NEW
PEOPLES BANKSHARES, INC.
67
Commerce Drive
Honaker, Virginia 24260
Dear
Shareholder:
You
are cordially invited to attend the 2022 Annual Meeting of Shareholders of New Peoples Bankshares, Inc. (the “Company”) to
be held on Tuesday, May 17, 2022, at 6:00 p.m. by virtual audio meeting. In support of the health of our shareholders, directors and
employees, the Board of Directors has determined that the Annual Meeting will be conducted exclusively as a “virtual audio meeting”
of shareholders via online live webcast. There will be no physical location for the meeting. You will be able to attend and listen to
the meeting live, submit questions and vote online during the meeting by visiting meetnow.global/MUWP9Q9. For information on how to participate
in the virtual Annual Meeting, please see the first paragraph on page 1 of the accompanying proxy statement.
At
the Annual Meeting, you will be asked to vote on two proposals. We are furnishing proxy materials to our shareholders primarily over
the Internet. You may read, print and download these materials, including a formal notice of the Annual Meeting, a Proxy Statement, the
proxy card, and the 2021 Annual Report on Form 10-K at http://www.edocumentview.com/NWPP. On or about April 4, 2022, we mailed our shareholders
a notice with instructions on how to access these materials and how to vote their shares online. The notice also provides instructions
on how you can request a paper copy of these materials if you would prefer.
Whether
or not you plan to attend the Annual Meeting online, it is important that your shares be represented and voted.
Please read the accompanying Proxy Statement and submit your proxy via the Internet, by using the toll-free telephone number or, if you
request a paper copy, by completing, signing, dating and returning your proxy card promptly using the enclosed postage-paid envelope.
This will not prevent you from voting your shares electronically during the meeting, but it will ensure that your vote is counted if
you are unable to attend the meeting. Your Proxy may be revoked at any time before it has been voted. If your broker, bank or other nominee
holds your shares, you also should contact your nominee for additional information.
We
hope you will participate in the Annual Meeting online, either in person or by proxy.
Sincerely,
/s/
C. Todd Asbury
C.
Todd Asbury
President
and Chief Executive Officer
Honaker,
Virginia
April
4, 2022
NEW
PEOPLES BANKSHARES, INC.
67
Commerce Drive
Honaker,
Virginia 24260
___________________
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
___________________
The
Annual Meeting of Shareholders (the “Annual Meeting”) of New Peoples Bankshares, Inc. (the “Company”) will be
held on Tuesday, May 17, 2022 at 6:00 p.m. The Annual Meeting will be conducted exclusively as a “virtual audio meeting”
of shareholders via online live webcast. You will be able to attend and participate in the Annual Meeting online, vote your shares electronically
and submit your questions prior to and during the meeting by visiting meetnow.global/MUWP9Q9.
At
the meeting, you will be asked to vote on the following proposals:
| 1. | To
elect four directors to serve for terms of three years each expiring at the 2025 annual meeting
of shareholders; and |
| 2. | To
ratify the Audit Committee’s appointment of Yount, Hyde & Barbour, PC (“YHB”)
as the Company’s independent registered public accounting firm for the year ending
December 31, 2022. |
| 3. | Act
upon such other matters as may properly come before the Annual Meeting. |
Only
holders of shares of Common Stock of record at the close of business on March 23, 2022, the record date set by our Board of Directors,
are entitled to notice of, and to vote at, the Annual Meeting.
It
is important that as many shares as possible be represented at the Annual Meeting. Please read this Proxy Statement and submit your proxy
via the Internet, by using the toll-free telephone number or, if you request a paper copy, by completing, signing, dating and returning
your proxy card promptly using the enclosed postage-paid envelope. You may revoke your proxy at any time before it has been voted.
By
Order of the Board of Directors
/s/
John J. Boczar
John
J. Boczar
Secretary
April
4, 2022
Important
Notice Regarding the Availability of Proxy Materials
for
the Shareholder Meeting to be Held on May 17, 2022.
The
Proxy Statement, proxy card and the 2021 Annual Report on Form 10-K are available at http://www.edocumentview.com/NWPP.
If
your shares of the Company’s common stock are held by a broker or other custodian, then that organization is considered the shareholder
of record and the shares are considered held in “street name”. The Company provided its proxy materials to the shareholder
of record for distribution to you along with your voting instruction form. As the beneficial owner of the shares, you have the right
to direct the shareholder of record how to vote your shares. Check the information forwarded to you by the shareholder of record to see
which voting methods are available to you. As a beneficial owner, you must register in advance to attend the Annual Meeting virtually
on the Internet. Additional instructions are included in the Proxy Statement.
NEW
PEOPLES BANKSHARES, INC.
67
Commerce Drive
Honaker,
Virginia 24260
________________________________________________
PROXY
STATEMENT
2022
ANNUAL MEETING OF SHAREHOLDERS
________________________________________________
This
Proxy Statement is furnished to holders of the common stock, par value $2.00 per share (“Common Stock”), of New Peoples Bankshares,
Inc., in connection with the solicitation of proxies by our Board of Directors on behalf of the Company to be used at the 2022 Annual
Meeting of Shareholders (the “Annual Meeting”) to be held on Tuesday, May 17, 2022 at 6:00 p.m. The Annual Meeting will be
conducted exclusively as a “virtual audio meeting” of shareholders via online live webcast. You will be able to attend and
participate in the Annual Meeting online, vote your shares electronically and submit your questions prior to and during the meeting by
visiting meetnow.global/MUWP9Q9.
We
are furnishing our proxy materials primarily over the Internet rather than mailing paper copies of those materials to each shareholder.
On or about April 4, 2022, we first mailed an Important Notice Regarding the Availability of Proxy Materials on the Internet (the “Notice”)
to shareholders and posted our proxy materials on the Internet site referenced therein. These proxy materials include the accompanying
notice of Annual Meeting, this Proxy Statement, the proxy card and our Annual Report on Form 10-K for the year ended December 31, 2021.
The Notice provides information regarding how to access these proxy materials on the Internet, vote your shares or request a paper copy
of these materials.
Your
vote is very important, regardless of the number of shares you own. You are urged to submit your vote as soon as possible. As described
in the Notice, you will have the option to vote by telephone, via the Internet or, if you request a paper copy, by completing, dating
and signing a proxy card and returning it to the Company. Execution or submission of a proxy will not affect a registered shareholder’s
right to attend the Annual Meeting via the Internet and vote during the meeting. Any registered shareholder who has executed or submitted
a proxy may revoke it by attending the Annual Meeting via the Internet and voting during the meeting. Any shareholder who executes a
proxy also has the power to revoke it at any time by written notice to our Secretary, or by submitting a subsequent vote using any of
the methods described above. If your shares are held in “street name,” and you want to change or revoke voting instructions
you have given to the record holder of your shares, please follow the directions given by the institution that holds your shares.
The
cost of soliciting proxies for the Annual Meeting will be borne by us. We do not intend to solicit proxies other than by use of mail
and electronic notice and access to the Internet; however, certain officers and regular employees of the Company or its subsidiaries,
without additional compensation, may use their personal efforts, by telephone or otherwise, to obtain proxies. We may also reimburse
banks, brokerage firms and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses in forwarding proxy
materials to the beneficial owners of shares of Common Stock.
