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
INDEPENDENT COMMUNITY 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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INDEPENDENT COMMUNITY BANKSHARES, INC.
Dear Shareholder:
You are cordially invited to attend the 2001 Annual Meeting of
Shareholders of Independent Community Bankshares, Inc. (the "Company") to be
held on Wednesday, April 18, 2001 at 10:00 a.m. at the Middleburg Community
Center, 300 West Washington Street, Middleburg, Virginia.
At the Annual Meeting, you will be asked to elect 11 directors for
terms of one year each and to ratify the appointment of independent auditors for
the Company for 2001. 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,
/s/ Joseph L. Boling
Joseph L. Boling
Chairman and Chief Executive Officer
Middleburg, Virginia
March 19, 2001
INDEPENDENT COMMUNITY BANKSHARES, INC.
111 West Washington Street
Middleburg, Virginia 20117
___________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
___________________
The Annual Meeting of Shareholders (the "Annual Meeting") of
Independent Community Bankshares, Inc. (the "Company") will be held on
Wednesday, April 18, 2001 at 10:00 a.m. at the Middleburg Community Center, 300
West Washington Street, Middleburg, Virginia, for the following purposes:
1. To elect 11 directors to serve for terms of one year each
expiring at the 2002 annual meeting of shareholders;
2. To ratify the appointment of the firm of Yount, Hyde &
Barbour, P.C. as independent auditors for the Company for the
fiscal year ending December 31, 2001; and
3. 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 6, 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
/s/ Alice P. Frazier
Alice P. Frazier
Senior Vice President and
Chief Financial Officer
March 19, 2001
INDEPENDENT COMMUNITY BANKSHARES, INC.
111 West Washington Street
Middleburg, Virginia 20117
PROXY STATEMENT
This Proxy Statement is furnished to holders of the common stock, par
value $5.00 per share ("Common Stock"), of Independent Community 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 Wednesday, April 18, 2001 at
10:00 a.m. at the Middleburg Community Center, 300 West Washington Street,
Middleburg, 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 6, 2001, the record date for determining those shareholders
entitled to notice of and to vote at the Annual Meeting, there were 1,739,247
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
Eleven directors will be elected at the Annual Meeting. The individuals
listed below are nominated by the Board of Directors for election at the Annual
Meeting. John C. Palmer is retiring from the Board of Directors and will not be
standing for re-election at the Annual Meeting.
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 11 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 or its predecessor:
Nominees for Election for Terms Expiring in 2002
Howard M. Armfield, 58, has been a director since 1984.
Mr. Armfield is President and owner of Armfield, Harrison & Thomas,
Inc., an independent insurance agency in Leesburg, Virginia.
Joseph L. Boling, 56, has been a director since 1993.
Mr. Boling has been the Chairman, President and Chief Executive Officer
of the Company and The Middleburg Bank (the "Bank"), a subsidiary of
the Company, since April 1997. From February 1993 to April 1997, he was
President and Chief Executive Officer of the Company and the Bank.
Prior to employment by the Company and the Bank, he was a Senior Vice
President of Crestar Bank in Richmond, Virginia.
Childs Frick Burden, 50, has been a director since 1997.
Mr. Burden is a partner with Secor Group, an investment firm in
Washington, D.C.
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J. Lynn Cornwell, Jr., 76, has been a director since 1984.
Mr. Cornwell is currently retired. Until August 2000, he had served as
President and was owner of J. Lynn Cornwell, Inc., a real estate
development company in Loudoun County.
William F. Curtis, 72, has been a director since 1962.
Mr. Curtis is currently retired. Until February 1993, he had served as
President and Chief Executive Officer of the Bank for 25 years.
Robert C. Gilkison, 65, has been a director since 1999.
Mr. Gilkison is President of Gilkison Patterson Investment Advisors,
Inc. ("GPIA"), an investment advisory firm based in Alexandria,
Virginia.
C. Oliver Iselin, III, 71, has been a director since 1975.
Mr. Iselin is owner and operator of the Wolver Hill Farm.
Thomas W. Nalls, 59, has been a director since 1997.
Mr. Nalls is a partner with Hazel & Thomas, P.C., a law firm in
Leesburg, Virginia.
John Sherman, 60, has been a director since 1997.
Mr. Sherman is owner and operator of The Ashby Inn in Paris, Virginia.
Millicent W. West, 79, has been a director since 1975.
