UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
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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 Section 240.14a-11(c) or Section 240.14a-12
Pinnacle Bankshares Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[Logo]
Dear Fellow Shareholders:
You are cordially invited to attend the 2002 Annual Meeting of
Shareholders of Pinnacle Bankshares Corporation, the holding company
for The First National Bank of Altavista. The meeting will be held on
Tuesday, April 9, 2002, at 11:30 a.m. at the Fellowship Hall of
Altavista Presbyterian Church, located at 707 Broad Street, Altavista,
Virginia. The accompanying Notice and Proxy Statement describe the
matters to be presented at the meeting. Enclosed is our 2001 Annual
Report to Shareholders that will be reviewed at the Annual Meeting.
Please complete, sign, date and return the enclosed proxy card
as soon as possible. Whether or not you will be able to attend the
Annual Meeting, it is important that your shares be represented and
your vote recorded. Your proxy may be revoked at any time before it is
voted at the Annual Meeting.
We appreciate your continuing loyalty and support of The First
National Bank of Altavista and Pinnacle Bankshares Corporation.
Sincerely,
/s/ Robert H. Gilliam, Jr.
Robert H. Gilliam, Jr.
President &
Chief Executive Officer
Altavista, Virginia
March 7, 2002
Pinnacle Bankshares Corporation
622 Broad Street
Altavista, Virginia 24517
___________________________________________
NOTICE OF 2002 ANNUAL MEETING OF SHAREHOLDERS
___________________________________________
TO BE HELD APRIL 9, 2002
The 2002 Annual Meeting of Shareholders of Pinnacle Bankshares
Corporation will be held at the Fellowship Hall of Altavista Presbyterian
Church, located at 707 Broad Street, Altavista, Virginia, on Tuesday, April 9,
2002, at 11:30 a.m. for the following purposes:
1. To elect four Class II directors to serve until the 2005
Annual Meeting of Shareholders, as described in the Proxy
Statement accompanying this notice.
2. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Shareholders of record at the close of business on February 22, 2002,
are entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
By Order of the Board of Directors
/s/ Bryan M. Lemley
Bryan M. Lemley
Secretary
March 7, 2002
IMPORTANT NOTICE
Please complete, sign, date and return the enclosed proxy card in the
accompanying postage paid envelope so that your shares will be represented at
the meeting. Shareholders attending the meeting may personally vote on all
matters which are considered, in which event the signed proxies are revoked.
Pinnacle Bankshares Corporation
622 Broad Street
Altavista, Virginia 24517
PROXY STATEMENT
2002 ANNUAL MEETING OF SHAREHOLDERS
April 9, 2002
GENERAL
The following information is furnished in connection with the
solicitation by and on behalf of the Board of Directors of the enclosed proxy to
be used at the 2002 Annual Meeting of Shareholders (the "Annual Meeting") of
Pinnacle Bankshares Corporation (the "Company") to be held Tuesday, April 9,
2002, at 11:30 a.m. at the Fellowship Hall of Altavista Presbyterian Church,
located at 707 Broad Street, Altavista, Virginia. The approximate mailing date
of this Proxy Statement and accompanying proxy is March 7, 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 properly
adjourned session of the Annual Meeting. If a shareholder specifies how the
proxy is to be voted with respect to any proposals for which a choice is
provided, the proxy will be voted in accordance with such specifications. If a
shareholder fails to specify with respect to such proposals, the proxy will be
voted FOR proposal 1, as set forth in the accompanying notice and further
described herein.
Voting Rights of Shareholders
Only those shareholders of record at the close of business on February
22, 2002, are entitled to notice of and to vote at the Annual Meeting, or any
adjournments thereof. The number of shares of common stock of the Company
outstanding and entitled to vote at the Annual Meeting is 1,453,203. 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. Each share of Company common stock entitles the record
holder thereof to one vote upon each matter to be voted upon at the Annual
Meeting.
