SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for the Use of the Commission Only (as permitted by
Rule 14a-6(e) (2)
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
VRB Bancorp
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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) (4)
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 fileing fee is calculated and state how it is 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 No.:
3) Filing Party:
4) Date Filed:
<PAGE>
VRB BANCORP
110 Pine Street
Rogue River, Oregon 97537
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 30, 1997
To the Shareholders of VRB Bancorp:
Notice is hereby given that the Annual Meeting of Shareholders of VRB
Bancorp ("Bancorp") will be held at the Rogue Valley Country Club located at
2660 Hillcrest Road, Medford, Oregon, on Wednesday, April 30, 1997, at 2:00
PM for the following purposes:
1. To consider and act upon the election of nine (9) Directors of
Bancorp.
2. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Only shareholders of record at the close of business on record date,
March 1, 1997 are entitled to vote at the Annual Meeting or any adjournments
thereof.
Further information regarding voting rights and the business to be
transacted at the Annual Meeting is given in the accompanying Proxy
Statement. Your continued interest as a shareholder in the affairs of
Bancorp, its growth and development, is genuinely appreciated by the
officers and personnel who serve you.
March 8, 1997 BY ORDER OF THE BOARD OF DIRECTORS
Tom Anderson
Executive Vice President
Secretary
YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the Annual Meeting, please sign and date
your Proxy and return it in the enclosed postage prepaid envelope. A
shareholder who completes and returns the Proxy and subsequently attends the
Annual Meeting may elect to vote in person, since a proxy may be revoked at
any time before it is voted. Retention of the Proxy is not necessary for
admission to the Annual Meeting.
<PAGE>
VRB BANCORP
110 Pine Street
Rogue River, Oregon 97537
PROXY STATEMENT
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors of VRB Bancorp ("Bancorp") of proxies
to be used at the Annual Meeting of shareholders of Bancorp scheduled to be
held April 30, 1997 (the "Annual Meeting"). This Proxy Statement and the
enclosed form of proxy are being mailed to shareholders on or about March
15, 1997. The 1996 Annual Report of Bancorp to its shareholders is being
mailed to shareholders with this Proxy Statement.
BUSINESS OF THE MEETING
The only matter proposed to be considered by the shareholders at the
Annual Meeting is the election of nine (9) Directors of Bancorp.
Election of Directors
Nominees
The following persons will be nominated to serve for terms expiring
with the 1997 Annual Meeting of shareholders and until their successors have
been elected and qualified. All nine nominees are presently serving as
Directors of Bancorp.
Name of Nominee
James D. Coleman
John O. Dunkin
Michael Donovan
April Sevcik
Gary Lundberg
Robert J. DeArmond
Larry L. Parducci
William A. Haden
Tom Anderson
It is the intention of the persons named in the Proxy to vote for the
election of the nominees listed above. If any nominee is not available for
election, the Proxy will be voted by the individuals named in the proxy for
such substitute nominee as the Board of Directors may designate. Management
has no reason to believe any nominee will be unavailable.
Approval Required and Board of Directors' Recommendations
Directors are elected by a plurality of votes cast. Shareholders are
not entitled to accumulate votes for Directors. The Board of Directors
recommends a vote "For" the election of all nominees.
<PAGE>
Information Regarding Nominees
The following table shows as to each nominee for director, position
held with Bancorp, age, year in which he/she first became a director of
Bancorp (or it's subsidiary bank, Valley of the Rogue Bank, prior to
Bancorp's formation), and principal occupation and business experience
during the last five years.
<TABLE>
<CAPTION>
Director of Principal Occupation and last Five
Name and Position Age Bancorp Since Years Business Experience
<S> <C> <C> <C>
James D. Coleman 58 1987 Owner and President, Crater Lake Motors
Director
John O. Dunkin 58 1986 CEO, Grants Pass Moulding, Rogue Valley Sash &
Director Door and Pacific Lumber
Michael Donovan 46 1997 Co-Owner Chateaulin Restaurant & Wine Shoppe
Director
April Sevcik 50 1997 Owner General Credit Service Inc.
Director
Gary Lundberg 58 1993 Retired, Funeral Home Owner
Director
Robert J. DeArmond 66 1990 Retired, Idaho Forest Industries Inc.
