Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CASCADE FINANCIAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
CASCADE FINANCIAL CORPORATION
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] No filing fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transactions applies:
N/A
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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[ ] 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:
N/A
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(2) Form, schedule or registration statement no.:
N/A
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(3) Filing party:
N/A
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(4) Date filed:
N/A
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<PAGE>
September 22, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Cascade Financial Corporation, to be held at the Corporation's main office,
2828 Colby Avenue, Everett, Washington on Saturday, October 23, 1999 at 10:00
a.m.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the meeting. During the meeting, we will
also report on the operations of the Corporation. Directors and officers of
the Corporation as well as a representative from the Corporation's independent
accounting firm, KPMG, LLP, will be present to respond to appropriate
questions of stockholders.
Detailed information concerning our activities and operating
performance during our fiscal year ended June 30, 1999 is contained in the
enclosed Annual Report to Stockholders.
To ensure proper representation of your shares at the meeting, the
Board of Directors requests that you sign, date and return the enclosed proxy
card in the enclosed postage-prepaid envelope as soon as possible, even if you
currently plan to attend the meeting. If you attend the meeting, you may vote
in person even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
\s\Frank M. McCord
FRANK M. McCORD
Chairman of the Board and
Chief Executive Officer
<PAGE>
CASCADE FINANCIAL CORPORATION
2828 Colby Avenue
Everett, Washington 98201
(425) 339-5500
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On October 23, 1999
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Cascade Financial Corporation ("Corporation") will be held at the
Corporation's main office located at 2828 Colby Avenue, Everett, Washington on
Saturday, October 23, 1999 at 10:00 a.m., for the following purposes:
1. To elect four directors to serve for a term of three years;
2. The approval of a proposal to increase the number of shares
reserved for issuance under the Corporation's 1997 Stock
Option Plan; and
3. To consider and act upon such other matters as may properly
come before the meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to
come before the meeting.
Any action may be taken on the foregoing proposals at the meeting on
the date specified above, or on any date or dates to which, by original or
later adjournment, the meeting may be adjourned. Pursuant to the Bylaws, the
Board of Directors has fixed the close of business on August 27, 1999, as the
record date for determination of the stockholders entitled to vote at the
meeting and any adjournments thereof.
Please complete and sign the enclosed form of proxy, which is solicited
by the Board of Directors, and mail it promptly in the enclosed envelope. The
proxy will not be used if you attend the meeting and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
\s\Russell E. Rosendal
RUSSELL E. ROSENDAL
Secretary
Everett, Washington
September 22, 1999
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IMPORTANT: The prompt return of proxies will save your corporation the
expense of further requests for proxies in order to ensure a quorum. A
self-addressed envelope is enclosed for your convenience. No postage is
required if mailed in the United States.
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<PAGE>
PROXY STATEMENT
OF
CASCADE FINANCIAL CORPORATION
2828 Colby Avenue
Everett, Washington 98201
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ANNUAL MEETING OF STOCKHOLDERS
October 23, 1999
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This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Cascade Financial Corporation
("Corporation") to be used at the Annual Meeting of Stockholders of the
Corporation. The Annual Meeting will be held at the Corporation's main office
located at 2828 Colby Avenue, Everett, Washington, on Saturday, October 23,
1999 at 10:00 a.m. The Corporation is the holding company for Cascade Bank
("Cascade" or the "Bank"). This Proxy Statement and the enclosed proxy card
are being first mailed to stockholders on or about September 22, 1999.
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VOTING AND PROXY PROCEDURE
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Stockholders Entitled to Vote. Stockholders of record as of the close
of business on August 27, 1999 are entitled to one vote for each share of
common stock ("Common Stock") of the Corporation then held. As of August 27,
1999, the Corporation had 5,462,302 shares of Common Stock issued and
outstanding.
Quorum. The presence, in person or by proxy, of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum at the Annual Meeting. Abstentions will be
counted as shares present and entitled to vote at the Annual Meeting for
purposes of determining the existence of a quorum. Broker non-votes will be
considered shares present for purposes of determining whether a quorum is
present.
Voting. The Board of Directors solicits proxies so that each
stockholder has the opportunity to vote on the proposals to be considered at
the Annual Meeting. When a proxy card is returned properly signed and dated,
the shares represented thereby will be voted in accordance with the
instructions on the proxy card. Where no instructions are indicated, proxies
will be voted in accordance with the recommendations of the Board of
Directors. If a stockholder of record attends the Annual Meeting, he or she
may vote by ballot. The Board recommends a vote FOR the election of the
nominees for director and FOR the approval of the proposal to increase the
shares reserved for issuance under the Corporation's 1997 Stock Option Plan.
The four directors to be elected at the Annual Meeting will be elected
by a plurality of the votes cast by stockholders present in person or by proxy
and entitled to vote. Stockholders are not permitted to cumulate their votes
for the election of directors. Votes may be cast for or withheld from each
nominee. Votes that are withheld and broker non- votes will have no effect on
the outcome of the election because the nominees receiving the greatest number
of votes will be elected.
With respect to the vote on the proposal to increase the number of
shares reserved for issuance under the Corporation's 1997 Stock Option Plan,
stockholders may vote for or against the proposal or may abstain from voting.
This proposal requires the affirmative vote of a majority of the outstanding
shares of the Corporation's Common Stock present in person or by proxy at the
Meeting and entitled to vote. Abstentions and broker non-votes, therefore,
will have no effect on its outcome.
Revocation of a Proxy. Stockholders who execute proxies retain the
right to revoke them at any time before they are voted. Proxies may be
revoked by written notice delivered in person or mailed to the Secretary of
the Corporation or by filing a later proxy prior to a vote being taken on a
particular proposal at the Annual Meeting.
<PAGE>
Attendance at the Annual Meeting will not automatically revoke a proxy, but a
stockholder of record in attendance may request a ballot and vote in person,
thereby revoking a prior granted proxy.
Participants in the Cascade Financial Corporation ESOP. If a
stockholder is a participant in the Cascade Financial Corporation, Employee
Stock Ownership Plan (the "ESOP"), the proxy card represents a voting
instruction to the trustees of the ESOP as to the number of shares in the
participant's plan account. Each participant in the ESOP may direct the
trustees as to the manner in which shares of Common Stock allocated to the
participant's plan account are to be voted. Unallocated shares of Common
Stock held by the ESOP and allocated shares for which no voting instructions
are received will be voted by the trustees.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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Persons and groups who beneficially own more than 5% of the
Corporation's Common Stock are required to file certain reports disclosing
such ownership pursuant to the Securities Exchange Act of 1934, as amended
("Exchange Act"). Based on such reports, the following table sets forth, as
of August 27, 1999, certain information as to those persons who were
beneficial owners of more than 5% of the outstanding shares of Common Stock.
