<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Sterling Financial Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
March 24, 2000
Dear Fellow Shareholder:
It is my pleasure to invite you to attend the Annual Meeting of Shareholders of
Sterling Financial Corporation. The Annual Meeting will be held on Tuesday,
April 25, 2000, at 10:00 a.m., at the Spokane Agricultural Trade Center.
The formal Notice of Annual Meeting of Shareholders and the Proxy Statement are
attached and describe the proposals to be voted on at the Annual Meeting. The
Board of Directors believes the proposals are in the best interests of Sterling
and its Shareholders and, accordingly, recommends that you vote "FOR" each of
the proposals.
It is very important that you be represented at the Annual Meeting regardless of
the number of shares you own or whether you are able to attend the Annual
Meeting in person. We urge you to mark, sign and date your proxy card today and
return it in the envelope provided, even if you plan to attend the Annual
Meeting. This will not prevent you from voting in person but will ensure that
your vote is counted if you are unable to attend.
Your continued support is sincerely appreciated.
Sincerely,
/s/ Harold B. Gilkey
Harold B. Gilkey
Chairman of the Board
and Chief Executive
Officer
<PAGE>
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
The Annual Meeting of Shareholders (the "Annual Meeting") of Sterling
Financial Corporation ("Sterling") will be held in the Conference Theater of the
Agricultural Trade Center (located in the Convention Center), 334 West Spokane
Falls Boulevard, Spokane, Washington, on Tuesday, April 25, 2000, at
10:00 a.m., local time, for the following purposes:
1. To elect four Directors of Sterling;
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
independent public accountants for Sterling for 2000; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
All of these proposals are more fully described in the Proxy Statement
which follows. Only record holders of shares of Sterling's Common Stock at the
close of business on February 29, 2000 are entitled to vote at the Annual
Meeting. As of February 29, 2000, there were 8,099,028 shares of Common Stock
outstanding.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN OR
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. EVEN IF YOU EXPECT TO
ATTEND THE ANNUAL MEETING, WE URGE YOU TO COMPLETE, SIGN AND DATE THE ENCLOSED
PROXY AND RETURN IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE.
By Order of the Board of Directors,
/s/ Ned M. Barnes
NED M. BARNES
Secretary
Spokane, Washington
March 24, 2000
<PAGE>
[LOGO]
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 2000
GENERAL
This Proxy Statement is being furnished to Shareholders in connection with
the solicitation by the Board of Directors of Proxies to be used at the Annual
Meeting of Shareholders to be held on April 25, 2000 (and any adjournments
thereof). This Proxy Statement and the accompanying form of proxy (the "Proxy"),
the Notice of Annual Meeting of Shareholders (the "Notice") and the Annual
Report to Shareholders are being mailed to Shareholders on or about March 24,
2000. Unless the context clearly suggests otherwise, references in this Proxy
Statement to Sterling include its subsidiaries.
HOLDERS OF COMMON STOCK OF STERLING ARE REQUESTED TO COMPLETE, SIGN AND
DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
TIME AND PLACE OF ANNUAL MEETING
The Annual Meeting will be held on Tuesday, April 25, 2000 at 10:00 a.m.
in the Conference Theater of the Agricultural Trade Center (located in the
Convention Center), 334 West Spokane Falls Boulevard, Spokane, Washington.
RECORD DATE
The Board of Directors of Sterling has fixed February 29, 2000 as the
record date (the "Record Date") for the determination of Shareholders of
Sterling who are entitled to receive notice of and to vote at the Annual
Meeting.
VOTING AND REVOCABILITY OF PROXIES
Proxies properly signed and returned in time for the Annual Meeting,
unless subsequently revoked, will be voted in accordance with the instructions
thereon. Persons named in the Proxy to represent Shareholders at the Annual
Meeting are Harold B. Gilkey and William W. Zuppe. If a Proxy is signed and
returned without indicating any voting instructions, the Proxy will be voted
"FOR" the proposals listed in the Notice. Any Proxy given pursuant to this
solicitation may be revoked by the person giving it at any time prior to the
commencement of the Annual Meeting by the filing with the Secretary of Sterling
of a written notice of revocation or of a duly executed Proxy bearing a later
date. All such notices of revocation or Proxies should be addressed to the
Secretary of Sterling in care of Sterling Financial Corporation, 111
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North Wall Street, Spokane, Washington 99201, not less than four business days
prior to the Annual Meeting. After this time, all such notices of revocation or
Proxies should be personally delivered to the Secretary or the Assistant
Secretary of Sterling in the meeting room on the day of the Annual Meeting prior
to the commencement of the Annual Meeting. Attendance or voting at the Annual
Meeting will not, in and of itself, constitute revocation of a Proxy. If your
shares of Common Stock are held in the name of a bank, broker or other holder of
record, you must obtain a Proxy, executed in your favor, from the holder of
record to be able to vote at the Annual Meeting.
VOTING SHARES AND REQUIREMENTS
As of the Record Date, there were 8,099,028 shares of Common Stock of
Sterling, par value $1.00 per share (the "Common Stock"), outstanding. Each
share of Sterling's Common Stock outstanding on the Record Date is entitled to
one vote on each matter properly submitted at the Annual Meeting. Shares of
Common Stock can be voted only if the owner of record is present to vote or is
represented by Proxy at the Annual Meeting. The holders of a majority of the
shares of Common Stock outstanding on the Record Date, present in person or
represented by Proxy, shall constitute a quorum. Abstentions and broker
"non-votes" are counted as present and entitled to vote for purposes of
determining a quorum. A broker "non-vote" occurs when a nominee holding shares
for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that item. The
nominees for election as Directors receiving the largest number of votes cast at
the Annual Meeting will be elected Directors. Abstentions and broker non-votes
are not counted for purposes of the election of Directors. The affirmative vote
by the holders of the majority of the Common Stock present in person or
represented by Proxy and entitled to vote is required to approve the other
matters to be acted upon at the Annual Meeting. An abstention is counted as a
vote against, and a broker non-vote is not counted for purposes of approving
those matters.
SOLICITATION OF PROXIES
The cost of the solicitation of Proxies will be borne by Sterling.
