AMERICAN RIVER HOLDINGS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 22, 2003
TO THE SHAREHOLDERS OF AMERICAN RIVER HOLDINGS:
NOTICE IS HEREBY GIVEN that, pursuant to the call of its Board of Directors, the
Annual Meeting of Shareholders (the "Meeting") of American River Holdings (the
"Company") will be held on Thursday, May 22, 2003 at 5:30 p.m., at the Corporate
Offices of the Company, located at 1545 River Park Drive, Suite 107, Sacramento,
California 95815, for the purpose of considering and voting upon the following
matters:
1. Election of Directors. To elect the following nominees of the Board of
Directors as Class III Directors to serve until the 2006 Annual
Meeting of Shareholders and until their successors are elected and
qualified:
M. Edgar Deas Charles D. Fite David T. Taber Stephen H. Waks
2. Ratification of Independent Public Accountants. To ratify the
appointment of Perry-Smith LLP as independent public accountants for
the 2003 fiscal year.
3. Other Business. To transact such other business as may properly come
before the Meeting and any postponements or adjournments thereof.
Article III, Section 3.3 of the bylaws of the Company provides for the
nomination of directors in the following manner:
"Nominations for election of members of the board may be made by the
board or by any holder of any outstanding class of capital stock of the
corporation entitled to vote for the election of directors. Notice of intention
to make any nominations (other than for persons named in the notice of the
meeting called for the election of directors) shall be made in writing and shall
be delivered or mailed to the president of the corporation by the later of: (i)
the close of business twenty-one (21) days prior to any meeting of shareholders
called for the election of directors; or (ii) ten (10) days after the date of
mailing of notice of the meeting to shareholders. Such notification shall
contain the following information to the extent known to the notifying
shareholder: (a) the name and address of each proposed nominee; (b) the
principal occupation of each proposed nominee; (c) the number of shares of
capital stock of the corporation owned by each proposed nominee; (d) the name
and residence address of the notifying shareholder; (e) the number of shares of
capital stock of the corporation owned by the notifying shareholder; (f) the
number of shares of capital stock of any bank, bank holding company, savings and
loan association or other depository institution owned beneficially by the
nominee or by the notifying shareholder and the identities and locations of any
such institutions; and (g) whether the proposed nominee has ever been convicted
of or pleaded nolo contendere to any criminal offense involving dishonesty or
breach of trust, filed a petition in bankruptcy or been adjudged bankrupt. The
notification shall be signed by the nominating shareholder and by each nominee,
and shall be accompanied by a written consent to be named as a nominee for
election as a director from each proposed nominee. Nominations not made in
accordance with these procedures shall be disregarded by the chairperson of the
meeting, and upon his or her instructions, the inspectors of election shall
disregard all votes cast for each such nominee. The foregoing requirements do
not apply to the nomination of a person to replace a proposed nominee who has
become unable to serve as a director between the last day for giving notice in
accordance with this paragraph and the date of election of directors if the
procedure called for in this paragraph was followed with respect to the
nomination of the proposed nominee."
The Board of Directors has fixed the close of business on April 17, 2003 as the
record date for determination of shareholders entitled to notice of, and to vote
at, the Meeting and any postponements or adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ MARJORIE G. TAYLOR
----------------------
Marjorie G. Taylor
Corporate Secretary
Dated: April 28, 2003
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND
INDICATE IF YOU WILL ATTEND THE MEETING IN PERSON.
AMERICAN RIVER HOLDINGS
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
May 22, 2003
INTRODUCTION
These Proxy materials are furnished in connection with the solicitation of
Proxies for use at the 2003 Annual Meeting of Shareholders (the "Meeting") of
American River Holdings (the "Company") to be held on Thursday, May 22, 2003 at
5:30 p.m., at the Corporate Offices of the Company located at 1545 River Park
Drive, Suite 107, Sacramento, California 95815, and at any and all postponements
or adjournments thereof. Only shareholders of record on April 17, 2002 (the
"Record Date") will be entitled to notice of the Meeting and to vote at the
Meeting. At the close of business on the Record Date, the Company had
outstanding and entitled to be voted 2,652,831 shares of the Company's no par
value Common Stock.
It is expected that this Proxy Statement and the accompanying Notice, Proxy
Card and Annual Report to Shareholders will be mailed on or about April 28, 2003
to shareholders eligible to receive notice of, and to vote at, the Meeting.
Revocability of Proxies
A Proxy Card for voting your shares at the Meeting is enclosed. Any
shareholder who executes and delivers such Proxy has the right to and may revoke
it at any time before it is exercised by filing with the Secretary of the
Company an instrument revoking it or a duly executed Proxy bearing a later date.
In addition, a Proxy will be revoked if the shareholder executing such Proxy is
in attendance at the Meeting and such shareholder votes in person. Subject to
such revocation, all shares represented by a properly executed Proxy received in
time for the Meeting will be voted by the Proxyholders in accordance with the
instructions specified on the Proxy Card.
Unless otherwise directed in the accompanying Proxy Card, the shares
represented by your executed Proxy will be voted "FOR" the nominees for election
of directors named herein, and "FOR" the ratification of Perry-Smith LLP as
independent public accountants. If any other business is properly presented at
the Meeting, the Proxy will be voted in accordance with the recommendations of
management.
Solicitation of Proxies
This solicitation of Proxies is being made by the Board of Directors of the
Company. The expenses of preparing, assembling, printing and mailing this Proxy
Statement and the materials used in this solicitation of Proxies will be borne
by the Company. It is contemplated that Proxies will be solicited principally
through the use of the mail, but directors, officers and employees of the
Company may solicit Proxies personally or by telephone, without receiving
special compensation. The Company will reimburse banks, brokerage houses and
other custodians, nominees and fiduciaries for their reasonable expenses in
forwarding these Proxy materials to shareholders whose stock in the Company is
held of record by such entities. In addition, the Company may use the services
of individuals or companies it does not regularly employ in connection with this
solicitation of Proxies, if management determines it is advisable.
Voting Securities
On any matter submitted to the vote of the shareholders, each holder of
common stock will be entitled to one vote, in person or by Proxy, for each share
of common stock he or she held of record on the books of the Company as of the
Record Date.
A majority of the shares entitled to vote, represented either in person or
by a properly executed proxy, will constitute a quorum at the Meeting. If, by
the time scheduled for the Meeting, a quorum of shareholders of the Company is
not present or if a quorum is present but sufficient votes in favor of any of
the proposals have not been received, the Meeting may be held for purposes of
voting on those proposals for which sufficient votes have been received, and the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies with respect to any of the proposals as
to which sufficient votes have not been received.
1
Votes cast by proxy or in person at the Meeting will be counted by the
Inspectors of Election for the Meeting. The Inspectors will treat abstentions
and "broker non-votes" (shares held by brokers or nominees as to which
instructions have not been received from the beneficial owners or persons
entitled to vote and the broker or nominee does not have discretionary voting
power under applicable rules of the stock exchange or other self-regulatory
organization of which the broker or nominee is a member) as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. Abstentions and "broker non-votes" will not be counted as shares voted
for purposes of determining the outcome of any matter as may properly come
before the Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of the Record Date, April 17, 2003, no individual known to the Company
owned more than five percent (5%) of the outstanding shares of its Common Stock,
except as described below.
