SCHEDULE 14A
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<Table>
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</Table>
Habersham Bancorp.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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HABERSHAM BANCORP
282 HISTORIC HIGHWAY 441 NORTH
P.O. BOX 1980
CORNELIA, GEORGIA 30531
(706) 778-1000
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SATURDAY, APRIL 20, 2002.
To the Shareholders of Habersham Bancorp:
The annual meeting of shareholders of Habersham Bancorp (the "Company")
will be held on Saturday, April 20, 2002, at 1:00 p.m., in the Central Office of
Habersham Bank at 282 Historic Highway 441 North, Cornelia, Georgia, for the
following purposes:
(1) To elect directors.
(2) To transact any other business that may properly come before
the meeting or any adjournment.
March 8, 2002 is the record date for the determination of shareholders
entitled to notice of and to vote at the meeting.
Please mark, date, sign and return the enclosed form of proxy as soon
as possible. If you attend the meeting and wish to vote your shares in person,
you may do so at any time before the vote takes place.
By Order of the Board of Directors,
David D. Stovall
President and Chief Executive Officer
March 22, 2002
HABERSHAM BANCORP
282 HISTORIC HIGHWAY 441 NORTH
P.O. BOX 1980
CORNELIA, GEORGIA 30531
PROXY STATEMENT
-----------------------------------
INTRODUCTION
TIME AND PLACE OF THE MEETING
The Company's Board of Directors is furnishing this Proxy Statement to
solicit proxies for use at the annual meeting of shareholders to be held on
Saturday, April 20, 2002, at 1:00 p.m., in the Central Office of Habersham Bank
at 282 Historic Highway 441 North, Cornelia, Georgia, and at any adjournment of
the meeting.
PROCEDURES FOR VOTING BY PROXY
If you properly sign, return and do not revoke your proxy, the persons
named as proxies will vote your shares according to the instructions you have
specified on the proxy card. If you sign and return your proxy card but do not
specify how the persons appointed as proxies are to vote your shares, your proxy
will be voted FOR the election of the nominated directors and in accordance with
the best judgment of the persons appointed as proxies as to all other matters
properly brought before the meeting. You can revoke your proxy by delivering to
Edward D. Ariail at the Company's Central Office either a written revocation of
your proxy or a duly executed proxy bearing a later date or by attending the
meeting and voting in person.
RECORD DATE AND MAILING DATE
The close of business on March 8, 2002 is the record date for the
determination of shareholders entitled to notice of and to vote at the meeting.
We first mailed this Proxy Statement and accompanying proxy card to shareholders
on or about March 22, 2002.
NUMBER OF SHARES OUTSTANDING
As of the close of business on the record date, the Company had
10,000,000 shares of common stock, $1.00 par value, authorized, of which
2,698,746 shares were issued and outstanding. Each such share is entitled to one
vote on matters to be presented at the meeting.
REQUIREMENTS FOR SHAREHOLDER APPROVAL
A quorum will be present if a majority of the votes entitled to be cast
are present in person or by valid proxy. We will count abstentions and broker
non-votes, which are described below, in determining whether a quorum exists. To
be elected, a director must receive more votes than any other nominee for the
same seat on the Board of Directors. As a result, if you
1
withhold your vote as to one or more directors, it will have no effect on the
outcome of the election unless you cast that vote for a competing nominee.
Only votes actually cast will count in determining whether the
shareholders have approved a proposal. Abstentions and broker "non-votes"
resulting from a broker's inability to vote a client's shares on
non-discretionary matters will not affect the outcome of the election of
directors or any other proposals that may be brought before the meeting.
THE COMPANY
The Company was incorporated in 1984 as a bank holding company under
the laws of the State of Georgia. The Company's subsidiary, Habersham Bank, is a
general commercial bank located in Cornelia, Georgia. Habersham Bank has the
following operating divisions and subsidiaries:
NAME LOCATION PRINCIPAL BUSINESS
---- -------- ------------------
Security State Bank Canton, Georgia General commercial banking
(a division of Habersham Bank)
Advantage Insurers, Inc. Cornelia, Georgia Property, casualty and life
(a subsidiary of Habersham Bank) insurance agency
BancMortgage Financial Corp. (a Northern Atlanta, Georgia Full service mortgage lending and
subsidiary of Habersham Bank) metropolitan area servicing
BancFinancial Services Corporation Northern Atlanta, Georgia Wholesale mortgage lending,
(a subsidiary of BancMortgage metropolitan area specializing in sub-prime mortgage
Financial Corp.) loans
BancMortgage Reinsurance Ltd. Northern Atlanta, Georgia Reinsurance for insurance
(a subsidiary of BancMortgage Metropolitan area companies offering private
Financial Corp.) mortgage insurance
2
OWNERSHIP OF STOCK
PRINCIPAL SHAREHOLDERS
On March 8, 2002, the Company had 550 shareholders of record. The
following table lists the persons who, to our best knowledge, beneficially owned
5% or more of the Company's outstanding shares of common stock as of that date.
