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
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
KLAMATH FIRST BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
KLAMATH FIRST BANCORP, INC.
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(Name of Person(s) Filing Proxy Statement)
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:
N/A
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(2) Aggregate number of securities to which transactions applies:
N/A
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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[ ] 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:
N/A
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(2) Form, schedule or registration statement no.:
N/A
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(3) Filing party:
N/A
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(4) Date filed:
N/A
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<PAGE>
December 22, 2000
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Klamath First Bancorp, Inc. ("Company"), the holding company for Klamath First
Federal Savings and Loan Association. The meeting will be held at the Shilo
Inn, 2500 Almond Street, Klamath Falls, Oregon, on Wednesday, January 24,
2001, at 2:00 p.m., Pacific Time.
The Notice of Annual Meeting of Shareholders and the Proxy Statement
appearing on the following pages describe the formal business to be transacted
at the meeting. During the meeting, we will also report on the operations of
the Company. Directors and officers of the Company, as well as a
representative of Deloitte & Touche LLP, the Company's independent auditors,
will be present to respond to any questions our shareholders may have.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person and regardless of the number of shares
you own. To make sure your shares are represented, please sign, date and
return the enclosed proxy card. If you attend the meeting, you may vote in
person even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Kermit K. Houser
Kermit K. Houser
President and Chief Executive Officer
<PAGE>
KLAMATH FIRST BANCORP, INC.
540 Main Street
Klamath Falls, Oregon 97601
(541) 882-3444
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on January 24, 2001
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NOTICE IS HEREBY GIVEN THAT, the Annual Meeting of Shareholders
("Meeting") of Klamath First Bancorp, Inc. ("Company") will be held at the
Shilo Inn, 2500 Almond Street, Klamath Falls, Oregon, on Wednesday, January
24, 2001, at 2:00 p.m., Pacific Time.
The Meeting is for the purpose of considering and acting upon:
1. The election of three directors of the Company;
2. The approval of the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending September
30, 2001; and
3 Such other matters as may properly come before the Meeting or any
adjournments thereof.
NOTE: 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, by original or later
adjournment, the Meeting may be adjourned. Shareholders of record at the
close of business on November 22, 2000, are the shareholders entitled to
receive notice of and to vote at the Meeting and any adjournments thereof.
You are requested to fill in and sign the enclosed form of proxy, which
is solicited by the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend the Meeting and
vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert A. Tucker
ROBERT A. TUCKER
SECRETARY
Klamath Falls, Oregon
December 22, 2000
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
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<PAGE>
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PROXY STATEMENT
OF
KLAMATH FIRST BANCORP, INC.
540 Main Street
Klamath Falls, Oregon 97601
(541) 882-3444
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ANNUAL MEETING OF SHAREHOLDERS
January 24, 2001
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Klamath First Bancorp, Inc. ("Company"),
the holding company for Klamath First Federal Savings and Loan Association
("Association"), to be used at the Annual Meeting of Shareholders of the
Company ("Meeting"). The Meeting will be held at the Shilo Inn, 2500 Almond
Street, Klamath Falls, Oregon, on Wednesday, January 24, 2001, at 2:00 p.m.,
Pacific Time. The accompanying Notice of Annual Meeting of Shareholders, this
Proxy Statement and the enclosed form of Proxy are being first mailed to
shareholders on or about December 22, 2000.
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VOTING AND PROXY PROCEDURE
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Shareholders Entitled to Vote at Meeting. Shareholders of record at the
close of business on November 22, 2000 ("Record Date") are entitled to one
vote for each share of common stock ("Common Stock") of the Company then held.
As of the close of business on the Record Date, the Company had 7,318,726
shares of Common Stock issued and outstanding.
Quorum Requirement. The presence, in person or by proxy, of at least a
majority of the total number of outstanding shares of Common Stock entitled to
vote is necessary to constitute a quorum at the Meeting. Abstentions will be
counted as shares present and entitled to vote at the Meeting for purposes of
determining the existence of a quorum. Broker non-votes will not be
considered shares present and will not be included in determining whether a
quorum is present.
Proxies; Proxy Revocation Procedures. The Board of Directors solicits
proxies so that each shareholder has the opportunity to vote on the proposals
to be considered at the Meeting. When a proxy card is returned properly
signed and dated, the shares represented thereby will be voted in accordance
with the instructions on the proxy card. Where a proxy card is properly
signed but no instructions are indicated, proxies will be voted FOR the
nominees for directors set forth below and FOR the approval of the appointment
of Deloitte & Touche LLP as independent auditors. If a shareholder attends
the Meeting, he or she may vote by ballot.
If a shareholder is a participant in the Klamath First Federal Savings
and Loan Association Employee Stock Ownership Plan ("ESOP"), the proxy card
represents a voting instruction to the trustees of the ESOP as to the number
of shares in the participant's plan account. Each participant may direct the
trustees as to the manner in which shares of Common Stock allocated to the
participant's plan account are to be voted. Unallocated shares of Common
Stock held by the ESOP, and allocated shares for which no voting instructions
are received from participants, will be voted by the trustees in the same
proportion as shares for which the trustees have received voting instructions.