Director
Larry L. Parducci 66 1994 Owner/Operator, Holiday RV Park
Director
William A. Haden 48 1996 President & CEO, Valley of the Rogue Bank and
President, Director President & CEO, VRB Bancorp
Tom Anderson 46 1996 Executive Vice President & Secretary VRB Bancorp
Executive Vice President and Executive Vice President & Chief Operating
Director Officer, Valley of the Rogue Bank
</TABLE>
The Board of Directors of Bancorp has established the number of
Directors at nine (9), as provided in the by-laws. All of the Directors of
Bancorp also serve as Directors of Valley of the Rogue Bank.
During 1996, the sole business activity of Bancorp related to the
operation of its wholly-owned subsidiary, Valley of the Rogue Bank. Bancorp
held twelve regularly scheduled meetings and six special meetings during
1996. With the exception of Directors Lundberg, Sevcik and Donovan, all
directors nominated attended at least 80 percent of the total number of
meetings held. Directors Sevcik and Donovan were not members of the Board
during 1996. Director Lundberg attended fewer than 75 percent of the
meetings held.
Certain Committees of the Board of Directors
Bancorp does not have a Nominating committee. When the need arises
the full Board serves as the nominating committee.
<PAGE>
Bancorp does not maintain a standing Compensation committee. All
compensation paid Directors and executive officers is paid by Bancorp's
subsidiary bank, Valley of the Rogue Bank. The Bank maintains a standing
Compensation committee which during 1996 consisted of directors John O.
Dunkin (Chairman of the committee), R. Gene Morris, Robert J. DeArmond,
James D. Coleman and Larry L. Parducci.
Bancorp does not maintain a standing Examination committee. Reports
of examinations, regulatory or otherwise are reviewed with the entire Board
of Directors. Bancorp's subsidiary bank, Valley of the Rogue Bank,
maintains a standing Examination committee which during 1996 consisted of
directors Lawrence S. Horton (Chairman of the committee), Robert J.
DeArmond, R. Gene Morris and Gary Lundberg.
The Bank also maintains two standing Loan committees. These
committees review and approve extensions of credit when the borrowers total
indebtedness to the Bank is in excess of $200,000. The committees meet on
an as needed basis. All nine of Bancorp's directors serve on one of the
Banks two loan committees.
Compensation of Directors
No fees are paid to Directors of Bancorp other than as Directors of
the subsidiary bank. Each non-employee Director of Valley of the Rogue Bank
received a fee of $625.00 per month during 1996. R. Gene Morris received
$675.00 per month. During 1996, Bancorp and Bank officers who also served
as Directors received no additional fees. Effective January 1, 1997,
monthly fees paid to non-employee directors were increased to $750.00
($800.00 for the chairman). Directors also participate in a Non-
Discretionary Stock Option Plan approved by Bancorp's shareholders in 1991
and amended in 1994. The Plan provides for granting of options to Directors
on an annual basis. The number of shares granted to the Directors is
determined by dividing the total compensation paid each Director during the
year, by the most recent year end book value per share. Grants are made in
January of each year, based on the preceding years compensation and service.
Directors are required to serve for one full calendar year before becoming
eligible to participate in the plan.
Other Business
The Board of Directors knows of no other matters to be brought before
the shareholders at the Annual Meeting. In the event other matters are
presented for a vote at the Meeting, the proxy holders will vote shares
represented by properly executed proxies in their discretion in accordance
with their judgment on such matters.
At the Meeting, management will report on Bancorp's business and
shareholders will have the opportunity to ask questions.
PROXIES AND VOTING AT THE ANNUAL MEETING
A majority of the outstanding common stock must be represented at the
Annual Meeting in person or by proxy in order to constitute a quorum for the
transaction of business. Only shareholders of record of Bancorp's Common
<PAGE>
Stock as of the close of business on March 1, 1997, the record date for the
Annual Meeting, will be entitled to vote. As of that date, there were
3,578,374 shares outstanding and entitled to vote. Each share of Common
Stock is entitled to one vote.
If a proxy in the accompanying form is signed and returned, the shares
represented will be voted at the Annual Meeting. Proxies will be voted in
accordance with the instructions thereon, but if no directions are given,
proxies will be voted FOR the election of the nominees identified in this
Proxy Statement.
Any proxy given pursuant to this solicitation may be revoked by the
shareholder at any time before it is exercised by affirmatively electing to
vote in person at the Annual Meeting or by filing with Bancorp at the
address shown above either an instrument of revocation or a duly executed
proxy bearing a later date. However, a shareholder who attends the Annual
Meeting need not revoke his or her proxy and vote in person unless he or she
wishes to do so.
