LETTER TO SHAREHOLDERS
TIMBERLINE BANCSHARES, INC.
June 7, 2000
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders the
("Meeting") of Timberline Bancshares, Inc. which will be held at the Yreka
Community Center, 821 North Oregon Street, Yreka, California, on Thursday,
June 29, 2000 at 4:00 p.m.
At the Meeting, shareholders will be asked to elect directors for the ensuing
year and ratify the appointment of Carlson, Pavlik & Drageset as Timberline
Bancshares, Inc.'s independent certified public accountants for 2000.
Information regarding the nominees for election of directors and the
independent certified public accountants is set forth in the accompanying
Proxy Statement.
It is important that your shares be represented at the Meeting whether or not
you plan to attend. Please indicate on the enclosed proxy card your vote on
the matters presented, and sign, date and return the proxy card. If you do
attend the Meeting and wish to vote in person, your proxy will be withdrawn at
that time. We urge you to vote for the election of all of the nominees named
in the Proxy Statement and for ratification of the independent certified
public accountants.
ss/John A. Linton
John A. Linton
President
123 N. Main St.
Yreka, Ca 96097
TIMBERLINE BANCSHARES, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
June 29, 2000
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
Proxies for use at the 2000 Annual Meeting of Shareholders (the "Meeting")
of Timberline Bancshares, Inc. (the "Corporation") to be held at the Yreka
Community Center, 821 North Oregon Street, Yreka, California, on
Thursday, June 29, 2000 at 4:00 p.m., and at any and all adjournments
thereof.
It is anticipated that this Proxy Statement and the accompanying Notice and
form of Proxy will be mailed on or about June 7, 2000 to shareholders
eligible to receive notice of, and to vote at, the Meeting.
Revocability of Proxies
A form of Proxy for voting your shares at the Meeting is enclosed. Any
shareholder who executes and delivers such Proxy has the right to and may
revoke it at any time before it is exercised by filing with the Secretary of
the Corporation an instrument revoking it or a duly executed Proxy bearing a
later date. In addition, the powers of the proxy-holders will be suspended
ifthe person executing the Proxy is present at the Meeting and elects to vote
in person by advising the chairman of the Meeting of his or her election to
vote in person, and votes in person at the Meeting. Subject to such
revocation or suspension, all shares represented by a properly executed
Proxy received in time for the Meeting will be voted by the proxy-holders
accordance with the instructions specified on the Proxy. UNLESS OTHERWISE
DIRECTED IN THE ACCOMPANYING PROXY, SHARES REPRESENTED BY YOUR EXECUTED PROXY
WILL VOTED "FOR" THE NOMINEES FOR ELECTION OF DIRECTORS NAMED HEREIN AND FOR"
RATIFICATION OF THE APPOINTMENT OF CARLSON, PAVLIK & DRAGESET AS THE
CORPORATION'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR 2000. IF ANY
OTHER BUSINESS IS PROPERLY PRESENTED AT THE MEETING, THE PROXY WILL BE VOTED
IN ACCORDANCE WITH THE RECOMMENDATIONS OF MANAGEMENT.
Persons Making the Solicitation
This solicitation of Proxies is being made by the board of directors (the
"Board") of the Corporation. The expense of preparing, assembling,
printing and mailing this Proxy Statement and the materials used in the
solicitation of Proxies for the Meeting will be borne by the Corporation. It
is contemplated that Proxies will be solicited principally through the use of
the mail, but directors, officers and employees of the Corporation and its
subsidiary, Timberline Community Bank (the "Bank") may solicit Proxies
personally or by telephone, without receiving special compensation therefore.
Although there is no formal agreement to do so, the Corporation will
reimburse banks, brokerage houses and other custodians, nominees and
fiduciaries for their reasonable expenses in forwarding these Proxy materials
to shareholders whose stock in the Corporation is held of record by such
entities. In addition, the Corporation may use the services of individuals
or companies it does not regularly employ in connection with this
solicitation of Proxies, if management determines it to be advisable.
