Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by Registrant |X|
Filed by a Party other than the Registrant | |
Check the appropriate box:
| | Preliminary Proxy Statement
|X| Definitive Proxy Statement
| | Definitive Additional Materials
| | Soliciting Material Pursuant to Paragraph 240.14a-11(c) or
240.14a-12
Sterling Financial Corporation
(Name of Registrant as Specified In Its Charter)
John E. Stefan
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check appropriate box):
| | $125 per Exchange Act Rules )-11(c)(1)(ii), 14-6(i)(1),
or 14a-6(j)(2)
| | $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3)
March 29, 1996
Dear Shareholder:
The 1996 Annual Meeting of Shareholders of Sterling
Financial Corporation (the "Corporation") will be held at 9:00
a.m. on Tuesday, April 30, 1996, at the Willow Valley Family
Resort and Conference Center, 2416 Willow Street Pike, Lancaster,
Pennsylvania. You are cordially invited to attend the Annual
Meeting as well as a breakfast buffet which will be held in
the Palm Court at the Resort and Conference Center at 8:00 a.m.
In addition to the election of four Class of 1999
Directors, shareholders are being asked to approve the
proposal to amend Article 5 of the Corporation's amended Articles
of Incorporation to increase the number of authorized shares of
the Corporation's Common Stock, par value $5.00 per share,
from 10,000,000 shares to 35,000,000 shares. Shareholders are
also being asked to consider the proposal to ratify
the selection of Trout, Ebersole & Groff as the Corporation's
certified public accountants. The formal Notice of Annual
Meeting, Proxy Statement and Proxy card are enclosed
herewith. The 1995 Annual Report of Sterling Financial
Corporation is also enclosed. I hope you will take the
opportunity to review the material contained in the Annual
Report, which reflects a successful year in 1995.
It is important that your shares be represented at the
Annual Meeting whether or not you are personally able to attend.
I urge you to sign and date the enclosed Proxy and return it in
the enclosed envelope as soon as possible. If you do attend the
meeting and wish to vote in person, you must give written
notice to the Secretary of the Corporation so that your Proxy
will be superseded by any ballot that you submit at the meeting.
Please indicate on the enclosed business reply card whether
or not you plan to attend the breakfast and return it to Sterling
Financial Corporation.
I look forward to seeing you at the breakfast and Annual
Meeting.
Sincerely,
/s/ John E. Stefan
John E. Stefan
Chairman of the Board,
President and Chief Executive
Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 30, 1996
TO THE SHAREHOLDERS OF STERLING FINANCIAL CORPORATION:
NOTICE IS HEREBY GIVEN that, pursuant to the call of its
directors, the regular Annual Meeting of the shareholders of
Sterling Financial Corporation (the "Corporation") will be held
at the Willow Valley Family Resort and Conference Center, 2416
Willow Street Pike, Lancaster, Pennsylvania, on Tuesday, April
30, 1996 at 9:00 a.m., prevailing time, for the purpose of
considering and voting upon the following matters:
1. ELECTION OF DIRECTORS. To elect four Class of 1999
directors to serve for a three-year term until their
successors are elected and qualified.
2. AMENDMENT OF THE ARTICLES OF INCORPORATION. To consider
and act upon a proposal to amend Article 5 of the
Corporation's amended Articles of Incorporation to
increase the number of authorized shares of the
Corporation's Common Stock, par value $5.00 per share,
from 10,000,000 shares to 35,000,000 shares.
3. SELECTION OF AUDITORS. To ratify the selection of
Trout, Ebersole & Groff as the corporation's independent
certified public accountants for the year ending
December 31, 1996.
4. OTHER BUSINESS. To consider and vote upon such other
business as may properly be brought before the meeting
and any adjournment or post-ponement thereof.
Only those shareholders of record at the close of business
on March 15, 1996, shall be entitled to notice of and to vote at
the meeting.
It is requested that you promptly sign the enclosed Proxy
and return it in the enclosed postpaid envelope. You are
cordially invited to attend the meeting. Your Proxy is revocable
and may be withdrawn at any time by giving written notice to the
Secretary of the Corporation before it is voted at the meeting or
by executing a later dated Proxy and giving written notice to the
Secretary of the Corporation.
A copy of the 1995 Annual Report of Sterling Financial
Corporation is
enclosed.
BY ORDER OF THE BOARD DIRECTORS
/s/ John E. Stefan
John E. Stefan
Chairman of the Board,
President and Chief Executive Officer
Lancaster, Pennsylvania
March 29, 1996 PROXY STATEMENT
Dated and to be mailed March 29, 1996
STERLING FINANCIAL CORPORATION
101 NORTH POINTE BOULEVARD
LANCASTER, PENNSYLVANIA 17601-4133
(717) 581-6030
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 30, 1996
TABLE OF CONTENTS
PAGE
GENERAL.....................................................1
Introduction................................................1
Date, Time and Place of Meeting.............................1
Shareholders Entitled to Vote...............................1
Purpose of Meeting..........................................1
Solicitation of Proxies.....................................1
Revocability and Voting of Proxies..........................2
Quorum and Voting of Shares.................................2
Principal Holders...........................................3
Beneficial Ownership of Executive Officers, Directors and
Nominees....................................................4
Shareholder Proposals.......................................5
Recommendations of the Board of Directors...................5
INFORMATION CONCERNING ELECTION OF DIRECTORS................5
General Information.........................................5
Information about Nominees and Continuing Directors.........6
Meetings and Committees of the Board of Directors...........8
Officers and Executive Officers.............................9
Executive Compensation.....................................10
Compensation of Directors..................................16
Transactions with Directors and Executive Officers.........16
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE
ACT OF 1934................................................17
PROPOSED AMENDMENT TO ARTICLE 5 OF THE CORPORATION'S AMENDED
ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK..........................17
RATIFICATION OF SELECTION OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS................................................19
ADDITIONAL INFORMATION.....................................19
OTHER MATTERS..............................................20
GENERAL
Introduction
On June 30, 1987, The First National Bank of Lancaster
County became a wholly-owned subsidiary of Sterling Financial
Corporation (sometimes referred to herein as the "Corporation"),
a Pennsylvania business corporation based in Lancaster,
Pennsylvania and organized for the purpose of becoming a bank
holding company. As of that date, the shareholders of The First
National Bank of Lancaster County became shareholders of Sterling
Financial Corporation. At the same time, The First National Bank
of Lancaster County changed its name to Bank of Lancaster County,
N.A. (hereinafter referred to as "Bank of Lancaster County" or
the "Bank"). The meeting to which this Proxy Statement relates
will be the ninth Annual Meeting of the shareholders of Sterling
Financial Corporation.
The principal executive office of the Corporation is
located at 101 North Pointe Boulevard, Lancaster, Pennsylvania
17601-4133. The telephone number for the Corporation is (717)
581-6030. All inquiries should be directed to Ronald L. Bowman,
Vice President/Secretary of the Corporation.
Date, Time and Place of Meeting
The regular Annual Meeting of the shareholders of Sterling
Financial Corporation will be held on Tuesday, April 30, 1996 at
9:00 a.m. at the Willow Valley Family Resort and Conference
Center, 2416 Willow Street Pike, Lancaster, Pennsylvania.
Shareholders Entitled to Vote
Shareholders of record at the close of business on March
15, 1996 shall be entitled to vote at the meeting.
