SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of the Securities
Exchange Act of 1934 (Amendment No. ____)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only ( as permitted by Rule
14a-6 (e) (2) )
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11 (c) or Rule 14a-12
COMMUNITY WEST BANCSHARES
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(Name of Registrant as Specified in Its Charter)
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(Name of Person (s) Filing Proxy Statement, if other than Registrant
Payment of Filing Fee (Check the appropriate box) :
/X/ No fee Required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(I) (1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(2) Aggregate number of securities to which transaction applies:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid
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(2) Form, schedule or registration statement number:
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(3) Filing party:
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(4) Date filed:
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COMMUNITY WEST BANCSHARES
445 Pine Avenue
Goleta, California 93117-3474
Telephone: (805) 692-1862
---------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 23, 2002
---------------------------
NOTICE IS HEREBY GIVEN that the 2002 Annual Meeting of Shareholders of
Community West Bancshares (the "Company") will be held at the Holiday Inn, 5650
Calle Real, Goleta, California 93117, on Thursday, May 23, 2002, at 6:00 p.m.
Pacific Daylight Time (the "Meeting"), for the purpose of considering and voting
on the following matters:
1. ELECTION OF DIRECTORS. To elect eight persons to the Board of
Directors to serve until the 2003 Annual Meeting of Shareholders and until their
successors are elected and have qualified. The following persons are the Board
of Directors' nominees:
Michael A. Alexander John D. Illgen
Robert H. Bartlein Lynda Nahra
Jean W. Blois William R. Peeples
Stephen W. Haley James R Sims, Jr.
2. OTHER BUSINESS. Transacting such other business as may properly
come before the Meeting and any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on April 19, 2002,
as the record date for determination of shareholders entitled to notice of, and
the right to vote at, the Meeting.
The Bylaws of the Company provide for the nomination of directors in the
following manner:
"Nominations for election of members of the board of directors may be made
by the board of directors or by any shareholder 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 at which such nomination is to
be made) shall be made in writing and shall be delivered or mailed to the
president of the corporation no more than sixty (60) days prior to any
meeting of shareholders called for the election of directors and no more
than ten (10) days after the date the notice of such meeting is sent to
shareholders pursuant to Section 2.4 of these Bylaws; provided, however,
that if ten (10) days notice of such meeting is sent to shareholders, such
notice of intention to nominate must be received by the president of the
1
corporation not later than the time fixed in the notice of the meeting for
the opening of the meeting. 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) with the
written consent of the proposed nominee, a copy of which shall be furnished
with the notification, 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 a
bankrupt. The notice shall be signed by the nominating shareholder and by
the nominee. Nominations not made in accordance herewith shall be
disregarded by the chairman of the meeting and, upon his instructions, the
inspectors of election shall disregard all votes cast for each such
nominee. The restrictions set forth in this paragraph shall not apply to
nomination of a person to replace a proposed nominee who has died or
otherwise become incapacitated to serve as a director between the last day
for giving notice hereunder 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. A copy of the preceding paragraph shall
be set forth in the notice to shareholders of any meeting at which
directors are to be elected."
SINCE IMPORTANT MATTERS ARE TO BE CONSIDERED AT THE MEETING, IT IS VERY
IMPORTANT THAT EACH SHAREHOLDER VOTE.
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. THE ENCLOSED PROXY IS
SOLICITED BY THE COMPANY'S BOARD OF DIRECTORS. ANY SHAREHOLDER WHO EXECUTES AND
DELIVERS SUCH A PROXY HAS THE RIGHT TO REVOKE IT AT ANY TIME BEFORE IT IS
EXERCISED BY GIVING WRITTEN NOTICE OF REVOCATION TO THE SECRETARY OF THE
COMPANY, BY SUBMITTING PRIOR TO THE MEETING A PROPERLY EXECUTED PROXY BEARING A
LATER DATE, OR BY BEING PRESENT AT THE MEETING AND ELECTING TO VOTE IN PERSON BY
ADVISING THE CHAIRMAN OF THE MEETING OF SUCH ELECTION.
PLEASE INDICATE ON THE PROXY WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING SO THAT THE COMPANY CAN ARRANGE FOR ADEQUATE ACCOMMODATIONS.
By Order of the Board of Directors
April 26, 2002 Michel Nellis, Secretary
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ANNUAL REPORT ON FORM 10-K
COPIES OF THE COMPANY'S 2001 ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, ARE AVAILABLE UPON REQUEST TO: STEPHEN W.
HALEY, PRESIDENT AND CHIEF OPERATING OFFICER, COMMUNITY WEST BANCSHARES, 445
PINE AVENUE, GOLETA, CALIFORNIA 93117-3474, TELEPHONE (805) 692-1862, ON THE
COMPANY'S WEBSITE AT WWW.COMMUNITYWEST.COM AND ON THE WEBSITE OF THE SECURITIES
AND EXCHANGE COMMISSION AT WWW.SEC.GOV.
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COMMUNITY WEST BANCSHARES
445 Pine Avenue
Goleta, California 93117-3474
---------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 23, 2002
---------------------------
SOLICITATION AND VOTING OF PROXIES
Community West Bancshares (the "Company") is furnishing this proxy to its
shareholders in connection with the solicitation by the Board of Directors of
proxies to be used at the Annual Meeting of Shareholders, to be held on
Thursday, May 23, 2002 at 6:00 p.m. Pacific Daylight Time at the Holiday Inn,
5650 Calle Real, Goleta, California 93117 (the "Meeting"), and at any and all
adjournments thereof. The Company's 2001 Annual Report to Shareholders,
including consolidated financial statements for the year ended December 31, 2001
accompanies this Proxy Statement, which is first being mailed to record holders
on or about April 26, 2002.
