SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-26556
OREGON TRAIL FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
Oregon 91-1829481
------------------------------------------------------------------------------
State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
2055 First Street, Baker City, Oregon 97814
------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (541) 523-6327
---------------------
Securities registered pursuant to Section 12(b) of the Act: None
---------------------
Securities registered pursuant Common Stock. Par value $.01 per share
to Section 12(g) of the Act: --------------------------------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days. YES [ X ] NO [ ]
As of July 31, 2000, there were issued and outstanding 3,330,420 shares
of the Registrant's Common Stock. The Registrant's voting common stock is
traded over-the-counter and is listed on the Nasdaq National Market under the
symbol "OTFC".
<PAGE>
OREGON TRAIL FINANCIAL CORP. AND SUBSIDIARY
TABLE OF CONTENTS
Part I. Financial Information
Item I. Financial Statements (Unaudited) Page
Consolidated Balance Sheets 2
as of June 30, 2000 and March 31, 2000
Consolidated Statements of Income (For the Three 3
Months Ended June 30, 2000 and 1999)
Consolidated Statements of Shareholders' Equity
(For the Three Months Ended June 30, 2000 and for
the Year Ended March 31, 2000) 4
Consolidated Statements of Cash Flows (For the
Three Months Ended June 30, 2000 and 1999) 5 - 6
Notes to Consolidated Financial Statements 7 - 10
Item II. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-14
Item III. Quantitative and Qualitative Disclosures about Market Risk 14
Part II. Other Information
Item 1. Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
<PAGE>
OREGON TRAIL FINANCIAL CORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2000 and MARCH 31, 2000
(UNAUDITED)
($ in thousands)
June 30 March 31
ASSETS 2000 2000
--------- ---------
Cash (including interest earning accounts of
$8,030 and $7,588) $10,082 $9,261
Securities:
Available for sale, at fair value (amortized cost:
$125,407 and $127,373) 120,292 122,051
Held to maturity, at amortized cost 0 0
Loans receivable, net of allowance for loan
losses of $1,459 and $1,396 240,810 220,591
Accrued interest receivable 2,473 2,452
Premises and equipment, net 10,617 9,902
Stock in Federal Home Loan Bank of Seattle, at cost 4,432 3,897
Real estate owned and other repossessed assets 57 8
Net deferred tax asset 1,489 1,822
Other assets 505 628
--------- ---------
TOTAL ASSETS $390,757 $370,612
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits:
Interest-bearing $107,087 $106,285
Noninterest-bearing 16,752 14,961
Time certificates 122,556 116,489
--------- ---------
Total deposits 246,395 237,735
Advances from Federal Home Loan Bank of Seattle 87,300 76,750
Accrued expenses and other liabilities 2,023 2,333
Advances from borrowers for taxes and insurance 1,201 690
--------- ---------
Total liabilities 336,919 317,508
SHAREHOLDERS' EQUITY:
Preferred Stock - $.01 par value; 1,000,000 shares
authorized; no shares issued or outstanding 0 0
Common stock, $.01 par value; 8,000,000 shares
authorized
March 31, 2000, 4,694,875 issued, 3,317,006
outstanding;
March 31, 1999, 4,694,875 issued, 3,763,564
outstanding 36 36
Additional paid-in capital 31,738 31,743
Retained earnings (substantially restricted) 28,103 27,759
Unearned shares issued to the Employee Stock
Ownership Plan (2,280) (2,415)
Unearned shares issued to the Management Recognition
and Development Plan (668) (740)
Accumulated comprehensive loss (3,091) (3,279)
--------- ---------
Total shareholders' equity 53,838 53,104
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $390,757 $370,612
========= =========
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
(2)
<PAGE>
OREGON TRAIL FINANCIAL CORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
($ in thousands except per share data)
3 MOS ENDED 3 MOS ENDED
30-Jun-00 30-Jun-99
INTEREST INCOME:
Interest and fees on loans receivable $4,677 $3,870
Securities:
Mortgage-backed and related securities 1,488 1,107
U.S. government and government agencies 604 586
Other interest and dividends 67 58
--------- ---------
Total interest income 6,836 5,621
INTEREST EXPENSE:
Deposits 2,410 1,882
Federal Home Loan Bank of Seattle
advances 1,224 641
--------- ---------
Total interest expense 3,634 2,523
Net interest income 3,202 3,098
Provision for loan losses 104 71
--------- ---------
Net interest income after provision for
loan losses 3,098 3,027
NONINTEREST INCOME:
Service charges on deposit accounts 344 242
Loan servicing fees 103 88
Other Income (expense) (6) 12
--------- ---------
Total noninterest income 441 342
NONINTEREST EXPENSE:
Employee compensation and benefits 1,537 1,404
Supplies, postage, and telephone 216 190
Depreciation 165 155
Occupancy and equipment 204 131
FDIC insurance premium 12 30
Customer account 108 73
Advertising 66 142
Professional fees 101 42
Other 202 176
--------- ---------
Total noninterest expense 2,611 2,343
Income before income taxes 928 1,026
Provision for income taxes 316 388
--------- ---------
NET INCOME $612 $638
========= =========
Basic Earnings per share $0.18 $0.17
========= =========
Weighted Average Number of
Shares Outstanding (1) 3,323,784 3,717,381
Diluted Earnings per share $0.18 $0.16
========= =========
Weighted Average Number of
Dilutive Shares 3,328,638 3,913,680
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
(3)
<PAGE>
<TABLE>
OREGON TRAIL FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND THE YEAR ENDED MARCH 31, 2000
(UNAUDITED)
($ in thousands)
Unearned
Shares
Unearned Issued to
Shares Management Accumu-
Issued to Recogni- lated
Employee tion Other
Stock and Compre- Compre-
Additional Owner- Develop- hensive hensive
Common Stock Paid-In Retained ship ment Income Income
Shares Amount Capital Earnings Trust Plan (Loss) (Loss) Total
------ ------ ------- -------- ----- ---- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, April 1,
1999 3,763,564 $42 $38,357 $26,206 ($2,951) ($1,453) ($118) $60,083
Net income 2,609 $2,609 2,609
Cash dividends paid (1,056) (1,056)
Stock repurchased (534,228) (6) (6,350) (6,356)
Earned ESOP shares 53,656 76 536 612
New MRDP shares
granted 71 (71) 0
Earned MRDP shares 34,014 373 373
Forfeiture of MRDP
shares (411) 411 0
Unrealized loss
on securities
available for
sale, net of tax (3,161) (3,161) (3,161)
------
Comprehensive
income ($552)
--------- --- ------- ------- ------- ------- ====== ------- -------
Balance, March 31,
2000 3,317,006 36 31,743 27,759 (2,415) (740) (3,279) 53,104
Net income 612 612 612
Cash dividends
paid (268) (268)
Earned ESOP
shares 13,414 (5) 135 130
New MRDP shares
granted 0
Earned MRDP
shares 72 72
Unrealized loss
on securities
available for
sale, net of tax 188 188 188
------
Comprehensive
income $800
--------- --- ------- ------- ------- ------- ====== ------- -------
Balance, June 30,
2000 3,330,420 $36 $31,738 $28,103 ($2,280) ($668) ($3,091) $53,838
========= === ======= ======= ======= ======= ======= =======
The accompanying notes are an integral part of these unaudited consolidated financial statements.
