[WESTERFED LETTERHEAD]
September 28, 1998
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 27, 1998 at the
Missoula Southgate Branch of Western Security 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 27, 1998
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 Security Bank, a wholly owned
subsidiary of the Company, located at 2601 Garfield Street, Missoula, Montana at
9:00 a.m., Missoula, Montana time, on October 27, 1998.
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 three 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, 1999;
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 28, 1998 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 28, 1998
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
WESTERFED FINANCIAL CORPORATION
110 East Broadway
Missoula, Montana 59802-4511
(406) 721-5254
ANNUAL MEETING OF STOCKHOLDERS
October 27, 1998
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 Security Bank (the "Bank"), a wholly owned subsidiary of the Company,
located at 2601 Garfield Street, Missoula, Montana, on October 27, 1998, 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 28, 1998.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon the election of three 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). Pursuant to the Company's Employee Stock Ownership Plan, unallocated
shares will be voted by the Trustee in the same proportion as allocated shares
voted by participants. 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 28, 1998
will be entitled to one vote for each share of Common Stock then held. As of
that date, the Company had 5,588,862 shares of Common Stock issued and
outstanding (including a total of 4,797 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
1
<PAGE>
$100,000 during fiscal 1998 (the "Named Officers") and (iii) all directors and
executive officers of the Company and the Bank as a group.
<TABLE>
<CAPTION>
Shares
Beneficially Percent
Beneficial Owner Owned of Class
- -------------------------------------------------------------------------------- ------------- ----------
Principal Owners
- ----------------
<S> <C> <C>
WesterFed Financial Corporation Employee Stock Ownership Plan and Trust 339,113 6.19%
110 East Broadway
Missoula, Montana 59802-4511(1)
John Hancock Mutual Life Insurance Company, et al. 496,588 8.90
John Hancock Place
P.O. Box 111
Boston, Massachusetts 02117(2)
J.J. Cramer & Co., James J. Cramer, Karen L. Kramer, Cramer Pratners, L.P.,
and Cramer Capital Corporation 320,000 5.70
100 Wall Street
New York, New York 10005(3)
Named Officers and Directors and Executive Officers as a Group(4)
- -----------------------------------------------------------------
Lyle R. Grimes, President, Chief Executive Officer and Chairman of the Board (5) 150,374 2.65
Douglas G. Bardwell, Executive Vice President and Secretary(6) 94,171 1.67
James A. Salisbury, Treasurer and Chief Financial Officer(7) 71,875 1.28
David W. Jorgenson, Executive Vice President and Director(8) 69,133 1.23
Directors and executive officers of the Company and the Bank as a group (14 persons)(9) 721,057 12.14
</TABLE>
- -----------------------
(1) As reported in Amendment No. 2 to a Schedule 13G dated January 29,
1997. The amount reported represents shares held by the Employee Stock
Ownership Plan and Trust (the "ESOP"), 141,344 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. 2 to a Schedule 13G dated January 28, 1998
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 496,588 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 August 27, 1998 by the above named
persons. James J. Kramer and Karen L. Kramer reported shared voting and
dispositive power over 320,000 shares; J.J. Cramer & Co., Cramer
Partners, L.P., and Cramer Capital Corporation reported sole voting and
dispositive power over 320,000 shares.
(4) The address of each Named Officer is the same as that of the Company.
(5) Includes 67,028 shares held directly, 933 shares held in custodial
accounts for a minor children, 5,969 shares allocated to the account of
Mr. Grimes under the ESOP, 0 shares subject to restriction, awarded
pursuant to the RRP over which Mr. Grimes has voting and no dispositive
power and 76,444 shares subject to currently exercisable options
granted pursuant to the 1993 Stock Option and Incentive Plan (the
"Stock Option Plan"). Excludes options to purchase 50,000 shares which
are not exercisable within 60 days of August 28, 1998.
(6) Includes 40,296 shares held directly, 1,414 shares held by Mr.
