Notice of Annual Meeting and Proxy Statement
[WESTERFED LETTERHEAD]
March 28, 2000
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 April 25, 2000 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,
/s/ Ralph K. Holliday
RALPH K. HOLLIDAY
President and Chief Executive Officer
<PAGE>
WESTERFED FINANCIAL CORPORATION
110 East Broadway
Missoula, Montana 59802-4511
(406) 721-5254
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on April 25, 2000
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 April 25, 2000.
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 December
31, 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
February 29, 2000 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
/s/ Ralph K. Holliday
Ralph K. Holliday
President and Chief Executive Officer
Missoula, Montana
March 28, 2000
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
WESTERFED FINANCIAL CORPORATION
110 East Broadway
Missoula, Montana 59802-4511
(406) 721-5254
ANNUAL MEETING OF STOCKHOLDERS
April 25, 2000
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 April 25, 2000, 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 March 28, 2000.
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.
<PAGE>
Voting Securities and Certain Holders Thereof
Stockholders of record as of the close of business on February 29, 2000
will be entitled to one vote for each share of Common Stock then held. As of
that date, the Company had 4,116,404 shares of Common Stock issued and
outstanding (including a total of 1,359 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 February 29,
2000, information regarding share ownership of: (i) those persons or entities
known by management to beneficially own more than five percent of the Common
Stock, (ii) the Company's Chief Executive Officer and each other executive
officer who made in excess of $100,000 during the calendar year ended December
31, 1999 (the "Named Officers") and (iii) all directors and executive officers
of the Company and the Bank as a group.
Shares
Beneficially Percent
Beneficial Owner Owned of Class
- --------------------------------------------------------------------------------
Principal Owners
WesterFed Financial Corporation
Employee Stock Ownership Plan and Trust 322,166 7.8%
110 East Broadway
Missoula, Montana 59802-4511(1)
John Hancock Mutual Life Insurance Company, et al. 351,588 8.5
John Hancock Place
P.O. Box 111
Boston, Massachusetts 02117(2)
Paul J. McCann 278,083 6.8
P.O. Box 2249
Great Falls, Montana 59403(3)
Dimensional Fund Advisors Inc. 283,100 6.9
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401(4)
Named Officers and Directors and
Executive Officers as a Group(5)
Ralph K. Holliday, President and Chief
Executive Officer(6) 10,000 0.2
Lyle R. Grimes, Former President, Chief
Executive Officer and Chairman of the Board (7) 170,637 4.1
James A. Salisbury, Executive Vice
President, Treasurer and Chief Financial Officer(8) 60,891 1.5
David W. Jorgenson, Executive Vice
President - Eastern Region Manager(9) 86,488 2.1
Charles E. Eiseman, Senior Vice President
- Western Region Manager(10) 37,695 0.9
Directors and executive officers of the Company
and the Bank as a group (16 persons)(11) 610,159 14.8%
- ----------------------
(1) As reported in Amendment No. 2 to a Schedule 13G dated January 29,
1997. The amount reported represents shares held by the ESOP, 179,128
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) As reported in an initial statement on Form 13G dated February 11, 2000
by Dimensional Fund Advisors Inc., a registered investment advisor.
Dimensional Fund reported sole voting and dispositive power over
283,100 shares.
(5) The address of each Named Officer is the same as that of the Company.
(6) Includes 10,000 shares subject to currently exercisable options.
Excludes 50,000 options to purchase shares which are not exercisable
within 60 days of February 29, 2000.
(7) Includes 66,403 shares held directly, 985 shares held in custodial
accounts for minor children, 6,805 shares allocated to the account of
Mr. Grimes under the ESOP, and 96,444 shares subject to currently
exercisable options. Excludes options to purchase 30,000 shares which
are not exercisable within 60 days of February 29, 2000.
(8) 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. Excludes 7,500 options
to purchase shares which were not exercisable within 60 days of
February 29, 2000.