(4)
</TABLE>
<PAGE>
OREGON TRAIL FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
($ in thousands)
30-Jun-00 30-Jun-99
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $612 $638
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 215 155
Compensation expense related to ESOP 129 172
Compensation expense related to MRDP 72 95
Amortization of deferred loan fees, net (17) (92)
Provision for loan losses 104 71
Amortization(accretion) of premiums/discounts 50 54
on investments and loans purchased
Federal Home Loan Bank of Seattle dividends (67) (58)
Changes in assets and liabilities:
Accrued interest receivable (21) (209)
Other assets 291 347
Accrued expenses and other liabilities (311) 461
----------- -----------
Net cash provided by operating activities 1,057 1,634
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Loan originations (32,350) (35,287)
Loan principal repayments 21,468 25,431
Loans purchased (9,472) (2,709)
Purchase of stock in Federal Home Loan Bank
of Seattle (468) 0
Purchase of securities available for sale 0 (12,683)
Proceeds from maturity of securities available
for sale 0 2,004
Principal repayments of securities available
for sale 2,062 3,110
Proceeds from sales of real estate owned 0 53
Proceeds from sales of premises and equipment 0 6
Purchases of premises and equipment (928) (675)
----------- -----------
Net cash used in investing activities (19,688) (20,750)
----------- -----------
(5)
<PAGE>
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits, net of withdrawals $8,658 $12,738
Change in advances from borrowers for taxes
and insurance 513 529
Change in borrowings from Federal Home Loan
Bank of Seattle 10,550 9,900
Payment of cash dividend (269) (231)
Stock repurchase 0 (2,489)
----------- -----------
Net cash used in financing activities 19,452 20,447
----------- -----------
Net increase in cash 822 1,332
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,261 6,276
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $10,082 $7,607
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest on deposits and other borrowings $3,577 $2,373
Income taxes 0 0
Noncash investing activities:
Transfer of loans to foreclosed real estate 0 71
Unrealized gain(loss) on securities available
for sale 188 (1,551)
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
(6)
<PAGE>
OREGON TRAIL FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary for a fair presentation
of Oregon Trail Financial Corp. and Subsidiary's (the "Company") financial
condition as of June 30, 2000 and March 31, 2000, the results of operations
for the three months ended June 30, 2000 and 1999, and the cash flows for the
three months ended June 30, 2000 and 1999. All adjustments are of a normal
recurring nature. Certain information and note disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual Report to
Shareholders filed as an exhibit to the Company's Form 10-K for the year ended
March 31, 2000. The results of operations for the three months ended June 30,
2000 are not necessarily indicative of the results which may be expected for
the entire fiscal year.
2. REORGANIZATION
On October 3, 1997, Pioneer Bank, A Federal Savings Bank, (the "Bank")
completed a mutual-to-stock conversion. The Company sold 4,694,875 shares of
common stock at $10 per share, 8% or 375,590 of which shares were purchased by
an Employee Stock Ownership Plan (the "ESOP"). Proceeds from the sale were
recorded as $46,949 of Common Stock at $.01 par value and $45,681,982 of Paid
in Capital. The Common Stock and Paid in Capital at June 30, 2000 are
partially offset by the unissued ESOP shares and unissued Management
Recognition and Development Plan ("MRDP") shares.
The Company purchased all of the stock of the Bank for one-half of the net
investable proceeds of the offering. The retained earnings of the Company
represent all prior earnings of the Bank as a mutual savings bank and all
earnings since the conversion.
The primary business of the Company is overseeing the operations of the Bank.
Accordingly, the information presented herein relates primarily to the Bank.
3. COMPREHENSIVE INCOME
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income" requires all items that are required to be recognized
under accounting standards as components of comprehensive income to be
reported in a financial statement that is displayed in equal prominence with
the other financial statements and to disclose as a part of shareholders'
equity accumulated comprehensive income. Comprehensive income is defined as
the change in equity during a period from transactions and other events from
nonowner sources. Comprehensive income is the total of net income and other
comprehensive income, which for the Company is comprised entirely of
unrealized gains and losses on securities available for sale, net of tax.
