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:
|X| Preliminary Proxy Statement
| | 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):
|X| $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superseded by any ballot that you submit at the meeting.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,
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 OF DIRECTORS
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 with respect to his Employees 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, XX,XXX 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 X.XX 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 By-laws 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 XXX,XXX(2) XX.XX%
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 XXX,XXX(3) X.XX%
________________________
(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 XXX,XXX 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. (3) %
John E. Burkholder (4) %
Robert H. Caldwell (5) %
Howard E. Groff, Jr. (6) %
Joan R. Henderson (7) %
J. Robert Hess (8) %
Calvin G. High (9) %
J. Roger Moyer, Jr. (10) %
E. Glenn Nauman (11) %
Jere L. Obetz (12) %
John E. Stefan (13) %
Glenn R. Walz (14) %
All Executive Officers, %
Directors and Nominees
as a Group (19 persons)
________________________
(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 X,XXX shares owned jointly with spouse, X,XXX shares owned
directly by spouse and XXX shares owned as custodian for children.
(4) Includes XX,XXX shares owned jointly with spouse and X,XXX shares owned
directly by child.
(5) Includes XXX shares owned directly by spouse.
(6) Includes X,XXX shares owned directly by spouse and X,XXX shares owned
as custodian for children.
(7) Includes XXX shares owned directly by spouse.
(8) Includes XX,XXX shares owned jointly with spouse, X,XXX shares owned
directly by spouse, X,XXX shares owned as custodian for children and
XX,XXX shares owned in trust for the benefit of grandchildren.
(9) Includes XX,XXX shares owned jointly with spouse.
(10) Includes XX,XXX shares held by Trustee under the Employee Stock Plan,
X,XXX shares owned jointly with spouse, XXX shares owned directly by
spouse, XXX shares owned as custodian for children, XXX shares owned
directly by child and X,XXX 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 X,XXX shares owned jointly with spouse, XX,XXX owned directly
by spouse and XXX shares owned directly by mother.
(12) Includes XX,XXX shares held by Trustee under the Employee Stock Plan and
X,XXX shares owned directly by spouse.
(13) Includes XX,XXX shares held by Trustee under the Employees Stock Plan,
X,XXX shares owned jointly with spouse, XX,XXX shares owned directly
by spouse, and XX,XXX shares owned directly by child. Mr. Stefan
disclaims beneficial ownership of shares owned directly by his spouse.
(14) Includes X,XXX shares owned jointly with spouse, X,XXX shares owned
directly by spouse and X,XXX shares owned by spouse 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 offices 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:
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
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:
<TABLE>
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards Payouts
------------------------------------- -----------------------------
<CAPTION>
Other
Name and Annual All
Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary Bonus sation(1) Awards SAR's Payouts sation(2)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John E. Stefan 1995 $242,008 $60,585 none none none $X,XXX
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 $X,XXX
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 $X,XXX
Senior Vice 1994(3)
President/Chief 1993(3)
Financial Officer of
Sterling Financial
Corporation and Bank
Bank of Lancaster
County, N.A.
________________________
<FN>
<F1>(1) Disclosure not required.
<F2>(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 XX and
XX of this Proxy Statement.
<F3>(3) Disclosure not required for this year.
</TABLE>
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.
Employee 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
interest in the Plan attributable to voluntary contributions made by him) 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 Service.
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. The
monthly 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
with in 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 (35,000,000) MILLION 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
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.
<TABLE>
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.<PAGE>
Please mark your
votes as in this
example.
<CAPTION>
<S> <C> <C> <C> <C>
Nominees:
1. ELECTION OF CLASS OF FOR WITHHELD 2. PROPOSAL TO AMEND ARTICLE 5 OF THE
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.
The Board of Directors unanimously recommends
INSTRUCTION: To withhold authority to vote for any individual nominee, 3. PROPOSAL TO RATIFY THE SELECTION
write that nominee's name on the line provided below: 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>
