SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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-12
HERITAGE OAKS BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
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(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
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/ / Fee paid previously with preliminary materials.
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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HERITAGE OAKS BANCORP
545 12TH STREET
PASO ROBLES, CALIFORNIA 93446
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 24, 2001
7:00 P.M.
TO THE SHAREHOLDERS OF HERITAGE OAKS BANCORP:
NOTICE IS HEREBY GIVEN that pursuant to its Bylaws and the call of its
Board of Directors, the 2001 Annual Meeting of Shareholders (the "Meeting") of
Heritage Oaks Bancorp ("Company") will be held at the Company's office at 545
12th Street, Paso Robles, California 93446 on Thursday, May 24, 2001 at 7:00
p.m. local time for the purpose of considering and voting on the following
matters:
1. ELECTION OF DIRECTORS. To elect ten (10) persons to the Board
of Directors of the Company to serve until the 2002 Annual
Meeting of Shareholders and until their successors are elected
and have qualified. The following persons have been nominated
by the Company for election:
Dr. B. R. Bryant Donald H. Campbell
Kenneth L. Dewar Dolores T. Lacey
Merle F. Miller Michael J. Morris
John Palla Ole K. Viborg
Lawrence P. Ward David Weyrich
2. To ratify the appointment of Vavrinek, Trine, Day & Co. LLP as
the Company's independent accountants for the 2001 fiscal
year.
3. OTHER BUSINESS. To transact such other business as may
properly come before the Meeting and any adjournment or
adjournments thereof.
Only those shareholders of record at the close of business on April 2,
2001 will be entitled to notice of and to vote at the Meeting.
In connection with nominations for directors, Section 1.10 of the
Company's Bylaws provides:
"Nominations for election of members of the Board of Directors may be
made by the Board of Directors or by any Shareholder of any outstanding
class of capital stock of the Company entitled to vote for the election
of directors provided that a notice of intention to make nominations is
made in the form and manner specified in this paragraph. Notice
of intention to make any nominations other than by the Board of
Directors shall be made in writing and shall be delivered or mailed to
the President of the Company not later than the close of business on
the day which is at least ten (10) days before the date of any meeting
of Shareholders called for the election of Directors. Said notification
shall contain the following information to the extent known to the
person making the nomination: (a) the name and address of each proposed
nominee; (b) the principal occupation of each proposed nominee; (c) the
number of shares of capital stock of the Company owned by each proposed
nominee; (d) the name and address of the person making the nominations;
and (e) the number of shares of capital stock of the Company owned by
the said person. Nominations not made in accordance herewith may in the
discretion of the Chairman of the meeting be disregarded and upon the
Chairman's instruction, the inspector of elections can disregard all
votes cast for each such nominee. Notwithstanding anything in this
paragraph to the contrary, a written notice of intention to make a
nomination as provided herein shall not be required unless the notice
to Shareholders of any meeting at which Directors are to be elected is
mailed at least ten (10) days prior to the date last available to the
Shareholder for delivery or mailing to the President of the Company of
the notice required herein. A copy of this paragraph shall be set forth
in a notice to Shareholders of any meeting at which Directors are to be
elected."
IT IS VERY IMPORTANT THAT EVERY SHAREHOLDER VOTE. WE URGE YOU TO SIGN
AND RETURN THE ENCLOSED PROXY AS SOON AS POSSIBLE WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING IN PERSON. IF YOU DO ATTEND THE MEETING, YOU MAY THEN
WITHDRAW YOUR PROXY. IF YOU DO NOT ATTEND THE MEETING, YOU MAY REVOKE THE PROXY
PRIOR TO THE TIME IT IS VOTED BY NOTIFYING THE CORPORATE SECRETARY IN WRITING TO
THAT EFFECT OR BY FILING A LATER DATED PROXY.
IN ORDER TO FACILITATE THE PROVISION OF ADEQUATE ACCOMMODATIONS, PLEASE
INDICATE ON THE PROXY WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING.
Dated: April 6, 2001 BY ORDER OF THE BOARD OF DIRECTORS
Gwen R. Pelfrey
Secretary
Mailed to Shareholders
on or about April 13, 2001
HERITAGE OAKS BANCORP
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is being furnished to the shareholders of Heritage
Oaks Bancorp, a California corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors for use at the Annual Meeting
of Shareholders to be held at 545 12th Street, Paso Robles, California on
Thursday, May 24, 2001 at 7:00 p.m. local time (the "Meeting"). Only
shareholders of record on April 2, 2001 (the "Record Date") will be entitled to
notice of the Meeting and to vote at the Meeting. At the close of business on
the Record Date, the Company had outstanding and entitled to be voted 1,295,145
shares of its no par value Common Stock (the "Common Stock").