With regard to the election of directors, votes may be cast in favor or
withheld. If a quorum is present, the nominees receiving a plurality of the
votes cast at the Annual Meeting will be elected directors; therefore, votes
withheld will have no effect. Thus, although abstentions and broker non-votes
(shares held by customers which may not be voted on certain matters because the
broker has not received specific instructions from the customer) are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business, they are generally not counted for purposes of determining whether
a proposal has been approved and, therefore, have no effect.
Solicitation of Proxies
The cost of solicitation of proxies will be borne by the Company.
Solicitations will be made only by the use of the mails, except that officers
and regular employees of the Company and The First National Bank of Altavista
(the "Bank") may make solicitations of proxies by telephone, telegram, special
letter, or by special call, acting without compensation other than their regular
compensation. It is contemplated that brokerage houses and other nominees,
custodians, and fiduciaries will be requested to forward the Company's proxy
soliciting material to the beneficial owners of the stock held of record by such
persons, and the Company will reimburse them for their charges and expenses in
connection with this activity.
Securities Ownership of Certain Beneficial Owners
The following table sets forth the beneficial ownership of the
Company's common stock, as of the date of this Proxy Statement, for each
director, director nominee certain executive officers and for all directors,
director nominees and executive officers as a group. To the Company's knowledge,
no shareholder of the Company owns 5% or more of the outstanding common stock.
Ownership as a
Percentage of
Amount and Nature of Common Stock
Name Beneficial Ownership (1)(2) Outstanding
---- --------------------------- -----------
A. Willard Arthur 2,003 *
Alvah P. Bohannon, III 4,148 *
James E. Burton, IV 11,094 (3) *
John P. Erb 4,299 (4) *
Robert H. Gilliam, Jr. 20,041 (5) 1.23%
R. B. Hancock, Jr. 4,223 (6) *
James P. Kent, Jr. 21,235 (7) 1.46%
Warren G. Lowder 1,200 *
Percy O. Moore 3,402 (8) *
William F. Overacre 600 *
Herman P. Rogers, Jr. 3,345 (8) *
Carroll E. Shelton 13,121 (9) *
John L. Waller 4,191 (10) *
All directors, director nominees and executive
officers as a group (13 persons) 92,902 6.39%
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* Less than 1.0%, based on total outstanding shares of 1,453,203 shares as of
the date of this Proxy Statement.
(1) For purposes of this table, beneficial ownership has been determined in
accordance with the provisions of Rule 13d-3 of the Securities Exchange
Act of 1934 under which, in general, a person is deemed to be the
beneficial owner of a security if he has or shares the power to vote or
direct the voting of the security or the power to dispose of or direct
the disposition of the security, or if he has the right to acquire
beneficial ownership of the security within sixty days.
(2) Includes shares held by affiliated corporations, close relatives and
children, and shares held jointly with spouses or as custodians or
trustees for children.
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(3) 681 of the reported shares held solely in spouse's name and 7,370 shares
held as custodian for minor children.
(4) 4,279 of the reported shares held jointly with spouse and 20 of the
reported shares held in name of majority child living at home.
(5) Includes 9,600 shares that Mr. Gilliam has the option to purchase as of
May 1, 2001 under the 1997 Incentive Stock Option Plan.
(6) 3,618 of the reported shares held jointly with spouse and 605 of the
reported shares held in name of majority child living at home.
(7) 1,977 of the reported shares held solely in spouse's name.
(8) Shares held jointly with spouse.
(9) 6,721 of the reported shares held jointly with spouse; also includes
6,400 shares that Mr. Shelton has the option to purchase as of May 1,
2001 under the 1997 Incentive Stock Option Plan.
(10) 583 of the reported shares held in name of majority children living at
home.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's Board is divided into three classes (I, II and
III) of directors. The term of office for Class II directors will expire at the
Annual Meeting. The four persons named below are being nominated to serve as
Class II directors. If elected, the Class II nominees will serve until the 2005
Annual Meeting of Shareholders.
Alvah P. Bohannon, III is currently a Class II director of the
Company. Mr. Bohannon has expressed his intention not to stand for re-election
based upon the anticipated relocation of his residence out of the area.
