<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
WESTERFED FINANCIAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
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):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / 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
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
[WESTERFED LETTERHEAD]
September 30, 1997
Dear Fellow Stockholder:
On behalf of the Board of Directors and Management of WesterFed
Financial Corporation, I cordially invite you to attend the Annual Meeting of
Stockholders. The meeting will be held at 9:00 a.m. on October 28, 1997 at the
Missoula Southgate Branch of Western Federal Savings Bank located at 2601
Garfield Street, Missoula, Montana.
The stockholders will be asked to vote on the election of Directors
and to ratify the appointment of an independent auditor as described in the
accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.
Whether or not you attend the meeting, I encourage you to read the
enclosed Proxy Statement and then complete, sign and date the enclosed proxy
card and return it in the postage prepaid envelope provided. This will save
WesterFed additional expense in soliciting proxies and will ensure that your
shares are represented. Please note that you may vote in person at the meeting
even if you have previously returned the proxy.
Thank you for your attention to this important matter.
Sincerely,
LYLE R. GRIMES
President, Chief Executive Officer and
Chairman of the Board
<PAGE>
WESTERFED FINANCIAL CORPORATION
110 East Broadway
Missoula, Montana 59802-4511
(406) 721-5254
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 28, 1997
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of WesterFed Financial Corporation (the "Company") will be held at
the Missoula Southgate Branch of Western Federal Savings Bank of Montana, a
wholly owned subsidiary of the Company, located at 2601 Garfield Street,
Missoula, Montana at 9:00 a.m., Missoula, Montana time, on October 28, 1997.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company;
2. The ratification of the appointment of KPMG Peat Marwick LLP as
the auditors of the Company for the fiscal year ending June 30,
1998;
and such other matters as may properly come before the Meeting, or any
adjournments or postponements thereof. The Board of Directors is not aware of
any other business to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned or postponed. Stockholders of record at the close of business on
August 29, 1997 are the stockholders entitled to vote at the Meeting and any
adjournments or postponements thereof.
A complete list of stockholders entitled to vote at the Meeting is
available for examination by any stockholder, for any purpose germane to the
Meeting, between 9:00 a.m. and 4:00 p.m. at the office of the Company located
at 110 East Broadway, Missoula, Montana for a period of ten days prior to the
Meeting.
You are requested to complete and sign the enclosed form of proxy,
which is solicited on behalf of the Board of Directors, and to mail it
promptly in the enclosed envelope. The proxy will not be used if you attend
and vote at the Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
Lyle R. Grimes
President, Chief Executive Officer and
Chairman of the Board
Missoula, Montana
September 30, 1997
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
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<PAGE>
PROXY STATEMENT
WESTERFED FINANCIAL CORPORATION
110 East Broadway
Missoula, Montana 59802-4511
(406) 721-5254
ANNUAL MEETING OF STOCKHOLDERS
October 28, 1997
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of WesterFed Financial Corporation (the
"Company") of proxies to be used at the Annual Meeting of Stockholders of the
Company (the "Meeting"), which will be held at the Missoula Southgate Branch
of Western Federal Savings Bank of Montana (the "Bank"), a wholly owned
subsidiary of the Company, located at 2601 Garfield Street, Missoula, Montana,
on October 28, 1997, at 9:00 a.m., Missoula, Montana time, and all
adjournments and postponements of the Meeting. The accompanying Notice of
Annual Meeting and this Proxy Statement are first being mailed to stockholders
on or about September 30, 1997.
At the Meeting, stockholders of the Company are being asked to
consider and vote upon the election of two directors and a proposal to ratify
the appointment of KPMG Peat Marwick LLP as auditors for the Company.
Vote Required and Proxy Information
All shares of the Company's common stock, par value $.01 per share
(the "Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the director nominees
and the proposal set forth in this Proxy Statement. The Company does not know
of any matters, other than as described in the Notice of Annual Meeting, that
are to come before the Meeting. If any other matters are properly presented at
the Meeting for action, the persons named in the enclosed form of proxy and
acting thereunder will have the discretion to vote on such matters in
accordance with their best judgment.
Directors shall be elected by a plurality of the votes present in
person or represented by proxy at the Meeting and entitled to vote on the
election of directors. In all matters other than the election of directors,
the affirmative vote of a majority of shares present in person or represented
by proxy at the Meeting and entitled to vote on the matter shall be the act of
the stockholders. Proxies marked to abstain with respect to a proposal have
the same effect as votes against the proposal. Broker non-votes have no effect
on the vote. One-third of the shares of the Common Stock, present in person or
represented by proxy, shall constitute a quorum for purposes of the Meeting.
Abstentions and broker non-votes are counted for purposes of determining a
quorum.
A proxy given pursuant to the solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary
of the Company at or before the Meeting a written notice of revocation bearing
a later date than the proxy, (ii) duly executing a subsequent proxy relating
to the same shares and delivering it to the Secretary of the Company at or
before the Meeting, or (iii) attending the Meeting and voting in person
(although attendance at the Meeting will not in and of itself constitute
revocation of a proxy). Any written notice revoking a proxy should be
delivered to Douglas G. Bardwell, Secretary, WesterFed Financial Corporation,
110 East Broadway, Missoula, Montana 59802-4511.
Voting Securities and Certain Holders Thereof
Stockholders of record as of the close of business on August 29, 1997
will be entitled to one vote for each share of Common Stock then held. As of
that date, the Company had 5,564,904 shares of Common Stock issued and
outstanding (including a total of 46,171 shares not fully vested, subject to
restriction, which have been issued under the Company's Recognition and
Retention Plan (the "RRP")). The following table sets forth information
regarding share ownership of: (i) those persons or entities known by
management to beneficially own more than five percent of the Common Stock,
(ii) the Company's Chief Executive Officer and each other executive officer
who made in excess of $100,000 during fiscal 1997 (the "Named Officers") and
(iii) all directors and executive officers of the Company and the Bank as a
group.
