Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
TIMBERLAND BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
TIMBERLAND BANCORP, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transactions applies:
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11 (a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
N/A
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(2) Form, schedule or registration statement no.:
N/A
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(3) Filing party:
N/A
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(4) Date filed:
N/A
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<PAGE>
[Timberland logo]
December 20, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Timberland Bancorp, Inc. ("Company"). The meeting will be held at the Elks
Lodge, 624 K Street, Hoquiam, Washington, on Thursday, January 25, 2001 at
1:00 p.m., local time.
The Notice of Annual Meeting of Stockholders and Proxy Statement
appearing on the following pages describe the formal business to be transacted
at the meeting. During the meeting, we will also report on the operations of
the Company. Directors and officers of the Company, as well as a
representative of Knight Vale & Gregory PLLC, the Company's independent
auditors, will be present to respond to appropriate questions of shareholders.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person and regardless of the number of shares
you own. To make sure your shares are represented, we urge you to complete
and mail the enclosed proxy card. If you attend the meeting, you may vote in
person even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
/s/Clarence E. Hamre
Clarence E. Hamre
President and Chief Executive Officer
<PAGE>
TIMBERLAND BANCORP, INC.
624 SIMPSON AVENUE
HOQUIAM, WASHINGTON 98550
(360) 533-4747
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 25, 2001
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Timberland Bancorp, Inc. ("Company") will be held at the Elks Lodge, 624 K
Street, Hoquiam, Washington, on Thursday, January 25, 2001, at 1:00 p.m.,
local time, for the following purposes:
(1) To elect three directors of the Company;
(2) The approval of the appointment of Knight Vale & Gregory PLLC as the
Company's independent auditors for the fiscal year ending September
30, 2001; and
(3) To consider and act upon such other matters as may properly come
before the meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Any action may be taken on the foregoing proposal at the meeting on the
date specified above or on any date or dates to which, by original or later
adjournment, the meeting may be adjourned. Stockholders of record at the
close of business on December 6, 2000 are entitled to notice of and to vote at
the meeting and any adjournments or postponements thereof.
You are requested to complete and sign the enclosed form of proxy, which
is solicited by the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend the meeting and
vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/MICHAEL R. SAND
MICHAEL R. SAND
CORPORATE SECRETARY
Hoquiam, Washington
December 20, 2000
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
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<PAGE>
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PROXY STATEMENT
OF
TIMBERLAND BANCORP, INC.
624 SIMPSON AVENUE
HOQUIAM, WASHINGTON 98550
(360) 533-4747
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ANNUAL MEETING OF STOCKHOLDERS
JANUARY 25, 2001
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Timberland Bancorp, Inc. ("Company") to
be used at the Annual Meeting of Stockholders of the Company ("Meeting"). The
Company is the holding company for Timberland Savings Bank, SSB ("Bank"). The
Meeting will be held at the Elks Lodge, 624 K Street, Hoquiam, Washington, on
Thursday, January 25, 2001, at 1:00 p.m., local time. This Proxy Statement
and the enclosed proxy card are being first mailed to shareholders on or about
December 20, 2000.
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VOTING AND PROXY PROCEDURE
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Shareholders Entitled to Vote. Stockholders of record as of the close of
business on December 6, 2000 ("Voting Record Date") are entitled to one vote
for each share of common stock ("Common Stock") of the Company then held. At
the close of the Voting Record Date the Company had 4,753,295 shares of Common
Stock issued and outstanding.
Quorum. The presence, in person or by proxy, of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum at the Meeting. Abstentions and broker
non-votes will be counted as shares present and entitled to vote at the
Meeting for purposes of determining the existence of a quorum.
Voting. The Board of Directors solicits proxies so that each shareholder
has the opportunity to vote on the proposal to be considered at the Meeting.
When a proxy card is returned properly signed and dated, the shares
represented thereby will be voted in accordance with the instructions on the
proxy card. Where no instructions are indicated, proxies will be voted FOR the
nominees for directors set forth below and FOR the approval of the appointment
of independent auditors set forth below. If a shareholder of record attends
the Meeting, he or she may vote by ballot.
The directors to be elected at the Meeting will be elected by a plurality
of the votes cast by shareholders present in person or by proxy and entitled
to vote. Pursuant to the Company's Articles of Incorporation, stockholders
are not permitted to cumulate their votes for the election of directors.
Votes may be cast for or withheld from each nominee. Votes that are withheld
and broker non-votes will have no effect on the outcome of the election
because directors will be elected by a plurality of the votes cast.
With respect to the other proposal to be voted upon at the Meeting,
stockholders may vote for or against the proposal or may abstain from voting.
Approval of the appointment of independent auditors requires the affirmative
vote of a majority of the shares of Common Stock present in person or by proxy
and entitled to vote. Broker non-votes will have no effect on the outcome of
this proposal. Abstentions, however, will have the same effect as a vote
against this proposal.
Revocation of a Proxy. Stockholders who execute proxies retain the right
to revoke them at any time. Proxies may be revoked by written notice
delivered in person or mailed to the Secretary of the Company or by filing a
later dated and signed proxy prior to a vote being taken on a proposal at the
Meeting. Attendance at the Meeting will not
<PAGE>
automatically revoke a proxy, but a shareholder in attendance may request a
ballot and vote in person, thereby revoking a prior granted proxy.
