PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CAVALRY BANCORP, INC.
(Name of Registrant as Specified in Its Charter)
CAVALRY BANCORP, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transactions applies:
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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[ ] Check box if any part of the fee is offset as provided by 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.
(1) Amount previously paid:
N/A
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(2) Form, schedule or registration statement no.:
N/A
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(3) Filing party:
N/A
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(4) Date filed:
N/A
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March 23, 2001
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Cavalry Bancorp, Inc., the holding company for Cavalry Banking. The meeting will
be held at the Bank's main office located at 114 West College Street,
Murfreesboro, Tennessee, on Thursday, April 26, 2001 at 10:00 a.m., local time.
The Notice of Annual Meeting of Shareholders and Proxy Statement appearing
on the following pages describe the formal business to be transacted at the
meeting. During the meeting, we will also report on the operations of the
Company. Directors and officers of the Company, as well as a representative of
Rayburn, Betts & Bates, P.C., the Company's independent auditors, will be
present to respond to appropriate questions of shareholders.
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THIS MEETING, WHETHER
OR NOT YOU ATTEND THE MEETING IN PERSON AND REGARDLESS OF THE NUMBER OF SHARES
YOU OWN. TO MAKE SURE YOUR SHARES ARE REPRESENTED, WE URGE YOU TO COMPLETE AND
MAIL THE ENCLOSED PROXY CARD. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON
EVEN IF YOU HAVE PREVIOUSLY MAILED A PROXY CARD.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Ed C. Loughry, Jr.
Ed C. Loughry, Jr.
Chairman of the Board and Chief Executive Officer
CAVALRY BANCORP, INC.
114 WEST COLLEGE STREET
MURFREESBORO, TENNESSEE 37130
(615) 893-1234
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 26, 2001
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Cavalry
Bancorp, Inc. ("Company") will be held at the main office of Cavalry Banking
located at 114 West College Street, Murfreesboro, Tennessee, on Thursday, April
26, 2001 at 10:00 a.m., local time, for the following purposes:
(1) To elect three directors of the Company to serve for a term of
three years;
(2) To approve the appointment of Rayburn, Betts & Bates, P.C.
as the Company's independent auditors for the fiscal year ending
December 31, 2001; and
(3) To consider and act upon such other matters as may properly come
before the meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Any action may be taken on the foregoing proposals at the meeting on the
date specified above or on any date or dates to which, by original or later
adjournment, the meeting may be adjourned. Only shareholders of record at the
close of business on March 1, 2001 are entitled to notice of and to vote at the
meeting and any adjournments or postponements thereof.
You are requested to complete and sign the enclosed form of proxy, which is
solicited by the Board of Directors, and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend the meeting and vote in
person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Ira B. Lewis, Jr.
IRA B. LEWIS, JR.
CORPORATE SECRETARY
Murfreesboro, Tennessee
March 23, 2001
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
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PROXY STATEMENT
OF
CAVALRY BANCORP, INC.
114 WEST COLLEGE STREET
MURFREESBORO, TENNESSEE 37130
(615) 893-1234
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ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 2001
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Cavalry Bancorp, Inc. ("Company") to be
used at the Annual Meeting of Shareholders of the Company ("Meeting"). The
Company is the holding company for Cavalry Banking ("Bank"). The Meeting will
be held at the main office of the Bank located at 114 West College Street,
Murfreesboro, Tennessee, on Thursday, April 26, 2001 at 10:00 a.m., local time.
This Proxy Statement and the enclosed proxy card are being first mailed to
shareholders on or about March 23, 2001.
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VOTING AND PROXY PROCEDURE
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Shareholders Entitled to Vote. Only shareholders of record as of the close
of business on March 1, 2001 ("Voting Record Date") are entitled to vote at the
Meeting and are entitled to one vote for each share of common stock ("Common
Stock") of the Company then held. At the close of business on the Voting Record
Date the Company had 7,104,801 shares of Common Stock issued and outstanding.
The Common Stock is the only class of outstanding securities of the Company.
As provided in the Company's Charter, record holders of the Company's
Common Stock who beneficially own, either directly or indirectly, in excess of
10% of the Company's outstanding shares are not entitled to any vote in respect
of the shares held in excess of the 10% limit.
If you are a beneficial owner of Company Common Stock held by a broker,
bank or other nominee (i.e., in "street name"), you will need proof of ownership
to be admitted to the Meeting. A recent brokerage statement or letter from a
bank or broker are examples of proof of ownership. If you want to vote your
shares of Company Common Stock held in street name in person at the Meeting, you
will have to get a written proxy in your name from the broker, bank or other
nominee who holds your shares.
Quorum. The presence, in person or by proxy, of at least a majority of the
total number of outstanding shares of Common Stock entitled to vote is necessary
to constitute a quorum at the Meeting. Abstentions and broker non-votes will be
counted as shares present and entitled to vote at the Meeting for purposes of
determining the existence of a quorum.
Voting. The Board of Directors solicits proxies so that each shareholder
has the opportunity to vote on the proposals to be considered at the Meeting.
When a proxy card is returned properly signed and dated, the shares represented
thereby will be voted in accordance with the instructions on the proxy card.
Where no instructions are indicated, proxies will be voted FOR the nominees for
directors set forth below, and FOR the approval of the appointment of
independent auditors. If a shareholder attends the Meeting, he or she may vote
by ballot.
Revocation of a Proxy. Shareholders who execute proxies retain the right
to revoke them at any time. Proxies may be revoked by written notice delivered
in person or mailed to the Secretary of the Company or by filing a later proxy
prior to a vote being taken on a particular proposal at the Meeting. Attendance
at the Meeting will not automatically revoke a proxy, but a shareholder in
attendance may request a ballot and vote in person, thereby revoking a prior
granted proxy.
