<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
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
SCRIPPS FINANCIAL CORPORATION
(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:
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4) Date Filed:
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<PAGE>
April 20, 2000
Dear Shareholder:
When the first sound movie opened, Charlie Chaplin said: "Moving pictures
need sound as much as Beethoven symphonies need lyrics." Well, Mr. Chaplin
was correct to have been proud of his achievements in silent films and they
are rewarding to view even today. Although I wince at a lot of the language
in modern movies, we all know that sound is a permanent and important aspect
of films.
As a community bank, Scripps too is proud of its history of successfully
relating directly with clients. As the new structure of a holding company,
this skill will not be abandoned anymore than Mr. Chaplin forfeited his
artistry when he began starring in sound movies. We have simply added
dimensions. Some of these dimensions are technological as we add electronic
capabilities, some are in specialty financial capabilities as we add new
services, and some are physical as we add to our office network. All of what
we have done and will do in the future is dedicated to recognition as the
superior deliverer of financial services in this area.
The shareholders of Scripps Financial Corporation have been a steady source
of support and your management is determined to reciprocate that support.
Sincerely,
/S/ William E. Nelson
- ---------------------
William E. Nelson
Chairman of the Board
<PAGE>
[SCRIPPS FINANCIAL CORPORATION LOGO]
April 20, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of
Shareholders of Scripps Financial Corporation to be held at Al Bahr Shrine,
5440 Kearny Mesa Road, San Diego, California on May 17, 2000, at 6:00 p.m.
Scripps Financial Corporation will make special provisions to accommodate
persons who are handicapped or hearing-impaired at the annual meeting. Please
contact Vicki Gee at Scripps Bank (858) 720-7167 if you require special
assistance.
The Notice of Annual Meeting of Shareholders and a Proxy Statement,
which describe the formal business to be conducted at the meeting, follow
this letter. A copy of the Scripps Financial Corporation Annual Report to
Shareholders is also enclosed for your information.
After reading the Proxy Statement, please promptly mark, sign and
return the enclosed proxy card in the prepaid envelope to assure that your
shares will be represented. Your shares cannot be voted unless you date,
sign, and return the enclosed proxy card or attend the annual meeting in
person. Regardless of the number of shares you own, your vote on the matters
before our shareholders is important.
At the annual meeting we will review the activities of Scripps
Financial Corporation over the past year and our plans for the future. The
Board of Directors and Management look forward to seeing you at the annual
meeting.
It is important that your shares be represented at the annual
meeting. Accordingly, whether or not you plan to attend the annual meeting,
please sign, date and mail the enclosed proxy promptly in the postage-paid
envelope that has been provided to you for your convenience.
Very truly yours,
William E. Nelson
Chairman of the Board
<PAGE>
SCRIPPS FINANCIAL CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 17, 2000
TO THE SHAREHOLDERS:
Please take notice that the annual meeting of the shareholders of
Scripps Financial Corporation, a California corporation (the "Company"), will be
held at Al Bahr Shrine, 5440 Kearny Mesa Road, San Diego, California on
Wednesday, May 17, 2000, at 6:00 p.m., for the following purposes:
1. To elect six (6) directors to hold office until their
respective successors are elected and qualified.
2. To consider, approve and ratify the appointment of
PricewaterhouseCoopers LLP as the Company's independent public auditors for the
fiscal year ending December 31, 2000.
3. To transact such other business as may properly come before
the meeting.
Shareholders of record at the close of business on April 7, 2000 are
entitled to notice of, and to vote at, this meeting and any adjournment or
postponement.
By order of the Board of Directors,
M. Catherine Wright
SECRETARY
San Diego, California
April 20, 2000
- --------------------------------------------------------------------------------
IMPORTANT: Please fill in, date, sign and promptly mail the enclosed proxy card
in the accompanying postage-paid envelope to assure that your shares are
represented at the meeting. If you attend the meeting, you may choose to vote in
person even if you have previously sent in your proxy card.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS.........................................1
SOLICITATION AND VOTING OF PROXIES.........................................................1
INFORMATION ABOUT SCRIPPS FINANCIAL CORPORATION............................................2
Stock Ownership of Certain Beneficial Owners and Management.............................2
Directors and Executive Officers........................................................3
Meetings of the Board of Directors......................................................6
EXECUTIVE COMPENSATION AND OTHER MATTERS...................................................6
Executive Compensation..................................................................6
Severance and Change of Control Arrangements............................................7
Supplemental Retirement Plan............................................................7
President's Unfunded Deferred Compensation Agreements...................................8
Long Term Incentive Compensation Plan...................................................8
Employment Agreements...................................................................9
Scripps Financial Corporation 1992 and 1995 Stock Option Plans..........................9
Compensation of Directors...............................................................9
Compensation Committee Interlocks and Insider Participation in Compensation Decisions..10
Certain Relationships and Related Transactions.........................................10
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION............................11
Section 16(a) Beneficial Ownership Reporting Compliance................................13
COMPARISON OF SHAREHOLDER RETURN..........................................................13
ELECTION OF DIRECTORS.....................................................................14
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC AUDITORS................................15
Vote Required and Board of Directors' Recommendation..................................15
SHAREHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING..............................16
TRANSACTION OF OTHER BUSINESS.............................................................17
</TABLE>
<PAGE>
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
The accompanying proxy is solicited by the Board of Directors of
Scripps Financial Corporation, a California corporation ("SFC"), for use at its
annual meeting of shareholders to be held on May 17, 2000, or any adjournment or
postponement, for the purposes set forth in the accompanying Notice of Annual
Meeting of Shareholders. The date of this Proxy Statement is April 20, 2000, the
approximate date on which this Proxy Statement and the accompanying form of
proxy were first sent or given to shareholders.