Participants in the Timberland Savings Bank, SSB ESOP. If a shareholder
is a participant in the Timberland Savings Bank, SSB Employee Stock Ownership
Plan ("ESOP"), the proxy card represents a voting instruction to the trustees
of the ESOP as to the number of shares in the participant's plan account.
Each participant in the ESOP may direct the trustees as to the manner in which
shares of Common Stock allocated to the participant's plan account are to be
voted. Unallocated shares of Common Stock held by the ESOP and allocated
shares for which no voting instructions are received will be voted by the
trustees in the same proportion as shares for which the trustees have received
voting instructions.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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Persons and groups who beneficially own in excess of 5% of the Company's
Common Stock are required to file certain reports with the Securities and
Exchange Commission ("SEC"), and provide a copy to the Company, disclosing
such ownership pursuant to the Securities Exchange Act of 1934, as amended
("Exchange Act"). Based on such reports, the following table sets forth, at
the close of business on the Voting Record Date, certain information as to
those persons who were beneficial owners of more than 5% of the outstanding
shares of Common Stock. Based on such reports, management knows of no persons
other than those set forth below who beneficially owned more than 5% of the
outstanding shares of Common Stock at the close of business on the Voting
Record Date. The table also sets forth, as of the close of business on the
Voting Record Date, certain information as to shares of Common Stock
beneficially owned by the Company's directors and "named executive officers"
and all directors and executive officers as a group.
Number of Shares Percent of Shares
Name Beneficially Owned (1) Outstanding
---- ---------------------- -----------
Beneficial Owners of More Than 5%
Timberland Savings Bank, SSB
Employee Stock Ownership Plan Trust 432,016 8.9%
Westport Asset Management, Inc.(2)
253 Riverside Avenue
Westport, Connecticut 06880 464,900 9.5
Directors
Andrea M. Clinton 8,652 *
Robert Backstrom 29,502 *
Richard R. Morris, Jr. 48,502 1.0
Peter J. Majar 23,502 *
Jon C. Parker 30,902 *
James C. Mason 36,502 *
David A. Smith -- --
(Table continued, and footnotes located on following page)
2
<PAGE>
Number of Shares Percent of Shares
Name Beneficially Owned (1) Outstanding
---- ---------------------- -----------
Named Executive Officers(3)
Clarence E. Hamre(4) 76,184(5) 1.6
Michael R. Sand (4) 50,008(5) 1.0
All Executive Officers and
Directors as a Group (11 persons) 327,366(5) 6.7%
----------------
* Less than one percent of shares outstanding.
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed
to be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he or she has voting and/or investment power with
respect to such security. The table includes shares owned by spouses,
other immediate family members in trust, shares held in retirement
accounts or funds for the benefit of the named individuals, and other
forms of ownership, over which shares the persons named in the table may
possess voting and/or investment power. Table assumes pro rata vesting of
stock options over a ten year period with the next 10% installment
vesting on January 29, 2001. However, the additional amount vested on
January 29, 2001 could increase to 20% if the Company meets three of four
established performance criteria items. These four performance criteria
items are: generating a return on assets which exceeds that of the median
of all thrifts in the 12th FHLB District having assets within $250
million of the Company; generating an efficiency ratio which is less than
that of the median of all thrifts in the 12th FHLB District having assets
within $250 million of the Company; generating a net interest margin
which exceeds the median of all thrifts in the 12th FHLB District having
assets within $250 million of the Company; and increasing earnings per
share over the prior fiscal year. The amounts shown also include the
following number of shares which the indicated individuals have the right
to acquire within 60 days of December 6, 2000 through the exercise of
stock options granted pursuant to the Company's 1999 Stock Option Plan:
Mr. Hamre, 29,757 shares; Mr. Sand, 23,805 shares; Ms. Clinton, 8,502
shares; Mr. Backstrom, 8,502 shares; Mr. Morris, 8,502 shares; Mr.
Majar, 8,502 shares; Mr. Parker, 8,502 shares; Mr. Mason, 8,502 shares;
Mr. Smith, 0 shares; and all executive officers and directors as a group,
118,324 shares.
(2) Based on an amended SEC Schedule 13G dated February 16, 2000, that
discloses sole voting and dispositive power as to 584,900 shares, and a
letter from Westport Asset Management, Inc. to the Federal Reserve Board
regarding the sale of 120,000 shares of the Company's Common Stock.
(3) SEC regulations define the term "named executive officers" to include
all individuals serving as chief executive officer during the most
recently completed fiscal year, regardless of compensation level, and
the four most highly compensated executive officers, other than the
chief executive officer, whose total annual salary and bonus for the
last completed fiscal year exceeded $100,000. Messrs. Hamre and Sand
were the Company's only "named executive officers" for the fiscal year
ended September 30, 2000.
(4) Messrs. Hamre and Sand are also directors of the Company.
(5) Includes an approximation of the number of shares in the participant's
ESOP account. Includes initial purchase of shares of Common Stock held
in the Timberland Savings Bank 401(k) Profit Sharing Plan.