Bardwell's spouse, 5,779 shares allocated to the account of Mr.
Bardwell under the ESOP, 2,316 shares held in custodial accounts for a
minor children, 0 shares subject to restriction, awarded pursuant to
the RRP over which Mr. Bardwell has voting and no dispositive power and
44,366 shares subject to currently exercisable options granted pursuant
to the Stock Option Plan. Excludes options to purchase 0 shares which
are not exercisable within 60 days of August 28, 1998.
(7) Includes 25,158 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, 5,249 shares allocated to the account of Mr.
Salisbury under the ESOP, 0 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.
(8) Includes 27,537 shares held directly, 3,743 shares held in custodial
accounts for minor children, 10,414 shares held in a retirement trust,
1,238 shares, subject to restriction, awarded pursuant to the RRP over
which Mr. Jorgenson has voting but no dispositive power, 26,200 shares
subject to currently exercisable options. Excludes options to purchase
33,600 shares which are not exercisable within 60 days of August 28,
1998.
(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 4,797
shares, subject to restriction, awarded pursuant to the RRP over which
the holders have voting but no dispositive power and an aggregate of
352,436 shares subject to currently exercisable options granted under
the Stock Option Plan. Amount excludes 83,600 shares subject to options
which are not exercisable within 60 days of August 28, 1998.
2
<PAGE>
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 September 2, 1998(2) Class
- -------------------------------------------------------------------------------------------------------------------
NOMINEES
--------
<S> <C> <C> <C> <C> <C> <C>
Lyle R. Grimes 62 President, Chief Executive Officer 1983 2001 150,374(3) 2.65%
and Chairman of the Board
Otto G. Klein, Jr., M.D. 59 Director 1988 2001 62,492(4) 1.12
William M. Leslie 63 Director 1997 2001 19,871(5) *
DIRECTORS CONTINUING IN OFFICE
------------------------------
Laurie C. DeMarois 44 Director 1996 1999 17,322(6) *
John E. Roemer 67 Vice Chairman of the Board 1978 1999 51,757(7) *
David W. Jorgenson 48 Executive Vice President and Directo1997 1999 69,133(8) 1.23
Marvin P. Reynolds 66 Director 1969 2000 58,383(9) 1.04
Robert F. Burke 66 Director 1994 2000 18,826(10) *
</TABLE>
- --------------------------
* Less than 1 %
(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 shares subject to options
granted under the Stock Option Plan which are exercisable within 60
days of August 28, 1998 and shares subject to restriction under the
RRP.
(3) See Footnote 5 on page 2 for information regarding Mr. Grimes' share
ownership.
(4) Includes 21,301 shares held by a pension/profit sharing plan and 1,126
shares held in a custodial account for a minor child.
(5) Includes 82 shares held by Mr. Leslie's spouse, 15,084 shares subject
to options granted under the Stock Option Plan and 1,238 shares subject
to restriction, granted under the RRP.
(6) Includes 15,084 shares subject to options granted under the Stock
Option Plan and 1,589 shares, subject to restrictions granted under the
RRP.
(7) Includes 1,907 shares held by Mr. Roemer's spouse, and 29,725 shares
subject to options granted under the Stock Option Plan.
(8) See Footnote 8 on page 2 for information on Mr. Jorgenson's share
ownership.
(9) Includes 20,000 shares held by a Keogh plan and 365 shares held by Mr.
Reynolds' spouse.
(10) Includes 15,084 shares subject to options granted under the Stock
Option Plan and 732 shares, subject to restriction, granted under the
RRP.
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.
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 40 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.
3
<PAGE>
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 and Executive Vice President, Business Division of the
Bank. 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.
Marvin P. Reynolds, D.D.S. Dr. Reynolds is a self-employed dentist who
has practiced in Missoula, Montana for over 39 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 33 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.
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 14 meetings during the fiscal year ended
June 30, 1998. 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 did not meet during fiscal
1998.
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 1998.
