<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
CITIZENS BANCORP/OR
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] 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
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
CITIZENS BANCORP
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date of Meeting: April 20, 1999
The Annual Meeting of the shareholders of Citizens Bancorp ("Bancorp") will be
held on April 20, 1999 at 7:00 p.m. Pacific Time, in the lobby of Citizens
Bank's main office, 275 Southwest Third Street, Corvallis, Oregon 97333. The
following four items are scheduled to be considered and voted on at the Annual
Meeting:
- The election of three (3) directors of Bancorp to serve for three-year
terms beginning April 20, 1999.
- The approval of an amendment to Bancorp's Articles of Incorporation to
increase Bancorp's authorized shares of its common stock from
5,000,000 to 10,000,000.
- The approval of an Incentive Stock Option Plan authorizing Bancorp to
issue incentive compensation in the form of stock options.
- The approval of a Stock Bonus Plan authorizing Bancorp to issue
incentive compensation in the form of stock bonuses.
The management of Bancorp does not intend to present any other business at the
Annual Meeting except as described above, and is not aware of any other matters
to be brought before the Annual Meeting by shareholders. If any other matters
are properly brought before the Annual Meeting, it is the intention of the
persons named as proxies for voting purposes to vote in accordance with their
best judgment.
Only shareholders of record as of the close of business on March 1, 1999 will be
entitled to vote at the Annual Meeting.
YOU WILL FIND ENCLOSED A FORM OF PROXY AND A RETURN ENVELOPE WITH YOUR NAME AND
ADDRESS. The proxy is solicited on behalf of the Board of Directors of Bancorp.
Each properly completed proxy returned in time for voting at the Annual Meeting
will be voted in accordance with the instructions provided in the proxy. If no
instructions are provided, the proxy will be voted in favor of management's
nominees for director, in favor of the other proposals described above, and in
the discretion of management as to other matters that may properly be raised at
the Annual Meeting.
You are cordially invited to attend the Annual Meeting in person. HOWEVER,
WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE COMPLETE, DATE, SIGN, AND MAIL THE
ENCLOSED PROXY TO AVOID THE EXPENSE OF FURTHER SOLICITATIONS. A MAJORITY OF ALL
ISSUED AND OUTSTANDING SHARES MUST BE REPRESENTED AT THE ANNUAL MEETING IN ORDER
TO TRANSACT BUSINESS. REGARDLESS OF HOW MANY SHARES YOU OWN, YOUR PROXY IS
IMPORTANT IN FULFILLING THE VOTING REQUIREMENT.
If you attend the Annual Meeting, you may withdraw your proxy and vote in
person. In addition, you may revoke the proxy at any time prior to its exercise
by written notification to Bancorp or by timely submission of a proxy bearing a
later date. A shareholder who attends the Annual Meeting need not revoke the
proxy and vote in person unless the shareholder so elects.
BY ORDER OF THE BOARD OF DIRECTORS
William V. Humphreys
President and Chief Executive Officer,
Citizens Bancorp
March 10, 1999
<PAGE> 3
PROXY STATEMENT
CITIZENS BANCORP 1999 ANNUAL MEETING
OF SHAREHOLDERS
Date of Proxy Statement: March 10, 1999
ANNUAL MEETING INFORMATION
PURPOSES OF ANNUAL MEETING
This Proxy Statement (the "Proxy Statement") is furnished by Citizens
Bancorp ("Bancorp") to its shareholders in connection with the solicitation of
proxies by the Board of Directors of Bancorp for use at the 1999 annual meeting
(the "Annual Meeting") of Bancorp shareholders. The Proxy Statement and the
accompanying form of proxy is being mailed to Bancorp shareholders on or before
April 1, 1999.
At the Annual Meeting, shareholders will consider and vote upon the
following matters:
1. Election of Directors. The election of three (3) directors of
Bancorp to serve for three-year terms beginning April 20, 1999.
2. Increase in Number of Authorized Shares. The approval of an
amendment to Bancorp's Articles of Incorporation to increase Bancorp's
authorized shares of its common stock from 5,000,000 to 10,000,000.
3. Approval of Incentive Stock Option Plan. The approval of an
Incentive Stock Option Plan authorizing Bancorp to issue incentive compensation
in the form of stock options.
4. Approval of Stock Bonus Plan. The approval of a Stock Bonus Plan
authorizing Bancorp to issue incentive compensation in the form of stock
bonuses.
5. Other Matters. To consider and vote on such other matters as may
properly be raised at the Annual Meeting. The management of Bancorp does not
intend to present any matters at the Annual Meeting other than those outlined
above, and as of the date of this Proxy Statement has no knowledge of any
matters which may be presented by shareholders of Bancorp at the Annual Meeting.
DATE, TIME AND PLACE
The Annual Meeting will be held on Tuesday, April 20, 1999 at 7:00
p.m., Pacific Time, in the lobby of the main office of Citizens Bank, Bancorp's
wholly-owned subsidiary, 275 Southwest Third Street, Corvallis, Oregon 97333.
The telephone number of Citizens Bank at that address is (541) 752-5161.
RECORD DATE AND VOTING RIGHTS
Bancorp's Board of Directors has fixed the close of business on March
1, 1999 as the record date for determining the holders of outstanding shares of
Bancorp's common stock entitled to notice of and to vote at the Annual Meeting.
Each share of Bancorp common stock will be entitled to one vote on the matters
to be considered at the Annual Meeting. The number of shares of common stock of
Bancorp outstanding on the record date is 3,927,705.608 held by 780 shareholders
of record. The number of votes held in the aggregate by the holders of those
shares is 3,927,705.608.
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<PAGE> 4
REQUIRED SHAREHOLDER VOTES; EFFECT OF ABSTENTION
The election of directors to the Bancorp Board requires the vote of the
holders of a majority of the issued and outstanding shares of Bancorp's common
stock. The required vote for the proposed amendment to the Articles of
Incorporation and for the approval of the Incentive Stock Option Plan and the
Stock Bonus Plan is also a simple majority vote of shareholders. An abstention
will have the same effect as a vote against a director nominee and against the
other matters submitted for shareholder approval. Broker non-votes will not be
treated as shares present or represented and entitled to vote at the Annual
Meeting.
SOLICITATION AND USE OF PROXIES; REVOCATION
The enclosed proxy is solicited on behalf of the Board of Directors of
Bancorp. Proxies may be solicited by directors, officers and employees of
Bancorp and Citizens Bank by mail, personal interview, telephone or telegram.
All costs of soliciting proxies will be paid by Bancorp. Each properly completed
proxy returned in time for voting at the Annual Meeting will be voted in
accordance with the instructions provided in the proxy. If a signed proxy is
received without voting instructions, the proxy will be voted in favor of the
Proposal, in favor of management's nominees for director and in management's
discretion as to other matters raised at the Annual Meeting.
Any person providing a proxy in the form accompanying the Proxy
Statement may revoke the proxy at any time prior to its exercise at the Annual
Meeting. The proxy may be revoked by written notification to Bancorp, by timely
submission to Bancorp of a proxy bearing a later date, or by attending the
Annual Meeting and voting in person. Any shareholder who attends the Annual
Meeting need not revoke his or her proxy and vote in person unless he or she so
elects.
RETURN OF PROXIES
Each shareholder is requested to sign and date the accompanying proxy
and return it promptly in the enclosed stamped addressed envelope, whether or
not the shareholder plans to attend the Annual Meeting in person.
BANCORP RESPECTFULLY REQUESTS ALL SHAREHOLDERS TO RETURN THEIR PROXIES
TO BANCORP AS PROMPTLY AS POSSIBLE.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the ownership of Bancorp common stock,
which is Bancorp's only class of stock issued and outstanding, beneficially
owned as of January 15, 1999 by: (i) the nominees to the Board of Directors of
Bancorp; (ii) the directors of Bancorp continuing in office; and (iii) certain
executive officers of Bancorp and Citizens Bank. The table includes the
percentage of total Bancorp shares owned by each based on total issued and
outstanding shares, as of January 15, 1999, of 3,927,705.608. Except as
disclosed below or elsewhere in this Proxy Statement no person known to Bancorp
beneficially owns more than 5% of Bancorp's common stock.
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<PAGE> 5
<TABLE>
<CAPTION>
COMMON STOCK
--------------------------------
PERCENT OF
NUMBER OF OUTSTANDING
SHARES* SHARES
----------- -----------
<S> <C> <C>
DIRECTOR NOMINEES
Scott A. Fewel (1) 2,718.49 .0692%
Duane L. Sorensen (2) 1,612.00 **
Rosetta C. Venell (3) 59,862.23 1.524%
DIRECTORS CONTINUING IN OFFICE
Jock Gibson (4) 8,918.80 .227%
William V. Humphreys (5) 7,159.38 .182%
James E. Richards (6) 18,546.91 .472%
Gene N. Thompson (7) 311,669.71 7.935%
John Truax (8) 4,559.34 .116%
All Directors and Director Nominees (8 persons):
EXECUTIVE OFFICERS (9)
William F. Hubel, Jr 292.00 **
Daniel E. Wybenga 3,484.28 .089%
Lark E. Wysham 197.00 **
Scott M. Zimbrick 640.00 **
ALL DIRECTORS, DIRECTOR NOMINEES AND
EXECUTIVE OFFICERS AS A GROUP (12 PERSONS): 419,660.14 10.684%
</TABLE>
*Share ownership totals include shares held individually, shares owned
jointly with other persons including spouses, shares held in trust for the owner
or for the owner's minor children, shares owned by other immediate family
members and their spouses, and shares owned or controlled directly or indirectly
by any of the above through partnerships or corporations, all as more
particularly described below.
**Less than 0.05%.
(1) All shares owned jointly with Mr. Fewel's spouse, with whom he
shares voting and investment power.
(2) All shares held in the name of a family limited partnership, over
which Mr. Sorensen has voting and investment power.
(3) Includes 35,808.604 shares held by Ms. Venell, 22,440.270 shares
held by Ms. Venell's spouse as to which Ms. Venell disclaims beneficial
ownership, and 1,613.452 shares held as a custodian for the benefit of minor
grandchildren, over which Ms. Venell shares voting and investment power.
(4) All shares owned jointly with Mr. Gibson's spouse, with whom he
shares voting and investment power.
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<PAGE> 6
(5) All shares owned jointly with Mr. Humphreys' spouse, with whom he
shares voting and investment power. (6) All shares held in the name of a family
trust, over which Mr. Richards has voting and investment power as a trustee.
(7) Includes 30,208.35 shares owned directly and 61,675.87 shares held
as a custodian for the benefit of minor grandchildren, over which Mr. Thompson
shares voting and investment power. Also includes 213,833.46 shares held by a
corporation in which Mr. Thompson is a shareholder, and 5,952.03 shares held by
Mr. Thompson's spouse, as to which he disclaims beneficial ownership. See also
the section and table immediately below for further information concerning the
share ownership of the Gene N. Thompson family.
