<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
United Securities Bancorporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(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:
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(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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Notes:
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UNITED SECURITY BANCORPORATION
9506 North Newport Highway
Spokane, Washington 99218-1200
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 23, 2000
----------------
To the Shareholders of United Security Bancorporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of United
Security Bancorporation ("USBN") will be held in the lower level of The United
Security Bank Building, 222 North Wall, Spokane, Washington, on Tuesday, May
23, 2000, at 7:00 p.m. local time for the purpose of considering and voting
upon the following matters:
1. ELECTION OF DIRECTORS. To elect twelve (12) Directors to serve until the
next annual meeting or until their successors have been elected and
qualified.
2. WHATEVER OTHER BUSINESS may properly come before the Annual Meeting, or
any adjournments thereof.
Only those shareholders of record at the close of business on April 5, 2000,
shall be entitled to notice of, and to vote at, the Annual Meeting or any
adjournments thereof.
Further information regarding voting rights and the business to be
transacted at the Annual Meeting is given in the accompanying Proxy Statement.
The directors, officers and personnel who serve you genuinely appreciate your
continued interest as a shareholder in the affairs of USBN, its growth and
development.
April 21, 2000
BY ORDER OF THE BOARD OF DIRECTORS
Keith Sattler Richard C. Emery
Chairman of the Board President & C.E.O.
YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the Annual Meeting, please sign and date
your Proxy card and return it in the enclosed postage prepaid envelope.
The prompt return of your proxy will assist us in preparing for the
meeting. Retention of the Proxy is not necessary for admission to the
Annual Meeting.
<PAGE>
UNITED SECURITY BANCORPORATION
9506 North Newport Highway
Spokane, Washington 99218-1200
(509) 467-6949
----------------
PROXY STATEMENT
----------------
This Proxy Statement and the accompanying Proxy are being sent to
shareholders on or about April 21, 2000, for use in connection with the Annual
Meeting of Shareholders of United Security Bancorporation (USBN) to be held on
Tuesday, May 23, 2000. Only those shareholders of record at the close of
business on April 5, 2000 (the "Record Date"), shall be entitled to vote. The
number of shares of USBN's no par common stock (the "Common Stock"),
outstanding on the Record Date and entitled to vote at the Annual
Shareholders' Meeting is 7,315,959.
Voting Rights and Solicitations
The enclosed Proxy is solicited by and on behalf of the Board of Directors
of USBN, with the cost of solicitation borne by USBN. Solicitation may be made
by directors and officers of USBN and its operating subsidiaries, United
Security Bank ("USB"), Home Security Bank ("HSB"), Bank of Pullman ("BOP"),
Grant National Bank ("GNB"), AmericanWest Bank ("AWB") and USB Insurance
Agencies, Inc. ("USB Insurance"). USB, HSB, BOP, GNB and AWB are sometimes
collectively referred to in this Proxy Statement as the "Banks". Solicitation
may be made by use of the mails, by telephone, facsimile and personal
interview.
USBN's Common Stock is the only type of security entitled to vote at the
annual meeting. If you were a shareholder of record of Common Stock of USBN at
the close of business on the Record Date of April 5, 2000, you may vote at the
annual meeting. On all matters requiring a shareholder vote at the Annual
Meeting, each shareholder is entitled to one vote, in person or by proxy, for
each share of common stock of USBN recorded in his or her name.
The affirmative vote of a plurality of the shares present at the annual
meeting, in person or by proxy, is required to elect directors (Item No. 1).
Abstentions and "broker non-votes" (shares held by a broker or nominee as to
which a broker or nominee indicates in the Proxy that it does not have the
authority, either express or discretionary, to vote on a particular matter)
are counted for purposes of determining the presence or absence of a quorum
for the transaction of business at the Annual Meeting. For the election of
Directors, an abstention from voting and broker non-votes will have the legal
effect of neither a vote for nor against the nominee. For all other matters,
an abstention from voting and broker non-votes, since they are not affirmative
votes, will have the same practical effect as a vote against the respective
matters. Cumulative voting for directors is not permitted.
If you are unable to attend the annual meeting, you may vote by proxy. The
enclosed proxy is solicited by the Board of Directors of USBN, and when
returned, properly completed, will be voted as you direct on your proxy. If
the proxy is returned with no instructions on how the shares are to be voted,
shares represented by such proxies will be voted FOR election of the director-
nominees identified by the Board of Directors (Item No. 1).