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 1998.
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
4
<PAGE>
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, 1998, the Board of Directors of the Bank held 15 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
1998.
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 1998.
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 1998.
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 four times during fiscal 1998.
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 six times during fiscal 1998.
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 1998.
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. In
addition, outside directors meeting for commercial loan approval receive $100.00
per occurrence.
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 $4,000 or more of their directors' fees earned during each
fiscal year. Deferred fees are maintained in an account at the Bank and upon
retirement are paid to directors in monthly installments over a ten-year period.
The Director Plan also provides that, in the event of the death of a
participating director while serving on the Board, the director's designated
beneficiary shall receive an aggregate amount equal to the amount the director
would have deferred, to be paid on a monthly basis. At June 30, 1998, two
outside directors participated in the Director Plan.
Executive Compensation
The Company has not paid any compensation to its executive officers
since its formation. The Company does not presently anticipate paying any
compensation to such persons until it becomes actively involved in the operation
or acquisition of businesses other than the Bank.
5
<PAGE>
The following table sets forth the compensation paid or accrued by the
Bank during fiscal years indicated for services rendered by the Named Officers.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------------------------------------------------
Long-Term Compensation
----------------------
Annual Compensation(1) Awards
- --------------------------------------------------------------------------------------------------------
Restricted
Stock Options/ All Other
Fiscal Salary Bonus Award(s) SARs Compensation
Name and Principal Position Year ($) ($)(2) ($) (#) ($)
- ------------------------------------------------- ------ ------------ --------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Lyle R. Grimes, President, Chief Executive Officer 1998 $220,000(3) $33,595 $0 0 $ 76,251(4)
Chairman of the Board 1997 220,000(3) 80,015 --- --- 77,708
1996 220,000(3) 90,025 --- --- 136,802
Douglas G. Bardwell, Executive Vice President and 1998 127,000(5) 12,930 0 0 31,144(6)
Chief Operating Officer 1997 123,000(5) 29,830 --- --- 29,335
1996 123,000(5) 33,555 --- --- 35,760
James A. Salisbury, Treasurer and Chief Financial 1998 120,000(7) 12,215 0 0 33,678(8)
Officer 1997 105,000(7) 25,465 --- --- 29,222
1996 100,000(7) 27,280 --- --- 22,048
David W. Jorgenson, Executive Vice President(9) 1998 160,200(10) 16,290 0 0 22,900(11)
================================================= ====== ============ ========= ============= ============ ==============
</TABLE>
- --------------------
(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 $424, $326, and $346 deferred under the Flexible Compensation
Plan in fiscal 1998, 1997 and 1996, respectively. Includes $8,800
deferred under the 401(k) Plan.
(4) Includes $45,000 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 $25,407 allocated to Mr. Grimes' account under the ESOP
(representing 1,037 shares at $24.50 per share), $0 in unused sick
leave, a $102 Christmas bonus and the following insurance premiums paid
by the Bank on Mr. Grimes' behalf: $212 in life insurance, $882 in life
insurance under the Salary Continuation Plan and $248 in long-term
disability. Includes $4,400 in contributions to the 401(k) Plan paid by
the Bank on behalf of Mr. Grimes.
(5) Includes $7,284, $6,156, and $5,810 deferred under the 401(k) Plan, and
$1,712, $1,602, and $862 deferred under the Flexible Compensation Plan
in fiscal 1998, 1997 and 1996, respectively.
(6) Includes a life insurance premium of $250 paid on behalf of Mr.
Bardwell under the Salary Continuation Plan. Also includes $25,113
allocated to Mr. Bardwell's account under the ESOP (representing 1,025
shares at $24.50 per share), $1,465 of unused sick leave, a Christmas
bonus of $102, a long-term disability insurance premium of $248, a life
insurance premium of $212 and contributions to the 401(k) Plan of
$3,754 paid by the Bank on behalf of Mr. Bardwell.
