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 Sec. 240.14a-11(c) or Sec. 240.14a-12
North Valley 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.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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 transactions applies:
- ----------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions 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):
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(4) Proposed maximum aggregate value of transaction:
- ----------------------------------------------------------------------------
(5) Total fee paid:
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/ / 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.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
NORTH VALLEY BANCORP
880 East Cypress Avenue
Redding, California 96002
Dear Shareholders:
The 1997 Annual Meeting of Shareholders of North Valley Bancorp will be
held at 4:30 p.m. on Monday, May 19, 1997, in Administration, North Valley
Bank, 880 East Cypress Avenue, Redding, California. In connection with the
Annual Meeting, we are enclosing the following:
1. Notice of Annual Meeting of Shareholders.
2. Proxy Statement.
3. Proxy.
We encourage you to read all of the enclosed materials carefully and invite
you to attend the Annual Meeting. Whether or not you plan to attend the Annual
Meeting in person, please return the Proxy, properly completed and executed, as
promptly as possible so that your shares may be represented at the Annual
Meeting.
We appreciate your support and look forward to seeing you at the Annual
Meeting on Monday, May 19, 1997.
Cordially,
Rudy V. Balma
Chairman of the Board
Donald V. Carter
President
<PAGE>
NORTH VALLEY BANCORP
--------------------
Notice of Annual Meeting of Shareholders
Monday, May 19, 1997
4:30 P.M.
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of North Valley Bancorp, a California
corporation (the "Corporation"), will be held in Administration, North Valley
Bank, 880 East Cypress Avenue, Redding, California, on Monday, May 19, 1997, at
4:30 P.M., for the following purposes:
1. To elect eight (8) Directors of the Corporation to serve until the 1998
Annual Meeting and until their successors are elected and qualified.
2. To ratify the appointment of Deloitte & Touche LLP as independent public
accountants for the Corporation for 1997.
3. To consider such other business as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
Section 15 of the By-laws of the Corporation provides for the nomination of
Directors, as follows:
Nomination for election of members of the Board of Directors may be made by
the Board of Directors or by any shareholder of any outstanding class of capital
stock of the corporation entitled to vote for the election of directors. Notice
of intention to make any nominations shall be made in writing and shall be
delivered or mailed to the President of the corporation not less than 21 days
nor more than 60 days prior to any meeting of shareholders called for election
of directors; provided however, that if less than 21 days notice of the meeting
is given to shareholders, such notice of intention to nominate shall be mailed
or delivered to the President of the corporation not later than the close of
business on the tenth day following the day on which the notice of meeting was
mailed; provided further, that if notice of such meeting is sent by third class
mail as permitted by Section 6 of these By-laws, no notice of intention to make
nominations shall be required. Such notification shall contain the following
information to the extent known to the notifying shareholder: (a) the name and
address of each proposed nominee; (b) the principal occupation of each proposed
nominee; (c) the number of shares of capital stock of the corporation owned by
each proposed nominee; (d) the name and residence address of the notifying
shareholder; and (e) the number of shares of capital stock of the corporation
owned by the notifying shareholder. Nominations not made in accordance herewith
may, in the discretion of the Chairman of the meeting, be disregarded and upon
the Chairman's instructions, the inspectors of election can disregard all votes
cast for each such nominee.
Only shareholders of record at the close of business on April 1, 1997 are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
<PAGE>
By Order of the Board of Directors,
J. M. ("Mike") Wells, Jr.
Secretary
Redding, California
April 18, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE COMPLETE, SIGN, DATE
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
<PAGE>
First mailed to Shareholders on
or about April 18, 1997
NORTH VALLEY BANCORP
880 East Cypress Avenue
Redding, California 96002
(916) 221-8400
PROXY STATEMENT
Information Concerning the Solicitation
The enclosed proxy (the "Proxy") is solicited on behalf of the Board of
Directors of North Valley Bancorp, a California corporation (the "Corporation"),
for use at the Annual Meeting of Shareholders to be held in Administration,
North Valley Bank, 880 East Cypress Avenue, Redding, California, at 4:30 P.M.,
on Monday, May 19, 1997 and any adjournment or postponement thereof (the
"Meeting"). Only shareholders of record at the close of business on April 1,
1997 (the "Record Date"), will be entitled to notice of and to vote at the
Meeting. At the close of business on the Record Date, the Corporation had
outstanding 1,823,688 shares of its no par value common stock (the "Common
Stock").
Shareholders of Common Stock are entitled to one vote for each share held,
except that in the election of Directors each shareholder may be eligible to
exercise cumulative voting rights and may be entitled to as many votes as shall
equal the number of shares held by such shareholder multiplied by the number of
Directors to be elected, and such shareholder may cast all of his or her votes
for a single candidate or distribute such votes among any or all of the
candidates he or she chooses. No shareholder, however, shall be entitled to
cumulate votes (in other words, cast for any candidate a number of votes greater
than the number of shares of stock held by such shareholder multiplied by the
number of Directors to be elected) unless the name(s) of the candidate(s) has
(have) been placed in nomination prior to the voting and a shareholder has given
notice of an intention to cumulate votes prior to the voting. Any shareholder
who desires to announce his or her intention to cumulate his or her votes will
be given an opportunity to do so at the Meeting prior to the voting. If any
shareholder has given such notice, all shareholders may cumulate their votes for
candidates in nomination, in which event votes represented by Proxies delivered
pursuant to this Proxy Statement may be cumulated, in the discretion of the
proxy holders, in accordance with the recommendations of the Board of Directors.