(9) Includes 28,504 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,
414 shares, subject to restriction, awarded pursuant to the RRP over
which Mr. Jorgenson has voting but no dispositive power, and 43,000
shares subject to currently exercisable options. Excludes options to
purchase 24,300 total shares which are not exercisable within 60 days
of February 29, 2000.
(10) 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.
Excludes 6,000 options not exercisable within 60 days of February 29,
2000.
2
<PAGE>
(11) 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 1,359
shares, subject to restriction, awarded pursuant to the RRP over which
the holders have voting but no dispositive power and an aggregate of
335,779 shares subject to currently exercisable options. Amount
excludes 133,300 shares subject to options which are not exercisable
within 60 days of February 29, 2000.
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 February 29, 2000(2) Class
- ------------------------- ---- ---------------------------------- -------- -------- --------------------- --------
<S> <C> <C> <C> <C>
NOMINEES
Marvin P. Reynolds 68 Director 1969 2003 59,045(3) 1.4%
Robert F. Burke 67 Director 1994 2003 19,480(4) 0.5
Ralph K. Holliday 58 President, Chief Executive Officer 1999 2003 10,000(5) 0.2
and Director
DIRECTORS CONTINUING IN OFFICE
Lyle R. Grimes 64 Chairman of the Board 1983 2001 170,637(6) 4.1
Otto G. Klein, Jr., M.D. 61 Director 1988 2001 62,947(7) 1.5
William M. Leslie 64 Director 1997 2001 19,376(8) 0.5
John E. Roemer 69 Vice Chairman of the Board 1978 2002 49,760(9) 1.2
Laurie C. DeMarois 46 Director 1996 2002 17,503(10) 0.4
David W. Jorgenson 50 Executive Vice President - Eastern 1997 2002 86,488(11) 2.1%
Region Manager
</TABLE>
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(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. Amount excludes shares
subject to options which are not exercisable within 60 days of February
29, 2000.
(3) Includes 20,000 shares held by a Keogh plan and 365 shares held by Mr.
Reynolds' spouse.
(4) Includes 15,084 shares subject to currently exercisable options.
(5) See Footnote 6 on page 2 for information regarding Mr. Holliday's share
ownership.
(6) See Footnote 7 on page 2 for information regarding Mr. Grimes' share
ownership.
(7) Includes 21,617 shares held by a pension/profit sharing plan and 1,133
shares held in a custodial account for a minor child.
(8) Includes 82 shares held by Mr. Leslie's spouse, 15,084 shares subject
to currently exercisable options and 414 shares, subject to
restriction, granted under the RRP.
(9) Includes 1,907 shares held by Mr. Roemer's spouse and 29,725 shares
subject to currently exercisable options.
(10) Includes 15,084 shares subject to currently exercisable options and 531
shares, subject to restrictions, granted under the RRP.
(11) See Footnote 9 on page 2 for information regarding Mr. Jorgenson's
share ownership.
3
<PAGE>
The business experience of each director and director nominee is set
forth below. All directors have held their present positions for at least the
past five years, except as otherwise indicated.
Marvin P. Reynolds, D.D.S. Dr. Reynolds is a self-employed dentist who
has practiced in Missoula, Montana for over 40 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.
Ralph K. Holliday. Mr. Holliday is President and Chief Executive
Officer of the Company and the Bank. Mr. Holliday was previously Regional Vice
Chairman of Key Bank N.A. He also served as President and COO of Key Bank of
Washington from 1993 through August of 1996. From May of 1990 until August 1992
he served as Chairman, President and CEO of Bank of America Alaska. Prior to
1990 he held various positions with Security Pacific Bank which was ultimately
acquired by Bank of America.
Lyle R. Grimes. Mr. Grimes was President and Chief Executive Officer of
the Company, a position he held from September 1993 until November 23, 1999. 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 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 served as a Director of the Federal Home Loan Bank of Seattle from
January 1993 to January 1995. Mr. Grimes graduated from the University of
Montana.
