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:
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| | 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)
March 26, 1999
Dear Shareholder:
The 1999 Annual Meeting of Shareholders of Sterling Financial Corporation
will be held at 9:00 a.m. on Tuesday, April 27, 1999, 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 continental breakfast 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 one Class of 2000 Director and four Class
of 2002 Directors, shareholders will consider the proposal to ratify
the selection of Trout, Ebersole & Groff as the corporation's
certified public accountants. We enclose the Notice of Annual Meeting, Proxy
Statement and proxy card with this letter. We also enclose the 1998
Annual Report of Sterling Financial Corporation. I hope you will take the
opportunity to review the material in the Annual Report, which
reflects a successful year in 1998.
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notice to the Secretary of the corporation so that your proxy will be superseded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 27, 1999
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 will be
held at the Willow Valley Family Resort and Conference Center,
2416 Willow Street Pike, Lancaster, Pennsylvania, on Tuesday,
April 27, 1999 at 9:00 a.m., prevailing time, for the purpose of
considering and voting upon the following matters:
1. To elect one Class of 2000 director to serve for a one-year term
until his successor is elected and qualified.
2. To elect four Class of 2002 directors to serve for a three-year term
until their successors are elected and qualified.
3. To ratify the selection of Trout, Ebersole & Groff as the
corporation's independent certified public accountants for the year
ending December 31, 1999.
4. 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 12,
1999, are entitled to notice of and to vote at the meeting.
Please promptly sign the enclosed proxy and return it in the enclosed
postpaid envelope. We cordially invite you to attend the meeting. Your proxy
is revocable and you may withdraw it at any time by giving written
notice to the Secretary of the corporation before the vote at
the meeting or by executing a later dated proxy and giving written
notice to the Secretary of the corporation.
We enclose a copy of the 1998 Annual Report 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 26, 1999
PROXY STATEMENT
Dated and to be mailed on or about March 26, 1999
STERLING FINANCIAL CORPORATION
101 NORTH POINTE BOULEVARD
LANCASTER, PENNSYLVANIA 17601-4133
(717) 581-6030
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 27, 1999
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......................................................4
Beneficial Ownership of Executive Officers, Directors and Nominees.....5
Shareholder Proposals..................................................6
Recommendations of the Board of Directors..............................7
INFORMATION CONCERNING ELECTION OF DIRECTORS.............................7
General Information....................................................7
Information about Nominees and Continuing Directors....................8
Meetings and Committees of the Board of Directors.....................11
Executive Officers....................................................12
Executive Compensation................................................14
Compensation of Directors.............................................22
Transactions with Directors and Executive Officers....................22
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.................23
RATIFICATION OF SELECTION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS...23
ADDITIONAL INFORMATION..................................................24
OTHER MATTERS...........................................................24
GENERAL
Introduction
On June 30, 1987, The First National Bank of Lancaster County became a
wholly-owned subsidiary of Sterling Financial Corporation. Sterling Financial
Corporation is a Pennsylvania business corporation based in Lancaster,
Pennsylvania. On formation of the holding company, The First National Bank of
Lancaster County changed its name to Bank of Lancaster County, N.A. The meeting
to which this Proxy Statement relates will be the twelfth 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 27, 1999 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 12, 1999 are
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:
to elect one Class of 2000 director to serve a one-year term
to elect four Class of 2002 directors to serve for a three-year term
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, 1999
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
The Board of Directors furnishes this proxy statement and the enclosed
form of proxy to shareholders of the corporation on or about March 26, 1999 in
connection with the solicitation of proxies for use at the annual meeting and
any adjournments or postponements thereof.
The corporation will bear the expense of soliciting proxies. In addition
to the use of the mails, directors, officers and employees of the 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
A shareholder's execution and return of the enclosed proxy will not affect
the 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 the corporation, or by executing
a later dated proxy and giving written notice of the revocation to the Secretary
of the corporation at any time before the proxy is voted at the meeting.
Proxyholders will vote shares represented by proxies on the accompanying proxy,
if properly signed and returned, in accordance with the specifications made on
the proxies by the shareholders. Any proxy not specifying to the contrary will
be voted FOR:
the election of the nominees identified in this Proxy Statement and
the proposal to ratify the selection of independent certified
public accountants for the year ending December 31, 1999.
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.