(7)
<PAGE>
4. ALLOWANCE FOR LOAN LOSSES
Activity in allowance for loan losses is summarized as follows for the year
ended March 31, 2000 and for the three months ended June 30, 2000:
June 30, 2000 March 31, 2000
(in thousands) (in thousands)
-------------- --------------
Balance, beginning of
period $ 1,396 $ 1,228
Charge-offs (42) (42)
Recoveries 1 32
Provision for loan losses 104 178
-------------- --------------
Balance, end of period $ 1,459 $ 1,396
============== ==============
5. ADVANCES FROM FEDERAL HOME LOAN BANK
Borrowings at June 30, 2000 consisted of fifteen term advances varying in
length from seven days to 38 months totaling $87.3 million from the Federal
Home Loan Bank ("FHLB") of Seattle. The advances are collateralized in
aggregate as provided for in the Advances Security and Deposit Agreement with
the FHLB by certain mortgages or deeds of trust, government agency securities
and cash on deposit with the FHLB. Scheduled maturities of advances from the
FHLB were as follows at June 30, 2000:
Due in less than one year:
--------------------------
Amount Range of Interest Weighted Average
Rates Interest Rate
-----------------------------------------------------------
$64,800,000 4.75% - 7.05% 6.68%
Due within one to five years:
-----------------------------
Amount Range of Interest Weighted Average
Rates Interest Rate
-----------------------------------------------------------
$22,500,000 4.93% - 7.22% 6.05%
(8)
<PAGE>
6. EARNINGS PER SHARE
Shares held by the Company's ESOP that are committed for release are
considered common stock equivalents and are included in weighted average
shares outstanding (denominator) for the calculation of basic and diluted
Earning Per Share ("EPS"). Diluted EPS is computed using the treasury stock
method, giving effect to potential additional common shares that were
outstanding during the period. Potential dillutive common shares include
shares awarded but not released under the Company's MRDP and stock options
granted under the Stock Option Plan. Following is a summary of the effect of
dilutive securities in weighted average number of shares (denominator) for the
basic and diluted EPS calculations. There are no resulting adjustments to net
earnings.
For the Three Months ended June 30,
2000 1999
------------------------------------------------------------------
Weighted average common shares
outstanding - basic 3,323,784 3,717,381
------------------------------------------------------------------
Effect of Dilutive Securities on
Number of Shares:
------------------------------------------------------------------
MRDP shares 4,854 147,322
------------------------------------------------------------------
Stock Options 0 48,977
------------------------------------------------------------------
Total Dilutive Securities 4,854 196,299
------------------------------------------------------------------
Weighted average common shares
outstanding - with dilution 3,328,638 3,913,680
------------------------------------------------------------------
For the three months ended June 30, 2000 options to purchase 280,996
shares of stock were excluded from dilutive shares as they had an antidilutive
effect on the calculation.
7. REGULATORY CAPITAL
The Company is not subject to separate regulatory capital requirements.
The following table illustrates the Bank's compliance with currently
applicable regulatory capital requirements at June 30, 2000 and March 31,
2000.
As of June 30, 2000:
Categorized as
"Well Capitalized"
Actual For Capital Under Prompt
(In Thousands) Adequacy Corrective
Purposes Action Provision
(In Thousands) (In Thousands)
------------------- ----------------- -----------------
Amount Ratio Amount Ratio Amount Ratio
As of June 30,
2000:
Total Capital:
(To Risk Weighted
Assets) $ 53,791 25.8% $ 16,661 8.0% $ 20,826 10.0%
Tier I Capital:
(To Risk Weighted
Assets) 52,332 25.1 N/A N/A 12,495 6.0
Tier I Capital:
(To Tangible
Assets) 52,332 13.3 15,704 4.0 19,630 5.0
Tangible Capital:
(To Tangible
Assets) 52,332 13.3 5,889 1.5 N/A N/A
(9)
<PAGE>
As of March 31, 2000
Categorized as
"Well Capitalized"
Actual For Capital Under Prompt
(In Thousands) Adequacy Corrective
Purposes Action Provision
(In Thousands) (In Thousands)
------------------- ----------------- -----------------
Amount Ratio Amount Ratio Amount Ratio
As of March 31,
2000:
Total Capital:
(To Risk Weighted
Assets) $ 53,812 28.5% $ 15,114 8.0% $ 18,892 10.0%
Tier I Capital:
(To Risk Weighted
Assets) 52,416 27.7 N/A N/A 11,335 6.0
Tier I Capital:
(To Tangible
Assets) 52,416 14.0 14,934 4.0 18,667 5.0
Tangible Capital:
(To Tangible
Assets) 52,416 14.0 5,600 1.5 N/A N/A
8. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2000, the Financial Accounting Standards Board issued SFAS No.
138, "Accounting of Certain Derivative Instruments and Certain Hedging
Activities". This pronouncement adds to and amends certain reporting
standards from the guidance in SFAS No. 133. SFAS No. 138 is effective for
all quarters after June 15, 2000 for entities that adopted SFAS No. 133 prior
to June 15, 2000. The Company does not expect the adoption of SFAS No. 138 to
have material impact on its financial statements.
(10)
<PAGE>
ITEM II.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Safe Harbor Clause. This report contains certain "forward-looking
statements". The Company desires to take advantage of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995 and is
including this statement for the express purpose of availing itself of the
protection of such safe harbor with respect to all of such forward-looking
statements. These forward-looking statements, which are included in
Management's Discussion and Analysis, describe future plans or strategies and
include the Company's expectations of future financial results. The words
"believe," "expect," "anticipate," "estimate," "project," and similar
expressions identify forward-looking statements. The Company's ability to
predict results or the effect of future plans or strategies is inherently
uncertain. Factors which could affect actual results include interest rate
trends, the general economic climate in the Company's market area and the
country as a whole, loan delinquency rates, and changes in federal and state
regulation. These factors should be considered in evaluating the
forward-looking statements, and undue reliance should not be placed on such
statements.
General
The Company, an Oregon corporation, was organized on June 9, 1997 for the
purpose of becoming the holding company for the Bank upon the Bank's
conversion from a federal mutual to a federal stock savings bank
("Conversion"). The Conversion was completed on October 3, 1997. At June 30,
2000, the Company had total assets of $390.8 million, total deposits of $246.4
million and shareholders' equity of $53.8 million. The Company is currently
not engaged in any business activity other than holding the stock of the Bank.
Accordingly, the information set forth in this report, including financial
statements and related data, relates primarily to the Bank. All references to
the Company herein include the Bank where applicable.
The Bank was organized in 1901. It is regulated by the OTS and its deposits
are insured up to applicable limits under the Savings Association Insurance
Fund ("SAIF") of the Federal Deposit Insurance Corporation ("FDIC").
The Bank is a member of the FHLB of Seattle, conducting its business through
nine office facilities, with the headquarters located in Baker City, Oregon.
The primary market areas of the Bank are the counties of Wallowa, Union,
Baker, Malheur, Harney, Grant and Umatilla in Eastern Oregon. On May 30, 2000
the Company purchased Western Bank's Pendleton branch located in Umatilla
County to increase the Bank's potential customer base.