Regardless of the number of shares of Common Stock owned, it is important
that the shareholders of a majority of shares be represented by proxy or present
in person at the Meeting. Shareholders are requested to vote by completing the
enclosed proxy card and returning it signed and dated in the enclosed postage
paid envelope. Shareholders are to indicate their vote in the spaces provided
on the proxy card. Proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein. Where no
instructions are indicated, signed proxy cards will be voted "AUTHORITY GIVEN"
for the election of the nominees for directors named in this Proxy Statement.
If any other business is properly presented at the Meeting, the proxy will be
voted in accordance with the recommendations of the Company's Board of
Directors.
Other than the matters set forth on the attached Notice of the Meeting, the
Board of Directors knows of no additional matters that will be presented for
consideration at the Meeting. Execution of a proxy, however, confers the
designated proxy holder's discretionary authority to vote the shares in
accordance with the recommendations of the Company's Board of Directors on such
other business, if any, that may properly come before the Meeting and at any
adjournments thereof, including whether or not to adjourn the Meeting.
You may revoke your proxy at any time prior to its exercise by filing a
written notice of revocation with the Secretary of the Company, by delivering to
the Company a duly executed proxy bearing a later date, or by attending the
Meeting and voting in person. However, if you are a shareholder whose shares are
not registered in your own name, you will need to provide appropriate
documentation from the record holder to vote personally at the Meeting.
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The following matter will be considered and voted upon at the Meeting:
1. ELECTION OF DIRECTORS. To elect eight persons to the Board of
Directors to serve until the 2003 Annual Meeting of Shareholders and until their
successors are elected and have qualified. The following persons are the Board
of Directors' nominees:
Michael A. Alexander John D. Illgen
Robert H. Bartlein Lynda Nahra
Jean W. Blois William R. Peeples
Stephen W. Haley James R Sims, Jr.
2. OTHER BUSINESS. Transacting such other business as may properly
come before the Meeting and any adjournment or adjournments thereof.
This solicitation of proxies is being made by the Board of Directors of the
Company. The expense of solicitation of proxies for the Meeting will be borne by
the Company. It is anticipated that proxies will be solicited primarily through
the use of the mail. Proxies may also be solicited personally or by telephone
by directors, officers and employees of the Company, and its wholly owned
subsidiary, Goleta National Bank ("Goleta"), without additional compensation
therefor. The Company will also request persons, firms and corporations holding
shares in their names, or in the name of their nominees, that are beneficially
owned by others, to send proxy materials to and obtain proxies from such
beneficial owners, and will reimburse such holders for their reasonable expenses
in doing so.
VOTING SECURITIES
The securities that may be voted at the Meeting consist of shares of common
stock of the Company (the "Common Stock"), with each share entitling its owner
to one vote on all matters to be voted on at the Meeting. The close of business
on April 19, 2002 has been fixed by the Board of Directors as the record date
(the "Record Date") for the determination of shareholders of record entitled to
notice of and to vote at the Meeting and at any adjournment or adjournments
thereof. The total number of shares of Common Stock outstanding on the Record
Date was 5,690,224 shares. In connection with the election of directors, shares
shall be voted cumulatively if a candidate's or candidates' name(s) have been
properly placed in nomination prior to voting and the shareholder has properly
given notice of the intention to vote cumulatively. Cumulative voting allows a
shareholder to cast a number of votes equal to the number of shares held in his
or her name as of the Record Date, multiplied by the number of directors to be
elected. The total number of votes may be cast for one nominee or may be
distributed among as many nominees, or in such proportions, as the shareholder
so directs.
Directors are elected by plurality vote. Abstentions and broker non-votes
do not have the effect of votes in opposition to a director. Abstentions are,
however, counted towards a quorum.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
Except as set forth below, Management of the Company does not know of any
person who owns beneficially or of record, more than 5% of the Company's
outstanding Common Stock. The following table sets forth certain information as
of the Record Date, concerning the beneficial ownership of the Company's
outstanding Common Stock by persons known to own more than 5% of the Company's
outstanding stock, by the Company's directors and executive officers, and by all
directors and executive officers of the Company as a group.
Except as indicated, the address of each of the persons listed below is c/o
Community West Bancshares, 445 Pine Avenue, Goleta, CA 93117.
NUMBER OF SHARES OF NUMBER OF SHARES PERCENT OF CLASS
COMMON STOCK SUBJECT TO VESTED BENEFICIALLY
NAME AND TITLE BENEFICIALLY OWNED(1) STOCK OPTIONS(2) OWNED(2)
------------------------------------ --------------------- ------------------ -----------------
MICHAEL A. ALEXANDER, 126,717 13,341 2.46%
Chairman Of The Board
MOUNIR R. ASHAMALLA, 97,391 13,341 1.94%
Director
ROBERT H. BARTLEIN, 125,762 13,341 2.44%
Director
JEAN W. BLOIS, 50,824 24,895 1.32%
Director
CYNTHIA HOOPER, 9,600 - *
Senior Vice President, Goleta
National Bank
JOHN D. ILLGEN, 46,956 27,755 1.31%
Director
INVESTORS OF AMERICA LIMITED 375,000 - 6.60%
PARTNERSHIP
135 North Meramec
Clayton, MO 63105
BERNIE MERRY, - 10,100 *
Senior Vice President,
Goleta National Bank
LYNDA NAHRA, 1,350 11,900 0.23%
Director, President, Goleta
National Bank
MICHEL NELLIS, 45,761 27,755 1.29%
Secretary And Director
WILLIAM R. PEEPLES, 841,129(3) 13,341 14.98%
Vice Chairman of the Board
BOB ROTHENBERG, - 1,800 *
Senior Vice President,
Goleta National Bank
JAMES R. SIMS, JR., 29,141 27,755 1.00%
Director
ALL DIRECTORS AND EXECUTIVE 1,374,631 185,324 27.35%
OFFICERS AS A GROUP (12 in Number)
6
* Less than 1%
(1) Includes shares beneficially owned, directly and indirectly, together with
associates, except for shares subject to vested stock options and
outstanding warrants. Also includes shares held as trustee and held by or
as custodian for minor children. Unless otherwise noted, all shares are
held as community property under California law or with sole investment and
voting power.