Discretionary authority to cumulate votes in such event is, therefore, solicited
in this Proxy Statement.
Any person submitting a Proxy in the form accompanying this Proxy Statement
has the power to revoke or suspend such Proxy prior to its exercise. A Proxy is
revocable prior to the Meeting by a written directive to the Corporation, or by
a duly executed Proxy bearing a later date, delivered to the Secretary of the
Corporation. A Proxy may also be revoked if the shareholder is present and
elects to vote in person at the Meeting.
-1-
<PAGE>
The Corporation will bear the entire cost of preparing, assembling,
printing and mailing proxy materials furnished by the Board of Directors to
shareholders. Copies of proxy materials will be furnished to brokerage houses,
fiduciaries and custodians to be forwarded to the beneficial owners of the
Common Stock. The Corporation will reimburse brokerage houses, fiduciaries,
custodians and others holding stock in their names or names of nominees or
otherwise for reasonable out-of-pocket expenses incurred in sending proxies and
proxy materials to the beneficial owners of such stock. In addition to the
solicitation of Proxies by use of the mail, some of the officers, directors and
employees of the Corporation may (without additional compensation) solicit
Proxies by telephone or personal interview, the costs of which the Corporation
will bear.
Each Proxy will be voted as directed by the shareholder submitting the
Proxy, and, if no instructions are given on the Proxy, it will be voted "FOR"
the election of the eight nominees for Director recommended by the Board of
Directors and "FOR" the ratification of the appointment of Deloitte & Touche LLP
as independent public accountants for the Corporation for the 1997 fiscal year,
all as described in the Proxy Statement; and, at the proxy holders' discretion,
on such other matters, if any, which may properly come before the Meeting
(including any proposal to adjourn the Meeting). In the election of Directors,
the eight candidates receiving the highest number of votes will be elected, and
approval of the ratification of the appointment of the independent public
accountants will require the affirmative vote of a majority of the shares
represented and voted at the Meeting. A majority of the shares entitled to vote,
represented either in person or by a properly executed Proxy, will constitute a
quorum at the Meeting. Abstentions and broker non-votes are each included in the
determination of the number of shares present and voting for purposes of
determining the presence of a quorum. Abstentions will be included in
tabulations of the votes cast on proposals presented to the shareholders and
therefore will have the effect of a negative vote. Broker non-votes will not be
counted for purposes of determining the number of votes cast for a proposal.
A copy of the Annual Report of the Corporation for the fiscal year ended
December 31, 1996, including audited financial statements (the "Annual Report"),
is enclosed. Additional copies of the Annual Report are available upon request
to J. M. ("Mike") Wells, Jr., Secretary of the Corporation. A COPY OF THE
CORPORATION'S 1996 ANNUAL REPORT ON FORM 10-KSB TO THE SECURITIES AND EXCHANGE
COMMISSION MAY ALSO BE OBTAINED WITHOUT CHARGE BY WRITING TO MR. WELLS, C/O
NORTH VALLEY BANCORP, 880 EAST CYPRESS AVENUE, REDDING, CALIFORNIA 96002.
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<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The By-laws of the Corporation provide a procedure for nomination for
election of members of the Board of Directors, which procedure is printed in
full on the Notice of Annual Meeting of Shareholders accompanying this Proxy
Statement. Nominations not made in accordance therewith may, in the discretion
of the Chairman of the Meeting, be disregarded, and, upon his instruction, the
inspectors of election shall disregard all votes cast for such nominee(s).
The authorized number of Directors shall be not less than six (6) nor more
than eleven (11). The number of directors of the Board to be elected at the
Meeting to hold office for the ensuing year and until their successors are
elected and qualified is eight (8).
All Proxies will be voted for the election of the following eight (8)
nominees recommended by the Board of Directors, all of whom are incumbent
Directors, unless authority to vote for the election of any or all Directors is
withheld:
Rudy V. Balma Thomas J. Ludden
Donald V. Carter Kelly V. Pierce
William W. Cox Douglas M. Treadway
Dan W. Ghidinelli J. M. ("Mike") Wells, Jr.
If any of the nominees should unexpectedly decline or be unable to act as a
Director, the Proxies may be voted for a substitute nominee to be designated by
the Board of Directors. The Board of Directors has no reason to believe that any
nominee will become unavailable and has no present intention to nominate persons
in addition to or in lieu of those named above. The Board of Directors
recommends a vote "FOR" each of the nominees listed above.
Security Ownership of Certain Beneficial Owners and Management
To the best knowledge of the Corporation, as of the Record Date, no person
or entity was the beneficial owner of more than five percent (5%) of the
outstanding shares of the Corporation's Common Stock, except as described below
and in the following tables. For the purpose of this disclosure and the
disclosure of ownership of shares by management, shares are considered to be
"beneficially" owned if the person has or shares the power to vote or direct the
voting of the shares, the power to dispose of or direct the disposition of the
shares, or the right to acquire beneficial ownership (as so defined) within 60
days of the Record Date.
-3-
<PAGE>
<TABLE>
<CAPTION>
Amount and
Name and Address Nature of Percent
Title of Class of Beneficial Owner Beneficial Ownership of Class
- -------------- ------------------- -------------------- --------
<S> <C> <C> <C>
Common Stock North Valley Bancorp Employee 108,129 (1) 5.9%
Stock Ownership Plan ("ESOP")
880 East Cypress Avenue
Redding, CA 96002
<FN>
(1) Directors Balma and Carter have authority to vote these shares on behalf of
the ESOP. Mr. Balma and Mr. Carter disclaim beneficial ownership with
respect to all such shares.