The Bank is a community oriented financial institution whose principal
business is attracting retail deposits from the general public and using these
funds to originate one-to-four family residential mortgage loans and consumer
loans within its primary market area. The Bank also actively originates home
equity and second mortgage loans. At June 30, 2000, one-to-four family
residential mortgage loans totaled $132.3 million, or 54.9% of total loans
receivable. Beginning in 1996, the Bank began supplementing its traditional
lending activities with commercial business loans, agricultural loans and the
purchase of dealer-originated automobile contracts. As a result of
(11)
<PAGE>
these activities at June 30, 2000 the Company had agricultural loans of $16.2
million, commercial business loans of $23.1 million, commercial real estate
loans of $16.8 million, agricultural real estate loans of $2.8 million, and
automobile loans of $24.8 million (including $20.0 million of purchased
dealer-originated contracts).
Net interest income, which is the difference between interest and dividend
income on interest-earning assets, primarily loans and investment securities,
and interest expense on interest-bearing deposits and borrowings, is the major
source of income for the Company. Because the Company depends primarily on
net interest income for its earnings, the focus of management is to create and
implement strategies that will provide stable, positive spreads between the
yield on interest-earning assets and the cost of interest-bearing liabilities.
Such strategies include increasing the origination of commercial and
agricultural loans with rates that are adjustable based upon the Wall Street
Journal's prime rate or the current five year Treasury Note yield. Commercial
(including both commercial real estate and commercial business) and
agricultural loans outstanding totaled $30.9 million and $15.7 million,
respectively, at March 31, 2000 and increased to $39.9 million and $19.1
million, respectively, at June 30, 2000. The Company has also increased
origination of shorter term consumer loans, increasing automobile loans from
$21.5 million at March 31, 2000 to $24.8 million at June 30, 2000.
To a lesser degree, the net earnings of the Company rely on the level of its
non-interest income. The Company is focusing on improvements in its fee
structure for income generation, and to control its non-interest expense,
which includes employee compensation and benefits, and occupancy and equipment
expense.
Changes in Financial Condition
At June 30, 2000, the consolidated assets of the Company totaled $390.8
million, an increase of $20.1 million, from $370.6 million at March 31, 2000.
The primary reason for the increase was a $20.2 million increase in net loans
receivable. The increase in assets was funded primarily by an $8.7 million
increase in deposits and a $10.6 million increase in FHLB borrowings.
Net loans receivable increased to $240.8 million at June 30, 2000 compared to
$220.6 million at March 31, 2000. The increase was largely the result of
continued new loan demand for all types of loans exceeding loan repayments, as
well as the purchase of $2.9 million in loans with the Pendleton branch
acquisition.
Nonperforming assets, consisting of non-accruing loans, real estate owned and
other repossessed assets, increased $8,000 from $163,000 at March 31, 2000 to
$171,000 at June 30, 2000. Nonperforming assets were .04% of total assets
both at June 30, 2000 and at March 31, 2000. The allowance for loan losses
was 1,280% of nonperforming loans at June 30, 2000, compared to 901% at March
31, 2000.
Deposits increased $8.7 million from $237.7 million at March 31, 2000 to
$246.4 million at June 30, 2000. This includes the purchase of $3.4 million
in deposits with the Pendleton branch acquisition. Advances from borrowers
for taxes and insurance increased $511,000 from $690,000 at March 31, 2000 to
$1.2 million at June 30, 2000. Taxes are paid annually in November and
accordingly, such deposits increase ratably from December to November when the
taxes are paid. The Company had $87.3 million in advances from the FHLB at
June 30, 2000 compared to $76.8 million at March 31, 2000.
(12)
<PAGE>
Results of Operations
Comparison of Three Months Ended June 30, 2000 and 1999
General. Net interest income increased $104,000 to $3.2 million from $3.1
million comparing the three-month period ended June 30, 2000 to the same
period in the prior year. Interest income increased $1.2 million to $6.8
million for the three month period ended June 30, 2000 from $5.6 million for
the same period in 1999, while interest expense increased $1.1 million to $3.6
million for the three month period ended June 30, 2000 from $2.5 million for
the same period in 1999. Non-interest income increased $99,000 to $441,000
for the three month period ended June 30, 2000 from $342,000 for the same
period in 1999, and the provision for loan losses increased $33,000 to
$104,000 for the three month period ended June 30, 2000 from $71,000 for the
same period in 1999. Non-interest expense increased $268,000 to $2.6 million
from $2.3 million, and income taxes decreased $72,000 from $388,000 to
$316,000. This resulted in net income decreasing by $26,000 for the three
months ended June 30, 2000 compared to the same period in 1999.
Interest Income. The increase of $1.2 million in interest income was
generated by an additional $51.0 million in average interest earning assets
for the three months ended June 30, 2000 compared to the same period in 1999.
The increase in average interest earning assets included increases in the
average loan portfolio of $31.3 million.
The average yield on interest earning assets increased to 7.62% for the three
months ended June 30, 2000 from 7.32% for the three months ending June 30,
1999. This is primarily attributable to rising interest rates on our loan
products.
Interest Expense. Interest expense on savings deposits increased by $528,000
to $2.4 million from $1.9 million for the three months ended June 30, 2000
compared to the same period in 1999. Average deposits increased by $28.6
million for the same period. Interest expense on FHLB advances increased
$583,000 to $1.2 million from $641,000 for the same period comparison.
Average advances increased by $28.3 million for the three months ended June
30, 2000 compared to the same period in the prior year.
Provision for Loan Losses. The provision for loan losses was $104,000 during
the three months ended June 30, 2000 compared to $71,000 for the three-month
period ended June 30, 1999. The provision was increased primarily in response
to portfolio growth, especially in commercial, agricultural and consumer
loans.
Non-Interest Income. Non-interest income increased $99,000 to $441,000 for the
three months ended June 30, 2000 from $342,000 for the same period in the
prior year. Income from deposit accounts increased $102,000 to $344,000 for
the three months ended June 30, 2000 from $242,000 for the same period in the
prior year, due to strong growth in core deposits as well as an improved fee
schedule.