(8) All shares owned individually by Mr. Truax.
(9) Excluding William V. Humphreys, President and Chief Executive
Officer, whose ownership is shown under the "Directors Continuing in Office"
section of this table. All shares owned by these executive officers are owned
jointly with their respective spouses, with whom each shares voting and
investment power.
SECURITIES OWNERSHIP OF GENE N. THOMPSON FAMILY
The Gene N. Thompson family, consisting of director Gene N. Thompson
and his wife, their children, their children's spouses and their three
grandchildren, collectively are the beneficial owners of 743,460.97 shares of
Bancorp common stock, or 18.929% of all issued and outstanding common stock of
Bancorp. Four individual members of the Gene N. Thompson family, through
individual, custodial and joint ownership, own or control more than 5% of
Bancorp's stock. The following table sets forth the ownership of Bancorp common
stock (the only class of issued and outstanding stock of Bancorp) held as of
January 15, 1999 by each of these four individuals. The address for mailing
purposes of the Gene N. Thompson family is c/o P. O. Box 30, Corvallis, Oregon
97339.
<TABLE>
<CAPTION>
COMMON STOCK
---------------------------------
PERCENT OF
NUMBER OF OUTSTANDING
SHARES* SHARES
---------- ------------
<S> <C> <C>
Courtenay A. Thompson (1) 378,343.44 9.633%
Eric C. Thompson (2) 405,024.62 10.312%
Gene N. Thompson (3) 311,669.71 7.935%
Gina Morrow (4) 350,739.86 8.930%
</TABLE>
*Certain individual members of the Gene N. Thompson family share voting
and investment power over certain shares through an Oregon corporation and
through an Oregon general partnership. The total number of shares for which
voting and investment power is shared are included for each such individual.
Since such shares have been counted more than once, the sum of the shares
displayed in this column do not equal the total share ownership of the Gene N.
Thompson family, which does not exceed 743,460.97 shares in the aggregate.
(1) Includes 103,693.67 shares owned individually, 213,833.46 shares
held by a corporation in which Ms. Thompson is a shareholder and 60,816.31
shares held by a partnership in which Ms. Thompson is a partner.
(2) Includes 105,998.66 shares owned individually, 213,833.46 shares
held by a corporation in which Mr. Thompson is a shareholder and 60,816.31
shares held by a partnership in which Mr. Thompson is a partner. Also includes
50.802 shares held by Mr. Thompson's spouse and 5,979.43 shares held by Mr.
Thompson's spouse as a custodian for a minor child, as to which Mr. Thompson
disclaims
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<PAGE> 7
beneficial ownership in each case. Also includes 12,366.53 shares held in
individual retirement accounts and 5,979.43 held as a custodian for a minor
child.
(3) Includes 30,208.35 shares owned directly and 61,675.87 shares held
as a custodian for the benefit of minor grandchildren, over which Mr. Thompson
shares voting and investment power. Also includes 213,833.46 shares held by a
corporation in which Mr. Thompson is a shareholder, and 5,952.03 shares held by
Mr. Thompson's spouse, as to which he disclaims beneficial ownership.
(4) Includes 136,906.40 shares owned individually and 213,833.46 shares
held by a corporation in which Ms. Morrow is a shareholder.
PROPOSAL ONE: ELECTION OF DIRECTORS
NOMINEES TO THE BOARD OF DIRECTORS OF BANCORP
The Bancorp Board of Directors is divided into three classes of
directors. At each annual meeting of shareholders, members of one of the
classes, on a rotating basis, are elected for a three-year term. Management
proposes the following nominees for election to the Board of Directors of
Bancorp for three-year terms beginning April 20, 1999. All of these nominees are
presently members of Bancorp's Board of Directors. The present terms of all
nominees expire on April 20, 1999.
Nominee No. 1: SCOTT A. FEWEL, age 52, is an attorney in private
practice in the Law Office of Scott A. Fewel in Corvallis, Oregon. Mr. Fewel has
practiced law for over 27 years, and served as the City Attorney for Corvallis,
Oregon from 1971 to 1981 and from 1992 to the present. Mr. Fewel also serves on
the board of directors of the Benton County Foundation. He has been a director
of Citizens Bank since 1996 and a director of Bancorp since its formation in
1997.
Nominee No. 2: DUANE L. SORENSEN, age 58, is the President of Waste
Control Systems, Inc., a solid waste management company headquartered in
Corvallis, Oregon. Mr. Sorensen has been in the waste management business for 21
years, and is the past President of the Oregon Refuse and Recycling Association,
a trade association. He also serves on the board of directors of Samaritan
Health Services and of Good Samaritan Hospital in Corvallis, Oregon. Mr.
Sorensen became a director of Bancorp and of Citizens Bank on April 21, 1998,
when he was appointed to the director positions formerly held by retiring
director Dr. Larry C. Hunter.
Nominee No. 3: ROSETTA C. VENELL, age 59, is the secretary-treasurer of
Venell Farms, Inc., Venell Pellets, Inc. and Mid-Valley Agricultural Products,
Inc., and is involved in the daily management of these companies. She has been
in the agriculture business, including farming and seed marketing, since 1957.
Ms. Venell is also a director of Good Samaritan Hospital in Corvallis, Oregon.
She has been a director of Citizens Bank since 1981 and a director of Bancorp
since its formation in 1997.
To be elected, each director nominee must receive the affirmative vote
of the holders of a simple majority of Bancorp's common stock represented in
person or by proxy at the 1999 Annual Meeting. Abstentions and broker non-votes
will be considered as votes against the nominee.
THE BOARD OF DIRECTORS OF BANCORP RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE SLATE OF NOMINEES SET FORTH ABOVE.
Although Bancorp knows of no reason why any of the above nominees may
be unable or unwilling to serve, if any nominee becomes unable or unwilling to
serve, it is the intention of the persons named in the proxy to vote for any
substitute nominee the Board of Directors of Bancorp may recommend.
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<PAGE> 8
MEMBERS OF THE BANCORP BOARD CONTINUING IN OFFICE
The following individuals are presently members of the Board of
Directors of Bancorp whose terms in office do not expire on the date of the 1999
Annual Meeting.
JOCK GIBSON, age 57, is the President of Lochmead Dairy, Inc., a dairy
food processing company, and the Vice President of Dari Mart Stores, a retail
grocery. He has been in the dairy food processing and retail business since
1965. He has been a director of Citizens Bank since 1993 and a director of
Bancorp since its formation in 1997. Mr. Gibson's term as director expires on
the date of the year 2000 Annual Meeting of Bancorp.
WILLIAM V. HUMPHREYS, age 51, has served as the President and Chief
Executive Officer of Citizens Bank since January 2, 1996, and as the President
and Chief Executive Officer of Bancorp since its formation as the holding
company of Citizens Bank in 1997. Mr. Humphreys has been in the banking industry
since 1968, and prior to his employment at Bancorp served as the President and
Chief Executive Officer of another Oregon community bank for eight years. He has
been a director of Citizens Bank since 1996 and a director of Bancorp since its
formation in 1997. Mr. Humphreys' term as director expires on the date of the
2001 Annual Meeting of Bancorp.
JAMES E. RICHARDS, age 60, is the general manager of Fisher Implement
Company, a farm implement distributor in Albany, Oregon. Mr. Richards has been
in the farm implement business since 1964. He has been a director of Citizens
Bank since 1988 and a director of Bancorp since its formation in 1997. Mr.
Richard's term as director expires on the date of the year 2000 Annual Meeting
of Bancorp.
GENE N. THOMPSON, age 62, is the co-owner and operator of Thompson
Timber Co., and has been in the business of logging, hauling and selling timber
since 1959. Mr. Thompson has been a director of Citizens Bank since 1980 and a
director of Bancorp since its formation in 1997, and presently serves as the
Chairman of the Board of Directors of Citizens Bank and of Bancorp. Mr.
Thompson's term as director expires on the date of the year 2000 Annual Meeting
of Bancorp.
JOHN TRUAX, age 44, is the President of Truax Corporation, a
distributor of petroleum products. He has been in the petroleum distribution
business since 1976. He has been a director of Citizens Bank since 1995 and a
director of Bancorp since its formation in 1997. Mr. Truax's term as director
expires on the date of the 2001 Annual Meeting of Bancorp.
MEMBERS OF THE BOARD OF DIRECTORS OF CITIZENS BANK
During 1998 and as of the date of this Proxy Statement the members of
the Board of Directors of Bancorp and of Citizens Bank, the wholly-owned
subsidiary of Bancorp, are identical. Shareholders of Bancorp do not elect the
members of the Board of Directors of Citizens Bank. Bancorp, acting through its
Board of Directors, elects the Board of Directors of Citizens Bank.
EMERITUS DIRECTORS OF CITIZENS BANCORP AND CITIZENS BANK
In 1998 and through the date of this Proxy Statement, two emeritus
directors, Dr. Larry C. Hunter and James Eickelberg, served on the Bancorp and
Citizens Bank boards. Under the Bylaws of Bancorp and Citizens Bank, an emeritus
director has no voting rights as a director, and may attend meetings of the
boards of Citizens Bank and Bancorp upon the invitation of the board. Emeritus
directors receive the regular monthly attendance fee payable to voting
directors, may be removed from office by a simple majority vote of directors at
any time, and may not serve past the date on which the emeritus director reaches
the age of 70.
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<PAGE> 9
DR. LARRY C. HUNTER, age 67, a private investor and an independent
computer consultant, retired from the Boards of Bancorp and of Citizens Bank in
April of 1998. Upon his retirement, Dr. Hunter was elected by the Bancorp Board
to serve as an emeritus director. Until its sale in 1996, Dr. Hunter was the
President of Hunter International, Inc., a software development and computer
consulting company. He has been in the computer software business since 1968.
Until his retirement, Mr. Hunter was a voting director of Citizens Bank
beginning in 1982, and voting director of Bancorp since its formation in 1997.
JAMES EICKELBERG, age 68, retired from the Board of Citizens Bank in
1996, which he first joined in 1981. Mr. Eickelberg was a partner in the
Corvallis, Oregon law firm of Eickelberg & Fewel prior to his retirement from
that firm.
EXECUTIVE OFFICERS OF BANCORP AND OF CITIZENS BANK
The executive officers of Bancorp and of Citizens Bank are William F.
Hubel, Jr., William V. Humphreys, Daniel E. Wybenga, Lark E. Wysham and Scott M.
Zimbrick. The following table sets forth in summary form information about these
executive officers.