<PAGE>
<TABLE>
<CAPTION>
Shares
Beneficially Percent
Beneficial Owner Owned of Class
---------------- ------------ --------
Principal Owners
- ----------------
<S> <C> <C>
WesterFed Financial Corporation Employee Stock Ownership Plan and Trust 354,933 6.4%
110 East Broadway
Missoula, Montana 59802-4511(1)
John Hancock Mutual Life Insurance Company, et al. 390,000 7.0
John Hancock Place
P.O. Box 111
Boston, Massachusetts 02117(2)
Paul J. McCann, First Montana Title Insurance Company, TSI, Inc., UAC, Inc. 301,418 5.4
First Montana Title Company of Billings
First Montana Title Company of Great Falls and Paul T. McCann Foundation, Inc.(3)
P.O. Box 2249
Great Falls, MT 59403
Named Officers and Directors and Executive Officers as a Group(4)
- -----------------------------------------------------------------
Lyle R. Grimes, President, Chief Executive Officer and Chairman of the Board (5) 139,315 2.5
Douglas G. Bardwell, Executive Vice President and Secretary(6) 88,780 1.6
James A. Salisbury, Treasurer and Chief Financial Officer(7) 70,938 1.2
Jack E. Lovell, Senior Vice President, Credit Administrator(8) 25,197 .4
Directors and executive officers of the Company and the Bank as a group (14 persons)(9) 705,760 12.0
</TABLE>
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(1) As reported in Amendment No. Two to a Schedule 13G dated January 29,
1997. The amount reported represents shares held by the Employee Stock
Ownership Plan and Trust (the "ESOP"), 114,842 of which have been
allocated to accounts of participants. First Bankers Trust Company,
Quincy, Illinois, the trustee of the ESOP, may be deemed to beneficially
own the shares held by the ESOP which have not been allocated to accounts
of participants. Participants in the ESOP are entitled to instruct the
trustee as to the voting of shares allocated to their accounts under the
ESOP. Unallocated shares held in the ESOP's suspense account or allocated
shares for which no voting instructions are received are voted by the
trustee in the same proportion as allocated shares voted by participants.
(2) As reported in Amendment No. One to a Schedule 13G dated January 27, 1995
by John Hancock Mutual Life Insurance Company and certain of its
subsidiaries, including John Hancock Advisers, Inc., a registered
investment adviser, which reported sole voting and dispositive power as
to 390,000 shares of the Common Stock held by two mutual funds for which
it acts as investment adviser.
(3) As reported on Schedule 13-D dated May 27, 1997 by the above-named
individuals. Mr. McCann reported shared voting and shared dispositive
power over 301,418 shares. First Montana Title Insurance Company reported
sole voting and sole dispositive power over 97,087 shares. TSI, Inc.
reported sole voting and sole dispositive power over 172,420 shares. UAC,
Inc. reported sole voting and sole dispositive power over 5,576 shares.
First Montana Title Company of Billings reported sole voting and sole
dispositive power over 700 shares. First Montana Title Company of Great
Falls reported sole voting and sole dispositive power over 2,300 shares.
Paul J. McCann Foundation, Inc. reported sole voting and sole dispositive
power over 23,335 shares. Paul J. McCann and his wife Anne Marie McCann
and members of their family control, directly or indirectly, a majority
of the outstanding common stock of M Corp. First Montana Title Insurance
Company, TSI, Inc., UAC, Inc., First Montana Title Company of Billings
and First Montana Title Company of Great Falls are each controlled,
directly or indirectly, through M Corp.
<PAGE>
(4) The address of each Named Officer is the same as that of the Company.
(5) Includes 55,271 shares held directly, 911 shares held in a custodial
account for a minor child, 4,932 shares allocated to the account of Mr.
Grimes under the ESOP, 11,757 shares, subject to restriction, awarded
pursuant to the RRP over which Mr. Grimes has voting and no dispositive
power and 66,444 shares subject to currently exercisable options granted
pursuant to the 1993 Stock Option and Incentive Plan (the "Stock Option
Plan"). Excludes options to purchase 60,000 shares which are not
exercisable within 60 days of August 29, 1997.
(6) Includes 34,639 shares held directly, 1,414 shares held by Mr. Bardwell's
spouse, 4,754 shares allocated to the account of Mr. Bardwell under the
ESOP, 2,316 shares held in a custodial account for a minor child, 5,657
shares, subject to restriction, awarded pursuant to the RRP over which
Mr. Bardwell has voting and no dispositive power and 40,000 shares
subject to currently exercisable options granted pursuant to the Stock
Option Plan. Excludes options to purchase 4,366 shares which are not
exercisable within 60 days of August 29, 1997.
(7) Includes 20,610 shares held directly, 1,400 shares held in custodial
accounts or by minor children, 300 shares held indirectly by child, 2,500
shares held by a corporation of which Mr. Salisbury is a director and
executive officer, 4,312 shares allocated to the account of Mr. Salisbury
under the ESOP, 4,548 shares, subject to restriction, awarded pursuant to
the RRP over which Mr. Salisbury has voting and no dispositive power and
37,268 shares subject to currently exercisable options granted pursuant
to the Stock Option Plan.
2
<PAGE>
(8) Includes 7,985 shares held directly, 3,459 shares allocated to the
account of Mr. Lovell under the ESOP, 2,662 shares, subject to
restriction, awarded pursuant to the RRP over which Mr. Lovell has voting
and no dispositive power and 11,091 shares subject to currently
exercisable options granted pursuant to the Stock Option Plan.
(9) Amount includes shares held directly, as well as shares held jointly with
family members, shares held in retirement accounts, shares allocated to
the ESOP accounts of the group members, held in a fiduciary capacity or
by certain family members, with respect to which shares the group members
may be deemed to have sole or shared voting and/or dispositive power.
Amount also includes an aggregate of 43,867 shares, subject to
restriction, awarded pursuant to the RRP over which the holders have
voting but no dispositive power and an aggregate of 336,321 shares
subject to currently exercisable options granted under the Stock Option
Plan. Amount excludes 106,366 shares subject to options which are not
exercisable within 60 days of August 29, 1997.
PROPOSAL I - ELECTION OF DIRECTORS
The Company's Board of Directors is composed of eight members, each
of whom is also a director of the Bank. Approximately one-third of the
directors are elected annually. Directors of the Company are generally elected
to serve for a three-year term or until their respective successors shall have
been elected and shall qualify.
The table below sets forth certain information regarding the
Company's Board of Directors, including their terms of office. It is intended
that the proxies solicited on behalf of the Board of Directors (other than
proxies in which the vote is withheld as to one or more nominees) will be
voted at the Meeting for the election of the nominees identified below. If any
nominee is unable to serve, the shares represented by all such proxies will be
voted for the election of such substitute as the Board of Directors may
recommend. At this time, the Board of Directors knows of no reason why any of
the nominees might be unable to serve, if elected. Except as described herein,
there are no arrangements or understandings between any director or nominee
and any other person pursuant to which such director or nominee was selected.