Proxyholders will vote shares held for the account of shareholders who
participate in the Dividend Reinvestment and Stock Purchase Plan in accordance
with the instructions of each shareholder as set forth in his/her proxy. If a
shareholder who participates in the Dividend Reinvestment and Stock Purchase
Plan does not return a proxy, proxyholders will not vote the shares held for
his/her account by the Plan Agent.
The Plan Trustee will vote shares held for the account of employees who
participate in the Employees Stock Plan in accordance with the instructions of
each participant set forth in the separate proxy sent to him/her with respect to
Employees Stock Plan shares. The Plan Trustee will vote shares with respect to
which a separate Employees Stock Plan proxy is not returned in the same
proportion as shares with respect to which voting instructions are received.
Quorum and Voting of Shares
At the close of business on March 12, 1999, 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 of the meeting, the corporation had
outstanding 6,447,136 shares of common stock, par value $5.00 per share. The
corporation has no other class of stock authorized or outstanding. As of the
record date, 19,758 shares of common stock were held by the bank's Trust
Department as sole fiduciary. These shares represent, in the aggregate,
approximately .31% of the shares outstanding and proxyholders will vote them
FOR the election of the 5 nominees for director and FOR the proposal to ratify
the selection of independent certified public accountants.
A majority of the outstanding shares of 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
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
corporation's Articles of Incorporation or Bylaws. In the case of the election
of directors, the candidates receiving the greatest number of votes are elected.
A majority of the votes cast at a meeting at which a quorum is present is
required to ratify the selection of auditors.
Under Pennsylvania law and the corporation's bylaws, the presence of a
quorum is required for each matter to be acted upon at the meeting. Votes
withheld and abstentions are counted in determining the presence of a quorum for
a particular matter. Broker non-votes are not counted in determining the
presence of a quorum for a particular matter as to which the broker withheld
authority.
Assuming the presence of a quorum, the 5 nominees for director receiving
the highest number of votes cast by shareholders entitled to vote for the
election of directors will be elected. Votes withheld from a nominee and broker
non-votes will not be cast for the nominee.
Assuming the presence of a quorum, the affirmative vote of a majority of
all votes cast by shareholders 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
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 26, 1999 more than 5% 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 752,705(2) 11.68%
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 545,528(3) 8.46%
________________________
(1) Beneficial ownership of shares of the corporation's common stock
is determined in accordance with Securities and Exchange Commission
Rule 13d-3, which provides that a person is deemed to own any stock
that he, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise has or shares:
voting power, which includes the power to vote or to direct
the voting of the stock, or
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 12, 1999.
(2) Mr. Groff holds sole voting and investment power on 751,104 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 26, 1999, the amount and
percentage of the common stock beneficially owned by each director, each
nominee, each named executive officer and all directors, nominees and
executive officers of the corporation as a group.
Name of
Individual Amount and
or Identity Nature of Beneficial Percent of
of Group Ownership(1)(2) Class (3)
Directors and Nominees
Richard H. Albright, Jr. 37,355 (4) ---
Robert H. Caldwell 5,870 (5) ---
Howard E. Groff, Jr. 23,284 (6) ---
Joan R. Henderson 1,613 (7) ---
J. Robert Hess 88,863 (8) 1.38%
Calvin G. High 19,668 (9) ---
David E. Hosler 410 ---
J. Roger Moyer, Jr. 38,008 (10) ---
E. Glenn Nauman 37,439 (11) ---
W. Garth Sprecher 439 ---
John E. Stefan 147,975 (12) 2.29%
Glenn R. Walz 8,427 (13) ---
Other Named Executive Officers
Jere L. Obetz 20,500 (14) ---
All Directors, Nominees
and Executive Officers
as a Group (15 persons) 458,432 7.10%
________________________
(1) Beneficial ownership of shares of the corporation's common stock
is determined in accordance with Securities and Exchange Commission
Rule 13d-3, which provides that a person is deemed to own any
stock that he, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise has or shares:
voting power, which includes the power to vote or to direct the
voting of the stock, or
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 12, 1999.
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) Less than 1% unless otherwise indicated.
(4) Includes 1,987 shares owned jointly with spouse, 7,293 owned directly
by spouse, 4,290 shares owned by spouse as custodian for children and
10,715 shares owned by Albright Family Enterprises, L.P. of which Dr.
Albright is a general partner.