</FN>
</TABLE>
The following table sets forth information with respect to each Director,
each person nominated for election as a Director and each executive officer
named in the Summary Compensation Table elsewhere herein, as well as for all
Directors and executive officers as a group. All of the shares of Common Stock
of the Corporation shown in the following table are owned both of record and
beneficially, except as indicated in the notes to the table, as of April 1,
1997. The table should be read with the understanding that more than one person
may be the beneficial owner or possess certain attributes of beneficial
ownership with respect to the same securities. Therefore, careful attention
should be given to the footnote references set forth in the column "Amount and
Nature of Beneficial Ownership."
There are no arrangements or understandings pursuant to which any of the
Directors was or is to be selected as a Director or nominee.
-4-
<PAGE>
Amount and Nature
Name and Address of of Beneficial Percent of
Beneficial Owner (1) Ownership(2) Class (11)
-------------------- ------------ ----------
Rudy V. Balma 171,532 (3)(4) 9.4%
Donald V. Carter 162,980 (3)(5) 8.9%
James F. Cowee, Jr. 15,822 (6) *
William W. Cox 0
Fred A. Drake II 12,789 *
Dan W. Ghidinelli 13,356 (7) *
Thomas J. Ludden 7,974 *
Kelly V. Pierce 47,791 (8) 2.6%
Douglas M. Treadway 0
J. M. ("Mike") Wells, Jr. 46,316 (9) 2.8%
All Executive Officers and Directors as
a group (14 in number) 382,422(10) 21.0%
--------------------
* Indicates less than 1%
(1) The address for all persons listed is c/o North Valley Bancorp, 880 East
Cypress Avenue, Redding, California 96002.
(2) Includes shares beneficially owned, directly and indirectly, together with
associates. Subject to applicable community property laws and shared voting
and investment power with a spouse, sole investment and voting power is
held by the beneficial owner of all shares unless noted otherwise. Includes
stock options granted pursuant to the North Valley Bancorp 1989 Director
Stock Option Plan (the "Director Plan") with: 10,044 shares each
exercisable within 60 days by Directors Carter and Wells; 1,430 shares each
exercisable within 60 days by Directors Balma and Pierce; 1,970 shares
exercisable within 60 days by Director Ludden; and 2,700 shares exercisable
within 60 days by Director Ghidinelli.
(3) Includes 108,129 shares which Messrs. Balma and Carter have authority to
vote on behalf of the ESOP. Mr. Balma and Mr. Carter disclaim beneficial
ownership with respect to all 108,129 shares.
(4) Includes 49,338 shares held by The Balma Family Trust, of which Mr. Balma
is trustee, and 12,635 shares held by Mr. Balma's grown daughter and son,
as to which Mr. Balma disclaims beneficial ownership.
(5) Includes 1,316 shares held by Mr. Carter's son, daughter and
granddaughters, as to which Mr. Carter disclaims beneficial ownership.
-5-
<PAGE>
(6) Includes 1,224 shares held by Mr. Cowee's sons, as to which Mr. Cowee
disclaims beneficial ownership, and 4,381 shares held by the James F.
Cowee, Sr., Testamentary Trust, of which Mr. Cowee is trustee.
(7) Includes 9,156 shares held by the Balma Grandchildren Trust, of which Mr.
Ghidinelli is a trustee and as to which Mr. Ghidinelli disclaims beneficial
ownership.
(8) Includes 42,348 shares held by the Pierce Family Trust, of which Mr. Pierce
is trustee, and 4,013 shares owned by Mr. Pierce's grown children, as to
which Mr. Pierce disclaims beneficial ownership.
(9) Includes 2,151 shares owned by Mr. Wells' daughter, 2,151 shares owned by
Mr. Wells' son, and 2,184 shares owned by Mr. Wells' mother, as to which
Mr. Wells disclaims beneficial ownership, and 29,786 shares held by the
Wells Family Trust, of which Mr. Wells is trustee.
(10) See footnotes 3 through 9. Includes 27,618 shares subject to options
exercisable within 60 days by the Directors under the Director Plan.
(11) In calculating the percentage of ownership, all shares which the identified
person or persons have the right to acquire by exercise of options are
deemed to be outstanding for the purpose of computing the percentage of the
class owned by such person, but are not deemed to be outstanding for the
purpose of computing the percentage of the class owned by any other person.
Certain information with respect to the Directors, nominees for Director
and executive officers of the Corporation and its banking subsidiary, North
Valley Bank (the "Bank"), is provided below:
Rudy V. Balma (age 68), the Chairman of the Board of Directors and a
Director of the Corporation since 1982, is a retired licensed funeral director
and President of Redding Memorial Park, doing business as Redding Cemetery and
McDonald's Chapel.
Sharon L. Benson (age 44) has been Vice President, Accounting, of the Bank
since December 1990.
Ted A. Brockman (age 51) has been Vice President of Bank Processing, Inc.,
a subsidiary of the Corporation, for the past eight years.
Donald V. Carter (age 57) has been Director, President and Chief Executive
Officer of the Corporation and its subsidiaries since 1986.
James F. Cowee, Jr. (age 60), has been Executive Vice President of the Bank
and Chief Financial Officer of the Corporation since 1986. He is also a Director
and the Chief Financial Officer of Bank Processing, Inc.
-6-
<PAGE>
William W. Cox (age 49), a Director of the Corporation since February 1997,
has been owner and president of Cox Real Estate Consultants, Inc., since August
1996. From May 1985 to August 1996, he was President and 50% owner of Haedrich &
Cox, Inc., a real estate brokerage company.