Participants in the Cavalry Banking ESOP. If a shareholder is a participant
in the Cavalry Banking Employee Stock Ownership Plan ("ESOP"), the proxy card
represents a voting instruction to the trustees of the ESOP as to the number of
shares in the participant's plan account. Each participant may direct the
trustees as to the manner in which shares of Common Stock allocated to the
participant's plan account are to be voted. Unallocated shares of Common Stock
held by the ESOP, and allocated shares for which no voting instructions are
received from participants, will be voted by the trustees in the same proportion
as shares for which the trustees have received voting instructions. The
deadline for returning your voting instructions to the trustees is April 23,
2001.
Vote Required. The directors to be elected at the Meeting will be elected
by a plurality of the votes cast by shareholders present in person or by proxy
and entitled to vote. Pursuant to the Company's Charter, shareholders are not
permitted to cumulate their votes for the election of directors. Votes may be
cast for or withheld from each nominee. Votes that are withheld and broker
non-votes will have no effect on the outcome of the election because directors
will be elected by a plurality of the votes cast.
With respect to the other proposal to be voted upon at the Meeting,
shareholders may vote for or against the proposal or may abstain from voting.
Approval of the appointment of independent auditors requires the affirmative
vote of a majority of the shares of Common Stock present in person or by proxy
and entitled to vote. Broker non-votes will have no effect on the outcome of
this proposal. Abstentions, however, will have the same effect as a vote
against this proposal.
If your Company Common Stock is held in street name, you will receive
instructions from your broker, bank or other nominee that you must follow in
order to have your shares voted. Your broker or bank may allow you to deliver
your voting instructions via the telephone or the Internet. Please see the
instruction form that accompanies this proxy statement. If you wish to change
your voting instructions after you have returned your voting instruction form to
your broker or bank, you must contact your broker or bank.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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Persons and groups who beneficially own in excess of 5% of the Company's
Common Stock are required to file certain reports with the Securities and
Exchange Commission ("SEC"), and provide a copy to the Company, disclosing such
ownership pursuant to the Securities Exchange Act of 1934, as amended ("Exchange
Act"). Based on such reports, the following table sets forth, at the close of
business on the Voting Record Date, certain information as to those persons who
were beneficial owners of more than 5% of the outstanding shares of Common
Stock. Management knows of no persons other than those set forth below who
beneficially owned more than 5% of the outstanding shares of Common Stock at the
close of business on the Voting Record Date. The table also sets forth, as of
the close of business on the Voting Record Date, certain information as to
shares of Common Stock beneficially owned by the Company's directors and "named
executive officers" and all directors and executive officers as a group.
Number of Shares Percent of Shares
Name Beneficially Owned (1) Outstanding
- ---------------------------------- ---------------------- ------------------
BENEFICIAL OWNERS OF MORE THAN 5%
Cavalry Banking Employee
Stock Ownership Plan Trust. . . 916,746(2) 12.9%
114 West College Street
Murfreesboro, Tennessee 37130
DIRECTORS
William Kent Coleman . . . . . . . 13,300 0.2%
James C. Cope. . . . . . . . . . . 47,021 0.7
Terry G. Haynes. . . . . . . . . . 104,171 1.5
William H. Huddleston, IV. . . . . 40,401 0.6
Gary Brown . . . . . . . . . . . . 104,026 1.5
Tim J. Durham. . . . . . . . . . . 90,751 1.3
Ed Elam. . . . . . . . . . . . . . 44,919 0.6
NAMED EXECUTIVE OFFICERS (3)(4)
Ed C. Loughry, Jr. . . . . . . . . 113,437 1.6
Ronald F. Knight . . . . . . . . . 98,500 1.4
William S. Jones . . . . . . . . . 56,788 0.8
Hillard C. Gardner . . . . . . . . 10,678 0.2
All Executive Officers and . . . . 890,612 12.5
Directors as a Group (16 persons)
<FN>
- ------------------------------
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed
to be the beneficial owner, for purposes of this table, of any shares of Common
Stock if he or she has voting and/or investment power with respect to such
security. The table includes shares owned by spouses, other immediate family
members in trust, shares held in retirement accounts or funds for the benefit of
the named individuals, and other forms of ownership, over which shares the
persons named in the table may possess voting and/or investment power. Shares of
restricted stock granted under the Company's 1999 Management Recognition Plan
("MRP"), as to which the holders have voting power but not investment power, are
included as follows: Mr. Cope, 10,338 shares; Mr. Haynes, 10,338 shares; Mr.
Brown, 10,338 shares; Mr. Durham,10,338 shares; Mr. Elam,10,338 shares; Mr.
Loughry, 60,306 shares; Mr. Knight, 48,252 shares; Mr. Jones, 6,031 shares and
Mr. Gardner, 6,031 shares; all executive officers and directors as a group,
202,465 shares.
(2) Under the terms of the ESOP, the trustees will vote unallocated shares
and allocated shares for which no voting instructions are received in the same
proportion as shares for which the trustees have received voting instructions
from participants. As of the Voting Record Date, 244,431 shares have been
allocated to participants' accounts. The trustees of the ESOP are Messrs.
Loughry, Brown, Knight and Jones.
(3) Messrs. Loughry and Knight are also directors of the Company.
(4) SEC regulations define the term "named executive officers" to include
all individuals serving as chief executive officer during the most recently
completed fiscal year, regardless of compensation level, and the four most
highly compensated executive officers, other than the chief executive officer,
whose total annual salary and bonus for the last completed fiscal year exceeded
$100,000. Messrs. Loughry, Knight, Jones and Gardner were the Company's only
"named executive officers" for the fiscal year ended December 31, 2000.
2
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Company's Board of Directors consists of nine members. On August 18,
2000, Mr. Frank E. Crosslin, Jr., a Director since 1985, passed away. In
connection with Mr. Crosslin's death, on October 26, 2000, the Board of
Directors appointed William Kent Coleman to fill the unexpired term of Mr.
Crosslin.