Shareholders are entitled to one vote for each share held, except that
for the election of directors each shareholder has cumulative voting rights and
is entitled to as many votes as shall equal the number of shares held by such
shareholder multiplied by the number of directors to be elected. Each
shareholder may cast all his or her votes for a single candidate or distribute
such votes among any or all of the candidates as he or she chooses. However, no
shareholder shall be entitled to cumulate votes (in other words, cast for any
candidate a number of votes greater than the number of shares of stock held by
such shareholder) unless such candidate's name has been placed in nomination
prior to the voting and the shareholder has given notice at the Meeting prior to
the voting of the shareholder's intention to cumulate his or her votes. If any
shareholder has given such notice, all shareholders may cumulate their votes for
candidates in nomination. Prior to voting, an opportunity will be given for
shareholders or their proxies at the Meeting to announce their intention to
cumulate their votes. The proxy holders are given, under the terms of the proxy,
discretionary authority to cumulate votes on shares for which they hold a proxy.
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke that proxy prior to its exercise. The proxy may be
revoked prior to the Meeting by delivering to the Secretary of the Company
either a written instrument revoking the proxy or a duly executed proxy bearing
a later date. The proxy may also be revoked by the shareholder by attending and
voting at the Meeting.
Votes cast by proxy or in person at the Meeting will be counted by the
Inspectors of Election for the Meeting. The Inspectors will treat abstentions
and "broker non-votes" (shares held by brokers or nominees as to which
instructions have not been received from the beneficial owners or persons
entitled to vote and the broker or nominee does not have discretionary voting
power under applicable rules of the stock exchange or other self regulatory
organization of which the broker or nominee is a member) as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. Abstentions and "broker non-votes" will not be counted as shares voted
for purposes of determining the outcome of any matter as may properly come
before the Meeting.
1
Unless otherwise instructed, each valid proxy returned which is not
revoked will be voted in the election of directors "FOR" the nominees of the
Board of Directors, "FOR" the ratification of accountants, and, at the proxy
holders' discretion, on such other matters, if any, which may properly come
before the Meeting (including any proposal to postpone or adjourn the Meeting).
The Company will bear the entire cost of preparing, assembling,
printing and mailing proxy materials furnished by the Board of Directors to
shareholders. Copies of proxy materials will be furnished to brokerage houses,
fiduciaries and custodians to be forwarded to the beneficial owners of the
Common Stock. In addition to the solicitation of proxies by use of the mail,
some of the officers, directors and regular employees of the Company and its
subsidiary, Heritage Oaks Bank (the "Bank"), may (without additional
compensation) solicit proxies by telephone or personal interview, the costs of
which will be borne by the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of March 1, 2001, no individual known to the Company owned more than
five percent (5%) of the outstanding shares of its Common Stock except as
described below.
Name and Address(1) Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership(2) of Class(3)
- --------------------- ---------------------- ------------
Dr. B.R. Bryant 97,768 7.98%
Merle F. Miller 88,351 7.21%
John Palla 63,014 5.14%
Ole K. Viborg 100,817 8.23%
Lawrence P. Ward 69,520 5.68%
David Weyrich 120,358 9.76%
(1) Except as otherwise indicated, the address for all persons listed is
c/o Heritage Oaks Bancorp, 545 12th Street, Paso Robles, California,
93446.
(2) For information concerning the amount and nature of beneficial
ownership, see "Security Ownership of Management."
(3) Including shares of Common Stock subject to stock options exercisable
within 60 days of the Record Date.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of March 1, 2001,
concerning the equity ownership of the Company's directors/nominees and the
executive officers named in the Summary Compensation Table, and directors and
executive officers(1) as a group. Unless otherwise indicated in
2
the notes to the table below, each director and executive officer listed below
possesses sole voting power and sole investment power for the shares of the
Company's Common Stock listed below. All of the shares shown in the following
table are owned both of record and beneficially except as indicated in the notes
to the table. The Company has only one class of shares outstanding, Common
Stock.
Name and Address(2) Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class(3)
- ---------------------- --------------------- -------------
Dr. B.R. Bryant 97,768(4) 7.98%
Donald H. Campbell 27,843(5) 2.27%
Kenneth L. Dewar 3,158(6) *
Dolores T. Lacey 8,129(7) *
Merle F. Miller 88,351(8) 7.21%
Michael Morris 1,400(9) *
John Palla 63,014(10) 5.14%
Ole K. Viborg 100,817(11) 8.23%
Lawrence P. Ward 69,520(12) 5.68%
David Weyrich 120,358 9.76%
Margaret Torres 6,552(3) *
Gwen R. Pelfrey 13,716(3) 1.12%
Paul Tognazzini 14,572(3) 1.19%
All directors, nominees,
and executive officers
of the Company
as a group (13 persons) 615,198 50.20%
- -----------
* Less than 1%.