According to rules adopted by the Securities and Exchange Commission, a
"beneficial owner" of securities has or shares the power to vote the securities
or to direct their investment. Unless otherwise indicated, each person is the
record owner of, and has sole voting and investment power with respect to, his
or her shares. The number of issued and outstanding shares used to calculate the
percentage of total ownership for a given individual or group includes any
shares covered by the option(s) issued to that individual or group.
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------- --------------------- ----------------
John Robert Arrendale 170,072 6.30%
200 Hillcrest Heights
Cornelia, Georgia 30531
Thomas A. Arrendale, III 853,729(1)(2) 31.61%
P. O. Box 558
Baldwin, Georgia 30511
Cyndae Arrendale Bussey 515,776(1) 19.11%
P. O. Box 558
Baldwin, Georgia 30511
David D. Stovall 177,697(3) 6.42%
P. O. Box 1980
Highway 441 North
Cornelia, Georgia 30531
Footnotes
- ---------
(1) Includes 400,000 shares owned by the Arrendale Undiversified Family
Limited Partnership and 85,000 shares owned by the Thomas A. Arrendale,
Jr. Family Limited Partnership. As general partners of each limited
partnership, Thomas A. Arrendale, III and Cyndae Arrendale Bussey share
voting and dispositive authority with respect to the shares owned by
each partnership.
(2) Includes 2,500 shares subject to options exercisable on or before
May 7, 2002.
(3) Includes 95,129 shares owned of record by Mr. Stovall jointly with his
wife, 2,666 shares owned of record as custodian for his daughter, 8,334
shares owned of record by Mr. Stovall
3
jointly with his daughter, and 70,318 shares subject to options
exercisable on or before May 7, 2002. Excludes 9,130 shares (as of the
latest available valuation of December 31, 2001) held in Mr. Stovall's
account in the Company's 401(k) Savings Investment Plan Trust (the
"Savings Plan"), as to which Mr. Stovall has no voting or investment
power.
STOCK OWNED BY MANAGEMENT
The following table lists the number and percentage ownership of shares
of common stock beneficially owned by each director and director nominee, each
executive officer named in the Summary Compensation Table contained elsewhere in
this Proxy Statement and all directors and executive officers as a group as of
March 8, 2002. Unless otherwise indicated, each person is the record owner of,
and has sole voting and investment power with respect to, his shares. The number
of issued and outstanding shares used to calculate the percentage of total
ownership includes any shares covered by the option(s) issued to the individual
or to members of the group, as applicable, identified in the table.
Number of Shares Percentage
Name Beneficially Owned of Total
- ---- ------------------ -------------
Directors and Director Nominees:
- -------------------------------
Edward D. Ariail(1) 54,192(2) 1.99%
Thomas A. Arrendale, Jr. 2,500(3) *
Thomas A. Arrendale, III 853,729(3)(4) 31.61%
Michael C. Martin 24,936(5) *
James E. McCollum(1) 53,967(6) 1.96%
James A. Stapleton, Jr. 7,950(3)(7) *
David D. Stovall(1) 177,697(8) 6.42%
Calvin R. Wilbanks 16,325(3) *
Named Executive Officers who are not Directors:
- ----------------------------------------------
Robert S. Cannon 54,200(9) 1.98%
Anthony L. Watts 46,500(9) 1.70%
All Directors, Director Nominees and
Executive Officers as a Group (12 persons) 1,317,100(10) 44.38%
Footnotes
- ---------
(*) Indicates less than 1%.
(1) Messrs. Ariail, McCollum and Stovall are also executive officers of the
Company.
(2) Includes 15,815 shares owned of record by Mr. Ariail jointly with his
wife, 350 shares owned of record by Mr. Ariail jointly with his wife
and daughters and 27,000 shares subject to options exercisable on or
before May 7, 2002. Excludes 6,283 shares (as of the
4
latest available valuation of December 31, 2001) held in Mr. Ariail's
account in the Savings Plan, as to which Mr. Ariail has no voting or
investment power.
(3) Includes 2,500 shares subject to options exercisable on or before
May 7, 2002.
