-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L6tgD1OEAqHAmFZOOWYOAU+CfKEGFskIGSD8BUxiMNM9jTZF69mvipnQaScBOgS6 6nNg9SV2Rny3rZ2MucSrGw== 0000930661-99-000499.txt : 19990322 0000930661-99-000499.hdr.sgml : 19990322 ACCESSION NUMBER: 0000930661-99-000499 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990420 FILED AS OF DATE: 19990319 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUMMIT BANCSHARES INC /TX/ CENTRAL INDEX KEY: 0000745344 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 751694807 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-11986 FILM NUMBER: 99568635 BUSINESS ADDRESS: STREET 1: 1300 SUMMIT AVE CITY: FORT WORTH STATE: TX ZIP: 76102 BUSINESS PHONE: 8173368383 MAIL ADDRESS: STREET 1: 1300 SUMMIT AVENUE CITY: FORT WORTH STATE: TX ZIP: 76102 DEF 14A 1 DEFINITIVE NOTICE & PROXY 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 Section 240.14a-11(c) or Section 240.14a-12 Summit Bancshares, Inc. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) Summit Bancshares, Inc. - -------------------------------------------------------------------------------- (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)(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 (Set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------- (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: ------------------------------------------------------------------------- Notes: SUMMIT BANCSHARES, INC. 1300 SUMMIT AVENUE FORT WORTH, TEXAS 76102 ________________________________________________________________________________ NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 20, 1999 ________________________________________________________________________________ NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Summit Bancshares, Inc. (the "Corporation") will be held at Summit National Bank, 1300 Summit Avenue, Fort Worth, Texas on April 20, 1999 at 4:30 p.m., for the following purposes: 1. To elect a Board of Directors of the Corporation consisting of ten (10) persons. 2. To ratify the appointment by the Board of Directors of Stovall, Grandey & Whatley as independent auditors of the Corporation for its fiscal year ending December 31, 1999 3. To transact such other business as may properly come before the Annual Meeting of Shareholders or any adjournment or adjournments thereof. Only those shareholders of record at the close of business on March 17, 1999, are entitled to notice of and to vote at the Annual Meeting of Shareholders or at any adjournment or adjournments thereof. IMPORTANT --------- All shareholders are urged to sign, date and return as promptly as possible the enclosed proxy in the enclosed postage-paid envelope. It is important that as many shares as possible be represented at the Annual Meeting of Shareholders. Any person executing the accompanying proxy may revoke it at any time prior to the actual voting thereof by filing with the Secretary of the Corporation a written revocation thereof or a duly executed proxy bearing a later date. Consequently, whether or not you expect to be present, please execute and return the enclosed proxy. By Order of the Board of Directors, /s/ Philip E. Norwood Philip E. Norwood, Chairman of the Board March 19, 1999 Fort Worth, Texas SUMMIT BANCSHARES, INC. 1300 SUMMIT AVENUE FORT WORTH, TEXAS 76102 TELEPHONE (817) 336-6817 PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 20, 1999 This statement is furnished in connection with the solicitation of proxies by the Board of Directors of SUMMIT BANCSHARES, INC. (the "Board") to be used at the Annual Meeting of Shareholders of SUMMIT BANCSHARES, INC. (the "Corporation") to be held at Summit National Bank, 1300 Summit Avenue, Fort Worth, Texas on April 20 1999, at 4:30 p.m., and at any adjournment or adjournments thereof. This Proxy Statement and accompanying proxy are being mailed on or about March 19, 1999, to the shareholders of the Corporation. The Corporation's Annual Report to Shareholders for the year ended December 31, 1998, is being furnished with this Proxy Statement to the shareholders of record on March 17, 1999. The Annual Report to Shareholders does not constitute a part of the proxy soliciting material. GENERAL INFORMATION The close of business on March 17, 1999, has been fixed as the record date for determining the shareholders entitled to vote at the Annual Meeting of Shareholders to be held on April 20, 1999. The Annual Meeting of Shareholders has been called for the purposes of (i) electing directors of the Corporation for the coming year, (ii) ratifying the appointment by the Board of Stovall, Grandey & Whatley as independent auditors of the Corporation for its fiscal year ending December 31, 1999, and (iii) transacting such other business as may properly come before the Annual Meeting of Shareholders or any adjournment or adjournments thereof. Whether you can attend the meeting or not, your vote is important. Shares can be voted at the meeting only if the owner is present or represented by proxy. Accordingly, it is requested that you sign and return the enclosed proxy in the envelope provided. Any person executing the accompanying proxy may revoke it at any time prior to the actual voting thereof by filing with the Secretary of the Corporation a written revocation thereof or a duly executed proxy bearing a later date. Shares represented by each signed proxy received by the Board will be voted in accordance with the direction specified by the shareholder, and if no direction is specified, such shares will be voted "FOR" each proposal. The cost of soliciting proxies will be borne by the Corporation. The solicitation will be made by mail. The Corporation will also supply brokerage firms and other custodians, nominees and fiduciaries with such number of proxy materials as they may require for mailing to beneficial owners, and will reimburse them for their reasonable expenses in connection therewith. Certain directors, officers and employees of the Corporation, not specifically employed for the purpose, may solicit proxies, without remuneration therefore, by mail, telephone, telegraph or personal interview. OUTSTANDING SHARES AND VOTING RIGHTS At the close of business on March 17, 1999, the record date for determining the shareholders of the Corporation entitled to notice of and to vote at the Annual Meeting of Shareholders, the Corporation had 6,505,627 shares of common stock, $1.25 par value (the "Common Stock"), issued and outstanding. The presence, in person or by proxy duly authorized in writing, of the holders of a majority of the issued and outstanding shares of Common Stock of the Corporation is necessary to constitute a quorum at the Annual Meeting of Shareholders. Each holder of shares of Common Stock will be entitled to one vote, in person or by proxy, for each share of Common Stock of the Corporation owned of record at the close of business on March 17, 1999. Cumulative voting for directors is not permitted. Directors are elected by plurality vote and, therefore, the ten (10) nominees receiving the highest number of affirmative votes shall be elected as directors provided a quorum is present. All shares represented at the Annual Meeting in person or by proxy shall be counted in determining the presence of a quorum. Abstentions and broker non-votes (shares held by a broker or nominee as to which a broker or nominee indicates on the proxy that it does not have the authority, either express or discretionary, to vote on a particular matter) are counted for the purpose of determining the presence or absence of a quorum for the transaction of business at the Annual Meeting but will not be considered part of the voting power present with respect to any matter on which such shares are not voted. PROPOSAL NO. 1: ELECTION OF DIRECTORS The bylaws of the Corporation provide that the Board shall be comprised of not more than twenty-five (25) members and that each director shall be elected to serve until the next Annual Meeting of Shareholders and until his successor shall be elected and shall qualify. Any vacancies on the Board may be filled by a majority vote of the Board and any director so elected shall hold office for the unexpired term of his predecessor or until the next election of directors by the shareholders of the Corporation. The Board of Directors has set the number of directors at ten (10) and has nominated the ten (10) persons named below for election to the Board of Directors of the Corporation. 