SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO.)
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[ ] Definitive Additional Materials
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OREGON PACIFIC BANCORP
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11
CALCULATION OF FILING FEE
- -------------------------- ---------------------- ------------------------ ------------------- ------------
Per unit price or
other underlying value
Title of each class of Aggregate number of of transaction Proposed maximum
securities to which securities to which computed pursuant to aggregate value Total Fee
transaction applies: transaction applies: Exchange Act Rule 0-11: of transaction: Paid
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Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid:___________________ Filing Party: _____________________
Form, Schedule or
Registration Statement No.:____________________Date Filed:_____________________
OREGON PACIFIC BANCORP
PROXY STATEMENT FOR 2005 ANNUAL MEETING OF SHAREHOLDERS
Date of Proxy Statement: March 28, 2005
GENERAL
This Proxy Statement is furnished by the Board of Directors of Oregon
Pacific Bancorp (the "Company"), an Oregon Corporation and financial bank
holding company, in connection with the solicitation of proxies by the Company
Board of Directors for use at the Company's 2005 Annual Meeting of Shareholders
(the "2005 Annual Meeting"), to be held at 7:00 p.m. Pacific Time on April 26,
2005 at the Oregon Pacific Banking Co.'s (the "Bank") principal executive
offices, 1355 Highway 101, Florence, Oregon 97439. This Proxy Statement and the
enclosed proxy card are first being mailed to Company shareholders on or about
March 28, 2005. The Company's 2005 Annual Report to Shareholders is being mailed
to Company shareholders with this Proxy Statement.
PURPOSES OF ANNUAL MEETING
1. ELECTION OF DIRECTORS. The election of three (3) directors of the
Company to serve for three-year terms beginning on April 26, 2005.
2. OTHER MATTERS. Any other matters as may properly be raised at the 2005
Annual Meeting. The management of the Company does not intend to present any
matters at the Annual Meeting other than that outlined above. As of the date of
this Proxy Statement, management has no knowledge of any matters which may be
presented by its shareholders at the Annual Meeting.
RECORD DATE AND OUTSTANDING SHARES
The only class of issued and outstanding stock of the Company is its
common stock, no par value (the "Common Stock"). Only holders of record of the
Common Stock at the close of business on March 16, 2005 will be entitled to vote
at the 2005 Annual Meeting. On that date, the Company had 2,149,898 shares of
Common Stock outstanding held by approximately 640 shareholders.
QUORUM AND VOTING
Each holder of Common Stock is entitled to one vote per share on each
matter submitted to a vote at the 2005 Annual Meeting. Under Oregon law, action
may be taken on a matter submitted to shareholders only if a quorum exists with
respect to that matter. A majority of the outstanding shares of Common Stock
entitled to vote at the 2005 Annual Meeting, present in person or represented by
proxy, will constitute a quorum for the 2005 Annual Meeting.
Holders of shares of Common Stock are not entitled to cumulative voting
rights in the election of directors. A nominee for election to the Board of
Directors will be elected by a plurality of the votes cast by the shares
entitled to vote at the 2005 Annual Meeting. In the election of directors, any
action other than a vote for a nominee will have the practical effect of voting
against the nominee. Abstentions and other non-votes (including broker
non-votes) are counted in determining whether a quorum exists at the 2005 Annual
Meeting, but are not counted in determining whether a proposal is approved or in
determining whether a plurality exists with respect to a given nominee. Proxies
and ballots will be received and tabulated by an employee of the Bank on behalf
of the Company's transfer agent, Registrar and Trust Services.
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REVOCABILITY OF PROXIES
A proxy delivered pursuant to this solicitation is revocable at the
option of the person giving the proxy, at any time before it is exercised, by
delivering to the Secretary of the Company a written notice of revocation or a
duly executed proxy card bearing a later date, or by attending the 2005 Annual
Meeting and electing to vote in person. Attendance at the 2005 Annual Meeting,
in and of itself, will not constitute revocation of a proxy. If no directions
are specified, the shares will be voted (i) "FOR" the election of the directors
to a three-year term recommended by the Board of Directors, and (ii) in
accordance with the discretion of the named proxies, on other matters properly
brought before the 2005 Annual Meeting.
SOLICITATION OF PROXIES
The accompanying proxy is solicited by and on behalf of the Board of
Directors, and the entire cost of preparing, printing and mailing this Proxy
Statement and the proxy solicited hereby will be borne by the Company. In
addition to use of the mails, proxies may be solicited by directors, officers
and other employees of the Bank, without additional remuneration, in person or
by telephone or facsimile transmission. The Company will also ask brokerage
firms, bank nominees, custodians and fiduciaries to forward proxy materials to
beneficial owners of the Common Stock as of the record date and will reimburse
them for the cost of forwarding the proxy materials in accordance with customary
practice. Your cooperation in promptly completing, signing, dating and returning
the enclosed proxy card will help avoid additional expense.
PROPOSAL ONE: ELECTION OF DIRECTORS
ELECTION OF DIRECTORS AND INFORMATION ABOUT NOMINEES
The Company's Articles of Incorporation authorize a Board of no less
than seven (7) and no more than fifteen (15) directors. The Board of Directors
is divided into three classes identified as Class A, Class B, and Class C. The
three current directors of the Bank in Class C whose terms expire in 2005 have
been nominated for re-election. These nominees (the "Nominees") for election are
Patricia Benetti, Doug Feldkamp, and Martin L. Wick. Each Nominee, if elected,
will serve as director of the Company until the third succeeding annual meeting
following his or her election or until his or her successor is qualified and
elected, subject to earlier termination by death, disability, resignation or
removal.