To
reduce the expenses of delivering duplicate proxy materials to shareholders, we are relying upon rules of the Securities and Exchange
Commission (“SEC”) that permit us to deliver only one Notice and annual report to multiple shareholders who share an address
unless we received contrary instructions from any shareholder at that address. All shareholders sharing an address will continue to receive
separate proxy cards based on their registered ownership of Common Stock. Any shareholder sharing an address who does not receive an
individual proxy statement and annual report may write or call Computershare Investor Services (“Computershare”) as specified
below and Computershare will promptly send the materials to the shareholder at no cost. For future meetings, a shareholder may request
separate copies of our proxy materials, or request that we only send one set of these materials if the shareholder is receiving multiple
copies, by contacting Computershare at Attn.: Proxy Services, P.O. Box 505008, Louisville, Kentucky 40233-9814 or by telephoning Computershare
toll free at 1-800-368-5948.
On
March 23, 2022, the record date for determining those shareholders entitled to notice of and to vote at the Annual Meeting, there were
23,922,086 shares of Common Stock issued and outstanding. Each outstanding share of Common Stock is entitled to one vote on all matters
to be acted upon at the Annual Meeting. A majority of the shares of Common Stock entitled to vote, represented in person or by proxy,
constitutes a quorum for the transaction of business at the Annual Meeting.
A
shareholder may abstain or (only with respect to the election of directors) withhold his or her vote (collectively, “Abstentions”)
with respect to each item submitted for shareholder approval. Abstentions will be counted for purposes of determining the existence of
a quorum. Abstentions will not be counted as voting in favor of the relevant item, and generally will have no effect on whether or not
the item is approved.
If
your shares are held in an account with a broker or other custodian, then your shares are held in “street name.” As a beneficial
owner, you must register in advance to attend the Annual Meeting virtually on the Internet. To register to attend the Annual Meeting,
you must submit proof of your proxy power (legal proxy) reflecting your holdings along with your name and email address to the Company’s
transfer agent, Computershare, Inc. Requests for registration must be labeled as “Legal Proxy” and be received no later than
5:00 p.m., Eastern Time, on May 10, 2022. You will receive confirmation of your registration by email after we receive your registration
materials. Requests for registration should be directed to us at the following: By email: Forward the email from your broker,
or attach an image of your legal proxy, to legalproxy@computershare.com; By mail: Computershare, New Peoples Bankshares, Inc.
Legal Proxy, P.O. Box 43001, Providence, Rhode Island 02940-3001.
A
broker who holds shares in “street name” is prohibited from voting on certain items when he or she has not received instructions
on how to vote from the beneficial owner, but on other items, the broker is entitled to vote without instructions from the beneficial
owner. Where brokers do not have or do not exercise such discretion, the inability or failure to vote is referred to as a “broker
non-vote.” Brokers are not permitted to vote on the election of directors without specific instruction from the beneficial owner
of the shares in street name. We expect that brokers will be allowed to exercise discretionary authority for beneficial owners who have
not provided voting instructions with respect to the ratification of Yount, Hyde & Barbour, PC (“YHB”) as our independent
registered public accounting firm; therefore, no broker non-votes are expected to exist in connection with this proposal. “Broker
shares” for which a vote has been cast on at least one matter will be counted for purposes of determining the existence of a quorum
for the transaction of business at the Annual Meeting. “Broker shares” that are not voted on any matter at the Annual Meeting
will not be counted for purposes of determining the existence of a quorum. Broker non-votes will not be counted as voting in favor of
any particular matter, and generally will have no effect on whether or not the item is approved.
The
Board of Directors is not aware of any matters other than those described in this Proxy Statement that may be presented for action at
the Annual Meeting. However, if other matters do properly come before the Annual Meeting, the persons named in the enclosed proxy possess
discretionary authority to vote in accordance with their best judgment with respect to such other matters.
PROPOSAL
ONE: ELECTION OF DIRECTORS
The
Board of Directors currently consists of eleven members, four of whom are nominated for election as directors at the Annual Meeting to
serve for terms of three years each expiring on the date of the annual meeting of shareholders in 2025. Seven other directors are serving
terms that end in either 2023 or 2024, as indicated below.
The
election of each nominee for director requires the affirmative vote of the holders of a plurality of the shares of Common Stock cast
in the election of directors. If the proxy is executed in such manner as not to withhold authority for the election of any or all of
the nominees for directors, then the persons named in the proxy will vote the shares represented by the proxy for the election of the
four nominees named below. If the proxy indicates that the shareholder wishes to withhold a vote from one or more nominees for director,
such instructions will be followed by the persons named in the proxy.
Each
nominee has consented to being named in this Proxy Statement and has agreed to serve if elected. The Board of Directors has no reason
to believe that any of the nominees will be unable or unwilling to serve. If, at the time of the Annual Meeting, any nominee is unable
or unwilling to serve as a director, votes will be cast, pursuant to the enclosed proxy, for such substitute nominee as may be nominated
by the Board of Directors. There are no current arrangements between any nominee and any other person pursuant to which a nominee was
selected. No family relationships exist among any of the directors or between any of the directors and executive officers of the Company.
The
following biographical information discloses each nominee’s age and business experience for the past five years, unless otherwise
noted, and the year that each individual was first elected to our Board of Directors or earlier to the Board of Directors of New Peoples
Bank, Inc. (the “Bank”), the predecessor to and now a wholly owned subsidiary of the Company.
Nominees
for Election for Terms Expiring in 2025
Tim
W. Ball, age 62, has been President, Owner and Operator of Ball Coal Company and owner of Tim Ball Trucking Company since 1985, and
President of Tim Ball Farming Corporation since 1987. He is active in various community services. He has been a director of the Company
since 1999. Mr. Ball’s experience in the coal industry and farming serve well for the Board of Directors because many of the Company’s
customers are involved in these lines of business.
Michael
G. McGlothlin, age 70, is an attorney and President of the Appalachian College of Pharmacy (2005 to 2006 and 2008 to present). He
also serves as President of Watkins Branch Development, LTD and The Inn on Garden Creek, LTD, as Secretary and Director of MGM Methane
Corporation, as Trustee and Treasurer of the Appalachian School of Law, and as a Trustee and as Secretary of the McGlothlin Foundation.
He has been the owner of Michael G. McGlothlin, Attorney-at-Law in Grundy, Virginia since 2002. He previously served as Commonwealth
Attorney for Buchanan County, Virginia and as County Attorney for Buchanan County, Virginia. Mr. McGlothlin is past President of the
Buchanan County Bar Association. Mr. McGlothlin has been a Director of the Company and the Bank since 1998. Mr. McGlothlin’s experience
as an attorney, administrator, and organization and community leader provide the Board with a broad range of professional experience
and his community involvement assists the Board in understanding the communities it serves and developing relationships within those
communities.
B.
Scott White, age 76, is a retired cattle rancher in Castlewood, Virginia, as well as a private investor and has served as Vice Chairman
of the Board of Directors of the Company and the Bank since 2019. He was the President and CEO of White Stone Company in Castlewood,
Virginia and White’s Pelletizing Company in Paradise, Pennsylvania until the companies were sold in 1997. Mr. White also previously
served as General Manager of Sky Blue Tower Company, LLC, a cell phone tower rental company in southwest Virginia. Currently, he serves
on the Board of Rockydale Quarries in Roanoke, Virginia. He has been a director since 1998. Mr. White’s experience as a small business
owner and rancher provides experience to the Board relevant to its small business and agricultural customer base.
C.