3
(1) As used throughout this Proxy Statement, the term "executive officer"
means the President and Chief Executive Officer, the Executive Vice
President and Chief Administrative Officer, Executive Vice President
and Chief Lending Officer and the Executive Vice President and Chief
Financial Officer. The Chairman of the Board, the Vice Chairman of the
Board, the Corporate Secretary and the Company's other officers are not
treated as executive officers of the Company.
(2) The address for all persons listed is c/o Heritage Oaks Bancorp, 545
12th Street, Paso Robles, California, 93446.
(3) Includes shares of Common Stock subject to stock options exercisable
within 60 days of the Record Date.
(4) Includes shares of Common Stock held by Dr. Bryant and his spouse as
trustees of a family trust and shares of Common Stock subject to stock
options exercisable within 60 days of the Record Date.
(5) Includes shares of Common Stock owned jointly with Mr. Campbell's
spouse under a profit sharing trust, and shares of Common Stock subject
to stock options exercisable within 60 days of the Record Date.
(6) Includes shares of Common Stock owned jointly with Mr. Dewar's spouse
and shares of Common Stocks subject to stock options exercisable within
60 days of Record Date.
(7) Includes shares of Common Stock owned jointly with Mrs. Lacey's spouse
and shares of common stock options excisable within 60 days of the
Record Date.
(8) Includes shares of Common Stock held by Mr. Miller and his spouse as
trustees of a family trust, shares held in a rollover IRA account and
shares of Common Stock subject to stock options exercisable within 60
days of the Record Date.
(9) Includes shares of Common Stock of owned jointly with Mr. Morris's
spouse and shares of common stock options excisable within 60 days of
the Record Date.
(10) Includes shares of Common Stock held by Mr. Palla and his spouse as
trustees of a family trust and shares of common stock subject to stock
options exercisable within 60 days of the Record Date.
(11) Includes shares of Common Stock held by Mr. Viborg and his spouse as
trustees of a family trust, shares of Common Stock held by Mr. Viborg
in Ole Viborg, Inc., and shares of Common Stock subject to stock
options exercisable within 60 days of the Record Date.
(12) Includes shares of Common Stock held by Mr. Ward individually, shares
of Common Stock owned jointly with his spouse, and shares of Common
Stock subject to stock options exercisable within 60 days of the Record
Date.
(13) Includes shares of Common Stock owned individually, shares of common
stock owned jointly with his spouse, shares held in a rollover IRA
account and shares of common stock options excisable within 60 days
of the Record Date.
4
PROPOSAL NO. 1
ELECTION OF DIRECTORS OF THE COMPANY
The number of directors authorized for election at the Meeting is ten
(10). Management has nominated the ten (10) incumbent directors to serve as the
Company's directors. Each director will hold office until the next Annual
Meeting of Shareholders and until his successor is elected and qualified.
All proxies will be voted for the election of the ten (10) nominees
listed below recommended by the Board of Directors unless authority to vote for
the election of any directors is withheld. The nominees receiving the highest
number of affirmative votes of the shares entitled to be voted for them shall be
elected as directors. Abstentions and votes cast against nominees have no effect
on the election of directors. If any of the nominees should unexpectedly decline
or be unable to act as a director, their proxies may be voted for a substitute
nominee to be designated by the Board of Directors. The Board of Directors has
no reason to believe that any nominee will become unavailable and has no present
intention to nominate persons in addition to or in lieu of those named below.
The following table sets forth certain information as of March 1, 2001,
regarding information concerning its Directors and Executive Officers. The
Company knows of no arrangements, including any pledge by any person of
securities of the Company, the operation of which may, at a subsequent date,
result in a change in control of the Company. There is no family relationship
between any of the directors or executive officers.
Name Age Position/Background
- ---- --- --------------------
Dr. B.R. Bryant 68 Chairman of the Board of Directors of the Company and of the
Bank since November 15, 1994, and 1982, respectively.
Veterinarian; General Contractor dba B.R. Bryant Construction
Donald H. Campbell 60 Vice Chairman of the Board of Directors of the Company and
of the Bank since November 15, 1994, and 1983,
respectively. Owner, El Pomar Vineyard Service.
Kenneth L. Dewar 42 President, J.B. Dewar, Inc. (wholesale petroleum
distribution). Director of the Company and of the Bank since
August 27, 1998.
Dolores T. Lacey 58 Director of the Company and of the Bank since January 23,
1997. Rancher and businesswoman.
5
Merle F. Miller 64 Director of the Company and of the Bank since November 15,
1994, and 1985, respectively. Rancher; Owner, Golden Hill
Company (land sales and development).
Michael J. Morris 55 Director of the Company and of the Bank since January 26,
2001. Attorney, Chairman of the Board of the law firm of
Andre, Morris & Buttery.