--------------------------------------------------------------------------------------------------
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class (1)
--------------------------------------------------------------------------------------------------
Common Stock Keefe Managers, LLC 143,383 5.40%
375 Park Avenue, 23rd Floor
New York, New York 10152
--------------------------------------------------------------------------------------------------
(1) Percentage calculated based on 2,652,831 shares outstanding as of the
Record Date.
The following table sets forth information as of April 17, 2003, concerning
the equity ownership of the Company's directors, Class III Director nominees and
the executive officers named in the Summary Compensation Table, and directors,
Class III Director nominees and executive officers as a group. Unless otherwise
indicated in the notes to the table, each director and executive officer listed
below possesses sole voting power and sole investment power for the shares of
the Company's Common Stock listed below. All of the shares shown in the
following table are owned both of record and beneficially except as indicated in
the notes to the table. The table does not include James O. Burpo, who resigned
his Board seat on September 18, 2002, or Kathryn A. Pinkard who resigned as
President and Chief Executive Officer of North Coast Bank on January 27, 2003.
The Company has only one class of shares outstanding, Common Stock. Management
is not aware of any arrangements which may, at a subsequent date, result in a
change of control of the Company.
Name and Address (1) of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class (2)
---------------- -------------------- ---------
M. Edgar Deas 31,491 (3) 1.2%
Mitchell A. Derenzo 29,527 (4) 1.1%
Charles D. Fite 67,585 (5) 2.5%
Sam J. Gallina 80,354 (6) 3.0%
Wayne C. Matthews, M.D. 67,684 2.6%
David T. Taber 89,042 (7) 3.3%
Marjorie J. Taylor 38,529 1.5%
Roger J. Taylor, D.D.S. 75,356 (8) 2.8%
Douglas E. Tow 16,548 (9) 0.6%
Stephen H. Waks 32,120 (10) 1.2%
Larry L. Wasem 41,292 (11) 1.6%
William L. Young 94,528 (12) 3.5%
Michael A. Ziegler 1,553 0.1%
All directors and executive officers 665,609 (13) 23.0%
as a group (13 persons)
(1) The address for all persons listed is c/o American River Holdings,
1545 River Park Drive, Suite 107, California, 95815.
(2) Includes shares of Common Stock subject to stock options exercisable
within 60 days of the record date.
(3) Includes 16,150 shares which Mr. Deas has the right to acquire upon
the exercise of stock options within 60 days of the record date.
(4) Includes 20,101 shares which Mr. Derenzo has the right to acquire upon
the exercise of stock options within 60 days of the record date.
(5) Includes 20,100 shares which Mr. Fite has the right to acquire upon
the exercise of stock options within 60 days of the record date.
2
(6) Includes 20,100 shares which Mr. Gallina has the right to acquire upon
the exercise of stock options within 60 days of the record date.
(7) Includes 50,255 shares which Mr. Taber has the right to acquire upon
the exercise of stock options within 60 days of the record date.
(8) Includes 20,100 shares which Dr. Taylor has the right to acquire upon
the exercise of stock options within 60 days of the record date.
(9) Includes 13,903 shares which Mr. Tow has the right to acquire upon the
exercise of stock options within 60 days of the record date.
(10) Includes 12,061 shares which Mr. Waks has the right to acquire upon
the exercise of stock options within 60 days of the record date.
(11) Includes 17,544 shares which Mr. Wasem has the right to acquire upon
the exercise of stock options within 60 days of the record date.
(12) Includes 50,255 shares which Mr. Young has the right to acquire upon
the exercise of stock options within 60 days of the record date.
(13) Includes 240,569 stock options outstanding to purchase common stock
exercisable within 60 days of the record date.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
The Company's Bylaws provide that the number of directors of the Company
shall not be less than eight (8) nor more than fifteen (15) until changed by an
amendment to the Articles of Incorporation or by a Bylaw amending Section 3.2
duly adopted by the vote or written consent of holders of a majority of the
outstanding shares entitled to vote. The exact number of directors shall be
fixed from time to time, within the range specified in the Articles of
Incorporation (i) by a resolution duly adopted by the Board; (ii) by a Bylaw or
amendment thereof duly adopted by the vote of a majority of the shares entitled
to vote represented at a duly held meeting at which a quorum is present, or by
the written consent of the holders of a majority of the outstanding shares
entitled to vote; or (iii) by approval of the shareholders. The exact number of
directors was fixed at eleven (11) at the Annual Meeting of Shareholders on
September 21, 2000.
The Company has three groups of directors, each of whom is elected for a
three-year term. Class III directors are nominated for election this year. Class
I directors and Class II directors were elected to serve until 2004 and 2005,
respectively, at the Annual Meetings of Shareholders on May 15, 2001, and May
23, 2002, respectively. If any nominee should become unable or unwilling to
serve as a director, the proxies will be voted for such substitute nominee as
shall be designated by the Board of Directors. The Board of Directors presently
has no knowledge that any of the nominees will be unable or unwilling to serve.
The following persons are the nominees of the Board of Directors for
election as Class III directors to serve for a three-year term until the 2006
Annual Meeting of Shareholders and until their successors are duly elected and
qualified.
Nominees for Election as Class III Directors
------------------------------------------------------------------------------------------------------------------------------------
Name and Title Year First Elected
Other than Director Principal Occupation During the Last Five Years Age Director
------------------------------------------------------------------------------------------------------------------------------------
M. Edgar Deas President and Chief Executive Officer of E&M Electric in 67 2000
Healdsburg.
Charles D. Fite President, Fite Development Company in Sacramento. 45 1993
Chairman
David T. Taber President and CEO, American River Holdings. 42 1989
President and CEO
Stephen H. Waks Attorney-at-Law; owner of Stephen H. Waks, Inc. in Sacramento. 55 1986
Class I Directors, Continuing in Office:
------------------------------------------------------------------------------------------------------------------------------------
Name and Title Year First Elected
Other than Director Principal Occupation During the Last Five Years Age Director
------------------------------------------------------------------------------------------------------------------------------------
Wayne C. Matthews, M.D. Family Practitioner in Sacramento. 73 1984
Marjorie G. Taylor Property Manager (self-employed) in Sacramento. 69 1983
Corporate Secretary
William L. Young President and CEO, American River Bank. 61 1988
3
Class II Directors, Continuing in Office:
------------------------------------------------------------------------------------------------------------------------------------
Name and Title Year First Elected
Other than Director Principal Occupation During the Last Five Years Age Director
------------------------------------------------------------------------------------------------------------------------------------
Sam J. Gallina Retired Partner, S.J. Gallina & Co., Certified Public 70 1986
Accountants in Sacramento.
Roger J. Taylor, D.D.S. Dentist (Retired) and National Executive Director Impax Health 57 1983
Vice-Chairman Prime and a real estate developer in Sacramento.
Larry L. Wasem Real estate developer and partner of the Airport Business Center 48 2000
in Santa Rosa.