Fred A. Drake II (age 58) has served as Senior Vice President and Cashier
of the Bank since joining the Bank in July 1986.
Dan W. Ghidinelli (age 49), a Director of the Corporation since 1993, has
been a Certified Public Accountant and partner with Nystrom & Company since
1974.
Robert G. Jones (age 48) is Senior Vice President and Loan Administrator of
the Bank, serving in this capacity since he joined the Bank in June 1986.
Thomas J. Ludden (age 64), a Director of the Corporation since 1991, has
been an educator in the Weaverville School District in Trinity County,
California, for over 30 years, owner of the Tri-L Ranch, a tree farm, since
1956, and President of Ludden & Co., Inc., a dry goods and clothing business
located in Weaverville, California, since 1975.
Faith A. Pfeiffer (age 54) has been Assistant Vice President, Personnel, of
the Bank since 1986.
Kelly V. Pierce (age 70), a Director of the Corporation since 1982, is a
retired dentist residing in Redding, California.
Douglas M. Treadway (age 54), a Director of the Corporation since February
1997, is President of Shasta College and has served in that capacity since 1994.
From 1991 to 1994, he was Chancellor for the North Dakota University System.
J. M. ("Mike") Wells, Jr. (age 56), the General Counsel and Secretary of
the Board of Directors of the Corporation and a member of the Board of Directors
since 1982, is an attorney and a founding partner of Wells, Small, Selke &
Graham, a Law Corporation, located in Redding, California. Mr. Wells has
practiced law with that firm since 1972.
None of the Corporation's Directors is a director of any other reporting
company. There are no family relationships between any of the Directors and
executive officers of the Corporation.
Committees of the Board of Directors
The Board of Directors of the Corporation and of the Bank have established
an Audit Committee, the members of which are Messrs. Balma, Cox, Ghidinelli,
Ludden, Pierce and Treadway. The Audit Committee met five times during 1996. The
functions of the Audit Committee are to recommend the appointment of and to
oversee a firm of independent public accountants whose duty is to audit the
books and records of the Corporation for the fiscal year for which they are
appointed, to review and analyze the reports of the Corporation's independent
-7-
<PAGE>
public accountants, to analyze the results of internal and regulatory
examinations, to monitor the effectiveness of the Corporation's accounting
system and financial reporting and to interface with the Corporation's
independent public accountants concerning additional specific engagements
requested by the Corporation.
The Corporation does not have a nominating committee. The Board of
Directors of the Corporation performs the function of a nominating committee,
which function is to recommend and nominate qualified individuals to serve on
the Corporation's Board of Directors.
The Corporation does not have a compensation committee. The Board of
Directors of the Corporation performs the function of a compensation committee,
which function is to determine annual compensation for executive officers of the
Corporation and its subsidiaries.
Compensation Committee Interlocks and Insider Participation
During the fiscal year 1996, Mr. Carter participated in deliberations of
the Corporation's Board of Directors concerning executive officer compensation
for all executive officers excluding himself.
Meetings of the Board of Directors
During 1996, the Board of Directors held twelve regularly scheduled
meetings and three special meetings. In 1996, each Director attended at least
75% of the aggregate of the total number of meetings of the Board of Directors
(held during the period for which he has been a Director) and the total number
of meetings of Committees of the Board of Directors on which such Director
served (during the periods that he served).
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Corporation's Directors and executive officers and
persons who own more than 10% of a registered class of the Corporation's equity
securities to file with the Securities and Exchange Commission (the "SEC")
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Corporation. Officers, Directors and greater
than 10% shareholders are required by the SEC to furnish the Corporation with
copies of all Section 16(a) forms they file.
To the Corporation's knowledge, based solely on a review of such reports
furnished to the Corporation and written representations that no other reports
were required, during the fiscal year ended December 31, 1996, all Section 16(a)
filing requirements applicable to its officers, Directors and 10% shareholders
were complied with.
-8-
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the compensation of the
Corporation's Chief Executive Officer and the two other most highly compensated
executive officers for services in all capacities to the Corporation, the Bank
and other subsidiaries during 1996, 1995 and 1994:
SUMMARY COMPENSATION TABLE
Long-
Term
Compen-
sation
Annual Compensation Awards
----------------------------------------- --------
Secur- All
ities other
Name and Other Annual Under- Compen-
Principal Salary Compensation lying sation
Position Year (1) Bonus (2) options (3)(4)
- --------------- -------- --------- ------- ------- ------- ------
Donald V. 1996 $151,285 $44,436 $6,145 1,000 $5,618
Carter
President & 1995 144,084 44,436 4,639 1,500 5,899
Chief
Executive 1994 137,220 37,030 3,316 1,500 7,930
Officer
James F. 1996 $98,331 $28,884 $5,550 -- $6,612
Cowee, Jr.
Executive 1995 93,660 28,884 5,019 -- 4,268
Vice
President 1994 89,196 24,070 3,954 -- 3,757
of the Bank
& C.F.O.
of the
Corporation
Fred A. 1996 $85,728 $24,444 $1,540 -- $4,076
Drake II
Senior Vice 1995 81,648 24,444 1,334 -- 4,037
President &
Cashier of 1994 77,760 20,370 1,079 -- 4,604
the Bank
(1) Base salary includes 401(k) Plan and Executive Deferred Compensation Plan
("EDCP") contributions.
(2) Represents the above-market portion of interest earned under the EDCP for
Messrs. Carter, Cowee and Drake; and the cost of a company car for each of
Messrs. Carter and Cowee.