(5) Includes 755 shares owned directly by spouse.
(6) Includes 4,529 shares owned directly by spouse and 8,010 shares owned
as custodian for children.
(7) Includes 11 shares owned jointly with spouse and 300 shares owned
directly by spouse.
(8) Includes 28,994 shares owned jointly with spouse, 4,531 shares owned
directly by spouse, 9,610 shares owned as custodian for children and
20,315 shares owned in trust for the benefit of grandchildren.
(9) Includes 19,442 shares owned jointly with spouse.
(10) Includes 28,213 shares held by Trustee under the Employees Stock Plan,
1,311 shares owned jointly with spouse, 14 shares owned directly by
spouse, 1,199 shares owned directly by children and 3,553 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
children. Mr. Moyer has the right to acquire an additional 8,150 shares
pursuant to the exercise of stock options.
(11) Includes 34,725 shares owned directly by spouse and 895 shares owned
directly by mother.
(12) Includes 49,802 shares held by Trustee under the Employees Stock Plan,
3,087 shares owned jointly with spouse, 50,400 shares owned directly
by spouse, and 11,750 shares owned directly by child. Mr. Stefan
disclaims beneficial ownership of shares owned directly by his spouse.
Mr. Stefan has the right to acquire an additional 14,310 shares pursuant
to the exercise of stock options.
(13) Includes 6,531 shares owned directly by spouse and 210 shares owned as
custodian for children.
(14) Includes 15,290 shares held by Trustee under the Employees Stock Plan
and 2,497 shares owned directly by spouse. Mr. Obetz disclaims
beneficial ownership of shares owned directly by his spouse. Mr. Obetz
has the right to acquire an additional 5,800 shares pursuant to the
exercise of stock options.
Shareholder Proposals
Shareholder proposals intended to be presented at the 2000 Annual Meeting
must be received at the administrative headquarters of Sterling Financial
Corporation at 101 North Pointe Boulevard, Lancaster, Pennsylvania not later
than Monday, November 29, 1999 in order to be included in the proxy
statement and proxy form to be prepared by the Corporation in connection
with the 2000 Annual Meeting.
Recommendations of the Board of Directors
The Board of Directors recommends that the shareholders vote FOR:
the election of the 5 nominees identified in this Proxy Statement and
the proposal to ratify the selection of independent certified public
accountants for the year ending December 31, 1999.
INFORMATION CONCERNING ELECTION OF DIRECTORS
General Information
The bylaws of the corporation provide that the Board of Directors consists
of not less than 1 nor more than 25 persons. The Board of Directors is also
divided into 3 classes. Each class consists, as nearly as possible, of
one-third of the directors. The bylaws also provide that the directors of
each class are elected for a term of 3 years, so that the
term of office of 1 class of directors expires at the annual
meeting each year. The bylaws also provide that the number
of directors in each class of directors is 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 holds
office until the next annual meeting of the shareholders and until his/her
successor is elected and qualified. There is a mandatory retirement provision
in the bylaws that states that the office of a director is considered vacant
at the Annual Meeting of shareholders next following
his/her attaining the age of 70 years.
The Board of Directors has fixed the number of directors at 12. There are
5 directors whose terms of office will expire at the 1999 annual meeting. There
are 7 continuing directors whose terms of office will expire at the 2000 or 2001
annual meeting. The Board of Directors proposes to nominate the following 5
persons for election to the Board of Directors for the terms specified:
Nominee for Class of 2000 Director
For a Term of One Year
W. Garth Sprecher
Nominees for Class of 2002 Directors
For a Term of Three Years
Joan R. Henderson
Calvin G. High
David E. Hosler
E. Glenn Nauman
Each of the above nominees is presently a director of the corporation and
also a director of the bank.
In the event that any of the nominees are unable to accept nomination or
election, proxyholders will vote proxies given pursuant to this solicitation in
favor of other persons recommended by management. The Board of Directors has no
reason to believe that any of its nominees will be unable to serve as a director
if elected.
Section 2.3 of the corporation's bylaws requires that nominations, other
than those made by or on behalf of the existing management of the corporation,
be made pursuant to timely notice in writing to the
Secretary of the corporation. To be timely, a shareholder's notice must
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. 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 will be disregarded.