(4) Includes 400,000 shares owned by the Arrendale Undiversified Family
Limited Partnership and 85,000 shares owned by the Thomas A. Arrendale,
Jr. Family Limited Partnership. As general partners of each limited
partnership, Thomas A. Arrendale, III and Cyndae Arrendale Bussey share
voting and dispositive authority with respect to the shares owned by
each partnership.
(5) Includes 591 shares owned of record by Mr. Martin jointly with his
children and 8,818 shares subject to options exercisable on or before
May 7, 2002.
(6) Includes 49,000 shares subject to options exercisable on or before May
7, 2002. Excludes 3,259 shares (as of the latest available valuation of
December 31, 2001) held in Mr. McCollum's account in the Savings Plan,
as to which Mr. McCollum has no voting or investment power.
(7) Mr. Stapleton owns 450 of the indicated shares jointly with his
children.
(8) Includes 95,129 shares owned of record by Mr. Stovall jointly with his
wife, 2,666 shares owned of record as custodian for his daughter, 8,334
shares owned of record by Mr. Stovall jointly with his daughter, and
70,318 shares subject to options exercisable on or before May 7, 2002.
Excludes 9,130 shares (as of the latest available valuation of December
31, 2001) held in Mr. Stovall's account in the Savings Plan, as to
which Mr. Stovall has no voting or investment power.
(9) Includes 43,000 shares subject to options exercisable on or before
May 7, 2002.
(10) Of the indicated shares, 263,136 shares are subject to options
exercisable on or before May 7, 2002. Excludes 19,067 shares (as of the
latest available valuation of December 31, 2001) held in accounts for
the benefit of the Company's executive officers under the Savings Plan,
as to which participants have no voting or investment power.
PROPOSAL 1: ELECTION OF DIRECTORS
NOMINEES
We propose that the nominees listed below be elected as directors of
the Company. Each director will serve until the 2003 annual meeting of
shareholders or until his successor is duly elected and qualified. If any
nominee becomes unavailable to serve as a director, which we do not now
anticipate, then the persons named as proxies will have complete discretion to
vote for another duly nominated candidate.
5
The following table shows, for each director, his name and age at
December 31, 2001, the year he was first elected as a director, his position
with the Company other than as a director and his principal occupation and other
business experience for the past five years. Thomas A. Arrendale, Jr. and Thomas
A. Arrendale, III are father and son.
YEAR FIRST POSITION WITH COMPANY;
NAME AGE ELECTED BUSINESS EXPERIENCE
- ---- --- ---------- ----------------------
Edward D. Ariail 43 2000 Vice President and Corporate Secretary of the Company;
President of Habersham Bank since April 1996; prior thereto,
Executive Vice President of Habersham Bank; and member of
the Board of Directors of BancMortgage Financial Corp.
Thomas A. Arrendale, Jr. 81 1984 Chairman of the Board of the Company and Habersham Bank;
Director and President, Fieldale Farms, Inc. (poultry
processing and distribution)
Thomas A. Arrendale, III 44 1990 Vice Chairman of the Board of the Company; Director of
Marketing, Fieldale Farms, Inc. (poultry processing and
distribution)
Michael C. Martin 48 2000 President of Martin and Norton, Inc. (land surveyors)
James E. McCollum 51 2000 Executive Vice President of the Company since August 1998;
Chief Operating Officer of Habersham Bank since October
1999; Director of Habersham Bank and Advantage Insurers,
Inc. since August 1998; prior thereto, President, First Data
Retail Services, Omaha, Nebraska from 1996 through 1997;
Manager of Credit Development, J.C. Penney, Dallas, Texas
from 1980 to 1996.
James A. Stapleton, Jr. 53 1990 President and General Manager, Habersham Metal Products
David D. Stovall 45 1989 President and Chief Executive Officer of the Company; Vice
Chairman and Chief Executive Officer of Habersham Bank;
Chairman of the Board of Directors of Security State Bank,
BancMortgage Financial Corp., and Advantage Insurers, Inc.
Calvin R. Wilbanks 55 1990 Co-Owner, C.P. Wilbanks Lumber Company
6
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE
NOMINEES LISTED ABOVE.
MEETINGS AND COMMITTEES OF THE BOARD
The Company's Board of Directors holds its regular meetings on the
third Saturday of the first month of each quarter and otherwise as necessary.
Habersham Bank's Board of Directors meets on the third Saturday of each month.
During 2001, the Company's Board of Directors met 12 times and Habersham Bank's
Board of Directors met 12 times. Each nominated director of the Company attended
at least 75% of the meetings of the Company's Board of Directors and of any
committees of which he was a member, and each nominated director of Habersham
Bank attended at least 75% of the aggregate number of meetings of the Board of
Directors and committees of which he was a member.