William F. Overacre is being nominated for election as a new Class II
director. Mr. Overacre is a native of Campbell County and has been active in
residential and commercial real estate brokerage in the Lynchburg area market
for the past thirty years. Mr. Overacre was a director of the former Cooperative
Savings Bank in Lynchburg. He currently owns and manages Overacre, Inc., doing
business as RE/MAX 1st Olympic.
The other nominees for election as Class II directors, James E.
Burton, IV, James P. Kent, Jr. and Percy 0. Moore, currently serve as directors
of the Company and are standing for re-election.
The persons named in the proxy will vote for the election of the
nominees named below unless authority is withheld. The Company's Board believes
that the nominees will be available and able to serve as directors, but if any
of these persons should not be available or able to serve, the proxies may
exercise discretionary authority to vote for a substitute proposed by the
Company's Board.
Certain information concerning the nominees for election at the Annual
Meeting is set forth below, as well as certain information about the Class I and
Class III directors who will continue in office.
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Director of
Name (Age) and Principal Occupation Company
Address Last Five Years Since (1)
------- --------------- ---------
Class II Directors (Nominees) (Serving until the 2005 Annual Meeting)
James E. Burton, IV (45) Vice President, Operations 1998
Lynchburg, Virginia Marvin V. Templeton & Sons, Inc.
James P. Kent, Jr. (62) Partner 1980
Hurt, Virginia Kent & Kent
Percy O. Moore (68) Retired 1989
Altavista, Virginia Customer Service Supervisor
William F. Overacre (60) President & Owner --
Forest, Virginia Overacre, Inc., d/b/a RE/MAX 1/st/ Olympic
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION OF THE NOMINEES LISTED ABOVE.
Class III Directors (Serving until the 2003 Annual Meeting)
Warren G. Lowder (48) Vice President 1999
Altavista, Virginia Classic Design Furnishings Inc.
Herman P. Rogers, Jr. (58) Plant Manager 1997
Altavista, Virginia BGF Industries, Inc.
Carroll E. Shelton (51) Senior Vice President 1990
Hurt, Virginia The First National Bank of Altavista
and
Pinnacle Bankshares Corporation
John L. Waller (58) Owner & Operator 1989
Hurt, Virginia Waller Farms, Inc.
Class I Directors (Serving until the 2004 Annual Meeting)
A. Willard Arthur (56) Chairman and Secretary 1998
Rustburg, Virginia Marvin V. Templeton & Sons, Inc.
John P. Erb (58) Assistant Superintendent 1989
Altavista, Virginia Campbell County Schools
Robert H. Gilliam, Jr. (56) President & CEO 1979
Lynch Station, Virginia The First National Bank of Altavista
and
Pinnacle Bankshares Corporation
R. B. Hancock, Jr. (51) President & Owner 1994
Huddleston, Virginia R.B.H., Inc. d/b/a Napa
Auto Parts
(1) Reflects year that director initially served on the Board of the Bank, the
Company's sole subsidiary. Effective May 1, 1997, the Company became the
holding company for the Bank.
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Meetings and Committees of the Board of Directors
The Board of Directors conducts its business through meetings of the
Company's Board and through committees of the Bank's Board, certain of which are
described below. The Company became the holding company for the Bank in May
1997, and currently, the Bank's committees make recommendations to the Company's
Board regarding the audit, personnel and nominating functions. During calendar
year 2001, the Company's Board of Directors held 5 meetings and the Bank's Board
of Directors held 12 meetings. No director attended fewer than 75 percent of the
total meetings of the Company's and the Bank's Boards of Directors and the Bank
committees on which he or she served during this period.
Audit Committee. The Bank's Audit Committee meets to review reports of the
Bank's internal auditor who reports directly to the Audit Committee and reviews
the annual report of the Company's independent auditors. Members of the Audit
Committee are Messrs. Lowder (Chair), Bohannon, Hancock, Moore, Burton and
Waller, and they met 4 times in 2001. In addition, the Chairman of the Audit
Committee held discussions with the Company's independent auditors each quarter
prior to the filing of the Company's Form 10-QSBs as required by Statement on
Auditing Standards No. 90 (Audit Committee Communications).