Sterling will, upon request, reimburse persons holding stock for others for
their reasonable expenses in sending proxy materials to their principals and
obtaining their Proxies. In addition to solicitation by mail, Proxies may be
solicited in person or by telephone, telefax or other types of communications by
Directors, Officers, and Employees of Sterling or others, without additional
compensation.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of Sterling believes the proposals described herein
are in the best interests of Sterling and its Shareholders and, accordingly,
recommends that Shareholders vote "FOR" each of the proposals listed in the
Notice.
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PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors currently consists of nine Directors who are
divided into three classes. The members of each class serve three-year terms,
and one class is elected annually. The Board of Directors has nominated the
three individuals listed below for election as Directors to serve terms of three
years ending at the annual meeting of Shareholders of Sterling in the year 2003
or when their respective successors have been duly elected and qualified. The
nominees are:
Rodney W. Barnett
David O. Wallace
William W. Zuppe
In addition, Thomas H. Boone was appointed in May 1999 to fill a vacancy
on the Board of Directors. The Board of Directors has nominated Mr. Boone for
election as a Director to serve a term of two years ending at the annual meeting
of Shareholders of Sterling in the year 2002 or when his successor has been duly
elected and qualified.
Sterling has no reason to believe that any of the nominees will be unable
to serve; however, should any nominee become unable to serve as a Director for
any reason, the Board of Directors shall designate a substitute nominee. Unless
instructions to the contrary are specified in the Proxy, Proxies will be voted
in favor of the four persons who have been nominated by the Board of Directors.
Sterling expects each nominee for election as a Director at the Annual Meeting
to be able to serve if elected. If any nominee is unable to serve if elected,
Proxies will be voted in favor of the remainder of those nominated and may be
voted for substitute nominees.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" THE NOMINEES
BOARD OF DIRECTORS OF STERLING FINANCIAL CORPORATION
HAROLD B. GILKEY
Mr. Gilkey, 60, has served as Chairman of the Board and Chief Executive
Officer of Sterling since its inception and as Chairman of the Board and Chief
Executive Officer of Sterling Savings Bank ("Sterling Savings") since 1981.
Mr. Gilkey co-founded Sterling Savings in 1981. Additionally, he is Chairman of
the Board of INTERVEST-Mortgage Investment Company ("INTERVEST"), Action
Mortgage Company ("Action Mortgage") and Harbor Financial Services, Inc.
("Harbor Financial"), subsidiaries of Sterling Savings. Mr. Gilkey brought to
Sterling Savings over 19 years of commercial and mortgage banking experience. He
served as President of Bancshares Mortgage Company of Spokane, Washington, and
Senior Vice President of Old National Bank of Spokane, Washington. Prior to
this, Mr. Gilkey was employed by Bank of America for twelve years. Mr. Gilkey is
a past Director of the Washington Savings League and a member of the Savings
Association Insurance Fund Industry Advisory Committee, an advisory committee of
the FDIC. Mr. Gilkey received his degree in Business Administration from the
University of Montana in 1962 and his Master of Business Administration degree
from the University of Southern California in 1970. His term expires in 2002.
WILLIAM W. ZUPPE
Mr. Zuppe, 58, has served as Director, President and Chief Operating
Officer of Sterling since its inception and as Director, President and Chief
Operating Officer of Sterling Savings since 1981. Mr. Zuppe co-founded Sterling
Savings in 1981. Mr. Zuppe is also Vice President and serves as a Director of
INTERVEST, Action Mortgage and Harbor Financial. Mr. Zuppe brought to Sterling
Savings 18 years
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<PAGE>
of mortgage lending experience as Vice President of Bancshares Mortgage Company
and Manager of Loan Administration of Sherwood & Roberts, Inc. of Walla Walla,
Washington, a mortgage banking company. Mr. Zuppe is Chairman-Elect of the
Washington Savings League Board of Directors and a member of its
Legislative/Regulatory Committee, as well as a Board member of America's
Community Bankers. If elected, his term will expire in 2003.
NED M. BARNES
Mr. Barnes, 63, has served as Secretary and a Director of Sterling since
its inception and as Secretary of Sterling Savings since 1981 and a Director
since 1983. Mr. Barnes is also Secretary and serves as a Director of INTERVEST,
Action Mortgage and Harbor Financial. Mr. Barnes is a Principal in the law firm
of Witherspoon, Kelley, Davenport & Toole, P.S. of Spokane, Washington, which he
joined in 1965. Mr. Barnes' law practice emphasizes the areas of real estate,
banking and corporate law. He is President and Director of the Spokane Community
Mental Health Center and a Trustee of the Spokane City Library Board.
Mr. Barnes graduated from the University of Minnesota in 1958, earning a degree
in Business Administration. He received his Juris Doctorate from the University
of Washington in 1961. His term expires in 2001.
RODNEY W. BARNETT
Mr. Barnett, 55, has served as a Director of Sterling since its inception
and as a Director of Sterling Savings since 1981. He is a Principal and General
Manager of Carr Sales Company, an electrical supply firm in Spokane, Washington.
Mr. Barnett is also a past Director of the National Association of Electrical
Distributors and is a past Chairman of the Inland Empire Chapter of that
Association. If elected, his term will expire in 2003.
THOMAS H. BOONE
Mr. Boone, 59, has served as a Director of Sterling since 1999 and as a
Director of Sterling Savings since 1998. Mr. Boone is an attorney and
shareholder in the law firm of Boone, Karlberg & Haddon, P.C. of Missoula,
Montana. He is a member and Past President of the Missoula YMCA Board of
Directors and the Western Montana Bar Association, a member of the Board of
Community Advisors for Missoula Youth Homes, and a Director and President of the
Missoula County Scholarship Fund. Mr. Boone graduated from Harvard College and
received his Juris Doctorate from Harvard Law School. Mr. Boone was a member of
the Board of Directors of Big Sky Bancorp, Inc., which merged with Sterling in
November 1998. If elected, his term will expire in 2002.
JAMES P. FUGATE
Mr. Fugate, 67, has served as a Director of Sterling since its inception
and as a Director of Sterling Savings since 1989. He is the retired
Superintendent of Auburn School District No. 408. Mr. Fugate is a former
Director of Central Evergreen Savings & Loan Association. His term expires in
2001.
