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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December 18, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Klamath First Bancorp, Inc. ("Corporation"), 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
27, 1999, 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 Corporation. Directors and officers of the Corporation, as well as a
representative of Deloitte & Touche LLP, the Corporation's independent
auditors, will be present to respond to any questions our shareholders may
have.
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/ Gerald V. Brown
Gerald V. Brown
President and Chief Executive Officer
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 27, 1999
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NOTICE IS HEREBY GIVEN THAT, the Annual Meeting of Shareholders
("Meeting") of Klamath First Bancorp, Inc. ("Corporation") will be held at the
Shilo Inn, 2500 Almond Street, Klamath Falls, Oregon, on Wednesday, January
27, 1999, at 2:00 p.m., Pacific Time.
A Proxy Card and Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of three directors of the Corporation; and
2. 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 24, 1998, 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 18, 1998
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE CORPORATION 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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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 27, 1999
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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.
("Corporation"), the holding company for Klamath First Federal Savings and
Loan Association ("Association"), to be used at the Annual Meeting of
Shareholders of the Corporation ("Meeting"). The Meeting will be held at the
Shilo Inn, 2500 Almond Street, Klamath Falls, Oregon, on Wednesday, January
27, 1999, 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 18, 1998.
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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 24, 1998 ("Record Date") are entitled to one
vote for each share of common stock ("Common Stock") of the Corporation then
held. As of the close of business on the Voting Record Date, the Corporation
had 9,916,766 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. 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 Corporation 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
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.
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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 Corporation's Common Stock are required to file with
the Securities and Exchange Commission ("SEC"), and provide a copy to the
Corporation, 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 Corporation as a group.
Number of Shares Percent of Shares
Name Beneficially Owned (1) Outstanding
- ---- ---------------------- -----------
Klamath First Federal Savings 685,055 6.57%
and Loan Association Employee
Stock Ownership Plan
540 Main Street
Klamath Falls, Oregon 97601
J.J. Cramer & Co.(2) 930,500 9.38
100 Wall Street
New York, New York 10005
Directors and Named Executive
Officers(3)
Rodney N. Murray, Chairman of
the Board 61,138(4) *
Gerald V. Brown, President and Chief
Executive Officer 198,116(5) 2.00
Bernard Z. Agrons 42,545(6) *
J. Gillis Hannigan 45,433(7) *
Dianne E. Spires 10,815(8) *
Timothy A. Bailey 42,797(9) *
James D. Bocchi 59,602(10) *
William C. Dalton 35,751(11) *
Robert A. Tucker, Senior Vice President
and Secretary 126,487(12) 1.28
All Executive Officers and 758,424(13) 7.65
Directors as a Group (11 persons)
(footnotes on following page)
2
- -----------------
(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 March 17, 1998 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 Corporation's only "named executive officers" for the
fiscal year ended September 30, 1998. Mr. Brown is also a director of
the Corporation.
(4) Includes 24,467 shares underlying stock options exercisable within 60
days of the Record Date.
(5) Includes 97,865 shares underlying stock options exercisable within 60
days of the Record Date.
(6) Includes 18,268 shares underlying stock options exercisable within 60
days of the Record Date.
(7) Includes 18,268 shares underlying stock options exercisable within 60
days of the Record Date.
(8) Includes 4,649 shares underlying stock options exercisable within 60
days of the Record Date.
(9) Includes 18,268 shares underlying stock options exercisable within 60
days of the Record Date.
(10) Includes 18,268 shares underlying stock options exercisable within 60
days of the Record Date.
(11) Includes 18,268 shares underlying stock options exercisable within 60
days of the Record Date.
(12) Includes 62,634 shares underlying stock options exercisable within 60
days of the Record Date.
(13) Includes 351,418 shares underlying stock options exercisable within 60
days of the Record Date.
* Less than 1%.
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PROPOSAL I - ELECTION OF DIRECTORS
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The Corporation's Board of Directors consists of eight directors as
required by the Corporation's Bylaws. The Corporation's Bylaws also provide
that directors will be elected for three-year staggered terms with
approximately one-third of the directors elected each year.