Personnel Committee. The Bank's Personnel Committee reviews officer and
employee compensation and employee benefit plans and makes recommendations to
the Board concerning such matters. The Personnel Committee makes recommendations
as to the employment of officers of the Bank. Members of the Personnel Committee
are Messrs. Erb, Hancock, Rogers, Arthur, Lowder, and Gilliam, and they met 3
times in 2001.
Nominating Committee. The Nominating Committee's duties include
consideration of candidates for board election. The Nominating Committee makes a
recommendation to the Board concerning candidates for any vacancy that may occur
and the entire Board then determines which candidate(s) should be nominated for
the shareholders' approval. Members of the Nominating Committee are Messrs. Erb,
Burton, Kent, and Gilliam, and they met 2 times in 2001.
The Board of Directors will accept for consideration shareholders'
nominations for directors if made in writing by a shareholder entitled to vote
in the election of directors. Such a nomination must include the information
required by the Company's bylaws as well as the nominee's written consent to the
nomination. Shareholder nominations must be received by the Company's Secretary
no later than February 5, 2003, in order to be considered for the next annual
election of directors.
Transactions with Management
Directors and officers of the Bank and persons with whom they are
associated have had, and expect to have in the future, banking transactions with
the Bank in the ordinary course of their businesses. In the opinion of
management of the Bank, all such loans and commitments for loans were made on
substantially the same terms, including interest rates, collateral and repayment
terms as those prevailing at the same time for comparable transactions with
other persons, were made in the ordinary course of business, and do not involve
more than a normal risk of collectibility or present other unfavorable features.
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Directors' Fees
All directors of the Company received an annual retainer of $1,000 in 2001.
Directors of the Bank received an annual retainer of $4,000 in 2001 and, in
addition, the Bank's outside directors received $200 for each committee meeting
attended.
Interest of Management in Certain Transactions
As of December 31, 2001, borrowing by all policy-making officers,
directors, principal shareholders and their associates amounted to $2,306,000,
or 12% of total capital. The maximum aggregate amount of such indebtedness
during 2001 was $3,654,000, or 20% of total year-end capital. These loans were
made in the ordinary course of the Bank's business, on the same terms, including
interest rates and collateral, as those prevailing at the same time for
comparable transactions with others, and do not involve more than the normal
risks of collectibility or present other unfavorable features. The Bank expects
to have in the future similar banking transactions with officers, directors,
principal shareholders and their associates.
EXECUTIVE COMPENSATION
The following table provides information concerning Mr. Gilliam, President
and CEO, the only executive officer of the Company whose compensation exceeded
$100,000 for any year in the three-year period ended December 31, 2001. All
compensation, other than director fees for members of the Company's Board of
Directors, was paid by the Bank, the Company's wholly-owned subsidiary.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
------------------- ------------
Name and Principal Options All Other
------------------
Position Year Salary($)(1) Bonus($) Granted (#) Compensation ($)(2)
-------- ---- ------------ -------- ----------- -------------------
Robert H. Gilliam, Jr. 2001 144,125 4,174 - 3,125
President & Chief 2000 135,750 11,813 - 2,945
Executive Officer 1999 129,500 11,250 - 1,364
___________________________
(1) Includes Company and Bank Board retainers of $5,000 in 2001, $4,500 in
2000, and $4,500 in 1999.
(2) Cost (based on IRS uniform cost table) of more than $50,000 of group-term
life insurance provided by employer.
Stock Options
No options were granted to Mr. Gilliam during 2001, 2000, or 1999.
The following table reflects certain information regarding the exercise of
stock options during the year ended December 31, 2001, as well as information
with respect to unexercised options held at such date by Mr. Gilliam.
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Year-End Option Values
----------------------
Options Exercised Number of Value of Unexercised
-----------------
Unexercised Options "In the Money"
Shares at Year End(#) Options at Year
Acquired on Value Exercisable/ End($)(1) Exercisable/
Name Exercised(#) Realized($) Unexercisable Unexercisable
---- ------------ ----------- ------------- -------------
Robert H. Gilliam, Jr. 0 0 9,600/2,400 31,200/7,800
____________
(1) Calculated as the difference between the current market value and the
exercise price of the options. Assumes a current market value of $13.25 per
share, as of December 31, 2001.