(3) Represents matching contributions under the Corporation's 401(k) Plan and
EDCP.
-9-
<PAGE>
(4) Includes a yearly allocation of Common Stock under the ESOP, excluding
shares allocated as a result of stock dividends issued in 1993 and the
three-for-two stock split effected as a 50% stock dividend in 1995.
<TABLE>
The following table describes stock options that were granted pursuant to
the North Valley Bancorp 1989 Director Stock Option Plan (the "Director Plan")
to the Corporation's Chief Executive Officer in the fiscal year ended December
31, 1996:
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term(2)
- ----------------------------------------------------------------------------------------------------- ---------------------------
Number of Percent of
Securities Total Options Market
Underlying Granted to Exercise or Price on
Options Employees in Base Price Date of Expiration
Name Granted Fiscal Year ($/Sh) Grant Date 5% 10%
- ---- ------- ----------- ------ ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Donald V. 1,000(1) 100% $16.58 $19.50 January 22, 2005 $13,670 $29,400
Carter
- ----------
<FN>
(1) Mr. Carter's options were granted under the Director Plan at 85% of the
fair market value of the Corporation's Common Stock on the date of grant.
See the discussion of the Director Plan below.
(2) The 5% and 10% assumed rates of appreciation are mandated by the rules of
the Securities and Exchange Commission and are not an estimate or
projection of future prices for the Company's Common Stock.
</FN>
</TABLE>
Mr. Carter did not exercise any options in 1996.
<TABLE>
The following table sets forth the December 31, 1996 unexercised value of
both vested and unvested stock options for the Corporation's Chief Executive
Officer:
<CAPTION>
FISCAL YEAR END OPTION VALUES
Number of Securities Underlying Value of Unexercised In-The-Money
Unexercised Options at Fiscal Year End Options at Fiscal Year End (1)
-------------------------------------- ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Donald V. Carter 8,714 2,630 $126,497 $22,664
- ----------
</TABLE>
-10-
<PAGE>
(1) Based on the fair market value of the Corporation's Common Stock of $21.00
per share at December 31, 1996.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
Mr. Carter entered into an employment agreement with the Corporation on
February 1, 1986. As amended in January 1997, this agreement provides for cash
compensation at the rate of $155,823 per annum, a 3% increase over his $151,285
base salary for 1996, and bonus compensation and/or salary increases at the sole
discretion of the Board of Directors. Under the terms of the employment
agreement, which expires December 31, 1999, Mr. Carter may participate in the
various benefit plans available to any employee of the Corporation and in a
death benefit which provides for payment of $250,000 to Mr. Carter's widow in
the event of his death during his employment with the Corporation.
Supplemental Executive Retirement Plan. The Supplemental Executive
Retirement Plan (the "Executive Retirement Plan") was established by the
Corporation effective October 1, 1988, for the purpose of providing supplemental
retirement benefits to key employees of the Corporation and its subsidiaries
designated by the Board of Directors. The Executive Retirement Plan is
administered by a committee of three persons appointed by the Chairman of the
Board, and is an unfunded and unsecured plan as defined in sections 201, 301 and
401 of ERISA (Employee Retirement Income Security Act of 1974).
The Executive Retirement Plan provides for two general classes of benefits:
(1) Retirement benefits commencing at age 65 or upon termination within two
years after a change in control of the Corporation, payable monthly for not
less than ten years in an amount, depending upon length of service, equal
to up to 45% of the executive's highest average monthly compensation for
any 36 consecutive months during his last 60 months of service.
"Compensation" includes base salary and bonuses. An early retirement
benefit is also available if the executive retires early between the ages
of 55 and 65 after not less than ten years of service. If commencement of
payment of the early retirement benefit is deferred until the executive
attains age 65, it is equal to the normal retirement benefit; if payment
commences prior to age 65, the monthly benefit is reduced according to a
formula set forth in the Executive Retirement Plan. Optional benefit forms,
such as joint/survivor annuities, are also available.
(2) Survivor benefits payable after death occurring either while employed
or after employment but before commencement of normal retirement benefits.
The survivor benefit is generally equal to the greater of the normal
retirement benefit which would have been payable to the executive or 36
times his highest average monthly compensation and is payable in ten equal
annual installments.
Vesting of benefits under the Executive Retirement Plan is 100% if
termination occurs within 24 months after change in control of the Corporation
or as a result of disability, retirement on or after the age of 65 or death. For
any other reason, vesting occurs at the rate of
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<PAGE>
25% for each year of credited service. Benefits are reduced by an amount equal
to 50% of the amount of any monthly primary Social Security benefit (determined
at age 65) or, in the case of commencement of payment of early retirement
benefits prior to age 65, by 50% of the monthly primary Social Security benefit
that would become payable at age 65, determined under the terms of the Social
Security Act in effect at the time early retirement benefits commence.
As in the case of the Directors' Retirement Plan, the Corporation (or the
subsidiary responsible for payment of benefits) may purchase insurance policies
or annuity contracts to provide for payment of benefits under the Executive
Retirement Plan, but persons entitled to benefits have no right to such policies
or contracts or other specific assets or properties of the Corporation or
subsidiary unless express trusts of any such assets or properties have been
established for the purpose of payment of benefits.
For the period ending December 31, 1996, the Bank paid insurance premiums
of $147,513 in order to fund obligations under the Supplemental Executive
Retirement Plan, with a cash residual value of $1,536,000.