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Company's Board of Directors consists of nine members. On October
13, 2000, Mr. Alan E. Smith, a Director since 1992, passed away. In connection
with Mr. Smith's death, on November 21, 2000, the Board of Directors appointed
David A. Smith to fill the unexpired term of Alan E. Smith.
3
<PAGE>
In accordance with the Company's Articles of Incorporation, the Board is
divided into three classes with three-year staggered terms, with approximately
one-third of the directors elected each year. Three directors have been
nominated to be elected at the Meeting to serve for the respective terms set
forth in the table, or until their respective successors have been elected and
qualified.
It is intended that the proxies solicited by the Board of Directors will
be voted for the election of the nominees named in the following table. If
any nominee is unable to serve, the shares represented by all valid proxies
will be voted for the election of such substitute as the Board of Directors
may recommend or the Board of Directors may adopt a resolution to amend the
Bylaws and reduce the size of the Board. At this time the Board of Directors
knows of no reason why any nominee might be unavailable to serve.
The Board of Directors recommends a vote "FOR" the election of Messrs.
Sand, Majar and Smith.
The following table sets forth certain information regarding the nominees
for election at the Meeting.
Year First Elected or Term to
Name Age(1) Appointed Director(2) Expire
---- ------ --------------------- ------
BOARD NOMINEES
Michael R. Sand 46 1993 2003(3)
Peter J. Majar 73 1987 2003(3)
David A. Smith 45 2000 2003(3)
DIRECTORS CONTINUING IN OFFICE
Richard R. Morris, Jr. 63 1992 2001
Jon C. Parker 51 1992 2001
James C. Mason 45 1993 2001
Clarence E. Hamre 66 1969 2002
Andrea M. Clinton 43 1996 2002
Robert Backstrom 71 1992 2002
--------------
(1) As of September 30, 2000.
(2) Includes prior service on the Board of Directors of the Bank.
(3) Assuming the individual is elected.
The present principal occupation and other business experience during the
last five years of each nominee for election and each director continuing in
office is set forth below:
Michael R. Sand has been affiliated with the Bank since 1977 and has
served as Executive Vice President and Secretary since 1993.
Peter J. Majar is retired as General Manager of Hoquiam Plywood Co.,
Inc., a plywood manufacturer, and former President of the Plywood Marketing
Association and President of PMA Transportation Company, Vancouver,
Washington.
David A. Smith is a pharmacist and the owner of Harbor Drug, Inc., a
retail pharmacy located in Hoquiam, Washington.
Richard R. Morris, Jr. is the former owner of Dick's Food Centers, Inc.,
retail grocery stores located in Ocean Shores and Raymond, Washington.
4
<PAGE>
Jon C. Parker is a member of the law firm of Parker, Johnson & Parker
P.S., Hoquiam, Washington, which serves as general counsel to the Bank.
James C. Mason is the President and owner of Mason Timber Co., Aberdeen,
Washington. Mr. Mason also is the owner of Mason Trucking, Mason Properties,
MASCO Petroleum and Mason Aviation, all of which are located in Aberdeen,
Washington.
Clarence E. Hamre has been affiliated with the Bank since 1969 and has
served as President and Chief Executive Officer since 1969.
Andrea M. Clinton, an interior designer, is the owner of AMC Interiors,
Olympia, Washington.
Robert Backstrom is retired after serving as owner of Price & Price Real
Estate and Insurance, Montesano, Washington, for 31 years.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Boards of Directors of the Company and the Bank conduct their
business through meetings of the Boards and through their committees. During
the fiscal year ended September 30, 2000, the Board of Directors of the
Company held 13 meetings, and the Board of Directors of the Bank held 26
meetings. No director of the Company or the Bank attended fewer than 75% of
the total meetings of the Boards and committees on which such person served
during this period, except for Director Morris who missed 14 of these 39
meetings because he was out of town.
Committees of the Company's Board. The Company's Board of Directors
established Audit, Nominating and Compensation Committees.
The Audit Committee, consisting of Directors Backstrom, Majar and Parker,
receives and reviews all reports prepared by the Company's external and
internal auditor. The Audit Committee met four times during the fiscal year
ended September 30, 2000.
The full Board of Directors acts as a Nominating Committee for the annual
selection of management's nominees for election as directors of the Company.
The full Board of Directors met once in its capacity as Nominating Committee
during the fiscal year ended September 30, 2000.
The Compensation Committee, consisting of Directors Parker and Clinton,
makes recommendations to the full Board of Directors concerning employee
compensation. The Compensation Committee meets as needed and met once during
the fiscal year ended September 30, 2000.
Committees of the Bank's Board. The Bank's Board of Directors has
established Audit, Salary and Nominating Committees, among others.
The Audit Committee, consisting of Directors Backstrom, Majar and Parker,
is responsible for meeting with the Bank's internal and external auditors to
discuss the results of the annual audit and any related matters. The Audit
Committee is also responsible for the Bank's employee compliance issues. The
Board also receives and reviews the reports and findings and other information
presented to them by the Bank's outside auditor. The Audit Committee meets as
needed and met four times during the fiscal year ended September 30, 2000.