The following table sets forth, as of August 27, 1999, information as
to the shares of Common Stock beneficially owned by (a) each director, (b)
each of the executive officers named in the Summary Compensation Table found
below (the "named executive officers") and (c) by all executive officers and
directors of the Corporation as a group.
Amount and Nature of Percent of Shares
Name Beneficial Ownership(a) Outstanding
- ---- ----------------------- -----------
Beneficial Owners of More Than 5%
Arthur W. Skotdal 320,525(b) 5.9%
Andrew Skotdal
Craig G. Skotdal
c/o Douglas A. Schafer
Schafer Law Firm
P.O. Box 1134
Tacoma, WA 98401
Frank M. McCord 297,227 5.5
2828 Colby Avenue
Everett, WA 98201
Directors
Paull H. Shin 12,206 *
Janice Halladay 6,230 *
Dwayne Lane 35,099 *
Gary L. Meisner 14,062 *
David W. Duce 25,194 *
G. Brandt Westover 20,450 *
Dennis R. Murphy 27,901 *
Ronald E. Thompson 39,919 *
Henry Robinett 31,500 *
David O'Connor 85,406 1.6
(table continued on following page)
-2-
<PAGE>
Amount and Nature of Percent of Shares
Name Beneficial Ownership(a) Outstanding
- ---- ---------------------- ----------------
Named Executive Officers
Frank M. McCord** 297,227 5.5%
C. Fredrick Safstrom** 108,960 2.0
Robert G. Disotell** 91,788 1.7
Steven R. Erickson 19,327 *
James J. Palm 6,881 *
All Executive Officers and Directors
as a Group (19 persons) 919,005 46.8
- ----------------
* Less than 1%.
** Also a director of the Corporation and the Bank. Effective December 31,
1998, Mr. Disotell resigned as a director of the Corporation.
(a) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed
to be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he or she has voting and/or investment power with
respect to such security. The table includes shares owned by spouses,
other immediate family members in trust, shares held in retirement
accounts or funds for the benefit of the named individuals, and other
forms of ownership, over which shares the persons named in the table may
possess voting and/or investment power. Shares held in accounts under
the Corporation's ESOP as of June 30, 1999, as to which the holders have
voting power but not investment power, are included as follows: Mr.
McCord, 8,742 shares; Mr. Safstrom, 6,480 shares; Mr. Disotell, 6,348
shares; Mr. Palm, 542 shares; Mr. Erickson, 10,291; all executive
officers and directors as a group, 377,192 shares. Does not include
103,326 shares held under Cascade Bank's 401(k) Plan, for which Messrs.
McCord and Safstrom act as trustees. The amounts shown also include the
following amounts of Common Stock which the indicated individuals have
the right to acquire within 60 days of August 27, 1999 through the
exercise of stock options granted pursuant to the Corporation's stock
option plans: Mr. Shin, 9,155; Ms. Halladay, 1,465; Mr. Lane, 7,324;
Mr. Meisner, 7,324; Mr. Duce, 3,742; Mr. Westover, 7,497; Mr. Murphy,
13,909; Mr. Thompson, 13,909; Mr. Robinett, 4,945; Mr. O'Connor, 4,945;
Mr. McCord, 78,670; Mr. Safstrom, 69,141; Mr. Disotell,64,373; Mr. Palm,
4,922; Mr. Erickson, 10,291; Mr. Little, 33,241; Mr. Rosendal,40,774;
Ms. Wildauer, 1,563; and all executive officers and directors as a
group, 377,190.
(b) Information concerning the shares owned by the Skotdals was obtained
from an amended Schedule 13D dated March 6, 1998. According to this
filing, Arthur Skotdal has sole voting and dispositive power with
respect to 115,496 shares and shared voting and dispositive power with
respect to 205,029 shares, Andrew Skotdal has shared voting and
dispositive power with respect to 99,650 shares and Craig Skotdal has
shared voting and dispositive power with respect to 105,379 shares.
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Corporation's Board of Directors currently consists of twelve
members. The Board of Directors is divided into three classes with three-year
staggered terms, with approximately one-third of the directors elected each
year. On December 31, 1999, Director Robert G. Disotell resigned and the
Board appointed Janice Halladay to succeed Mr. Disotell. Additionally, on
December 31, 1999, Director Joan M. Earl resigned and the Board of Directors
determined to decrease the number of Board members from thirteen to twelve.
The Nominating Committee has nominated for election as directors
Messrs. Frank M. McCord, C. Fredrick Safstrom, David W. Duce and David
O'Connor each for a three year term. All nominees currently serve as members
of the Boards of Directors of the Corporation and the Bank.
-3-
<PAGE>
It is intended that the proxies solicited by the Board of Directors
will be voted for the election of the above named nominees. If any nominee is
unable to serve, the shares represented by all valid proxies will be voted for
the election of such substitute as the Board of Directors may recommend or the
Board of Directors may amend the Bylaws and reduce the size of the Board. At
this time, the Board knows of no reason why any nominee might be unable to
serve.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ALL OF
THE NOMINEES NAMED BELOW FOR DIRECTORS OF THE CORPORATION.
The following table sets forth certain information regarding the
nominees for election at the Annual Meeting, as well as information regarding
those directors continuing in office after the Annual Meeting.
Year First
Positions Elected or
Held With Appointed Term to
Name Age(a) the Corporation Director (b) Expire
- ---- ------ --------------- ------------ -------
BOARD NOMINEES
Frank M. McCord 69 Chairman of the Board, Chief 1986 2002(c)
Executive Officer and Director
C. Fredrick Safstrom 45 President, Chief Operating
Officer and Director 1990 2002(c)
David W. Duce 39 Vice Chairman of the Board 1991 2002(c)
David O'Connor 54 Director 1997 2002(c)
DIRECTORS CONTINUING IN OFFICE
Dwayne Lane 64 Director 1995 2000
G. Brandt Westover 39 Director 1986 2000
Dennis R. Murphy 57 Vice Chairman of the Board 1991 2000
Ronald E. Thompson 50 Director 1991 2000
Janice Halladay 55 Director 1999 2001
Paull H. Shin 63 Director 1995 2001
Gary L. Meisner 63 Director 1995 2001
Henry Robinett 68 Director 1997 2001
- --------------
(a) At June 30, 1999.