Todd Asbury, age 51, has served as the Company’s and the Bank’s President and Chief Executive Officer since December
17, 2014, and was elected to the Board in 2018. He previously served as Executive Vice President, Chief Financial Officer, and
Treasurer of both the Company and the Bank from May 2009 to December 2014. Mr. Asbury served as Secretary of the Company and the
Bank from May 2010 to December 2014. He served as Senior Vice President, Chief Financial Officer, and Treasurer of the Company
and the Bank starting in December 2003. Prior to joining the Company, he worked for several community financial institutions and in public
accounting. He is a certified public accountant. Mr. Asbury serves as Chairman of the Board of Trustees of Bluefield University;
as a member of the Board of Trustees of the Virginia Bankers’ Association School of Bank Management, as a member of Board of Directors
of the United Way of Southwest Virginia, a member of the Board of Directors of the Virginia Early Childhood Development Foundation, and
as a member of the Southwest Virginia Workforce Development Board of Directors. Based on his background and extensive understanding
of the operations of the Company, Mr. Asbury is well qualified to serve as a director.
THE
BOARD OF DIRECTORS RECOMMENDS THE SHAREHOLDERS VOTE “FOR” THE NOMINEES SET FORTH ABOVE.
PROPOSAL
TWO: RATIFICATION OF
APPOINTMENTOF
INDEPENDENT AUDITORS
For
the year ending December 31, 2022, the Audit Committee of the Board of Directors has selected YHB, an independent registered public accounting
firm, to perform the audit of the Company’s financial statements.
The
selection of YHB as the Company’s independent auditors is not required to be submitted to a vote of the shareholders for ratification.
The Company is doing so because it believes that it is a matter of good corporate practice. If the shareholders fail to vote on an advisory
basis in favor of the selection of YHB, the Audit Committee will reconsider whether to retain YHB, and may retain that firm or another
firm without re-submitting the matter to the shareholders. Even if the shareholders ratify the appointment, the Audit Committee may,
in its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year if
it determines that a change would be in the Company’s best interests. Approval of this Proposal requires the affirmative vote of
a majority of the shares voted on the Proposal.
Elliott
Davis, PLLC (“Elliott Davis”) served as the Company’s independent registered public accounting firm during the fiscal
years ended December 31, 2021 and 2020. On March 25, 2022, the Company notified Elliott Davis that it was being dismissed as the Company's
independent registered public accounting firm, effective with the completion of the audit for the year ending December 31, 2021. The
dismissal of Elliott Davis was made upon the recommendation of the Audit Committee of the Company’s Board of Directors.
The
audit reports of Elliott Davis on the Company’s consolidated financial statements for each of the two fiscal years ended December
31, 2021 and 2020 did not contain any adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope, or accounting principles. During the Company's two most recent fiscal years ended December 31, 2021 and 2020, and the subsequent
interim period from January 1, 2022 through the date of Elliott Davis’s dismissal, there were (i) no disagreements (as defined
in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and Elliott Davis on any matters of accounting
principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the satisfaction of
Elliott Davis, would have caused Elliott Davis to make reference to the subject matter of the disagreement in connection with Elliott
Davis’s reports on the Company’s consolidated financial statements for 2021 and 2020, and (ii) no “reportable events”
(as defined in Item 304(a)(1)(v) of Regulation S-K and the related instructions).
During
the Company’s two most recent fiscal years ended December 31, 2021 and 2020, and the subsequent interim period from January 1,
2021 through the date of Elliott Davis’s dismissal, neither the Company nor anyone acting on its behalf consulted with YHB regarding
either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion
that might be rendered on the Company's consolidated financial statements, and neither a written report nor oral advice was provided
to the Company that YHB concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing
or financial reporting issue, or (ii) any matter that was either the subject of a “disagreement” or a “reportable event”
(as defined in Item 304(a)(1)(iv) and Item 304(a)(1)(v) of Regulation S-K and the related instructions, respectively).
Representatives
of YHB and Elliott Davis are expected to participate in the Annual Meeting of Shareholders. Those representatives will have the opportunity
to make a statement at the meeting and will be available to respond to appropriate questions.
THE
BOARD OF DIRECTORS RECOMMENDS THE SHAREHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF YHB AS THE INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2022.
Incumbent
Directors
Incumbent
Directors Whose Terms Expire in 2023
Gina
D. Boggess, age 51, is the Coordinator of Religious Education for Sacred Heart Catholic Church in Princeton, West Virginia, a position
she has held since 2018. Previously, she was involved in Met Resources, a family owned coal mining business, for ten years. Prior to
that, she worked for a community bank for seven years in various positions, including branch management and as a financial services representative
and marketing director. She is active in her community serving on various boards including the Princeton Rescue Squad, Community Foundation
of the Virginias and as a state and local board member for Catholic Charities. Ms. Boggess’ experience in both the banking and
coal industries as well as her community involvement in the Princeton, West Virginia market provides experience that is relevant to serving
customers in this market.
John
D. Cox, age 65, is the owner of Cox Tractor Company, a farm equipment business, located in Kingsport, Tennessee, that he has owned
and operated since 1978. Mr. Cox is also a local farmer and entrepreneur. Mr. Cox has served as a director of the Company since 1998
and served as Chairman of the Board of Directors for the Company and the Bank for two years from 2012 through 2014. Mr. Cox’s experience
in agriculture and agricultural-related small businesses support the Company’s significant customer base in these markets.
Charles
H. Gent, Jr., age 62, is self-employed in the logging and farming industries in Honaker, Virginia and served as Vice Chairman of
the Board of Directors of the Company and the Bank from 2012 to 2019. He is President of C & R Gent Logging. Mr. Gent is also involved
in farming and various real estate ventures with his family. Previously, he was vice president and owner of Genwal Coal Company in Utah.
He is actively involved in several community activities. He has been a director since 1998. Mr. Gent’s experience in logging and
mining, as well as real estate and farming, provides experience to the Board relevant to understanding these businesses in the Company’s
rural markets.
Eugene
S. Hearl, age 90, is a retired banker who has over 65years of banking experience serving in capacities as President and CEO for two
community banks, TruPoint Bank and the former Cumberland Bank, and as the Regional President for the former Dominion Bank in the Southwest
Virginia market. Mr. Hearl was appointed as a director of the Company on November 29, 2010. Mr. Hearl’s vast wealth of knowledge
in community banking and the various industries in our local markets provide additional financial institution management skills and perspective
to the Board.
Incumbent
Directors Whose Terms Expire in 2024
Joe
M. Carter, 84, is a retired general manager of Daugherty Chevrolet in Gate City, Virginia, where he served 43 years in this role
until 2008. He served as an advisory Board member of the former Peoples Bank, Inc. and its successors, Premier Bank – Central,
N.A. and First Virginia Bank Southwest. He has been a director of the Company since 1998. Mr. Carter’s experience in the automotive
industry and consumer finance assists the Board of Directors in understanding these businesses, which are important in the Company’s
markets.
Harold
Lynn Keene, age 67, has been President of Keene Carpet, Inc. since 1976 and was President of Harold Keene Coal Co., Inc. until its
sale in January 2011. He served as a bank director for Peoples Bank, Inc. and its successor Premier Bank-Central, N.A. He also served
as an advisory board member with First Virginia Bank Southwest. He has been a director of the Company since 1998. He has been the Chairman
of the Board of Directors of the Company and the Bank since May 2014. Mr. Keene’s experience in banking provides an important resource
to the Board of Directors in dealing with bank and finance-related matters. His experience in the coal industry provides for a resource
in this important market for the Company.
J.
