SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Board of Governors Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 240.14a-12
PACIFIC STATE BANCORP
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(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.
(1) Title of each class of securities to which transaction applies:
_____________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
_____________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________
(5) Total fee paid:
_____________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:______________________________________________
(2) Form, Schedule or Registration Statement No.:________________________
(3) Filing Party:________________________________________________________
(4) Date Filed:__________________________________________________________
PACIFIC STATE BANCORP
1899 W. March Lane
Stockton, California 95207
NOTICE OF 2005 ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN TO SHAREHOLDERS that the 2005Annual Meeting of
Shareholders of Pacific State Bancorp ("Bancorp") will be held Thursday, May 12,
2005, at the main office of Pacific State Bank, 6 South El Dorado, Stockton,
California, at 4:30 p.m. for the following purposes:
1. To elect ten (10) directors of Bancorp for the ensuing year. See
"PROPOSAL ONE: ELECTION OF DIRECTORS."
2. To transact any other business which may properly come before the
Annual Meeting and any postponement or adjournment thereof.
Section 16 of the By-Laws of Bancorp provides for the nomination of
Directors in the following manner:
"Nomination for election of members of the Board of Directors may be made
by the Board of Directors or by any stockholder of any outstanding class of
capital stock of the corporation entitled to vote for the election of directors.
Notice of intention to make any nominations shall be made in writing and shall
be delivered or mailed to the President of the corporation not less than 21 days
nor more than 60 days prior to any meeting of stockholders called for the
election of directors; provided however, that if less than 21 days notice of the
meeting is given to shareholders, such notice of intention to nominate shall be
mailed or delivered to the President of the corporation not later than the close
of business on the tenth day following the day on which the notice of meeting
was mailed; provided further, that if notice of such meeting is sent by
third-class mail as permitted by Section 6 of these By-Laws, no notice of
intention to make nominations shall be required. Such notification shall contain
the following information to the extent known to the notifying shareholder: (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
corporation owned by each proposed nominee; (d) the name and residence address
of the notifying shareholder; and (e) the number of shares of capital stock of
the corporation owned by the notifying shareholder. Nominations not made in
accordance herewith may, in the discretion of the Chairman of the meeting, be
disregarded and upon the Chairman's instructions, the inspectors of election can
disregard all votes cast for each such nominee."
Only those shareholders of record at the close of business on March 15,
2005, will be entitled to notice of and to vote at the Annual Meeting.
Dated: April 12, 2005 By Order of the Board of Directors
/s/ STEVEN J. KIKUCHI
Steven J. Kikuchi, Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POST-PAID ENVELOPE.
Mailed to shareholders on
or about April 12, 2005
PACIFIC STATE BANCORP
PROXY STATEMENT
1889 W. March Lane
Stockton, California 95207
Telephone (209) 870-3200
INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is furnished to solicit proxies for use at the 2005
Annual Meeting of Shareholders (the "Meeting") of Pacific State Bancorp
("Bancorp"), to be held Thursday, May 12, 2005, at 4:30 p.m. at 6 South El
Dorado, Stockton, California, and at any and all adjournments thereof.
Revocability of Proxies
A form of proxy for voting your shares at the Meeting is enclosed. If you
execute and deliver this proxy, you will still have the right to and may revoke
it at any time before it is exercised by filing with the Secretary of Bancorp a
written revocation or a duly executed proxy bearing a later date. In addition,
you may revoke your proxy by attending the Meeting and voting in person.
Subject to your revocation, all shares represented by your properly
executed proxy received in time for the Meeting will be voted by the proxy
holders in accordance with your instructions specified on the proxy. UNLESS YOU
OTHERWISE DIRECT IN THE ACCOMPANYING PROXY, THE SHARES REPRESENTED BY YOUR
EXECUTED PROXY WILL BE VOTED "FOR" THE NOMINEES FOR ELECTION OF DIRECTORS NAMED
HEREIN. IF ANY OTHER BUSINESS IS PROPERLY PRESENTED AT THE MEETING, THE PROXY
WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF MANAGEMENT.
Persons Making the Solicitation
The Board of Directors of Bancorp is making this solicitation. All
associated expenses will be borne by Bancorp. Proxies will be solicited
principally by mail, but officers, directors, and employees of Bancorp may
solicit proxies personally or by telephone, without receiving special
compensation for such activities. Bancorp will reimburse banks, brokerage houses
and other custodians, nominees and fiduciaries for their reasonable expenses in
forwarding these proxy materials to shareholders whose stock in Bancorp is held
of record by such entities. In addition, Bancorp may employ others to solicit
proxies if management deems it advisable.
