<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
COAST 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)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
None
------------------------------------------------------------------------
/ / 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:
None
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
Schedule 14A
------------------------------------------------------------------------
3) Filing Party:
Coast Bancorp
------------------------------------------------------------------------
4) Date Filed:
April 10, 1997
------------------------------------------------------------------------
<PAGE>
COAST BANCORP
April 10, 1997
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Coast Bancorp which will be held at the Hollins House, 20 Clubhouse Road, Santa
Cruz, California on Tuesday, May 20, 1997 at 3:00 p.m.
You will be asked to elect as directors, the nine individuals nominated by
the Board of Directors and to ratify the appointment of the bank's independent
public accountants.
Although you may presently plan to attend the meeting, we strongly suggest
that you indicate your approval by voting FOR the election of the directors
named in the attached Proxy Statement and FOR the ratification of the Board of
Directors' selection of independent accountants, in the spaces provided on the
enclosed proxy card and sign, date and return it promptly in the enclosed
business reply envelope. If you attend the meeting, which we hope you will, you
may vote in person even if you have previously mailed a proxy.
We look forward to seeing you.
Very truly yours,
/s/ James C. Thompson /s/ Harvey J. Nickelson
- ---------------------------------- -------------------------------------
James C. Thompson Harvey J. Nickelson
Chairman of the Board of Directors President and Chief Executive Officer
<PAGE>
COAST BANCORP
740 FRONT STREET
SANTA CRUZ, CALIFORNIA 95060
(408) 458-4500
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 20, 1997
3:00 P.M.
The Annual Meeting of Shareholders of Coast Bancorp, a California
corporation (the "Company") and the bank holding company for Coast Commercial
Bank (the "Bank"), will be held at the Hollins House, 20 Clubhouse Road, Santa
Cruz, California, on Tuesday, May 20, 1997 at 3:00 P.M., for the following
purposes:
1. To elect nine directors. The names of the nominees for the Board of
Directors of Coast Bancorp are set forth in the accompanying proxy statement.
2. To ratify the appointment of Deloitte & Touche LLP to audit the
financial statements of Coast Bancorp for the year ending December 31, 1997.
3. To consider and transact such other business as may properly be
brought before the meeting and any adjournment or adjournments thereof.
The foregoing proposals are more fully described in the accompanying Proxy
Statement to which your attention is invited.
Shareholders of record at the close of business on March 21, 1997 are
entitled to notice of and to vote at the meeting.
Provisions of the Bylaws of Coast Bancorp govern nominations for election
of members of the Board of Directors as follows:
NOMINATION OF DIRECTORS. Nominations for election of members of the board
may be made by the board or by any holder 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 (other than for persons named in the notice
of the meeting called for the election of directors) shall be made in writing
and shall be delivered or mailed to the President of the corporation by the
later of: (i) the close of business twenty-one (21) days prior to any meeting
of shareholders called for the election of directors; or (ii) seven (7) days
after the date of mailing of notice of the meeting to shareholders. 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
<PAGE>
shares of capital stock of the corporation owned by each proposed nominee; (d)
the name and residence address of the notifying shareholder; (e) the number of
shares of capital stock of the corporation owned by the notifying shareholder;
(f) the number of shares of capital stock of any bank, bank holding company,
savings and loan association or other depository institution owned beneficially
by the nominee or by the notifying shareholder and the identities and locations
of any such institutions; and (g) whether the proposed nominee has ever been
convicted or pleaded nolo contendere to any criminal offense involving
dishonesty or breach of trust, filed a petition in bankruptcy or been adjudged
bankrupt. The notification shall be signed by the nominating shareholder and by
each nominee, and shall be accompanied by a written consent to be named as a
nominee for election as a director from each proposed nominee. Nominations not
made in accordance with these procedures shall be disregarded by the chairman of
the meeting, and upon his or her instructions, the inspectors of election shall
disregard all votes cast for each such nominee.
All shareholders are cordially invited to attend the Meeting in person. To
insure your representation at the Meeting, you are requested to date, execute
and return the enclosed proxy card, without delay, in the enclosed postage-paid
envelope whether or not you plan to attend the Meeting. Any shareholder
present at the Meeting may vote personally on all matters brought before the
meeting in which event your proxy will not be used.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Sandra Anderson
-----------------------------------
Sandra Anderson, Secretary
April 10, 1997
Santa Cruz, California
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE>
COAST BANCORP
PROXY STATEMENT
INFORMATION CONCERNING PROXY
The following information is furnished in connection with the solicitation
of the enclosed proxy by and on behalf of Coast Bancorp (the "Company"), the
bank holding company for Coast Commercial Bank (the "Bank"), for use at the
Annual Meeting of Shareholders of the Company to be held at the Hollins House,
20 Clubhouse Road, Santa Cruz, California on Tuesday, May 20, 1997 at 3:00 P.M.,
and at any adjournment or adjournments thereof (the "Meeting"). (References to
the Company include the Bank.)