(2) Shares subject to options held by directors or executive officers that were
exercisable within 60 days after the Record Date ("vested") are treated as
issued and outstanding for the purpose of computing the percent of the
class owned by such person, but not for the purpose of computing the
percent of class owned by any other person.
(3) Includes 273,100 shares held by Mr. Peeples' spouse, concerning which Mr.
Peeples disclaims beneficial ownership.
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PROPOSAL 1.
ELECTION OF DIRECTORS
DIRECTORS AND EXECUTIVE OFFICERS
The Company's Bylaws provide that the authorized number of directors shall
be not less than six nor more than 11, with the exact number of directors fixed
from time to time by resolution of a majority of the Board of Directors or by
resolution of the Shareholders. The number of directors is currently fixed at
11. On the effective date of the Meeting, the number of directors shall be
reduced to eight by action of a majority of the Board of Directors.
At the Meeting eight persons will be elected to serve as directors of the
Company until the 2003 Annual Meeting of Shareholders and until their successors
are elected and have qualified. The eight persons named below, all of whom are
currently directors of the Company, have been nominated by the Board of
Directors for re-election. A Proxy that is submitted with the instruction
"AUTHORITY GIVEN" or without instructions will be voted in such a way as to
effect the election of all eight nominees, or as many thereof as possible. In
the event that any of the nominees should be unable to serve as a director, it
is intended that the Proxy will be voted for the election of such substitute
nominees, if any, as shall be designated by the Board of Directors. The Board
of Directors has no reason to believe that any of the nominees will be unable or
unwilling to serve. Additional nominations can only be made by complying with
the notice provision set forth in the Bylaws of the Company, an extract of which
is included in the Notice of Annual Meeting of Shareholders accompanying this
Proxy Statement. This Bylaw provision is designed to give the Board of
Directors advance notice of competing nominations, if any, and the
qualifications of nominees, and may have the effect of precluding third-party
nominations if the notice provisions are not followed.
The following persons have been nominated for election by the Board of
Directors:
Michael A. Alexander John D. Illgen
Robert H. Bartlein Lynda Nahra
Jean W. Blois William R. Peeples
Stephen W. Haley James R Sims, Jr.
Two directors, Dr. Ashamalla and Ms. Nellis, have declined to stand for
re-election. Since the last Annual Meeting, two directors resigned before the
end of their terms, Richard M. Sanborn and Llewelyn W. Stone, both of whom
resigned in 2001. Mr. Haley was appointed by the board of directors to fill the
vacancy created by the resignation of Mr. Sanborn.
None of the directors or executive officers of the Company 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. The
Company knows of no family relationships between the directors and executive
officers of the Company, nor do any of the directors or executive officers of
the Company serve as directors of any other company which has a class of
securities registered under, or which is subject to the periodic reporting
requirements of, the Securities Exchange Act of 1934 or any investment company
registered under the Investment Company Act of 1940.
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The following table sets forth, as of the Record Date, the names and
certain other information concerning the directors of the Company, including
each of the persons nominated by the Board of Directors for re-election as
directors of the Company.
YEAR FIRST
ELECTED OR
` APPOINTED YEAR FIRST ELECTED
BUSINESS EXPERIENCE DURING DIRECTOR OF THE OR APPOINTED
NAME AND TITLE AGE THE PAST FIVE YEARS COMPANY DIRECTOR OF GOLETA
------------------------ --- ------------------------------- --------------- ------------------
MICHAEL A. ALEXANDER, 71 Chairman of Utilicom Corp. 1997 1989
Chairman of the Board since 1994. (Electronics).
MOUNIR R. ASHAMALLA, 64 Oral-Maxillo-Facial Surgeon 1997 1989
Director
ROBERT H. BARTLEIN, 54 President of Bartlein Group, 1997 1989
Director Inc. and Bartlein & Company,
Inc. (Real estate management).
JEAN W. BLOIS, 74 Independent consultant. 1997 1989
Director
STEPHEN W. HALEY (1), 48 President and Chief Operating 2002 2002
Director, President and Officer of Community West
Chief Operating Officer Bancshares; Senior Vice
President, Finance and Risk
Management, United PanAm
Financial Corporation (1997-
2001); CFO United PanAm
Mortgage Corp. (1998-2000).
JOHN D. ILLGEN, 57 President and Chairman of 1997 1989
Director Illgen Simulation
Technologies, Inc. (Computer
software simulations).
LYNDA NAHRA, (1) 51 President of Goleta National 2001 2000
Director, President of Bank; Regional President
Goleta National Bank Goleta National Bank; COO
Goleta National Bank (1997-
Present); Vice President
Business Sales Manager,
WestAmerica Bank (1996-
1997); Vice President, Team
Leader, First Interstate Bank,
Private Banking Services
(1995-1996).
MICHEL NELLIS, 54 Partner, Nellis Associates 1997 1989
Director, Secretary (financial services)
WILLIAM R. PEEPLES, 59 Private investor. 1997 1989
Vice Chairman of the
Board
JAMES R. SIMS, JR., 65 Realtor. 1997 1989
Director
--------------------------------
(1) Also an executive officer of the Company.
