SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
GRAYSON BANKSHARES, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided in Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
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(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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GRAYSON BANKSHARES, INC.
Dear Shareholder:
You are cordially invited to attend the 2001 Annual Meeting of
Shareholders of Grayson Bankshares, Inc. to be held on Tuesday, April 10, 2001
at 1:00 p.m. at the VFW Building, Klondike Road, Highway 58 West, Independence,
Virginia.
At the Annual Meeting, you will be asked to elect three directors for
terms of three years each and one director for a term of two years. Enclosed
with this letter is a formal notice of the Annual Meeting, a Proxy Statement and
a form of proxy.
Whether or not you plan to attend the Annual Meeting, it is important
that your shares be represented and voted. Please complete, sign, date and
return the enclosed proxy promptly using the enclosed postage-paid envelope. The
enclosed proxy, when returned properly executed, will be voted in the manner
directed in the proxy.
We hope you will participate in the Annual Meeting, either in person or
by proxy.
Sincerely,
Jacky K. Anderson
President and Chief Executive Officer
Independence, Virginia
March 19, 2001
GRAYSON BANKSHARES, INC.
113 West Main Street
Independence, Virginia 24348
___________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
___________________
The Annual Meeting of Shareholders (the "Annual Meeting") of Grayson
Bankshares, Inc. (the "Company") will be held on Tuesday, April 10, 2001 at 1:00
p.m. at the VFW Building, Klondike Road, Highway 58 West, Independence,
Virginia, for the following purposes:
1. To elect three directors to serve for terms of three years
each expiring at the 2004 annual meeting of shareholders and
one director to serve for a term of two years expiring at the
2003 annual meeting of shareholders; and
2. To act upon such other matters as may properly come before the
Annual Meeting.
Only holders of shares of Common Stock of record at the close of
business on March 19, 2001, the record date fixed by the Board of Directors of
the Company, are entitled to notice of, and to vote at, the Annual Meeting.
By Order of the Board of Directors
Brenda C. Smith
Secretary
March 19, 2001
GRAYSON BANKSHARES, INC.
113 West Main Street
Independence, Virginia 24348
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished to holders of the common stock, par
value $1.25 per share ("Common Stock"), of Grayson Bankshares, Inc. (the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company to be used at the 2001 Annual Meeting of Shareholders
(the "Annual Meeting") to be held on Tuesday, April 10, 2001 at 1:00 p.m. at the
VFW Building, Klondike Road, Highway 58 West, Independence, Virginia, and any
duly reconvened meeting after adjournment thereof.
Any shareholder who executes a proxy has the power to revoke it at any
time by written notice to the Secretary of the Company, by executing a proxy
dated as of a later date, or by voting in person at the Annual Meeting. It is
expected that this Proxy Statement and the enclosed proxy card will be mailed on
or about March 19, 2001 to all shareholders entitled to vote at the Annual
Meeting.
The cost of soliciting proxies for the Annual Meeting will be borne by
the Company. The Company does not intend to solicit proxies otherwise than by
use of the mails, but certain officers and regular employees of the Company or
its subsidiaries, without additional compensation, may use their personal
efforts, by telephone or otherwise, to obtain proxies. The Company may also
reimburse banks, brokerage firms and other custodians, nominees and fiduciaries
for their reasonable out-of-pocket expenses in forwarding proxy materials to the
beneficial owners of shares of Common Stock.
On March 19, 2001, the record date for determining those shareholders
entitled to notice of and to vote at the Annual Meeting, there were 1,718,968
shares of Common Stock issued and outstanding. Each outstanding share of Common
Stock is entitled to one vote on all matters to be acted upon at the Annual
Meeting. A majority of the shares of Common Stock entitled to vote, represented
in person or by proxy, constitutes a quorum for the transaction of business at
the Annual Meeting.
A shareholder may abstain or (only with respect to the election of
directors) withhold his or her vote (collectively, "Abstentions") with respect
to each item submitted for shareholder approval. Abstentions will be counted for
purposes of determining the existence of a quorum. Abstentions will not be
counted as voting in favor of the relevant item.
A broker who holds shares in "street name" has the authority to vote on
certain items when it has not received instructions from the beneficial owner.