Michael A. Ziegler President and Chief Executive Officer of PRIDE Industries in 58 2002
Sacramento.
None of the directors, nominees for Class III director listed above or
executive officers(1) listed on page 6, were selected pursuant to any
arrangement or understanding other than with the directors and executive
officers of the Company acting within their capacities as such. There are no
family relationships between any two or more of the directors, nominees for
Class III director or executive officers, except that Marjorie G. Taylor was
married to Roger J. Taylor's deceased father. No director, nominee for Class III
director or executive officer serves as a director of (i) any company which has
a class of securities registered under Section 12, or which is subject to the
periodic reporting requirements of Section 15(d) of the Securities Exchange Act
of 1934, or (ii) any company registered as an investment company under the
Investment Company Act of 1940.
None of the nominees were subject to any legal proceedings involving
violations of securities laws, convictions in a criminal proceeding (excluding
traffic violations or minor offenses) or had a petition under bankruptcy laws
filed against themselves or an affiliate within the last five years.
Committees of the Board of Directors
The Audit Committee, whose members are Sam J. Gallina (Chairman), Wayne C.
Matthews, M.D., Marjorie G. Taylor and Larry Wasem, oversees American River
Holdings and its subsidiaries' independent public accountants, analyzes the
results of internal and regulatory examinations and monitors the financial and
accounting organization and reporting. The Audit Committee met four (4) times in
2002. See the Audit Committee Report on Page 14 for additional information
regarding the functions of the Audit Committee.
The Board of Directors has not established a nominating committee. The full
Board of Directors performs the functions of a nominating committee with
responsibility for considering appropriate candidates for election as directors.
The Compensation Committee, whose members include M. Edgar Deas, Charles D.
Fite (Chairman), Sam J. Gallina and Roger J. Taylor, D.D.S., oversees the
performance and reviews the compensation of the executive officers of American
River Holdings and its subsidiaries. The Compensation Committee met three times
during 2002.
The Finance and Capital Committee, whose members include Wayne C. Matthews,
M.D., David T. Taber, Marjorie G. Taylor and Stephen Waks (Chairman), has the
responsibility to oversee asset liability management and the investment
portfolio including recommending to the full Board of Directors the annual
investment strategy; and recommending to the full Board of Directors the annual
operating budget for American River Holdings and its subsidiaries; and reviewing
premises leases for recommendation to the full Board of Directors. The Finance
and Capital Committee met five times during 2002.
The Executive Committee, whose members include M. Edgar Deas, Charles D.
Fite (Chairman), Sam J. Gallina, David T. Taber, and Roger J. Taylor, D.D.S.,
oversees long range planning, and the Technology Strategic Plan and its
implementation; formulates and recommends policy positions for the full Board of
Directors to consider; and is responsible for evaluating and recommending to the
full Board of Directors matters pertaining to mergers and acquisitions. The
Executive Committee met thirteen times during 2002.
--------------------------------------------------------------------------------
(1) As used in this Proxy Statement, the term "executive officer" of the Company
includes the President and CEO of American River Holdings, the Executive Vice
President and Chief Financial Officer of American River Holdings, the President
and CEO of American River Bank, the Senior Vice President and Credit
Administrator of American River Bank, and the President and CEO of North Coast
Bank.
4
Each of the Subsidiary Banks have Loan Committees that have the
responsibility for establishing loan policy, approving loans which exceed
certain dollar limits and reviewing the outside loan review firm's examinations
of the loan portfolios. American River Bank's Loan Committee includes James O.
Burpo, Charles D. Fite, Sam J. Gallina, Roger J. Taylor, D.D.S. (Chairman) and
Stephen H. Waks. American River Bank's Loan Committee met twenty-six times
during 2002. North Coast Bank's Loan Committee includes Leo J. Becnel, O.D., M.
Edgar Deas, Larry L. Wasem, (Chairman) and Philip A. Wright. North Coast Bank's
Loan Committee met thirty-three (33) times during 2002.
During 2002, American River Holdings' Board of Directors held twelve (12)
regular meetings. All directors attended at least 75% of the aggregate of the
total number of meetings of the Board of Directors and the number of meetings of
the committees on which they served.
Compensation of Directors
The fees paid to non-employee directors of American River Holdings during
2002 included a retainer of $250 per month, a base fee of $250 per month for
attendance at board meetings, and a fee of $150 per month for attendance at
committee meetings, other than the Directors Loan Committee of American River
Bank whose outside director members received a fee of $250 for each meeting
attended and the Directors Loan Committee of North Coast Bank whose outside
director members received a fee of $100 for each meeting attended. Outside
director members of the Executive Committee received an additional retainer fee
of $150 per month. In addition to the fees received as non-employee directors in
connection with the meetings and matters described above, the Chairman of the
Board of Directors also received a retainer fee of $250 per month, and the
Chairman of the Audit Committee and the Chairman of American River Bank's
Directors Loan Committee also received a retainer fee of $150 per month. The
Chairman of North Coast Bank's Directors Loan Committee also received a retainer
fee of $100 per month and the Chairman of the Finance and Capital Committee also
received a retainer fee of $50 per month; and the Chairman of the Compensation
Committee received a retainer fee of $150 per year. In 2002, the total amount of
fees paid by American River Holdings to all directors as a group was $73,150. In
addition, certain directors of American River Holdings also serve as directors
and/or committee members for the subsidiaries. In 2002, the total amount of fees
paid by the subsidiaries to directors of American River Holdings (in their
capacities as directors and/or committee members for the subsidiaries) as a
group was $53,450.
On August 25, 1995, the Board of Directors authorized the grant to each
outside director of a nonstatutory stock option to purchase 10,000 shares of
American River Holdings common stock at $10.50 per share ($5.223 as adjusted for
stock splits and stock dividends). During 2002, there were no stock options
granted to any director of the Company.
On June 18, 1997, the Board of Directors approved a Gross-Up Plan (the
"Plan") to compensate for the tax effects of the exercise of nonstatutory stock
options. The Plan named Directors Fite, Gallina, Dr. Matthews, M. Taylor, Dr. R.
Taylor and Waks as participants and applies only to those options granted on
August 25, 1995. The Plan encourages participating optionees to retain shares
acquired through the exercise of nonstatutory stock options by American River
Holdings paying to the participating optionee an amount equal to the taxable
income resulting from an exercise of a nonstatutory stock option multiplied by
American River Holdings' effective tax rate, subject to the optionee's agreement
to hold the shares acquired for a minimum of one (1) year. In the event that the
shares acquired upon exercise are not held for at least one year from the date
of acquisition, the optionee is required to reimburse the amount paid to the
optionee under the Plan. During 2002, Director M. Taylor executed an agreement
in return for payment of $13,095.
Effective December 20, 2001, a Deferred Fee Plan was established for the
purpose of providing the directors an opportunity to defer director fees.
Participating directors may elect to defer a portion, up to 100%, of their
monthly directors fees. American River Holdings bears the administration costs,
but does not make contributions to the Plan. During 2002, two directors
participated in the Plan and deferred $13,050.