2 Names of the nominees for directors and other information about them appear in the following table. All of the nominees are now directors of the Corporation and have consented to serve if elected. If for any unforeseen reason a nominee is unable to serve if elected, the persons named in the accompanying proxy may exercise their discretion to vote for a substitute nominee selected by the Board. However, the Board has no reason to anticipate that any of the nominees will not be able to serve, if elected. Name and Age of Nominee; Years Principal Occupation for Past Served as Director Five Years; Other Directorships ------------------ ------------------------------- Philip E. Norwood Mr. Norwood became Chairman of the Board of Summit Age 49 Bancshares, Inc. and Chairman of Summit Community Director Since 1984 Bank, N.A. in January 1998 and President of Summit Community Bank, N.A. in July 1994 and continues to serve in these capacities. From October 1993 to January 1998 Mr. Norwood served as President and Chief Executive Officer of the Corporation. He has served as a director of the Corporation since March 1984. From January 1990 to October 1993 Mr. Norwood served as Secretary of the Corporation, from December 1992 to October 1993 he served as Executive Vice President of the Corporation, and from March 1984 to January 1990 he served as Secretary and Treasurer of the Corporation. From April 1981 to December 1992 Mr. Norwood served as President of Alta Mesa National Bank (currently a banking office of Summit Community Bank, N.A.). From December 1992 to December 1995 Mr. Norwood served as Chief Executive Officer of Alta Mesa National Bank. Mr. Norwood served as a director of Alta Mesa National Bank from April 1981 to March 1997 and as a director of Summit Community Bank, N.A. since January 1990. Mr. Norwood served as a director of Summit National Bank from March 1983 to January 1996. 3 Jeffrey M. Harp Mr. Harp became President of the Corporation in Age 50 January 1998 and continues to serve in that Director Since 1990 capacity. From October 1993 to January 1998 Mr. Harp served as Chief Operating Officer and Secretary of the Corporation. He served as Executive Vice President of the Corporation from December 1992 to January 1998, and Treasurer from January 1990 to January 1998. He has served as director of the Corporation since January 1990. He has served as President of Summit National Bank since January 1991, and served as Executive Vice President of Summit National Bank from February 1985 to December 1990. He has served as a director of Summit National Bank since January 1990. He served as a director of Alta Mesa National Bank and Summit Community Bank, N.A. from January 1990 to January 1996. D. Jerrell Farr Mr. Farr is President and Chief Executive Officer Age 64 of FJW Co., Inc., a general contracting firm Director Nominee operating in the commercial construction industry and a company Mr. Farr founded in 1973. He has served as a director of Summit National Bank since March 1998. Elliott S. Garsek Mr. Garsek is an attorney with, and is Chairman of Age 50 the Board of, the law firm of Barlow & Garsek, a Director Since 1987 Professional Corporation. He has served as a director of Summit Community Bank, N.A. since June 1984. Ronald J. Goldman Mr. Goldman is President of Ronnie's LLC, a Age 56 corporation engaged in retail sales of fine wines Director Since 1984 and gourmet foods and is also presently involved in personal investments. From June 1989 to June 1991 Mr. Goldman was a consultant to Tarrant Distributors, a wholesale liquor and wine distributorship located in Fort Worth, Texas. Mr. Goldman served as President of White Rose Distributing Company, a liquor and wine distributorship located in Fort Worth, Texas, from March 1973 until September 1989. Mr. Goldman served as a director of Ganucheau Stupfel & Brumley Investment Counsel, an investment advisory firm located in Fort Worth, Texas, from 1988 to December 1993. Mr. Goldman has served as a direc- tor of Summit National Bank since January 1975 and served as a director of Alta Mesa National Bank from April 1981 to March 1997 when he became a director of Summit Community Bank, N.A. 4 F. S. Gunn On December 31, 1997 Mr. Gunn retired from the Age 65 Corporation. From October 1993 to January 1998 Mr. Director Since 1979 Gunn served as Vice Chairman of the Board of the Corporation and continues to serve on the Board of the Corporation. From January 1990 to October 1993 Mr. Gunn served as President of the Corporation, and from January 1985 to January 1990 he served as Vice Chairman of the Board of the Corporation. Mr. Gunn has served as Chairman of the Board of Summit National Bank since January 1991, and served as President of Summit National Bank from October 1981 to January 1991. He has served as a director of Summit National Bank since January 1975. He served as a director of Alta Mesa National Bank from March 1982 to January 1996 and as a director of Summit Community Bank, N.A. from January 1990 to January 1996. Robert L. Herchert Mr. Herchert has served as President and Chief Age 56 Executive Officer of Freese & Nichols, Inc., a Director Since 1998 consulting engineering company since 1991 and has been employed by that firm since 1990 in various executive capacities. Mr. Herchert has served as a director of Summit Community Bank, N.A. since April 1996. William W. Meadows Mr. Meadows has served as Executive Vice President Age 46 of Wm. Rigg Insurance Co., an insurance agency, Director Since 1991 since 1986, and has been employed by that company since 1976 in various executive capacities. Mr. Meadows has served as a director of Summit Community Bank, N.A. since June 1984. 