As many of our shareholders are unable to personally attend the Meeting,
the Company solicits proxies so that each shareholder is given an opportunity to
vote. Shares represented by duly executed proxies in the accompanying form
received by management prior to the Meeting will be voted at the Meeting. A
shareholder executing and delivering the enclosed proxy may revoke such proxy at
any time prior to exercise of the authority thereby given. A proxy may be
revoked (i) by written notice to Sandra Anderson, Secretary of the Company;
(ii) by a subsequently dated proxy; or (iii) by attending the Meeting and voting
by ballot. If a shareholder specifies a choice with respect to any matter to be
acted upon by means of the ballot provided in the accompanying form of proxy,
the shares will be voted accordingly. If no specification is made, the shares
represented by this proxy will be voted in favor of election of the nominees
specified and in favor of the specified proposals. A shareholder who attends
the Meeting may vote by ballot at the Meeting, thereby canceling any proxy the
shareholder may previously have given.
The Proxy Committee is composed of three directors of the Company, Douglas
D. Austin, John C. Burroughs and Ronald M. Israel, who will vote all shares of
Common Stock represented by the proxies. However, the Proxy Committee cannot
vote the shares of a shareholder unless the shareholder signs and returns a
proxy. Proxy cards also confer upon the Proxy Committee discretionary authority
to vote the shares represented thereby on any matter that was not known at the
time this Proxy Statement was mailed which may properly be presented for action
at the Meeting and may include: approval of minutes of the prior annual meeting
which will not constitute ratification of the actions taken at such meeting;
action with respect to procedural matters pertaining to the conduct of the
Meeting; and election of any persons to any office for which a bona fide nominee
is named herein if such nominee is unable to serve or for good cause will not
serve.
1
<PAGE>
The principal solicitation of proxies is being made by mail. However,
additional solicitations may be made by telephone, telegraph or personal visits
by directors, officers and employees of the Company or Bank. The Company may,
at its discretion, engage the services of a proxy solicitation firm to assist in
the solicitation of proxies. The total expense of this solicitation will be
borne by the Company and will include reimbursement paid to brokerage firms and
others for their expenses in forwarding soliciting material and such expenses as
may be paid to any proxy soliciting firm engaged by the Company. This Proxy
Statement and the accompanying form of proxy are being mailed to shareholders on
or about April 10, 1997.
The proxy card makes provisions to enable you to record your vote on each
matter. If you wish to withhold your vote for any one or more directors, place
an X in the box marked FOR and circle the name of each of the directors for whom
you wish to withhold your vote. You may withhold authority to vote for all of
the directors by placing an X in the box marked WITHHOLD AUTHORITY. You may
vote FOR or AGAINST each other item by placing an X in the box appropriately
marked. Please note that a vote to ABSTAIN may have the same effect as a vote
AGAINST.
VOTING SECURITIES
OUTSTANDING VOTING SECURITIES AND RECORD DATE
The Company has only one class of voting securities outstanding, identified
as the Common Stock. Shareholders of record entitled to notice of and to vote
at the Meeting have been determined as of the close of business on March 21,
1997 (the "Record Date"), and as of such date 2,209,659 shares were outstanding,
all of which will be entitled to vote at the Meeting.
CUMULATIVE VOTING
Each shareholder of record is entitled to one vote for each share held on
all matters to come before the Meeting, except that the shareholders may have
cumulative voting rights with respect to the election of directors. Pursuant to
California law, no shareholder can cumulate votes unless the name(s) of the
candidate(s) for which such votes are to be cast has been placed in nomination
prior to the voting and, also prior to the voting at the meeting, a shareholder
has given notice of the shareholder's intention to cumulate the shareholder's
votes at such Meeting. If any shareholder has given such notice, all
shareholders may cumulate their votes for candidates in nomination. Management
does not, at this time, intend to give such notice or to cumulate the votes it
may hold pursuant to the proxies solicited herein unless the required notice by
a shareholder is given in proper form at the Meeting, in which instance
management intends to cumulatively vote all of the proxies held by it in
favor of the nominees for office as set forth herein or for such
2
<PAGE>
of said nominees as it may determine is required in the case of cumulative
voting. Therefore, discretionary authority to cumulate votes in such event is
solicited in this Proxy Statement.
If cumulative voting shall be utilized, each shareholder may give one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which the shareholder's shares are
entitled, or may distribute the same number of votes among as many candidates as
the shareholder desires. The candidates (up to the number of directors to be
elected) receiving the highest number of votes are elected.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company is of the opinion that there is no person who possesses
directly or indirectly the power to direct or cause to direct the management and
policies of the Company, nor is it aware of the existence of a group of persons
formed for such purpose, whether through the ownership of voting securities, by
contract, or otherwise.
