SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
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 Section 240.14a-11(c)or Section 240.14a-12
WesterFed Financial Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/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>
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
[WESTERFED LETTERHEAD]
September 24, 1999
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 26, 1999 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 26, 1999
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 26, 1999.
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 LLP as the auditors of
the Company for the fiscal year ending June 30, 2000;
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 30, 1999 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, as well as at the Meeting.
You are requested to complete and sign the enclosed Proxy Card, which is
solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The Proxy Card 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 24, 1999
- ------------------------------------------------------------------------------
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 26, 1999
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 26, 1999, 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 24, 1999.
At the Meeting, stockholders of the Company are being asked to consider and
vote upon the election of three directors, a proposal to ratify the appointment
of KPMG LLP as auditors for the Company and such other matters as may properly
come before the Meeting or any adjournments or postponements thereof.
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 cast. In the
election of directors, stockholders may either vote "FOR" all nominees for
election or withhold their votes from one or more nominees for election. Votes
that are withheld and shares held by a broker, as nominee, that are not voted
(so-called "broker non-votes") in the election of directors will not be included
in determining the number of votes cast. In all matters other than the election
of directors, the affirmative vote of the majority of shares present and
entitled to vote 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 and Trust (the
"ESOP"), 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 Suzanne Loewen, 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 30, 1999 will
be entitled to one vote for each share of Common Stock then held. As of that
date, the Company had 4,568,678 shares of Common Stock issued and outstanding
(including a total of 2,712 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, as of August 30, 1999, information
regarding share ownership of: (i) those persons or entities known by management
to beneficially own more
1
<PAGE>
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 1999 (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
- ------------------------------------------------------ ------------ --------
<S> <C> <C>
PRINCIPAL OWNERS
- ----------------
WesterFed Financial Corporation Employee Stock Ownership 330,869 7.24%
Plan and Trust
110 East Broadway
Missoula, Montana 59802-4511(1)
John Hancock Mutual Life Insurance Company, et al. 351,588 7.70
John Hancock Place
P.O. Box 111
Boston, Massachusetts 02117(2)
Paul J. McCann 278,083 6.09
P.O. Box 2249
Great Falls, Montana 59403(3)
NAMED OFFICERS AND DIRECTORS AND EXECUTIVE OFFICERS AS A
GROUP(4)
- ---------------------------------------------------------
Lyle R. Grimes, President, Chief Executive Officer and 161,243 3.46
Chairman of the Board (5)
Douglas G. Bardwell, Executive Vice President(6) 94,956 2.06
James A. Salisbury, Executive Vice President, Treasurer and 60,891 1.32
Chief Financial Officer(7)
David W. Jorgenson, Executive Vice President - Eastern 78,088 1.70
Region Manager(8)
Charles E. Eiseman, Senior Vice President - Western Region 37,695 *
Manager(9)
Directors and executive officers of the Company and the 738,257 14.93
Bank as a group (15 persons)(10)
</TABLE>
- ------------------------
* Less than 1%
(1) As reported in Amendment No. 2 to a Schedule 13G dated January 29, 1997.
The amount reported represents shares held by the ESOP, 166,774 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. 3 to a Schedule 13G filed January 15, 1999 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 351,588 shares of
the Common Stock held by two mutual funds for which it acts as investment
adviser.
(3) As reported in a Schedule 13D filed April 20, 1999 by Paul J. McCann and
certain corporations directly or indirectly controlled by Mr. McCann and
members of his family.
(4) The address of each Named Officer is the same as that of the Company.
(5) Includes 67,028 shares held directly, 966 shares held in custodial accounts
for minor children, 6,805 shares allocated to the account of Mr. Grimes
under the ESOP, and 86,444 shares subject to currently exercisable options
granted pursuant to the 1993 Stock Option and Incentive Plan (the "Stock
Option Plan"). Excludes options to purchase 40,000 shares which are not
exercisable within 60 days of August 30, 1999.
(6) Includes 40,296 shares held directly, 1,414 shares held by Mr. Bardwell's
spouse, 6,564 shares allocated to the account of Mr. Bardwell under the
ESOP, 2,316 shares held in custodial accounts for minor children, and
44,366 shares subject to currently exercisable options granted pursuant to
the Stock Option Plan. Mr. Bardwell retired on July 1, 1999.
(7) Includes 14,168 shares held directly, 975 shares held in custodial accounts
or by minor children, 2,500 shares held by a corporation of which Mr.
Salisbury is a director and executive officer, 5,980 shares allocated to
the account of Mr. Salisbury under the ESOP, and 37,268 shares subject to
currently exercisable options granted pursuant to the Stock Option Plan.