If your shares are held by a bank, broker or other holder of record and you
want to attend the meeting and vote in person, you will need to bring an
account statement or letter from the nominee indicating that you were the
beneficial owner of the shares on April 5, 2000, the record date.
You may revoke or change your proxy at any time before it is exercised at
the Annual Meeting. To do this, send a written notice of revocation or another
signed proxy bearing a later date to the Secretary of USBN at its principal
executive office. You may also revoke your proxy by giving notice and voting
in person at the annual meeting.
1
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Costs of Solicitation
The cost of soliciting proxies will be borne by USBN. In addition, USBN will
reimburse brokerage firms, custodians, nominees and fiduciaries for their
expenses in forwarding solicitation material to beneficial owners. Proxies may
also be solicited personally or by telephone or telegram by certain of USBN's
directors, executive officers and regular employees, who will not receive
additional compensation.
PURPOSE OF MEETING
There is one matter being presented for consideration by the shareholders at
the Annual Meeting.
No. 1 -- Election of Directors
General
USBN's Articles of Incorporation, as Amended ("Articles") allow the Board or
the shareholders to set the number of directors on the Board within a range of
5 to 25. Currently, this number is 13. The Articles also allow the Board to
fill vacancies created on the Board. The Board by resolution has set the
number of directors for the next Board to serve at 12.
Directors are elected for terms of one year or until their successors are
elected and qualified.
At the annual meeting, twelve (12) directors are to be elected, each to
serve until the next annual meeting of shareholders or until his successor is
elected and qualified.
Unless authority to vote is withheld on a proxy, proxies in the form
enclosed will be voted FOR the director-nominees identified below. If any
nominee is not available for election (a contingency which USBN does not now
foresee), it is the intention of the Board of Directors to recommend the
election of a substitute nominee, and proxies in the form enclosed will be
voted FOR the election of such substitute nominee unless authority to vote
such proxies in the election of directors has been withheld.
In accordance with the above, the Board of Directors has nominated David C.
Blankenship, Wes Colley, James Rand Elliott, David E. Frame, Robert J.
Gardner, Robert L. Golob, Norman V. McKibben, Buddy R. Sampson, Keith P.
Sattler, Donald H. Swartz II, Dann Simpson, and Ronald Wachter as directors,
to serve a one year term or until their successors are elected and qualified.
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INFORMATION WITH RESPECT TO NOMINEES
The following tables set forth certain information with respect to the
nominees for director, including the number of shares of common stock
beneficially held. Beneficial ownership is a technical term broadly defined by
the SEC to mean more than ownership in the usual sense. In general, beneficial
ownership includes any shares a director or executive officer can vote or
transfer and stock options that are exercisable currently or become
exercisable within 60 days. Except as noted below, each holder has sole voting
and investment power for all shares shown as beneficially owned by them. Where
beneficial ownership was less than one percent of all outstanding shares, the
percentage is not reflected in the table.
<TABLE>
<CAPTION>
Shares and
Percentage of
Common Stock
Principal Occupation Beneficially
Name, Age and of Director During Owned as of
Tenure as Director Last Five Years December 31, 1999 *
------------------ -------------------- -------------------
(1)
<C> <S> <C>
David C. Blankenship, 57 President and owner of 129,793
Since 1991 Blankenship and Associates, (1.77%)
Inc.; Holland Road Properties,
Inc., RiverPark Properties,
Inc., and Triple Ten
Investments; director of USB,
BOP and USB Insurance
Wesley E. Colley, 61 President/Chief Executive 258,670
Since 1999 Officer & Director AWB (3.54%)
James Rand Elliott, 49 Partner of Premium Finance 10,278 (2)
Since 1996 Company; director of Yakima
Chapter of American Red Cross;
director of HSB
David E. Frame, 60 Chairman and CEO of American 155,171 (3)
Since 1999 Line Builders, Inc.; director (2.12%)
of AWB
Robert J. Gardner, 60 Self-employed in the logging 37,656 (4)
Since 1985 business; President/owner of
Gardner Logging and Trucking,
Inc.; director of USB and USB
Insurance
Robert L. Golob, 69 President of Golob Dairy, Inc.; 24,604 (5)