Otto G. Klein, Jr., M.D. Dr. Klein has practiced ophthalmology with the
Rocky Mountain Eye and Ear Center located in Missoula, Montana since 1978. Prior
to such time, he was a Clinical Associate Professor of Ophthalmology at the
University of Washington and partner of the Mason Clinic in Seattle. He is a
graduate of Stanford University and Cornell Medical School.
William M. Leslie. Mr. Leslie has served as President and Chairman of
the Board of Quality Concrete Company, a family-owned business, since 1967. Mr.
Leslie is also the Chief Executive Officer of Cody Brick & Masonry Supplies and
Rocky Mountain Concrete Products and President of Billings Brick and Masonry
Supply.
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.
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.
David W. Jorgenson. Mr. Jorgenson is Vice President and Director of the
Company and Executive Vice President - Eastern Region Manager and Director 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.
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 12 meetings during the calendar year
ended December 31, 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.
4
<PAGE>
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 the
calendar year ended December 31, 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 Grimes, Klein, Burke, Roemer, DeMarois, Leslie and
Reynolds are members of this Committee. The Audit Committee met two times during
the calendar year ended December 31, 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 five times during the calendar year ended December 31, 1999.
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 calendar year
ended December 31, 1999, the Board of Directors of the Bank held 14 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,
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, Holliday, Reynolds and Roemer. The Executive Committee did not meet
during the calendar year ended December 31, 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 Grimes, Reynolds, Roemer, Klein,
Leslie, DeMarois and Burke. The Audit Committee is scheduled to meet quarterly
and met three times during the calendar year ended December 31, 1999.
The Asset/Liability Committee of the Bank is responsible for oversight
of the Bank's investment activities and development of investment policies.
Directors Holliday, Burke, Jorgenson and Klein serve on this committee with
James Salisbury acting as Chairman. The Asset/Liability Committee met four times
during the calendar year ended December 31, 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 six times during the calendar year ended
December 31, 1999.
The Nominating Committee of the Bank meets annually in order to
nominate candidates for membership on the Board of Directors. Directors Klein,
DeMarois and Leslie are the current members of this Committee. This committee
met one time during the calendar year ended December 31, 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. Mr. Grimes,
as Chairman of the Board, receives an additional fee of $300 per month.
5
<PAGE>
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 $4,000 or more of their directors' fees earned during each
fiscal year. Deferred fees are maintained in an account at the Bank and upon
retirement are paid to directors in monthly installments over a ten-year period.
The Director Plan also provides that, in the event of the death of a
participating director while serving on the Board, the director's designated
beneficiary shall receive an aggregate amount equal to the amount the director
would have deferred, to be paid on a monthly basis. At December 31, 1999, two
outside directors participated in the Director Plan.
Executive Compensation
The Company has not paid any compensation to its executive officers
since its formation. The Company does not presently anticipate paying any
compensation to such persons until it becomes actively involved in the operation
or acquisition of businesses other than the Bank.
The following table sets forth the compensation paid or accrued by the
Bank during the periods indicated for services rendered by the Named Officers.