The Compensation Committee, consisting of Directors Clinton and Parker,
makes recommendations to the full Board of Directors concerning employee
compensation. The Compensation Committee meets as needed and met once during
the fiscal year ended September 30, 2000.
5
<PAGE>
The full Board of Directors acts as a Nominating Committee for the annual
selection of management's nominees for election as directors of the Bank. The
full Board of Directors met once in its capacity as Nominating Committee
during the year ended September 30, 2000.
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AUDIT COMMITTEE CHARTER AND REPORT CONCERNING FINANCIAL MATTERS
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Audit Committee Charter
The Audit Committee operates pursuant to a Charter approved by the
Company's Board of Directors. The Audit Committee reports to the Board of
Directors and is responsible for overseeing and monitoring financial
accounting and reporting, the system of internal controls established by
management and the audit process of the Company. The Audit Committee Charter
sets out the responsibilities, authority and specific duties of the Audit
Committee. The Charter specifies, among other things, the structure and
membership requirements of the Committee, as well as the relationship of the
Audit committee to the independent accountants, the internal audit department,
and management of the Company. A copy of the Audit Committee Charter is
attached to this Proxy Statement as Appendix A.
Report of the Audit Committee
In connection with the specific activities performed by the Committee in
its oversight role, it has issued the following report as of December 5, 2000:
(1) The Audit Committee has reviewed and discussed the audited
financial statements as of and for the year ended September 30,
2000 with management of the Company.
(2) The Audit Committee has discussed with the independent auditors
the matters required to be discussed by SAS 61 and SAS 90.
(3) The Audit Committee has received from the independent accountants,
as required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committee, (i) a written
disclosure, indicating all relationships, if any, between the
independent auditor and its related entities and the Company and
its related entities which, in the auditor's professional
judgment, reasonably may be thought to bear on the auditor's
independence, and (ii) a letter from the independent auditor
confirming that, in its professional judgment, it is independent
of the Company; and the Audit Committee has discussed with the
auditor the auditor's independence from the Company.
Based on the review and discussions referred to in paragraphs (1) through
(3) above, the Audit Committee recommended to the Board of Directors that the
audited financial statements should be included in the Company's Annual Report
on Form 10-K for the fiscal year ended September 30, 2000, for filing with the
Securities and Exchange Commission.
The Audit Committee:
Robert Backstrom
Peter J. Majar (Chairman)
Jon C. Parker
6
<PAGE>
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DIRECTORS' COMPENSATION
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Fees
Except for Directors Hamre and Sand, each director receives $750 per
month and $375 for each regular Board meeting attended. Each director also
receives $200 for each special Board meeting or committee meeting attended.
Director fees totalled $124,425 for the year ended September 30, 2000.
Deferred Compensation Plan
The Company maintains a deferred compensation plan for the benefit of
directors who may elect to defer receipt of all or a portion of their fees
until retirement or termination of service. At the director's election,
benefits are distributed in a lump sum or installment payments. At September
30, 2000, none of the Company's directors had elected to participate in the
plan.
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EXECUTIVE COMPENSATION
------------------------------------------------------------------------------
Summary Compensation Table
The following information is provided for Messrs. Hamre and Sand.
Long-Term
Compen-
sation
Annual Compensation Awards
-------------------------------- ------
All Other Securities All Other
Compen- Underlying Compen-
Name and Position Year Salary Bonus sation(1) Options(2) sation(3)
----------------- ---- ------ ----- --------- ---------- ---------
Clarence E. Hamre 2000 $170,000 $44,845 $ -- -- $41,656
President and Chief 1999 158,106 41,783 -- 99,188 61,384
1998 150,577 33,389 -- -- 85,443
Michael R. Sand 2000 110,000 22,422 -- -- 34,350
Executive Vice 1999 99,533 20,891 -- 79,350 32,371
President and 1998 102,538(4) 16,644 -- -- 30,786
Secretary
-----------
(1) Does not include certain benefits, the aggregate amounts of which do not
exceed 10% of total annual salary and bonus.
(2) Table assumes pro rata vesting over a ten year period with the next 10%
installment vesting on January 29, 2001. However, the amount vested on
January 29, 2001 could increase to 20% if the Company meets three of four
established performance criteria items. These four performance criteria
items are: generating a return on assets which exceeds that of the median
of all thrifts in the 12th FHLB District having assets within $250
million of the Company; generating an efficiency ratio which is less than
that of the median of all thrifts in the 12th FHLB District having assets
within $250 million of the Company; generating a net interest margin
which exceeds the median of all thrifts in the 12th FHLB District having
assets within $250 million of the Company; and increasing earnings per
share over the prior fiscal year.
(footnotes continued on following page)
7
<PAGE>
(3) In 2000, includes employer profit sharing contribution $16,000) and
ESOP contribution ($25,656, based on the fair market value of the
shares) for Mr. Hamre; and employer profit sharing contribution
($13,242) and ESOP contribution ($21,108, based on the fair market value
of the shares) for Mr. Sand.
(4) Includes compensation received in lieu of vacation of $7,888.