Since 1988 director of HSB;
President/director of Bleyhl
Farm Service; director of
Valley Irrigation Dist.;
director of All West/Select
Sires; director of WA State
Dairy Products Commission
Norman V. McKibben, 63 Self-employed wine grape 80,664
Since 1999 grower; director of The Hogue (1.10%)
Cellars Winery; director of
Canoe Ridge Winery; Partner of
Pepper Bridge Winery; director
of AWB
Buddy R. Sampson, 63 Farmer; director USB, USB 5,624
Since 1999 Insurance and GNB
Keith P. Sattler, 56 CPA/Principal of Sattler and 19,436 (5)
Since 1993 Heslop; director and treasurer
of Lower Valley Holding Corp.;
director of Sunnyside Housing
Authority; Chairman/director of
HSB and AWB
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Shares and
Percentage of
Common Stock
Principal Occupation Beneficially
Name, Age and of Director During Owned as of
Tenure as Director Last Five Years December 31, 1999 *
------------------ -------------------- -------------------
(1)
<C> <S> <C>
Dann Simpson, 67 Semi-retired C.P.A.; Past 6,492
Since 1985 Chairman of USBN; Chairman of
USB and USB Insurance
Donald H. Swartz, II, 54 Owner, J&M Electric director of 26,635 (6)
Since 1998 GNB
Ronald Wachter, 62 President of NuChem Industries; 14,940
Since 1997 General Manager NuChem Ltd.;
President Whitman County Bus
Development; Secretary Greater
Pullman Economic Development;
director of BOP
</TABLE>
- --------
* Share amounts reflect stock dividends, including the 10% dividend declared
January 18, 2000.
(1) Share amounts include stock options which are exercisable within 60 days
as follows: David C. Blankenship, 3,463 shares; Wesley E. Colley, 20,791
shares; James Rand Elliott, 1,597 shares; David E. Frame, 16,858 shares;
Robert J. Gardner, 2,662 shares; Robert L. Golob, 2,662 shares; Norman V.
McKibben, 440 shares; Buddy R. Sampson, 2,662 shares; Keith P. Sattler,
2,662 shares; Dann Simpson, 5,883 shares; Donald H. Swartz, II, 2,420
shares; Ronald Wachter, 2,662 shares.
(2) Includes 3,038 shares held of record by Mr. Elliott's spouse.
(3) Includes 39,902 shares held of record by ALB Trust.
(4) Includes 12,176 shares held of record by Gardner Logging and Trucking,
Inc. and 2,017 shares held of record by Mr. Gardner's spouse.
(5) Includes 157 shares held of record by TIPS.
(6) Includes 2,677 shares held of record by J&M Electric and 171 shares held
of record by Mr. Swartz's children.
The Board of Directors recommends that you vote FOR the nominees to be
elected as directors.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The following sets forth information concerning the Board of Directors and
certain Committees of USBN during the year ended December 31, 1999.
Board of Directors
USBN held ten (10) Board meetings in 1999. Each director attended at least
75 percent of the aggregate of: (i) the total number of meetings of the Board
of Directors; and (ii) the total number of meetings held by all committees on
which he served.
Certain Committees of the Board of Directors
The Board of Directors of USBN has established an Audit and Compliance
Committee ("Audit Committee"), a Compensation Committee and an Executive
Committee. When the need arose the full Board served as the Nominating
Committee. The following table shows membership of the various committees
during the fiscal year.
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Committee Membership
<TABLE>
-----------------------------------------------------
<CAPTION>
Name Audit Compensation Executive
-----------------------------------------------------
<S> <C> <C> <C>
David C. Blankenship X X X
-----------------------------------------------------
Richard C. Emery X
-----------------------------------------------------
Robert J. Gardner X X X
-----------------------------------------------------
Buddy R. Sampson X
-----------------------------------------------------
Keith P. Sattler X* X
-----------------------------------------------------
Dann Simpson X X* X
-----------------------------------------------------
</TABLE>
* Chairman
Audit Committee. The main function of the Audit Committee includes reviewing
the plan, scope, and audit results of the independent auditors, as well as
reviewing and approving the services of the independent auditors. The Audit
Committee reviews or causes to be reviewed the reports of bank regulatory
authorities and reports its conclusions to the Board of Directors. The Audit
Committee also reviews procedures with respect to USBN's records and its
business practices, and reviews the adequacy and implementation of the
internal auditing, accounting and financial controls. The Committee held four
(4) meetings during the year.