ROBERT D. LARRABEE
Mr. Larrabee, 65, has served as a Director of Sterling since its inception
and as a Director of Sterling Savings since 1983. Mr. Larrabee is the former
owner of Merchant Funeral Home in Clarkston, Washington. He is also a former
Director of Laurentian Capital Corporation, a former Director of Lewis and Clark
Savings & Loan Association and a past President of the Board of Regents of the
University of Washington. His term expires in 2001.
4
<PAGE>
ROBERT E. MEYERS
Dr. Meyers, 74, has served as a Director of Sterling since its inception
and as a Director of Sterling Savings since 1983. He is a retired dentist from
Clarkston, Washington. Dr. Meyers is a former Director of Lewis and Clark
Savings & Loan Association. His term expires in 2002.
DAVID O. WALLACE
Mr. Wallace, 62, has served as a Director of Sterling since its inception
and as a Director of Sterling Savings since 1981. He is the owner of Startup
Business Planning. Mr. Wallace is a Past Chairman of the Citizens Advisory
Council for School District No. 81 in Spokane, Washington. If elected, his term
will expire in 2003.
COMPENSATION OF DIRECTORS
Directors of Sterling are paid an annual fee of $2,500 plus a fee, which
is currently $750, for every meeting attended. Each of the Directors of Sterling
also serves as a Director of Sterling Savings for the same term. Directors of
Sterling Savings are paid an annual fee of $2,500 plus a fee, which is currently
$1,000, for every meeting attended. Additionally, Directors who also serve as
Directors of the subsidiaries of Sterling Savings receive a fee, which is
currently $250 for a principal subsidiary and $100 for other subsidiaries, for
each meeting attended. Directors receive reimbursement for travel and other
expenses incurred in connection with Board business.
Non-Employee Directors of Sterling also receive annual grants of
non-qualified stock options. Such options have an exercise price equal to at
least the fair market value of the Common Stock on the date of grant and
generally expire ten years from the date of grant. In the event that a
Non-Employee Director is removed from office for cause, all options granted to
such Non-Employee Director pursuant to the automatic grants of non-qualified
stock options described above will expire immediately upon such removal.
ATTENDANCE AT MEETINGS. The Board of Directors of Sterling held 12 meetings
during 1999. The Board of Directors of Sterling Savings also held 12 meetings
during 1999. The Boards of Directors for all Sterling Savings subsidiaries held
an aggregate of 30 meetings during 1999. Aggregating for each incumbent Director
(i) the total number of meetings of the Board of Directors and (ii) the total
number of meetings held by all Committees of the Board on which each Director
served, each member of Sterling's Board of Directors attended more than 75% of
such meetings. The total combined attendance at all meetings by the incumbent
Directors was 99.6%.
COMMITTEES OF THE BOARD OF DIRECTORS
The Boards of Directors of Sterling and Sterling Savings have established
standing Personnel and Audit Committees. Neither Board has established a
Nominating Committee.
The Personnel Committees review and make recommendations to the Boards of
Directors with respect to personnel policies which include, but are not limited
to, officer and employee salaries and benefits. The Committees held four
meetings during 1999 and currently consist of Directors Larrabee (Chairman),
Fugate and Meyers.
The Audit Committees oversee the financial reporting process and internal
controls of Sterling and Sterling Savings. The Committees consult with the
internal auditor, Sterling's independent auditors and management regarding
internal accounting controls, the annual audit and regulatory examinations. The
Committees held six meetings during 1999 and currently consist of Directors
Barnett (Chairman), Barnes, Boone, Meyers and Wallace.
5
<PAGE>
EXECUTIVE OFFICERS
In addition to Messrs. Gilkey, Zuppe and Barnes, the Executive Officers of
Sterling and its subsidiaries are David P. Bobbitt, Heidi B. Stanley, Daniel G.
Byrne, Stephen L. Page, John M. Harlow, Stanton C. Parrish and John B.
Richardson. Each Executive Officer has held his or her present position for the
past five years unless otherwise stated.
DAVID P. BOBBITT
Mr. Bobbitt, 52, serves as Executive Vice President-Community Banking of
Sterling Savings. He joined Sterling Savings in March of 1996. Before joining
Sterling Savings, Mr. Bobbitt was with West One Bank for 26 years. He serves as
a Director of the Pacific Coast Banking School and of the Idaho Association of
Commerce and Industry. He is an Advisory Director of the College of Business &
Economics at the University of Idaho. He is a member of the Idaho Bankers
Association Executive Council and the American Bankers Association Government
Relations Council. He also serves on the Board of the Idaho Fish and Game
Foundation. Mr. Bobbitt is a graduate of North Idaho College, the Pacific Coast
Banking School and Harvard University's Advanced Management Program.
HEIDI B. STANLEY
Ms. Stanley, 43, serves as Executive Vice President-Corporate
Administration of Sterling Savings. She joined Sterling Savings in 1985.
Ms. Stanley was formerly employed by IBM in San Francisco, California, and
Tucson, Arizona. She is an Executive Committee Board member of the Association
of Washington Business (AWB), Washington Public Affairs Network (TVW), College
of Business and Economics at Washington State University, Spokane Area Chamber
of Commerce and the Spokane Intercollegiate Research and Technology Institute
(SIRTI). She also serves on the Boards of Focus 21 and the Spokane Higher
Education Leadership Group. Ms. Stanley graduated from Washington State
University in 1979 with a degree in Business Administration.
DANIEL G. BYRNE
Mr. Byrne, 45, has served as Chief Financial Officer, Senior Vice
President-Finance and Assistant Secretary of Sterling since its inception. He
also serves in the same capacities with Sterling Savings, which he joined in
1983. Mr. Byrne is also the Assistant Secretary and Treasurer of INTERVEST,
Action Mortgage and Harbor Financial. Before joining Sterling, Mr. Byrne was on
the staff of the accounting firm of Coopers & Lybrand in Spokane, Washington. He
is a member of Kiwanis International and a member of the Finance Committee for
Gonzaga Preparatory School. Mr. Byrne is a certified public accountant and
graduated from Gonzaga University in 1977 with a degree in accounting.