Except for certain items for which brokers are prohibited from exercising their
discretion, a broker is entitled to vote on matters presented to shareholders
without instructions from the beneficial owner. Where brokers do not have or do
not exercise such discretion, the inability or failure to vote is referred to as
a "broker nonvote." Under the circumstances where the broker is not permitted
to, or does not, exercise its discretion, assuming proper disclosure to the
Company of such inability to vote, broker nonvotes will not be counted for
purposes of determining the existence of a quorum, and also will not be counted
as not voting in favor of the particular matter.
The Board of Directors is not aware of any matters other than those
described in this Proxy Statement that may be presented for action at the Annual
Meeting. However, if other matters do properly come before the Annual Meeting,
the persons named in the enclosed proxy card possess discretionary authority to
vote in accordance with their best judgment with respect to such other matters.
PROPOSAL ONE
ELECTION OF DIRECTORS
At the Annual Meeting, three directors are to be elected to serve for
terms of three years each, and one director is to be elected to serve for a term
of two years. Five other directors have been elected to terms that end in either
2002 or 2003, as indicated below.
The election of each nominee for director requires the affirmative vote
of the holders of a plurality of the shares of Common Stock cast in the election
of directors. If the proxy is executed in such manner as not to withhold
authority for the election of any or all of the nominees for directors, then the
persons named in the proxy will vote the shares represented by the proxy for the
election of the four nominees named below. If the proxy indicates that the
shareholder wishes to withhold a vote from one or more nominees for director,
such instructions will be followed by the persons named in the proxy.
Each nominee has consented to being named in this Proxy Statement and
has agreed to serve if elected. The Board of Directors has no reason to believe
that any of the nominees will be unable or unwilling to serve. If, at the time
of the Annual Meeting, any nominee is unable or unwilling to serve as a
director, votes will be cast, pursuant to the enclosed proxy, for such
substitute nominee as may be nominated by the Board of Directors. There are no
current arrangements between any nominee and any other person pursuant to which
a nominee was selected. No family relationships exist among any of the directors
or between any of the directors and executive officers of the Company.
The following biographical information discloses each nominee's age and
business experience in the past five years and the year that each individual was
first elected to the Board of Directors of the Company or of The Grayson
National Bank (the "Bank") prior to the formation of the Company in 1992:
Nominees for Election
for Terms Expiring in 2004
Dr. Julian L. Givens, 69, has been Chairman of the Board of the Company
since 1992 and of the Bank since 1987, and he has been a director since 1972.
Dr. Givens is a retired physician.
Jean W. Lindsey, 59, has been a director since 1985. She is a
pharmacist and owner of Walter's Drug, Inc., in Independence, Virginia.
Carl J. Richardson, 55, has been a director since 1976. He served as
President and Chief Executive Officer of the Bank from 1991 to 2000 and of the
Company from 1992 to 2000. Mr. Richardson was employed by the Bank from 1965 to
2000.
Nominees for Election
for Term Expiring in 2003
Dennis B. Gambill, 42, has been a director since November 2000. He was
employed by the Bank in January 1999 and served as a Vice President through July
2000. In July 2000, Mr. Gambill was
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named Executive Vice President of the Bank. Previously, Mr. Gambill was a Vice
President with First Community Bancshares, Inc. and Blue Ridge Bank.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
NOMINEES SET FORTH ABOVE.
Incumbent Directors Serving
for Terms Expiring in 2002
Jacky K. Anderson, 48, has been President and Chief Executive Officer
of the Company and the Bank since July 2000 and a director since 1992. He served
as Vice President of the Company from 1992 to 2000 and as Executive Vice
President of the Bank from 1991 to 2000. Mr. Anderson has been employed by the
Bank since 1971.
Fred B. Jones, 65, has been a director since 1992. Mr. Jones owns and
operates a farm in Grayson County.
J. David Vaughan, 32, has been a director since 1999. He is Senior Vice
President of Vaughan Furniture, Incorporated, a furniture manufacturer located
in Galax, Virginia.
Incumbent Directors Serving
for Terms Expiring in 2003
Jack E. Guynn, Jr., 43, has been a director since 1995. He is a
co-owner of Guynn Enterprises, which owns and operates retail furniture outlets
and funeral homes in Grayson County and surrounding areas.