Compensation Committee. The main function of the Compensation Committee is
to attract and retain well-qualified executive officers and other personnel
through competitive compensation arrangements, with emphasis on rewards for
outstanding contributions to USBN's success, with a special emphasis on
aligning the interests of executive officers and other personnel with those of
USBN's shareholders. There were eight (8) meetings of the Compensation
Committee in 1999.
Executive Committee. The main function of the Executive Committee is to
establish the agenda for USBN's Board of Directors meetings, to receive
reports from the Executive Officers regarding their activities and the
implementation of USBN's business plan, and to ensure USBN's strategic
planning process is being followed. The Committee held two (2) meetings during
the year.
Compensation of Directors
Directors of USBN receive a monthly retainer of $500 and $500 for each
meeting of the board of directors attended. During the year ended December 31,
1999, USBN paid total director fees of $148,175 pursuant to such arrangements.
Certain directors of USBN are also directors or executive officers of USBN's
Subsidiaries or members of various committees of USBN's board of directors,
and receive fees for meetings attended in such capacities. Similar programs
for directors of the Subsidiaries have been established which are commensurate
with the size of the institution and the procedures of its peer and affiliate
banks.
Directors of USBN are eligible to receive options under the 1995 Incentive
Stock Option Plan. This plan is described in the Executive Compensation
section under the heading "Description of Incentive Stock Option Plan".
Employment Agreement
USBN has entered into an employment agreement with Wes Colley, President and
Chairman of AWB. Mr. Colley's agreement is for a term of 36 months, which
commenced on the merger effective date of February 1, 1999. Mr. Colley's
initial base salary under the agreement was $108,600. The agreement provides
that Mr. Colley will receive all benefits that are generally provided to
similarly situated full-time employees of
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USBN. Mr. Colley will also receive certain fringe benefits, including the
right to participate in group life insurance, disability, health and accident
insurance plans, profit sharing and pension plans and other employee fringe
benefit plans that are in effect from time to time for similarly situated
employees. If Mr. Colley is terminated without cause or Mr. Colley terminates
his employment for a legitimate reason as defined in his agreement before the
end of the term of the agreement, Mr. Colley is entitled to receive his base
salary for the remaining term of the agreement. The employment agreement also
provides for a restriction on Mr. Colley's ability to compete with USBN or AWB
following his termination from employment (voluntary or otherwise) for a
period of 24 months.
EXECUTIVE COMPENSATION
The following table sets forth a summary of certain information concerning
compensation awarded to or paid by USBN for services rendered in all
capacities, during the last three fiscal years to the Chief Executive Officer
and the three most highly compensated executive officers of USBN and, in
certain instances, its Subsidiaries, whose total compensation in 1999 exceeded
$100,000.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------------ -----------------------
Payouts
Securities -------
Name and Principal Other Annual Underlying LTIP All Other
Position Year Salary(1) Bonus Compensation(2) Options/SARs(4) Payouts Compensation(4)
------------------ ---- --------- ------- --------------- --------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard C. Emery........ 1999 $171,875 $43,842 $0 0 0 $ 0
President and CEO 1998 164,100 77,704 0 0 0 0
USBN 1997 23,916(5) 11,125 0 17,343 0 0
Daniel P. Murray........ 1999 $121,140 $25,922 $0 0 0 $17,052
Senior Vice President-- 1998 114,200 49,918 0 0 0 17,052
Loan Adminhistrator of 1997 102,950 46,960 0 0 0 17,052
USBN and USB
Wesley E. Colley........ 1999 $124,248 $82,232 $0 18,990 0 $ 0
President and CEO of 1998 118,879 71,427 0 4,013 0 0
AWB 1997 102,800 45,967 0 4,952 0 0
</TABLE>
- --------
(1) Includes director fees paid during the year.
(2) Does not include amounts attributable to miscellaneous benefits received
by executive officers, including the use of company-owned automobiles and
the payment of certain club dues. In the opinion of management, the costs
to USBN of providing such benefits to any individual executive officer
during the year ended December 31, 1999 did not exceed the lesser of
$50,000 or 10% of the total of annual salary and bonus reported for the
individual.
(3) Represents options to acquire shares of Common Stock that were granted
under stock option plans.
(4) Represents the value attributed to the named executive officer during the
year pursuant to agreements entered into between USB, AWB and such
officers as part of USB and AWB salary continuation plans.
(5) Includes director fees of $1,000; Mr. Emery's 1997 salary on an annualized
basis (exclusive of director fees) would have been $137,500.