(2) Mr. Haley began serving as President and COO of the Company on September 1, 2001.
(3) Mr. Stone served as President and CEO of the Company until September 1, 200l.
9
The following table sets forth, as of the Record Date, the names and
certain other information concerning the executive officers of the Company, in
addition to those executive officers who are nominated for election as directors
and appear in the table above.
BUSINESS EXPERIENCE DURING YEAR FIRST SERVING
NAME AND TITLE AGE THE PAST FIVE YEARS COMPANY
------------------------------- --- ------------------------------------- ------------------
CYNTHIA HOOPER 39 Senior Vice President, SBA Loan 1997
Senior Vice President, SBA Specialist, Goleta National Bank
Loan Specialist, Goleta (1998 to present) Vice President, SBA
National Bank Loan Specialist, Goleta National Bank
(1989-1998).
BERNIE MERRY 54 Senior Vice President, Alternative 1998
Senior Vice President, Mortgage Products and Mortgage
Alternative Mortgage Products Division Manager, Goleta National
and Mortgage Division Bank (2001 to present); Senior Vice
Manager, Goleta National Bank President, Alternative Mortgage
Products Manager (2000-2001); Vice
President, HUD Administrator (1998-
2000); Assistant Vice President,
Cityscape Mortgage (1996-1997).
BOB ROTHENBERG 59 Senior Vice President, Credit 1998
Senior Vice President, Credit Administrator, Goleta National Bank
Administrator, Goleta National (1998 to present); Credit
Bank Administrator, Montecito Bank &
Trust (1992-1998).
CERTAIN INFORMATION REGARDING THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES
The Board of Directors of the Company met 17 times (14 regular meetings and
three special meetings) during the year ended December 31, 2001, and had the
following standing committees which met during the year: the Audit Committee and
the Compensation Committee. The Company does not have a nominating committee.
In addition, the Company's directors served on the Board of Directors of Goleta,
including the various committees established by that subsidiary. During 2001,
none of the Company's directors attended less than 75% of the Company's board
meetings and meetings of committees on which they served.
The Audit Committee is composed of four members of the Board of Directors:
Messrs. Alexander, Peeples and Sims, and Ms. Nellis. This Committee is
responsible for review of all internal and external examination reports and
selection of the Company's independent accountants. The Audit Committee met
twice during 2001.
The Compensation Committee, which is currently composed of four members of
the Board of Directors; Messrs. Alexander, Illgen and Peeples, and Ms. Blois.
The Committee is responsible for deciding executive compensation. The
Compensation Committee met twice in 2001.
10
DIRECTORS' COMPENSATION
In 2001, the Company's directors were paid for attendance at Company Board
meetings at the rate of $500 for each regular Board meeting (with the Chairmen
receiving $750); and, for all directors except Messrs. Sanborn and Stone and Ms.
Nahra, $150 for each committee meeting.
AUDIT COMMITTEE REPORT
The Board of Directors maintains an Audit Committee comprised of four
of the Company's directors. Each member of the Audit Committee meets the
independence and experience requirements of the Nasdaq Stock Market. The Audit
Committee assists the Board of Directors in monitoring the accounting, auditing
and financial reporting practices of the Company.
The Audit Committee operates under a written charter, which was last
amended and restated on April 25, 2002 and is assessed annually for adequacy by
the Audit Committee. A copy of the charter is attached to this Proxy Statement
as Appendix A. The Audit Committee held four meetings during fiscal 2001.
Management is responsible for the preparation of the Company's financial
statements and financial reporting process, including its system of internal
controls. In fulfilling its oversight responsibilities, the Audit Committee:
- Reviewed and discussed with management the audited financial
statements contained in the Company's Annual Report on Form 10-K for
fiscal 2001; and
- Obtained from management their representation that the Company's
financial statements have been prepared in accordance with accounting
principles generally accepted in the United States.
The Company's independent public accountants, Arthur Andersen LLP
("Andersen") are responsible for performing an audit of the Company's financial
statements in accordance with the auditing standards generally accepted in the
United States and expressing an opinion on whether the Company's financial
statements present fairly, in all material respects, the Company's financial
position and results of operations for the periods presented and conform with
accounting principles generally accepted in the United States. In fulfilling
its oversight responsibilities, the Audit Committee:
- Discussed with Andersen the matters required to be discussed by
Statement on Auditing Standards No. 61, as amended ("Communication
with Audit Committees"); and
- Received and discussed with Andersen the written disclosures and the
letter from Andersen required by Independent Standards Board Standard
No. 1 ("Independence Discussions with Audit Committees"), and reviewed
and discussed with Andersen whether the rendering of the non-audit
services provided by them to the Company during fiscal 2001 was
compatible with their independence.
11
In addition, the Company received a letter from Andersen to the effect
that Andersen's audit of the Company was subject to its quality control system
for the U.S. accounting and auditing practice to provide reasonable assurance
that the engagement was conducted in compliance with professional standards,
that there was appropriate continuity of Andersen personnel working on the audit
and the availability of national office consultation.
In performing its functions, the Audit Committee acts only in an
oversight capacity. It is not the responsibility of the Audit Committee to
determine that the Company's financial statements are complete and accurate, are
presented in accordance with accounting principles generally accepted in the
United States or present fairly the results of operations of the Company for the
periods presented or that the Company maintains appropriate internal controls.
Nor is it the duty of the Audit Committee to determine that the audit of the
Company's financial statements has been carried out in accordance with generally
accepted auditing standards or that the Company's auditors are independent.
Based upon the reviews and discussions described above, and the report
of Andersen, the Audit Committee has recommended to the Board of Directors, and
the Board of Directors has approved, that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001 for filing with the Securities and Exchange Commission.