Shareholders who do not vote in person or who have not submitted a
proxy, including broker non-votes, will be considered abstentions and may
not be counted toward a quorum or in favor of any proposition. Proxies will
be counted by representatives of Valley of the Rogue Bank as the transfer
agent for VRB Bancorp.
The cost of this Proxy solicitation will be borne by Bancorp. Bancorp
does not expect to pay any compensation for the solicitation of proxies but
may reimburse brokers and other persons holding stock in their names, or in
the names of nominees, for their expenses in sending proxy material to
principals and obtaining their proxies. In addition to solicitation of
proxies by mail, Bancorp may also use its officers and regular employees or
officers and employees of its subsidiary, Valley of the Rogue Bank, to
solicit proxies from shareholders, either in person or by telephone, fax, or
letter, without extra compensation.
STOCK PERFORMANCE GRAPH
The chart, shown on the facing page, compares the yearly percentage
change in the cumulative shareholder return on Bancorp's common stock during
the five fiscal years ended December 31, 1996, with (i) the Total Return
Index for The NASDAQ Stock Market (U.S. Companies) as reported by the Center
for Research in Securities Prices and (ii) the Total Return Index for NASDAQ
Bank Stocks as reported by the Center for Research in Securities Prices.
This comparison assumes $100.00 was invested on December 31, 1991, in
Bancorp's Common Stock, and the comparison groups, and assumes the
reinvestment of all cash dividends prior to any tax effect, and retention of
all stock dividends. VRB Bancorp stock is not currently quoted on NASDAQ
and its trading activity during the last five years has been limited. For
purposes of computing return information for the periods being compared,
Bancorp has used price information for trades that were reported to it.
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHICS
<TABLE>
<CAPTION>
PERIOD ENDING
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
<S> <C> <C> <C> <C> <C> <C>
VRB Bancorp 100.00 110.80 174.90 248.80 263.70 362.10
Nasdaq Stock Market (US) 100.00 116.40 133.60 130.60 184.70 227.20
Nasdaq Bank Stocks 100.00 145.60 166.00 165.40 246.30 325.60
</TABLE>
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth the shares of Common Stock of Bancorp
beneficially owned as of March 1, 1997 by each Director, each executive
officer, and the Directors and executive officers as a group. As of that
date, Bancorp is not aware of any person who owns more than 5 percent of its
shares either beneficially or of record, except as set forth below.
<TABLE>
<CAPTION>
Common Stock
Name of Beneficial Owner Beneficially Owned(1) Percent of Class
<S> <C> <C>
James D. Coleman 53,111 shares (2) (3) 1.47%
John O. Dunkin 21,827 shares (3) (4) (5) Less than 1%
Michael Donovan None
April Sevcik 391 shares Less than 1%
Gary A. Lundberg 5,678 shares (2)(3) Less than 1%
Robert J. DeArmond 52,003 shares 1.45%
Larry L. Parducci 5,561 shares (2) Less than 1%
Tom Anderson 127,170 shares (2)(3)(6)(7) 3.53%
Virgil N. Syverson 113,547 shares (3)(6) 2.79%
William Haden 83,575 shares (3)(6)(8) 2.33%
Brad Copeland None
All Directors and 289,924 sharoes (1)-(8) 8.10%
Executive Officers as a
Group
(1) Shares held directly with sole voting and sole investment power, unless
otherwise indicated.
(2) These figures include the following shares owned jointly by the spouses
of James D. Coleman (27,553), Gary A. Lundberg (2,433), Larry
L. Parducci (4,060), Tom Anderson (2,608)
(3) These figures include stock options which are currently exercisable by
James D. Coleman, 5,812 shares, John O. Dunkin, 8,617 shares,
Gary A. Lundberg, 3,245 shares, Tom Anderson, 973 shares, Virgil N.
Syverson, 7,660 shares.
(4) These figures include shares owned by John O. Dunkin as Custodian for
his minor child (3,312).
(5) These figures include shares owned by John O. Dunkin in the name of
JCLS Ltd. Partnership. Mr. Dunkin is the general partner. His
children are limited partners.
<PAGE>
(6) Includes 80,983 shares held by Valley of the Rogue Bank Employees 401(k)
Profit Sharing Plan for the benefit of all participants, of
which this person is a trustee.
(7) Includes 42,606 shares held by Valley of the Rogue Bank Employees 401(k)
Profit Sharing Plan, in a segregated self directed account for
the benefit of Tom Anderson.