Purpose of Meeting
The shareholders will be asked to consider and vote upon
the following matters at the meeting: (1) to elect four Class of
1999 directors to serve for a three-year term, (2) to consider
and act upon a proposal to amend Article 5 of the Corporation's
amended Articles of Incorporation to increase the number of
authorized shares of the Corporation's Common Stock, par value
$5.00 per share, from 10,000,000 shares to 35,000,000 shares, (3)
to vote upon a proposal to ratify the selection of Trout,
Ebersole & Groff as the Corporation's independent certified
public accountants for the year ending December 31, 1996, and (4)
to consider and vote upon such other business as may be properly
brought before the meeting and any adjournment or postponement
thereof.
Solicitation of Proxies
This Proxy Statement and the enclosed form of proxy (the
"Proxy")are being furnished to shareholders of the Corporation on
or about March 29, 1996 in connection with the solicitation of
proxies, in the accompanying form, by the Board of Directors of
Sterling Financial Corporation for use at the Annual Meeting of
shareholders to be held at 9:00 a.m. on Tuesday, April 30, 1996,
and any adjournments or postponements thereof.
The expense of soliciting proxies will be borne by Sterling
Financial Corporation. In addition to the use of the mails,
directors, officers and employees of Sterling Financial
Corporation and the Bank of Lancaster County may, without
additional compensation, solicit proxies personally, by
telephone, by telegraph, or by telecopier.
Revocability and Voting of Proxies
The execution and return of the enclosed Proxy will not
affect a shareholder's right to attend the meeting and to vote in
person. Any Proxy given pursuant to this solicitation may be
revoked by delivering written notice of revocation to Ronald L.
Bowman, Secretary of Sterling Financial Corporation, or by
executing a later dated Proxy and giving written notice thereof
to the Secretary of the Corporation at any time before the Proxy
is voted at the meeting. Shares represented by proxies on the
accompanying Proxy, if properly signed and returned, will be
voted in accordance with the specifications made thereon by the
shareholders. Any Proxy not specifying to the contrary will be
voted FOR the election of the four nominees identified in this
Proxy Statement, FOR the approval and adoption of the amendment
to Article 5 of the Corporation's amended Articles of
Incorporation to increase the number of authorized shares of the
Corporation's Common Stock, par value $5.00 per share, from
10,000,000 shares to 35,000,000 shares and FOR the proposal to
ratify the selection of independent certified public accountants
for the year ending December 31, 1996. Although the Board of
Directors knows of no other business to be presented, in the
event that any other matters are properly brought before the
meeting, any Proxy given pursuant to this solicitation will be
voted in accordance with the recommendations of the management of
Sterling Financial Corporation.
Shares held for the account of shareholders who participate
in the Dividend Reinvestment and Stock Purchase Plan will be
voted by the Plan Agent in accordance with the instructions of
each shareholder as set forth in his Proxy. If a shareholder who
participates in the Dividend Reinvestment and Stock Purchase Plan
does not return a Proxy, the shares held for his account by the
Plan Agent will not be voted.
Shares held for the account of employees who participate in
the Employees Stock Plan will be voted by the Plan Trustee in
accordance with the instructions of each participant as set forth
in the separate Proxy sent to him/her with respect to
his/herEmployees Stock Plan shares. Shares with respect to which
a separate Employees Stock Plan Proxy is not returned will be
voted by the Plan Trustee in the same proportion as shares with
respect to which voting instructions have been received.
Quorum and Voting of Shares
At the close of business on March 15, 1996, which is the
record date for determination of shareholders entitled to receive
notice of and to vote at the meeting and any adjournment or
postponement thereof, the Corporation had outstanding 5,938,110
shares of common stock, par value $5.00 per share (the
"Common Stock"). There is no other class of stock authorized or
outstanding. As of the record date, 70,823 shares of Common
Stock were held by the Trust Department of the Bank of Lancaster
County as sole fiduciary, which shares represent in the aggregate
approximately 1.19 percent of the shares outstanding and will be
voted FOR the election of the four nominees identified
in this Proxy Statement, FOR the approval and adoption of the
amendment to Article 5 of the Corporation's amended Articles of
Incorporation and FOR the proposal to ratify the selection of
independent certified public accountants.
A majority of the outstanding Common Stock present in
person or by Proxy constitutes a quorum for the conduct of
business. Each share is entitled to one vote on all matters
submitted to a vote of the shareholders. A majority
of the votes cast at a meeting at which a quorum is present is
required in order to approve any matter submitted to a vote of
the shareholders, except in cases where the vote of a greater
number of shares is required by law or under the Articles of
Incorporation or Bylaws of the Corporation. In the case of
the election of directors, the candidates receiving the greatest
number of votes shall be elected to the Board of Directors. A
majority of the votes cast at a meeting at which a quorum is
present is required in order to ratify the selection of auditors.
Under Pennsylvania law and the Bylaws of the Corporation,
the presence of a quorum is required for each matter to be acted
upon at the Annual Meeting. Votes withheld and abstentions will
be counted in determining the presence of a quorum for the
particular matter. Broker non-votes will not be counted in
determining the presence of a quorum for the particular matter as
to which the broker withheld authority.
Assuming the presence of a quorum, the four nominees for
director receiving the highest number of votes cast by
shareholders entitled to vote for the election of directors shall
be elected. Votes withheld from a nominee and broker non-votes
will not be cast for such nominee.
Assuming the presence of a quorum, the affirmative vote of
the holders of at least a majority of the votes outstanding is
required to approve and adopt the amendment to Article 5 of the
Corporation's Articles of Incorporation to increase the number of
authorized shares of Common Stock from 10,000,000 shares to
35,000,000 shares. Abstentions and broker non-votes are
not deemed to constitute "votes cast" under the Pennsylvania
Business Corporation Law, and, therefore, do not count either for
or against the amendment. Although broker non-votes and
abstentions are not deemed to be votes cast, they do have the
practical effect of voting against the proposal.
Assuming the presence of a quorum, the affirmative vote of
a majority of all votes cast by shareholders on such a matter is
required for the ratification of the selection of independent
auditors. Abstentions and broker non-votes are not deemed to
constitute "votes cast" and, therefore, do not count either for
or against such ratification. Abstentions and broker non-
votes, however, have the practical effect of reducing the number
of affirmative votes required to achieve a majority for each such
matter by reducing the total number of shares voted from which
the required majority is calculated.
Principal Holders
To the knowledge of the Corporation, no person owned of
record or beneficially on February 29, 1996 more than five
percent of the outstanding Common Stock, except as follows:
Name and Address Amount and
of Beneficial Nature of Beneficial Percent
Title of Class Owner Ownership(1)
of Class
Common Stock, Howard E. Groff
$5.00 par value 111 E. State Street
per share Quarryville, PA 17566 686,057(2) 11.55%
Common Stock, Bank of Lancaster
$5.00 par value County Employees Stock
per share Plan c/o Trust
Department
101 North Pointe Boulevard
Lancaster, PA 17601-4133 476,988(3) 8.03%
________________________
(1) Beneficial ownership of shares of the common stock of
Sterling Financial Corporation is determined in accordance
with Securities and Exchange Commission Rule 13d-3(d)(1),
which provides that a person shall be deemed to own any
stock which he, directly or indirectly through any
contract, arrangement, understanding, relationship or
otherwise has or shares: (i) voting power, which includes
the power to vote or to direct the voting of the stock, or
(ii) investment power, which includes the power to dispose
or direct the disposition of the stock, or has the
right to acquire beneficial ownership within 60 days after
March 15, 1996.
(2) Mr. Groff holds sole voting and investment power on 685,557
shares.
(3) Shares held for the account of Plan participants are voted
by the Plan Trustee in accordance with the instructions
given by the individual participants.