Employee Benefit Plans
Retirement Plan. The Bank maintains a Non-Contributory Defined Benefit
Retirement Plan (the "Retirement Plan") covering substantially all employees who
have reached the age of 21 and have been fully employed for at least one year.
The Retirement Plan, sponsored by the Virginia Bankers Association, provides
participants with retirement benefits related to salary and years of credited
service. Employees become vested after five plan years of service, and the
normal retirement date is the plan anniversary date nearest the employee's 65th
birthday. The Retirement Plan does not cover directors who are not active
employees. The amount expensed for the Retirement Plan during the year ended
December 31, 2001, was $129,528.
The following table shows the estimated annual retirement benefits payable
to employees in the average annual salary and years of service classifications
set forth below assuming retirement at the normal retirement age of 65.
ANNUAL RETIREMENT BENEFIT: First National Bank of Altavista
Five-Year
Average Salary YEARS OF CREDITED SERVICE
-------------- -------------------------
10 15 20 25 30 35
-- -- -- -- -- --
$ 25,000 $ 3,750 $ 5,625 $ 7,500 $ 9,375 $ 11,250 $ 12,188
40,000 6,525 9,788 13,050 16,313 19,575 21,338
55,000 9,900 14,850 19,800 24,750 29,700 32,588
75,000 14,400 21,600 28,800 36,000 43,200 47,588
100,000 20,025 30,038 40,050 50,063 60,075 66,338
125,000 25,650 38,475 51,300 64,125 76,950 85,088
150,000 31,275 46,913 62,550 78,188 93,835 103,838
175,000 36,900 55,350 73,800 92,250 110,700 122,588
200,000 42,525 63,788 85,050 106,313 127,575 141,338
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Benefits under the Retirement Plan are based on a straight life annuity
assuming full benefit at age 65, no offsets, and covered compensation of $33,000
for a person age 65 in 2001. Compensation for 2001 was limited to $160,000 by
the Internal Revenue Code. The estimated annual benefit payable under the
Retirement Plan upon retirement is $87,756 for Mr. Gilliam, credited with 40
years of service. Benefits are estimated on the basis that he will continue to
receive, until age 65, covered salary in the same amount paid in 2001.
Profit Sharing/401(k) Plan. The Bank adopted a Defined Contribution Profit
Sharing Thrift Plan (the "Thrift Plan") effective January 1, 1997. The Thrift
Plan, sponsored by the Virginia Bankers Association, includes a 401(k) savings
provision that authorizes a maximum voluntary salary deferral of up to 15% of
compensation, subject to statutory limitations. All full-time employees who have
reached the age of 21 with at least six months of service are eligible to
participate. Contributions and earnings, which are tax-deferred, may be invested
in various investment vehicles offered through the Virginia Bankers Association.
The profit sharing arrangement allows for employer contributions in such amount,
if any, which the Board of Directors shall determine. Employees become 100%
vested in any employer contributions that may be made after five plan years of
service. The Bank made no contributions to the Thrift Plan for the year ended
December 31, 2001.
Incentive Stock Option Plan. The Company adopted the 1997 Incentive Stock
Plan (the "Incentive Plan") effective May 1, 1997. The Incentive Plan makes
available up to 50,000 shares of common stock for awards to key employees of the
Company and its subsidiaries in the form of stock options, stock appreciation
rights, and restricted stock (collectively, "Awards"). The purpose of the
Incentive Plan is to promote the success of the Company and its subsidiaries by
providing incentives to key employees that will promote the identification of
their personal interests with the long-term financial success of the Company and
with growth in shareholder value. The Incentive Plan is designed to provide
flexibility to the Company in its ability to motivate, attract, and retain the
services of key employees upon whose judgment, interest, and special effort the
successful conduct of its operation is largely dependent.
Under the terms of the Incentive Plan, the non-employee directors of the
Personnel Committee of the Board of Directors of the Bank (the "Committee") will
administer the plan. No director may serve as a member of the Committee if he is
eligible to participate in the Incentive Plan or was at any time within one year
prior to his appointment to the Committee eligible to participate in the
Incentive Plan. The Committee will have the power to determine the key employees
to whom Awards shall be made.
