<PAGE> 1
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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] 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 the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
VRB BANCORP
110 Pine Street
Rogue River, Oregon 97537
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1998
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 Friday, April 24, 1998, at 2:00 PM for
the following purposes:
(1) To elect nine Directors of Bancorp.
(2) To consider and vote upon a proposed amendment to Bancorp's
Articles of Incorporation increasing the number of authorized shares of
Common Stock from 10,000,000 to 30,000,000, as more particularly
described in the Board of Directors' proxy statement dated March 8,
1998.
(3) 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 the record date,
February 20, 1998, 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, 1998 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> 3
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 24, 1998 (the "Annual Meeting"). This Proxy Statement and the enclosed
form of proxy are being mailed to shareholders on or about March 9, 1998. The
1997 Annual Report of Bancorp to its shareholders is being mailed to
shareholders with this Proxy Statement.
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.
BUSINESS OF THE MEETING
The following matters will be presented for shareholder action at the
annual meeting:
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES
The following persons have been nominated to serve terms expiring with
the 1999 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.
1
<PAGE> 4
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, and
principal occupation and business experience during the last five years.
<TABLE>
<CAPTION>
DIRECTOR OF
BANCORP PRINCIPAL OCCUPATION AND LAST
NAME AND POSITION AGE SINCE FIVE YEARS BUSINESS EXPERIENCE
- ----------------- --- ----------- ------------------------------
<S> <C> <C> <C>
James D. Coleman 59 1987 Mr. Coleman currently serves as
Director Chairman of the Board of
Directors. Mr. Coleman was
previously a director of
Medford State Bank which
Bancorp acquired in 1987. He is
President and owner of Crater
Lake Motors, a Ford and
Mercedes automobile dealership
in Medford, Oregon.
John O. Dunkin 59 1986 Mr. Dunkin currently serves as
Director Vice Chairman of the Board of
Directors. Mr. Dunkin is Chief
Executive Officer of Grants
Pass Moulding, Rogue Valley
Sash & Door, and Pacific
Lumber, all located in Grants
Pass, Oregon.
Michael Donovan 47 1997 Mr. Donovan is Co-Owner of the
Director Chateaulin Restaurant & Wine
Shoppe in Ashland, Oregon.
April Sevcik 51 1997 Ms. Sevcik is the owner and
Director President of General Credit
Service Inc. in Medford,
Oregon.
Gary Lundberg 59 1993 Mr. Lundberg was formerly an
Director owner of Lundberg's Funeral
Home in Grants Pass, Oregon.
Robert J. DeArmond 67 1990 Mr. DeArmond formerly served
Director (22 years) as a director of
Mountain States Savings Bank in
Coeur d'Alene Idaho and as
Chairman of the Board of Idaho
Forest Products until his
retirement in 1995. He
currently serves on the Board
of Directors of North Pacific
Lumber Company in Portland,
Oregon.
Larry L. Parducci 53 1994 Mr. Parducci is the
Director owner/operator of Holiday RV
Park in Phoenix, Oregon. Mr.
Parducci also serves on the
Phoenix City Council.
William A. Haden 49 1996 Mr. Haden currently serves as
President and Director President & CEO for VRB Bancorp
and President & CEO for Valley
of the Rogue Bank.
Tom Anderson 47 1996 Mr. Anderson currently serves
Executive Vice President as Executive Vice President &
and Director Secretary for VRB Bancorp and
Executive Vice President &
Chief Operating Officer for
Valley of the Rogue Bank.
</TABLE>
The Board of Directors of Bancorp has established the number of
Directors at nine, as provided in the by-laws. All of the Directors of Bancorp
also serve as Directors of Valley of the Rogue Bank.
During 1997, the sole business activity of Bancorp related to the
operation of its wholly-owned subsidiary, Valley of the Rogue Bank. Bancorp held
10 meetings of the Board of Directors during 1997. With the exception of
Director Donovan, all directors nominated attended at least 80 percent of the
total number of meetings held during 1997. Mr. Donovan joined the Board in
February 1997. His attendance following his appointment exceeded 80 percent.
2
<PAGE> 5
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.