Voting Securities
Bancorp is authorized to issue 24,000,000 shares of Common Stock, no par
value, of which 3,454,922 shares were issued and outstanding as of March 15,
2005 (the "Record Date"). All common shares are voting shares, but only
shareholders of record as of the Record Date are entitled to notice of and to
vote at the Meeting and at any and all postponements or adjournments of it. The
presence in person or by proxy of the holders of a majority of the outstanding
shares entitled to vote at the Meeting will constitute a quorum for the purpose
of transacting business.
Each common share is entitled to one vote at the Meeting, except in the
election of directors, in which case California law permits a shareholder or the
shareholder's proxy holder to cumulate votes. Cumulation of votes means that
each shareholder has a number of votes equal to the number of shares owned by
the shareholder, multiplied by the number of directors to be elected, and that a
shareholder may cumulate such votes for a single candidate or distribute them
among as many candidates as the shareholder deems appropriate. However, a
shareholder may cumulate votes only for a candidate or candidates whose names
have been placed in nomination prior to the voting, and only if the shareholder
(or another shareholder) has given notice at the Meeting, prior to the voting,
of the shareholder's intention to cumulate votes. 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
discretionary authority to cumulate votes represented by shares for which they
are named in the proxy.
In an election of directors, California law provides that the nominees
receiving the highest number of affirmative votes of the shares entitled to vote
for them, up to the number of directors to be elected by such shares, are
elected; votes against the director and votes withheld have no effect.
PRINCIPAL SHAREHOLDERS
Except as listed in the table below. management of Bancorp does not know
of any person who owned, as of the Record Date, beneficially or of record,
either individually or together with associates, five percent (5%) or more of
the outstanding shares of the Common Stock of Bancorp.
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Amount and Nature of Beneficial
Name and Address Ownership(1) Percentage of Ownership
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Maxwell M. Freeman 310,000(10,000) 9.26%
1818 Grand Canal Boulevard
Stockton, CA 95207
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Hot Creek Capital, L.L.C. 289,592 8.38%
144 Summit Ridge Way
Gardnerville, Nevada 89410-3178
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Harold Hand, M.D. 275,408(10,000) 8.26%
36 W. Yokuts, Suite 2
Stockton, CA 95207
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Steven A. Rosso 317,934(22,000) 9.84%
1889 W. March Lane
Stockton, CA 95207
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(1) The first number in this column indicates the total number of shares
beneficially owned, including (if specified by the number in parenthesis) the
numbers of shares which could be acquired by options exercisable within 60 days
of the Record Date.
PROPOSAL ONE:
ELECTION OF DIRECTORS
The Bylaws of Bancorp fix the number of directors of Bancorp within the
range of nine and seventeen; the exact number is set at ten (10) until changed
by resolution of the Board of Directors or Bylaw amendment duly adopted by
Bancorp's shareholders or the Board of Directors.
Information Concerning Directors
The table below provides information concerning the nominees of the Board
of Directors for election as directors of Bancorp. The persons named are all
current members of the Board of Directors, and will be nominated for election as
directors at the Meeting, to serve until the 2006 annual meeting of shareholders
and until their successors are elected and have qualified.
Unless otherwise directed, the proxy holders will cast votes so as to
effect, if possible, the election of the ten nominees. The ten nominees
receiving the most votes will be elected. If any nominee is unable to serve as a
director, the proxy will be voted to elect a substitute nominee designated by
the Board of Directors. The Board of Directors has no reason to believe that any
of the nominees will be unable to serve if elected. Additional nominations may
only be made by complying with the nomination procedures that are included in
the Notice of Annual Meeting of Shareholders accompanying this Proxy Statement.
2
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Director
Name Age Since Principal Occupation
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Michael L. Dalton, C.P.A. 58 1987 Certified Public Accountant, Certified Financial
Planner and Registered Investment Adviser.
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Maxwell M. Freeman 67 2000 Attorney - Freeman, D'Aiuto, Pierce, Gurev,
Keeling & Wolf, Stockton, California
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Harold Hand, M.D. 67 1987 Physician practicing ophthalmology. Owner and
operator of the Advanced Vision Institute, Inc.
Staff member of Dameron Hospital and St. Joseph's
Hospital of Stockton.