<TABLE>
<CAPTION>
Shares of Common
Term Stock Beneficially Percent
Director to Owned at of
Name Age Position(s) Held Since(1) Expire August 29, 1997(2) Class
---- --- ---------------- -------- ------ ------------------ -----
NOMINEES
--------
<S> <C> <C> <C> <C> <C> <C>
Marvin P. Reynolds 65 Director 1969 2000 58,199(3) 1.0
Robert F. Burke 65 Director 1994 2000 18,316(4) .3
DIRECTORS CONTINUING IN OFFICE
------------------------------
Lyle R. Grimes 61 President, Chief Executive Officer 1983 1998 139,315(5) 2.5
and Chairman of the Board
Otto G. Klein, Jr., M.D. 58 Director 1988 1998 61,731(6) 1.1
William M. Leslie 62 Director 1997 1998 19,871(7) .4
Laurie C. DeMarois 43 Director 1996 1999 17,251(8) .3
John E. Roemer 66 Vice Chairman of the Board 1978 1999 51,757(9) .9
David W. Jorgenson 47 Vice President and Director 1997 1999 59,885(10) 1.1%
</TABLE>
<PAGE>
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(1) Includes service as a director of the Bank.
(2) Includes shares held directly, as well as shares which are subject to
presently exercisable options granted under the Stock Option Plan, held
in retirement accounts, held by certain members of the named individuals'
families, or held by trusts of which the named individual is a trustee or
substantial beneficiary, with respect to which shares the named
individuals may be deemed to have sole or shared voting and/or
dispositive power. Also includes 29,725 shares subject to options granted
under the Stock Option Plan which are exercisable within 60 days of
August 29, 1997 and 1,997 shares, subject to restriction, granted under
the RRP, respectively, to each non-employee director of the Company,
other than Robert F. Burke, Laurie C. DeMarois and William M. Leslie who
were granted 1,505, 2,167 and 1,650 shares under the RRP.
(3) Includes 20,000 shares held by a Keogh plan and 365 shares held by Mr.
Reynolds' spouse.
(4) Includes 15,084 shares subject to options granted under the Stock Option
Plan and 1,505 shares, subject to restriction, granted under the RRP.
(5) See Footnote 5 on page 2 for information regarding Mr. Grimes' share
ownership.
(6) Includes 20,000 shares held by a pension/profit sharing plan and 1,093
shares held in a custodial account for a minor child.
(7) Includes 82 shares held by Mr. Leslie's spouse, 15,084 shares subject to
options granted under the Stock Option Plan and 1,650 shares subject to
restriction, granted under the RRP.
(8) Includes 15,084 shares subject to options granted under the Stock Option
Plan and 2,167 shares, subject to restrictions granted under the RRP.
3
<PAGE>
(9) Includes 1,907 shares held by Mr. Roemer's spouse, 29,725 shares subject
to options granted under the Stock Option Plan and 1,997 shares subject
to restriction, granted under the RRP.
(10) Includes 2,106 shares held in a custodial account for minor child, 1,661
shares subject to restriction granted under the RRP and 21,360 shares
subject to options granted under the Stock Option Plan.
The business experience of each director and director nominee is set
forth below. All directors have held their present positions for at least the
past five years, except as otherwise indicated.
Marvin P. Reynolds, D.D.S. Dr. Reynolds is a self-employed dentist
who has practiced in Missoula, Montana for over 38 years. He is a graduate of
the Washington University Dental School at St. Louis.
Robert F. Burke. Mr. Burke joined American Express Financial
Advisors, Inc., as a personal financial advisor in August 1991. Prior to that
time, he was Chairman and President of the Bank of Sheridan, a commercial bank
located in Sheridan, Montana, from 1983 to 1990. Mr. Burke has approximately
32 years of experience in management and ownership of several Montana banks.
He is a graduate of the University of Montana and the Pacific Coast Banking
School. He is a Past President of the Montana Bankers Association.
Lyle R. Grimes. Mr. Grimes is President and Chief Executive Officer
of the Company and the Bank, positions he has held since September 1993 and
January 1983, respectively. In October 1996, Mr. Grimes was also named
Chairman of the Board of the Company and the Bank. Mr. Grimes is responsible
for establishing policies and plans for directing and controlling the
activities of the Company and the Bank in order to achieve the objectives set
by the Board of Directors. Mr. Grimes also acts as spokesman for the Company
and the Bank and maintains business, civic and governmental contacts. Mr.
Grimes joined the Bank in 1958 and has worked in all phases of the Bank's
operations during his 39 years of employment with the Bank. Mr. Grimes also
serves as President and a Director of the Bank's subsidiaries. Mr. Grimes
served as a Director of the Federal Home Loan Bank of Seattle from January
1993 to January 1995. Mr. Grimes graduated from the University of Montana.
Otto G. Klein, Jr., M.D. Dr. Klein has practiced ophthalmology with
the Rocky Mountain Eye and Ear Center located in Missoula, Montana since 1978.
Prior to such time, he was a Clinical Associate Professor of Ophthalmology at
the University of Washington and partner of the Mason Clinic in Seattle. He is
a graduate of Stanford University and Cornell Medical School.
William M. Leslie. Mr. Leslie has served as President and Chairman of
the Board of Quality Concrete Company, a family-owned business, since 1967. He
also has been a part owner of Mineral Specialties, Inc., a family-owned
industrial company since 1964 and is the Chief Executive Officer of Cody Brick
& Masonry Supplies and Rocky Mountain Concrete Products.
Laurie Caras DeMarois. Ms. DeMarois joined the Garden City Floral
Company in 1976. She now manages the Company and is the majority shareholder.
Ms. DeMarois has served as President of the Montana State Florists Association
and as a director on the boards of the Missoula Chamber of Commerce, United
Way and Rotary Club. Ms. DeMarois is a graduate of the University of Montana.
John E. Roemer. Mr. Roemer is retired. From 1953 to 1988, Mr. Roemer
was the owner and operator of Roemer's Tire Center, Inc. with retail tire and
automotive centers located in Missoula, Montana and Coeur d'Alene, Idaho.