Beneficial Ownership of Executive Officers, Directors and
Nominees
The following table sets forth as of February 29, 1996, the
amount and percentage of the Common Stock beneficially owned by
each director, each nominee, each named executive officer and all
executive officers, directors and nominees of the Corporation as
a group.
Name of
Individual Amount and
or Identity Nature of Beneficial Percent of
of Group Ownership(1)(2) Class
Richard H. Albright, Jr. 29,782 (3) .50%
John E. Burkholder 89,361 (4) 1.50%
Robert H. Caldwell 4,758 (5) .08%
Howard E. Groff, Jr. 20,506 (6) .35%
Joan R. Henderson 441 (7) .007%
J. Robert Hess 81,755 (8) 1.38%
Calvin G. High 14,634 (9) .25%
J. Roger Moyer, Jr. 29,616 (10) .50%
E. Glenn Nauman 32,828 (11) .55%
Jere L. Obetz 14,324 (12) .24%
John E. Stefan 122,338 (13) 2.06%
Glenn R. Walz 7,502 (14) .13%
All Executive Officers,
Directors and Nominees
as a Group (19 persons) 493,460 8.31%
________________________
(1) Beneficial ownership of shares of the common stock of
Sterling Financial Corporation is determined in accordance
with Securities and Exchange Commission Rule 13d-3(d)(1),
which provides that a person shall be deemed to own any
stock which he, directly or indirectly, through any
contract, arrangement, understanding, relationship or
otherwise has or shares: (i) voting power, which includes
the power to vote or to direct the voting of the stock, or
(ii) investment power, which includes the power to dispose
or direct the disposition of the stock, or has the right to
acquire beneficial ownership within 60 days after March 15,
1996. Unless otherwise indicated in a footnote appearing
below, all shares reported in the table above are
owned directly by the reporting person.
(2) Rounded to the nearest whole share.
(3) Includes 2,258 shares owned jointly with spouse, 9,627
shares owned directly by spouse and 3,713 shares owned by
spouse as custodian for children.
(4) Includes 10,174 shares owned jointly with spouse and 1,683
shares owned directly by child.
(5) Includes 635 shares owned directly by spouse.
(6) Includes 3,801 shares owned directly by spouse and 8,787
shares owned as custodian for children.
(7) Includes 100 shares owned directly by spouse.
(8) Includes 31,246 shares owned jointly with spouse, 2,161
shares owned directly by spouse, 9,645 shares owned as
custodian for children and 13,456 shares owned in trust for
the benefit of grandchildren.
(9) Includes 11,321 shares owned jointly with spouse.
(10) Includes 22,278 shares held by Trustee under the Employees
Stock Plan, 1,190 shares owned jointly with spouse, 14
shares owned directly by spouse, 915 shares owned as
custodian for children, 155 shares owned directly by child
and 4,548 shares owned directly by mother for whom
Mr. Moyer holds power of attorney and with respect to which
Mr. Moyer shares voting and investment power. Mr. Moyer
disclaims beneficial ownership of shares owned directly by
his child.
(11) Includes 31,214 shares owned directly by spouse and 812
shares owned directly by mother.
(12) Includes 12,223 shares held by Trustee under the Employees
Stock Plan and 2,101 shares owned directly by spouse.
(13) Includes 41,297 shares held by Trustee under the Employees
Stock Plan, 2,305 shares owned jointly with spouse,
43,680 shares owned directly by spouse, and 10,126 shares
owned directly by child. Mr. Stefan disclaims beneficial
ownership of shares owned directly by his spouse.
(14) Includes 5,617 shares owned directly by spouse and 672
shares owned as custodian for children.
Shareholder Proposals
Shareholder proposals intended to be presented at the 1997
Annual Meeting must be received at the administrative
headquarters of Sterling Financial Corporation at 101 North
Pointe Boulevard, Lancaster, Pennsylvania not later than Monday,
December 2, 1996 in order to be included in the proxy
statement and proxy form to be prepared by Sterling Financial
Corporation in connection with the 1997 Annual Meeting.
Recommendations of the Board of Directors
The Board of Directors recommends that the shareholders
vote FOR the election of the four nominees identified in this
Proxy Statement, FOR the approval and adoption of the amendment
to Article 5 of the Corporation's amended Articles of
Incorporation and FOR the proposal to ratify the selection
of independent certified public accountants for the year ending
December 31, 1996.
INFORMATION CONCERNING ELECTION OF DIRECTORS
General Information
The Bylaws of the Corporation provide that the Board of
Directors shall consist of not less than one nor more than 25
persons and that the directors shall be classified with respect
to the time they shall severally hold office by dividing them
into three classes, each consisting as nearly as possible of
one-third of the number of the whole Board of Directors. The
Bylaws further provide that the directors of each class shall be
elected for a term of three years, so that the term of office of
one class of directors shall expire at the Annual Meeting each
year. Finally, the Bylaws provide that the number of
directors in each class of directors shall be determined by the
Board of Directors.
A majority of the Board of Directors may increase the
number of directors between meetings of the shareholders. Any
vacancy occurring in the Board of Directors, whether due to an
increase in the number of directors, resignation, retirement,
death or any other reason, may be filled by appointment by the
remaining directors. Any director who is appointed to fill
a vacancy shall hold office until the next Annual Meeting of the
shareholders and until his/her successor is elected and shall
have qualified. There is a mandatory retirement provision in the
Bylaws which states that the office of a director shall be
considered vacant at the Annual Meeting of shareholders next
following his/her attaining the age of 70 years.
The Board of Directors has presently fixed the number of
directors at eleven. There are four directors whose terms of
office will expire at the 1996 Annual Meeting. There are seven
continuing directors whose terms of office will expire at the
1997 or 1998 Annual Meeting, respectively. The Board of
Directors proposes to nominate the following four persons for
election to the Board of Directors for the term specified:
Nominees for Class of 1999 Directors
For a Term of Three Years
John E. Burkholder
Joan R. Henderson
Calvin G. High
E. Glenn Nauman
Each of the above nominees is presently a director of
Sterling Financial Corporation and also a director of the Bank of
Lancaster County.
In the event that any of the foregoing nominees are unable
to accept nomination or election, any proxy given pursuant to
this solicitation will be voted in favor of such other persons as
the management of Sterling Financial Corporation may recommend.
However, the Board of Directors has no reason to believe that any
of its nominees will be unable to accept nomination or to serve
as a director if elected.
Section 2.3 of the Bylaws of Sterling Financial Corporation
requires that nominations, other than those made by or on behalf
of the existing management of Sterling Financial Corporation,
shall be made pursuant to timely notice in writing to the
Secretary of the Corporation. To be timely, a shareholder's
notice shall be delivered to or received at the principal
executive office of the Corporation not less than 90 days prior
to the anniversary date of the immediately preceding meeting of
shareholders of the Corporation called for the election of
directors. The chairman of the meeting is required to determine
whether nominations have been made in accordance with the
requirements of the Bylaws and, if he determines that a
nomination was not made in accordance with the Bylaws, he shall
so declare at the Annual Meeting and the defective nomination
shall be disregarded.
Information about Nominees and Continuing Directors
Information concerning the four persons to be nominated for
election to the Board of Directors of Sterling Financial
Corporation at the 1996 Annual Meeting and concerning the seven
continuing directors is set forth in the table which appears
below:<PAGE>
Principal Occupation
for the Past 5 years
and Position held with
Director the Corporation and
Name and Age Since(1) Bank of Lancaster County
Class of 1999 - Nominees - For a Term of Three Years
John E. Burkholder 1968 Partner,Burkholder's
(63) Quality Cars(auto sales);
Vice Chairman of the Board
of Sterling Financial
Corporation and Bank of
Lancaster County since
1994
Joan R. Henderson 1995 President,J.R. Henderson &
(53) Associates, Inc.(Corporate
Event Planning and Fund
Raising)
Calvin G. High 1976 Senior Vice President, High
(63) Industries, Inc. (Real
Estate and Construction
Group); Partner, High
Properties
E. Glenn Nauman 1976 Chairman of the Board,
(63) Nauman Construction
(building contractor)
Class of 1997 - Continuing Directors
Robert H. Caldwell 1991 Retired Senior Executive
(65) Vice President and
Director, Armstrong World
Industries, Inc.