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Patricia A. Hatton, M.D 55 1988 Physician practicing obstetrics and gynecology.
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Steven J. Kikuchi 47 1987 Registered landscape architect, contractor and
certified nurseryman.
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Yoshikazu Mataga 62 1987 Owner and operator of Tracy Pontiac-Cadillac and
GMC Truck
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Steven A. Rosso 50 1990 President and Chief Executive Officer of Bancorp.
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Gary A. Stewart 55 1998 Executive Vice President and Chief Credit Officer
of Bancorp
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Kathleen M. Verner 62 1988 Co-owner and Vice President of Verner
Construction Company (residential and commercial
development firm).
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Philip B. Wallace 87 1987 Chairman of Western Empire Management Company.
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Stock Ownership of Management
The following table lists, as of the Record Date, the number and
percentage of shares of Common Stock beneficially owned by each nominee and by
the directors and principal officers of Bancorp as a group. The table does not
include 169,258 shares held beneficially by Bancorp officers as administrators
of the Pacific State Bank Retirement 401(k) Plan.
3
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Beneficial Owner Amount and Nature of Beneficial Ownership(1) Percent of
Class
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Michael L. Dalton 126,700(10,000) 1,920 3.96%
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Maxwell M. Freeman 310,000(10,000) 9.26%
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Harold Hand, M.D. 275,408(10,000) 19,680 8.26%
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Patricia A. Hatton, M.D. 133,250(10,000) 28,616 4.15%
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Steven J. Kikuchi 78,876(10,000) -- 2.57%
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Yoshikazu Mataga 97,268(10,000) -- 3.10%
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Steven A. Rosso 317,934(22,000) 5,208 9.84%
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Gary A. Stewart 68,825(39,400) -- 3.13%
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Kathleen M. Verner 138,040(10,000) -- 4.28%
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Philip B. Wallace 155,472(10,000) -- 4.79%
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All directors, nominees and
principal officers as a group 1,701,773(141,400) 55,424 53.35%
(11 in all) (2)
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(1) The first number in the first subcolumn indicates the total number of shares
beneficially owned, including (as specified by the number in the parenthesis)
the number of shares that could be acquired pursuant to stock options
exercisable within 60 days of the Record Date. Numbers in the second subcolumn
indicate the number of shares (out of the total number of shares beneficially
owned) as to which the person or group shares voting and/or investment power.
(2) Principal officers included are the President and Chief Executive Officer,
Executive Vice President and Chief Credit Officer, and Vice President and Chief
Financial Officer.
Options Outstanding and Available for Issuance at Year-End
The following table provides information as of December 31, 2004 with
respect to compensation plans (including individual compensation arrangements)
under which equity securities of the Company are authorized for issuance under
the Company's 1997 Stock Option Plan.
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Plan category Number of securities to Weighted-average Number of securities remaining
be issued upon exercise exercise price of available for future issuance
of outstanding options, outstanding under equity compensation plans
warrants and rights options, warrants (excluding securities reflected in
and rights column (a))
(a) (b) (c)
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Equity compensation
plans approved by 1,014,210 $6.10 24,904
security holders
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Equity compensation
plans not approved by NA NA NA
security holders
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Total 1,014,210 $6.10 24,904
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4
The Board of Directors and Committees
Bancorp's Board of Directors held 14 meetings during 2004. In addition to
meeting as a group to review Bancorp's business, members of the board of
directors served on certain standing committees. During 2004, no nominee for
director of Bancorp attended less than 75% of the aggregate of the number of
meetings held by the board of directors and of all committee meetings on which
he or she served.
The Personnel Committee held 3 meetings during 2004. Its members include
Dr. Harold Hand, Michael L. Dalton, Steven Kikuchi, Steven A. Rosso and Kathleen
M. Verner. The Personnel Committee is responsible for determining and/or
recommending to the Board the compensation of officers of Bancorp.
Nominating Procedures and Policies
Bancorp has no standing nominating committee, and the full board of
directors meets annually as a nominating committee to discuss nominations for
the board of directors. The board accordingly has no written document or charter
to guide its procedures or deliberations in this matter. A majority of the
members of the board are "independent" within the meaning of the Marketplace
Rule 4200(A)(15) of the NASD, including Michael L. Dalton, Harold Hand, Patricia
Hatton, Yosh Mataga, Kathleen Verner and Philip Wallace. Under this definition,
an independent director is a person other than an officer or employee of the
company or its subsidiaries or any other individual having a relationship that,
in the opinion of the company's board of directors, would interfere with the
exercise of independent judgment in carrying out the responsibilities of a
director. Types of persons deemed not to be independent include (but are not
limited to) employees of Bancorp or the Bank; persons (or their family members
or affiliate entities) compensated for services other than as a director; and
persons (or their family members) who are partners or employees of Bancorp's
independent auditors.