David W. Jorgenson. Mr. Jorgenson is currently Vice President and
Director of the Company. Mr. Jorgenson was the President and Chief Executive
Officer of Security Bancorp prior to its acquisition by WesterFed. He also
served as President and Chief Executive Officer of Security Bank since June 1,
1992. He had previously served as Executive Vice President and Chief Operating
Officer of Security Bank from October 1, 1991 until May 31, 1992. Mr.
Jorgenson was employed by United Tote Company, a supplier of computerized
wagering systems and a subsidiary of United Tote, Inc., from January 1989 to
September 30, 1991, as Senior Vice President-Finance. He previously worked at
First Interstate Bank of Billings, N.A. (formerly Security Bank, N.A.) from
1973 to 1989, his last position being Vice President and head of the Banking
Division.
4
<PAGE>
Meetings and Committees of the Boards of Directors
Board and Committee Meetings of the Company. Meetings of the
Company's Board of Directors are generally held annually or on an as needed
basis. The Board of Directors of the Company held 16 meetings during the
fiscal year ended June 30, 1997. No incumbent director attended fewer than 75%
of the total number of meetings held by the Board of Directors and by all
committees of the Board of Directors on which he served during the year.
The Board of Directors of the Company has standing Executive, Audit
and Compensation Committees.
The Executive Committee of the Company acts on issues arising between
regular board meetings. The Executive Committee is comprised of Directors
Grimes, Reynolds and Roemer. The Executive Committee met two times during
fiscal 1997.
The Audit Committee of the Company reviews audit reports and related
matters to ensure effective compliance by the Company with internal policies
and procedures. Directors Klein, Burke, Roemer, DeMarois and Reynolds are
members of this Committee. The Audit Committee met one time during fiscal
1997.
The Compensation Committee of the Company is responsible for
administration of the RRP and Stock Option Plan. The current members of the
Compensation Committee are Directors Roemer, Klein and Reynolds. This
Committee did not meet during fiscal 1997.
The entire Board of Directors acting as the Nominating Committee of
the Company is responsible for nominating persons to serve on the Board of
Directors of the Company. While the Board of Directors will consider nominees
recommended by stockholders, the Committee has not actively solicited such
nominations. Pursuant to the Company's Bylaws, nominations by stockholders
must be delivered in writing to the Secretary of the Company at least 30 days
before the date of the Meeting.
Board and Committee Meetings of the Bank. During the year ended June
30, 1997, the Board of Directors of the Bank held 16 meetings. No director
attended fewer than 75% of the total meetings of the Board of Directors and
committees on which such Board member served during this period. The Board of
Directors of the Bank has standing Executive, Audit, Asset/Liability,
Building, Compensation and Benefits and Nominating Committees.
The Executive Committee of the Bank acts on issues arising between
regular board meeting dates. The Executive Committee consists of Directors
Grimes, Reynolds and Roemer. The Executive Committee did not meet during
fiscal 1997.
The Audit Committee of the Bank is responsible for setting policies
with regard to internal controls and outside audits. In addition, the Audit
Committee reviews the reports of the Bank's internal auditor, independent
auditors and regulators and makes recommendations to the Board of Directors.
This committee is comprised of Directors Reynolds, Roemer, Klein, Leslie,
DeMarois and Burke. The Audit Committee is scheduled to meet quarterly and met
three times during fiscal 1997.
The Asset/Liability Committee of the Bank is responsible for
oversight of the Bank's investment activities and development of investment
policies. Directors Grimes, Burke, Jorgenson and Klein serve on this committee
with James Salisbury acting as Chairman. The Asset/Liability Committee met
four times during fiscal 1997.
The Building Committee of the Bank reviews corporate office building
needs and site acquisitions and makes recommendations to the Board of
Directors. This committee currently consists of Directors Grimes, Roemer,
Jorgenson, Leslie, DeMarois and Burke. This committee met 11 times during
fiscal 1997.
The Compensation and Benefits Committee of the Bank is comprised of
Directors Roemer, Klein and Reynolds. This committee reviews changes in the
benefit package offered to the Bank officers and employees and recommends
salary levels for executive officers for consideration by the full Board. This
committee meets as necessary and met three times during fiscal 1997.
5
<PAGE>
The Nominating Committee of the Bank meets annually in order to
nominate candidates for membership on the Board of Directors. Directors
Grimes, Roemer and Klein are the current members of this Committee. This
committee met one time during fiscal 1997.
Director Compensation
The Board of Directors of the Company are not paid for their service
in such capacity. Compensation of the Bank's directors is described below.
Cash Compensation. Non-employee directors of the Bank are currently
paid fees of $1,667 per month and $200 for each committee meeting attended,
unless held on a regular Board meeting day or by telephone. Mr. Roemer, Vice
Chairman of the Board, receives an additional fee of $142 per month.
Directors' Deferred Income Plan. The Bank maintains a Directors'
Deferred Income Plan (the "Director Plan") for the benefit of the Bank's
non-employee directors. Directors participating in the Director Plan are
permitted to defer $4,000 or more of their directors' fees earned during each
fiscal year. Deferred fees are maintained in an account at the Bank and upon
retirement are paid to directors in monthly installments over a ten-year
period. The Director Plan also provides that, in the event of the death of a
participating director while serving on the Board, the director's designated
beneficiary shall receive an aggregate amount equal to the amount the director
would have deferred, to be paid on a monthly basis. At June 30, 1997, two
outside directors participated in the Director Plan.
Executive Compensation
The Company has not paid any compensation to its executive officers
since its formation. The Company does not presently anticipate paying any
compensation to such persons until it becomes actively involved in the
operation or acquisition of businesses other than the Bank.
The following table sets forth the compensation paid or accrued by
the Bank during fiscal years indicated for services rendered by the Named
Officers.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------------------------
----------------------
Long-Term Compensation
Annual Compensation(1) ----------------------
Awards
- ----------------------------------------------------------------------------------------------------------------------------
Restricted
Stock Options/ All Other
Fiscal Salary Bonus Award(s) SARs Compensation
Name and Principal Position Year ($) ($)(2) ($) (#) ($)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lyle R. Grimes, President, Chief Executive Officer 1997 $220,000(3) $80,015 $--- --- $ 77,708(4)
Chairman of the Board 1996 220,000(3) 90,025 --- --- 136,802
1995 210,000(3) 52,059 --- --- 128,086
Douglas G. Bardwell, Executive Vice President and 1997 123,000(5) 29,830 --- --- 29,335(6)
Chief Operating Officer 1996 123,000(5) 33,555 --- --- 35,760
1995 117,000(5) 19,340 --- --- 32,031
James A. Salisbury, Treasurer and Chief Financial 1997 105,000(7) 25,465 --- --- 29,222(8)
Officer 1996 100,000(7) 27,280 --- --- 22,048
1995 95,000(7) 15,704 --- --- 19,826
Jack E. Lovell, Senior Vice President/Credit 1997 89,900(9) 10,790 --- --- 20,906(10)
Administrator 1996 85,000(9) 11,595 --- --- 15,648
1995 81,000(9) 6,691 --- --- 14,217
</TABLE>
<PAGE>
- --------------------
(1) "Perquisites" received by the named officers are not presented in the
table as such amounts are below the minimum required for disclosure under
executive compensation disclosure rules adopted by the Securities and
Exchange Commission.