In accordance with the Company's Charter, the Board is divided into three
classes with three-year staggered terms, with one-third of the directors elected
each year. Three directors will be elected at the Meeting to serve for the
respective term set forth in the following table, or until their respective
successors have been elected and qualified. The nominees for election this year
are Ed C. Loughry, Jr., William Kent Coleman and James C. Cope, each of whom is
a current member of the Board of Directors of the Company and of the Bank.
It is intended that the proxies solicited by the Board of Directors will be
voted for the election of the nominees named in the table below. If any
nominee is unable to serve, the shares represented by all valid proxies will be
voted for the election of such substitute as the Board of Directors may
recommend or the Board of Directors may adopt a resolution to amend the Bylaws
and reduce the size of the Board. At this time the Board of Directors knows of
no reason why any nominee might be unavailable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF MESSRS.
LOUGHRY, COLEMAN AND COPE.
The following table sets forth certain information regarding the nominees
for election at the Meeting as well as information regarding those directors
continuing in office after the Meeting.
Year First
Elected or
Appointed Term to
Name Age(1) Director(2) Expire
- ---- ------ ---------------- --------
BOARD NOMINEES
Ed C. Loughry, Jr. . . . . . . 58 1982 2004(3)
William Kent Coleman . . . . . 46 2000 2004(3)
James C. Cope. . . . . . . . . 51 1992 2004(3)
DIRECTORS WHOSE TERM CONTINUES
Terry G. Haynes. . . . . . . . 43 1997 2002
William H. Huddleston, IV. . . 37 1999 2002
Gary Brown . . . . . . . . . . 58 1984 2002
Ronald F. Knight . . . . . . . 50 1990 2003
Tim J. Durham. . . . . . . . . 47 1986 2003
Ed Elam. . . . . . . . . . . . 60 1977 2003
<FN>
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(1) As of December 31, 2000.
(2) Includes prior service on the Board of Directors of the Bank before
March 1998.
(3) Assuming the individual is elected.
The present principal occupation and other business experience during the
last five years of each nominee for election and each director continuing in
office is set forth below:
3
Ed C. Loughry, Jr. joined the Bank in 1968 and currently serves as Chairman
of the Board and Chief Executive Officer. Mr. Loughry has served on the Boards
of Directors of the Rutherford County Chamber of Commerce, United Way, Heart
Fund, the Federal Home Loan Bank of Cincinnati and the Tennessee Bankers
Association where he is currently serving as First Vice President. He currently
serves on the Healthnet Board and the ABA BankPac Board. He was selected
Business Person of the Year in 1993 and Business Legend in 2000 by the
Rutherford County Chamber of Commerce.
William Kent Coleman is a partner in the law firm, Rucker, Rucker &
Coleman, an Association of Attorneys, in Murfreesboro, Tennessee. Mr. Coleman
is a board member of the Rutherford County Chamber of Commerce and the Volunteer
Behavioral Health Care System.
James C. Cope is a partner in the law firm, Murfree, Cope, Hudson &
Scarlett in Murfreesboro, Tennessee. Mr. Cope serves as attorney for Rutherford
County, Tennessee, Middle Tennessee Electric Membership Corporation, the
Murfreesboro Housing Authority, the Smyrna/Rutherford County Airport Authority
and otherwise engages in a general civil practice of law. He is past President
of the Middle Tennessee State University Foundation and the Murfreesboro Rotary
Club.
Terry G. Haynes is the Chief Executive Officer, General Manager and Chief
Operating Officer of Haynes Bros. Lumber Co., a retail building supply dealer
located in Murfreesboro, Tennessee. Mr. Haynes is a past Chairman of the
Rutherford County Chamber of Commerce.
William H. Huddleston, IV, a professional engineer and registered land
surveyor licensed in the State of Tennessee, is the President of
Huddleston-Steele Engineering, Inc. in Murfreesboro, Tennessee. Mr. Huddleston
currently serves on the City of Murfreesboro Construction Board of Adjustments
and Appeals, the First United Methodist Church Council of Stewards, and is
President of The Webb School Alumni Board.
Gary Brown is the owner and President of Roscoe Brown, Inc., a heating and
air conditioning company, Murfreesboro, Tennessee. Mr. Brown is a member of the
Murfreesboro Water and Sewer Department Board, the Electrical Examining Board,
the Middle Tennessee State University Foundation Board and the Rutherford County
Chamber of Commerce Board.
Ronald F. Knight joined the Bank in 1972 and currently serves as President
and Chief Operating Officer. Mr. Knight was the 1999 Chairman of the Rutherford
County Chamber of Commerce and serves on the Rutherford County Economic
Development Council and serves as Chairman of the Rutherford County Chamber of
Commerce Chairman's Council. He also serves on the Board of the Tennessee
Housing Development Agency, is a committee member of United Way and the
co-founder of a local charity, "Christmas For The Children." Mr. Knight has
also served as a director of the Tennessee Bankers Association.
Tim J. Durham is the owner of Durham Realty & Auction, Inc., a real estate
and auction service company in Murfreesboro, Tennessee. Mr. Durham is also a
partner in D&H Development Co., a commercial and residential developer. Mr.
Durham currently serves on the Board of the Rutherford County Chamber of
Commerce and he is a member of the Murfreesboro Water and Sewer Board. He also
served on the Murfreesboro Planning Commission for eight years and is a former
member of the Board of Zoning Appeals. Mr. Durham is past President and
Director of the Rutherford County Board of Realtors.
Ed Elam is the Rutherford County Clerk in Murfreesboro, Tennessee, a
position he has held since 1974. Mr. Elam is a member of the Christy/Houston
Foundation Board and the Evergreen Cemetery Board. He is also active in the
American Cancer Society as a Relay for Life Volunteer.
4
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Boards of Directors of the Company and the Bank conduct their business
through meetings of both of the Boards and through each Board's committees.
During the fiscal year ended December 31, 2000, the Board of Directors of the
Company held 16 meetings, and the Board of Directors of the Bank held 16
meetings. No director of the Company or the Bank attended fewer than 75% of the
total meetings of the Boards and committees on which such person served during
this period.