Bancorp's bylaws prescribe the procedures for direct shareholder
nominations of directors. These procedures are reprinted in the Notice of Annual
Meeting that accompanies this proxy statement. In his discretion, the chairman
of the Annual Meeting may disregard nominations not made in accordance with
these procedures and instruct the inspector of elections to disregard all votes
cast for such nominees. As a matter of policy, the board of directors will
consider for inclusion in Bancorp's proxy statement nominees made in accordance
with these procedures and submitted to Bancorp on or before the deadline
specified for inclusion of shareholder proposals. For purposes of the 2006
Annual Meeting, that date will be December 15, 2005.
The board of directors identifies nominees by first evaluating the current
members of the board willing to continue in service. Current members of the
board who are willing to continue in service are first considered for
re-nomination, balancing the value of continuity of service by existing members
of the board with that of obtaining new perspectives. Should any member of the
board not wish to continue in service, or if the board should decide not to
re-nominate a member for re-election, or if the size of the board were
increased, the board would solicit suggestions for director candidates from all
board members. The board would seek to identify candidates who at a minimum
possess the following characteristics:
o High personal and professional ethics and integrity, and values compatible
with those of Bancorp.
o Success in a business or occupation relevant to the business or operations
of Bancorp and the Bank.
o Good business judgment.
o Willingness and ability to devote the necessary time to the work of the
board and its committees.
o Familiarity with the communities in which the Bank operates and active
engagement in community activities.
o No activities or interests that could create a conflict with
responsibilities to Bancorp and its stockholders.
o Capacity and desire to represent the balanced, best interests of the
stockholders of Bancorp as a group, and not primarily a special interest
group or constituency.
Shareholder Communications
Any shareholder who wishes to communicate with the board or with any
committee or individual member may write to the President and Chief Executive
Officer at 1899 W. March Lane, Stockton, California 95207, Attention: Board
Administration. The letter should indicate that the author is a shareholder and,
if shares are not held of record, should include appropriate evidence of stock
ownership. Depending on the subject matter, management will:
5
o Forward the communication to the board or the director or committee to
whom it is addressed;
o Attempt to handle the inquiry directly, for example, if it is a request
for information about Bancorp or concerns a stock-related matter; or
o Not forward the communication if it is primarily commercial in nature,
relates to an improper or irrelevant topic, is hostile, threatening,
illegal or otherwise inappropriate, or is otherwise unrelated to the
activities, functions and responsibilities of the board.
Attendance at Annual Meetings
All of the Company's directors are expected and encouraged to attend annual
meetings to the extent possible consistent with their other obligations. All of
the directors attended the 2004 Annual Meeting.
AUDIT COMMITTEE REPORT
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF BANCORP'S
PREVIOUS OR FUTURE FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934 THAT MIGHT INCORPORATE THIS PROXY STATEMENT OR FUTURE
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE BOARD OF GOVERNORS OF
THE FEDERAL RESERVE SYSTEM, IN WHOLE OR IN PART, THE FOLLOWING REPORT SHALL NOT
BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY SUCH FILING.
The Audit Committee held 5 meetings during 2004. The Audit Committee
consists of the following members of Bancorp's Board of Directors: Michael A.
Dalton, Chairman, Yoshikazu Mataga and Philip Wallace. Michael A. Dalton, CPA is
the designated audit committee financial expert. This designation is based upon
his experience as a certified public accountant. Each of the members of the
Committee is independent as defined under the National Association of Securities
Dealers' listing standards, and each member of the committee is free of any
relationship that, in the opinion of the Board of Directors, would interfere
with his individual exercise of independent judgment. The Board has not adopted
a written charter to govern the Committee's operations.