Ms. West has served in many volunteer positions in the Garden Club of
America and Garden Club of Virginia.
Edward T. Wright, 64, has been a director since 1972.
Mr. Wright retired as Senior Vice President of the Bank in 1998 after
42 years of service.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
NOMINEES SET FORTH ABOVE.
Executive Officers Who Are Not Directors
Alice P. Frazier (Age 36) has served as Senior Vice President and Chief
Financial Officer since April 1993.
Arch A. Moore, III (Age 49) has served as Senior Vice President and
Senior Lender since February 1995.
William E. Doyle, Jr. (Age 48) has served as Senior Vice President,
Mortgage and Retail Services, since November 1997. From 1996 to 1997, he was a
private consultant in the banking industry.
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Security Ownership of Management
The following table sets forth, as of March 6, 2001, certain
information with respect to beneficial ownership of shares of Common Stock by
each of the members of the Board of Directors, by each of the executive officers
named in the "Summary Compensation Table" below (the "named executive officers")
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 a director 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.
Name Number of Shares Percent of Class (%)
- ---- ---------------- --------------------
Howard M. Armfield 17,004 *
Joseph L. Boling (1) 44,822 2.52
Childs Frick Burden 9,860 *
J. Lynn Cornwell, Jr. 4,144 *
William F. Curtis (2) 113,172 6.51
William E. Doyle, Jr. (1) 7,706 *
Alice P. Frazier (1) 17,900 1.02
Robert C. Gilkison 3,000 *
C. Oliver Iselin, III 45,733 2.62
Arch A. Moore, III (1) 17,338 *
Thomas W. Nalls 850 *
John C. Palmer 22,486 1.29
John Sherman 1,008 *
Millicent W. West 258,306 14.86
Edward T. Wright 58,420 3.36
Directors and executive officers
as a group (14 persons) (1) 621,749 34.19
___________________
* Percentage of ownership is less than one percent of the outstanding shares
of Common Stock.
(1) Amounts disclosed include shares of Common Stock issuable upon the exercise
of stock options exercisable within 60 days of March 6, 2001.
(2) Amount disclosed include shares of Common Stock beneficially owned by a
trust of which Mr. Curtis serves as trustee.
4
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of March 6, 2001, certain
information with respect to the beneficial ownership of shares of Common Stock
by each person who owns, to the Company's knowledge, more than five percent of
the outstanding shares of Common Stock.
Name and Address Number of Shares Percent of Class (%)
- ---------------- ---------------- --------------------
Millicent W. West 258,306 14.86
P.O. Box 236
Upperville, Virginia
William F. Curtis (1) 113,172 6.51
3618 Zulla Road
The Plains, Virginia
____________________
(1) Amounts disclosed include shares of Common Stock beneficially owned by a
trust of which Mr. Curtis serves as trustee.
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 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 and directors were complied with, except that each of
the named executive officers inadvertently filed late a report under Section
16(a) to disclose a grant of options by the Board of Directors in December 2000.
The Board of Directors and its Committees
There were 12 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 Company's Executive Committee, which acts for the Board of
Directors when the Board is not in session, consists of Mrs. West and Messrs.
Armfield, Boling, Burden, Cornwell and Nalls. The Executive Committee met eight
times during the year ended December 31, 2000.
The Audit Committee consists of Mrs. West and Messrs. Armfield, Burden,
Iselin, Sherman and Wright. The Audit Committee is responsible for examining the
affairs of the Bank at least annually, reporting the results of examinations and
recommending changes in the manner of doing business. The Audit Committee held
four meetings during the year ended December 31, 2000. Additional information
with respect to the Audit Committee is discussed below under "Audit
Information."
The Company's Nominating Committee consists of Mrs. West and Messrs.
Boling, Curtis, Iselin and Sherman and nominates the individuals proposed for
election as directors. Shareholders entitled to
5
vote for the election of directors may nominate candidates for consideration by
the Nominating Committee under procedures that the Company has established. See
"Proposals for 2002 Annual Meeting of Shareholders." The Nominating Committee
met three times during the year ended December 31, 2001.
The Company does not have a standing compensation committee.
Director Compensation
As compensation for their services to the Company, each member of the
Board of Directors receives a fee of $400 for each meeting of the Board and $300
for each committee meeting attended. Board members who are also officers do not
receive any additional compensation above their regular salary for attending
committee meetings. In 2000, directors received $78,900 in the aggregate as
compensation for their services as directors.