The following sets forth information as of March 21, 1997, pertaining to
securities ownership by persons known to the Company to own 5% or more of any
class of the Company's voting securities. The information contained herein has
been obtained from the Company's records, and from information furnished
directly by the individual or entity to the Company.
AMOUNT AND
RELATIONSHIP NATURE
NAME AND ADDRESS OF WITH OF BENEFICIAL PERCENTAGE
BENEFICIAL OWNER COMPANY OWNERSHIP(1) OF CLASS
- ------------------------ ------------ ------------- ----------
Richard E. Alderson(2) Director 167,281(3)(4) 7.56%
Ronald M. Israel, M.D.(2) Director 175,833(3)(6) 7.94%
- ------------------------------
(1) Unless otherwise indicated, the beneficial owner of these securities has
sole voting and investment powers.
(2) The address is c/o Coast Bancorp, 740 Front Street, Santa Cruz,
California 95060.
3
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors of the
Company may be no less than seven (7) and no more than thirteen (13) with the
exact number to be fixed from time to time by resolution of the Board of
Directors. The number of directors is presently fixed at nine (9). Such
directors, if elected, shall hold office for a term continuing until the next
Annual Meeting and until their successors are duly elected and qualified. Each
nominee is at present a member of the Board of Directors of the Company. If any
nominee should become unable or unwilling to serve as a director, the proxies
will be voted for such person as shall be designated by the Board of Directors
to replace the nominee. The Board presently has no knowledge that any of the
nominees will be unable or unwilling to serve.
The following information is supplied with respect to each person nominated
and recommended to be elected by the current Board of Directors of the Company
and is based upon the records of the Company and information furnished to it by
the nominees.
<TABLE>
<CAPTION>
AMOUNT AND
DIRECTOR NATURE
RELATIONSHIP SINCE OF BENEFICIAL PERCENTAGE
NAME OF NOMINEE AGE WITH COMPANY (COMPANY/BANK) OWNERSHIP(1) OF CLASS
--------------- --- ------------ -------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Richard E. Alderson 58 Director 1995/1993 167,281(3)(4) 7.56%
Douglas D. Austin 56 Director 1995/1982 22,048(3) 1.00%
John C. Burroughs 52 Director and 1995/1982 27,000(5) 1.22%
Vice President
Bud W. Cummings 65 Director 1995/1982 46,760(3) 2.11%
Ronald M. Israel, M. D. 59 Director 1995/1982 175,833(3)(8) 7.94%
</TABLE>
- -----------------------------
(3) Includes options for 4,000 shares which is exercisable within sixty days of
the Record Date.
(4) Mr. Alderson disclaims beneficial ownership of 4,177 shares held in trust
for his children and 161,451 shares held in trust over which Mr. Alderson
has sole investment and disposition power.
(5) Includes an option for 2,000 shares which is exercisable within sixty days
of the Record Date.
(6) Includes 61,714 shares in a trust over which Dr. Israel has sole voting and
investment power.
4
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
DIRECTOR NATURE
RELATIONSHIP SINCE OF BENEFICIAL PERCENTAGE
NAME OF NOMINEE AGE WITH COMPANY (COMPANY/BANK) OWNERSHIP(1) OF CLASS
--------------- --- ------------ -------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Malcolm D. Moore 59 Director 1995/1982 104,095(3) 4.70%
Harvey J. Nickelson 53 President, 1995/1982 69,038(5) 3.12%
Chief
Executive
Officer and
Director
Gus J.F. Norton 56 Director 1995/1982 56,743(3)(7) 2.56%
James C. Thompson 57 Chairman of 1995/1982 84,090(3) 3.80%
the Board
All Executive Officers
and Directors of the
Company as a Group
(12 in number) 801,926(8) 35.74%
</TABLE>
There are no family relationships between any two or more of the directors,
officers or persons nominated or chosen by the Board of Directors to become a
director or officer. No officer or director of the Company serves as a director
of any company required to report under the Securities Exchange Act of 1934 or
any investment company registered under the Investment Company Act of 1940.
Set forth below are brief summaries of the background and business
experience of all the directors and persons nominated to become a director of
the Company. Unless otherwise indicated, each person has been engaged in the
noted occupation with the same entity for more than 5 years.
RICHARD E. ALDERSON is engaged in personal investments.
DOUGLAS D. AUSTIN is President of Austin Insurance Agency, Inc.
JOHN C. BURROUGHS, is a Vice President of the Bank and Manager of the
Bank's Investment Services Department. Prior to that he was a Certified
Financial Planner with Burroughs Financial Management from 1989 to 1992 and with
Burroughs, Costa Associates prior to 1989.
- ----------------------------
(7) Includes 52,743 shares in a trust over which Mr. Norton has sole voting and
investment power.