5 James L. Murray On December 31, 1997 Mr. Murray retired from the Age 66 Corporation. From January 1985 to January 1998 Mr. Director Since 1979 Murray served as Chairman of the Board of the Corporation and continues to serve on the Board of the Corporation. From January 1990 to January 1998 Mr. Murray served as Chairman of the Board of Summit Community Bank, N.A. and continues to serve on this Board. Mr. Murray served as Chief Executive Officer of the Corporation from January 1990 to October 1993, as President of the Corporation from 1979 to January 1985, as President of Summit Community Bank, N.A. from January 1990 to January 1994, and as Chairman of the Board of Directors of Summit National Bank from October 1981 to January 1990. He has served as a director of Summit Community Bank, N.A. since April 1985. Additionally, Mr. Murray was a director of Alta Mesa National Bank from April 1981 to April 1985. He was reelected to the Board of Directors of Alta Mesa National Bank in January 1990 and served until January 1996. Mr. Murray served as a director of Summit National Bank from January 1975 to January 1996. Byron B. Searcy Mr. Searcy has served as President of Kelly, Age 63 Geren, & Searcy, Inc. a corporation engaged in the Director Since 1984 real estate brokerage business in Fort Worth, Texas, or its predecessor company, since 1962. Mr. Searcy has served as a director of Summit National Bank since January 1975 and served as a director of Alta Mesa National Bank from April 1981 to March 1997 when he became a director of Summit Community Bank, N.A. No family relationships exist among the named Executive Officers and directors of the Corporation. No director of the Corporation is a director of any other company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or subject to the requirements of Section 15(d) of that Act or of any company registered as an investment company under the Investment Corporation Act of 1940, as amended. 6 THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE ELECTION AS DIRECTORS OF THE TEN (10) PERSONS NAMED ABOVE. BOARD OF DIRECTORS Directors are elected annually by the shareholders of the Corporation for one year and hold office until their successors are elected and have qualified. Various meetings of the Board are held each year, including an organizational meeting following the conclusion of the Annual Meeting of Shareholders. The Board has established an Executive Committee, an Audit Committee, a Compensation and Benefits Committee (the "Compensation Committee"), an Asset/Liability Management Committee (the "ALCO Committee"), and a Nominating Committee. EXECUTIVE COMMITTEE Members: Elliott S. Garsek (Chairman), Ronald J. Goldman, F. S. Gunn, Jeffrey M. Harp, William W. Meadows, James L. Murray, Philip E. Norwood and Byron B. Searcy. The Executive Committee, during intervals between meetings of the Board, has the authority to exercise all the powers of the full Board other than matters coming specifically within the purview of other committees of the Board and certain extraordinary corporate matters. AUDIT COMMITTEE Members: Edgar Snelson (Chairman), Robert L. Herchert and Edward P. Munson. The functions of the Audit Committee are to (i) meet with the independent auditors of the Corporation to review the annual audit and its results, (ii) review internal audit controls and procedures of the Corporation and its subsidiaries, Summit National Bank and Summit Community Bank, N.A. (collectively referred to as the "Subsidiary Banks"), and (iii) make recommendations to the Board as to the engagement of the independent auditors of the Corporation. COMPENSATION AND BENEFITS COMMITTEE Members: William W. Meadows (Chairman), Robert E. Bolen, F. S. Gunn, Robert L. Herchert, Edward P. Munson and James L. Murray. The function of the Compensation Committee is to make recommendations to the Board with regard to the remuneration of the executive officers and directors of the Corporation and the Subsidiary Banks. The Compensation Committee is also responsible for the administration of the Incentive Stock Option Plans, the Defined Benefit Pension Plan, the 401(k) Plan, the 7 Management Security Plan and the Performance Compensation Plans of the Corporation. See "EXECUTIVE COMPENSATION AND OTHER INFORMATION." ASSET/LIABILITY MANAGEMENT COMMITTEE Members: Philip E. Norwood (Chairman), Robert E. Bolen, Ronald J. Goldman, F.S. Gunn, Jeffrey M. Harp, James L. Murray and Philip E. Norwood. The functions of the Asset/Liability Committee are to review the implementation of the Corporation's asset and liability management functions and assure that those functions are in a workable and productive fashion. The Committee is also responsible for monitoring asset and liability management objectives while working within the range of operating guidelines set forth in the Asset/Liability Management Policy. NOMINATING COMMITTEE Members: Robert E. Bolen (Chairman), Jeffrey M. Harp, Ronald J. Goldman, William W. Meadows, Philip E. Norwood and Byron B. Searcy. The function of the Nominating Committee is to make recommendations to the Board with the regard to prospective new members of the Board of Directors. DIRECTORS' COMPENSATION During 1998 the Corporation paid each of its directors $100 for attendance at each meeting of the Board and each committee meeting thereof. In addition, each director was paid a quarterly retainer of $500. The Corporation paid a total of $33,000 in directors' fees and $19,450 in committee fees during 1998. During 1998 Summit National Bank paid each of its directors $300 for attendance at a meeting of the Board of Directors and $100 for attendance at each committee meeting thereof. Summit National Bank paid a total of $29,850 in directors' fees and $16,150 in committee fees during 1998. During 1998 Summit Community Bank, N.A. paid each of its directors $300 for atten dance at a meeting of the Board of Directors and $100 for attendance at each committee meeting thereof. Summit Community Bank, N.A. paid a total of $65,550 in directors' fees and $43,450 in committee fees during 1998. ATTENDANCE AT BOARD AND COMMITTEE MEETINGS During 1998 there were nine (9) meetings (including regularly scheduled and special meetings) of the Board, twelve (12) meetings of the Executive Committee, two (2) meetings of the Audit Committee, four (4) meetings of the ALCO Committee and twelve (12) meetings of the Compensation Committee. Each director attended at least seventy-five percent (75%) of 8 the total number of meetings of the Board and Committees of the Board of which he was a member during 1998. PROPOSAL NO. 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS Subject to approval by the shareholders, the Board has selected the firm of Stovall, Grandey & Whatley, Certified Public Accountants, as independent auditors of the Corporation for its fiscal year ending December 31, 1999. Stovall, Grandey & Whatley has acted in such capacity for the Corporation since 1979 and has reported that neither the firm nor any of its partners has any material direct or indirect financial interest in the Corporation, other than as independent auditors. Representatives of Stovall, Grandey & Whatley will be present at the Annual Meeting of Shareholders with the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions. The affirmative vote of the holders of a majority of the shares of Common Stock of the Corporation represented at the annual meeting of shareholders is required to ratify the appointment of Stovall, Grandey & Whatley as independent auditors of the Corporation. THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE APPOINTMENT OF STOVALL, GRANDEY & WHATLEY AS INDEPENDENT AUDITORS OF THE CORPORATION. 9 STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT BY MANAGEMENT The following table shows beneficial ownership of shares of Common Stock of the Corporation by all current directors, nominees for director, and Named Executive Officers, individually, and, together with all current executive officers of the Corporation, as a group, at March 17, 1999.