The following table illustrates the approximate retirement income that may
become payable to a key employee credited with the number of years of service
shown, assuming that benefits commence at age 65 and are payable in the form of
an annuity for the employee's life or for 10 years (whichever is greater):
ANNUAL RETIREMENT INCOME
Years of Credited Service
Final Average 10
Compensation 2 4 6 8 or more
- ------------- ----- ------ ------ ------ ------
$ 60,000 5,400 10,800 16,200 21,600 27,000
80,000 7,200 14,400 21,600 28,800 36,000
100,000 9,000 18,000 27,000 36,000 45,000
120,000 10,800 21,600 32,400 43,200 54,000
140,000 12,600 25,200 37,800 50,400 63,000
160,000 14,400 28,800 43,200 57,600 72,000
180,000 16,200 32,400 48,600 64,800 81,000
200,000 18,000 36,000 54,000 72,000 90,000
Messrs. Carter, Cowee and Drake each have 10 years of credited service.
Executive Deferred Compensation Plan. The EDCP was established by the
Corporation effective January 1, 1989, in order to provide current tax planning
opportunities and supplemental retirement or death benefits to Directors and
selected key employees or their designated beneficiaries or surviving spouses,
children or estates. It is administered by a committee of not less than three
persons appointed by the Chairman of the Board of Directors. Although the EDCP
is intended to be an unfunded and unsecured plan as defined in sections 201, 301
and 401 of ERISA, the employer (the Corporation or a subsidiary thereof)
responsible for payment of benefits may establish trusts, which may be
irrevocable but which are subject to the claims of the Corporation's creditors,
to provide for payment thereof.
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<PAGE>
Participants may elect to defer to their account under the EDCP not less
than $2,400 in amount, up to 100%, of their annual compensation. The employer is
required to make matching contributions in the amount of 25% of the amount
deferred up to a maximum of 5% of compensation before deferrals, and may also
make discretionary contributions in any amounts.
EDCP benefits are payable from participants' individual accounts upon
termination within 24 months of a change of control of the Corporation or as the
result of normal or early retirement, disability or death, or under other
limited circumstances. Benefits are payable usually over a period of five years
in the case of directors and 10 years in the case of executives, in equal
monthly installments commencing on a date chosen by the participant not later
than 60 days after the end of the month in which termination of service occurs.
Other payment alternatives which may be elected at the discretion of the
administrative committee of the EDCP include payment in a single sum or over a
period of 15 years, and early withdrawals in limited amounts and hardship
distributions are permitted. All amounts deferred are immediately vested at
100%; discretionary contributions are vested as set forth by agreement with the
participant at the time of the related deferral, and matching contributions are
vested according to the schedule set forth for matching contributions under the
Corporation's Deferred Salary Profit-Sharing Thrift Plan. In 1996, amounts which
were deferred by the executive officers totaled $25,189 for Mr. Carter, $19,560
for Mr. Cowee, and $7,200 for Mr. Drake, which amounts are included in the
Summary Compensation Table. For the period ending December 31, 1996, the Bank
paid insurance premiums of $107,150 in order to fund obligations under the EDCP,
with a cash residual value of $1,122,000.
As of December 31, 1996, the Corporation's accrued pension obligation under
the Directors' Retirement Plan, the Executive Retirement Plan and the EDCP was
$1,544,000.
Compensation of Directors
General. At its meeting on January 22, 1996, the Board of Directors of the
Corporation recommended and approved an increase in Directors' fees from $750 to
$850 paid per Board Meeting attended (except that if the Director was a member
of the Board of Directors of both the Corporation and the Bank, and both Boards
met on the same day, the Director only received a single $850 fee for attending
both meetings) with payments per Committee meeting attended to remain at $200,
effective January 1996. During 1996, cash compensation paid to all Directors
totaled $30,420, and payment of additional Director compensation of $60,950 was
deferred under the EDCP. Mr. Carter does not receive Director's fees. Directors
electing coverage under the group health insurance plan available to employees
of the Corporation have been required to pay 100% of their premiums since
January 1989.
North Valley Bancorp 1989 Director Stock Option Plan.
Under the North Valley Bancorp 1989 Director Stock Option Plan, as amended
(the "Director Plan"), which was adopted by the Board of Directors in December
1989 and by the shareholders of the Corporation at the 1990 Annual Meeting, all
members of the Board of
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<PAGE>
Directors, including employees who are Directors, automatically receive every
January 1,000 nonstatutory options to purchase shares of the Corporation's
Common Stock. As of April 1, 1997, 180,000 shares were reserved for awards,
72,000 shares were issued and outstanding and 108,000 shares were available for
issuance under the Director Plan.
Options granted under the Director Plan vest immediately as to 20%, with an
additional 20% vesting on each of the first four anniversary dates following the
date of grant. Such options are exercisable for a period of 10 years from the
date of grant at a price which shall be 85% of the fair market value of the
Corporation's Common Stock on the date of grant. The exercise price can be paid
by cash, certified check, official bank check or the equivalent thereof
acceptable to the Corporation. Options granted pursuant to the Director Plan
automatically expire three months after termination of service as a Director for
any reason other than cause, death or disability. In the case of termination of
service due to death or disability, such options terminate one year from the
date of such termination of service. In the event that service as a Director is
terminated for cause, the options granted pursuant to the Director Plan expire
30 days after such termination.
Each Director was granted an option to purchase 1,000 shares in January
1996 at an exercise price per share of $16.58, and 1,000 shares in January 1997
at an exercise price of $18.28. It is anticipated that additional options to
purchase 1,000 shares will be granted to each Director each year at the regular
January meeting of the Board of Directors.