STEPHEN L. PAGE
Mr. Page, 51, serves as Senior Vice President-Credit Management of
Sterling Savings. He joined Sterling Savings in 1983. Prior to 1983, Mr. Page
was employed by Kiemle and Hagood Company of Spokane, Washington as a Property
Management Leasing Officer. He is a Director of the Educational Loan Foundation.
Mr. Page graduated from the University of Utah in 1970 and received a Master of
Business Administration degree from the University of New Mexico in 1973.
JOHN M. HARLOW
Mr. Harlow, 57, serves as Vice President of Sterling Savings and President
and Director of INTERVEST. He joined Sterling Savings in 1987. Mr. Harlow was
formerly the President of the Mortgage Banking Division of Moore Financial
Services of Portland, Oregon, Senior Vice President of Income Property Lending
for Bancshares Mortgage Company of Spokane, Washington, and Vice President/
Regional Manager for I.D.S. Mortgage Company in Northern California. Mr. Harlow
graduated from the University of Illinois in 1965 and is a Certified Mortgage
Banker.
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<PAGE>
STANTON C. PARRISH
Mr. Parrish, 49, serves as Vice President of Sterling Savings and
President and Director of Harbor Financial. He joined Sterling Savings in 1983.
Prior to 1983, Mr. Parrish was employed by Western Savings Association of
Portland, Oregon. He is the Budget and Finance Chairman for Big Brothers and
Sisters and President of the Advisory Board for the Downtown YMCA. Mr. Parrish
is a 1972 graduate of Washington State University.
JOHN B. RICHARDSON
Mr. Richardson, 48, serves as Vice President of Sterling Savings and
President and Director of Action Mortgage. He joined Sterling Savings in
November of 1998. Mr. Richardson was formerly Senior Vice President and Chief
Operating Officer/National Loan Production manager for WMC Mortgage Corp.,
formerly Weyerhaeuser Mortgage Company, in Woodland Hills, California. He is a
member of Toastmasters International and the Mortgage Bankers Association of
America--Single Family Subcommittee. Mr. Richardson graduated from San Diego
State University with a B.A. in Industrial Arts/ Business Management.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of December 31, 1999, information about
the only known beneficial owners of more than five percent of Sterling's Common
Stock. The following information is based solely on statements filed with the
Securities and Exchange Commission (the "SEC") or other information that
Sterling believes to be reliable.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ---------------------------------------------- -------------------- ----------------
<S> <C> <C>
Westport Asset Management, Inc.(1) 770,600 9.53
253 Riverside Avenue
Westport, CT 06880-4816
David L. Babson & Company, Inc.(2) 497,400 6.15
One Memorial Drive
Cambridge, MA 02142-1300
Dimensional Fund Advisors, Inc.(3) 456,299 5.64
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>
- ---------
(1) Based on information provided by Westport Asset Management, Inc., which
states that it has shared voting and dispositive power as to 658,600 shares
and sole voting and dispositive power as to 112,000 shares.
(2) Based on information provided by David L. Babson & Company, Inc., which
states that it has sole voting and dispositive power as to 497,400 shares.
(3) Based on information provided by Dimensional Fund Advisors, Inc., which
states that it has sole voting power and shared dispositive power as to
456,299 shares.
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The following table sets forth, as of January 31, 2000, information
concerning the beneficial ownership of Sterling Common Stock by each Director
and Executive Officer named in the Summary Compensation Table and by all
Directors and Executive Officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
- --------------------------------------------------------- ------------------ --------
<S> <C> <C>
Ned M. Barnes............................................ 25,406(1) *
Rodney W. Barnett........................................ 21,989(2) *
David P. Bobbitt......................................... 22,345(3) *
Thomas H. Boone.......................................... 27,212(4) *
James P. Fugate.......................................... 10,748(5) *
Harold B. Gilkey......................................... 156,765(6) 1.98
John M. Harlow........................................... 47,212(7) *
Robert D. Larrabee....................................... 18,030(5) *
Robert E. Meyers......................................... 33,289(5) *
Heidi B. Stanley......................................... 48,220(8) *
David O. Wallace......................................... 12,441(9) *
William W. Zuppe......................................... 86,365(10) 1.09
All Directors and Executive Officers as a Group (16
persons)............................................... 639,055(11) 7.78
</TABLE>
- ---------
* Less than 1%
(1) Includes 987 shares as to which Mr. Barnes has shared voting and investment
power, 14,726 shares held in a self-directed profit-sharing plan and 7,000
shares issuable pursuant to stock options exercisable within 60 days of
January 31, 2000. Excludes 1,331 shares owned by the law firm of which
Mr. Barnes is a principal, as to which shares Mr. Barnes disclaims
beneficial ownership.
(2) Includes 5,898 shares owned by a profit-sharing plan, of which Mr. Barnett
is the principal administrator and as to which shares he disclaims
beneficial ownership, and 7,000 shares issuable pursuant to stock options
exercisable within 60 days of January 31, 2000.
(3) Includes 19,000 shares issuable pursuant to stock options exercisable within
60 days of January 31, 2000 and 1,323 shares held for Mr. Bobbitt's
individual account under the Sterling Savings Bank Employee Savings Plan
(the "Savings Plan"). Excludes 4,408 shares held by Sterling's Deferred
Compensation Plan and 430 shares (as of December 31, 1999) held by the
Savings Plan for the benefit of Mr. Bobbitt, as to which shares Mr. Bobbitt
disclaims beneficial ownership.
(4) Includes 9,074 shares owned by a profit-sharing plan, as to which shares
Mr. Boone disclaims beneficial ownership, and 4,134 shares issuable pursuant
to stock options exercisable within 60 days of January 31, 2000.
(5) Includes 7,000 shares issuable to this Director pursuant to stock options
exercisable within 60 days of January 31, 2000. Excludes 234,192 shares held
by Sterling's Deferred Compensation Plan, which is administered by
Sterling's Personnel Committee of which this Director is a member. This
Director disclaims beneficial ownership of these shares.