Amount and Name of Beneficial Nature of Percent Owner or Number Beneficial of of Persons in Group Ownership/(1)/ Class/(2)/ ------------------- -------------- ----------- Philip E. Norwood 177,730 shares/(3)/ 2.7% Jeffrey M. Harp 154,800 shares/(4)/ 2.3% Robert E. Bolen 19,952 shares * D. Jerrell Farr 10,500 shares * Elliott S. Garsek 40,392 shares/(5)/ * Ronald J. Goldman 265,828 shares/(6)/ 4.0% F. S. Gunn 280,128 shares/(7)/ 4.2% Robert L. Herchert 3,000 shares * William W. Meadows 20,722 shares/(8)/ * Edward P. Munson 9,750 shares/(9)/ * James L. Murray 151,126 shares 2.3% Bob G. Scott 41,400 shares/(10)/ * Byron B. Searcy 43,090 shares/(11)/ * Edgar Snelson 51,576 shares * All directors and 1,269,994 shares/(12)/ 19.2% executive officers as a group (14 persons)
____________________________ * Less than one percent (1%) of all of the issued and outstanding shares of Common Stock. (1) Based on information furnished by persons named and, except as otherwise indicated below, each person has sole voting power and investment power with respect to all shares of Common Stock owned by such person. 10 (2) Based on 6,616,827 shares of Common Stock issued and outstanding as of March 17, 1999, as adjusted for shares convertible or exercisable within sixty (60) days of March 17, 1999 which are deemed outstanding for a specific shareholder pursuant to Rule 13d-3(d)(1) under the Securities Exchange Act of 1934. (3) Includes 133,954 shares of Common Stock owned of record; 3,776 shares of Common Stock owned by Mr. Norwood's children; and 40,000 shares of Common Stock which Mr. Norwood has the right to acquire within sixty (60) days of March 17, 1999 pursuant to options granted to him under the 1993 Stock Plan. See "EXECUTIVE COMPENSATION AND OTHER INFORMATION - Option Exercises and Holdings." (4) Includes 102,000 shares of Common Stock owned of record; 18,800 shares of Common Stock owned by Mr. Harp's children in a Trust; and 34,000 shares of Common Stock which Mr. Harp has the right to acquire within sixty (60) days of March 17, 1999 pur suant to options granted to him under the 1993 Stock Plan. See "EXECUTIVE COMPENSATION AND OTHER INFORMATION - Option Exercises and Holdings." (5) Includes 38,392 shares of Common Stock owned of record and 2,000 shares of Common Stock owned by Mr. Garsek's children. (6) Includes 265,820 shares of Common Stock owned of record and eight (8) shares of Common Stock owned by Mr. Goldman's son. (7) Includes 200,000 shares of Common Stock owned of record; and 80,128 shares of Common Stock held by a trust for which Mr. Gunn serves as a co-trustee. (8) Includes 13,700 shares of Common Stock owned of record; 6,496 shares of Common Stock held by a trust for which Mr. Meadows' serves as an Independent Executor; and 526 shares of Common Stock held in trust for the benefit of Mr. Meadows' children. (9) Includes 9,750 shares of Common Stock owned in trust for the benefit of Mr. and Mrs. Munson. (10) Includes 4,200 shares of Common Stock owned of record and 37,200 shares of Common Stock which Mr. Scott has the right to acquire within sixty (60) days of March 17, 1999 pursuant to options granted to him under the 1993 Stock Plan. See "EXECUTIVE COMPENSATION AND OTHER INFORMATION - Option Exercises and Holdings." (11) Includes 41,850 shares of Common Stock owned of record and 1,240 shares of Common Stock owned by Mr. Searcy's wife. (12) Includes 111,200 shares of Common Stock with respect to which certain named Executive Officers of the Corporation have the right to acquire beneficial ownership within sixty (60) days of March 17, 1999 pursuant to options granted to them under the 11 1993 Stock Plan. See "EXECUTIVE COMPENSATION AND OTHER INFORMATION - Option Exercises and Holdings." BY OTHERS As of March 17, 1999 there were no known beneficial owners of more than five percent (5%) of the outstanding shares of Common Stock. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation's executive officers, directors, and persons who own more than ten percent (10%) of a registered class of the Corporation's equity securities to file reports of ownership with the Securities and Exchange Commission. Based upon a review of Forms 3, 4 and 5 and amendments thereto furnished to the Corporation, to the best knowledge of management of the Corporation, during 1998 no directors, officers, or ten percent (10%) beneficial shareholder of Common Stock of the Corporation failed to timely file with the Securities and Exchange Commission one or more required reports on Form 3, 4 or 5 regarding transactions in securities of the Corporation. 12 EXECUTIVE COMPENSATION AND OTHER INFORMATION SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION The following table provides certain summary information concerning compensation paid or accrued by the Corporation and its subsidiaries, to or on behalf of the Corporation's Chief Executive Officer and each of the two other most highly compensated executive officers of the Corporation (determined as of the end of the last fiscal year) (referred to in this Proxy Statement as the "Named Executive Officers") for the fiscal years ended December 31, 1996, 1997 and 1998: SUMMARY COMPENSATION TABLE - -------------------------------------------------------------------------------- Name and Annual Compensation All Other ------------------- Principal Position Year Salary Bonus Compensation as of December 31, 1998 ($)/(1)/ ($)/(2)/ ($)/(3)/ - ---------------------------------------------------------------------------------------------------------- Philip E. Norwood 1998 $207,792 $ 43,282/(4)/ $3,114/(7)/ Chairman of the Board 1997 $200,450 $ 43,495/(4)/ $3,174/(8)/ of the Corporation 1996 $195,375 $ 26,262/(4)/ $2,548/(9)/ Jeffrey M. Harp 1998 $199,550 $ 52,155/(5)/ $ 864 President of the Corporation 1997 $191,600 $ 38,384/(5)/ $ 464 1996 $175,011 $ 33,988/(5)/ $ 348 Bob G. Scott 1998 $116,480 $ 22,442/(6)/ $2,106 Executive Vice President and Chief 1997 $112,000 $ 22,427/(6)/ $1,200 Operating Officer of the Corporation 1996 $107,016 $ 14,077/(6)/ $ 900
________________________________________________ (1) Includes salary and directors' fees, if applicable. (2) The bonus amounts were paid pursuant to the Corporation's Performance Compensation Plan. (See detailed discussion beginning on page 21 of this Proxy Statement under "Board Compensation and Benefits Committee Report on Executive Compensation"). The amounts for 1998 were in recognition of achievements performed in 1997. The amounts for 1997 were in recognition of achievements performed in 1996. The amounts for 1996 were in recognition of achievements performed in 1995. (3) Except as otherwise noted, "All Other Compensation" consists of premium payments with respect to term life insurance for the benefit of the Named Executive Officer. (4) Consist of a bonus from the Corporation in the amount of $24,397 and a bonus from Summit Community Bank, N.A. in the amount of $18,885 in 1998 and $9,969 from the Corporation and $33,526 from Summit Community Bank, N.A. in 1997 and $7,322 from the Corporation and $18,940 from Summit Community Bank, N.A. in 1996. 