10-K/A 1 file001.txt United States SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K/A (Amendment No. 1 to Form 10-K) (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year ended December 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number 0-11771 SJNB Financial Corp. ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 77-0058227 ----------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ONE NORTH MARKET STREET, SAN JOSE, CALIFORNIA 95113 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (408) 947-7562 -------------- Securities registered pursuant to Section 12(b) of the Act: NONE ------------- Securities registered pursuant to Section 12(g) of the Act: Common Stock, no par value -------------------------------------------------------------------------------- (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting common equity held by non-affiliates of the registrant, based on a market value of $38.56 per share (the closing price of the Common Stock, as of February 28, 2001) was $120,605,000. Number of shares of common stock outstanding as of February 28, 2001: 3,791,951 shares Documents incorporated by reference: Portions of the registrant's definitive proxy statement for the registrant's 2001 Annual Meeting of Shareholders (to be filed pursuant to Regulation 14A) are incorporated by reference into Part III of this Report. Explanatory Note: The undersigned registrant hereby amends its Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2000 to (1) correct the last sentence of Note 13 of Item 8 thereof, (2) correct Item 14 thereof, and (3) refile Exhibits 10(m) and 10(o) to replace those documents previously filed with the executed copies of the amendments to the employment agreements of Messrs. Kenny and Blakeslee. Part II Item 8: Financial Statements and Supplementary Data The following section includes the Company's Consolidated Financial Statements: Independent Auditors' Report Consolidated Balance Sheets-December 31, 2000 and 1999 Consolidated Statements of Income for the Years Ended December 31, 2000, 1999 and 1998 Consolidated Statements of Shareholders' Equity and Comprehensive Income for the Years Ended December 31, 2000, 1999 and 1998 Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998 Notes to consolidated Financial Statements Independent Auditors' Report The Board of Directors SJNB Financial Corp.: We have audited the accompanying consolidated balance sheets of SJNB Financial Corp. and subsidiary (the Company) as of December 31, 2000 and 1999, and the related consolidated statements of income, shareholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2000. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of SJNB Financial Corp. and subsidiary as of December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP San Francisco, California January 17, 2001