Committees of the Company's Board. The Company's Board of Directors has
established Audit, Compensation and Nominating Committees.
The Audit Committee of the Company also serves as the Audit Committee of
the Bank and consists of Directors Durham (Chairman), Huddleston, Coleman and
Haynes. The Committee receives and reviews all reports prepared by the Company
and Bank's external and internal auditors. The Committee meets at least
semi-annually in April and October to review the reports issued by the internal
auditor and the external auditor. The Audit Committee has a Charter which
specifies its obligations. See "Audit Committee Charter and Report Concerning
Financial Matters" below. The Audit Committee met three times during the year
ended December 31, 2000.
The Compensation Committee of the Company also serves as the Compensation
Committee of the Bank and consists of Directors Brown (Chairman), Durham, and
Cope. The Compensation Committee makes recommendations to the full Board of
Directors concerning employee compensation. The Compensation Committee met
three times during the year ended December 31, 2000.
The full Board of Directors acts as a Nominating Committee for the annual
selection of management's nominees for election as directors of the Company.
The full Board of Directors met in December 2000 to nominate the candidates for
election as directors at the Meeting.
5
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DIRECTORS' COMPENSATION
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FEES
All directors of the Company receive a monthly fee of $500. All outside
directors of the Bank, other than the Vice-Chairman of the Board, receive a
monthly fee of $1,300. The Vice-Chairman of the Board receives a monthly fee of
$1,350. All inside directors receive a monthly fee of $1,000. Outside
directors receive an additional fee of $300 per Executive Committee, Audit
Committee, Compensation Committee and Trust Committee meeting attended, not to
exceed $300 per month. Directors' fees totaled $199,500 for the year ended
December 31, 2000.
Under the MRP, which was adopted by the Company's shareholders on April 22,
1999, non-employee directors Brown, Cope, Durham, Elam and Haynes each received
stock awards of 12,922 shares of restricted stock. Each award vests over a
five-year period in 20% annual increments, with the first increment having
vested on April 22, 2000, and the remaining 80% scheduled to vest on April 22,
2001, April 22, 2002, April 22, 2003 and April 22, 2004.
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EXECUTIVE COMPENSATION
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SUMMARY COMPENSATION TABLE
The following information is furnished for the Chief Executive Officer of
the Company and for the four highest paid executive officers of the Company who
received salary and bonus in excess of $100,000 for the year ended December 31,
2000.
Long-term
Compensation
Annual Compensation(1) Awards
----------------------- ------------
Restricted All
Name and Stock Other Annual
Position Year Salary($) Bonus Awards($)(2) Compensation(3)
- -------- ---- -------- ----- ------------ ---------------
Ed C. Loughry, Jr.. . . . . 2000 $168,000 $35,246 $ -- $59,055
Chairman of the Board and . 1999 168,000 29,064 1,686,672 43,184
Chief Executive Officer of. 1998 168,000 56,112 -- 35,052
the Company and the Bank
Ronald F. Knight. . . . . . 2000 140,000 29,372 -- 58,887
President and Chief . . . . 1999 140,000 24,220 1,349,526 43,184
Operating Officer of the. . 1998 140,000 46,760 -- 33,652
Company and the Bank
William S. Jones. . . . . . 2000 97,000 30,350 -- 32,288
Executive Vice President. . 1999 89,760 7,764 168,625 36,997
and Chief Administrative. . 1998 86,333 14,418 -- 21,715
Officer of the Company
and the Bank
Hillard C. Gardner, C.P.A. 2000 91,500 9,598 -- 28,805
Senior Vice President and . 1999 87,210 7,543 168,625 36,970
Chief Financial Officer of. 1998 85,500 19,279 -- 21,671
the Company and the Bank
<FN>
- -----------------
(1) The aggregate amount of perquisites and other personal benefits was less
than 10% of the total annual salary and bonus reported.
(2) Represents the value as of April 22, 1999 (the date of award) of 75,382
shares, 60,314 shares, 7,538 shares and 7,538 shares awarded to Messrs. Loughry,
Knight, Jones and Gardner, respectively, pursuant to the terms of the Company's
MRP. These shares vest over a five-year period at the rate of 20% per year.
The first 20% of the restricted shares vested on April 22, 2000. Dividends are
paid on such awards if and when declared and paid by the Company on the Common
Stock. At December 31, 2000, the value of the unvested restricted stock awards
was $640,751 (60,306 shares at $10.625 per share), $512,678 (48,252 shares at
$10.625 per share), $64,079 (6,031 shares at $10.625 per share) and $64,079
(6,031 shares at $10.625 per share) for Messrs. Loughry, Knight, Jones and
Gardner, respectively.
(3) For fiscal 2000, includes director fees, market value of stock allocated
under the ESOP, employer paid 401(k) matching contributions, employer paid
medical, dental, group term life and disability insurance premiums.
6
EMPLOYMENT AGREEMENTS. The Company and the Bank (collectively, the
"Employers") have entered into three-year employment agreements ("Employment
Agreements") with Messrs. Loughry and Knight (individually, the "Executive").
Under the Employment Agreements, the current salary levels for Messrs. Loughry
and Knight are $168,000 and $140,000, respectively, which amounts are paid by
the Bank and may be increased at the discretion of the Board of Directors or an
authorized committee of the Board. On each anniversary of the commencement date
of the Employment Agreements, the term of each agreement may be extended for an
additional year at the discretion of the Board of Directors. The agreements are
terminable by the Employers at any time, by the Executive if the Executive is
assigned duties inconsistent with his initial position, duties, responsibilities
and status, or upon the occurrence of certain events specified by federal
regulations. In the event that an Executive's employment is terminated without
cause or upon the Executive's voluntary termination following the occurrence of
an event described in the preceding sentence, the Bank would be required to
honor the terms of the agreement through the expiration of the current term,
including payment of current cash compensation and continuation of employee
benefits.