13 (5) Consists of a bonus from the Corporation in the amount of $18,125 and a bonus from Summit National Bank in the amount of $34,030 in 1998, $38,384 from Summit National Bank in 1997 and $15,264 from the Corporation and $18,724 from Summit National Bank in 1996. (6) Consist of a bonus from the Corporation. (7) Consists of premium payments with respect to term life insurance in the amount of $522 and premium payments with respect to dependent health coverage for the benefit of the named executive officer in the amount of $2,592. (8) Consists of premium payments with respect to term life insurance in the amount of $464 and premium payments with respect to dependent health coverage for the benefit of the named executive officer in the amount of $2,710. (9) Consists of premium payments with respect to term life insurance in the amount of $348 and premium payments with respect to dependent health coverage for the benefit of the named executive officer in the amount of $2,200. OPTION EXERCISES AND HOLDINGS The following table provides information with respect to the named executive officers concerning the exercise of stock options during the last fiscal year and unexercised stock options held as of the end of December 31, 1998: AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES - ---------------------------------------------
Value of Number of Unexercised Unexercised In-the-Money Options at Options at December 31, 1998(#) December 31, 1998($) ------------------------------------------- Shares Acquired on Value Realized ($)/(1)/ Exercisable/ Exercisable/ Name Exercise (#) Unexercisable Unexercisable/(2)/ - -------------------------------------------------------------------------------------------------------- Philip E. Norwood 40,000 $640,000 40,000/-0-/(3)/ $620,000/-0- Jeffrey M. Harp 14,000 $214,000 46,000/-0-/(3)/ $713,000/-0- Bob G. Scott 1,600 $ 21,600 37,200/-0-/(4)/ $520,800/-0-
___________________________________ (1) Market value of underlying securities at exercise, minus the exercise price. 14 (2) Market value of underlying securities as of December 31, 1998 ($18.50), minus the exercise price. These values, unlike the amounts set forth in the column headed, "Value Realized", have not been, and may never be, realized. The underlying options have not been, and may not be, exercised. Actual gains, if any, on exercise will depend on the value of the Company's stock on the date of exercise. There can be no assurance that the value shown will be realized. (3) These options are exercisable at $3.00 per share. (4) These options are exercisable at $4.50 per share. PENSION PLAN The Corporation has provided benefits under a qualified defined benefit pension plan (the "Pension Plan") since 1977. In 1997, the Corporation decided to no longer provide this benefit but instead to provide a 401(k) plan which was organized effective December 1, 1997. Therefore, effective August 31, 1998, participants no longer accrued benefits under the defined benefit plan and effective April 15, 1999, the defined benefit plan is to be terminated. Following termination the assets held in trust for the plan participants will be distributed. The distribution of assets will be made following the requirements of the plan, and the approval of the Internal Revenue Service and the Pension Benefit Guaranty Corporation. The following table shows the estimated annual pension benefits payable to a participant in the Corporation's Pension Plan at normal retirement age (age 65), based on a participant's compensation that is covered under the Pension Plan, and years of service with the Corporation and its subsidiaries: ANNUAL BENEFITS* FOR YEARS OF CREDITED SERVICE
Remuneration 10 15 20 25 30 35 - -------------------------------------------------------------------------------- $ 90,000 $12,906 $19,359 $25,812 $32,265 $38,718 $45,171 $100,000 $14,756 $22,134 $29,512 $36,890 $44,268 $51,646 $120,000 $18,456 $27,684 $36,912 $46,140 $55,368 $64,596 $130,000 $20,306 $30,459 $40,612 $50,765 $60,918 $71,071 $150,000 $24,006 $36,009 $48,012 $60,015 $72,018 $84,021
* Retirement benefits are subject to reduction for subsequent changes in the federal social security benefit levels or taxable wage base, and are further limited by a maximum of thirty-five (35) years of credited service. A participant's compensation for purposes of the formula utilized by the Pension Plan consists of salary, bonus, and all other compensation reported in the Summary Compensation Table, as well as certain other personal benefits which, in the aggregate, do not exceed the minimum amounts required for disclosure thereunder. 15 The Pension Plan also provides that upon a participant's termination of employment or retirement certain benefits may be paid under the Pension Plan in a lump sum cash payment. If a participant's benefits, determined as of the date of termination of employment or retirement, are not more than $3,500, the Compensation Committee may direct, without the consent of the participant or his spouse, if any, that the benefits be paid in a lump sum cash payment in lieu of any other Pension Plan benefits. If a participant's benefits exceed $3,500, a lump sum payment to the participant shall require his written consent and the written consent of his spouse, if any. Any such lump sum payment must be approved by the Compensation Committee. Annual compensation covered under the Pension Plan and credited years of service as of December 31, 1998 for the named executive officers are as follows: Philip E. Norwood, $150,000 (18 years); Jeffrey M. Harp, $150,000 (14 years) and Bob G. Scott, $138,922 (5 years). 401(K) PLAN Effective December 1, 1997, the Corporation established a contributory plan pursuant to Internal Revenue Code Section 401(k) covering substantially all employees (the "401-K Plan"). Each year the Corporation determines, at its discretion, the amount, if any, of matching contributions. In 1997 and 1998, the Corporation did not make any matching contributions. MANAGEMENT SECURITY PLAN Effective September 1, 1992 the Board adopted the Management Security Plan of Summit Bancshares, Inc. (the "Security Plan"). The purpose of the Security Plan is to provide specified benefits to a select group of management and highly compensated employees who contribute materially to the continued growth, development and future business success of the Corporation and the Subsidiary Banks. The Security Plan, and the individual agreements established thereunder (each a "Security Plan Agreement"), are intended to be administered by the Compensation Committee as unfunded welfare benefit plans established and maintained for the participants. Under the Security Plan, if a participant remains an employee until his or her normal retirement date, the Corporation shall pay to the participant a retirement benefit in the amount specified in the participant's Security Plan Agreement (the "Retirement Benefit"). Payment of the Retirement Benefit under the Security Plan shall begin on the normal retirement date and will continue for one hundred eighty (180) months. If a participant continues employment beyond his or her normal retirement date, the Compensation Committee shall specify the amount of the Retirement Benefit due to the participant upon retirement, which shall not be less than the Retirement Benefit such participant would otherwise have received had the participant retired at normal retirement age. If a participant dies after retirement but before the applicable Retirement Benefit is paid in full, the unpaid Retirement Benefit payments to which that participant is entitled shall 16 continue and be paid to the participant's beneficiary. No Death Benefit will be paid to the beneficiary of a participant who dies after attaining normal retirement age. Under the Security Plan, if a participant dies prior to attaining normal retirement age and the Security Plan is in effect at that time, the Corporation will pay