The Company's Board of Directors has established a Compensation
Committee and an Audit Committee. The Compensation Committee is composed of
Thomas A. Arrendale, Jr. and Calvin R. Wilbanks. The Committee determines the
compensation of Company officers and administers the Company's employee stock
option plans. The Committee met once in 2001.
The Audit Committee's functions include (a) providing assistance to the
Board of Directors in fulfilling its responsibilities for examinations of the
Company by regulatory agencies and independent auditors; (b) determining that
the Company has adequate administrative, operating and internal accounting
controls and that it is operating in accordance with prescribed procedures; and
(c) serving as an independent party in the review of the Company's financial
information prior to its distribution to the Company's shareholders and the
public. The current members of the Audit Committee are Michael C. Martin, James
A. Stapleton, Jr. and Calvin R. Wilbanks. Either the Chairman or the Company's
internal auditor may call a meeting of the Audit Committee. The Audit Committee
met four times during 2001.
Neither the Company nor any of its subsidiaries has a standing
nominating committee.
COMPENSATION OF DIRECTORS
The same individuals who served as directors of the Company in 2001
also served as directors of Habersham Bank. They were compensated for their
service to the Company and to Habersham Bank at rates of from $500 to $6,000 per
Board meeting attended. Directors are not compensated for their service as
members of committees. In 2001, Mr. Stovall received a total of $56,000 in
director fees and $10,500 in fees for his service as a member of Security State
Bank's advisory council; Mr. Ariail received $28,000 in director fees; and Mr.
McCollum received $21,000 in director fees and $7,000 in fees for his service as
a member of Security State Bank's advisory council.
Directors of the Company and its bank subsidiaries who are not
employees of the Company or any of its subsidiaries are granted options annually
under the Habersham Bancorp Outside Directors' Stock Option Plan (the
"Directors' Plan"). On December 31 of each year, so long as the Company or the
applicable bank subsidiary has a return on beginning assets of at
7
least one percent for the prior 12-month period, each eligible director of the
Company receives an option to purchase 1,000 shares of common stock at an
exercise price equal to the fair market value of the common stock on the date of
grant and each director of a bank subsidiary receives an option to purchase 250
shares on the same terms. Options are exercisable in full six months after the
date of grant. No directors received options under the Directors' Plan in 2001.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16 (a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and persons who own
beneficially more than 10% of the Company's outstanding common stock to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in their ownership of the Company's common stock. Directors,
executive officers and greater than 10% shareholders are required to furnish the
Company with copies of the forms they file. To our knowledge, based solely on a
review of the copies of these reports furnished to the Company, during the
fiscal year ended December 31, 2001, our directors, executive officers and
greater than 10% shareholders complied with all applicable Section 16(a) filing
requirements.
EXECUTIVE OFFICERS
The Company's executive officers are appointed by and hold office at
the discretion of the Board of Directors. The following table lists for each
executive officer (a) the person's name, (b) his or her age at December 31,
2001, (c) the year he or she was first elected as an executive officer of the
Company, (d) his or her position with the Company and its subsidiaries, and (e)
other business experience for the past five years, if he or she has been
employed by the Company or any subsidiary for less than five years.
YEAR FIRST POSITION WITH COMPANY;
NAME AGE ELECTED BUSINESS EXPERIENCE
- ---- --- ---------- ----------------------
Thomas A. Arrendale, Jr. 81 1984 Chairman of the Board of the Company and Habersham Bank;
Director and President, Fieldale Farms, Inc. (poultry
processing and distribution)
David D. Stovall 45 1984 President and Chief Executive Officer of the Company; Vice
Chairman and Chief Executive Officer of Habersham Bank;
Chairman of the Board of Directors of BancMortgage Financial
Corp. and Advantage Insurers, Inc.
Edward D. Ariail 43 1990 Vice President and Corporate Secretary of the Company;
President of Habersham Bank since April 1996; prior thereto,
Executive Vice President of Habersham Bank; and member of
the Board of Directors of BancMortgage Financial Corp.
8
Annette Banks 55 1997 Vice President and Chief Financial Officer of the Company
since April 1997; prior thereto, Chief Financial Officer of
the Company and Vice President, Controller of Habersham Bank.