EXECUTIVE OFFICERS
The executive officers of the Company include David T. Taber, President and
Chief Executive Officer of American River Holdings and William L. Young,
President and Chief Executive Officer of American River Bank, about whom
information is provided on pages 3 and 4, and the following persons:
5
--------------------------------------------------------------------------------
Officer Principal Occupation
Name Age Since During the Past Five Years
--------------------------------------------------------------------------------
Mitchell A. Derenzo 41 1992 Executive Vice President and
Chief Financial Officer of
American River Holdings since
1995. Senior Vice President and
Chief Financial Officer of
American River Bank since 1992.
Chief Financial Officer of First
Source Capital and North Coast
Bank since 1999 and 2000,
respectively.
--------------------------------------------------------------------------------
Kathryn A. Pinkard 50 2000 Former Director, President and
(Ms. Pinkard resigned Chief Executive Officer of North
January 27, 2003) Coast Bank since 1998. Formerly
Executive Vice President and
Chief Operating Officer, and
Senior Vice President and Chief
Financial Officer of North Coast
Bank since September 1, 1997 and
February 6, 1996, respectively.
--------------------------------------------------------------------------------
Douglas E. Tow 49 1994 Senior Vice President and Credit
Administrator of American River
Bank since 1994. Chief Credit
Officer of North Coast Bank since
2000.
--------------------------------------------------------------------------------
Executive Compensation
Set forth below is the summary compensation paid during the three years
ended December 31, 2002 to David T. Taber, Mitchell A. Derenzo, William L.
Young, Kathryn A. Pinkard and Douglas E. Tow, the only executive officers of
American River Holdings and its subsidiaries.
Summary Compensation Table
------------------------------------------------------------------------------------------------------------------------------
Long-Term Compensation
--------------------------------------------------
Annual Compensation Awards Payouts
------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Year Salary Bonus Other Annual Restricted Securities LTIP All Other
Principal Position ($) (1) ($) (2) Compensation Stock Underlying Payouts Compensation
($) (3) Award(s) Options/SARs ($) ($) (5)
($) (#) (4)
------------------------------------------------------------------------------------------------------------------------------
David T. Taber, President and 2002 $175,000 $ 44,688 -- -- -- -- $ 31,472
Chief Executive Officer 2001 175,000 194,026 -- -- -- -- 27,551
2000 175,000 144,465 -- -- -- -- 50,845
------------------------------------------------------------------------------------------------------------------------------
Mitchell A. Derenzo, 2002 105,124 18,387 -- -- -- -- 5,586
Executive Vice President and 2001 102,833 22,617 -- -- -- -- 4,918
Chief Financial Officer 2000 94,709 18,202 -- -- -- -- 18,699
------------------------------------------------------------------------------------------------------------------------------
William L. Young, President 2002 150,000 28,239 -- -- -- -- 7,213
and Chief Executive Officer, 2001 150,000 160,345 -- -- -- -- 6,093
American River Bank 2000 150,000 144,465 -- -- -- -- 75,874
------------------------------------------------------------------------------------------------------------------------------
Kathryn A. Pinkard (6) 2002 105,892 2,286 -- -- -- -- 3,346
President and Chief Executive 2001 105,949 20,611 -- -- -- -- 3,576
Officer, North Coast Bank 2000 104,500 2,500 -- -- -- -- 3,135
------------------------------------------------------------------------------------------------------------------------------
Douglas E. Tow, Senior Vice 2002 100,650 15,982 -- -- -- -- 5,459
President and Credit 2001 98,457 21,656 -- -- -- -- 4,921
Administrator, American 2000 95,325 20,443 -- -- -- -- 4,811
River Bank
------------------------------------------------------------------------------------------------------------------------------
(1) Amounts shown include cash compensation earned and received by executive
officers as well as amounts earned but deferred at the election of those
officers under the 401(k) Plan and the Deferred Compensation Plan.
(2) Amounts indicated as bonus payments are listed in the year paid. The
amounts listed as paid in 2002 were all earned in 2001. Additional amounts
accrued in 2002 and paid in 2003 were $137,617 to Mr. Taber; $38,522 to Mr.
Derenzo; $98,082 to Mr. Young and $41,389 to Mr. Tow.
(3) No executive officer received perquisites or other personal benefits in
excess of the lesser of $50,000 or 10% of each such officer's total annual
salary and bonus during 2002, 2001, and 2000.
(4) Represents the number of shares granted as adjusted for stock splits and
stock dividends. American River Holdings had a 1995 Stock Option Plan (the
"1995 Plan") pursuant to which options could be granted to directors and
key, full-time salaried officers and employees of American River Holdings
6
and its subsidiaries. The 1995 Plan was replaced with the Company's 2000
Stock Option Plan (the "2000 Plan"). Options granted under the 1995 Plan
were either incentive options or nonstatutory options. Options granted
under the 1995 Plan became exercisable in accordance with a vesting
schedule established at the time of grant. Vesting could not extend beyond
ten years from the date of grant. Upon a change in control of American
River Holdings, all outstanding options under the 1995 Plan will become
fully vested and exercisable. Options granted under the 1995 Plan are
adjusted to protect against dilution in the event of certain changes in
American River Holdings' capitalization, including stock splits and stock
dividends. The 2000 Plan is substantially similar to the 1995 Plan
regarding provisions related to option grants, vesting and dilution. All
options granted to the named executive officers have an exercise price
equal to the fair market value of the common stock on the date of grant. No
stock options were granted to any of the named executive officers in 2002.
(5) Amounts shown for each named executive officer include 401(k) matching
contributions, the use of an automobile owned by American River Bank,
payments received as well as amounts deferred at the election of those
executive officers under the Gross-Up Plan, earned but unpaid interest on
amounts deferred under the Company's Deferred Compensation Plan and excess
life insurance premiums paid by the Company. During 2002, no executive
officers exercised stock options that qualified for payments under the
Gross-Up Plan. There are no other nonstatutory stock options held by any of
the executive officers that would qualify for a Gross-Up payment in the
future.
(6) Kathryn A. Pinkard resigned January 27, 2003.
The following table sets forth the number of shares of common stock
acquired by each of the named executive officers upon the exercise of stock
options during fiscal year 2002, the net value realized upon exercise, the
number of shares of common stock represented by outstanding stock options held
by each of the named executive officers as of December 31, 2002, the value of
such options based on the closing price of American River Holdings common stock,
and certain information concerning unexercised options under the 1995 and 2000
Stock Option Plans.
Aggregated Option/SAR Exercises In Last Fiscal Year And
FY-End Option/SAR Values
--------------------------------------------------------------------------------------------------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised in-the-Money
Options/SARs Options/SARs
Shares Value at Fiscal Year-End (#) at Fiscal Year-End ($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
(a) (b) (c) (d) (e) (1)
--------------------------------------------------------------------------------------------------------------
David T. Taber -- -- 50,255 / -- $935,077 / $ --
--------------------------------------------------------------------------------------------------------------
Mitchell A. Derenzo -- -- 20,101 / -- $294,007 / $ --
--------------------------------------------------------------------------------------------------------------
William L. Young -- -- 50,255 / -- $935,077 / $ --
--------------------------------------------------------------------------------------------------------------
Kathryn A. Pinkard 3,000 47,142 15,516 / 4,966 $252,289 / $ 87,132
--------------------------------------------------------------------------------------------------------------
Douglas E. Tow 1,212 14,966 13,903 / 1,823 $187,004 / $ 18,688
--------------------------------------------------------------------------------------------------------------
(1) The aggregate value has been determined based upon the closing price
for American River Holdings common stock at year-end, minus the
exercise price.