John Palla 72 Director of the Company and of the Bank since November 15,
1994, and 1985, respectively. Retired (formerly owner of
Palla Equipment, a farm equipment dealership).
Ole K. Viborg 69 Director of the Company since November 15, 1994, and former
founding director of the Bank. Owner, Ole Viborg, Inc.
(paving contractor).
Lawrence P. Ward 49 Director, President and Chief Executive Officer of the
Company and of the Bank since November 15, 1994, and January
11, 1993, respectively. President, Chief Executive Officer
and Director of Bank of Evergreen, Evergreen, Colorado,
1991-92, and Mountain Valley National Bank, Conifer,
Colorado, 1986-92.
David Weyrich 46 Director of the Company and of the Bank since January 1,
1999. Owner, Martin-Weyrich Winery; CEO, Weyrich
Development; CEO, San Luis Obispo Mortgage; and President of
San Luis Obispo Magazine.
None of the Company's or the Bank's Directors 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 such Act or any company registered as an investment company
under the Investment Company Act of 1940, whose common stock is registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.
6
The following is a brief account of the business experience for a
minimum of five years of each non-director executive officer in addition to
their current positions.
Name Position/Background
---- -------------------
Gwen R. Pelfrey Age: 49. Secretary of the Company and
Secretary, Executive Vice President and
Chief Administrative Officer of the Bank
since November 15, 1994, and October 1987,
respectively.
Paul Tognazzini Age: 51. Senior Vice President/Chief Lending
Officer 1990 to 1997. Executive Vice
President/Chief Lending Officer 1997 to present.
Margaret Torres Age: 50. Executive Vice President and Chief
Financial Officer of the Company and the
Bank since February, 1999. Executive Vice
President and Chief Financial Officer of
Antelope Valley Bank, 1991-January 1999.
DIRECTORS
COMMITTEES OF THE BOARD OF DIRECTORS
During 2000, the Company's Board of Directors held nine meetings and
the Bank's Board of Directors held 18 meetings.
The Board of Directors has not established a nominating committee. The
functions of the nominating committee are performed by the full Board of
Directors.
The Bank has an Audit Committee, whose members included Messrs.
Weyrich (Chairman), Bryant, Campbell, Miller and Palla, each of whom is
"Independent" as defined in the NASDAC Listing Standards. The Committee
oversees Bank's independent public accountants, analyzes the results of
internal and regulatory examinations and monitors the financial and
accounting organization and reporting. The Bank's Audit Committee met 12
times in 2000. A copy of the Bank's Audit Committee Report year ended
December 31, 2000 is attached as Exhibit A to this Proxy Statement.
The Bank has a Loan Committee, whose members included Messrs. Miller
(Chairman), Bryant, Palla, Ward and Campbell, with Ms. Lacey as an alternate,
which has responsibility for reviewing loans made by management, establishing
loan policy and approving certain size and types of loans as specified in the
Bank's loan policy. The Loan Committee met 48 times in 2000.
The Bank has a Personnel Committee, whose members included Ms. Lacey
(Chairperson) and Messrs. Bryant, Miller and Ward, which has responsibility for
reviewing and establishing compensation and benefits for all officers and
employees. The Personnel Committee met four times in 2000.
7
The Bank has an Investment/Asset-Liability Committee whose members
include Messrs. Campbell (Chairman), Bryant, Dewar, Palla, Ward and Weyrich.
This committee reviews asset/liability information each quarter, and administers
and reviews the Bank's strategies for asset/liability management. The committee
met 12 times in 2000.
The Bank has an EFT Committee whose members include Messrs. Palla
(Chairman), Bryant, Miller, Ward and Ms. Lacey. This committee is responsible
for reviewing the bank's electronic funds, ATM, and technology policies. The
committee met two times in 2000.
The Bank has a CRA Compliance Committee whose members include Ms. Lacey
(Chairperson), Messrs. Bryant, Campbell, Palla, and Ward. The committee reviews
the Bank's CRA materials and the Bank's CRA investments, loans and community
involvement. The committee discusses community needs and develops and oversees
the implementation of programs that address those needs. The committee met three
times in 2000.
The Bank has a Marketing Committee whose members include Messrs. Dewar
(Chairman), Bryant, Ward, Campbell and Ms. Lacey. The committee reviews the
Bank's marketing policies and strategies. The committee met three times in 2000.
During 2000 all directors in the aggregate attended at least
seventy-five percent (75%) of all meetings of the Company's Board of Directors
and of meetings of the Bank's committees on which they served.
COMPENSATION OF DIRECTORS
Directors receive no compensation from the Company.
Directors' fees are paid by the Bank. The Chairman of the Board of
Directors was paid a retainer of $1,350 per month, which was increased to $2,000
per month effective June 1, 2000 and all other non-employee directors received a
retainer of $1,250 per month during 2000. The chairman of each committee
received $125 for each committee meeting attended during 2000. All other
non-employee directors received $100 for each committee meeting attended during
the year. The total amount of fees paid to directors as retainers and for
attendance at Board and committee meetings during 2000 was $169,295.