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OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed
Individual Grants Annual Rates of
---------------------------------------------- Stock Price
% of Appreciation For
Options Total Options Exercise Option Term(2)
Granted Granted to Price ----------------
Name (1) Employees (1) Expiration Date 5% 10%
- ---- ------- ------------- -------- --------------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Wesley E. Colley........ 18,990 57.41% 12.71 2004 $66,684 $147,354
Richard C. Emery........ 0 0.00% 0.00 -- 0 0
Daniel P. Murray........ 0 0.00% 0.00 -- 0 0
</TABLE>
- --------
(1) Share amount and exercise price have been adjusted to reflect the 10%
stock dividend declared on January 18, 2000. The options vest in 20%
increments beginning at the time the agreement is signed and annually
thereafter.
(2) The potential realizable value portion of the foregoing table illustrates
values that might be realized upon exercise of the options immediately
prior to the expiration of their term based upon the assumed compounded
rates of appreciation in the value of Common Stock as specified in the
table over the term of the options. These amounts do not take into
account provisions of the options providing for termination of the option
following termination of employment or non-transferability.
Option Exercises. The following table sets forth certain information
concerning exercises of stock options pursuant to USBN's stock option plan by
the named executive officers during the year ended December 31, 1999 and stock
options held at year-end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised Value of Realizable
Options at Year End(1) Options at Year End(2)
Shares Acquired Value ------------------------- -------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Emery........ 0 $ 0 10,406 6,937 $ 0 $ 0
Daniel P. Murray........ 0 $ 0 15,190 0 $58,178 $ 0
Wesley E. Colley........ 500 $13,750 20,791 11,394 $80,579 $ 0
</TABLE>
- --------
(1) Share amounts and values have been adjusted for stock dividends,
including the 10% stock dividend declared on January 18, 2000.
(2) On December 31, 1999, the closing price of the Common Stock was $11.36.
For purposes of the foregoing table, stock options with an exercise price
less than that amount are considered to be "in-the-money" and are
considered to have a value equal to the difference between this amount
and the exercise price of the stock option multiplied by the number of
shares covered by the stock option. Options with an exercise price
greater than the closing price on December 31, 1999, are showing no
value.
Employee Stock Ownership Plan
USBN maintains an employee stock ownership plan and trust, known as the
United Security Bancorporation Employee Stock Ownership Plan ("Plan"), for the
benefit of employees of USBN and its subsidiaries. The Plan became effective
January 1, 1989, and is intended to enable participating employees to share in
the growth and prosperity of USBN and thereby accumulate capital for
retirement needs. The Plan is qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended, as a stock bonus plan. Employees of USBN or
its subsidiaries who are 21 years of age or older become eligible for
participation in the Plan in any Plan year after achieving 1,000 hours or more
of service.
7
<PAGE>
At December 31, 1999 (as adjusted for the stock dividend declared January
18, 2000), the Plan owned 206,457 shares of Common Stock of USBN, representing
approximately 2.72% of the then outstanding shares. At such date, the Plan had
no outstanding debt.
USBN makes annual contributions to the trust created under the Plan (for
which USBN receives a deduction) and the trust invests such contributions and
trust earnings in Common Stock of USBN. Contributions to the Plan in fiscal
year 1999 totaled $322,000.
Description of Incentive Stock Option Plan
USBN presently maintains one stock option plan, known as the 1995 Incentive
Stock Option Plan ("1995 Plan"). The 1995 Plan, adopted by the Board of
Directors on March 14, 1995, and by the shareholders on May 24, 1995, provides
for the issuance of incentive stock options intended to qualify under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), and options
that are not qualified under the Code. Key individuals of USBN and its
Subsidiaries (including directors, executive officers who are also employees,
and advisors or consultants to USBN) are eligible to receive grants of
options.
The 1995 Plan is administered by the Compensation Committee ("Committee") of
the Board of Directors, comprised of at least 2 non-employee directors, whose
members are entitled to receive awards of options if and when granted by an
independent executive remuneration committee. Up to 399,300 shares of Common
Stock of USBN or shares representing eight percent (8%) of the Common Stock of
USBN from time-to-time outstanding, whichever is less, are available for
issuance in the form of options under the 1995 Plan.