Information about Nominees and Continuing Directors
Information concerning the 5 persons to be nominated for election to the
Board of Directors of Sterling Financial Corporation at the 1999 annual meeting
and concerning the 7 continuing directors is set forth in the table that 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 2000 - Nominee - For a Term of One Year
W. Garth Sprecher 1998 Vice President and
(47) Corporate Secretary and
Director, D & E
Communications, Inc.
(TeleCommunications)
Class of 2002 - Nominees - For a Term of Three Years
Joan R. Henderson 1995 President, J.R. Henderson &
(56) Associates, Inc. (Planning
and Fund Development for
Non-Profit Organizations)
Calvin G. High 1976 Senior Vice President, High
(66) Industries, Inc.;
Partner, High Properties
David E. Hosler 1998 Chairman, President, Chief
(48) Executive Officer and
Director, Old Guard Group,
Inc. (Property and Casualty
Insurance Companies)
E. Glenn Nauman 1976 Retired Chairman of the Board
(66) and retired Director,
Nauman Construction
(building contractor)
Class of 2000 - Continuing Directors
Robert H. Caldwell 1991 Retired Senior Executive
(68) Vice President and
Director, Armstrong World
Industries, Inc.
(manufacturer, building
materials, home furnishings
and industrial specialties)
J. Robert Hess 1971 President, B&E Realty;
(68) President, Hessco
Construction Co.; Partner,
Sycamore Industrial Park;
Broker and Partner,
Kingsway Realty
J. Roger Moyer, Jr. 1994 Executive Vice President
(50) 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 2001 - Continuing Directors
Richard H. Albright, Jr. 1985 Dentist, Specialist,
(56) Practice Limited to
Orthodontics
Howard E. Groff, Jr. 1988 Vice President, Howard E.
(52) Groff Co. (fuel oil sales
and service)
John E. Stefan 1979 Chairman of the Board,
(59) 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,
(52) Geisenberger, Bucklen &
Tennis, P.C. (Certified
Public Accountants); Vice
Chairman of the Board,
Sterling Financial
Corporation and Bank of
Lancaster County
________________________
(1) Includes service as a Director of Bank of Lancaster County, N.A.
Meetings and Committees of the Board of Directors
The Board of Directors of the 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 the corporation and will continue to do so until the
corporation appoints a committee.
Members of the Audit Committee of the corporation and the Bank of
Lancaster County during 1998 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 4 times during 1998.
Members of the Compensation Committee of the Bank of Lancaster County
during 1998 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 5 times during 1998.
The Board of Directors of the corporation met 10 times during 1998 and the
Board of Directors of the bank met 12 times during 1998. All directors attended
at least 75% or more of the meetings of the Boards of Directors of the
corporation and of the bank and of the various committees of the Boards on which
they served, except Robert H. Caldwell, who attended 60% of the meetings of the
corporation and 78% of the meetings of the bank.
Executive Officers
The following persons are the executive officers of the corporation:
Office Held with the Corporation and
Bank of Lancaster County and
Name Age Term in Office
John E. Stefan 59 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. 50 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.
Thomas P. Dautrich 50 Executive Vice President of Sterling
Financial Corporation since 1998 and
Executive Vice President/Banking
Services of the Bank of Lancaster
County since 1998; previously
Executive Vice President, CoreStates
Bank, July, 1997 to February, 1998;
President, Susquehanna Valley Division,
CoreStates Bank, April, 1996 to July,
1997 and President Susquehanna Valley
Division, Meridian Bank and Executive
Vice President, Meridian Bancorp Inc.,
March, 1990 to April, 1996.
Jere L. Obetz 50 Executive Vice President/Treasurer and
Chief Financial Officer of Sterling
Financial Corporation since 1998;
Senior Vice President/Treasurer and
Chief Financial Officer of Sterling
Financial Corporation from 1995 to 1998;
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 Executive Vice President/Chief
Financial Officer of the Bank of
Lancaster County since December 1997;
Senior Vice President/Chief Financial
Officer from 1992 to 1997.
Ronald L. Bowman 55 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.