Charles T. Sturgill, 56, has been a director since 1995. He has been
Vice Chairman of the Company and the Bank since 1998. Mr. Sturgill is the Clerk
of Circuit Court of Grayson County, Virginia.
Executive Officers Who Are Not Directors
Curtis A. Jennings, 50, was appointed Senior Vice President of the Bank
in July 2000. Prior to that time, Mr. Jennings served as a Vice President and
has been employed by the Bank since 1979.
Brenda C. Smith, 44, has served as Secretary of the Company since its
inception in 1992. Prior to that time, she served as Secretary of the Bank
beginning in 1989. She is currently a Senior Vice President and personnel
manager of the Bank and has been employed by the Bank since 1979.
Blake M. Edwards, Jr., 35, began working for the Bank as Chief
Financial Officer in June 1999. Prior to that time, he worked with Larrowe &
Company, PLC, a public accounting firm specializing in audits of community
banks.
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Security Ownership of Management
The following table sets forth information as of March 16, 2001
regarding the number of shares of Common Stock beneficially owned by each
director, by the executive officer named in the summary compensation table in
Item 6 below and by all directors and executive officers as a group. Beneficial
ownership includes shares, if any, held in the name of the spouse, minor
children or other relatives of the director or executive officer living in such
person's home, as well as shares, if any, held in the name of another person
under an arrangement whereby the director or executive officer can vest title in
himself at once or at some future time.
Common Stock Percentage
Name Beneficially Owned of Class (%)
---- ------------------ ------------
Jacky K. Anderson 3,645 *
Julian L. Givens 10,520 *
Jack E. Guynn, Jr. 3,050 *
Fred B. Jones 3,100 *
Jean W. Lindsey 10,356 *
Carl J. Richardson 15,000 *
Charles T. Sturgill 3,423 *
Dennis B. Gambill 1,400 *
John David Vaughan 1,734 *
All present executive officers and
directors as a group (12 persons) 53,033 3.1
______________________
* Percentage of ownership is less than one percent of the outstanding shares of
Common Stock.
Security Ownership of Certain Beneficial Owners
The following table sets forth information as of March 16, 2001
regarding the number of shares of Common Stock beneficially owned by all persons
who, to the Company's knowledge, own five percent or more of the outstanding
shares of Common Stock.
Common Stock Percentage
Name and Address Beneficially Owned of Class (%)
- ---------------- ------------------ ------------
Jacqueline Peer 175,631 10.2
Post Office Box 15
Mouth of Wilson, Virginia 24363
Nancy M. and Ernest W. Stone 108,603 6.3
46 Willowshade Lane
Elk Creek, Virginia 24326
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and any persons who own
more than 10% of the outstanding shares of Common Stock, to file with the
Securities and Exchange Commission ("SEC") reports of ownership and
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changes in ownership of Common Stock. Officers and directors are required by SEC
regulations to furnish the Company with copies of all Section 16(a) reports that
they file. Based solely on review of the copies of such reports furnished to the
Company or written representation that no other reports were required, the
Company believes that, during fiscal year 2000, all filing requirements
applicable to its officers, directors and 10% shareholder were complied with,
except that the 10% shareholder inadvertently filed late a Form 3.
The Board of Directors and its Committees
There were 13 meetings of the Board of Directors in 2000. Each
incumbent director attended greater than 75% of the aggregate number of meetings
of the Board of Directors and meetings of committees of which the director was a
member in 2000.
The Board of Directors has both an Audit Committee and a Salary
Committee.
The Audit Committee consists of Jack E. Guynn, Jr., Fred B. Jones, and
Charles T. Sturgill. The Audit Committee is responsible for the selection and
recommendation of the independent accounting firm for the annual audit. It
reviews and accepts the reports of the Company's independent auditors, internal
auditor and federal examiners. The Audit Committee met four times during the
year ended December 31, 2000. Additional information with respect to the Audit
Committee is discussed below under "Audit Information."
The Salary Committee consists of Dr. Julian L. Givens, Jean W. Lindsey,
and Carl J. Richardson. The Salary Committee serves as the Company's
compensation committee and reviews senior management's performance and
compensation and reviews and sets guidelines for compensation of all employees.
The Salary Committee met two times during the year ended December 31, 2000.