SOLICITATION AND VOTING OF PROXIES
The cost of soliciting proxies will be borne by SFC. In addition to
soliciting shareholders by mail through its employees, SFC will request banks
and brokers, and other custodians, nominees and fiduciaries, to solicit their
customers who have stock of SFC registered in the names of such persons and will
reimburse them for their reasonable, out-of-pocket costs. SFC may use the
services of its officers, directors and others to solicit proxies, personally or
by telephone, without additional compensation.
On April 7, 2000, SFC had outstanding 6,917,737 shares of its Common
Stock, no par value ("Common Stock"), all of which are entitled to vote with
respect to all matters to be acted upon at the annual meeting. Each shareholder
of record as of that date is entitled to one vote for each share of Common Stock
held by such shareholder. SFC's Bylaws provide that a majority of all of the
shares of the stock entitled to vote, whether present in person or represented
by proxy, shall constitute a quorum for the transaction of business at the
meeting. Votes for and against, abstentions and "broker non-votes" will each be
counted as present for purposes of determining the presence of a quorum.
The shareholders have cumulative voting rights in electing directors.
However, a shareholder may not cumulate his or her votes for a candidate unless
such candidate's name has been placed in nomination prior to the voting and
unless a shareholder has given notice at the meeting, prior to the voting, of
his or her intention to cumulate his or her votes. If any shareholder gives such
notice, all shareholders may then cumulate their votes. Management is hereby
soliciting discretionary authority to cumulate votes represented by proxies if
cumulative voting is invoked. Under the cumulative voting method, a shareholder
may multiply the number of shares owned by the number of directors to be elected
and cast this total number of votes for any one candidate or distribute the
total number of votes in any proportion among as many candidates as the
shareholder desires.
All valid proxies received before the meeting will be exercised. All
shares represented by a proxy will be voted, and where a shareholder specifies
by means of his or her proxy a choice with respect to any matter to be acted
upon, the shares will be voted in accordance with the specification so made. If
no choice is indicated on the proxy, the shares will be voted in favor of the
proposal. A shareholder giving a proxy has the power to revoke his or her proxy
at any time before the time it is exercised by delivering to the Secretary of
SFC a written
1
<PAGE>
instrument revoking the proxy or a duly executed proxy with a later date, or
by attending the meeting and voting in person.
INFORMATION ABOUT SCRIPPS FINANCIAL CORPORATION
PRINCIPAL OFFICES
The principal offices of SFC are located at 5787 Chesapeake Court, San
Diego, California 92123.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 29, 2000 certain
information with respect to the beneficial ownership of SFC's Common Stock by
(i) each shareholder known by SFC to be the beneficial owner of more than 5% of
SFC's Common Stock, (ii) each director and director-nominee of SFC, (iii) the
two executive officers of SFC as of December 31, 1999, the President and Chief
Executive Officer and the Secretary and Chief Financial Officer of SFC (the
"Named Executive Officers") and (iv) all directors and executive officers of SFC
as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL COMMON STOCK
NAME OF BENEFICIAL OWNER(1) OWNERSHIP(2) OUTSTANDING(2)
--------------------------- ----------------- --------------
<S> <C> <C>
Thomas W. Sefton Trust dtd. 12/27/82 (3)
c/o William T. Stephens, Trustee,
Kennebec Corporation
2550 Fifth Avenue
San Diego, CA 92103 ............................... 710,208 10.27%
William E. Nelson (4).............................. 578,168 8.36%
Alfred B. Salganick(4)............................. 492,384 7.12%
Christopher C. Calkins(4).......................... 57,535 *
Ronald J. Carlson (5).............................. 31,200 *
Christopher S. McKellar (4)(6)..................... 286,650 4.15%
William T. Stephens (4)(7)......................... 16,822 *
2
<PAGE>
M. Catherine Wright (8)............................ 1,852 *
Directors and executive officers as a group
(seven persons)(9) ............................... 2,174,819 31.39%
</TABLE>
- ------------------
* Less than 1%.
(1) The persons named in the table above have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially
owned by them, subject to community property laws where applicable and
to the information contained in the footnotes to this table. The
address for all persons is 5787 Chesapeake Court, San Diego, CA 92123
unless otherwise noted.