(8) Includes 2,592 shares held by Valley of the Rogue Bank Employees (401(k)
Profit Sharing Plan, in a segregated self directed account for
the benefit of William Haden.
</TABLE>
EXECUTIVE OFFICERS
The persons listed below are the executive officers of Bancorp, and
those of its subsidiary bank, Valley of the Rogue Bank.
William A. Haden, age 48. Mr. Haden has served as President and Chief
Executive Officer of VRB Bancorp and President and Chief Executive Officer
of Valley of the Rogue Bank since January 1996. He served as Senior Vice
President of Valley of the Rogue Bank between 1996 and July 1993, when he
joined the Bank. Previous to joining Valley of the Rogue Bank, Mr. Haden
served as President of Family Bank of Commerce, from 1985 until its merger
into Valley of the Rogue Bank in 1993. Mr. Haden served as Senior Vice
President and Credit Administrator for Family Bank of Commerce from 1981
until 1985. Previous to joining Family Bank of Commerce, Mr. Haden held
various lending positions with First Interstate Bank of Oregon.
Tom Anderson, age 46. Mr. Anderson has served as Executive Vice President
and Secretary of VRB Bancorp and Executive Vice President and Chief
Operating Officer of Valley of the Rogue Bank since January 1996. He served
as Senior Vice President & Cashier of Bancorp's subsidiary bank, Valley of
the Rogue Bank from 1983 to 1996, and as Vice President and Cashier of
Valley of the Rogue Bank from 1979 to 1983. Prior to 1979, Mr. Anderson
served in Cashier and Assistant Cashier positions with Valley of the Rogue
Bank. Prior to joining Valley of the Rogue Bank in 1977, Mr. Anderson was
employed with Bank of America (1972 to 1977).
Virgil Syverson, age 64. Mr. Syverson has served as Senior Vice President
of VRB Bancorp since January 1996. He has served as Senior Vice President
and Credit Administrator of Bancorp's subsidiary bank, Valley of the Rogue
Bank since July 1993. Previous to joining Valley of the Rogue Bank in 1989,
Mr. Syverson served in various lending and management positions with The
Oregon Bank and Security Bank, between 1965 and 1989.
Brad Copeland, age 48. Mr. Copeland was hired in 1996 and has served as
Senior Vice President of Valley of the Rogue Bank since his employment.
Prior to joining Valley of the Rogue Bank he served as Senior Vice President
and Senior Credit Officer for Bank of America Alaska (1987 to 1996).
Previous to his employment with Bank of America Alaska, Mr. Copeland served
in various lending and management positions within the banking industry
(1972 to 1987). Mr. Copeland was hired to fill the vacancy which will be
<PAGE>
created by the retirement of Virgil Syverson, Senior Vice President and
Credit Administrator, which is expected to occur in July 1, 1997.
The officers are elected by the Board of Bancorp or the Bank to serve
until the next annual meeting of the Boards of Directors or until their
successors are elected and qualified, subject to prior death, resignation or
removal. The terms of the current officers expire at the annual meetings of
the Board of Directors which are scheduled to follow immediately after the
Annual Meeting of Shareholders.
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid or to be
paid by Bancorp or any subsidiary, as well as certain other compensation
paid or accrued, during the years ended December 31, 1996, 1995 and 1994, to
William A. Haden, Bancorp's President & Chief Executive Officer and Valley
of the Rogue Bank's President and Chief Executive Officer, Tom Anderson,
Bancorp's Executive Vice President and Secretary and Valley of the Rogue
Bank's Executive Vice President & Chief Operating Officer, Virgil N.
Syverson, Bancorp's Senior Vice President and Valley of the Rogue Bank's
Senior Vice President & Credit Administrator and Brad Copeland, Valley of
the Rogue Bank's Senior Vice President, for services rendered in all
capacities. No other Director or executive officer of Bancorp received
salary and bonuses during the year ended December 31, 1996 in excess of
$100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payout
Other Annual Restricted Securities LTIP All other
Name and Principal Position Year Salary(1) Bonus(2) Compensation Stock Underlying Payout Compensation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William A. Haden 1996 90,000.00 67,500.00 none none none 16,050.00 (5)
President & Chief 1995 80,000.00 66,524.00 (3) 12,884.82 (5)
Executive Officer 1994 80,000.00 48,719.00 11,519.50 (5)
Tom Anderson 1996 90,000.00 67,500.00 none none none 15,111.00 (6)
Executive Vice President 1995 85,000.00 70,675.00 (3) 14,383.16 (6)
and Chief Operating 1994 85,000.00 51,760.00 13,209.80 (6)
Officer
Virgil N. Syverson 1996 80,000.00 60,000.00 none none none 32,292.40 (7)
Sr. Vice President and 1995 80,000.00 66,524.00 (3) 30,518.39
Credit Administrator 1994 80,000.00 48,719.00 27,936.64 (7)
Brad Copeland 1996 14,598.03 none none none none none
Sr. Vice President 1995 none none (3)
1994 none none
<PAGE>
(1) Salary includes amounts contributed by the identified executive officer
to Bancorp's subsidiary bank's 401(k) Employee Profit Sharing Plan .