PATRICIA BENETTI, age 49, joined as a director of the Company in July
2004. Ms. Benetti has been the President and co-owner of The House of
Myrtlewood, Inc., DBA The Oregon Connection, a manufacturing and retail store in
Coos Bay, Oregon since 1989. Ms. Benetti is the chair of the Coos Bay North Bend
Promotions Committee and is also on the board of the Bay Area Chamber of
Commerce. In the evenings, she often helps her husband, current Mayor of Coos
Bay, Joe Benetti, at his business, Benetti's Italian Restaurant in Coos Bay,
Oregon.
DOUG FELDKAMP, age 45, joined as a director of the Company in March
2004. Mr. Feldkamp has been President of Umpqua Dairy Products Co., a national
award winning diary product manufacturing company in Roseburg, Oregon, since
1989. Mr. Feldkamp, a Roseburg native, received a degree in business from Oregon
State University. Mr. Feldkamp has served as a board member and or chairman to
organizations such as the Roseburg Area Chamber of Commerce, Douglas County
Library Foundation, the Public Works Commission, Umpqua Fishery Enhancement, the
United Way, March of Dimes, and the Kiwanis Club. He currently holds an
Executive Board position while chairing the Scout House Committee.
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MARTEEN L. WICK, age 54, has served as a director of the Bank since
October 1997 and became a director of the Company in 2003. Ms. Wick has been the
owner of Kitchen Klutter, a retail kitchenware store in Florence, Oregon since
1995 and previously served as manager of that store from 1988 to 1994.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES.
The election of the Nominees requires the affirmative vote of the
holders of a simple majority (50%) of the Company's issued and outstanding
common stock entitled to vote on the matter. Shares eligible to be voted, for
which a properly dated and executed proxy is received by the Secretary of the
Company before the 2005 Annual Meeting, will be voted in accordance with any
choice specified. Where no choice is specified, eligible shares will be voted
for each Nominee. If any nominee is not available for election, the proxies will
be voted by the named proxy holders for such substitute Nominee as the Board of
Directors may designate. Management has no reason to believe any Nominee will be
unavailable to serve.
INFORMATION ABOUT THE DIRECTORS CONTINUING IN OFFICE
A.J. BRAUER, M.D., age 75, has been a director of the Bank since its
formation in December 1979 and became a director of the Company in 2003. He
served as Chairman of the Board of Directors from 1979 until 1990 and again from
1993 to the present. Dr. Brauer operated a medical practice as a physician and
surgeon in Florence, Oregon for 31 years until 1989, and then served as a
medical missionary in Kenya from 1990 until his retirement in 1993. Dr. Brauer
also serves as a director of Peace Harbor Hospital in Florence. His term expires
on the date of the 2006 annual meeting of shareholders.
LYDIA G. BRACKNEY, age 66, has served as a director of the Bank since
October 1997 and became a director of the Company in 2003. Ms. Brackney served
as Secretary of and a teacher with Siuslaw School District in Florence, Oregon
for nine years until her retirement in 1995. Her term expires on the date of the
2006 annual meeting of shareholders.
THOMAS K. GROVE, age 59, has served as President, Chief Executive
Officer, and Secretary, of the Bank since June 1984 and became President and
Chief Executive Officer of the Company in January 2003. Before joining the Bank,
Mr. Grove held a number of positions with Wyoming National Bank in Casper,
Wyoming. Mr. Grove also serves as a director of Peace Harbor Hospital, Friends
of Florence, Siuslaw School District No. 97J, and Western Lane Community
Development Corporation; as an officer of Oregon Dunes Restoration Council; and
serves on the advisory board at Lane Community College, all nonprofit
organizations located in the Florence, Oregon area. His term expires on the date
of the 2007 annual meeting of shareholders.
ROBERT R. KING, age 61, has served as a director of the Bank since its
inception in 1979 and became a director of the Company in 2003. Mr. King has
been the President and a principle shareholder of R&R King Logging, Inc., a
logging company in Florence, Oregon, since 1967. He is also part owner of King
Land & Cattle, LLC, a cattle ranch in the Florence area. His term expires on the
date of the 2007 annual meeting of shareholders.
JON THOMPSON, age 43, has served as a director of the Company since
February 2004. Mr. Thompson is the president, general manager, and owner of KCST
Radio in Florence that he launched in 1988. Mr. Thompson is a member of the
board of Florence Food Share and is past president and board member of the
Florence Area Chamber of Commerce. He also has served as chairman of the
Rhododendron and Chowder, Blues and Brews festivals in Florence and the city's
Casino Task Force. His term expires on the date of the 2007 annual meeting of
shareholders.
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RICHARD L. YECNY, age 50, has served as a director of the Bank since
April 1994 and became a director of the Company in 2003. Mr. Yecny, a Certified
Public Accountant, is Chief Financial Officer of Peace Health Siuslaw Region
since January 2001. From 1982 through 2000, he was a principal shareholder of
Davis, Yecny & McCulloch, P.C., a certified public accounting firm with offices
in Florence and formerly Reedsport, Oregon. Mr. Yecny is also a Chamber of
Commerce board member, regional board member of the Oregon Community Foundation,
and treasurer of Friends of Florence, all nonprofit organizations located in
Florence. His term expires on the date of the 2006 annual meeting of
shareholders.
All of the directors serve also as a director of the Bank.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the ownership of the Company's Common
Stock, which is the Company's only class of stock issued and outstanding,
beneficially owned as of January 31, 2005 by the Board of Directors of the
Company and executive officers of the Bank. The table includes the percentage of
total Company shares owned by each based on total issued and outstanding shares,
as of January 31, 2005, of 2,144,316. Except as disclosed below or elsewhere in
this Proxy Statement no person known to the Company beneficially owns more than
5% of its Common Stock. The mailing address of each person listed below is the
Company's principal executive offices, 1355 Highway 101, Florence, Oregon 97439.
