
The Company knows of no other matters to come before the meeting. If any
other matters properly come before the meeting, the proxies solicited hereby
will be voted on such matters in accordance with the judgment of the persons
voting such proxies.
12
Appendix
FIRST WEST VIRGINIA BANCORP, INC.
AUDIT COMMITTEE CHARTER
- -------------------------------------------------------------------------------
I. PURPOSE
The primary function of the Audit Committee of First West Virginia Bancorp,
Inc. (hereinafter the "Company") is to assist the Board of Directors in
fulfilling its oversight responsibilities by reviewing: the financial
reports and other financial information provided by the Company to the
shareholders, any governmental body, and others; the Company's systems of
internal controls regarding finance, accounting, legal compliance and
ethics that management and the Board have established; and the Company's
auditing, accounting and financial reporting processes generally.
Consistent with this function, the Audit committee should encourage
continuous improvement of, and should foster adherence to, the Company's
policies, procedures, and practices at all levels. The Audit Committee's
primary duties and responsibilities are to:
Serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system.
Review and appraise the audit efforts of the Company's independent
accountants and internal auditing department
Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditing
department, and the Board of Directors.
II. RESPONSIBILITIES
In meeting its responsibilities, the Audit Committee is expected to:
1. Review and update this Charter periodically, at least annually, as
conditions may dictate.
2. Recommend to the Board of Directors the independent accountants to
be nominated, approve the compensation of the independent
accountants, and review and approve the discharge of the independent
accountants.
3. Evaluate the performance of the outside auditors to make
recommendations to the Board of Directors as to the selection,
retention and replacement of the outside auditors.
4. Review and concur in the appointment, replacement, reassignment, or
dismissal of the internal audit department and internal audit
coordinator.
5. Confirm and assure the independence of the internal auditor and the
independent accountant, including a review of management consulting
services and related fees provided by the independent accountant.
Receive and discuss the independent auditor's disclosures in regard
to their independence required by Independence Standards Board
Standard No., 1 Independence Discussions with Audit Committees, as
may be hereafter modified or supplemented.
6. Inquire of management, the coordinator of internal auditing, the
internal audit director, and the independent accountants about
significant risks or exposures and assess the steps management has
taken to minimize such risk to the Company.
7. Consider, in consultation with the independent accountant, the
coordinator of internal audit, and the director of internal audit,
the audit scope and plan of the internal auditors and the
independent accountant.
i
8. Consider with management and the independent accountants the
rationale for employing audit firms other than the principal
independent accountants.
9. Review with the director of internal audit and the independent
accountants the coordination of audit efforts to assure completeness
of coverage, reduction of redundant efforts, and the effective use
of audit resources.
10. Consider and review with the independent accountants and the director
of internal audit:
a. The adequacy of the company's internal controls including
computerized information system controls and security.
b. Any related significant findings and recommendations of the
independent accountants and internal auditors together with
management's responses thereto.
11. Review with management and the independent accountants at the
completion of the annual examination:
a. The company's annual financial statements and related footnotes.
b. The independent accountants' audit of the financial statements
and the report thereon.
c. Any significant changes required in the independent accountants'
audit plan.
d. Any significant disagreement among management and independent
accountants in connection with the preparation of the financial
statements.
e. Other matters related to the conduct of the audit which are to
be communicated to the Committee under generally accepted
auditing standards.
12. Consider and review with management and the director of internal
auditing:
a. Significant findings during the year and management's responses
thereto.
b. Any difficulties encountered in the course of their audits,
including any restrictions on the scope of their work or
access to required information.
c. Any changes required in the planned scope of their audit plan.
d. The internal audit outsourcing contract amount and outsourcing
staff qualifications.
e. The internal audit department charter.
13. Review and discuss with management and the independent auditors
filings with the SEC or other regulators, and other published
documents containing the Company's financial statements and consider
whether the information contained in these documents is consistent
with the information contained in the financial statements.
14. Review and discuss with management and the independent accountants
the interim financial report before it is filed with the SEC or
other regulators. The Chair of the Audit Committee may represent the
entire Committee for purposes of this review.
ii
15. Review policies and procedures with respect to officers' expense
accounts and perquisites, including their use of corporate assets,
and consider the results of any review of these areas by the
internal auditor or the independent accountants.