The Committee's responsibilities include providing advice with respect to
Bancorp's financial matters and assisting the Board of Directors in discharging
its responsibilities regarding corporate accounting. The Committee's primary
responsibilities are to: (1) serve as an independent and objective party to
monitor Bancorp's financial reporting process and internal control system; (2)
review and evaluate the audit efforts of Bancorp's independent accountants and
internal auditor; (3) evaluate Bancorp's quarterly financial performance as well
as its compliance with laws and regulations; (4) oversee management's
establishment and enforcement of financial policies and business practices; and
(5) facilitate communication among the independent accountants, financial and
senior management, counsel, the internal auditor and the Board of Directors.
The Committee has reviewed and discussed the audited financial statements
of Bancorp for the fiscal year ended December 31, 2004 with Bancorp's
management. The Committee has discussed with Perry-Smith LLP, Bancorp's
independent public accountants ("Perry-Smith"), the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees). The Committee has also received the written disclosures and the
letter from Perry-Smith required by Independence Standards Board Standard No. 1
(Independence Discussion with Audit Committees) and the Committee has discussed
the independence of Perry-Smith with that firm.
Based on the Committee's review and discussions noted above, the Committee
recommended to the Board of Directors that Bancorp's audited financial
statements be included in Bancorp's Annual Report on Form 10-K for the fiscal
year ended December 31, 2004 for filing with the Securities and Exchange
Commission.
Submitted by:
Michael A. Dalton, Chairman
Yoshikazu Mataga
Philip Wallace
6
COMPENSATION AND CERTAIN TRANSACTIONS
Summary Compensation Table
The following table lists the compensation of executive officers of
Bancorp who received, during any of the periods indicated, annual salary and
bonus exceeding $100,000.
================================================================================================================
Annual Compensation
------------------- Other Annual All Other
Year Salary Bonus Compensation Compensation(2)
---- -------- --------- ------------ ---------------
Steven A. Rosso 2004 $198,083 $ 20,000 (1) $ 4,927
2003 $174,750 $ -0- (1) $ 16,830
2002 $162,203 $ 9,333 (1) $ 8,343
================================================================================================================
================================================================================================================
Annual Compensation
------------------- Other Annual All Other
Year Salary Bonus Compensation Compensation(2)
---- -------- --------- ------------ ---------------
Gary A. Stewart 2004 $132,500 $ 10,000 (1) $ 3,975
2003 $117,500 $ 1,000 (1) $ 7,919
2002 $114,179 $ -0- (1) $ 5,747
================================================================================================================
(1) Includes calculated value of personal use of bank automobile and personal
benefit derived from club memberships. The total dollar value of such benefits
to Mr. Rosso and Mr. Stewart did not exceed ten percent of the reported annual
salary in any one year.
(2) Includes matching contributions to Bancorp's Retirement Plan.
Mr. Rosso currently serves under an employment agreement dated October 26,
1999. The annual salary for 1999 was $129,000. The employment agreement allows
for annual increases at the discretion of the compensation committee (plus a
minimum of $5,000 which must be deferred), for a term extending through
September 1, 2005. The agreement also provides for five weeks annual vacation
(non-use of which may not be carried over), use of a Bank automobile, and
payment by Bancorp of various service and social club memberships. Mr. Rosso's
employment may be terminated at will by Bancorp, in which case he is entitled to
severance pay equal to one year's annual salary, continuation of all health and
welfare benefits for a period of one year following termination, and
distribution of all deferred salary items within six months of termination. The
agreement provides for payments in the event of disability and for the payment
of incentive compensation as determined in the discretion of the Board of
Directors. In the event of a change of control of Bancorp in which Bancorp is
not the surviving corporation, and provided Mr. Rosso does not assume the post
of president and chief executive office of the new or reorganized entity, the
employment agreement terminates, Mr. Rosso's outstanding options to purchase
shares of common stock of Bancorp become fully exercisable, and Mr. Rosso is
entitled to be paid one year's salary upon the closing of the sale or transfer
of control of Bancorp. Also in the event of a sale of control of Bancorp,
Bancorp is required by the agreement to create a pool equal to five percent of
the total sale price of Bancorp in excess of book value and consisting of cash
or stock of the acquiring entity, to be distributed among Bancorp's senior
management with not less than 60% of the pool to be distributed to Mr. Rosso.
Disputes under the agreement are required to be arbitrated under the California
Arbitration Act, with the cost of arbitration to be apportioned as the
arbitrators shall decide.
Salary Continuation Agreements
In order to provide long-term incentive to selected senior executive
officers, effective September 30, 2003, the Bank entered into Executive Salary
Continuation Agreements (each an "SCA") with six current senior executive
officers of the Company, including the two named executive officers listed on
the Summary Compensation Table.