In addition, 108,878 shares of USBN common stock were available to AWB
directors and officers as part of the merger with Bancwest Financial effective
February 1, 1999. These options were previously granted under the Bancwest
option plans that were adopted by USBN, separate from the plan described above
and will be exercised, terminated or forfeited by the year 2003 consistent
with the termination schedules in the merger agreement.
Salary Continuation Agreements
USB, HSB, BOP and GNB have entered into Executive Salary Continuation
Agreements with certain of its directors and employees, including certain
named executive officers. Under the terms of the respective agreements, the
director or officer will receive an annual sum, payable on a monthly basis,
for a period of ten years upon retirement. The following named executive
officers will receive payments under their individual agreements: Mr. Emery
will receive $67,000 and Mr. Murray will receive $40,800.
The plans are generally available to most directors, executive officers and
other key employees of the Banks, and vest according to years of service.
Persons employed by the Banks for at least six continuous years prior to the
effective date of the plans are deemed vested with respect to 20% of the
salary continuation benefits available to them, and become vested in an
additional 20% of such benefits for each succeeding year of employment
thereafter until the employee becomes fully vested. Eligible persons employed
by the Banks for at least ten continuous years prior to the effective date of
the plans are deemed fully vested. Obligations under the salary continuation
plans are funded by prepaid policies of universal life insurance covering the
lives of the plan participants.
Report on Executive Compensation
The Compensation Committee of the Board of Directors of the Company is
composed of Messrs. Dann Simpson (Chair), David C. Blankenship, Keith P.
Sattler and Robert J. Gardner.
The intention of this Compensation Committee Report is to describe in
general terms the process the Compensation Committee and Board of Directors
undertakes and the matters it considers in determining the appropriate
compensation for the Company's executive officers.
8
<PAGE>
USBN believes that the Compensation of its executive officers and other key
personnel should reflect and support the goals and strategies that USBN has
established.
Compensation Philosophy. There are two principal objectives in determining
executive compensation: (1) to attract, reward and retain key executive
officers, and (2) to motivate executive officers to perform to the best of
their abilities and to achieve short-term and long-term corporate objectives
that will contribute to the overall goal of enhancing stockholders value. In
furtherance of these objectives, the Committee has adopted the following
policies:
. USBN will compensate competitively with the practices of other leading
companies in the related fields;
. Performance at the corporate, subsidiary and individual executive
officer level will determine a significant portion of compensation;
. The attainment of realizable but challenging objectives will determine
performance-based compensation; and
. USBN will encourage executive officers to hold substantial, long-term
equity stakes in USBN so that the interest of executive officers will
coincide with the interest of stockholders; accordingly, stock options
will constitute a significant portion of compensation.
Elements of Executive Compensation. The elements of USBN's compensation of
executive officers are: (1) annual cash compensation in the form of base
salary and incentive bonuses; (2) long-term incentive compensation in the form
of Salary Continuation Agreements; (3) long-term incentive compensation in the
form of stock options granted under USBN's 1995 Plan; and (4) other
compensation and employee benefits generally available to all employees of
USBN, such as health insurance and employer contributions under USBN's Plan.
Base salary is determined by considering the overall performance of each
executive officer with respect to the duties and responsibilities assigned.
Salary surveys of other community banks are reviewed and factored into the
process to insure fair rates of compensation in an increasingly competitive
labor market.
During the fiscal year ended December 31, 1999, Richard C. Emery, the
President and Chief Executive, received total compensation (less director's
fees) of $185,467, representing $141,625 in base salary and $43,842 in bonus.
Mr. Emery's total compensation paid during 1999 was approximately 30% less
than that paid during the fiscal year 1998. This decrease is directly
attributed to the amount paid in "performance bonus" as a result of a new
formula adopted by the Board during 1999. Under this new formula, performance
bonuses are calculated using a quantitative formula that consists of various
growth and performance measures different than those used in years past.
Executive Compensation Committee
Dann Simpson (Chair) . David C. Blankenship . Keith P. Sattler . Robert J.
Gardner
9
<PAGE>
STOCK PERFORMANCE GRAPH
The chart below depicts the total return to shareholders during the period
beginning May 5, 1995, when USBN first issued its shares publicly, and ending
December 31, 1999. The definition of total return includes appreciation in
market value of the stock as well as the actual cash and stock dividends paid
to shareholders. The comparable indices utilized are the S&P 500 Index and the
Regional Pacific Banks Index. The chart assumes that the value of the
investment in USBN's Common Stock and each of the two indices was $100 on May
5, 1995, and that all dividends were reinvested.