The Employment Agreements provide for severance payments and other benefits
in the event of involuntary termination of employment in connection with any
change in control of the Employers. Severance payments also will be provided on
a similar basis in connection with a voluntary termination of employment where,
subsequent to a change in control, the Executive is assigned duties inconsistent
with his position, duties, responsibilities and status immediately prior to such
change in control. The term "change in control" is defined in the agreement as
having occurred when, among other things, (a) a person other than the Company
purchases shares of Common Stock pursuant to a tender or exchange offer for such
shares, (b) any person (as such term is used in Sections 13(d) and 14(d)(2) of
the Exchange Act) is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 25% or more of the combined voting power
of the Company's then outstanding securities, (c) the membership of the Board of
Directors changes as the result of a contested election, or (d) shareholders of
the Company approve a merger, consolidation, sale or disposition of all or
substantially all of the Company's assets, or a plan of partial or complete
liquidation.
The maximum value of the severance benefits under the Employment Agreements
is 2.99 times the Executive's average annual compensation during the five-year
period preceding the effective date of the change in control (the "base
amount"). Such amounts will be paid in a lump sum within ten business days
following the termination of employment. Had a change in control of the
Employers occurred in 2000, Messrs. Loughry and Knight would be entitled to
payments of approximately $1,055,867 and $885,785, respectively. Section 280G
of the Internal Revenue Code of 1986, as amended ("Code"), provides that
severance payments that equal or exceed three times the individual's base amount
are deemed to be "excess parachute payments" if they are contingent upon a
change in control. Individuals receiving excess parachute payments are subject
to a 20% excise tax on the amount of such excess payments, and the Employers
would not be entitled to deduct the amount of such excess payments.
The Employment Agreements restrict each Executive's right to compete
against the Employers for a period of one year from the date of termination of
the agreement if an Executive voluntarily terminates employment, except in the
event of a change in control.
7
SEVERANCE AGREEMENTS. The Company and the Bank (collectively, the
"Employers") have entered into two-year severance agreements ("Severance
Agreements") with Messrs. Jones and Gardner ("Executives"). On each anniversary
of the commencement date of the Severance Agreements, the term of each agreement
may be extended for an additional year at the discretion of the Board.
The Severance Agreements provide for severance payments and continuation of
insured employee welfare benefits in the event of involuntary termination of
employment in connection with any change in control of the Employers in the same
manner as provided for in the Employment Agreements. Severance payments and
benefits also will be provided on a similar basis in connection with a voluntary
termination of employment where, subsequent to a change in control, an officer
is assigned duties inconsistent with his position, duties, responsibilities and
status immediately prior to such change in control. The term "change in
control" is defined in the Severance Agreements as having occurred when, among
other things, (a) a person other than the Company purchases shares of Common
Stock pursuant to a tender or exchange offer for such shares, (b) any person (as
such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of the Company's
then outstanding securities, (c) the membership of the Board of Directors
changes as the result of a contested election, or (d) shareholders of the
Company approve a merger, consolidation, sale or disposition of all or
substantially all of the Company's assets, or a plan of partial or complete
liquidation.
Assuming that a change in control of the Employers had occurred in 2000,
Messrs. Jones and Gardner would be entitled to payments of approximately
$159,638 and $206,575, respectively.
8
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COMPENSATION COMMITTEE MATTERS
- --------------------------------------------------------------------------------
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this Proxy Statement, in
whole or in part, the following Report of the Compensation Committee and
Performance Graph shall not be incorporated by reference into any such filings.
REPORT OF THE COMPENSATION COMMITTEE. Under rules established by the SEC,
the Company is required to provide certain data and information in regard to the
compensation and benefits provided to the Company's and the Bank's Chief
Executive Officer and named executive officers. Insofar as no separate
compensation is currently paid by the Company, the Personnel/Compensation
Committee of the Bank (the "Committee"), at the direction of the Board of
Directors of the Company, has prepared the following report for inclusion in
this proxy statement.
The Personnel/Compensation Committee of the Bank's Board of Directors is
responsible for establishing and implementing all compensation policies of the
Bank and its subsidiaries. The Committee is also responsible for evaluating the
performance of the Chairman and the President of the Company and the Bank and
approving an appropriate compensation level. The President evaluates the
performance of the Executive Vice President and certain Senior Vice Presidents
of the Company and the Bank and recommends to the Committee individual
compensation levels for approval by the Committee.
The Committee believes that a compensation plan for executive officers
should take into account management skills, long-term performance results and
shareholders' returns. The principals underlying compensation policies are: (1)
to attract and retain key executives who are highly qualified and are vital to
the long-term success of the Bank and its subsidiaries; (2) to provide levels of
compensation competitive with those offered throughout the banking industry; (3)
to motivate executives to enhance long-term shareholder value by helping them
build their ownership in the Company; and (4) to integrate the compensation
program with the Bank's long-term strategic planning and management process.
The Bank's current compensation plan involves a combination of salary and
bonuses to reward short-term performance, and restricted stock under the MRP and
stock options under the Stock Option Plan to encourage long-term performance.
The salary levels of executive officers are designed to be competitive within
the banking and financial services industries. Independent compensation
surveys, such as The SNL Executive Compensation Review, are used to review the
compensation levels of management as compared with peers with comparable
responsibilities in other financial institutions.
The Annual Incentive Plan is based on annual performance of the Bank. The
Plan is designed to provide for bonuses based upon a multiple derived from a
formula that combines the return on equity and a return on assets as a
percentage of salary for corporate officers. The multiple for Chairman Loughry,
President Knight and Executive Vice President Jones is 20.98 and the multiple
for all other corporate officers is 10.48. In addition, the Committee will
sometimes award an additional cash bonus to individuals who provided exemplary
service that was beneficial to the long-term goals of the Bank.
During the fiscal year ended December 31, 2000, the base salary of Ed C.