________________________
Executive Compensation
The officers of the corporation do not receive any additional compensation
for their services, beyond the compensation paid to them as officers of the Bank
of Lancaster County. 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, 1998, 1997 and 1996 to those
persons who were, at December 31, 1998, (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 is set forth
below:
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards Payouts
------------------- ------ -------
Other Securities
Name and Annual Restricted Underlying All Other
Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary Bonus sation Awards SAR's Payouts sation(2)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John E. Stefan 1998 $266,989 $65,796 (1) none 7,800 none $5,921
Chairman of the 1997 261,747 53,619 (1) none 6,615 none 5,021
Board, President 1996 254,114 64,961 (1) none 6,000 none 5,032
and Chief Executive
Officer of Sterling
Financial
Corporation and
Bank of Lancaster
County, N.A.
J. Roger Moyer, Jr. 1998 $146,355 $27,958 (1) none 5,000 none $6,165
Executive Vice 1997 141,945 23,601 (1) none 3,150 none 5,854
President of 1996 134,630 26,294 (1) none 3,150 none 5,890
Sterling Financial
Corporation and
Bank of Lancaster
County, N.A.
Jere L. Obetz 1998 $107,466 $21,052 (1) none 3,000 none $3,140
Executive Vice 1997 99,923 17,019 (1) none 2,888 none 2,732
President/Treasurer/ 1996 94,432 19,079 (1) none 2,625 none 2,841
Chief Financial Officer
of Sterling Financial
Corporation and
Executive Vice
President/Chief
Financial Officer of
Bank of Lancaster
County, N.A.
________________________
</TABLE>
(1) Perquisites and other personal benefits which do not exceed the lesser of
$50,000 or 10% of total annual salary and bonus are not disclosed.
(2) Includes $4,036, $3,673, $3,779 for Mr. Stefan, $4,036, $3,673, and
$3,779 for Mr. Moyer and $3,140, $2,732, and $2,841 for Mr. Obetz
for 1998, 1997 and 1996, respectively, pursuant to the
Employees Stock Plan performance incentive feature
of the Plan as described on pages 19 and 20 of this Proxy Statement.
Also included is the benefit of $1,885, $1,348 and $1,253 for
Mr. Stefan and $2,129, $2,181 and $2,111 for Mr. Moyer for 1998, 1997 and
1996, respectively, in the form of employer-provided automobile usage.
Option Exercises and Fiscal Year-End Values
Information with respect to options granted in the last fiscal year to
purchase the corporation's common stock under the Stock Incentive Plan to the
named officers of the corporation and the Bank of Lancaster County and held by
them at December 31, 1998 is shown below.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants For Option Term
% of Total
Options/SARs
Options/ Granted to Exercise or
SARs Employees in Base Price Expiration
Name Granted(#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
John E. Stefan 7,800(1) 14.5% $42.25(2) 12/14/08 $207,252 $525,218
J. Roger Moyer, Jr. 5,000(1) 9.3% 42.25(2) 12/14/08 132,854 336,678
Jere L. Obetz 3,000(1) 5.6% 42.25(2) 12/14/08 79,712 202,007
(1) These options granted December 14, 1998, and under the terms of the Stock Incentive
Plan, are exercisable one third per year for three years commencing on December 14, 1999.
(2) The base price of the grant is adjustable in the event of any change in the number of issued
and outstanding shares of stock which results from a stock split, reverse stock split,
payment of a stock dividend or any other change in the capital structure of the Corporation.
</TABLE>
Aggregated Option Exercises and Fiscal Year-End Values
Information with respect to all exercises of stock options awarded to the
named officers during the last fiscal year and the fiscal year-end option values
for each named executive officer under the Stock Incentive Plan and held by them
at December 31, 1998 is shown below.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-money
Options/SARs at Options/SARs at
Fiscal Year-End(#) Fiscal Year-end($)(2)
Shares Acquired Value
Name On Exercise(#) Realized($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
John E. Stefan 1,400 $24,055 5,005/14,310 $79,598/$87,124
J. Roger Moyer, Jr. --- --- 3,150/8,150 $51,630/$40,832
Jere L. Obetz --- --- 2,713/5,800 $44,201/$37,773
(1) Represents the difference between the fair market value on the date of exercise of the shares
acquired and the exercise price of the options exercised.
(2) Market value of underlying securities based on the average of the average of the closing bid
and ask quotations for 5 trading days immediately preceding December 31, 1998, minus
the exercise price.
</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, all Executive Vice Presidents, 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,
Pennsylvania banks $1 billion to $4 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. 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 that appears in
the Shareholder Return Performance Graph.
The compensation committee is comprised of 5 non-employee directors
who are listed below. The Committee met 5 times during 1998.