Option Grants in Last Fiscal Year
No stock options were granted to the named executive officers during the
fiscal year ended September 30, 2000.
Option Exercise/Value Table
The following information with respect to options exercised during the
fiscal year ended September 30, 2000, and remaining unexercised at the end of
the fiscal year, is presented for the named executive officers.
<TABLE>
Number of Value of Unexercised
Securities Underlying In-the-Money Options
Shares Unexercised Options at Fiscal Year End($)(1)
Acquired on Value -------------------------- ----------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Clarence E. Hamre -- $ -- 19,838 79,350 $ -- $ --
Michael R. Sand -- -- 15,870 63,480 -- --
------------
(1) Value of unexercised in-the-money options equals market value of
shares covered by in-the-money options on September 30, 2000, less
the option exercise price. Options are in-the-money if the market
value of the shares covered by the options is greater than the option
exercise price.
</TABLE>
Deferred Compensation Agreement. The Bank has entered into a deferred
compensation agreement with Mr. Hamre which provides that, commencing upon his
retirement at or after age 65, Mr. Hamre will receive $2,000 per month for
life. At Mr. Hamre's death, the monthly benefit would be payable to his
surviving spouse until the earlier to occur of her death or 60 months. At
September 30, 2000, the Bank had accrued $239,000 in compensation expense with
respect to its obligation to Mr. Hamre under the agreement.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or
the Exchange Act that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following Report of the Compensation
Committee and Performance Graph shall not be incorporated by reference into
any such filings.
Report of the Compensation Committee. The Compensation Committee of the
Company and the Compensation Committee of the Bank ("Committees") administer
all policies that govern executive compensation for the Company and the Bank.
Since the Company has no employees other than Bank employees who perform
services on behalf of the Company without additional compensation, the Bank's
Compensation Committee evaluates individual executive performance,
compensation policies and salaries. The Bank's Compensation Committee is
responsible for evaluating the performance of the Chief Executive Officer of
the Bank, while the Chief Executive Officer of the Bank evaluates the
performance of other senior officers of the Bank and makes recommendations to
the Committee regarding their compensation levels. The Company's executive
compensation policies are intended to retain and attract key executives who
are vital to the success of the Company and Bank by providing a compensation
package that is competitive in the financial industry and motivational to each
individual executive.
8
<PAGE>
Currently, the compensation for executive officers consists principally
of a base salary and bonus. In addition, the Bank maintains a profit sharing
pension plan for all qualifying employees and provides opportunities for
employee ownership of Timberland Bancorp, Inc. stock through participation in
an employee stock ownership plan. The Bank also maintains a deferred
compensation agreement with the Chief Executive Officer.
Base Salary. The Bank's Board of Directors approves an annual base
salary for all senior officers and executive officers, based upon
recommendations from the Bank's Compensation Committee. Annual base salaries
are generally effective October 1st of each year. Factors considered in
setting base salaries include the executive's performance, the Company's and
the Bank's overall performance and compensation levels in the financial
industry, among other factors.
Annual Incentive Bonus. The Bank maintains a discretionary bonus plan,
which is based on the Bank's net income for each fiscal year. Under the plan,
Chief Executive Officer Clarence E. Hamre receives 1.0% of the Bank's net
income and Executive Vice President Michael R. Sand receives 0.5% of the
Bank's net income, and the remaining employees receive 2.84% of the Bank's net
income, distributed based upon each employee's salary to total employees'
salaries.
Profit Sharing Pension Plan. The Bank maintains a tax-qualified profit-
sharing plan for the benefit of employees with one year of service who have
attained age 21. The Bank's annual contribution is 10% of a qualifying
employee's compensation.
Executive Officer Compensation. During the fiscal year ended September
30, 2000, the base salary of the Company's President and Chief Executive
Officer, Clarence E. Hamre, was $170,000. In addition, he received an
incentive bonus of $44,845 and was credited with $41,656 in other compensation
as set forth in the preceding Summary Compensation Table. This resulted in
total compensation of $256,501, which represents a 1.8% decrease from the
previous year. The Board of Directors believes that Mr. Hamre's compensation
is appropriate based on the Bank's compensation policy, consideration of
salaries for similar positions in the financial industry and the Bank's
performance during the fiscal year.
During the fiscal year ended September 30, 2000, the base salary of the
Company's Executive Vice President, Michael R. Sand, was $110,000. In
addition, he received an incentive bonus of $22,422 and was credited with
$34,350 in other compensation as set forth in the preceding Summary
Compensation Table. This resulted in total compensation of $166,772, which
represents a 9.1% increase from the previous year. The Board of Directors
believes that Mr. Sand's compensation is appropriate based on the Bank's
performance during the fiscal year.
Compensation Committee of the Company and the Bank consisting of:
/s/ Jon C. Parker
/s/ Andrea M. Clinton
Compensation Committee Interlocks and Insider Participation. No
executive officer of the Company or the Bank has served as a member of the
compensation committee of another entity, one of whose executive officers
served on the Personnel Committee. No executive officer of the Company or the
Bank has served as a director of another entity, one of whose executive
officers served on the Personnel Committee. No executive officer of the
Company or the Bank has served as a member of the compensation committee of
another entity, one of whose executive officers served as a director of the
Company or the Bank.