Shareholders who execute proxies retain the right to revoke them at any
time. Proxies may be revoked by written notice delivered in person or mailed
to the Secretary of the Company or by filing a later dated proxy before a vote
being taken on a particular proposal at the Meeting. Attendance at the
Meeting will not automatically revoke a proxy, but a shareholder in attendance
may request a ballot and vote in person, thereby revoking a prior granted
proxy.
Vote Required. The three directors to be elected at the Meeting will be
elected by a plurality of the votes cast by shareholders present in person or
by proxy and entitled to vote. Shareholders are not permitted to cumulate
their
<PAGE>
votes for the election of directors. Votes may be cast for or withheld from
each nominee for election as directors. Votes that are withheld and broker
non-votes will have no effect on the outcome of the election because directors
will be elected by a plurality of votes cast.
The approval of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending September 30, 2001 requires
the affirmative vote of a majority of the outstanding shares of the Company's
Common Stock present in person or by proxy and entitled to vote at the
Meeting. Abstentions are not affirmative votes and, therefore, will have the
same effect as a vote against the proposal and broker non-votes will be
disregarded and will have no effect on the outcome of the vote.
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VOTING SECURITIES AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
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Persons and groups who beneficially own in excess of 5% of the
outstanding shares of the Company's Common Stock are required to file with the
Securities and Exchange Commission ("SEC"), and provide a copy to the Company,
certain reports disclosing such ownership pursuant to the Securities Exchange
Act of 1934, as amended ("Exchange Act"). Based solely upon the receipt of
such reports, other than as set forth in the following table, management knows
of no person who owned more than 5% of the outstanding shares of Common Stock
as of the Record Date. In addition, the following table sets forth, as of the
Record Date, information as to the shares of the Common Stock beneficially
owned by each director and named executive officer and by all executive
officers and directors of the Company as a group.
Number of
Shares Percent of
Beneficially Shares
Name Owned (1) Outstanding
---- ------------ -----------
Klamath First Federal Savings and Loan
Association Employee Stock Ownership Plan 489,325 6.69%
540 Main Street
Klamath Falls, Oregon 97601
Dimensional Fund Advisors, Inc.(2) 557,900 7.62
1299 Ocean Avenue
11th Floor
Santa Monica, California 90401
Directors and Named Executive Officers(3)
Rodney N. Murray, Chairman of the Board 81,896(4) 1.12
Gerald V. Brown, President and Chief
Executive Officer(5) 288,469(6) 3.94
Bernard Z. Agrons 61,313(7) *
J. Gillis Hannigan 59,774(8) *
Dianne E. Spires 24,760(9) *
Timothy A. Bailey 61,409(10) *
James D. Bocchi 69,482(11) *
William C. Dalton 49,631(12) *
Kermit K. Houser, President and Chief
Executive Officer(5) --(13) --
Robert A. Tucker, Senior Vice President
and Secretary 186,684(14) 2.55
All Executive Officers and
Directors as a Group (11 persons) 1,037,791(15) 14.18
(footnotes on next page)
2
<PAGE>
--------------------
* Less than 1% of shares outstanding.
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed
to be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he has voting and/or investment power with respect to
such security or has a right to acquire, through the exercise of
outstanding options or otherwise, beneficial ownership at any time within
60 days from the Record Date. The table includes shares owned by
spouses, other immediate family members in trust, shares held in
retirement accounts or funds for the benefit of the named individuals,
and other forms of ownership, over which shares the persons named in the
table possess voting and/or investment power.
(2) Based on a Schedule 13G, dated February 3, 2000, filed with the SEC.
(3) Under SEC regulations, the term "named executive officer(s)" is defined
to include the chief executive officer, regardless of compensation level,
and the four most highly compensated executive officers, other than the
chief executive officer, whose total annual salary and bonus for the last
completed fiscal year exceeded $100,000. Gerald V. Brown and Robert A.
Tucker were the Company's only "named executive officers" for the fiscal
year ended September 30, 2000.
(4) Includes 48,934 shares underlying stock options exercisable within 60
days of the Record Date.
(5) Mr. Brown served as President and Chief Executive Officer of the
Association and the Company, and as a director of the Company, until his
resignation in August 2000. Mr. Kermit K. Houser was hired by the
Company as Mr. Brown's successor, effective November 15, 2000.
(6) Includes 195,730 shares underlying stock options exercisable within 60
days of the Record Date.
(7) Includes 36,536 shares underlying stock options exercisable within 60
days of the Record Date.
(8) Includes 36,536 shares underlying stock options exercisable within 60
days of the Record Date.
(9) Includes 18,594 shares underlying stock options exercisable within 60
days of the Record Date.
(10) Includes 36,536 shares underlying stock options exercisable within 60
days of the Record Date.
(11) Includes 36,536 shares underlying stock options exercisable within 60
days of the Record Date.
(12) Includes 36,536 shares underlying stock options exercisable within 60
days of the Record Date.
(13) Mr. Houser does not beneficially own any of the Company's Common Stock at
this time.
(14) Includes 125,267 shares underlying stock options exercisable within 60
days of the Record Date.
(15) Includes 665,155 shares underlying stock options exercisable within 60
days of the Record Date.