(6) Includes 61,000 shares issuable pursuant to stock options exercisable within
60 days of January 31, 2000 and 6,195 shares held for Mr. Gilkey's
individual account under the Savings Plan. Excludes 98,730 shares held by
Sterling's Deferred Compensation Plan and 3,457 shares (as of December 31,
1999) held by the Savings Plan for the benefit of Mr. Gilkey, as to which
shares Mr. Gilkey disclaims beneficial ownership.
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<PAGE>
(7) Includes 37,000 shares issuable pursuant to stock options exercisable within
60 days of January 31, 2000 and 4,812 shares held for Mr. Harlow's
individual account under the Savings Plan. Excludes 18,070 shares held by
Sterling's Deferred Compensation Plan and 1,919 shares (as of December 31,
1999) held by the Savings Plan for the benefit of Mr. Harlow, as to which
shares Mr. Harlow disclaims beneficial ownership.
(8) Includes 35,000 shares issuable pursuant to stock options exercisable within
60 days of January 31, 2000 and 2,765 shares held for Ms. Stanley's
individual account under the Savings Plan. Excludes 16,022 shares held by
Sterling's Deferred Compensation Plan and 1,649 shares (as of December 31,
1999) held by the Savings Plan for the benefit of Ms. Stanley, as to which
shares Ms. Stanley disclaims beneficial ownership.
(9) Includes 7,000 shares issuable pursuant to stock options exercisable within
60 days of January 31, 2000.
(10) Includes 62,250 shares issuable pursuant to stock options exercisable
within 60 days of January 31, 2000 and 3,561 shares held for Mr. Zuppe's
individual account under the Savings Plan. Excludes 68,922 shares held by
Sterling's Deferred Compensation Plan and 3,203 shares (as of December 31,
1999) held by the Savings Plan for the benefit of Mr. Zuppe, as to which
shares Mr. Zuppe disclaims beneficial ownership.
(11) Includes 353,284 shares issuable pursuant to stock options exercisable
within 60 days of January 31, 2000 and 28,865 shares held in individual
accounts under the Savings Plan. Excludes 234,192 shares held by Sterling's
Deferred Compensation Plan and 15,421 shares (as of December 31, 1999) held
by the Savings Plan for the benefit of members of the group, as to which
shares such members disclaim beneficial ownership.
PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
Sterling seeks to promote a strong pay-for-performance culture by aligning
compensation with Sterling's performance. Sterling's Board of Directors believes
that compensation should:
- - relate to the value created for Shareholders by being directly tied to the
financial performance and condition of Sterling and each Executive
Officer's contribution thereto;
- - reward individuals who help Sterling achieve its short-term and long-term
objectives and thereby contribute significantly to the success of
Sterling;
- - help to attract and retain the most qualified individuals available by
being competitive in terms of compensation paid to persons having similar
responsibilities and duties in other companies in the same and
closely-related industries; and
- - reflect the qualifications, skills, experience and responsibilities of
each Executive Officer.
The Personnel Committee, which is composed of three Non-Employee
Directors, administers the compensation of the Chief Executive Officer (the
"CEO") and the other Executive Officers of Sterling and its subsidiaries
("Executive Officers"), subject to review and appropriate approval of Sterling's
Board of Directors.
9
<PAGE>
In determining executive compensation, Sterling uses peer group
comparisons as part of its overall analysis. The Personnel Committee believes
that companies operating in the banking and financial services industries are
appropriate to include in its compensation analysis. Additionally, the Personnel
Committee is advised from time to time by outside compensation consultants on
its compensation policies.
Several factors are used to measure the performance of Sterling and its
Executive Officers. In order to measure corporate financial and operating
results, the Personnel Committee examines Sterling's return on equity and its
earnings per share as compared to the performance of peers. Individual
performance measures are designed to be reasonably attainable, under the
immediate influence of the executive and related to the success of the
individual.
COMPONENTS OF COMPENSATION
At present, the executive compensation program is comprised of base
salary, annual cash incentive compensation, long-term compensation in the form
of deferred compensation and stock options and benefits typically offered to
executives of similar corporations.
BASE SALARY. In establishing the base salaries of the CEO and the other
Executive Officers, the Personnel Committee examines competitive peer group
surveys and data in order to determine whether compensation is competitive with
that offered by other companies in the banking and financial services
industries. The Personnel Committee looks primarily at companies which are
similar in terms of their size and the complexity of their operations. The
Personnel Committee also takes into account Sterling's financial and operating
performance as compared with the industry as a whole and considers the diverse
skills required of its executive management to expand its operations while
maintaining good performance. In addition, the Personnel Committee considers the
particular executive's performance, responsibilities, qualifications and
experience in the banking industry.
EXECUTIVE EMPLOYMENT AGREEMENTS. Sterling has entered into a separate
employment agreement with each of the Named Executive Officers for a term that
continues until either the Board of Directors in its sole discretion or the
Named Executive Officer in his or her sole discretion terminates the respective
agreement in accordance with its terms.
Under the employment agreements, the annual salary of the Named Executive
Officer is determined by the Chairman and the President of Sterling. Upon
termination for any reason or resignation for Good Cause upon or within three
years after a Change in Control (as Change in Control and Good Cause are defined
in the individual employment agreements), certain Named Executive Officers will
be paid three times (and certain Named Executive Officers will be paid two
times) annual compensation including the greater of salary and target bonus for
the calendar year in which the termination occurs (if established before the
termination) or salary and actual bonus for the prior calendar year (annualized
if the Named Executive Officer was not employed by Sterling for the entire
calendar year), but excluding the value of grants of stock options or restricted
stock. In addition, all of the Named Executive Officer's outstanding, unvested
options will immediately vest and become exercisable and, subject to prior
approval of the Board, restrictions on all or certain grants of the Named
Executive Officer's restricted stock will immediately lapse.
Under the terms of the agreements, if a change-of-control payment
constitutes a "parachute payment" under Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), the agreement provides for payment of an
additional amount (the "Gross-Up Payment") to the Named Executive Officer within
a specified period of time. The Gross-Up Payment would be equal to the amount
necessary to cause the net amount retained by the Named Executive Officer, after
subtracting the parachute excise tax imposed by Section 4999 of the Code (the
"Excise Tax") and any federal, state and
10
<PAGE>
local income taxes, FICA tax and Excise Tax on the Gross-Up Payment, to be equal
to the net amount the Named Executive Officer would have retained had no Excise
Tax been imposed and no Gross-Up Payments been paid.