(2) Kathryn A. Pinkard resigned January 27, 2003.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
On August 17, 2000, American River Holdings entered into an employment
agreement with David T. Taber and American River Bank entered into an employment
agreement with William L. Young. The agreements provide for an original term of
two years subject to automatic extensions of two years following expiration of
the original term and one-year extensions thereafter unless terminated in
accordance with the terms of the agreements. The agreements provide for a base
salary which is disclosed in the Summary Compensation Table on page 6. The base
salary under each agreement is reviewed annually and is subject to adjustment at
the discretion of the Board of Directors. Additionally, the agreements provide
for, among other things (i) an annual incentive bonus based upon American River
Holdings' achievement of certain profitability, growth and asset quality
standards as set forth in the agreements; (ii) in the event of disability,
payment of base salary reduced by the amounts received from state disability
insurance or workers' compensation or other similar insurance benefits through
policies provided by American River Holdings and/or American River Bank; (iii)
stock option grants in the discretion of the Board of Directors under American
7
River Holdings' stock option plan; (iv) four weeks annual paid vacation leave;
(v) use of an automobile; and (vi) reimbursement for ordinary and necessary
expenses incurred in connection with employment.
The agreements may be terminated with or without cause, but if the
agreements are terminated without cause due to the occurrence of circumstances
that make it impossible or impractical for American River Holdings and/or
American River Bank to conduct or continue its business, the loss by American
River Holdings and/or American River Bank of its legal capacity to contract or
American River Holdings and/or American River Bank's breach of the terms of the
agreement, the employee is entitled to receive severance compensation equal to
six months of the existing base salary plus any incentive bonus due. The
agreements further provide that in the event of a "change in control" as defined
therein and within a period of two years following consummation of such change
in control (i) the employee's employment is terminated; or (ii) any adverse
change occurs in the nature and scope of the employee's position,
responsibilities, duties, salary, benefits or location of employment; or (iii)
any event occurs which reasonably constitutes a demotion, significant diminution
or constructive termination of employment, then the employee will be entitled to
receive severance compensation in an amount equal to one and one-half times the
employee's average annual compensation for the five years immediately preceding
the change in control.
On March 18, 1998, American River Bank adopted the American River Bank
Employee Severance Policy. The Policy allows for certain named employees to
receive severance payments equal to six times their monthly base pay should
these named employees be terminated within one year of a "change in control."
The Board of Directors has designated executive officers, Mitchell A. Derenzo
and Douglas E. Tow to be covered under the Policy.
EQUITY COMPENSATION PLAN INFORMATION
The chart below summarizes share information about American River Holdings'
equity compensation plans including the 1995 Stock Option Plan and the 2000
Stock Option Plan as of December 31, 2002. Both of these plans have been
approved by our shareholders. The Company has no other equity compensation plan
and there are no warrants or other rights outstanding that would result in the
issuance of shares of the Corporation's common stock.
-----------------------------------------------------------------------------------------------------------
Plan Category Number of securities to Weighted-average Number of securities
be issued upon exercise exercise price of remaining available for
of outstanding options, outstanding options, future issuance under equity
warrants and rights warrants and rights compensation plans
(excluding securities
reflected in column (a))
(a) (b) (c)
-----------------------------------------------------------------------------------------------------------
Equity compensation
plans approved by 416,445 (1) $7.47 314,419
security holders
-----------------------------------------------------------------------------------------------------------
Equity compensation
plans not approved by -0- -0- -0-
security holders
-----------------------------------------------------------------------------------------------------------
Total 416,445 $7.47 314,419
-----------------------------------------------------------------------------------------------------------
(1) Shares reserved but unissued shall remain available for grant during
any subsequent calendar year. Awards that expire or are cancelled,
forfeited or terminated before being exercised shall again become
available for future awards under the Plan.
8
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation of the executive officers of American River Holdings and
its subsidiaries is reviewed and approved annually by the Board of Directors on
recommendation by the Compensation Committee. During 2002, M. Edgar Deas,
Charles D. Fite (Chairman), Sam J. Gallina and Roger J. Taylor, D.D.S., served
as members of the Committee. Executive officers of American River Holdings
and/or its subsidiaries during 2002 were David T. Taber, Mitchell A. Derenzo,
William L. Young, Kathryn A. Pinkard and Douglas E. Tow.
The Compensation Committee's philosophy is that compensation should be
designed to reflect the value created for shareholders while supporting American
River Holdings' strategic goals. The Compensation Committee reviews annually the
compensation of the executive officers to insure that American River Holdings'
compensation programs are related to financial performance and consistent
generally with employers of comparable size in the industry. Annual compensation
for American River Holdings' executive officers includes the following
components:
Base salary is related to the individual executive officer's level of
responsibility and comparison with comparable employers in the industry.
Executive officers are eligible to participate in the American River
Holdings Incentive Compensation Plan (the "Incentive Plan"). The Incentive Plan
outlines minimum financial performance standards which include performance,
growth, efficiency and asset quality minimums which must be achieved prior to
any payout. If the performance standards are met, the pool amount available for
payment to all employees of the Company is set at a predetermined rate by the
Compensation Committee. The incentive pool for 2002 was set at 18% of net income
prior to incentive accruals and adjusted for taxes. The actual amounts accrued
in 2002 to be paid in 2003 represented 18% of net income prior to incentive
accruals and adjusted for taxes. The incentive pool also includes 401(k)
matching funds.
Stock option grants are intended to increase the executive officers'
interest in American River Holdings' long-term success and link interests of the
executive officer with those of shareholders as measured by American River
Holdings' share price. Stock options are granted at the discretion of the Board
of Directors and at the prevailing market value of American River Holdings
common stock. Consequently, the value of the options is directly connected to
the increase in value of American River Holdings' stock price. There were no
stock options granted to any of the executive officers in 2002.
American River Holdings matches salary deferred by employees participating
in its 401(k) Plan at a rate equal to 50% of the participant's contribution up
to a maximum of 6% of such participant's annual compensation. Executive officers
are eligible to participate in the 401(k) plan.
Effective May 1, 1998, the American River Bank Deferred Compensation Plan
was established for the purpose of providing certain highly compensated
individuals, which includes the executive officers, an opportunity to defer
compensation. Participants, who are selected by a committee designated by the
Board of Directors, may elect to defer annually a minimum of $5,000 or a maximum
of eighty percent of their base salary and all of their cash bonus. American
River Bank bears all administration costs, but does not make contributions to
the plan. Effective December 20, 2000, the Deferred Compensation Plan was
renamed the American River Holdings Deferred Compensation Plan and beginning
January 1, 2001, American River Holdings now bears the administration costs for
participants that are employed by American River Holdings and each subsidiary
bears the costs for participants that are employed by the subsidiary.