(2) Calculated on the basis of 6,913,139 shares of SFC Common Stock
outstanding as of February 29, 2000 except that shares of Common Stock
underlying options exercisable within 60 days of February 29, 2000 are
deemed outstanding for purposes of calculating the beneficial ownership
of Common Stock of the holders of such options.
(3) Based on a Schedule 13G filed by Thomas W. Sefton Trust dtd. 12/27/82
with the Securities and Exchange Commission on February 14, 2000.
(4) Includes 1,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of 2/29/00.
(5) Includes 9,840 shares subject to options in the Scripps Financial
Corporation Stock Option Plans that may be exercised within 60 days of
2/29/00 and 4,112 shares owned as a participant in the Scripps
Financial Corporation Employee Stock Ownership Plan,
(6) Does not include 32,729 shares owned by record by James A. McKellar,
his father.
(7) Does not include 710,208 shares owned by record by the Thomas W. Sefton
Trust, of which Mr. Stephens is the trustee. Includes 3,552 shares
owned as a participant in the Scripps Financial Corporation Restated
Stock Purchase plan for employees, officers and directors.
(8) Includes 1,200 shares issuable upon exercise of outstanding options
exercisable within 60 days of 2/29/00.
(9) Includes shares subject to options that may be exercised within 60 days
of 2/29/00.
DIRECTORS AND EXECUTIVE OFFICERS
This section sets forth for the current directors, including the
nominees to be voted upon at this meeting, and for the executive officers of
SFC. Information concerning their age and background is included.
<TABLE>
<CAPTION>
DIRECTOR
NAME POSITION WITH SFC AGE SINCE
- ---- ----------------- --- ---------
3
<PAGE>
<S> <C> <C> <C>
Christopher C. Calkins Director 54 1999
Ronald J. Carlson Director, President and Chief 65 1999
Executive Officer
Christopher S. McKellar Director 50 1999
William E. Nelson Director, Chairman of the Board 73 1999
Alfred B. Salganick Director 61 1999
William T. Stephens Director 61 1999
M. Catherine Wright Secretary and Chief Financial Officer 49 N/A
</TABLE>
CHRISTOPHER C. CALKINS is a director of SFC, Vice Chairman of the Board of
Scripps, President of Carltas Management, Manager of Carltas Company, a real
estate holding company, and general counsel of the Paul Ecke Ranch, a
floricultural production company. He has been a director of Scripps since 1984.
He is a Director of the Thomas C. Ackerman Foundation and President of the
Charles H. and Anna S. Stern Foundation. Mr. Calkins is a former partner of the
law firm of Gray Cary Ames & Frye (now Gray Cary Ware & Freidenrich).
RONALD J. CARLSON is President and a director of SFC. He assumed the position of
President and Chief Operating Officer of Scripps Bank (in organization) on July
1, 1983, and was named President and Chief Executive Officer of Scripps Bank on
December 20, 1984. Prior to joining Scripps, Mr. Carlson served as President and
Chief Executive Officer of the Bank of Rancho Bernardo from 1981 to 1983, and
President and Chief Operating Officer and Executive Vice President of La Jolla
Bank & Trust Company from 1973 to 1980. Prior to his employment with La Jolla
Bank & Trust Company, he was employed by California First Bank (now Union Bank
of California) for 10 years in various assignments including Manager of the Main
Office and Regional Vice President. Mr. Carlson has a B.S. degree from the
University of Colorado. He is a Regent of California Lutheran University,
Chairman of the Board of Directors of the Greater San Diego Division of the
American Heart Association, Advisory Director of the Salvation Army, and a
Trustee of the San Diego Maritime Museum.
CHRISTOPHER S. MCKELLAR was a director of Scripps from 1984 until the 1999
annual meeting of Scripps and is a director of SFC. He is Chief Executive
Officer of California Traditions, Inc. Mr. McKellar has been involved in more
than $1 billion of commercial, industrial and residential development in
Southern California and Utah. Mr. McKellar serves as Chairman of the Board of
the Medical Biology Institute. Formerly, he served on the boards of the
4
<PAGE>
Scripps Memorial Hospital Foundation, Chancellor's Advisory Board of
University of California, San Diego, and the Mayor's Housing Committee.
WILLIAM E. NELSON has been Chairman of the Board of Scripps since 1984 and is
Chairman of the Board of SFC. He is an attorney and real estate developer. He
served as President and Chief Executive Officer of Scripps Institution of
Medicine and Science from 1993 to 1996. He has been the prime developer of
several commercial buildings in Southern California. He has also authored books
and articles on real estate finance and served as a Lecturer on finance at the
University of Southern California. He currently is a Regent's Lecturer on
Economics and Ethics of Health Care at University of California, San Diego. He
is currently President and a Director of the San Diego Blood Bank, a Director of
the San Diego Dialogue, which he also founded, and is involved with other
community activities such as the San Diego Opera.
ALFRED B. SALGANICK, M.D. is on the board of SFC. He retired from his practice
as a family practice physician in 1997. He received his pre-medical education in
New York and completed medical school in Chicago. Dr. Salganick served in the
U.S. Navy from 1965 through 1967 and then practiced medicine in Chula Vista,
California from 1967 through 1997. He was a founder and Chairman of the Board of
Pacific Commerce Bank ("PCB") in Chula Vista, which merged with Scripps in 1998.