Each Award under the Incentive Plan will be made pursuant to a written
agreement between the Company and the recipient of the Award (the "Agreement").
In administering the Incentive Plan, the Committee will have the authority,
subject to approval, amendment and modification by the Board of Directors of the
Company, to determine the terms and conditions upon which Awards may be made and
exercised, to determine terms and provisions of each Agreement, to construe and
interpret the Incentive Plan and the Agreements, to establish, amend, or waive
rules or regulations for the Incentive Plan's administration, to accelerate the
exercisability of any Award, the end of any performance period, or termination
of any period of restriction, and to make all other determinations and take all
other actions necessary or advisable for the administration of the Incentive
Plan.
The Board may terminate, amend, or modify the Incentive Plan from time to
time in any respect without shareholder approval, unless the particular
amendment or modification requires shareholder approval under the Internal
Revenue Code of 1986, as amended (the "Code"), the rules and regulations
-8-
under Section 16 of the Securities Exchange Act of 1934 or pursuant to any other
applicable laws, rules, or regulations.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires directors, executive officers
and 10% beneficial owners of the Company's common stock to file reports
concerning their ownership of common stock. The Company believes that its
officers and directors complied with all filing requirements under Section 16(a)
of the Securities Exchange Act of 1934 during 2001.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP, served as the Company's independent public accountants for the
year ended December 31, 2001. No accountants have been selected by the Board to
act as the Company's independent public accountants for the year ending December
31, 2002. The Board will make that selection later in the year. A representative
of KPMG LLP will be present at the Annual Meeting and will be given the
opportunity to make a statement and respond to appropriate questions from the
shareholders.
The following table sets forth the amount of audit fees, financial
information systems design and implementation fees, and all other fees billed or
expected to be billed for services rendered by KPMG LLP, the Company's principal
accountant, for the year ended December 31, 2001:
Amount
------------
Audit fees (1) $ 48,250
Financial information systems design and
implementation fees (2) -
All other fees (3) 6,500
------------
Total fees $ 54,750
============
- --------------------
(1) Includes annual financial statement audit and limited quarterly review
services.
(2) No such services were provided by KPMG LLP for the most recent fiscal
year.
(3) Represents income tax services other than those directly related to the
audit of the income tax accrual.
The Audit Committee of the Board of Directors has considered whether the
provision of financial information systems design and implementation and other
non-audit services is compatible with maintaining KPMG LLP's independence.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors, which consists entirely of
directors who meet the independence requirements of the National Association of
Securities Dealers' listing standards, has furnished the following report:
The Audit Committee (the "Committee") reviews the Company's financial
reporting process on behalf of the Board. The role and responsibilities of the
Committee are set forth in a written Charter
-9-
adopted by the Board. Management has the primary responsibility for the
consolidated financial statements and the reporting process, including the
system of internal controls. The independent auditors are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with accounting principles generally accepted in the
United States of America and to issue a report thereon. The Committee monitors
these processes.
In this context, the Committee met and held discussions with management and
the independent auditors. Management represented to the Committee that the
Company's consolidated financial statements were prepared in accordance with
accounting principles generally accepted in the United States of America, and
the Committee reviewed and discussed the consolidated financial statements with
management and the independent auditors. The independent auditors also discussed
with the Committee the matters required to be communicated by Statement on
Auditing Standards No. 61 (Communication with Audit Committees).
In addition, the independent auditors discussed with the Committee their
judgments about the quality, not just the acceptability, of the Company's
accounting principles and underlying estimates in the Company's consolidated
financial statements as required by Statement on Auditing Standards No. 90
(Audit Committee Communications).
The independent auditors also discussed with the Committee the auditors'
independence from the Company and its management, and the independent auditors
provided to the Committee the written disclosures and letter required by the
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees).
The Committee also discussed with the Company's internal and independent
auditors the overall scope and plans for their respective audits. The Committee
met with the internal and independent auditors, with and without management
present, to discuss the results of their examinations, the evaluations of the
Company's internal controls, and the overall quality of the Company's financial
reporting.