Additional information with respect to the Salary Committee is discussed below
under "Salary Committee Report on Executive Compensation."
The Company does not have a standing nomination committee.
COMPENSATION AND RELATED TRANSACTIONS
Director Compensation
The Chairman of the Board of Directors of the Company receives
directors' fees of $350 per month and all other directors receive $300 per
month. Additionally, $50 is paid for each committee meeting attended. Directors
may elect to defer said fees in accordance with a deferred compensation plan
discussed below.
Executive Compensation
The following table sets forth information regarding compensation paid
in 2000 and 1999 to the past and current President and Chief Executive Officer
of the Company and the Bank. No other officers of the Company or the Bank
received compensation in excess of $100,000. Officers of the Company receive
their salary from the Bank.
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Summary Compensation Table
Annual Compensation
-------------------
Name and All Other
Principal Position Year Salary ($) Bonus ($) Compensation ($)
------------------ ---- ---------- --------- ----------------
Jacky K. Anderson 2000 97,885 0 4,500*
President and Chief Executive 1999 75,643 9,200 4,500*
Officer (1)
Carl J. Richardson 2000 93,471 0 0
Former President and Chief 1999 112,000 10,400 12,000*
Executive Officer (2)
__________________
* Represents salary deferred pursuant to a deferred compensation agreement
discussed below.
(1) Mr. Anderson became President and Chief Executive Officer of the Company
and the Bank on July 1, 2000. Prior to that time, he served as Vice
President of the Company and Executive Vice President of the Bank.
(2) Mr. Richardson retired as President and Chief Executive Officer of the
Company and the Bank on July 1, 2000.
Stock Options
No stock options were granted to the named executive officers during
the fiscal year ended December 31, 2000. In addition, no options were exercised
during the fiscal year ended December 31, 2000 or held at December 31, 2000 by
the named executive officers.
Deferred Compensation Plan
Effective December 1, 1987, the Board approved and established a
deferred compensation plan for Directors and certain Executive Officers.
Participants may contribute up to 100% of directors' fees, or, up to 10% of
annual salaries to the plan. Under plan provisions aggregate annual payments
ranging from $1,992 to $61,044 are payable for ten years certain, generally
beginning at age 65. Reduced benefits apply in cases of early retirement or
death prior to the benefit date, as defined. Liability accrued for compensation
deferred under the plan amounted to $496,765 at December 31, 2000. The Bank is
owner and beneficiary of life insurance policies on directors and officers
participating in this plan.
Defined Benefit Pension Plan
The Bank has a qualified noncontributory, defined benefit pension plan
which covers substantially all of its employees. All employees who have reached
age 21 with one year of service are eligible. The benefits are primarily based
on years of service and average earnings for the participants' final five years
of employment. Participants are fully vested in the plan after five years of
service.
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Salary Committee Report on Executive Compensation
The Salary Committee (the "Committee") of the Board of Directors has
furnished the following report on executive compensation.
The Committee, which is composed of non-employee Directors of the
Company and the Bank listed below, recommends to the Board of Directors (the
"Board") the annual salary levels to be paid to the executive officers of the
Company and the Bank. The Committee also makes recommendations to the Board
regarding any other compensation-related matters.
The Committee has developed and implemented compensation policies and
plans that seek to enhance the profitability of the Company and maximize
shareholder value by aligning closely the financial interests of its senior
officers with those of its shareholders. The policies are designed to provide
competitive levels of compensation to attract and retain corporate officers and
key employees with outstanding abilities and to motivate them to perform to the
full extent of their abilities.
The sole component of the compensation of executive officers of the
Company and the Bank is salary paid by the Bank. The Company's program for
executive officers currently does not include any bonus or other incentive
program directly linking executive compensation to specific performance of the
Company. However, the performance of the Company, in general, is considered in
determining the amount of annual salary increases. The Committee sets base
salaries at levels competitive with amounts paid to senior executives with
comparable qualifications, experience and responsibilities after comparing
salary ranges of similarly sized banks located in Virginia. The Virginia Bankers
Association Salary Survey of Virginia Banks is used for comparison of salaries
paid for similar positions and responsibilities.