(8) Includes options for 34,400 shares which are exercisable within sixty days
of the Record Date.
5
<PAGE>
BUD W. CUMMINGS retired in 1986 from serving as the proprietor of the Santa
Cruz Coin Exchange.
RONALD M. ISRAEL, M.D. is a private investor. Previously, he was a
self-employed physician and an Assistant Professor of Clinical Medicine at the
University of California Medical Center, San Francisco from 1971 to 1994.
MALCOLM D. MOORE is President of P & M Plumbing, Inc. He is also a partner
in two property management and real estate development firms -- P & M
Enterprises and Triad Associates.
HARVEY J. NICKELSON is President, Chief Executive Officer and a director of
the Company and Bank.
GUS J. F. NORTON is the broker of record and a partner in Sun Properties, a
real estate sales and development association.
JAMES C. THOMPSON is currently a partner with the law firm of Comstock,
Thompson, Kontz and Brenner since August 1, 1994. Prior to that he was with the
law firms of Comstock, Shannon and Thompson from June 1, 1992 to August 1, 1994
and Comstock, Shanle, Shannon & Thompson from August 1, 1989 to June 1992.
On November 2, 1993, MPC/PCI Steinhardt Limited, a California limited
partnership which owned a multi-unit apartment building located in San
Francisco, filed a Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court
in San Francisco. John C. Burroughs, a Vice President of the Bank and a
Director of the Company, was a general partner of this partnership until July
30, 1993.
RECOMMENDATION OF MANAGEMENT
THE BOARD OF DIRECTORS INTENDS TO VOTE ALL PROXIES HELD BY IT IN FAVOR OF
ELECTION OF EACH OF THE NOMINEES. YOU ARE URGED TO VOTE FOR PROPOSAL 1: TO
ELECT THE NINE (9) NOMINEES SET FORTH HEREIN TO SERVE UNTIL THE NEXT ANNUAL
MEETING OF SHAREHOLDERS AND UNTIL THEIR RESPECTIVE SUCCESSORS SHALL BE ELECTED
AND QUALIFIED.
INFORMATION PERTAINING TO ELECTION OF DIRECTORS
COMMITTEES OF THE BOARD OF DIRECTORS; DIRECTOR ATTENDANCE
The Board of Directors maintains the following committees, which perform
the following functions and are comprised of the members listed below. The
Company and the Bank each have an Audit Committee composed of the same members.
6
<PAGE>
<TABLE>
<CAPTION>
NAME FUNCTIONS; NUMBER OF MEETINGS IN 1996 MEMBERS
- ----- ------------------------------------- -------
<S> <C> <C>
Audit Monitors significant accounting policies; approves services Alderson, Austin,
Committee rendered by the auditors; reviews audit and management reports; Cummings, Israel,
makes recommendations regarding the appointment of independent Moore, Norton and
auditors and the fees payable for their services. The Audit Thompson.
Committee for the Company met two times in 1996 and the Audit
Committee for the Bank met six times in 1996.
Compensation Determines salaries of the Company's executive officers and Alderson, Austin,
Committee stock options to be granted to them based upon recommendations Cummings, Israel,
of the Company's Chief Executive Officer and the Chairman of the Moore, Norton and
Board of Directors. Consults with the Chief Executive Officer Thompson.
regarding incentive compensation to be paid to the executive
officers of the Company.
The Compensation Committee met one time in 1996.
</TABLE>
The Company does not have a nominating committee. The Board of Directors
performs the functions of this committee.
During 1996, the Company's Board of Directors held six regular meetings and
seven special meetings. Each director attended at least 75% of the aggregate
of: (1) the total number of meeting of the Board of Directors; and (2) the
total number of meetings of committees of the Board on which they served.
EXECUTIVE OFFICERS
Set forth below is certain information as of March 21, 1997, with respect
to each executive officer of the Company, not previously discussed.
<TABLE>
<CAPTION>
OFFICER
POSITIONS AND OFFICES SINCE
NAME AGE WITH THE COMPANY AND THE BANK (COMPANY/BANK)
- ---- --- ----------------------------- --------------
<S> <C> <C> <C>
David V. Heald 48 Executive Vice President of the 1995/1982
Company; Executive Vice President
and Chief Banking Officer of the Bank
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
OFFICER
POSITIONS AND OFFICES SINCE
NAME AGE WITH THE COMPANY AND THE BANK (COMPANY/BANK)
- ---- --- ----------------------------- --------------
<S> <C> <C> <C>
Richard G. Hofstetter 42 Senior Vice President and Senior ---/1987
Lending Officer of the Bank
Bruce H. Kendall 39 Senior Vice President and Chief 1995/1995
Financial Officer of the Company and
the Bank
</TABLE>
DAVID V. HEALD is Executive Vice President of the Company and Executive
Vice President and Chief Banking Officer of the Bank. Prior to 1992, Mr. Heald
was the Senior Loan Officer of the Bank.