<TABLE>
<CAPTION>
YEARS OF BANKING
NAME AGE POSITION EXPERIENCE
---- --- -------- ----------
<S> <C> <C> <C>
William F. Hubel, Jr. 43 Sr. Vice President and Chief Operating Officer, 21
Citizens Bank
William V. Humphreys 51 President and Chief Executive Officer, Bancorp 31
and Citizens Bank
Daniel E. Wybenga 58 Executive Vice President/Loan Administration, 40
Citizens Bank
Lark E. Wysham 49 Sr. Vice President and Chief Financial Officer, 22
Bancorp and Citizens Bank
Scott M. Zimbrick 43 Sr. Vice President and Branch Manager, Citizens 20
Bank
</TABLE>
WILLIAM F. HUBEL, JR., age 43, is a Senior Vice President and Chief
Operating Officer of Citizens Bank. His responsibilities include managing all
branch operations for Citizens Bank. He joined Citizens Bank in 1998. Prior to
that time, he served as a Vice President for Wells Fargo Bank, and has over 21
years of experience in the banking industry. He is a 1977 graduate of Western
Oregon State College, and a 1990 graduate of the Pacific Coast Banking School.
WILLIAM V. HUMPHREYS, age 51, is the President and Chief Executive
Officer of Bancorp and of Citizens Bank. Mr. Humphreys is a director of Bancorp,
and information concerning his business experience and background is contained
in the section above entitled "Members of the Bancorp Board Continuing in
Office."
DANIEL E. WYBENGA, age 58, is Executive Vice President in charge of
loan administration of Citizens Bank. His responsibilities include supervising
the loan portfolio of Citizens Bank. He joined Citizens Bank in 1975. Prior to
his present appointment he served as a Senior Vice President of Citizens Bank in
charge of loan administration, and has a total of 40 years of experience in the
banking industry. Mr. Wybenga is a 1978 graduate of the Pacific Coast Banking
School.
LARK E. WYSHAM, age 49, is Senior Vice President and Chief Financial
Officer of Bancorp and of Citizens Bank. She joined Bancorp and Citizens Bank in
1997. From 1995 to 1997 she served as Executive Vice President and Chief
Operations Officer of Columbia River Bank. For many years prior to 1995 she was
the Vice President/Operations of Juniper Banking Company. Ms. Wysham has 22
years of experience in the banking industry. She is a 1987 graduate of the Bank
Administration Institute and a 1990 graduate of the Northwest Intermediate
Commercial Lending School.
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<PAGE> 10
SCOTT M. ZIMBRICK, age 43, is a Senior Vice President and Branch
Manager of Citizens Bank. He joined Citizens Bank in 1997. Prior to that time he
served for many years as Marketing Area Manager and Vice President for Wells
Fargo Bank. Mr. Zimbrick has over 20 years of experience in the banking
industry. He is a 1978 graduate of the University of Oregon and a 1996 graduate
of the Pacific Coast Banking School.
1998 BOARD AND COMMITTEE MEETINGS OF BANCORP
The Board of Directors of Bancorp held a total of 12 regularly
scheduled Board meetings during the 1998 calendar year. Each member of the Board
of Directors, excluding the Board's two emeritus directors, attended at least
75% of such meetings. Emeritus Director Larry C. Hunter attended all of the
meetings he was entitled to attend prior to his retirement. Emeritus Director
James Eickelberg attended one Bancorp Board meeting in 1998. The Board of
Directors of Bancorp appointed no committees during the calendar year ending
December 31, 1998.
1998 BOARD AND COMMITTEE MEETINGS OF CITIZENS BANK
The Board of Directors of Citizens Bank held a total of 12 regularly
scheduled Board meetings and two special Board meetings during the 1998 calendar
year. Each member of the Board of Directors, excluding the Board's two emeritus
directors, attended at least 79% of such meetings, except for John Truax, who
attended 72% of such meetings. Emeritus Director Larry C. Hunter attended all of
the meetings he was entitled to attend prior to his retirement. Emeritus
Director James Eickelberg attended one Citizens Bank Board meeting in 1998.
The Board of Directors of Citizens Bank appointed seven committees
during the calendar year ending December 31, 1998: (1) the Audit/Examination
Committee, (2) the Human Resources Committee, (3) the Investment/Asset-Liability
Committee, (4) the Lending/CRA Committee, (5) the Nominating Committee, (6) the
Management Review Committee, and (7) the Technology/EDP Committee.
The Audit/Examination Committee met 6 times during calendar 1998. This
Committee reviews Citizens Bank's compliance with audit and bank policies and
procedures, reviews reports prepared by Bancorp's and Citizens Bank's
accountants, recommends the selection of Bancorp's and Citizens Bank's outside
accountants, and advises the Board of Directors concerning Citizens Bank's
compliance with Bank policy and federal and state regulations. In 1998 the
members of this Committee were Scott A. Fewel, Chairperson, Jock Gibson (from
June through December), Emeritus Director Larry C. Hunter (from January through
April), Gene N. Thompson, John Truax (from January through May) and Rosetta C.
Venell (from June through December). Each member of this Committee attended at
least 75% of the meetings the member was entitled to attend, except for Jock
Gibson, Larry C. Hunter and John Truax, who attended 50% of the meetings each
was entitled to attend.
The Human Resources Committee met 3 times during calendar 1998. This
Committee evaluates the performance of Citizens Bank's executive officers, other
than the President and Chief Executive Officer. This Committee makes
recommendations to the Board of Directors concerning compensation and personnel
issues, reviews and makes recommendations concerning employee benefits issues,
and reviews and monitors any claims of employees against Citizens Bank. The
members of this Committee in 1998 were Jock Gibson, William V. Humphreys, Gene
N. Thompson and James E. Richards, Chairperson. Each member of this Committee
attended 100% of the meetings the member was entitled to attend.
The Investment/Asset-Liability Committee met 3 times during calendar
1998. This Committee was formed to establish, update and monitor Citizens Bank's
policies concerning asset, liability, liquidity, investment, interest rate and
market risk management, oversee the management of these functions, and recommend
to the Board of Directors where appropriate the retention of securities advisors
and brokers. In 1998 the members of this Committee were William V. Humphreys,
James E. Richards (from January
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<PAGE> 11
through May), Duane L. Sorensen (from June through December), John Truax and
Rosetta C. Venell, Chairperson. Each member of this Committee attended 100% of
the meetings the member was entitled to attend, except for John Truax, who
attended 2 of 3 meetings.
The Lending/CRA Committee met 13 times in calendar 1998. This Committee
reviews Citizens Bank's compliance with Citizens Bank's loan and CRA policies
and procedures, advises the Board of Directors of any material violations of
these policies, and reviews and approves loans recommended by Citizens Bank's
management that exceed internal approval limits. In 1998 the members of this
Committee were Scott A. Fewel, Jock Gibson (from January through May), William
V. Humphreys, Chairperson, James E. Richards and Duane L. Sorensen (from June
through December). Each member of this Committee attended at least 75% of the
meetings the member was entitled to attend.
The Nominating Committee met 2 times in calendar 1998. This Committee
recommends prospective members of the Board of Directors of Citizens Bank. The
members of the Nominating Committee in 1998 were Scott A. Fewel (from June
through December), Jock Gibson (from January through May), James E. Richards,
Gene N. Thompson, Chairperson and Rosetta C. Venell. Each member of this
Committee attended 100% of the meetings the member was entitled to attend.
The Management Review Committee met 2 times in calendar 1998. This
Committee evaluates the performance of Citizens Bank's President and Chief
Executive Officer and recommends compensation for this officer. The members of
this Committee consist of all of the outside directors of Citizens Bank. The
Chairperson is Gene N. Thompson. Each member of this Committee attended 100% of
the meetings the member was entitled to attend, except for John Truax, who
attended 1 of 2 meetings.
The Technology/EDP Committee met 2 times during calendar 1998. This
Committee reviews Citizens Bank's data processing operations and procedures as
well as various technology issues. In 1998 the members of this Committee were
William V. Humphreys, Emeritus Director Larry C. Hunter (from January through
April), Duane L. Sorensen (from June to December) and John Truax (from June to
December). The Committee also included non-director members Jub
Leelaamornvichet, a Vice President of Citizens Bank, and Lark E. Wysham, Chief
Financial Officer of Bancorp and Citizens Bank. Each member of this Committee
attended 100% of the meetings the member was entitled to attend, except for
William V. Humphreys, who attended 1 of 2 meetings.
PROPOSAL TWO: AMENDMENT OF ARTICLES OF
INCORPORATION TO INCREASE NUMBER OF AUTHORIZED SHARES
Section (1), Article II of Bancorp's Articles of Incorporation, which
were filed in 1996, authorizes Bancorp to issue up to 5,000,000 shares of its
common stock. As of February 22, 1999, Bancorp had a total of 3,927,705.608
shares of its common stock issued and outstanding. Under Bancorp's present
Articles of Incorporation, Bancorp may therefore issue no more than 1,072,294.4
additional shares of its common stock.
Bancorp's Board of Directors believes that an increase in the total
number of authorized shares of its common stock, from 5,000,000 to 10,000,000,
is necessary and appropriate in order to provide Bancorp the ability to issue
additional shares in the future in excess of the current limit. The purposes for
which additional shares may be issued include, without limitation, stock splits,
stock dividends and the issuance of shares pursuant to Bancorp's proposed
Incentive Stock Option Plan and Stock Bonus Plan. The Board of Directors of
Bancorp has therefore approved a resolution providing for the amendment of
Section (1) of Article II allowing this increase.
This amendment of Article II requires the approval of Bancorp's
shareholders through an affirmative vote of the holders of a simple majority of
Bancorp's common stock represented in person or by proxy at the 1999 Annual
Meeting. Abstentions and broker non-votes will be considered as votes against
the approval of the amendment.
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<PAGE> 12
THE BOARD OF DIRECTORS OF BANCORP RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THIS PROPOSED AMENDMENT OF ARTICLE II OF BANCORP'S ARTICLES OF INCORPORATION.
PROPOSAL THREE: ADOPTION OF INCENTIVE STOCK OPTION PLAN
In November 1998, Bancorp's Board of Directors adopted, subject to
shareholder approval, the 1998 Incentive Stock Option Plan (the "ISOP"). If
approved by shareholders, the ISOP will allow Bancorp to grant stock options to
employees of Bancorp and its subsidiary Citizens Bank. The purpose of the ISOP
is to enable Bancorp and Citizens Bank to attract and retain experienced and
able employees, and to provide an incentive to these individuals to exert their
best efforts for Bancorp and its shareholders. No more than 4% of Bancorp's
issued and outstanding common stock may be issued in the form of stock options
under the ISOP.
