Volunteer Bancorp, Inc.
Parent Company of:
The Citizens Bank of East Tennessee
P.O. Box 550
Rogersville, TN 37857
April 18, 2003
TO THE SHAREHOLDERS OF VOLUNTEER BANCORP, INC.
In connection with the Annual Meeting of Shareholders of Volunteer Bancorp,
Inc. to be held on May 15, 2003, we enclose a notice of Annual Shareholders'
Meeting, a proxy statement, and a form of proxy.
At the meeting, you will be asked to elect four (4) directors for a
three-year term or until their successors are duly elected and qualified.
Information about these matters is contained in the attached proxy statement.
We have enclosed for your information the Company's Consolidated Financial
Statements as reported on by Welch & Associates, Ltd.
You are cordially invited to attend the Annual Meeting of Shareholders in
person. We would appreciate your completing the enclosed form of proxy so that
your shares can be voted in the event you are unable to attend the meeting. If
you are present at the meeting and desire to vote your shares personally, your
form of proxy will be withheld from voting upon your request prior to balloting.
We urge you to return your proxy card to us in the stamped envelope as soon as
possible.
Sincerely yours,
/s/ William E. Phillips
William E. Phillips
Chairman of the Board
Volunteer Bancorp, Inc.
210 East Main Street
Rogersville, Tennessee 37857
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 18, 2003
Notice is hereby given that the Annual Meeting of Shareholders of Volunteer
Bancorp, Inc. (the "Company"), will be held on May 15, 2003, at 10:00 A.M.,
local time, in the corporate offices of the Company at 210 East Main Street,
Rogersville, Tennessee 37857, for the following purposes:
1. To elect four (4) directors to serve a three-year term or until their
successors have been duly elected and qualified.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on April 18, 2003, are entitled
to notice of and to vote at the Annual Shareholders' Meeting.
By Order of the Board of Directors
/s/ G. Douglas Price
G. Douglas Price
Secretary
IMPORTANT
WHETHER YOU EXPECT TO ATTEND THE MEETING OR NOT, PLEASE MARK, SIGN, DATE
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE STAMPED ENVELOPE
PROVIDED.
Volunteer Bancorp, Inc.
210 East Main Street
Rogersville, Tennessee 37857
PROXY STATEMENT
Annual Meeting of Shareholders
April 18, 2003
Information Concerning the Solicitation
This statement is furnished in connection with the solicitation of proxies
to be used at the Annual Meeting of Shareholders (the "Annual Meeting") of
Volunteer Bancorp, Inc. (the "Company") to be held on May 15, 2003, at 10:00
A.M., local time, in the corporate offices of the Company at 210 East Main
Street, Rogersville, Tennessee 37857 and at any adjournment or adjournments
thereof. This Proxy Statement is first being sent to shareholders on or about
April 18, 2003.
At the Annual Meeting, the shareholders will vote to elect four (4)
directors. The affirmative vote of a plurality of the shares present or
represented at the meeting, if a quorum exists, is required to elect directors.
The presence in person or by proxy of the holders of a majority of the issued
and outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum.
Shareholders are urged to sign the enclosed form of proxy and return it
promptly in the envelope enclosed for that purpose. Proxies will be voted in
accordance with the shareholder's directions. If no directions are given,
proxies will be voted FOR the election of the nominees named herein as
directors.
The Board of Directors knows of no other business to be presented at the
Annual Meeting. If any other business is properly presented, the persons named
in the enclosed proxy will use their discretion in voting the shares. The proxy
may be revoked at any time prior to the voting thereof by written request to the
Company at 210 East Main Street, Rogersville, Tennessee 37857, Attention: G.
Douglas Price, Secretary. The proxy may also be revoked by submission to the
Company of a more recently dated proxy. The giving of the proxy will not affect
the right of a shareholder to attend the Annual Meeting and vote in person.
The solicitation of proxies in the enclosed form is made on behalf of the
Board of Directors of the Company. The entire cost of soliciting these proxies,
which we estimate to be approximately $5,000.00, will be borne by the Company.
In addition to being solicited through the mails, proxies may be solicited
personally or by telephone or telegraph by officers, directors and employees of
the Company who will receive no additional compensation for such activities.
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Arrangements will also be made with brokerage houses and other custodians,
nominees and fiduciaries to forward solicitation materials to the beneficial
owners of shares held of record by such persons, who will be reimbursed for
their reasonable expenses incurred in such connection.