a death benefit to such participant's beneficiary, provided the participant was not retired, disabled or on an authorized leave of absence at the time of death (the "Death Benefit"). The Death Benefit is (i) a sum equal to one hundred percent (100%) of the participant's covered salary, an amount specified in the Security Plan Agreement, paid monthly for the first twelve (12) months after death, and (ii) fifty percent (50%) of the covered salary for the next one hundred eight (108) months. The payments commence on the first day of the month following the date of death. A participant who ceases to be an employee after enrollment in the Security Plan, unless such termination is for just cause (defined in the Security Plan as theft, fraud, embezzlement or willful misconduct causing significant property damage to the Corporation or personal injury to another employee) or has less than five (5) years of employment from date of enrollment in the Security Plan or employment, shall receive all or a pro-rated portion of the benefit of the Retirement Benefit provided in the Security Plan upon the earlier of the participant's death or attainment of normal retirement age (the "Deferred Termination Benefit"). Any increase in benefit from that first established at date of entering the Security Plan would be prorated relative to the years employed under the Security Plan to the maximum years that could be served to retirement. Should a participant be terminated for just cause or not remain employed at least five (5) years from enrollment in the Security Plan, such participant will not be eligible for benefits. A Security Plan Agreement may be terminated by the participant upon written notice not less than thirty (30) days prior to an anniversary date of the date of execution of the Participant's Security Plan Agreement. In such case a participant's entitlement to receive the Death Benefit will cease, but the participant will still be entitled to receive the Deferred Termination Benefit. The Security Plan may be terminated by the Corporation at any time provided thirty (30) days notice is given to the participant and provided no payment of benefits has been commenced and not completed. In the event the Corporation undergoes a change of control, as defined in the Security Plan, and the surviving corporation takes action to terminate the Security Plan or a specific Security Plan Agreement as a result of the change in control, the participant will, nevertheless, be entitled to receive the Retirement Benefit, the Death Benefit, or the Deferred Termination Benefit as described in the Security Plan. 17 The Corporation has entered into Security Plan Agreements with the following individuals:
Retirement Participant and Date of Benefit Position as of Agreement Death Benefits Years 1-15 --------- -------------- ----------- December 31, 1998 Year 1 Years 2-10 (per year) ----------------- ------------------------- (per year) James L. Murray Sept. 1, 1992 * * $48,000 Retired Chairman of the Board of the Corporation F.S. Gunn Sept. 1, 1992 * * 48,000 Retired Vice Chairman of the Board of the Corporation Philip E. Norwood Jan. 1, 1995 $180,500 $90,250 $72,000 Chairman of the Board Jeffrey M. Harp Jan. 1, 1995 187,300 93,650 72,000 President Bob G. Scott Sept. 1, 1995 112,000 56,000 36,000 Executive Vice President & Chief Operating Officer Don R. Waters July 1, 1995 120,000 60,000 48,000 President of Northeast Office of Summit Community Bank, N.A. Micky Severson Jan. 1, 1997 115,000 57,500 36,000 President of Alta Mesa Office of Summit Community Bank, N.A. S. Tom Senor Jan. 20, 1997 105,000 52,500 24,000 President of Fossil Creek Office Summit Community Bank, N.A. N. David Moore Jan. 1, 1998 100,000 50,000 24,000 President of Camp Bowie Office of Summit Community Bank, N.A.
* Mr. Murray and Mr. Gunn have retired and have begun to receive their respective retirement benefit. Amounts payable under the Security Plan shall be paid exclusively from the general assets of the employer. However, under the Security Plan, the Corporation may invest in any specific asset or fund in order to provide the means for the payment of any benefits under the Security Plan. Security Plan participants will have no interest whatsoever in any such fund or asset. The Corporation has purchased life insurance policies insuring the lives of the individual participants with the Corporation as owner, premium payor and beneficiary of each policy, in 18 order to indemnify itself against the liability for the payment of any benefits under the Security Plan. The face or policy value of these policies are as follows:
Policy Participant Amount ----------- ------ James L. Murray $ 700,311 F.S. Gunn 649,591 Philip E. Norwood 862,939 Jeffrey M. Harp 1,009,407 Bob G. Scott 842,957 Don R. Waters 598,655 Micky Severson 501,611 Tom Senor 543,622 David Moore 345,189
BOARD COMPENSATION AND BENEFITS COMMITTEE REPORT ON EXECUTIVE COMPENSATION Notwithstanding anything to the contrary set forth in any of the Corporation's previous filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate future filings, including this Proxy Statement, in whole or in part, the following report and the Performance Graph shall not be incorporated by reference into any such filings. As of December 31, 1998, the Compensation and Benefits Committee (the "Committee") is comprised of the following non-employee members of the Board: William W. Meadows (Chairman), Robert E. Bolen, F.S. Gunn, Robert L. Herchert, Edward P. Munson and James L. Murray. Among other duties, the Committee makes recommendations to the Board with regard to the remuneration of the executive officers and directors of the Corporation and the Subsidiary Banks. COMPENSATION PHILOSOPHY. The Corporation's executive compensation policy incorporates the fundamental principle that executive compensation should be linked directly to corporate performance and increases in shareholder value, while concurrently ensuring that key employees are motivated and retained. The following objectives set forth the Committee's general guidelines for compensation decisions: - The Corporation must provide a competitive total compensation package that enables the Corporation to attract and retain key executives. - All of the Corporation's compensation programs must be integrated with the Corporation's annual and long-term business objectives so that executives remain focused on the fulfillment of these objectives. - The Corporation's compensation package must include a variable component that directly links compensation with the overall performance of the 19 Corporation, thereby expressly aligning executive compensation with the interest of shareholders. ELEMENTS OF EXECUTIVE COMPENSATION. The Committee regularly reviews the Corporation's compensation programs to ensure that remuneration levels and incentive opportunities are competitive and reflect performance. The various components of the compensation programs for executive officers are discussed below. (I) BASE SALARY. Base salary levels are largely determined through comparison with banking organizations of a size similar to the Corporation's. Surveys are utilized to establish base salaries that are within the range of those persons holding positions of comparable responsibility at other banking organizations of a size and complexity similar to the Corporation. Actual base salaries also are intended to reflect individual performance contributions as determined through performance evaluations. In addition to individual