Notes to Consolidated Financial Statements December 31, 2000, 1999 and 1998 NOTE 1 - Summary of Significant Accounting Policies SJNB Financial Corp. ("Company") is a bank holding company registered under the Bank Holding Company Act of 1956, as amended. The Company was incorporated under the laws of the State of California on April 18, 1983. Its principal office is located at One North Market Street, San Jose, California, 95113. The Company owns 100% of the issued and outstanding common shares of San Jose National Bank (referred to herein as "SJNB" or "the Bank"). The Bank was incorporated on November 23, 1981 and commenced business in San Jose, California on June 10, 1982. Its main office is located at One North Market Street, San Jose, California, 95113. SJNB engages in the general commercial banking business with special emphasis on the banking needs of the business and professional communities in San Jose and the surrounding areas. The Financial Services Division is located at 95 South Market, San Jose, California, 95113, where it engages in the factoring of accounts receivable. The Bank's wholly-owned subsidiary, Epic Funding Corp. is located in Danville, California where it shares an office with the Bank's Danville branch. Epic Funding Corp. is primarily in the business of originating equipment lease financing throughout the United States, but primarily in the State of California. Dollars and share amounts are in thousands in these footnotes, except per share amounts or as otherwise noted. The accounting policies of SJNB Financial Corp. and San Jose National Bank (collectively, the "Company") are in accordance with generally accepted accounting principles and conform to general practices within the banking industry. a. Consolidation The consolidated financial statements include the accounts of SJNB. All material intercompany accounts and transactions have been eliminated in the consolidated financial statements. b. Investment Securities The Company accounts for its investment securities as follows: Available for sale-Investment securities that are acquired without the intent to hold until maturity are classified as available for sale. Such securities are carried at market value. Market value adjustments are reported as a separate component of other comprehensive income included in shareholders' equity until realized. Held to maturity-Investment securities purchased with the intent and ability to hold them until maturity are classified as held to maturity. Such securities are carried at cost, adjusted for accretion of discounts and amortization of premiums. Investment securities purchased are recorded as of their trade date. Accretion of discounts and amortization of premiums arising at acquisition are included in income using methods approximating the interest method. Gains or losses on sales of securities, if any, are determined based on the specific identification method. The carrying values of individual investment securities are reduced, if necessary, through write-downs to reflect other than temporary impairments in value. In connection with the Company's adoption of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities as described in note 1(f) below, the Company elected to reclassify all of its "Held to maturity" investments to "available for sale" as of January 1, 2001. The impact of this will be to account for the unrealized gain or loss in the held to maturity securities as an additional component of other comprehensive income included in shareholders' equity until realized. The amount of the net unrealized gain in the held to maturity classification was $19 as of December 31, 2000. c. Loans and Leases and Allowance for Loan and Lease Losses Loans and leases generally are stated at the principal amount outstanding. Interest on loans is credited to income on a simple interest basis. Unearned revenue on direct financing leases is accreted over the lives of the leases in decreasing amounts to provide a constant rate of return on the net investment in the leases. Loan origination fees and direct origination costs, including initial direct cost of lease origination are deferred and amortized to income by a method approximating the level yield method over the estimated lives of the underlying loans. The accrual of interest on loans and leases is discontinued and any accrued and unpaid interest is reversed when, in the opinion of management, there is significant doubt as to the collectibility of interest or principal or when the payment of principal or interest is ninety days past due, unless the loan is well-secured and in the process of collection. The allowance for loan and lease losses is a valuation allowance maintained to provide for future loan losses through charges to current operating expense. The allowance is based upon a continuing review of loans and leases by management which includes consideration of changes in the character of the loan and lease portfolio, current and anticipated economic conditions, past lending experience and such other factors which, in management's judgment, deserve recognition in estimating potential loan losses. In addition, regulatory examiners may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examinations. Impaired loans are those in which, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan or lease agreement, including scheduled interest payments. The Company measures such loans and leases based on the present value of future cash flows discounted at the loan's or lease's effective interest rate, or at the loan's or lease's market value or the fair value of the collateral if the loan is secured. If the measurement of the impaired loan or lease is less than the recorded investment, impairment is recognized by creating or adjusting an existing allocation of the allowance for loan and lease losses. d. Premises and Equipment Premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are charged to expense over the estimated useful lives of the assets on a straight-line basis as follows: Buildings 30 years Furniture and equipment 3-10 years Improvements 7-15 years e. Intangibles Goodwill is amortized using the straight-line method over 15 years. Core deposit intangibles are amortized using an accelerated method over ten years. On a periodic basis, the Company reviews its intangible assets for events or changes in circumstances that may indicate that the carrying amount of the assets may not be recoverable. Should such a change indicate that the value of such intangibles may be impaired, an evaluation of the recoverability would be performed, using undiscounted cash flows, prior to any writedown of the assets. f. Derivative Instruments and Hedging Activities Interest rate instruments are entered into in conjunction with the Bank's asset/liability management. As these contracts are entered into only after meeting the accounting criteria for a hedge, and as long as they continue to meet such criteria, changes in market value are deferred and the net settlements are accrued as adjustments to interest income. The Bank currently has outstanding a callable interest rate swap for $10 million it issued simultaneously with a $10 million ten-year callable synthetic floating rate certificate of deposit and a three-year $20 million prime/fixed interest rate swap, which are accounted for as hedges. In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. This Statement requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. In June 1999, the FASB issued SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities-Deferral of Effective Date. In June 2000, the FASB issued SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of SFAS No. 133. SFAS No. 138 addresses a limited number of issues causing implementation difficulties for entities which are required to apply SFAS No. 133. SFAS No. 137 deferred the effective date to the fiscal quarters of fiscal years beginning after June 15, 2000. The Company adopted SFAS No. 133, as amended on January 1, 2001 and there was no effect. As noted above the Bank currently has outstanding $30 million in derivative instruments as defined by SFAS No. 133. These derivative instruments will qualify as cash flow or fair market hedges in accordance with the Statement. g. Income Taxes The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Under the asset and liability method, deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and then a valuation allowance is established to reduce that deferred tax asset if it is "more likely than not" that the related tax benefits will not be realized. h. Stock-based Compensation The Company continues to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." The Company only grants stock options at fair market value. SFAS No. 123, Accounting for Stock-Based Compensation," established accounting and disclosure requirements using a fair-value-based method of accounting for stock-based employee compensation plans. The Company has elected to remain on its current method of accounting as described above, and has adopted the disclosure requirements of SFAS No. 123. i. Net Income Per Share Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the year plus shares issuable assuming exercise of all employee stock options, except where anti-dilutive. j. Comprehensive Income Effective January 1, 1998, the Company adopted SFAS No. 130, Reporting Comprehensive Income, which establishes new rules for the reporting and display of comprehensive income and its components. Comprehensive income is a part of an enterprises financial performance and, as described in SFAS No. 130, includes net income and other comprehensive income such as revenues, expenses, gains and losses not included in net income. The adoption of this statement had no impact on net income or shareholders' equity. SFAS No. 130 requires the Company's net unrealized gains or losses on available-for-sale securities to be included in other comprehensive income. Comprehensive income is included in the statement of shareholders' equity for the periods presented. k. Statement of Cash Flows For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, fed funds sold and money market investments. l. Use of Estimates Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent asset and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. m. Impairment of Long-lived Assets Long-lived assets and certain identifiable intangibles held and used by an entity are reviewed for impairment whenever events or changes indicate that the carrying amount of an asset may not be recoverable. The Company has not identified any long-lived assets or identifiable intangibles which were impaired. n. Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities SFAS No. 125, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities based on consistent application of a financial-components approach that focuses on control. It distinguishes transfers of financial assets that are sales from transfers that are secured borrowings. Under this approach, after a transfer of financial assets, an entity recognizes all financial and servicing assets it controls and liabilities it has incurred and derecognizes financial assets it no longer controls and liabilities that have been extinguished. SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, was issued in September 2000 and replaces the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures. The Company did not have any significant transactions in which these Statements had any impact on its consolidated financial statements. o. Segments of an Enterprise and Related Information SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, requires certain information about the operating segments of the Company. The objective of requiring disclosures about segments of an enterprise and related information is to provide information about the different types of business activities in which an enterprise engages and the different economic environments in which it operates to help users of financial statements better understand its performance, better assess its prospects for future cash flows and make more informed judgments about the enterprise as a whole. The Company has determined it has three segments: general commercial banking, leases, and factoring/asset based financing. Neither leasing nor factoring/asset based financing meet the required thresholds for disagregation and therefore the disclosures and related information about such segments has not been included in the consolidated financial statements. At such time that these segments meet the required thresholds, such disclosures and other information will be included. p. Reclassification Certain 1999 and 1998 amounts have been reclassified to conform to the 2000 presentation. NOTE 2 - Acquisitions On January 5, 2000, the Company acquired all of the outstanding shares of common stock of Saratoga Bancorp, the parent company of Saratoga National Bank, pursuant to an exchange of the Company's common stock for all common stock of Saratoga Bancorp. Saratoga National Bank, headquartered in Saratoga, California, operated three branches and as of the acquisition date had $142 million (unaudited) in assets and $103 million (unaudited) in deposits. Saratoga's San Jose office, which was located near SJNB's San Jose office, was consolidated into SJNB's San Jose office in January 2000. The shareholders of Saratoga received 0.70 shares of the Company's common stock for each outstanding share of Saratoga common stock. Based on the closing price of the Company's stock on January 5, 2000 of $29.125, the transaction was valued at approximately $34.2 million, excluding the value of any unexercised options, and each Saratoga shareholder received SJNB common stock valued at $20.39 per share for each share of Saratoga common stock. The merger has been accounted for as a pooling of interests. On May 22, 1998, SJNB acquired all of the stock of a private company, Epic Funding Corporation (Epic), pursuant to a definitive agreement dated April 13, 1998. In connection with the acquisition, which was structured as a tax-free reorganization and accounted for as a purchase transaction for accounting purposes, SJNB issued 12.2 shares of its common stock and paid $110 to Epic's sole shareholder in exchange for all of Epic's outstanding stock. The total purchase price was $611, while Epic's fair value of net assets was $28; goodwill amounted to $759 including certain expenses of the transaction. Epic provides direct and vendor lease programs to manufacturers and equipment users throughout California and across parts of the United States. Epic is a wholly owned subsidiary of the Bank. Epic's office is located in Danville, California, together with a small de novo branch of the Bank at the same facility which opened July 1, 1998. NOTE 3 - Cash and Due from Banks The Federal Reserve requires the Bank to maintain average reserve balances for certain deposit balances. Required reserves at December 31, 2000 were $746 and there were no required reserves in 1999. NOTE 4 - Investment Securities Investment securities as of December 31, 2000 and 1999 are summarized as follows:

As of December 31, 2000 and 1999 investment securities with carrying values of approximately $54.9 million and $36.9 million, respectively, were pledged as collateral for deposits of public funds and other purposes. Investments in the Federal Reserve Bank and Federal Home Loan Bank stock is carried at cost, which is approximately equal to their market value. Mutual funds consist of several funds invested in U. S. Government securities and government issued adjustable rate mortgages (ARMS). The following tables provide the scheduled maturities of the Company's investment securities portfolio as of December 31, 2000: Maturity of investment securities portfolio (dollars in thousands) Amortized Fair Securities available for sale Cost Value ----------------------------- Due in one year or less $1,998 $2,029 Due after one year through five years 42,050 42,928 Due after five years through ten years 18,090 18,204 Due after ten years 46,787 46,999 ----------------------------- Total 108,925 110,160 ----------------------------- Securities held to maturity Due in one year or less 915 918 Due after one year through five years 2,067 2,092 Due after five years through ten years 1,483 1,498 Due after ten years 12,430 12,406 ----------------------------- Total 16,895 16,914 ----------------------------- Non-maturity investments Held to maturity - FRB/FHLB Stock 1,732 1,732 ----------------------------- Total 1,732 1,732 ----------------------------- Total Investment securities $127,553 $128,806 ============================= Interest and dividend income earned on investment securities for the years ended December 31, 2000, 1999 and 1998 are as follows: Interest and dividend income