COMMON STOCK
---------------------------
PERCENT OF
NUMBER OF OUTSTANDING
SHARES SHARES
DIRECTORS
Patricia Benetti(1) 2,518 0.1%
Lydia G. Brackney (2) 3,956 0.2%
A.J. Brauer, M.D. (3) 133,197 6.2%
Doug Feldkamp (4) 6,545 0.3%
Thomas K. Grove (5) 98,860 4.6%
Robert R. King (6) 129,111 6.0%
Jon Thompson (7) 3,085 0.1%
Marteen L. Wick (8) 3,919 0.2%
Richard L. Yecny (9) 6,490 0.3%
------- -----
All Directors (9 persons): 387,681 18.1%
EXECUTIVE OFFICERS
Joanne Forsberg 2,440 0.1%
Christopher Giovinco 1,000 **
Mary Hipkiss 1,500 0.1%
Don Mabry 925 **
Patricia Riley 1,250 0.1%
------- -----
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (14 PERSONS) 394,796 18.4%
======= =====
**Less than .05%
- ------------
Note 1: Only officers who owned stock as of January 31, 2005 are
listed.
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Note 2: "Beneficial Ownership" is defined pursuant to Rule 13d-3 of the
Exchange Act, and generally means any person who directly or indirectly has or
shares voting or investment power with respect to a security. Share ownership
totals include shares held individually, shares owned jointly with other persons
including spouses, shares held in trust for the owner or for the owner's minor
children or grandchildren, shares owned by certain other family members and
their spouses, and shares owned or controlled directly or indirectly by any of
the above through partnerships or corporations, all as more particularly
described below. A person shall be deemed to be the beneficial owner of a
security if that person has the right to acquire beneficial ownership of the
security within 60 days, including, but not limited to, any right to acquire the
security through the exercise of any option or warrant or through the conversion
of a security. Any securities not outstanding that are subject to such options
or warrants shall be deemed to be outstanding for the purpose of computing the
percentage of outstanding securities of the class owned by that person, but
shall not be deemed to be outstanding for the purpose of computing the
percentage of the class owned by any other person.
(1) All shares are owned jointly with Ms. Benetti's husband, Joe
Benetti.
(2) All shares are owned individually.
(3) All shares are owned jointly with Dr. Brauer's wife, Catherine
Brauer.
(4) Includes 2,553 shares owned by Umpqua Dairy Products Company which
Mr. Feldkamp has voting power.
(5) Includes 66,947 shares jointly owned with Mr. Grove's spouse,
Sharon Grove and 20,311 shares held solely by Mr. Grove's Individual
Retirement Account. It also includes 11,602 shares beneficially owned
solely by Mr. Grove's spouse, of which Mr. Grove disclaims beneficial
ownership.
(6) Includes 88,392 shares held jointly with Mr. King's wife, Kay
King. Also includes 39,888 shares beneficially owned by Mr. King's mother,
Dorothemae King, 19,944 of those shares as trustee of the Robert K. King
Family Trust and 19,944 of those shares as trustee of the Dorothemae King
Survivor's Trust. Mr. King has the right to vote those shares, on all
matters submitted to a shareholder vote, as Trustee under a Voting Trust
Agreement that expires on February 23, 2015, and may be deemed to
beneficially own those shares. Also includes 698 shares of the R. Justin
King Trust and 133 shares held by Kay King as custodian for Will Ryan
Pennington, both of which Mr. King disclaims beneficial ownership.
(7) All shares are owned jointly with Mr. Thompson's wife, Pamela
Thompson.
(8) All shares owned jointly with Ms. Wick's husband, John Wick.
(9) Includes 3,920 shares held in an Individual Retirement Account and
2,570 shares held jointly with Mr. Yecny's spouse, Jane Yecny.
MANAGEMENT AND COMPENSATION INFORMATION
COMPENSATION OF DIRECTORS
During 2004, Bank directors received $400 per month each through April
2004, and then received $900 per month each as compensation for serving as a
director. Directors are also eligible for a discretionary annual performance
bonus. No bonuses were awarded to any director in fiscal 2004.
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BOARD COMMITTEES AND MEETINGS OF OREGON PACIFIC BANCORP
The Board of Directors of the Company held 12 meetings during fiscal
2004. Each director serving on the Board of Directors during 2004 was present
for more than 92% of the aggregate number of all meetings of the Board of
Directors held during the year the director was in office.
The Board of Directors has an Audit Committee that oversees actions
taken by the independent auditors, which it has authority to hire, and the
Bank's examiners. The members of the Committee in fiscal 2004 were Messrs.
Yecny, King, Feldkamp and Ms. Wick. The Audit Committee held 4 meetings in
fiscal 2004 and each member attended at least 75% of all meetings held during
the year the director was in a member of the committee. The Company has
determined that one member of the audit committee, Mr. Yecny, qualifies as a
"financial expert" as defined in Section 401(h) of Regulation S-K promulgated by
the Securities and Exchange Commission.
BOARD COMMITTEES AND MEETINGS OF THE BANK
The Board of Directors of the Bank held 20 meetings during fiscal 2004.
Each director serving on the Bank Board of Directors during 2004 was present for
more than 90% of the aggregate number of all meetings of the Board of Directors
held during the year the director was in office.
The Bank Board of Directors has a Trust Committee. The purpose of the
Directors' Trust Committee is to review any reportable transactions, pending
litigation, compliance issues, and conflicts of interest for the Trust
Department. All members of the Bank Board are members of the Trust Committee.
The Directors' Trust Committee held 4 meetings in fiscal 2004. Each member
attended 100% of the meetings.