Bonnie Bowling 43 1997 Vice President, Operations, Audit, Compliance of the Company
since April 1997; from December 1994 to 1997, Process Owner
of Audit/Compliance of the Company; prior thereto, Vice
President of CB&T - West Georgia, Carrollton, Georgia
Robert S. Cannon 50 1997 Vice President, Mortgage Banking of the Company since 1996;
Vice Chairman and Co-Chief Executive Officer of BancMortgage
Financial Corp. since December 1999 (Principal/Director
since 1996); prior thereto, President of HomeBanc Mortgage
Corporation, Atlanta, Georgia
Anthony L. Watts 54 1997 Vice President, Mortgage Banking of the Company since 1996;
Vice Chairman and Co-Chief Executive Officer of BancMortgage
Financial Corp. since December 1999 (Principal/Director
since 1996); prior thereto, President and Chief Executive
Officer of Mt. Vernon Federal Savings Bank, Dunwoody,
Georgia.
James E. McCollum 51 1998 Chief Operating Officer of Habersham Bank since October
1999; Executive Vice President of the Company and Director
of Habersham Bank and Advantage Insurers, Inc. since August
1998; prior thereto, President, First Data Retail Services,
Omaha, Nebraska from 1996 through 1997; Manager of Credit
Development, J.C. Penney, Dallas, Texas from 1980 to 1996.
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries to or on behalf
of the Company's Chief Executive Officer and the four other mostly highly
compensated executive officers of the Company who earned over $100,000 in salary
and bonus during 2001 for the last three fiscal years or for a shorter period if
their employment by the Company began within the last three fiscal years.
9
SUMMARY COMPENSATION TABLE
Annual Long-Term
Compensation(1) Compensation(2)
---------------------- ---------------------
Securities Underlying All Other
Name and Principal Position Year Salary($) Bonus($) Options/SARs(#) Compensation($)(3)
- --------------------------- ---- --------- -------- --------------------- ------------------
David D. Stovall 2001 193,394 0 15,000 8,653(4)
President and Chief Executive 2000 168,056 0 13,000 8,233(4)
Officer of the Company and Vice 1999 170,924 0 12,000 6,819(4)
Chairman and Chief Executive
Officer of Habersham Bank
Edward D. Ariail 2001 121,307 0 7,000 5,362(5)
Vice President and Corporate 2000 111,823 0 5,000 4,915(5)
Secretary of the Company and 1999 105,823 0 4,500 4,490(5)
President of Habersham Bank
Robert S. Cannon 2001 150,000 0 9,000 2,528,268(6)
Vice President, Mortgage Banking 2000 150,000 0 8,000 422,285(6)
of the Company and Vice Chairman 1999 150,000 0 8,000 356,656(6)
and Co-Chief Executive Officer of
BancMortgage Financial Corp.
James E. McCollum 2001 158,519 0 15,000 4,896
Executive Vice President of the 2000 144,900 0 12,000 4,347
Company and Chief Operating 1999 147,400 0 11,000 2,301
Officer of Habersham Bank
Anthony L. Watts 2001 150,000 0 9,000 2,528,268(6)
Vice President, Mortgage Banking 2000 150,000 0 8,000 422,285(6)
of the Company and Vice Chairman 1999 150,000 0 8,000 356,656(6)
and Co-Chief Executive Officer of
BancMortgage Financial Corp.
- ---------------
(1) We have omitted information on "perks" and other personal benefits
because the aggregate value of these items does not meet the minimum
amount required for disclosure under Securities and Exchange Commission
regulations.
(2) The Company has not awarded any restricted stock or long-term
incentives other than stock options. Accordingly, we have omitted
columns relating to these types of awards. The
10
terms of the 2001 option grants are included in the table captioned
"Option Grants in Last Fiscal Year."
(3) Includes the following Company contributions to the indicated person's
savings plan account for the year indicated:
2001 2000 1999
------- ------- -------
Mr. Stovall $ 5,100 $ 4,680 $ 3,266
Mr. Ariail 3,802 3,355 2,930
Mr. Cannon 5,100 5,100 9,750
Mr. McCollum 4,896 4,347 2,301
Mr. Watts 5,100 5,100 9,750
(4) Includes $3,553 in premiums paid by the Company under a split dollar
life insurance plan for the benefit of Mr. Stovall in each of the years
indicated.
(5) Includes $1,560 in premiums paid by the Company under a split dollar
life insurance policy for the benefit of Mr. Ariail in each of the
years indicated.
(6) For each of the years indicated, the total includes the following
amounts earned in the year indicated and paid at the beginning of the
following year as a part of a distribution required under an agreement
entered into by Habersham Bank with Messrs. Cannon and Watts relating
to the establishment of BancMortgage Financial Corp. See "-Employment
Agreements."
2001 2000 1999
---- ---- ----
$2,523,168 $417,185 $346,906
The following table sets forth information regarding the grant of stock
options to the executives named in the Summary Compensation Table during 2001.