(b) Includes prior service on the Board of Directors of the Bank.
(c) Assuming the individuals are reelected at the Annual Meeting.
-4-
<PAGE>
The principal occupation of each director of the Corporation is set
forth below. All of the directors reside in Everett and have held their
present position for at least five years unless otherwise stated.
FRANK M. MCCORD, C.P.A., became Chairman of the Board of Directors,
President and Chief Executive Officer of the Bank in 1990. Mr. McCord was the
Managing Partner of the KPMG Peat Marwick LLP, Seattle, Washington office
until his retirement in 1986. In addition to his responsibilities to the
Corporation, Mr. McCord is a Director and past Chairman of the Everett Area
Chamber of Commerce and is a Director of the Everett Performing Arts
Association. Mr. McCord has previously served as President of the Evergreen
Area Council of Boy Scouts of America, Treasurer of the United Way of King
County, Campaign Chairman of United Way of Snohomish County, Trustee of
Seattle University, a Fellow of Seattle Pacific University, Treasurer of the
Washington Society of Certified Public Accountants, Director of the Everett
Rotary Club, and a Director of the Seattle Chamber of Commerce.
C. FREDRICK SAFSTROM is the Bank's President and Chief Operating
Officer. He has served Cascade in a variety of managerial positions with
increasing responsibilities since 1976. Mr. Safstrom is a trustee and
treasurer of Seattle Pacific University, chairman-elect of the Snohomish
County YMCA, past-president and director of the Everett Public Schools
Foundation, director and treasurer of Housing Hope, director of the Snohomish
County Investment Plan Corporation, and a member of the Everett Rotary.
DAVID W. DUCE is a practicing attorney with Duce, Bastian, Peterson and
Zielke in Everett, Washington. He is the vice-chairman of the Professional
Negligence Section of the Washington State Trial Lawyers Association. Mr.
Duce has also served as a volunteer attorney at Snohomish County Legal
Services, a Bishop in the Church of Jesus Christ Latter Day Saints, and a
former member of Senator Henry M. Jackson's Washington, D.C. staff.
DAVID O'CONNOR is Co-Owner of Mobile Country Club in Everett
Washington, and was a founding director of American First National Bank. Mr.
O'Connor was Co-Owner of O'Connor & Oehler Construction Inc. from 1974 to 1996
and continues in his development business. Mr. O'Connor is a member of the
Manufactured Housing Communities of Washington. Mr. O'Connor resides in
Arlington, Washington.
DWAYNE LANE is the owner of three automobile dealerships in Everett and
Arlington, Washington. Mr. Lane, an Everett native, is active in community
affairs. Mr. Lane served 12 years as an Everett Port Commissioner and was a
board member for Olympic Bank and Providence Hospital.
G. BRANDT WESTOVER is a Corporate Vice President and Branch Manager for
PaineWebber Inc. in Bellevue, Washington, a position he has held since 1996.
From 1993 to 1996, Mr. Westover was a Vice President/Investments with
PaineWebber in Seattle, Washington. Mr. Westover was recently elected to the
Board of Trustees for the University of Washington Alumni Association. He is
also active with the Juvenile Diabetes Association. Mr. Westover is a
resident of Bellevue, Washington.
DENNIS R. MURPHY, Ph.D., is Dean of the College of Business and
Economics and Professor of Economics at Western Washington University,
Bellingham, Washington. He serves on the boards of the Northwest Medical
Bureau, the PACE Foundation, Jr. Achievement, and the Whatcom Chamber of
Commerce and Industry. He is Past-President of the United Way of Whatcom
County and the Bellingham Rotary. Dr. Murphy was elected Vice-Chairman of the
Corporation in July 1998. He is a resident of Bellingham, Washington.
RONALD E. THOMPSON is the President of WRE Commercial and Property
Management, Inc., Everett, Washington, a real estate sales and property
management company. He is a past president of the Snohomish County-Camano
Association of Realtors, a current State director of the Washington
Association of Realtors, member of the Everett Rotary Club, and serves on the
Board of Directors for the Mt. Baker Council Boy Scouts of America.
JANICE HALLADAY is employed by Moss Adams LLP in Everett, Washington.
She was previously employed by Pioneer Bank, Lynnwood, Washington, as Senior
Vice President. Ms. Halladay is currently a member
-5-
<PAGE>
of the Board of Directors of the Northwest Service Area of the Providence
Health System and also serves on the Board of Trustees for Deaconess
Children's Services. She is a resident of Everett, Washington.
PAULL H. SHIN, Ph.D., is a Washington State Senator and a retired
Professor of History at Shoreline Community College, Seattle, Washington. Dr.
Shin is Chairman of Transpacific Telecommunications, Inc. and a board member
of the Snohomish County United Way, and the YMCA. Dr. Shin is a resident of
Edmonds, Washington.
GARY L. MEISNER is President of Clearview Management, Inc., a
management and investment services company in Everett, Washington. From 1978
to December 1996, Mr. Meisner served as President of the Small Business
Center, Inc., a firm that provided accounting, tax preparation and insurance
services to individuals and small businesses in Everett and Seattle,
Washington. Prior to this position, Mr. Meisner spent 14 years in commercial
and consumer banking. Mr. Meisner is a graduate of Wayne State College and
the Pacific Coast Banking School. Mr. Meisner is active in community affairs.
HENRY ROBINETT is general partner of Boyden, Robinett & Assoc. L.P. and
was a founding director of American First National Bank in 1984. Mr. Robinett
is active in real estate development in Snohomish County and is very involved
in community activities. Mr. Robinett resides in Snohomish, Washington.
Meetings and Committees of the Board of Directors
The Board of Directors of the Corporation and the Bank conduct their
business through meetings of the Board and through their committees. During
the fiscal year ended June 30, 1999, the Board of Directors of the Corporation
and the Bank held six meetings. No director of the Corporation or the Bank
attended fewer than 75% of the total meetings of the Board of Directors and
committee meetings on which such Board member served during this period.