(7) Includes $5,628, $5,130, and $4,878 deferred under the 401(k) Plan, and
$1,495, $1,222, and $900 deferred under the Flexible Compensation Plan
in fiscal 1998, 1997 and 1996, respectively.
(8) Includes $3,505 accrued and life insurance premiums of $101 paid on
behalf of Mr. Salisbury under the Salary Continuation Plan. Also
includes $22,957 allocated to Mr. Salisbury's account under the ESOP
(representing 937 shares at $24.50 per share), $1,385 in unused sick
leave, a Christmas bonus of $102, life insurance premiums of $212, a
long-term disability insurance premium of $248, and contributions to
the 401(k) Plan of $3,378 paid by the Bank on behalf of Mr. Salisbury.
Also split dollar agreement value of $1,790.
(9) Mr. Jorgenson became an employee of the Bank on February 28, 1997.
(10) Includes $2,364 deferred under the Flexible Compensation Plan. Includes
$9,575 deferred under the 401(k) Plan.
(11) Includes $0 in unused sick leave; a Christmas bonus of $102; a long
term disability insurance premium of $194; a life insurance premium of
$266. Also includes $4,805 in contributions to the 401(k) Plan paid by
the Bank on behalf of Mr. Jorgenson. Includes $17,533 accrued on behalf
of Mr. Jorgenson under the Salary Continuation Plan.
6
<PAGE>
The following table sets forth certain information concerning the
number and value of unexercised stock options held by the Named Officers at June
30, 1998. No options or stock appreciation rights were awarded to the Named
Officers during fiscal 1998.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
- ---------------------------------------------------------------------------------
Number of Unexercised Value of Unexercised In-the-Money
Options/SARs at FY-End (#)(1) Options/SARs at FY-End ($)(2)
----------------------------- -----------------------------
Shares
Name Acquired Value
on Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------ -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lyle R. Grimes N/A N/A 76,444 50,000 1,108,438 725,000
Douglas G. Bardwell N/A N/A 44,366 ---- 643,307 ---
James A. Salisbury N/A N/A 37,268 ---- 540,386 ---
David W. Jorgenson N/A N/A 29,760 33,600 317,066 100,800
=========================================================================================================================
</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 $24.50 per share of the Common Stock as reported on the Nasdaq
National Market on June 30, 1998.
Employment Agreements
The Bank has entered into employment agreements with Messrs. Grimes,
Bardwell, Salisbury, and Jorgenson and three other executive officers. The
employment agreements are designed to assist the Bank in maintaining a stable
and competent management base. 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 employment agreements (other than
Mr. Jorgenson's) became effective January 6, 1994.
The following discussion relates to the terms of the agreements with
Messrs. Grimes, Bardwell, and Salisbury. These employment agreements provide for
an initial term of three 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
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, and
Salisbury had been terminated as of June 30, 1998, 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 $849,425,
$417,089, and $346,231.
Under the terms of Mr. Jorgenson's employment agreement with the Bank,
he serves as Executive Vice President of the Bank during the three-year period
beginning February 28, 1997. The agreement further provides that Mr. Jorgenson
is eligible to participate in certain employee benefit plans. If Mr. Jorgenson's
employment is terminated by the Bank and such termination does not constitute a
"termination for cause" (as that term is defined in the employment agreement),
he will be entitled to receive his salary then in effect and certain employee
benefits for the remaining term of the agreement, unless such termination occurs
within 12 months following a "change in control" of
7
<PAGE>
the Bank (as that term is defined in the agreement), in which case he will be
entitled to receive his salary then in effect and certain employee benefits for
the longer of the remaining term of the agreement or 18 months after
termination. In the event that the Bank materially breaches the employment
agreement or upon the occurrence of certain other events that would adversely
affect his employment, Mr. Jorgenson will be entitled to terminate his
employment with the Bank and receive his salary then in effect and certain
employee benefits for the remaining term of the agreement.