(2) Paid pursuant to the Annual Incentive Plan. See "Compensation Committee
Report on Executive Compensation."
(3) Includes $326, $346 and $253 deferred under the Flexible Compensation
Plan in fiscal 1997, 1996 and 1995, respectively.
(4) Includes $50,000 accrued by the Bank for the benefit of Mr. Grimes under
the Benefit Equalization Plan. The Benefit Equalization Plan provides
supplemental retirement income to Mr. Grimes since his normal retirement
benefit is diminished as a result of IRS rules limiting benefits payable
under the Pension Plan. See "Benefit Plans." Also includes $24,047
allocated to Mr. Grimes' account under the ESOP (representing 1,173
shares at $20.50 per share), $2,538 in unused sick leave, a $102
Christmas bonus and the following insurance premiums paid by the Bank on
Mr. Grimes' behalf: $34 in life insurance, $775 in life insurance under
the Salary Continuation Plan and $212 in long-term disability.
6
<PAGE>
(5) Includes $6,156, $5,810 and $4,680 deferred under the 401(k) Plan, and
$1,602, $862 and $841 deferred under the Flexible Compensation Plan in
fiscal 1997, 1996 and 1995, respectively.
(6) Includes a life insurance premium of $235 paid on behalf of Mr. Bardwell
under the Salary Continuation Plan. Also includes $23,637 allocated to
Mr. Bardwell's account under the ESOP (representing 1,153 shares at
$20.50 per share), $1,419 of unused sick leave, a Christmas bonus of
$102, a long-term disability insurance premium of $212, a life insurance
premium of $34 and contributions to the 401(k) Plan of $3,696 paid by the
Bank on behalf of Mr. Bardwell.
(7) Includes $5,130, $4,878 and $4,752 deferred under the 401(k) Plan, and
$1,222, $900 and $500 deferred under the Flexible Compensation Plan in
fiscal 1997, 1996 and 1995, respectively.
(8) Includes $3,173 accrued and life insurance premiums of $91 paid on behalf
of Mr. Salisbury under the Salary Continuation Plan. Also includes
$21,320 allocated to Mr. Salisbury's account under the ESOP (representing
1,040 shares at $20.50 per share), $1,212 in unused sick leave, a
Christmas bonus of $102, life insurance premiums of $34, a long-term
disability insurance premium of $212, and contributions to the 401(k)
Plan of $3,078 paid by the Bank on behalf of Mr. Salisbury.
(9) Includes $936, 1,014 and $957 deferred under the Flexible Compensation
Plan in 1997, 1996 and 1995, respectively. Includes $6,090, $4,720 and
$3,954 deferred under the 401(k) Plan.
(10) Includes $1,027 in unused sick leave; a Christmas bonus of $102; a long
term disability insurance premium of $189; a life insurance premium of
$34. Also includes $16,687 allocated to Mr. Lovell's account under the
ESOP (representing 814 shares at $20.50 per share). Includes life
insurance premiums of $257 paid on the behalf of Mr. Lovell under the
Salary Continuation Plan. Also includes $2,610 in contributions to the
401(k) Plan paid by the Bank on behalf of Mr. Lovell.
The following table sets forth certain information concerning the
number and value of unexercised stock options held by the Named Officers at
June 30, 1997. No options or stock appreciation rights were awarded to the
Named Officers during fiscal 1997.
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
- ----------------------------------------------------------------------------------------------------------------------
Number of Unexercised Value of Unexercised In-the-Money
Options/SARs at FY-End (#)(1) Options/SARs at FY-End ($)(2)
----------------------------- -------------------------------
Shares Acquired
Name on Exercise (#) Value
Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lyle R. Grimes N/A N/A 66,444 60,000 $697,662 $630,000
Douglas G. Bardwell N/A N/A 40,000 4,366 420,000 45,843
James A. Salisbury N/A N/A 37,268 --- 391,314 ---
Jack E. Lovell N/A N/A 11,091 --- 116,455 ---
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------
(1) Represents options to purchase Common Stock granted pursuant to the Stock
Option Plan. Except for an option to purchase 26,444 shares of Common
Stock granted to Mr. Grimes, all of which vested in March 1994, the terms
of the option awards provide that shares will be exercisable at a rate of
10,000 shares per year, commencing on January 6, 1995.
(2) Represents the aggregate market value (market price of the Common Stock
less the exercise price) of the option granted based on the closing price
of $20.50 per share of the Common Stock as reported on the Nasdaq National
Market on June 30, 1997.
Employment Agreements
The Bank has entered into employment agreements with Messrs. Grimes,
Bardwell, Salisbury and Lovell and three other executive officers. The
employment agreements are designed to assist the Bank in maintaining a stable
and competent management base. The employment agreements became effective
January 6, 1994 and provide for an annual base salary in an amount equal to
the employee's current salary. The agreements provide for termination upon the
employee's death, for cause or in certain events specified by Office of Thrift
Supervision ("OTS") regulations. The employment agreements are terminable by
the employee upon 90 days' notice to the Bank.
The following discussion relates to the terms of the agreements with
Messrs. Grimes, Bardwell, Salisbury and Lovell. These employment agreements
provide for an initial term of three years with the exception of Mr. Lovell
whose agreement provides for an initial term of two years. Subject to annual
Board approval following a satisfactory annual performance review, on each
annual anniversary of the effective date of the agreement, each agreement
shall be automatically extended for an additional one-year period, unless
either the employee or the Bank gives notice to the contrary. The employment
agreements provide for a lump sum payment to the employee of up to 299% of his
then-current annual compensation in the event there is a change in control of
the Bank where employment terminates involuntarily in connection with such
change in control of the Bank or the Company or within 12 months thereafter.