Immediately after the PCB merger, Dr. Salganick joined the Scripps Board. Dr.
Salganick has been a member of the New York Stock Exchange since 1978.
WILLIAM T. STEPHENS is a director of SFC and President of Kennebec Financial
Corporation, a company providing trustee and investment services to private
trusts. Mr. Stephens served on the Scripps board of directors for three
years, has been in banking for over 35 years and served on the board of
directors of San Diego Trust and Saving Bank until its sale in 1994. He
currently is a Director of the J.W. Sefton Foundation and serves on the Board
of Directors of the San Diego County Tax Payers Association and is an active
member of the San Diego Downtown Rotary Club. He has served as an officer and
director for many local philanthropic organizations including having served
as President and a Director of the local American Cancer Society. Mr.
Stephens is a Staff Commodore of the San Diego Yacht Club and a member of the
De Anza Country Club.
M. CATHERINE WRIGHT assumed the position of Senior Vice President/Chief
Financial Officer/Finance & Administration Division Manager of Scripps in
December 1997 and is Secretary and Chief Financial Officer of SFC. Ms. Wright
has over 25 years of banking experience which include serving as Senior Vice
President/Cashier at First National Bank, Vice President/Cashier at Bank of
Commerce and in various capacities in the areas of lending and operations at
Bank of America. She has a B.S. in Accountancy from National University, San
Diego and is a graduate of Pacific Coast Banking School at the University of
Washington and the ABA National School of Bank Investments and Financial
Management. Ms. Wright is a member of Financial Women International.
5
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS.
During the fiscal year ended December 31, 1999, the Board of Directors
of SFC held fourteen meetings. During that period the Audit Committee of SFC
held one meeting. Since SFC currently has no employees, the SFC Compensation
Committee did not meet in 1999. SFC has no standing nominating committee of the
Board. All of the members of the SFC Board were also members of each committee
of the Board during the portion of 1999 SFC was in existence. No SFC director
attended fewer than 75% of the total number of meetings of the Board and all of
the committees of the Board on which such director served held during that
period.
The functions of the Audit Committee include, recommending to the Board
the retention of independent public auditors, subject to shareholder approval;
reviewing and approving the planned scope, proposed fee arrangements and results
of SFC's annual audit; reviewing the adequacy of accounting and financial
controls; and reviewing the independence of SFC's auditors.
The Compensation Committee reviews and determines the salary and bonus
criteria of and stock option grants to officers and employees of SFC that are
not also executive officers of Scripps Bank . The SFC Compensation Committee did
not meet in 1999 because it had no employees and both of its officers were also
executive officers of Scripps Bank.
SFC directors are nominated in meetings of the full Board. Shareholders
may nominate one or more persons for election as directors at a meeting only if
timely notice of such nomination(s) has been given in writing to the Secretary
of SFC in accordance with SFC's bylaws. Nominations of shareholders intended to
be presented at the next annual meeting of shareholders of SFC must be received
by SFC at its offices at 5787 Chesapeake Court, San Diego, California 92123 no
later than sixty (60) days prior to the annual meeting of shareholders and not
more than ten (10) days after the date notice of such meeting is sent to
shareholders pursuant to the Bylaws of SFC; provided, however, that if ten (10)
days' notice of the meeting has been given to shareholders, such notice of
intention to nominate must be received by the Secretary of the Corporation not
later than the time fixed in the notice of the meeting for the opening of the
meeting.
EXECUTIVE COMPENSATION AND OTHER MATTERS
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid to or earned by
the named executive officers--the SFC President and Chief Executive Officer, and
the Secretary and Chief Financial Officer--the only two officers of SFC during
the fiscal year ended December 31, 1999:
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
1999 ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
--------------------------- ------------------------------------
SECURITIES
UNDERLYING OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS COMPENSATION (1)
- --------------------------------------- ------------ ------------ -------------- --------------------
<S> <C> <C> <C> <C>
Ronald J. Carlson, President and Chief
Executive Officer.................... $230,000 $22,304 - $219,489 (2)
M. Catherine Wright, Secretary and
Chief Financial Officer.............. 87,550 9,044 - 11,831
</TABLE>
- ----------------------------------
(1) Includes taxable auto allowance or lease value, club dues, term life
insurance in excess of $50,000, and the bank's contribution to the Stock
Purchase Plan, the Stock Ownership Plan and the 401(k) Plan.
(2) Includes accruals toward supplemental retirement plans.
There were no grants of options to purchase SFC Common Stock made
during the fiscal year ended December 31, 1999 to the named executive officers.
The following table provides the specified information concerning
option exercises during fiscal year 1999 and the exercisable and unexercisable
options held by the named executive officers.
OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
DECEMBER 31, 1999 (3) DECEMBER 31, 1999 (2)
-------------------------------- ----------------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ------------ ----------- ------------- --------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Ronald J. Carlson 6,050 $64,731 9,840 11,210 $36,348 $9,087
M. Catherine Wright 0 $0 1,200 4,800 $0 $0
</TABLE>
- ---------------------------
(1) Difference between fair market value of shares acquired and cost of shares
pursuant to exercise of option.
(2) Based on the closing sale price of SFC Common Stock as of December 31, 1999
as reported by Bloomberg Financial Markets Service ($13.50).
SEVERANCE AND CHANGE OF CONTROL ARRANGEMENTS
SUPPLEMENTAL RETIREMENT PLAN
7
<PAGE>
Scripps Bank has entered into a Supplemental Retirement Plan (the
"Retirement Plan") with Mr. Carlson. Under the Retirement Plan, if Mr. Carlson
remains in the employment of Scripps Bank until he attains age 67, he will be
entitled to a monthly annuity payment in the base amount of $4,167. The amount
of the monthly payment will adjust annually by a three- percent increase as a
cost-of-living adjustment. If Mr. Carlson terminates employment with Scripps
Bank prior to age 67, he may elect early commencement of a reduced monthly
payment, as determined actuarially. However, if Mr. Carlson terminates
employment prior to age 67 due to total disability, he will be entitled to the
full amount of the monthly annuity payment beginning on the first day of the
month following such termination of service. If Mr. Carlson dies and is survived
by Barbara Ann Carlson, then she will be entitled for life to monthly payments
equivalent to those Mr. Carlson would have received if he were alive. Scripps
Bank has established a grantor trust to which it may make contributions to help
satisfy its obligations under the Retirement Plan. All assets held in the trust
are subject to the claims of general creditors of Scripps Bank.
PRESIDENT'S UNFUNDED DEFERRED COMPENSATION AGREEMENTS
Scripps Bank has entered into two Unfunded Deferred Compensation
Agreements (the "Deferred Compensation Agreements") with Mr. Carlson. Under one
Deferred Compensation Agreement, an annual benefit of $20,000 per year is to be
paid to Mr. Carlson following the latter of the dates at which he attains age 65
or the date he separates from service with Scripps Bank. Payments are to be made
each year beginning with the year in which Mr. Carlson attains age 66. The
amount of this payment is adjusted on each annual anniversary date to take into
effect any cost of living increases from the date in which he attains the age of
65. If Mr. Carlson dies, is impaired by a disability, or otherwise separates
from service prior to attaining age 65, then he or Barbara Ann Carlson if he is
deceased, receives a reduced annual benefit.
Under the other Deferred Compensation Agreement, an annual benefit of
$25,000 per year, increased by 3% as a cost of living adjustment, is to be paid
to Mr. Carlson commencing upon his retirement if he remains in the employment of
Scripps Bank until the earlier of October 1, 2002 or total and permanent
disability. If Scripps Bank terminates Mr. Carlson's employment prior to October
1, 2002 for reasons other than cause, he is entitled to receive the retirement
benefit. If Mr. Carlson's employment is terminated by Scripps Bank for cause at
any time, no payments will be made under this Deferred Compensation Agreement.
This Deferred Compensation Agreement includes death benefits payable to Deirdre
Carlson.
The obligations of Scripps Bank under the Deferred Compensation
Agreements are unfunded. Scripps Bank accrues a liability for its obligations
each year, but does not set aside a separate fund to be held in trust for Mr.
Carlson's benefit.
LONG TERM INCENTIVE COMPENSATION PLAN
8
<PAGE>
Scripps Bank has entered into a Long Term Incentive Compensation Plan
with Mr. Carlson. The Plan allows for awards based on the bank's attainment of
certain performance related goals. The goals will be measured as of December 31,
2001. If the goals are met or exceeded, awards would be payable to Mr. Carlson
as of October 1, 2002. The maximum amount payable would be 140 percent of Mr.
Carlson's salary as of October 1, 2002. Mr. Carlson will have the option to
receive his award in the form of cash, SFC stock, or deferred payments up to
five years.
EMPLOYMENT AGREEMENTS
Scripps Bank has entered into employment agreements ("Employment
Agreements") with Mr. Ronald Carlson and Ms. M. Catherine Wright, which provide
for base annual salaries that adjust annually. As of December 31, 1999, the base
salaries of such employees were $230,000 and $87,550, respectively. In addition,
the Employment Agreements provide for an automobile use allowance. The
respective terms of the Employment Agreements expire October 2002 and June 2001.
SCRIPPS FINANCIAL CORPORATION 1992 AND 1995 STOCK OPTION PLANS
The purpose of the SFC Stock Option Plans is to attract, retain and
reward persons providing services to SFC and certain affiliated entities and to
motivate such persons to contribute to the growth and profits of SFC. Options
may be granted to directors and full-time salaried employees, including officers
and directors who are also employees.