Dated: April 25, 2002 THE AUDIT COMMITTEE
Michael A. Alexander
Michel Nellis
William R. Peeples
James R. Sims, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee (the "Committee") is made up of four directors,
Messrs. Alexander, Illgen and Peeples, and Ms. Blois, none of whom serve as an
officer of the Company or of its subsidiaries. The Company's executive officers
have represented to the Company that none of them served on the board of
directors or compensation committee, or in an equivalent capacity, of another
entity.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Committee was responsible for reviewing and approving the Company's
overall compensation and benefit programs, and for administering the
compensation of the Company's executive and senior officers.
The Committee's functions and objectives are: (i) to determine the
competitiveness of current base salary, annual incentives and long-term
incentive relative to specific competitive markets for the president; (ii) to
develop a performance review mechanism that has written objectives and goals
12
which are used to make salary increase determinations; (iii) to develop an
annual incentive plan for senior management; and (iv) to provide guidance to the
Board of Directors in its role in establishing objectives regarding executive
compensation. The Committee's overall compensation philosophy is as follows:
(i) to attract and retain quality talent which is critical to both short-term
and long-term success; (ii) to reinforce strategic performance objectives
through the use of incentive compensation programs; (iii) to create a mutuality
of interest between executive and senior officers and shareholders through
compensation structures that share the rewards and risks of strategic
decision-making; and (iv) to encourage executives to achieve substantial levels
of ownership of stock in the Company.
The compensation package offered to executive officers consists of a mix of
salary, incentive bonus awards and stock option awards, as well as benefits
under employee benefit plans. Salary levels recommended by the Committee are
intended to be consistent and competitive with the practices of comparable
financial institutions and each executive's level of responsibility. The
Committee generally utilizes internal and/or external surveys of compensation
paid to executive officers performing similar duties for depository institutions
and their holding companies.
In establishing executive compensation for the presidents, the Committee
considered the overall financial condition of the Company, profitability, asset
quality and compliance with rules and regulations. Excluded from the Committee's
consideration of incentive bonuses would be income or expenses resulting from
extraordinary or non-recurring events, regulatory changes, merger or acquisition
activity, or the imposition of changes in generally accepted accounting
principles.
In determining Mr. Haley and Ms. Nahra's bonuses, the Committee considered
the amount of time these executives had been with the Company and general
industry customs.
The Committee believes that the Company's compensation program and
compensation levels are effective in attracting, motivating and retaining
outstanding executive and senior officers and that they are consistent with the
Company's immediate and long-term goals.
Dated: April 25, 2002 THE COMPENSATION COMMITTEE
Michael A. Alexander
Jean W. Blois
John D. Illgen
William R. Peeples
13
EXECUTIVE COMPENSATION
The following table sets forth, for the years ended December 31, 2001, 2000
and 1999, the cash compensation paid or payable by the Company and its
Subsidiaries to the Chief Executive Officer, the other four most highly
compensated executive officers serving the Company on December 31, 2001, one
additional person serving as president of the Company, and one additional
executive officer who resigned prior to December 31, 2001 (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
Annual Compensation
-----------------------
Name And Principal Position Year Salary Bonus
------------------------------------ ---- -------- -------
------------------------------------ ---- -------- -------
LLEWELLYN W. STONE (1) 2001 $147,833 -
---- -------- -------
President, Chief Executive Officer 2000 $175,000 $60,000
---- -------- -------
1999 $175,000 -
------------------------------------ ---- -------- -------
STEPHEN W. HALEY (2) 2001 $103,750 $10,000
---- -------- -------
President, Chief Operating Officer - - -
---- -------- -------
- - -
------------------------------------ ---- -------- -------
LYNDA NAHRA, 2001 $129,167 $25,000
---- -------- -------
President, Chief 2000 $101,458 $23,577
---- -------- -------
Executive Officer, Goleta National 1999 $103,227 -
Bank
------------------------------------ ---- -------- -------
BERNIE MERRY 2001 $131,016 $15,000
---- -------- -------
Senior Vice President, Alternative 2000 $126,450 $ 5,000
---- -------- -------
Mortgage Products and Mortgage 1999 $121,000 $ 2,500
Division Manager, Goleta National
Bank
------------------------------------ ---- -------- -------
BOB ROTHENBERG 2001 $118,917 $ 5,000
---- -------- -------
Senior Vice President, Credit 2000 $112,250 $ 5,000
---- -------- -------
Administrator,Goleta National Bank 1999 $ 74,295 -
------------------------------------ ---- -------- -------
CYNTHIA HOOPER 2001 $123,630 -
---- -------- -------
Senior Vice President, SBA Loan 2000 $112,918 -
---- -------- -------
Specialist, Goleta National Bank 1999 $112,850 -
------------------------------------ ---- -------- -------
LYNDA PULLON RADKE (3) 2001 $191,438 -
---- -------- -------
Senior Vice President and Chief 2000 $110,000 $25,000
---- -------- -------
Financial Officer 1999 $ 86,408 -
------------------------------------ ---- -------- -------
--------------------------------
(1) Mr. Stone was the President and CEO of the Company from January 2001
to September 1, 2001.
(2) Mr. Haley was the President and COO of the Company from September 1,
2001.
(3) Ms. Radke resigned as Senior Vice President and Chief Financial
Officer, effective November 30, 2001. Listed 2001 salary includes
severance payments.
14
STOCK OPTIONS
In connection with the bank-holding company reorganization, the Company
adopted the Community West Bancshares 1997 Stock Option Plan (the "1997 Plan")
providing for the issuance of up to 924,398(1) shares. As of the Record Date
190,363 options had been exercised and options for 432,624 shares were
outstanding, leaving 301,411 shares available for future grants.