Robert Buchanan, age 70 is a retired veteran Virginia banker with more than 40 years of industry experience. He served most recently
as President, Chief Executive Officer and Director of First Region Bancshares and First Sentinel Bank from 2008 through 2015. He also
held positions as Chief Financial Officer with National Bankshares, Inc., National Bank of Blacksburg, and Premier Bankshares Corporation;
as Controller and Internal Auditor with Dominion Bank of Middle Tennessee; and internal auditor with Virginia Polytechnic Institute.
He began his career as an assistant bank examiner in the Fifth National Bank Region of the OCC. Based on his extensive banking background,
Mr. Buchanan was appointed to boards of the Bank and the Company January 22, 2018, and is well qualified to serve as a director.
Executive
Officers Who Are Not Directors
The
following biographical information discloses the age and business experience in the past five years for each of our executive officers
who are not directors.
Bryan
T. Booher, age 51, has served as Executive Vice President and Chief Risk Officer of the Bank since January 27, 2020. He was
previously employed by Highlands Union Bank from January 2004 until January 2020 in multiple roles, including Interim President and Chief
Executive Officer, Chief Risk Officer, Executive Vice President of Operations and Information Technology, and Senior Lending Officer.
Prior to that, he was employed by BB&T from 1992 to 2004.
James
W. Kiser, age 41 has served as Executive Vice President and Chief Banking Officer of the Bank since May 29, 2020. He previously served
as First Senior Vice President and Chief Commercial Banking Officer from March 2018 to May 2020; and First Senior Vice President and
Senior Commercial Banking officer from August 2015 to March 2018. Prior to joining the Bank in August 2015, Mr. Kiser served as Chief
Lending Officer at First Sentinel Bank from June 2014 to July 2015 and in various positions with First Bank of Virginia from November
2007 to June 2014.
Christopher
G. Speaks, age 56, has served as Executive Vice President, Chief Financial Officer and Treasurer of both the Company and the Bank
since August 16, 2021. He joined the Company from FNB Bancshares, Inc. in Scottsboro, Alabama where he served as the Chief Financial
Officer from January 2021 until it was acquired in April 2021. Prior to that, he served as Chief Financial Officer and in senior level
accounting and finance roles at several financial institutions, including Executive Vice President and Chief Financial Officer for Tyndall
Federal Credit Union from May 2016 to January 2020, and Director of Finance and other senior level positions at CertusBank from November
2011 through October 2015. He worked in senior accounting level roles at The South Financial Group and TD Bank from 1998 through 2011.
Security
Ownership of Management
The
following table sets forth, as of March 23, 2022, certain information with respect to beneficial ownership of shares of Common Stock
by each of the members of the Board of Directors, by each of the executive officers named in the “Summary Compensation Table”
below and by all directors and executive officers as a group. Beneficial ownership includes shares, if any, held in the name of the individual’s
spouse, minor children or other relatives of the individual living in such person’s home, as well as shares, if any, held in the
name of another person under an arrangement whereby the director or executive officer can vest title in himself at once or at some future
time.
Name
of Beneficial Owner |
|
Common
Stock
Beneficially
Owned (1) |
|
Percent
of
Class (2) |
| |
|
|
|
|
| C.
Todd Asbury |
|
10,208 |
|
* |
| Tim
W. Ball |
|
3,432 |
|
* |
| Gina
D. Boggess |
|
2,476 |
|
* |
| J.
Robert Buchanan |
|
4,100 |
|
* |
| Joe
M. Carter |
|
29,955 |
(3) |
* |
| John
D. Cox |
|
614,489 |
(4) |
2.57% |
| Charles
H. Gent, Jr. |
|
31,970 |
(5) |
* |
| Eugene
Hearl |
|
3,297 |
|
* |
| Harold
Lynn Keene |
|
4,508,487 |
(6) |
18.85% |
| Michael
G. McGlothlin |
|
458,267 |
|
1.92% |
| B.
Scott White |
|
5,132,752 |
(7) |
21.46% |
| Named
Executive Officers: |
|
|
|
|
| James
W. Kiser |
|
10,360 |
(8) |
* |
All
Directors and Executive
Officers
as a Group (14 persons) |
|
10,809,793 |
|
45.19% |
* Percentage
of ownership is less than one percent of the outstanding shares of Common Stock.
| (1) | Except
as otherwise indicated, each director, director nominee or executive officer has sole voting
power and investment power with respect to the shares shown. |
| (2) | Based
on 23,922,086 shares of Common Stock issued and outstanding on March 23, 2022. |
| (3) | Includes
8,201 shares held by Mr. Carter's wife. |
| (4) | Includes
526,411 shares in a revocable personal trust. |
| (5) | Includes
2,860 shares held by Mr. Gent's wife, 2,860 shares Mr. Gent holds as custodian for his child,
and 4,800 shares held jointly with his wife. |
| (6) | Includes
1,076,779 shares held by H.L. Keene, L.L.C. in which Mr. Keene is the sole manager, and 500
shares held by The Harold Lynn Keene Trust. |
| (7) | Includes
2,061,666 shares held by SBTB, L.P. in which Mr. White is a general partner, 986,862 shares
held by Sky Investments, LLC in which Mr. White is the manager, and 172,160 shares held by
Mr. White's wife. Mr. White holds shares as trustee under various trust agreements –
108,010 shares in revocable personal trust, 156,637 shares in a self-directed IRA, 9,056
shares under irrevocable trust for an offspring, and 412,186 shares allocated to three irrevocable
trusts for grandchildren. |
| (8) | Held
jointly with spouse. |
Security
Ownership of Certain Beneficial Owners
As
of March 23, 2022, the following persons are known to us that beneficially own five percent or more of the Company’s stock. Other
than as disclosed below, the Company is not aware of any person or group, as those terms are defined in the Securities Exchange Act of
1934, who beneficially owned more than 5% of the outstanding Common Stock as of March 23, 2022.
| Name
and Address of Beneficial Owner |
|
Amount
and Nature of Beneficial Ownership |
|
Percent
of Class |
| |
|
|
|
|
B.
Scott White
Post
Office Box 520
Castlewood,
Virginia 24224 |
|
5,132,752(1)
|
|
21.46%
|
| |
|
|
|
|
Harold
Lynn Keene
Post
Office Box 1320
Lebanon,
Virginia 24260 |
|
4,508,487(2) |
|
18.85% |
Richard
G. Preservati, Sr.
Post
Office Box 1003
Princeton,
West Virginia 24740
|
|
3,039,999(3)
|
|
12.71%
|
| | | |
| (1) | Includes
2,061,666 shares held by SBTB, L.P. in which Mr. White is a general partner, 986,862 shares
held by Sky Investments, LLC in which Mr. White is the manager, and 172,160 shares held by
Mr. White's wife. Mr. White holds shares as trustee under various trust agreements –
108,010 shares in revocable personal trust, 156,637 shares in a self-directed IRA, 9,056
shares under irrevocable trust for an offspring, and 412,186 shares allocated to three irrevocable
trusts for grandchildren. |
| (2) | Includes
1,076,779 shares held by H.L. Keene, L.L.C. in which Mr. Keene is the sole manager, and 500
shares held by The Harold Lynn Keene Trust. |
| (3) | Includes
2,533,333 held by Family’s Future IV Limited Partnership in which Mr. Preservati is
a general partner. |
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires our directors and certain officers to file reports with the SEC indicating their holdings of, or transactions
in, our equity securities. Based on a review of these reports and written representations furnished to us, we believe that our directors
and officers timely complied with all Section 16(a) filing requirements with respect to 2021, other than Mr. White with three reports
listing three late transactions; Mr. Keene with one report listing one late transaction, Mr. Cox with one report listing one late transactions
and Mr. Kiser with one report listing one late transaction.