RICHARD G. HOFSTETTER is Senior Vice President and Senior Lending Officer
of the Bank. Prior to 1992, Mr. Hofstetter was Manager of the Bank's Real
Estate Department.
BRUCE H. KENDALL become Senior Vice President and Chief Financial Officer
of the Company and the Bank in 1995. From October 1990 to August 1994, Mr.
Kendall was employed by Silicon Valley Bank, most recently as Senior Vice
President of Finance.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the compensation paid (for
services rendered in all capacities) during the past three fiscal years to the
executive officers of the Company whose annual compensation for 1996 exceeded
$100,000. All compensation is presently paid by the Bank.
8
<PAGE>
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
OTHER ANNUAL ------------ ALL OTHER
NAME POSITION YEAR SALARY BONUS COMPENSATION (9) OPTIONS COMPENSATION
- ---- -------- ---- ------ ----- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Harvey J. Nickelson President and 1996 $156,250 $107,000 -0- -0- $ 96,237 (10)(11)
Chief Executive 1995 $148,750 $ 93,000 -0- -0- $ 116,156 (10)(11)
Officer 1994 $141,222 $ 81,000 -0- -0- $ 46,030 (10)(11)
David V. Heald Executive Vice 1996 $112,552 $ 55,000 -0- -0- $ 46,943 (11)
President and 1995 $107,192 $ 47,530 -0- -0- $ 53,784 (11)
Chief Banking 1994 $102,083 $ 42,500 -0- -0- $ 17,490 (11)
Officer
Richard G. Hofstetter Senior Vice 1996 $ 94,425 $ 42,500 -0- -0- $ 4,994 (12)
President and 1995 $ 89,942 $ 38,000 -0- -0- $ 4,936 (12)
Senior Loan 1994 $ 85,591 $ 35,000 -0- -0- $ 4,860 (12)
Officer
Bruce H. Kendall Senior Vice 1996 $88,000 $ 37,500 -0- -0- $ 4,254 (12)
President and 1995 $78,938 $ 25,000 -0- -0- $ 2,483 (12)
Chief Financial
Officer
</TABLE>
During 1996, non-employee directors of the Company received a
retainer of $4,800 per year and also received $500 for attending Board
meetings, $300 for loan committee meetings and $200 for other
committee meetings. The Chairman of the Company receives a retainer
of $7,500 per quarter for his services and receives no other cash
compensation. Employee directors of the Company receive $1,000 for
attending Board meetings.
In addition, non-employee directors of the Company receive a
stock option grant for 2,000 shares each year for five years beginning
in 1995.
DIRECTORS' DEFERRED COMPENSATION
In November, 1992, the Bank entered into Deferred Compensation
Agreement ("Compensation Agreements") with its directors, except
Harvey J. Nickelson. Under
- -------------------
(9) No perquisites are reported as Other Annual Compensation as they did
not exceed the lesser of $50,000 or 10% of the total of the annual
salary and bonus reported for the named executive officer.
(10) Includes director's fees of $12,000 per year.
(11) Includes amounts allocated to an ESOP account, contributed to a
401(k) Plan and accrued under a Salary Continuation Agreement.
(12) Includes amounts allocated to an ESOP account and contributed to a
401(k) Plan.
9
<PAGE>
the Compensation Agreements, the directors may elect before January 1 of each
year to defer all or a part of their directors' fees, and they will be credited
with interest based upon the deferred amount. The interest rate on the deferred
amount of the directors' compensation is presently 7.4%. The deferred amount of
the directors' compensation is to be paid to each director at the earlier of
termination of their service as a director of the Bank; attainment of age 65; or
upon 180 days advance notice to the director by the Bank. In the event of a
director's death prior to termination of his service with the Bank or age 65,
his beneficiary will be entitled to receive the payments under the Compensation
Agreement. The Bank has purchased an insurance policy on the life of each of
the participating directors to enable the Bank to make payments as required by
the Compensation Agreements.
EXECUTIVE SALARY CONTINUATION PLANS
On September 19, 1992, the Bank entered into Executive Salary Continuation
Agreements ("Salary Continuation Agreements") with Harvey J. Nickelson and David
V. Heald (collectively "Recipient"). Under the Salary Continuation Agreements
upon retirement at age 65, Mr. Nickelson is entitled to $75,000 per year and Mr.
Heald is entitled to $50,000 per year, each for 15 years. If the Recipient
elects early retirement after age 55 but prior to attaining age 65, the annual
payments shall be reduced by 2% per year for each year such retirement precedes
age 65 and payments are limited to the vested portion of the benefit. In the
event of the Recipient's death or disability, their designated beneficiary would
be entitled to the benefits. The Bank has purchased insurance policies on the
life of each of these officers to enable the Bank to make payments as required
by the Salary Continuation Agreements.