7
Benefits payable under the SCAs are intended by the Bank to be funded by
single-premium life insurance policies that were purchased in connection with
entering into the SCAs and of which the Bank is the owner and beneficiary. The
cash surrender value of those policies was $4,246,000 at December 31, 2004.
Notwithstanding the existence of such policies of insurance, however, the SCAs
create no rights or interests in the property or assets of the Bank, the sole
obligation of the Bank under the SCAs is an unfunded and unsecured promise to
pay money in the future, and the status of any person who may assert a claim
pursuant to an SCA is that of an unsecured general creditor of the Bank.
Generally, each SCA provides the named executive officer with a specified
annual money benefit (the "Annual Benefit") payable to the executive or to his
named beneficiary or surviving spouse or estate, in that order, for a period of
up to 20 years following the executive's retirement upon or after a specified
retirement age. If the executive should die or become disabled prior to such
specified retirement age, a percentage of the Annual Benefit (on a sliding
upward scale depending upon the number of years which elapse between execution
of the SCA and the executive's early death or disability) would be payable.
No Annual Benefit is payable if the executive's employment is terminated
for cause or the executive voluntarily terminates his employment with the
Company prior to his specified retirement age, but the full Annual Benefit is
payable if the executive's employment with the Company is terminated by the
Company without cause or in connection with a change in control of the Company.
The amount of the Annual Benefit also is subject to reduction if in any year it
exceeds the compensation expense which (with respect to the payment of such
Annual Benefit) the Company may deduct under the Internal Revenue Code of 1986,
as amended (the "Code"), or if any portion of the Annual Benefit not waived by
the executive constitutes an "excess parachute" payment under the Code.
Subject to such contingencies, the following table sets forth information
regarding benefits payable under the SCAs which are currently in effect between
the Company and the executive officers named in the Summary Compensation Table:
- --------------------------------------------------------------------------------
Name Annual Years Required Year Annual Retirement
---- Benefit For Full Benefit Benefit Commences Age
------- ---------------- ----------------- ---
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Steven A. Rosso $134,587 10 September 2019 65
- --------------------------------------------------------------------------------
Gary A. Stewart $ 93,253 10 September 2015 65
- --------------------------------------------------------------------------------
Stock Option Plans
As of December 31, 2004, options for a total of 1,014,210 shares granted
to employees, officers and directors of Bancorp were outstanding under the
Bancorp's 1997 Stock Option Plan. As of March 31, 2005, options included in this
total had been exercised for 3,300 shares. The number of shares currently
reserved for issuance of additional options under the 1997 plan is 24,904.
Please see the tables below for information concerning options held as of
December 31, 2004, or exercised during 2004 by the executive officers named in
the Summary Compensation Table above and for options granted to these officers
during 2004.
Option Exercises and Year-End Values for 2004
The following table sets forth, with respect to the executive officers
named in the Summary Compensation Table above, the estimated value of options
exercised during 2004, and the estimated 2004 year-end value of all unexercised
in-the-money options held by such executive officers.
8
=========================================================================================================
Number of Value of
Securities Underlying Unexercised
Shares Unexercised In-the-Money
Acquired on Value Options (FY-End) Options (FY-End)
Name Exercise Realized(1) (Exercisable/Unexercisable) (Exercisable/Unexercisable)
=========================================================================================================
Steven A. Rosso 13,696 $33,536 22,000/ 88,000 $286,000/$1,144,000
Gary A. Stewart 8,600 $68,180 37,400/ 70,000 $593,119/$932,650
=========================================================================================================
(1) Represents the difference between the market value and the exercise price
of the shares acquired by exercise.
Option Grants in Last Fiscal Year
There were no options granted to the named executive officers during 2004.
Retirement Plan
The Pacific State Bank Retirement 401(k) Plan (the "Retirement Plan") is a
qualified plan under the Internal Revenue Code which provides profit-sharing
benefits to eligible Bank employees at least 18 years of age with not less than
1 month of service. Participating employees may elect to defer up to 15% of
salary each pay period as a contribution to the Retirement Plan, and may make
voluntary non-deductible contributions in amounts not to exceed 10% of the
employee's aggregate compensation since the employee's date of entry into the
Retirement Plan. Federal law limits the amounts which can be contributed
annually by individual participants; the Bank is required by the Retirement Plan
to make matching contributions equal to one-half of employee deferrals up to the
first 6% of such deferrals, and in addition may declare year-end bonus and
certain other discretionary contributions to all eligible participants. During
2004, the Bank's contributions to the Retirement Plan totaled approximately
$45,000. Bank contributions pursuant to the Retirement Plan in 2004 for the
benefit of the named individual executive officers of Bancorp are included in
the Summary Compensation Table above.
