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 Only (as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-12
COMMUNITY BANKSHARES, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(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:
_________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
_________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________________________
5) Total fee paid
_________________________________________________________________________
[ ] Fee paid previously with preliminary materials
[ ] 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:________________________________________________
2) Form, Schedule or Registration Statement No.:__________________________
3) Filing Party:__________________________________________________________
4) Date Filed:____________________________________________________________
COMMUNITY BANKSHARES, INC.
102 Founders Court
Post Office Box 2086
Orangeburg, South Carolina 29116-2086
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held May 22, 2006
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of the Shareholders (the
"Annual Meeting") of Community Bankshares, Inc., a South Carolina corporation
(the "Company"), will be held at the offices of the Company, 102 Founders Court,
Orangeburg, South Carolina at 3:00 p.m., on Monday, May 22, 2006, for the
following purposes:
(1) To elect four directors to each serve three-year terms; and
(2) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only record holders of Common Stock of the Company at the close of
business on March 27, 2006, are entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof.
You are cordially invited and urged to attend the Annual Meeting in
person. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENCLOSED
ENVELOPE. IF YOU NEED ASSISTANCE IN COMPLETING YOUR PROXY, PLEASE CALL THE
COMPANY AT (803) 535-1060 or (888) 329-1060. IF YOU ARE THE RECORD OWNER OF YOUR
SHARES AND ATTEND THE ANNUAL MEETING AND DESIRE TO REVOKE YOUR PROXY AND VOTE IN
PERSON, YOU MAY DO SO. IN ANY EVENT, A PROXY MAY BE REVOKED BY THE RECORD OWNER
OF SHARES AT ANY TIME BEFORE IT IS EXERCISED.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
APPROVAL OF ALL THE PROPOSALS PRESENTED.
By Order of the Board of Directors
William W. Traynham
President
Orangeburg, South Carolina
April 17, 2006
Community Bankshares, Inc.
102 Founders Court
Post Office Box 2086
Orangeburg, South Carolina 29116-2086
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
to be Held May 22, 2006
-------------------------------------------------
This Proxy Statement is furnished to shareholders of Community Bankshares,
Inc., a South Carolina corporation (herein, unless the context otherwise
requires, together with its subsidiaries, the "Company"), in connection with the
solicitation of proxies by the Company's Board of Directors for use at the
Annual Meeting of Shareholders to be held at the offices of the Company, 102
Founders Court, Orangeburg, South Carolina at 3:00 p.m. on Monday, May 22, 2006,
or any adjournment thereof (the "Annual Meeting"), for the purposes set forth in
the accompanying Notice of Annual Meeting of Shareholders.
Solicitation of proxies may be made in person or by mail, telephone or
other electronic means by directors, officers and regular employees of the
Company. The Company may also ask banking institutions, brokerage firms,
custodians, nominees and fiduciaries to forward solicitation materials to the
beneficial owners of Common Stock of the Company held of record by such persons,
and the Company will reimburse the reasonable forwarding expenses. The cost of
solicitation of proxies will be paid by the Company. This Proxy Statement was
first mailed to shareholders on or about April 17, 2006.
The Company's principal executive offices are located at 102 Founders
Court, Orangeburg, South Carolina 29115. The Company's telephone number is (803)
535-1060 or (888) 329-1060.
ANNUAL REPORT
The Annual Report on Form 10-K covering the Company's fiscal year ended
December 31, 2005, including financial statements, constitutes the Company's
Annual Report to Shareholders and is included (without exhibits) with this Proxy
Statement. Such Annual Report does not form any part of the material for
solicitation of proxies.
VOTING PROCEDURES AND MATTERS RELATING TO PROXIES
Voting
Shareholders who hold their shares of record in their own names can
vote their shares by marking the enclosed proxy form, dating it, signing it, and
returning it to the Company in the enclosed postage-paid envelope. Shareholders
of record can also attend the Annual Meeting and vote in person. Shareholders
who hold their shares in street name with a broker or other nominee can direct
their vote by submitting voting instructions to the broker or nominee in
accordance with the procedure on the voting card provided by the broker or
nominee. Shareholders who hold their shares in street name may attend the Annual
Meeting, but may not vote in person without a proxy appointment from a
shareholder of record.
Revocation of Proxy
Any record shareholder who returns the accompanying proxy may revoke such
proxy at any time prior to its exercise (a) by giving written notice to the
Company of such revocation, (b) by voting in person at the meeting, or (c) by
executing and delivering to the Company a later dated proxy. Attendance at the
Annual Meeting will not in itself constitute revocation of a proxy. Any written
notice or proxy revoking a proxy should be sent to Community Bankshares, Inc.,
P.O. Box 2086, Orangeburg, South Carolina 29116-2086, Attention: William W.
Traynham, President. Written notice of revocation or delivery of a later dated
proxy will be effective upon receipt thereof by the Company. Shareholders who
hold their shares in street name with a broker or other nominee may change or
revoke their proxy instructions by submitting new voting instructions to the
broker or other nominee.
Quorum, Vote Required and Method of Counting Votes
The Company's only voting security is its no par value Common Stock
("Common Stock"), each share of which entitles the holder thereof to one vote on
each matter to come before the Annual Meeting. At the close of business on March
27, 2006, (the "Record Date"), the Company had issued and outstanding 4,425,648
shares of Common Stock, which were held of record by approximately 2,003
persons. Only shareholders of record at the close of business on the Record Date
are entitled to notice of and to vote on matters that come before the Annual
Meeting. Shares of the Common Stock may be transferred subsequent to the Record
Date. However, all votes must be cast in the names of holders of record on the
Record Date.
The presence in person or by proxy of the holders of one-third of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum at the Annual Meeting. If a share is
represented for any purpose at the Annual Meeting by the presence of the
registered owner or a person holding a valid proxy for the registered owner, it
is deemed to be present for the purposes of establishing a quorum. Therefore,
valid proxies which are marked "Abstain" or "Withhold" or as to which no vote is
marked, including proxies submitted by brokers that are the record owners of
shares (so-called "broker non-votes"), will be included in determining the
number of votes present or represented at the Annual Meeting. If a quorum is not
present or represented at the meeting, the shareholders entitled to vote,
present in person or represented by proxy, have the power to adjourn the meeting
from time to time, without notice other than an announcement at the meeting,
until a quorum is present or represented. Directors, officers and regular
employees of the Company may solicit proxies for the reconvened meeting in
person or by mail, telephone or other electronic means. At any such reconvened
meeting at which a quorum is present or represented, any business may be
transacted that might have been transacted at the meeting as originally noticed.