(8) Includes 28,092 shares held directly, 413 shares allocated to the account
of Mr. Jorgenson under the ESOP, 3,743 shares held in custodial accounts
for minor children, 10,414 shares held in a retirement trust, 826 shares,
subject to restriction, awarded pursuant to the RRP over which Mr.
Jorgenson has voting but no dispositive power and 34,600 shares subject to
currently exercisable options granted pursuant to the Stock Option Plan.
Excludes options to purchase 25,200 shares which are not exercisable within
60 days of August 30, 1999.
(9) Includes 19,781 shares held directly, 717 shares held in custodial accounts
or by minor children, 1,554 shares held by Mr. Eiseman's spouse, 4,552
shares allocated to the account of Mr. Eiseman under the ESOP and 11,091
shares subject to currently exercisable options granted pursuant to the
Stock Option Plan.
(10) 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 2,712 shares, subject to restriction, awarded
pursuant to the RRP over which the holders have voting but no dispositive
power and an aggregate of 375,336 shares subject to currently exercisable
options granted under the Stock Option Plan. Amount excludes 115,200 shares
subject to options which are not exercisable within 60 days of August 30,
1999.
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 Stock
Term Beneficially Percent
Director to Owned at of
NAME Age Position(s) Held Since Expire August 30, 1992 Class
- --------------- --- ------------------- -------- ------ --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
NOMINEES
--------
John E. Roemer 69 Vice Chairman of the 1978 2002 49,760(3) 1.08%
Board
Laurie C. 46 Director 1996 2002 17,424(4) *
DeMarois
David W. 49 Executive Vice 1997 2002 78,088(5) 1.70
Jorgenson President - Eastern
Region Manager
DIRECTORS CONTINUING IN OFFICE
------------------------------
Marvin P. 67 Director 1969 2000 58,870(6) 1.29
Reynolds
Robert F. Burke 67 Director 1994 2000 19,166(7) *
Lyle R. Grimes 64 President, Chief 1983 2001 161,243(8) 3.46
Executive Officer and
Chairman of the Board
Otto G. Klein, 61 Director 1988 2001 62,896(9) 1.38
Jr., M.D.
William M. Leslie 64 Director 1997 2001 19,870(10) *
</TABLE>
- --------------------------
* Less than 1 %
(1) Includes service as a director of the Bank.
(2) 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 shares, subject to restriction, awarded
pursuant to the RRP over which the holders have voting but no dispositive
power and an aggregate of shares subject to currently exercisable options
granted under the Stock Option Plan. Amount excludes shares subject to
options which are not exercisable within 60 days of August 30, 1999.
(3) Includes 1,907 shares held by Mr. Roemer's spouse, and 29,725 shares
subject to options granted under the Stock Option Plan.
(4) Includes 15,084 shares subject to options granted under the Stock Option
Plan and 1,060 shares, subject to restrictions, granted under the RRP.
(5) See Footnote 8 on page 2 for information regarding Mr. Jorgenson's share
ownership.
(6) Includes 20,000 shares held by a Keogh plan and 365 shares held by Mr.
Reynolds' spouse.
(7) Includes 15,084 shares subject to options granted under the Stock Option
Plan.
(8) See Footnote 5 on page 2 for information regarding Mr. Grimes' share
ownership.
(9) Includes 21,617 shares held by a pension/profit sharing plan and 1,131
shares held in a custodial account for a minor child.
(10) Includes 82 shares held by Mr. Leslie's spouse, 15,084 shares subject to
options granted under the Stock Option Plan, 826 shares, subject to
restriction, granted under the RRP, and 494 shares held in a retirement
trust.
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, a position he has held since September 1993. In October 1996, Mr.
Grimes was named Chairman of the Board of the Company and the Bank. Until June
30, 1999, Mr. Grimes was also President and Chief Executive Officer of the Bank.
Mr. Grimes is responsible for establishing policies and plans for directing and
controlling the activities of the Company in order to achieve the objectives set
by the Board of Directors. Mr. Grimes also acts as spokesman for the Company and
maintains business, civic and governmental contacts. Mr. Grimes joined the Bank
in 1958 and worked in all phases of the Bank's operations during his 41 years of
employment with the Bank. Mr. Grimes also serves as 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 1975. 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 Vice President and Director of the
Company and Executive Vice President - Eastern Region Manager 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 34 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 21 meetings during the fiscal year ended
June 30, 1999. 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
1999.
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, Leslie and Reynolds are
members of this Committee. The Audit Committee met two times during fiscal 1999.