The Board of Directors of the Corporation and the Bank has an Executive
Committee consisting of Messrs. McCord, O'Connor, Robinett, Safstrom, Thompson
and Westover. This committee primarily serves as a large loan review
committee but also has the authority to generally act for the full board.
This committee meets as necessary and met 25 times during the 1999 fiscal
year.
The Board of Directors of the Corporation and the Bank has an Audit and
Finance Committee consisting of Messrs. Murphy (Chairman), Robinett, Meisner
and Thompson. The purpose of the committee is to provide direction and
oversight to the Internal Audit Department and bears responsibility for the
audit function and reviews the examination of the Bank by federal and state
regulatory authorities and the audit by the independent auditing firm. The
Audit and Finance Committee meets at least quarterly and met eight times
during the 1999 fiscal year.
The Board of Directors of the Corporation and the Bank has a
Compensation and Personnel Committee consisting of Messrs. Duce (Chairman),
Lane, Shin and Halladay, all of whom are outside directors. This committee is
responsible for reviewing the compensation policies of the Corporation and the
Bank, approving compensation of executive officers, and recommending the
granting of stock options. The committee met eight times during the 1999
fiscal year.
In connection with the Annual Meeting and selection of the nominees for
election as directors, the Board of Directors of the Corporation acts as a
nominating committee for selecting the nominees for election as directors.
The Board of Directors of the Corporation held one meeting in its capacity as
the nominating committee during fiscal 1999 in order to nominate the
individuals for election at the Annual Meeting.
Directors' Compensation
During fiscal 1999, outside members of the Board of Directors received
a retainer of $7,500. In addition, outside members of the executive committee
received a retainer of $2,000 plus 150 shares of Common Stock in fiscal 1999.
Committee chairmen also received $3,000 plus 150 shares of Common Stock in
fiscal 1999 instead of per
-6-
<PAGE>
meeting fees. Other members of the board received in fiscal 1999 a fee of
$200 for each committee meeting attended other than on a day of a regular
board meeting.
A Director bonus program was started during fiscal 1999. Under the
program, outside directors qualify for a bonus equally to 1% of the executive
management pool. Payments under the program will be made in fiscal 2000.
- ------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
- ------------------------------------------------------------------------------
Summary Compensation Table
The following information is furnished for the Chief Executive Officer
of the Corporation for the year ended June 30, 1999 and those executive
officers of the Corporation who received salary and bonus in excess of
$100,000 during the year ended June 30, 1999.
<TABLE>
Long-Term
Compensation
Annual Compensation Awards
------------------------------------ ------
Name and Fiscal Other Annual Number of All Other
Principal Position Year Salary Bonus Compensation(1) Options Compensation(2)
- ------------------ ---- ------ ----- --------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Frank M. McCord 1999 $130,548 $31,180 -- -- $11,365
Chief Executive Officer 1998 118,680 25,286 -- -- 6,720
1997 118,680 48,368 -- -- 4,994
C. Fredrick Safstrom 1999 91,300 24,187 -- 12,500 13,055
President 1998 83,016 19,453 -- -- 13,459
1997 83,016 38,826 -- -- 9,246
Robert G. Disotell 1999 83,016 30,140 -- 3,750 13,478
Executive Vice President 1998 83,016 36,109 -- -- 8,919
1997 83,016 30,780 -- -- 8,025
Steven R. Erickson (3) 1999 70,000 35,010 -- 7,500 9,345
Executive Vice President 1998 60,000 6,215 -- 3,906 3,759
1997 60,000 56,344 -- -- 4,269
James J. Palm (3) 1999 66,750 152,291 -- 6,250 13,485
Executive Vice President 1998 51,600 95,069 -- 10,938 4,827
1997 32,250 15,660 -- 13,672 --
- ---------------
(1) Does not include perquisites which did not exceed $50,000 or 10% of salary and bonus.
(2) All Other Compensation for fiscal year 1999 includes the following: for Mr. McCord, employer
contribution to 401(k) Plan of $3,579 and ESOP contribution of $7,786; for Mr. Safstrom, cash
distribution of accrued leave of $4,740 pursuant to executive's election, employer contribution
to 401(k) Plan of $2,574 and ESOP contribution of $5,741, and employer contribution to employee
stock purchase plan of $1,271; for Mr. Disotell, cash distribution of accrued leave of $4,789
pursuant to executive's election, employer contribution to 401(k) Plan of $2,949, and ESOP
contribution of $5,740; for Mr. Erickson, employer contribution to 401(k) Plan of $2,541 and ESOP
contribution of $5,189; for Mr. Palm, employer contribution to 401(k) Plan of $4,000, ESOP
contribution of $7,786, and and employer contribution to employee stock purchase plan of $529.
(3) Messrs. Erickson and Palm became executive officers of the Corporation during fiscal 1999.
-7-
</TABLE>
<PAGE>
<TABLE>
Option Grants Table
The following table sets forth information concerning the grant of stock options to the named
executive officers during the fiscal year ended June 30, 1999. Mr. McCord did not receive any stock
options in fiscal 1999.
Individual Grants
------------------------------------------------- Potential Realizable Value
Number of Percent of at Assumed Annual Rates of
Securities Total Options Stock Price Appreciation
Underlying Granted to Exercise for Option Term(2)
Options Employees in Price Expiration --------------------------
Name Granted(1) Fiscal Year ($/sh) Date 5% 10%
- -------------------- ---------- ----------- ------ ------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
C. Fredrick Safstrom 12,500 10.15% $11.90 7/21/08 $271,500 $412,625
Robert G. Disotell 3,750 3.05 11.90 7/21/08 81,450 123,788
Steven R. Erickson 7,500 6.09 9.90 7/21/08 162,900 247,575
James J. Palm 6,250 5.08 9.90 7/21/08 135,750 206,313
- ----------------
(1) Options granted vest at the rate of 20 percent per annum, after the second year of grant. Options
will become immediately exercisable in the event of a change in control of the Corporation.
Option was granted under the Corporation's 1997 Stock Option Plan and has an exercise price equal
to the fair market value of the Common Stock on the date of grant. The indicated options for
Messrs. Safstrom and Disotell were granted on July 21, 1998. The options for Messrs. Erickson and
Palm were priced in September 1998.