Director
Compensation
The
following table sets forth, as of December 31, 2021, certain information with respect to director compensation for each of the members
of the Board of Directors. The directors did not receive any other compensation during 2021 for their services as directors on the Board.
| Director
Compensation for 2021 |
| Name |
Fees
Earned or
Paid
in Cash ($) |
Total
($) |
| C.
Todd Asbury |
- |
- |
|
| Tim
W. Ball |
9,000 |
9,000 |
|
| Gina
D. Boggess |
9,200 |
9,200 |
|
| J.
Robert Buchanan |
10,000 |
10,000 |
|
| Joe
M. Carter |
13,000 |
13,000 |
|
| John
D. Cox |
14,800 |
14,800 |
|
| Charles
H. Gent, Jr. |
9,000 |
9,000 |
|
| Eugene
Hearl |
13,600 |
13,600 |
|
| Harold
Lynn Keene |
18,400 |
18,400 |
|
| Fred
W. Meade |
3,500 |
3,500 |
|
| Michael
G. McGlothlin |
8,600 |
8,600 |
|
| B.
Scott White |
15,600 |
15,600 |
|
| |
|
|
|
|
In
2021, each director was paid $700 per month, except for Mr. Keene, Chairman, who received $1,000 per month, for service on the Board
of Directors and $200 per committee meeting for each committee of which a director attended as a member.
CORPORATE
GOVERNANCE
General
Our
business and affairs are managed under the direction of the Board of Directors in accordance with the Virginia Stock Corporation Act
and our Articles of Incorporation and Bylaws. Members of the Board are kept informed of our business through discussions with our executive
officers and other officers, by reviewing materials provided to them and by participating in meetings of the Board and its committees.
Except
for Mr. Asbury, the Board of Directors has determined that all members are independent as defined by the listing standards of the Nasdaq
Stock Market (“Nasdaq”). In reaching this conclusion, the Board of Directors considered that the Company and its subsidiary
bank may conduct business with companies of which certain members of the Board of Directors or members of their immediate families are
or were directors or officers; however, in 2021, no transactions occurred with such companies other than those described under “Certain
Relationships and Related Transactions.”
Code
of Ethics
The
Board of Directors has adopted a Code of Ethics for our directors, executive officers, and senior officers who have financial responsibilities.
The Code of Ethics is designed to promote, among other things, honest and ethical conduct, proper disclosure of financial information
in our periodic reports, and compliance with applicable laws, rules and regulations by our senior officers who have financial responsibilities.
A
copy of the Code of Ethics may be obtained on our website at https://newpeoples.bank/Code-of-Ethics.
Whistleblower
Procedures
The
Audit Committee and the Board of Directors have approved procedures for the receipt, retention and treatment of reports or complaints
to the Audit Committee regarding accounting, internal accounting controls, auditing matters and legal or regulatory matters. There
are also procedures for the submission by Company or Bank employees of confidential, anonymous reports to the Audit Committee.
Anti-Hedging
Policy
The
Company currently does not have any policies with respect to financial instruments or transactions in derivative securities or otherwise
that hedge or offset any decrease in the market value of the Company’s common stock.
Communications
with Directors
Any
director may be contacted by writing to him or her c/o Post Office Box 1810, Honaker, Virginia 24260. Communications to the directors
as a group may be sent to the same address, c/o the Secretary of the Company. We promptly forward, without screening, all such correspondence
to the indicated directors.
Board
Leadership
Except
for Mr. Asbury, the Company’s and the Bank’s Boards of Directors are currently composed of non-management members.
The
Chairman of the Board is occupied by a non-management member. The Board believes that the principal role of the President and Chief Executive
Officer is to manage the business of the company in a safe, sound, and profitable manner. The role of the Board, including
its Chairman, is to provide independent oversight of the President and Chief Executive Officer, to oversee the business and affairs of
the organization in the best interests of its shareholders, to adopt or approve major policies and procedures, to oversee financial reporting
and compliance, and to serve the Company’s constituencies including shareholders, customers, employees, and communities. The Board
believes that the inclusion of the President and Chief Executive Officer on the Boards of the Company and the Bank enhances the effectiveness
of the Boards’ activities due to the operational expertise and institutional knowledge possessed by the President and Chief Executive
Officer. Executive sessions of the Board are held periodically with the absence of the Chief Executive Officer.
The
Company’s leadership structure consists of varying levels of authority, responsibility and risk exposure that increase through
each incremental level of management hierarchy. The senior management team reports directly to the CEO and meets collectively on a regular
basis, and dialogs daily regarding the Bank’s activities. The senior management team manages every aspect of the Bank’s activities
and acts as a primary communications medium across all functional areas of the organization. This structure enables information
and management guidance to flow easily up, down and horizontally.
Board’s
Role in Risk Oversight
The
Board is intimately engaged in overseeing the risk management of the Company, including credit risk, liquidity risk, interest rate risk,
price risk, operational risk, cyber security risk, compliance risk, strategic risk, and reputational risk. This is accomplished through
a strong committee system consisting of the Asset Liability (“ALCO”) Committee, the Director’s Loan Committee, the
Compensation Committee, the Nominating Committee, and the Audit, Risk and Compliance Committee; each of which meets with scheduled frequency
with its senior staff counterparts. In addition, the leadership structure of the Board of Directors (independent chair) supports the
Board’s independent risk oversight role. Each of these committees is composed of directors who are familiar with their areas of
responsibility. Senior management is responsible for day-to-day risk management in each functional area and report at each full Board
meeting on the risk-related matters within their area of responsibility. In addition, the Board receives and reviews minutes
from each committee and additional commentary from each respective committee chair is provided as deemed appropriate. Data reviewed are
both historical and forward-looking to enable the Board to look at both recent outcomes and to the likelihood of various future outcomes.
The entire executive management team attends all Board meetings and remains for the duration of the meeting except when the Board goes
into Executive Session. The schedule below lists all Board committees and their members:
| |
ALCO
(2) |
Audit
Risk and Compliance(1) |
Compensation(1) |
Executive(3) |
Loan(2) |
Nominating(1) |
| C.
Todd Asbury |
X |
|
|
X |
X |
|
| Tim
W. Ball |
|
|
X |
|
|
X |
| Gina
D. Boggess |
|
|
X |
|
|
X |
| J.
Robert Buchanan |
X* |
X |
|
X |
|
|
| Joe
M. Carter |
|
|
|
|
X |
|
| John
D. Cox |
|
X |
X* |
X |
X |
X |
| Charles
H. Gent, Jr. |
|
|
X |
|
A |
|
| Eugene
Hearl |
X |
|
X |
|
X* |
|
| Harold
Lynn Keene |
X |
X* |
|
X* |
X |
|
| Michael
G. McGlothlin |
|
|
|
|
|
X* |
| B.
Scott White |
X |
X |
X |
X |
X |
X |
| (3) | Committee
of both Company and Bank |
*
Committee Chair
A
Alternate Member
Board
Committees & Committee Meeting Attendance
The
Boards of the Company and the Bank are identical in membership. Among other committees described above the Boards have standing executive,
nominating, audit and compensation committees (or committees performing similar functions) as discussed further below. The Board of Directors
has adopted charters for its Audit Committee, Compensation Committee, ALCO Committee, and Nominating Committee to define the duties and
responsibilities of those committees. These charters are available on our website at https://newpeoples.bank/Bankshares-About-Us.