Based on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors, and the Board of Directors has approved,
that the audited consolidated financial statements 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.
Audit Committee Members
Warren G. Lowder - Chair
A.P. Bohannon, III
James E. Burton, IV
R.B. Hancock, Jr.
Percy O. Moore
John L. Waller
OTHER BUSINESS
As of the date of this Proxy Statement, 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
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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 their best judgment.
SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
In accordance with the Company's bylaws, proposals of shareholders intended
to be presented at the 2003 Annual Meeting (other than director nominations)
must be received by the Company no later than November 7, 2002. Under applicable
law and in accordance with the Company's bylaws, the Board of Directors need not
include an otherwise appropriate shareholder proposal (including any shareholder
nominations for director candidates) in its proxy statement or form of proxy for
that meeting unless the proposal is received by the Company's Secretary, at the
Company's principal office in Altavista, Virginia, on or before the date set
forth above.
By Order of the Board of Directors
/s/ Bryan M. Lemley
Bryan M. Lemley
Secretary
Altavista, Virginia
March 7, 2002
A copy of the Company's Annual Report on Form 10-KSB Report (including
exhibits) as filed with the Securities and Exchange Commission for the year
ended December 31, 2001, will be furnished without charge to shareholders upon
written request directed to the Company's Secretary as set forth on the first
page of this Proxy Statement.
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[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE PINNACLE BANKSHARES CORPORATION
ANNUAL MEETING OF STOCKHOLDERS 1. To elect four Class II directors With- For All
APRIL 9, 2002 for three-year terms (Proposal 1): For hold Except
[_] [_] [_]
The undersigned shareholder of Pinnacle Bankshares Corporation Nominees:
(the "Corporation") hereby appoints E.H. Frazier, Jr., Henry
S. Pittard and Robert I. Steele as proxies, such persons being duly James E. Burton IV, James P. Kent Jr., Percy O. Moore, and
appointed by the Board of Directors with the power to appoint an William F. Overacre
appropriate substitute, to cast all votes that the undersigned
shareholder is entitled to cast the annual meeting of shareholders INSTRUCTION: To withhold authority to vote for any individual
(the "Annual Meeting") to be held at 11:30 a.m. Eastern Time, on nominee(s), mark "For All Except" and write the name of the
Tuesday, April 9, 2002, at the Fellowship Hall of Altavista nominee(s) in the space provided below.
Presbyterian Church, located at 707 Broad Street, Altavista,
Virginia and at any adjournments there of upon the following ---------------------------------------------------------------
matters. The undersigned shareholder hereby revokes any proxy or
proxies heretofore given. 2. The Proxies are authorized to vote upon such other business
as may properly come before the Annual Meeting or any
adjournments of the meeting in accordance with the
determination of a majority of the Corporation's Board of
Directors.
Please check box if you plan to attend the [_]
April 9, 2002 Annual Stockholders Meeting.
Number Attending -- [_]
The proxy will be voted as directed by the undersigned
shareholder. Unless contrary direction is given, this proxy
will be voted FOR the election of the nominees listed in
-------------------------- Proposal 1, and in accordance with the determination of a
Please be sure to sign and date Date majority of the Board of Directors as to any other matters. The
this Proxy in the box below. undersigned shareholder may revoke this proxy at any time
- ----------------------------------------------------------------- before it is voted by delivering to the Secretary of the
Corporation either a written revocation of the proxy or a duly
executed proxy bearing a later date, or by appearing at the
Annual Meeting and voting in person. The undersigned
- --Stockholder sign above---------Co-holder (if any) sign above--- shareholder hereby acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement.
. Detach above card, sign, date and mail in postage paid envelope provided. .
PINNACLE BANKSHARES CORPORATION
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Please date and sign exactly as your name(s) appear(s) hereon. Each executor, administrator, trustee, guardian, attorney-in-fact
and any other fiduciary should sign and indicate his or her full title. When stock has been issued in the name of two or more
persons, all should sign.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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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.
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