(2) The dollar gains under these columns result from calculations required by the Securities and
Exchange Commission's ("SEC") rules and are not intended to forecast future price appreciation of
the Common Stock of the Corporation. It is important to note that options have value to the
listed executive only if the stock price increases above the exercise price shown in the table
during the effective option period. In order for the listed executive to realize the potential
values set forth in the 5% and 10% columns in the table, the price per share of the Corporation's
Common Stock would be approximately $21.72 and $33.01, respectively, as of the expiration date of
the options.
</TABLE>
<TABLE>
Option Exercise/Value Table
The following table sets forth information with respect to options exercised during the fiscal
year ended June 30, 1999 and remaining unexercised at the end of the fiscal year for the named executive
officers.
Value of Unexercised
Number of Number of Securities In-the-Money Options
Shares Underlying Unexercised Options at Fiscal Year End(1)
Acquired on Value ------------------------------ ---------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank M. McCord 2,000 $ 25,000 78,670 -- $1,002,256 $ --
C. Fredrick Safstrom -- -- 69,141 12,500 880,856 26,250
Robert G. Disotell -- -- 64,373 3,750 820,112 7,875
Steven R. Erickson 10,700 167,125 9,509 14,336 111,204 77,850
James J. Palm -- -- 2,734 28,125 17,279 163,881
- ------------------
(1) The value of unexercised in-the-money options is calculated using a fair market value of $14.00 as
of June 30, 1999, based on the last known trade on or before such date. Options have been adjusted
for stock dividends.
</TABLE>
Notwithstanding anything to the contrary set forth in any of the
Corporation's previous filings under the Securities Act of 1933, as amended,
or the Exchange Act that might incorporate future filings, including this
Proxy
-8-
<PAGE>
Statement, in whole or in part, the following report and Performance Graph
shall not be incorporated by reference into any such filings.
Report of the Compensation and Personnel Committee
Under rules established by the SEC, the Corporation is required to
provide certain data and information in regard to the compensation and
benefits provided to the Corporation's Chief Executive Officer and other
executive officers of the Bank and Corporation. The Compensation and
Personnel Committee's duties are to establish and administer policies that
govern executive compensation for the Corporation. The Committee evaluates
the individual performance of the Chief Executive Officer, the President and
Chief Operating Officer, the Chief Financial Officer, and other senior level
officers and reviews compensation policies for all senior management. The
Committee receives input from the Chief Executive Officer on the other two
executive officers' performance and has final authority to set individual
compensation levels.
The executive compensation policies of the Corporation are designed to
reflect the attainment of short and long-term financial performance goals and
to enhance the ability of the Corporation to attract and retain qualified
executive officers. The Committee considers a variety of subjective and
objective factors in determining the compensation package for individual
executives. These factors include the performance of the Corporation overall,
the responsibilities assigned to each executive, and the performance of each
executive in their assigned areas of responsibilities.
Base salary. The Corporation's compensation plan involves a
combination of salary and cash bonuses tied to short-term performance. Salary
levels are designed to be competitive within the banking industry based on a
peer group analysis of Washington State financial institutions. Specifically,
the Committee reviews the Washington Savings League's compensation report on
senior banking executives. Given the Corporation's performance and size, the
Committee concluded that the base salaries of the reviewed executive officers
will remain unchanged for fiscal 2000.
Bonus program. An incentive bonus plan is in effect for the executive
officers of the Corporation that is designed to compensate for performance.
The plan provides for a bonus pool to be shared by the Chief Executive
Officer, President, Chief Financial Officer, and the Marketing Director, who
was added in fiscal 1999, based on net earnings of the Corporation above
predetermined annual targets. For the year ended June 30, 1998 the bonus pool
was $81,750 and for the year ended June 30, 1999 the bonus pool was $132,000.
Bonuses for the year ended June 30, 1999 will be allocated and paid in
quarterly installments beginning in October 1999. Percentages are allocated
among the executive officers participating in the pool based on the
Committee's evaluation of individual performance and responsibilities.
Option grants. The Committee selects employees who will receive stock
options and determines the number to be granted. Stock option grants are
designed to provide long-term incentives for key employees. The Committee
grants options throughout each year. The Committee granted options to
purchase 12,500, 6,250 and 5,000 shares to the President, Chief Financial
Officer, and Marketing Director, respectively, during fiscal 1999. These
grants were made at current market prices under the rules of the 1997 Stock
Option Plan.
Compensation of the Chief Executive Officer and Named Executive
Officers. For the year ended June 30, 1999, the base salary of Frank M.
McCord, Chairman and Chief Executive Officer of the Bank and Cascade Financial
Corporation was $130,548. In addition he received $31,180 in deferred bonuses
for the fiscal year ended June 30, 1998. He was also credited with $11,365 in
compensation relating to his 401(k) and ESOP accounts. Mr. McCord's
performance bonus reflected the attainment of the specific performance
criteria for the 1998 fiscal year established by the Compensation and
Personnel Committee. The Committee believes that Mr. McCord's compensation is
appropriate based on the Corporation's overall performance.
-9-
<PAGE>
For the year ended June 30, 1999, the base salary of C. Fredrick
Safstrom, President of the Bank and Cascade Financial Corporation was $91,300.
In addition he received $24,187 in deferred bonuses for the fiscal year ended
June 30, 1998. He was also credited with $13,055 in compensation relating to
his 401(k), ESOP accounts, and a cash distribution of accrued leave. Mr.
Safstrom's performance bonus reflected the attainment of the specific
performance criteria for the 1998 fiscal year established by the Compensation
and Personnel Committee. The Committee believes that Mr. Safstrom's
compensation is appropriate based on the Corporation's overall performance.
For the year ended June 30, 1999, the base salary of Robert G.
Disotell, Executive Vice President of the Bank and Cascade Financial
Corporation was $83,016. In addition he received $30,140 in deferred bonuses
for the fiscal year ended June 30, 1998. He was also credited with $13,478 in
compensation relating to his 401(k) and ESOP accounts, and a cash distribution
for accrued leave. Mr. Disotell's performance bonus reflected the attainment
of the specific performance criteria for the 1998 fiscal year established by
the Compensation and Personnel Committee. The Committee believes that Mr.
Disotell's compensation is appropriate based on the Corporation's overall
performance.
For the year ended June 30, 1999, the base salary of Steven R.