(2) Includes bonuses paid or to be paid during the subsequent year but
attributable to the year indicated.
(3) Perquisites and other personal benefits, if any, did not exceed the
lesser of $50,000 or 10 percent of total annual salary and bonus for the
named executive officer for any of the periods indicated.
(4) Options to acquire shares of Common Stock, as adjusted for subsequent
stock dividends and stock splits.
(5) Includes life insurance premiums (1996 only) of $1,050 for $375,000 face
amount insurance above company group insurance and the balance the
company's contribution to match employees' salary deferral under
Bancorp's subsidiary bank's 401(k) Profit Sharing Plan.
(6) Includes life insurance premiums ($511 for 1996 and $711 for 1995 and
1994) for $375,000 face amount insurance above company group coverage
and the balance, the company's contribution to match employees salary
deferral under Bancorp's subsidiary bank's 401(k) Profit Sharing Plan.
(7) Includes $17,640 (1994, 1995 and 1996) expensed by the company to fund
supplemental retirement plan and the balance the company's contribution
to match employee's salary deferral under Bancorp's subsidiary bank's
401(k) Employee Profit Sharing Plan.
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The non-employee members of the Board of Directors and the
Compensation committee of Valley of the Rogue Bank are responsible for
establishing and administering the company's executive compensation program.
Compensation Philosophy and Objectives
The philosophy underlying the development and administration of
Bancorp's compensation plan is the alignment of the interests of executive
management with those of the shareholders. Key elements of this philosophy
are:
Set base compensation at a level to attract competent executives.
Establish incentive compensation plans which deliver bonuses based
on the financial performance of the company.
Provide significant equity based incentives for executives to
ensure they are motivated over the long term to respond to the
company's business challenges and opportunities, as owners rather
than just employees.
The objective in determining base salaries for executives is to set
levels that are competitive and commensurate with the level of
responsibility assumed. In January of 1996 the Board of Directors
increased the annual base compensation of executive officers Haden and
Anderson to $90,000, based on their performance and assumption of additional
responsibilities. Bancorp's Incentive based Bonus Plan is the vehicle by
which executives can earn additional compensation depending on the financial
performance of the company.
<PAGE>
Bancorp's long term incentive program consists of the 1991 Non-
Qualified Stock Option Plan, which was amended in 1994. Grants are made at
the discretion of the Board of Directors and awarded to individual
executives, thereby providing additional incentive for executives to build
shareholder value. Executives receive value from these options when
Bancorp's stock appreciates over the long term.
Compensation Committee Members
John O. Dunkin (chairman)
Robert J. DeArmond
James D. Coleman
Larry L. Parducci
R. Gene Morris
DESCRIPTION OF COMPENSATION PLANS AND AGREEMENTS
Incentive Based Bonus Plan
The company's Incentive based Bonus Plan for executive officers
provides for establishment of a pool of funds equal to eleven and one
quarter (11.25) percent of net profits in excess of a one (1) percent
return on average assets. The pool is limited to no more than seventy five
percent of the executive officers annual base salary. The pool is then
divided between the executive officers on a pro-rata basis, based on base
salary compensation paid during the preceding year. The executive must be
employed at the time the pool is distributed in order to participate.
Distribution normally occurs during the first quarter of each year. The
Board reserves the right to modify or terminate the plan at its discretion.
For the year ending December 31, 1996 profits generated by Bancorp
amounted to $3,251,270. These earnings equaled a return on average assets
of 1.99% and a return on average shareholder equity of 17.26%. Based on the
performance of the company and the Incentive based Bonus Plan in place for
1996, a bonus pool of $195,000 was established for payment of bonus' to
executive officers. Considering this performance, the Board awarded
incentive bonus payments to, Mr. Haden, Mr. Anderson and Mr. Syverson in the
amounts of $67,500, $67,500, and $60,000 respectively. These payments were
awarded during February 1997.
Employment and Change of Control Agreements
VRB Bancorp and it's subsidiary Valley of the Rogue Bank have entered
into special agreements with certain executive officers. These agreements
are intended to help ensure that the executive remains in the employ of the
Bank.
The Bank entered into an agreement with President and Chief Executive
Officer, William Haden, effective January 10, 1996, to provide at its
expense a term life insurance policy on Mr. Haden's life in the amount of
$350,000, through the year 2002 and at $150,000 thereafter. The ownership
and right to name the beneficiary under the policy is reserved to Mr. Haden.
The cost of providing this policy is estimated to be less than $1,000 during
1996. The policy was not in place during 1995.
<PAGE>
The agreement with Mr. Haden additionally provides for a "change in
control" payment equal to his base salary plus any cash bonuses or other
compensation paid to or for his benefit, during the fiscal year preceding
the change in control. Further, if Mr. Haden leaves the Bank following a
change in control, the Bank will, at it's expense, provide COBRA benefits to
Mr. Haden for no longer than eighteen (18) months following a change in
control, provided he is eligible for such benefits.
Valley of the Rogue Bank also entered into a supplemental retirement
agreement with Senior Vice President Virgil Syverson on April 10, 1992,
which was amended on April 24, 1996. The amended agreement provides for
payments of $20,000 per year, for a period of ten (10) years, upon Mr.
Syverson's retirement. The agreement prohibits Mr. Syverson from competing
with the Bank during the time he is receiving payments. Mr. Syverson will
be fully vested and entitled to receive the full benefit if he retires on
July 1, 1997 or later. Mr. Syverson would also be fully vested if a change
in control of the ownership of VRB Bancorp occurred prior to Ju1y 1, 1997.
The above referenced supplemental program is self funded by the Bank
through the setting aside of funds into a bank controlled deposit account.
During 1996, 1995 and 1994, the Bank recorded expenses of $28,000, $17,640,
$17,640 respectively.
Additionally, the Bank entered into an agreement with Mr. Syverson on
April 24, 1996 in which Mr. Syverson agrees to provide consulting services
to the Bank, at the Bank's request following his retirement. Mr.
Syverson's compensation for the consulting services will be based on a
predetermined hourly rate for actual hours worked.
In January 1990 the Bank entered into a special termination agreement
with Senior Vice President, Virgil Syverson. The special agreement provides
that should Mr. Syverson's employment terminate within one (1) year after a
Change in Control, the Bank or it's successor, would pay him an amount equal
to six month's salary.
The Bank entered into an agreement with Executive Vice President Tom
Anderson , on April 10, 1992, to provide at its expense a term life
insurance policy on Mr. Anderson's life in the amount of $350,000, through
the year 2002, and at $150,000 thereafter. The ownership and right to name
the beneficiary under said policy is reserved to Mr. Anderson. The Bank
has also provided an additional policy for $25,000 of death benefits on Mr.
Anderson's life. The premiums paid by the Bank, are included as taxable
compensation income to Mr. Anderson and are reported as such. The cost of
providing these additional two policies was less than $1,000 during 1996.
This benefit is in addition to group life insurance provided to all
employees.
The April 10, 1992 agreement with Mr. Anderson additionally provides
for a "change in control" payment equal to his base salary plus any cash
bonuses or other compensation paid to or for his benefit, during the fiscal
year preceding the Change in Control. Further, if Mr. Anderson leaves the
bank following a Change in Control, the Bank will, at it's expense, provide
<PAGE>
COBRA benefits to Mr. Anderson for no longer than eighteen (18) months
following a change in control, provided he is eligible for such benefits.
On May 1, 1996 the Bank entered into an employment agreement with
Senior Vice President, Brad Copeland. The agreement provided for the
employment of Mr. Copeland in an executive management position effective no
later than January 1, 1997. The agreement addresses base salary and
participation in the Company's Incentive based compensation program The
agreement also provided for the granting on January 1, 1997 of options to
purchase 5,000 shares of VRB Bancorp securities at a price equal to the
market price at the time of grant. The options will vest over a ten year
period with no vesting prior to January 1, 2000.
Profit Sharing Plan
Bancorp does not maintain a qualified retirement or profit sharing
plan for its employees. Bancorp's subsidiary bank, Valley of the Rogue Bank
adopted effective January 1, 1982 a profit sharing plan (the "Plan") which
is qualified for special tax treatment under Section 401(k) of the Internal
Revenue Code in replacement of prior plans. All of the Executive Officers
of Bancorp are eligible to participate in the Plan on the same basis as
other employees. Under the Plan, eligible employees are permitted to make
elective contributions by salary reductions for a portion of their
compensation. The Bank will match two hundred (200) percent of an
employee's elective contribution up to a maximum Bank contribution level of
ten (10) percent of the participant's compensation.
Employee elective contributions in the Plan are 100 percent vested at
all times. Matching contributions under the Plan vest on a schedule of ten
(10) percent each of the first four years and twenty (20) percent per year
thereafter, becoming fully vested in seven (7) years. As a result of the
tax qualification of the Plan, employees are not subject to federal income
taxation on either employee elective contributions or any employer
contributions until those amounts are distributed from the Plan, although
Bancorp continues to receive a compensation expense deduction for
compensation paid.
STOCK OPTION PLANS
Bancorp has two non-qualified stock option plans which were approved
by the shareholders during 1991, and amended in 1994. The plans reserved an
aggregate of 362,746 shares of Bancorp's unissued common stock for possible
grants to employees and non-employee directors. The purchase price of the
optioned shares is equal to not less than the book value of a share of stock
as of the end of the most recently completed fiscal year. Options granted
are exercisable for ten years from the date of grant, with shares fully
vested after six months for directors and up to a ten year period for
employees.
The purposes of these plans are to advance the interests of VRB
Bancorp and its shareholders by enabling the company to attract and retain
the services of people with training, experience and ability to serve as
outside directors and employees, and to provide additional incentive to key
employees and directors of the company by giving them an opportunity to
participate in the ownership and growth of Bancorp.
<PAGE>
During 1996, 7,000 options were granted or contractually committed to
employees for the purchase of Bancorp shares under the 1991 Non-Qualified
Stock Option Plan for Employees. As part of his employment agreement Mr.
Copeland will be granted options to purchase 5,000 shares at $12.25 per
share (the market value as of January 1, 1997), with a vesting period of ten
years. The grant to Mr. Copeland is dated January 1, 1997 and was
contractually committed in an agreement dated May 1, 1996. The grant to Mr.
Copeland represented 71.4 percent of the total grants awarded during 1996 to
employees. No other grants were awarded to any of the executive officers.
7,087 (10,630 when adjusted for the 1996 stock dividend) options were
awarded to directors in January of 1996, as authorized by the 1991 Non-
Discretionary Stock Option Plan for Non-Employee Directors.
The following charts reflect (i) options granted to executive officers
during the last fiscal year and (ii) options exercised in the last fiscal
year and the value of options exercised and unexercised at December 31,
1996.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
of Option Term (2)
Number of
Securities % of Total Market
Underlying Options Granted Price on
Options to Employees in Exercise or Base Date of Expiration
Granted(1) Fiscal Year Price ($/Share) (1) Grant (1) Date 0% 5% 10%
Name
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William A. Haden None None None None None None None None
Tom Anderson None None None None None None None None
Virgil N. Syverson None None None None None None None None
Brad Copeland None None None None None None None None
(1) Adjusted to reflect subsequent stock dividends and splits.
(2) The potential realizable value portion of the foregoing table
illustrates values that might be realized upon exercise of the options
immediately prior to the expiration of their term based upon the
assumed compounded rates of appreciation in the value of the company's
common stock as specified in the table over the term of the options.
These amounts do not take into account provisions of the options
providing for termination of the option following termination of
employment or non-transferability.
</TABLE>
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Stock Option Values
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Securities Underlying In-the-Money
Options at FY-End Options at FY-End ($) (1)
Shares
Acquired on Exercisable/ Exercisable/
Name Exercise (#) Value Realized ($) Unexercisable (2) Unexercisable (2)
<S> <C> <C> <C> <C>
None None
William A Haden None None 18,720 $148,800
None None
Tom Anderson 12,270 (2) $80,170 2,920 $18,367
4,740 $45,747
Virgil N. Syverson 13,950 (2) $87,388 2,920 $18,370
None None
Brad Copeland None None None None
(1) On December 31, 1996 the market price of Bancorp's Common Stock was
$12.25 per share. For purposes of the foregoing table, stock options
with an exercise price less than that amount are considered to be "in-
the-money" and are considered to have a value equal to the difference
between this amount and the exercise price of the stock option
multiplied by the number of shares covered by the stock option.