If a quorum is present at the meeting, directors will be elected by a
plurality of the votes cast by shares present and entitled to vote at the
meeting. "Plurality" means that if there are more nominees than positions to be
filled, the individuals who receive the largest number of votes cast for the
positions to be filled will be elected as directors. Votes that are withheld or
shares that are not voted in the election of directors will have no effect on
the outcome of election of directors. Cumulative voting will not be permitted.
If a quorum is present, all other matters which may be considered and
acted upon by the holders of Common Stock at the Annual Meeting will be approved
if the votes cast in favor of the proposal at the Annual Meeting exceed the
votes cast against the proposal.
Actions to be taken by the Proxies
If the shareholder appropriately specifies how the proxy is to be voted,
it will be voted in accordance with the shareholder's specifications. If the
shareholder does not specify how the proxy is to be voted, the proxy will be
voted "FOR" the election of the persons named in this Proxy Statement as the
Board of Directors' nominees for election to the Board of Directors. As to any
other matter of business which may be brought before the Annual Meeting, a vote
may be cast pursuant to the accompanying proxy in accordance with the best
judgment of the persons voting the same, but the Board of Directors does not
know of any such other business.
SHAREHOLDER PROPOSALS
Any shareholder of the Company who wishes to present a proposal for action
at the 2007 Annual Meeting of Shareholders must deliver the proposal to the
executive offices of the Company, P.O. Box 2086, Orangeburg, South Carolina
29116-2086, Attention: William W. Traynham, President. Any shareholder who
wishes for the Company to include any such proposal in its proxy statement and
2
form of proxy for the 2007 Annual Meeting of Shareholders must deliver the
proposal to the executive offices of the Company to Mr. Traynham's attention no
later than December 18, 2006. If any shareholder proposal is not received by Mr.
Traynham by March 3, 2007, proxies solicited by the Board of Directors of the
Company will be voted on the proposal in the discretion of the designated proxy
agents. Only proper proposals that are timely received will be included in the
Company's proxy statement and proxy.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 27, 2006, the number and
percentage of outstanding shares beneficially owned by (i) each director and
director nominee of the Company, (ii) each person named in the Summary
Compensation Table, and (iii) all executive officers and directors of the
Company as a group. No person is known by the Company to own more than 5% of the
outstanding Common Stock.
Position in the Company and Number of Shares % of Common
Name the Banks* Beneficially Owned Stock Ownership
---- --------------------------- ------------------ ---------------
E. J. Ayers, Jr. Director CBI, ONB and CRM; 96,280 (1) 2.18%
Chairman CBI and CRM
Gregory G. Burke Chief Credit Officer, CBI 8,000 (2) **
Alvis J. Bynum Director CBI, SNB and CRM;
Vice Chairman CBI 32,685 (3) **
Martha Rose C. Carson Director CBI and ONB 66,629 (4) 1.51%
Anna O. Dantzler Director CBI and ONB 90,500 (5) 2.05%
Jo H. Davies Chief Information Officer, CBI 3,500 (6) **
Thomas B. Edmunds Director CBI, BR and CRM 20,000 (7) **
Samuel L. Erwin CEO and Director, CBI 21,775 (8) **
Charles E. Fienning Director CBI, Chairman SNB 16,535 (9) **
J. M. Guthrie Director CBI, Chairman ONB 170,000 (10) 3.85%
Richard L. Havekost Director CBI and FNB 12,450 (11) **
J. V. Nicholson, Jr. Director CBI, Chairman BR 135,000 (12) 3.07%
Samuel F. Reid, Jr. Director CBI and ONB 53,702 (13) 1.22%
William W. Traynham, Jr. President and CFO, CBI 65,511 (14) 1.48%
J. Otto Warren, Jr. Director CBI and ONB 176,519 (15) 4.00%
Wm. Reynolds Williams Chairman FNB, Director CBI 6,627 (16) **
3
Michael A. Wolfe President, CEO and Director,
ONB; Chief Banking Officer CBI 58,854 (17) 1.33%
All executive officers and
directors as a group (22
persons) 1,157,301 (18) 25.08%
-----------------------------
*CBI - the Company; ONB - Orangeburg National Bank; SNB - Sumter National Bank;
FNB - Florence National Bank; BR - Bank of Ridgeway; CRM - Community Resource
Mortgage
**Less than one percent.
(1) Includes 1,680 shares owned by Nancy R. Ayers, Mr. Ayers' wife; 2,030
shares owned by an IRA for the benefit of Nancy R. Ayers; 1,680 shares held
by an IRA for the benefit of Mr. Ayers; and 5,000 shares subject to stock
options which are currently exercisable.
(2) Includes 8,000 stock options which are currently exercisable.
(3) Includes 5,874 shares owned by Marjorie F. Bynum, Mr. Bynum's wife; and
8,150 shares subject to stock options which are currently exercisable.
(4) Includes 10,250 shares subject to stock options which are currently
exercisable.
(5) Includes 10,500 shares held jointly with Charlton Ardis, Mrs. Dantzler's
son; and 10,250 shares subject to stock options which are currently
exercisable.
(6) Includes 3,500 stock options which are currently exercisable.
(7) Includes 10,000 shares held by Lucy Edmunds, Mr. Edmund's wife.
(8) Includes 20,000 stock options which are currently exercisable.
(9) Includes 5,070 shares owned by Suzanne S. Fienning, Mr. Fienning's wife.
(10) Includes 159,750 shares owned jointly with Lou D. Guthrie, Mr. Guthrie's
wife; and 10,250 shares subject to stock options which are currently
exercisable.
(11) Includes 4,050 shares subject to stock options which are currently
exercisable.
(12) Includes 67,500 shares owned by Ellen Nicholson, Mr. Nicholson's wife.
(13) Includes 14,052 shares held by Mr. Reid as trustee for his children; 16,800
shares owned by Rosa G. Reid, Mr. Reid's wife; and 10,250 shares subject to
stock options which are currently exercisable.
(14) Includes 18,436 shares owned jointly with Margaret S. Traynham, Mr.