[PERFORMANCE GRAPH APPEARS HERE]
-------------------- FISCAL YEAR ENDING ------------------------
COMPANY/INDEX/
MARKET 5/05/1995 12/29/1995 12/31/1996 12/31/1997 12/31/1998 12/31/1999
Untd Sec Bcp Wa 100.00 172.87 207.47 311.93 253.18 230.19
MG GROUP INDEX 100.00 141.32 177.06 318.82 298.59 304.44
S&P 500 INDEX 100.00 121.79 149.75 199.71 256.79 310.83
<TABLE>
<CAPTION>
Period Ending
----------------------------------
5/95 12/95 12/96 12/97 12/98 12/99
Index ---- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
United Security Bancorp 100 173 207 312 253 230
Regional-Pacific Banks 100 141 177 319 299 304
S & P Composite 100 122 150 200 257 311
</TABLE>
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information concerning the non-director
executive officers named in the compensation table and all executive officers
and directors of USBN as a group. USBN is not aware of any person who at
December 31, 1999, beneficially owned more than five percent of its
outstanding Common Stock.
<TABLE>
<CAPTION>
Current Position Shares and
with the Company and Percentage
Prior Five Year of Common Stock
Name and Age Business Experience Beneficially Owned *
------------ -------------------- --------------------
<S> <C> <C>
Daniel P. Murray, 52 Senior Vice President-Loan 25,124 (1)
Administrator of the Company and USB
Executive officers and 795,087 (2)
directors as a group (10.87%)
(13 individuals)
</TABLE>
- --------
* Unless otherwise noted, all shares owned represent less than one percent.
Share amounts have been adjusted for the 10% stock dividend declared on
January 18, 2000.
(1) Includes 8,162 shares allocated to Mr. Murray under USBN's employee stock
ownership plan, and 15,190 shares for stock options, which are
exercisable within 60 days.
(2) Includes shares for stock options owned by directors and executive
officers as a group, which are exercisable within 60 days.
MANAGEMENT
Executive Officers who are not Directors
The following table sets forth information with respect to the executive
officers that are not directors or nominees for director of USBN or one of the
named executive officers listed in the summary compensation table. All
executive officers are elected annually and serve at the discretion of the
Board of Directors.
<TABLE>
<CAPTION>
Name Age Position with Company
---- --- ---------------------
<S> <C> <C>
Chad Galloway 53 Vice President and CFO of the Company and USB
since 1995; formerly, Senior Internal Auditor
for Metropolitan Mortgage and Vice President and
Controller of AGAmerica, FCB.
</TABLE>
- --------
Includes 1,261 shares allocated to Mr. Galloway under USBN's employee stock
ownership plan, and 11,506 shares for stock options, which are exercisable
within 60 days.
RELATED PARTY TRANSACTIONS AND BUSINESS RELATIONSHIPS
Loans to Affiliates. Some of USBN's directors and executive officers were
customers of the Banks during the last fiscal year and had transactions with
such Banks in the ordinary course of business. In addition, some of USBN's
directors and executive officers are officers, directors or shareholders of
corporations or members of partnerships, which were customers of the Banks
during the last fiscal year and had transactions with such Banks in the
ordinary course of business. All loans included in such transactions were 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 any normal risk of collectibility or present
other unfavorable terms.
COMPLIANCE WITH SECTION 16(a) FILING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, ("Section
16(a)") requires that all executive officers and directors of USBN and all
persons who beneficially own more than 10 percent of USBN's
11
<PAGE>
Common Stock file reports with the Securities and Exchange Commission with
respect to beneficial ownership of USBN's Securities. USBN has adopted
procedures to assist its directors and executive officers in complying with
the Section 16(a) filings.
Based solely on its review of copies of reports made pursuant to Section
16(a) of the Securities Exchange Act of 1934, related regulations, and written
representations that no other reports were required, USBN believes that during
the year ended December 31, 1999 all filing requirements applicable to its
directors, executive officers and 10% shareholders were satisfied, except as
follows: Robert L. Golob inadvertently neglected to file a Form 4 for a
transaction for the purchase of 2,500 shares; David C. Blankenship
inadvertently neglected to file a Form 4 for a transaction for the purchase of
1,551 shares. A Form 4 reflecting the purchase of these shares was
subsequently filed for each of Messrs. Golob and Blankenship.