As of December 31, 1999, there were outstanding stock options for the
purchase of 221,249 shares of Common Stock under the Stock Option Plan
originally adopted in 1995 (the "1995 Plan") with a weighted average exercise
price of $12.44 per share. As of that date, there were 190,542 shares of Common
Stock available for grant under the 1995 Plan. As of December 31, 1999, there
were outstanding stock options for the purchase of 44,152 shares of SFC Common
Stock under the Stock Option Plan originally adopted in 1992 (the "1992 Plan"),
with weighted average exercise price of $5.32 per share. No shares of Common
Stock remain available for grant under the 1992 Plan.
COMPENSATION OF DIRECTORS
SFC and Scripps Bank pay fees to all non-management directors for their
attendance at board meetings and committee meetings, including $750 for
attendance at board meetings and $200 for attendance at all committee meetings.
Because of the additional time commitment, the Chairman of SFC and Scripps Bank
receives $1,500 per month for attendance at board meetings. No director has
received reimbursement for travel expenses incurred in traveling to meetings. In
1999, as a group, SFC and Scripps Bank non-management directors received
compensation totaling $219,350 for services in their capacity as directors. This
amount does not include
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approximately $34,100 contributed on their behalf by SFC and Scripps Bank to
the Restated Stock Purchase Plan. In addition, under the 1998 Outside
Directors Stock Option Plan, each non-employee director was granted an option
to purchase 1,000 shares of Common Stock of SFC after the 1999 annual meeting
and will receive an option to purchase additional 1,000 shares upon
re-election. As of December 31, 1999 there were outstanding stock options
under the 1998 Outside Directors Stock Option Plan for the purchase of 30,000
shares of Common Stock, with a weighted average exercise price of $17.47. As
of that date, there were 70,000 shares available for grant under such plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The SFC Compensation Committee is made up of the full board of
directors, including Mr. Carlson, an officer of SFC.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Scripps Bank from time to time has outstanding extensions of credit
to individual officers, directors, principal security holders or their
associates. Extensions of credit to such persons were made in the ordinary
course of business, on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions
with other persons, and did not involve more than the normal risk of
collectability or present other unfavorable features. The aggregate
extensions of credit by Scripps Bank to directors, executive officers,
principal shareholders, employees and their associates as of December 31,
1999 totaled approximately $333,194.
SFC has entered into indemnification agreements in a form originally
approved by its shareholders with each director and various executive officers
containing provisions which may require it, among other things, to indemnify its
officers and directors against liabilities that m may arise by reasons of their
status or service as officers or directors and to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified. Scripps Bank and SFC intend to execute these agreements with their
future directors and executive officers.
Richard B. Huntington, a director of Scripps Bank, and his wife own
shares of a corporation that is the general partner of the lessor of Scripps
Bank's Point Loma branch. Together, Mr. Huntington and his wife own one-third of
the real estate partnership. The ten-year lease of Scripps Bank for this office
space began in 1997. Scripps Bank paid for tenant improvements, which are
amortized over the lease term, and monthly rent, which increases by 4% annually;
2000 rental and premises and equipment expenses are expected to be approximately
$162,000.
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<PAGE>
In 1997 Sefton Capital Management began providing advisory services for
the securities portfolio of Scripps Bank. This agreement was approved by the
Scripps Bank board of directors. In 1998 an independent committee of the Scripps
Bank board of directors approved the Scripps Bank trust department entering into
a contract with Sefton Capital Management for the management of trust investment
vehicles for which investment was not otherwise designated. The fees for these
services were based upon the bank's understanding of the market rate for such
services. In 1999, aggregate fees paid to Sefton Capital Management were
approximately $217,000. In the first quarter of 1999, the Trust Department
reviewed the services it could obtain elsewhere; it terminated the agreement
with Sefton Capital Management effective May 1999. Harley K. Sefton, a director
of Scripps Bank, is an officer, principal and shareholder of Sefton Capital
Management. In November 1999 Sefton Capital Management merged into another
company, at which time the investment portfolio advisory service was moved to
Chandler Asset Management in San Diego.
The husband of Susan Whiteley, the Senior Vice President/Services and
Support Division Manager of Scripps Bank, is the Chief Operating Officer of
Advanced Network, Inc. ANI provides Scripps Bank with information technology
consulting, automated teller machine processing and servicing and merchant
deposit processing services. The fee arrangements with ANI were based in part on
competitive bids and were approved by the board of directors of Scripps Bank.
Scripps Bank paid ANI an aggregate of approximately $373,000 in 1999.
When PCB merged with and into Scripps Bank in 1998, Dr. Salganick, the
former Chairman of PCB, became a director of Scripps Bank and began to receive
compensation and stock options at the same level as the other outside directors
of Scripps Bank. Pursuant to the terms of the merger agreement, each of the
directors of PCB who was party to an ongoing deferred compensation agreement
elected, effective as of the effective date of the PCB merger, to have all
deferred compensation drawn and paid within ten years of the "normal retirement
date" or "expiration date."
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The SFC Compensation Committee is comprised of the entire board of
directors and is responsible for setting and monitoring policies governing
compensation of executive officers of SFC that are not also executive officers
of Scripps Bank. No individuals fell into this category in 1999; consequently
the discussion below reflects the understanding of the SFC board of directors
regarding the policies the Scripps Bank uses in setting executive compensation
for its officers, some of whom are also officers of SFC.