There
were twelve meetings of the Company’s Board of Directors in 2021. Each incumbent director attended greater than 75% of the aggregate
number of meetings of the Board and meetings of committees of which the director was a member in 2021. We encourage, but do not require,
members of the Board of Directors to attend the annual meeting of shareholders. All of the directors attended the 2021 annual meeting
of shareholders except for Joe Carter.
Executive
Committee - The Company and the Bank each also have an Executive Committee that, when necessary, is empowered to act on behalf
of the full Board, on routine matters, between scheduled Board meetings. The Executive Committee met three times in 2021.
Nominating
Committee - The Nominating Committee was created in May 2006 to propose prospective members for nomination to the Board
of Directors. All decisions by the Nominating Committee relating to the nominations of prospective Board members are reported to the
full Board of Directors. All of the members of the Committee are independent as defined in the Nasdaq listing standards. The Nominating
Committee met one time in 2021 at which time the recommendations for nominees in the 2021 proxy were discussed for the Board of Directors’
approval.
Shareholders
entitled to vote for the election of directors may submit candidates for consideration by the Nominating Committee if the Committee receives
timely written notice, in proper form, for each such recommended director candidate. If the notice is not timely and in proper form,
the nominee will not be considered. Any candidates recommended by a shareholder will be reviewed and considered in the same manner as
all other director candidates considered by the Board.
In
accordance with our Bylaws, any shareholder entitled to vote in the election of directors may directly nominate one or more persons for
election as director(s) at an annual meeting if the nomination is made in writing. Any such shareholder nominations must be received
by our Secretary within the timeframe set forth in “Proposals for 2023 Annual Meeting of Shareholders” below. To be in proper
form, the notice must include (a) the name and address of the shareholder who intends to make the nomination of the person(s) and of
the person(s) to be nominated; (b) a representation that the shareholder is the owner of our stock entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person(s) specified in the notice; (c) a description of all arrangements
or understandings between the shareholder and each nominee for director and any other person(s) (naming such person(s)) pursuant to which
the nomination(s) are to be made by the shareholder; (d) such other information regarding such nominee proposed by such shareholder as
would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC, had the nominee been nominated, or
intended to be nominated, by the Board of Directors, including, but not limited to, the amount and nature of his beneficial ownership
of our securities and his principal occupation for the past five years; and (e) the written consent of each nominee to serve as a director
if so elected.
The
Nominating Committee considers, at a minimum, the following factors in recommending to the Board potential new directors, including candidates
submitted by shareholders, or the continued service of existing directors:
| · | the
ability of the prospective nominee to represent the interests of our shareholders; |
| · | the
prospective nominee’s standards of integrity, commitment and independence of thought
and judgment; |
| · | the
prospective nominee’s ability to dedicate sufficient time, energy and attention to
the diligent performance of his or her duties, including the prospective nominee’s
service on other public company boards; and |
| · | the
extent to which the prospective nominee contributes to the range of talent, skill and expertise
appropriate for the Board of Directors. |
The
Board’s priorities in evaluating Board candidates and the relative weight it gives to any given characteristic will vary from time
to time based on the particular needs of the Board and us at the time and based on the expertise of the incumbent members of the Board
of Directors.
To
identify candidates for nomination, the Nominating Committee does the following:
| · | Establish
criteria and qualifications for the selection of new directors to serve on the Board. |
| · | Identify
individuals believed to be qualified as candidates to serve on the Board (including from
among those individuals recommended by shareholders) and recommend the candidates for any
directorships to be filled by the Board or by the shareholders at an annual or special meeting.
In addition, the Committee reviews and makes recommendations to the Board with respect to
whether members of the Board should stand for re-election. |
| · | Conduct
all necessary and appropriate inquiries into the backgrounds and qualifications of possible
candidates as directors. In that connection, the Committee has sole authority to retain and
to terminate any search firm used to assist it in identifying candidates to serve as directors
of the Company, including sole authority to approve the fees payable to such search firm
and any other terms of retention. |
| · | Review
and make recommendations to the Board, as the Committee deems appropriate regarding the composition
and size of the Board in order to ensure the Board has the requisite expertise and its membership
consists of persons with sufficient expertise and independent backgrounds and always consists
of a majority of independent directors in accordance with Nasdaq listing standards. |
Compensation
Committee - The Compensation Committee of the Company reviews management’s performance and compensation, and reviews
and sets guidelines for compensation of all employees, including the Company’s executive officers. Currently, the individuals serving
as Chief Executive Officer and as executive officers of the Company also serve in the same capacities, respectively, for the Bank, except
for Messrs. Booher and Kiser, who only serve as executive officers of the Bank and not the Company. These executive officers are presently
compensated for services rendered by them to the Bank, but not for services rendered by them to the Company. All decisions by the Compensation
Committees relating to the compensation of our executive officers are reported to the full Board of Directors. Except for his own compensation,
Mr. Asbury provides information and advice to the Compensation Committee regarding the form and amount of compensation of executive officers.
No other executive officer participates in this process with the Committee. The Compensation Committee may not delegate its authority
and has not utilized a consultant.
The
Chief Executive Officer does not set his own salary or bonus. The Chief Executive Officer recommends the salary and bonuses of the other
named executive officers and provides input to the Committee regarding his own, but he does not participate in the Compensation Committees
discussions or approval of his own compensation. Recommendations are made by the Committee and final decisions reside with the Board
of Directors.
The
Compensation Committee and Board attempt to align performance and compensation based upon strategic goals that are incorporated in the
Company’s budget as approved by the Board of Directors. We believe that our conservative but competitive compensation policies
and practices are unlikely to create risks that are reasonably likely to have a materially adverse effect on the Company. As discussed
in this Proxy Statement, most of the compensation that we pay consists of annually determined salaries and bonuses. This permits the
Board of Directors to review annually the budget versus actual performance, internal policy limits for various key performance ratios,
asset quality ratios, interest rate sensitivity shocks, liquidity management, and capital levels before compensation is set. All of these
components together with continuation of employment are assessed each year. It is at the discretion of the Board of Directors to pay
cash bonuses or any other incentives if goals are met or exceeded. We believe that this contemporaneous approach to determining compensation
is not likely to encourage excessive risk taking and in fact allows the Board to align compensation with business factors such as acceptable
versus unacceptable risk taking.
The
Board in its business judgment has determined that all members of the Compensation Committee are independent as defined by the Nasdaq
Stock Market Listing Rules. The Compensation Committee held four meetings in 2021. For additional information regarding executive compensation
and the Compensation Committee, see “Executive Compensation and Related Party Transactions” below.
Audit,
Risk and Compliance Committee - The Audit Risk and Compliance Committee (Audit Committee) assists the Board of Directors
in fulfilling the Board’s oversight responsibility to the shareholders relating to the integrity of our financial statements, our
compliance with legal and regulatory requirements for our accounting and reporting practices, the qualifications, independence and performance
of our independent public accountants and the performance of the internal audit function. The Audit Committee is directly responsible
for the appointment, compensation, retention and oversight of the work of our independent public accountants engaged for the purpose
of preparing or issuing an audit report or performing other audit, review or attestation services for us. The Board of Directors and
the Audit Committee have adopted a written charter for the Audit Committee.
The
Audit Committee also oversees the internal audit and regulatory compliance and review functions.
The
Board in its business judgment has determined that all of the members of the Audit Committee are independent as defined by Nasdaq Stock
Market Listing Rules for audit committee members and applicable SEC regulations. The Board of Directors also has determined that
all of the members of the Audit Committee have sufficient knowledge in financial and auditing matters to serve on the Audit Committee
and that Mr. Buchanan qualifies as an audit committee financial expert as defined by SEC regulations.