ANNUAL CASH INCENTIVE COMPENSATION. Sterling maintains an Annual Cash
Incentive Compensation Program. The annual component of this plan is intended to
encourage and reward the achievement of (1) growth in Sterling's reported
earnings and (2) targeted returns on equity. These criteria are deemed by the
Personnel Committee to be critical to increasing Shareholder value. The plan
also is designed to assist in the attraction and retention of qualified
employees, to further link the financial interests and objectives of employees
with those of Sterling, and to foster accountability and teamwork throughout
Sterling.
DEFERRED COMPENSATION PLAN. Since 1984, Sterling has maintained a
non-qualified Deferred Compensation Plan. The Deferred Compensation Plan
component of the overall compensation plan is intended to link compensation to
the long-term performance of Sterling and to provide a strong incentive for
increasing Shareholder value. As of January 31, 2000, there were nine
participants in the Deferred Compensation Plan. The Personnel Committee may, as
it has done in the past, choose additional participants from a group of
management employees. Contributions to the Plan for each given year are
determined by the Board following recommendations by the Personnel Committee.
All amounts in a participant's account become 100% vested upon a change of
control; when the related participant attains normal retirement age; when the
employment of the related participant terminates due to death or disability; or
upon termination of the Plan. Prior to such an event, amounts in a participant's
account vest at the rate of 10% per year of service, provided that such vesting
shall reach 100% when the participant reaches the age of 60. Payment of an
account may be in a lump sum or in installments as determined by the Personnel
Committee, and installments may be accelerated by the Committee. Payment must be
commenced within one year of the termination of the participant's employment
with Sterling.
LONG-TERM INCENTIVE PLANS. The Personnel Committee believes that plans such
as the 1998 Long-Term Incentive Plan provide a competitive incentive opportunity
which links the achievement of financial goals and greater Shareholder value
with individual performance. The purpose of these plans is to encourage the
ownership of Common Stock, attract and retain qualified employees, develop and
maintain strong management and employee loyalty and to give suitable recognition
to individuals' material contributions to Sterling's success.
COMPENSATION OF CEO
During 1999, the compensation of the CEO was based on the general
principles of the executive compensation program and on the CEO's Employment
Agreement. In determining the salary and other forms of compensation for the
Chairman of the Board and CEO, Mr. Gilkey, the Personnel Committee took into
consideration Mr. Gilkey's substantial experience and standing in the industry
in general and with Sterling in particular. The Personnel Committee also
considered the increased responsibilities for Mr. Gilkey as a result of
Sterling's diversification and growth in recent years. The Personnel Committee
believes that Mr. Gilkey's compensation as Chief Executive Officer appropriately
reflects Sterling's performance during 1999 and his contributions to that
performance.
11
<PAGE>
PERSONNEL COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999 there were no "interlocking" or cross-board memberships, which
are required to be disclosed under SEC rules.
For a general description of transactions and relationships Directors and
Executive Officers and their associates may have had with Sterling and its
affiliates during the year, see "Interest of Directors and Executive Officers in
Certain Transactions."
SUBMITTED ON BEHALF OF THE PERSONNEL COMMITTEE:
Robert D. Larrabee, Chairman
James P. Fugate
Robert Meyers
12
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation
received from Sterling by each of the named Executive Officers for services in
all capacities to Sterling and its subsidiaries for the last three years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
NAME AND ----------------------------------------------- ---------------------
PRINCIPAL FISCAL OTHER ANNUAL SECURITIES UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMP.($)(1) OPTIONS(#) COMP.($)(2)
- ------------------------ -------- --------- -------- ------------- --------------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Harold B. Gilkey, 1999 280,000 48,000 33,762 41,376 25,000 20,000 10,000 258,594
Chairman & CEO of 1998 252,000 24,000 35,368 166,329
Sterling 1997 240,000 0 153,904
William W. Zuppe, 1999 210,000 40,000 25,887 38,554 25,000 20,000 10,000 101,268
President & COO of 1998 189,000 18,000 32,606 82,850
Sterling 1997 180,000 0 76,520
David P. Bobbitt, 1999 132,000 25,000 6,700 6,600 10,000 7,500 5,000 10,850
Exec. Vice President of 1998 120,000 18,000 N/A 7,100
Sterling Savings 1997 110,000 0 3,266
Heidi B. Stanley, 1999 120,000 25,000 14,539 12,375 10,000 7,500 -- 20,400
Exec. Vice President of 1998 102,000 18,000 -- 17,256 --
Sterling Savings(3) 1997 -- --
John M. Harlow, 1999 175,000 40,000 11,958 11,665 7,500 7,500 5,000 27,267
Vice President of 1998 165,000 35,000 N/A 21,311
Sterling Savings; 1997 156,000 0 18,475
President of INTERVEST
</TABLE>
- ---------
(1) Compensation amounts are not required to be provided where the aggregate
amounts of perquisites and other personal benefits do not exceed the lesser
of either $50,000 or 10% of the total of such officer's annual salary and
bonus. Amounts shown for 1999 include Director's fees of $13,500 each for
Messrs. Gilkey and Zuppe, and $1,050 for Mr. Harlow; auto allowances of
$8,400 each for Messrs. Gilkey and Zuppe, and $6,600 each for Mr. Bobbitt,
Ms. Stanley, and Mr. Harlow; and club dues of $11,862, $3,987, $100, $7,939
and $4,308 for Mr. Gilkey, Mr. Zuppe, Mr. Bobbitt, Ms. Stanley, and
Mr. Harlow, respectively.
(2) Includes 1999 vesting of amounts in the Deferred Compensation Plan,
matching contributions under Sterling Savings' Employee Savings Plan and
the value (as projected on an actuarial basis pursuant to I.R.C. Rev.
Rule 55-747 ("PS 58")) of the premium for life insurance coverage provided
for Messrs. Gilkey and Zuppe. Aggregate contributions to the Deferred
Compensation Plan during 1999, 1998 and 1997 for the named officers were
$198,000, $118,000 and $82,000, respectively.