Shareholders' Proposals For 2004 Annual Meeting
Proposals by shareholders to be considered for inclusion in the proxy
materials for the Annual Meeting in 2004 must be received by the Corporate
Secretary, G. Douglas Price, 210 East Main Street, Rogersville, Tennessee 37857,
no later than December 1, 2003. The use of certified mail, return receipt
requested, is advised. To be eligible for inclusion, a proposal must also comply
with Rule 14a-8 and all other applicable provisions of Regulation 14A under the
Securities Exchange Act of 1934. Shareholder proposals not submitted for
inclusion in the board of directors' proxy statement but which are received on
or prior to March 1, 2004 may be presented at the meeting. Shareholder proposals
which are received after March 1, 2004 will be considered untimely. Accordingly,
the Chairman may exclude the proposal from consideration or the proxies may
exercise their discretion and vote on these matters in a manner they determine
to be appropriate.
Outstanding Voting Securities
Only shareholders of record on April 18, 2003, are entitled to notice of
and to vote at the Annual Meeting. On that date there were 539,027 shares of
Common Stock issued and outstanding. The holder of each share of common stock is
entitled to one vote on all matters submitted before the Annual Meeting or any
adjournments of the Annual Meeting.
2
Security Ownership of Certain Beneficial Owners
As of April 18, 2003, the Company's records indicated that the following
number of shares were beneficially owned by (i) each person known by the Company
to beneficially own more than 5% of the Company's shares; (ii) directors and
persons nominated to become directors of the Company and executive officers; and
(iii) directors and executive officers of the Company as a group.
Amount and Nature
Name of of Beneficial Ownership Percent
Beneficial Owner (Number of Shares) of Class
---------------- ------------------- --------
(i) Ralph T. Hurley 85,500 15.86%
Route 2 Box 157
Sneedville, TN 37869
(ii) George L. Brooks 6,165 1.14
Scott F. Collins 1,647 *
Leon Gladson 3,723 *
Lawrence Gray(1) 13,201 2.44
M. Carlin Greene 15,080 2.80
Reed D. Matney 8,393 1.55
Neil D. Miller (5) 11,150 2.06
William E. Phillips(2) 22,495 4.17
G. Douglas Price(3) 15,934 2.95
Shirley A. Price 7,937 1.47
Gary E. Varnell(4) 16,260 3.01
(iii) Directors and executive 121,985 22.63%
officers as a group (11
persons)
- -------------
* Less than 1%
(1) Includes 665 shares owned by his spouse, for which he disclaims voting and
investment power.
(2) Includes 12,211 shares owned by the Joe H. Wilson Trust, for which Mr.
Phillips serves as Co-Trustee, and stock owned by his spouse.
(3) Includes 6,105 shares owned by his spouse, for which he disclaims voting
and investment power.
(4) Includes 200 shares owned jointly with his sons. (5) Includes 11,150 shares
owned by Miller Family Trust, for which Mr. Miller serves as Trustee.
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Proposal 1. ELECTION OF DIRECTORS
At the Annual Meeting, four (4) directors are nominees for election to hold
office for a three-year term or until their successors are elected and
qualified. If any nominee should be unable to accept nomination or election as a
director, which is not expected, the proxies may be voted with discretionary
authority for a substitute designated by the Board of Directors. The election of
a director requires the affirmative vote of a plurality of shares present or
represented at the meeting.
Management of the Company recommends the
election of the following nominees:
G. Douglas Price
Gary Varnell
George Brooks
Jim Friddell
Following is certain information regarding the directors, nominee directors
and executive officers of the Company.
Reed D. Matney (53) has served as the President and Director since 1994.
Mr. Matney was employed by First Union National Bank of Tennessee until April
1994 and he was employed by the Bank in May 1994.
G. Douglas Price (62) has served as Director since 1994, and as the
Company's Secretary since January, 2002. Mr. Price is retired from the position
of County Executive for Hawkins County, Tennessee.
William E. Phillips (55) has served as Chairman of the Board since 1994.
Mr. Phillips is an attorney with the law firm of Phillips and Hale in
Rogersville, Tennessee.
George L. Brooks (73) has served as a Director of the Company since 1994.
Mr. Brooks retired from Citizens Union Bank in 1993 and resides in Rogersville,
Tennessee.
Scott F. Collins (54) has served as a Director of the Company since 1994.
Mr. Collins is the Hancock County Clerk & Master in Sneedville, Tennessee.
Leon Gladson (77) has served as a Director of the company since 1994. Mr.
Gladson is a retired businessman and resides in Rogersville, Tennessee.
Lawrence E. Gray (58) has served as a Director of the Company since 1994.
Mr. Gray is retired from his position as Executive Vice-President with The
Citizens Bank of East Tennessee.
4
M. Carlin Greene (60) has served as a Director of the Company since 1994.
Mr. Greene is a real estate agent and farmer in Sneedville, Tennessee.
Neil D. Miller (83) has served as a Director of the Company since 1994. Mr.
Miller is a farmer in Rogersville, Tennessee.