VOTING SECURITIES
There were issued and outstanding 1,006,860 shares of Corporation
common stock ("Common Stock") on June 1, 2000, which has been fixed as
the record date for the purpose of determining shareholders entitled to
notice of, and to vote at, the Meeting (the "Record Date"). On any matter
submitted to the vote of the shareholders, each holder of Common Stock
will be entitled to one vote, in person or by Proxy, for each share of
Common Stock he or she held of record on the books of the Corporation as
of the Record Date. In connection with the election of directors, shares may
be voted cumulatively if a shareholder present at the Meeting gives notice at
the Meeting, prior to the voting for election of directors, of his or her
intention to vote cumulatively. If any shareholder of the Corporation gives
such notice, then all shareholders eligible to vote will be entitled to
cumulate their shares in voting for election of directors. Cumulative voting
allows a shareholder to cast a number of votes equal to the number of shares
held in his or her name as of the Record Date, multiplied by the number of
directors to be elected. These votes may be cast for any one nominee, or may
be distributed among as many nominees as the shareholder sees fit. If
cumulative voting is declared at the Meeting, votes represented by Proxies
delivered pursuant to this Proxy Statement may be cumulated in the
discretion of the proxy-holders, in accordance with management's
recommendation. The effect of broker non-votes is that such votes are not
counted as being voted; however such votes are counted for purposes of
determining a quorum. The effect of a vote of abstention on any matter is
that such vote is not counted as a vote for or against the matter, but is
counted as an abstention.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Management of the Corporation knows of no person who owns, beneficially
or of record, either individually or together with associates, 5 percent or
more of the outstanding shares of Common Stock, except as set forth in the
table below. The following table sets forth, as of May 1, 2000, the number
and percentage of outstanding shares of Common Stock beneficially owned,
directly or indirectly, by each of the Corporation's directors and named
executive officers and by the directors and executive officers of the
Corporation as a group. The shares "beneficially owned" are determined
under Securities and Exchange Commission rules, and do not necessarily
indicate ownership for any other purpose. In general, beneficial ownership
includes shares over which a director or named executive officer has sole or
shared voting or investment power and shares which such person has the
right to acquire within 60 days of May 1, 2000. Unless otherwise indicated,
the persons listed below have sole voting and investment powers.
Management is not aware of any arrangements which may, at a subsequent
date, result in a change of control of the Corporation.
Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class(1)
Directors and Named
Executive Officers:
Stephen P. Bradley 16,320(1)(2) 1.6
Gareld J. Collins 73,866(1)(9) 7.3
Richard S. Day 72,800(1)(3) 2.2
Norman E. Fiock 95,024(1)(4)(9) 9.3
Don L. Hilton 82,734(1)(5)(9) 8.1
John A. Linton 20,500(6)(7) 2.0
Robert J. Youngs 81,364(1)(8)(9) 8.0
Principal Shareholder:
Charles J. Cooley 63,244(9) 6.3
All Directors and Executive
Officers as a Group (numbering 8) 403,854(10) 37.0
(1) The amount includes 10,000 shares acquirable by the exercise of vested
stock options.
(2) The amount includes 6,320 shares of which Mr. Bradley has shared voting
and investment powers.
(3) The amount includes 12,800 shares of which Mr. Day has shared voting and
investment powers.
(4) The amount includes 8,050 shares owned by Mrs. Fiock of which Mr. Fiock
disclaims beneficial ownership.
(5) The amount includes 32,888 shares of which Mr. Hilton has shared voting
and investment powers.
(6) The amount includes 20,000 shares acquirable by the exercise of vested
stock options.
(7) The amount includes 500 shares of which Mr. Linton has shared voting and
investment powers.
(8) The amount includes 71,364 shares of which Mr. Youngs has shared voting
and investment powers.
(9) The business address of these shareholders is c/o Timberline Bancshares,
Inc., 123 Main Street, Yreka, California.
(10)The amount includes 85,000 shares acquirable by the exercise of stock
options.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and certain executive officers and persons who own
more than ten percent of a registered class of the Corporation's equity
securities (collectively, the "Reporting Persons"), to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. The Reporting Persons are required by Securities and Exchange
Commission regulation to furnish the Corporation with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from the Reporting Persons that no Forms 5 were
required for those persons, the Corporation believes that, during 1999 the
Reporting Persons complied with all filing requirements applicable to them.