Executive Compensation
The following table shows, for the fiscal years ended December 31,
2000, 1999 and 1998, the cash compensation paid by the Company and its
subsidiaries, as well as certain other compensation paid or accrued for those
years, to each of the named executive officers in all capacities in which they
served:
Summary Compensation Table
Long Term
Compensation
Annual Compensation ------------
------------------- Securities
Name and Other Annual Underlying
Principal Position Year Salary ($) Bonus ($) Compensation ($) Options (#)
------------------ ---- ---------- --------- ---------------- -----------
Joseph L. Boling 2000 235,000 25,000 * 10,000
Chairman, President and 1999 213,990 35,000 * 10,075
Chief Executive Officer 1998 191,407 30,000 * 10,000
F. E. Deacon, III (1) 2000 156,156 2,960 * 4,000
Former President and Chief 1999 148,720 2,974 * 4,075
Executive Officer of Tredegar 1998 143,000 -- * 5,000
William E. Doyle, Jr. 2000 147,420 9,828 * 4,000
Senior Vice President, Mortgage 1999 142,020 9,941 * 4,075
and Retail Services 1998 135,000 9,450 13,964(2) 4,000
Alice P. Frazier 2000 115,259 5,868 * 4,000
Senior Vice President and 1999 83,825 5,334 * 4,000
Chief Financial Officer 1998 76,200 3,556 * 4,000
Arch A. Moore, III 2000 126,881 8,213 * 4,000
Senior Vice President and Senior 1999 117,497 8,224 * 4,075
Lender 1998 109,647 7,675 * 4,000
_________________
* All benefits that might be considered of a personal nature did not exceed
the lesser of $50,000 or 10% of total annual salary and bonus.
(1) Mr. Deacon resigned as an officer and employee and a director of the Company
in February 2001.
(2) Amount presented includes $6,000 paid by the Bank for Mr. Doyle's initiation
fees for the Loudoun Golf and Country Club and $7,964 paid by the Bank
associated with moving expenses.
6
Stock Options
The following table sets forth for the year ended December 31, 2000,
the grants of stock options to the named executive officers:
Option Grants In Last Fiscal Year
Percent of Total
Number of Securities Options Granted to
Underlying Options Employees in Fiscal Exercise or Base
Name Granted (#) (1) Year (%) (2) Price ($/Share) Expiration Date
- ---- --------------- ------------ --------------- ---------------
Joseph L. Boling 10,000 32.3 21.25 December 20, 2010
F. E. Deacon, III 4,000 12.9 21.25 December 20, 2010
William E. Doyle, Jr. 4,000 12.9 21.25 December 20, 2010
Alice P. Frazier 4,000 12.9 21.25 December 20, 2010
Arch A. Moore, III 4,000 12.9 21.25 December 20, 2010
_____________________
(1) Stock options were granted at or above the fair market value of the shares
of Common Stock at the date of grant. Ten percent of each grant is
immediately exercisable, and 30% of each grant becomes exercisable on the
first, second and third anniversaries of the date of grant.
(2) Options to purchase 31,000 shares of Common Stock were granted to employees
during the year ended December 31, 2000.
No stock options were exercised by the named executive officers during
2000. The following table sets forth the amount and value of stock options held
by the named executive officers as of December 31, 2000:
Fiscal Year End Option Values
Number of
Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options
Fiscal Year End (#) at Fiscal Year End ($)(1)
------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
Joseph L. Boling 37,715 12,360 119,410 10,590
F. E. Deacon, III 18,013 5,062 59,264 4,236
William E. Doyle, Jr. 5,955 2,120 1,764 4,236
Alice P. Frazier 17,131 4,944 59,264 4,236
Arch A. Moore, III 17,131 4,944 59,264 4,236
__________________
(1) The value of in-the-money options at fiscal year end was calculated by
determining the difference between the closing price of a share of Common
Stock as reported on the Nasdaq SmallCap Market on December 31, 2000 and
the exercise price of the options.
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Employment Agreements
Effective as of January 1, 1998, the Company and Joseph L. Boling
entered into an employment contract that provides for Mr. Boling's service as
Chairman, President and Chief Executive Officer of both the Company and the
Bank. Mr. Boling's employment contract is for five years at an initial base
annual salary of $191,408, and he is eligible for base salary increases and
bonuses as determined by the Executive Committee of the Board of Directors. Mr.