Loughry, Jr., Chairman and Chief Executive Officer of the Company and the Bank,
was $168,000, which represented no increase from the previous fiscal year, plus
an incentive bonus of $35,246. During the fiscal year ended December 31, 2000,
the base salary of Ronald F. Knight, President and Chief Operating Officer of
the Company and the Bank, was $140,000, which represented no increase from the
previous fiscal year, plus an incentive bonus of $29,372. In determining not to
increase the salaries of Messrs. Loughry and Knight, the Compensation Committee
took into account the directors fees which such executives receive from the
Company, and the MRP awards and stock options received by them. In 1999, the
Board of Directors and shareholders approved the MRP and Stock Option Plan. In
the case of the MRP, in fiscal 1999 the Committee awarded 75,382 restricted
shares to Mr. Loughry and 60,314 restricted shares to Mr. Knight in recognition
of their significant contribution to the Company's financial performance and the
substantial role such executives are expected to play in the Company's future
performance. The Committee believes the current compensation of Messrs. Loughry
and Knight is appropriate based on competitive salary surveys and the
performance of the Company and the Bank.
9
The Committee also recommends to the Board of Directors the amount of fees
paid for service on the Board. Effective May 2000, fees paid to Directors for
service on the Bank's Board and committees of the Bank's Board were set at
$1,300 per month plus $300 per committee meeting attended, not to exceed $300
per month.
Personnel/Compensation Committee
/s/Gary Brown, Chairman
/s/Tim J. Durham
/s/James C. Cope
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. No executive
officer of the Company or the Bank has served as a member of the compensation
committee of another entity, one of whose executive officers served on the
Personnel Committee. No executive officer of the Company or the Bank has served
as a director of another entity, one of whose executive officers served on the
Personnel Committee. No executive officer of the Company or the Bank has served
as a member of the compensation committee of another entity, one of whose
executive officers served as a director of the Company or the Bank.
PERFORMANCE GRAPH. The following graph compares the cumulative total
shareholder return on the Company's Common Stock with the cumulative total
return on the Nasdaq Index (U.S. Companies) and with the SNL Thrift Index.
[GRAPHIC OMITED]
Index . . . . . . . . 03/17/98 06/30/98 12/31/98 6/30/99 12/31/99 06/30/00 12/31/00
- --------------------- -------- -------- -------- ------- -------- -------- --------
Cavalry Banking 100.00 106.01 104.10 111.95 118.77 87.10 77.82
NASDAQ - Total US*. . 100.00 106.23 124.56 152.82 231.50 225.92 139.32
SNL Thrift. . . . . . 100.00 97.24 82.91 82.49 67.72 69.37 108.14
<FN>
* Source: CRSP, Center for Research in Security Prices, Graduate School of Business, The
University of Chicago 2001. Used with permission. All rights reserved. crsp.com
10
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AUDIT COMMITTEE CHARTER AND REPORT CONCERNING FINANCIAL MATTERS
- --------------------------------------------------------------------------------
AUDIT COMMITTEE CHARTER
The Audit Committee operates pursuant to a Charter approved by the
Company's Board of Directors. The Audit Committee reports to the Board of
Directors and is responsible for overseeing and monitoring financial accounting
and reporting, the system of internal controls established by management and the
audit process of the Company. The Audit Committee Charter sets out the
responsibilities, authority and specific duties of the Audit Committee. The
Charter specifies, among other things, the structure and membership requirements
of the Committee, as well as the relationship of the Audit Committee to the
independent accountants, the internal audit department, and management of the
Company. A copy of the Audit Committee Charter is attached to this Proxy
Statement as Appendix A.
REPORT OF THE AUDIT COMMITTEE
In connection with the specific activities performed by the Committee in
its oversight role, it has issued the following report as of February 14, 2001:
(1) The Audit Committee has reviewed and discussed the audited financial
statements as of and for the year ended December 31, 2000 with management of the
Company.
(2) The Audit Committee has discussed with the independent auditors the
matters required to be discussed by SAS 61 and SAS 90.
(3) The Audit Committee has received from the independent accountants, as
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committee, (i) a written disclosure, indicating all
relationships, if any, between the independent auditor and its related entities
and the Company and its related entities which, in the auditor's professional
judgment, reasonably may be thought to bear on the auditor's independence, and
(ii) a letter from the independent auditor confirming that, in its professional
judgment, it is independent of the Company; and the Audit Committee has
discussed with the auditor the auditor's independence from the Company.
Based on the review and discussions referred to in paragraphs (1) through
(3) above, the Audit Committee recommended to the Board of Directors that the
audited financial statements should 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.
The Audit Committee:
Tim J. Durham (Chairman)
William H. Huddleston, IV
Terry G. Haynes
William Kent Coleman
INDEPENDENCE AND OTHER MATTERS. Each member of the Audit Committee is
"independent," as defined, in the case of the Company, under the Nasdaq Stock
Market Rules. The Audit Committee members do not have any relationship to the
Company that may interfere with the exercise of their independence from
management and the Company. None of the Audit Committee members are current
officers or employees of the Company or its affiliates.
11
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COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
- --------------------------------------------------------------------------------
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than 10% of any registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Executive officers, directors and greater than 10%
shareholders are required by regulation to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on its review of the copies of such forms it has received and
written representations provided to the Company by the above referenced persons,
the Company believes that during the fiscal year ended December 31, 2000 all
filing requirements applicable to its reporting officers, directors and greater
than 10% shareholders were properly and timely complied with.
- --------------------------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT
- --------------------------------------------------------------------------------
At December 31, 2000, loans to directors and executive officers, any member
of the immediate family of a director or executive officer, any corporation or
organization of which any director and executive officer is an executive officer
of partner of or is directly or indirectly the beneficial owner of 10% or more
of any class of equity securities or any trust or other estate in which a
director or executive officer has a substantial beneficial interest or serves as
a trustee to totaled approximately $5.1 million. All loans or extensions of
credit to those persons or entities above were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons or entities, except for loans
made pursuant to programs generally available to all employees, and do not
involve more than the normal risk of repayment or present other unfavorable
features.