Bancorp does not maintain a standing Compensation committee. All
compensation paid to 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 1997 consisted of directors John O. Dunkin
(Chairman), Michael Donovan, 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 1997 consisted of directors Robert
J. DeArmond (Chairman), April Sevcik, James Coleman 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 Bank's 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 $750.00 per month during 1997. James Coleman (Chairman of the Board)
received $800.00 per month upon assumption of the Chairman position in April of
1997. During 1997, Bancorp and Bank officers who also served as Directors
received no additional fees for serving on the Boards. Non-Employee 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 April of each year, based on the preceding year's compensation.
Directors are required to serve for one full calendar year before becoming
eligible to participate in the plan.
3
<PAGE> 6
STOCK PERFORMANCE GRAPH
The chart, shown on the following page, compares the yearly percentage
change in the cumulative shareholder return on Bancorp's Common Stock during the
five fiscal years ended December 31, 1997, with (i) the Total Return Index for
The NASDAQ Stock Market (U.S. Companies) as reported by the Center for Research
in Securities Prices (ii) the Total Return Index for NASDAQ Bank Stocks as
reported by the Center for Research in Securities Prices, and (iii) the SNL Bank
Index for financial institutions with assets less than $250 million, as reported
by SNL Securities. This comparison assumes $100.00 was invested on December 31,
1992, in Bancorp's Common Stock, and the comparison indices, and assumes the
reinvestment of all cash dividends prior to any tax effect, and retention of all
stock dividends. Prior to November 1997, VRB Bancorp Common Stock was not quoted
on NASDAQ. Prior to its listing on NASDAQ trading activity was limited. For
purposes of computing return information for the periods being compared, Bancorp
used price information for trades that were reported to it prior to November
1997. Price information for December 31, 1997 was obtain by using the NASDAQ
quote as of that date.
VRB BANCORP
TOTAL RETURN PERFORMANCE
<TABLE>
<CAPTION>
PERIOD ENDING
------------------------------------------------------------
INDEX 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Valley of the Rogue Bancorp 100.00 127.48 168.66 185.86 247.46 446.24
NASDAQ - Total US 100.00 101.97 99.67 140.96 173.38 212.76
NASDAQ Bank Index 100.00 97.56 97.21 144.77 191.13 322.90
SNL < $250M Bank Index 100.00 103.50 110.56 155.48 196.44 320.55
</TABLE>
4
<PAGE> 7
EXECUTIVE OFFICERS
The persons listed below are the executive officers of Bancorp, and of
its subsidiary bank, Valley of the Rogue Bank.
William A. Haden, age 49. 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, now Wells Fargo Bank.
Tom Anderson, age 47. 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 & 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).
Brad Copeland, age 48. Mr. Copeland has served as Executive Vice
President & Credit Administrator of Bancorp's subsidiary Valley of the Rogue
Bank since January 1998. Mr. Copeland served as Senior Vice President & Credit
Administrator from July 1997 through January 1998. Mr. Copeland was retained by
Valley of the Rogue Bank in October 1996 to fill the anticipated vacancy created
by the retirement of the Bank's previous Senior Vice President and Credit
Administrator. Prior to joining Valley of the Rogue Bank Mr. Copeland 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).
Felice Belfiore, age 28. Ms. Belfiore has served as Senior Vice
President and Chief Financial Officer of Bancorp and its subsidiary Valley of
the Rogue Bank since January 1998. She served as Vice President and Chief
Financial Officer from June 1997 until January 1998. Previous to joining
Bancorp, Ms. Belfiore, a certified public accountant, was employed with Moss
Adams LLP where she specialized in community bank auditing.
The officers are elected by the Board of Bancorp and the Bank to serve
at the discretion of the Board.
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, 1997, 1996 and 1995, 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, and Brad Copeland, Valley of the Rogue
Bank's Executive Vice President & Credit Administrator, for services rendered in
all capacities. No other Director or executive officer of Bancorp received
salary and bonuses during the year ended December 31, 1997 in excess of
$100,000.