The Directors also participate in the Company's Stock Option Plan.
During 2000 no directors were granted options pursuant to the 1997 Stock Option
Plan.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Set forth below is the summary compensation paid or accrued during
1998-2000 to Lawrence P. Ward, Margaret Torres, Gwen R. Pelfrey and Paul
Tognazzini, the only executive officers of the Company or the Bank to receive
total annual salary and bonus of more than $100,000 during 2000.
8
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
PAYOUTS ANNUAL COMPENSATION AWARDS
- --------------------------------- ----------------------------------- ----------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Year Salary Bonus Other Restricted Securities LTIP All Other
Principal Position ($) (1) ($) (2) Annual Stock Underlying Payouts Compen-
Compen- Award(s) Options/ ($) sation
sation $ ($) SARs (#) ($) (5)
(3) (4)
- -------------------------------------------------------------------------------------------------------------------------
Lawrence P. Ward 2000 $146,417 $81,225 $7,200 - - - $35,290
President and Chief 1999 $139,375 $33,615 $7,200 - - - $32,594
Executive Officer 1998 $131,875 $45,073 $7,200 - - - $30,539
Margaret Torres 2000 $107,198 $25,000 $3,600 - - - $18,513
Executive Vice President and 1999 $ 93,958 $20,000 $3,300 - - - $12,473
Chief Financial Officer 1998 N/A N/A N/A - - - $ 0
Gwen R. Pelfrey 2000 $ 95,373 $25,289 $ 0 - - - - $17,489
Executive Vice President and 1999 $ 91,018 $12,000 $ 0 - - - - $16,083
Chief Administrative Officer 1998 $ 79,954 $16,000 $ 0 - - - - $14,558
Paul Tognazzini 2000 $ 88,919 $38,870 $3,600 - - - $18,017
Executive Vice President and 1999 $ 82,818 $21,894 $3,600 - - - $17,358
Chief Lending Officer 1998 $ 78,107 $16,000 $3,600 - - - $16,638
(1) Amounts shown include cash and non-cash compensation earned and
received as well as amounts earned but deferred at the election of
those officers under the 401(k) Plan.
(2) Amount shown as bonus payments were earned in the year indicated but
not paid until the first quarter of the next fiscal year.
(3) Represents auto allowance for Mr. Ward, Ms. Torres and Mr. Tognazzini.
(4) The Company has a 1990 Stock Option Plan (the "1990 Plan") and a 1997
Stock Option Plan (the "1997 Plan") pursuant to which options are
granted to directors and to key, full-time salaried officers and
employees of the Company and its subsidiary. Options granted under
either the 1990 Plan or the 1997 Plan were either incentive options or
non-qualified stock options. Options granted under either the 1990 Plan
or the 1997 Plan become exercisable in accordance with a vesting
schedule established at the time of grant. Vesting may not extend
beyond ten years from the date of grant. Options become fully
exercisable upon the sale, merger or consolidation of the Company in
which the Company is not a survivor notwithstanding the vesting
provisions under either the 1990 Plan or the 1997 Plan. Options granted
under the Plans are adjusted to protect against dilution in the event
of certain changes in the Company's capitalization, including stock
splits and stock dividends. All options granted in the years indicated
below to the named executive officers were incentive stock options and
have an exercise price equal to the fair market value of the Company's
Common Stock on the date of grant. As of December 31, 2000 there were
no shares remaining in the 1990 Plan. In 1999, the Company amended the
1997 Plan to add 99,254 shares. This was approved by the Shareholders
in the May 1999 Shareholder Meeting. At December 31, 2000, 74,873
shares remained available for grant under the 1997 Plan.
9
(5) Amounts shown for Lawrence P. Ward in 2000 represent $23,716 in salary
continuation provision, $1,463 in term life insurance premiums, $7,486
in excess medical insurance premiums and $2,625 in 401(k) matching
contributions; the 1999 figures includes $21,900 in salary continuation
provision, $1,463 in term life insurance premiums, $6,731 in excess
medical insurance premiums and $2,500 in 401(k) matching contributions;
and 1998 represent $20,220 in salary continuation provision, $1,463 in
term life insurance premiums, $6,249 in excess medical insurance
premiums, and $3,087 in 401(k) matching contributions. Amounts shown
for Margaret A. Torres in 2000 represent $14,476 in salary continuation
provision, $3,499 in excess medical insurance premiums and $538 in
401(k) matching contributions; the figure for 1999 includes $10,152 in
salary continuation provision, $2,321 in excess medical insurance
premiums. Amounts shown for Gwen R. Pelfrey in 2000 represent $10,664
in salary continuation provision, $4,200 in excess medical insurance
premiums, $2,625 in 401(k) matching contributions; the figure for 1999
includes $9,848 in salary continuation provision, $3,960 in excess
medical insurance premiums and $2,275 in 401(k) matching contributions;
and 1998 represents $9,096 in salary continuation provision, $3,960 in
excess medical insurance premiums and $1,502 in 401(k) matching
contributions. Amounts shown for Paul Tognazinni in 2000 represent
$11,192 in salary continuation provision, $4,200 in excess medical
insurance premiums and $2,625 in 401(k) matching contributions; the
figure for 1999 includes $10,896 in salary continuation provision,
$3,960 in excess medical insurance premiums and $2,500 in 401(k)
matching contributions; and 1998 represents $10,058 in salary
continuation provision, $3,960 in excess medical insurance premiums and
$2,620 in 401(k) matching contributions.