(manufacturer, building
materials, home furnishings
and industrial specialties)
J. Robert Hess 1971 President, B&E Realty;
(65) President, Hessco
Construction Co.; Partner,
Sycamore Industrial Park;
Broker and Partner,
Kingsway Realty
J. Roger Moyer, Jr. 1994 Executive Vice President
(47) and Assistant Secretary of
Sterling Financial
Corporation since 1994;
Vice President from 1987 to
1994; and Executive Vice
President and Assistant
Secretary of Bank of
Lancaster County since
1994; Senior Vice
President/Chief
Administrative Officer from
1985 to 1994
Class of 1998 - Continuing Directors
Richard H. Albright, Jr. 1985 Dentist, Specialist,
(53) Practice Limited to
Orthodontics
Howard E. Groff, Jr. 1988 Vice President, Howard E.
(49) Groff Co. (fuel oil sales
and service)
John E. Stefan 1979 Chairman of the Board,
(56) President and Chief
Executive Officer of
Sterling Financial
Corporation since 1994;
President and Chief
Executive Officer from 1987
to 1994; and Chairman of
the Board, President and
Chief Executive Officer of
Bank of Lancaster County
since 1994; President and
Chief Executive Officer
from 1979 to 1994
Glenn R. Walz 1988 President, Walz, Deihm,
(49) Geisenberger, Bucklen &
Tennis, P.C. (Certified
Public Accountants)
________________________
Meetings and Committees of the Board of Directors
The Board of Directors of Sterling Financial Corporation
has a standing Audit Committee but does not have a standing
Nominating Committee or Compensation Committee. The Bank of
Lancaster County has a standing Audit Committee and Compensation
Committee. The Bank of Lancaster County does not have a standing
Nominating Committee. The Compensation Committee of the Bank
of Lancaster County has been acting on behalf of Sterling
Financial Corporation and will continue to do so until a Sterling
Financial committee is appointed.
Members of the Audit Committee of Sterling Financial
Corporation and the Bank of Lancaster County during 1995 were
Richard H. Albright, Jr., Chairman, and Messrs. High, Nauman and
Walz. The principal duties of the Audit Committee include
reviewing significant audit and accounting principles, policies
and practices, reviewing performance of internal auditing
procedures, reviewing reports of examination received from
regulatory authorities, and recommending annually to the Board of
Directors the engagement of an independent certified public
accountant. The Audit Committee met five times during 1995.
Members of the Compensation Committee of the Bank of
Lancaster County during 1995 were Robert H. Caldwell, Chairman
and Messrs. Hess, High, Nauman and Walz. The principal duties of
the Compensation Committee include the establishment of policies
dealing with various compensation plans for the Bank of Lancaster
County and the Corporation. In addition, the Committee makes
recommendations to the Board with respect to the compensation
paid to senior executives. The Committee also oversees personnel
matters. The Compensation Committee met five times during 1995.
The Board of Directors met 12 times during 1995. All
directors attended 75 percent or more of the aggregate number of
meetings of the Board of Directors and of the various committees
of the Board of Directors on which they serve.
Officers and Executive Officers
The following persons are the officers and executive
officers of Sterling Financial Corporation:
Office Held with the Corporation and
Bank of Lancaster County and
Name Age Term in Office
John E. Stefan 56 Chairman of the Board, President and
Chief Executive Officer of Sterling
Financial Corporation since 1994;
President and Chief Executive Officer
of Sterling Financial Corporation from
1987 to 1994 and Chairman of the
Board, President and Chief Executive
Officer of the Bank of Lancaster
County since 1994; President and Chief
Executive Officer from 1979 to 1994.
J. Roger Moyer, Jr. 47 Executive Vice President and Assistant
Secretary of Sterling Financial
Corporation since 1994; Vice President
of Sterling Financial Corporation from
1987 to 1994 and Executive Vice
President and Assistant Secretary of
the Bank of Lancaster County since
1994; Senior Vice President/Chief
Administrative Officer from 1985 to
1994.
Jere L. Obetz 47 Senior Vice President/Treasurer and
Chief Financial Officer of Sterling
Financial Corporation since 1995;
Vice President/Treasurer and Chief
Financial Officer of Sterling
Financial Corporation from 1994 to
1995; Vice President of Sterling
Financial Corporation from 1987 to
1994 and Senior Vice President/Chief
Financial Officer of the Bank of
Lancaster County since 1992.
Ronald L. Bowman 52 Vice President/Secretary of Sterling
Financial Corporation since 1994;
Secretary/Treasurer of Sterling
Financial Corporation from 1987 to
1994 and Vice President/Corporate
Financial Secretary of the Bank of
Lancaster County since 1995; Vice
President/Comptroller from 1971 to
1995.
John C. Boyer, Jr. 40 Vice President of Sterling Financial
Corporation since 1995 and Vice
President/Business Development of the
Bank of Lancaster County since August
1992; previously Vice President-
Private Banker for CoreStates/Hamilton
Bank.
Nancy H. Draude 38 Vice President of Sterling Financial
Corporation since 1987 and Vice
President/Marketing of the Bank of
Lancaster County since 1984.
Beverly Wise Hill 36 Vice President of Sterling Financial
Corporation since 1993 and Senior Vice
President/Human Resources of the Bank
of Lancaster County since 1995; Vice
President/Human Resources from 1992 to
1995; previously Senior Vice President
of Fulton Financial Corp. from January
1992 to December 1992 and Vice
President/Director of Human Resources
of Fulton Bank from January 1989 to
January 1992
Donald L. Neff 44 Vice President of Sterling Financial
Corporation since 1988 and Senior
Vice President/Operations of the Bank
of Lancaster County since 1992.
Sharon K. Owens 35 Vice President of Sterling Financial
Corporation since 1993; Director of
Audit of Sterling Financial
Corporation from 1989 to 1993 and
Vice President/Audit of the Bank of
Lancaster County since 1992.
William K. Poole 35 Vice President of Sterling Financial
Corporation since 1994 and Senior Vice
President/Chief Lending Officer of the
Bank of Lancaster County since 1995;
Vice President/Senior Commercial Loan
Officer from 1991 to 1995.
________________________
Executive Compensation
The officers of Sterling Financial Corporation do not
receive any additional compensation for their services as such,
beyond the compensation paid to them as officers of the Bank of
Lancaster County. Shown below is information concerning annual
and long-term compensation for services in all capacities to the
Corporation and to the Bank of Lancaster County for the
fiscal years ended December 31, 1995, 1994 and 1993 to those
persons who were, at December 31, 1995, (i) the Chief Executive
Officer and (ii) the other most highly compensated executive
officers of the Corporation to the extent that such person's
annual salary and bonus exceeded $100,000:
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards Payouts
------------------- ------ -------
Other
Name and Annual All Other
Principal Compen- Stock Options/LTIP Compen-
Position Year Salary Bonus sation(1)Awards SAR's Payouts sation(2)
- -------------------------------------------------------------------- --------
John E. Stefan 1995 $242,008 $60,585 none none none $3,928
Chairman of the 1994 223,776 38,738 none none none 3,894
Board, President 1993 206,772 60,638 none none none 6,221
and Chief Executive
Officer of Sterling
Financial
Corporation and
Bank of Lancaster
County, N.A.