CEO Compensation
The Board of Directors has determined that the Chief Executive Officer's
1998 compensation of $332,785, comprised of $266,989 in base annual salary and
$65,796 in bonus is appropriate in light of the following 1998 corporation
performance accomplishments:
an 11.54% increase in net income;
a 15.63% return on equity; and
an 8.73% increase in assets.
While there is no direct correlation between the increase in Chief Executive
Officer base salary and the above criteria, the Compensation Committee did
review 1997 corporate performance, as well as the peer bank comparisons
mentioned previously, in order to recommend a 2% increase in
base salary over the previous year. The Chief Executive
Officer's annual performance incentive (bonus) is tied
directly to the organization's performance results by rewarding Mr. Stefan for
growth in the corporation's net income, return on shareholder equity and
efficiency ratio goals. Mr. Stefan's total bonus of $65,796 represents an
increase of 22.7% from the total bonus paid in 1997.
In addition, Mr. Stefan was awarded an incentive stock option. This option
to purchase 7,800 shares of corporation common stock is listed in the table on
page 15. In addition, the Incentive Stock Option program itself is described on
page 18.
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 of the corporation and the bank have an annual
management incentive bonus tied directly to the corporation's performance
results. Similar to the Chief Executive Officer, the executive officers'
bonuses are directly dependent upon the organization's growth in
net income, return on shareholder equity and the corporation's
efficiency ratio. In addition, executive officers
have been awarded incentive stock options to encourage
ownership in the corporation and provide continued focus on enhancing
shareholder value. The Incentive Stock Option program
is described on page 18.
In addition to base salary and the management incentive bonus, 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
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 Nasdaq Bank Index for
the period of 5 fiscal years commencing January 1, 1994 and
ending December 31, 1998 is set forth below. The shareholder return
shown on the graph below is not necessarily
indicative of future performance.
The corporation has changed the Peer Group Index in the graph to the
Nasdaq Bank Index. Management believes that the Nasdaq Bank Index
more accurately reflects the proper peer group by which
you should measure the corporations' common stock. In addition to the Nasdaq
Bank Index, we include last years Peer Group on the graph for your information.
Comparison of Five-Year Cumulative Total Return
Sterling Financial Corporation Common Stock, S&P 500 & Nasdaq Bank Indices
Period Ending
Index 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
Sterling Financial Corp. 100.00 132.12 136.17 129.17 168.90 235.04
S & P 500 100.00 101.32 139.39 171.26 228.42 293.69
Nasdaq Bank Index 100.00 99.64 148.38 195.91 328.02 324.90
Sterling Financial
Peer Group 100.00 118.32 124.00 137.87 196.96 240.98
________________________
(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; Franklin Financial Services Corporation; Hanover Bancorp,
Inc.; Penseco Financial Services Corporation; PennRock Financial Services
Corporation; Penns Woods Bancorp, Inc.; and Sterling Financial Corporation.
These companies were selected based on four criteria: total assets between
$309 million and $919 million; market capitalization greater than $66
million; and headquarters located in Pennsylvania. This is the same Peer
Group as 1997.
1996 Stock Incentive Plan
The corporation maintains the Sterling Financial Corporation 1996 Stock
Incentive Plan which was approved by the shareholders of the corporation at the
1997 annual meeting. The purpose of the Stock Incentive Plan is to advance the
development, growth and financial condition of the corporation and its
subsidiaries by providing incentives through participation in the appreciation
of capital stock of the corporation in order to secure, retain and motivate
personnel responsible for the operation and management of the corporation and
its subsidiaries.
A committee of non-employee directors administers the Stock Incentive Plan.
Persons eligible to receive awards under the Stock Incentive Plan are those key
officers and other management employees of the corporation and its subsidiaries
as determined by the committee.
There were 53,675 options granted during 1998. There were 4,024 options
exercised during 1998. At December 31, 1998, there were 413,910 shares reserved
for future grants under the Stock Incentive Plan.
Employees Stock Plan/401(k)
The Bank of Lancaster County maintains an Employees Stock Plan which was
approved by the shareholders in 1982. All employees of the Bank of Lancaster
County who have attained the age of 18, have completed 1 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 2% and 10% of
compensation. The Bank of Lancaster County will make a matching contribution
equal to 25% of each participant's voluntary contributions, up to the first 6%.