COAST COMMERCIAL BANK EMPLOYEE STOCK OWNERSHIP PLAN
In November, 1991, the Bank amended and restated the Coast Commercial Bank
Employee Savings Plan and it was renamed the Coast Commercial Bank Employee
Stock Ownership Plan, which contains 401(k) provisions ("KSOP"). The KSOP is
considered by the Board of Directors to be a means of recognizing the
contributions made to the Bank's successful operation by its employees and to
reward such contributions. Under the KSOP, there is both a purchase of the
Company's Common Stock for the account of employees as part of the employee
stock ownership provisions and a contribution by the Bank and an opportunity for
employee contributions and matching under the 401(k) provisions. During 1996,
the Bank contributed $120,000 to the employee stock ownership portion and
$41,885 to the 401(k) portion of the KSOP. Under the 401(k) portion, the Bank's
matching funds are used to purchase the Company's Common Stock.
All employees who are 21 years old and have been credited with 1,000 hours
of service are eligible to participate in the KSOP. When an employee retires or
in the event of death or total disability, an employee will be entitled to their
distribution not
10
<PAGE>
later than the end of the year following termination of employment. An employee
who has attained age 55 and has 15 years of service may elect to receive
benefits pursuant to the early retirement provisions of the KSOP. If employment
is terminated for any other reason, an employee is entitled to the payment of
their KSOP account.
COAST BANCORP 1995 STOCK OPTION PLAN
On February 22, 1995, the Company adopted the Coast Bancorp 1995 Stock
Option Plan ("1995 Plan") which sets aside 400,000 shares of no par value Common
Stock of the Company for which options may be granted to key, full-time
salaried employees and officers of the Company, as well as non-employee
directors of the Company.
The exercise price of all options to be granted under the 1995 Plan must be
at least 100% of the fair market value of the Company's Common Stock on the
granting date and be paid in full at the time the option is exercised either in
cash, shares of the Company's Common Stock with a fair market value equal to the
purchase price or a combination thereof. Under the 1995 Plan, all options
expire no more than ten years after the date of grant.
In the case of termination of employment or status as a director, no
additional options become exercisable, and exercise rights cease after three (3)
months unless employment or status as a director is terminated because of death
or disability, in which case the option may be exercised for not more than one
year following termination. In case of termination of employment for cause, or
cessation of status as a director as a result of being removed from office by a
bank regulatory authority or by judicial process, exercise rights cease after
thirty (30) days.
The following table shows information regarding stock options during 1996
to the executive officers of the Company.
11
<PAGE>
<TABLE>
<CAPTION>
OPTIONS GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
----------------------------------------------------------------- --------------------
NUMBER OF
SECURITIES % OF TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE EXPIRATION
NAME GRANTED (#) IN FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- -------------------- ----------- ------------------ -------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Harvey J. Nickelson 10,000 20% $14.25 March 20, 2006 $77,738 $191,060
David V. Heald 5,000 10% $14.25 March 20, 2006 $38,869 $95,530
Richard G. Hofstetter 4,000 8% $14.25 March 20, 2006 $31,095 $76,424
Bruce H. Kendall 3,000 6% $14.25 March 20, 2006 $23,322 $57,318
</TABLE>
The following table shows information regarding the value at December 31,
1996 of unexercised stock options held by the executive officers of the Company.
No stock options were exercised during 1996 by the executive officers of the
Company.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT
OPTIONS AT FISCAL FISCAL
YEAR-END(#) YEAR-END ($)
SHARES --------------------- ------------------------
ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- --------------------- --------------- ------------------ ---------------------- ------------------------
<S> <C> <C> <C> <C>
Harvey J. Nickelson -0- -0- 2,000/8,000 $8,250/$33,000
David V. Heald -0- -0- 1,000/4,000 $4,125/$16,500
Richard G. Hofstetter -0- -0- 800/3,200 $3,300/$13,200
Bruce H. Kendall -0- -0- 600/2,400 $2,475/$ 9,900
</TABLE>
PERFORMANCE GRAPH
As part of the proxy statement disclosure requirements mandated by the
Securities and Exchange Commission, the Company is required to provide a
five-year comparison of the cumulative total stockholder return on its Common
Stock with that
12
<PAGE>
of a broad equity market index and either a published industry index or a
Company-constructed peer group index.
The following chart compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock assuming that all cash
dividends have been reinvested, during the five years ended December 31, 1996
with the cumulative total return on the NASDAQ Bank Index, the SNL Securities,
Inc. Index for Banks under $500 million in asset size, and the S&P 500 Total
Return Index. The comparison assumes $100 was invested on December 31, 1991 in
the Company's Common Stock in each of the foregoing indices and the reinvestment
of dividends.
There can be no assurance as to future trends in the cumulative total
return of the Company's Common Stock or of the following indices. The Company
does not make or endorse any predictions as to future stock performance.