(2) Adjusted to reflect subsequent stock dividends and splits.
</TABLE>
TRANSACTIONS WITH MANAGEMENT
Various Directors and executive officers are customers of and have had
banking transactions with Bancorp's subsidiary, Valley of the Rogue Bank, in
the ordinary course of business, and the Bank expects to have such
transactions in the future. All loans and commitments to loan included in
such transactions were made in compliance with applicable laws, on
substantially the same terms (including interest rate and collateral) as
those prevailing at the time for comparable transactions with other persons
and, in the opinion of management of the Bank, do not involve more than the
normal risk of collectibility or present any other unfavorable features.
The amount of loans outstanding to directors, executive officers, and
companies with which they are associated was $1,447,209 at December 31,
1996.
AUDITORS
Moss Adams, independent Certified Public Accountants, audited the
consolidated financial statements of Bancorp for the year ended December 31,
1996. The Board of Directors of Bancorp has not selected auditors for the
current year. Representatives of Moss Adams are expected to be present at
the shareholder's annual meeting, will be given the opportunity to make a
<PAGE>
statement, and will be available to respond to any appropriate questions.
However management has been advised that representatives of Moss Adams do
not plan to make a statement.
Compliance With Section 16 Filing Requirements
Section 16 of the Securities Exchange Act of 1934, as amended
("Section 16"), requires that all executive officers and directors of the
Company and all persons who beneficially own more than 10 percent of the
Company's Common Stock file an initial report of their ownership of the
Company's securities on Form 3 and report changes in their ownership of the
Company's securities on Form 4 or Form 5. These filings must be made with
the Securities and Exchange Commission with a copy sent to the Company.
Based solely upon the Company's review of the copies of the filings
that it received with respect to the fiscal year ended December 31, 1996,
the Company believes that, other than as stated above, all reporting persons
made all required Section 16 filings with respect to such fiscal year on a
timely basis.
Information Available to Shareholders
VRB Bancorp's Annual Report is being mailed to shareholders with this
Proxy Statement. Additional copies of Bancorp's Annual Report and Form 10K,
which is expected to be filed with the Securities and Exchange Commission
prior to April 1, 1997, may be obtained without charge by writing to Tom
Anderson, Executive Vice President and Secretary of VRB Bancorp, at P.O.
Box 1046, Rogue River, Oregon 97537.
<PAGE>
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the 1998 Annual
Shareholder's Meeting must be received by the Secretary of Bancorp prior to
November 1, 1997, for inclusion in the 1998 Proxy Statement and form of
proxy.
March 8, 1997 BY ORDER OF THE BOARD OF DIRECTORS
Tom Anderson
Executive Vice President
Secretary
<PAGE>
Annual Meeting of Shareholders
April 30, 1997
VRB BANCORP
110 Pine Street
Rogue River, OR 97537
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of VRB Bancorp (the "Corporation") hereby
constitutes and appoints William A. Haden and R. Gene Morris and each of
them with power of substitution, attorneys and proxies to vote all of the
shares of common stock of the Corporation held of record by the undersigned
shareholder on March 1, 1997, at the Annual Meeting of Shareholders to be
held on April 30, 1997, at 2:00 P.M., and at any adjournments, as follows:
1. Election of Directors.
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to vote
below (except as marked for all nominees listed below
to the contrary below)
(INSTRUCTIONS: To withhold authority to vote for any individual, strike a
line through the nominee's name.)
Nominees are:
William A. Haden Larry Parducci
John O. Dunkin Gary Lundberg
April Sevcik Michael Donovan
Robert J. DeArmond James D. Coleman
Tom Anderson
2. Other Matters. At the discretion of the proxy holder, on such other
business as may properly come before the meeting and any adjournments
thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE, BUT
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
ALL NOMINEES. The proxies may vote in their discretion as to other matters
which may come before the meeting.
The undersigned shareholder hereby acknowledges receipt of VRB
Bancorp's 1996 Annual Report, and VRB Bancorp's Proxy Statement dated March
8, 1997.
Dated: ______________________
________________________________
_____________________________________
(Signature(s) of Shareholder(s)
Please sign exactly as your name appears.
When shares are held by joint tenants,
both should sign. When signing as an attorney,
executor, administrator, trustee or guardian,
please give full title.
<PAGE>