PROPOSAL 1:
ELECTION OF DIRECTORS
Nominees
The Corporations Bylaws presently provide that the number of directors of
the Corporation shall not be less than seven (7) nor more than thirteen (13)
until changed by an amendment to the Bylaws adopted by the Corporation's
shareholders. The Bylaws further provide that the exact number of directors
shall be seven (7) until changed by a Bylaw amendment duly adopted by the
Corporation's shareholders or the Board.
The persons named below, all of whom are currently members of the Board, have
been nominated for election as directors to serve until the 2001 Annual
Meeting of Shareholders and until their successors are elected and have
qualified. Unless otherwise instructed, the proxy-holders will vote the
Proxies received by them for the election of the nominees named below. Votes
of the proxy-holders will be cast in such a manner as to effect, if possible,
the election of all seven (7) nominees, as appropriate, (or as many thereof
as possible under the rules of cumulative voting). The seven nominees for
directors receiving the most votes will be elected directors. In the event
that any of the nominees should be unable to serve as a director, it is
intended that the Proxy will be voted for the election of such substitute
nominee, if any, as shall be designated by the Board. The Board has no
reason to believe that any of the nominees named below will be unable to
serve if elected. Additional nominations for directors may only be made by
complying with the nomination procedures which are included in the Notice of
Annual Meeting of Shareholders accompanying this Proxy Statement.
The following table sets forth as of May 1, 2000, the names of, and certain
information concerning, the persons nominated by the Board for election as
directors of the Corporation.
Year First Principal Occupation
Name and Title Appointed During the
Other Than Director Age Director Past Five Years
Stephen P. Bradley 62 1999 President, Shasta Forest Products.
Gareld J. Collins 86 1991 General Partner, Enterprises
Investments.
Richard S. Day 82 1991 Secretary of the Corporation.
Retired business executive.
Norman E. Fiock 75 1991 Retired cattle rancher and farmer.
Don L. Hilton 63 1991 Chairman of the Corporation.
President of Don Hilton
Enterprises and Shasta Holiday,
Inc.
John A. Linton 59 1998 President of the Corporation and
President and Chief Executive
Officer of the Bank. Former
Executive Vice President of the
Bank (1998-1999). Former
Executive Vice President of
Colonial Bank, Grants Pass, Oregon
(1991-1998)
Robert J. Youngs 65 1991 Chairman and Chief Executive
Officer of the Corporation.
Former President and Chief
Executive Officer of the Bank.
All nominees will continue to serve if elected at the Meeting until the 2001
Annual Meeting of Shareholders and until their successors are elected and
have qualified. None of the directors were selected pursuant to any
arrangement or understanding other than with the directors and executive
officers of the Corporation acting within their capacities as such. There
are no family relationships among any of the directors and executive officers
of the Corporation. No director or executive officer of the Corporation
serves as a director of any company which has a class of securities
registered under, or which is subject to the periodic reporting requirements
of, the Securities Exchange Act of 1934, or of any company registered as an
investment company under the Investment Company Act of 1940.
The Board of Directors and Committees
The Corporation's Board held eleven (11) meetings during 1999. None of the
directors attended less than 75 percent of all Board meetings and committee
meetings (of which they were a member) that were held in 1999.
There were no standing committees of the Corporation's Board in 1999, except
an audit committee.
The Corporation's audit committee, which consisted of all the directors
except Messrs. Linton and Youngs met one time in 1999. The audit committee's
functions include making recommendations to the Board on the selection of the
Corporation's independent certified public accountants, reviewing the
arrangements for the independent certified public accountants' examination,
reviewing the internal accounting controls and reporting, and any other
duties assigned by the Board.
Compensation of Directors
The directors of the Corporation who are not employees of the Bank received a
fee of $400 per board meeting. The Secretary of the Corporation's Board
received a fee of $600 per meeting. No directors fees are paid for the
committee meetings, and directors and their dependents are provided with
health and dental insurance coverage. The directors were each granted a 10
year stock option to acquire 10,000 shares of common stock at $10.00 per
share in June 1999.