Director Compensation
Members of the Board of Directors of Bancorp accrued attendance fees of
$2,000 per month. A total of $192,000 in directors' fees was paid during 2004.
Bancorp's current practice is to pay directors' monthly.
Transactions with Management
Some of the directors and officers of Bancorp and the companies with which
those directors and officers are associated are customers of, and have had
banking transactions with, Bancorp in the ordinary course of Bancorp's business,
and Bancorp expects to have banking transactions with such persons in the
future. In the opinion of Bancorp's management, all loans and commitments to
lend in such transactions were made in compliance with applicable laws and on
substantially the same terms, including interest rates and collateral, as those
prevailing for comparable transactions with other persons of similar
creditworthiness and did not involve more than a normal risk of collectibility
or present other unfavorable features.
During 2004, the law firm of Freeman, D'Auito, Pierce, Gurev, Keeling & Wolf of
which director Maxwell Freeman is a partner was paid $20,383 for legal services
provided to the bank.
9
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires Bancorp's
directors, executive officers and ten percent or more shareholders of Bancorp's
equity securities, to file with the Securities and Exchange Commission ("SEC")
reports of ownership and reports of changes of ownership of Bancorp's equity
securities. Officers, directors and ten percent or more shareholders are
required by regulation to furnish Bancorp with copies of all Section 16(a) forms
they file. To Bancorp's knowledge, based solely on review of the copies of such
reports furnished to Bancorp and written representations that no other reports
were required, during the fiscal year ended December 31, 2004, all Section 16(a)
filing requirements applicable to Bancorp's directors, executive officers, and
beneficial owners of 10% or more of Bancorp's equity securities appear to have
been met.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Perry-Smith LLP ("Perry-Smith"), certified public
accountants, serves Bancorp as its auditors at the direction of the board of
directors and Audit Committee of Bancorp. It is anticipated that a
representative of Perry-Smith will be present at the Annual Meeting with the
opportunity to make a statement if he or she desires to do so and will be
available to answer appropriate questions.
Audit Fees
The aggregate fees billed by Perry-Smith for professional services
rendered for the audit of Bancorp's annual financial statements for the fiscal
year ended December 31, 2004 and for the reviews of the financial statements
included in Bancorp's Quarterly Reports on Form 10-Q for that fiscal year were
$95,300; related fees for the year ended December 31, 2003 were $87,640. These
amounts represented 88% and 81%, respectively, of the total fee paid to
Perry-Smith during these years
Financial Information Systems Design and Implementation Fees
The aggregate fees billed by Perry-Smith for professional services
rendered to Bancorp for financial information systems design and implementation
for the fiscal year ended December 31, 2004 were $0.00; related fees for the
year ended December 31, 2003 were $0.00 These amounts represented 0% and 0%,
respectively, of the total fee paid to Perry-Smith during these years
All Other Fees
The aggregate fees billed by Perry-Smith for services rendered to Bancorp,
other than the audit services and tax services described above, for the fiscal
years ended December 31, 2004 and December 31, 2003 were $0.0 and $3,800,
respectfully. Those amount represented 0% and 4%, respectively of the total fees
paid o Perry-Smith during these years. The audit committee has considered
whether the provision of non-audit services is compatible with maintaining the
principal accountant's independence.
Before each professional service provided by Perry-Smith was rendered to
Bancorp, such service was approved by, and its effect upon Perry-Smith's
independence was considered by, the Audit Committee.
SHAREHOLDER PROPOSALS
Next year's Annual Meeting of Shareholders of Bancorp is scheduled be held
on May 11, 2006. Any shareholder desiring to submit a proposal for action at the
2006 Annual Meeting of Shareholders which is desired to be presented in
Bancorp's Proxy Statement with respect to such meeting, should mail such
proposal by certified mail, return receipt requested, to Pacific State Bancorp,
1899 W. March Lane, Stockton, California 95207, Attention: Dr. Harold Hand,
Chairman of the Board. All such proposals must be received by Bancorp not later
than December 13, 2005. Management of Bancorp will have discretionary authority
to vote proxies obtained by it in connection with any shareholder proposal not
submitted on or before the December 13, 2005 deadline. Matters pertaining to
such proposals, including the number and length thereof, eligibility of persons
entitled to have such proposals included, and other aspects, are regulated by
the Securities Exchange Act of 1934, and regulations adopted there under.