Mr. Holliday joined the Bank on April 19, 1999. Therefore, compensation
information for 1998 and 1997 is not applicable.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------
Long-Term Compensation
Annual Compensation(1) Awards
- ------------------------------------------------------------------------------ --------------------------
Restricted
Calendar/ Stock Options/ All Other
Fiscal Salary Bonus Award(s) SARs Compensation
Name and Principal Position Year ($) ($)(2) ($) (#) ($)
- -------------------------------------------- ---------- ------------ --------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Lyle R. Grimes, Chairman of the Board(3) 1999 $133,646(4) 40,200 --- --- 71,181(5)
Former President and Chief Executive Officer 1998 220,000(4) 33,595 --- --- 76,251
1997 220,000(4) 80,015 --- --- 77,708
Ralph K. Holliday, President and 1999 155,128(6) 44,000 --- 60,000 62,672(7)
Chief Executive Officer
James A. Salisbury, Executive Vice President, 1999 132,400(8) 33,910 --- 7,500 24,017(9)
Treasurer and Chief Financial Officer 1998 120,000(8) 12,215 --- --- 33,678
1997 105,000(8) 25,465 --- --- 29,222
David W. Jorgenson, Executive Vice President - 1999 160,200(11) 41,420 --- 7,500 34,488(12)
Eastern Region Manager(10) 1998 160,200(11) 16,290 --- --- 22,900
Charles E. Eiseman, Senior Vice President 1999 96,000(13) 21,190 --- 6,000 18,808(14)
- Western Region Manager 1998 87,500(13) 6,685 --- --- 25,865
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 and President and Chief Executive Officer of the
Company on November 23, 1999. He remains Chairman of the Board of the
Bank and the Company.
(4) Includes $360 , $424 and $326, deferred under the Flexible Compensation
Plan in calendar year 1999 and fiscal 1998 and 1997, respectively.
Includes $7,311, $8,800 and $0 deferred under the 401(k) Plan. Also
includes $11,800 in directors fees for calendar year 1999.
(5) Includes benefit payments totaling $42,930 and $9,501 under the Benefit
Equalization Plan and Salary Continuation Plan respectively. Also
includes $572 in life insurance premiums paid by the Bank on Mr.
Grimes' behalf under the Salary Continuation Plan. Includes $13,432
allocated to Mr. Grimes' account under the ESOP (representing 820
shares at $16.38 per share). Also includes the following insurance
premiums paid by the Bank on Mr. Grimes' behalf: $257 in life insurance
and $114 in long term disability. Includes $3,655 in contributions to
the 401(k) Plan paid by the Bank on behalf of Mr. Grimes in addition to
a split dollar agreement taxable income of $720.
(6) Includes $300 deferred under the Flexible Compensation Plan.
(7) Includes $8,540 accrued and life insurance premiums of $158 paid on
behalf of Mr. Holliday under the Salary Continuation Plan. Also
includes a Christmas bonus of $102; a long term disability insurance
premium of $38; and a life insurance premium of $66. Includes
automobile expense of $4,250 in addition to moving expenses of $49,518.
(8) Includes $7,966, $5,628, and $5,130, deferred under the 401(k) Plan,
and $960, $1,495, and $1,222, deferred under the Flexible Compensation
Plan in calendar year 1999 and fiscal 1998 and 1997, respectively.
(9) Includes $4,074 accrued and life insurance premiums of $121 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), $1,615 in unused sick
leave; a Christmas bonus of $102; life insurance premiums of $396; a
long term disability insurance premium of $228; contributions to the
401(k) Plan of $3,947 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.
6
<PAGE>
(11) Includes $7,040 and $2,364 deferred under the Flexible Compensation
Plan and includes $9,612 and $9,575 deferred under the 401(k) Plan in
calendar year 1999 and fiscal 1998, respectively.
(12) Includes $19,188 accrued and life insurance premiums of $547 paid on
behalf of Mr. Jorgenson under the Deferred Compensation Plan in
addition to $608 accrued under the Benefit Equalization Plan. Also
includes $1,848 in unused sick leave; a Christmas bonus of $102; a long
term disability insurance premium of $228; a life insurance premium of
$396; $4,806 in contributions to the 401(k) Plan paid by the Bank on
behalf of Mr. Jorgenson and $6,765 allocated to Mr. Jorgenson's account
under the ESOP (representing 413 shares at $16.38 per share.)
(13) Includes $4,779, $4,272 and $4,068 deferred under the 401(k) Plan, and
$960, $504 and $288, deferred under the Flexible Compensation Plan in
calendar year 1999 and fiscal 1998, and 1997, respectively.