The nominees for election this year are Gerald V. Brown, J. Gillis
Hannigan and Dianne E. Spires, all of whom are current members of the Board of
Directors. Each have been nominated to serve for a three-year term.
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.
Brown and Hannigan and Ms. Spires.
3
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
Gerald V. Brown 62 President of the Corporation; 1994 2002(3)
President and Chief Executive
Officer of the Association since
June 1994; Senior Vice President
of the Association from 1982 to
1994.
J. Gillis Hannigan 69 Retired; Former Executive Vice 1987 2002(3)
President of Modoc Lumber,
Klamath Falls, Oregon.
Dianne E. Spires 44 Certified public accountant; 1997 2002(3)
Partner in Rusth, Spires &
Menefee, LLP, Klamath Falls,
Oregon.
DIRECTORS CONTINUING IN OFFICE
Rodney N. Murray 70 Owner and operator of Rod 1976 2001
Murray Ranch, Klamath Falls,
Oregon.
Bernard Z. Agrons 76 Retired; Weyerhaeuser Company 1974 2001
Vice President for the Eastern
Oregon Region until 1981. Former
State Representative in the Oregon
State Legislature from 1983 to 1991.
Timothy A. Bailey 52 President of Klamath Medical 1993 2000
Services Bureau, Klamath Falls,
Oregon.
James D. Bocchi 74 Retired; President of the 1983 2000
Association from 1984 to 1994.
William C. Dalton 67 Self-employed, former owner of 1972 2000
W.C. Dalton and Company, farming.
- ----------------
(1) As of September 30, 1998.
(2) Includes service on the Board of Directors of the Association.
(3) Assuming election or re-election at the Meeting.
4
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Boards of Directors of the Corporation and the Association conduct
their business through meetings of the Boards and through their committees.
During the fiscal year ended September 30, 1998, the Board of Directors of the
Corporation held 11 regular meetings and one special meeting and the Board of
Directors of the Association held 12 regular meetings. No director of the
Corporation 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 Corporation and the Association have
established various committees, including Executive, Audit, Compensation and
Nominating Committees.
The Executive Committee consists of Messrs. Brown, 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 Corporation and of the Association
did not meet during the year ended September 30, 1998.
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
Corporation's independent auditors. The Audit Committee met five times during
the year ended September 30, 1998.
The Compensation Committee, consisting of Messrs. Hannigan, Agrons and
Bailey, reviews and recommends compensation arrangements for management and
other personnel. The Compensation Committee met three times during the year
ended September 30, 1998.
The Nominating Committee, consisting of the Corporation's full Board of
Directors, selects the management nominees for election as directors. The
Nominating Committee met once to nominate the nominees for directors at the
Meeting.
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DIRECTORS' COMPENSATION
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The Corporation and the Association each pay fees to its directors, and
each director of the Corporation is a director of the Association. Each
director of the Corporation 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 $1,400 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 $1,800 per month for
attendance at regular Board meetings. The Corporation and the Association
paid total fees to directors of $227,700 for the fiscal year ended September
30, 1998, and $18,800 was paid to two directors emeriti.
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
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EXECUTIVE COMPENSATION
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Summary Compensation Table. The following information is provided for
Messrs. Brown and Tucker.
=========================================================================================================
SUMMARY COMPENSATION TABLE(1)
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Long-Term Compensation
-----------------------------------
Annual Compensation(1) Awards
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Other
Name and Annual Restricted All Other
Principal Compensa- Stock Options Compensa-
Position Year Salary(2) Bonus tion Awards(3) (#) tion(4)
- ---------------------------------------------------------------------------------------------------------
Gerald V. Brown 1998 $ 168,312 $ 25,245 $ -- $ -- -- $ 39,050
President and Chief 1997 153,012 30,000 -- -- -- 51,090
Executive Officer and 1996 141,624 21,241 -- 1,220,258 224,662 57,130
Director
Robert A. Tucker 1998 $ 93,384 $ 9,600 $ -- $ -- -- $ 39,050
Senior Vice President, 1997 86,874 10,678 -- -- -- 51,090
and Secretary 1996 73,510 7,340 -- 770,687 156,584 33,080
=========================================================================================================
- --------------
(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 includes directors' fees of $31,700 for fiscal 1998.