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.
In 1997, the plan was amended to allow participants to defer their
contributions to 5 different investment alternatives. Previously, all
contributions to this plan were invested in Sterling Financial Corporation
stock. In addition to corporation stock, as of July 1, 1997,
participants could elect to diversify their contributions in increments
of 5% to models with the following investment objectives:
Guaranteed Principal
Fixed Income
Growth and Income
Growth (Equity)
The corporation's matching contributions and the performance incentive feature
continue to be made in Sterling Financial Corporation stock. In addition, as of
January 1, 1998, all participants could elect to diversify their existing
holdings in the pre-tax employee deferral account (those contributions made
after January 1,1995) into the 4 different models. Those participants
who are over age 55 and have 10 years of participation in the
plan can elect to diversify up to 25% of their entire post 1987
account balance in accordance with Internal Revenue
Code Section 401(a)(28).
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% 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.
Pension Plan
The Bank of Lancaster County Pension Plan is a qualified non-contributory
defined benefit pension plan that 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 1 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% vested upon the
completion of 5 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 5 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 1998 and covered by the plan was $160,000, $146,355, and $107,466
respectively. As of December 31, 1998, Messrs. Stefan, Moyer, and Obetz had
accrued 19, 21, and 27 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 that 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, 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 $120,691, subject to adjustment based
upon increases in the Consumer Price Index. In addition, salary in excess of
$160,000, effective in the year 1997, is disregarded in determining a
participant's retirement benefit pursuant to regulations of the Internal Revenue
Service.
<TABLE>
<CAPTION>
Average
Annual
Compensation Years of Credited Service
10 20 30 40
<C> <C> <C> <C> <C>
$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 24,000 48,000 72,000 96,000
200,000 24,000 48,000 72,000 96,000
225,000 24,000 48,000 72,000 96,000
250,000 24,000 48,000 72,000 96,000
275,000 24,000 48,000 72,000 96,000
300,000 24,000 48,000 72,000 96,000
</TABLE>
________________________
Retirement Restoration Plan
Bank of Lancaster County adopted a Restoration Plan during 1996 for any
officer whose compensation exceeded $160,000. The plan is designed to "restore"
the level of benefits lost to these employees under certain qualified retirement
plans because of Internal Revenue Code restrictions.
The plan is designed to mirror the provisions set forth in the qualified
retirement plans available to all Bank of Lancaster County employees--the
defined benefit pension plan, and the employee stock or 401(k) plan.
The plan allows for the calculation of benefits on an officer's salary in
excess of $160,000. The effective date of the Plan is May 1, 1996.
Employment Agreement
In April of 1983, the Bank of Lancaster County entered into a 5 year
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 5 years each. The employment agreement may be terminated by
the Bank of Lancaster County:
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
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 the 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 the
corporation.
Compensation of Directors
The directors of the corporation do not receive any additional compensation
for their services, beyond the compensation paid to them as directors of the
Bank of Lancaster County. All directors of the corporation are directors of
the bank. Directors who are also salaried officers of the corporation
or the bank do not receive any fees for board or committee meetings.
All non-employee directors receive 200 shares of Sterling Financial
Corporation common stock and an amount paid in cash equal to the value of the
stock received. The stock is issued by July 15th of each year and is valued at
the same price as established for the Dividend Reinvestment Plan as of July 1st
of each year. In addition, each non-employee director receives $100 for each
meeting attended of a committee of which he or she is a member. Committee
chairs receive $150 for each meeting attended. The cash portion of the
director fee is based on attendance at official board meetings of
at least 75% of the meetings held during a calendar year.
If a director attends less than 75% of the
scheduled meetings held, the fees will be reduced by one-twelfth of the cash
portion for each meeting missed in excess of three. The value of the stock
received in July 1998 was $9,660 based on $48.30 per share. Therefore, the
yearly cash portion of director fees was set at $9,660 for the period beginning
July 1, 1998. In the aggregate, the value of the stock and fees paid to
directors during 1998 was $176,450.
Transactions with Directors and Executive Officers
Some of the directors and executive officers of the corporation and the
companies with which they are associated were customers of and had banking
transactions with the Bank of Lancaster County during 1998. All loans and loan
commitments 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 Bank of Lancaster County entered into a 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 the corporation and the Bank of Lancaster County
until August 1995. Bank of Lancaster County also maintains a branch office in
this building since October 1984 and continues to maintain a branch office at
this location. The term of the lease is 15 years and is subject to renewal.