Executive Officers
The following table sets forth information, as of May 1, 2000, concerning
executive officers of the Corporation:
Position and Principal Occupation
Name Age For the Past Five Years
John A. Linton 59 President of the Corporation and
President and Chief Executive Officer
of the Bank. Former Executive Vice
President of the Bank (1998-1999).
Former Executive Vice President of
Colonial Bank, Grants Pass, Oregon
(1991-1998).
Robert J. Youngs 65 Chairman and Chief Executive Officer of
the Corporation. Former President and
Chief Executive Officer of the Bank.
Helen L. Gaulden 60 Senior Vice President/Treasurer of the
Corporation and Senior Vice President
/Cashier of the Bank.
Executive Compensation The executive officers of the Corporation received no
compensation from the Corporation other than stock options. The Executive
officers of the Corporation as executive officers of the Bank received
compensation from the Bank. The following table summarizes the compensation of
the named executive officers from the Corporation and Bank.
Summary Compensation Table
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C> <C>
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Annual Restricted All
Name and Compen- Stock LTIP Other
Principal Salary Bonus Sation Award(s) Options/ Payouts Compen-
Position Year ($) ($) ($) ($) SARs(1) ($) ($)(2)
John A. Linton(3) 1999 $82,000 $17,500 -- -- 20,000 -- 232
President of the 1998 $60,000 $2,500 -- -- 10,000 -- 360
Corporation 1997 -- -- -- -- -- -- --
President
and Chief Exec-
utive Officer
of the Bank
Robert J. Youngs 1999 $120,000 $18,000 -- -- 10,000 -- 1,829
Chairman and Chief 1998 $120,000 $39,000 -- -- 10,000 -- 1,685
Executive Officer 1996 $120,000 $39,000 -- -- -- -- 1,685
of the Corporation,
Former President and
Chief Executive
Officer of the Bank
(1) The options granted in 1998 were canceled in 1999.
(2) Represents life insurance.
(3) Mr. Linton started in February 1998.
Option/SAR Grants Table
Option/SAR Grants in Last Fiscal Year
Individual Grants
(a) (b) (c) (d) (e)
% of Total
Options/SARs
Options/SARs Granted to Exercise or
Granted Employees in Base Price Expiration
Name (#) Fiscal Year ($/Share) Date
John A. Linton 20,000 16.4 10.00 6/09
Robert J. Youngs 10,000 8.2 10.00 6/09
Option/SAR Exercises and Year-End Value Table
Aggregated Option/SAR Exercises in Last Fiscal Year and Year-End Option/SAR Value
(a) (b) (c) (d) (e)
Number of Value of Unexercised
Un-exercised In-the-Money
Options/SARs at Options/SARs at
Year-End (#) Year-End ($)
Shares Acquired on Value Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
John A. Linton 0 0 20,000/0 0/0
Robert J. Youngs 0 0 10,000/0 0/0
10-year Option Repricings
Number of Length of
Securities Market Price Exercise Original
Underlying of Stock at Price at New Option Term
Options Time of Time of Exercise Remaining
Date of Repriced Repricing Repricing Price at Date of
Name and Position Repricing (#) ($) ($) ($) Repricing
John A. Linton 6/99 10,000 $10.00 $12.50 $10.00 9 yrs. 2mos.
Robert J. Youngs 6/99 10,000 $10.00 $12.50 $10.00 9 yrs. 2mos.