Mr. Jorgenson's employment agreement also provides that if the
shareholders of WesterFed Financial authorize an increase in the number of
shares to be awarded under the WesterFed Financial Corporation 1993 Stock Option
and Incentive Plan (the "Plan"), or if they approve a new stock option plan for
WesterFed Financial executive officers, WesterFed Financial will grant to Mr.
Jorgenson options to purchase 30,000 shares of WesterFed Financial Common Stock
at an exercise price equal to the market value on the date of grant. These
options will vest based on Continuous Service (as defined in the Plan) at the
rate of 20% per year over the five years following date of grant. If a change in
control or merger, consolidation or combination of WesterFed Financial into
another corporation occurs, vesting of the options will accelerate in the same
manner as options previously granted to WesterFed Financial executive officers
under the Plan.
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 no
contributions to such plan during fiscal 1998.
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 48,000 64,000 80,000 96,000 112,000
200,000 48,000 64,000 80,000 96,000 112,000
225,000 48,000 64,000 80,000 96,000 112,000
250,000 48,000* 64,000* 80,000* 96,000* 112,000*
================================================================================================
</TABLE>
*Maximum annual benefit payable.
8
<PAGE>
At June 30, 1998, Messrs. Grimes, Bardwell, Salisbury, and Jorgenson
had 39 years, 23 years and 11 months, 17 years and 6 months, and 5 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.
Salary Continuation Plan. The Bank has adopted the Salary Continuation
Plan ("SCP") for the benefit of 14 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 65. 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;
9
<PAGE>
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 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 Jorgenson were increased 0%, 3.25%, 14.28%, and 0%, respectively,
for fiscal year 1997-98. 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 1998. 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 Jorgenson, were 15%, 10%, 10%, and 10% of their
base salaries, respectively, as compared to the maximum possible award of 60%,
40%, 40%, and 40%, 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).
10
<PAGE>
No Stock Options or Restricted Stock were granted during fiscal 1998 to
Messrs. Grimes, Bardwell, Salisbury, Lovell and Jorgenson. 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.
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
Otto G. Klein, Jr., M.D.
Marvin P. Reynolds
John E. Roemer (Chairman)
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, 1998.
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
ASSUMES $100 INVESTED JAN. 10, 1994
[GRAPHIC OMITTED]
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING JUNE 30, 1998
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, 1997, 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.
<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 7/1/97 6/30/98 Origination Origination
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lyle R. Grimes 02/88 Residential $ 92,800 $70,782 $69,006 8.75% 7.46%
President, Chief Executive Officer
and Chairman of the Board
Otto G. Klein, Jr., M.D. 05/87 Residential 125,000 105,411 102,576 8.75 7.44
Director
John E. Roemer 06/89 Residential 99,750 87,730 83,592 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 $2,079,223, or 1.90%
of the Company's stockholders' equity, at June 30, 1998.
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, 1999. 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, 1999.
12
<PAGE>
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 main office located at
101 East Broadway, Missoula, Montana 59802-4511, no later than May 31, 1999. Any
such proposal shall be subject to the requirements of the proxy rules adopted
under the Securities Exchange Act of 1934 as amended. If a proposal does not
meet the above requirements for inclusion in the Company's proxy materials, but
otherwise meets the Company's eligibility requirements to be presented at the
next Annual Meeting of Stockholders, the persons named in the enclosed form of
proxy and acting thereon will have the discretion to vote on any such proposal
in accordance with their best judgement if the proposal is received at the
Company's main office later than August 14, 1999.
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 28, 1998
13
<PAGE>
WESTERFED FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
October 27, 1998
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 Security Bank, 2601 Garfield Street, Missoula Montana, on October 27,
1998 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.
LYLE R. GRIMES OTTO G. KLEIN, JR., M.D. WILLIAM M. LESLIE
2. The ratification of the appointment of KPMG Peat Marwick LLP as auditors
for the Company for the fiscal year ending June 30, 1999.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
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:_________________________, 1998 _________________________
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
