Preferred Stock Information 
    (Cusip: 658654 20 7):

General:

There are 360,791 shares of preferred stock outstanding.  Dividends on the preferred stock, at an annual rate of $1.00 per share (10%) are paid quarterly when declared by the Board of Directors of the Company and with the consent of the Insurance Commissioner of Washington state, on January 31, April 30, July 31, and October 31 (see "Financial and Investor News for "declaration" and other dates). 

Notice Regarding Non-Taxable Year 2000 Distributions to Preferred Shareholders:

The year 2000 preferred stock dividend payments constitute a non-taxable return of capital.  The non-taxable treatment of the dividends results from differences between taxable versus book income.  In other words, due to differences in how North Coast's taxable income is calculated, North Coast's tax basis earnings and profits are less than the divedend distributions.  

The tax basis carrying value of your preferred stock investment should generally be reduced for the amount of non-taxable dividends received.  This reduction in tax basis carrying value can, among other things, affect the amount of gain or loss realized if and when your preferred stock holding is sold.  

Please note that the receipt of the non-taxable dividends does not adversely affect the value of your stock holdings. nor does it decrease the number of shares you own.  In addition, the amount of future dividends on the preferred stock is not affected by the receipt of non-taxable dividends.  Please consult your tax advisor for additional information on the receipt of non-taxable dividend distributions.