American River Holdings purchased an additional life insurance policy on
the life of David T. Taber and American River Bank purchased an additional life
insurance policy on the life of William L. Young. Mr. Taber's policy is a
10-year, $1,000,000 level-term life insurance policy with American River
Holdings as the owner and sole beneficiary. The annual premium cost for the
policy on Mr. Taber is approximately $700. Two policies were purchased on the
life of Mr. Young in the amount of $250,000 each. Each term life insurance
policy consists of two 5-year step rates with American River Holdings as the
owner and sole beneficiary. The annual premium cost for the policies on Mr.
Young is approximately $5,000 for the first 5-year period and $8,000 for the
second 5-year period.
/s/ M. EDGAR DEAS /s/ CHARLES D. FITE /s/ SAM J. GALLINA
------------------- --------------------- --------------------
M. Edgar Deas Charles D. Fite Sam J. Gallina
/s/ ROGER J. TAYLOR
---------------------------
Roger J. Taylor, D.D.S.
9
COMPARISION OF AMERICAN RIVER HOLDINGS SHAREHOLDERS RETURN
Set forth below is a line graph comparing the annual percentage change in
the cumulative total return on American River Holdings common stock with the
cumulative total return of the SNL Securities Index of National Peer Banks
(asset size of less than $500 million) and the S&P 500 Index as of the end of
each of American River Holdings' last five fiscal years.
The following table assumes that $100.00 was invested on December 31, 1997
in American River Holdings common stock and each index, and that all dividends
were reinvested. Returns have been adjusted for any stock dividends and stock
splits declared by American River Holdings. Shareholder returns over the
indicated period should not be considered indicative of future shareholder
returns.
--------------------------------------------------------------------------------
American River Holdings
================================================================================
Total Return Performance
[GRAPHIC CHART OMITTED]
Period Ending
---------------------------------------------------------------
Index 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
--------------------------------------------------------------------------------------------
American River Holdings 100.00 95.35 86.45 87.67 107.01 171.67
S&P 500 100.00 128.55 155.60 141.42 124.63 96.95
SNL <$500M Bank Index 100.00 91.31 84.52 81.54 112.79 144.45
10
TRANSACTIONS WITH MANAGEMENT AND OTHERS
There have been no transactions, or series of similar transactions, during
2002, or any currently proposed transaction, or series of similar transactions,
to which American River Holdings and its subsidiaries was or is to be a party,
in which the amount involved exceeded or will exceed $60,000 and in which any
director or executive officer of American River Holdings or its subsidiaries,
any shareholder owning of record or beneficially 5% or more of American River
Holdings common stock, or any member of the immediate family of any of the
foregoing persons, had, or will have, a direct or indirect material interest,
except as follows:
American River Bank leases premises at 9750 Business Park Drive,
Sacramento, California, from Bradshaw Plaza Group, which is owned in part by
Charles D. Fite, a director of American River Holdings. The lease term is 7
years and expires on November 30, 2006, subject to extension for one five-year
option term. The premises consist of 4,590 square feet on the ground floor. The
current monthly rent is $7,300. The approximate aggregate rental payments for
the period from January 1, 2003 through the lease term expiring on November 30,
2006 will be $357,500. If the five-year option is exercised, the approximate
aggregate rental payments for the option term will be $474,000.
American River Bank leases premises at 10123 Fair Oaks Boulevard, Fair
Oaks, California, from Marjorie Taylor, a director of American River Holdings.
The lease term is 12 years and expires on March 1, 2009. The premises consist of
2,380 square feet on the ground floor and the current monthly rent is $1,780.
The approximate aggregate rental payments for the period from January 1, 2003
through the lease term expiring on March 1, 2009 will be $139,930.
Certain Business Relationships
There were no business relationships during 2002 of the type requiring
disclosure under Item 404(b) of Regulation S-K.
Indebtedness of Management
American River Holdings, through its subsidiaries, has had, and expects in
the future to have banking transactions in the ordinary course of its business
with many of American River Holdings' directors and officers and their
associates, including transactions with corporations of which such persons are
directors, officers or controlling shareholders, on substantially the same terms
(including interest rates and collateral) as those prevailing for comparable
transactions with others. Management believes that in 2002 such transactions
comprising loans did not involve more than the normal risk of collectability or
present other unfavorable features. Loans to executive officers of American
River Holdings and its subsidiaries are subject to limitations as to amount and
purposes prescribed in part by the Federal Reserve Act, as amended, and the
regulations of the Federal Deposit Insurance Corporation.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and any persons beneficially owning
ten percent or more of the Company's common stock to timely file initial reports
of ownership and reports of changes in that ownership with the Securities and
Exchange Commission. Such persons are required by Securities and Exchange
Commission regulation to send copies of such reports to the Company. To the
Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended December 31, 2002, the Company believes
all such filing requirements applicable to its directors, executive officers and
ten percent shareholders were met, except for a Form 4 filed six calendar days
late by Kathryn A. Pinkard.
CODE OF ETHICS
The Company has adopted a Code of Ethics that complies with the
requirements under Item 406 of Regulation S-K. The Code of Ethics is applicable
to the Chief Executive Officer, Chief Financial Officer and Controller of the
Company. Item 406 of Regulation S-K defines the term "code of ethics" to mean
written standards that are reasonably necessary to deter wrongdoing and to
promote:
o Honest and ethical conduct, including ethical handling of actual or
apparent conflicts of interest between personal and professional
relationships;
o Full, fair, accurate, timely and understandable disclosure in reports
and documents that a company files with, or submits to, the SEC and in
other company public communications;
11
o Compliance with applicable laws, rules and regulations;
o Prompt internal reporting of code violations to an appropriate person
or persons identified in the code of ethics; and
o Accountability for adherence to the code of ethics.
The Company's Code of Ethics is attached as to this Proxy as Appendix B. In
addition, the Code of Ethics was filed as Exhibit 14.1 to the Company's 2002
Annual Report on Form 10-K. A copy of the Company's Code of Ethics is available,
free of charge, upon written request to Mitchell A. Derenzo, American River
Holdings, 1545 River Park Drive, Suite 107, Sacramento, California, 95815.
12
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
RATIFICATION OF ACCOUNTANTS
The accounting firm of Perry-Smith LLP, certified public accountants,
served the Company as its independent public accountants and auditors for the
2002 fiscal year at the direction of the Board of Directors of the Company.
Perry-Smith LLP has no interests, financial or otherwise, in the Company. The
services rendered by Perry-Smith LLP during the 2002 fiscal year were audit
services, consultation in connection with various accounting matters, and
preparation of the Company's income tax returns. The fees paid to Perry-Smith
LLP for professional services during the 2002 fiscal year were as follows:
Audit Fees
The Company paid Perry-Smith LLP $82,000 during the 2002 fiscal year for
the audit of the Company's annual financial statements for the most recent
fiscal year and for reviews of the Company's financial statements included in
the Company's Form 10-Q filings for the 2002 fiscal year.