A complete copy of the ISOP is attached to this Proxy Statement as
Exhibit 1. Below is a summary of certain key features of the ISOP. The following
discussion is a summary only, and shareholders are urged to read the complete
text of the ISOP attached hereto as Exhibit 1. In addition, the discussion below
of certain tax matters and effects is a summary only of such matters and
effects, and is qualified in its entirety by reference to the applicable
sections of the Internal Revenue Code of 1986, as amended, together with all
relevant regulations and letter rulings.
PURPOSE OF THE ISOP
The purpose of the ISOP is to enable Bancorp and its subsidiaries to
attract and retain experienced and able employees and to motivate these
individuals to exert their best efforts for Bancorp and its shareholders.
Stock-based compensation is a key tool for the retention of employees. Stock
options have value only if Bancorp's stock price increases above the fair market
value of the stock on the grant date and the employee remains on the job for the
period required for the option to be exercised. In addition, stock options link
the value of the grant to the value of Bancorp's stock. This aligns the
interests of the recipient with the interests of all shareholders, providing an
incentive for the recipient to maximize shareholder value. The Board of
Directors believes that the issuance of stock options will be effective in
motivating and retaining employees, and that the adoption of the ISOP is in the
best interests of Bancorp and its shareholders.
TYPES OF STOCK OPTIONS AVAILABLE FOR ISSUANCE
The ISOP authorizes two kinds of stock option grants of the common
stock (the "Stock") of Bancorp, Incentive Stock Options as defined in the
Internal Revenue Code of 1986, as amended, and Non-Statutory Stock Options. Each
option grant must be specifically designated as either an Incentive Stock Option
or a Non-Statutory Stock Option. The difference between the two types of stock
options arises chiefly from the tax consequences associated with the option.
Incentive Stock Options.
At the time an Incentive Stock Option is granted, the recipient does
not recognize gain. Further, at the time the option is exercised, the recipient
does not recognize the gain (or loss), if any, on the difference between the
exercise price and the market price of the stock covered by the option on the
date of exercise. The recipient is able to defer the recognition of gain (or
loss) to the date on which the stock acquired through exercise is sold. This
deferral of the recognition of gain for tax purposes can be of benefit to the
recipient. To qualify as an Incentive Stock Option under the Internal Revenue
Code of 1986, as amended, certain requirements must be met, including
limitations on the value of the options granted to certain employees.
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<PAGE> 13
Non-Statutory Stock Options.
Non-Statutory Stock Options, which are sometimes also called
"Nonqualified Stock Options," do not provide the same potential tax benefits to
the recipient as do Incentive Stock Options. At the time a Non-Statutory Stock
Option is granted, the recipient does not recognize gain. However, at the time
of exercise, the recipient must recognize the gain (or loss), if any, on the
difference between the exercise price and the market price of the stock covered
by the option on the date of exercise. The recipient may therefore not defer the
recognition of gain (or loss) beyond the exercise date. Non-Statutory Stock
Options are nonetheless a useful form of incentive compensation, especially in
cases in which Incentive Stock Options are not available.
PERSONS ELIGIBLE FOR GRANTS UNDER THE ISOP
Grants of stock options may be made under the ISOP only to officers and
key employees of Bancorp whom the Board believes have made, or will make, an
essential contribution to Bancorp. Bancorp directors are not eligible for option
grants unless the director is also an employee of Bancorp or Citizens Bank.
LIMITATION ON NUMBER OF SHARES SUBJECT TO THE ISOP.
The total number of shares of stock that may be issued upon the
exercise of all options granted under the ISOP may not exceed, in the aggregate,
four percent (4%) of Bancorp's issued and outstanding stock. For example, if
Bancorp had 4,000,000 shares of stock issued and outstanding, no more than
160,000 shares of stock could be subject to option grants under the ISOP. If the
number of shares of stock issued and outstanding increased, then the number of
shares that could be subject to option grants would also increase, based on and
subject to the 4% limitation. Any increase in the 4% limitation imposed by the
ISOP requires shareholder approval.
IMPLEMENTATION AND ADMINISTRATION OF THE ISOP
The ISOP will be administered by Bancorp's Board of Directors, which
may adopt or amend rules and regulations for its administration. The
interpretation and construction of the ISOP by the Board shall be final and
conclusive. The administration of the ISOP may be delegated to a committee of
the Board. The grant of stock options under the ISOP shall be at the complete
discretion of Bancorp's Board, which has and shall retain the sole authority to
grant options. Nothing in the ISOP requires the Board to issue option grants in
any amount, at any time, or to any group of individuals. The amount, terms and
conditions of all option grants under the ISOP shall be determined by the Board,
subject to the limitations imposed by the ISOP and by applicable law and
regulation. The Board may provide that the recipient's rights under an option
grant shall vest over time. Bancorp's Board intends to use the ISOP as a
management tool to appropriately motivate and reward Bancorp's employees.
VALUATION OF STOCK SUBJECT TO OPTION GRANTS UNDER THE ISOP
At the time an option is granted under the ISOP, the terms of the grant
shall specify an "exercise price," which is the price at which the recipient of
the option may exercise the option. To exercise an option means to purchase the
stock at the exercise price. For example, if the exercise price of the option is
$20.00 per share, the holder of the option has the right to purchase the shares
of stock covered by the option at a price of $20.00 per share.
The ISOP requires that the exercise price of all stock options approved
for grant shall be the fair market value of Bancorp's common stock on the date
of grant. Since Bancorp's common stock is infrequently traded and is not quoted
on any established stock market or quotation system, the Board will
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<PAGE> 14
choose and apply an appropriate valuation method at the time of grant,
consistent with its fiduciary duties. Such methods may include, without
limitation, the valuation method specified in Bancorp's currently effective
Dividend Reinvestment Plan. In the event of a stock split, recapitalization or
other similar event, the exercise price of outstanding options or rights already
awarded shall be adjusted in order to prevent either the dilution or the
enlargement of the benefit intended at the time of the original grant.
AMENDMENTS TO THE ISOP
Bancorp's Board may amend the ISOP to comply with changes in the law or
for other reasons. Shareholder approval of amendments shall be sought if such
approval is necessary to comply with applicable law. Amendments shall not affect
the rights of a recipient of a stock option granted prior to the amendment
without the written consent of the recipient.
MANAGEMENT'S RECOMMENDATION
Shareholder approval of the ISOP will allow Bancorp to implement an
incentive compensation program which the Board believes should be successful in
attracting and retaining qualified employees.
The approval of the ISOP requires the affirmative vote of the holders
of a simple majority of Bancorp's common stock represented in person or by proxy
at Bancorp's 1999 Annual Meeting. Abstentions and broker non-votes will be
considered as votes against the adoption of the ISOP.
THE BOARD OF DIRECTORS OF BANCORP RECOMMENDS THAT SHAREHOLDERS VOTE FOR
ADOPTION OF THE INCENTIVE STOCK OPTION PLAN.
PROPOSAL FOUR: ADOPTION OF STOCK BONUS PLAN
In November 1998, Bancorp's Board of Directors adopted, subject to
shareholder approval, the 1998 Stock Bonus Plan (the "Bonus Plan"). If approved
by shareholders, the Bonus Plan will allow Bancorp to grant bonuses in the form
of Bancorp's common stock to employees of Bancorp and its subsidiary Citizens
Bank. As with the ISOP, the purpose of the Bonus Plan is to enable Bancorp and
Citizens Bank to attract and retain experienced and able employees, and to
provide an incentive to these individuals to exert their best efforts for
Bancorp and its shareholders. No more than 1% of Bancorp's issued and
outstanding common stock may be issued in the form of stock options under the
Bonus Plan.
A complete copy of the Bonus Plan is attached to this Proxy Statement
as Exhibit 2. Below is a summary of certain key features of the Bonus Plan. The
following discussion is a summary only, and shareholders are urged to read the
complete text of the Bonus Plan attached hereto as Exhibit 2.
PURPOSE OF THE BONUS PLAN
The purpose of the Bonus Plan is to enable Bancorp and its subsidiaries
to attract and retain experienced and able employees and to motivate these
individuals to exert their best efforts for Bancorp and its shareholders. The
Bonus Plan is intended to supplement the stock-based compensation available
under the ISOP. Stock ownership by employees helps align the interests of the
employee with the interests of all shareholders, providing an incentive for the
employee to maximize shareholder value. The Board of Directors believes that
the ability to issue of stock bonuses as a form of compensation will be
effective in motivating and retaining employees, and that the adoption
of the Bonus Plan is in the best interests of Bancorp and its shareholders.
PERSONS ELIGIBLE FOR GRANTS UNDER THE BONUS PLAN
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<PAGE> 15
Grants of stock under the Bonus Plan may be made only to officers and
key employees of Bancorp whom the Board believes have made, or will make, an
essential contribution to Bancorp. Bancorp directors are not eligible for grants
under the Bonus Plan unless the director is also an employee of Bancorp or
Citizens Bank.
LIMITATION ON NUMBER OF SHARES SUBJECT TO THE BONUS PLAN.
The total number of shares of stock that may be issued under the Bonus
Plan may not exceed, in the aggregate, one percent (1%) of Bancorp's issued and
outstanding common stock. For example, if Bancorp had 4,000,000 shares of stock
issued and outstanding, no more than 40,000 shares of stock could be subject to
grants under the Bonus Plan. If the number of shares of stock issued and
outstanding increased, then the number of shares that could be subject to grants
would also increase, based on and subject to the 1% limitation. Any increase in
the 1% limitation imposed by the Bonus Plan requires shareholder approval.
IMPLEMENTATION AND ADMINISTRATION OF THE BONUS PLAN
The Bonus Plan will be administered by Bancorp's Board of Directors,
which may adopt or amend rules and regulations for its administration. The
interpretation and construction of the Bonus Plan by the Board shall be final
and conclusive. The administration of the Bonus Plan may be delegated to a
committee of the Board. The grant of stock bonuses under the Bonus Plan shall be
at the complete discretion of Bancorp's Board, which has and shall retain the
sole authority to make such grants. Nothing in the Bonus Plan requires the Board
to make grants in any amount, at any time, or to any group of individuals. The
amount, terms and conditions of all grants under the Bonus Plan shall be
determined by the Board, subject to the limitations imposed by the Bonus Plan
and by applicable law and regulation. Bancorp's Board intends to use the Bonus
Plan as a management tool to appropriately motivate and reward Bancorp's
employees.
AMENDMENTS TO THE BONUS PLAN
Bancorp's Board may amend the Bonus Plan to comply with changes in the
law or for other reasons. Shareholder approval of amendments shall be sought if
such approval is necessary to comply with applicable law.
MANAGEMENT'S RECOMMENDATION
Shareholder approval of the Bonus Plan will allow Bancorp to implement
an incentive compensation program which the Board believes should be successful
in attracting and retaining qualified employees.