The Bank Board of Directors also has a Compensation Committee. The
Committee reviews the compensation of the Bank's executive officers and sets
compensation policies and guidelines. The members of the Committee in fiscal
2004 were Messrs. Brauer, Grove, Thompson, and Mmes. Brackney and Benetti. Three
meetings were held during 2004, and each member attended 100% of the meetings.
EXECUTIVE OFFICERS
The following information identifies the Bank's executive officers. All
executive officers serve at the discretion of the Board of Directors. The Bank
has no written employment agreements with any of its executive officers.
YEARS OF
BANKING
NAME AGE POSITION EXPERIENCE
- ---- --- -------- ----------
Thomas K. Grove 59 President, Chief Executive Officer 34
and Secretary
Joanne Forsberg 53 Chief Financial Officer 6
Christopher Giovinco 55 Senior Vice President, Credit Risk 32
Administrator
Mark Hetrick 48 Senior Vice President, Chief Lending Officer 15
Mary Hipkiss 55 Vice President, Director Human Resources 6
Don Mabry 57 Executive Vice President, Chief Operations 23
Officer
Patricia Riley 60 Senior Vice President, Trust and Asset 19
Management Services
Gary Parker 57 Senior Vice President, Regional Manager 35
Commercial Loans
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Mr. Grove's biographical information is set forth under "Information
about the Directors Continuing in Office" above.
JOANNE FORSBERG, a Certified Public Accountant, has been Controller or
Chief Financial Officer of the Bank since May 1999 and became Corporate
Secretary and Chief Financial Officer of the Company in January 2003. Ms.
Forsberg is a 2003 graduate of the Graduate School of Bank Investments and
Financial Management; Moore Business School, University of South Carolina. Prior
to joining the Bank she had fourteen years of experience as an accountant in the
public and private sectors.
CHRISTOPHER GIOVINCO has served the Bank as Senior Vice President,
Credit Risk Administrator since August 2004. Mr. Giovinco served as Credit
Administrator from March 2000 until August 2004. Mr. Giovinco was employed by
Washington Mutual from 1990 to 2000, serving most recently as Credit Examiner
for all Washington Mutual commercial branches.
MARK HETRICK served the Bank as Senior Vice President and Chief Lending
Officer from June 2003 until his departure in September 2004 to pursue other
opportunities.
MARY HIPKISS has served the Bank as Director of Human Resources since
October 2001 and was promoted to Vice President in January 2004. From March 1999
she served as Assistant and later as Coordinator of the Bank's Human Resources
Department. Prior to joining the bank Ms. Hipkiss was a co-owner of local
business, and held prior positions of a financial advisor and a medical practice
office manager.
DON MABRY has served the Bank as Executive Vice President and Chief
Operations Officer since January 2002. He worked for Umpqua Bank from January
2001 to January 2002 as Vice President and Manager, Credit Review. From August
1998 through January 2001, Mr. Mabry was the Compliance Officer of Valley of the
Rogue Bank. He was a staff accountant at Moss Adams LLP from 1993 through 1998.
PATRICIA RILEY, Senior Vice President of Trust and Asset Management
Services, has served the Bank since May 2000. Ms. Riley was admitted to the
Oregon State Bar in April 1985. She worked for Bank of America in Portland,
Oregon from 1985 to 1995 as Vice President/Senior Trust Officer. From 1995 to
2000, Ms. Riley was employed as Vice President/Senior Trust Officer by Union
Bank of California in Portland, Oregon.
GARY PARKER served the Bank as Senior Vice President and Regional
Manager of Commercial Loans for the Roseburg Bank from November 2003 through
December 2004 when he resigned to pursue other opportunities
FAMILY RELATIONSHIPS
There are no family relationships among the directors and executive
officers of the Bank.
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COMPENSATION SUMMARY
The following table sets forth certain information regarding the
compensation paid in the last three fiscal years to the Bank's President and
Chief Executive Officer, Thomas K. Grove, for services rendered in all
capacities to the Bank. Two additional executive officers, listed below,
exceeded $100,000 in 2004.
SUMMARY COMPENSATION TABLE
Long-Term
Name and Salary and Compensation All Other
Principal Position Year Commission Bonus Securities Options (#) Compensation
--------------------------- -------- -------------- --------------- ---------------------- ---------------------
Thomas K. Grove 2004 $125,219 $115,874 __ $23,272
President, CEO
2003 $110,000 $100,905 __ $16,929
2002 $85,160 $21,904 __ $15,256
Mark Hetrick SVP, 2004 $104,805 - __ $3,994
Chief Lending
Officer
Gary Parker SVP, 2004 $90,239 $13,000 __ -
Regional Mgr.
Com'l Loans
Bonuses for Mr. Grove were earned for the year indicated and not paid
until the following year. Other compensation represents fees for service as a
Board of Directors member ($10,800, $4,800 and $4,800 for 2004, 2003 and 2002,
respectively) plus the value of Mr. Grove's use of a Bank-owned automobile
($1,972, $3,129, $2,956) and Simple Plan contributions ($10,500, $9,000,
$7,500). The total of the perquisites received by Mr. Grove, including the use
of the Bank's automobile and payment of dues for a club membership, did not
exceed 10% of his salary plus bonus for the years shown. Mr. Hetrick's other
compensation represents a Simple Plan contribution.
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GRANT OF STOCK OPTIONS
No stock option grants were made to Mr. Grove in fiscal 2004. One
option grant was made in fiscal 2004 to an executive officer. See the Section
below entitled "Report on Compensation."
OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth certain information regarding options
outstanding at year-end:
AGGREGATE OPTION EXERCISES IN FISCAL 2004
AND YEAR-END OPTION/WARRANT VALUES
Shares Value of Unexercised
Acquired Number of Securities Underlying In-the-money Options/warrants
On Value Unexercised Options/warrant At At
Exercise Realized December 31, 2004 December 31, 2004
Name --------- --------- ------------------------------- ----------------------------
---- (#) ($)
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
Christopher -- -- -- 1,538 -- $1,307
Giovinco
Joanne Forsberg -- -- -- 5,197 -- $13,200
Don Mabry -- -- -- 2,963 -- $1,786
EQUITY COMPENSATION PLAN SUMMARY
The following table shows the status of option grants under the
Company's Stock Incentive Plan as of December 31, 2004:
EQUITY COMPENSATION PLAN INFORMATION
Plan Category # of Securities to Weighted-Average # of Securities Remaining
be Issued on Exercise Price of Available for Future
Exercise of Outstanding Options Issuance Under Plan
Outstanding Options (Excluding Securities in
Column (a))
(a) (b) (c)
Equity Compensation 9,698 $5.67 211,898
Plans Approved by
Security Holders
Equity Compensation N/A N/A N/A
Plans Not Approved by
Security Holders
Total: 9,698 $5.67 211,898
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DEFERRED COMPENSATION AND INCENTIVE PLAN
The Bank established in 1995 and amended in 2003, a Deferred
Compensation and Incentive Plan, (the "Plan") under which certain senior
officers of the Bank selected by the Board of Directors may defer a portion of
their annual compensation, including salary and bonus. Amounts deferred are
credited to a bookkeeping deferred compensation account maintained by the Bank
for each participant in the Plan. The Bank has no obligation to fund its
liability under the Plan, and the deferred compensation accounts under the Plan
remain the property of the Bank until distributed to the participants. A
participant's deferrals under the Plan are vested on the first to occur of the
following events: (i) the participant's death or disability while employed by
the Bank; (ii) the participant's retirement; (iii) termination of the Plan; or
(iv) termination of the participant's employment with the Bank. Participants are
entitled to the value of the vested portion of their deferred compensation
accounts after the occurrence of one of the vesting events described in the
preceding sentence. As of December 31, 2004 the Bank's liability to the seven
participants in the Plan was $1,102,953.
COMPENSATION COMMITTEE REPORT
The Bank Compensation Committee submits the following report on
executive compensation for fiscal 2004. This report is submitted by the Bank's
Compensation Committee, consisting of A. J. Brauer, Lydia G. Brackney, Thomas K.
Grove, Jon Thompson, and Patricia Benetti.
The executive compensation policies and programs developed by the Bank
are designed to retain and motivate executive officers and to ensure that their
interests are aligned with the interests of the Company's shareholders. The
Bank's policy is to offer competitive compensation opportunities for its
employees based on a combination of factors, including Bank growth, financial
performance, and the individual's personal contribution to the business.
The Bank's compensation programs are implemented by the Bank's Board of
Directors and consist of base salary, annual incentives, and long-term
incentives. The Bank's President recommends to the Compensation Committee annual
salary adjustments and incentive grants for the Bank's executive officers other
than himself. All members of the Board of Directors ratify Committee decisions
concerning executive compensation. Executive officers do not participate in
decisions affecting their own compensation.
In reaching a determination concerning fiscal 2004 executive officer
base salaries, the Bank Board of Directors considered the recommendations of the
President, which were based in part on a review of competitive information
supplied by the Company's accountants and compiled by independent compensation
consultants. In making recommendations, the President compared the Bank to a
selected group of Western Oregon region banks of similar size and business
niche, and considered compensation only for executives with similar job
descriptions. There is no fixed numerical or formula-based relationship between
base salary and corporate performance, or between base salary and the
competitive range of salaries that may be offered by competitive companies.
On an annual basis, the Board of Directors considers the grant of
annual incentive bonuses to each executive officer. Incentive bonuses are
discretionary. In making its bonus determinations, the Board of Directors takes
into consideration the individual's performance, contribution, and
accomplishments during the past fiscal year, and the Bank's financial
performance. In addition, the Board in its discretion may utilize an incentive
formula based on the Bank's return on average equity ("ROAE") as compared with
the Bank's national peer group. Under this formula, the Bank's minimum
performance must be equal to or greater than the 50th percentile of its peer
group on ROAE for the award of an incentive bonus to the Bank's President and
Chief Executive Officer, Thomas K. Grove. Some formulas of other executive
officers are substantially similar. The bonus is tied to a fixed percentage of
the Bank's after-tax profit. In fiscal 2004, $156,676 of incentive bonuses were
awarded to executive officers, including $105,874 awarded to Mr. Grove. By
contrast, $116,585 of incentive bonuses were awarded to executive officers,
including $100,905 awarded to Mr. Grove in 2003.
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In 1994, the shareholders of the Bank approved an Incentive Stock
Option Plan ("ISOP"). The Bank Board of Directors recommended the ISOP because
it believed that stock ownership by executive officers and key employees
provides valuable incentives for those persons to benefit as the common stock
price increases, and that stock option-based incentive compensation arrangements
help align the interests of executives, employees, and shareholders. From 1994
and continuing through 2002, the Bank Board of Directors had the ability to
grant stock options to executives and key employees through the ISOP. At the
2003 Annual Meeting, a new stock-based incentive plan was approved by the
shareholders. The plan authorizes both stock options and other forms of
stock-based compensation. Among other things, the new plan provides that options
granted under the Bank's old ISOP be converted automatically, effective January
1, 2003, into options covering Company common stock. Under the 1994 and 2003
ISOPs, there were options outstanding for 9,698 shares as of December 31, 2004.