OPTION/SAR GRANTS, EXERCISES AND YEAR-END VALUE TABLE
The following tables set forth certain information concerning stock
option grants and unexercised options held by Lawrence P. Ward, Margaret
Torres, Gwen R. Pelfrey and Paul Tognazzini under the 1990 Plan and the 1997
Plan.
AGGREGATED OPTION/SAR GRANTS IN LAST FISCAL YEAR
No stock options were granted during 2000 to any of the officers set forth in
the preceding table.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END OPTION/
SAR VALUE
(a) (b) (c) (d) (e)
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs
FY-End(#) at FY-End ($)
Value ------------------ ------------------
Shares Acquired on Realized Exercisable/ Exercisable/
Name Exercise(#) ($)(1) Unexercisable Unexercisable(1)
----- ------------ ------- ------------------ ------------------
Lawrence P. Ward -0- $0.00 39,186/13,104 $685,755/$229,320
Margaret Torres -0- $0.00 3,276/13,104 $57,330/$229,320
Gwen R. Pelfrey -0- $0.00 4,423/2,948 $77,403/$51,590
Paul Tognazzini 9,360 $124,830 4,423/2,948 $77,403/$51,590
(1) The aggregate value has been determined based upon the average of the
bid and asked prices for the Company's Common Stock at exercise or
year-end, minus the exercise price.
10
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
There are no employment contracts between the Company or the Bank and
their executive officers except that the Bank has an employment agreement with
Lawrence P. Ward, its President and Chief Executive Officer. In general, the
agreement has a three-year term expiring on January 31, 2002, and renews
annually unless a party gives written notice to the other within certain time
periods. The agreement establishes a base salary in 2000 of $140,000, provides
for continuation of participation in the Bank's bonus compensation, 401-K, and
executive salary continuation plans. The agreement also provides for payment of
life insurance policy premiums and an auto allowance. If the agreement is
terminated without cause, Mr. Ward would receive severance pay equal to one
year's annual base salary in effect at the date of termination plus one year of
insurance payments and auto allowance. In the event of termination during or
after a merger or change of control, Mr. Ward would be entitled to severance pay
equal to two year's base salary plus one year of insurance payments and auto
allowance. In the event of a change of control where Mr. Ward is offered
subsequent employment, Mr. Ward would be entitled to severance pay equal to two
(2) years' annual base salary if he is terminated or resigns for good reason.
Events that are considered good reason include, but are not limited to,
reduction in title, compensation, demotion, or expanded travel.
Recognizing the importance of building and retaining a competent
management team, the Board of Directors purchased life insurance policies on the
lives of four key employees, Lawrence Ward, Gwen Pelfrey, Paul Tognazzini and
Margaret Torres for the purpose of providing certain death, disability and
post-employment/retirement benefits. The Bank is the sole owner and beneficiary
of each policy. In order to define the specific death, disability and
post-employment/retirement benefits to be provided, the Bank's Board of
Directors reviewed and adopted an integrated conditional non-qualified deferred
compensation plan provided to the Bank by Bank Compensation Strategies Group.
The form of the plan provided has been endorsed by the California Bankers
Association, the American Bankers Association, as well as numerous other state
banking associations. Under the terms of the plan, differing death, disability
and post-employment/retirement benefits are provided to each covered employee.