J. Roger Moyer, Jr.1995 $123,823 $25,033 none none none $3,776
Executive Vice 1994 112,221 20,378 none none none 3,635
President of 1993 95,937 27,611 none none none 3,116
Sterling Financial
Corporation and
Bank of Lancaster
County, N.A.
Jere L. Obetz 1995 $87,100 $18,358 none none none $2,728
Senior Vice 1994(3)
President/Chief 1993(3)
Financial Officer of
Sterling Financial
Corporation and Bank
Bank of Lancaster
County, N.A.
________________________
(1) Disclosure not required.
(2) Amounts shown in each year represent contributions for the
benefit of Mr. Stefan, Mr. Moyer and Mr. Obetz pursuant to
the Employees Stock Plan performance incentive feature of
the Plan as described on pages 10 of this Proxy Statement.
(3) Disclosure not required for this year.
Board Compensation Committee Report on Executive
Compensation
Role of the Compensation Committee and Compensation Philosophy
The objectives of the Compensation Committee are to
establish the Corporation's compensation philosophy and to
monitor compensation programs and related practices for
conformity with that philosophy. The Compensation Committee
believes that the Corporation should maintain a competitive
compensation structure with a strong emphasis toward paying for
an employee's contribution and performance. Therefore, the
financial interests of the shareholders are served by closely
aligning, particularly for executive management, year end
financial results with an employee's reward for performance.
Accordingly, the Committee and the Corporation adhere to the
concept of pay-for-performance thus increasing the opportunity to
maximize shareholder value.
The compensation of the Corporation's and the Bank's top
executives is reviewed and approved annually by the Board of
Directors. The top executives whose compensation is determined
by the Committee include the President and Chief Executive
Officer, the Executive Vice President, all senior vice
presidents and all senior management employees. As a guideline
for review in determining competitive base salaries, the
Committee uses information from salary survey sources from
Pennsylvania banks with assets from $500 million to
$1 billion, as well as peer banks located in the surrounding
geographic region. Many local competitors, which are represented
in the above peer groups, share similar performance results to
the Bank of Lancaster County, N.A. These peer group banks have
been utilized because of common industry issues and competition
for the same executive talent. The peer group used as
a guideline for review in determining executive compensation is
not the same peer group as appearing in the Shareholder Return
Performance Graph.
The Compensation Committee is comprised of five
non-employee directors who are listed below. The Committee met
five times during 1995.
CEO Compensation
The Board of Directors has determined that the CEO's 1995
compensation of $302,593, comprised of $242,008 in base annual
salary and $60,585 in bonus is appropriate in light of the
following 1995 Corporation performance accomplishments: (1) an
8.66 percent increase in net income; (2) a 15.02 percent return
on equity; and (3) a 12.28 percent increase in assets. While
there is no direct correlation between the increase in CEO base
salary and the above criteria, the Compensation Committee did
review 1994 Corporate performance, as well as the peer bank
comparisons mentioned previously, in order to recommend an 8.1
percent increase in base salary over the previous year. The
CEO's annual performance incentive (bonus) is, for the first
time, tied directly to the organizations's performance results by
rewarding Mr. Stefan for growth in the Corporation's net income.
Mr. Stefan's total bonus of $60,585 represents an increase of
56.4 percent over the total bonus paid in 1994.
Executive Officer Compensation
Base salary ranges for executive positions are determined
by evaluating the responsibilities of the positions, required
skills and experiences and the average compensation paid for
similar positions within peer banks of similar asset size and
within the Corporation's geographic market region. Annual base
salary increases were determined by the Committee based on its
subjective analysis of the individual's contribution to the
Corporation's strategic goals and objectives, and by taking into
account any additional or new responsibilities assumed by the
individual in connection with promotions or organizational
changes. In determining whether strategic goals and objectives
have been achieved, the Board of Directors considers among
numerous factors the following: the Corporation's performance as
measured by earnings, revenues, return on assets, return on
equity, market share, total assets and non-performing loans.
Although the performance and increases in base salary were
measured in light of these factors, there is no direct
correlation between any specific criterion and the employees'
base compensation, nor is there any specific weight provided to
any such criteria in the Committee's analysis. The determination
by the Committee is subjective after review of all information,
including the above, it deems relevant.
The Executive Officers, for the first time, have an annual
management incentive bonus tied directly to the Corporation's
performance results. Similar to the CEO, the executive officers'
bonuses are directly dependent upon the organization's growth in
net income.
In addition to base salary, executive officers of the
Corporation and the Bank may participate currently in the
following annual and long-term incentive plans:
Bank of Lancaster County, N.A.
Employees Stock Plan
Total compensation opportunities available to the employees
of the Bank are influenced by general labor market conditions,
the specific responsibilities of the individual and the
individual's contributions to the Corporation's success.
Individuals are reviewed annually on an anniversary year basis.
The Bank strives to offer compensation that is competitive with
that offered by employers of comparable size in the banking
industry, as well as those within the Corporation's and the
Bank's reasonable market area. Through these compensation
policies, the Corporation strives to meet its strategic goals and
objectives to its constituencies and to provide compensation that
is fair and meaningful to its employees.
Compensation Committee
Robert H. Caldwell, Chairman
J. Robert Hess
Calvin G. High
E. Glenn Nauman
Glenn R. Walz
Shareholder Return Performance Graph
Set forth below is a line graph comparing the yearly dollar
change in the cumulative total shareholder return on the
Corporation's common stock against the cumulative total return of
the S&P 500 Stock Index and the Peer Group Index for the period
of five fiscal years commencing January 1, 1991 and ending
December 31, 1995. The shareholder return shown on the graph
below is not necessarily indicative of future performance.
Comparison of Five-Year Cumulative Total Return
Sterling Financial Corporation Common Stock, S&P 500 & Peer Group Indices
1990 1991 1992 1993 1994 1995
ACNB Corp. 100.00 115.06 156.89 229.28 178.72 223.30
CNB Financial Corp. 100.00 102.48 107.04 111.84 144.26 147.61
Citizens & Northern Corp.100.00 105.87 112.37 185.30 205.63 237.12
Drovers Bancshares Corp. 100.00 103.90 136.59 175.49 183.62 226.08
First West Chester Corp. 100.00 69.39 82.12 95.60 99.23 134.68
Franklin Financial
Services Corp. 100.00 95.11 110.83 174.87 177.21 218.44
Hanover Bancorp Inc. 100.00 104.54 161.35 231.80 276.03 289.08
Penn Security Bank
& Trust Co. 100.00 93.96 103.96 138.25 179.28 185.50
Penns Woods Bancorp Inc. 100.00 100.52 119.05 205.90 245.90 288.08
PennRock Financial
Services Corp. 100.00 113.97 148.44 218.37 322.01 229.94
Peer Group Total 1,000.00 1,004.80 1,238.64 1,766.70 2,011.89 2,179.83
Peer Group Index 100.00 100.48 123.86 176.67 201.19 217.98
Sterling Financial Corp. 100.00 102.55 156.06 246.53 325.74 332.88
S & P 500 330.22 417.09 435.71 466.45 459.27 615.93
S & P 500 Index 100.00 126.31 131.95 141.25 139.08 186.52
________________________
(1) The Peer Group for which information appears above includes
the following companies: ACNB Corporation; CNB Financial
Corporation; Citizens and Northern Corporation; Drovers
Bancshares Corporation; First West Chester Corporation;
Penn Security Bank and Trust Company; PennRock Financial
Services; Sterling Financial Corporation; Franklin
Financial; Hanover Bancorp, Inc.; and Penns Woods Bancorp,
Inc. These companies were selected based on four criteria:
total assets between $230 million and $720 million; market
capitalization greater than $43 million; headquarters
located in Pennsylvania; and not quoted on NASDAQ. This is
the same Peer Group as 1994.