The Director Plan is presently administered by the Board of Directors,
which has the authority to delegate some or all of its duties to a committee of
the Board of Directors appointed for this purpose, which committee must be
composed of not less than three members of the Board of Directors. This
committee is generally authorized to administer the Director Plan in all
respects, subject to the express terms of the Director Plan.
The Director Plan provides for adjustment of and changes in the shares of
Common Stock reserved for issuance in the event certain changes occur or in the
event of the sale, dissolution or liquidation of the Corporation or any
reorganization, merger or consolidation of the Corporation.
The Board of Directors may amend or terminate the Director Plan as provided
therein. No amendment or termination may adversely affect the rights of an
optionee under a previously granted option without that optionee's consent. The
Director Plan terminates in 1999.
Supplemental Retirement Plan for Directors. The Supplemental Retirement
Plan for Directors (the "Directors' Retirement Plan") was established by the
Corporation as of October 1, 1988 as an unfunded and unsecured plan to provide
deferred compensation to Directors of the Corporation who are not also employees
of the Corporation or any affiliate ("Outside Directors"). Its general purpose
is to aid in retaining the services of such Outside Directors. Outside Directors
with 10 years of service to the Corporation or any of its subsidiaries are
eligible to receive benefits under the Directors' Retirement Plan, which
benefits consist of the payment (commencing upon the earlier of death or the
72nd birthday of the Director) of $5,000
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<PAGE>
per year for 10 years to the Director, his designated beneficiaries or (in the
absence of such a designation) his surviving spouse, children or estate (in that
order).
The obligation to pay benefits under the Directors' Retirement Plan is the
responsibility of the Bank. The Bank is authorized to purchase life insurance
policies and/or annuity contracts in order to provide for payment of its
obligations under the Directors' Retirement Plan, but such obligations have only
the legal status of unfunded, unsecured promises to pay money in the future, and
no one entitled to receive benefits under the Directors' Retirement Plan has, as
a result, any rights to such policies or contracts or other specific property or
assets of the Bank unless an express trust is established for such purpose. For
the period ending December 31, 1996, the Bank paid insurance premiums of $61,105
in order to fund obligations under the Directors' Retirement Plan, with a cash
residual value of $756,000.
REPORT OF THE COMPENSATION COMMITTEE
The Board of Directors acts as the Corporation's compensation committee and
reviews salaries recommended by the Chief Executive Officer for executive
officers other than the Chief Executive Officer, and can, at its discretion,
grant stock options to key officers of the Corporation and its affiliates who
are primarily responsible for the management and growth of the Corporation's
business (no such options were granted in 1996). In conducting its review of
salaries, the Board of Directors takes into consideration the overall
performance of the Company and the Chief Executive Officer's evaluation of
individual executive officer performance, with final decisions on base salary
adjustments made in conjunction with the Chief Executive Officer. The Board of
Directors determines the base salary for the Chief Executive Officer by: (1)
examining the Company's performance against its preset goals, (2) examining the
Company's performance within the banking industry, (3) evaluating the overall
performance of the Chief Executive Officer, and (4) comparing the base salary of
the Chief Executive Officer to that of other chief executive officers in the
banking industry in the Corporation's market area. Based upon the data and
performance, the Chief Executive Officer's salary was increased by 3% to
$155,823 per annum effective January 1, 1997.
The Corporation does not have a formal bonus plan. However, at its
discretion, the Board of Directors can, and has since 1990, set aside
approximately 3% of the after tax profits of North Valley Bank, which is then
divided by the Chief Executive Officer among the top four most highly
compensated executive officers. This is not a formal bonus plan and there is no
guarantee that such bonuses will be granted in the future.
Members of the Board of Directors, which acts as the Corporation's
compensation committee, as of April 7, 1997, are: Rudy V. Balma, Donald V.
Carter, William W. Cox, Dan W. Ghidinelli, Thomas J. Ludden, Kelly V. Pierce,
Douglas M. Treadway and J. M. ("Mike") Wells, Jr.
<TABLE>
<CAPTION>
(The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T)
STOCK PERFORMANCE CHART
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>
North Valley Bancorp 100.00 135.67 165.88 195.31 185.43 213.76
S&P 500 100.00 107.62 118.47 120.03 165.13 202.89
Northern California Proxy 100.00 101.55 126.11 123.43 187.15 202.67
<FN>
(1) Assumes $100 invested on December 31,1991 in the Corporation's Common
Stock, the S&P 500 composite stock index and SNL Securities' Northern
California Proxy index, with reinvestment of dividends.
(2) Source: SNL Securities.
</FN>
</TABLE>
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Through its banking subsidiary, the Corporation has had and expects in the
future to have banking transactions, including loans and other extensions of
credit, in the ordinary course of its business with many of the Corporation's
Directors, executive officers, holders of five percent or more of the
Corporation's Common Stock and members of the immediate family of any of the
foregoing persons, including transactions with corporations or organizations of
which such persons are directors, officers or controlling shareholders, on
substantially the same terms (including interest rates and collateral) as those
prevailing at the time for comparable transactions with others, except that all
employees (other than executive officers or Directors of the Corporation or its
subsidiaries) are granted rate concessions on installment loans and are not
charged origination fees on residential real estate loans. Management believes
that in 1996 such loan transactions did not involve more than the normal risk of
collectibility or present other unfavorable features.
The largest aggregate extension of credit by the Corporation to all
Directors, principal shareholders and executive officers and their respective
associates as a group at any time since the beginning of the Corporation's 1996
fiscal year was $3,329,000 on December 31, 1996, or 13.93% of the Corporation's
equity capital on that date.