The Committee approves the Chief Executive Officer's annual salary
based on the above criteria and its assessment of both the Chief Executive
Officer's past performance and expected future contributions in leading the
Company and the Bank. In addition to the internal measures above, the Board also
reviews the financial performance of the Company in relation to peer group
averages. A subjective approach is used in its evaluation of these factors and
therefore does not rely on a formula or weights of specific factors.
Members of the Salary Committee
Dr. Julian L. Givens
Jean W. Lindsey
Carl J. Richardson
Compensation Committee Interlocks and Insider Participation
Carl J. Richardson retired as President and Chief Executive Officer of
the Company and the Bank on July 1, 2000. Mr. Richardson was appointed to the
Salary Committee after his retirement.
Transactions with Management
Some of the directors and officers of the Company are at present, as in
the past, customers of the Company and, the Company has had, and expects to have
in the future, banking transactions in the ordinary course of its business with
directors, officers, principal shareholders and their associates, on
substantially the same terms, including interest rates and collateral on loans,
as those prevailing at the same time for comparable transactions with others.
These transactions do not involve more than the normal risk of collectibility or
present other unfavorable features. The aggregate outstanding balance of
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loans to directors, executive officers and their associates, as a group, at
December 31, 2000 totaled $2,167,561 or 11.0% of the Company's equity capital at
that date.
There are no legal proceedings to which any director, officer or
principal shareholder, or any affiliate thereof, is a party that would be
material and adverse to the Company.
STOCK PERFORMANCE
The Common Stock is not listed on any exchange or quoted on the Nasdaq
Stock Market. Shares of Common Stock have periodically been sold in a limited
number of privately negotiated transactions. The following graph compares the
cumulative total return to the shareholders of the Company, based on
transactions known to the Company, for the last five fiscal years with the total
return on the S&P 500 Index and the SNL <$500M Bank Index, as reported by SNL
Securities LC, assuming an investment of $100 in the Company's common stock on
December 31, 1995, and the reinvestment of dividends.
[PERFORMANCE GRAPH]
Period Ending
------------------------------------------------------------------------
Index 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
- --------------------------------------------------------------------------------------------------------
Grayson Bankshares, Inc. 100.00 173.03 221.46 276.89 327.37 331.16
S&P 500 100.00 122.86 163.86 210.64 254.97 231.74
SNL <$500M Bank Index 100.00 128.71 219.41 200.34 185.44 178.90
8
AUDIT INFORMATION
General
The Board of Directors has appointed the firm of Larrowe & Company, PLC
as independent public accountants to audit the consolidated financial statements
of the Company for the fiscal year ending December 31, 2001. Larrowe & Company,
PLC has audited the financial statements of the Company and the Bank for over
five years. Representatives of Larrowe & Company, PLC are expected to be present
at the Annual Meeting, will have an opportunity to make a statement, if they
desire to do so, and are expected to be available to respond to appropriate
questions.
Fees of Independent Public Accountants
As the Company's independent accountants for 2000, Larrowe & Company,
PLC provided various audit and non-audit services for which the Company was
billed for fees as further described below. None of the hours expended on
Larrowe & Company, PLC's audit of the Company's financial statements were
attributed to work performed by persons other than the principal accountant's
full-time, permanent employees. The Company's Audit Committee has considered
whether Larrowe & Company, PLC's provision of non-audit services is compatible
with maintaining its independence.
Audit Fees. Larrowe & Company, PLC audited the Company's annual
financial statements included in its 2000 Annual Report on Form 10-K and, during
2000, it reviewed the financial statements included in the Company's Quarterly
Reports on Form 10-Q. The aggregate amount of fees billed to the Company for
those services was $29,940.
Financial Information System Design and Implementation Fees. During
2000, Larrowe & Company, PLC provided no services related to financial
information systems design and implementation.
All Other Fees. In addition to the services listed above, during 2000,
Larrowe & Company, PLC provided a number of other services to the Company for
which the aggregate amount of fees billed to the Company was $6,800.
Audit Committee Report
Management is responsible for the Company's internal controls,
financial reporting process and compliance with laws and regulations and ethical
business standards. The independent auditor is responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and issuing a report
thereon. The Audit Committee of the Board is responsible for providing
independent, objective oversight of these processes on behalf of the Board of
Directors. The Audit Committee is composed of independent directors, and acts
under a written charter adopted and approved by the Board of Directors. Each of
the members of the Audit Committee is independent as that term is defined in the
listing standards of the National Association of Securities Dealers. A copy of
the Audit Committee Charter is attached to this proxy statement as Appendix "A".