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 met once
during fiscal 1999.
4
<PAGE>
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,
1999, the Board of Directors of the Bank held 19 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 met once during fiscal 1999.
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 four times during
fiscal 1999.
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 1999.
The Building Committee of the Bank reviews corporate office building needs
and site acquisitions and makes recommendations to the Board of Directors. This
committee consists of Directors Grimes, Roemer, Jorgenson, Leslie, DeMarois and
Burke. This committee met nine times during fiscal 1999.
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 four times during fiscal 1999.
The Nominating Committee of the Bank meets annually in order to nominate
candidates for membership on the Board of Directors. Directors Burke, Klein and
Reynolds are the current members of this Committee. This committee met one time
during fiscal 1999.
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 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
$4,000 or more of their directors' fees earned during each fiscal year. Deferred
fees are maintained in an account at the Bank and upon retirement are paid to
directors in monthly installments over a ten-year period. The Director Plan also
provides that, in the event of the death of a participating director while
serving on the Board, the director's designated beneficiary shall receive an
aggregate amount equal to the amount the director would have deferred, to be
paid on a monthly basis. At June 30, 1999, two outside directors participated in
the Director Plan.
EXECUTIVE COMPENSATION
The Company has not paid any compensation to its executive officers since
its formation. The Company does not presently anticipate paying any compensation
to such persons until it becomes actively involved in the operation or
acquisition of businesses other than the Bank.
5
<PAGE>
The following table sets forth the compensation paid or accrued by the Bank
during the fiscal years indicated for services rendered by the Named Officers.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation(1) Compensation
Awards
Restricted
Stock Options/ All Other
Fiscal Salary Bonus Award(s) SARs Compensation
Name and Principal Position Year ($) ($)(2) ($) (#) ($)
- ----------------------------- ------ -------- ----- ---------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lyle R. Grimes, PRESIDENT, 1999 $220,000(4) 40,200 --- --- 78,637(5)
CHIEF EXECUTIVE OFFICER AND 1998 220,000(4) 33,595 --- --- 76,251
CHAIRMAN OF THE BOARD(3) 1997 220,000(4) 80,015 --- --- 77,708
Douglas G. Bardwell, EXECUTIVE 1999 127,000(6) 15,470 --- --- 18,945(7)
VICE PRESIDENT AND 1998 127,000(6) 12,930 --- --- 31,144
CHIEF OPERATING OFFICER 1997 123,000(6) 29,830 --- --- 29,335
James A. Salisbury, EXECUTIVE 1999 124,800(8) 18,770 --- --- 23,433(9)
VICE PRESIDENT, 1998 120,000(8) 12,215 --- --- 33,678
TREASURER AND CHIEF FINANCIAL 1997 105,000(8) 25,465 --- --- 29,222
OFFICER
David W. Jorgenson, EXECUTIVE 1999 160,200(11) 24,095 --- --- 33,401(12)
VICE PRESIDENT-EASTERN 1998 160,200(11) 16,290 --- --- 22,900
REGION MANAGER(10)
Charles E. Eiseman, SENIOR VICE 1999 91,000(13) 10,265 --- --- 18,404(14)
PRESIDENT - WESTERN 1998 87,500(13) 6,685 --- --- 25,865
REGION MANAGER 1997 83,300(13) 15,145 --- --- 22,635
</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) Mr. Grimes retired as President and Chief Executive Officer of the Bank on
June 30, 1999. He remains Chairman of the Board of the Bank and President,
Chief Executive Officer and Chairman of the Board of the Company.
(4) Includes $630, $424 and $326, deferred under the Flexible Compensation Plan
in fiscal 1999, 1998 and 1997, respectively. Includes $12,111, $8,800 and
$0 deferred under the 401(k) Plan.
(5) Includes $43,000 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 $13,432
allocated to Mr. Grimes' account under the ESOP (representing 820 shares at
$16.38 per share), $14,385 in unused sick leave and unused vacation, a $102
Christmas bonus and the following insurance premiums paid by the Bank on
Mr. Grimes' behalf: $432 in life insurance, $1,003 in life insurance under
the Salary Continuation Plan and $228 in long-term disability. Includes
$6,055 in contributions to the 401(k) Plan paid by the Bank on behalf of
Mr. Grimes.
(6) Includes $8,201, $7,284, and $6,156, deferred under the 401(k) Plan, and
$1,140, $1,712, and $1,602, deferred under the Flexible Compensation Plan
in fiscal 1999, 1998 and 1997, respectively.
(7) Includes a life insurance premium of $276 paid on behalf of Mr. Bardwell
under the Salary Continuation Plan. Also includes $12,629 allocated to Mr.