This termination payment is subject to reduction by the amount of all other
compensation to the employee deemed for
7
<PAGE>
purposes of the Internal Revenue Code of 1986, as amended (the "Code") to be
contingent on a change in control. Such termination payments are provided on a
similar basis in connection with a voluntary termination of employment, where
the change in control was at any time opposed by the Bank's Board of
Directors. For the purposes of the employment agreements, a change in control
is defined to mean an acquisition of control of the Bank or the Company (other
than by a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or its subsidiary) as defined in OTS regulations
which would require the filing of an application for acquisition of control or
notice of change in control. The agreements provide, among other things, for
participation in an equitable manner and employee benefits applicable to
executive personnel.
Based on current salary information, if Messrs. Grimes, Bardwell,
Salisbury and Lovell had been terminated as of June 30, 1997, under
circumstances entitling each of them to severance pay as described above, such
individuals would have been entitled to receive a lump sum cash payment of
approximately $781,957, $388,380, $313,935 and $243,326.
Benefit Plans
Pension Plan and Benefit Equalization Plan. The Bank's employees are
included in the Financial Institutions Retirement Fund, a multiple employer
comprehensive pension plan (the "Pension Plan"). This noncontributory defined
benefit retirement plan covers all employees who have met minimum service
requirements. The Bank's policy is to fund pension costs accrued. In addition
to administrative expenses of the Pension Plan paid by the Bank, the Bank made
contributions totaling approximately $74,180 to such plan during fiscal 1997.
The following table illustrates annual pension benefits payable upon
retirement at age 65 to a participant electing to receive the standard form of
retirement benefits based on various levels of compensation and years of
service.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
- -----------------------------------------------------------------------------------------------
Years of Service
----------------------------------------------------------------------------
Remuneration 15 20 25 30 35
- ------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 15,000 $ 20,000 $ 25,000 $ 30,000 $ 35,000
75,000 22,500 30,000 37,500 45,000 52,500
100,000 30,000 40,000 50,000 60,000 70,000
125,000 37,500 50,000 62,500 75,000 87,500
150,000 45,000 60,000 75,000 90,000 105,000
175,000 52,500 70,000 87,500 105,000 113,636*
200,000 60,000 80,000 100,000 113,636* 113,636*
225,000 67,500 90,000 112,500 113,636* 113,636*
250,000 75,000 100,000 113,636* 113,636* 113,636*
</TABLE>
- ------------
*Maximum annual benefit payable.
At June 30, 1997, Messrs. Grimes, Bardwell, Salisbury and Lovell had 38
years, 22 years and 11 months, 16 years and 6 months, and 20 years and 9
months, respectively, of credited services under the Plan. Retirement benefits
payable under the Pension Plan are based upon salary contained in the Summary
Compensation Table.
The Bank also maintains a Benefit Equalization Plan for the benefit of
certain highly compensated individuals whose normal benefits payable upon
retirement under the Pension Plan are reduced due to limits placed on benefits
payable under the Pension Plan by federal law. This plan provides for an
annual retirement benefit commencing at the normal retirement date (as defined
in the Bank's Pension Plan) equal to the actuarial equivalent of the
participant's accrued benefit (as determined before applying the limitations
contained in the Pension Plan and any dollar limitation for the amount
considered compensation) minus the actuarial equivalent of the participant's
accrual provided under the Pension Plan. In the event of the participant's
death prior to the date payments are due to commence under this plan, the plan
provides for a death benefit payable to the participant's beneficiary.
Currently, Mr. Grimes is the only person participating in this plan.
Information regarding the amount contributed by the Bank to this plan on
behalf of Mr. Grimes is contained in the Summary Compensation Table.
8
<PAGE>
Salary Continuation Plan. The Bank has adopted the Salary Continuation
Plan ("SCP") for the benefit of 13 officers. The SCP provides for the payment
of monthly retirement benefits to participating officers for a period of ten
years upon retirement at age 55, provided the officer has at least 20 years of
service to the Bank. Benefits payable under the SCP are equal to 1/120 of such
officer's monthly salary for calendar 1992. The SCP also provides for a
benefit equal to one to two times the participant's 1992 salary, in the event
of such person's death while employed by the Bank. Information regarding
amounts contributed to the SCP during the past three fiscal years on behalf of
the Named Officers is contained in the Summary Compensation Table.
Deferred Compensation Agreements. Pursuant to WesterFed's acquisition of
Security Bancorp, WesterFed has adopted Deferred Compensation Agreements with
David W. Jorgenson, Executive Vice President/Commercial Lending and two other
employees of the Bank. Such agreements were originally entered into between
the parties and Security Bancorp in 1992. Pursuant to the Deferred
Compensation Agreements, the Bank has insured the lives of Mr. Jorgenson and
two other employees with single premium, whole life insurance policies. Mr.
Jorgenson and the employees have no rights in or to the insurance policies
purchased by the Bank. If each of Mr. Jorgenson and the two other employees
remain continuously employed by the Bank until retirement, they will receive a
retirement benefit which will be paid in monthly installments for a period of
15 years. For the purposes of the Deferred Compensation Agreements, Mr.
Jorgenson's retirement age is 62 and the two other employees' retirement age
is 60 and 52. If Mr. Jorgenson or the other employees die before the
expiration of 15 years, the unpaid balance will be paid in monthly
installments to the parties' beneficiaries. If Mr. Jorgenson or the other
employees die before retirement and while employed full time by the Bank, the
parties' beneficiaries will receive a pre-retirement death benefit payable in
monthly installments for a period of 15 years. Under his Deferred Compensation
Agreement, Mr. Jorgenson will receive annual payments of $46,200 for a period
of 15 years.
The parties to the Deferred Compensation Agreements will forfeit all
rights in and to any benefits payable under the Deferred Compensation
Agreements if they are terminated other than by reason of disability or death
before attaining their respective retirement ages. If the parties have been
employed for at least three years from the time of entering into the Deferred
Compensation Agreements, the Officers will be considered to be vested in 30%
of the payments due, with an additional 10% vesting each succeeding year.
Compensation Committee Report on Executive Compensation
The Compensation and Benefits Committee has furnished the following
report on executive compensation:
Compensation Policies. This report reflects the Company's compensation
policies as endorsed by the Board of Directors and the Committee. The
Committee recommends to the Board of Directors amounts of cash compensation
for executive officers of the Company and its subsidiaries. With regard to the
compensation actions affecting the CEO, all of the non-employee members of the
Board of Directors acted as the approving body.