In this context, the Audit Committee has reviewed and discussed with
management and the independent auditors the audited financial statements. The
Audit Committee has discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61 (Communication with
Audit Committees). In addition, the Audit Committee has received from the
independent auditors the written disclosures required by Independence Standards
Board Standard No. 1
9
(Independence Discussions with Audit Committees) and discussed with them their
independence from the Company and its management.
In reliance on the reviews 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
fiscal year ended December 31, 2000, for filing with the Securities and Exchange
Commission. By recommending to the Board of Directors that the audited financial
statements be so included, the Audit Committee is not opining on the accuracy,
completeness or presentation of the information contained in the audited
financial statements.
Members of the Audit Committee
Jack E. Guynn, Jr., Chairman
Fred B. Jones
Charles T. Sturgill
PROPOSALS FOR 2002 ANNUAL MEETING OF SHAREHOLDERS
Under the regulations of the SEC, any shareholder desiring to make a
proposal to be acted upon at the 2002 annual meeting of shareholders must cause
such proposal to be received, in proper form, at the Company's principal
executive offices at 113 West Main Street, Independence, Virginia 24348, no
later than November 19, 2001, in order for the proposal to be considered for
inclusion in the Company's Proxy Statement for that meeting. The Company
presently anticipates holding the 2002 annual meeting of shareholders on April
9, 2002.
The Company's Bylaws also prescribe the procedure that a shareholder
must follow to nominate directors or to bring other business before
shareholders' meetings. For a shareholder to nominate a candidate for director
at the 2002 annual meeting of shareholders, notice of nomination must be
received by the Secretary of the Company not less than 60 days and not more than
90 days prior to the date of the 2002 annual meeting. The notice must describe
various matters regarding the nominee and the shareholder giving the notice. For
a shareholder to bring other business before the 2002 annual meeting of
shareholders, notice must be received by the Secretary of the Company not less
than 60 days and not more than 90 days prior to the date of the 2002 annual
meeting. The notice must include a description of the proposed business, the
reasons therefor, and other specified matters. Any shareholder may obtain a copy
of the Company's Bylaws, without charge, upon written request to the Secretary
of the Company. Based upon an anticipated date of April 9, 2002 for the 2002
annual meeting of shareholders, the Company must receive any notice of
nomination or other business no later than February 8, 2002 and no earlier than
January 9, 2002.
OTHER MATTERS
THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31,
2000, INCLUDING FINANCIAL STATEMENTS, IS BEING MAILED TO SHAREHOLDERS WITH THIS
PROXY STATEMENT. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR 2000
FILED WITH THE COMMISSION, EXCLUDING EXHIBITS, MAY BE OBTAINED WITHOUT CHARGE BY
WRITING TO BLAKE M. EDWARDS, JR., CHIEF FINANCIAL OFFICER, WHOSE ADDRESS IS 113
WEST MAIN STREET, INDEPENDENCE, VIRGINIA 24348. THE ANNUAL REPORT IS NOT PART OF
THE PROXY SOLICITATION MATERIALS.
10
Exhibit A
GRAYSON NATIONAL BANK
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
December 11, 2000
I. PURPOSE
----------
The primary purpose of the Audit Committee of the Board of Directors of
Grayson National Bank is to provide independent and objective oversight of the
accounting functions and internal controls of Grayson National Bank, its
subsidiaries and affiliates (as applicable), and to ensure the objectivity of
their financial statements. The Committee and the Board shall have the ultimate
authority and responsibility to select, evaluate and, where appropriate, replace
the independent accountants and the senior internal audit officer. The Committee
shall also review and advise the Board with respect to the Bank's risk
management policies, and tax policies.
II. FUNCTIONS
-------------
The Audit Committee shall perform the following functions:
1. Independent Accountants. Recommend to the Board the firm to be employed
by the Bank as its independent accountants, which firm shall be
ultimately accountable to the Board and the Committee as
representatives of shareholders.
2. Plan of Audit. Consult with the independent accountants regarding the
plan of audit. The Committee shall also review with the independent
accountants their report on the audit and review with management the
independent accountants' suggested changes or improvements in the
Bank's accounting practices or controls.