5
<PAGE> 8
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) COMPENSATION COMPENSATION
- --------------------------- ---- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
William A. Haden 1997 $ 90,000 $ 80,000 $ 16,905(4)
President and Chief 1996 $ 90,000 $ 67,500 (3) $ 16,050(4)
Executive Officer 1995 $ 80,000 $ 66,524 $ 12,885(4)
Tom Anderson 1997 $ 90,000 $ 80,000 $ 16,493(5)
Executive Vice President 1996 $ 90,000 $ 67,500 (3) $ 15,111(5)
& Chief Operating Officer 1995 $ 85,000 $ 70,675 $ 14,383(5)
Brad Copeland 1997 $ 80,000 $ 37,500 $ -
Executive Vice President 1996 $ 14,598 $ - (3) $ -
& Credit Administrator 1995 $ - $ - $ -
</TABLE>
- ---------------
(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) Includes life insurance premiums (1996 and 1997) of $1,050 for $350,000 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.
(5) Includes life insurance premiums ($511 for 1996 and 1997, and $711 for 1995)
for $350,000 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.
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:
o Set base compensation at a level to attract and retain competent
executives.
o Establish incentive compensation plans which deliver bonuses based
on the financial performance of the company.
o 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. Bancorp's incentive based Bonus Plan is the vehicle by which executives
can earn additional compensation depending on the financial performance of the
company.
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
6
<PAGE> 9
executives, thereby providing additional incentive for executives to increase
shareholder value. Executives receive value from these options when Bancorp's
stock appreciates over the long term.
COMPENSATION COMMITTEE MEMBERS
John O. Dunkin (chairman)
James D. Coleman
Larry L. Parducci
Michael Donovan
DESCRIPTION OF COMPENSATION PLANS AND AGREEMENTS
INCENTIVE-BASED BONUS PLAN
Bancorp's Incentive-Based Bonus Plan for executive officers provides for
establishment of a pool of funds equal to 11.25 percent of net profits in excess
of a 1.0 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.
For the year ending December 31, 1997 profits generated by Bancorp
amounted to $3,704,000. These earnings equaled a return on average assets of
2.00 percent and a return on average shareholder equity of 15.65 percent. Based
on the performance of the Company and the Incentive based Bonus Plan in place
for 1997, a bonus pool of $220,000 was established for payment of bonuses to
executive officers. Considering their respective performances, the Board awarded
incentive bonus payments to Mr. Haden and Mr. Anderson in the amounts of $67,500
each. Mr. Copeland and Mr. Syverson (Valley of the Rogue Bank's previous Credit
Administrator) were each awarded bonus payments of $30,000. The payments to Mr.
Copeland and Mr. Syverson were awarded under an agreement with both parties that
the 1997 payment for the position would be shared equally. These payments were
awarded during February 1998. The Board of Directors approved the awarding of
special bonus payments, totaling $37,500, in connection with management's
performance related to the acquisition of Colonial Bank and Bancorp's recent
public stock offering. Both of these events contributed significantly to the
duties and responsibilities of management during the later half of 1997. Ms.
Belfiore did not participate in the 1997 executive officer bonus program, but
will participate in 1998.
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 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.
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 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 COBRA benefits to Mr. Anderson for no longer than 18
months following a "Change in Control", provided he is eligible for such
benefits.
7
<PAGE> 10
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 725,492 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.
During 1997, 140,500 options were granted or contractually committed to
employees for the purchase of Bancorp shares under the 1991 Non-Qualified Stock
Option Plan for Employees. Grants to executive officers totaled eighty five
percent of the total grants awarded to employees during 1997. Mr. Haden, Mr.
Anderson, Mr. Copeland and Ms. Belfiore were awarded grants totaling 40,000
shares, 30,000 shares, 30,000 shares and 20,000 shares, respectively.
18,790 options were awarded to directors in January of 1997, as
authorized by the 1991 Non-Discretionary Stock Option Plan for Non-Employee
Directors.