Boling's employment may be terminated by the Company with or without cause. If
he resigns for "good reason" or is terminated without "cause" (as those terms
are defined in the employment agreement), however, he is entitled to salary and
certain benefits for the greater of the remainder of his contract or three
years. Mr. Boling's contract also contains a covenant not to compete if his
employment terminates for any reason other than a change in control of the
Company.
A deferred compensation plan has been adopted for the Chairman and
Chief Executive Officer. Benefits are to be paid in monthly installments for 15
years following retirement or death. The agreement provides that, if employment
is terminated for reasons other than death or disability prior to age 65, the
amount of benefits would be reduced. The deferred compensation expense for 2000,
1999 and 1998, based on the present value of the retirement benefits, was
$18,716, $16,936 and $15,698, respectively. The plan is unfunded. However, life
insurance has been acquired on the life of the employee in an amount sufficient
to discharge the obligation.
Transactions with Management
Robert C. Gilkison, a director of the Company, is President of GPIA and
the owner of 49.5% of its capital stock. On August 9, 1999, the Company
purchased 100 shares of the capital stock of GPIA, which represents one percent
of the issued and outstanding capital stock of GPIA. In connection with this
purchase, the Company also purchased the option to acquire GPIA on or after July
1, 2001. The Company paid $1.2 million for the option to acquire GPIA. If the
option to acquire GPIA is exercised, the Company will purchase all of the
remaining issued and outstanding shares of GPIA's capital stock for an
additional $4.8 million in cash and shares of the Common Stock.
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 balance of loans to directors, executive
officers and their associates totaled $3,027,249 at December 31, 2000, or 11.1%
of the Company's equity capital at that date.
There were no transactions during 2000 between the Company's directors
or officers and the Company's retirement or profit sharing plans, nor are there
any proposed transactions. Additionally, 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.
8
PROPOSAL TWO
RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed, subject to shareholder approval,
the firm of Yount, Hyde & Barbour, P.C. as independent public accountants to
audit the consolidated financial statements of the Company for the fiscal year
ending December 31, 2001. Yount, Hyde & Barbour, P.C. has audited the financial
statements of the Company and the Bank for over 25 years. A majority of the
votes cast by holders of the Common Stock is required for the ratification of
the appointment of the independent public accountants.
Representatives of Yount, Hyde & Barbour, P.C. 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPOINTMENT OF YOUNT, HYDE & BARBOUR, P.C. AS INDEPENDENT PUBLIC ACCOUNTANTS FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2001.
AUDIT INFORMATION
The Board of Directors has adopted a written charter for the Audit
Committee that is set forth in Exhibit A to this Proxy Statement. With the
exception of Edward T. Wright, who retired from the Company in 1998, the members
of the Audit Committee are independent as that term is defined in the listing
standards of the National Association of Securities Dealers.
Fees of Independent Public Accountants
Audit Fees
The aggregate amount of fees billed by Yount, Hyde & Barbour, P.C. for
professional services rendered for the audit of the Company's annual financial
statements for the fiscal year ended December 31, 2000, and the review of the
financial statements included in the Company's Quarterly Reports on Form 10-QSB
for that fiscal year was $35,601.
Financial Information System Design and Implementation Fees
There were no fees billed by Yount, Hyde & Barbour, P.C. for
professional services rendered to the Company for the fiscal year ended December
31, 2000, for the design and implementation of financial information systems.
All Other Fees
The aggregate amount of fees billed by Yount, Hyde & Barbour, P.C. for
all other non-audit services rendered to the Company for the fiscal year ended
December 31, 2000 was $16,611.
9
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's responsibility is to monitor and oversee these
processes on behalf of the Board of Directors.
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 (Independence Discussions with Audit Committees) and
discussed with them their independence from the Company and its management.
Moreover, the Audit Committee has considered whether the independent auditor's
provision of other non-audit services to the Company is compatible with
maintaining the auditor's independence.
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-KSB for the
fiscal year ended December 31, 2000, for filing with the SEC. 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.
Audit Committee
Howard M. Armfield, Jr., Chairman
Childs Frick Burden
C. Oliver Iselin
John Sherman
Millicent W. West
Edward T. Wright
Middleburg, Virginia
February 14, 2001
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 111 West Washington Street, Middleburg, Virginia 20117, 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
17, 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
10
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 17, 2002 for the 2002
annual meeting of shareholders, the Company must receive any notice of
nomination or other business no later than February 16, 2002 and no earlier than
January 17, 2002.