3. Accounting Principles and Disclosure. Review significant developments
in accounting rules. The Committee shall review with management
recommended changes in the Bank's methods of accounting or financial
statements. The Committee also shall review with the independent
accountants any significant proposed changes in accounting principles
and financial statements.
4. Internal Accounting Controls. Consult with the independent accountants
regarding the adequacy of internal accounting controls. Where
appropriate, consultation with the independent accountants regarding
internal controls shall be conducted out of management's presence. In
connection with this function, the Committee may require the Bank's
counsel to circulate a questionnaire to evaluate the Bank's compliance
with banking, financial disclosure and accounting laws.
5. Financial Disclosure Documents. Review with management and the
independent accountants the Bank's financial disclosure documents,
including all financial statements and reports filed with the
Securities and Exchange Commission (or the Bank's primary Federal
securities regulator), or sent to stockholders and following the
satisfactory completion of each year-end review recommend to the Board
the inclusion of the audited financial statements in the Bank's filing
on Form 10-K (or Form 10-KSB). The review shall include any significant
problems and material disputes between management and the independent
accountants out of management's
11
presence of the quality of the Bank's accounting principles as applied
in its financial reporting, the clarity of the Bank's financial
disclosures and degree of aggressiveness or conservatism of the Bank's
accounting principles and underlying estimates, and a frank and open
discussion of other significant decisions made by management in
preparing the financial disclosure.
6. Internal Control System. Review with management and internal auditors
the Bank's internal control systems intended to ensure the reliability
of financial reporting and compliance with applicable codes of conduct,
laws, and regulations. The review shall include any significant
problems and regulatory concerns. The Committee also shall review
internal audit plans in significant compliance areas.
7. Ethical Environment. Consult with management on the establishment and
maintenance of an environment that promotes ethical behavior, including
the establishment, communication, and enforcement of codes of conduct
to guard against dishonest, unethical, or illegal activities.
8. Oversight of Executive Officers and Directors and Conflicts of
Interest. Review significant conflicts of interest involving directors
or executive officers. The Committee shall review compliance with Bank
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 accountant. The Committee shall review executive officers'
and directors' loan and deposit relationships and consider the results
of any review of these areas by the internal auditors or the
independent accountant. The Committee also shall review significant
questionable or illegal payments.
9. Oversight of Independent Accountant. Evaluate the independent
accountants on an annual basis and where appropriate recommend a
replacement for the independent accountants. In such evaluation, the
Committee shall ensure that the independent accountants deliver to the
Committee a formal written statement delineating all relationships
between the accountants and the Bank. The Committee also shall engage
in a dialogue with the accountants with respect to any disclosed
relationships or services that may impact the objectivity and
independence of the independent accountants and in response to the
independent accountant's report take, or recommend that the Board take,
appropriate action to satisfy itself of the independent accountant's
independence.
10. Adequacy of Personnel. Review periodically the adequacy of the Bank's
accounting, financial, and auditing personnel resources.
11. Risk Management. Review and evaluate risk management policies in light
of the Bank's business strategy, capital strength, and overall risk
tolerance. The Committee also shall evaluate on a periodic basis the
Bank's investment and derivatives risk management policies, including
the internal system to review operational risks, credit risks, interest
rate risks, procedures for derivatives investment and trading, and
safeguards to ensure compliance with procedures.
12. Tax Policies. Review periodically the Bank's tax policies and any
pending audits or assessments.
13. Offerings of Securities. Perform appropriate due diligence on behalf of
the Board of Directors with respect to the Bank's offerings of
securities.
14. Charter Amendments. Review this Charter annually, assess its adequacy
and propose appropriate amendments to the Board.
12
The Committee's function is one of oversight and review, and it is not
expected to audit the Bank, to define the scope of the audit, to control the
Bank's accounting practices, or to define the standards to be used in
preparation of the Bank's financial statements.
III. COMPOSITION AND INDEPENDENCE
---------------------------------
The Committee shall consist of not less than three independent members,
who shall be appointed by the Board of Directors. Members of the Committee shall
be financially literate or become financially literate within a reasonable
period of time after appointment to the Committee and at least one member of the
committee shall have accounting, related financial management expertise, or any
other comparable experience or background that results in the individual's
financial sophistication. No member of the Committee shall be employed or
otherwise affiliated with the Bank's independent accountants.