The Scripps Bank Compensation and Nomination Committee considers and
sets, by recommendation to the full board, the compensation, titles, and other
aspects of the powers and names of individuals acting as, or being considered
for, executive officers of Scripps Bank. Further, the Scripps Bank Compensation
and Nomination Committee considers and acts, by
11
<PAGE>
similar recommendation, the general levels of compensation for all employees
by class, not individually, and it reviews and acts by recommendation, any
and all bonus, incentive plans, or other special awards and payments. In its
consideration of individual executive officers, weight is given to the
recommendations of the Scripps Bank Chief Executive Officer, however,
supporting data such as industry comparisons and individual performance
outcomes are also reviewed. The industry comparisons used reflect a different
group of companies than those used in the "Comparison of Shareholder Return"
table set forth below.
SFC strongly believes that equity ownership by executive officers
provides incentives to build shareholder value and aligns the interests of
executive officers with those of the shareholders, and therefore makes
periodic grants of stock options under the Option Plan. The size of an option
grant to an executive officer has generally been determined with reference to
banks of a similar size to Scripps Bank in Southern California, the
responsibilities and expected future contributions of the executive officer,
previous grants to that officer, as well as recruitment and retention
considerations. To assist SFC in retaining and motivating key employees,
option grants generally vest over five years from the date of grant. In 1999
no stock option grants were made to SFC executive officers.
The performance standards for the CEO of Scripps Bank, who is also
the CEO of SFC, are established and agreed to in writing by the Scripps Bank
Compensation and Nominations Committee at the start of each year. The
Chairman of the Board (who is not an officer or employee of SFC or Scripps
Bank) reviews with the CEO the objective achievements towards those agreed
upon standards each quarter.
The Scripps Bank Compensation and Nominations Committee discusses
and decides upon the CEO's compensation when he is not present. The degree of
difficulty of the agreed performance standards, the actual accomplishments,
any special achievements, and the local industry trends are all issues
bearing on the CEO's ultimate compensation. Since the CEO's age at the
commencement of his employment with Scripps Bank was significantly different
than the ages of other executive officers, it was clear that the standard
retirement program would seriously disadvantage him. Therefore, with the
concurrence of the full board (except the CEO who was not present) special
supplementary retirement programs were designed by a consultant and adopted
by the board.
With respect to all compensation and benefits, the performance of
SFC, objectively measured by Return on Equity, Return on Assets and other
criteria approved by the Board, is a primary factor; however, subjective
factors such as "shopping reports", customer comments, and growth also have
weight.
The Scripps Bank Compensation and Nominations Committee has
considered the provisions of Section 162(m) of the Internal Revenue Code and
related Treasury Department regulations which restrict deductibility of
executive compensation paid to the SFC chief executive officer and each of
the four other most highly compensated executive officers holding
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<PAGE>
office at the end of any year to the extent such compensation exceeds
$1,000,000 for any of such officers in any year if such compensation does not
qualify for an exception under the statute or regulations. The Scripps Bank
Compensation and Nominations Committee does not believe compensation for any
executive officer will be likely to exceed $1,000,000 in the foreseeable
future and therefore concluded that no further action with respect to
qualifying such compensation for deductibility was necessary at this time. In
the future, the Committee will continue to evaluate the advisability of
qualifying its executive compensation for deductibility of such compensation.
The Committee's policy is to qualify its executive compensation for
deductibility under applicable tax laws as practicable.
SFC COMPENSATION COMMITTEE
Christopher C. Calkins
Ronald J. Carlson
Christopher S. McKellar
William E. Nelson
Alfred B. Salganick
William T. Stephens
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires SFC's
executive officers, directors and persons who beneficially own more than 10% of
SFC's Common Stock to file initial reports of ownership and reports of changes
in ownership with the Securities and Exchange Commission ("SEC"). Such persons
are required by SEC regulations to furnish SFC with copies of all Section 16(a)
forms filed by such person.
Based solely on SFC's review of such forms furnished to SFC and written
representations from certain reporting persons, SFC believes that all filing
requirements applicable to SFC's executive officers, directors and more than 10%
shareholders were complied with.
COMPARISON OF SHAREHOLDER RETURN
Set forth below is a line graph comparing the cumulative total return
to shareholders on the SFC's Common Stock with the cumulative total return on
the American Stock Exchange Composite Index (Amex) and the S & P Banks Index for
the five year period ending December 31, 1999. Since SFC was established in
1999, the data presented prior to 1999 represents the return for Scripps Bank
Common Stock. (1)
13
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<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SFC 100 $125.10 $179.10 $431.70 $ 351.90 $ 281.90
- --------------------------------------------------------------------------------------------------------
AMEX 100 $126.42 $134.50 $163.13 $ 165.96 $ 214.40
- --------------------------------------------------------------------------------------------------------
S & P Banks 100 $158.40 $223.00 $321.00 $ 342.00 $ 298.60
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes that $100 was invested in SFC's Common Stock on December 31, 1994,
and that all dividends were reinvested. Stockholder returns over the indicated
period should not be considered indicative of future stockholder returns.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
SFC has a six member Board of Directors, all of who will serve until
the 2001 annual meeting or until their successors are duly elected and
qualified. The nominees for the SFC board of directors are:
Christopher C. Calkins
Ronald J. Carlson
Christopher S. McKellar
William E. Nelson
Alfred B. Salganick, M.D.