Bardwell's account under the ESOP (representing 771 shares at $16.38 per
share), $1,465 of unused sick leave, a Christmas bonus of $102, a long-term
disability insurance premium of $228, a life insurance premium of $432 and
contributions to the 401(k) Plan of $3,813 paid by the Bank on behalf of
Mr. Bardwell
(8) Includes $6,190, $5,628, and $5,130, deferred under the 401(k) Plan, and
$1,233, $1,495, and $1,222, deferred under the Flexible Compensation Plan
in fiscal 1999, 1998 and 1997, respectively.
(9) Includes $3,873 accrued and life insurance premiums of $110 paid on behalf
of Mr. Salisbury under the Salary Continuation Plan. Also includes $11,744
allocated to Mr. Salisbury's account under the ESOP (representing 717
shares at $16.38 per share), $1,440 in unused sick leave, a Christmas bonus
of $102, life insurance premiums of $228, a long-term disability insurance
premium of $432, contributions to the 401(k) Plan of $3,714 paid by the
Bank on behalf of Mr. Salisbury and a split dollar agreement value of
$1,790.
(10) Mr. Jorgenson became an employee of the Bank on February 28, 1997.
(11) Includes $4,234 deferred under the Flexible Compensation Plan. Includes
$9,612 deferred under the 401(k) Plan.
(12) Includes $1,848 in unused sick leave, a Christmas bonus of $102, a long
term disability insurance premium of $228 and a life insurance premium of
$432, $4,803 in contributions to the 401(k) Plan paid by the Bank on behalf
of Mr. Jorgenson, $18,615 accrued on behalf of Mr. Jorgenson under the
Salary Continuation Plan and $608 accrued under the Benefit Equalization
Plan and $6,765 allocated to Mr. Jorgenson's account under the ESOP
(representing 413 shares at $16.38 per share).
(13) Includes $4,521, $4,272 and $4,068 deferred under the 401(k) Plan, and
$840, $504 and $288, deferred under the Flexible Compensation Plan in
fiscal year 1999, 1998, and 1997, respectively.
(14) Includes $1,050 in unused sick leave, a Christmas bonus of $102, a long
term disability insurance premium of $173 and a life insurance premium of
$432, $2,713 in contributions to the 401(k) Plan paid by the Bank on behalf
of Mr. Eiseman, $3,075 accrued and life insurance premiums of $96 paid
under the Salary Continuation Plan, $8,714 allocated to Mr. Eiseman's
account under the ESOP (representing 532 shares at $16.38 per share) and a
split dollar agreement value of $2,049.
6
<PAGE>
The following table sets forth certain information concerning the number
and value of unexercised stock options held by the Named Officers at June 30,
1999. No options or stock appreciation rights were awarded to the Named Officers
during fiscal 1999.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT FY-END
FY-END (#)(1) ($)(2)
SHARES
ACQUIRED VALUE
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------- ------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lyle R. Grimes N/A N/A 86,444 40,000 551,513 255,200
Douglas G. N/A N/A 44,366 --- 283,055 ---
Bardwell
James A. N/A N/A 37,268 --- 237,770 ---
Salisbury
David W. N/A N/A 34,600 25,200 83,393 ---
Jorgenson
Charles E. N/A N/A 11,091 --- 70,761 ---
Eiseman
</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 $16.38 per share of the Common Stock as reported on the Nasdaq National
Market on June 30, 1999.
EMPLOYMENT AGREEMENTS
The Bank has entered into employment agreements with Messrs. Grimes,
Bardwell, Salisbury, Eiseman 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 agreement of
the Named Officers other than Mr. Jorgenson became effective January 6, 1994.
The following discussion relates to the terms of the agreements with
Messrs. Grimes, Bardwell, Salisbury and Eiseman. These employment agreements
provide for an initial term of three years with the exception of Mr. Eiseman
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 purposes of the Internal Revenue Code of 1986, as amended, 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 Eiseman had been terminated as of June 30, 1999, 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
$1,107,830, $418,448, $357,337 and $328,136.
7
<PAGE>
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, 1998. 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 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 the Company 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 the Company executive
officers, the Company will grant to Mr. Jorgenson options to purchase 30,000
shares of the Company 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 the Company into another corporation occurs, vesting of the
options will accelerate in the same manner as options previously granted to the
Company 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 1999.
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, 1999, Messrs. Grimes, Bardwell, Salisbury, Eiseman and
Jorgenson had 40 years, 24 years and 11 months, 18 years and 6 months, 25 years
and 6 years and 9 months, respectively, of credited service 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 and Mr.