Financial Information Systems Design and Implementation Fees
Perry-Smith LLP rendered no professional services for financial information
systems design and implementation for the fiscal year ended December 31, 2002.
All Other Fees
The aggregate fees billed for services rendered by Perry-Smith LLP, other
than for the services described above, for the 2002 fiscal year was $33,800.
This included fees paid for other advisory services and tax compliance fees.
The Board of Directors of the Company approved each professional service
rendered by Perry-Smith LLP during the 2002 fiscal year and considered whether
the provision of such services is compatible with Perry-Smith LLP maintaining
its independence. It is anticipated that one of the representatives of
Perry-Smith LLP will be present at the Meeting and will be able to make a
statement if they so desire and answer appropriate questions.
The Board of Directors has selected Perry-Smith LLP to serve as the
Company's independent public accountants for the year 2003 and recommends that
shareholders vote "FOR" the ratification of the appointment of Perry-Smith LLP.
The ratification of the appointment of Perry-Smith LLP as the Company's
independent public accountants requires approval of the shareholders of a
majority of the total number of shares voting at the Meeting. In the event such
appointment is not ratified, the adverse vote will be deemed to be an indication
to the Board of Directors that it should consider selecting other independent
public accountants for 2003. Because of the difficulty and expense of making any
substitution of accounting firms after the beginning of the current year, it is
the intention of the Board of Directors that the appointment of Perry-Smith LLP
for the year 2003 will remain in effect, unless for a reason other than such
adverse vote of the shareholders, the Board of Directors deems it necessary or
appropriate to make a change. The Board of Directors also retains the power to
appoint another independent public accounting firm to replace the accountants
ratified by the shareholders in the event the Board of Directors determines that
the interests of the Company require such a change.
13
AUDIT COMMITTEE REPORT
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS OR FUTURE FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934 THAT MIGHT INCORPORATE THIS PROXY STATEMENT OR FUTURE
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, IN WHOLE OR IN PART, THE
FOLLOWING REPORT SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY
SUCH FILING.
The Audit Committee consists of the following members of the Company's
Board of Directors: Sam J. Gallina, (Chairman), Wayne C. Matthews, M. D.
Marjorie G. Taylor, and Larry Wasem. Each member of the Committee is independent
as defined under the National Association of Securities Dealers' listing
standards. The Committee operates under a written charter adopted by the Board
of Directors which is included in this Proxy Statement as Appendix A.
The Committee's responsibilities include providing advice with respect to
the Company's financial matters and assisting the Board of Directors in
discharging its responsibilities regarding finance, accounting, tax and legal
compliance. The Committee's primary responsibilities are to: (1) serve as an
independent and objective party to monitor the Company's financial reporting
process and internal control system; (2) review and evaluate the audit efforts
of the Company's independent accountants and internal audits; (3) evaluate the
Company's quarterly financial performance as well as its compliance with laws
and regulations; (4) oversee management's establishment and enforcement of
financial policies and business practices; and (5) facilitate communication
among the independent accountants, financial and senior management, counsel,
regulatory bodies, internal auditors, and the Board of Directors.
The Committee has reviewed and discussed the audited financial statements
of the Company for the fiscal year ended December 31, 2002 with management and
Perry-Smith LLP, the Company's independent public accountants. The Committee has
also discussed with Perry-Smith LLP, the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees).
The Committee has also received the letter from Perry-Smith LLP required by
Independence Standards Board Standard No. 1 (Independence Discussion with Audit
Committees) and the Committee has discussed the independence of Perry-Smith LLP
with that firm.
Based on the Committee's review and discussions noted above, the Committee
recommended to the Board of Directors that the Company's audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2002 for filing with the Securities and Exchange
Commission.
/s/ SAM J. GALLINA /s/ WAYNE C. MATTHEWS /s/ MARJORIE G. TAYLOR
------------------ --------------------------- ----------------------
Sam J. Gallina Wayne C. Matthews, M.D. Marjorie G. Taylor
/s/ LARRY L. WASEM
------------------
Larry L. Wasem
14
ANNUAL REPORT
The Annual Report of the Company containing audited financial statements
for the fiscal year ended December 31, 2002 is included in this mailing to
shareholders.
FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, IS AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO
MARJORIE G. TAYLOR, SECRETARY, AMERICAN RIVER HOLDINGS, 1545 RIVER PARK DRIVE,
SUITE 107, SACRAMENTO, CALIFORNIA, 95815.
SHAREHOLDERS' PROPOSALS
Next year's Annual Meeting of Shareholders will be held on May 20, 2004.
The deadline for shareholders to submit proposals for inclusion in the Proxy
Statement and form of Proxy for the 2004 Annual Meeting of Shareholders is
December 31, 2003. Management of the Company will have discretionary authority
to vote proxies obtained by it in connection with any shareholder proposal not
submitted on or before the December 30, 2004 deadline. All proposals should be
submitted by Certified Mail - Return Receipt Requested, to Marjorie G. Taylor,
Secretary, American River Holdings, 1545 River Park Drive, Suite 107 Sacramento,
California, 95815.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before the Meeting, but if such matters are properly presented to the Meeting,
proxies solicited hereby will be voted in accordance with the judgment of the
persons holding such proxies. All shares represented by duly executed proxies
will be voted at the Meeting in accordance with the terms of such proxies.
Dated: April 28, 2003 AMERICAN RIVER HOLDINGS
By: /s/ MARJORIE G. TAYLOR
-----------------------
Marjorie G. Taylor
Corporate Secretary
15
AUDIT COMMITTEE CHARTER Appendix A
Approved by the Board of Directors February 19, 2003
================================================================================
MEMBERSHIP
Each audit committee will consist of at least three independent Board members,
one of which will serve as the Committee Chair. Officers and internal Directors
of the Company cannot be members of the Committee. The members of the American
River Holdings' Audit Committee must posses' necessary skills to read and
understand fundamental financial statements. A quorum must be present to conduct
official business.
ORGANIZATION
There shall be a committee of the Board of Directors to be known as the audit
committee. The audit committee shall be composed of Directors who are
independent of the management of the companies and are free of any relationship
that, in the opinion of the Board of Directors, would interfere with their
exercise of independent judgment as a committee member.
STATEMENT OF POLICY
The audit committee shall provide assistance to the Directors in fulfilling
their responsibility to the shareholders, potential shareholders, and investment
community relating to accounting, reporting practices of the Company, and the
quality and integrity of the financial reports of the Company. In so doing, it
is the responsibility of the audit committee to maintain free and open means of
communication between the Directors, the independent auditors, the internal
auditors, and the financial management of the companies.