Chairman and Chief Executive Officer Ed C. Loughry, Jr.'s wife is a
principal partner in an insurance agency from which the Bank purchases some of
its insurance coverage. Mr. Loughry has no ownership interest in the insurance
agency and does not participate in its business affairs. Mrs. Loughry is not
paid any direct commissions on sales to the Bank. Premiums paid to the
insurance agency by the Bank amounted to approximately $122,928 for the year
ended December 31, 2000.
- --------------------------------------------------------------------------------
PROPOSAL II -- APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
Rayburn, Betts & Bates, P.C. was the Company's independent auditors for the
fiscal year ended December 31, 2000. The Board of Directors has appointed
Rayburn, Betts & Bates, P.C. as independent auditors for the fiscal year ending
December 31, 2001, subject to approval by shareholders. A representative of
Rayburn, Betts & Bates, P.C. is expected to be present at the Meeting to respond
to shareholders' questions and will have the opportunity to make a statement if
he so desires.
AUDIT FEES
The aggregate fees billed to the Company by Rayburn, Betts & Bates, P.C.
for professional services rendered for the audit of the Company's financial
statements for fiscal 2000 and the reviews of the financial statements included
in the Company Forms 10-Q for that year were $57,500.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Rayburn, Betts & Bates, P.C. performed no financial information system
design or implementation work for the Company during the fiscal year ended
December 31, 2000.
ALL OTHER FEES
Other than audit fees, the aggregate fees billed to the Company by Rayburn,
Betts & Bates, P.C. for fiscal 2000, none of which were financial information
systems design and implementation fees, were $30,000. The Audit Committee of
the Board of Directors determined that the services performed by Rayburn, Betts
& Bates, P.C. other than audit services are not incompatible with Rayburn, Betts
& Bates, P.C. maintaining its independence.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL
OF THE APPOINTMENT OF RAYBURN, BETTS & BATES, P.C. AS INDEPENDENT AUDITORS OF
THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2001.
12
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OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting the proxies.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, directors, officers and regular employees of
the Company may solicit proxies personally or by telephone without additional
compensation. The Company has retained Corporate Communications, Nashville,
Tennessee, to assist in soliciting proxies for a fee of $2,500, plus
reimbursable expenses.
The Company's Annual Report to Shareholders has been mailed to shareholders
as of the close of business on the Voting Record Date. Any shareholder who has
not received a copy of such Annual Report may obtain a copy by writing to the
Secretary of the Company. The Annual Report is not to be treated as part of the
proxy solicitation material or as having been incorporated herein by reference.
- --------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy solicitation
materials for next year's Meeting of Shareholders, any shareholder proposal to
take action at such meeting must be received at the Company's main office at 114
West College Street, Murfreesboro, Tennessee 37130, no later than November 23,
2001. Any such proposals shall be subject to the requirements of the proxy
solicitation rules adopted under the Exchange Act.
The Company's Charter generally provides that shareholders will have the
opportunity to nominate directors of the Company if such nominations are made in
writing and are delivered to the Secretary of the Company 120 calendar days in
advance of the month and day the Company's proxy statement to shareholders was
mailed to shareholders the preceding year; provided however, that if notice is
given fewer than 40 calendar days before the meeting, such written notice shall
be delivered to the secretary of the Company not later than the close of the
tenth calendar day following the day on which notice of the meeting was mailed
to shareholders. The notice must set forth (i) the name, age, business address
and, if known, residence address of each nominee proposed in such notice, (ii)
the principal occupation or employment of each nominee, (iii) the number of
shares of stock of the Company which are beneficially owned by each such
nominee, (iv) such other information as would be required to be included in a
proxy statement soliciting proxies for the election of the proposed nominee
pursuant to the Exchange Act, including, without limitation, such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director, if elected, and (v) as to the shareholder giving such
notice (a) his name and address as they appear on the Company's books and (b)
the class and number of shares of the Company which are beneficially owned by
such shareholder.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Ira B. Lewis, Jr.
IRA B. LEWIS, JR.
SECRETARY
Murfreesboro, Tennessee
March 23, 2001
- --------------------------------------------------------------------------------
FORM 10-K
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000,
AS FILED WITH THE SEC WILL BE FURNISHED WITHOUT CHARGE TO PERSONS WHO WERE
SHAREHOLDERS AS OF THE CLOSE OF BUSINESS ON THE VOTING RECORD DATE UPON WRITTEN
REQUEST TO IRA B. LEWIS, JR., SECRETARY, CAVALRY BANCORP, INC., 114 WEST COLLEGE
STREET, MURFREESBORO, TENNESSEE 37130.
- --------------------------------------------------------------------------------
13
APPENDIX A
AUDIT COMMITTEE CHARTER
STATEMENT OF POLICY
The Audit Committee is a committee of the board of directors. Its primary
function is to assist the board in fulfilling its oversight responsibilities by
reviewing the financial information which will be provided to the shareholders
and others, the systems of internal controls which management and the board of
directors have established, and the audit process.
RESPONSIBILITIES
The responsibilities of the audit committee are to ensure the directors and
shareholders that the accounting and reporting practices of the corporation are
in accordance with all requirements and are of the highest quality. In carrying
out its responsibilities, the audit committee believes its policies and
procedures should remain flexible, in order to effectively respond to changing
conditions.
In meeting its responsibilities, the audit committee is expected to:
1. Provide an open avenue of communication between the internal
auditors, the independent accountant and the board of directors.
2. Review and update the committee's charter annually.
3. Recommend to the board of directors the independent accountants to be
nominated, approve the compensation of the independent accountant, and
review and approve the discharge of the independent accountants.
4. Review and concur in the appointment, replacement, reassignment, or
dismissal of the officer in charge of internal auditing.