Employees Stock Plan
The Bank of Lancaster County maintained during 1995 an
Employees Stock Plan (the "Plan") which was approved by the
shareholders in 1982. Substantially all Plan assets are invested
in Sterling Financial Corporation Common Stock. All employees of
the Bank of Lancaster County who have attained the age of 18,
have completed one year of service and worked at least 1,000
hours per year are eligible to participate in the Plan. Outside
Directors are not eligible to participate in the Plan. Employees
of Town & Country, Inc., a wholly-owned subsidiary of the Bank of
Lancaster County participate only in the salary deferral feature
of the Plan.
The Plan has two components, a salary deferral feature and
a performance incentive feature. Under the salary deferral
feature of the Plan, a participant may make voluntary
contributions to the Plan each year of between two percent and
six percent of compensation. The Bank of Lancaster County
will make a matching contribution equal to 25 percent of each
participant's voluntary contributions. Under the performance
incentive feature of the Plan, the Bank of Lancaster County
contributes to the Plan each year an amount determined by the
Board of Directors on the basis of the achievement by the
Bank of Lancaster County of certain performance objectives;
contributions to the Plan may not exceed the amount which is
deductible under the Internal Revenue Code. Contributions made
by the Bank of Lancaster County to the Plan pursuant to the
performance incentive feature are allocated to participants
who are employees of Bank of Lancaster County in the same
proportion that each participant's compensation bears to the
aggregate compensation of all participants.
Voluntary contributions to the Plan are fully vested at all
times. Matching contributions and contributions made by the Bank
of Lancaster County to the Plan vest at the rate of 20 percent
per year for each year of service. In general terms, benefits
under the Plan may be paid to participants upon retirement,
termination of employment, disability or death. A participant
may under certain circumstances make earlier withdrawals (to the
extent of his/her interest in the Plan attributable to voluntary
contributions made by him/her) upon a showing of financial
hardship.
The Plan was revised in 1987 for the purpose of adopting
certain conforming amendments necessary in order to reflect the
occurrence of the holding company reorganization. The Plan was
again amended on March 8, 1988 and was approved by the
shareholders at the 1988 Annual Meeting. In addition, on
December 27, 1994 the Plan was amended by the Board of Directors
to provide for employees to make their voluntary contributions on
a pre-federal income tax basis commencing on January 1, 1995.
Pension Plan
The Bank of Lancaster County Pension Plan (the "Plan") is a
qualified non-contributory defined benefit pension plan which
provides retirement benefits to employees of the Bank of
Lancaster County and to employees of Town & Country, Inc., a
wholly-owned subsidiary of the Bank of Lancaster County. All
employees who have completed one year of service, work at least
1,000 hours per year and who have attained the age of 21 are
eligible to participate in the Plan. Outside directors do not
participate in the Plan. Employees become 100 percent vested
upon the completion of five years of service. Contributions to
the Plan are made by the Bank of Lancaster County and are
determined actuarially.
Benefits under the Plan (which are not integrated with
Social Security benefits) are based upon average monthly
compensation (determined on the basis of the highest five
consecutive years' base compensation preceding retirement)
and years of credited service. For purposes of determining
benefits payable under the Plan, the term "compensation" is
defined to mean base salary only and does not include overtime
pay or bonuses. Compensation paid to Messrs. Stefan, Moyer and
Obetz during 1995 and covered by the Plan was $150,000,
$123,823, and $87,100, respectively. As of December 31, 1995,
Messrs. Stefan, Moyer and Obetz had accrued 16, 18 and 24 years
of credited service, respectively, under the Plan for benefit
accrual purposes.
The following table indicates, for purposes of
illustration, the approximate annual retirement benefit which
would be payable under the Plan, in the form of a straight life
annuity with 120 months' certain period, at age 65, under various
assumptions as to average annual compensation and years of
credited service. The benefit amounts set forth below are not
subject to further deduction for Social Security or other offset
amounts. Under the Internal Revenue Code of 1986, as amended,
the maximum annual retirement benefit that may be paid in the
form of a straight life annuity with 120 months' certain period
under a qualified defined benefit plan such as the Plan is
$109,390 (subject to adjustment based upon increases in the
Consumer Price Index). In addition, salary in excess of $150,000
(effective in the year 1994) is disregarded in determining a
participant's retirement benefit pursuant to regulations of the
Internal Revenue
Average
Annual
Compensation Years of Credited Service
10 20 30 40
$100,000 $15,000 $30,000 $45,000 $60,000
125,000 18,750 37,500 56,250 75,000
150,000 22,500 45,000 67,500 90,000
175,000 22,500 45,000 67,500 90,000
200,000 22,500 45,000 67,500 90,000
225,000 22,500 45,000 67,500 90,000
250,000 22,500 45,000 67,500 90,000
275,000 22,500 45,000 67,500 90,000
300,000 22,500 45,000 67,500 90,000
________________________
Employment Agreement
In April of 1983, the Bank of Lancaster County entered into
a five year employment agreement (the "Employment Agreement")
with John E. Stefan under the terms of which the Bank engaged Mr.
Stefan as its President and Chief Executive Officer. Unless
previously terminated or unless notice of intention not to renew
is given by either party, the Employment Agreement is subject to
automatic renewal for additional terms of five years each. The
Employment Agreement may be terminated by the Bank of Lancaster
County: (i) without cause, in which case Mr. Stefan is entitled
to receive his then current salary for the unexpired balance of
the term of the Employment Agreement; or (ii) with cause, in
which case Mr. Stefan's right to receive salary and benefits
under the Employment Agreement terminates as of the effective
date of termination. In the event of any change in control of
Sterling Financial Corporation or the Bank of Lancaster County,
the right of the Bank of Lancaster County to terminate the
Employment Agreement without cause expires and the term of the
Employment Agreement is extended automatically. The obligations
of the Bank of Lancaster County under the Employment Agreement
have been jointly and severally assumed by Sterling Financial
Corporation.
Compensation of Directors
The directors of Sterling Financial Corporation do not
receive any additional compensation for their services as such,
beyond the compensation paid to them as directors of the Bank of
Lancaster County. Each member of the Board of Directors of the
Bank of Lancaster County is paid an annual fee of $8,000 for
his/her services as a director. This fee is based on attendance
of at least 75 percent of the Board meetings held during a
calendar year. If a director attends less than 75 percent of the
Board meetings held, the director's fee would be reduced by $650
per meeting missed. In addition to the foregoing, each director
is paid $250 for each meeting attended of a committee of which he
or she is a member. Directors fees are not paid to directors who
are also salaried officers of the Bank of Lancaster County.
Transactions with Directors and Executive Officers
Some of the directors and executive officers of Sterling
Financial Corporation and the companies with which they are
associated were customers of and had banking transactions with
the Bank of Lancaster County during 1995. All loans and
commitments to loan made to such persons and to the companies
with which they are associated were made in the ordinary course
of bank business, on substantially the same terms (including
interest rates, collateral and repayment terms) as those
prevailing at the time for comparable transactions with other
persons, and did not involve more than a normal risk of
collectibility or present other unfavorable features. It is
anticipated that similar transactions will be entered into by the
Bank of Lancaster County in the future.