Pursuant to the plan, agreements were entered into between the Bank and each of
the four key employees. By defining and increasing, over each employee's term of
employment, the amounts each employee will receive upon the occurrence of
certain specified events, including formal retirement on or after a specified
age, each employee has been given what the Board believes to be a reasonable
incentive to remain with the Bank until retirement. While several provisions
have been included which will serve to reduce the overall amounts payable, the
agreements are expected to provide a maximum annual benefit payment of Sixty
Thousand Dollars ($60,000) to Mr. Ward, and Thirty Thousand Dollars ($30,000) to
Ms. Pelfrey, Mr. Tognazzini and Ms. Torres. Although the annual benefit amount
will typically be paid in equal monthly installments over a fifteen (15) year
period, a lesser and defined lump sum payment may be required in the event the
employee's employment with the Bank is terminated without cause. In the event of
the executive's death, the Bank is obligated to pay any remaining amounts due
under the agreement to the executive's spouse or designated beneficiary over the
remaining payout period (or in a lump sum, as the case may be). Other events
which may also alter when payment of the annual benefit is to begin, and the
amount to be paid, include: (i) disability, as defined in the agreement, in
which case the employee will begin to receive the defined benefit at the earlier
of the defined retirement age or when he is no longer entitled to receive
disability benefits under his principal disability insurance policy; and (ii)
constructive
11
termination following a change of control, in which case the executive is
entitled to all or a portion of the annual benefit depending upon length of
service prior to termination. If, however, the executive's employment
is terminated for cause, the Bank is released from all payment obligations to
the Employee.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and ten percent or more shareholders of
the Company's equity securities, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes of ownership of
the Company's equity securities. Officers, directors and ten percent or more
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file. To the Company's knowledge, based solely
on review of the copies of such reports furnished to the Company and written
representations that no other reports were required, during the fiscal year
ended December 31, 2000, all Section 16(a) filings requirements applicable to
its executive officers, directors and beneficial owners of ten percent or more
of the Company's equity securities appear to have been met.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
There have been no transactions, or series of similar transactions,
during 2000, or any currently proposed transaction, or series of similar
transactions, to which the Company or the Bank was or is to be a party, in which
the amount involved exceeded or will exceed $60,000 and in which any director
(or nominee for director) of the Company or the Bank, executive officer of the
Company or the Bank, any shareholder owning of record or beneficially 5% or more
of the Company's Common Stock, or any member of the immediate family of any of
the foregoing persons, had, or will have, a direct or indirect material
interest.
INDEBTEDNESS OF MANAGEMENT
The Company, through the Bank, has had, and expects in the future to
have banking transactions in the ordinary course of its business with many of
the Company's directors and officers and their associates, including
transactions with corporations of which such persons are directors, officers or
controlling shareholders, on substantially the same terms (including interest
rates and collateral) as those prevailing for comparable transactions with
others. Management believes that in 2000 such transactions comprising loans did
not involve more than the normal risk of collectibility or present other
unfavorable features. Loans to executive officers of the Company and the Bank
are subject to limitations as to amount and purposes prescribed in part by the
Federal Reserve Act, as amended, the regulations of the Federal Deposit
Insurance Corporation and the California Financial Code.
12
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Vavrinek, Trine, Day & Co. LLP ("Vavrinek") served the
Company as independent public accountants for the 2000 fiscal year. Vavrinek has
no interest, financial or otherwise, in the Company. The services rendered by
Vavrinek during the 2000 fiscal year were audit services, consultation in
connection with various accounting matters and preparation of corporation income
tax returns. The Board of Directors of the Company approved each professional
service rendered by Vavrinek during the 2000 fiscal year. Representatives of
Vavrinek are expected to be present at the Meeting and will have an opportunity
to make a statement if they so desire and respond to appropriate questions.
The Board of Directors of the Company has selected Vavrinek to serve as
the independent public accountants for the 2001 fiscal year and recommend that
the shareholders vote "FOR" approval to ratify the selection of Vavrinek as the
Company's independent public accountants for the 2001 fiscal year.
AUDIT FEES
The aggregate fees billed to the company by Vavrinek for professional services
rendered for the audit of Company's annual financial statements for the most
recent fiscal year and the review of Forms 10-QSB for that fiscal year were
$49,490.00.
ALL OTHER FEES
The aggregate fees billed by the Company's independent public accountants for
all other professional services rendered to Company and the Bank during
Company's most recently concluded fiscal year, including tax related services,
were $6,340.00.
In the opinion of the Board of Directors, after due consideration of the
question, the provision of services as described above to the Company by
Vavrinek is fully compatible with maintaining the accountants' independence.
ANNUAL REPORT
The Annual Report of the Company containing audited financial
statements for the fiscal year ended December 31, 2000 is included in this
mailing to shareholders.
13
FORM 10-KSB
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, IS AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO
GWEN R. PELFREY, SECRETARY, HERITAGE OAKS BANCORP, 545 12TH STREET, PASO ROBLES,
CALIFORNIA, 93446.
SHAREHOLDER'S PROPOSALS
Next year's Annual Meeting of Shareholders will be held on May 23,
2002. The deadline for shareholders to submit proposals for inclusion in the
Proxy Statement and form of Proxy for the 2002 Annual Meeting of Shareholders is
December 17, 2001. All proposals should be submitted by Certified Mail-Return
Receipt Requested, to Gwen R. Pelfrey, Secretary, Heritage Oaks Bancorp, 545
12th Street, Paso Robles, California, 93446.