AUDITORS
USBN selected Moss Adams, LLP, Certified Public Accountants, as its
independent auditors for the current year and for the year ended December 31,
1999. Representatives of Moss Adams, LLP will be present at the Annual
Meeting, and will have the opportunity to make a statement if they so desire.
They will also be available to respond to appropriate questions.
OTHER BUSINESS
The Board of Directors knows of no other matters to be brought before the
shareholders at the Annual Meeting. In the event other matters are presented
for a vote at the Meeting, the proxy holders will vote shares represented by
properly executed proxies in their discretion in accordance with their
judgment on such matters.
At the Annual Meeting, management will report on USBN's business and
shareholders will have the opportunity to ask questions.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
Shareholders who intend to present proposals for consideration at next
year's annual meeting are advised that any such proposal must be received by
the Secretary of USBN no later than the close of business on December 21,
2000, if such proposal is to be considered for inclusion in the proxy
statement and form of proxy relating to that meeting. In addition, if USBN
receives notice of a shareholder proposal after March 9, 2001, the persons
named as proxies in the form of Proxy will have discretionary authority to
vote on such shareholder proposal.
ANNUAL REPORT TO SHAREHOLDERS
A copy of USBN's Annual Report, including Form 10-K filed with the
Securities and Exchange Commission under the Securities and Exchange Act of
1934 for the year ended December 31, 1999, including financial statements, is
included with this mailing. Additional copies may be obtained without charge.
Written requests for additional copies of the Form 10-K should be addressed to
Jacqueline A. Barnard, Secretary to the Board of Directors of United Security
Bancorporation, 9506 North Newport Highway, Spokane, WA 99218-1200.
April 21, 2000 BY ORDER OF THE BOARD OF DIRECTORS
Jacqueline A. Barnard, Secretary
12
<PAGE>
PROXY
UNITED SECURITY BANCORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PLEASE SIGN AND RETURN IMMEDIATELY
The undersigned hereby constitutes and appoints Keith P. Sattler and
Jacqueline A. Barnard, each of them the undersigned's attorney-in-fact and
proxy to vote all of the shares of common stock of United Security
Bancorporation (USBN) owned of record by the undersigned on April 5, 2000 at
the annual meeting of shareholders of USBN to be held on May 23, 2000 or any
adjournment(s) thereof.
UNLESS OTHERWISE INDICATED, THE SHARES OF COMMON STOCK OWNED BY THE
UNDERSIGNED WILL BE VOTED FOR ITEM NO. 1.
ITEM NO. 1 Election of Directors.
A. I vote FOR all nominees listed below (except as marked to the contrary
below) [_]
B. I WITHHOLD AUTHORITY to vote for any individual nominee whose name I have
struck a line through in the list below [_]
<TABLE>
<S> <C> <C>
David C. Blankenship Wesley E. Colley James Rand Elliot
David E. Frame Robert J. Gardner Robert L. Golob
Norman V. McKibben Buddy R. Sampson Keith P. Sattler
Dann Simpson Donald H. Swartz, II Ronald Wachter
</TABLE>
C. I WITHHOLD AUTHORITY to vote for all nominees listed above [_]
<PAGE>
ITEM NO. 2. WHATEVER OTHER BUSINESS may properly be brought before the Annual
Meeting or any adjournment(s) thereof.
THIS PROXY CONFERS AUTHORITY TO VOTE "FOR" AND WILL BE VOTED "FOR" THE
PROPOSAL LISTED UNLESS AUTHORITY IS WITHHELD, IN WHICH CASE THIS PROXY WILL BE
VOTED IN ACCORDANCE WITH THE SPECIFICATION SO MADE.
Management knows of no other matters that may properly be, or which are
likely to be, brought before the Annual Meeting. However, if any other matters
are properly presented at the Annual Meeting, this Proxy will be voted in
accordance with the recommendations of management.
The Board of Directors recommends a vote "FOR" the listed proposal.
Dated: , 2000
------------------------
Print Name(s)
------------------------
------------------------
WHEN SIGNING AS ATTOR-
NEY, EXECUTOR, ADMINIS-
TRATOR, TRUSTEE OF
GUARDIAN, PLEASE GIVE
FULL TITLE. IF MORE
THAN ONE TRUSTEE, ALL
SHOULD SIGN. ALL JOINT
OWNERS MUST SIGN.