The approval of the Bonus Plan requires the affirmative vote of the
holders of a simple majority of Bancorp's common stock represented in person or
by proxy at Bancorp's 1999 Annual Meeting. Abstentions and broker non-votes will
be considered as votes against the adoption of the Bonus Plan.
THE BOARD OF DIRECTORS OF BANCORP RECOMMENDS THAT SHAREHOLDERS VOTE FOR
ADOPTION OF THE BONUS PLAN.
OTHER BUSINESS
Bancorp's management knows of no matters to be brought before the 1999
Annual Meeting for a vote other than those matters described above in this Proxy
Statement. However, if other matters are presented for a vote at the Annual
Meeting, the proxy holders will vote the shares represented by properly executed
proxies according to their judgment on those matters. At the Annual Meeting,
management will
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<PAGE> 16
report on Bancorp's business, and shareholders will have an opportunity to ask
questions. For information concerning the procedures provided by Bancorp's
Articles of Incorporation for the presentation of business by shareholders at an
annual meeting, see the section below entitled "Proposals of Shareholders."
MANAGEMENT COMPENSATION INFORMATION
EXECUTIVE COMPENSATION
The following table shows the compensation paid by Citizens Bank for
services rendered during the calendar years 1998, 1997 and 1996 for the
President and Chief Executive Officer of Citizens Bank. No other officer or
employee of Citizens Bank earned compensation consisting of salary and bonus
which exceeded $100,000 for these calendar years. Officers of Bancorp, including
Mr. Humphreys, do not received separate compensation for services rendered in
their capacity as Bancorp officers.
ANNUAL COMPENSATION TABLE
<TABLE>
<CAPTION>
NAME AND PRINCIPAL OTHER ANNUAL
POSITION YEAR SALARY BONUS COMPENSATION(1)
- ---------------------- ---- ---------- --------- -----------------
<S> <C> <C> <C> <C>
William V. Humphreys, 1998 $ 145,000 $ 18,000 $ 30,000
President and Chief 1997 $ 122,000 $ 12,000 $ 27,000
Executive Officer 1996 $ 115,000 $ 0 $ 6,000
</TABLE>
- ----------
(1) Includes an automobile allowance of $500 per month. Mr. Humphreys was also
reimbursed for club membership dues for the years shown. The total of the
perquisites received by Mr. Humphreys, including the automobile allowance and
club dues, did not exceed 10% of his salary plus bonus for the years shown. Also
includes discretionary contributions made by Citizens Bank of $24,000 (in 1998)
and $21,000 (in 1997) to the Citizens Bank's Employee Profit-Sharing and
Retirement Plan.
DIRECTOR COMPENSATION
The members of the Board of Directors of Bancorp do not received
separate compensation for serving as Board members of Bancorp.
Six of the eight directors of Citizens Bank received compensation of
$700 per month in calendar 1998. The Chairman of the Citizens Bank Board was
paid compensation of $1,400 per month. No compensation was paid to the President
and Chief Executive Officer of Citizens Bank for his service as a Citizens Bank
director. Each emeritus director of Citizens Bank received compensation of $700
per month. The compensation paid to outside and emeritus directors constitutes
the entire compensation paid to them for their work as directors, including
preparing for and attending regular and special Board meetings, preparing for
and attending committee meetings, and rendering advice and assistance to
Citizens Bank in their capacities as directors.
PROFIT-SHARING RETIREMENT PLAN
Citizens Bank has had an Employee Profit-Sharing and Retirement Plan
(the "Plan") in effect since 1960. All Citizens Bank employees who have been
employed by Citizens Bank for 12 consecutive months from a start date of January
1 or July 1 in any given year are eligible to participate. Members of the Board
of Directors of Bancorp or of Citizens Bank are not eligible to participate
unless they are also Citizens Bank employees. The Plan is qualified as a
retirement plan under the Employee Retirement Income Security Act of 1974. The
normal retirement age under the Plan is 65.
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<PAGE> 17
Contributions to the Plan are made at the sole discretion of the
Citizens Bank Board of Directors. Employees may not make contributions. The
benefits payable to an employee covered by the Plan depend on a number of
factors, including Citizens Bank's contributions to the Plan, the present and
future compensation paid to the employee and the performance of the investments
purchased and managed under the Plan.
The amount approved by the Citizens Bank Board of Directors for
contribution to the Plan in any fiscal year may not exceed 15% of the value of
the aggregate salaries paid to participants in the Plan. Contributions to the
Plan are allocated by the Plan trustee and administrator among Plan participants
on a pro-rata basis as determined by the yearly salary of each participant.
As of December 31, 1998 there were a total of 4 executive officers and
78 other employees of Citizens Bank who were participants in the Plan. The
executive officer participants were: (1) William V. Humphreys President and
Chief Executive Officer; (2) Daniel E. Wybenga, Executive Vice President/ Loan
Administration; (3) Lark E. Wysham, Senior Vice President and Chief Financial
Officer; and (4) Scott M. Zimbrick, Senior Vice President and Branch Manager.
The following table shows the amounts expensed by Citizens Bank as
contributions to the Plan for the fiscal year ending December 31, 1998 for the
participants shown, and the aggregate value of contributions under the Plan as
of the end of that period.
<TABLE>
<CAPTION>
Amount Expensed in Aggregate Value Accrued
Fiscal Year 1998 as of December 31, 1998
(Estimate)
------------------ -----------------------
<S> <C> <C>
Executive Officers as a Group
(4 Total): $ 47,212.51 $ 47,212.51
Citizen Bank Employees as a
Group (Excluding Executive
Officers): 291,571.52 291,571.52
-------------- --------------
Totals for All Participants
(82 Total Participants): $ 338,784.03 $ 338,784.03
</TABLE>
STOCK OPTIONS
In November 1998, Bancorp's Board of Directors adopted, subject to
shareholder approval, an Incentive Stock Option Plan. No options may be issued
under the proposed Plan until it has been approved by Bancorp's shareholders.
The proposed Plan is described elsewhere in this Proxy Statement. No options to
purchase shares of Bancorp's common stock were awarded by Bancorp to anyone in
calendar year 1998 under the proposed Plan or under any other plan or
arrangement.
METHODS AND PROCEDURES FOR SETTING EXECUTIVE COMPENSATION AND REPORT OF
COMMITTEES
Annual compensation for the President and Chief Executive Officer of
Citizens Bank is determined directly by the Management Review Committee of the
Citizens Bank Board. This Committee consists of Citizens Bank's outside
directors. For all other executive officers of Citizens Bank, annual
compensation is approved by the entire Citizens Bank Board based on the
recommendations of the Board's Human Resources Committee.
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<PAGE> 18
In setting executive officer compensation, Citizens Bank does not
presently employ quantitative methods, such as basing compensation on the
achievements of specific performance targets or goals. Compensation for each
officer, including the President and Chief Executive Officer, is set
individually based on a performance review. The review takes into account such
factors as the quality of the officer's performance for the year, the year over
year growth and return on assets achieved by Citizens Bank, and the extent to
which, in the ultimate judgment of the Board, the officer has contributed to
enhancing shareholder value. Citizens Bank also collects compensation data from
national surveys and peer group banks. This data is used as a reference point to
set compensation at what the Board believes are competitive levels. In general,
the Board strives to assure that its executive officer compensation levels do
not fall below the median level for peer group banks.
Citizens Bank has no formula for awarding bonuses or for making
discretionary contributions to its Employee Profit Sharing and Retirement Plan,
and does not guarantee its executive officers that such awards or contributions
will be made. However, the amount of compensation potentially available for such
purposes does depend on Citizens Bank's return on assets for the year. The
Citizens Bank Board generally approves higher bonuses and contributions in years
in which its return on average assets have been strong. For the 1998 fiscal
year, Citizens Bank did award higher than usual bonuses and discretionary
retirement plan contributions because of the strength of Citizens Bank's return
on average assets for the year.
This report is submitted by the Management Review Committee (Scott A.
Fewel, Jock Gibson, James E. Richards, Duane L. Sorensen, Gene N. Thompson,
Jock Truax, and Rosetta C. Venell) and the Human Resources Committee (Jock
Gibson, William V. Humphreys, James E. Richards, and Gene N. Thompson).
TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS
Citizens Bank extends credit from time to time to some of the executive
officers and directors of Bancorp and of Citizens Bank in the ordinary course of
business. All such loans are made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons, and the loans do not involve more than the
normal risk of collectibility or present any other unfavorable features. As of
December 31, 1998 there were outstanding loans to a total of 10 executive
officers and directors of Bancorp or to companies in which such executive
officers or directors have an interest. The total of all such loans, plus
unfilled commitments to lend, was $6,364,000. None of these loans were
delinquent as of December 31, 1998. As of December 31, 1998 no indebtedness of
any one individual or company exceeded 10% of the equity capital accounts of
Bancorp and its wholly-owned subsidiary, Citizens Bank.
ADDITIONAL INFORMATION
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Bancorp believes that all Forms 3, 4 and 5 required to be filed,
pursuant to the Securities Exchange Act of 1934, as amended, by its directors,
officers and others who are required to file such reports were timely filed
during the 1998 fiscal year.
INDEPENDENT ACCOUNTANTS AND AUDITORS
In December of 1997 Bancorp's management recommended to the Audit
Committee of the Board of Directors that Bancorp solicit bids from independent
certified public accountants to perform its accounting and auditing work
beginning in the 1998 fiscal year. The Audit Committee approved the
recommendation, and directed management to schedule interviews to evaluate
qualified candidates to serve as Bancorp's independent accountant.
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<PAGE> 19
The Audit Committee scheduled interviews with three accounting firms as
part of its review and evaluation process. David O. Christensen, C.P.A.,
Bancorp's outside accounting firm at the time of the bidding process, was
invited to be considered as a candidate for Bancorp's accounting and auditing
work and to be included among firms interviewed. Mr. Christensen notified
Bancorp on January 9, 1998 that he declined to stand for consideration or for
re-election as Bancorp's independent accountant. The Audit Committee held its
interviews on February 11, 1998, and thereafter recommended that the accounting
firm of Knight, Vale and Gregory, Inc., P.S. ("KVG") be retained as Bancorp's
independent accountant. The recommendation was approved by the Board of
Directors on February 17, 1998.
The recommendation did not arise from any disagreements, within the
meaning of Item 304 of Regulation S-K, between Bancorp and Bancorp's prior
independent accountant, David O. Christensen, and there have been no such
disagreements, or any "reportable events" under paragraph (a)(1)(v) of Item 304,
with respect to any Company financial statement, audit, report or tax return or
any matters relating thereto for Bancorp's 1996 or 1997 fiscal years or any
subsequent interim period through January 9, 1998. In particular, with respect
to such financial statements, Mr. Christensen's report did not contain an
adverse opinion or a disclaimer of opinion, and was not qualified or modified as
to uncertainty, audit scope or accounting principles.