</TABLE>
Salary Continuation Agreements
Messrs. Linton and Youngs each have a salary continuation agreement with the
Bank which provides for retirement benefits. Mr. Linton's agreement provides
that he will be paid $48,000 per year for ten years following his retirement
from the Bank at age 65 or later. In the event of disability prior to
retirement, Mr. Linton would be totally vested in salary continuation benefits
up to a maximum of $48,000 per year for ten years. The amount of such benefit
may be paid in a one time lump at the election of Mr. Linton. Furthermore, if
Mr. Linton dies within 24 months of receiving a lump sum salary continuation
payment for disability prior to retirement, his beneficiary shall be entitled
to a further lump sum payment, if any, in the amount that would be sufficient
to fund an annuity assuming Mr. Linton had retired at age 65 and less the
amount paid in the original lump sum payment. In the event of voluntary
termination prior to retirement, Mr. Linton would be totally vested in salary
continuation benefits up to $216,069 to be paid within three months of his
voluntary termination. In the event Mr. Linton dies while in active service
of the Bank, his beneficiary will receive from the Bank a benefit amount of
$48,000 per year for 10 years beginning one month after his death or a lump
sum equivalent at the election of Mr. Linton's beneficiary. In the event of
termination with cause, Mr. Linton will forfeit any benefits from the salary
continuation agreement. In the event of termination by the Bank without
cause, Mr. Linton shall receive the benefits of $48,000 per year for ten years
beginning at age 65 or a lump sum equivalent at the election of Mr. Linton.
Mr. Youngs' agreement provides that he will be paid $48,000 per year for
fifteen years following his retirement from the Bank at age 65 or later.
Mr. Youngs retired in December 1999 and is receiving his salary continuation
benefits.
PROPOSAL 2:
RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The firm of Carlson, Pavlik & Drageset, Yreka, California, served as
independent certified public accountants for the Corporation and the Bank
through the year 1999. The Corporation has selected Carlson, Pavlik &
Drageset to serve as the Corporation's independent certified public
accountants for the year 2000. All services rendered by Carlson, Pavlik
& Drageset were approved by the Board, which has determined the firm of
Carlson, Pavlik & Drageset to be independent. It is expected that one or
more representatives of Carlson, Pavlik & Drageset will be present at the
Meeting and will be given the opportunity to make a statement, if desired,
and to respond to appropriate questions.
In the event shareholders do not ratify the appointment of Carlson, Pavlik
& Drageset as the Corporation's independent certified public accountants for
the forthcoming fiscal year, such appointment will be reconsidered by the
Corporation's audit committee and the Board.
Ratification of the appointment of Carlson, Pavlik & Drageset as the
Corporation's independent certified public accountants for fiscal year 2000
requires the affirmative vote of a majority of the outstanding shares of
Common Stock represented and voting at the meeting.
Management recommends that the shareholders vote "FOR" ratification of the
appointment of Carlson, Pavlik & Drageset as the Corporation's independent
certified public accountants for 2000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Some of the Corporation's directors and executive officers and their immediate
families as well as the companies with which they are associated are
customers of, or have had banking transactions with, the Bank in the ordinary
course of the Bank's business, and the Bank expects to have banking
transactions with such persons in the future. In management's opinion, all
loans and commitments to lend included in such transactions were made in
compliance with applicable laws on substantially the same terms, including
interest rates and collateral, as those prevailing for comparable transactions
with other persons of similar creditworthiness and, in the opinion of
management, did not involve more than a normal risk of collectibility or
present other unfavorable features.
SHAREHOLDER PROPOSALS
The deadline for shareholders to submit proposals to be considered for
inclusion in the Proxy Statement for the Corporation's 2001 Annual Meeting
of Shareholders is February 10, 2001.
OTHER MATTERS
Management does not know of any matters to be presented at the Meeting other
than those set forth above. However, if other matters come before the
Meeting, it is the intention of the persons named in the accompanying Proxy as
proxyholders to vote the shares represented by the Proxy in accordance with
the recommendations of management on such matters, and discretionary authority
to do so is included in the Proxy.
TIMBERLINE BANCSHARES, INC.
Ss/Richard S. Day
Dated: June 7, 2000 Richard S. Day
Secretary
The Annual Report to Shareholders for the fiscal year ended December 31, 1999
has been previously mailed to the Corporation's shareholders.
A COPY OF THE CORPORATION'S 1999 ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K WILL BE PROVIDED TO THE BANCORP'S SHAREHOLDERS WITHOUT
CHARGE UPON WRITTEN REQUEST TO THE SECRETARY, TIMBERLINE BANCSHARES, INC.,
123 NORTH MAIN STREET, YREKA, CALIFORNIA 96097.