(13)
<PAGE>
Non-Interest Expense. Non-interest expense increased $268,000 to $2.6 million
for the three months ended June 30, 2000, from $2.3 million for the comparable
period in 1999. This increase includes costs associated with the expanding
infrastructure to support positioning the company in new market areas and
widening its customer base.
Income Taxes. The provision for income taxes decreased $172,000 for the three
months ended June 30, 2000 compared with the same period in the prior year.
The Company's effective tax rate decreased to 34% from 38% for the three
months ended June 30, 2000 compared with the same period in the prior year,
due to a higher level of non-taxable income.
Item No. III
Quantitative and Qualitative Disclosures about Market Risk
During the quarter ended June 30, 2000, there was no material change in the
market risk disclosures included in the Company's Form 10-K for the year ended
March 31, 2000.
(14)
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
The Company is involved in various claims and legal actions arising
in the normal course of business. Management believes that these
proceedings will not result in a material loss to the Company.
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
Not applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable.
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
3(a) Articles of Incorporation of the Registrant*
3(b) Bylaws of the Registrant*
10(a) Employment Agreement with Zane Lockwood
10(b) Severance Agreement with William H. Winegar**
10(c) Severance Agreement with Thomas F. Bennett****
10(d) Severance Agreement with Jerry Kincaid****
10(e) Employee Severance Compensation Plan**
10(f) Amendment to the Pioneer Bank, FSB Employee Severance
Compensation Plan
10(g) Pioneer Bank, a Federal Savings Bank Employee Stock
Ownership Plan**
10(h) Pioneer Bank, a Federal Savings Bank 401(k) Plan*
10(i) Pioneer Bank Director Emeritus Plan***
10(j) 1998 Stock Option Plan***
10(k) 1998 Management Recognition and Development Plan***
21 Subsidiaries of the Registrant****
27 Financial Data Schedule
------------------
* Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (333-30051), as amended.
** Incorporated by reference to the Registrant's Form 10-Q for the quarter
ended September 30, 1997.
*** Incorporated by reference to the Registrant's Definitive Proxy Statement
for the 1998 Annual Meeting of Shareholders.
**** Incorporated by reference to the Registrant's Form 10-Q for the quarter
ended September 30, 1998.
(b) Reports on Form 8-K
No Current Reports on Form 8-K were filed during the quarter ended
December 31, 1998.
(15)
<PAGE>
SIGNATURES
Pursuant to requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
OREGON TRAIL FINANCIAL CORP.
Date: August 11, 2000 By: /s/ Berniel L. Maughan
---------------------------------
Berniel L. Maughan, President and
Chief Executive Officer
Date: August 11, 2000 By: /s/ Jon McCreary
---------------------------------
Jon McCreary, Chief Financial
Officer
(16)
<PAGE>
Exhibit 10(a)
Employment Agreement with Zane Lockwood
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made effective as of April 1, 2000 (the
"Effective Date"), by and between PIONEER BANK, FSB (the "Bank"); OREGON TRAIL
FINANCIAL CORP. (the "Company"), an Oregon corporation; and ZANE F. LOCKWOOD
("Executive").
RECITALS:
A. Executive serves in a position of substantial responsibility;
B. The Bank wishes to continue to avail itself of the services of
Executive for the period provided in this Agreement and Company is willing to
assume financial responsibility for payment of any sums due Executive under
this Agreement if the Bank is unable to meet its financial obligations; and
C. Executive is willing to serve in the employ of the Bank on a
full-time basis under the terms of this Agreement.
AGREEMENT:
In consideration of the mutual covenants contained herein, and upon the
other terms and conditions provided herein, the parties agree as follows:
1. POSITION AND RESPONSIBILITIES
Executive will serve as Executive Vice President of the Bank. Executive
is also an officer of the Company, but is not employed by the Company.
Executive's duties and responsibilities include those customarily associated
with these positions and such other duties as the Bank may assign him from
time to time. Except as otherwise approved by the Board of Directors of the
Bank (the "Board"), Executive will devote substantially all of his business
time, attention, skill, and efforts to the faithful performance of his duties
under this Agreement. Executive agrees to conduct himself at all times in
conformance with Bank policies, state and federal law and ethical business
practices. Executive will not undertake any activity or accept any position
that creates either an actual or potential conflict of interest with the Bank
or which may negatively affect the reputation of Executive or the Bank in the
community or banking industry.
2. TERM
(a) Initial Term. This Agreement shall have an initial term of twenty
(20) months, commencing on the Effective Date.
(b) Extension of the Term. On or about June 1, 2001, and on each
subsequent anniversary of that date so long as Executive remains employed by
Bank, the Board, in its sole discretion, may offer Executive the opportunity
to extend the term of this Agreement for an
<PAGE>
additional year on the same or any other terms the Board proposes. Each year,
the President of the Bank will conduct a formal performance evaluation of
Executive at its convenience as part of the process for determining whether to
offer to extend the Agreement.
3. COMPENSATION AND EXPENSE REIMBURSEMENT
(a) Base Salary. "Base Salary" shall be defined as regular base annual
salary plus any earned cash bonuses. The Bank shall pay Executive a Base
Salary of Ninety-six Thousand Dollars ($96,000), payable in installments
according to the Bank's usual payroll practices. During the period of this
Agreement, Executive's Base Salary shall be reviewed at least annually by the
President of the Bank, who will submit his recommendation for any change in
Executive's Base Salary or other compensation to the Board for its approval.
(b) Bonus. Executive is entitled to participate in any incentive
compensation or other bonus program the Bank may establish and for which his
position is eligible.
(c) Benefits. Executive is entitled to participate in any employee
benefits plans or programs generally available to full-time salaried employees
of the Bank, including without limitation, health insurance, paid vacation and
other similar benefits. Executive is subject to the eligibility requirements
and other terms of any Bank benefit plan or program, including any stock
option plan, as set forth in the documents governing those plans.
(d) Expense Reimbursement. The Bank will reimburse Executive for all
reasonable travel and entertainment expenses incurred by Executive in
connection with his duties on behalf of the Bank, subject to the approval by
the Bank. Executive is only entitled to reimbursement to the extent that he
follows the reasonable procedures established by the Bank for reimbursement of
such expenses, including providing satisfactory evidence of such expenditures.