16. Review legal and regulatory matters that may have a material impact
on the financial statements, related company compliance policies,
and programs and reports received from regulators.
17. Meet with the director of internal audit, the coordinator of internal
audit, the independent accountants, and management in separate
executive sessions to discuss any matters that the Committee or
these groups believe should be discussed privately with the Audit
Committee.
18. Report Audit Committee actions to the Board of Directors with such
recommendations as the Committee may deem appropriate.
19. Include in a report in the annual proxy statement regarding:
a. Committee review of the annual audited financial statements with
management.
b. Committee review of the requirements of SAS No. 61.
c. Committee receipt of the required communication from the
independent auditors and discussion with them regarding their
independence.
d. Committee being governed by a formal written charter and being
comprised of only independent directors.
e. Recommendation to the Board of Directors that, based on the
above, the audited financial statements be included in the Form
10-K for filing with the SEC.
20. The Audit Committee shall have the power to conduct or authorize
investigations into any matters within the Committee's scope of
responsibilities. The Audit Committee shall be empowered to retain
independent counsel, accountants, or others to assist it in the
conduct of any investigation.
21. The Audit Committee shall meet at least four times per year or more
frequently as circumstances require. The committee may ask members
of management or others to attend the meeting and provide pertinent
information as necessary.
22. The Audit Committee shall maintain minutes or other records of its
meetings and activities.
23. The Audit Committee will perform such other functions as assigned by
law, the Company's Charter or Bylaws, or the Board of Directors.
III. COMPOSITION
The Audit Committee shall be comprise of three or more independent
directors as determined by the Board. All members of the Committee shall
have a working familiarity with basic finance and accounting practices,
and at least one member of the Committee shall have accounting or related
financial management expertise.
The members of the Audit Committee shall be elected by the Board of
Directors at the annual organizational meeting of the Board or until
their successors shall be duly elected and qualified.
iii
PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF SHAREHOLDERS
APRIL 9, 2002
The undersigned does hereby appoint NADA E. BENEKE, JAMES C. INMAN, JR.,
and R. CLARK MORTON or any of them, the true and lawful attorneys in fact,
agents and proxies of the undersigned to represent the undersigned at the
Annual Meeting of the Shareholders of FIRST WEST VIRGINIA BANCORP, INC., to be
held on April 9, 2002, commencing at 4:00 p.m., at the Warwood Office of the
Company at 1701 Warwood Avenue, Wheeling, West Virginia, and at any and all
adjournments of said meeting, and to vote all the shares of Common Stock of the
Company standing on the books of the Company in the name of the undersigned as
specified and in their discretion on such other business as may properly come
before the meeting.
REVOCABLE PROXY
First West Virginia Bancorp, Inc. With- For All
1. ELECTION OF DIRECTORS: For hold Except
To elect two Directors
to serve as Class I
directors for terms
ending in 2005:
Laura G. Inman
Karl W. Neumann
In connection with the election of Directors, shareholders are entitled
to cumulate their votes. Accordingly, each shareholder may cast that
number of votes determined by multiplying the number of shares of common
stock owned by such shareholder by two (the number of directors to be
elected). Such aggregate number of votes may be allocated equally between
each of the nominees for director or may be cumulated by being
distributed in varying amounts between each of the nominees for director.
INSTRUCTION: To vote equally for each of the nominees, mark "For". To
withhold authority to vote for any individual nominee, mark "For All
Except" and write that nominee's name in the space provided below. To
vote cumulatively, mark "For" and beside each nominee's name write the
number of votes allocated to each nominee.
- -------------------------------------------------------------------------------
The undersigned hereby acknowledges receipt of Notice of said Annual
Meeting and accompanying Proxy Statement each dated March 13, 2002.
This Proxy will be voted as specified, if no specification is made, this
Proxy will be "FOR" the nominees named.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
Please be sure to sign and date Date -----------------
this Proxy in the box below.
-----------------------------------------------------------
Shareholder sign above Co-holder (if any) sign above
- -------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
First West Virginia Bancorp, Inc.
YOUR VOTE IS IMPORTANT TO US
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY