SCHEDULE 14A INFORMATION
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
[_] Confidential of Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CHESAPEAKE FINANCIAL SHARES, INC.
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(Name of Registrant as Specified in Its Charter)
CHESAPEAKE FINANCIAL SHARES, INC.
----------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] 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:
_______________________________________________________________
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: __________________________________________________
Chesapeake Financial Shares, Inc.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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To Our Shareholders:
The Annual Meeting of Shareholders of Chesapeake Financial Shares, Inc.
will be held on Friday, April 5, 2002, at 4:00 p.m. in the auditorium at
Rappahannock Westminster-Canterbury, Irvington, Virginia, for the following
purposes:
1. To elect eight (8) directors to serve for the ensuing year; and
2. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Shareholders of record at the close of business on February 1, 2002 will be
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
By Order of the Board of Directors
/s/ John H. Hunt, II
--------------------
John H. Hunt, II
Secretary
March 6, 2002
Even if you plan to attend the Annual Meeting, please sign, date and return
the enclosed proxy in the postpaid envelope provided. If you attend the Annual
Meeting, you may withdraw your proxy and vote your own shares.
Chesapeake Financial Shares, Inc.
97 North Main Street
Post Office Box 1419
Kilmarnock, Virginia 22482
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 5, 2002
GENERAL
The enclosed proxy is solicited by the Board of Directors of Chesapeake
Financial Shares, Inc. (the "Company") for the Annual Meeting of Shareholders of
the Company to be held on Friday, April 5, 2002, at the time and place and for
the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders. The approximate mailing date of this Proxy Statement and
accompanying proxy is March 6, 2002.
Revocation and Voting of Proxies
Execution of a proxy will not affect a shareholder's right to attend
the Annual Meeting and to vote in person. Any shareholder who has executed and
returned a proxy may revoke it by attending the Annual Meeting and requesting to
vote in person. A shareholder may also revoke his proxy at any time before it is
exercised by filing a written notice with the Company or by submitting a proxy
bearing a later date. Proxies will extend to, and will be voted at, any
adjourned session of the Annual Meeting.
Voting Rights of Shareholders
Only shareholders of record at the close of business on February 1,
2002, the record date, are entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof. As of the close of business on February 1,
2002, 1,255,398 shares of the Company's common stock, par value $5.00 per share,
were outstanding and entitled to vote at the Annual Meeting. The Company has no
other class of stock outstanding. A majority of the votes entitled to be cast,
represented in person or by proxy, will constitute a quorum for the transaction
of business. Shares for which the holder has elected to abstain or to withhold
the proxies' authority to vote (including broker non-votes) on a matter will
count toward a quorum, but will not be included in determining the number of
votes cast with respect to such matter.
Each share of the Company's common stock entitles the record holder
thereof to one vote upon each matter to be voted upon at the Annual Meeting,
except with respect to the election of directors for which shareholders have
cumulative voting rights. Cumulative voting entitles a shareholder to give one
nominee as many votes as is equal to the number of directors to be elected,
multiplied by the number of shares owned by such shareholder, or in the
alternative, to distribute his or her votes on the same principle between two or
more nominees as he or she sees fit.
Solicitation of Proxies
The cost of solicitation of proxies will be borne by the Company.
Solicitation is being made by mail, and if necessary, may be made in person or
by telephone, or special letter by officers and regular employees of the Company
or its subsidiaries, acting without compensation other than regular
compensation.
Principal Shareholders
Mr. Douglas D. Monroe, Jr., who is a director and executive officer of the
Company and its wholly-owned subsidiaries, Chesapeake Bank (the "Bank") and
Chesapeake Investment Group, Inc., is the only individual who beneficially owns
5% or more of the common stock of the Company. His ownership as of February 1,
2002 is shown in the table below. The address of Mr. Monroe is the same as the
Company's principal offices.
As of February 1, 2002, the directors and executive officers of the Company
beneficially owned as a group 547,314 shares, or approximately 41.9% of the
Company's common stock (including shares for which they hold presently
exercisable stock options).
ELECTION OF DIRECTORS - PROPOSAL ONE
The Bylaws of the Company provide that the Board shall consist of not less
than three nor more than nine directors, with the exact number within such
limits to be fixed according to the number elected by the shareholders. The
Board is nominating eight persons as directors of the Company for 2002. The
persons named below, each of whom are members of the present Board of Directors
of the Company, will be nominated for election to serve until the next annual
meeting and until their successors have been duly elected and have qualified.
It is the intention of the persons named in the proxy to vote for the
election of the eight nominees named below. The election of each nominee
requires the affirmative vote of the holders of a plurality of the shares of
common stock cast in the election of directors. If for any reason any of the
persons named below should become unavailable to serve, then the proxies will be
voted for such substitute nominees as the Board of Directors may designate.
Management has no reason to believe that any of the nominees will be
unavailable.
Number of Shares
Director Principal Occupation Beneficially Owned as
Nominee (Age) Since For the Last Five Years of February 1, 2002 (1)
------------- ----- ----------------------- -----------------------
T. Nash Broaddus (83) 1988 Chairman Emeritus since 2001 and 25,698 (2.0%)
former Chief Executive Officer,
Prodesco, Inc., a textile
manufacturer, Perkasie,
Pennsylvania
Eugene S. Hudnall, Jr. (63) 1983 Chairman of the Board of 9,901*
Directors since 2001 and former
President, George Noblett, Inc.,
a major appliance dealer,
mechanical contractor, and
propane gas dealer, Kilmarnock,
Virginia
2
Number of Shares
Director Principal Occupation Beneficially Owned as
Nominee (Age) Since For the Last Five Years of February 1, 2002 (1)
------------- ----- ----------------------- -----------------------
Douglas D. Monroe, Jr. (68) 1982 Chairman of the Board & Chief 307,261(24.1%)
Executive Officer of the (2)(3)
Company; Chairman Emeritus of
the Bank since 2001
Katherine W. Monroe (68) 1985 A licensed real estate agent; 57,698(4.6%)
Treasurer of the Company (3)
Bruce P. Robertson (56) 1999 President, Shirley Pewter Shops, 1,505*
Inc. and The Porcelain Collector
of Williamsburg, Ltd.,
Williamsburg, Virginia
William F. Shumadine, Jr. (57) 1997 Managing Director, Lowe, 10,043*
Brockenbrough & Co., Inc.,
registered investment advisor,
Richmond, Virginia
Robert L. Stephens (69) 1985 Retired; Former Owner, The Tides 15,604 (1.2%)
Inn, Inc. a resort & conference
center in Irvington, Virginia
Jeffrey M. Szyperski (40) 1999 Chairman of the Board of 56,051(4.4%)
Directors, President & Chief (4)
Executive Officer of the Bank
-----------------------
* Represents less than 1.0% of the total outstanding shares of common stock.
(1) For purposes of this table, a person is deemed to be the beneficial
owner of shares of the Company's common stock if he or she has or
shares the power to vote or to direct the voting of the security or the
power to dispose of or to direct the disposition of the security, or if
he has the right to acquire beneficial ownership of the security within
60 days.
(2) Includes: (i) 47,884 shares which are held jointly with his wife
Katherine W. Monroe (see Note 3 below); (ii) 22,320 shares that may be
acquired pursuant to presently exercisable stock options; and (iii)
15,840 shares held in trust for which he serves as joint trustee.
(3) Douglas D. Monroe, Jr., and Katherine W. Monroe are husband and wife.
Mr. Monroe has sole voting power over 221,217 shares of common stock.
Mrs. Monroe has sole voting power over 57,698 shares. Mr. and Mrs.
Monroe share voting power over 47,884 shares, which are reflected in
Mr. Monroe's stock ownership information in order to avoid double
counting. In the aggregate, Mr. and Mrs. Monroe beneficially own
365,059 shares of common stock.
(4) Includes: (i) 14,140 shares which are held by Mr. Szyperski's spouse;
(ii) 12,960 shares that may be acquired pursuant to presently
exercisable stock options; and (iii) 23,040 shares held in trust for
his children, nieces, and nephews for which he serves as trustee.
3
The Employee Stock Ownership Plan adopted by the Company holds 33,951
shares of common stock for the benefit of the employees participating in the
plan. The trustees of the plan are Douglas D. Monroe, Jr., John H. Hunt, II and
Jeffrey M. Szyperski, all of whom are executive officers of the Bank. They have
no voting rights nor any investment or dispositive power with respect to the
shares other than as directed by plan participants.
Except as set forth below, there are no family relationships among any
of the directors or principal officers. Douglas D. Monroe, Jr. and Katherine W.
Monroe are husband and wife and Mr. Szyperski is the son-in-law of Mr. and Mrs.
Monroe. None of the directors currently serves as a director of any other
company with a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
Board Committees and Attendance
During 2001, the Board of Directors of the Company met four times. All
directors attended at least 75% of the total Board meetings. The Company has no
standing committees.
The Bank's Audit Committee is comprised of Messrs. Albert C. Pollard,
Chairman, E. S. Hudnall, Jr., R. L. Stephens, Jr., Thomas G. Tingle and Harry M.
Ward. The Audit Committee reviews on a regular basis the work of the internal
audit department. It also reviews and approves the scope and detail of the
continuous audit program which is conducted by the internal audit staff to
protect against improper and unsound practices and to furnish adequate
protection of all assets and records. The committee also recommends the
selection of independent certified public accountants and reviews the reports of
examination by the regulatory agencies and the independent accountants. During
2001, the Audit Committee met five times.
Compensation of Directors
Directors of the Company received an annual retainer fee of $5,000 in
2001. During 2001, 2000 and 1999, the Company issued a total of 2,992, 1,751 and
1,333 shares, respectively, of common stock to its directors as a group for
partial compensation in lieu of cash for the annual retainer fees due.
AUDIT COMMITTEE REPORT
The Board of Directors of the Company and the members of the Audit
Committee have independently reviewed and discussed the audited financial
statements with management. The Board and the committee also have independently
reviewed and discussed with Yount, Hyde & Barbour, P.C. ("Yount Hyde"), the
Company's independent auditors, the matters required to be discussed by
Statement in Accounting Standards No. 61, as amended.
In discharging their oversight responsibility as to the audit process,
the Board of Directors and the Audit Committee obtained the written disclosures
and the letter from the independent accountants required by Independence
Standards Board Standard No. 1, "Independence Discussions with Audit Committee,"
as may be modified or supplemented, and have discussed with Yount Hyde its
independence.
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Based on the foregoing discussions, the Board of Directors of the
Company approved the audited financial statements to be included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2001, for
filing with the Securities and Exchange Commission.
Board of Directors
Chesapeake Financial Shares, Inc.
ACCOUNTING FIRM FEES
The following table provides the aggregate fees billed to the Company
for the fiscal year ended December 31, 2001 by the Company's independent public
accountants, Yount Hyde:
Audit Fees .................................................. $ 50,625
Financial Information Systems Design and Implementation ..... -0-
All Other Fees .............................................. 20,325
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Compensation
The following table provides information on the total compensation
paid or accrued during the fiscal years indicated below to certain executive
officers of the Company and the Bank. The principal officers of the Company do
not receive any compensation in their capacities as such, but are paid by the
Bank for their services as officers of the Bank.
Summary Compensation Table
Long-Term
Compensation
------------
Securities
Name and Annual Compensation (1) Underlying All Other
-------------------------
Principal Position Year Salary (2) Bonus Options Compensation (3)
------------------ ---- ---------- ----- ------- ----------------
Douglas D. Monroe, Jr. 2001 $ 172,085 $ -- 3,500 $ 203,365
Chairman/Chief 2000 163,481 15,000 3,500 58,014
Executive Officer 1999 161,101 -- 3,000 41,949
Jeffrey M. Szyperski 2001 $ 173,074 $ 7,000 3,500 $ 27,835
President and Chief 2000 138,581 12,500 3,500 29,230
Executive Officer of 1999 122,663 -- 3,000 20,777
the Bank
John H. Hunt, II 2001 $ 105,658 $ 4,750 1,000 $ 19,373
Chief Financial Officer 2000 99,946 9,000 1,000 22,887
and Secretary of the 1999 94,644 -- 1,000 16,292
Company and the Bank
(footnotes on next page)
5
(footnotes from table on previous page)
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(1) The named officers received certain perquisites and other personal
benefits, the amounts of which are not shown because the aggregate
amount of such compensation during the year did not exceed the lesser
of $50,000 or 10% of his total salary and bonus.
(2) Includes directors' fees paid by the Company and the Bank.
(3) Consists of for 2001: (i) $2,422, $2,586 and $1,594 accrued on behalf
of Messrs. Monroe, Szyperski and Hunt, respectively, under the
Company's 401(k) Plan; (ii) $24,806 and $17,130 credited to Messrs.
Szyperski and Hunt under the Company's 401(k) Overflow Deferred
Compensation Plan; (iii) the taxable portion of the group life
insurance premium paid by the Bank on behalf of Messrs. Monroe,
Szyperski and Hunt of $4,130, $444 and $649, respectively; (iv) the
taxable portion of a key man life insurance policy paid by the Bank on
behalf Mr. Monroe of $32,000; and (v) $164,813 accrued by the Bank
under a deferred compensation agreement with Mr. Monroe. See "Employee
Benefit Plans" for further information.
Employee Benefit Plans
Pension Plan. The Bank has a noncontributory defined benefit pension
plan for all full-time employees at least 18 years of age. The pension plan is
designed to assist employees in providing for their retirement income security.
All employees who complete at least 1,000 hours of service each year are
automatically eligible to participate. The Bank funds pension costs in
accordance with the funding provisions of the Employee Retirement Income
Security Act. All contributions to the pension plan are made by the Bank.
Employees become fully vested after five years of credited service.
Upon retiring at normal retirement age, pension plan participants will
receive an annual pension based on their years of service. The normal retirement
age under the pension plan is 65. Reduced benefits are available as early as age
55 if at least ten years of credited service have been completed. Cash benefits
under the pension plan generally commence on retirement, death, or other
termination of employment and are payable in various forms, generally at the
election of the participant.
Employee Stock Ownership Plan. The Bank has adopted a tax-credit
employee stock ownership plan (the "ESOP"). Each employee of the Bank who
completes at least 1,000 hours of service each year is eligible to participate
in the ESOP beginning on any January 1 after he or she completes one year of
service and reaches the age of 18.
Contributions each year are at the discretion of the Board of
Directors, within certain limitations prescribed by federal tax regulations.
Compensation expense related to the ESOP was $30,000 in 2001, and was $20,000 in
each of 2000 and 1999. The ESOP intends to invest contributions received in
shares of the Company's common stock.
Under the ESOP, the Bank will make contributions in cash necessary to
service loans to the ESOP and may make additional discretionary contributions in
cash or stock of the Company (the "ESOP Contribution"). In addition, the Bank
will make further contributions designed to satisfy certain nondiscrimination
requirements of the Internal Revenue Service, if such requirements should ever
become applicable (the "Top-Heavy Contribution"). Participants in the ESOP are
neither required nor permitted to make contributions.
ESOP and Top-Heavy Contributions become fully vested when a participant
reaches age 65, whether or not he retires at that time, when a participant has
completed 7 years of service, becomes permanently or totally disabled, or dies
while employed by the Bank. If a participant leaves before the occurrence of one
of these events, the ESOP and Top-Heavy Contributions allocated to his account
will
6
become 20% vested after 3 years of service, 40% vested after 4 years of service,
60% vested after 5 years of service, 80% vested after 6 years of service, and
100% vested after 7 years of service.
Distribution of benefits under the ESOP to a participant or beneficiary
is made after death, retirement, or termination of employment in a single
payment consisting of cash and to the extent allocated to his account, common
stock of the Company. Each participant or beneficiary may direct that all
distributions be made in the form of common stock of the Company or, conversely,
may direct that all distributions be made in the form of cash.
401(k) Plan. The Company maintains a defined contribution plan
established in accordance with Section 401(k) of the Internal Revenue Code (the
"401(k) Plan"). Employees who have attained age 18 are eligible to participate
after one year of employment. The 401(k) Plan provides for employee pre-tax
contributions not to exceed 15% of the employee's compensation. The Company
matches 25% of an employee's contributions up to the first 6% of the employee's
compensation. Company contributions, if any, vest 30% after 3 years of service,
40% after 4 years of service, 60% after 5 years of service, 80% after 6 years of
service, and 100% after 7 years of service. Distributions are made at death,
retirement or other termination of employment. Distributions may be made in a
lump sum cash payment, in the form of annuities, or in annual installment
payments.
401(k) Overflow Deferred Compensation Plan. The Company maintains a
voluntary non-qualified deferred compensation plan for certain highly
compensated employees under which participants may elect to contribute on a
pre-tax basis compensation the participants would have contributed to the
Company's 401(k) Plan but for limits on contributions to that plan imposed under
the Internal Revenue Code. Distributions are made at death, retirement, or other
termination of employment. Distributions may be made in a lump sum cash payment,
in the form of annuities, or in annual installment payments.
Stock Options. As of February 1, 2002, the Company had options
outstanding covering 102,520 shares of common stock, of which options covering
59,520 shares are currently exercisable. Options are generally not exercisable
until after three years from the date of issuance. The table below shows the
stock option grants made to each of the executive officers named in the Summary
Compensation Table during 2001.
Number of
Securities % of Total
Underlying Options Granted
Options To Employees Exercise Expiration
Name Granted in 2001 Price(1) Date(2)
---- ------- ------- -------- -------
Douglas D. Monroe, Jr. 3,500 28.0% $ 15.95 2008
Jeffrey M. Szyperski 3,500 28.0 14.50 2008
John H. Hunt, II 1,000 8.0 14.50 2008
------------------
(1) The exercise price is based on the market value of a share of common
stock at the time the option was granted, with the exception of the
options granted to Mr. Monroe which exercise price must be set at 10%
above market value in accordance with the provisions of the Company's
stock option plan and applicable regulations.
(2) The expiration date for the options granted to Mr. Monroe is shortened
by two years in accordance with the provisions of the Company's stock
option plan and applicable regulations.
The following table shows information with respect to exercises of
options to purchase common stock by each executive officer named in the Summary
Compensation Table during 2001 and with
7
respect to the aggregate value of options held by each executive officer named
in the Summary Compensation Table as of December 31, 2001.
Number of Value of
Shares Underlying Unexercised
Number of Unexercised In-the-Money
Shares Options at Options at
Acquired Value December 31, 2001 December 31, 2001(2)
---------------------------- ----------------------------
Name on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
Douglas D. Monroe, Jr. 8,640 $ 76,170 22,320 10,000 $ 233,600 $ 20,300
Jeffrey M. Szyperski 4,320 40,710 12,960 10,000 133,080 31,500
John H. Hunt, II 4,320 40,710 3,960 3,000 38,880 9,000
------------------
(1) Calculated by subtracting the exercise price from the fair market value
of the stock as of the exercise date.
(2) Calculated by subtracting the exercise price from the market value of
the stock at December 31, 2001.
Deferred Compensation Arrangement. In 1984, the Company entered into a
deferred compensation agreement with Mr. Monroe under the terms of which Mr.
Monroe was required to work through April of 1994 in order to earn the right to
receive payments from the Company of $3,042 per month for 180 months beginning
at the date of his retirement from the Company, but in no event prior to his
reaching age 70. The Company has funded its deferred compensation commitment
through a life insurance policy on Mr. Monroe.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934,
directors and executive officers of the Company are required to file reports
with the Securities and Exchange Commission indicating their holdings of and
transactions in the Company's equity securities. To the Company's knowledge,
based solely on a review of the copies of such reports furnished to the Company
and written representations that no other reports were required, insiders of the
Company complied with all filing requirements during the fiscal year ended
December 31, 2001.
INDEBTEDNESS AND CERTAIN TRANSACTIONS
In calendar year 2001 and up to the present time, there were
transactions between the Bank and certain of the officers and directors of the
Company and the Bank and their known associates, all consisting of extensions of
credit by the Bank in the ordinary course of its business. Each transaction was
made on substantially the same terms, including interest rates, collateral, and
repayment terms, as those prevailing at the time for comparable transactions
with the general public. In the opinion of management, none of the transactions
involves more than the normal risk of collectibility or presents other
unfavorable features. Thus, the Bank has had, and the Bank expects to have in
the future, banking transactions in the ordinary course of its business with the
officers and directors of the Company and the Bank and their associates on the
same terms, including interest rate, collateral and repayment terms on loans, as
those prevailing at the same time for comparable transactions with others.