The 2003 ISOP provides for an aggregate of 10% of outstanding shares of the
Bank's common stock to be granted to key employees. Grants made prior to 2003
are excluded from the percentage share limitation of which 6,735 remain
outstanding at December 31, 2004. One option grant was made in fiscal 2004 to
executive officers and key employees.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee consists of four outside directors, each of whom is
determined to be independent for audit committee purposes as defined by the
NASDAQ Listing Standards. The Board of Directors has affirmed that each member
of the Audit Committee has no material relationship with the Company that would
jeopardize the director's ability to exercise independent judgment. The
Committee operates under a written charter adopted by the Board of Directors
which is attached as appendix A. Committee members include independent directors
Richard L. Yecny (Chair), Doug Feldkamp, Robert R. King, and Marteen L. Wick.
Director Yecny has been determined to be qualified as an Audit Committee
financial expert as defined in Item 401 of Regulation S-K.
The Audit Committee provides assistance to the Board of Directors in
fulfilling their oversight responsibilities relating to corporate accounting,
reporting practices of the Company, and the quality and integrity of the
financial reports of the corporation. The purpose of the Committee is to serve
as an independent and objective party to monitor the Company's financial
reporting process and internal control system, review and appraise the audit
effort of the Company's independent accountants and internal auditing
department, maintain free and open means of communication between the Board of
Directors, the independent accountants, financial management, and the internal
audit department.
The Audit Committee is responsible for assuring the independence of the
independent auditor and for retention, supervision, and termination of the
independent auditor. The independent auditor reports directly to the Audit
Committee. The Committee must approve all non-audit related engagements awarded
to the independent auditor. Such engagements must not impair the independence of
the auditor with respect to the Company, as prescribed by the Sarbanes-Oxley Act
of 2002, thus payment amounts are limited and non-audit related engagements must
be approved in advance. The Audit Committee determines the extent of funding
that the Company must provide to it, and has determined that such amounts are
sufficient to carry out its duties.
With respect to the year ended December 31, 2004, in addition to its
other work, the Committee:
o Reviewed and discussed with management the audited
consolidated financial statements of Oregon Pacific Bancorp as
of December 31, 2004 and the year then ended;
o Discussed with Moss Adams LLP the matters required to be
discussed by Statement on Auditing Standards No. 61,
"Communication with Audit Committees," as amended, with
respect to its review of the findings of the independent
auditor during its examination of the Company's financial
statements; o Received from Moss Adams LLP written affirmation
of their independence. In addition, discussed with the
auditors the firm's independence and determined that the
provision of non-audit services was compatible with
maintaining auditor independence.
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The Committee recommended, based on the review and discussion
summarized above, that the Board of Director's include the audited consolidated
financial statements in Oregon Pacific Bancorp's Annual Report on Form 10-K for
the year ended December 31, 2004 for filing with the SEC.
Note: Notwithstanding anything to the contrary set forth in any of the
Company's previous or future filings under the Securities Act or the Exchange
Act that might incorporate this Proxy Statement in future filings with the
Securities and Exchange Commission, in whole or in part, the foregoing report
shall not be deemed to be incorporated by reference into any such filing.
TRANSACTIONS WITH OFFICERS AND BOARD MEMBERS
During the Company's 2004 fiscal year, the Bank entered into
banking-related transactions in the ordinary course of business with certain
executive officers, directors and principal shareholders of the Company
(including certain executive officers of the Bank), members of their immediate
families and corporations or organizations with which they are affiliated. It is
expected that similar transactions will be entered into in the future. Loans to
such persons have been made on substantially the same terms, including the
interest rate charged and collateral required, as those prevailing at the time
for comparable transactions with persons not affiliated with the Company or the
Bank. These loans have been, and are presently, subject to no more than the
normal risk of collectibility and present no other unfavorable features. The
amount of loans to directors, executive officers and principal shareholders of
the Company (including certain executive officers of the Bank) and their
associates as a group at December 31, 2004, was $2,592,000. As of the date of
this proxy statement, all of these loans were performing loans.
PROPOSALS OF SHAREHOLDERS
Under Section 1.8 of the Company's Bylaws, unless otherwise permitted
by the Board of Directors, any business, including without limitation
nominations of directors, may be properly brought before an annual shareholders'
meeting, or before any special meeting of shareholders, by a shareholder only
upon the shareholder's timely notice in writing to the secretary of the Bank. To
be timely, a shareholder's written notice must be physically received at the
principal executive offices of the Bank not later than the close of business on
the thirtieth (30th) calendar day before the date of the meeting. A
shareholder's notice under this provision shall set forth (i) a brief
description of each matter desired to be brought before the meeting and the
reason for conducting such business at the meeting, (ii) the name and address of
the proposing shareholder, (iii) the class and number of shares of stock of the
Bank which are beneficially owned by the proposing shareholder, (iv) any
material interest of the shareholder in the business proposed, and (v) as for
each person whom the shareholder proposes to nominate for election as a director
(a) the name, age, business address, and residence address of such person, (b)
the principal occupation or employment of such person, (c) the class and number
or shares of stock, if any, of the Bank which are beneficially owned by such
person, (d) the proposed nominee's written consent, and (e) any other
information relating to such person that is required to be disclosed or is
otherwise required by any applicable law.
In addition, shareholder proposals intended for inclusion in the proxy
materials for the Company's 2006 Annual Meeting of Shareholders must be received
by the Bank no later than November 25, 2005. Any such proposals should be
directed to: Corporate Secretary, Oregon Pacific Bancorp, 1355 Highway 101, P.O.
Box 22000, Florence, Oregon 97439.
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CODE OF ETHICS
The Board of Directors has adopted a code of business conduct and
ethics for the Company's and Bank's Chief Executive Officer and Chief Financial
Officer and the Bank's Chief Operating Officer, known as the Code of Ethics
Policy. The Code of Ethics Policy requires, among other things, that the
Company's senior officers avoid conflicts of interest, comply with all laws and
other legal requirements, conduct business in an honest and ethical manner and
otherwise act with integrity and in the Company's best interest. A copy of the
Code of Ethics Policy is posted on the Company's website at WWW.OPBC.COM or is
available free of charge upon written request. Please direct the request to
Oregon Pacific Bancorp, P.O. Box 22000, Florence, Oregon, 97439.