Erickson, Executive Vice President of the Bank was $70,000. In addition he
received $35,010 in bonuses for the fiscal year ended June 30, 1999. He was
also credited with $9,345 in compensation relating to his 401(k) and ESOP
accounts. Mr. Erickson's performance bonus reflected the attainment of the
specific performance criteria for the 1998 fiscal year established by the
Compensation and Personnel Committee. The Committee believes that Mr.
Erickson's compensation is appropriate based on the Corporation's overall
performance.
For the year ended June 30, 1999, the base salary of James J. Palm,
Executive Vice President of the Bank was $66,750. In addition he received
$152,291 in bonuses for the fiscal year ended June 30, 1999. He was also
credited with $13,485 in compensation relating to his 401(k) and ESOP
accounts. Mr. Palm's performance bonus reflected the attainment of the
specific performance criteria for the 1998 and 1999 fiscal years established
by the Compensation and Personnel Committee. The Committee believes that Mr.
Palm's compensation is appropriate based on the Corporation's overall
performance.
Compensation and Personnel Committee
David W. Duce (Chairman)
Janice Halladay
Dwayne Lane
Paull H. Shin
-10-
<PAGE>
Performance Graph
The following graph compares the Corporation's cumulative stockholder
return on its Common Stock with the return on the Nasdaq (U.S. Stock) Index
and a peer group of the Nasdaq's Financial Index. Total return assumes the
reinvestment of all dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL*
[Graph Appears Here]
6/30/94 6/30/95 6/30/96 6/30/97 6/30/98 6/30/99
------- ------- ------- ------- ------- -------
Cascade Financial
Corporation $100.00 $139.80 $161.90 $186.32 $232.90 $281.08
Nasdaq (U.S. Stock)
Index 100.00 133.48 171.38 208.43 274.43 392.16
Nasdaq Financial
Index 100.00 114.34 148.88 218.04 283.53 285.47
* Assumes that the value of the investment in the Corporation's Common Stock
and each index was $100 on June 30, 1994, and that all dividends were
reinvested.
-11-
<PAGE>
- ------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
- ------------------------------------------------------------------------------
Section 16(a) of the Exchange Act requires the Corporation's executive
officers and directors, and persons who own more than 10% of any registered
class of the Corporation's equity securities, to file reports of ownership and
changes in ownership with the SEC. Executive officers, directors and greater
than 10% shareholders are required by 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 it has received
and written representations provided to the Corporation by the above
referenced persons, the Corporation believes that all filing requirements
applicable to its reporting officers, directors and greater than 10%
shareholders were properly and timely complied with during the fiscal year
ended June 30, 1999, except for several directors who recently indicated to
the Corporation that they may have transactions that were not timely reported.
The directors are reviewing their transaction records and may be required to
file late or amended reports with the SEC.
- ------------------------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT
- ------------------------------------------------------------------------------
As required by federal regulations, all loans or extensions by the Bank
of credit to executive officers and directors are made on substantially the
same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons (except for loans made
pursuant to programs generally available to all employees) and do not involve
more than the normal risk of repayment or present other unfavorable features.
In addition, loans made by the Bank to a director or executive officer in an
amount that, when aggregated with the amount of all other loans by the Bank to
such person and his or her related interests, are in excess of the greater of
$25,000 or 5% of the Bank's capital and surplus (up to a maximum of $500,000)
are subject to approval in advance by a majority of the disinterested members
of the Board of Directors.
- ------------------------------------------------------------------------------
PROPOSAL II -- INCREASE IN SHARES RESERVED FOR ISSUANCE
UNDER 1997 STOCK OPTION PLAN
- ------------------------------------------------------------------------------
As originally adopted, the 1997 Stock Option Plan provided for the
issuance of options to purchase up to 179,688 shares of Common Stock. To
date, options to purchase a total of 115,587 shares have been granted net of
forfeitures, of which none have been exercised. There are 64,101 options that
remain to be granted under the Plan.
At the Meeting, stockholders are being asked to consider and vote on an
amendment to the Plan that would authorize the grant of options to purchase a
total of 250,000 additional shares of Common Stock. The Board of Directors is
proposing this amendment because it believes that stock options have been, and
will continue to be, an important tool when negotiating mergers and
acquisitions of other corporations, and to a lesser extent retaining and
attracting management personnel. Moreover, the exercise of stock options is
beneficial to the Corporation because it provides additional capital to the
Corporation at no cost. Any options granted before stockholder approval of the
increase in the number of shares of Common Stock under the Option Plan are
contingent upon such approval.
Under certain circumstances, it is possible for stock options to have a
dilutive effect. Stock options under the Plan are issued at no less than fair
market value at the time they are granted. If the book value per share is or
becomes significantly higher than the exercise price, then the exercise of
such stock options may have an effect on the book value per share. It is
unlikely, however, that such effect would be significant.
The following description is a summary of the Plan prior to adoption of
the foregoing amendments by the Board of Directors of the Corporation.
-12-
<PAGE>
General. On March 18, 1997, the Board of Directors adopted the Plan
which was approved and ratified by stockholders at the 1997 Special Meeting of
Stockholders. Pursuant to the Plan, up to 179,688 shares of the Corporation's
Common Stock were reserved for future issuance by the Corporation pursuant to
the exercise of stock options under the Plan, which may be granted to
officers, employees and non-employee directors.
Shares to be issued under the Plan may be either treasury shares or
authorized but unissued shares. Any shares subject to an award that expires
or is terminated unexercised will again be available for issuance under the
Plan. No award or any right or interest therein is assignable or transferable
except by will or the laws of descent and distribution.
Administration of the Plan. The Plan is administered by a committee of
the Corporation's Board ("Committee"). The Committee determines who will be
granted options and has the authority and discretion to determine when options
will be granted and the number of options to be granted. In making such
determination, the Committee will consider those non-employee directors,
officers and employees who are expected to make significant contributions to
the long-term success of the Corporation and the Bank. With respect to awards
to officers and employees, the Committee also determines which options are
intended to qualify for special treatment under the Internal Revenue Code
("Incentive Stock Options") ("Code") or to be issued as options which are not
intended to so qualify ("Non-Qualified Stock Options"). The Plan provides
that all options granted to non-employee directors are Non-Qualified Stock
Options.