All options shown are presently exercisable.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATE
SECURITIES TOTAL OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM($)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------------
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ----------- ------------- --------- ---------- -------- ---------
David D. Stovall 15,000 15.15 16.50 12/31/06 $ 68,380 $ 151,101
Edward D. Ariail 7,000 7.07 16.50 12/31/06 31,911 70,514
Robert S. Cannon 9,000 9.09 16.50 12/31/06 41,028 90,661
James E. McCollum 15,000 15.15 16.50 12/31/06 68,380 151,101
Anthony L. Watts 9,000 9.09 16.50 12/31/06 41,028 90,661
11
The following table contains information, with respect to the
executives named in the Summary Compensation Table, concerning the exercise of
options during 2001 and unexercised options held as of the end of 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
SHARES VALUE OF UNEXERCISED
ACQUIRED NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS/SARS
ON VALUE OPTIONS AT FY-END(#) AT FY/END($)(1)
EXERCISE REALIZED ---------------------------- -------------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ---------- ---------- ----------- ------------- ----------- -------------
David D. Stovall 0 0 64,000 0 $160,530 0
Edward D. Ariail 0 0 27,000 0 57,675 0
Robert S. Cannon 0 0 43,000 0 159,210 0
James E. McCollum 0 0 49,000 0 134,220 0
Anthony L. Watts 0 0 43,000 0 159,210 0
- ---------------
(1) Calculated by subtracting the exercise price from the market price of
the common stock at fiscal year-end ($16.50) and multiplying the
resulting figure by the number of shares subject to options for which
the exercise price was less than the market price of the common stock
at fiscal year-end.
EMPLOYMENT AGREEMENTS
Under an agreement dated as of January 2, 1996 among the Company,
Habersham Bank (the "Bank"), BancMortgage Financial Corp. ("BancMortgage"),
Robert S. Cannon and Anthony L. Watts, each of Messrs. Cannon and Watts is
entitled to an annual base salary of $150,000 (subject to adjustment by the
Board of Directors) and a percentage of BancMortgage's annual net income before
taxes. See Note (6) to the Summary Compensation Table for the amounts paid under
this provision of the agreement. Other elements of compensation include the use
of a company car, club memberships, life insurance and such other benefits as
are provided under the Bank's employee benefit plans. If the Company or the Bank
is acquired or if the Bank receives and wishes to accept a bona fide offer for
the acquisition of BancMortgage, Messrs. Cannon and Watts have a right of first
refusal to acquire BancMortgage.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report discusses the compensation objectives and policies
applicable to our executive officers and our policy generally with respect to
the compensation of all executive officers as a group for 2001 and specifically
reviews the compensation established for our Chief Executive Officer during
2001.
COMPENSATION PHILOSOPHY
Our executive compensation program has three objectives: (1) to align
the interests of the executive officers with those of our shareholders by basing
a significant portion of an
12
executive's compensation on the Company's performance, (2) to attract and retain
highly talented and productive executives, and (3) to provide incentives for
superior performance by our executives. To achieve these objectives, our
executive compensation program consists of base salary and incentive
compensation in the form of stock options. These compensation elements are in
addition to the general benefit programs that are offered to all of our
employees.
In determining the amount and type of compensation to be awarded to
executive officers, we study the compensation packages for executives of a peer
group of the Company's most direct publicly held competitors for executive
talent, assess the competitiveness of our executive compensation program and
review the Company's financial performance for the previous year. We also gauge
our success in achieving the compensation program's objectives in the previous
year and consider the Company's overall performance objectives. Each element of
our executive compensation program is discussed below.
BASE SALARIES
Base salaries for our executive officers for 2001 are reflected in the
Summary Compensation Table. In addition to the factors described above that
support our executive compensation program generally, we evaluate subjectively
the responsibilities of the specific executive position and the individual
executive's experience and knowledge in determining his or her base salary.
Salaries are not based upon the achievement of any predetermined performance
targets.
INCENTIVE COMPENSATION
Our incentive compensation is based upon our Incentive Stock Option
Plan. We believe that placing a portion of executives' total compensation in the
form of stock options achieves three objectives. It aligns the interest of our
executives directly with those of our shareholders, gives executives a
significant long-term interest in the Company's success and helps us retain key
executives. In determining the number and terms of options to grant an
executive, we primarily consider subjectively the executive's past performance
(or, in the case of a new executive, his or her knowledge, and experience and
the degree to which we can recruit executives with similar skills) and the
degree to which an incentive for long-term performance would benefit the
Company.