Under the terms of the 1997 Plan, full time salaried employees may be
granted either nonqualified or incentive stock options, and directors of the
Company may only be granted nonqualified options. Options may be granted at a
price of not less than 100% of the fair market value of the stock on the date of
grant. Options are exercisable in such increments, which need not be equal, as
may be determined by the Board of Directors provided, however, that the options
granted shall vest and become exercisable at a rate of at least 20% annually
over five years from the date of grant. The optionee is not obligated to
exercise any portion of an option granted under the 1997 Plan in the period that
any portion becomes exercisable. Rather, the optionee's right to exercise such
portion shall continue until the option expires. All options expire no later
than ten years from the date of grant. Options are granted at the discretion of
the Company's Board of Directors.
The following table sets forth certain information regarding stock options
granted by the Company to the Named Executive Officers during 2001:
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants Potential Realizable
Value At Assumed
Annual Rates of Stock
Price Appreciation for
Option Term
--------------------------------------------------------------------- --------------------
Number of
Securities
Underlying Percent of
Options Total Options Exercise Expiration
Name Granted Granted (1) Price Date 5% 10%
------------------ ---------- -------------- --------- ---------- -------- ---------
Stephen W. Haley 20,000 10.7% $ 5.75 5/24/11 $69,000 $138,000
------------------ ---------- -------------- --------- ---------- -------- ---------
Bernie Merry 4,000 2.1% $ 5.08 4/30/11 $12,192 $ 24,384
------------------ ---------- -------------- --------- ---------- -------- ---------
Lynda Nahra 4,000 2.1% $ 5.08 4/30/11 $12,192 $ 24,384
------------------ ---------- -------------- --------- ---------- -------- ---------
Lynda Pullon Radke 2,000 1.1% $ 5.08 4/30/11 $ 6,096 $ 12,192
------------------ ---------- -------------- --------- ---------- -------- ---------
--------------------------------
(1) The Company issued options to purchase 186,228 shares of Common Stock in 2001.
The Company issued no SARs in 2001.
15
The following table sets forth certain information regarding stock options
outstanding at December 31, 2001 for the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised In-
Unexercised The Money
Options at Fiscal Options at Fiscal
Year-End (# Year-End (1)
Shares Acquired exercisable/ ($exercisable/
Name on Exercise Value Realized unexercisable) unexercisable)
------------------ --------------- --------------- ------------------ -------------------
Llewellyn W. Stone - - - -
------------------ --------------- --------------- ------------------ -------------------
Stephen W. Haley - - 0/20,000 $ 0/$5,000
------------------ --------------- --------------- ------------------ -------------------
Lynda Nahra - - 7,900/7,600 $ 525/$2,100
------------------ --------------- --------------- ------------------ -------------------
Bernie Merry - - 10,100/8,400 $ 4,048/$750
------------------ --------------- --------------- ------------------ -------------------
Bob Rothenberg - - 1,800/7,200 $ 375/$1,500
------------------ --------------- --------------- ------------------ -------------------
Cynthia Hooper 4,400 $ 10,010 800/3200 -
------------------ --------------- --------------- ------------------ -------------------
Lynda Pullon Radke 20,000 $ 79,535 - -
------------------ --------------- --------------- ------------------ -------------------
(1) Based on the closing price on the Nasdaq National Market at $6.00 per share
on December
EMPLOYMENT AND OTHER COMPENSATION AGREEMENTS
Mr. Stone served as Chief Executive Officer and President of the Company
until September 1, 2001. On September 1, 2001, Mr. Haley assumed the position
of President of the Company. Mr. Stone continued as Chief Executive Officer of
the Company until December 31, 2001, at which time he entered into a twenty-six
month contract to serve as a part-time employee and consultant for a monthly
salary of $3,645.83.
Mr. Stone is a party to an Executive Salary Continuation Agreement with the
Company dated January 1, 1994. The purpose of the Executive Salary Continuation
Agreement was to provide a special incentive to Mr. Stone for his continuing
employment with Goleta on a long-term basis. The Executive Salary Continuation
Agreement provides Mr. Stone with salary continuation benefits of up to $50,000
per year for 15 years after retirement. Normal retirement in the Executive
Salary Continuation Agreement is age 61. In the event of death prior to
retirement, Mr. Stone's beneficiary will receive the full salary continuation
benefits. In the event of disability, wherein Mr. Stone does not continue
employment with the Bank, Mr. Stone is entitled to a total yearly payment equal
to $5,000 per year of service beginning with January 1, 1994, up to a total
yearly payment of $50,000. If Mr. Stone terminates employment with the Bank for
16
a reason other than death, disability, cause, or voluntary termination, prior to
the normal retirement age, he will be entitled to salary continuation benefits
calculated as set forth above for disability. If Mr. Stone's employment is
terminated after a transfer of controlling ownership of the Company or a sale of
the Company or Goleta, Mr. Stone will become fully vested as to the full amount
of salary continuation benefits. Although Mr. Stone has reduced his duties to
those of part-time employee and consultant, he continues to be an employee of
the Company and is not currently receiving benefits under the Executive Salary
Continuation Agreement.
Mr. Haley receives an annual salary of $175,000 per year. He is also
entitled to a moving allowance of $5,000 and a living allowance of $2,000 per
month through June, 2002. Finally, if he is involuntarily terminated before May
21, 2003, he will be entitled to six months' salary.
Ms. Nahra is entitled to one year's severance pay in the case of
involuntary termination.
The Board of Directors of the Company is currently negotiating an
employment agreement with Mr. Haley, and the Board of Directors of Goleta is
currently negotiating an employment agreement with Ms. Nahra.