job performance and the above-referenced market comparisons, other factors may be taken into consideration, such as cost of living increases as well as an individual's perceived potential with the Corporation. All executive officer base salary levels, which are reviewed annually, are considered by the Committee to be competitive and within a necessary and reasonable range. (II) PERFORMANCE COMPENSATION PLAN. The Board has approved Performance Compensation Plans (the "Plans") for use within the Corporation and its subsidiaries. The Plans are administered by the Committee. The objective of the Plans is to create competitive levels of compensation tied directly to the attainment of performance objectives which the Committee believes are important for achieving long-term shareholder value. The Plans reward all employees based on the attainment of certain goals of the Corporation and/or its individual subsidiaries. The executive officers of the Corporation are eligible to participate at the same level as all employees in relationship to their respective base salaries. In addition, the executive officers through a related program earn additional compensation for achievement of those goals. The Committee annually determines the executive officers eligible to participate in the supplemental program of the Plan and the potential awards to be made for various levels of achievement under the Plan. The performance goals effective for 1998 included specific goals for growth, profits, asset quality and operational productivity or return on equity. In 1998, Philip E. Norwood, Jeffrey M. Harp and Bob G. Scott participated in the supplemental program for executive officers of the Corporation. All awards under the Plans are contingent on the Corporation and the subsidiaries attaining certain basic financial objectives such as return on assets and/or return on equity. For the most senior executives a portion of each years annual reward is deferred and held by the Corporation for payment at a later date. Under the Plan the deferral period is two years. The accumulated deferred payments may be reduced because of less than satisfactory performance in any one year. (III) STOCK OPTIONS. In 1993 the Board adopted the 1993 Incentive Stock Option Plan of Summit Bancshares, Inc. which was ratified by the shareholders of the Corporation at the 1993 annual meeting. In 1997 the Board adopted the 1997 Incentive Stock Option Plan of 20 Summit Bancshares, Inc. which was ratified at the 1997 annual meeting. It is the Corporation's philosophy that awarding incentive stock options to officers of the Corporation and the Subsidiary Banks based upon their respective positions and contributions to the Corporation's and each Subsidiary Bank's overall success will help attract and retain high quality, results-oriented professionals committed to creating long-term shareholder value. The activity for 1998 of these plans can be found in Note 12 to the Financial Statements in the Annual Report to Shareholders. (IV) MANAGEMENT SECURITY PLAN. Certain executive officers of the Corporation and its Subsidiary Banks participate in a Management Security Plan that was approved by the Board of Directors of the Corporation in 1992 and is administered by the Committee. This plan is more fully described in this proxy statement beginning on page 18. Through the programs described above, a significant portion of the Corporation's executive compensation program is linked directly to individual and corporate performance and long-term shareholder return. The Committee will continue to review all elements of executive compensation to ensure that the total compensation program, and each element therein, meets the Corporation's objectives and philosophy, as discussed above. 1998 COMPENSATION OF THE CHAIRMAN OF THE BOARD Mr. Norwood serves as the Chairman of the Board of the Corporation and as the president and chief executive officer of Summit Community Bank, N.A. Mr. Norwood's 1998 base salary was established by the Board of the Corporation on the Committee's recommendation, which was based on a survey of peer group institutions. Mr. Norwood participates in the Performance Compensation Plan at the all employee level and the executive officer level. Based on the 1998 performance of the Corporation and it's subsidiaries, he earned an award of $31,167 of which 38% was from the supplemental executive program. Also, 20% of the earned award is deferred for a period of two years. The award, net of the deferral and appropriate taxes, was paid in January 1999. This performance award was equal to 16% of Mr. Norwood's 1998 base salary. No stock options were granted to Mr. Norwood in 1998. In April 1993 the Committee granted options to the executive officers of the Corporation and the Subsidiary Banks under the Stock Plan. At that time Mr. Norwood was granted an option to purchase 80,000 shares at a price of $3.00 per share (adjusted for stock splits). These options vested rateably in 1993, 1994 and 1995 and are now fully vested. The Committee based its decision on the Corporation's improved performance, including net income, return on assets, reduction in classified and non-performing assets and improved expense control. 21 December 31, 1998 THE COMPENSATION AND BENEFITS COMMITTEE OF THE BOARD OF DIRECTORS William W. Meadows, Chairman Robert E. Bolen F. S. Gunn Robert L. Herchert Edward P. Munson James L. Murray COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION No member of the Compensation Committee of the Board of Directors of the Corporation as it was constituted in 1998 was an officer or employee of the Corporation or any of its subsidiaries, or, except for Mr. Murray and Mr. Gunn, the retired Chairman and Vice Chairman of the Board of Directors of the Corporation, was formerly an officer of the Corporation or any of its subsidiaries or had any relationships requiring disclosure by the Corporation under Item 404 of Regulation S-K. During 1998 no executive officer of the Corporation (i) served as a member of the compensation committee (or other board committee performing equivalent functions) of another entity, one of whose executive officers served on the Compensation Committee of the Corporation, (ii) served as a director of another entity, one of whose executive officers served on the Compensation Committee of the Corporation, or (iii) was a member of the compensation committee (or other board committee performing equivalent functions) of another entity, one of whose executive officers served as a director of the Corporation. 22 PERFORMANCE GRAPH The following graph compares the cumulative total shareholder return on the Common Stock of the Corporation with that of the CRSP Total Return Index ("Total Return") for The Nasdaq Stock Market (US) Index, a broad market index published by the Center for Research in Security Prices at the University of Chicago, and the NASDAQ Bank Stocks Index ("Bank Stock"), a bank industry stock index also published by the Center for Research in Security Prices at the University of Chicago. The comparison for each of the periods assumes that $100 was invested on December 31, 1993 in each of the Common Stock of the Corporation, the stocks included in the CRSP Total Return Index for The NASDAQ Stock Market (US) Index and the NASDAQ Bank Stocks Index. These indexes, which reflect formulas for dividend reinvestment and weighing of individual stocks, do not necessarily reflect returns that could be achieved by individual investors. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG THE CORPORATION, THE CRSP TOTAL RETURN INDEX FOR THE NASDAQ STOCK MARKET (US) INDEX, AND THE NASDAQ BANK STOCKS INDEX [GRAPH APPEARS HERE] ---------------------------------------------------------------------------- At December 31, 1993 1994 1995 1996 1997 1998 ---------------------------------------------------------------------------- Summit Bancshares, $100.00 $111.69 $180.52 $255.34 $474.41 $424.66 Inc. ---------------------------------------------------------------------------- Total Return $100.00 $ 97.75 $138.26 $170.02 $208.58 $293.21 ---------------------------------------------------------------------------- Bank Stocks $100.00 $ 99.64 $148.38 $195.91 $328.02 $324.90 ----------------------------------------------------------------------------