Shirley A. Price (68) has served as a Director of the Company since 1994.
Ms. Price is an insurance agent in Rogersville, Tennessee.
Gary E. Varnell (56) has served as a Director of the Company since 1994.
Mr. Varnell is the owner and operator of a retail office products store in
Rogersville, Tennessee.
James Friddell (53) has served as the Executive Vice President and Director
of the Company since 2002. Mr. Friddell is the former president of Tennessee
State Bank and currently resides in Rogersville, Tennessee.
No director of the Company is a director or executive officer of another
bank holding company, bank saving and loan association, or credit union.
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Information Regarding Meetings of Directors
During the last fiscal year (2002), the Board of Directors of the Company
held three (3) meetings. The Directors of the Company also serve as directors of
the Bank. The Board of Directors of the bank held fifteen (15) meetings in 2002.
No director attended less than 75% of the meetings held by the Company or the
Bank during 2002 or less than 75% of the meetings of any committee on which he
served. The Directors received no compensation as directors of the Company but
as directors of the Bank received $500 for each meeting attended.
The Board of Directors has three committees. Messrs. Phillips, Miller and
Matney serve as the Executive Committee, Messrs. G. Douglas Price, Gladson,
Collins and Phillips, serve as members of the Audit Committee and Messrs.
Phillips, Matney and G. Douglas Price serve as members of the Trust Committee.
These persons receive no compensation as members of such committees. For more
information regarding the Audit Committee, see the section entitled "Report of
the Audit Committee of the Board of Directors."
Executive Compensation
The following table sets forth the aggregate cash compensation paid by the
Company to the chief executive officer to the Company. No other executive
officer of the Company received cash compensation in excess of $100,000
(determined as of the end of 2002) for the years ended December 2002, 2001, and
2000.
Annual Compensation
Name and Position Year Salary ($)
- ----------------- ---- ----------
Reed D. Matney 2002 105,000
Chief Executive Officer 2001 105,000
2000 100,000
Certain Relationships and Related Transactions
The Company expects to have in the future banking and other business
transactions in the ordinary course of its banking business with directors,
officers, and 10% beneficial owners of the Company and their affiliates,
including members of their families, or corporations, partnerships, or other
organizations in which such officers or directors have controlling interest, on
substantially the same terms (including price, or interest rates and collateral)
as those prevailing at the time for comparable transactions with unrelated
parties. Any such banking transactions will not involve more than the normal
risk of collectibility nor present other unfavorable features to the Company or
the Bank. The law firm of Phillips & Hale, of which Chairman Phillips is a
partner, serves as general counsel for the Company.
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Section 16(a) Beneficial Ownership Reporting Compliance
The federal securities laws, as applicable to the Company, require the
directors and executive officers, and persons who beneficially own more that 10%
of a registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of any
securities of the Company. To the Company's knowledge, based solely on review of
the copies of these reports furnished to the Company and representations by
reporting persons, all of the Company's officers, directors and greater than 10%
beneficial owners made all filings required in a timely manner.
Report of the Audit Committee of the Board of Directors
The Audit Committee of the Board is composed of four of the directors of
the Company. Although the common stock of the Company is not traded on the
National Association of Securities Dealers Automated Quotation system (NASDAQ),
or listed or listed on any exchange, the Company has adopted the definition of
an "independent director" provided in the NASDAQ listing standards. Under this
standard, the members of the Audit Committee are independent directors except
for Mr. G. Douglas Price, who serves as Secretary of the Company, and Mr.
Phillips, whose firm serves as General Counsel to the Company. The Board has
adopted a written charter for the Audit Committee. During 2002, the Audit
Committee met two times.
The functions of the Audit Committee include:
o appointing independent auditors;
o approving the scope of audits and other services to be performed by
the independent and internal auditors; and
o reviewing the results of internal and external audits, the accounting
principles applied in financial reporting and the adequacy of
financial and operational controls.
The Committee reviews the Company's financial reporting process. Management
has the primary responsibility for the financial statements and the reporting
process, including the system of internal controls.
In this context, the Committee has met and held discussions with management
and the independent auditors for the year ended December 31, 2002, Welch &
Associates, Ltd. Management represented to the Committee that the Company's
financial statements were prepared in accordance with generally accepted
accounting principles, and the Committee has reviewed and discussed the
financial statements with management and with the independent auditors. The
Committee also discussed with the independent auditors matters required to be
discussed by Statement on Auditing
7
Standards No. 61 (Communication With Audit Committees). The Committee has also
reviewed the fees paid to Welch & Associates, Ltd., for the services it provided
during 2002, as detailed in the section called "Audit Fees."