[GRAPH]
<TABLE>
<CAPTION>
PERIOD ENDING
----------------------------------------------------------------
Index 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Coast Bancorp 100.00 89.19 126.34 110.08 151.89 220.35
S&P 500 Total Return Index 100.00 107.62 118.47 120.03 165.13 202.89
Nasdaq Bank Index 100.00 145.55 165.99 165.38 246.32 325.60
SNL $500m Bank Asset-Size Index 100.00 132.05 172.41 185.43 253.67 326.50
</TABLE>
13
<PAGE>
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
officers and directors, and any person who owns more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, directors and holders of more than ten percent are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. To the best knowledge of the Company, no person owns ten percent or
more of the Company's Common Stock.
Based solely on its review of the copies of such forms received by it, or
written representations from certain persons that no Form 5 was required to be
filed, the Company believes that for the period from January 1, 1996 through
December 31, 1996, its officers and directors complied with all applicable
filing requirements.
INDEBTEDNESS OF MANAGEMENT AND OTHER TRANSACTIONS
The Company has had and expects to have in the future, banking transactions
in the ordinary course of its business with its directors, executive officers,
principal shareholders, and their associates, on substantially the same terms,
including interest rates and collateral on loans comparable to transactions with
others, and such transactions did not involve more than the normal risks of
collectibility or present other unfavorable features.
REPORT ON EXECUTIVE COMPENSATION
THE COMPENSATION COMMITTEE
The following report is made by the Company's Compensation Committee.
Presently, all compensation of the executive officers is being paid by the Bank.
The Compensation Committee has considered the tax law limitation of
deductibility of executive compensation of $1,000,000 per executive for publicly
held corporations. The Compensation Committee does not believe that this
limitation will affect the Company as it does not anticipate that its
executives' compensation will approach this limit.
COMPENSATION PHILOSOPHY
The Company's compensation philosophy is to incent the performance of its
executive officers so that the Company will achieve financial performance at the
upper levels of profitability for a company of its size in the banking industry.
The Company believes that it has achieved this objective, particularly during
the last several years.
14
<PAGE>
Accordingly, the Company makes incentive compensation a significant part of the
total compensation paid to its executive officers.
CORPORATE PERFORMANCES FACTORS
The Company determines the salary of executive officers based in part upon
the salaries paid by industry peers consisting of other banks located in
California of similar asset size. As the Company's compensation philosophy is
to incent the performance of its executive officers to achieve greater
performance, salaries are kept in line with median salaries of its industry
peers.
In keeping with the Company's philosophy of incenting the performances of
its executive officers, in determining bonuses it takes into consideration the
Company's Return on Assets and Return on Equity.
INDIVIDUAL PERFORMANCE FACTORS
Annual increases to an executive officer's salary is based upon their
annual review as measured by their achievement of goals and objectives as
discussed with them at their annual review for the prior year, their level of
performance and their responsibilities.
COMPENSATION - SALARIES AND AWARD OF INCENTIVE COMPENSATION
The Chief Executive Officer of the Company makes a recommendation to the
Compensation Committee for the salary of each executive officer based upon the
attainment of goals and objectives for each officer as discussed with them at
their annual review for the prior year, and an evaluation of their performance
and responsibilities. Industry peer group data is also considered. The
recommendation for the Chief Executive Officer's salary is made to the
Compensation Committee by the Chairman of the Company's Board of Directors.
The amount available to be paid as incentive compensation to the executive
officers of the Company is determined by the Chief Executive Officer after
considering the Company's pre-tax income. The amount of incentive compensation
to be paid to each executive officer is then determined by the Chief Executive
Officer using the same criteria used for the determination of salary. The
amount of the incentive compensation to be paid to other executive officers is
discussed by the Chief Executive Officer with the Compensation Committee.
CHIEF EXECUTIVE OFFICER COMPENSATION
Harvey J. Nickelson is the President and Chief Executive Officer of the
Company and the Bank.
15
<PAGE>
Mr. Nickelson's salary is based upon the same factors as used for the
determination of salary for the other executive officers. However, Mr.
Nickelson's annual review determination of salary is performed by the Chairman
of the Board of Directors of the Company after discussion with the other outside
directors.
Mr. Nickelson's incentive compensation is thirty-five percent (35%) of the
amount available for payment of incentive compensation to those employees at the
level of Senior Vice President and above. This level includes four executive
officers and two officers who are not considered to be executive officers.
STOCK OPTIONS
The amount of stock options to be granted to executive officers of the
Company is recommended by the Chief Executive Officer to the Company's Stock
Option Committee. The same criteria as used for the determination of salary is
used for the recommendation of stock option grants.
Coast Bancorp Compensation Committee:
Richard E. Alderson
Douglas D. Austin
Gilbert "Bud" W. Cummings
Ronald M. Israel, M.D.