Option Price. The exercise price of Non-Qualified Stock Options and
Incentive Stock Options may not be less than 100% of the fair market value of
the shares of the Common Stock on the date of grant. Any Incentive Stock
Option granted to a person owning more than 10% of the outstanding Common
Stock must have an exercise price of at least 110% of fair market value on the
date of grant. The maximum aggregate fair market value (determined as of the
date of grant) of the shares to which Incentive Stock Options held by an
individual become exercisable for the first time during any calendar year may
not exceed $100,000.
Nonqualified Stock Options. Under the terms of the Plan, nonqualified
stock options not exercised within 120 months from the effective date of the
Plan will expire. Such options may be granted but are not exercisableuntil
the Plan has been ratified by stockholders.
An option holder who is granted a Non-Qualified Stock Option under the
Plan will not realize any income for Federal income tax purposes on the grant
of an option. An option holder will realize ordinary income for Federal
income tax purposes on the exercise of an option, provided the shares are not
then subject to a substantial risk of forfeiture within the meaning of Section
83 of the Code ("Risk of Forfeiture"), in an amount equal to the excess, if
any, of the fair market value of the shares of the Common Stock on the date of
exercise over the exercise price thereof. If the shares are subject to a Risk
of Forfeiture on the date of exercise, the option holder will realize ordinary
income for the year in which the shares cease to be subject to a Risk of
Forfeiture in an amount equal to the excess, if any, of the fair market value
of the shares at the date they cease to be subject to a Risk of Forfeiture
over the exercise price, unless the option holder shall have made a timely
election under Section 83 of the Code to include in his or her income for the
year of exercise an amount equal to the excess of the fair market value of the
shares of Common Stock on the date of exercise over the exercise price. The
amount realized for tax purposes by an option holder by reason of the exercise
of a Non-Qualified Stock Option granted under the Plan is subject to
withholding by the Corporation and the Corporation is entitled to a deduction
in an amount equal to the income so realized by an option holder.
Provided that the option holder satisfies certain holding period
requirements provided by the Code, an employee will realize long-term capital
gain or loss, as the case may be, if the shares issued upon exercise of a Non-
Qualified Stock Option are disposed of more than one year after (i) the shares
are transferred to the employee or (ii) if the shares were subject to a Risk
of Forfeiture on the date of exercise and a valid election under Section 83 of
the Code shall not have been made, the date as of which the shares cease to be
subject to a Risk of Forfeiture. The amount recognized upon such disposition
will be the difference between the option holder's basis in such shares and
the amount
-13-
<PAGE>
realized upon such disposition. Generally, an option holder's basis in the
shares will be equal to the exercise price plus the amount of income
recognized upon exercise of the option.
Incentive Stock Options. An Incentive Stock Option holder who meets
the eligibility requirements of Section 422 of the Code will not realize
income for Federal income tax purposes, and the Corporation will not be
entitled to a deduction, on either the grant or the exercise of an Incentive
Stock Option. If the Incentive Stock Option holder does not dispose of the
shares acquired within two years after the date the Incentive Stock Option was
granted to him or her or within one year after the transfer of the shares to
him or her, (i) any proceeds realized on a sale of such shares in excess of
the option price will be treated as long-term capital gain and (ii) the
Corporation will not be entitled to any deduction for Federal income tax
purposes with respect to such shares.
If an Incentive Stock Option holder disposes of shares during the
two-year or one-year periods referred to above (a "Disqualifying
Disposition"), the Incentive Stock Option holder will not be entitled to the
favorable tax treatment afforded to incentive stock options under the Code.
Instead, the Incentive Stock Option holder will realize ordinary income for
Federal income tax purposes in the year the Disqualifying Disposition is made,
in an amount equal to the excess, if any, of the fair market value of the
shares of the Corporation's Common Stock on the date of exercise over the
exercise price.
An Incentive Stock Option holder generally will recognize long-term
capital gains or loss, as the case may be, if the Disqualifying Disposition is
made more than one year after the shares are transferred to the Incentive
Stock Option holder. The amount of any such gain or loss will be equal to the
difference between the amount realized on the Disqualifying Disposition and
the sum of (x) the exercise price and (y) the ordinary income realized by the
Incentive Stock Option holder as the result of the Disqualifying Disposition.
The Corporation will be allowed in the taxable year of a Disqualifying
Disposition a deduction in the same amount as the ordinary income recognized
by the Incentive Stock Option holder.
Notwithstanding the foregoing, if the Disqualifying Disposition is made
in a transaction with respect to which a loss (if sustained) would be
recognized to the Incentive Stock Option holder, then the amount of ordinary
income required to be recognized upon the Disqualifying Disposition will not
exceed the amount by which the amount realized from the disposition exceeds
the exercise price. Generally, a loss may be recognized if the transaction is
not a "wash" sale, a gift or a sale between certain persons or entities
classified under the Code as "related persons."
Alternative Minimum Tax. For purposes of computing the alternative
minimum tax with respect to shares acquired pursuant to the exercise of
Incentive Stock Options, the difference between the fair market value of the
shares on the date of exercise over the exercise price will be an item of tax
preference in the year of exercise if the shares are not subject to a Risk of
Forfeiture; if the shares are subject to a Risk of Forfeiture, the amount of
the tax preference taken into account in the year the Risk of Forfeiture
ceased will be the excess of the fair market value of the shares at the date
they cease to be subject to a Risk of Forfeiture over the exercise price. The
basis of the shares for alternative minimum tax purposes, generally, will be
an amount equal to the exercise price, increased by the amount of the tax
preference taken into account in computing the alternative minimum taxable
income.
Termination of the Plan. The right to grant options under the Plan
will terminate upon the earlier of ten years after the date on which the Plan
is approved by stockholders, the issuance of the Common Stock or exercise of
nonqualified stock options equal to the maximum number of shares of Common
Stock reserved for issuance under the Plan.
In light of the foregoing, the Board of Directors recommends that
stockholders approve the amendment to the Plan as described under this
Proposal II. The proposal must be approved by the affirmative vote of a
majority of the outstanding shares of the Corporation's Common Stock present
in person or by proxy at the Meeting and entitled to vote. THE BOARD OF
DIRECTORS RECOMMENDS THAT STOCKHOLDERS
-14-
<PAGE>
VOTE "FOR" THE APPROVAL OF THE INCREASE IN SHARES RESERVED FOR ISSUANCE UNDER
THE 1997 STOCK OPTION PLAN.