Beginning on February 18, 1998 KVG commenced providing accounting and
audit services to Bancorp for matters arising in fiscal 1998, and served as
Bancorp's independent auditor to audit Bancorp's financial statements for the
fiscal year 1998. A representative of KVG will be present at the Annual Meeting,
will have an opportunity to make a statement if he or she so desires and will be
available to respond to appropriate questions.
Bancorp retained the firm of Shiraishi and Kitchen, Inc. to perform the
internal operational audit of Citizens Bank for fiscal 1998.
ANNUAL REPORT AND ADDITIONAL INFORMATION
THE BANK'S ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1998, INCLUDING THE FINANCIAL STATEMENTS OF BANCORP AND ITS
SUBSIDIARY AND THE NOTES RELATING THERETO, TOGETHER WITH THE REPORT OF THE
INDEPENDENT AUDITORS AND OTHER INFORMATION CONCERNING BANCORP, WILL BE SENT TO
SHAREHOLDERS ON OR ABOUT THE DATE OF MAILING TO SHAREHOLDERS OF THIS PROXY
STATEMENT. ADDITIONAL COPIES OF THE 1998 ANNUAL REPORT, AND COPIES (NOT
INCLUDING EXHIBITS) OF BANCORP'S FORM 10-K FOR THE 1998 FISCAL YEAR TO BE FILED
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION ON OR BEFORE MARCH 31,
1999 MAY BE OBTAINED WITHOUT CHARGE FROM LARK E. WYSHAM, CHIEF FINANCIAL
OFFICER, CITIZENS BANCORP, P. O. BOX 30, CORVALLIS, OREGON 97339. COPIES OF
EXHIBITS TO BANCORP'S FORM 10-K WILL BE PROVIDED UPON PAYMENT OF BANCORP'S
REASONABLE EXPENSES INCURRED IN FURNISHING SUCH EXHIBITS IN THE AMOUNT OF $.25
PER PAGE. BANCORP'S FILINGS WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION ARE ALSO AVAILABLE AT THE WEBSITE MAINTAINED BY THAT AGENCY AT
HTTP://WWW.SEC.GOV.
PROPOSALS OF SHAREHOLDERS
Shareholders may present matters for consideration at any annual
meeting of Bancorp. Shareholders are reminded that under Article VII of the
Articles of Incorporation of Bancorp, there are certain procedural requirements
relating to the presentation of business at an annual meeting by a shareholder.
Unless otherwise permitted by the Board of Directors, any business, including
without limitation nominations of directors, may be properly brought before an
annual shareholders meeting, or before any special meeting of shareholders, by a
shareholder only upon the shareholder's timely notice in writing to the
Secretary of Bancorp. To be timely, a shareholder's written notice must be
physically received at the principal executive offices of Bancorp not later than
the close of business on the thirtieth (30th) calendar day before the date of
the meeting.
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<PAGE> 20
The notice provided by the shareholder must set forth (i) a brief
description of each matter desired to be brought before the meeting and the
reason for conducting such business at the meeting, (ii) the name and address of
the proposing shareholder, (iii) the class and number of shares of stock of
Bancorp which are beneficially owned by the proposing shareholder, (iv) any
material interest of the shareholder in the business proposed, and (v) as for
each person whom the shareholder proposes to nominate for election as a director
(a) the name, age, business address, and residence address of such person, (b)
the principal occupation or employment of such person, (c) the class and number
or shares of stock, if any, of Bancorp which are beneficially owned by such
person, (d) the proposed nominee's written consent, and (e) any other
information relating to such person that is required to be disclosed or is
otherwise required by any applicable law.
For shareholder proposals to be considered at the 2000 Annual Meeting
of shareholders, if a shareholder wishes to present a proposal at that Annual
Meeting and also wishes to have the proposal included in Bancorp's official
Proxy Statement for the 2000 Annual Meeting, the written notice of proposal must
be submitted to the Secretary of Bancorp no later than December 31, 1999.
Date: March 10, 1999
18
<PAGE> 21
CITIZENS BANCORP
TOTAL CUMULATIVE SHAREHOLDER RETURN FOR
THE PERIOD ENDING DECEMBER 31, 1998
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
CITIZENS BANCORP* $100 131.76 147.50 201.14 316.48 451.81
S&P 500 $100 101.52 139.71 170.46 228.47 292.37
S&P MAJOR REGIONAL BANKS $100 93.76 146.24 199.69 303.27 335.38
</TABLE>
*Bancorp became the holding company of Citizens Bank effective July 1, 1997, and
the stock performance data shown above encompasses the performance of Citizens
Bank common stock prior to that date. This stock performance data is based
solely on prices reported to Bancorp and to Citizens Bank for specific
transactions between buyers and sellers who informed Bancorp or Citizens Bank of
specific transactions. There was and is no established market for the common
stock of either Bancorp or Citizens Bank, and their common stock was not and is
not listed on any exchange or other trading or quotation system. Stock
performance data for these entities may not represent all transactions in the
shares traded for the periods in question, and no assurance can be given as to
the accuracy of reported prices, as the prices were not independently verified.
The data is based on prices for actual sales transactions only, and excludes
offers to buy or offers to sell.
19
<PAGE> 22
Exhibit 1 of Citizens Bancorp 1999 Proxy Statement
CITIZENS BANCORP
1998 INCENTIVE STOCK OPTION PLAN
1. Purpose. The purpose of this 1998 Incentive Stock Option Plan (the
"Plan") is to enable Citizens Bancorp (the "Company") to attract and retain
experienced and able employees of the Company and to provide an incentive to
these individuals to exert their best efforts for the Company and its
shareholders.
2. Types of Stock Options Available. The Board of Directors of the
Company (the "Board") is authorized to make two kinds of stock option grants of
the common stock ("Stock") of the Company: (i) grants of Incentive Stock Options
and (ii) grants of Non-Statutory Stock Options. Such grants shall be made
subject to the conditions and restrictions set forth in the Plan.
3. Administration.
3.1 Board of Directors. The Board shall administer the Plan, and shall
determine and designate the persons to whom grants shall be made and the
amounts, terms and conditions of such grants. Subject to the provisions of the
Plan, the Board may adopt or amend rules and regulations for the administration
of the Plan. The interpretation and construction of the Plan by the Board shall
be final and conclusive. The Board may delegate to a committee of the Board
authority to administer the Plan; provided, that only the Board, and not a
committee, may amend or terminate the Plan as provided elsewhere herein.
3.2 Stock Valuation. Whenever the operation of the Plan requires that
the fair market value of the Stock be determined, the fair market value shall be
established in accordance with methods chosen by the Board in its discretion and
in accordance with its fiduciary duties. Such methods may include, without
limitation, the valuation method specified in the Company's currently effective
Dividend Reinvestment Plan.
3.3 Employee Participation. No employee of the Company who receives a
stock option under the Plan shall participate in any decisions of the Board with
respect to the grant of the option to that employee.
4. Eligibility. Stock option Grants may be made under the Plan to
officers and key employees of the Company whom the Board believes have made or
will make an essential contribution to the Company; provided, however, that
directors of the Company, except for directors who are also employees of the
Company, are not eligible for grants under the Plan.
5. Shares Subject to the Plan. The total number of shares of Stock that
may be issued upon the exercise of all options granted under the Plan shall at
no time exceed in the aggregate four percent (4%) of the issued and outstanding
Stock of the Company. If any option under the Plan expires or is canceled or
terminated and is unexercised in whole or in part, the shares of Stock allocable
to the unexercised portion shall again become available for awards under the
Plan. Stock issued under the Plan may be subject to such restrictions on
transfer, repurchase rights, or other restrictions as are determined by the
Board. The certificates representing such Stock shall include language stating
such restrictions as determined by the Board.
6. Effective Date and Duration of Plan.
6.1 Effective Date. The Plan shall become effective (the "Effective
Date") upon the approval of a resolution by a majority of the shareholders of
the Company ratifying the adoption of the Plan by the Board. Grants may be made
under the Plan at any time after the Effective Date and before termination of
the Plan.
Exhibit 1, Page 1 - Citizens Bancorp 1998 Incentive Stock Option Plan
<PAGE> 23
Exhibit 1 of Citizens Bancorp 1999 Proxy Statement
6.2 Duration of the Plan. The Plan shall continue in effect until, in
the aggregate, options have been awarded and exercised with respect to all Stock
subject to the Plan under paragraph 5 (subject to any adjustments under
paragraph 10). The Board may suspend or terminate the Plan at any time except
with respect to options then outstanding under the Plan. Termination shall not
affect any right of the Company to repurchase shares or the forfeitability of
shares issued under the Plan.
7. Grants.
7.1 Power of Board of Directors. The Board may, from time to time, take
the following actions, separately or in combination, under the Plan: (i) grant
Incentive Stock Options, as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"); and (ii) grant options other than Incentive
Stock Options (hereinafter "Non-Statutory Stock Options"). The Board shall
specify the action taken with respect to each person granted an option under the
Plan, and shall specifically designate each option granted under the Plan as an
Incentive Stock Option or a Non-Statutory Stock Option. All such grants are
subject to the restrictions described elsewhere in the Plan.
7.2 General Rules Relating to Grants of Stock Options.
7.2.1 Time of Exercise. Except as provided in paragraph 9,
stock options granted under the Plan may be exercised over the period stated in
each option in amounts and at times prescribed by the Board and stated in the
option, provided that options shall not be exercised for fractional shares. If
the optionee does not exercise an option in any period with respect to the full
number of shares to which the optionee is entitled in that period, the
optionee's rights shall be cumulative and the optionee may purchase those shares
in any subsequent period during the term of the option.
7.2.2 Purchase of Shares. Shares may be purchased or acquired
pursuant to an option only on receipt by the Company of notice in writing from
the optionee of the optionee's intention to exercise, specifying the number of
shares the optionee desires to purchase and the date on which the optionee
desires to complete the transaction, which may not be more than 30 days after
receipt of the notice. On or before the date specified for completion of the
purchase, the optionee must have paid the Company the full purchase price in
cash, in shares of Stock previously acquired by the optionee valued at fair
market value, or in any combination of cash and shares of Stock. No shares shall
be issued until full payment has been made. Each optionee who has exercised an
option shall, on notification of the amount due, if any, and prior to or
concurrently with delivery of the certificates representing the shares for which
the option was exercised, pay to the Company amounts necessary to satisfy any
applicable federal, state, and local withholding tax requirements. If additional
withholding becomes required beyond any amount deposited before delivery of the
certificates, the optionee shall pay such amount to the Company on demand. If
the optionee fails to pay the amount demanded, the Company shall have the right
to withhold that amount from other amounts payable by the Company to the
optionee, including salary, subject to applicable law. The optionee exercising
the option shall be solely responsible for payment of federal income taxes and
other taxes for which optionee is liable as a result of the exercise.