(3) Ms. Stanley did not qualify for inclusion on this Table until 1998.
13
<PAGE>
EMPLOYMENT AGREEMENTS AND ARRANGEMENTS
Sterling has entered into employment agreements (the "Agreements") with
Messrs. Gilkey and Zuppe, which provide for annual fixed minimum salaries.
Salaries for 1999 for Mr. Gilkey and Mr. Zuppe have been set at $280,000 and
$210,000, respectively. Additionally, the Agreements provide for incentive
bonuses, non-qualified deferred compensation, long-term incentive compensation
including stock options, certain perquisites, split-dollar life insurance
policies and rights to participate in other benefit programs offered or
maintained by Sterling. The Agreements with Messrs. Gilkey and Zuppe expire on
June 30, 2004 and August 31, 2006, respectively.
The Agreements provide for the payment of certain severance benefits to
Messrs. Gilkey and Zuppe upon termination of their employment by Sterling
without cause or following a constructive discharge, a notice of non-renewal or
their permanent disability. Pursuant to these provisions, Mr. Gilkey and
Mr. Zuppe would be entitled to receive their base salary in effect at the time
of termination until the later to occur of the expiration of their Agreements or
the end of a three-year period. In the event Messrs. Gilkey or Zuppe were
discharged within eighteen months following a change in control of Sterling,
they would be entitled to their base salaries and incentive bonuses, at the
highest annual rates during their employment, for a three-year period. In
addition, earned but unpaid base salary and incentive bonus amounts and amounts
held for Messrs. Gilkey and Zuppe in the Deferred Compensation Plan as of the
date of termination would be payable in full. Group hospitalization, health,
dental care, life or other insurance, including travel, accident and disability
insurance and the perquisites set forth in the Agreements would continue through
the end of the applicable period. Stock options granted pursuant to the
Agreements would become fully exercisable during the severance period. In the
event any payments received by Messrs. Gilkey and Zuppe in connection with a
change in control were subject to the excise tax imposed upon certain
change-in-control payments under federal tax laws, the Agreements provide for an
additional payment sufficient to restore each executive to the same after-tax
position the executive would have been in if the excise tax had not been
imposed.
Sterling is the plaintiff in a lawsuit which is pending in the United
States Court of Federal Claims (the "Lawsuit"). The Lawsuit is an action for
damages arising out of the government's breach of its contracts with Sterling in
connection with Sterling's past acquisitions of certain troubled thrift
associations. In the event that a settlement or judgment amount is received by
Sterling as a result of the Lawsuit, Messrs. Gilkey and Zuppe are entitled by
the terms of the Agreements to receive three percent and two percent,
respectively, of the gross amount received in recognition of their substantial
contribution in bringing about the settlement or judgment. This provision is
intended to survive the termination of the Agreements.
14
<PAGE>
The following tables set forth information with respect to stock options
granted to and exercised by the Chief Executive Officer of Sterling and the next
four most highly compensated Executive Officers during 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
---------------------------------------------------- STOCK
NUMBER PRICE
OF SECURITIES % OF TOTAL EXERCISE APPRECIATION
UNDERLYING OPTIONS OR BASE FOR OPTION TERM
OPTIONS GRANTED IN PRICE EXPIRATION -------------------
NAME GRANTED FISCAL YEAR ($/SH)(1) DATE 5% ($) 10% ($)
- ---- ------------- ----------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Harold B. Gilkey 25,000 14.08 11.69 12/13/09 183,793 465,770
William W. Zuppe 25,000 14.08 11.69 12/13/09 183,793 465,770
David P. Bobbitt 7,500 4.23 11.69 2/28/08 48,337 119,057
2,500 1.41 11.69 2/28/09 18,379 46,577
Heidi B. Stanley 5,000 2.82 11.69 2/28/08 32,224 79,371
5,000 2.82 11.69 2/28/09 36,758 93,154
John M. Harlow 4,000 2.25 11.69 2/28/08 25,779 63,497
3,500 1.97 11.69 2/28/09 25,731 65,207
</TABLE>
- ---------
(1) The Exercise or Base Price is the fair market value of the Common Stock on
the date of grant as listed on the Nasdaq National Market, as adjusted for
stock dividends declared and/or paid.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN THE MONEY
OPTIONS AT YEAR END OPTIONS AT YEAR-END ($)(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Harold B. Gilkey 0 0 81,500 32,500 27,920 0
William W. Zuppe 0 0 82,250 32,000 66,032 0
David P. Bobbitt 0 0 20,000 21,500 0 0
Heidi B. Stanley 0 0 35,000 22,500 15,900 0
John M. Harlow 0 0 37,000 21,000 15,900 0
</TABLE>
- ---------
(1) Values are adjusted for stock dividends declared and/or paid.
15
<PAGE>
SHAREHOLDER RETURN COMPARISON
The following chart sets forth a five-year comparison of total Shareholder
return on the Common Stock of Sterling to the Nasdaq National Stock Index (US
Companies) and a peer group index comprised of all publicly traded savings and
loan associations with a market capital of $250 million or less. The chart
assumes an investment of $100 on December 31, 1994 and the reinvestment of all
dividends.
THE STOCK PRICE PERFORMANCE SHOWN ON THE FOLLOWING CHART IS PROVIDED AS OF
YEAR-END AND MAY NOT BE INDICATIVE OF CURRENT STOCK PRICE LEVELS OR FUTURE STOCK
PRICE PERFORMANCE.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL SHAREHOLDER RETURNS
<S> <C> <C> <C>
Sterling Financial NASDAQ
Corporation Peer Group Index Market Index
31-Dec-94 100.00 100.00 100.00
31-Dec-95 134.15 140.89 129.71
31-Dec-96 137.80 167.59 161.18
31-Dec-97 212.20 272.00 197.16
31-Dec-98 165.85 219.95 278.08
31-Dec-99 112.20 194.30 490.46
Index Value
Assumes Dividend Reinvested
</TABLE>
16
<PAGE>
PROPOSAL 2: RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed PricewaterhouseCoopers LLP to serve
as independent auditors for Sterling and its subsidiaries for the year ending
December 31, 2000, and any interim periods, subject to ratification by the
Shareholders at the Annual Meeting. PricewaterhouseCoopers LLP has advised
Sterling that it will have in attendance at the Annual Meeting one or more
representatives who will be available to respond to appropriate questions
presented at the Annual Meeting. Such representatives will be given an
opportunity to make a statement at the Annual Meeting if they desire to do so.