In the event that a Committee member faces a potential or actual
conflict of interest with respect to a matter before the Committee, that
Committee member shall be responsible for alerting the committee Chairman, and
in the case where the Committee chairman faces a potential or actual conflict of
interest, the Committee Chairman shall advise the chairman of the Board of
Directors. In the event that the Committee Chairman, or the Chairman of the
Board of Directors, concurs that a potential or actual conflict of interest
exists, an independent substitute Director shall be appointed as a Committee
member until the matter, posing the potential or actual conflict of interest, is
resolved.
IV. QUORUM AND MEETINGS
-----------------------
A quorum of the committee shall be declared when a majority of the
appointed members of the Committee are in attendance, except for receiving the
quarterly review report of the independent accountants relating to the interim
financial statements included in the Bank's Form 10-Q (or Form 10-QSB). This
report may be received on behalf of the Committee by the Committee Chair (as
permitted by SEC regulations) and reported to the full Committee at its next
scheduled meeting. The Committee shall meet on a quarterly basis. Meetings shall
be scheduled at the directions of the Chairman. Except in emergency situations,
notice of the meetings shall be provided at least ten days in advance. The
Committee may ask members of management or others to attend the meeting and
provide pertinent information as necessary.
V. REPORTS
----------
The Committee will report to the Board from time to time with respect
to its activities and its recommendations. When presenting any recommendation or
advice to the Board, the Committee will provide such background and supporting
information as may be necessary for the Board to make an informed decision. The
Committee will keep minutes of its meetings and will make such minutes available
to the full Board for its review.
The Committee shall report to shareholders in the Bank's proxy
statement for its annual meeting whether the Committee has satisfied its
responsibilities under this Charter.
VI. OTHER AUTHORITY
-------------------
The Committee is authorized to confer with Bank management and other
employees to the extent it may deem necessary or appropriate to fulfill its
duties. The Committee is authorized to conduct or authorize investigations into
any matters within the Committee's scope of responsibilities. The committee also
is authorized to seek outside legal or other advice to the extent it deems
necessary or appropriate, provided it shall keep the Board advised as to the
nature and extent of such outside advice.
13
The Committee will perform such other functions as are authorized for
this Committee by the Board of Directors.
14
Grayson Bankshares, Inc.
Annual Meeting of Shareholders - April 10, 2001
Proxy Solicited on Behalf of the Board of Directors
---------------------------------------------------
The undersigned hereby appoints Jack E. Guynn, Jr. and Charles T.
Sturgill, jointly and severally, proxies, with full power to act alone, and with
full power of substitution, to represent the undersigned and to vote, as
designated below and upon any and all other matters that may properly be brought
before such meeting, all shares of Common Stock that the undersigned would be
entitled to vote at the Annual Meeting of Shareholders of Grayson Bankshares,
Inc., a Virginia corporation (the "Corporation"), to be held at the VFW
Building, Klondike Road, Highway 58 West, Independence, Virginia, on April 10,
2001 at 1:00 p.m., local time, or any adjournments thereof, for the following
purposes:
1. To elect as directors the four persons listed as nominees below.
[ ] FOR nominees listed below [ ] WITHHOLD AUTHORITY to
(except as written on the line below) vote for all nominees listed below
For Terms Expiring in 2004 For Term Expiring in 2003
Dr. Julian L. Givens Dennis B. Gambill
Jean W. Lindsey
Carl J. Richardson
(INSTRUCTION: To withhold authority to vote for any individual
nominee listed above, write that nominee's name on the space
provided below.)
__________________________________________________________________
2. In their discretion, the proxies are authorized to vote upon any
other business that may properly come before the meeting, or any
adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES LISTED IN ITEM 1.
____________________________________ _______________________________________
Printed Name Signature
_______________________________________
Signature
[INSERT LABEL] Dated: ___/___/01
(If signing as Attorney, Administrator,
Executor, Guardian or Trustee, please
add your title as such.)
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY
PLEASE CHECK ONE:
I WILL ___ WILL NOT ___ BE ATTENDING THE MEETING.