9
<PAGE>
Performance Graph. The following graph compares the cumulative total
shareholder return on the Company's Common Stock with the cumulative total
return on the Nasdaq U.S. Companies Index and with the SNL $250 to $500
Million Asset Thrift Index, a peer group index. Total return assumes the
reinvestment of all dividends. The base amount for the Company's Common Stock
is $14.50 per share, which was the closing price on the initial day of trading
on January 13, 1998. The initial offering price for the Company's Common
Stock was $10.00 per share.
[Graph appears here]
01-13-98 3/31/98 06-30-98 09-30-98 09/30/99 09-30-00
-------- ------- -------- -------- -------- --------
Timberland
Bancorp, Inc. $100.00 $123.28 $114.18 $ 91.20 $ 81.21 $ 88.04
Nasdaq U.S.
Companies Index 100.00 119.12 123.39 110.44 180.42 239.53
SNL $250 to
$500 Million
Thrift Index 100.00 110.21 105.26 87.40 108.73 115.35
------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
------------------------------------------------------------------------------
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than 10% of any registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the SEC. Executive officers, directors and greater
than 10% shareholders are required by regulation to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms it has received
and written representations provided to the Company by the above referenced
persons, the Company believes that during the fiscal year ended September 30,
10
<PAGE>
2000 all filing requirements applicable to its reporting officers, directors
and greater than 10% shareholders were properly and timely complied with
except for Dean J. Brydon, Chief Financial Officer of the Company and the
Bank. Mr. Brydon inadvertently failed to file a Form 3, Statement of
Beneficial Ownership of Securities, when he became an officer of the Company
and the Bank and became subject to the reporting requirements of Section 16(a)
of the Exchange Act. Mr. Brydon became an officer of the Company and the Bank
in January 2000 and subsequently filed a Form 3 on December 5, 2000.
------------------------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT
------------------------------------------------------------------------------
Current law requires that all loans or extensions of credit to executive
officers and directors must be made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons (unless the loan or extension of credit is
made under a benefit program generally available to all other employees and
does not give preference to any insider over any other employee) and does not
involve more than the normal risk of repayment or present other unfavorable
features. The aggregate amount of loans by the Bank to its executive officers
and directors was approximately $807,000 at September 30, 2000. Such loans
(i) were made in the ordinary course of business, (ii) were made on
substantially the same terms and conditions, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
the Bank's other customers, or were available to all other employees under the
Bank's employee loan program; and (iii) did not involve more than the normal
risk of collectibility or present other unfavorable features when made.
Director Parker is a member of the law firm of Parker, Johnson & Parker,
P.S., which serves as general counsel to the Bank. The Bank paid legal fees
of approximately $36,952 to the firm during the fiscal year ended September
30, 2000 for services rendered to the Bank.
Director Clinton is the owner of AMC Interiors, which periodically does
interior design work for the Bank. The Bank paid AMC Interiors approximately
$11,388 for supplies and services provided during the fiscal year ended
September 30, 2000.
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AUDITORS
------------------------------------------------------------------------------
Knight Vale & Gregory PLLC, independent public accountants, was the
Company's independent auditors for the fiscal year ended September 30, 2000.
The Board of Directors has appointed Knight Vale & Gregory PLLC as independent
auditors for the fiscal year ending September 30, 2001, subject to approval by
stockholders. A representative of Knight Vale & Gregory PLLC will be present
at the Meeting to respond to appropriate questions from shareholders and will
have the opportunity to make a statement if he or she so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE APPOINTMENT OF KNIGHT VALE & GREGORY PLLC AS INDEPENDENT
AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2001.
------------------------------------------------------------------------------
OTHER MATTERS
------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect
thereof in accordance with the judgment of the person or persons voting the
proxies.
11
<PAGE>
------------------------------------------------------------------------------
MISCELLANEOUS
------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy material
to the beneficial owners of the Company's Common Stock. In addition to
solicitations by mail, directors, officers and regular employees of the
Company may solicit proxies personally or by telephone without additional
compensation.
The Company's Annual Report to Stockholders, which includes the Company's
Annual Report on Form 10-K as filed with the SEC, has been mailed to
stockholders as of the close of business on the Voting Record Date. Any
stockholder who has not received a copy of such Annual Report may obtain a
copy by writing to the Secretary of the Company. The Annual Report is not to
be treated as part of the proxy solicitation material or as having been
incorporated herein by reference.
------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy solicitation
materials for next year's Annual Meeting of Stockholders, any stockholder
proposal to take action at such meeting must be received at the Company's main
office at 624 Simpson Avenue, Hoquiam, Washington, no later than August 23,
2001. Any such proposals shall be subject to the requirements of the proxy
solicitation rules adopted under the Exchange Act.