J. M. "Mike" Wells, Jr., the General Counsel of the Corporation, Secretary
of the Board of Directors and Director, is an attorney and a founding partner in
the law firm of Wells, Small, Selke & Graham, A Law Corporation, which
contracted to provide professional legal services to the Corporation and the
Bank during 1996 and expects to provide professional legal services to them in
the future. Wells, Small, Selke & Graham, A Law Corporation, received from the
Bank in 1996 a total of $13,883 in legal fees and costs reimbursed.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP, which served the Corporation as
independent public accountants for the 1996 fiscal year, has been selected by
the Audit Committee of the Board of Directors of the Corporation as the
Corporation's independent public accountants for the 1997 fiscal year. Deloitte
& Touche LLP has no interest, financial or otherwise, in the Corporation. All
Proxies will be voted for ratification of the appointment of Deloitte & Touche
LLP, unless authority to vote for the ratification of such selection is withheld
or an abstention is noted. If Deloitte & Touche LLP should for any reason
decline or be unable to act as independent public accountants, the Proxies will
be voted for a substitute independent public accounting firm to be designated by
the Audit Committee.
The ratification of the appointment of Deloitte & Touche LLP as the
Corporation's independent public accountant for the 1997 fiscal year requires
approval of the holders of a majority of the shares present or represented by
Proxy and voting at the Meeting. The Board of Directors recommends a vote "FOR"
ratification of the appointment of Deloitte & Touche LLP.
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<PAGE>
A representative of Deloitte & Touche LLP is expected to attend the Meeting
with the opportunity to make a statement if he or she desires to do so and
respond to appropriate questions from shareholders present at the Meeting.
SHAREHOLDER PROPOSALS
The Corporation's 1998 Annual Meeting of Shareholders will be held on May
18, 1998. Shareholder proposals must be received by the Corporation no later
than December 20, 1997, to be considered for inclusion in the Proxy Statement
and Proxy for the 1998 Annual Meeting of Shareholders.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before the Meeting, but if such matters are properly presented to the Meeting,
Proxies solicited hereby will be voted in accordance with the judgment of the
persons holding such Proxies. All shares represented by duly executed Proxies
will be voted at the Meeting.
By Order of the Board of Directors,
J. M. ("Mike") Wells, Jr., Secretary
Redding, California
April 18, 1997
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<PAGE>
Appendix A
PROXY PROXY
NORTH VALLEY BANCORP
Proxy Solicited on Behalf of the Board of Directors
of North Valley Bancorp
for the Annual Meeting of Shareholders, May 19, 1997
The undersigned holder of Common Stock acknowledges receipt of a copy of
the Notice of Annual Meeting of Shareholders of North Valley Bancorp and the
accompanying Proxy Statement dated April 18, 1997, and revoking any proxy
heretofore given, hereby constitutes and appoints Donald V. Carter and James F.
Cowee, Jr., and each of them, each with full power of substitution, as attorneys
and proxies to represent and vote, as designated on the reverse side, all shares
of Common Stock of North Valley Bancorp (the "Corporation"), which the
undersigned would be entitled to vote at the Annual Meeting of Shareholders of
the Corporation to be held in Administration, North Valley Bank, 880 East
Cypress Avenue, Redding, California, on Monday, May 19, 1997, at 4:30 P.M., or
at any postponement or adjournment thereof, upon the matters set forth in the
Notice of Annual Meeting and Proxy Statement and upon such other business as may
properly come before the meeting or any postponement or adjournment thereof. All
properly executed proxies will be voted as indicated.
(Continued and to be signed on reverse side.)
<PAGE>
THIS PROXY IS SOLICITED BY, AND ON BEHALF OF, THE BOARD OF DIRECTORS OF THE
CORPORATION AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
Please mark your votes as indicated in this example. [X]
1. To elect as Directors the nominees set forth below.
[ ] FOR ALL nominees listed below (except as marked to the contrary below).
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below.
INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below. Any proxy which does not
withhold authority to vote for the election of any nominee shall be deemed to
grant such authority.
Nominees: Rudy V. Balma Thomas J. Ludden
Donald V. Carter Kelly V. Pierce
William W. Cox Douglas M. Treadway
Dan W. Ghidinelli J. M. ("Mike") Wells, Jr.
2. To ratify the appointment of Deloitte & Touche LLP as independent public
accountants for the Corporation's 1997 fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxy holders are authorized to vote upon such
other business as may properly come before the meeting.
I/we do [ ] or do not [ ] expect to attend this meeting.
- -----------------------
Number of Common Shares
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS
NOMINATED BY THE BOARD OF DIRECTORS AND "FOR" RATIFICATION OF THE APPOINTMENT OF
DELOITTE & TOUCHE LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE CORPORATION FOR
1997. WHEN THE PROXY IS PROPERLY EXECUTED, SHARES REPRESENTED BY THE PROXY WILL
BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN IN THE PROXY, SHARES REPRESENTED
BY THE PROXY WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS NOMINATED BY THE
BOARD OF DIRECTORS, "FOR" RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE
LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE CORPORATION FOR 1997, AND, IN THE
DISCRETION OF THE PROXY HOLDERS, ON ALL OTHER MATTERS WHICH MAY PROPERLY COME
BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
Signatures(s) Date
-------------------------------------- ------------------------
Please mark, date and sign exactly as your name(s) appear(s) above. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title. If there is more than one trustee, all should sign. WHETHER OR NOT YOU
PLAN TO ATTEND THIS MEETING, PLEASE SIGN AND RETURN THIS PROXY AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