OTHER MATTERS
The Board of Directors knows of no other matters that will be brought
before the Meeting, but if such matters are properly presented to the Meeting,
proxies solicited hereby will be voted in accordance with the discretion of the
persons holding such proxies. All shares represented by duly executed proxies
will be voted at the Meeting in accordance with the terms of such proxies.
HERITAGE OAKS BANCORP
Paso Robles, California
April 13, 2001
By: Gwen R. Pelfrey
Secretary
14
EXHIBIT A
REPORT OF THE AUDIT COMMITTEE
The Audit Committee ("Committee") of the Board of Directors is composed of
five independent directors. The members are: Director Weyrich (Chairman),
Bryant, Campbell, Palla and Miller. The Committee held two (2) meetings
during 2000.
The Committee oversees the financial reporting process for Heritage Oaks
Bancorp ("The Company") on behalf of the Board of Directors. In fulfilling
its oversight responsibilities, the Committee reviewed the annual financial
statements to be included in the Annual Report and Form 10-K.
In accordance with Statements on Accounting Standards (SAS) No. 61,
discussions were held with management and the independent auditors regarding
the acceptability and the quality of the accounting principals used in the
reports. These discussions include the clarity of the disclosures made
therein, the underlying estimates and assumptions used in the financial
reporting, and the reasonableness of the significant judgments and management
discussions made in developing the financial statements. In addition, the
Committee has discussed with the independent auditors their independence from
Heritage Oaks Bancorp and its management, including the matters in the
written disclosures required by the Independence Standards Board Standard No.
1.
The Committee has also met and discussed with management and its independent
auditors, issues related to the overall scope and objectives of the audits
conducted, the internal controls used by Heritage Oaks Bancorp, and the
selection of Heritage Oaks Bancorp's independent auditors.
Pursuant to the review and discussions described above, the Committee
recommended to the Board of Directors that the audited financial statements
be included in the Annual Reports on Form 10-K for the fiscal year ended
December 31, 2000.
Signed and adopted by the Audit Committee this a 28th day of March, 2001.
/s/ DAVID WEYRICH
- ---------------------------
Committee Chairman
/s/ DR. B.R. BRYANT
- ---------------------------
Director/Committee Member
/s/ DONALD CAMPBELL
- ---------------------------
Director/Committee Member
/s/ JOHN PALLA
- ---------------------------
Director/Committee Member
/s/ MERLE MILLER
- ---------------------------
Director/Committee Member
15
REVOCABLE PROXY - HERITAGE OAKS BANCORP
ANNUAL MEETING OF SHAREHOLDERS - MAY 24, 2001
The undersigned shareholder(s) of Heritage Oaks Bancorp (the "Company")
hereby appoints, constitutes and nominates Donald H. Campbell, David Weyrich and
Merle F. Miller, and each of them, the attorney, agent and proxy of the
undersigned, with full power of substitution, to vote all shares of the Company
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
to be held at 545 12th Street, Paso Robles, California on Thursday, May 24, 2001
at 7:00 p.m. local time, and any and all adjournments thereof, as fully and with
the same force and effect as the undersigned might or could do if personally
present thereat, as follows:
1. ELECTION OF DIRECTORS. To elect the following ten (10) persons
to the Board of Directors of the Company to serve until the
2002 Annual Meeting of Shareholders and until their successors
are elected and have qualified:
Dr. B. R. Bryant Donald H. Campbell
Kenneth L. Dewar Dolores T. Lacey
Merle F. Miller John Palla
Michael J. Morris Ole K. Viborg
Lawrence P. Ward David Weyrich
[ ] FOR ALL NOMINEES LISTED ABOVE [ ] WITHHOLD AUTHORITY TO VOTE
(EXCEPT AS MARKED TO THE CONTRARY) FOR ALL NOMINEES LISTED ABOVE
A SHAREHOLDER MAY WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE BY LINING
THROUGH OR OTHERWISE STRIKING OUT THE NAME OF SUCH NOMINEE.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS.
To ratify the appointment of Vavrinek, Trine, Day & Co. LLP as
the Company's independent accountants for the 2001 fiscal
year.
/ / FOR / / AGAINST / / ABSTAIN
3. OTHER BUSINESS. To transact such other business as may
properly come before the Meeting and any adjournment or
adjournments thereof.
The Board of Directors recommends a vote FOR each of the foregoing
proposals. If any other business is presented at the Annual Meeting, this Proxy
shall be voted in accordance with the discretion of the proxy holders. This
Proxy also vests discretionary authority to cumulate votes. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED PRIOR TO ITS
USE.
Signature(s) ____________________________ Date: _______________________
____________________________ _______________________
Number of shares ____________
I (We) will [ ] will not [ ] attend the Annual Meeting in person.
NOTE: Please sign your full name. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such.