BENEFITS
We believe we must offer a competitive benefits program to attract and
retain key executives. We provide the same medical and other benefits to our
executive officers that are generally available to our other employees.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
We based our Chief Executive Officer's 2001 salary and stock options on
our review of the compensation packages for chief executive officers of our most
direct competitors and on our subjective assessment of his experience, knowledge
and abilities. We have and will continue to
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base salary adjustments, stock option awards or other long-term incentive
compensation on the same elements and measures of performance as we review in
determining the compensation for our other executive officers. Aside from the
incentives inherent in the grant of stock options, we do not directly tie our
Chief Executive Officer's compensation to the Company's performance.
SECTION 162(M) OF THE INTERNAL REVENUE CODE
It is our responsibility to address the issues raised by Section 162(m)
of the Internal Revenue Code, as amended. The revisions to Section 162(m) made
certain non-performance based compensation in excess of $1,000,000 to executives
of public companies non-deductible to the companies beginning in 1994. We have
reviewed these issues and have determined that no portion of compensation
payable to any executive officer for 2001 is non-deductible. Our Incentive Stock
Option Plan limits to $100,000 the aggregate fair market value of the common
stock subject to options that first become exercisable during any calendar year
for any individual optionee.
Submitted by: THE COMPENSATION COMMITTEE
Thomas A. Arrendale, Jr.
Calvin R. Wilbanks
AUDIT COMMITTEE MATTERS
AUDIT COMMITTEE REPORT
The Audit Committee is responsible for providing independent, objective
oversight of the Company's accounting functions and internal controls. The Audit
Committee is composed of three directors, each of whom is independent as defined
by applicable Nasdaq standards. The Audit Committee operates under a written
charter approved by the Board of Directors.
Management is responsible for the Company's internal controls and
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with auditing standards generally accepted in the
United States of America and to issue a report thereon. The Audit Committee's
responsibility is to monitor and oversee these processes.
In connection with these responsibilities, the Audit Committee met with
management and the independent accountants to review and discuss the December
31, 2001 consolidated financial statements. The Audit Committee also discussed
with the independent accountants the matters required by Statement on Auditing
Standards No. 61 (Communication with Audit Committees). The Audit Committee also
received written disclosures from the independent accountants required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and the Audit Committee discussed with the independent accountants
that firm's independence.
14
Based upon the Audit Committee's discussions with management and the
independent accountants, and the Audit Committee's review of the representations
of management and the independent accountants, the Audit Committee recommended
that the Board of Directors include the audited consolidated financial
statements in the Company's Annual Report on Form 10-K for the year ended
December 31, 2001, to be filed with the Securities and Exchange Commission.
THE AUDIT COMMITTEE
Michael C. Martin
James A. Stapleton, Jr.
Calvin R. Wilbanks
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
KPMG LLP, Atlanta, Georgia, acted as the Company's principal
independent certified public accountants for the year ended December 31, 2001.
Representatives of KPMG LLP will be present at the 2002 Annual Meeting and will
have the opportunity to make a statement if they desire to do so and respond to
appropriate questions.
AUDIT FEES
In connection with services rendered in connection with the audit of
the Company's annual financial statements and the review of the Company's
interim financial statements, the Company has estimated that its total audit
fees for 2001 were approximately $124,000. This figure is based on an estimate
provided by our accountants, KPMG LLP, and includes fees for services that were
billed to the Company in 2002 in connection with the 2001 audit.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company did not retain KPMG LLP to perform financial information
systems design or implementation services in 2001.
OTHER FEES
During 2001, the Company was billed by KPMG LLP $58,000 for other
audit-related services and $56,450 for other services. The Audit Committee has
considered the provision of non-audit services by KPMG LLP and has determined
that the provision of such services was consistent with maintaining the
independence of KPMG LLP.
15
PERFORMANCE GRAPH
The following Performance Graph compares the yearly percentage change
in the cumulative total shareholder return on our common stock to the cumulative
total return on the Nasdaq Stock Market (U.S.) Index and the Nasdaq Bank Stock
Index from December 31, 1996 through the last trading day of each succeeding
fiscal year through December 31, 2001. The Performance Graph assumes
reinvestment of dividends, where applicable.
[GRAPH APPEARS HERE.]
CRSP Total Returns Index for: 12/1996 12/1997 12/1998 12/1999 12/2000 12/2001
- ----------------------------- ------- ------- ------- ------- ------- -------
Habersham Bancorp 100.0 116.3 86.9 77.9 60.6 101.9
Nasdaq Stock Market 100.0 122.5 172.7 320.8 193.0 153.1
(U.S. Companies)
Nasdaq Bank Stocks 100.0 167.4 166.3 159.9 182.4 197.4
SIC 6020-6029, 6710-6719 US
And Foreign
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/29/1996.