Traynham's wife; 2,180 shares owned jointly with children; and 23,650
shares subject to stock options which are currently exercisable.
(15) Includes 53,010 shares owned by Mildred J. Warren, Mr. Warren's wife; and
10,250 shares subject to stock options which are currently exercisable.
(16) Includes 600 shares owned jointly with Mary T. Williams, Mr. Williams'
wife; and 4,050 shares subject to stock options which are currently
exercisable.
(17) Includes 2,352 shares owned by Mr. Wolfe's wife, Joye McGrady Wolfe, as
custodian for minor children; and 23,650 shares subject to stock options
which are currently exercisable.
(18) Includes 210,883 shares subject to stock options which are currently
exercisable.
4
ELECTION OF DIRECTORS
The Bylaws of the Company provide for a Board of Directors consisting of
not less than nine nor more than twenty-four directors divided into three
classes each serving three-year staggered terms. The number of directors is
currently fixed by the Board at thirteen. Four directors have been nominated for
re-election by the shareholders at the 2006 Annual Meeting to serve for
three-year terms. All directors serve until their successors are elected and
qualified to serve. All of the nominees are presently directors of the Company
and have served continuously since first becoming directors.
Should any of the nominees become unable or unwilling to serve upon
election, the proxy agents intend to vote for the election, in his or her stead,
of such other person or persons as the Board of Directors of the Company may
recommend. The Board of Directors has no reason to believe that any of the
proposed directors will be unable or unwilling to serve if elected.
MANAGEMENT
Directors
The table below sets forth the age, business experience for the past five
years, and term in office for each of the directors of the Company. Each of the
directors of the Company, except Mr. Erwin, is also a director of one or more of
the Company's subsidiaries as shown in the table on page 3. Mr. Erwin is an ex
officio, non-voting member of each bank subsidiary board and is a board member
of Community Resource Mortgage. There are no family relationships among any of
the directors or executive officers of the Company.
Name (and age) Director Since Business Experience During the Past 5 Years
-------------- --------------- -------------------------------------------
Nominees for Election to Serve Until 2009
E. J. Ayers, Jr. (73) 1987* Chairman of the Board of Directors of the Company since
Orangeburg, S.C. January, 1999; Chief Executive Officer of the Company
from January 1999 until December 2004
Avis J. Bynum (68) 1996 Retired President, Cities Supply Co., waterwork supplies
Sumter, S.C. distributor
J. Otto Warren, Jr. (78) 1987* President, Warren and Griffin Lumber Co., Inc. and Home
Orangeburg, S.C. Builder's Supply Co., Inc., builders' supply and lumber
manufacturer
J. V. Nicholson, Jr. (61) 2002 Retired dentist; Chairman Bank of Ridgeway since 2001;
Ridgeway, S.C. Chairman Ridgeway Bankshares from 2001 to June 2002
Current Directors Whose Terms Expire in 2008
Thomas B. Edmunds (68) 2002 Retired financial consultant, Merrill Lynch
Columbia, S.C.
Martha Rose C. Carson (70) 1987* President, Marty Rae, Inc., apparel and furniture
Orangeburg, S.C. retailers
J. M. Guthrie (78) 1987* President, Superior Motors, Inc.; Vice President, Superior
Orangeburg, S.C. Honda car dealerships; Chairman of the Board of Directors
of Orangeburg National Bank since March 1998
Wm. Reynolds Williams (60) 1998 Attorney, Managing Partner, Willcox, Buyck & Williams,
Florence, S.C. P.A.; Chairman of the Board of Directors of Florence
National Bank since July 1998
Charles E. Fienning (62) 2005 President and Chief Executive Officer of Sumter Packaging
Sumter, S.C. Corporation since 1984; Chairman of the Board of
Directors of Sumter National Bank since March 2005.
5
Current Directors Whose Terms Expire in 2007
Samuel L. Erwin (38) 2005 Chief Executive Officer of the Company since January 2005;
Senior Vice President and Commercial Relationship Manager
for Carolina National Bank from June 2002 to December
2004; Senior Vice President and Market President for
First Union National Bank from January 2000 to June 2002
Anna O. Dantzler (66) 1994 Retired since 1989; former customer service representative
Orangeburg, S.C. for Orangeburg National Bank
Richard L. Havekost (65) 1998 Licensed professional engineer; Principal in Raldex, Inc.
Florence S.C. (investor in motel properties); Principal and Secretary
of RDBP, Inc. (retail beverage store); from 1967 to 1993,
employed by Nucor Corp. in various capacities, including
Vice President of Nucor Corp. and General Manager of the
Florence Division
Samuel F. Reid, Jr. (57) 1994 Attorney, Horger, Barnwell & Reid
Orangeburg, S.C.
--------------------
* Includes service as Director of Orangeburg National Bank prior to formation of
the Company in 1992.
Executive Officers
Information about Mr. Erwin, the Chief Executive Officer of the Company
is set forth above under "--Directors." Michael A. Wolfe (age 49) has served as
President and Chief Executive Officer of Orangeburg National Bank, the Company's
largest subsidiary, since 1992, and as Chief Banking Officer for the Company
since April 2006. Gregory G. Burke (age 45) has served as Chief Credit Officer
of the Company since April 2005. Mr. Burke was a senior credit officer for First
Citizens of South Carolina from June 2001 until April 2005. Jo H. Davies (age
42) has served as Chief Information Officer of the Company since 2002. Ms.
Davies was a self-employed systems analyst and information technology consultant
from 1997 until her employment by the Company in 2002. William W. Traynham (age
50) has served as President and Chief Financial Officer of the Company since
1992.
GOVERNANCE MATTERS
Attendance at Meetings of the Board of Directors and Shareholder Meetings
The Board of Directors of the Company held 12 meetings during 2005.
Each director, except Mr. J. Otto Warren, attended at least 75% of the total
number of meetings of the Board of Directors and committees on which he or she
served during the period in 2005 for which he or she served as director.
The Company encourages, but does not require, its directors to attend
annual meetings of shareholders. Last year, 10 of the Company's 13 directors
attended the annual meeting of shareholders.
Board Member Independence
The American Stock Exchange's Listing Standards require that a majority
of the members of the Board of Directors be independent as defined by Section
121A of the Exchange's Listing Standards. The Company has determined that the
following directors are independent under the listing standards: Alvis J. Bynum,
Martha Rose C. Carson, Anna O. Dantzler, Thomas B. Edmunds, Charles E. Fienning,
J. M. Guthrie, Richard L. Havekost, J. V. Nicholson, Jr., Samuel F. Reid, Jr.,
J. Otto Warren, and Wm. Reynolds Williams.
6
Committees of the Board of Directors
Audit Committee
The Company has an Audit Committee established in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The Audit Committee
is comprised of Alvis J. Bynum, Thomas B. Edmunds (chairman), Anna O. Dantzler,
Charles E. Fienning, Richard L. Havekost, and J. V. Nicholson, Jr., all of whom
are non-employee directors. Each member of the Audit Committee is independent as
defined in Section 121A of the American Stock Exchange's listing standards, as
modified or supplemented, and also meets the independence standards of the
Securities and Exchange Commission's Rule 10A-3(b). The Audit Committee is
responsible for appointment of the independent auditors and oversees the
internal and external audit function. The Audit Committee met eight times in
2005. The Audit Committee acts pursuant to a written charter adopted by the
Board of Directors, a copy of which was attached to the 2004 Proxy Statement and
is available on the Company's website at www.communitybanksharesinc.com.
Compensation Committee
The Company has a Compensation Committee comprised of Wm. Reynolds
Williams, J. M. Guthrie, Charles E. Fienning, J. V. Nicholson and Alvis J. Bynum
(chairman). Each member of the Compensation Committee is independent as defined
in Section 121A of the American Stock Exchange's listing standards, as modified
or supplemented. The Compensation Committee makes recommendations to the Board
of Directors concerning the compensation for the senior officers of the Company.
The Compensation Committee met twice during 2005.
Governance and Nominating Committee
The Company has a Governance and Nominating committee comprised of
Alvis J. Bynum, Martha Rose Carson, Thomas B. Edmunds, Richard L. Havekost, and
Samuel F. Reid (chairman). Each member of the Governance and Nominating
Committee is independent as defined in Section 121A of the American Stock
Exchange's listing standards, as modified or supplemented. The committee
operates pursuant to a charter approved by the Board of Directors, a copy of
which is available on the Company's website at www.communitybanksharesinc.com.
The Governance and Nominating Committee met twice during 2005.
In recommending director candidates, the Committee takes into
consideration such factors as it deems appropriate based on the Company's
current needs. These factors generally include diversity, age, skills such as
understanding of banking and general finance, decision-making ability,
inter-personal skills, experience with businesses and other organizations of
comparable size, community activities and relationships, commitment to a
significant financial investment in the Company, and the interrelationship
between the candidate's experience and business background and other Board
members' experience and business background, as well as the candidate's ability
to devote the required time and effort to serve on the Board.
The Committee will consider for nomination by the Board director
candidates recommended by shareholders if the shareholders comply with the
following requirements. If a shareholder wishes to recommend a candidate to the
Committee for consideration as a Board of Directors' nominee, such shareholder
must submit in writing to the Committee the recommended candidate's name, a
brief resume setting forth the recommended candidate's business and educational
background and qualifications for service, and a notarized consent signed by the
recommended candidate stating the recommended candidate's willingness to be
nominated and to serve. This information must be delivered to the Chairman of
the Committee at the Company's address and must be received no later than
January 15 in any year for a potential candidate to be considered as a potential
Board of Directors' nominee. The Committee may request further information if it
determines a potential candidate may be an appropriate nominee. Director
candidates recommended by shareholders that comply with these requirements will
receive the same consideration that the Committee's candidates receive.
Director candidates recommended by shareholders will not be considered
for recommendation by the Committee as potential Board of Directors' nominees if
the shareholder recommendations are received later than January 15 in any year.
However, shareholders may nominate director candidates for election at the
7
annual meeting, but no person who is not already a director may be elected at an
annual meeting of shareholders unless that person is nominated in writing at
least 30 days prior to the meeting. Such nominations, other than those made by
or on behalf of the existing management of the Company, must be made in writing
and must be delivered or mailed to the President of the Company, not less than
30 days prior to any meeting of Shareholders called for the election of
Directors. Nominations not made in accordance with these requirements may be
disregarded by the presiding officer of the meeting, and upon his instructions,
the vote tellers shall disregard all votes cast for each such nominee.
Shareholder Communications with the Board of Directors
Any shareholder who wishes to send communications to the Board of
Directors should mail them addressed to the intended recipient by name or
position in care of: Corporate Secretary, Community Bankshares, Inc., P.O. Box
2086, Orangeburg, South Carolina 29116. Upon receipt of any such communications,
the Corporate Secretary will determine the identity of the intended recipient
and whether the communication is an appropriate shareholder communication. The
Corporate Secretary will send all appropriate shareholder communications to the
intended recipient. An "appropriate shareholder communication" is a
communication from a person claiming to be a shareholder in the communication
the subject of which relates solely to the sender's interest as a shareholder
and not to any other personal or business interest.
In the case of communications addressed to the Board of Directors, the
Corporate Secretary will send appropriate shareholder communications to the
Chairman of the Board. In the case of communications addressed to the
independent or outside directors, the Corporate Secretary will send appropriate
shareholder communications to the Chairman of the Audit Committee. In the case
of communications addressed to committees of the Board, the Corporate Secretary
will send appropriate shareholder communications to the Chairman of such
committee.
MANAGEMENT COMPENSATION
Executive Officer Compensation
The following table summarizes for the years ended December 31, 2005,
2004 and 2003 the compensation awarded to, earned by or paid to following
executive officers of the Company: the Chief Executive Officer, the President,
the Chief Credit Officer, the Chief Information Officer, and the current chief
executive officer of Orangeburg National Bank, the Company's largest subsidiary.
No other executive officer of the Company earned or was awarded or paid
compensation greater than $100,000 in 2005.
8
Summary Compensation Table
Long-Term
Compensation
------------
Year Annual Compensation(1) Awards
---- -------------------------------------- ------
Other Annual Securities All Other
Compen- Underlying Compen-
Salary Bonus sation(1) Options sation (2)
------ ----- --------- ------- ----------
Samuel L. Erwin (3) ................................ 2005 $190,000 $ 30,000 $ 49,210 10,000 $ 3,069
Chief Executive Officer of Community
Bankshares, Inc.
William W. Traynham ................................ 2005 $144,000 $ 38,000 - - $ 5,321
President of Community Bankshares ............. 2004 139,000 50,000 - - 5,432
2003 135,000 42,072 - 5,000 4,333
Michael A. Wolfe ................................... 2005 $144,000 $ 40,000 - - $ 3,084
President and Chief Executive ................. 2004 139,000 50,000 - - 5,463
Officer of Orangeburg National Bank ........... 2003 135,000 42,072 - 5,000 4,050
Gregory G. Burke (4) ............................... 2005 $ 97,749 $ 18,000 - 8,000 $ -
Chief Credit Officer of Community
Bankshares, Inc.
Jo H. Davies ....................................... 2005 $115,211 $ 22,000 - - $ 3,523
Chief Information Officer of .................. 2004 109,725 7,533 - - 3,255
Community Bankshares, Inc. .................... 2003 100,884 7,069 - 3,500 3,030
(1) Perquisites and other personal benefits paid to each such person did not
exceed in the aggregate the lesser of $50,000 or 10% of his or her annual
salary and bonus, except with respect to Mr. Erwin, who received $9,000 in
auto-related payments and $40,210 in one-time moving expense
reimbursements.
(2) This column sets forth Company contributions made on behalf of the named
executive officers to the 401(k) plan maintained by the Company for all
eligible employees.
(3) Mr. Erwin became Chief Executive Officer in January, 2005.
(4) Mr. Burke's employment with the Company commenced in April, 2005.
9
Option Grants in Fiscal 2005
Individual Grants
--------------------------------------------------------------
Number of % of Total Potential realizable
Securities Options value at assumed
Underlying Granted to Exercise annual rates of stock
Options Employees Price Expiration price appreciation for
Name Granted in 2005 (per share) Date option term
---- ------- ------- ----------- ---- ----------------------
5% 10%
-------- -------
Samuel L. Erwin (1) 10,000 22.0% $18.00 1/4/2010 $113,201 $286,874
10,000 22.0% $17.00 12/31/2010 $106,912 $270,936
Gregory G. Burke (2) 8,000 17.6% $17.40 3/29/2010 $ 87,542 $221,849
(1) The options were granted at the closing price on the American Stock
Exchange on the date of grant. 10,000 of such options were granted on
January 3, 2005 and 10,000 were granted on December 30, 2005. The
options are nonqualified and were immediately vested.
(2) The options were granted at the closing price on the American Stock
Exchange on March 28, 2005, the date of grant. The options are
nonqualified and were immediately vested.
Aggregated Option Exercises in 2005 and 2005 Year End Option Values
The following table sets forth information about stock options held at
December 31, 2005 by the executive officers listed in the Summary Compensation
Table. No options were exercised by such persons in 2005.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options 12/31/05 Options 12/31/05(1)
---------------- -------------------
Name Exercisable(2) Unexercisable Exercisable Unexercisable
---- -------------- ------------- ----------- -------------
Samuel L. Erwin 20,000 - - -
William W. Traynham 23,650 - $130,685 -
Michael A. Wolfe 23,650 - $130,685 -
Gregory G. Burke 8,000 - - -
Jo H. Davies 3,500 - - -
----------------------
(1) Based on a fair value of $17.00 per share, the closing price of a share of
the Company's common stock on the American Stock Exchange on December 31,
2005.
(2) The table below summarizes the number of options held by each officer, the
option price and the vesting dates.
Number
of
Optionee Options Option Price Vesting Date
-------- ------- ------------ ------------
Samuel L. Erwin 10,000 $17.00 1/4/2005
10,000 $18.00 12/31/2005
William W. Traynham 8,400 $7.62 4/27/1998
5,250 $12.83 2/17/2000
5,000 $11.00 2/26/2002
5,000 $18.85 10/27/2004
10
Number
of
Optionee Options Option Price Vesting Date
-------- ------- ------------ ------------
Michael A. Wolfe 8,400 $7.62 4/27/1998
5,250 $12.83 2/17/2000
5,000 $11.00 2/26/2002
5,000 $18.85 10/27/2004
Gregory G. Burke 8,000 $17.40 3/29/2005
B. Jo Davies 3,500 $18.85 10/27/2004
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee for the year ended December
31, 2005 were Wm. Reynolds Williams, J. M. Guthrie, Charles E. Fienning, J. V.
Nicholson and Alvis J. Bynum (chairman).
The law firm of Willcox, Buyck & Williams, P.A. in which Wm. Reynolds
Williams is a member, provided legal services to the Company in 2005, and is
continuing to provide legal services to the Company in 2006.
Board Report on Executive Compensation
The Compensation Committee is required to report to the shareholders
the basis for the Committee's actions in determining the compensation for
Community Bankshares' executive officers.
The Community Bankshares compensation program is designed to attract,
retain, and motivate executive officers who are responsible for carrying out the
company's strategic plan. The components of the compensation plans for the
executive officers are reviewed and approved annually by the Compensation
Committee. Four important variables are used by the committee in managing these
compensation programs and making individual compensation decisions. These are:
o External competitiveness as determined by the use of survey data
regarding similar positions in other banking companies,
o Internal equity as determined by the relative value of each
position in executing the company's strategic plan,
o Financial performance of the company for the year, and
o Individual performance of each executive officer for the year.
There are three primary forms of compensation for the company's
executive officers:
o Base salary (Initially determined to be externally competitive
and internally equitable) - Increases in base salary are
determined by the use of formal salary increase guidelines. These
guidelines result in salary increase decisions based upon
individual performance and the individual's position in the
salary range for his or her position. Base salary increase
decisions for executive officers are made by the CEO. Base salary
for the CEO was specified in his initial employment contract
executed January 1, 2005.
o Senior Management Incentive Plan - Annual cash incentives are
directly linked to performance. For CBI executives, 50% of each
individual's incentive award is determined by Community
Bankshares' financial performance. The other 50% of the award is
determined by performance based on individual goals established
at the beginning of the year. For Mr. Wolfe 37.5% of his
incentive award is determined by Community Bankshares' financial
performance, 37.5% by Orangeburg National's financial
11
performance, and 25% by performance based on individual goals
established at the beginning of each year. An individual target
award of 25% to 40% of base salary is established for each
executive officer and awards can range from 0 to 150% of this
target depending on individual performance and financial
performance. Incentive awards for executive officers are
recommended by the CEO and are approved by the Compensation
Committee. The CEO's contract specifies a maximum performance
based incentive award which is also subject to review and
approval by the Compensation Committee.
o Long term incentives - From time to time, the company provides
stock options to executive officers. Stock option awards provide
an incentive that focuses each executive's attention on managing
the company from the perspective of a stockholder with an equity
stake in the business. The economic value of stock options
awarded is directly tied to the future performance of Community
Bankshares stock and will provide value to the recipient only
when the price of Community Bankshares stock increases over the
option price. Stock option awards for executive officers are
approved by the Board of Directors. Stock option awards for the
CEO are specified in his contract executed at the time of his
hiring.
During 2005, base salaries paid were as follows: Mr. Erwin, CEO,
$190,000; Mr. Traynham, President and CFO, $144,000; Mr. Burke, Chief Credit
Officer, $125,000 (his employment began April 1, so this amount was prorated);
Ms. Davies, Chief Information Officer, $115,211; and Mr. Wolfe, President and
CEO of Orangeburg National Bank, $144,000.
Awards from the Senior Management Incentive Plan paid in 2006 for
performance in 2005 were as follows: Mr. Traynham, $38,000; Mr. Burke, $18,000
(prorated from employment date of April 1, 2005); Ms. Davies, $22,000; and Mr.
Wolfe, $40,000. Although the Company's financial performance in 2005 failed to
meet the earnings threshold set in the plan, the Compensation Committee and
Board of Directors elected to invoke a provision in the plan that allows for
exceptions in the case of unusual circumstances. They decided to pay incentives
based on the performance of the individuals because they concluded that the
negative earnings impact from one subsidiary should not totally negate the
important contributions of key officers. Mr. Erwin's incentive award as
determined by his performance and the terms of his contract was $30,000.
Stock option awards made in 2005 were as follows:
o Mr. Erwin received a grant of 10,000 shares on January 3, 2005 at
$18.00 per share and a grant of 10,000 shares at $17.00 per share
on December 30, 2005. These grants are nonqualified options which
immediately vested and expire in five years. They were granted in
conformity with his initial employment contract.
o Mr. Burke received a grant of 8,000 shares on March 28, 2005 at
$17.40 per share. These grants are nonqualified options which
immediately vested and expire in five years.
This report summarizes the current Board practice with regard to CEO
and executive officer compensation for 2005.
Alvis J. Bynum (chair) J. V. Nicholson, Jr.
Charles E. Fienning Wm. Reynolds Williams
J. M. Guthrie
Shareholder Return Performance Graph
The Company is required to provide its shareholders with a line graph
comparing the Company's cumulative total shareholder return with a performance
indicator of the overall stock market and either a published industry index or a
Company-determined peer comparison. Shareholder return (measured through
increases in stock price and payment of dividends) is often a benchmark used in
assessing corporate performance and the reasonableness of compensation paid
executive officers.
12
The performance graph below compares the Company's cumulative total
return over the most recent five year period with the Russell 2000 Index
(reflecting overall stock market performance for small cap stocks) and the SNL
Southeast Bank Index (reflecting changes in banking industry stocks in the
southeastern U. S.), and a peer group index consisting of all the publicly
traded banks and thrifts in South Carolina. Returns are shown on a total return
basis, assuming the reinvestment of dividends and a beginning stock index price
of $100 per share The total five year return was calculated for each of the
banks in the peer group taking into consideration changes in stock price, cash
dividends, stock dividends and stock splits since December 31, 2000. The
individual results were then weighted by the market capitalization of each bank
relative to the entire peer group. Values presented for the Company are based on
transactions as reported through the American Stock Exchange
The peer group consists of the following South Carolina publicly traded
financial institutions: .
Company City State
------- ---- -----
SCBT Financial Corporation Columbia SC
Community Capital Corp. Greenwood SC
South Financial Group, Inc. (The) Greenville SC
First Citizens Bancorporation, Inc. Columbia SC
First Community Corporation Lexington SC
Peoples Bancorporation, Inc. Easley SC
Southcoast Financial Corporation Mt. Pleasant SC
Union Financial Bancshares, Incorporated Union SC
Summit Financial Corporation Greenville SC
Greenville First Bancshares, Inc. Greenville SC
HCSB Financial Corporation Loris SC
Community First Bancorporation Walhalla SC
First South Bancorp, Inc. Spartanburg SC
First Reliance Bancshares, Inc. Florence SC
Beach First National Bancshares, Inc. Myrtle Beach SC
First National Bancshares, Inc. Spartanburg SC
Greer Bancshares Incorporated Greer SC
Grandsouth Bancorporation Greenville SC
Bank of South Carolina Corporation Charleston SC
Coastal Banking Company, Inc. Beaufort SC
People's Community Capital Corporation Aiken SC
New Commerce BanCorp Greenville SC
Security Federal Corporation Aiken SC
Coastal Financial Corporation Myrtle Beach SC
First Financial Holdings, Inc. Charleston SC
Great Pee Dee Bancorp, Inc. Cheraw SC
13
Community Bankshares, Inc.
Period Ending
-----------------------------------------------------------------------
Index 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05
----- -------- -------- -------- -------- -------- --------
Community Bankshares, Inc. 100.00 121.09 154.46 186.93 181.64 172.73
Russell 2000 100.00 102.49 81.49 120.00 142.00 148.46
SNL Southeast Bank Index 100.00 124.58 137.62 172.81 204.94 209.78
Community Bankshares Peer Group* 100.00 130.14 158.15 213.35 251.77 244.85
*The Community Bankshares Peer Group consists of publicly traded banks and
thrifts headquartered in South Carolina.
Employment Agreements
The Company has entered into employment agreements with its Chief
Executive Officer, Samuel L. Erwin, its President, William W. Traynham, and
Michael A. Wolfe, the President and Chief Executive Officer of Orangeburg
National Bank, its largest subsidiary. Each agreement was for an initial term of
three years and, at the end of the initial term, each agreement automatically
renews for an additional year unless notice that it will not renew is given as
provided in the agreement. Each agreement provides for a base salary;
eligibility for bonuses and participation in incentive compensation plans as
determined by the Board; benefits such as club dues, 401(k) plan participation
and contribution matching, health and dental insurance, reimbursement of
employment related expenses, vacation, and participation in other benefits
generally provided to Company employees. In addition, Mr. Erwin's agreement
provides for the granting of stock options, an automobile allowance, and life
14
insurance. Each agreement has terms dealing with payments to the executives upon
termination under various circumstances, including upon a change of control of
the Company, and terms dealing with noncompetition and confidentiality of
Company information.