PROFIT SHARING AND 401(K) PLAN
The Company has established a 401(k) plan for the benefit of its employees.
Employees are eligible to participate in the plan after 3 months of consecutive
service. Employees may make contributions to the plan under the plan's 401(k)
component, and the Company may make contributions under the plan's profit
sharing component, subject to certain limitations. The Company's contributions
were determined by the Board of Directors and amounted to $176,782, $164,125 and
$149,037, in 2001, 2000 and 1999 respectively.
17
STOCK PERFORMANCE GRAPH
The following graph presents the cumulative, five-year total return for the
Company's (and previously Goleta's) Common Stock compared with the Nasdaq Total
Return Index, a broad market index of stocks traded on the Nasdaq National
Market, and the SNL Securities Index of Banks over $500 million in total assets,
which the Company believes is most representative of peer issuers. The graph
assumes an initial investment of $100 in each of the Company's Common Stock, the
securities underlying the Nasdaq Total Return Index and the securities
underlying the SNL Index for Banks on December 31, 1996, and that all dividends
were reinvested.
[GRAPHIC OMITTED]
PERIOD ENDING
=====================================================================================
INDEX 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
=====================================================================================
Community West Bancshares 100.00 190.00 194.50 146.28 80.08 123.99
NASDAQ - Total US 100.00 122.48 172.70 320.88 193.00 153.13
SNL <$500M Bank Index 100.00 170.47 155.65 144.08 138.99 192.27
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Some of the directors and executive officers of the Company, as well as the
companies with which such directors and executive officers are associated, are
customers of, and have had banking transactions with its banking subsidiary,
Goleta, in the ordinary course of Goleta's businesses. Goleta expects to have
18
such ordinary banking transactions with such persons in the future. In the
opinion of management of Goleta, all loans and commitments to lend included in
such transactions were made in compliance with applicable laws on substantially
the same terms, including interest rates and collateral, as those prevailing for
comparable transactions with other persons of similar creditworthiness and did
not involve more than a normal risk of collectibility or present other
unfavorable features. Although Goleta does not have any limits on the aggregate
amount they would be willing to lend to directors and officers as a group, loans
to individual directors and officers must comply with their internal lending
policies and statutory lending limits.
In November 1999, the Company obtained a $3,600,000 loan from Mr. Peeples,
a director of the Company, the proceeds of which were used to make a capital
contribution to Goleta. Under the terms of the loan, interest accrued at the
rate of 8.25%, with the principal and accrued interest due and payable May 1,
2001. On March 30, 2001 the loan from Mr. Peeples was repaid from the proceeds
of a loan obtained by the Company from Union Bank of California, which was
repaid in August 2001.
INDEPENDENT ACCOUNTANT
The Company's independent accountant for the fiscal year ended December 31,
2001 is Arthur Andersen LLP ("Andersen"). The Company has not selected an
independent accountant for the fiscal year ending December 31, 2002 because of
uncertainty regarding the outcome of government proceedings that could affect
the ability of Andersen to provide necessary audit services. The Company has
elected to retain Andersen to review the unaudited interim financial statements
to be provided with the Company's quarterly report on Form 10-Q for the quarter
ended March 31, 2002. Representatives of Andersen will be invited to attend the
Meeting. The Company will afford the representatives an opportunity to make a
statement, should they desire to do so, and expect that the representatives will
be available to respond to appropriate questions.
AUDIT FEES
During the fiscal year ended December 31, 2001, the aggregate fees billed
by Andersen for the audit of the Company's consolidated financial statements for
such fiscal year and for the review of the Company's interim financial
statements were $208,695.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
During the fiscal year ended December 31, 2001, there were no fees billed
by Andersen for information technology consulting services.
OTHER FEES
During the fiscal year ended December 31, 2001, the aggregate fees billed
by Andersen for professional services other than audit and information
technology consulting fees were $389,500, relating primarily to state and
federal tax compliance and consulting and consultation with regard to the tax
treatment of the proceeds of a legal settlement with the Company's former
independent accountants.
19
The Audit Committee of the Company reviewed and discussed with Andersen
whether the rendering of the non-audit services provided by them to the Company
during fiscal 2001 was compatible with their independence.
SHAREHOLDER PROPOSALS
Shareholder proposals to be considered for inclusion in the Proxy Statement
for the Company's 2003 Annual Meeting of Shareholders must be received by the
Company at its offices at 445 Pine Avenue, Goleta, California 93117, no later
than December 27, 2002. The proposals must also satisfy the conditions
established by the Securities and Exchange Commission (the "SEC") for such
proposals in order to be included in the Company's Proxy Statement for the 2003
Annual Meeting of Shareholders.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers (as defined in regulations promulgated by the SEC thereunder),
directors and persons who own more than ten percent of the Common Stock to file
reports of stock ownership and changes in stock ownership with the SEC. The
officers, directors and greater than ten percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of all reports of ownership
furnished to the Company, or written representations that no forms were
necessary, the Company believes that during the last year its officers,
directors and greater than ten percent beneficial owners complied with all
filing requirements.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
In accordance with the rules of the SEC, the accompanying Proxy will confer
on the proxy holders the authority to vote at their discretion on any matter
concerning which the Company did not have notice on or before March 13, 2002.
The Company's Board of Directors knows of no business which will be
presented for consideration at the Meeting other than as stated in the Notice of
Annual Meeting of Shareholders. If however, other matters are properly brought
before the Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
20
Whether or not you intend to be present at the Meeting, you are urged to
return your proxy card promptly. If you are then present at the Meeting and wish
to vote your shares in person, your original proxy may be revoked by voting at
the Meeting. However, if you are a shareholder whose shares are not registered
in your own name, you will need the proxy card obtained from your recordholder
to vote personally at the Meeting.