The monthly rent is $12,331.70. Total rent payments of $147,980.40 were
paid by the Bank of Lancaster County to High Properties
during 1998 pursuant to the Lease Agreement. On January 10, 1997,
a sublease agreement was signed under the terms of which Bank of Lancaster
County will sublease to High Employee Services, Ltd.
4,424 square feet of this building. The term of the lease is two years
and eight months to coincide with the original lease expiration
date on this building. Total rent to be received over this
period of time is $159,264. On October 28, 1998, the bank entered
into a lease agreement with High Properties. Under the
terms of the lease, High Properties will lease to the bank 4,424 square feet in
the building located at 525 Greenfield Road, Lancaster, Pennsylvania. The bank
will continue to maintain a branch office at this location. The term of the
lease is 5 years and is subject to renewal. Base rent over the five-year
term is $370,999.92. Commencement of the lease term is
June 1, 1999. The commencement of the lease coincides with the
expiration date of the original lease of 1984.
Calvin G. High, a director of the corporation and the Bank of Lancaster County,
is a partner in High Properties. High Associates, Ltd., a division of High
Industries, Inc., was paid $191,259 in 1998 in connection with various services
performed. Calvin G. High, a director of the corporation and the Bank of
Lancaster County is Senior Vice President of High Industries.
D & E Computer Networking Services, a division of D & E Communications,
Inc. was paid $322,130.92 in 1998. This transaction was
payment for Local Area Network (LAN) and Wide Area Network (WAN)
integration services, purchase of Personal Computer hardware
and software and purchase of data communications
equipment. W. Garth Sprecher, a director of the corporation and the Bank of
Lancaster County, is Vice President and Corporate Secretary and Director of
D & E Communications, Inc.
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors, executive officers and shareholders owning in excess of
10% of the corporation's outstanding equity stock to file initial reports of
ownership and reports of changes in ownership of common stock and other equity
securities of the corporation with the Securities and Exchange Commission.
Based on a review of copies of such reports received by it, and on
the statements of the respective reporting person, the corporation
believes that all Section 16(a) filing requirements were complied
with in a timely fashion, during 1998.
RATIFICATION OF SELECTION OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors of the corporation has selected the firm of Trout,
Ebersole & Groff as independent certified public accountants to audit the books,
records and accounts of the corporation and the Bank of Lancaster County for the
year 1999, subject to ratification by vote of a majority of the shares of common
stock represented at the 1999 Annual Meeting. Trout, Ebersole & Groff has
served as independent certified public accountants for the 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 1999 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, 1999.
ADDITIONAL INFORMATION
A copy of the annual report of the corporation on Form 10-K for its fiscal
year ended December 31, 1998, 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 the corporation knows of no matters other than
those discussed in this Proxy Statement that will be presented at the 1999
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 the corporation.
BY ORDER OF THE BOARD OF DIRECTORS
JOHN E. STEFAN
Chairman of the Board,
President and
Chief Executive Officer
Lancaster, Pennsylvania
March 26, 1999
P R O X Y
ANNUAL MEETING OF SHAREHOLDERS
To Be Held On April 27, 1999
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 12, 1999, 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 27, 1999, 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.
This Proxy, when properly signed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted FOR Nominees listed in Proposal 1 and Proposal 2 and FOR Proposal 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 26, 1999, 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.
Please mark your
votes as in this
example.
<TABLE>
<CAPTION>
<C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR WITHHELD
1. ELECTION OF CLASS OF Nominee: W. Garth Sprecher 2. ELECTION OF
2000 DIRECTOR TO CLASS OF 2002
SERVE FOR A ONE- DIRECTORS TO
YEAR TERM SERVE FOR A
THREE-YEAR TERM
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the line provided below:
Nominees: Joan R. Henderson
Calvin G. High
David E. Hosler
E. Glenn Nauman
FOR AGAINST ABSTAIN
3. PROPOSAL TO RATIFY THE SELECTION
OF TROUT, EBERSOLE & GROFF AS THE
CORPORATION'S INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS FOR THE YEAR
ENDING DECEMBER 31, 1999.
SIGNATURE(S) DATE ,1999
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>