If the appointment of PricewaterhouseCoopers LLP is not ratified by the required
number of votes, the Board will reconsider its selection of independent auditors
for 2000.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE PROPOSAL TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS FOR STERLING FOR 2000.
OTHER MATTERS
Sterling knows of no other business that will be presented for
consideration at the Annual Meeting other than those items set forth herein. The
enclosed Proxy, however, confers discretionary authority to the Proxy agents to
vote with respect to matters which may be presented at the Annual Meeting,
including the election of any person as a Director in the event a nominee of the
Board of Directors of Sterling is unable to serve. If any such matters come
before the Annual Meeting, the Proxy agents will vote according to their own
judgment.
INTEREST OF DIRECTORS, OFFICERS AND OTHERS
IN CERTAIN TRANSACTIONS
Certain of the Directors and Executive Officers of Sterling and its
subsidiaries were customers of and had transactions with Sterling Savings during
1999. In addition, certain Directors and Executive Officers are officers,
directors or shareholders of corporations or members of partnerships which were
customers of or had transactions with Sterling Savings during 1999. All such
transactions were in the ordinary course of business, on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons, and did not involve more than
the normal risk of collectibility or present other unfavorable features. The law
firm of Witherspoon, Kelley, Davenport & Toole, P.S., of which Ned M. Barnes is
a principal, received approximately $975,863 during 1999 for legal services
rendered to Sterling and its subsidiaries, exclusive of amounts paid by
customers.
INDEPENDENT AUDITORS
Sterling's independent public accountant, PricewaterhouseCoopers LLP, has
advised Sterling that it will have a representative at the Annual Meeting. The
representative will have an opportunity to make a statement, if so desired, and
will be available to respond to appropriate questions. As described under
"Proposal 2: Ratification of Appointment of Independent Auditors," the Audit
Committee has recommended and the Board of Directors has approved, subject to
ratification at the Annual Meeting, appointment of PricewaterhouseCoopers LLP as
the independent public accountants for the year ending December 31, 2000 and any
interim periods.
17
<PAGE>
SHAREHOLDER PROPOSALS
It is presently anticipated that the next Annual Meeting of Shareholders
of Sterling will be held on Tuesday, April 24, 2001. In order for any
Shareholder proposal to be considered for inclusion in the proxy materials of
Sterling for the 2001 Annual Meeting of Shareholders, such proposal must be
submitted, in accordance with the rules and regulations of the SEC, in writing
to the Secretary of Sterling at Sterling's corporate offices by November 24,
2000.
SECTION 16 OF THE SECURITIES EXCHANGE ACT
Under Section 16(a) of the Securities Exchange Act of 1934, as amended,
and the regulations thereunder, Sterling's Directors, Executive Officers and
beneficial owners of more than 10% of any registered class of Sterling equity
securities are required to file reports of their ownership of Sterling's
securities and any changes in that ownership with the SEC. Based solely upon
written representations from such reporting persons, Sterling believes that
during 1999 such filing requirements were complied with.
ANNUAL REPORT
A copy of Sterling's 1999 Financial Highlights and Sterling's Annual
Report on Form 10-K, as filed with the SEC, are enclosed.
18
<PAGE>
- -------------------------------------------------------------------------------
STERLING FINANCIAL CORPORATION
REVOCABLE PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF STERLING,
FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD IN THE CONFERENCE
THEATER OF THE AGRICULTURAL TRADE CENTER (LOCATED IN THE CONVENTION CENTER), 334
WEST SPOKANE FALLS BOULEVARD, SPOKANE, WASHINGTON, ON TUESDAY, APRIL 25, 2000,
AT 10:00 A.M.
The undersigned hereby appoints Harold B. Gilkey and William W. Zuppe
and each of them, with full power of substitution, as proxies of the
undersigned, to vote at the above-stated Annual Meeting and at all
adjournments thereof, all shares of Sterling Financial Corporation held of
record by the undersigned on the record date for the Meeting upon the
following matters and upon any other matters which may properly come before
the Meeting or any adjournment thereof in their discretion.
(Continued, and to be marked, dated and signed, on the other side)
--------------
See Reverse
Side
--------------
- -------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION Please mark
IS INDICATED, WILL BE VOTED "FOR" THE PROPOSALS your votes as /X/
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD indicated in
OF DIRECTORS. this example
FOR WITHHOLD
FOR ALL
(1) TO ELECT THREE DIRECTORS FOR A / / / /
TERM EXPIRING AT THE ANNUAL
MEETING IN 2003, AND ONE DIRECTOR
FOR A TERM EXPIRING AT THE ANNUAL
MEETING IN 2002.
INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through such nominee's name. This proxy will be deemed to confer
authority to vote for each nominee whose name is not stricken.
Rodney W. Barnett (2003) David O. Wallace (2003)
William W. Zuppe (2003) Thomas H. Boone (2002)
FOR AGAINST ABSTAIN
(2) TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS / / / / / /
LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE YEAR
ENDING DECEMBER 31, 2000 AND ANY INTERIM PERIODS.
(3) IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO / / / / / /
VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
I plan to attend the meeting. / /
PLEASE SIGN, DATE AND RETURN PROMPTLY.
EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED HEREON AND
IN THE ABSENCE OF SPECIFICATION WILL BE TREATED AS GRANTING AUTHORITY TO VOTE
FOR ALL NOMINEES IN THE ELECTION OF DIRECTORS AND FOR PROPOSAL (2) ABOVE.
RECEIPT OF NOTICE OF ANNUAL MEETING AND PROXY STATEMENT IS HEREBY
ACKNOWLEDGED BY SHAREHOLDER WHOSE NAME APPEARS ON LEFT.
Signature(s) Dated , 2000
--------------------------------------------- ------
PLEASE COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
- -------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