RESPONSIBILITIES
In carrying out its responsibilities, the audit committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the Directors and shareholders that the accounting
and reporting practices of the Company are in accordance with all requirements
and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
o Review and recommend to the Directors the independent auditors to be
selected to audit the financial statements of the Company and its
divisions and subsidiaries.
o Meet with the independent auditors and financial management of the
Company to review the scope of the proposed audit for the current year
and the audit procedures to be utilized, and at the conclusion thereof
review such audit, including any comments or recommendations of the
independent auditors.
o Review with the independent auditors, the Company's internal auditor,
and financial and accounting personnel, the adequacy and effectiveness
of the accounting and financial controls of the Company, and elicit
any recommendations for the improvement of such internal control
procedures or particular areas where new or more detailed controls or
procedures are desirable. Particular emphasis should be given to the
adequacy of such internal controls to expose any payments,
transactions, or procedures that might be deemed illegal or otherwise
improper. Further, the committee periodically should review policy
statements to determine their adherence to the code of conduct.
o Review the regulatory examination reports and the loan review reports
and recommendations. Attend meetings with regulatory agencies and loan
review personnel if requested to do so.
o Review the internal audit function of the Company including the
independence and authority of its reporting obligations, the proposed
audit plans for the coming year, and the coordination of such plans
with the independent auditors.
o Receive prior to each meeting a summary of findings from completed
internal audits and a progress report on the proposed internal audit
plan, with explanations for any deviations from the original plan.
A-1
o Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the
shareholders. Any changes in accounting principles should be reviewed.
o The members of the American River Holdings' Audit Committee will
review the financial reports (10K's and 10Q's) submitted to the
Securities and Exchange Committee prior to submission.
o Provide sufficient opportunity for the internal and independent
auditors to meet with the members of the audit committee without
members of management present. Among the items to be discussed in
these meetings are the independent auditors' evaluation of the
Company's financial, accounting, and auditing personnel, and the
cooperation that the independent auditors received during the course
of the audit.
o Review accounting and financial human resources and succession
planning within the Company.
o Submit the minutes of all meetings of the audit committee to, or
discuss the matters discussed at each committee meeting with, the
Board of Directors.
o Investigate any matter brought to its attention within the scope of
its duties, with the power to retain outside counsel for this purpose
if, in its judgment, that is appropriate.
o Take measures to assure that all reports prepared by the external
auditors, internal control and loan review companies and regulatory
bodies are sent directly to the Chair of the Audit Committee.
o Review the adequacy of this Charter on an annual basis and recommend
any changes to the Board.
o Chair to review financial press releases prior to dissemination.
FREQUENCY OF MEETINGS
The Committee shall meet bi-monthly or no less than four times per year.
A-2
Appendix B
American River Holdings
Code of Ethical Conduct
In my role as _____________________ for American River Holdings (the "Company"),
I recognize that I hold an important and elevated role in corporate governance.
I am uniquely capable and empowered to ensure that shareholders' interests are
appropriately balanced, protected and preserved. Accordingly, this Code provides
principles to which I am expected to adhere and advocate. The Code embodies
rules regarding individual and peer responsibilities, as well as
responsibilities to the Company, the public and current and future shareholders.
I certify to you that I adhere to and advocate the following principles and
responsibilities governing my professional and ethical conduct.
To the best of my knowledge and ability:
1. I act with honesty and integrity, avoiding actual or apparent conflicts of
interest in personal and professional relationships.
2. I provide constituents with information that is accurate, complete,
objective, relevant, timely and understandable.
3. I comply with rules and regulations of federal, state, provincial and local
governments, and other appropriate private and public regulatory agencies.
4. I will provide a full, fair, accurate, timely and understandable disclosure
in the periodic reports required to be filed by the Company to the
Securities and Exchange Commission.
5. I act in good faith, responsibly, with due care, competence and diligence,
without misrepresenting material facts or allowing my independent judgment
to be subordinated.
6. I respect the confidentiality of information acquired in the course of my
work except when authorized or otherwise legally obligated to disclose.
Confidential information acquired in the course of my work is not used for
personal advantage.
7. I share knowledge and maintain skills important and relevant to my
constituents' needs.
8. I proactively promote ethical behavior as a responsible partner among peers
in my work environment and community.
9. I achieve responsible use of and control over all assets and resources
employed or entrusted to me.
--------------------------------------------
(Signature)
Copied to the Company's Audit Committee and CFO and/or CEO.
B-1
o DETACH PROXY CARD HERE o
--------------------------------------------------------------------------------
PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
AMERICAN RIVER HOLDINGS
for the Annual Meeting of Shareholders May 22, 2003
The undersigned shareholder(s) of American River Holdings (the "Company") hereby
appoint(s) David T. Taber and Mitchell A. Derenzo as proxyholders, each with
full powers of substitution, to represent and to vote all stock of the Company
which the undersigned is (are) entitled to vote at the Annual Meeting of
Shareholders of the Company to be held on Thursday, May 22, 2003 at 5:30 p.m. at
the Corporate Offices of the Company located at 1545 River Park Drive, Suite
107, Sacramento, California 95815, and at any and all postponements or
adjournments thereof, as fully and with the same force and effect as the
undersigned might or could do if personally present at the Meeting and at any
and all postponements or adjournments thereof, upon the following items on the
reverse side of the proxy.
The Board of Directors recommends a vote "FOR" Proposal No. 1 and Proposal No. 2
set forth on the reverse side. This proxy, when properly executed, will be voted
as directed herein by the undersigned shareholder(s). If no direction is
indicated, this proxy will be voted "FOR" all nominees listed in Proposal No. 1,
"FOR" Proposal No. 2, and in the proxyholders' discretion as to any other
business which may come before the Meeting.
PLEASE SIGN AND DATE ON REVERSE SIDE
------------------------------------
o DETACH PROXY CARD HERE o
--------------------------------------------------------------------------------
1. Election of Directors. To elect 2. Ratification of Independent Public
the following four (4) persons as Accountants. To ratify the selection of
Class III directors to serve for a Perry-Smith LLP as independent public
three-year term until the 2006 Annual accountants for the 2003 fiscal year.
Meeting of Shareholders and until
their successors are duly elected and [ ] FOR [ ] AGAINST [ ] ABSTAIN
qualified.
3. Other Business. To transact such
M. Edgar Deas Charles D. Fite other business as may properly come
David T. Taber Stephen H. Waks before the Meeting and any postponements
or adjournments thereof.
[ ] FOR ALL [ ] WITHHOLD ALL
Please date this Proxy and sign your
[ ] FOR ALL EXCEPT Nominee(s) Written name as it appears on the stock
Below: certificates. Executors, administrators,
trustees, etc., should give their full
_____________________________________ titles. All joint owners should sign.
Number of Shares: ___________________ Signature of Shareholder(s)
Date:_______________________, 2003 ________________________________________
________________________________________
Please print name(s)
I/we do [ ] do not [ ] expect to attend
the Meeting.
THIS PROXY IS SOLICATED ON BEHALF OF THE
BOARD OF DIRECTORS, AND MAY BE REVOKED
BY THE SHAREHOLDER(S) PRIOR TO ITS
EXERCISE BY FILING WITH THE CORPORATE
SECRETARY OF THE COMPANY AN INSTRUMENT
REVOKING THIS PROXY OR A DULY EXECUTED
PROXY BEARING A LATER DATE OR BY
APPEARING IN PERSON AND VOTING AT THE
MEETING.