By Order of the Board of Directors,
COMMUNITY WEST BANCSHARES
Stephen W. Haley,
President and Chief Operating Officer
Dated: April 26, 2002
Goleta, California
21
APPENDIX A
AUDIT COMMITTEE CHARTER
The audit committee is a committee of the board of directors. Its primary
function is to assist the board in fulfilling it oversight responsibilities by
reviewing the financial information which will be provided to the shareholders
and others, the systems of internal controls which management and the board of
directors have established, and the audit process.
In meeting its responsibilities, the audit committee is expected to:
1. Provide an open avenue of communication between the internal or
external auditors, the independent accountant and the Board of
Directors.
2. Review and update the committee's charter annually.
3. Recommend an independent accountant to the board of directors, approve
the compensation of the independent accountant and review and approve
the discharge of the independent accountants.
4. Review and concur in the appointment, replacement, reassignment, or
dismissal of the director of internal auditing, or the external
auditors.
5. Confirm and assure the independence of the internal auditor and the
independent accountant, including a review of management consulting
services and related fees provided by the independent accountant.
6. Inquire of management, the director of the internal auditing or
external auditor and the independent accountant about significant
risks or exposures and assess the steps management has taken to
minimize such risk to the company.
7. Consider, in consultation with the independent accountant and the
director of internal auditing or the external auditor, the audit scope
and plan of the internal auditors and the independent auditors.
8. Consider with management and the independent accountant the rationale
for employing a particular external audit firm.
9. Review with the director of internal auditing or the external auditor
and the independent accountant the coordination of audit effort to
assure completeness of coverage, redundant efforts and the effective
use of audit resources.
10. Consider and review with the independent accountant and the director
of internal auditing:
(a) The adequacy of the company's internal controls including
computerized information system controls and security.
A-1
(b) Any related significant findings and recommendations of the
independent accountant and internal auditing together with
management's responses thereto.
11. Review with management and the independent accountant at the
completion of the annual examination:
(a) The company's annual financial statements and related footnotes.
(b) The independent accountant's audit of the financial statements
and his or her report thereon.
(c) Any significant changes required in the independent accountant's
audit plan.
(d) Any serious difficulties or disputes with management encountered
during the course of the audit.
(e) Other matters related to the conduct of the audit, which are to
be communicated to the committee under generally accepted
auditing standards.
12 Consider and review with management and the director of internal
auditing or the external auditor
(a) Significant findings during the year and management's responses
thereto.
(b) Any difficulties encountered in the course of their audits,
including any restrictions on the scope of their work or access
to required information.
(c) Any changes required in the planned scope of their audit plan.
(d) The internal auditing department budget and staffing.
(e) The internal auditing department charter.
(f) Internal auditing's compliance with the IIA's Standards for the
Professional Practice of Internal Auditing (Standards).
13. Review filings with the SEC and other published documents containing
the company's financial statements and consider whether the
information contained in these documents is consistent with the
information contained in the financial statements.
A-2
PROXY
COMMUNITY WEST BANCSHARES
ANNUAL MEETING OF SHAREHOLDERS
MAY 23, 2002
The undersigned shareholder of Community West Bancshares (the "Company")
hereby nominates, constitutes and appoints Marcy Shewmon, the attorney, agent,
and proxy of the undersigned with full powers of substitution, to vote all stock
of the Company which the undersigned is entitled to vote at the Annual Meeting
of Shareholders of the Company to be held at the Holiday Inn, 5650 Calle Real,
Goleta, California 93117, on Thursday, May 23, 2002, at 6:00 p.m. and at any and
all adjournments thereof, as fully and with the same force and effect as the
undersigned might or could do if personally present there at, as follows:
1. ELECTION OF DIRECTORS. Authority to elect Eight (8) persons named
-----------------------
below and in the Proxy Statement dated April 26, 2002, accompanying
the Notice of said Meeting, to serve until the 2003 Annual Meeting of
Shareholders and until their successors are elected and have
qualified:
Michael A. Alexander John D. Illgen
Robert H. Bartlein Lynda Nahra
Jean W. Blois William R. Peeples
Stephen W. Haley James R. Sims, Jr.
AUTHORITY GIVEN [ ] AUTHORITY WITHHELD [ ]
(except as marked to (as to all nominees
the contrary below) listed above)
If You Wish to Withhold Authority To Vote For Some But Not All Of the
Nominees Named Above, You Should Check The Box Named "Authority Given"
And You Should Enter The Name(s) Of The Nominee(s) With Respect To
Whom You Wish To Withhold Authority To Vote In The Space Provided
Below:
----------------------------------------------------------------------
2. Other Business. To transact such other business as may properly come
before the Meeting and any adjournment or adjournments thereof.
PLEASE SIGN AND DATE THE OTHER SIDE
PLEASE SIGN AND DATE BELOW
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "AUTHORITY GIVEN" ON PROPOSAL
1. THE PROXY CONFERS AUTHORITY AND SHALL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS. IN ALL OTHER MATTERS, IF ANY,
PRESENTED AT THE MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE COMPANY'S BOARD OF DIRECTORS.
Dated: ,2002
-------------------------- ------------
(Number of Shares)
-------------------------- ----------------------------
(Please Print Your Name (Signature of Shareholder)
-------------------------- ----------------------------
(Please Print Your Name (Signature of Shareholder)
(Please date this Proxy and sign your name as it appears on the stock
certificates. Executors, administrators, trustees, etc., should give their full
titles. All joint owners should sign.)
I do [ ] do not [ ] expect to attend the Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED
BY THE SHAREHOLDER DELIVERING IT 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 AND VOTING IN PERSON AT THE
MEETING.