7.3 Incentive Stock Options. Incentive Stock Options shall be subject
to the following additional terms and conditions:
7.3.1 Limitation on Amount of Grants. No employee may be
granted Incentive Stock Options under the Plan such that the aggregate fair
market value on the date of grant of the Stock with respect to which Incentive
Stock Options are exercisable for the first time by that employee during any
calendar year, under the Plan and under any other incentive stock option plan
(within the meaning of Section 422 of the Code) of the Company or any parent or
subsidiary of the Company, exceeds $100,000.
7.3.2 Option Price. The option price per share under each
option granted under the Plan shall be determined by the Board, but the option
price with respect to an Incentive Stock Option shall
Exhibit 1, Page 2 - Citizens Bancorp 1998 Incentive Stock Option Plan
<PAGE> 24
Exhibit 1 of Citizens Bancorp 1999 Proxy Statement
be not less than 100 percent of the fair market value of the shares of Stock
covered by the option on the date the option is granted.
7.3.3 Duration of Options. Subject to paragraphs 7.3.4 and 9,
each option granted under the Plan shall continue in effect for the period fixed
by the Board, except that no Incentive Stock Option shall be exercisable after
the expiration of 10 years from the date it is granted.
7.3.4 Limitations on Grants to 10 Percent Shareholders. An
Incentive Stock Option may be granted under the Plan to an employee of the
Company, or of any parent or subsidiary of the Company, possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company, or of any parent or subsidiary of the Company, only if (i) the option
price is at least 110 percent of the fair market value of the Stock subject to
the option on the date it is granted, and (ii) the option by its terms is not
exercisable after the expiration of five years from the date it is granted.
7.3.5 Limitation on Time of Grant. No Incentive Stock Option
may be granted on or after the tenth anniversary of the Effective Date.
7.4 Non-Statutory Stock Options. Non-Statutory Stock Options shall be
subject to the following additional terms and conditions:
7.4.1 Option Price. The option price per share under each
option granted under the Plan for a Non-Statutory Stock Option shall be the fair
market value of the Stock at the time of the grant.
7.4.2 Duration of Options. Non-Statutory Stock Options granted
under the Plan shall continue in effect for the period fixed by the Board.
8. Nontransferability. Options granted under the Plan shall be
nonassignable and nontransferable by the holder except by will or by the laws of
descent and distribution applicable to the holder's estate, and shall be
exercisable during the holder's lifetime only by the holder.
9. Vesting of Option Grants; Time of Exercise.
9.1 Vesting. All stock options granted under the Plan shall fully vest
on the date of grant, unless the terms of the grant expressly provide otherwise.
The Board may in its discretion may provide for vesting in accordance with the
schedule provided below.
9.2 Vesting Schedule. The date of grant of a Stock option to an
employee of the Company shall be the "Grant Date." A Stock option grant shall,
if the terms of the grant so provide, vest in accordance with the following
schedule during the optionee's continuous employment by the Company from and
after the Grant Date.
<TABLE>
<CAPTION>
Years of Employment Nonforfeitable %
------------------- ----------------
<S> <C>
1 year from Grant Date 25%
2 years from Grant Date 50%
3 years from Grant Date 75%
4 years from Grant Date 100%
</TABLE>
9.3 Exercise of Options Granted Under Vesting Schedule. The Board shall
determine in its discretion, at the time the option is granted, the terms and
conditions under which an option granted under the vesting schedule provided in
Section 9.2 may be exercised by the optionee.
Exhibit 1, Page 3 - Citizens Bancorp 1998 Incentive Stock Option Plan
<PAGE> 25
Exhibit 1 of Citizens Bancorp 1999 Proxy Statement
9.4. Impact of Termination of Employment on Non-Vested Option Grants.
9.4.1 Retirement or General Termination. Unless otherwise
determined by the Board, (i) if an employee's employment by the Company is
terminated for cause, any portion of a stock option which has not vested shall
be deemed forfeited on the date of the termination; and (ii) if an employee's
employment by the Company is terminated without cause or by reason of the
employee's retirement, any portion of a stock option which has not vested shall
be deemed vested on the termination date. The transfer of an employee by the
Company or any parent or subsidiary of the Company to the Company or any parent
or subsidiary of the Company shall not be considered a termination under this
Section.
9.4.2 Death or Disability. Unless otherwise determined by the
Board, if an employee's employment by the Company is terminated because of death
or physical disability (within the meaning of Section 22(e)(3) of the Code), any
portion of a stock option which has not vested shall be deemed vested on the
date of such termination.
9.5. Impact of Termination of Employment on Vested Option Grants.
9.5.1 Retirement or General Termination. Unless otherwise
determined by the Board, if an employee's employment by the Company is
terminated by retirement or for any reason other than in the circumstances
specified in 9.5.2 below, any vested option held by the employee may be
exercised at any time prior to its expiration date or the expiration of 90 days
after the date of the termination, whichever is the shorter period, but only if
and to the extent the employee was entitled to exercise the option on the date
of termination. The transfer of an employee by the Company or any parent or
subsidiary of the Company to the Company or any parent or subsidiary of the
Company shall not be considered a termination for purposes of the Plan.
9.5.2 Death or Disability. Unless otherwise determined by the
Board, if an employee's employment by the Company is terminated because of death
or physical disability (within the meaning of Section 22(e)(3) of the Code), any
vested option held by the employee may be exercised at any time prior to its
expiration date or the expiration of one year after the date of termination,
whichever is the shorter period, for the greater of (a) the number of remaining
shares for which the employee was entitled to exercise the option on the date of
termination or (b) the number of remaining shares for which the employee would
have been entitled to exercise the option if such option had been 50 percent
exercisable on the date of termination. If an employee's employment is
terminated by death, any option held by the employee shall be exercisable only
by the person or persons to whom the employee's rights under the option pass by
the employee's will or by the laws of descent and distribution applicable to the
employee's estate.
9.6 Termination of Unexercised Rights. To the extent an option held by
any deceased employee or by any employee whose employment is terminated is not
exercised within the limited periods provided above, all further rights to
exercise the option shall terminate at the expiration of such periods.
10. Adjustments. If the Board determines that an adjustment in the
number of shares of Stock subject to outstanding grants of options is required
in order to prevent the dilution or enlargement of the benefits, or potential
benefits, which the Board intended to be made available under the Plan, the
Board may make such adjustments as it deems equitable. Any such adjustments made
by the Board shall be final. Examples of events which may require an adjustment
include, without limitation: (i) the issuance of a stock dividend; (ii) a stock
split or reverse stock split; and (iii) a recapitalization, reorganization,
merger, consolidation, merger, split-up, spin-off, combination, repurchase,
exchange of shares or other corporate transaction or event involving or
affecting the Stock. The adjustments which the Board may make include, without
limitation: (i) adjusting the number or percentage of shares of Stock with
respect to which grants may be made; (ii) adjusting the number of shares of
Stock subject to outstanding awards, including issued but unexercised option
grants; and (iii) adjusting the exercise price
Exhibit 1, Page 4 - Citizens Bancorp 1998 Incentive Stock Option Plan
<PAGE> 26
Exhibit 1 of Citizens Bancorp 1999 Proxy Statement
of any issued but unexercised option grants, or where appropriate, providing for
a cash payment to the holder of an outstanding grant. In the event of a stock
split or stock dividend, the adjustment to the number of shares of Stock covered
by an existing, unexercised stock option grant shall be mandatory, not
discretionary.
11. Change of Control. Notwithstanding any other provision of the Plan
or of the terms of a specific grant to the contrary, on the effective date of
any Change of Control of the Company any grant of a Stock option under the Plan
which is not vested shall vest immediately and fully. As used herein, "Change of
Control" means (i) the acquisition of twenty-five percent (25%) or more of the
voting securities of the Company by any person, or persons acting as a group
within the meaning of Section 13(d) of the Securities Exchange Act of 1934, or
(ii) any such acquisition of a percentage between ten percent (10%) and
twenty-five percent (25%) of such voting securities if any of the Board, the
Comptroller of the Currency, the Federal Deposit Insurance Corporation or the
Federal Reserve Bank have made a determination that such acquisition constitutes
or will constitute control of the Company. The term "person" means an
individual, corporation, bank, bank holding company, or other entity, but
excludes any employee stock ownership plan established for the benefit of
employees of the Company or any of its subsidiaries or other affiliates.
12. Amendment of Plan. The Board may at any time amend the Plan to
comply with changes in the law or for any other reason. Amendments to the Plan
shall not be submitted to the shareholders of the Company for approval except at
the discretion of the Board, unless applicable law requires shareholder approval
of the amendment or amendments. Except as provided in paragraph 10, however, no
change in an option already granted shall be made without the written consent of
the option holder. The Board may amend the Plan to provide for (a) an increase
in the total number of shares that may be issued under the Plan, and (b) a
change in the class of persons eligible to receive grants under the Plan.
13. Approvals. The obligations of the Company under the Plan may be
subject to the approval of state and federal authorities or agencies with
jurisdiction in the matter. The Company will use its best efforts to take steps
required by state or federal law or applicable regulations in connection with
any grants made under the Plan. The Company shall not be obligated to issue or
deliver shares of Stock under the Plan if the Company is advised by legal
counsel that doing so would violate applicable state or federal laws.
14. Employment Rights. Nothing in the Plan or any grant pursuant to the
Plan shall confer on a Company employee any right to be continued in the
employment of the Company, or shall interfere in any way with the right of the
Company to terminate such employee's employment at any time, with or without
cause.
15. Rights as a Shareholder. A holder of an option grant shall have no
rights as a shareholder with respect to any shares covered by the option until
the date of issue of a stock certificate to him or her for such shares. Except
as otherwise provided in the Plan, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date of such stock
certificate.
16. Definitions. As used herein, (i) "Company" includes any parent
corporation, subsidiaries and other affiliates of the Company, and (ii) "Board"
includes any committee of the Board of Directors of the Company established to
administer the Plan.
Date of Adoption: November 17, 1998.
Exhibit 1, Page 5 - Citizens Bancorp 1998 Incentive Stock Option Plan
<PAGE> 27
Exhibit 2 of Citizens Bancorp 1999 Proxy Statement
CITIZENS BANCORP
1998 STOCK BONUS PLAN
1. Purpose. The purpose of this 1998 Stock Bonus Plan (the "Plan") is
to enable Citizens Bancorp (the "Company") to attract and retain experienced and
able employees of the Company and to provide an incentive to these individuals
to exert their best efforts for the Company and its shareholders.
