UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest reported) December 16, 2020
American River Bankshares
(Exact name of registrant as specified in its charter)
|
California |
0-31525 |
68-0352144 |
||
|
(State or other jurisdiction Of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 3100 Zinfandel Drive, Suite 450, Rancho Cordova, California | 95670 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (916) 851-0123
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
| Common Stock, no par value | AMRB | Nasdaq Global Select Market |
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Solicitation material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers.
(e)(1) On December 16 2020, the Board of Directors of American River Bankshares (the “Company”), parent of American River Bank (the “Bank”) approved the American River Bankshares Executive Annual Incentive Plan (the “Plan”). The Plan sets the performance metrics and the weightings for incentive compensation for the Company’s executive officers. The Plan requires that a minimum level of quality of Bank performance be achieved before any incentive compensation may be payable under the Plan. Assuming the minimum metric level of quality of Bank performance is achieved, the Company’s executive officers are eligible to receive incentive compensation under the Plan based on the weightings assigned to the following performance metrics:
| Pretax/Pre Provision for Loan and Lease Losses | 25.00 | % | ||
| Net Income after Tax | 25.00 | % | ||
| ROE Relative to Internal Target | 20.00 | % | ||
| Credit Quality | 15.00 | % | ||
| Quality of Bank Performance | 15.00 | % |
Each of the performance metrics (other than Quality of Bank Performance) are set at a minimum percentage of 80% of target, which results in incentive compensation equal to 50% of the available payout for that particular metric. The maximum performance for each of these metrics is set at 115% of target which would result in incentive compensation equal to 150% of the available payout for that particular metric. Results achieved between the minimum and maximum would result in a pro rata share of the incentive available.
The targeted incentive as a percent of salary for the Company’s Chief Executive Officer is set at 50%, and for all of the other Company’s executive officers, is set at 30%.
The foregoing description is qualified by reference to the Plan which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
(e)(2) On December 16, 2020, the Board of Directors of the Company, made a change to the American River Bankshares Deferred Compensation Plan to eliminate the ability for the Company to defer the timing of compensation payments to avoid the provisions of Internal Revenue Code Section 162(m).
The foregoing description is qualified by reference to the Second Amendment to American River Bankshares Deferred Compensation Plan which is attached hereto as Exhibit 10.2 and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
| (a) |
Financial Statements Not Applicable. |
| (b) |
Pro Forma Financial Information Not Applicable. |
| (c) |
Shell Company Transactions Not Applicable. |
| (d) | Exhibits |
(10.1) American River Bankshares Executive Annual Incentive Plan.
(10.2) Second Amendment to American River Bankshares Deferred Compensation Plan.
(104) Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AMERICAN RIVER BANKSHARES | ||
|
|
||
| /s/ Mitchell A. Derenzo | ||
| December 17, 2020 | Mitchell A. Derenzo, Chief Financial Officer |
Exhibit 10.1
American River Bankshares
Executive Annual Incentive Plan Document
Establishment and Purpose of the Plan
The Executive Annual Incentive Plan for American River Bankshares (AMRB) is established as of January 1, 2021. The Plan is designed to promote exemplary performance and enhance shareholder value by focusing eligible employees on key AMRB metrics and providing rewards for excellent performance as measured by those metrics.
Eligibility
All Executive Officers are eligible for this Plan, including the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Credit Officer, Certain EVP’s, and any other positions at the discretion of the AMRB Board of Directors (the “Board”). Employees in these positions who have been employed in excess of three (3) months by the end of the fiscal year are eligible. Employees with over three months but less than one year of service at the end of the fiscal year will be eligible to receive a bonus based on the salary earned during the year.
To be eligible for incentive payout, participants must:
| a) | be employed on the last day of the fiscal year and on the date of the incentive payout, or |
| b) | have ceased employment from AMRB for one of the reasons cited in the section titled “Changes in Employment Status”. |
Performance Period
The period of the Plan is AMRB’s fiscal year, January 1 to December 31.
Performance Metrics
The Compensation Committee of the Board (the “Committee”), will recommend the AMRB performance metrics and assign a weight to each metric. The Board will approve all metrics recommended by the Committee.
The performance metrics and weights will be outlined each year. Each metric will be assessed for incentive independently, as long as the funding threshold is achieved (see “Funding Threshold”).
Funding Threshold
A minimum level of AMRB performance must be achieved before any incentives will be paid for AMRB metrics. The minimum Funding Threshold required to attain incentive compensation for any of the metrics is a Satisfactory rating in Quality of Bank Performance.
Incentive Opportunities
Each position has a Target Incentive established by the Committee as a percent of base salary. The targets are as follows:
|
Position |
Target Incentive as a % of Base Salary |
| CEO | 50% |
| CFO | 30% |
| COO | 30% |
| CCO | 30% |
| Other Specified EVP’s | 30% |
The incentive amount will be adjusted by a “multiplier”, depending on the level of performance for each metric. No incentive will be paid on any metric that falls below 80% of Target. Incentives will be “capped” at 115.0% of Target which is defined as Maximum performance.