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PROPOSAL I - ELECTION OF DIRECTORS
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The Company's Board of Directors consists of eight directors as required
by the Company's Bylaws. The Company's Bylaws also provide that directors
will be elected for three-year staggered terms with approximately one-third of
the directors elected each year. Effective August 2000, Gerald V. Brown
resigned his position as President and Chief Executive Officer of the Company
and the Association and as a director of the Company. Effective November 15,
2000, Kermit K. Houser was hired by the Company as Mr. Brown's successor.
The nominees for election this year are Kermit K. Houser, Rodney N.
Murray and Bernard Z. Agrons, all of whom are current members of the Board of
Directors. Messrs. Murray and Agrons have each been nominated to serve for a
three-year term. Mr. Houser has been nominated to serve for a two-year term
to fill the vacancy created by the resignation of Gerald V. Brown whose term
as director would have expired in 2002.
It is intended that the proxies solicited by the Board of Directors will
be voted for the election of the above named nominees for the terms specified
in the table below. If the nominees are unable to serve, the shares
represented by all valid 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 unavailable to
serve.
The Board of Directors recommends a vote "FOR" the election of Messrs.
Houser, Murray and Agrons.
3
<PAGE>
The following table sets forth certain information regarding the nominees
for election at the Meeting and the directors continuing in office after the
Meeting.
Year First
Elected or
Principal Occupation Appointed Term to
Name Age(1) During Last Five Years Director(2) Expire
---- ------ ---------------------- ----------- ------
BOARD NOMINEES
Kermit K. Houser 57 President and Chief Executive 2000 2002(3)
Officer of the Company and the
Association since November 2000.
Prior to joining the Company,
employed in various capacities
by Bank of America from 1991 to
November 2000, as senior vice
President and manager for commercial
banking; executive vice president
and senior credit officer; and most
recently, as senior vice president
and market executive for Bank of
America's South Valley commercial
banking, in Fresno, California.
Rodney N. Murray 72 Owner and operator of Rod Murray 1976 2004(3)
Ranch, Klamath Falls, Oregon.
Bernard Z. Agrons 78 Retired; Weyerhaeuser Company Vice 1974 2004(3)
President for the Eastern Oregon
Region until 1981. Former State
Representative in the Oregon State
Legislature from 1983 to 1991.
DIRECTORS CONTINUING IN OFFICE
J. Gillis Hannigan 71 Retired; Former Executive Vice 1987 2002
President of Modoc Lumber, Klamath
Falls, Oregon.
Dianne E. Spires 46 Certified public accountant; 1997 2002
Partner in Rusth, Spires & Menefee,
LLP, Klamath Falls, Oregon.
Timothy A. Bailey 54 Senior Vice President - Klamath 1993 2003
Operations for Regence Blue Cross/
Blue Shield, a health insurance
company.
James D. Bocchi 76 Retired; President of the Associa- 1983 2003
tion from 1984 to 1994.
William C. Dalton 69 Retired, former owner of W.C. 1972 2003
Dalton and Company, farming.
(footnotes on next page)
4
<PAGE>
------------------
(1) As of September 30, 2000.
(2) Includes service on the Board of Directors of the Association.
(3) Assuming election or re-election at the Meeting.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Boards of Directors of the Company and the Association conduct their
business through meetings of the Boards and through their committees. During
the fiscal year ended September 30, 2000, the Board of Directors of the
Company held 12 regular meetings and no special meetings and the Board of
Directors of the Association held 12 regular meetings. No director of the
Company or the Association attended fewer than 75% of the total meetings of
the Boards and committees on which such person served during this period.
The Boards of Directors of the Company and the Association have
established various committees, including Executive, Audit, Compensation and
Nominating Committees.
The Executive Committee consists of Messrs. Bocchi, Dalton, Hannigan and
Murray. The Executive Committee has the power and authority to act on behalf
of the Board of Directors on matters between regularly scheduled Board
meetings unless specific Board of Directors' action is otherwise required.
The Executive Committees of the Company and of the Association met four times
during the year ended September 30, 2000.
The Audit Committee consists of Messrs. Agrons, Dalton and Murray and Ms.
Spires. The Audit Committee reviews the internal auditors' reports and
results of their examination prior to review by and with the entire Board of
Directors and retains and establishes the scope of engagement of the Company's
independent auditors. The Audit Committee met four times during the year
ended September 30, 2000. For additional information regarding the Audit
Committee, see "Audit Committee Matters" below.
The Compensation Committee, consisting of Messrs. Hannigan, Agrons and
Bailey, reviews and recommends compensation arrangements for management and
other personnel. The Compensation Committee met four times during the year
ended September 30, 2000.
The Nominating Committee, consisting of the Company's full Board of
Directors, selects the nominees for election as directors. The Nominating
Committee met twice to nominate the nominees for directors at the Meeting.
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DIRECTORS' COMPENSATION
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The Company and the Association each pay fees to its directors, and each
director of the Company is a director of the Association. Each director of
the Company receives a quarterly fee of $1,000, except that the Chairman of
the Board receives a quarterly fee of $1,250. Each director of the
Association other than the Chairman of the Board receives an annual retainer
of $10,900 and a fee of $1,550 per month for attendance at regular Board
meetings. The Chairman of the Board of the Association receives the same
annual retainer as other directors but a fee of $1,950 per month for
attendance at regular Board meetings. The Company and the Association paid
total fees to directors of $236,100 for the fiscal year ended September 30,
2000, and $16,800 was paid to one director emeritus.