Jorgenson participate in this plan. Information regarding the amount contributed
by the Bank to this plan on behalf of Mr. Grimes and Mr. Jorgenson are contained
in the Summary Compensation Table.
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 the Company's acquisition of
Security Bancorp, the Company has adopted Deferred Compensation Agreements with
David W. Jorgenson and two other employees of the Bank. If Mr. Jorgenson remains
continuously employed by the Bank until retirement at age 62, he will receive
annual payments of $46,200 for a period of 15 years.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Benefits Committee (the "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 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.
9
<PAGE>
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,
Eiseman and Jorgenson were increased 0%, 0%, 4%, 4%, and 0%, respectively, for
fiscal year 1998-99. 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 1999. 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, Eiseman and Jorgenson, were 18%, 12%, 15%, 11% and
15% of their base salaries, respectively, as compared to the maximum possible
award 60%, 40%, 40%, 30% 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).
No stock options or restricted stock were granted during fiscal 1999 to
Messrs. Grimes, Bardwell, Salisbury, Eiseman or 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)
10
<PAGE>
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 June 30, 1994 through June 30, 1999. The graph
assumes that $100 was invested on June 30, 1994 and that all dividends were
reinvested.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG WESTERFED FINANCIAL CORPORATION,
NASDAQ MARKET INDEX AND SIC CODE INDEX
[GRAPH OMITTED]
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
COMPANY/INDEX/MARKET 6/30/1994 6/30/1995 6/30/1996 6/30/1997 6/30/1998 6/30/1999
- -------------------- --------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Westerfed Financial 100.00 108.93 109.28 154.44 188.50 130.06
Federal Savings
Institutions 100.00 116.53 146.85 230.16 324.00 267.05
NASDAQ Market Index 100.00 117.28 147.85 177.85 235.75 330.37
</TABLE>
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 restrictions under OTS regulations. 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, 1998, 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 TYPE OF ORIGINATION OUTSTANDING BALANCE AT RATE AT RATE AT
NAME AND POSITION LOAN LOAN AMOUNT SINCE 7/1/98 6/30/99 ORIGINATION ORIGINATION
- ---------------------- ------ ------- ----------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Lyle R. Grimes 02/88 Residential $92,800 $69,006 $67,080 8.75% 7.46%
President, Chief
Executive Officer and
Chairman of the Board
John E. Roemer 06/89 Residential 99,750 83,592 80,296 9.75 8.52
Vice Chairman of the
Board
</TABLE>
In addition to the loans listed in the table 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 $2,365,801, or 2.6% of the
Company's stockholders' equity, at June 30, 1999.
PROPOSAL II - RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed KPMG LLP, independent
certified public accountants, to be the Company's auditors for the fiscal year
ending June 30, 2000. Representatives of KPMG 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 LLP as the Company's auditors for the
fiscal year ending June 30, 2000.
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 110
East Broadway, Missoula, Montana 59802-4511, no later than May 26, 2000. Any
proposal submitted will be subject to the requirements of the proxy rules
adopted under the Securities Exchange Act of 1934, as amended, and, as with any
stockholder proposal (regardless of whether included in the Company's proxy
materials), the Company's Certificate of Incorporation and Bylaws and Delaware
law. Under the proxy rules, in the event that the Company receives notice of a
stockholder proposal to take action at the 2000 Annual Meeting that is not
submitted for inclusion in the Company's proxy materials, or is submitted for
inclusion but is properly excluded from the Company's proxy materials, the
persons named in the form of proxy sent by the Company to its stockholders
intend to exercise their discretion to vote on the proposal in accordance with
their best judgment if notice of the proposal is not received at the main office
of the Company by the Deadline date (as defined below). In addition to the
provision of the proxy rules regarding discretionary voting authority described
in the preceding sentence, the Company's Bylaws provide that if notice of a
stockholder proposal to take action at the 2000 Annual Meeting is not received
at the main office of the Company by the Deadline, the proposal will not be
recognized as a matter proper for submission to the Company's stockholders and
will not be eligible for presentation at the 2000 Annual Meeting. The "Deadline"
means the later of 30 days before the meeting or 10 days after the first notice
or public disclosure of the meeting.
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 24, 1999
13
<PAGE>
WESTERFED FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 26, 1999
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 26,
1999 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.
JOHN E. ROEMER LAURIE C. DEMAROIS DAVID W. JORGENSON
2. The ratification of the appointment of KPMG LLP as auditors for the Company
for the fiscal year ending June 30, 2000.
/ / 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: , 1999 _____________________________
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