(14) Includes $1,165 in unused sick leave, a Christmas bonus of $102; a long
term disability insurance premium of $182; and a life insurance premium
of $396. Also includes $2,868 in contributions to the 401(k) Plan paid
by the Bank on behalf of Mr. Eiseman; $3,236 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
$2,049.
The following table sets forth certain information concerning stock
options granted to the Named Officers in calendar year 1999. No stock
appreciation rights were granted during calendar year 1999.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST CALENDAR YEAR
- -----------------------------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
- ------------------------------------------------------------------------------------------- ---------------------------------
Number of
Securities
Underlying % of Total Exercise
Options Options or Base
Granted Granted in Price Expiration
Name (#)(1) Calendar Year ($/Sh) Date 5% ($) 10% ($)
- ------------------------ -------------- ------------------- -------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ralph K. Holliday 60,000 55% $16.1565 6/15/2009 $609,600 $1,545,000
James A. Salisbury 7,500 7 $16.50 9/28/2009 77,850 197,250
David W. Jorgenson 7,500 7 $16.50 9/28/2009 77,850 197,250
Charles E. Eiseman 6,000 6 $16.50 9/28/2009 62,280 157,800
</TABLE>
(1) Mr. Holliday's options become exercisable in equal installments over a
five-year period with the first installment becoming exercisable on June 15,
1999; Messrs. Salisbury's, Jorgenson's and Eiseman's options become
exercisable in equal installments over a four-year period with the first
installment becoming exercisable on September 28, 2000.
The following table sets forth certain information concerning the
number and value of unexercised stock options held by the Named Officers at
December 31, 1999.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST CALENDAR YEAR AND CY-END OPTION/SAR VALUES
- -----------------------------------------------------------------------------------------------------------------------
Number of Unexercised Value of Unexercised In-the-Money
Shares Options/SARs at CY-End (#)(1) Options/SARs at CY-End ($)(2)
Name Acquired Value ----------------------------- ----------------------------------
on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- --------------- ------------ --------------- ------------- ------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Lyle R. Grimes N/A N/A 96,444 30,000 506,331 157,500
Ralph K. Holliday N/A N/A 10,000 50,000 --- ---
James A. Salisbury N/A N/A 37,268 7,500 195,657 ---
David W. Jorgenson N/A N/A 43,000 24,300 63,279 ---
Charles E. Eiseman N/A N/A 11,091 6,000 58,228 ---
</TABLE>
7
<PAGE>
(1) Represents options to purchase Common Stock. 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 $15.25 per share of the Common Stock as reported on the Nasdaq
National Market on December 31, 1999.
Employment Agreements
The Bank has entered into employment agreements with Messrs. Salisbury
and Jorgenson. 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.
Mr. Salisbury's employment agreement provides 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, the 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 Mr. Salisbury had been
terminated as of December 31, 1999, under circumstances entitling him to
severance pay as described above, he would have been entitled to receive a lump
sum cash payment of approximately $418,600.
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.
Based on current salary information, if Mr. Jorgenson had been
terminated as of December 31, 1999, under circumstances entitling him to
severance pay as described above, he would have been entitled to receive cash
payments of approximately $240,300 payable over an 18 month period.
Change in Control Agreements
The Bank entered into Change in Control Agreements with Messrs.
Holliday and Eiseman for three years and two years, respectively. The Bank's
Change in Control Agreements provide that in the event involuntary termination
follows a change in control of the Company or the Bank, the officer would be
entitled to receive a severance payment equal to 299% with respect to Mr.
Holliday and 200% with respect to Mr. Eiseman of the officer's base salary as
defined in the agreements. In the event of a change in control of the Company or
the Bank, the total payments that would be due under the Change in Control
Agreements, based solely on the base salary paid to the officers covered by the
Change in Control Agreements and excluding any benefits under any employee
benefit plan which may be payable, would be approximately $660,000 and $202,000
to Messrs. Holliday and Eiseman, respectively.