8
2003 ANNUAL MEETING OF SHAREHOLDERS
It is contemplated that the 2003 Annual Meeting of Shareholders will be
held on or about Friday, April 4, 2003. In order for any appropriate shareholder
proposal to be included in the proxy materials of the Company for the 2003
Annual Meeting of Shareholders, it must be received by the Secretary at the
Company's principal place of business on or before November 6, 2003.
OTHER MATTERS
As of the date of this Proxy Statement, the management of the Company
has no knowledge of any matters to be presented for consideration at the Annual
Meeting other than those referred to above. If any other matters properly come
before the Annual Meeting, the persons named in the accompanying proxy intend to
vote such proxy, to the extent entitled, in accordance with the recommendation
of the Board of Directors.
By Order of the Board of Directors
/s/ John H. Hunt, II
John H. Hunt, II
Secretary
A copy of the Company's 2001 Annual Report on Form 10-KSB to the Securities
and Exchange Commission may be obtained without charge by any shareholder of
record on February 1, 2002. All requests must be in writing, addressed to
Douglas D. Monroe, Jr., Chief Executive Officer, Chesapeake Financial Shares,
Inc., Post Office Box 1419, Kilmarnock, Virginia 22482.
9
PROXY
Chesapeake Financial Shares, Inc.
MANAGEMENT PROXY: Solicited on Behalf of the Board of Directors
The undersigned hereby appoints T. Nash Broaddus and Eugene S. Hudnall,
Jr., jointly and severally, proxies, with full power to act alone and with full
power of substitution to represent the undersigned and vote all shares of the
Company standing in the name of the undersigned at the Annual Meeting of
Shareholders of Chesapeake Financial Shares, Inc. to be held on Friday, April 5,
2002 at 4:00 p.m. in the auditorium at Rappahannock Westminster-Canterbury,
Irvington, Virginia, or any adjournment thereof, on each of the following
matters:
1. Election of directors.
[_] FOR all Nominees listed below [_] WITHHOLD AUTHORITY TO VOTE
FOR THOSE INDICATED BELOW
T. Nash Broaddus, Eugene S. Hudnall, Jr., Douglas D. Monroe, Jr.,
Katherine W. Monroe, Bruce P. Robertson, William F. Shumadine, Jr.,
Robert L. Stephens, and Jeffrey M. Szyperski.
(Instructions: To withhold authority to vote for any individual nominee, place
a line through that nominee's name. Cumulative voting is permitted. See page
1 of the accompanying Proxy Statement for an explanation of cumulative voting.)
2. In their discretion, the proxies are authorized to vote upon any other
business that may properly come before the meeting or any adjournment
thereof. The Board of Directors at present knows of no other business
to be presented.
This proxy, when properly executed, will be voted in the manner
directed by the undersigned shareholder. If no direction is made, this proxy
will be voted "FOR" each proposal. All joint owners MUST sign.
Dated: ____________________, 2002 ________________________________
Signature*
________________________________
Signature if held jointly
*NOTE: When signing as attorney, executor, administrator, trustee or guardian,
please give full title. If more than one fiduciary, all should sign.
All joint owners MUST sign.
I [_] will / [_] will not attend the Annual Meeting.
The shares represented hereby will be voted in accordance with any
choice specified by the shareholders and, where there is no choice, such shares
will be voted IN FAVOR OF each proposal. This Proxy further provides authority
to accumulate such votes as the proxies may deem appropriate in the election of
directors.
IF YOU ARE INTERESTED IN RECEIVING VIA E-MAIL INFORMATION ABOUT THE COMPANY
THAT IT SENDS OUT IN PAPER FORM LIKE PRESS RELEASES, EARNINGS RELEASES AND
OUR QUARTERLY LETTER TO SHAREHOLDERS, PLEASE PROVIDE YOUR E-MAIL ADDRESS
BELOW:
E-mail Address: www.chesbank.com