INDEPENDENT AUDITORS
The Audit Committee retained Moss Adams LLP, independent auditors, to
audit the Company's and the Bank's financial statements for the fiscal year
ending December 31, 2004. Representatives of Moss Adams LLP are not expected to
be present at the 2005 Annual Meeting.
AUDIT FEES
The Company paid Moss Adams LLP $47,400 for professional services
rendered in connection with the audit of the Bank's financial statements for
2003 and for the review of the Company's and the Bank's quarterly financial
statements for the first three quarters of 2004. Set forth below is certain
information concerning aggregate fees billed for professional services rendered
during fiscal year 2004 and 2003 by the Company's and the Bank's auditors for
those respective years. The aggregate fees included in the Audit category were
fees billed FOR the fiscal years for the audit of the Company's or the Bank's
annual financial statements and the review of the Company's and the Bank's
quarterly financial statements. The aggregate fees included in each of the other
categories were fees billed IN the fiscal years.
------------------------------------------ ------------------------
2004 2003
---- ----
------------------------------------------ ------------------------
Audit fees $52,500 $50,000
------------------------------------------ ------------------------
Audit-Related Fees $ 4,737 $43,000
------------------------------------------ ------------------------
All Other Fees $ 3,850 $30,000
------------------------------------------ ------------------------
ALL OTHER FEES
The Bank paid Moss Adams LLP $3,850 for all other services
rendered to the Company and its subsidiaries during 2004. The Audit Committee
considered whether the provision of these services by Moss Adams LLP is
compatible with maintaining Moss Adams LLP's independence. (Moss Adams LLP
performed no information systems design or implementation services for the Bank
in 2004.)
The firm of Davis, McCulloch & Norton PC was paid $12,335 and $4,760
for tax work in 2004 and 2003, respectively. Other fees paid to them for
services rendered were $14,493 in 2004 and $20,445 for 2003 which includes
verification that loan underwriting meets guidelines for mortgages sold to a
third party.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, Bank executive officers and persons who own
10% of the Bank's Common Stock to file with the Securities and Exchange
Commission (the "SEC") initial reports of beneficial ownership on Form 3 and
reports of changes in beneficial ownership of Common Stock and other equity
securities of the Bank on Forms 4 and 5. Reporting persons are required by SEC
regulations to furnish the Bank with copies of all Section 16(a) reports that
they file. To the Company's best knowledge and belief, all directors, executive
officers and 10% stockholders were in compliance with such reporting
requirements except as follows: (1) Director A. J. Brauer purchased 1,600 shares
on September 24, 2004 for which a Form 4 was filed on October 21, 2004 and (2)
the following Form 4's for Thomas K. Grove and transactions shown were filed
April 23, 2004: (i) sold 5,000 shares on January 15, 2004; (ii) sold 2,500
shares on March 11, 2004; (iii) sold 1,800 shares on March 31, 2004; (iv) sold
2,400 shares on April 7, 2004.
OTHER BUSINESS
The Board of Directors does not intend to present any business at the
2005 Annual Meeting other than as set forth in the accompanying Notice of Annual
Meeting of Shareholders and as described in this Proxy Statement, and has no
present knowledge that any others intend to present business at the 2005 Annual
Meeting. However, if other matters requiring a shareholders vote properly come
before the 2005 Annual Meeting or any adjournment or postponement thereof, the
persons named in the accompanying form of proxy will have discretionary
authority to vote the proxies held by them in accordance with their judgment as
to those matters.
ANNUAL REPORT
A copy of the Bank's 2004 Annual Report to Shareholders accompanies
this Proxy Statement.
AVAILABILITY OF FORM 10-K AND OTHER INFORMATION
A full copy (without exhibits) of the Company's Form 10-K for the year
ended December 31, 2004 as filed with the Securities and Exchange Commission is
available free of charge upon written request. Please direct the request to
Oregon Pacific Bancorp, P.O. Box 22000, Florence, Oregon, 97439. The Company's
filings under the Exchange Act, including exhibits, may also be accessed over
the Internet through the website maintained by the Securities and Exchange
Commission at http://www.sec.gov. Copies of any exhibits attached to such Form
10-K are available from the Company at a charge of $.25 per page, the Company's
reasonable expense for copying and mailing such materials, upon written request.
14
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return to holders of
the Bank's Common Stock with the cumulative total return of the Nasdaq U.S.
Stock Market, and the Russell 2000 Index for the period beginning January 1,
2000, the first trading day of the Common Stock, and ending February 28, 2005.