8
<PAGE>
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 calendar year 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> <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.
At December 31, 1999, Messrs. Holliday, Grimes, Salisbury, Eiseman and
Jorgenson had zero years, 40 years and seven months, 19 years, 25 years and six
months and seven years and three 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. Jorgenson participates
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 nine 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 for officers participating in the SCP
prior to January, 1998. Officers participating in the SCP in 1999 and later will
receive benefits based on the participant's monthly salary for calendar 1999.
The SCP also provides for a benefit equal to one to two times the participant's
salary as defined in the plan in the event of such person's death while employed
by the Bank. Information regarding amounts contributed to the SCP during the
last calendar year and the past two 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.
9
<PAGE>
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. 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 1999. 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, Holliday,
Salisbury, Eiseman and Jorgenson were increased 0%, 0%, 12%, 11%, and 0%,
respectively. 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 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.
10
<PAGE>
Based on all these factors, the amount of bonus paid to Messrs. Grimes,
Salisbury, Eiseman and Jorgenson for the fiscal year ending June 30, 1999 were
18%, 15%, 11% and 15% of their base salaries, respectively, as compared to the
maximum possible award of 60%, 40%, 30% and 40%, respectively.
The amount of bonus accrued but not yet paid to Messrs. Grimes,
Salisbury, Eiseman and Jorgenson for the calendar year ending December 31, 1999
were 0%, 11%, 11% and 11% of their base salaries, respectively, as compared to
the maximum possible award of 60%, 40%, 40% and 40%, respectively.
As a condition of his employment, Mr. Holliday was paid a bonus of
$44,000 for calendar year end December 31, 1999. Mr. Grimes retired as President
and Chief Executive Officer of the Bank on June 30, 1999.
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).
Stock options were granted during calendar year 1999 to Messrs.
Holliday Salisbury, Eiseman 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. Messrs. Holliday,
Salisbury, Eiseman and Jorgenson received 60,000, 7,500, 6,000 and 7,500
options, respectively.
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)
11
<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 December 31, 1994 through December 31, 1999. The
graph assumes that $100 was invested on January 1, 1995 and that all dividends
were reinvested.
[GRAPHIC OMITTED]
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
WesterFed $100 $134.14 $150.97 $215.74 $157.23 $137.39
Federal Savings
Institutions $100 $156.90 $200.64 $340.12 $288.98 $245.88
NASDAQ National Market $100 $129.71 $161.18 $197.16 $278.08 $490.46
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 eight 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 January 1, 1999,
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.
12
<PAGE>
<TABLE>
<CAPTION>
Largest
Date Amount Market Modified
of Original Outstanding Balance at Rate at Rate at
Name and Position Loan Type of Loan Amount Since 1/1/99 12/31/99 Origination Origination
- ------------------------------------ ------ -------------- ---------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Lyle R. Grimes 02/88 Residential $ 92,800 $68,066 $66,033 8.75% 7.46%
Former President and Chief Executive
Officer; Chairman of the Board
John E. Roemer 06/89 Residential 99,750 82,524 75,570 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 $1,263,564, or 1.4% of the
Company's stockholders' equity, at December 31, 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 December 31, 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 December 31, 2000.
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 December 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 2001 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 2001 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 2001 Annual Meeting. The "Deadline"
means the later of 40 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
March 28, 2000
13
<PAGE>
WESTERFED FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
April 25, 2000
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 April 25, 2000
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)
o FOR o VOTE WITHHELD
INSTRUCTION: To withhold your vote for any individual nominee, strike a
line in that nominee's name below.
MARVIN P. REYNOLDS ROBERT F. BURKE RALPH K. HOLLIDAY
2. The ratification of the appointment of KPMG LLP as auditors for the
Company for the fiscal year ending December 31, 2000.
o FOR o AGAINST o 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: , 2000
------------------ ------------------------------------------
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