The Annual Incentive Plan of the Company is designed to:
1. support a pay-for-performance policy that differentiates compensation
based on corporate, business unit, and individual performance;
2. motivate key senior officers to achieve strategic business initiatives
and award them for their achievement;
3. provide compensation opportunities that are comparable to those offered
by other leading companies, allowing the Company to compete for and
retain talented executives who are critical to the Company's long-term
success; and
4. align the interests of executives with the long-term interests of
stockholders through award opportunities that can result in ownership of
Common Stock.
At present, the Annual Incentive Plan is comprised of salary, annual
cash incentive opportunities, long-term incentive opportunities in the form of
stock options, restricted stock and miscellaneous benefits typically offered
to executives by major corporations. Along with other eligible employees,
executive officers also participate in the Company's 401(k) Plan, which
provides for matching contributions, a defined benefit retirement program, and
the ESOP.
Annual incentive plans for executive officers of the Bank were
developed in 1993 with the assistance of outside consultants with
implementation occurring in fiscal year 1994. During the fiscal year,
incentive plans for each of the
9
<PAGE>
Named Officers listed in the compensation table, as well as other senior
officers, were established based on stated goals and objectives which are
drawn by the Bank's Business Plan. Incentives are awarded based on attainment
of those goals. However, all annual incentives are eliminated entirely under
this incentive plan if a set minimum of before-tax earnings in dollars is not
met during the fiscal year. There is also a maximum before-tax earnings set in
dollars above which incentives will not be paid. The Board believes that tying
executive officers' income more directly to institution performance will more
closely align individual objectives and interests with stockholder value.
Long-term incentives for executive officers, and to a lesser degree
for employees, were provided during the fiscal year ending 1994 with the
implementation of the RRP and the Stock Option Plan, which were approved by
the stockholders at the Special Meeting of Stockholders held on March 29,
1994. The price of the Common Stock must increase over time to maximize the
benefit of the RRP and for the employee to realize any benefit from the
options awarded under the Stock Option Plan.
Salaries. The base salaries paid to Messrs. Grimes, Bardwell,
Salisbury and Lovell were increased 0%, 0%, 5.0%, and 4.7%, respectively, for
fiscal year 1996-97. This change reflected consideration of the Company's
performance and competitive data on similar companies indicating that such
changes would be commensurate with experience and individual performance. The
other executive officers will be granted base salary increases based on
competitive data, individual performance, position, tenure and internal
comparability considerations. The Compensation Committee will review and
change the compensation strategy as needed in order that it be responsive to
stockholder interests over time.
Bonus Awards for Fiscal 1997. Executive officers of the Company were
awarded cash bonuses during the year based on a review of the Company's fiscal
year performance and individual performance. The Company performance review
included an assessment of how the Company's before-tax earnings compared with
goals set by the Board of Directors and the goals included in the Business
Plan. Additional factors that are taken into account by the non-employee
members of the Board of Directors were their assessment of non-performing
loans, interest rate risk, regulatory ratings, the degree of customer
satisfaction and morale of the Company's employees. Based on all these
factors, the amount of bonus paid to Grimes, Bardwell, Salisbury and Lovell
were 36.37%, 24.25%, 24.25% and 12.12% of their base salaries, respectively,
as compared to the maximum possible award of 60%, 40%, 40% and 20%,
respectively.
RRP and Stock Option Plan Awards. The RRP, Stock Option Plan and
Equity Incentive Plan (the "Plans") are designed to align a significant
portion of the executive officers' compensation, and to a lesser degree other
employees compensation, with stockholders' interests. The Plans, approved by
stockholders in 1994 and 1997, respectively, permit the granting of stock
based awards. To date, two types of awards have been granted to executive
officers and other key employees:
1. Stock Option -- a right to purchase shares of Common Stock over a
ten-year period at the market price on the date of grant.
2. Restricted Stock -- shares of Common Stock the recipient cannot sell or
otherwise dispose of until the applicable restriction period lapses and
which are forfeited if the recipient terminates employment for any reason
other than retirement, disability, or death prior to the lapsing of the
restriction period (or applicable portion of such period).
No Stock Options or Restricted Stock were granted during fiscal 1997
to Messrs. Grimes, Bardwell, Salisbury and Lovell. In making future grants,
the Committee will consider, among other things, the individual's position and
years of service, the value of the individual's service to the Bank and the
responsibilities of the individual as an executive officer of a public company
as well as the practices of other financial institutions.
10
<PAGE>
In 1993, Section 162(m) was added to the Internal Revenue Code, the
effect of which is to eliminate the deductibility of compensation over $1
million, with certain exclusions, paid to each of certain highly compensated
executive officers of publicly held corporations, such as the Company. Section
162(m) applies to remuneration (both cash and non-cash) that would otherwise
be deductible for tax years beginning on or after January 1, 1994, unless
expressly excluded. Although the current compensation of each of the Company's
executive officers is below the $1 million threshold, the Company intends to
consider the new provision in establishing future compensation policies and
has amended its Stock Option Plan to comply with the requirements of Section
162(m).
The Compensation and Benefits Committee
John E. Roemer (Chairman) Marvin P. Reynolds Otto G. Klein, Jr., M.D.
Stockholder Return Performance Presentation
The graph below compares the cumulative total stockholder return on
the Company's Common Stock to the cumulative total return of the Nasdaq Market
Index and the SIC Industry Group, an index of federally chartered savings
institutions, for the period January 10, 1994, the date the Company's Common
Stock commenced trading on the Nasdaq National Market, through June 30, 1997.