The contracting firm of Nauman Construction was paid
$138,485 in 1995 in connection with construction, renovations and
leasehold improvements at various offices of the Bank of
Lancaster County. E. Glenn Nauman, a director of Sterling
Financial Corporation and the Bank of Lancaster County, is
Chairman of the Board and principal stockholder of Nauman
Construction.
The Bank of Lancaster County entered into a lease agreement
(the "Lease Agreement") in 1984 with High Properties, under the
terms of which High Properties constructed and leased to the Bank
of Lancaster County a building at 525 Greenfield Road, Lancaster,
Pennsylvania. The building was occupied in October of 1984 and
served as the administrative headquarters of Sterling Financial
Corporation and the Bank of Lancaster County until August 1995.
Bank of Lancaster County has also maintained a branch office in
this building since October 1994 and continues to maintain a
branch office at this location. Efforts are being made to secure
tenants for the available space in this building. The term of
the lease is 15 years and is subject to renewal. Themonthly rent
is $10,574.26. Total rent payments of $126,891.12 were paid by
the Bank of Lancaster County to High Properties during 1995
pursuant to the Lease Agreement. Calvin G. High, a director of
Sterling Financial Corporation and the Bank of Lancaster County,
is a partner in High Properties. Additionally, on October 29,
1992, the Bank of Lancaster County entered into a lease agreement
with High Properties, under the terms of which High Properties
leased to Bank of Lancaster County office space at 1858 Charter
Lane, Suite 102, Lancaster, Pennsylvania. Occupancy took place
January 18, 1993. The term of the lease was originally five (5)
years. The lease was amended February 1,1994 in order to lease
additional space. The term of the lease is four (4) years. Base
rent for the entire term is $118,089.24. Total rent payments of
$28,904.18 were paid by Bank of Lancaster County during 1995
pursuant to this Lease Agreement.
High Associates, Ltd., a division of High Industries, Inc.,
was paid $28,372 in 1995 for various services performed. Calvin
G. High, a director of Sterling Financial Corporation and the
Bank of Lancaster County is Senior Vice President of High
Industries.
On June 28, 1994, the Bank of Lancaster County entered into
an agreement with High Construction, Inc., a division of High
Industries, Inc., to construct an office building at 101 North
Pointe Boulevard, Lancaster, Pennsylvania for a fixed price
contract amount of $5,599,800. This action was approved by the
Board of Directors of the Bank of Lancaster County on June 28,
1994. Construction began in mid-1994 and continued into 1995.
To date, the Bank has paid $5,453,002 to High Construction. The
building has been occupied since July of 1995 and serves as the
administrative headquarters of Sterling Financial Corporation and
the Bank of Lancaster County. It also houses other various
functions of the Bank of Lancaster County as well as branch
office facilities. Calvin G. High, a director of Sterling
Financial Corporation and the Bank of Lancaster County is Senior
Vice President of High Industries.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934
requires Sterling Financial Corporation's directors, executive
officers and shareholders owning in excess of 10 percent of the
Corporation's outstanding equity stock to file with the
Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of common stock and other
equity securities of Sterling Financial Corporation. Based
solely on a review of copies of such reports received by it, the
Corporation believes that all Section 16(a) filing requirements
applicable to its directors, executive officers and shareholders
owning in excess of 10 percent of the outstanding Common Stock
were complied within a timely fashion, except that one report
covering one (1) transaction was inadvertently not timely filed
by director Joan R. Henderson.
PROPOSED AMENDMENT TO ARTICLE 5 OF THE CORPORATION'S AMENDED
ARTICLES Of INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK
The Articles of Incorporation of the Corporation, as
amended, currently authorize ten million (10,000,000) shares of
Common Stock, par value $5.00 per share. As of March 15, 1996,
there were 5,938,110 shares of Common Stock issued and
outstanding. Of the remaining 4,061,890 authorized but unissued
shares of Common Stock, 871,090 were reserved for issuance in
connection with the Corporation's Dividend Reinvestment and Stock
Purchase Plan. The Corporation's thus has only a limited number
of authorized but unissued shares available for issuance from
time to time as may be necessary in connection with future
financings, investment opportunities, acquisitions of other
companies, the declaration of stock dividends, stock splits or
other distributions, or for other corporate purposes.
Accordingly, on November 28, 1995 the Board of Directors of
the Corporation approved and adopted resolutions to amend Article
5 of the Corporation's amended Articles of Incorporation to
increase the number of authorized shares of Common Stock from
10,000,000 shares to 35,000,000 shares. The increase in the
number of authorized shares of Common Stock requires that
the shareholders approve and adopt the proposed amendment to the
Corporation's amended Articles of Incorporation. A true and
correct copy of the proposed amendment to Article 5 of the
Corporation's amended Articles of Incorporation and the
resolutions approved and adopted by the Board of Directors are
set forth below:
WHEREAS, the Board of Directors of Sterling Financial
Corporation (the "Corporation") desires and finds that it is in
the best interests of the Corporation and its shareholders to
increase the number of authorized shares of the Corporation's
Common Stock, par value $5.00 per share, from 10,000,000 shares
to 35,000,000 shares, in order to provide the Corporation with as
much flexibility as possible to issue additional shares of Common
Stock for proper corporate purposes, including financings,
acquisitions, stock splits, stock dividends, employee incentive
plans, and other similar purposes; and
NOW, THEREFORE, BE IT RESOLVED, that in accordance
with Sections 1911, 1912, and 1914 of the Business Corporation
Law of 1988, as amended, the Board of Directors hereby approves
and adopts the following proposed amendment to the Corporation's
Articles of Incorporation, as amended, and hereby directs that
the following proposed amendment to the Articles of
Incorporation, as amended, of this Corporation be submitted to
the shareholders of the Corporation for their approval and
adoption at the 1996 Annual Meeting of Shareholders of the
Corporation to be held on April 30, 1996, at 9:00 a.m.,
prevailing time, at Willow Valley Family Resort and Conference
Center, 2416 Willow Street Pike, Lancaster, Pennsylvania, to wit:
Article 5 of the Articles of Incorporation, as amended, of
Sterling Financial Corporation is amended and restated to read in
full and in its entirety as follows:
5. The aggregate number of shares which the
Corporation shall have authority to issue is
Thirty-five Million (35,000,000) shares of Common
Stock of the par value of Five Dollars ($5.00) per
share (the "Common Stock").
BE IT FURTHER RESOLVED, that the Board of Directors
establishes and fixes Friday, March 15, 1996 at the close of
business as the record date and time to determine those
shareholders entitled to notice of and to vote at the 1996 Annual
Meeting of Shareholders to be held on April 30, 1996;
BE IT FURTHER RESOLVED, that the Board of Directors
directs and orders that the President and Secretary, or a Vice
President and an Assistant Secretary, of the Corporation shall
cause to be prepared proxy solicitation materials for the 1996
Annual Meeting of Shareholders to solicit proxies for approval
and adoption of the aforesaid amendment by the shareholders of
the Corporation and further directs and orders that said proxy
solicitation materials be mailed to the shareholders of
record, on March 29, 1996 or as soon as practicable thereafter;
and
BE IT FURTHER RESOLVED, that after approval and
adoption of the aforesaid amendment of the Articles of
Incorporation of the Corporation by the shareholders of the
Corporation at the 1996 Annual Meeting of Shareholders, the
President and Secretary, or a Vice President and an Assistant
Secretary, of the Corporation are hereby authorized, empowered
and directed to execute and file Articles of Amendment containing
said amendment with the Commonwealth of Pennsylvania, Department
of State, Corporation Bureau, and upon such filing said amendment
shall be effective.
Except as described in this section of the Proxy Statement,
the Corporation has no present plans, understandings or
arrangements for issuing the additional shares to be authorized
by the proposed amendment. The Board of Directors believes that
it is advisable to have authorization for such additional shares
in order to enable the Corporation, as the need may arise, to
take prompt advantage of market conditions and the availability
of favorable opportunities for the acquisition of other companies
without the delay and expense incident to the holding of a
special meeting of stockholders of the Corporation. The future
issuance by the Corporation of shares of Common Stock may dilute
the present equity ownership position of current holders of the
Common Stock. The proposed amendment is not intended to have
an anti-takeover effect. The issuance, however, of any of the
shares proposed to be authorized, as well as currently authorized
but unissued shares, may potentially have an anti-takeover effect
by making it more difficult to obtain shareholder approval of
actions such as certain business combinations or removal of
management.
The proposed amendment, if adopted by the shareholders,
would increase the number of authorized but unissued shares of
Common Stock of the Corporation from 10,000,000 to 35,000,000
shares. The unissued shares of Common Stock will be available
for issuance at the discretion of the Board of Directors from
time to time for any proper corporate purposes generally
without further action of the shareholders upon the affirmative
vote of a majority of the members of the Board of Directors. If
the proposed amendment is adopted by the shareholders, the Board
of Directors is not likely to solicit shareholder approval to
issue the additional authorized shares, except to the extent that
such approval may be required by law, regulation or any
agreement governing the trading of the Corporation' stock.
As a result, the Board of Directors proposes that Article 5
of the amended Articles of Incorporation of Sterling Financial
Corporation be amended and restated to read in full and in its
entirety as set forth above.
The affirmative vote of the holders of not less than a
majority of the outstanding shares of common stock is required to
approve and adopt this amendment to the Corporation's Articles of
Incorporation as set forth above.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
THE PROPOSAL TO AMEND THE CORPORATION'S ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM
TEN MILLION (10,000,000) SHARES TO THIRTY-FIVE MILLION
(35,000,000) SHARES.
RATIFICATION OF SELECTION OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors of Sterling Financial Corporation
has selected the firm of Trout, Ebersole & Groff as independent
certified public accountants to audit the books, records and
accounts of Sterling Financial Corporation and the Bank of
Lancaster County for the year 1996, subject to ratification by
vote of a majority of the shares of Common Stock represented
at the 1996 Annual Meeting. Trout, Ebersole & Groff has served
as independent certified public accountants for Sterling
Financial Corporation and its predecessor, the Bank of Lancaster
County, since 1979. In the event that the shareholders do not
ratify the selection of Trout, Ebersole & Groff, the selection of
independent certified public accountants will be reconsidered and
made by the Board of Directors.
A representative of Trout, Ebersole & Groff is expected to
be present at the 1996 Annual Meeting and will be given an
opportunity to make a statement if he should so desire and to be
available to respond to appropriate questions.
The Board of Directors recommends that the shareholders
vote FOR the ratification of the selection of Trout, Ebersole &
Groff as independent certified public accountants for the fiscal
year ending December 31, 1996.
ADDITIONAL INFORMATION
A COPY OF THE ANNUAL REPORT OF STERLING FINANCIAL
CORPORATION ON FORM 10-K FOR ITS FISCAL YEAR ENDED DECEMBER 31,
1995, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES,
IS AVAILABLE WITHOUT CHARGE TO SHAREHOLDERS UPON WRITTEN
REQUEST ADDRESSED TO RONALD L. BOWMAN, VICE PRESIDENT/SECRETARY,
STERLING FINANCIAL CORPORATION, 101 NORTH POINTE BOULEVARD,
LANCASTER, PENNSYLVANIA 17601-4133.
OTHER MATTERS
The Board of Directors of Sterling Financial Corporation
knows of no matters other than those discussed in this Proxy
Statement which will be presented at the 1996 Annual Meeting.
However, if any other matters are properly brought before the
meeting, any Proxy given pursuant to this solicitation will be
voted in accordance with the recommendations of the
management of Sterling Financial Corporation.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ John E. Stefan
JOHN E. STEFAN
Chairman of the Board,
President and
Chief Executive Officer
Lancaster, Pennsylvania
March 29, 1996
P R O X Y
ANNUAL MEETING OF SHAREHOLDERS
To Be Held On April 30, 1996
STERLING FINANCIAL CORPORATION
101 North Pointe Boulevard
Lancaster, Pennsylvania 17601-4133
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mary W. Wentz and Thomas
Wright, and each or any of them, as proxies, with full power of
substitution, to represent and vote, all of the shares of
STERLING FINANCIAL CORPORATION common stock held of record by the
undersigned on March 15, 1996, at the Annual Meeting of the
shareholders to be held at the Willow Valley Family Resort and
Conference Center, 2416 Willow Street Pike, Lancaster,
Pennsylvania, on Tuesday, April 30, 1996, at 9:00 a.m. prevailing
time, and at any adjournment or postponement thereof, with all of
the powers the undersigned would possess if personally present
thereat, as indicated on the reverse side of this card.
The shares represented by this Proxy will be voted as
directed below. If no directions are given, the shares
represented by this Proxy will be voted FOR Nominees
listed in Proposal 1 and FOR Proposals 2 and 3.
This proxy also confers authority as to other business as
may properly come before the meeting and any adjournment or
postponement thereof. The Board of Directors at present knows of
no other business to be brought before this meeting, but if any
other business is brought before the meeting, the shares
represented by this Proxy will be voted in accordance with the
recommendations of the management of Sterling Financial
Corporation.
The undersigned acknowledges receipt of the Notice of
Annual Meeting of Shareholders and Proxy Statement dated March
29, 1996, and hereby revoke(s) all other proxies heretofore given
by the undersigned in connection with this meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE
MEETING. PLEASE SIGN, DATE AND RETURN THIS PROXY AS PROMPTLY AS
POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING. THIS
PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS EXERCISED AND MAY BE
WITHDRAWN IF YOU ELECT TO ATTEND THE MEETING, GIVE WRITTEN
NOTIFICATION TO THE SECRETARY OF THE CORPORATION AND VOTE IN
PERSON.
<TABLE>
<caption
Please mark your
votes as in this
example.
<S> <C> <C> <C> <C>
Nominees:
1. ELECTION OF CLASS OF FOR WITHHELD 2. PROPOSAL TO AMEND ARTICLE 5 OF THE FOR AGAINST ABSTAIN
1999 DIRECTORS TO John E.Burkholder CORPORATION'S AMENDED ARTICLES OF
SERVE FOR A THREE- Joan R.Henderson INCORPORATION TO INCREASE THE NUMBER
YEAR TERM Calvin G. High OF AUTHORIZED SHARES OF THE CORPORATION'S
E. Glenn Nauman COMMON STOCK, PAR VALUE $5.00 PER SHARE,
FROM 10,000,000 SHARES TO 35,000,000 SHARES.
INSTRUCTION: To withhold authority to vote for any The Board of Directors unanimously recommends
individual nominee, write that nominee's name on a vote FOR this proposal.
the line provided below:
3. PROPOSAL TO RATIFY THE SELECTION FOR AGAINST ABSTAIN
OF TROUT, EBERSOLE & GROFF AS THE
CORPORATION'S INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS FOR THE YEAR
ENDING DECEMBER 31, 1996
SIGNATURE(S) DATE ,1996
Please sign exactly as your name appears hereon. If stock is jointly held, each joint owner should sign.
If signing for a corporation or a partnership, or as attorney or fiduciary, indicate your full title. If more
than one fiduciary is involved, all should sign.
</TABLE>