Malcolm D. Moore
Gus J. F. Norton
James C. Thompson
THE COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of seven outside Directors. None
of these individuals is or has been employed as an officer or employee of the
Company or the Bank or any subsidiaries.
PROPOSAL 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC
ACCOUNTANTS
The Board of Directors has selected and appointed Deloitte & Touche LLP,
independent public accountants, to examine the financial statements of the
Company for the year ending December 31, 1997. In recognition of the important
role of the independent public accountants, the Board of Directors has
determined that its selection of the independent public accountants should be
submitted to the shareholders for review and ratification on an annual basis.
Deloitte & Touche LLP has served as the Company's independent public accountants
since 1985. If ratified,
16
<PAGE>
Deloitte & Touche LLP will serve as the independent certified public accountants
for the Company and the Bank.
In the event the appointment is not ratified through the affirmative vote
of a majority of the outstanding shares, the adverse vote will be deemed to be
an indication to the Board of Directors that it should consider selecting other
independent public accountants for 1997. Because of the difficulty and expense
of making any substitution of auditors after the beginning of the current year,
it is the intention of the Board of Directors that the appointment of Deloitte
& Touche LLP for the year 1997 will stand unless for other reasons the Board of
Directors deems it necessary or appropriate to make a change. The Board of
Directors also retains the power to appoint another independent public
accountant to replace an independent public accountant ratified by the
shareholders in the event the Board of Directors determines that the interests
of the Company require such a change.
A representative of Deloitte & Touche LLP is expected to be present at the
Meeting, will be provided the opportunity to make a statement if he so desires,
and will be available to respond to appropriate questions of shareholders.
RECOMMENDATION
THE BOARD OF DIRECTORS INTENDS TO VOTE ALL PROXIES HELD BY IT IN FAVOR OF
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP TO AUDIT THE FINANCIAL
STATEMENTS OF THE COMPANY AND THE BANK AND URGES YOU TO VOTE FOR PROPOSAL 2.
PROPOSAL 3. 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 the enclosed form of proxy will have
discretionary authority to vote all proxies with respect thereto in
accordance with their judgment.
April 10, 1997
Santa Cruz, California
By Order of the Board of Directors,
/s/ Sandra Anderson
-----------------------------------
Sandra Anderson, Secretary
17
<PAGE>
PROXY
COAST BANCORP
Solicited by the Board of Directors
for the Annual Meeting of Shareholders
May 20, 1997
The undersigned holder of Common Stock acknowledges receipt of a copy of
the Notice of Annual Meeting of Shareholders of Coast Bancorp and the
accompanying Proxy Statement dated April 10, 1997, and, revoking any Proxy
heretofore given, hereby constitutes and appoints Douglas D. Austin, John C.
Burroughs and Ronald M. Israel, 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 Coast 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 Coast Bancorp, to
be held at the Hollins House, 20 Clubhouse Drive, Santa Cruz, California, on
Tuesday, May 20, 1997, at 3:00 P.M. or at any adjournment thereof, upon the
following items as set forth in the Notice of Meeting and Proxy Statement and
to vote according to their discretion on all matters which may be properly
presented for action at the meeting or any adjournments thereof. All properly
executed proxies will be voted as indicated.
<PAGE>
Please mark your votes as indicated in this example /X/
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE FOLLOWING ITEMS:
FOR all nominees listed below (except as marked to the contrary below). / /
WITHHOLD AUTHORITY to vote for all nominees listed below. / /
1. To elect as directors the nominees set forth below:
INSTRUCTION:
To withhold authority to vote for any individual nominee, circle and initial the
nominees name in the list below:
R. Alderson, D. Austin, J. Burroughs, B. Cummings,
R. Israel, M. Moore, H. Nickelson, G. Norton and
J. Thompson.
FOR AGAINST ABSTAIN
2. To approve the proposal to ratify the / / / / / /
appointment of Deloitte & Touche LLP as
independent public accountants for the Company's 1997
fiscal year.
3. To transact such other business as may properly come before the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE SIGN AND RETURN THIS
PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE.
I/WE DO I/WE DO NOT
/ / / / expect to attend this meeting.
THIS PROXY IS SOLICITED BY AND ON THE BEHALF OF THE BOARD OF DIRECTORS AND MAY
BE REVOKED PRIOR TO ITS EXERCISE. THIS PROXY WHEN PROPERLY EXECUTED WILL BE
VOTED IN THE MANNER DIRECTED HEREIN BY THE SHAREHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1 AND 2 AND DISCRETIONARY AUTHORITY
WILL BE GRANTED AS TO PROPOSAL 3.
Signature
--------------------------------------------------------------------
Signature
--------------------------------------------------------------------
Date:
------------------------------------------------------------------------
Please date and sign exactly as your name(s) appear to the left. 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.