The
Audit Committee held five meetings in 2021. For additional information regarding the Audit Committee, see “Audit Information –
Audit Committee Report” below.
EXECUTIVE
COMPENSATION AND RELATED PARTY TRANSACTIONS
The
following table is a summary of compensation that we paid for the fiscal years ended December 31, 2021 and 2020 to the named executive
officers in all capacities in which they served:
Summary
Compensation Table
Fiscal
Years 2021 and 2020
| Name
and Principal Position |
|
Year |
|
Salary
($) |
|
Bonus
($)(1) |
|
Non-Equity
Plan Compensation ($) |
|
Nonqualified
Deferred Compensation Earnings ($) |
|
All
Other Compensation ($)(2) |
|
Total
($) |
| C.
Todd Asbury |
|
2021 |
|
288,061 |
|
38,721 |
|
- |
|
- |
|
24,462 |
|
351,844 |
| President
and Chief |
|
2020 |
|
277,970 |
|
6,000 |
|
- |
|
|
|
19,610 |
|
303,580 |
| Executive
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| James
W. Kiser |
|
2021 |
|
213,595 |
|
23,160 |
|
- |
|
-
|
|
21,739 |
|
258,494 |
| Executive
Vice President and |
|
2020 |
|
185,807 |
|
6,000 |
|
|
|
|
|
13,570 |
|
205,377 |
| Chief
Banking Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bryan
Booher |
|
2021 |
|
175,577 |
|
19,750 |
|
- |
|
- |
|
13,725 |
|
209,052 |
| Executive
Vice President and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Chief
Risk and Credit Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) | Includes
awards for 2021, paid in 2022, under the Profit Sharing and Senior Performance Bonus plans
to Messrs. Asbury, Kiser, and Booher of $38,721, $23,160 and $19,750, respectively. All employees
received a Christmas bonus at the discretion of the Board of Directors of $500 for 2021 and
2020, with the exception of Mr. Speaks who received $250 for 2021 All employees received
an additional pandemic service bonus of $500 in 2020. In 2020, Messrs. Asbury and Kiser received
discretionary bonuses in 2020, paid in 2021, of $5,000,each. |
| (2) | All
benefits that might be considered of a personal nature did not exceed $10,000. All other
compensation includes matching contributions under the Bank’s 401(k) Plan, flexible
spending amounts contributions for cafeteria plan benefits, group term life insurance premiums
and long-term disability insurance premiums for all persons listed; allocated personal use
of a company vehicle for Mr. Asbury and an auto allowance for Mr.. Kiser |
Narrative
Disclosure to Summary Compensation Table
Base
Salary and Bonus
Our
performance, in general, is considered in determining the amount of annual salary increases. The Compensation Committee sets base salaries
at levels competitive with senior executives with comparable qualifications, experience and responsibilities, of similarly sized banks.
The Virginia Bankers Association Salary Survey was used for comparison of salaries paid for similar positions and responsibilities. The
Compensation Committee also takes into consideration our strategic plans and Company performance, including but not limited to, branch
performance, asset quality, capital management, core deposit growth, efficiency, regulatory compliance, and earnings.
The
named executive officers’ annual salary is based on the above criteria as well as an assessment of their past performance and expected
future contributions. In addition to the internal measures above, the Board of Directors also reviews our financial performance in relation
to peer group averages in the Virginia Bankers’ Association Salary Survey. A subjective approach is used in its evaluation of these
factors, and therefore the Compensation Committee does not rely on a formula or weights of specific factors.
Other
Elements of Compensation
Each
named executive officer, with the exception of Mr. Booher, is provided with the use of a company vehicle or a monthly allowance.
The
Bank has established a 401(k) plan that covers all full-time employees including the named executive officers. Matching contributions
paid by the Bank to the named executive officers is detailed in the Summary Compensation Table above.
Employment
Agreements
On
December 1, 2016, the Company and the Bank entered into an Employment Agreement (the “Agreement”) with Mr. Asbury. The Agreement
is effective as of December 1, 2016. The initial term of the Agreement ended on December 1, 2019, after which the Agreement automatically
renews for successive two-year terms (unless terminated prior to the commencement of the renewal term).
Under
Mr. Asbury’s Agreement, he is entitled to an annual base salary of $277,970 and an annual performance bonus, if any, in an amount
approved by New Peoples’ Board of Directors. Mr. Asbury is also eligible to participate in any equity and/or other long-term compensation
programs established by the Company as well as employee benefits, executive benefits, or perquisites approved by the Board and reimbursement
of expenses and vacation as set forth in his Agreement.
The
Agreement provides Mr. Asbury with severance benefits in the event of termination of his employment under certain circumstances and contains
certain confidentiality and noncompetition provisions.
The
Agreement provides that the executive’s employment may be terminated by the Company “With Cause” (as defined in the
Agreement) or without Cause, or by the executive for “Good Reason” (as defined in the Agreement) or without Good Reason.
The executive’s employment may be terminated upon a determination that the executive is disabled or automatically upon the executive’s
death. If an executive’s employment is terminated by the Company for Cause or by the executive for Other than Good Reason, then
under his Agreement, the executive will be entitled to receive any accrued but unpaid salary, bonus or other benefits or awards, and
expense reimbursement. The foregoing amounts are referred to collectively as the “Accrued Obligations.” If an executive’s
employment is terminated by the Company without Cause or by the executive for Good Reason, then, in addition to the Accrued Obligations,
the executive will be entitled under his Agreement to receive the following: (i) if not connected to a Change in Control (as defined
in the Agreement), a severance payment equal to two times the executive’s base salary and bonus; or (ii) if within 24 months after
a Change in Control, a severance payment equal to three times the executive’s base salary and bonus unless the Change in Control
is a Sale of the Company (as defined in the Agreement) in which case the severance payment is based on certain percentages of the Company’s
book value received by the Company’s shareholders in the transaction.
Neither
the Company nor the Bank has entered into an employment agreement with any of the other named executive officers, except as discussed
above.
Employee
Incentive Plans
In
December of 2015, the Board of Directors approved two employee incentive plans: a Short-Term Bonus Plan and Company-Wide Profit Sharing
Plan.
The
Short-Term Bonus Plan is designed to reward and recognize individual employees “on-the-spot” for extraordinary performance/accomplishments.
These bonuses are to individual employees in amounts ranging from $100 to $1,000 (with an aggregate annual amount for all short-term
bonuses not to exceed $25,000) and are awarded on recommendation of senior officers with the approval of the President and
Chief Executive Officer. Payments under the Short-term Bonus Plan were made for 2021 and 2020. For 2021 total bonuses of $23,100 were
paid, of which $13,950 was paid in 2022. For 2020 total bonuses were paid of $24,900, of which $18,750 was paid in 2021.
The
second plan is a Bank-Wide Profit Sharing Plan, which allows all eligible employees of New Peoples Bank to share in the profits of the
Bank when strategic goals are met. The Plan is designed to reward employees a percentage of his or her annual salary, or a flat
dollar amount for commissioned or lower-wage employees, when the Bank meets the budgeted net income for the year. If the Bank does not
make its budgeted net income for the year, the bonus pool is reduced by the shortfall, which is added back into net income until it equals
the budgeted amount or the bonus pool is exhausted. The Board of Directors of the Bank has established an award schedule that allocates
the bonus pool by percentage based on the employee’s position with the Bank. For 2021 bonuses awarded under the Profit Sharing
Plan totaled $187,414 and were paid in 2022. No bonuses were awarded under this plan for 2020.