William T. Stephens
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<PAGE>
If any of the nominees declines to serve or becomes unavailable for any
reason, or if a vacancy occurs before the election (although SFC knows of no
reason to anticipate that this will occur), the proxies may be voted for such
substitute nominees as SFC may designate. If a quorum is present and voting, the
six nominees receiving the highest number of votes will be elected as SFC
directors. Abstentions and broker non-votes have no effect on the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES NAMED ABOVE.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC AUDITORS
The Board of Directors of SFC has selected PricewaterhouseCoopers LLP
as independent public auditors to audit the consolidated financial statements of
SFC for the fiscal year ending December 31, 2000. PricewaterhouseCoopers LLP has
acted in such capacity for SFC since its formation and for Scripps Bank since
the inception of Scripps Bank in 1983. A representative of
PricewaterhouseCoopers LLP is expected to be present at the annual meeting, with
the opportunity to make a statement if the representative desires to do so, and
is expected to be available to respond to appropriate questions.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The selection of PricewaterhouseCoopers LLP as independent public
auditors will be approved if ratified by the affirmative vote of a majority of
shares represented and voting at the meeting, provided a quorum is present.
Abstentions and broker non-votes will each be counted as present for purposes of
determining the presence of a quorum.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS SFC'S INDEPENDENT PUBLIC AUDITORS
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2000.
15
<PAGE>
SHAREHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
Proposals of shareholders intended to be presented at the next annual
meeting of the shareholders of SFC must be received by SFC at its offices at
5787 Chesapeake Court San Diego, California 92123, no later than December 22,
2000 and satisfy the conditions established by the Securities and Exchange
Commission for shareholder proposals to be included in SFC's proxy statement for
that meeting.
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<PAGE>
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the Board of Directors knows of no
other business that will be conducted at the 2000 annual meeting of shareholders
of SFC other than as described in this Proxy Statement. If any other matter or
matters are properly brought before the meeting, or any adjournment or
postponement of the meeting, it is the intention of the persons named in the
accompanying form of proxy to vote the proxy on such matters in accordance with
their best judgment.
By Order of the Board of Directors
M. Catherine Wright
SECRETARY
April 20, 2000
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<PAGE>
SCRIPPS FINANCIAL CORPORATION
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 17, 2000
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints William E. Nelson, Christopher C.
Calkins and Alfred B. Salganik, and each of them, with full power of
substitution, to represent the undersigned and to vote all of the shares of
stock in Scripps Financial Corporation, a California corporation (the
"Company"), which the undersigned is entitled to vote at the Annual Meeting
of Shareholders of the Company to be held at the Al Bahr Shrine, 5440 Kearny
Mesa Road, San Diego, May 17, 2000, at 6:00 p.m. local time, and at any
adjournment or postponement thereof (1) as hereinafter specified upon the
proposals listed on the reverse side and as more particularly described in
the Proxy Statement of the Company dated April 20, 2000 (the "Proxy
Statement"), receipt of which is hereby acknowledged, and (2) in their
discretion upon such other matters as may properly come before the meeting.
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, SUCH SHARES SHALL BE VOTED FOR PROPOSALS 1 AND 2.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
--------------------------
SEE REVERSE
SIDE
--------------------------
<PAGE>
Please mark
/X/ votes as in
this example
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED
TO SIGN AND PROMPTLY MAIL THIS PROXY IN THE RETURN ENVELOPE SO THAT
YOUR STOCK MAY BE REPRESENTED AT THE MEETING.
A vote FOR the following proposals is recommended by the Board of
Directors:
4. To elect the following six (6) persons as directors to hold
office until their respective successors are elected and qualified:
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed below (except to vote for all
as marked to the nominees listed
contrary below.) below.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through that nominee's name in the list below.)
Christopher C. Calkins
Ronald J. Carlson
Christopher S. McKellar
William E. Nelson
Alfred B. Salganick, M.D.
William T. Stephens
5. To consider, approve and ratify the appointment of
PricewaterhouseCoopers LLP as independent public auditors for the Company for
the fiscal year ending December 31, 2000.
/ / FOR / / AGAINST / / ABSTAIN
MARK HERE
IF YOU
MARK HERE FOR PLAN TO
ADDRESS ATTEND
CHANGE AND THE
NOTE AT LEFT / / MEETING / /
PLEASE SIGN HERE. If shares of stock
are held jointly, both or all of such
persons should sign. Corporate or
partnership proxies should be signed
in full corporate or partnership name
by an authorized person. Persons
signing in a fiduciary capacity should
indicate their full titles in such
capacity.
Signature: Date:
-------------------- ---------
Signature: Date:
-------------------- ---------