4. TERMINATION
(a) Voluntary Resignation By Executive. Executive may voluntarily
resign his employment under this Agreement upon thirty (30) days' notice to
the Bank. If Executive fails to provide at least thirty (30) days' notice, he
shall be ineligible for rehire. The Bank may terminate Executive's employment
immediately upon receiving Executive's notice by paying Executive an amount
equal to thirty (30) days of Executive's then existing Base Salary as
compensation for the thirty (30) day period following Executive's notice of
termination. Executive shall not be entitled to any Base Salary, bonus,
benefits, severance compensation or any other remuneration or benefits beyond
the date of his termination, except as otherwise provided in this Agreement,
Bank retirement plan or required under applicable law.
(b) Involuntary Resignation by Executive. If the Bank unilaterally and
without Cause significantly reduces the compensation and benefits due
Executive under this Agreement; or if the Bank unilaterally reassigns
Executive to a Bank office more than 35 miles from Executive's Bank office on
the Effective Date, Executive may elect to involuntarily resign from his
employment under this Agreement by giving the Bank sixty (60) days' notice of
his intent to resign. Executive must make this election and notify the Bank
within thirty (30) days of being
2
<PAGE>
informed of any such change by the Bank. If Executive elects to resign, he
shall continue to receive Base Salary Agreement until the term of this
Agreement expires, except that if the Bank is not in compliance with its
minimum capital requirements at the time payments are due Executive or if such
payments would cause the Bank's capital to be reduced below its minimum
capital requirements, such payments shall be deferred until such time as the
Bank is in capital compliance.
(c) Termination By Bank.
(i) Upon Notice. The Bank may terminate Executive's employment at
any time without cause upon thirty (30) days' notice. In lieu of notice, the
Bank may immediately terminate Executive's employment and pay him thirty (30)
days' Base Compensation. If the Bank terminates Executive's employment under
this Section 4(c)(i), Executive shall continue to receive Base Salary until
the term of this Agreement expires, except that if the Bank is not in
compliance with its minimum capital requirements at the time payments are due
Executive or if such payments would cause the Bank's capital to be reduced
below its minimum capital requirements, such payments shall be deferred until
such time as the Bank is in capital compliance.
(ii) For Cause. The Bank may terminate Executive's employment
immediately and without notice for Cause. As used in this Agreement, "Cause"
means: (1) a material breach of the provisions of this Agreement by
Executive; (2) chemical or alcohol dependency which materially and adversely
affects Executive's performance of his employment duties; (3) any act of
disloyalty or breach of responsibilities to the Bank; (4) indictment, arrest
or conviction for a felony or misdemeanor; (5) suspension or revocation by any
government authority of Executive's right to perform some or all of his duties
for the Bank; (6) conduct which constitutes willful, wanton or grossly
negligent misfeasance of Executive's duties; (7) any conduct of Executive,
which in the reasonable judgment of the Board, may adversely affect the
reputation of Executive or the Bank in the community or the banking industry;
or (8) dissolution or insolvency of the Bank or Company or voluntary or
involuntary discontinued or significantly reduced operation of the Bank as a
going concern. The Board, in its good faith judgment, shall be solely
responsible for determining whether Cause exists and shall make its
determination after allowing Executive and his chosen representative, if any,
an opportunity to be heard. An affirmative vote of three-fourths (3/4) of the
Directors shall be required to find Cause. The Board's determination shall be
final and not subject to appeal in any forum. If Executive's employment is
terminated for Cause, Executive shall not be entitled to receive any
compensation or benefits, including unpaid bonus compensation, after
termination of his employment, except for Base Salary due for work actually
performed prior to Executive's termination. The Bank, in its sole discretion,
may elect to place Executive on paid or unpaid leave pending the completion of
the Bank's or other proper authority's investigation and resolution of any
matter that may constitute Cause.
(iii) Executive's Disability. If Executive is unable to perform
the essential functions of his position with or without reasonable
accommodation for a period of 90 consecutive days, the Bank may elect to
terminate his employment without notice. If the Bank terminates Executive's
employment under this Section 4(c)(iii), Executive shall continue to
3
<PAGE>
receive Base Salary until the term of this Agreement expires, except that if
the Bank is not in compliance with its minimum capital requirements at the
time payments are due Executive or if such payments would cause the Bank's
capital to be reduced below its minimum capital requirements, such payments
shall be deferred until such time as the Bank is in capital compliance. Any
compensation due Executive under this provision shall be reduced by the amount
of benefits Executive is receiving under any private or governmental
disability insurance or similar program.
(iv) Executive's Death. This Agreement shall terminate
automatically upon Executive's death. Executive or his estate shall not be
entitled to any other compensation or benefits, including unpaid bonus
compensation, after termination of his employment by death, except for Base
Salary for the complete calendar month in which Executive's death occurs. If
Executive dies after termination of employment pursuant to Sections 4(b),
4(c)(i) or 4(c)(iii), payment of Base Salary will cease after the month in
which Executive's death occurs.
(d) Change in Control.
(i) For purposes of this Agreement a "Change in Control" of the
Company or the Bank shall be deemed to occur if and when (1) an individual or
entity other than the Company purchases shares of the stock of the Company or
the Bank pursuant to a tender or exchange offer for such shares, (2) any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of securities
of the Company or the Bank representing twenty-five percent (25%) or more of
the combined voting power of the Company's or the Bank's then outstanding
shares, (3) the membership of the Board of Directors of the Company or the
Bank changes as the result of a contested election, such that individuals who
were directors at the beginning of any twenty-four (24) month period (whether
commencing before or after the date of adoption of this Agreement) do not
constitute a majority of the Board at the end of such period, or (4)
shareholders of the Company or the Bank approve a merger, consolidation, sale
or disposition of all or substantially all of the Company's or the Bank's
assets, or a plan of partial or complete liquidation. Whether a Change in
Control has occurred shall be decided by the Board of either the Company or
the Bank, in its reasonable, good faith discretion.