The foregoing descriptions of the Employment Agreements are merely
summaries of such agreements and are qualified in their entirety by reference to
the agreements, which are included in the Company's filings with the Securities
and Exchange Commission.
Director Compensation
Community Bankshares Inc. paid directors' fees of $400 per month during
2005; Orangeburg National Bank paid directors' fees of $800 per month during
2005; Sumter National Bank paid directors' fees of $600 per month during 2005;
and Florence National Bank and the Bank of Ridgeway paid directors' fees of $500
per month during 2005. Community Resource Mortgage Inc. paid directors' fees of
$200 per month during 2005. The Company and its subsidiaries only pay directors'
fees to outside directors. The foregoing directors' fees totaled $312,200 for
Community Bankshares Inc. and its subsidiaries in 2005.
1997 Stock Option Plan
The 1997 Stock Option Plan, as amended, reserves a total of 785,600
shares for issuance under the Plan. Options may be granted pursuant to the Plan
to persons who are employees of the Company or any subsidiary (including
officers and directors who are employees) at the time of grant. At December 31,
2005, the Company and its subsidiaries had 194 employees. Non-employee directors
are also permitted to participate in the Plan. Such non-employee directors are
only eligible to be granted non-qualified stock options.
All incentive stock options must have an exercise price not less than
the fair market value of the Common Stock at the date of grant, as determined by
the Board of Directors. Non-qualified options will have such exercise prices as
may be determined by the Board of Directors at the time of grant, and such
exercise prices may be less than fair market value. The Board of Directors may
set other terms for the exercise of the options but may not grant to any one
holder more than $100,000 of incentive stock options (based on the fair market
value of the optioned shares on the date of the grant of the option) which first
become exercisable in any calendar year. The Board of Directors also selects the
employees to receive grants under the plan and determines the number of shares
covered by options granted under the plan. No options may be exercised after ten
years from the date of grant, options may not be transferred except by will or
the laws of descent and distribution, and options may be exercised only while
the optionee is an employee of the Company, within three months after the date
of termination of employment, or within twelve months of death or disability.
The number of shares reserved for issuance under the Plan, the number of shares
covered by outstanding options, the exercise price and the exercise date of
options will be adjusted in the event of changes in the number of outstanding
shares of common stock effected without receipt of consideration by the Company.
The Board of Directors may amend, suspend or terminate the Plan, but may not
increase (except as discussed above) the maximum number of shares reserved for
issuance under the Plan, or materially modify the eligibility requirements under
the Plan without shareholder approval or ratification. The plan will terminate
on March 16, 2007, and no options will be granted thereunder after that date.
As of March 31, 2006, there were outstanding incentive options to
purchase 316,723 shares and nonqualified options to purchase 195,350 shares. The
market value of the Common Stock on March 16, 2006 was $16.00 per share.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The banks have loan and deposit relationships with some of the
directors of the Company and some of the directors of the subsidiaries of the
Company and with companies with which the directors are associated as well as
members of the immediate families of the directors ("Affiliated Persons"). (The
term "members of the immediate families" for purposes of this paragraph includes
each person's spouse, parents, children, siblings, mothers and fathers-in-law,
sons and daughters-in-law, and brothers and sisters-in-law.) The total loans
outstanding to these parties at December 31, 2005, were $7,071,000. Loans to
Affiliated Persons were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and did
15
not, at the time they were made involve more than the normal risk of
collectibility or present other unfavorable features.
The law firm of Horger, Barnwell & Reid, L.L.P. in which Samuel F.
Reid, a director of the Company, is a partner, provided legal services to the
Company in 2005, and is continuing to provide legal services to the Company in
2006. The law firm of Willcox, Buyck & Williams, P.A. in which Wm. Reynolds
Williams, a director of the Company, is a member also provided legal services to
the Company in 2005, and is continuing to provide legal services to the Company
in 2006.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
As required by Section 16(a) of the Securities Exchange Act of 1934,
the Company's directors, its executive officers and certain individuals are
required to report periodically their ownership of the Company's Common Stock
and any changes in ownership to the Securities and Exchange Commission. Based on
a review of Forms 3, 4 and 5 and written representations made to the Company, it
appears that all such reports for these persons were filed in a timely fashion
during 2005, except Messrs. Traynham, Wolfe and Erwin were each late in filing
one Form 5 with respect to one transaction. It is the Company's practice to
assist directors with filing of Section 16(a) reports.
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has appointed J. W. Hunt & Company, LLP,
independent certified public accountants, as independent auditors for the
Company and its subsidiaries for the current fiscal year ending December 31,
2006. A representative of J. W. Hunt & Company, LLP is expected to be present at
the 2006 Annual Meeting and will be given the opportunity to make a statement on
behalf of the firm if he or she so desires, and will respond to appropriate
questions from shareholders.
Fees Billed by Independent Auditors
The following table sets forth the aggregate fees expected to be billed
by and billed by J.W. Hunt & Company, LLP, the Company's independent auditors
for audit services rendered in connection with the consolidated financial
statements and reports for the fiscal years ended December 31, 2005 and December
31, 2004, and for other services rendered during fiscal years 2005 and 2004, on
behalf of the Company and its subsidiaries, as well as all out-of-pocket costs
incurred in connection with these services, which have been billed to the
Company.
Fee Category 2005 % of Total 2004 % of Total
------------ ---- ---------- ---- ----------
Audit Fees ....................... $112,300 85% $ 99,150 85%
Audit-Related Fees ............... 8,525 6% 6,515 6%
Tax Fees:
Tax compliance/preparation .. 11,900 9% 11,270 9%
Other tax services .......... - - - -
-------- --- -------- ---
Total Tax Fees ............ 11,900 9% 11,270 9%
-------- --- -------- ---
All Other Fees ................... - - - -
-------- --- -------- ---
Total Fees ....................... $132,725 100% $116,935 100%
-------- --------
16
Audit Fees: Audit fees include fees billed for professional services
rendered for the audit of the Company's consolidated financial statements and
review of the interim condensed consolidated financial statements included in
quarterly reports, and services that are normally provided by the Company's
independent auditor in connection with statutory and regulatory filings or
engagements, and attest services, except those not required by statute or
regulation.