16
CERTAIN TRANSACTIONS
Some of our directors, officers, principal shareholders and their
associates were customers of, or had transactions with, the Company or its
subsidiaries in the ordinary course of business during 2001. Some of our
directors are directors, officers, trustees or principal securities holders of
corporations or other organizations that also were customers of, or had
transactions with, the Company or its subsidiaries in the ordinary course of
business during 2001.
All outstanding loans and other transactions with our directors,
officers and principal shareholders were made in the ordinary course of business
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons and,
when made, did not involve more than the normal risk of collectability or
present other unfavorable features. In addition to banking and financial
transactions, the Company and its subsidiaries may have had additional
transactions with, or used products or services of, various organizations with
which directors of the Company and its subsidiaries were associated. The amounts
involved in these non-credit transactions have not been material in relation to
the business of the Company, its subsidiaries or such other organizations. We
expect that the Company and its subsidiaries will continue to have similar
transactions in the ordinary course of business with such individuals and their
associates in the future.
MISCELLANEOUS
SHAREHOLDER PROPOSALS
We must receive any shareholder proposals submitted for consideration
at the next annual meeting of shareholders no later than November 24, 2002 to be
included in our 2003 proxy materials. A shareholder must notify the Company
before January 31, 2003 of a proposal for the 2003 Annual Meeting that the
shareholder intends to present other than by inclusion in the Company's proxy
materials. If we do not receive such notice before January 31, 2003, proxies
solicited by our management will confer discretionary authority upon our
management to vote upon any such matter.
OTHER MATTERS
We know of no other matters that may be brought before the meeting. If,
however, any matter other than the election of directors or a matter incident to
the election of directors properly comes before the meeting, the persons
appointed as proxies will vote on the matter in accordance with their best
judgment.
EXPENSES AND SOLICITATION OF PROXIES
The Company will pay the expenses of soliciting proxies for the 2002
annual meeting of shareholders. In addition to solicitation by mail, certain
directors, officers and regular employees of the Company and its subsidiaries
may solicit proxies by telephone, telegram or personal interview. They will
receive no compensation in addition to their regular salaries for these
activities. The Company will direct brokerage houses and custodians, nominees
and fiduciaries to forward soliciting material to the beneficial owners of the
common stock that these institutions hold of record, and, upon request, will
reimburse them for their reasonable out-of-pocket expenses.
17
HABERSHAM BANCORP
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 20, 2002
The undersigned shareholder of Habersham Bancorp (the "Company") hereby
appoints David D. Stovall and Edward D. Ariail as proxies with full power of
substitution, acting unanimously or by either of them if only one be present and
acting, to vote all shares of common stock of the Company which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Shareholders (the "Meeting") to be held at the Central Office of the Company,
282 Historic Highway 441 North, Cornelia, Georgia on Saturday, April 20, 2002 at
1:00 p.m. and at any adjournments thereof, upon the proposals described in the
accompanying Notice of the Annual Meeting and the Proxy Statement relating to
the Meeting (the "Proxy Statement"), receipt of which is hereby acknowledged.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
PROPOSAL 1: To elect the nominees listed below to serve as directors of the
Company for the ensuing year.
Edward D. Ariail, Thomas A. Arrendale, Jr.,
Thomas A. Arrendale III, Michael C. Martin, James E. McCollum,
James A. Stapleton, Jr., David D. Stovall and Calvin R. Wilbanks.
FOR all nominees WITHHOLD AUTHORITY
----- listed above (except as ----- to vote for all nominees
indicated to the contrary listed above.
below).
INSTRUCTION: To withhold authority for any individual nominee(s), mark "FOR"
above, and write the name of the nominee(s) for whom you wish to
withhold authority in the space below:
-------------------------------------------------------------------
This proxy, when properly executed, will be voted as directed, but if
no direction to the contrary is indicated, it will be voted FOR the
nominees listed in Proposal 1. Discretionary authority is hereby
conferred as to all other matters which may come before the meeting.
Dated: , 2002
-----------------------------
(Be sure to date your Proxy)
-----------------------------------------
Name(s) of Shareholder(s)
-----------------------------------------
Signature(s) of Shareholder(s)
If stock is held in the name of more than one person, all holders
should sign. Signatures must correspond exactly with the name or names appearing
on the stock certificate(s). When signing as attorney, executor, administrator,
trustee, guardian or custodian, please indicate the capacity in which you are
acting. If a corporation, please sign in full corporate name by the President or
other authorized officer. If a partnership, please sign in name by authorized
person.
Please mark, date and sign this Proxy, and return it in the enclosed
return-addressed envelope. No postage is necessary.
PLEASE RETURN PROXY AS SOON AS POSSIBLE