The following charts reflect (i) options granted to the named 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,
1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
NUMBER OF % OF TOTAL APPRECIATION
SECURITIES OPTIONS EXERCISE MARKET OVER OPTION TERM(2)
UNDERLYING GRANTED TO OR BASE PRICE ON ------------------------
OPTIONS EMPLOYEES PRICE DATE OF EXPIRATION
NAME GRANTED(1) IN FISCAL YEAR ($/SHARE)(1) GRANT(1) DATE 5% 10%
---- ---------- -------------- ------------ -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
William A. Haden 40,000 28.5% $ 8.50 $ 8.50 2007 $ 213,824 $ 541,872
Tom Anderson 30,000 21.4% $ 8.50 $ 8.50 2007 $ 160,368 $ 406,404
Brad Copeland 30,000 21.4% $ 7.63 $ 7.63 2007 $ 143,954 $ 364,808
Felice Belfiore 20,000 14.2% $ 7.31 $ 7.31 2007 $ 91,944 $ 233,005
</TABLE>
- ---------------
(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.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END STOCK OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised
Securities Underlying Value of Unexercised In-the
Shares Options at FY End(2) Money Options at FY End(1)
Acquired on Value -------------------------- -------------------------
Name Exercise(#)(2) Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William A. Haden None None None 77,440 None $353,880
Tom Anderson 1,946 $ 7,336 None 33,896 None $ 72,350
Felice Belfiore None None None 20,000 None $ 53,750
Brad Copeland None None None 30,000 None $ 71,250
</TABLE>
- ---------------
(1) On December 31, 1997, the market price of Bancorp's Common Stock was $10.00
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.
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth the shares of Common Stock of Bancorp
beneficially owned as of February 20, 1998 by each Director, each named
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, except as set forth below.
<TABLE>
<CAPTION>
COMMON STOCK PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
- ------------------------ --------------------- --------
<S> <C> <C>
James D. Coleman 120,874(2)(3) 1.4%
John O. Dunkin 63,238(3)(4) *
Michael Donovan 250 *
April Sevcik 2,000 *
Gary A. Lundberg 28,306(2)(3) *
Robert J. DeArmond 111,255(3) 1.3%
Larry L. Parducci 25,919(2)(3) *
Tom Anderson 178,940(2)(3)(5)(6) 2.2%
Felice Belfiore 91,966(5) 1.1%
William Haden 102,550(5)(7) 1.2%
Brad Copeland 91,966(5) 1.1%
All Directors and Executive Officers 544,064(1)-(7) 6.5%
as a Group
</TABLE>
- ---------------
* Less than 1.0%.
(1) Shares held directly with sole voting and sole investment power, unless
otherwise indicated.
9
<PAGE> 12
(2) These figures include the following shares owned by the individuals jointly
with their respective spouses: James D. Coleman (56,106), Gary A. Lundberg
(13,351), Larry L.
Parducci (18,120), and Tom Anderson (5,162).
(3) These figures include stock options which are exercisable within 60 days by
James D. Coleman (25,276), John O. Dunkin (38,982), Gary A. Lundberg
(14,955), Robert DeArmond (7,497), Larry Parducci (7,497), and Tom Anderson
(1,948).
(4) These figures include shares owned by John O. Dunkin as Custodian for his
minor child (1,104) and shares owned by John O. Dunkin in the name of JCLS
Ltd. Partnership (23,152). Mr. Dunkin is the general partner. His children
are limited partners.
(5) Includes 91,966 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.
(6) Includes 82,812 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.
(7) Includes 10,584 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.
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 $1,354,803
at December 31, 1997.
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, 1997, 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.
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PROPOSAL 2
AMENDMENT TO ARTICLES OF INCORPORATION
AUTHORIZATION OF ADDITIONAL SHARES OF COMMON STOCK
The Board of Directors of Bancorp has approved an amendment to Bancorp's
Articles of Incorporation which would increase the number of authorized shares
of Bancorp Common Stock (the "Amendment") and has referred the Amendment for
consideration by the shareholders at the Annual Meeting. The following
description of the Amendment is only a summary. The text of the Amendment is
attached as Exhibit A to this Proxy Statement.
COMMON STOCK CURRENTLY AUTHORIZED. The Articles of Incorporation
currently authorize the issuance of up to 10,000,000 shares of Common Stock with
no par value. As of the Record Date, there were 8,340,744 shares outstanding. In
addition, 460,908 shares are reserved for issuance under Bancorp's stock option
plans. Holders of Common Stock are entitled to one vote per share on all matters
submitted to a vote of shareholders of Bancorp. Shareholders are also entitled
to receive dividends declared from time to time from funds legally available for
the payment of dividends. Holders of Common Stock are not entitled to preemptive
rights to acquire additional shares, or any conversion or redemption rights.
Holders of Common Stock may not cumulate votes for the election of directors. In
the event of the dissolution of Bancorp, holders of Common Stock would be
entitled to share proportionately in the assets of Bancorp remaining after the
payment of liabilities of Bancorp. Shares of Bancorp Common Stock are not
subject to assessment.
The Board of Directors is permitted to issue additional authorized but
unissued shares from time to time without further shareholder action (except
such action where required for other reasons). Such shares may be issued for
consideration which the Board of Directors determines to be adequate. Oregon law
permits shares to be issued for consideration which consists of any tangible or
intangible property or benefit to the corporation, such as cash, promissory
notes, services performed, and contracts for services to be performed.
Shareholders of the corporation do not have preemptive rights to purchase
additional shares.
The Articles of Incorporation also authorize the issuance of up to
5,000,000 shares of voting preferred stock and 5,000,000 shares of preferred
stock which is generally without voting rights. The Board of Directors has the
authority to fix the relative rights and preferences of the preferred stock
including the rate of dividend, whether shares can be redeemed and upon what
terms, the amount payable with respect to the shares in the event of
liquidation, and any terms on which the shares may be converted into other
securities of Bancorp.
ADDITIONAL STOCK TO BE AUTHORIZED. The proposed amendment would increase
the number of authorized shares of Common Stock which Bancorp may issue from
10,000,000 to 30,000,000. Each additional share of Common Stock authorized
would, when issued, have the same rights and privileges as the shares of Common
Stock currently outstanding.
REASONS FOR THE AMENDMENT. The availability of additional shares of
authorized stock makes it possible for the Board of Directors to issue
additional shares, up to the full number authorized, without shareholder
approval in some circumstances. This would permit Bancorp to raise additional
capital, complete an acquisition of additional assets, or to effect stock
dividends and stock splits without shareholder approval. The Board of Directors
of Bancorp currently has no plans to take any of these steps.
At present, the Board of Directors could issue up to 1,198,348
additional shares of Common Stock without approval of additional authorized
shares. As an example, sale of the remaining authorized shares at a price
between the minimum and maximum closing prices of Bancorp Common Stock on the
Nasdaq national market system since its listing for trading would generate
between $10.0 million and $13.3 million. The recent acquisition of Colonial
Banking Company involved a cash purchase price totaling $17.3 million. A
transaction involving a similar acquisition price could not be completed, either
for cash raised by the sale of additional shares or by exchange of Bancorp
Common Stock for stock of the acquired company, without additional authorized
shares. No such acquisition is currently planned, but the Board of Directors
believes it to be in the best interests of Bancorp and its shareholders to have
the flexibility to complete such a transaction or to raise additional capital
for other purposes using Common Stock, without the delay and expense incurred in
holding a special shareholders meeting to authorize additional shares at that
time.
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<PAGE> 14
The issuance of additional shares of unauthorized common or preferred
stock could have the effect of discouraging a hostile attempt to acquire control
of Bancorp. For example, such shares could be issued to persons known to be
favorable to management. The Board is not aware of any present effort by any
persons or entity to accumulate shares of Bancorp's securities for the purpose
of acquiring control of Bancorp.
REQUIREMENT FOR SHAREHOLDER APPROVAL. Approval of the proposed amendment
requires the affirmative vote of the holders of a majority of the shares
represented in person or by proxy at the annual meeting of shareholders. The
Board of Directors unanimously recommends that the shareholders vote to approve
the proposed amendment to Bancorp's Articles of Incorporation. Upon approval,
the amendment will become effective at the time of filing of Articles of
Amendment with the Oregon Secretary of State.
OTHER BUSINESS
At the Meeting, management will report on Bancorp's business and
shareholders will have the opportunity to ask questions.
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 at their discretion in accordance with their judgment
on such matters.