The Association also maintains an unfunded supplemental benefit plan to
provide retirement benefits to members of the Board of Directors. Payments
are based on directors' fees paid by the Association and continue for a period
of five years following a director's retirement, except for directors who
served at January 1, 1992, who receive this fee for life.
5
<PAGE>
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EXECUTIVE COMPENSATION
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Summary Compensation Table. The following information is provided for
Messrs. Brown and Tucker. Notwithstanding that Mr. Brown resigned as
President and Chief Executive Officer in August 2000, information regarding
his compensation is presented in accordance with SEC regulations.
Long-Term
Compensation
Annual Compensation(1) Awards
---------------------- ------------
Restricted All Other
Stock Compensa-
Name and Position Year Salary($)(2) Bonus($) Awards($)(3) tion($)(4)
----------------- ---- ------------ -------- ------------ ----------
Gerald V. Brown(5) 2000 $200,772 $ -- $-- $32,600
President and Chief 1999 182,412 12,845 -- 37,913
Executive Officer 1998 168,312 25,245 -- 39,050
and Director
Robert A. Tucker 2000 $109,164 $ 2,183 $-- $32,600
Senior Vice President 1999 98,964 5,084 -- 37,913
and Secretary 1998 93,384 9,600 -- 39,050
--------------------
(1) All compensation is paid by the Association. Excludes certain additional
benefits which did not exceed the lesser of $50,000 or 10% of salary and
bonus.
(2) Salary for Mr. Brown included directors' fees of $32,900.
(3) Represents the value of restricted stock awards at April 9, 1996, the date
of grant, pursuant to the Management Recognition and Development Plan
("MRDP"). Dividends are paid on such awards if and when dividends are
declared and paid by the Company on the Common Stock. At September 30,
2000, the value of the unvested awards (which vest pro rata over the
remaining one-year period) was approximately $237,074 (18,594 shares at
$12.75 per share) for Mr. Brown and approximately $149,736 (11,744 shares
at $12.75 per share) for Mr. Tucker.
(4) Represents the cost to the Company of awards under the ESOP.
(5) On November 15, 2000, Kermit K. Houser was selected by the Board of
Directors to become the President and Chief Executive Officer of the
Company and the Association.
Option Grants. There were no options granted during the fiscal year ended
September 30, 2000.
Option Exercise/Value Table. The following information is provided for
Messrs. Brown and Tucker. Mr. Brown resigned as President and Chief Executive
Officer in August 2000.
<TABLE>
Number of Dollar Value of
Number of Unexercised Options In-the-Money Options
Shares Dollar at Fiscal Year End(#) at Fiscal Year End($)
Acquired on Value -------------------------- --------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gerald V. Brown(1) -- $-- 195,730 48,932 $ -0- $ -0-
Robert A. Tucker -- $-- 125,267 31,317 $ -0- $ -0-
</TABLE>
-----------------
(1) Mr. Brown's options were accelerated and fully exercisable through
October 1, 2001.
6
<PAGE>
Employment Agreement. The Company and the Association (collectively,
"Employers") have entered into a three-year employment agreement ("Employment
Agreement") with Mr. Tucker (the "Executive").
Under the Employment Agreement, the current salary level for Mr. Tucker
is $109,164, which amount will be paid by the Association and which may be
increased at the discretion of the Board of Directors or an authorized
committee of the Board. On each anniversary of the commencement date of the
Employment Agreement, the term of the agreement may be extended for an
additional year at the discretion of the Board of Directors. The current term
for Mr. Tucker's Employment Agreement expires on October 4, 2001. The
Employment Agreement is terminable by the Employers for just cause at any time
or upon the occurrence of certain events specified by federal regulations.
The Employment Agreement provides for severance payments and other
benefits in the event of involuntary termination of employment in connection
with any change in control of the Employers. Severance payments also will be
provided on a similar basis in connection with a voluntary termination of
employment where, subsequent to a change in control, Mr. Tucker is assigned
duties inconsistent with his respective position, duties, responsibilities and
status immediately prior to such change in control. The term "change in
control" is defined in the Employment Agreement as, among other things, any
time during the period of employment when (a) a person other than the Company
purchases shares of Common Stock pursuant to a tender or exchange offer for
such shares, (b) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities, (c) the
membership of the Board of Directors changes as the result of a contested
election, or (d) shareholders of the Company approve a merger, consolidation,
sale or disposition of all or substantially all of the Company's assets, or a
plan of partial or complete liquidation.
The maximum value of the severance benefits under the Employment
Agreement is 2.99 times the Executive's average annual compensation during the
five-year period preceding the effective date of the change in control (the
"base amount"). Such amounts will be paid in a lump sum within ten business
days following the termination of employment. Had a change in control of the
Employers occurred in 2000, Mr. Tucker would have been entitled to a severance
payment of approximately $210,934. Section 280G of the Internal Revenue Code
of 1986, as amended ("Code"), provides that certain severance payments which
equal or exceed three times the base compensation of the individual are deemed
to be "excess parachute payments" if they are contingent upon a change in
control. Individuals receiving excess parachute payments are subject to a 20%
excise tax on the amount of such excess payments, and the Employers would not
be entitled to deduct the amount of such excess payments.