(3) Represents in 1996 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 Corporation on the Common Stock. At
September 30, 1998, the value of the unvested awards (which vest pro rata
over the remaining three-year period) was approximately $1.0 million
(55,784 shares at $17.375 per share) for Mr. Brown and approximately
$612,139 (35,231 shares at $17.375 per share) for Mr. Tucker.
(4) Represents the cost to the Corporation of awards under the ESOP.
Option Grants. No options were granted to Messrs. Brown and Tucker
during fiscal 1998.
6
Option Exercise/Value Table. The following information is provided for
Messrs. Brown and Tucker.
==============================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
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Number of Dollar Value
Unexercised of In-the-Money
Number of Options at Options at
Shares Fiscal Year End Fiscal Year End
Acquired Dollar
on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
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Gerald V. Brown -- $-- 97,865/146,797 $1,700,404/$2,550,598
Robert A. Tucker -- $-- 62,634/93,950 $1,088,266/$1,632,381
==============================================================================
Employment Agreement. The Corporation and the Association (collectively,
"Employers") have entered into three-year employment agreements ("Employment
Agreements") with Messrs. Brown and Tucker (individually, the "Executive").
Under the Employment Agreements, the current salary levels for Messrs.
Brown and Tucker are $168,312 and $93,384, which amounts 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 Agreements, the term of each agreement may
be extended for an additional year at the discretion of the Board of
Directors. The current term for each of Messrs. Brown's and Tucker's
Employment Agreement expires on October 4, 2001. The Employment Agreements
are terminable by the Employers for just cause at any time or upon the
occurrence of certain events specified by federal regulations.
The Employment Agreements provide 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, Messrs. Brown or Tucker
are assigned duties inconsistent with their respective positions, duties,
responsibilities and status immediately prior to such change in control. The
term "change in control" is defined in the Employment Agreements as, among
other things, any time during the period of employment when (a) a person other
than the Corporation 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 Corporation representing
25% or more of the combined voting power of the Corporation'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 Corporation approve a
merger, consolidation, sale or disposition of all or substantially all of the
Corporation's assets, or a plan of partial or complete liquidation.
The maximum value of the severance benefits under the Employment
Agreements 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 1998, Messrs. Brown and Tucker would have
been entitled to a severance payment of approximately $412,780 and $237,399,
respectively. 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
7
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 Agreements restrict each 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.
Retirement Plan. The Association participates in the Financial
Institutions Retirement Fund ("FIRF"), a defined benefit retirement plan. All
full-time employees 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, 1998, Messrs. Brown and Tucker had 40 years and 24 years,
respectively, 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 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 1998 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
Corporation'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.
8
Report of the Compensation Committee. The Compensation Committee's
duties are to recommend and administer policies that govern executive
compensation for the Corporation 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 Corporation and the Association
is designed to establish an appropriate relationship between executive pay and
the Corporation'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 Corporation and the Association and who are of the
highest caliber;
-- To provide compensation levels competitive with those offered
throughout the financial industry; and
-- To motivate executives to enhance long-term shareholder value by
building their personal ownership in the Corporation.
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 Corporation 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
Corporation 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 Corporation and the Association, the Compensation Committee
(and the Board of Directors) considered the overall profitability of the
Corporation and the Association when making their decisions. The Compensation
Committee believes that management compensation levels, as a whole,
appropriately reflect the application of the Corporation's and Association's
executive compensation policy and the progress of the Corporation and the
Association.
During the fiscal year ended September 30, 1998, the base compensation
for the Corporation's President and Chief Executive Officer, Gerald V. Brown,
was $168,312, which represented a 10% increase from the previous fiscal year.
The Compensation Committee believes the increase is appropriate based on
competitive salary surveys.
During the fiscal year ended September 30, 1998, the base compensation
for the Corporation's Senior Vice President and Secretary, Robert A. Tucker,
was $93,384, which represented a 7% increase from the previous fiscal year.
The Compensation Committee believes the increase is appropriate based on
competitive salary surveys.