OTHER MATTERS
THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31,
2000, INCLUDING FINANCIAL STATEMENTS (THE "ANNUAL REPORT"), IS BEING MAILED TO
SHAREHOLDERS WITH THIS PROXY STATEMENT. A COPY OF THE ANNUAL REPORT MAY ALSO BE
OBTAINED WITHOUT CHARGE BY WRITING TO ALICE P. FRAZIER, SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER, WHOSE ADDRESS IS P.O. BOX 5, MIDDLEBURG, VIRGINIA
20118. THE ANNUAL REPORT IS NOT PART OF THE PROXY SOLICITATION MATERIALS.
11
Exhibit A
INDEPENDENT COMMUNITY BANKSHARES, INC.
AUDIT COMMITTEE CHARTER
Organization
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The Audit Committee (the "Audit Committee") shall be appointed by the Board of
Directors and shall consist of at least three directors, all of whom are
independent of management and of the Company. Members of the Audit Committee
shall be considered independent if they have no relationship to the Company that
may interfere with the exercise of their independence from management and from
the Company. All Audit Committee members shall be financially literate, or shall
become financially literate within a reasonable period of time after appointment
to the Audit Committee, and at least one member shall have accounting or related
financial management expertise.
Statement of Policy
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The Audit Committee shall assist the Board of Directors in fulfilling the
Board's oversight responsibility to the stockholders relating to (A) the
Company's financial reporting process, systems of internal accounting and
financial controls, and internal audit function and (B) the annual independent
audit of the Company's financial statements. In so doing, the Audit Committee
will benefit from free and open communication between the Audit Committee, the
directors, the independent accountants, the internal auditor, and the financial
management of the Company. The Audit Committee may adopt such policies and
procedures, as it may deem necessary or appropriate to carry out its
responsibilities under this charter. The Audit Committee's policies and
procedures should be flexible in order to best react to changing conditions and
circumstances.
Processes
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The following shall be the recurring processes of the Audit Committee in
carrying out its oversight function. The Audit Committee may supplement these
processes as appropriate.
o The Audit Committee shall review and reassess the Audit Committee's charter
at least annually and the charter shall be approved by the Board of
Directors. The Company shall include a copy of the charter in its proxy
statement at least triennially or the year after any significant amendment
to the charter and shall disclose in all proxy statements whether Audit
Committee members are independent. Approximately once each year and, with
respect to any changes in the composition of the Audit Committee, the
Company must provide The Nasdaq Stock Market, Inc.SM written confirmation
regarding the Board's determination of Audit Committee members'
independence, the financial literacy of Audit Committee members, the
determination that at least one member of the Audit Committee has accounting
or related financial management expertise, and the annual review and
reassessment of the adequacy of the charter.
o The Audit Committee shall have a clear understanding with management and the
independent accountants that the independent accountants are ultimately
accountable to the Board and to the Audit Committee, both of which are
representatives of the Company's stockholders. The Audit Committee and the
Board shall have the ultimate authority and responsibility to engage,
evaluate, and, where appropriate, replace the independent accountants. The
Audit Committee shall discuss with the accountants their independence from
management and from the Company and shall discuss all relationships between
the accountants and their related entities and the Company and its related
entities that may reasonably be thought to bear on the accountants'
independence. The independent
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accountants shall confirm that, in their view, they are independent of the
Company. In this regard, the Audit Committee shall obtain a formal written
statement from the independent accountants delineating all relationships
between the accountants and the Company and shall, when necessary, recommend
that the Board take any appropriate action to satisfy itself of the
accountants' independence.
o The Audit Committee shall discuss with the internal auditor and the
independent accountants the overall scope and plans for their respective
audits. Also, the Audit Committee shall discuss with management, the
internal auditor, and the independent accountants the adequacy and
effectiveness of the accounting and financial controls and may elicit any
recommendations for the improvement of such internal controls or particular
areas where new or more detailed controls or procedures are desirable.