- ------------------------------------------------------------------------------
AUDITORS
- ------------------------------------------------------------------------------
The Board of Directors has appointed KPMG, LLP, independent public
accountants, to serve as the Corporation's auditors for the fiscal year ending
June 30, 2000. A representative of KPMG, LLP will be present at the Annual
Meeting to respond to appropriate questions from shareholders and will have
the opportunity to make a statement if he or she so desires.
- ------------------------------------------------------------------------------
OTHER MATTERS
- ------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Annual Meeting other than those matters described above in this Proxy
Statement. However, if any other matters should properly come before the
Meeting, it is intended that proxies in the accompanying form will be voted in
respect thereof in accordance with the judgment of the person or persons
voting the proxies, including matters relating to the conduct of the Annual
Meeting.
- ------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- ------------------------------------------------------------------------------
In order to be eligible for inclusion in the Corporation's proxy
materials for the 2000 annual meeting of stockholders, any stockholder
proposal to take action at such meeting must be received at the Corporation's
executive offices at 2828 Colby Avenue, Everett, Washington 98201 no later
than May 26, 2000. Any such proposal shall be subject to the requirements of
the proxy rules adopted under the Exchange Act.
The Corporation's Certificate of Incorporation provides that in order
for a stockholder to make nominations for the election of directors or
proposals for business to be brought before the Annual Meeting, a stockholder
must deliver notice of such nominations and/or proposals to the Secretary not
less than 30 nor more than 60 days prior to the date of the Annual Meeting;
provided that if less than 31 days' notice of the Annual Meeting is given to
stockholders, such notice must be delivered not later than the close of the
tenth day following the day on which notice of the Annual Meeting was mailed
to stockholders. Based on the date of the 1999 Annual Meeting, the
Corporation anticipates that, in order to be timely, shareholder nominations
or proposals intended to be made at the 2000 Annual Meeting must be made by
September 23, 2000. As specified in the Certificate of Incorporation, the
notice with respect to nominations for election of directors must set forth
certain information regarding each nominee for election as a director,
including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director, if elected, and certain information
regarding the stockholder giving such notice. The notice with respect to
business proposals to be brought before the Annual Meeting must state the
stockholder's name, address and number of shares of Common Stock held, and
briefly discuss the business to be brought before the Annual Meeting, the
reasons for conducting such business at the Annual Meeting and any interest of
the stockholder in the proposal.
- ------------------------------------------------------------------------------
MISCELLANEOUS
- ------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Corporation.
The Corporation will reimburse brokerage firms and other custodians, nominees
and fiduciaries for reasonable expenses incurred by them in sending proxy
material to the beneficial owners of the Corporation's Common Stock. In
addition to solicitations by mail, directors, officers and regular employees
of the Corporation and Bank may solicit proxies personally, by telegraph or
telephone without additional compensation.
-15-
<PAGE>
The Corporation's Annual Report to Stockholders, including financial
statements, has been mailed to all stockholders of record as of the close of
business on August 27, 1999. Any stockholder who has not received a copy of
such Annual Report may obtain a copy by writing to the Secretary of the
Corporation. Such Annual Report is not to be treated as part of the proxy
solicitation material or as having been incorporated herein by reference.
A copy of the Form 10-K as filed with the SEC will be furnished without
charge to stockholders of record as of August 27, 1999 upon written request to
Russell E. Rosendal, Secretary, Cascade Financial Corporation, 2828 Colby
Avenue, Everett, Washington 98201. Reports, proxy statements and other
information filed by the Corporation are also available on the Internet at the
SEC's World Wide Web site at http://www.sec.gov.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Russell E. Rosendal
RUSSELL E. ROSENDAL
Secretary
Everett, Washington
September 22, 1999
-16-
<PAGE>
REVOCABLE PROXY
CASCADE FINANCIAL CORPORATION
- ------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
October 23, 1999
- ------------------------------------------------------------------------------
The undersigned hereby appoints the official proxy committee consisting
of all of the members of the Board of Directors of Cascade Financial
Corporation ("Corporation"), Everett, Washington, with full powers of
substitution, to act as attorneys and proxies for the undersigned, to vote all
shares of Common Stock of the Corporation which the undersigned is entitled to
vote at the Annual Meeting of Stockholders, to be held at the Corporation's
main office located at 2828 Colby Avenue, Everett, Washington, on Saturday,
October 23, 1999, at 10:00 a.m., and at any and all adjournments thereof, as
follows:
FOR VOTE WITHHELD
--- -------------
1. The election as directors of all [ ] [ ]
nominees listed below
(except as marked to the contrary below).
Frank M. McCord
C. Fredrick Safstrom
David W. Duce
David O'Connor
INSTRUCTION: To withhold your vote for
any individual nominee, write the
nominee's name on the line below.
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
FOR AGAINST ABSTAIN
--- ------- ------
2. A proposal to approve an increase [ ] [ ] [ ]
in the number of shares reserved
for issuance under the Corporation's
1997 Stock Option Plan.
3. In their discretion, upon such other matters
as may properly come before the meeting.
The Board of Directors recommends a vote "FOR" the listed propositions.
- ------------------------------------------------------------------------------
This proxy will be voted as directed, but if no instructions are specified
this proxy will be voted "for" the proposals stated. If any other business is
presented at the meeting, this proxy will be voted by those named in this
proxy in their best judgment. At the present time, the board of directors
knows of no other business to be presented at the meeting. This proxy also
confers discretionary authority on the board of directors to vote with respect
to the election of any person as director where the nominee is unable to serve
or for good cause will not serve, and matters incident to the conduct of the
annual meeting.
- ------------------------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Annual
Meeting or at any adjournment thereof and after notification to the Secretary
of the Corporation at the Annual Meeting of the stockholder's decision to
terminate this proxy, then the power of said attorneys and proxies shall be
deemed terminated and of no further force and effect.
The undersigned acknowledges receipt from the Corporation prior to the
execution of this Proxy, of the Notice of the Annual Meeting of Stockholders,
a Proxy Statement dated September 22, 1999 and the 1999 Annual Report to
Stockholders.
Dated: , 1999
--------------------
- ------------------------------- -----------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ------------------------------- -----------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in which this card
was mailed. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If a corporation, please sign in full
corporate name by the president or other authorized officer. If a
partnership, please sign in partnership name by authorized person. For joint
accounts, only one signature is required.
- ------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
- ------------------------------------------------------------------------------
<PAGE>