The Company's Articles of Incorporation generally provide that
shareholders will have the opportunity to nominate directors of the Company if
such nominations are made in writing and are delivered to the Secretary of the
Company not less than 30 days nor more than 60 days before the annual meeting
of shareholders; provided, however, if less than 31 days notice is given, such
notice shall be delivered to the Secretary of the Company no later than the
close of the tenth day following the date on which notice of the meeting was
mailed to shareholders. The notice must set forth (i) the name, age, business
address and, if known, residence address of each nominee for election as a
director, (ii) the principal occupation or employment of each nominee, (iii)
the number of shares of stock of the Company which are beneficially owned by
each such nominee, (iv) such other information as would be required to be
included in a proxy statement soliciting proxies for the election of the
proposed nominee pursuant to the Exchange Act, including, without limitation,
such person's written consent to being named in the proxy statement as a
nominee and to serving as a director, if elected, and (v) as to the
shareholder giving such notice (a) his or her name and address as they appear
on the Company's books and (b) the class and number of shares of the Company
which are beneficially owned by such shareholder.
BY ORDER OF THE BOARD OF DIRECTORS
/S/MICHAEL R. SAND
MICHAEL R. SAND
CORPORATE SECRETARY
Hoquiam, Washington
December 20, 2000
12
<PAGE>
APPENDIX A
TIMBERLAND BANCORP, INC. June 8, 2000
AUDIT COMMITTEE CHARTER
PURPOSE
This Charter sets forth:
(1) The scope of the Audit Committee's responsibilities, and how it carries
out those responsibilities, including structure, processes and
membership requirements;
(2) The Audit Committee's responsibility for ensuring its receipt from the
outside auditors of a formal written statement delineating all
relationships between the auditor and Timberland Bancorp, Inc. ("the
Company") consistent with Independence Standards Board Standard No. 1
and the Audit Committee's responsibility for actively engaging in a
dialog with the auditor with respect to any disclosed relationships or
services that may impact the objectivity and independence of the auditor
and for taking, or recommending that the full board take, appropriate
action to (ensure) oversee the independence of the outside auditor; and
(3) The outside auditor's ultimate accountability to the Board of Directors
and the Audit Committee, as representatives of shareholders and these
shareholder representatives' ultimate authority and responsibility to
select, evaluate, and where appropriate, replace the outside auditor.
STRUCTURE AND MEMBERSHIP REQUIREMENTS
The Audit Committee shall have a minimum of three members, comprised solely of
independent directors, each of whom is able to read and understand fundamental
financial statements, including the Company's balance sheet, income statement
and cash flow statement or will be able to do so within a reasonable period of
time after his or her appointment to the Audit Committee. At least one member
of the Audit Committee will have had past employment experience in finance or
accounting, requisite professional certification in accounting, or other
comparable experience or background which results in the individual's
financial sophistication, including being or having been a chief executive
officer, chief financial officer or other senior officer with financial
oversight responsibilities.
CONTINUOUS ACTIVITIES - GENERAL
(1) Provide an open avenue of communication between the independent auditor,
the internal audit function, and the Board of Directors.
(2) Meet four times per year or more frequently as circumstances require.
The Committee may ask members of management or others to attend meetings
and provide pertinent information as necessary.
(3) Confirm and assure the independence of the independent auditor and the
objectivity of the internal auditor.
(4) Review with the independent auditor and the internal auditor the
coordination of audit efforts to assure completeness of coverage,
reduction of redundant efforts, and the effective use of audit
resources.
(5) Inquire of management, the independent auditor and the internal auditor
about significant risks or exposures, and assess the steps management
has taken to minimize such risk to the Company.
A-1
<PAGE>
(6) Consider and review with the independent auditor and the internal
auditor:
a. The adequate of the Company's internal controls including
computerized information system controls and security.
b. Related findings and recommendations of the independent auditor
and the internal auditor together with management's responses.
(7) Consider and review with management, the internal auditor and the
independent auditor:
a. Significant findings during the year, including the status of
previous audit recommendations.
b. Any difficulties encountered in the course of audit work including
any restrictions on the scope of activities or access to required
information.
c. Any changes required in the planned scope of the Internal Audit
plan.
d. The Internal Audit charter, budget and staffing.
(8) Meet periodically with the independent auditor, the internal auditor and
management in separate executive sessions to discuss any matters that
the Committee or these groups believe should be discussed privately with
the Audit Committee.
(9) Report periodically to the Board of Directors on significant results of
the foregoing activities.
(10) Instruct the independent auditor that the Board of Directors, as the
shareholders' representative, is the auditor's client.
CONTINUOUS ACTIVITIES - RE: REPORTING SPECIFIC POLICIES
(1) Advise financial management and the independent auditor they are
expected to provide a timely analysis of significant current financial
reporting issues and practices.
(2) Provide that financial management and the independent auditor discuss
with the audit committee their qualitative judgments about the
appropriateness, not just the acceptability, of accounting principles
and financial disclosure practices used or proposed to be adopted by the
Company and, particularly, about the degree of aggressiveness or
conservatism of its accounting principles and underlying estimates.
(3) Inquire as to the auditor's independent qualitative judgments about the
appropriateness, not just the acceptability, of the accounting
principles and the clarity of the financial disclosure practices used or
proposed to be adopted by the Company.
(4) Inquire as to the auditor's views about whether management's choices of
accounting principles are conservative, moderate, or aggressive from the
perspective of income, asset and liability recognition, and whether
those principles are common practices or are minority practices.