Further, the Audit Committee shall meet separately with the internal auditor
and the independent accountants, with and without management present, to
discuss the results of its examinations.
o The Audit Committee shall review interim financial statements with
management and the independent accountants prior to the filing of the
Company's Quarterly Report on Form 10-QSB as deemed necessary or if required
by law. The Audit Committee may discuss the results of the quarterly review
and any other matters required under generally accepted auditing standards
to be communicated to the Audit Committee by the independent accountants as
deemed necessary or if required by law. The chairperson of the Audit
Committee may represent the entire Audit Committee for the purposes of this
review.
o The Audit Committee shall review with management and the independent
accountants the financial statements to be included in the Company's Annual
Report on Form 10-KSB (or the annual report to stockholders if distributed
prior to the filing of the Form 10-KSB). The independent accountants shall
provide their judgment about the quality, not merely the acceptability, of
accounting principles, the reasonableness of any significant judgments, and
the clarity of disclosures in the financial statements as part of such
review. The Audit Committee shall also discuss the results of the annual
audit and any other matters required under generally accepted auditing
standards to be communicated to the Audit Committee by the independent
accountants.
o In discharging its role, the Audit Committee is free to consider an
investigation into any matter brought to its attention and shall have both
full access to all books, records, facilities, and personnel of the Company
and the power to retain outside counsel or other experts for this purpose
if, in its judgment, that is appropriate, without obtaining the prior
permission of the Board of Directors.
This charter shall not be construed in a manner that imposes upon the Audit
Committee a higher standard of care than that imposed upon Audit Committees of
boards of directors generally, pursuant to applicable law. It is not the duty of
the Audit Committee to plan or conduct audits or to determine that the Company's
financial statements are complete or accurate or are in accordance with
generally accepted accounting principles. These are the collective
responsibilities of management and the independent accountants. Nor is it the
duty of the Audit Committee to resolve disagreements, if any, between management
and the independent accountants or to assure compliance with laws or regulations
or the Company's audit policies and programs.
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PLEASE MARK VOTES REVOCABLE PROXY
|X| AS IN THIS EXAMPLE INDEPENDENT COMMUNITY BANKSHARES, INC.
With- For All
Proxy Solicited on Behalf of the Board of Directors For hold Except
The undersigned hereby appoints Arch A. 1. To elect as directors the 11 _ _ _
Moore, III and Alice P. Frazier, jointly and persons listed as nominees below. |_| |_| |_|
severally, proxies, with full power to act alone, and
with full power of substitution, to represent the Howard M. Armfield William F. Curtis John Sherman
undersigned and to vote, as designated below and upon Joseph L. Boling Robert C. Gilkison Millicent W. West
any and all other matters that may properly be Childs Frick Burden C. Oliver Iselin, III Edward T. Wright
brought before such meeting, all shares of Common J. Lynn Cornwell, Jr. Thomas W. Nalls
Stock that the undersigned would be entitled to vote
at the Annual Meeting of Shareholders of Independent
Community Bankshares, Inc., a Virginia corporation INSTRUCTION: To withhold authority to vote for any individual
(the "Corporation"), to be held at the Middleburg nominee, mark "For All Except" and write that nominee's name in the
Community Center, 300 West Washington Street, space provided below.
Middleburg, Virginia, on Wednesday, April 18, 2001
at 10:00 a.m., local time, or at any adjournments _____________________________________________________________________
thereof, for the following purposes:
For Against Abstain
_ _ _
2. To ratify the appointment of Yount, |_| |_| |_|
Hyde, & Barbour, P.C. as
independent auditors for the
Corporation for the fiscal year
ending December 31, 2001.
3. 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 AND FOR ITEM 2.
Please be sure to sign and date | Date |
this Proxy in the box below | |
---------------------------------------------------------- If signing as Attorney, Executor, Administrator, Guardian or
| | Trustee, please add your title as such.
| |
|-Shareholder sign above---Co-holder (if any) sign above-|
^ Detach above card, sign, date and mail in postage paid envelope provided. ^
INDEPENDENT COMMUNITY BANKSHARES, INC.
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Should the above-signed be present and elect to vote at the Annual Meeting
or at any adjournment thereof and after notification to the Secretary of the
Company at the Annual Meeting of the shareholder's decision to terminate this
proxy, then the power of said attorneys and proxies shall be deemed terminated
and of no further force and effect. This proxy may also be revoked by sending
written notice to the Secretary of the Company at the address set forth on the
Notice of Annual Meeting of Shareholders, or by the filing of a later proxy
prior to a vote being taken on a particular proposal at the Annual Meeting.
The above-signed acknowledges receipt from the Company prior to the
execution of this proxy of notice of the Annual Meeting, a proxy statement dated
March 19, 2001, and audited financial statements.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title.
If you wish to receive an annual report or proxy statement, please call
Alice Frazier at (540) 687-4228.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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