2. Grants of Stock Bonuses. The Board of Directors of the Company (the
"Board") is authorized to make of grants of the common stock ("Stock") of the
Company as bonuses. Such grants shall be made subject to the conditions and
restrictions set forth in the Plan.
3. Administration.
3.1 Board of Directors. The Board shall administer the Plan, and shall
determine and designate the persons to whom grants shall be made and the
amounts, terms and conditions of such grants. Subject to the provisions of the
Plan, the Board may adopt or amend rules and regulations for the administration
of the Plan. The interpretation and construction of the Plan by the Board shall
be final and conclusive. The Board may delegate to a committee of the Board
authority to administer the Plan; provided, that only the Board, and not a
committee, may amend or terminate the Plan as provided elsewhere herein.
3.2 Employee Participation. No employee of the Company who receives a
stock bonus under the Plan shall participate in any decisions of the Board with
respect to the grant of the stock bonus to that employee.
4. Eligibility. Grants may be made under the Plan to employees of the
Company whom the Board believes have made or will make an essential contribution
to the Company; provided, however, that directors of the Company, except for
directors who are also employees of the Company, are not eligible for grants of
stock bonuses under the Plan.
5. Shares Subject to the Plan. The total number of shares of Stock that
may be issued as stock bonuses shall at no time exceed in the aggregate one
percent (1%) of the issued and outstanding Stock of the Company. If Stock
awarded as a bonus under the Plan is forfeited to the Company or repurchased by
the Company pursuant to applicable restrictions, the number of shares forfeited
or repurchased shall again be available under the Plan. Stock issued under the
Plan may be subject to such restrictions on transfer, repurchase rights, or
other restrictions as are determined by the Board. The certificates representing
such Stock shall include language stating such restrictions as determined by the
Board.
6. Effective Date and Duration of Plan.
6.1 Effective Date. The Plan shall become effective (the "Effective
Date") upon the approval of a resolution by a majority of the shareholders of
the Company ratifying the adoption of the Plan by the Board. Grants may be made
under the Plan at any time after the Effective Date and before termination of
the Plan.
6.2 Duration of the Plan. The Plan shall continue in effect until Stock
has been awarded as bonuses covering all shares subject to the Plan under
paragraph 5 (subject to any adjustments under paragraph 8. The Board may suspend
or terminate the Plan at any time. Termination shall not affect any right of the
Company to repurchase shares or the forfeitability of shares issued under the
Plan.
Exhibit 2, Page 1 - Citizens Bancorp 1998 Stock Bonus Plan
<PAGE> 28
Exhibit 2 of Citizens Bancorp 1999 Proxy Statement
7. Stock Bonus Provisions.
7.1 Power of Board of Directors. The Board may, from time to time, make
grants of Stock as bonuses under the Plan in its sole discretion. The Board
shall specify the action taken with respect to each person granted a Stock bonus
under the Plan. All such grants are subject to the restrictions described
elsewhere in the Plan.
7.2 Stock Bonuses. Stock bonuses shall be subject to the terms,
conditions and restrictions determined by the Board at the time of the award.
The Board may require the recipient to sign an agreement as a condition of the
award containing such terms, conditions, representations and warranties as the
Board may require. The Board may not require the recipient to pay any money
consideration for the bonus; provided, that the Company may require the
recipient to pay to the Company amounts necessary to satisfy applicable federal,
state, or local tax withholding requirements prior to the issuance of Stock
through the delivery of certificates or otherwise. The recipient of a stock
bonus shall be solely responsible for payment of federal income taxes and other
taxes for which the recipient is liable as a result of the stock bonus.
8. Adjustments. If the Board determines that an adjustment in the
number of shares of Stock subject to outstanding non-vested grants of bonuses is
required in order to prevent the dilution or enlargement of the benefits, or
potential benefits, which the Board intended to be made available under the
Plan, the Board may make such adjustments as it deems equitable. Any such
adjustments made by the Board shall be final. Examples of events which may
require an adjustment include, without limitation,: (i) the issuance of a stock
dividend; (ii) a stock split or reverse stock split; and (iii) a
recapitalization, reorganization, merger, consolidation, merger, split-up,
spin-off, combination, repurchase, exchange of shares or other corporate
transaction or event involving or affecting the Stock. The adjustments which the
Board may make include, without limitation: (i) adjusting the number or
percentage of shares of Stock with respect to which grants may be made; (ii)
adjusting the number of shares of Stock subject to outstanding awards; and (iii)
where appropriate, providing for a cash payment to the holder of an outstanding
grant.
9. Change of Control. Notwithstanding any other provision of the Plan
or of the terms of a specific grant to the contrary, on the effective date of
any Change of Control of the Company: (i) any grant of a Stock bonus under the
Plan which is not vested shall vest immediately and fully, and (ii) a Stock
bonus granted through an unsecured promise to issue Stock in installments shall
be deemed accelerated and the grantee shall be entitled immediately to the
unissued portion of the grant. As used herein, "Change of Control" means (i) the
acquisition of twenty-five percent (25%) or more of the voting securities of the
Company by any person, or persons acting as a group within the meaning of
Section 13(d) of the Securities Exchange Act of 1934, or (ii) any such
acquisition of a percentage between ten percent (10%) and twenty-five percent
(25%) of such voting securities if any of the Board, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation or the Federal Reserve Bank
have made a determination that such acquisition constitutes or will constitute
control of the Company. The term "person" means an individual, corporation,
bank, bank holding company, or other entity, but excludes any employee stock
ownership plan established for the benefit of employees of the Company or any of
its subsidiaries or other affiliates.
10. Amendment of Plan. The Board may at any time amend the Plan to
comply with changes in the law or for any other reason. Amendments to the Plan
shall not be submitted to the shareholders of the Company for approval except at
the discretion of the Board, unless applicable law requires shareholder approval
of the amendment or amendments. The Board may amend the Plan to provide for (a)
an increase the total number of shares that may be issued under the Plan, and
(b) a change in the class of persons eligible to receive grants under the Plan.
11. Approvals. The obligations of the Company under the Plan may be
subject to the approval of state and federal authorities or agencies with
jurisdiction in the matter. The Company will
Exhibit 2, Page 2 - Citizens Bancorp 1998 Stock Bonus Plan
<PAGE> 29
Exhibit 2 of Citizens Bancorp 1999 Proxy Statement
use its best efforts to take steps required by state or federal law or
applicable regulations in connection with any grants made under the Plan. The
Company shall not be obligated to issue or deliver shares of Stock under the
Plan if the Company is advised by legal counsel that doing so would violate
applicable state or federal laws.
12. Employment Rights. Nothing in the Plan or any grant pursuant to the
Plan shall confer on a Company employee any right to be continued in the
employment of the Company, or shall interfere in any way with the right of the
Company to terminate such employee's employment at any time, with or without
cause.
13. Rights as a Shareholder. A recipient of Stock awarded as a bonus
shall have no rights as a shareholder with respect to any shares covered by any
bonus award until the date of issue of a stock certificate to him or her for
such shares. Except as otherwise provided in the Plan, no adjustment shall be
made for dividends or other rights for which the record date is prior to the
date of such stock certificate.
14. Definitions. As used herein, (i) "Company" includes any parent
corporation, subsidiaries and other affiliates of the Company, and (ii) "Board"
includes any committee of the Board of Directors of the Company established to
administer the Plan.
Date of Adoption: November 17, 1998.
Exhibit 2, Page 3 - Citizens Bancorp 1998 Stock Bonus Plan
<PAGE> 30
BACK OF PROXY BALLOT
CITIZENS BANCORP - VOTING PROXY
I (we), whose signature(s) appear on the reverse side of this proxy, hereby
appoint Rosetta C. Venell and Lark E. Wysham and each of them as proxies to vote
all shares of stock of Citizens Bancorp that I (we) would be entitled to vote at
the Annual Meeting of shareholders of Citizens Bancorp, to be held on April 20,
1999 at 7:00 p.m. Pacific Time, in Corvallis, Oregon, and at any adjournments
thereof, with all powers I (we) would have if personally present, and as
instructed below. THIS PROXY IS TO BE VOTED AS SPECIFIED BELOW, OR IF NO
SELECTIONS ARE MADE, SHALL BE VOTED FOR THE PROPOSALS SHOWN. THIS PROXY MAY ALSO
BE VOTED IN MANAGEMENT'S DISCRETION ON ANY OTHER MATTERS COMING BEFORE THE
ANNUAL MEETING.
PROPOSAL #1: ELECTION OF DIRECTORS - Management's Nominees
Scott A. Fewel Duane L. Sorensen Rosetta C. Venell
[ ] FOR all nominees [ ] WITHHOLD [ ] ABSTAIN
(except as shown) AUTHORITY
To vote against an individual nominee, line out the nominee's name.
- --------------------------------------------------------------------------------
PROPOSAL #2: INCREASE IN NUMBER OF AUTHORIZED SHARES - Proposed by Management
THE PROPOSAL: The approval of an amendment to Bancorp's Articles of
Incorporation to increase Bancorp's authorized shares of its common stock from
5,000,000 to 10,000,000. MANAGEMENT RECOMMENDS A VOTE FOR THE PROPOSAL.
[ ] FOR the Proposal [ ] AGAINST [ ] ABSTAIN
the Proposal
PROPOSAL #3: APPROVAL OF INCENTIVE STOCK OPTION PLAN - Proposed by Management
THE PROPOSAL: The approval of an Incentive Stock Option Plan authorizing Bancorp
to issue incentive compensation in the form of stock options. MANAGEMENT
RECOMMENDS A VOTE FOR THE PROPOSAL.
[ ] FOR the Proposal [ ] AGAINST [ ] ABSTAIN
the Proposal
PROPOSAL #4: APPROVAL OF INCENTIVE STOCK BONUS PLAN - Proposed by Management THE
PROPOSAL: The approval of a Stock Bonus Plan authorizing Bancorp to issue
incentive compensation in the form of stock bonuses. MANAGEMENT RECOMMENDS A
VOTE FOR THE PROPOSAL.
[ ] FOR the Proposal [ ] AGAINST [ ] ABSTAIN
the Proposal
CITIZENS BANCORP
P.O. Box 30, Corvallis, Oregon 97339-0030
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
April 20, 1999 Annual Meeting of Shareholders
Please sign EXACTLY as your name appears below. If shares are held by two or
more persons, each must sign. Please supply your title if you are signing as an
attorney, executor, trustee, guardian, corporate officer, or in some other
representative capacity.
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Signature
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Signature
Date: ________________ , 1999
PLEASE COMPLETE, DATE, SIGN, AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED
ENVELOPE. Thank you.