For
2022, both the Short-Term Bonus Plan and the Company-Wide Profit Sharing Plan are still in effect. Under the Short-Term Bonus Plan, the
aggregate annual amount for all short-term bonuses will not exceed $25,000 in 2022. For 2022, the Board of Directors budgeted
a total amount of $200,000 for the Company-Wide Profit Sharing Plan.
In
July 2021, the Board of Directors approved a Senior Performance Bonus Plan, for certain senior officers of the Company and Bank. Participants
have the ability to earn an annual incentive award up to a predetermined percentage of total compensation based on achievement of the
Bank’s operating or consolidated performance goals. In addition to promoting the achievement of Bank performance goals, the incentive
awards are designed to align the interests of senior management into a common objective. Any bonuses earned under the Senior Plan are
paid in cash. For 2021, $79,961 was accrued for this plan, and paid in 2022. For 2022, the Board of Directors budgeted $101,712
Certain
Relationships and Related Transactions
Certain
of our directors, executive officers, and shareholders known to us who own beneficially 5% or more of our stock (and their immediate
family members) have had, and expect to have in the future, lending transactions with us. Any extensions of credit to our directors,
executive officers, and such shareholders are made in the ordinary course of business, were required to be on substantially the same
terms, including interest rates and collateral, as comparable transactions to non-related parties at the time of the extension of credit,
and did not involve more than the normal risk of collectability or present other unfavorable features.
We
have not adopted a formal policy that covers the review and approval of related person transactions by our Board of Directors. The Board,
however, does review all related party transactions that are proposed to it for approval. During such a review, the Board will consider,
among other things, the related person’s relationship to us, the facts and the circumstances of the proposed transaction, the aggregate
dollar amount of the transaction, the related person’s relationship to the transaction and any other material information. Our
Audit Committee has the responsibility to review significant conflicts of interest involving directors or executive officers.
In
August 2021, the Bank sold a parcel of land adjacent to the Grundy, Virginia office to Director McGlothlin for $150 thousand, which approximated
the fair value of the property.
AUDIT
INFORMATION
The
Audit Committee operates under a written charter adopted by the Board of Directors. A copy of the Audit Committee charter can be found
on our website www.npbankshares.com.
2021
and 2020 Fees of Independent Registered Public Accountants – Elliott Davis
The
following table sets forth the aggregate fees paid to Elliott Davis for professional services rendered in connection with the audit of
the Company’s consolidated financial statements for 2021 and 2020, as well as fees paid for audit-related services, tax services
and all other services in 2021 and 2020.
| | |
2021 | |
2020 |
| Audit
fees (1) | |
$ | 105,902 | | |
$ | 110,858 | |
| Audit-related
fees (2) | |
| 10,400 | | |
| 10,475 | |
| Tax
fees | |
| 14,205 | | |
| 12,150 | |
| Total | |
$ | 130,507 | | |
$ | 133,483 | |
| (1) | Audit
fees include aggregate fees incurred for professional services rendered for the audit of
our annual financial statements and for the review of the financial statements included in
the Company’s Quarterly Reports on Forms 10-Q for the fiscal years 2021 and 2020. |
| (2) | The
audit-related fees include audits of employee benefit plans for both years. These audit-related
services are assurance and related services that are reasonably related to the performance
of the audit or review of our financial statements and are not reported under the heading
of “Audit fees”. |
All
audit related services, tax services and other services were pre-approved by the Audit Committee, which concluded that the provision
of such services by Elliott Davis was compatible with the maintenance of that firm’s independence in the conduct of their auditing
functions. The Audit Committee has a policy that provides for the pre-approval of all services to be provided by its independent registered
public accounting firm. The Audit Committee does not delegate to management its responsibility to pre-approve services performed by the
independent registered public accounting firm. All of the services mentioned above were pre-approved by the Audit Committee.
Audit
Committee Report
The
Audit Committee has furnished the following report:
Management
is responsible for our internal controls, financial reporting process and compliance with laws and regulations and ethical business standards.
Our independent public accountants are responsible for performing an independent audit of our consolidated financial statements in accordance
with generally accepted auditing standards and issuing a report thereon. The Audit Committee’s responsibility is to monitor and
oversee these processes on behalf of the Board of Directors.
In
this context, the Audit Committee has reviewed and discussed with management and Elliott Davis, our independent public accountants for
2020, the audited financial statements. Management represented to the Audit Committee that our consolidated financial statements were
prepared in accordance with accounting principles generally accepted in the United States.
The
Audit Committee has discussed with the independent public accountants the matters required to be discussed by the applicable requirements
of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC, including its judgments about the quality, not just
the acceptability, of our accounting principles and underlying estimates in our consolidated financial statements; all critical accounting
policies and practices to be used; all alternative treatments within generally accepted accounting principles for policies and practices
related to material items that have been discussed with our management; and other material written communication between the independent
public accountants and our management, such as any management letter or schedule of unadjusted differences.
In
addition, the Audit Committee has received from the independent public accountants the written disclosures and the letter required by
applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning
independence, and discussed with them their independence from us and our management. Moreover, the Audit Committee has considered whether
the independent public accountants’ provision of other non-audit services to us is compatible with maintaining their independence
from us.
In
reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited
financial statements be included in our Annual Report on the Form 10-K for the fiscal year ended December 31, 2021, for filing with the
SEC. By recommending to the Board of Directors that the audited financial statements be so included, the Audit Committee is not opining
on the accuracy, completeness or presentation of the information contained in the audited financial statements.
Members
of the Audit Committee
J.
Robert Buchanan
John
D. Cox
Harold
Lynn Keene (Chairman)
B.
Scott White
PROPOSALS
FOR 2023 ANNUAL MEETING OF SHAREHOLDERS
The
Company anticipates holding the 2023 Annual Meeting of Shareholders on May 16, 2023. As discussed above under “Director Nomination
Process,” our Bylaws prescribe the procedures that a shareholder must follow to nominate a director. For a shareholder to nominate
a candidate for director at the 2023 Annual Meeting of Shareholders, notice of the nomination must be received by our Secretary no later
than March 5, 2023. The notice must describe various matters regarding the nominee and the shareholder giving the notice. Any shareholder
may obtain a copy of our Bylaws, without charge, upon written request to our Secretary.
In
accordance with SEC regulations, if any shareholder intends to present a proposal to be considered for inclusion in our proxy materials
for our 2023 Annual Meeting, the proposal must be in proper form and must be received at our principal executive offices at 67 Commerce
Drive, Honaker, Virginia 24260, no later than December 5, 2022.
In
accordance with our Bylaws, if any shareholder intends to present a proposal (other than a director nomination) at the 2023 Annual Meeting
of Shareholders outside of the proxy statement process, notice of the shareholder’s intention to present the proposal must be received
by our Secretary no later than March 5, 2023. The notice must include a description of the proposed business, the reasons therefor, and
other specified matters. The proxy solicited by the Board of Directors for the 2023 Annual Meeting will confer discretionary authority
to vote on any shareholder proposal presented at the meeting if we have not received notice of such proposal by March 5, 2023, in writing
delivered to our Secretary.
OTHER
MATTERS
THE
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021 (THE “FORM 10-K”), AS FILED WITH THE SEC, ACCOMPANIES
THIS PROXY STATEMENT. A COPY OF OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021 (EXCLUDING EXHIBITS)
MAY BE OBTAINED WITHOUT CHARGE BY WRITING TO OUR SECRETARY, WHOSE ADDRESS IS POST OFFICE BOX 1810, HONAKER, VIRGINIA 24260.
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