Compensation Committee consisting of: J. Gillis Hannigan, Chairman
Timothy A. Bailey
Bernard Z. Agrons
9
Compensation Committee Interlocks and Insider Participation. No
executive officer of the Corporation 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
Corporation 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 Corporation 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 Corporation or the Association.
Performance Graph. The following graph compares the cumulative total
shareholder return on the Corporation's Common Stock with the cumulative total
return on the Nasdaq Index (U.S. Companies), with the SNL $500 million to $1
Billion Thrift Index and with the SNL $1 Billion to $5 Billion Thrift Index.
Total return assumes the reinvestment of all dividends.
[Performance Graph Appears Here]
10-05-95 03-31-96 09-30-96 03-31-97 09-30-97 03-31-98 9-30-98
-------- -------- -------- -------- -------- -------- -------
Klamath First
Bancorp, Inc. $100.00 $107.40 $115.50 $144.19 $182.51 $191.10 $146.31
The Nasdaq Index
(U.S. Companies) 100.00 109.01 122.09 121.14 167.58 183.83 171.30
SNL $1 Billion to
$5 Billion Thrift
Index 100.00 108.23 123.27 149.93 210.73 262.94 200.87
SNL $500 Million
to $1 Billion
Thrift Index 100.00 105.06 117.60 144.41 195.97 231.66 181.34
10
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COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
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Section 16(a) of the Exchange Act requires the Corporation's executive
officers and directors, and persons who own more than 10% of any registered
class of the Corporation'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 Corporation
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 Corporation by the above
referenced persons, the Corporation believes that, during the fiscal year
ended September 30, 1998, all filing requirements applicable to its reporting
officers, directors and greater than 10% shareholders were complied with
properly and timely.
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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 on the security of their primary residences
and also makes consumer loans to such persons. 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, 1998,
loans to directors and executive officers totalled approximately $1.9 million.
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INDEPENDENT AUDITORS
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The Board of Directors has appointed Deloitte & Touche LLP, independent
public accountants, to serve as the Corporation's auditors for the fiscal year
ending September 30, 1999. A representative of Deloitte & Touche LLP is
expected to be present at the Meeting to respond to appropriate questions from
shareholders and will have the opportunity to make a statement if he or she so
desires.
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OTHER MATTERS
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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 Corporation.
Directors, officers and regular employees of the Corporation and the
Association may solicit proxies personally or by telecopier or telephone
without additional compensation.
The Corporation'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 Corporation. Such annual report is not to be treated
as part of this proxy solicitation material or as having been incorporated
herein by reference.
11
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SHAREHOLDER PROPOSALS
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In order to be eligible for inclusion in the proxy materials of the
Corporation for next year's Annual Meeting of Shareholders, any shareholder
proposal to take action at such meeting must be received at the Corporation's
main office at 540 Main Street, Klamath Falls, Oregon, no later than August
21, 1999. Any such proposals shall be subject to the requirements of the
proxy solicitation rules adopted under the Exchange Act.
The Corporation's Articles of Incorporation provide that shareholders
will have the opportunity to nominate directors of the Corporation if such
nominations are made in writing and are delivered to the Secretary of the
Corporation 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 Corporation 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 corporation 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 Corporation's books and (b) the class and number of shares of
the Corporation which are beneficially owned by such shareholder.
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FORM 10-K
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A copy of the Annual Report 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 18, 1998
12
REVOCABLE PROXY
KLAMATH FIRST BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
January 27, 1999
The undersigned hereby appoints the official Proxy Committee of the Board
of Directors of Klamath First Bancorp, Inc. ("Corporation") with full powers
of substitution to act as attorneys and proxies for the undersigned, to vote
all shares of Common Stock of the Corporation 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 27, 1999, 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).
Gerald V. Brown
J. Gillis Hannigan
Dianne E. Spires
INSTRUCTION: To withhold your vote
for any individual nominee(s), write that
nominee's(s') name(s) on the line below.
----------------------------------------
2. Such other matters that may properly
come before the Meeting or any
adjournments thereof.
The Board of Directors recommends a vote "FOR" the above proposal.
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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 PROPOSITION
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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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
Corporation 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 Corporation 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: , 199
-------------------- --
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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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