(ii) Executive shall be entitled to the benefits provided in
paragraphs (3), (4) and (5) of this Section 4(d) if after (or in connection
with) a Change in Control he experiences (1) an involuntary termination, (2) a
voluntary termination within twelve (12) months of a Change in Control,
provided that following the Change in Control he experienced a demotion, loss
of title, office or significant authority, reduction in his annual
compensation or benefits (other than a reduction affecting the Bank's
personnel generally), or a relocation of his principal place of employment by
more than 35 miles from its location immediately prior to the Change in
Control. Any termination of employment described in the prior sentence shall
be referred to a "Change in Control Termination." A termination of
Executive's employment because of death, disability, voluntary retirement or
termination for Cause shall not constitute a Change in Control Termination.
4
<PAGE>
(iii) Upon a Change in Control Termination the Bank shall pay
Executive (or in the event of his death after a Change in Control Termination,
but prior to payment, his beneficiary or beneficiaries, or his estate, as the
case may be) as severance pay or liquidated damages, or both, a sum equal to
2.99 times Executive's "base amount," as defined in Section 280G(b)(3) of the
Internal Revenue Code of 1986 ("Code"), as amended. Payment shall be in a lump
sum, paid within ten (10) days of Executive's Date of Termination.
(iv) Upon a Change in Control Termination the Bank shall provide
life, medical, dental and disability insurance coverage substantially
identical to the coverage maintained by the Bank for Executive prior to his
termination. In addition, Executive shall be entitled to receive the value of
employer contributions that would have been made on Executive's behalf over
the remaining term of this Agreement to any tax-qualified retirement plan
sponsored by the Bank as of the Date of Termination. Such coverage and
payments shall cease upon the expiration of thirty-six (36) months.
(v) Upon the occurrence of a Change in Control Termination,
Executive shall be entitled to receive benefits due him under, or contributed
by the Company or the Bank on his behalf, pursuant to any non-qualified
retirement, incentive, profit sharing, bonus, performance, disability or other
employee benefit plan maintained by the Bank or the Company on Executive's
behalf to the extent that such benefits are not otherwise paid to Executive
upon a Change in Control.
(vi) In the event the aggregate payments and benefits payable to
Executive under this Section 4(d), when added to any other payments or
benefits received or to be received by Executive in connection with a Change
in Control Termination, would constitute an "excess parachute payment" under
Section 280G of the Code, then, at the election of Executive, (1) such payments
and benefits shall be payable or provided to Executive over the minimum period
necessary to reduce the present value of such payments and benefits to an
amount which is one dollar ($1.00) less than three (3) times Executive's "base
amount," as defined under Section 280G(b)(3) of the Code, or (2) the payments
and benefits to be provided under this Section 4(d) shall be reduced to the
extent necessary to avoid treatment as an excess parachute payment, with the
allocation of the reduction among such payments and benefits to be determined
by Executive.
5. NOTICE
Any notice required under this Agreement shall be in writing and
delivered personally or sent by certified or registered mail, postage prepaid,
return receipt requested. Notice shall be considered given immediately when
delivered personally, or if mailed, three (3) days after the date of deposit
in the United States mail addressed to the party at its last known address.
Any party may, by notice given according to this Section 5, designate an
address or person for the receipt of notices.
6. RESTRICTIVE COVENANTS
(a) Covenant Not to Compete. Executive has been employed under an
Employment Agreement dated October 6, 1998 that includes a covenant not to
compete. Executive
5
<PAGE>
acknowledges that he remains bound by the terms of that covenant and that he
has an obligation not to compete in any capacity with the Bank or Company for
a period of one (1) year following termination of his employment with the
Bank.
(b) Covenant of Confidentiality. Executive shall keep secret and retain
in strictest confidence, and shall not, without the prior written consent of
the Bank, furnish, make available or disclose to any third party (except in
furtherance of the Bank's business activities and for the sole benefit of the
Bank) or use for the benefit of himself or any third party, any Confidential
Information. As used in this Agreement, "Confidential Information" shall mean
any information relating to the business or affairs of the Bank or its
business, including but not limited to information relating to financial
affairs of the Bank or its past, current or potential customers; information
relating to the Bank's operations, strategies and marketing plans; information
relating to the Bank's former or current employees; or other proprietary
information used by the Bank in connection with its business; provided,
however, that Confidential Information shall not include any information which
is in the public domain or becomes known in the industry through no wrongful
act on the part of Executive. Executive acknowledges that the Confidential
Information is vital, sensitive, confidential and proprietary to the Bank.
(c) Remedies. Executive acknowledges and agrees that the covenants set
forth in Section 6 (a) and (b) are reasonable and necessary for the
protection of the Bank's business interests, that irreparable injury will
result to the Bank if Executive breaches their terms, and that in the event of
Executive's actual or threatened breach of these covenants, the Bank may have
no adequate remedy at law. Executive accordingly agrees that in the event of
any actual or threatened breach by him of these covenants, the Bank is
entitled to immediate temporary injunctive and other equitable relief, without
bond and without the necessity of showing actual monetary damages, subject to
hearing as soon thereafter as possible. Nothing contained herein shall be
construed as prohibiting the Bank from pursuing any other remedies available
to it for such breach or threatened breach, including the recovery of any
damages that it is able to prove.
(d) Bonus Restriction Agreement. In addition and independent of the
above covenants, Executive agrees that for a period of one (1) year following
the termination or expiration of his employment with the Company (the
"Restrictive Period") for any reason, he shall not, directly or indirectly, as
employee, agent, consultant, member, stockholder, officer, director,
co-partner or in any other individual or representative capacity, own,
operate, manage, control, engage in, invest in or participate in any manner
in, act as a consultant or advisor to, render services for (alone or in
association with any person, firm, corporation or entity), or otherwise assist
any person or entity that competes with the Bank or Company; provided,
however, that nothing contained herein shall be construed to prevent Executive
from investing in the stock of any competing corporation listed on a national
securities exchange or traded in the over-the-counter market, but only if
Executive is not involved in the business of the corporation and if Executive
and his associates (as such term is defined in Regulation 14(A) promulgated
under the Securities Exchange Act of 1934, as in effect on the date hereof),
collectively, do not own more than an aggregate of five (5%) percent of the
stock of such corporation. The Bank and the Company's sole remedy for
Executive's breach of this Bonus Restriction Agreement shall be a complete
release of the Bank and the Company from any obligation to pay Executive any
compensation or
6
<PAGE>
other monies owed under this Agreement after the date Executive first breaches
this Bonus Restriction Agreement.