[GRAPHIC OMITTED]
[PLEASE SEE SUPPLEMENTAL PDF FOR STOCK PERFORMANCE GRAPH VISUAL]
[DATA BELOW REPRESENTS GRAPH]
-------------------------------------------------------
OPBP NASDAQ Russell 2000
-------------------------------------------------------
12/31/1999 $ 100.00 $ 100.00 $ 100.00
3/31/2000 $ 89.89 $ 112.37 $ 107.08
6/30/2000 $ 82.84 $ 97.46 $ 103.04
9/30/2000 $ 67.51 $ 85.32 $ 104.18
12/31/2000 $ 62.43 $ 60.71 $ 96.98
3/31/2001 $ 62.41 $ 44.74 $ 90.67
6/30/2001 $ 80.33 $ 53.09 $ 103.63
9/30/2001 $ 78.46 $ 36.83 $ 82.08
12/31/2001 $ 78.75 $ 47.93 $ 99.39
3/31/2002 $ 80.25 $ 45.35 $ 103.35
6/30/2002 $ 100.10 $ 35.96 $ 94.72
9/30/2002 $ 116.34 $ 28.80 $ 74.45
12/31/2002 $ 112.25 $ 33.06 $ 79.03
3/31/2003 $ 98.33 $ 32.96 $ 75.48
6/30/2003 $ 97.39 $ 39.94 $ 93.16
9/30/2003 $ 96.40 $ 43.91 $ 101.62
12/31/2003 $ 109.69 $ 49.23 $ 116.38
3/31/2004 $ 127.91 $ 49.01 $ 123.66
6/30/2004 $ 112.72 $ 50.32 $ 124.25
9/30/2004 $ 113.55 $ 46.61 $ 120.70
12/31/2004 $ 120.04 $ 53.18 $ 137.71
2/28/2005 $ 131.51 $ 50.42 $ 134.01
12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 02/28/05
-------- -------- -------- -------- -------- -------- --------
OPBP $ 100.00 $ 62.43 $ 78.75 $ 112.25 $ 109.69 $ 120.04 $ 131.52
NASDAQ $ 100.00 $ 60.71 $ 47.93 $ 33.06 $ 49.23 $ 53.18 $ 50.42
Russell 2000 $ 100.00 $ 96.98 $ 99.39 $ 79.03 $ 116.38 $ 137.71 $ 134.01
[Assumes $100 invested in the Company's Common Stock (the Bank prior to 2003),
the Nasdaq U.S. Stock Market, and the Russell 2000 Index, with all dividends
reinvested. Stock price shown above for the Common Stock is historical and not
necessarily indicative of future price performance.]
By Order of the Board of Directors
By /s/ Thomas K. Grove
- ----------------------------------
SIGNATURE
Thomas K. Grove
President, Chief Executive Officer
Florence, Oregon
March 28, 2005
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OREGON PACIFIC BANCORP
March 28, 2005
Dear Shareholder:
On behalf of the Board of Directors, it is my pleasure to extend to you
an invitation to attend the 2005 Annual Meeting of Shareholders (the "2005
Annual Meeting") of Oregon Pacific Bancorp (the "Company"). We hope you can join
us. The 2005 Annual Meeting will be held at:
Place: Oregon Pacific Banking Co. Date: Thursday, April 26, 2005
1355 Highway 101
Florence, OR 97439 Time: 7:00 p.m.
The Notice of Annual Meeting, Proxy Statement and Annual Report
accompany this letter. The Proxy Statement describes the business to be
transacted at the meeting and provides other information concerning the Company.
The principal business to be transacted at the 2005 Annual Meeting will be the
election of directors in Class C whose terms expire in 2005 to three-year terms
to serve on the Company's Board of Directors and approval of the Incentive Stock
Option Plan.
After careful consideration, the Board of Directors unanimously
recommends that shareholders vote FOR the election of the nominated directors to
three-year terms.
We know that many of our shareholders will be unable to attend the 2005
Annual Meeting. We are therefore soliciting proxies so that each shareholder has
an opportunity to vote on all matters scheduled to come before the meeting.
Whether or not you plan to attend the 2005 Annual Meeting, we hope that you will
have your stock represented by marking, signing, dating and returning your proxy
card in the enclosed envelope as soon as possible. Your stock will be voted in
accordance with the instructions you give in your proxy card. You may, of
course, attend the 2005 Annual Meeting and vote in person even if you have
previously returned your proxy card.
Sincerely,
/s/ A.J. Brauer, M.D.
-----------------------
SIGNATURE
A.J. Brauer, M.D.
Chairman of the Board
- --------------------------------------------------------------------------------
IMPORTANT
A proxy card is enclosed. All shareholders are urged to complete and
mail the proxy card promptly. The enclosed envelope for return of the proxy card
requires no postage. Any shareholder attending the 2005 Annual Meeting may
personally vote on all matters considered at the meeting, in which event the
signed proxy will be revoked.
IT IS IMPORTANT THAT YOUR STOCK BE VOTED
- --------------------------------------------------------------------------------
OREGON PACIFIC BANCORP
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 2005
NOTICE IS HEREBY GIVEN that the 2005 Annual Meeting of Shareholders
(the "2005 Annual Meeting") of Oregon Pacific Bancorp, an Oregon financial
holding company (the "Company"), will be held at the Oregon Pacific Banking
Co.'s principal executive offices, 1355 Highway 101, Florence, Oregon 97439, at
7:00 p.m. local time on Thursday, April 26, 2005 for the following purpose:
1. ELECTION OF DIRECTORS. The election of three (3) directors of the Company to
serve for three-year terms beginning on April 26, 2005.
2. OTHER MATTERS. Any other matters as may properly be raised at the 2005 Annual
Meeting. The management of the Company does not intend to present any matters at
the Annual Meeting other than those outlined above. As of the date of this Proxy
Statement, management has no knowledge of any matters which may be presented by
its shareholders at the Annual Meeting.
The nominees for election as directors are named in the enclosed Proxy
Statement.
The record date for the 2005 Annual Meeting is March 16, 2005. Only
shareholders of record at the close of business on that date will be entitled to
notice of, and to vote at, the 2005 Annual Meeting or any adjournment or
postponement thereof.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE 2005 ANNUAL
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE 2005 ANNUAL MEETING, YOU ARE
URGED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT AS
PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE- PREPAID ENVELOPE IN ORDER TO
ASSURE THE PRESENCE OF A QUORUM. GIVING SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO
REVOKE IT LATER OR TO VOTE YOUR SHARES IN PERSON IF YOU ATTEND THE 2005 ANNUAL
MEETING.
By Order of the Board of Directors
By /s/ Thomas K. Grove
----------------------------------
SIGNATURE
Thomas K. Grove
President, Chief Executive Officer
Florence, Oregon
March 28, 2005