In addition, the Committee has discussed with Welch & Associates, Ltd., the
auditor's independence from the Company and its management, including matters in
the written disclosures and letters provided by Welch & Associates, Ltd., to the
Committee as required by the Independence Standards Board Standard No. 1
(Independence Discussions With Audit Committees).
The Committee has also discussed with the internal audit group and
independent auditors the overall scope and plans for their respective audits.
The Committee has met with the internal audit group and independent auditors,
with and without management present, to discuss the results of their
examinations, the evaluations of the Company's internal controls, and the
overall quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, the Committee
recommended that the audited financial statements be included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 2002, for filing
with the Securities and Exchange Commission. The Committee does not believe that
the independence of Welch & Associates, Ltd., is affected by the payment of the
fees detailed in the section called "Audit Fees."
Members of the Audit Committee:
Scott F. Collins Leon Gladson
William E. Phillips G. Douglas Price
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Audit Fees
During 2002, Welch & Associates, Ltd., not only acted as independent
auditors for the Company (work related to auditing the annual financial
statements for fiscal year 2002 and reviewing the financial statements included
in the Company's Forms 10-QSB) but also rendered on the Company's behalf other
services, including tax-related services, management consulting services and
other accounting and auditing services. The following table sets forth the
aggregate fees billed by Welch & Associates, Ltd., for audit services rendered
in connection with the financial statements and reports for fiscal year 2002 and
for other services rendered during fiscal year 2002 on the Company's behalf.
o Audit Fees (for the audit of the 2002 financial
statements): 82,000.00
o Financial Information Systems Design and Implementation Fees: 0
o All Other Fees (consisting primarily of consulting
and tax services): 6,000.00
The Audit Committee views the services provided by Welch & Associates,
Ltd., the Company's principal auditors, to be compatible with maintaining the
auditors' independence.
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Other Matters
The Board of Directors, at the time of the preparation of this Proxy
Statement, knows of no business to come before the meeting other than that
referred to herein. If any other business should come before the meeting, the
persons named in the enclosed Proxy will have discretionary authority to vote
all proxies in accordance with their best judgment.
Upon the written request of any record holder or beneficial owner of common
stock entitled to vote at the Annual Meeting, the Company, without charge, will
provide a copy of its Annual Report on Form 10-KSB for the year ended December
31, 2002, as filed with the Securities and Exchange Commission. Requests should
be directed to G. Douglas Price, Secretary, Volunteer Bancorp, Inc., 210 East
Main Street, Rogersville, Tennessee 37857.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ William E. Phillips
William E. Phillips
Chairman of the Board
Rogersville, Tennessee
April 18, 2003
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PROXY
-----
Volunteer Bancorp, Inc.
210 East Main Street, Rogersville, Tennessee 37857
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints William E. Phillips and G. Douglas Price or either
of them with the full power of substitution and revocation as Proxy to vote all
shares of stock standing in my name on the books of Volunteer Bancorp, Inc. (the
"Company") at the close of business on April 18, 2003 which I would be entitled
to vote if personally present at the Annual Meeting of Shareholders of the
Company to be held in the Company's offices at 210 East Main Street,
Rogersville, Tennessee 37857, on May 15, 2003 at 10:00 A.M., local time, and at
any and all adjournments, upon the matters set forth in the notice of said
meeting. The Proxy is further authorized to vote in his discretion as to any
other matters which may come before the meeting. The Board of Directors at the
time of preparation of the Proxy Statement knows of no business to come before
the meeting other that referred to in the Proxy Statement.
THE SHARES COVERED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS GIVEN BELOW AND WHEN NO INSTRUCTIONS ARE GIVEN WILL BE VOTED FOR
THE PROPOSALS DESCRIBED IN THE ACCOMPANYING NOTICE OF ANNUAL MEETING AND PROXY
STATEMENT AND ON THIS PROXY.
(1) Election of four (4) Directors
For all nominees listed below (except as indicated to the contrary
---- below).
WITHHOLD AUTHORITY to vote for all nominees listed below.
----
G. Douglas Price
Gary Varnell
George Brooks
Jim Friddell
Instruction: To withhold authority to vote for any individual nominee,
----------- write such nominee's name in the space provided below.
- ---------------------------------------
The undersigned hereby acknowledges receipt of notice of said meeting and the
related Proxy Statement.
Dated: Signed
------------------------
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[Label to be placed here] Signed
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Shareholder signs here exactly
as shown on the label affixed hereto.
Administrator, Trustee, or Guardian,
please give full title. If more than
one Trustee, all should sign. All
Joint Owners should sign.
Please indicate if you plan to attend the Shareholder's Meeting.
Yes, I plan to attend the Shareholder's Meeting.
- ----
No, I do not plan to attend the Shareholder's Meeting.
- ----
PLEASE COMPLETE, SIGN, DATE, AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.