The Employment Agreement restricts the Executive's right to compete
against the Employers for a period of one year from the date of termination of
the agreement if an Executive voluntarily terminates employment, except in the
event of a change in control.
The Employers had entered into an employment agreement with Mr. Brown on
substantially similar terms. Mr. Brown's employment agreement was terminated
upon his resignation. In connection with his resignation, the Boards of
Directors of the Employers authorized severance compensation payable to Mr.
Brown in installments of $16,731 per month beginning September 1, 2000 to
October 1, 2001. Each payment is subject to all applicable federal and state
withholding obligations. Mr. Brown also received a lump-sum payment of
$109,700 on December 1, 2000. As a condition of payment, Mr. Brown has agreed
not to compete with the Employers for a period of one year.
Retirement Plan. The Association participates in the Financial
Institutions Retirement Fund ("FIRF"), a defined benefit retirement plan. All
employees working at least 1,000 hours per year are eligible to participate in
the FIRF after completion of one year of service to the Association. Benefits
are based upon years of service and salary excluding bonuses, fees,
commissions, etc. Participants are fully vested in their accrued benefit
after five years of service. At September 30, 2000, Mr. Tucker had 25 years
of credited service under the FIRF.
The normal retirement age is 65 and the early retirement age is before
age 65, but at least age 45. Normal retirement benefits are equal to 1.5%
multiplied by the years of benefit service to the Association and by the
employee's
7
<PAGE>
average base salary for the five highest consecutive years preceding
retirement up to the covered compensation level. An employee may also elect
early retirement in which case the retirement benefit payable at age 65 will
equal the vested amount of the employee's normal retirement benefit accrued
through the employee's last day of employment. However, if payments commence
prior to age 65, the benefit is reduced proportionately based on the
employee's age. Payment may also be deferred to any time up to age 70, in
which case the retirement allowance payable at age 65 will be increased by .8%
for each month of deferment after age 65 (to a maximum increase of 48%). The
Association's contributions are determined actuarially in an amount necessary
to fund the accrued and anticipated benefits. Upon retirement, the regular
form of benefit under the FIRF is an annuity payable in equal monthly
installments for the life of the employee. Optional annuity benefit forms or
a lump sum distribution may also be elected by the employee. Benefits are not
reduced by a participant's social security benefits.
The following table indicates the annual retirement benefits that would
be payable under the FIRF upon retirement at age 65 to a participant electing
to receive his or her retirement benefits in the standard form of benefits,
assuming various specified levels of the FIRF compensation and various
specified years of credited service. Under the Code, maximum annual benefits
under the FIRF are limited to $130,000 per year for the 2000 calendar year.
Years of Service
Highest Five Year ----------------------------------------------------------
Annual Compensation 15 20 25 30 35
------------------- ----------------------------------------------------------
$ 10,000 $ 2,250 $ 3,000 $ 3,750 $ 4,500 $ 5,250
$ 20,000 4,500 6,000 7,500 9,000 10,500
$ 30,000 6,750 9,000 11,250 13,500 15,750
$ 40,000 9,000 12,000 15,000 18,000 21,000
$ 50,000 11,250 15,000 18,750 22,500 26,250
$ 60,000 13,500 18,000 22,000 27,000 31,500
$ 70,000 15,750 21,000 26,250 31,500 36,750
$ 80,000 18,000 24,000 30,000 36,000 42,000
$ 90,000 20,250 27,000 33,750 40,500 47,250
$ 100,000 22,500 30,000 37,500 45,000 52,500
$ 110,000 24,750 33,000 41,250 49,500 57,750
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or
the Exchange Act that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following Report of the Compensation
Committee and Performance Graph shall not be incorporated by reference into
any such filings.
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AUDIT COMMITTEE MATTERS
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Audit Committee Charter. The Audit Committee operates pursuant to a
Charter approved by the Company's Board of Directors. The Audit Committee
reports to the Board of Directors and is responsible for overseeing and
monitoring financial accounting and reporting, the system of internal controls
established by management and the audit process of the Company. The Audit
Committee Charter sets out the responsibilities, authority and specific duties
of the Audit Committee. The Charter specifies, among other things, the
structure and membership requirements of the Audit Committee, as well as the
relationship of the Audit Committee to the independent accountants, the
internal audit department, and management of the Company. A copy of the Audit
Committee Charter is attached to this Proxy Statement as Exhibit A.