NOTE 5 - Loans A summary of loans as of December 31, 2000, 1999 and 1998 is as follows:

Concentrations of credit risk arise when a number of customers are engaged in similar business activities, or activities in the same geographic region, or have similar features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. Although the Company has a diversified loan and lease portfolio, a substantial portion of its customers' ability to honor contracts is reliant upon the economic stability of the Santa Clara Valley, which in some degree relies on the stability of high technology companies in its "Silicon Valley." Loans and leases are generally made on the basis of a secure repayment source, which is based on a detailed cash flow analysis; however, collateral is generally a secondary source for loan qualification. Approximately 32% of the Company's loan and lease portfolio is made up of real estate term loans. This category of real estate loans includes loans on income-bearing or owner-occupied commercial properties and land loans. In addition, approximately 12% of the loan and lease portfolio is made up of real estate construction loans. These loans consist of approximately 30% residential and 70% commercial. Included in consumer loans are prime equity loans of $8.1 million or representing approximately 1.7% of the total loan portfolio. Included in the commercial category are mortgage warehouse loans, loans to real estate developers for short-term investment purposes and loans to nondevelopers for real estate investment purposes that amount to approximately 9% of the total loan portfolio. Included in the SBA category are real estate piggy back loans that amount to approximately 2% of the total loan portfolio. In the aggregate, approximately 55% of the loan portfolio is directly related to real estate or real estate interests. Approximately 30% of the total loan portfolio is commercial loans; however, no particular industry represents a significant portion of such loans. The following is an analysis of the allowance for loan and lease losses for the years ended December 31, 2000, 1999 and 1998:

At December 31, 2000 and 1999, impaired loans totaled $421 and $1.4 million with a corresponding valuation allowance of $284 and $224, respectively. For the years ended December 31, 2000 and 1999, the average recorded investment in impaired loans was approximately $828 and $475, respectively. The Company recognized $72, $41 and $60 of interest on impaired loans (during the portion of the year they were impaired), of which $72, $40 and $8 related to impaired loans for which interest income is recognized on the cash basis, for the years ended December 31, 2000, 1999 and 1998, respectively. The balance of nonaccrual loans as of December 31, 2000 and 1999 was approximately $421 and $1.4 million, respectively. The effect on interest income had these loans been performing in accordance with contractual terms was $62 in 2000, $132 in 1999, and $22 in 1998. Income actually recognized on these loans was $16 in 2000, $112 in 1999 and $21 in 1998. The Company has made loans to executive officers, directors and their affiliates in the ordinary course of business. An analysis of activity with respect to such loans during the years ended December 31, 2000, 1999 and 1998 is as follows:

As of December 31, 2000, loans of approximately $12 million were pledged as collateral for the Federal Reserve Discount Window. NOTE 6 - Premises and Equipment A summary of premises and equipment as of December 31, 2000 and 1999 is as follows: (dollars in thousands) 2000 1999 -------------------------------------------------------------------------------- Land $1,777 $1,777 Buildings and improvements 4,138 4,351 Furniture and equipment 2,623 3,447 -------------------------------------------------------------------------------- Premises and equipment 8,538 9,575 Less accumulated depreciation and amortization (3,094) (4,011) -------------------------------------------------------------------------------- Premises and equipment, net $5,444 $5,564 ================================================================================ NOTE 7 - Time Deposits As of December 31, 2000 and 1999, the Bank had $135 million and $105 million, respectively, in time deposits in denominations of $100 or more. Interest expense for these deposits was $7.5 million and $5.0 million in 2000 and 1999, respectively. Time deposits in denominations of $100 or more which mature in greater than one year were $8.8 million as of December 31, 2000. On December 4, 1998 the Bank raised $10 million through the placement of a ten-year synthetic floating rate certificate of deposit. The instrument consists of two linked transactions, a callable interest rate swap and callable fixed rate certificate of deposit. Under the swap agreement the Bank pays LIBOR plus five basis points and receives 6% for a period of ten years. The swap is callable after one year by the issuer. Simultaneously, the Bank issued a callable 6% fixed rate 10-year certificate of deposit. The certificate of deposit does not have any early redemption clauses, other than by death of the holder. Effectively, the Bank's rate of interest on the combined transaction is LIBOR plus five basis points. NOTE 8 - Borrowings Federal funds purchased and securities sold under agreements to repurchase and information relating to these borrowings are summarized below as of and for the years ended December 31:

Any securities used under securities sold under agreements to repurchase are under the control of the Bank. Securities subject to the agreement to repurchase represent securities held by the Bank in its securities available for sale portfolio with a total amortized cost of $9.9 million and a market value of $10.0 million as of December 31, 2000. The Company's bank subsidiary has informal arrangements with various correspondents providing short-term credit for liquidity requirements; such informal lines aggregated $22 million at December 31, 2000. The Company had borrowings from the Federal Home Loan Bank bearing interest ranging from 5.67% to 7.59% as of December 31, 2000 and 5.82% to 6.74% as of December 31, 1999. The borrowings are secured by U. S. Government Agency securities and are due as follows as of December 31, 2000 and 1999: Year 2000 1999 ---------------- ------------------ ----------------- 2001 $9,076 $9,096 2002 723 735 2003 2,616 2,639 2005 6,892 6,933 2010 246 274 2011 773 826 ---------------- ------------------ ----------------- Total $20,326 $20,503 ================ ================== ================= NOTE 9 - Accumulated Other Comprehensive Income

NOTE 10 - Earnings per Share The reconciliation of the numerators and denominators of the basic and diluted earnings per share (EPS) computations are as follows:

NOTE 11 - Income Taxes Income tax expense for the years ended December 31, 2000, 1999 and 1998 consists of the following:

Total income tax expense differed from the amount computed by applying the U. S. federal income tax rate of 34% in the years ended December 31, 2000, 1999 and 1998 to income before income taxes as a result of the following:

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2000 and 1999, are presented below: (dollars in thousands) 2000 1999 -------------------------------------------------------------------------------- Deferred tax assets: Provision for loan or lease losses $2,414 $2,193 Purchase accounting adjustments 65 95 Foreclosure income 43 43 State taxes 527 426 Deferred compensation 1,275 353 Securities available for sale ---- 936 -------------------------------------------------------------------------------- Total gross deferred tax assets 4,324 4,046 -------------------------------------------------------------------------------- Deferred tax liabilities: Depreciation and amortization 32 43 Leases 2 2 Securities available for sale 345 ---- Other 152 126 -------------------------------------------------------------------------------- Total gross deferred tax liabilities 531 171 -------------------------------------------------------------------------------- Net deferred tax assets $3,793 $3,875 ================================================================================ Amounts for the current year are based upon estimates and assumptions as of the date of this report and could vary significantly from amounts shown on the tax returns as filed. Accordingly, the variances from the amounts previously reported for 1999 are primarily as a result of adjustments to conform to tax returns as filed. Deferred tax assets related to purchase accounting adjustments include the tax effect of fair market value adjustments of the assets and liabilities of businesses acquired. The Company believes that the net deferred tax asset is realizable through sufficient taxable income within the carryback periods and the current year's taxable income. NOTE 12 - Detail of Other Expense Other expense for the years ended December 31, 2000, 1999 and 1998 consists of the following:

NOTE 13 - Stock Option Plan During 1996, the shareholders of the Company approved the 1996 Stock Option Plan (the "Plan"), which replaced two then existing stock option plans. The 1996 Stock Option Plan is described below. In accordance with APB 15, no compensation cost has been recognized for the Plan. Had compensation cost for the Plan been determined consistent with SFAS No. 123, the Company's net income and earnings per share would have been adjusted to the pro forma amounts for options granted for the years 2000, 1999 and 1998 indicated below:

The above amounts include the impact on net income and net income per share for options granted during the years 1995 through 2000; such amounts would have been substantially different if options granted prior to 1995 had been included in the computation. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in the following years: Assumptions: 2000 1999 1998 ------------------------------------------ ------------------- ----------------- Dividend yield 2.2% 2.0% 1.8% Volatility 31.2% 46.7% 50.0% Risk free interest rate 6.2% 5.4% 5.0% Expected lives (years) 4.9 7.2 6.4 The 1996 Stock Option Plan provides that either incentive stock options or nonstatutory stock options may be granted to certain key employees or directors to purchase authorized, but unissued, Common Stock of the Company. Shares may be purchased at a price not less than the fair market value of such stock on the date of the grant. Generally, stock options become exercisable 40% one year after the date of grant and 20% in each of the following three years. They expire no later than ten years after the date of the grant. The Plan provides that outside directors will automatically receive a nonstatutory option covering five thousand shares annually at an exercise price equal to 100% of the market price of the Common Stock on the date of grant. The 1996 Stock Option Plan replaced the previous two plans which had similar provisions. If options granted under the prior plans expire without being exercised, the corresponding common shares shall become available for awards under the Plan. During 2000, no shares became available under this provision. The number of shares available for future grants of options under the 1996 Stock Option Plan was 169 as of December 31, 2000. Activity under the stock plans is as follows: Weighted Number Average of Exercise Options Shares Price --------------------------------------------------------------------------- Balances, December 31, 1997 527,157 $12.03 Granted 428,950 30.09 Cancelled (198,230) 35.25 Exercised (41,233) 13.87 --------------------------------------------------------------------------- Balances, December 31, 1998 716,644 16.31 Granted 158,170 27.93 Cancelled (32,632) 25.51 Exercised (90,965) 9.34 --------------------------------------------------------------------------- Balances, December 31, 1999 751,217 19.21 --------------------------------------------------------------------------- Granted 93,186 30.17 Cancelled (26,258) 26.25 Exercised (155,978) 10.12 --------------------------------------------------------------------------- Balances, December 31, 2000 662,167 $22.62 =========================================================================== The weighted-average fair value of options granted during 2000, 1999 and 1998 was $9.05, $12.34 and $12.30, respectively. The following table summarizes options outstanding and exercisable at December 31, 2000:

Options exercisable as of December 31, 1999 were 453,799 and had a weighted average exercise price of $14.31. Options exercisable as of December 31, 1998 were 370,025 and had a weighted average exercise price of $9.38. NOTE 14 - Commitments and Contingent Liabilities In the normal course of business, there are outstanding commitments, such as commitments to extend credit, which are not reflected in the consolidated financial statements. These commitments involve, to varying degrees, credit risk in excess of the amount recognized as either an asset or liability in the consolidated balance sheet. The Company controls the credit risk through its credit approval process. The same credit policies are used when entering into such commitments. Management does not anticipate any loss from such commitments. Amounts committed to extend credit under normal lending agreements aggregated approximately $201 million and $164 million for undisbursed variable loan commitments and approximately $13 million and $5.6 million for commitments under unused standby letters of credit and other guarantees at December 31, 2000 and 1999, respectively. The Bank utilizes various financial instruments with off balance sheet risk to reduce its exposure to fluctuations in interest rates. These financial instruments involve, to varying degrees, credit and interest rate risk in excess of the amount recognized as either an asset or liability in the statement of financial position. The credit risk is the possibility that a loss may occur because a party to a transaction fails to perform according to the terms of the contract. Interest rate risk is the possibility that future changes in market prices will cause a financial instrument to be less valuable or more onerous. The Bank attempts to control the credit risk arising from these instruments through its credit approval process and through the use of risk control limits and monitoring procedures. Interest rate risk is managed by various asset and liability methods including the utilization of interest rate hedging vehicles. During 2000 the Company executed supplemental compensation agreements providing nonqualified defined benefit retirement income for the directors and certain executive officers of the Company. In connection with establishing these agreements, the Company also purchased single premium life insurance policies for each participant. Generally, the defined benefit for retirement was 50% vested at the date of the agreements and 10% for each year thereafter. For those directors for which mandatory retirement (age 70) was within five years, vesting was in equal periods until retirement. The agreements provide that each director will receive $22.5 annually (adjusted annually by 2%) over their lifetime commencing on the third anniversary subsequent to their retirement. The range of defined lifetime benefit for the participating executives is $72.5 to $182 (adjusted annually by 2%); retirement is at age 65. If an executive shall voluntarily resign prior to being 100% vested, the executive shall forfeit all rights and benefits under the agreement. At the participant's death, 80% of the difference between the insurance life benefit and the then cash surrender value, will be paid to the participant's heirs. The total amount accrued for these agreements was $215 during 2000. The Company also assumed a nonqualified defined contribution retirement plan for the benefit of the directors and certain executive officers of Saratoga. In connection with this plan, Saratoga purchased single premium life insurance policies for each participant. At the time of the acquisition of Saratoga the estimated net present value of the lifetime benefit of each participant was accrued by the Company in the amount of $1.4 million. During 1999, the total amount expensed for this plan was $231. The cash surrender value of life insurance purchased under these plans totaled approximately $15 million as of December 31, 2000. Of this amount, $9.3 million related to the Company's plan and $5.7 million related to the Saratoga plan. The Company is obligated under its lease agreements for 95 South Market Street, San Jose, 50 Oak Court, Danville and 15405 Los Gatos Boulevard, Los Gatos under noncancelable operating leases through September 2004, June 2004, and March 2003, respectively. The leases are subject to periodic adjustments based on changes in the CPI. The following table shows future minimum payments under the leases as of December 31, 2000: Years Ending December 31, ------------------------------------------ ------------------ (in thousands) 2001 $405 2002 409 2003 342 2004 220 ------------------------------------------ ------------------ Total minimum lease payments $1,376 ========================================== ================== Total minimum lease payments to be received under noncancelable operating subleases at December 31, 2001 were approximately $712; these payments are not reflected in the above table. Total rent expense was $434, $583, and $520 for the years ended December 31, 2000, 1999 and 1998, respectively. There is ordinary routine litigation incidental to the business pending against the Company but, in the opinion of management, liabilities (if any) arising from such claims will not have a material effect upon the consolidated financial statements of the Company. NOTE 15 - Fair Value of Financial Instruments SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," requires disclosure of estimated fair values for the Company's financial instruments. Fair value estimates, methods and assumptions, set forth below for the Company's financial instruments, are made solely to comply with the requirements of SFAS No. 107 and should be read in conjunction with the consolidated financial statements and notes thereto in this Annual Report. Fair values are based on estimates or calculations at the transaction level using present value techniques in instances where quoted market prices are not available. Because broadly traded markets do not exist for most of the Company's financial instruments, the fair value calculations attempt to incorporate the effect of current market conditions at a specific time. Fair valuations are management's estimates of the values, and they are often calculated based on current pricing policy, the economic and competitive environment, the characteristics of the financial instruments, and other such factors. These calculations are subjective in nature, involve uncertainties and matters of significant judgment and do not include tax ramifications; therefore, the results cannot be determined with precision, substantiated by comparison to independent markets and may not be realized in an actual sale or immediate settlement of the instruments. The fair valuations have not been updated since year end; therefore, the valuations may have changed significantly since that point in time. The Company has not included certain material items in its disclosure, such as the value of the long-term relationships with the Company's deposit customers, since these intangibles are not financial instruments. There may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results. For all these reasons, the aggregation of the fair value calculations presented herein do not represent, and should not be construed to represent, the underlying value of the Company. The following table presents a summary of the Company's financial instruments, as defined by SFAS No. 107 as of December 31, 2000 and 1999:

The methodology and assumptions utilized to estimate the fair value of the Company's financial instruments, not previously discussed above, are described below: Financial instruments with fair value approximate to carrying value - The carrying value of cash and due from banks, money market investments, accrued interest receivable, non-interest-bearing demand accounts, interest-bearing demand, money market and savings deposit accounts, accrued interest receivable and expense approximates fair value due to the short-term nature of these financial instruments. Investment securities - The estimated fair values of securities by type are based on quoted market prices when available. Loans and leases - The carrying amount of loans and leases is net of unearned fee income and the reserve for loan and lease losses. The fair valuation calculation process differentiates loans and leases based on their financial characteristics, such as product classification, loan category, pricing features and remaining maturity. Prepayment estimates are evaluated by product and respective interest rate. Discount rates presented in the paragraphs below have a wide range due to the Company's mix of fixed and variable rate products. The fair value of loans and leases is calculated by discounting contractual cash flows using discount rates that reflect the Company's current pricing for loans and leases with similar characteristics and remaining maturity. Most of the discount rates applied to these loans were between 8.2% and 10.6% at December 31, 2000. Additionally, the allowance for loan and lease losses was applied against the estimated fair value of loans and leases to recognize future defaults of contractual cash flows. Fair value for nonperforming loans and leases is based on discounting estimated cash flows using a rate commensurate with the risk associated with the estimated cash flows, or underlying collateral values, where appropriate. Deposits - The fair value of certificates of deposit and other time deposits is calculated based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for like deposits with similar remaining maturities. Other borrowings - A reasonable estimate of the fair value of federal funds purchased is the carrying amount because of the relatively short period of time between the origination of the instrument and its expected maturity. The fair value of the Company's securities sold under repurchase agreements is calculated based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for such instruments with similar remaining maturities. Commitment to extend credit - The majority of the Company's commitments to extend credit carry variable and current market interest rates if converted to loans or leases. Because these commitments are generally unassignable by either the Company or the borrower, they only have value to the Company and the borrower. The estimated fair value approximates the recorded deferred fee amounts and is excluded from the table. Derivative financial instruments - The fair value of the derivative financial instruments generally reflects the estimated amounts the Company would receive based upon dealer quotes, to terminate such agreements at the reporting date. NOTE 16 - SJNB Financial Corp. (Parent Company Only) The following are the financial statements of SJNB Financial Corp. (parent company only): ------------------------------------------------------------------------------ Balance Sheets December 31, 2000 and 1999 (dollars in thousands) 2000 1999 ------------------------------------------------------------------------------ Assets Cash and equivalents $1,085 $1,847 Real estate loans ---- 123 Investment in the Bank 61,686 50,898 Other assets 812 351 ------------------------------------------------------------------------------ Total assets $63,583 $53,219 ============================================================================== Liabilities and Shareholders' Equity Total liabilities-Accounts payable ---- ---- ------------------------------------------------------------------------------ Common stock $22,845 $20,769 Retained earnings 40,221 33,942 Accumulated other comprehensive income (losses) 517 (1,492) ------------------------------------------------------------------------------ Total shareholders' equity 63,583 53,219 ------------------------------------------------------------------------------ Total liabilities and shareholders' equity $63,583 $53,219 ==============================================================================

NOTE 17 - Regulatory Matters The Federal Reserve Board, the Comptroller of the Currency and the FDIC have issued substantially similar risk-based and leverage capital guidelines applicable to United States banking organizations. In addition, those regulatory agencies may from time to time require that a banking organization maintain capital above the minimum levels, whether because of its financial condition or actual or anticipated growth. The Federal Reserve Board risk-based guidelines define a two-tier capital framework. Tier 1 capital consists of common and qualifying preferred shareholders' equity, less certain intangibles and other adjustments. Tier 2 capital consists of subordinated and other qualifying debt, and the allowance for loan and lease losses up to 1.25% of risk weighted assets. The total of Tier 1 and Tier 2 capital, less investments in unconsolidated subsidiaries, represents qualifying total capital, at least 50% of which must consist of Tier 1 capital. Risk-based capital ratios are calculated by dividing Tier 1 and total capital by risk-weighted assets. Assets and off balance sheet exposures are assigned to one of four categories of risk-weights, based primarily on relative credit risk. The minimum Tier 1 risk-based capital ratio is 4% and the minimum total risk-based capital ratio is 8%. The leverage capital ratio is determined by dividing Tier 1 capital by adjusted average total assets. Although the stated minimum leverage capital ratio is 3%, most banking organizations are required to maintain leverage capital ratios of at least 100 to 200 basis points above the 3%. The table below summarizes the Tier 1 and total risk-based capital ratios and leverage capital ratios of the Company and the Bank as of December 31:

The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), among other things, identifies five capital categories for insured depository institutions (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) and requires the respective Federal regulatory agencies to implement systems for "prompt corrective action" for insured depository institutions that do not meet minimum capital requirements within such categories. FDICIA imposes progressively more restrictive constraints on operations, management and capital distributions, depending on the category in which an institution is classified. Failure to meet the capital guidelines could also subject a banking institution to capital raising requirements. An "undercapitalized" bank must develop a capital restoration plan and its parent holding company must guarantee the bank's compliance with the plan. The liability of the parent holding company under any such guarantee is limited to the lesser of 5% of the bank's assets at the time it became "undercapitalized" or the amount needed to comply with the plan. Furthermore, in the event of the bankruptcy of the parent holding company, such guarantee would take priority over the parent's general unsecured creditors. The various regulatory agencies have adopted substantially similar regulations that define the five capital categories identified by FDICIA, using the total risk-based capital, Tier 1 risk-based capital and leverage capital ratios as the relevant capital measures. Such regulations establish various degrees of corrective action to be taken when an institution is considered undercapitalized. Under the regulations, a "well capitalized" institution must have a Tier 1 capital ratio of at least 6%, a total capital ratio of at least 10% and a leverage ratio of at least 5% and not be subject to a capital directive order. An "adequately capitalized" institution must have a Tier 1 capital ratio of at least 4%, or 3% in some cases. Under these guidelines, the Company and the Bank were considered well capitalized at December 31, 2000 and 1999. Banking agencies consider concentrations of credit risk and risks from non-traditional activities, as well as an institution's ability to manage those risks, when determining the adequacy of an institution's capital. This evaluation is made as part of the institution's regular safety and soundness examination. Banking agencies also consider interest rate risk (when the interest rate sensitivity of an institution's assets does not match the sensitivity of its liabilities or its off balance sheet position) in evaluating a bank's capital adequacy. Banking agencies have adopted a methodology for evaluating interest rate risk. After gaining experience with this measurement process, such banking agencies may propose further regulations to establish an explicit risk-based capital charge for interest rate risk. The ability of the Company to pay dividends largely depends upon the dividends paid to it by the Bank. There are legal limitations on the ability of the Bank to provide funds to the Company in the form of loans, advances or dividends. Under national banking law, without the prior approval of the Comptroller of the Currency, the Bank may not declare dividends in any calendar year that exceed the Bank's net profits for that year, as defined by statute, combined with its net retained profits, as defined, for the preceding two years. As of December 31, 2000, the Bank may initiate dividend payments without prior regulatory approval of up to $16 million. PART IV ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) 1. All Financial Statements See Index to Financial Statements on 1 hereof. (a) 2. Financial statement schedules required. None. (Information included in Financial Statements). (a) 3. Exhibits The following exhibits are filed as part of this report: Exhibit Number (2)a. Agreement and Plan of Merger by and among the Registrant, Saratoga Bancorp and Saratoga National Bank, dated as of August 27, 1999, is hereby incorporated by reference to Exhibit 2.1 of the Registrant's Registration Statement on Form S-4 as filed on October 14, 1999, under Registration No. 333-89013. (3)(i). The Registrant's restated Articles of Incorporation are hereby incorporated by reference from Exhibit(3) (i) of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999. (3) (ii). The Registrant's Restated Bylaws as of February 23, 2000 are hereby incorporated by reference to Exhibit 3 (ii) of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)a. The Registrant's 1992 Employee Stock Option Plan is hereby incorporated by reference from Exhibit 4.1 of the Registrant's Registration Statement on Form S-8, as filed on September 4, 1992, under Registration No. 33-51740. *(10)b. Amendment No . 1 to the 1992 Employee Stock Option Plan is hereby incorporated by reference to Exhibit (10) b. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1998. *(10)c. The form of Incentive Stock Option Agreement being utilized under the 1992 Employee Stock Option Plan is hereby incorporated by reference from Exhibit 4.2 of the Registrant's Registration Statement on Form S-8, as filed on September 4, 1992, under Registration No. 33-51740. *(10)d. The form of Stock Option Agreement being utilized under the 1992 Employee Stock Option Plan is hereby incorporated by reference from Exhibit 4.3 of the Registrant's Registration Statement on Form S-8, as filed on September 4, 1992, under Registration No. 33-51740. *(10)e. The Registrant's Amended 1996 Stock Option Plan is hereby incorporated by reference to Exhibit 99.1 of the Registrant's Form S-8 filed June 15, 1999, under Registration No. 333-80683 *(10)f. The form of Nonstatutory Stock Option Agreement for outside Directors being utilized under the Amended 1996 Stock Option Plan is hereby incorporated by reference to Exhibit (10) f. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1998. *(10)g. The form of Nonstatutory Stock Option Agreement for Employees being utilized under the Amended 1996 Stock Option Plan is hereby incorporated by reference to Exhibit (10) g. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1998. *(10)h. The form of Incentive Stock Option Agreement being utilized under the Amended 1996 Stock Option Plan is hereby incorporated by reference to Exhibit (10) h. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1998. *(10)i. The Saratoga Bancorp 1982 Stock Option Plan is hereby incorporated by reference to Exhibit (10) i. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)j. The Saratoga Bancorp 1994 Stock Option Plan (Amended) is hereby incorporated by reference to Exhibit (10) j. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)k. Forms of Incentive Stock Option Agreement, Non-Statutory Stock Option Agreement and Non-Statutory Stock Option Agreement for Outside Directors is hereby incorporated by reference to Exhibit (10) k. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)l. Agreement between James R. Kenny and SJNB Financial Corp. and San Jose National Bank dated March 27, 1996 is hereby incorporated by reference to Exhibit (10) m. of the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 1996. *(10)m. Amendment No. 1 To Employment Agreement between James R. Kenny and SJNB Financial Corp. and San Jose National Bank dated October 6, 2000. *(10)n. Agreement between Eugene E. Blakeslee and SJNB Financial Corp. and San Jose National Bank dated March 27, 1996 is hereby incorporated by reference to Exhibit (10) n. of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1996. *(10)o. Amendment No. 1 To Employment Agreement between Eugene E. Blakeslee and SJNB Financial Corp. and San Jose National Bank dated October 6, 2000. (10)p. Sublease dated April 5, 1982, for premises at 95 South Market Street, San Jose, CA is hereby incorporated by reference to Exhibit (10) n. of the Registrant's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994. (10)q. Sublease by and between McWhorter's Stationary and San Jose National Bank, dated July 6, 1995, and as amended August 11, 1995, and September 21, 1995, for premises at 95 South Market Street, San Jose, CA is hereby incorporated by reference to Exhibit (10) o. of the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended September 30, 1995. (10)r. Agreement of Purchase and Sale dated July 27, 1988 for 12000 Saratoga-Sunnyvale Road, Saratoga, CA is hereby incorporated by reference to Exhibit (10) p. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)s. Form of Director Supplemental Compensation Agreement dated September 24, 1998 between Saratoga National Bank and Robert G. Egan, John F. Lynch III and V. Ronald Mancuso, respectively, is hereby incorporated by reference to Exhibit (10) q. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)t. Form of Director Life Insurance Endorsement Method Split Dollar Plan Agreement dated September 24, 1998 between Saratoga National Bank and Robert G. Egan, John F. Lynch III and V. Ronald Mancuso, respectively, is hereby incorporated by reference to Exhibit (10) r. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)u. Form of Director Surrogate Supplemental Compensation Agreement dated September 24, 1998 between Saratoga National Bank and Victor E. Aboukhater and William D. Kron, respectively, is hereby incorporated by reference to Exhibit (10) s. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)v. Form of Director Surrogate Life Insurance Endorsement Method Split Dollar Plan Agreement dated September 24, 1998 between Saratoga National Bank and Victor E. Aboukhater and William D. Kron, respectively, is hereby incorporated by reference to Exhibit (10) t. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)w. Form of Officer Supplemental Compensation Agreement dated September 24, 1998 between Saratoga National Bank and Earl Lanna, Mary Rourke, Sandra Swenson, Barbara Resop and Cathe Franklin, respectively, is hereby incorporated by reference to Exhibit (10) u. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)x. Form of Officer Life Insurance Endorsement Method Split Dollar Plan Agreement dated September 24, 1998 between Saratoga National Bank and Earl Lanna, Mary Rourke, Sandra Swenson, Barbara Resop and Cathe Franklin, respectively, is hereby incorporated by reference to Exhibit (10) v. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)y. Richard L. Mount Executive Supplemental Compensation Agreement dated September 24, 1998 is hereby incorporated by reference to Exhibit (10) w. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)z. Richard L. Mount Life Insurance Endorsement Method Split Dollar Plan Agreement dated September 24, 1998 is hereby incorporated by reference to Exhibit (10) x. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)aa. Richard L. Mount Executive Benefits Agreement dated June 18, 1999 is hereby incorporated by reference to Exhibit (10) y. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)ab. Form of Executive Supplemental Compensation Agreement dated June 1, 2000 between San Jose National Bank and James R. Kenny, Eugene E. Blakeslee, Frederic A. Charpiot, Margo Culcasi and Judith Doering Nielsen, respectively, is hereby incorporated by reference to Exhibit (10) z. of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000. *(10)ac. Form of Endorsement Method Split Dollar Plan Agreement dated August 1, 2000 between San Jose National Bank and James R. Kenny, Eugene E. Blakeslee, Frederic A. Charpiot, Margo Culcasi and Judith Doering Nielsen, respectively, is hereby incorporated by reference to Exhibit (10) aa. of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000. *(10)ad. Form of Endorsement Method Split Dollar Plan Agreement dated August 1, 2000 between San Jose National Bank and each of Ray S. Akamine, Robert A. Archer, Albert V. Bruno, Rod Diridon, Sr., F. Jack Gorry, Arthur K. Lund, Richard L. Mount, Louis Oneal, Diane Rubino, and Gary S. Vandeweghe and Douglas L. Shen, D.D.S. is hereby incorporated by reference to Exhibit (10) ab. of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000. *(10)ae. Form of Director Supplemental Compensation Agreement dated June 1, 2000 between San Jose National Bank and Ray S. Akamine, Robert A. Archer, Albert V. Bruno, Rod Diridon, Sr., Robert G. Egan, F. Jack Gorry, Arthur K. Lund, V. Ronald Mancuso, D.D.S., Richard L. Mount, Louis Oneal, Diane Rubino, and Gary S. Vandeweghe and Douglas L. Shen, D.D.S.., respectively, is hereby incorporated by reference to Exhibit (10) ae. of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000. 22 Subsidiary of the Registrant is hereby incorporated by reference to Exhibit 22 of the Registrant's Annual R eport on Form 10-K for the year ended December 31, 2000. 23 Consent of KPMG LLP * Indicates management contract or compensation plan or arrangement. (b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. Date: April 13, 2001 SJNB Financial Corp. By: S/J.R. Kenny By: S/E.E. Blakeslee ------------------ --------------------------- James R. Kenny Eugene E. Blakeslee President and Executive Vice President and Chief Executive Officer Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this amendment has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. S/J.R. Kenny -------------------------------------------- James R. Kenny President, Chief Executive Officer and Director (Principal Executive Officer) April 13, 2001 S/E.E. Blakeslee -------------------------------------------- Eugene E. Blakeslee Executive Vice President and Chief Financial Officer and Chief Accounting Officer (Principal Financial Officer and Principal Accounting Officer April 13, 2001 S/V. E. Aboukhater -------------------------------------------- Victor E. Aboukhater, Director April 13, 2001 S/R.S. Akamine -------------------------------------------- Ray S. Akamine, Director April 13, 2001 S/R.A. Archer -------------------------------------------- Robert A. Archer Chairman and Director April 13, 2001 S/A.V. Bruno -------------------------------------------- Albert V. Bruno, Director April 13, 2001 S/R. Diridon, Sr. -------------------------------------------- Rod Diridon, Sr., Director April 13, 2001 S/R. G. Egan -------------------------------------------- Robert G. Egan, Director April 13, 2001 S/F.J. Gorry -------------------------------------------- F. Jack Gorry, Director April 13, 2001 S/W. D. Kron -------------------------------------------- William D. Kron, Director April 13, 2001 S/A.K. Lund -------------------------------------------- Arthur K. Lund, Director April 13, 2001 S/V. R. Mancuso, D.D.S. -------------------------------------------- V. Ronald Mancuso, D.D.S., Director April 13, 2001 S/R. L. Mount -------------------------------------------- Richard L. Mount, Director April 13, 2001 S/L. Oneal -------------------------------------------- Louis Oneal, Director April 13,3 2001 S/D. Rubino -------------------------------------------- Diane Rubino, Director April 13, 2001 S/D.L. Shen -------------------------------------------- Douglas L. Shen, Director April 13, 2001 S/G.S. Vandeweghe -------------------------------------------- Gary S. Vandeweghe, Director April 13, 2001 SJNB Financial Corp. Form 10-K Exhibits December 31, 2000 The following exhibits are filed as part of this report: (2)a. Agreement and Plan of Merger by and among the Registrant, Saratoga Bancorp and Saratoga National Bank, dated as of August 27, 1999, is hereby incorporated by reference to Exhibit 2.1 of the Registrant's Registration Statement on Form S-4 as filed on October 14, 1999, under Registration No. 333-89013. (3)(i). The Registrant's restated Articles of Incorporation are hereby incorporated by reference from Exhibit (3) (i) of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999. (3)(ii). The Registrant's Restated Bylaws as of February 23, 2000 are hereby incorporated by reference to Exhibit 3 (ii) of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)a. The Registrant's 1992 Employee Stock Option Plan is hereby incorporated by reference from Exhibit 4.1 of the Registrant's Registration Statement on Form S-8, as filed on September 4, 1992, under Registration No. 33-51740. *(10)b. Amendment No. 1 to the 1992 Employee Stock Option Plan is hereby incorporated by reference to Exhibit (10) b. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1998. *(10)c. The form of Incentive Stock Option Agreement being utilized under the 1992 Employee Stock Option Plan is hereby incorporated by reference from Exhibit 4.2 of the Registrant's Registration Statement on Form S-8, as filed on September 4, 1992, under Registration No. 33-51740. *(10)d. The form of Stock Option Agreement being utilized under the 1992 Employee Stock Option Plan is hereby incorporated by reference from Exhibit 4.3 of the Registrant's Registration Statement on Form S-8, as filed on September 4, 1992, under Registration No. 33-51740. *(10)e. The Registrant's Amended 1996 Stock Optio n Plan is hereby incorporated by reference to Exhibit 99.1 of the Registrant's Form S-8 filed June 15, 1999, under Registration No. 333-80683 *(10)f. The form of Nonstatutory Stock Option Agreement for outside Directors being utilized under the Amended 1996 Stock Option Plan is hereby incorporated by reference to Exhibit (10) f. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1998. *(10)g. The form of Nonstatutory Stock Option Agreement for Employees being utilized under the Amended 1996 Stock Option Plan is hereby incorporated by reference to Exhibit (10) g. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1998. *(10)h. The form of Incentive Stock Option Agreement being utilized under the Amended 1996 Stock Option Plan is hereby incorporated by reference to Exhibit (10) h. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1998. *(10)i. The Saratoga Bancorp 1982 Stock Option Plan is hereby incorporated by reference to Exhibit (10) i. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)j. The Saratoga Bancorp 1994 Stock Option Plan (Amended) is hereby incorporated by reference to Exhibit (10) j. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)k. Forms of Incentive Stock Option Agreement, Non-Statutory Stock Option Agreement and Non-Statutory Stock Option Agreement for Outside Directors is hereby incorporated by reference to Exhibit (10) k. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)l. Agreement between James R . Kenny and SJNB Financial Corp. and San Jose National Bank dated March 27, 1996 is hereby incorporated by reference to Exhibit (10) m. of the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 1996. *(10)m. Amendment No. 1 To Employment Agreement between James R. Kenny and SJNB Financial Corp. and San Jose National Bank dated October 6, 2000. *(10)n. Agreement between Eugene E. Blakeslee and SJNB Financial Corp. and San Jose National Bank dated March 27, 1996 is hereby incorporated by reference to Exhibit (10) n. of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1996. *(10)o. Amendment No. 1 To Employment Agreement between Eugene E. Blakeslee and SJNB Financial Corp. and San Jose National Bank dated October 6, 2000. (10)p. Sublease dated April 5, 1982, for premises at 95 South Market Street, San Jose, CA is hereby incorporated by reference to Exhibit (10) n. of the Registrant's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994. (10) q. Sublease by and between McWhorter's Stationary and San Jose National Bank, dated July 6, 1995, and as amended August 11, 1995, and September 21, 1995, for premises at 95 South Market Street, San Jose, CA is hereby incorporated by reference to Exhibit (10) o. of the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended September 30, 1995. (10)r. Agreement of Purchase and Sale dated July 27, 1988 for 12000 Saratoga-Sunnyvale Road, Saratoga, CA is hereby incorporated by reference to Exhibit (10) p. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)s. Form of Director Supplemental Compensation Agreement dated September 24, 1998 between Saratoga National Bank and Robert G. Egan, John F. Lynch III and V. Ronald Mancuso, respectively, is hereby incorporated by reference to Exhibit (10) q. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)t. Form of Director Life Insurance Endorsement Method Split Dollar Plan Agreement dated September 24, 1998 between Saratoga National Bank and Robert G. Egan, John F. Lynch III and V. Ronald Mancuso, respectively, is hereby incorporated by reference to Exhibit (10) r. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)u. Form of Director Surrogate Supplemental Compensation Agreement dated September 24, 1998 between Saratoga National Bank and Victor E. Aboukhater and William D. Kron, respectively, is hereby incorporated by reference to Exhibit (10) s. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)v. Form of Director Surrogate Life Insurance Endorsement Method Split Dollar Plan Agreement dated September 24, 1998 between Saratoga National Bank and Victor E. Aboukhater and William D. Kron, respectively, is hereby incorporated by reference to Exhibit (10) t. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)w. Form of Officer Supplemental Compensation Agreement dated September 24, 1998 between Saratoga National Bank and Earl Lanna, Mary Rourke, Sandra Swenson, Barbara Resop and Cathe Franklin, respectively, is hereby incorporated by reference to Exhibit (10) u. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)x. Form of Officer Life Insurance Endorsement Method Split Dollar Plan Agreement dated September 24, 1998 between Saratoga National Bank and Earl Lanna, Mary Rourke, Sandra Swenson, Barbara Resop and Cathe Franklin, respectively, is hereby incorporated by reference to Exhibit (10) v. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)y. Richard L. Mount Executive Supplemental Compensation Agreement dated September 24, 1998 is hereby incorporated by reference to Exhibit (10) w. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)z. Richard L. Mount Life Insurance Endorsement Method Split Dollar Plan Agreement dated September 24, 1998 is hereby incorporated by reference to Exhibit (10) x. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)aa. Richard L. Mount Executive Benefits Agreement dated June 18, 1999 is hereby incorporated by reference to Exhibit (10) y. of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. *(10)ab. Form of Executive Supplemental Compensation Agreement dated June 1, 2000 between San Jose National Bank and James R. Kenny, Eugene E. Blakeslee, Frederic A. Charpiot, Margo Culcasi and Judith Doering Nielsen, respectively, is hereby incorporated by reference to Exhibit (10) z. of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000. *(10)ac. Form of Endorsement Method Split Dollar Plan Agreement dated August 1, 2000 between San Jose National Bank and James R. Kenny, Eugene E. Blakeslee, Frederic A. Charpiot, Margo Culcasi and Judith Doering Nielsen, respectively, is hereby incorporated by reference to Exhibit (10) aa. of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000. *(10)ad. Form of Endorsement Method Split Dollar Plan Agreement dated August 1, 2000 between San Jose National Bank and each of Ray S. Akamine, Robert A. Archer, Albert V. Bruno, Rod Diridon, Sr., F. Jack Gorry, Arthur K. Lund, Richard L. Mount, Louis Oneal, Diane Rubino, and Gary S. Vandeweghe and Douglas L. Shen, D.D.S. is hereby incorporated by reference to Exhibit (10) ab. of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000. *(10)ae. Form of Director Supplemental Compensation Agreement dated June 1, 2000 between San Jose National Bank and Ray S. Akamine, Robert A. Archer, Albert V. Bruno, Rod Diridon, Sr., Robert G. Egan, F. Jack Gorry, Arthur K. Lund, V. Ronald Mancuso, D.D.S., Richard L. Mount, Louis Oneal, Diane Rubino, and Gary S. Vandeweghe and Douglas L. Shen, D.D.S.., respectively, is hereby incorporated by reference to Exhibit (10) ae. of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000. 22 Subsidiary of the Registrant is hereby incorporated by reference to Exhibit 22 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 2000. 23 Consent of KPMG LLP * Indicates management contract or compensation plan or arrangement.

SJNB FINANCIAL CORP 10-K/A