23 CERTAIN TRANSACTIONS LOANS Certain of the officers, directors and principal shareholders (and their affiliates) of the Corporation and the Subsidiary Banks have deposit accounts and other transactions with the Subsidiary Banks, including loans in the ordinary course of business. All loans or other exten sions of credit made by the Subsidiary Banks to officers, directors and principal shareholders of the Corporation and the Subsidiary Banks, and to affiliates of such persons, were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with independent third parties and did not involve more than the normal risks of collectibility or present other unfavorable features. The Subsidiary Banks expect to continue to enter into such transactions in the ordinary course of business on similar terms with officers, directors and principal shareholders (and their affiliates) of the Corporation and the Subsidiary Banks. OTHER TRANSACTIONS During the year ended 1998 the Corporation and Summit Community Bank, N.A. retained Barlow & Garsek, a Professional Corporation, to perform legal services on behalf of each. Elliott S. Garsek, a director of the Corporation, is a shareholder of Barlow & Garsek. ACTION TO BE TAKEN UNDER THE PROXY The accompanying proxy will be voted "FOR" election of the nominees for director and Proposal No. 2 unless the proxy is marked in such a manner as to withhold authority to so vote. The accompanying proxy will also be voted in connection with the transaction of such other business as may properly come before the Annual Meeting of Shareholders, or any adjournment or adjournments thereof. Management knows of no other matters to be considered at the Annual Meeting of Shareholders. If, however, any other matters properly come before the Annual Meeting of Shareholders, or any adjournment or adjournments thereof, the persons named in the accompanying proxy will vote such proxy in accordance with their best judgment on any such matter. The persons named in the accompanying proxy will also, if in their judgment it is deemed to be advisable, vote to adjourn the meeting from time to time. 24 DATE OF RECEIPT OF SHAREHOLDER PROPOSALS Proposals of shareholders intended to be presented at the next Annual Meeting of Shareholders must be received by the Corporation at its principal executive offices not later than December 20, 1999 for inclusion in the Corporation's Proxy Statement and accompanying proxy relating to the next Annual Meeting of Shareholders. Any such proposals shall be subject to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934, as amended. It is anticipated that the next Annual Meeting of Shareholders will be held on April 18, 2000. ANNUAL REPORTS FORM 10-K. A copy of the Corporation's 1998 Annual Report on Form 10-K, in cluding the financial statements and schedules thereto, required to be filed with the Securities and Exchange Commission, may be obtained without charge (except for exhibits to such Annu al Report, which will be furnished upon payment of the Corporation's reasonable expenses in furnishing such exhibits) by any shareholder whose proxy is solicited upon written request to: Summit Bancshares, Inc. P.O. Box 2665 Fort Worth, Texas 76113 Attention: Mr. Bob G. Scott 1998 ANNUAL REPORT TO SHAREHOLDERS. The Annual Report to Shareholders of the Corporation for the Fiscal Year ended December 31, 1998, is enclosed herewith. The Annual Report, which includes audited financial statements, does not form any part of the material for the solicitation of Proxies. BY ORDER OF THE BOARD OF DIRECTORS By: /s/ Philip E. Norwood ------------------------------------- Philip E. Norwood, Chairman of the Board Fort Worth, Texas March 19, 1999 25 SUMMIT BANCSHARES, INC. PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION FOR ANNUAL MEETING OF SHAREHOLDERS APRIL 20, 1999 The undersigned hereby constitutes and appoints James L. Murray, F.S. Gunn and Jeffrey M. Harp, and each of them, proxies with full power of substitution to vote, as directed below, all the shares of Common Stock of Summit Bancshares, Inc. (the "Corporation") held of record by the undersigned at the close of business on March 17, 1999, at the Annual Meeting of Shareholders to be held at Summit National Bank, 1300 Summit Avenue, Fort Worth, Texas, at 4:30 p.m. on April 20, 1999, and at any adjournment or adjournments thereof. 1. ELECTION OF DIRECTORS - Nominees: D. Jerrell Farr, Elliott S. Garsek, Ronald J. Goldman, F.S. Gunn, Jeffrey M. Harp, Robert L. Herchert, William W. Meadows, James L. Murray, Philip E. Norwood and Byron B. Searcy. MARK ONLY ONE BOX [_] VOTE FOR all nominees listed above, except vote to be withheld from the following nominees, if any: ---------------------------------------------------------------------- [_] VOTE TO BE WITHHELD from all nominees 2. APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS. Proposal to approve the appointment of Stovall, Grandey & Whatley as independent auditors of the Corporation for the fiscal year ending December 31, 1999, as described in PROPOSAL NO. 2 of the Proxy Statement dated March 19, 1999. FOR ____ AGAINST ____ ABSTAIN ____ 3. OTHER BUSINESS. In their discretion upon such other business as may properly come before the meeting, or any adjournment or adjournments thereof. FOR ____ AGAINST ____ ABSTAIN ____ (continued on other side) THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" ALL THE NOMINEES LISTED ABOVE, "FOR" PROPOSAL NO. 2, AND, IN THE DISCRETION OF THE PERSON DESIGNATED HEREIN AS PROXIES, UPON SUCH OTHER BUSINESS AS MAY COME BEFORE THE MEETING AND ANY ADJOURNMENT OR ADJOURNMENTS THEREOF. The undersigned hereby revokes any proxy or proxies heretofore given and hereby confirms all that said attorneys and proxies, or any of them, or their substitutes may do by virtue hereof. In addition, receipt of the 1998 Annual Report, the Notice of Annual Meeting and the Proxy Statement of Summit Bancshares, Inc. dated March 19, 1999, is hereby acknowledged. SHARES OF COMMON STOCK:___________ DATED:_________________, 1999 PLEASE DATE THIS PROXY AND SIGN YOUR NAME EXACTLY AS IT APPEARS HEREON, AND MAIL TODAY. WHERE THERE IS MORE THAN ONE OWNER, EACH SHOULD SIGN. WHEN SIGNING AS AN ATTORNEY, ADMINISTRATOR, EXECUTOR, GUARDIAN, OR TRUSTEE, PLEASE ADD YOUR TITLE AS SUCH. IF EXECUTED BY A CORPORATION, THIS PROXY SHOULD BE SIGNED BY A DULY AUTHORIZED OFFICER. __________________________________ __________________________________ __________________________________ Signature of Shareholder(s) __________________________________ Street Address __________________________________ City State Zip Code NOTE: I _____ WILL _____ WILL NOT ATTEND THE SHAREHOLDERS MEETING ON APRIL 20, 1999. -----END PRIVACY-ENHANCED MESSAGE-----