OTHER MATTERS
Management is not aware of any other matters to come before the Meeting.
If any other matter not mentioned in this Proxy Statement is brought before the
Meeting, the persons named in this enclosed form of proxy will have
discretionary authority to vote all proxies with respect thereto in accordance
with the recommendations of management.
Stockton, California
April 12, 2005
10
PACIFIC STATE BANCORP
A COPY OF BANCORP'S ANNUAL REPORT ON FORM 10-K WILL BE MAILED FREE OF
CHARGE TO ANY SHAREHOLDER UPON REQUEST. REQUESTS MAY BE MADE BY TELEPHONE AT
(209) 870-3200 OR BY LETTER ADDRESSED TO PACIFIC STATE BANCORP, 1899 W. MARCH
LANE, STOCKTON, CALIFORNIA 95207.
11
REVOCABLE PROXY
PACIFIC STATE BANCORP
SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS
MAY 12, 2005
The undersigned holder of Common Stock, revoking any Proxy heretofore
given, hereby constitutes and appoints Steven A. Rosso and Steven J. Kikuchi and
each of them, with full power of substitution, as attorneys and proxies to
appear and vote all of the shares of Common Stock of Pacific State Bancorp, a
California corporation, standing in the name of the undersigned which the
undersigned could vote if personally present and acting at the Annual Meeting of
Shareholders of Pacific State Bancorp, to be held Thursday, May 12, 2005, at 6
South El Dorado Street, Stockton, California, at 4:30 p.m. or at any
adjournments thereof, upon the following items and to vote according to their
discretion on all other matters which may be properly presented for action at
the meeting or any postponements or adjournments thereof.
THIS PROXY IS SOLICITED BY, AND ON BEHALF OF, THE BOARD OF DIRECTORS AND MAY
BE REVOKED PRIOR TO ITS EXERCISE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS
NOMINATED BY THE BOARD OF DIRECTORS. THE PROXY, WHEN PROPERLY EXECUTED, WILL
BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, IT WILL BE VOTED "FOR" THE
ELECTION OF DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS.
(Continued and to be marked, dated and signed, on the other side)
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| Address Change/Comments (Mark the corresponding box on the reverse side) |
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| |
| |
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^FOLD AND DETACH HERE^
THE PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER. UNLESS Please [ ]
OTHERWISE DIRECTED BY THE SHAREHOLDER, THIS PROXY WILL BE VOTED "FOR" THE FOLLOWING ITEMS: Mark Here
for Address
INSTRUCTION: To withhold authority to vote for any individual nominee, Change or
strike a line through the nominee's name in the list below: Comments
SEE REVERSE SIDE
1. To elect as Directors the nominees 2. In their discretion, to transact
set forth below. FOR ALL nominees listed WITHHOLD such other business as may
to the right (except as AUTHORITY properly come before the meeting.
marked to the contrary to vote for all
01 Michael L. Dalton 06 Yosh Mataga below). nominees listed. THIS PROXY IS SOLICITED BY, AND
02 Maxwell M. Freeman 07 Steven A. Rosso [ ] [ ] ON BEHALF OF, THE BOARD OF
03 Harold Hand 08 Gary A. Stewart DIRECTORS AND MAY BE REVOKED
04 Patricia Ann Hatton 09 Kathleen Verner PRIOR TO ITS EXERCISE.
05 Steven J. Kikuchi 10 Philip B. Wallace
I/we do [ ] or do not [ ] expect to
attend this
meeting.
__________________________________________________________________________________________ SHAREHOLDER(S) Number. of
Common Shares
_________________ _________________
_________________ _________________
Signature_________________________ Signature_________________________ Date _____
Please date and sign exactly as your name(s) appears. When signing as attorney,
executor, administrator, trustee, or guardian, please give full title. If more
than one trustee, all should sign. All joint owners should sign. WHETHER OR NOT
YOU PLAN TO ATTEND THIS MEETING, PLEASE SIGN AND RETURN THIS PROXY AS PROMPTLY
AS POSSIBLE IN THE ENCLOSED POST-PAID ENVELOPE.
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^FOLD AND DETACH HERE^