7. SOURCE OF PAYMENTS
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Bank. The Company, as its sole obligation
under this Agreement, guarantees all payments and the provision of all amounts
and benefits due hereunder to Executive and, if such payments are not timely
paid or provided by the Bank, such amounts and benefits shall be paid or
provided by the Company. Executive acknowledges that this Agreement is not
intended to create an employer-employee relationship between the Company and
Executive.
8. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Bank or any
predecessor of the Bank and Executive, except to the extent this Agreement
references and incorporates the terms of other agreements, plans or policies.
9. ASSIGNMENT
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and
any attempt, voluntary or involuntary, to affect any such action shall be
null, void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive, the Bank, the Company and their respective successors and
authorized assigns.
10. MODIFICATION AND WAIVER
This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto, except that the Board may approve and
institute an increase in Executive's compensation without a written amendment
to this Agreement. No term or condition of this Agreement shall be deemed to
have been waived, nor shall there by any estoppel against the enforcement of
any provision of this Agreement, except by written instrument of the party
charged with such waiver or estoppel. No written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of any term or condition for the future as to any act
other than that specifically waived.
11. SEVERABILITY
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, it shall not affect the enforceability of any
other provision or remaining portion of any
7
<PAGE>
provision of this Agreement, which shall remain in full force and effect. The
parties specifically authorize the trier of any dispute arising under the
Restrictive Covenants to enforce the Restrictive Covenants to the greatest
extent permissible under Oregon law, judicially modifying the Restrictive
Covenants if necessary.
12. GOVERNING LAW
To this greatest extent permissible, this Agreement shall be governed by
the laws of the State of Oregon without regard for that state's choice of law
principles.
13. ARBITRATION
To the greatest extent permissible by law, any dispute or controversy
arising under or in connection with this Agreement shall be resolved by
arbitration conducted before a panel of three arbitrators sitting in a
location selected by the employee within one hundred (100) miles from the
office of the Bank to which Executive is assigned as of the Effective Date, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction. Pending the initiation and completion of arbitration, however,
either party may seek immediate injunctive relief in a court of law to
specifically enforce the terms of this Agreement.
14. PAYMENT OF LEGAL FEES
The prevailing party in any arbitrated or litigated dispute or
controversy arising under or in connection with this Agreement shall be
entitled to recover from the nonprevailing party its reasonable attorneys'
fees and costs incurred as a result of the dispute or controversy, including
attorneys' fees and costs incurred in any appeals.
15. INDEMNIFICATION
The Bank shall provide Executive (Including his heirs , executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under law against all expenses and liabilities reasonably incurred
by him in connection with or arising out of any action, suit or proceeding in
which he may be involved by reason of his having been a director or officer of
the Bank (whether or not he continues to be a director or officer at the time
of incurring the expenses or liabilities), the expenses and liabilities to
include, but not be limited to, judgment, court costs and attorneys' fees and
the cost of reasonable settlements.
8
<PAGE>
IT IS SO AGREED:
PIONEER BANK, FSB EXECUTIVE
/s/ Stephen R. Whittemore /s/ Zane F. Lockwood
-------------------------------- -------------------------------------
By: Stephen R. Whittemore Zane F. Lockwood
Its: Chairman of the Board
Date: April 1, 2000 Date: April 1, 2000
OREGON TRAIL FINANCIAL CORP.
/s/ Stephen R. Whittemore
--------------------------------
By: Stephen R. Whittemore
Its: Chairman of the Board
Date: April 1, 2000
9
<PAGE>
Exhibit 10(f)
Amendment to the Pioneer Bank, FSB
Employee Severance Compensation Plan
<PAGE>
AMENDMENT TO THE PIONEER BANK, FSB
EMPLOYEE SEVERANCE COMPENSATION PLAN
Pursuant to Section 8.2 of the Pioneer Bank, FSB Employee Severance
Compensation Plan (the "Plan"), which authorizes amendments to the Plan, the
Bank hereby amends the Plan, effective May 23, 2000, by modifying Section 4.3
in its entirety to read as follows:
4.3 Amount of Payment
(a) Each participant who was a senior vice president of the Bank
immediately prior to the effective date of the Change in Control and
entitled to a Payment under this Plan shall receive from the Bank a
lump sum cash payment equal to one hundred and fifty
percent (150%) of the Participant's Annual Compensation.
(b) Each participant who was a vice president of the Bank
immediately prior to the effective date of the Change in Control and
entitled to a Payment under this Plan shall receive from the Bank a
lump sum cash payment equal to the Participant's Annual
Compensation.
(c) Each Participant who was an assistant vice president of the
Bank or a manager immediately prior to the effective date of the
Change in Control and entitled to a Payment under this Plan shall
receive from the Bank a lump sum cash payment equal to seventy-
five percent (75%) of the Participant's Annual Compensation.
(d) Each Participant (other than a Participant entitled to a
benefit under Sections 4.3(a), (b) and (c) of the Plan) entitled to
a Payment under this Plan shall receive from the Employer a lump sum
cash payment equal to the product of fifty percent (50%) of the
Participant's Monthly Compensation and the Participant's years of
service (including partial years rounded up to the nearest full
month) from the Participant's date of hire through the date of
termination. Notwithstanding anything herein to the contrary, (i)
the maximum payment under this Section 4.3(d) to a Participant shall
not exceed fifty percent (50%) of the Participant's Annual
Compensation and the (ii) minimum payment under this Section 4.3(d)
shall be the Participant's Monthly Compensation (determined without
regard to the Participant's period of service).
(e) The Participant shall not be required to mitigate damages on
the amount of the Payment by seeking other employment or otherwise,
nor shall the amount of such Payment be reduced by any compensation
earned by the Participant as a result of employment after
termination of employment hereunder.
<PAGE>
In all other respects the Plan shall remain unchanged and in full force
and effect.
To record the adoption of this Amendment to the Plan, the Bank has caused
this Amendment to be executed by an authorized corporate officer on May 23,
2000.
PIONEER BANK, FSB
By:
--------------------------------
Its:
--------------------------------
Page 2
<PAGE>