Report of the Audit Committee. The Audit Committee reports as follows
with respect to the Company's audited financial statements for the year ended
September 30, 2000:
8
<PAGE>
-- The Audit Committee has completed its initial review and discussion
of the Company's 2000 audited financial statements with management
and final approval is scheduled for December 27, 2000;
-- The Audit Committee has discussed with the independent auditors
(Deloitte & Touche LLP) the matters required to be discussed by
Statement on Auditing Standards ("SAS") No. 61, Communication with
Audit Committees, as amended by SAS No. 90, Audit Committee
Communications, including, matters related to the conduct of the
audit of the Company's financial statements;
-- The Audit Committee has received written disclosures, as required by
Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committee, indicating all relationships, if
any, between the independent auditor and its related entities and
the Company and its related entities which, in the auditor's
professional judgment, reasonably may be thought to bear on the
auditors independence, and the letter from the independent auditors
confirming that, in its professional judgment, it is independent
from the Company and its related entities, and has discussed with
the auditors the auditors' independence from the Company; and
-- The Audit Committee has, based on its initial review and discussions
with management of the Company's 2000 audited financial statements
and discussions with the independent auditors, recommended to the
Board of Directors that the Company's audited financial statements
for the year ended September 30, 2000 be included in the Company's
Annual Report on Form 10-K and final approval of that recommendation
is scheduled for December 27, 2000.
Audit Committee consisting of: Bernard Z. Agrons, Chairman
William C. Dalton
Rodney N. Murray
Dianne E. Spires
Independence and Other Matters. Each member of the Audit Committee is
"independent," as defined, in the case of the Company, under the Nasdaq Stock
Market Rules. The Audit Committee members do not have any relationship to the
Company that may interfere with the exercise of their independence from
management and the Company. None of the Audit Committee members are current
officers or employees of the Company or its affiliates.
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COMPENSATION COMMITTEE MATTERS
------------------------------------------------------------------------------
Report of the Compensation Committee. The Compensation Committee's
duties are to recommend and administer policies that govern executive
compensation for the Company and the Association. The Compensation Committee
evaluates executive performances, compensation policies and salaries and makes
recommendations to the Board of Directors concerning the compensation of each
named executive officer and other executive officers. The Board of Directors
reviews the Compensation Committee's recommendations and establishes
compensation levels for the coming year.
The executive compensation policy of the Company and the Association is
designed to establish an appropriate relationship between executive pay and
the Company's and the Association's annual and long-term performance,
long-term growth objectives, and their ability to attract and retain qualified
executive officers. The principles underlying the program are:
-- To attract and retain key executives who are vital to the long-term
success of the Company and the Association and who are of the
highest caliber;
-- To provide compensation levels competitive with those offered
throughout the financial industry; and
9
<PAGE>
-- To motivate executives to enhance long-term shareholder value by
building their personal ownership in the Company.
The Compensation Committee also considers a variety of subjective and
objective factors in determining the compensation package for individual
executives, including (i) the performance of the Company and the Association
as a whole with emphasis on annual and long-term performance, (ii) the
responsibilities assigned to each executive, and (iii) the performance of each
executive of assigned responsibilities as measured by the progress of the
Company and the Association during the year.
Independent compensation consultants, such as Martech Associates, Inc.,
Portland, Oregon, are periodically engaged to review the compensation levels
of management as compared with peers with comparable responsibilities in other
financial institutions. The Compensation Committee also considers
compensation surveys prepared by The Bank Administration Institute, America's
Community Bankers, Ben S. Cole Financial Survey of Executive Salaries and
Benefits, and Milliman & Robertson.
Although the Compensation Committee did not establish executive
compensation levels on the basis of whether specific financial goals had been
achieved by the Company and the Association, the Compensation Committee (and
the Board of Directors) considered the overall profitability of the Company
and the Association when making their decisions. The Compensation Committee
believes that management compensation levels, as a whole, appropriately
reflect the application of the Company's and Association's executive
compensation policy and the progress of the Company and the Association.
During the fiscal year ended September 30, 2000, the base compensation
for the Company's Senior Vice President and Secretary, Robert A. Tucker, was
$109,164 which represented a 10% increase from the previous fiscal year. The
Compensation Committee believes the increase is appropriate based on
competitive salary surveys.
The compensation for the Company's new President and Chief Executive
Officer (effective as of November 15, 2000 and succeeding Gerald V. Brown who
resigned in August 2000), Kermit K. Houser, will be determined in the same
manner as the other executive officer described above.
Compensation Committee consisting of: J. Gillis Hannigan, Chairman
Timothy A. Bailey
Bernard Z. Agrons
Compensation Committee Interlocks and Insider Participation. No
executive officer of the Company or the Association has served as a member of
the compensation committee of another entity, one of whose executive officers
served on the Compensation Committee. No executive officer of the Company or
the Association has served as a director of another entity, one of whose
executive officers served on the Compensation Committee. No executive officer
of the Company or the Association has served as a member of the compensation
committee of another entity, one of whose executive officers served as a
director of the Company or the Association.
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PERFORMANCE GRAPH
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Performance Graph. The following graph compares the cumulative total
shareholder return on the Company's Common Stock with the cumulative total
return on the Nasdaq Index (U.S. Companies) and with the SNL $1 Billion to $5
Billion Thrift Index. Total return assumes the reinvestment of all dividends.
<PAGE>
10
<PAGE>
10-05-95 09-30-96 09-30-97 09-30-98 09-30-99 09/30/00
-------- -------- -------- -------- -------- --------
Klamath First
Bancorp, Inc. $100.00 $115.50 $182.51 $146.31 $109.60 $114.59
The Nasdaq Index
(U.S. Companies) 100.00 122.13 167.65 170.51 278.24 369.39
SNL $1 Billion to
$5 Billion Thrift
Index 100.00 123.27 210.73 200.87 204.97 218.85
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COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
------------------------------------------------------------------------------
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than 10% of any registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the SEC. Executive officers, directors and greater
than 10% shareholders are required by regulation to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms it has received
and written representations provided to the Company by the above referenced
persons, the Company believes that, during the fiscal year ended September 30,
2000, all filing requirements applicable to its reporting officers, directors
and greater than 10% shareholders were complied with properly and timely.
11
<PAGE>
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CERTAIN TRANSACTIONS WITH THE ASSOCIATION
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The Association has followed the policy of granting loans to its
officers, directors and employees. Loans to such persons are made in the
ordinary course of business on substantially the same terms, including
interest rate and collateral, as those prevailing at the time for comparable
transactions with other persons (unless the loan or extension of credit is
made under a benefit program generally available to all other employees and
does not give preference to any insider over any other employee), and, in the
opinion of management, do not involve more than the normal risk of
collectability or present other unfavorable features. At September 30, 2000,
loans to directors and executive officers totalled approximately $2.1 million.
------------------------------------------------------------------------------
PROPOSAL II -- APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
------------------------------------------------------------------------------
Deloitte & Touche LLP served as the Company's independent auditors for
the fiscal year ended September 30, 2000. The Board of Directors has
appointed Deloitte & Touche LLP as independent auditors for the fiscal year
ending September 30, 2001, subject to approval by stockholders. A
representative of Deloitte & Touche LLP will be present at the Meeting to
respond to stockholders' questions and will have the opportunity to make a
statement if he so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS
OF THE COMPANY FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2001.
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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 matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect
thereof in accordance with the judgment of the person or persons voting the
proxies.
The cost of solicitation of proxies will be borne by the Company.
Directors, officers and regular employees of the Company and the Association
may solicit proxies personally or by telecopier or telephone without
additional compensation.
The Company's Annual Report to Shareholders has been mailed to all
shareholders of record as of the close of business on the Record Date. Any
shareholder who has not received a copy of such annual report may obtain a
copy by writing to the Company. Such annual report is not to be treated as
part of this proxy solicitation material or as having been incorporated herein
by reference.
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SHAREHOLDER PROPOSALS
------------------------------------------------------------------------------
In order to be eligible for inclusion in the proxy materials of the
Company for next year's Annual Meeting of Shareholders, any shareholder
proposal to take action at such meeting must be received at the Company's main
office at 540 Main Street, Klamath Falls, Oregon, no later than August 24,
2001. Any such proposals shall be subject to the requirements of the proxy
solicitation rules adopted under the Exchange Act.
The Company's Articles of Incorporation provide that shareholders will
have the opportunity to nominate directors of the Company if such nominations
are made in writing and are delivered to the Secretary of the Company
12
<PAGE>
not less than 30 days nor more than 60 days before the annual meeting of
shareholders; provided, however, if less than 31 days notice is given, such
notice shall be delivered to the Secretary of the Company no later than the
close of the tenth day following the date on which notice of the meeting was
mailed to shareholders. The notice must set forth (i) the name, age, business
address and, if known, residence address of each nominee for election as a
director, (ii) the principal occupation or employment of each nominee, (iii)
the number of shares of stock of the Company which are beneficially owned by
each such nominee, (iv) such other information as would be required to be
included in a proxy statement soliciting proxies for the election of the
proposed nominee pursuant to the Exchange Act, including, without limitation,
such person's written consent to being named in the proxy statement as a
nominee and to serving as a director, if elected, and (v) as to the
shareholder giving such notice (a) his or her name and address as they appear
on the Company's books and (b) the class and number of shares of the Company
which are beneficially owned by such shareholder.
------------------------------------------------------------------------------
FORM 10-K
------------------------------------------------------------------------------
A copy of the Annual Report on Form 10-K as filed with the SEC will be
furnished without charge to shareholders as of the close of business on the
Record Date upon written request to Robert A. Tucker, Secretary, Klamath First
Bancorp, Inc., 540 Main Street, Klamath Falls, Oregon 97601.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert A. Tucker
ROBERT A. TUCKER
SECRETARY
Klamath Falls, Oregon
December 22, 2000
13
<PAGE>
Exhibit A
KLAMATH FIRST BANCORP, INC.
AUDIT COMMITTEE CHARTER
April 26, 2000
Mission
-------
The mission of the Audit Committee of the Board of Directors (the "Board") of
Klamath First Bancorp, Inc. (the "Company") shall be to assist the Board in
fulfilling its responsibilities by overseeing and reporting to the Board with
respect to the general policies and practices of the Company (and its
subsidiaries) relating to accounting, reporting practices, adequacy of
internal controls, quality and integrity of financial reporting, and such
other matters as may be assigned by the Board. The Audit Committee shall
maintain free and open communication with the Board, external auditors,
internal auditors, and management. In carrying out its mission, the Audit
Committee shall have discretion to initiate such investigations as it shall
deem necessary and shall have standing authority to employ special counsel or
experts in circumstances when it determines that necessary resources cannot be
provided by regular support staff. The Audit Committee shall coordinate and
act as the audit committee for all the Company's operations, including
subsidiary companies.