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 Stock
as of the close of business on February 20, 1998, the record date for the Annual
Meeting, will be entitled to vote. As of that date, there were 8,340,744 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 and FOR the approval of the amendment to Article III of Bancorp's
Articles of Incorporation.
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.
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, 1998, may be obtained without charge by writing to Felice Belfiore,
Senior Vice President and Chief Financial Officer of VRB Bancorp, at P.O. Box
1046, Rogue River, Oregon 97537.
AUDITORS
Moss Adams LLP, independent Certified Public Accountants, audited the
consolidated financial statements of Bancorp for the year ended December 31,
1997. 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
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<PAGE> 15
shareholder's annual meeting, will be given the opportunity to make a statement,
and will be available to respond to any appropriate questions. However,
management has been advised that representatives of Moss Adams LLP do not plan
to make a statement.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the 1999 Annual
Shareholder's Meeting must be received by the Secretary of Bancorp prior to
November 1, 1998 for inclusion in the 1999 Proxy Statement and form of proxy.
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EXHIBIT A
PROPOSED AMENDMENT TO ARTICLE III
OF
BANCORP'S ARTICLES OF INCORPORATION
Article III of the Articles of Incorporation of the Corporation is
amended to read as follows:
ARTICLE III
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is forty million (40,000,000)
divided into three classes as follows:
Five million (5,000,000) shares of voting preferred stock, with
a par value of five dollars ($5.00) per share (hereinafter sometimes
referred to as "Voting Preferred Stock");
Five million (5,000,000) shares of preferred stock, with a par
value of five dollars ($5.00) per share, without voting rights except
with respect to voting rights in the event of a default in the payment
of any dividend or with respect to any provision granting the right to
consent to the issuance of a different series of Preferred Stock which
would materially affect the rights, preferences or powers of such
issuance (hereinafter sometimes referred to as "Non-voting Preferred
Stock"); and
Thirty million (30,000,000) shares of common stock without par
value (hereinafter sometimes referred to as "Common Stock").
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<PAGE> 17
REVOCABLE PROXY
VRB BANCORP
ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 1998
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, VRB Bancorp's 1997 Annual Report, and the Board of
Director's Proxy Statement dated March 8, 1998, and hereby appoints William A.
Haden and James D. Coleman and each of them, proxies with power of substitution,
to vote all shares of Common Stock of VRB Bancorp held of record by the
undersigned on February 20, 1998, at the Annual Meeting of Shareholders to be
held on April 24, 1998, at 2:00 PM, and at any adjournments thereof, with all
powers the undersigned would possess if personally present, with respect to the
following:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS. [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below listed below
INSTRUCTION: To withhold authority to vote for any individual, strike a line
through the nominee's name below.
NOMINEES ARE: James D. Coleman, William Haden, John O. Dunkin, Tom Anderson,
Michael Donovan, Gary Lundberg, April Sevick, Robert DeArmond and Larry
Parducci.
2. AMENDMENT TO THE ARTICLES OF INCORPORATION. If approved, the Amendment would
increase the number of authorized shares of Common Stock from 10,000,000 to
30,000,000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. OTHER MATTERS. At the discretion of the proxy holder, on such other business
as may properly come before the meeting and any adjournments thereof.
</TABLE>
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, AND FOR THE PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION.
Proxies may vote in their discretion as to other matters which may come before
the meeting.
Number of Shares Held: ________________
Dated: ______________________, 1998 _________________________________
_________________________________
(Signature(s) of Shareholders(s)
PLEASE DATE AND SIGN EXACTLY
AS YOUR NAME APPEARS ON YOUR
STOCK CERTIFICATE(S) (WHICH
SHOULD BE THE SAME AS THE
NAME ON THE ADDRESS LABEL ON
THE ENVELOPE IN WHICH THIS
PROXY WAS SENT TO YOU),
INCLUDING DESIGNATION AS
EXECUTOR, TRUSTEE, ETC., IF
APPLICABLE. A CORPORATION
MUST SIGN ITS NAME BY THE
PRESIDENT OR OTHER AUTHORIZED
OFFICER. ALL CO-OWNERS MUST
SIGN.