Audit-Related Fees: Audit-related fees include fees billed for
assurance and related services that are reasonably related to the performance of
the audit or review of the Company's consolidated financial statements and are
not reported under "Audit Fees". These services include employee benefit plan
audits, attest services that are not required by statute or regulation,
consultations concerning financial accounting and reporting standards, and
agreed upon procedures required by various government agencies, such as the
Federal Home Loan Bank or the Department of Housing and Urban Development.
Tax Fees: Tax fees include fees for tax compliance/preparation and
other tax services. Tax compliance/preparation fees include fees billed for
professional services related to federal and state tax compliance.
All Other Fees: All other fees would include fees for services other
than those reported above. No other services were provided by J.W. Hunt &
Company, LLP in either year.
In making its decision to appoint J.W. Hunt & Company, LLP as the
Company's independent auditors for the fiscal year ending December 31, 2006, the
Audit Committee considered whether services other than audit and audit-related
services provided by that firm are compatible with maintaining the independence
of J.W. Hunt & Company, LLP.
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Auditors
The Audit Committee pre-approves all audit and permitted non-audit
services (including the fees and terms thereof) provided by the independent
auditors, subject to possible limited exceptions for non-audit services
described in Section 10A of the Securities Exchange Act of 1934, which are
approved by the Audit Committee prior to completion of the audit. The Committee
may delegate to one or more designated members of the Committee the authority to
pre-approve audit and permissible non-audit services, provided such pre-approval
decision is presented to the full Committee at its next scheduled meeting.
General pre-approval of certain audit, audit-related and tax services
is granted by the Committee at the first quarter Audit Committee meeting. The
Committee subsequently reviews fees paid. Specific pre-approval is required for
all other services, of which there were none during the year. During 2005, all
audit and permitted non-audit services were pre-approved by the Committee.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors has reviewed and
discussed with management the Company's audited financial statements for the
year ended December 31, 2005. The Audit Committee has discussed with the
Company's independent auditors, J. W. Hunt & Company, LLP, the matters required
to be discussed by Statement on Auditing Standards 61, as modified or
supplemented. The Audit Committee has also received the written disclosures and
the letter from J. W. Hunt & Company, LLP, required by Independence Standards
Board Standard No. 1, as modified or supplemented, and has discussed with J. W.
Hunt & Company, LLP, their independence. Based on the review and discussions
referred to above, the Audit Committee recommended to the Board of Directors
that the audited financial statements be included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2005 for filing with the
Securities and Exchange Commission.
Alvis J. Bynum Richard L. Havekost
Anna O. Dantzler J. V. Nicholson, Jr.
Charles E. Fienning Thomas B. Edmunds, Chair
17
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 2005, including financial statements (but not including exhibits),
is being provided free of charge with this Proxy Statement to each shareholder
of record. Copies of exhibits to the Form 10-K will be provided upon written
request to William W. Traynham, President, Community Bankshares, Inc., Post
Office Box 2086, Orangeburg, South Carolina 29116, at a charge of 20(cent) per
page. Copies of the Form 10-K and exhibits may also be downloaded from the
Securities and Exchange Commission website at http://www.sec.gov. The 10-K is
also available on the Company's website at www.communitybanksharesinc.com.
REFERENCES TO OUR WEBSITE ADDRESS
References to the Company's website address throughout this Proxy
Statement and the accompanying materials are for informational purposes only, or
to fulfill specific disclosure requirements of the Securities and Exchange
Commission's rules or the American Stock Exchange. These references are not
intended to, and do not, incorporate the contents of our website by reference
into this Proxy Statement or the accompanying materials.
INCORPORATION BY REFERENCE
The "Board Report on Executive Compensation," the "Audit Committee
Report" and the information set forth under the caption "Shareholder Return
Performance Graph" are not deemed to be filed with the Securities and Exchange
Commission and shall not be deemed incorporated by reference into any prior or
future filings made by the Company under the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended, except to the extent the
Company specifically incorporates such information by reference.
OTHER BUSINESS
The Board of Directors of the Company does not know of any other
business to be presented at the Annual Meeting. If any other matters are
properly brought before the Annual Meeting, however, it is the intention of the
persons named in the accompanying proxy to vote such proxy in accordance with
their best judgment.
18
[X] PLEASE MARK VOTES PROXY
AS IN THIS EXAMPLE
COMMUNITY BANKSHARES, INC.
PROXY SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS FOR ANNUAL MEETING OF
SHAREHOLDERS - MONDAY, MAY 22, 2006
Samuel L. Erwin and William W. Traynham, or either of them, with full power
of substitution, are hereby appointed as agent(s) of the undersigned to vote as
proxies all the shares of Common Stock of Community Bankshares, Inc. held of
record by the undersigned on the Record Date at the Annual Meeting of
Shareholders to be held on May 22, 2006, and at any adjournment thereof, as
follows:
1. Election of Directors. For Withhold For All Except
[ ] [ ] [ ]
NOMINEES: Three Year Terms: E. J. Ayers, Jr.,
Alvis J. Bynum,
J. Otto Warren, Jr. and
J. V. Nicholson, Jr.
Instructions: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.
________________________________________________________________________________
2. And, in the discretion of said agents, upon such other business as may
properly come before the meeting, and matters incidental to the conduct of
the meeting. (Management at present knows of no other business to be
brought before the meeting.)
THE PROXIES WILL BE VOTED AS INSTRUCTED. IF NO CHOICE IS INDICATED WITH
RESPECT TO A MATTER WHERE A CHOICE IS PROVIDED, THIS PROXY WILL BE VOTED "FOR"
SUCH MATTER.
Please sign exactly as your name appears on this proxy card. When signing
as attorney, executor, administrator, trustee or guardian, please give your full
title. If more than one trustee, all should sign. All joint owners must sign.
Please be sure to sign and date Date
this Proxy in the box below.
________________________________________
______________________________ ________________________________________
Shareholder sign above Co-holder (if any) sign above
________________________________________________________________________________
Detach above card, sign, date and mail in postage paid envelope provided.
COMMUNITY BANKSHARES, INC.
________________________________________________________________________________
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
________________________________________________________________________________
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
______________________________________________________
______________________________________________________
______________________________________________________