If performance for a metric falls below 80%, no incentive will be paid for that metric. The performance of any metric will not affect the payout for the other metrics, except in the case of the Funding Threshold as described previously.
Incentive Calculation
Incentives are calculated as a percentage of base salary. Base salary for purposes of this Plan excludes other types of pay including commissions, bonuses, incentives, expenses, and any other “extraordinary” pay. For participants who have been employed less than a full year, or have terminated for any reason outlined in the section titled “Change in Employment Status”, incentive will be calculated on base salary actually earned during the year.
Payment of Incentive
Incentives will be paid no later than 75 days following the end of the fiscal year after completion and approval of the annual company financial audit.
To the extent required by law at the time the incentive is paid, all applicable federal, state and local taxes will be withheld. Any payroll deductions required by benefit plan document(s) will also be withheld.
“Clawback” Provision
The Company may recoup certain incentive compensation previously paid (or due) to plan participants in instances where: (i) the Company issues a material restatement of its financial statements: (ii) a subsequent finding that the financial information or performance metrics used to determine the amount of the incentive compensation are materially inaccurate, in each case regardless of individual fault; (iii) a plan participant engages in intentional misconduct; or (iv) the plan participant has committed ethical or criminal violations. In addition, the Company may recover any incentive compensation awarded or paid based on a participant’s conduct which is not in good faith and which materially disrupts, damages, impairs or interferes with the business of the Company and its affiliates.
Change in Employment Status
If a participant’s employment terminates during the Plan year because of death, disability, planned retirement, or change of control, the participant may be entitled to a pro-rata portion of the incentive, subject to each Executive’s Employment Agreement. The timing of payouts for eligible, terminated employees will be subject to 409A rules.
For purposes of this Plan, a participant may be eligible for retirement status if he or she has attained age 65 and has worked for AMRB or the Bank at least 5 years.
Plan Administration
The Committee will administer the Annual Incentive Plan, and have the authority to:
| Ø | Interpret Plan provisions. |
| Ø | Amend or terminate the Plan. |
| Ø | Establish the funding threshold, if any, and the performance metrics. |
| Ø | Ensure performance metrics are met before incentives are paid. |
Amendment, Modification and Termination of the Plan
The Board may amend, modify, or terminate the Plan at any time. Any changes will be communicated to the participants as soon as practical.
Plan Does Not Create Employee Rights
Nothing in this Plan shall alter or amend AMRB’s or the Bank’s employment at-will policy.
Performance Metrics
The Pre-Tax/Pre Provision for Loan and Lease Losses, Net Income after Tax and the ROE Relative to Internal Target metrics are set to the annual budget each year. The performance metrics and the weightings for the incentive compensation plan are as follows:
The following weightings were assigned to the metrics for each Executive:
| Pretax/Pre Provision for Loan and Lease Losses | 25.00% | |
| Net Income after Tax | 25.00% | |
| ROE Relative to Internal Target | 20.00% | |
| Credit Quality | 15.00% | |
| Quality of Bank Performance | 15.00% |
The Pretax/Pre Provision for Loan and Lease Losses, Net Income after Tax, ROE Relative to Internal Target and Credit Quality metrics minimum are set at 80% of the target and result in incentive compensation equal to 50% of the available payout. The maximum performance for these metrics is set at 115% of the target and results in incentive compensation equal to 150% of the available payout for this metric. Results achieved between the minimum and maximum would result in a pro-rata share of the incentive available.
The maximum award opportunity does not apply to the Quality of Bank Performance metric. Incentive payouts for Quality of Bank Performance results are capped at Target performance.
The performance of the EVP’s will be evaluated by the Chief Executive Officer and target incentive recommendations will be provided to the Committee, but in no case will those recommendations exceed the maximum for any target.
Exhibit 10.2
SECOND AMENDMENT
TO THE
AMERICAN RIVER BANKSHARES
DEFERRED COMPENSATION PLAN
WHEREAS, American River Bankshares (“Employer”) previously established the American River Bankshares Deferred Compensation Plan (“Plan”);
WHEREAS, the Employer has the authority to amend the Plan; and
WHEREAS, the Employer desires to amend the Plan in certain respects;
NOW THEREFORE, the Employer hereby amends the Plan, effective December 16, 2020, as follows:
FIRST: Section 5.8 Section 162 of the Plan (as stated below) is eliminated in its entirety.
Section 5.8 Section 162. Notwithstanding any provision of the Plan to the contrary, the distribution of benefits to a Participant shall not be made to the extent that the receipt of such distribution, when combined with the receipt of all other “applicable employee remuneration” (as defined in Code Section 162(m)(4)), would cause any remuneration received by the Participant to be nondeductible by the Employer under Code Section 162(m)(1). The portion of any distribution that is not distributed by operation of this Section 5.8 shall be distributed at the earliest date on which the amount not distributed may be distributed without causing any remuneration received by the Participant to be nondeductible by the Employer under Code Section 162 (m)(1).
IN ALL OTHER RESPECTS, the Plan is hereby ratified and approved.
This Amendment is adopted this 16th day of December, 2020.
AMERICAN RIVER BANKSHARES
By: /s/ Kimberly A. Box
Title: Corporate Secretary