(5) Determine, as regards to new transactions or events, the auditor's
reasoning for the appropriateness of the accounting principles and
disclosure practices adopted by management.
(6) Assure that the auditor's reasoning is described in determining the
appropriateness of changes in accounting principles and disclosure
practices.
(7) Inquire as to the auditor's views about how the Company's choices of
accounting principles and disclosure practices may affect shareholders
and public views and attitudes about the Company.
A-2
<PAGE>
SCHEDULED ACTIVITIES
(1) Recommend the selection of the independent auditor for approval by the
Board of Directors, approve the compensation of the independent auditor,
and review and approve the discharge of the independent auditor.
(2) Consider, in consultation with the independent auditor and internal
auditor, the audit scope and plan of the independent auditor and the
internal auditors.
(3) Review with management and the independent auditor the results of annual
audits and quarterly reviews and related comments in consultation with
the Board of Directors or other committees as deemed appropriate
including:
a. The independent auditor's audit of the Company's annual financial
statements, accompanying footnotes and its report thereon.
b. Any significant changes required in the independent auditor's
audit plans.
c. Any difficulties or disputes with management encountered during
the course of the audit.
d. Other matters related to the conduct of the audit, which are to be
communicated to the Audit Committee under Generally Accepted
Auditing Standards.
(4) Review with management and the independent accountant, the interim
financial reports before they are filed with the SEC or other
regulators.
(5) Review annually with the independent auditor and the internal auditor
the results of the monitoring of compliance with the Company's code of
conduct.
(6) Describe in the Company's Annual Report and/or Proxy Statement the Audit
Committee's composition and responsibilities, and how they were
discharged.
(7) Arrange for the independent auditor to be available to the full Board of
Directors at least annually to help provide a basis for the board to
recommend to shareholders the appointment of the auditor.
(8) Assure that the auditor's reasoning is described in accepting or
questioning significant estimates by management.
(9) Review and update the Committee's Charter annually.
"WHEN NECESSARY" ACTIVITIES
(1) Review and concur in the appointment, replacement, reassignment, or
dismissal of the internal auditor.
(2) Review and approve requests for any management consulting engagement to
be performed by the Company's independent auditor and be advised of any
other study undertaken at the request of management that is beyond the
scope of the audit engagement letter.
(3) Review periodically with general counsel legal and regulatory matters
that may have a material impact on the Company's financial statements,
compliance policies and programs.
(4) Conduct or authorize investigations into any matters within the Audit
Committee's scope of responsibilities. The Audit Committee shall be
empowered to retain independent counsel and other professionals to
assist in the conduct of any investigation.
* * * * *
A-3
<PAGE>
REVOCABLE PROXY
TIMBERLAND BANCORP, INC.
------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 25, 2001
------------------------------------------------------------------------------
The undersigned hereby appoints the official Proxy Committee of the Board
of Directors of Timberland Bancorp, Inc. with full powers of substitution, as
attorneys and proxies for the undersigned, to vote all shares of common stock
of Timberland Bancorp, Inc. ("Company") which the undersigned is entitled to
vote at the Annual Meeting of Stockholders ("Meeting"), to be held at the Elks
Lodge, 624 K Street, Hoquiam, Washington, on Thursday, January 25, 2001, at
1:00 p.m., local time, and at any and all adjournments thereof, as indicated.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS
IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS
PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
(Continued and to be signed on the reverse side.)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
TIMBERLAND BANCORP, INC.
January 25, 2001
Please Detach and Mail in the Envelope Provided
------------------------------------------------------------------------------
[ X ] Please mark your
Votes as in this
Example
<PAGE>
<TABLE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
VOTE
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C>
1. The election as [ ] [ ] Nominees: 2. The approval of the appoint- [ ] [ ] [ ]
director of the Michael R. Sand ment of Knight Vale & Gregory
nominees listed Peter J. Majar PLLC as independent auditors
at right (except as marked to David A. Smith for the fiscal year ending
the contrary below). September 30, 2001.
3. In their discretion, upon such other matters
------------------------------ as may properly come before the meeting.
The Board of Directors recommends a vote
"FOR" the above proposals.
INSTRUCTIONS: To withhold your vote for any Should the undersigned be present and elect to
individual nominee, write the nominee's name vote at the Meeting or at any adjournment thereof
on the line below. and after notification to the Secretary of the
Company at the Meeting of the shareholder's
-------------------------------------------- decision to terminate this proxy, then the power of
said attorneys and proxies shall be deemed
terminated and of no further force and effect.
The undersigned acknowledges receipt from the
Company prior to the execution of this proxy of the
Notice of Annual Meeting of Stockholders, a Proxy
Statement for the Annual Meeting of Stockholders,
and the 2000 Annual Report to Stockholders.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY
PROMPTLY IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Dated:
--------------------- -------------------- -------------------- ---------------------- ---------------
Signature of Print Name of Signature of Print Name of
Shareholder Shareholder Shareholder Shareholder
Please sign exactly as your name appears on this proxy card. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title. If shares are held jointly, each holder
should sign.
</TABLE>
<PAGE>