Composition
-----------
The Audit Committee shall consist of three or more directors appointed by the
Board, each of whom shall be independent directors, and free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Committee.
"Independent director" shall have the same meaning as defined in National
Association of Securities Dealers, Inc., Rule No. 4200. All members of the
Audit Committee shall have a working familiarity with basic finance and
accounting practices, and at least one member of the Audit Committee shall
have accounting or related financial management expertise. Audit Committee
members may enhance their familiarity with finance and accounting by
participating in educational programs conducted by the Corporation, or outside
consultants or vendors.
Meetings
--------
Regular meetings of the Audit Committee shall be held no less frequently than
quarterly, on a schedule to be adopted by the Audit Committee. Special
meetings of the Audit Committee may be held for any purpose when called by the
Chair or any member. The Audit Committee may meet in separate executive
sessions with management, external auditors, and internal audit to discuss any
matters that the Audit Committee or each of these groups believe should be
discussed privately.
Duties
------
To fulfill its responsibilities and duties, the Audit Committee shall:
Financial Statements and External Auditors
------------------------------------------
Review and update this Charter periodically, at least annually, as conditions
dictate.
A-1
<PAGE>
Recommend to the Board the selection of the external auditors, considering
independence and effectiveness and approve the fees and other compensation to
be paid to the external auditors. The external auditors are ultimately
accountable to the Audit Committee and Board, as representatives of
shareholders. The Audit Committee and Board have the ultimate authority to
and responsibility to select, evaluate, and where appropriate, replace the
external auditor.
Receive and review a formal written statement from the external auditor
delineating all relationships between the auditor and the Company, consistent
with Independence Standards Board Statement 1. The Audit Committee will
actively discuss with the external auditor any disclosed relationships or
services that may impact the objectivity and independence of the auditor, and
will recommend to the Board any appropriate actions to ensure the independence
of the external auditor.
Review the plan, scope, and results of the external auditors' annual audit of
the Company's financial statements, including the independent auditors' report
thereon, conclusions regarding significant accounting estimates, and
recommendations with respect to accounting practices, policies or procedures.
Review with management and the external auditors their assessments of the
adequacy of internal controls, and the resolution of identified material
weaknesses and reportable conditions in internal controls, including the
prevention or detection of management override or compromise of the internal
control structure.
Discuss with management any issues regarding the external auditor, such as
management's evaluation of factors relating to the external auditor's
independence, or significant disagreements between management and the external
auditor.
Review management's engagement of the external auditor to perform non-audit
services, to determine if such engagement unduly influences or compromises the
auditor's independence.
Review with management the Company's compliance with laws and regulations
designated by its regulators, including, but not limited to those related to
safety and soundness, loans to insiders, and dividend restrictions.
Report promptly to the Board its deliberations and recommendations.
Internal Audit
--------------
Annually review the audit plan covering the proposed activities of the
Internal Audit Department.
Receive reports, at last annually, from the manager of the Internal Audit
Department covering organization and staffing of the department, scope of
activities, procedures for selection of audits and other relevant information.
Review internal audit findings quarterly.
Review and concur in the appointment, replacement, reassignment or dismissal
of the manager of the Internal Audit Department.
A-2
<PAGE>
REVOCABLE PROXY
KLAMATH FIRST BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
January 24, 2001
The undersigned hereby appoints the official Proxy Committee of the Board
of Directors of Klamath First Bancorp, Inc. ("Company") with full powers of
substitution to act as attorneys and proxies for the undersigned, to vote all
shares of Common Stock of the Company which the undersigned is entitled to
vote at the Annual Meeting of Shareholders ("Meeting"), to be held at the
Shilo Inn, 2500 Almond Street, Klamath Falls, Oregon, on Wednesday, January
24, 2001, at 2:00 p.m., Pacific Time, and at any and all adjournments thereof,
as follows:
VOTE VOTE
FOR WITHHELD
--- --------
1. The election as directors of all nominees [ ] [ ]
listed below (except as marked to the
contrary below).
Kermit K. Houser
Rodney N. Murray
Bernard Z. Agrons
INSTRUCTION: To withhold your vote
for any individual nominee(s), write that
nominee's(s') name(s) on the line below.
----------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. The approval of the appointment of Deloitte [ ] [ ] [ ]
& Touche LLP as independent auditors for the
fiscal year ending September 30, 2001.
3. Such other matters that may properly
come before the Meeting or any
adjournments thereof.
The Board of Directors recommends a vote "FOR" the above proposals.
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THIS PROXY, RETURNED PROPERLY SIGNED AND DATED, WILL BE VOTED AS DIRECTED, BUT
IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE
PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH 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.
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<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the Meeting of the shareholder's decision to terminate this proxy, then the
power of said attorneys and proxies shall be deemed terminated and of no
further force and effect.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of Notice of Annual Meeting of Shareholders, a proxy
statement for the Annual Meeting of Shareholders, and an Annual Report to
Shareholders.
Dated: , 2001
-----------------------
--------------------------------- --------------------------------------
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
--------------------------------- --------------------------------------
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, only one holder need sign, but each holder
should sign, if possible.
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PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.
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<PAGE>