5. Confirm and assure the independence of the internal auditor and the
independent accountant.
6. Inquire of management, the officer in charge of internal auditing,
and the independent accountant about significant risks or exposures and
assess the steps management has taken to minimize such risk to the
company.
7. Consider, in consultation with the independent accountant and the
officer in charge of internal auditing, the audit scope and plan of the
internal auditors and the independent accountant.
8. Review with the officer in charge of internal auditing and the
independent accountant the coordination of audit effort to assure
completeness of coverage, reduction of redundant efforts, and the
effective use of audit resources.
9. Consider and review with the independent accountant and the officer in
charge of internal auditing:
(a) The adequacy of the company's internal controls including
computerized information system controls and security.
(b) Any related significant findings and recommendations of the
independent accountant and internal auditing together with
management's responses thereto.
10. Review with management and the independent accountant at the completion
of the annual audit:
(a) The company's annual financial statements and related
footnotes.
(b) The independent accountant's audit of the financial statements
and his or her report thereon.
(c) Any significant changes required in the independent
accountant's audit plan.
(d) Any serious difficulties or disputes with management
encountered during the course of the audit.
14
(e) Other matters related to the conduct of the audit, which are to
be communicated to the committee under generally accepted
auditing standards.
11. Consider and review with management and the officer in charge of
internal auditing:
(a) Significant findings during the year and management's responses
thereto.
(b) Any difficulties encountered in the course of their audits,
including any restrictions on the scope of their work or access
to required information.
(c) Any changes required in the planned scope of their audit
plan.
(d) The internal auditing department staffing.
12. Review filings with the SEC and other published documents containing the
company's financial statements and consider whether the information
contained in these documents is consistent with the information
contained in the financial statements.
13. Review with management, the independent accountant, and the officer in
charge of internal auditing the interim financial report before it is
filed with the SEC or other regulator.
14. Review policies and procedures with respect to officer's 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.
15. Review legal and regulatory matters that may have a material impact on
the financial statements, related company compliance policies, and
programs and reports received from regulators.
16. Meet with the officer in charge of internal auditing, the independent
accountant, and management in separate executive sessions to discuss any
matters that the committee or these groups believe should be discussed
privately with the audit committee.
17. Report committee actions to the board of directors with such
recommendations, as the committee may deem appropriate.
18. Prepare a letter for inclusion in the annual report that describes the
committee's composition and responsibilities, and how they were
discharged.
19. The audit committee shall have the power to conduct or authorize
investigations into any matters within the committee's scope of
responsibilities. The committee shall be empowered to retain
independent counsel, accountants, or others to assist it in the conduct
of any investigation.
20. The committee shall meet at least two times per year or more frequently
as circumstances require. The committee may ask members of management or
others to attend the meeting and provide pertinent information as
necessary.
21. The committee will perform such other functions as assigned by law, the
company's charter or bylaws, or the board of directors.
15
COMPOSITION
The Audit Committee shall be comprised of three or more directors as determined
by the Board of directors, each of whom shall be independent directors, and free
from any relationship that, in the opinion of the Board of Directors, would
interfere with the exercise of his or her independent judgment as a member of
the Committee. All members of the Committee shall have a working familiarity
with basic finance and accounting practices, and at least one member of the
committee must have past employment experience in finance or accounting,
requisite professional certification in accounting, or any other comparable
experience or background which results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities. Committee members may enhance their familiarity with finance
and accounting by participating in educational programs conducted by the Company
or outside consultants.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified.
16
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REVOCABLE PROXY
CAVALRY BANCORP, INC.
- --------------------------------------------------------------------------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 2001
- --------------------------------------------------------------------------------
The undersigned hereby appoints the official Proxy Committee of the Board
of Directors of Cavalry Bancorp, Inc. with full powers of substitution, as
attorneys and proxies for the undersigned, to vote all shares of common stock of
Cavalry Bancorp, Inc. ("Company") which the undersigned is entitled to vote at
the Annual Meeting of Shareholders ("Meeting"), to be held at the main office of
Cavalry Banking located at 114 West College Street, Murfreesboro, Tennessee, on
Thursday, April 26, 2001, at 10:00 a.m., local time, and at any and all
adjournments thereof, as indicated.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE MEETING. THIS PROXY ALSO CONFERS
DISCRETIONARY AUTHORITY ON THE BOARD OF DIRECTORS TO VOTE WITH RESPECT TO THE
ELECTION OF ANY PERSON AS DIRECTOR WHERE THE NOMINEES ARE UNABLE TO SERVE OR FOR
GOOD CAUSE WILL NOT SERVE AND MATTERS INCIDENT TO THE CONDUCT OF THE MEETING.
(Continued and to be signed on other side)
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS.
Proposal 1. The election as director of the nominees listed below (except as
marked to the contrary below).
Nominees: Ed C. Loughry, Jr., William Kent Coleman and James C. Cope
[ ] FOR all nominees listed (except as [ ] WITHHOLD AUTHORITY to vote
marked to the contrary) for all nominees listed
INSTRUCTIONS: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THE
NOMINEE'S NAME ON THE LINE BELOW.
- ---------------------------------
Proposal 2. The approval of the appointment of Rayburn, Betts & Bates, P.C. as
independent auditors for the fiscal year ending December 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3. In their discretion, upon such other matters as may properly come
before the meeting.
Should the undersigned be present and elect to vote at the Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the 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.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of the Notice of Annual Meeting of Shareholders, a Proxy
Statement for the Annual Meeting of Shareholders, and the 2000 Annual Report to
Shareholders.
Please sign exactly as your name appears on the enclosed card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, only one signature is required, but each
holder should sign, if possible.
Dated: ,2001
--------------------
- -------------------------------
PRINT NAME OF SHAREHOLDER
- -------------------------------
SIGNATURE OF SHAREHOLDER
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE- PREPAID ENVELOPE.
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^