The graph assumes that $100 was invested on January 10, 1994 and that all
dividends were reinvested.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG WESTERFED FINANCIAL CORP.,
NASDAQ MARKET INDEX AND SIC CODE INDEX
275 |-----------------------------------------------------------------------|
| |
| |
250 |-----------------------------------------------------------------------|
| & |
| |
D 225 |-----------------------------------------------------------------------|
| |
O | |
200 |-----------------------------------------------------------------------|
L | |
| # |
L 175 |-----------------------------------------------------------------------|
| * |
A | & |
150 |-----------------------------------------------------------------------|
R | # |
| |
S 125 |-----------------------------------------------------------------------|
| *&# * |
| *& |
100 |------*&#-----------#--------------------------------------------------|
| |
| |
75 |-----------------------------------------------------------------------|
| |
| |
50 |-----------------------------------------------------------------------|
01/10/94 06/30/94 06/30/95 06/30/96 06/30/97
* WESTERFED FINANCIAL & SIC CODE INDEX # NASDAQ MARKET INDEX
ASSUMES $100 INVESTED ON JAN. 10, 1994
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING JUNE 30, 1997
11
<PAGE>
Certain Transactions
The Bank has followed a policy of granting loans to eligible
directors, officers, employees and members of their immediate families for the
financing of their personal residences and for consumer and commercial
purposes. All such loans, except as described below, to directors and the
seven executive officers of the Bank are required to be made in the ordinary
course of business and on the same terms, including collateral and interest
rates, as those prevailing at the time for comparable transactions and do not
involve more than the normal risk of collectibility. Loans to full-time
employees with the Bank secured by a first mortgage on the employee's
principal residence are made under a standard adjustable-rate mortgage program
and modified to a reduced interest rate equal to one percent over the Bank's
cost of funds subject to their continued employment or, if a fixed rate loan,
made at the current market rate with the origination fee waived. Full-time
employees with the Bank also receive a preferential rate on consumer and home
improvement loans obtained from the Bank. The rate on these loans is modified
by a margin (which varies depending on the type of loan) over the Bank
in-house consumer loan index or, is modified to a rate that is 2% below the
current market rate.
All loans by the Bank to its executive officers and directors are
subject to OTS regulations restricting loans and other transactions with
affiliated persons of the Bank. Executive officers and directors may
participate in the Employee Loan Program provided they do not receive any
preferential treatment compared to a regular employee.
Set forth below is certain information as to loans made by the Bank
prior to changes in federal law to each of its directors and executive
officers whose aggregate indebtedness exceeded $60,000 at any time since July
1, 1996, at a preferential interest rate pursuant to the Bank's loan policy at
the time such loans were made. Each of the loans was made in the ordinary
course of business and did not involve more than the normal risk of
collectibility. All loans designated as residential loans are first mortgage
loans secured by the borrower's principal place of residence.
<PAGE>
<TABLE>
<CAPTION>
Largest
Date Amount Market Modified
of Original Outstanding Balance at Rate at Rate at
Name and Position Loan Type of Loan Amount Since 7/1/96 6/30/97 Origination Origination
----------------- ---- ------------ ------ ------------ ------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Lyle R. Grimes 02/88 Residential $ 92,800 $72,417 $70,782 8.75% 7.46%
President, Chief Executive Officer
and Chairman of the Board
Otto G. Klein, Jr., M.D. 05/87 Residential 125,000 108,035 105,411 8.75 7.44
Director
John E. Roemer 06/89 Residential 99,750 90,624 87,730 9.75 8.52
Vice Chairman of the Board
</TABLE>
In addition to the loans listed in the tables above, the Bank has in
the ordinary course of business made loans to its directors, executive
officers and members of their immediate families or affiliates thereof on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with unrelated
parties and did not involve more than the normal risk of collectibility or
present other unfavorable features. All loans to such persons totaled
approximately $428,000, or .32% of the Company's stockholders' equity, at June
30, 1997.
PROPOSAL II - RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed KPMG Peat Marwick
LLP, independent certified public accountants, to be the Company's auditors
for the fiscal year ending June 30, 1998. Representatives of KPMG Peat Marwick
LLP are expected to attend the Meeting to respond to appropriate questions and
to make a statement if they so desire.
The Board of Directors recommends that stockholders vote "FOR" the
ratification of the appointment of KPMG Peat Marwick LLP as the Company's
auditors for the fiscal year ending June 30, 1998.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy
materials for the next Annual Meeting of Stockholders, any stockholder
proposal to take action at such meeting must be received at the Company's
office located at 110 East Broadway, Missoula, Montana 59802-4511, no later
than June 3, 1998. Any such proposal shall be subject to the requirements of
the proxy rules adopted under the Securities Exchange Act of 1934.
12
<PAGE>
OTHER MATTERS
The Board of Directors is not aware of any business to come before
the Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy
materials to the beneficial owners of Common Stock. In addition to
solicitation by mail, directors, officers and regular employees of the Company
and/or the Bank may solicit proxies personally or by telegraph or telephone
without additional compensation.
Missoula, Montana
September 30, 1997
13
<PAGE>
WESTERFED FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
October 28, 1997
The undersigned hereby appoints the Board of Directors of WesterFed
Financial Corporation (the "Company"), with full powers of substitution, to
act as attorneys and proxies for the undersigned to vote all shares of capital
stock of the Company which the undersigned is entitled to vote at the Annual
Meeting of Stockholders (the "Meeting") to be held at the Missoula Southgate
Branch of Western Federal Savings Bank, 2601 Garfield Street, Missoula
Montana, on October 28, 1997 at 9:00 a.m. and at any and all adjournments and
postponements thereof.
1. The election as directors of all nominees listed below (except as marked
to the contrary)
/ / FOR / / VOTE WITHHELD
INSTRUCTION: To withhold your vote for any individual nominee, strike a
line in that nominee's name below.
MARVIN P. REYNOLDS ROBERT F. BURKE
2. The ratification of the appointment of KPMG Peat Marwick LLP as auditors
for the Company for the fiscal year ending June 30, 1998.
/ / FOR / / AGAINST / / VOTE WITHHELD
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment or
postponement thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSAL AND EACH OF THE NOMINEES
LISTED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY
WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE
PRESENTED AT THE MEETING.
The Board of Directors recommends a vote "FOR" the proposal
and the election of the nominees listed above.
(Continued and to be SIGNED on Reverse Side)
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and choose to vote at the Meeting or
at any adjournments or postponements thereof, and after notification to the
Secretary of the Company at the Meeting of the stockholder's decision to
terminate this proxy, then the power of such attorneys or proxies shall be
deemed terminated and of no further force and effect. This proxy may also be
revoked by filing a written notice of revocation with the Secretary of the
Company or by duly executing a proxy bearing a later date.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of notice of the Meeting, a Proxy Statement and an
Annual Report to Stockholders.
Dated: , 1997 ----------------------------------
--------------------- Signature of Stockholder
----------------------------------
Signature of Stockholder
Please sign exactly as your name(s)
Appear(s) to the left. When signing
as attorney, executor, administrator,
trustee or guardian, please give
your full title. If shares are held
jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE
