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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-22953
OREGON TRAIL FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
Oregon 91-1829481
- ------------------------------------------------------------------------------
State or other jurisdiction of incorporation (I.R.S. Employer or
organization Identification
Number)
2055 First Street, Baker City, Oregon 97814
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (541) 523-6327
-----------------
Securities registered pursuant to Section 12(b) of the Act: None
-----------------
Securities registered pursuant to Section 12(g) of the Act: Common Stock Par
value $.01 per
share
-----------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days.
YES [ X ] NO [ ]
As of January 1, 2003 there were issued and outstanding 3,095,438 shares
of the Registrant's Common Stock. The Registrant's voting common stock is
traded and listed on the Nasdaq National Market under the symbol "OTFC".
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [ X ]
OREGON TRAIL FINANCIAL CORP.
TABLE OF CONTENTS
Part I. Financial Information
Item 1. Financial Statements (Unaudited) Page
Consolidated Balance Sheets 2
as of December 31, 2002 and March 31, 2002
Consolidated Statements of Income (For the Three and Nine 3
Months Ended December 31, 2002 and 2001)
Consolidated Statements of Shareholders' Equity
(For the Nine Months Ended December 31, 2002 and for
the Year Ended March 31, 2002) 4
Consolidated Statements of Cash Flows for the
Nine Months Ended December 31, 2002 and 2001 5 - 6
Notes to Consolidated Financial Statements 7 - 10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11 - 16
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
Item 4. Controls and Procedures 17
Part II. Other Information
Item 1. Legal Proceedings 18
Item 2. Changes in Securities and Use of Proceeds 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signature Page 19
CEO/CFO Certifications
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
OREGON TRAIL FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2002 and MARCH 31, 2002
($ in thousands)
December 31 March 31
ASSETS 2002 2002
--------- ---------
Cash and cash equivalents (including interest-
earning accounts of $13,574 and $6,070) $ 15,473 $ 7,795
Securities:
Available for sale, at fair value (amortized
cost: $89,251 and $91,959) 92,039 92,419
Loans receivable, net of allowance for loan
losses of $2,317 and $2,280 240,669 265,863
Accrued interest receivable 1,938 2,308
Premises and equipment, net 8,891 9,466
Stock in Federal Home Loan Bank of Seattle
("FHLB"), at cost 6,617 6,315
Real estate owned and other repossessed assets 215 58
Other assets 14,332 14,142
--------- ---------
TOTAL ASSETS $ 380,174 $ 398,366
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits:
Interest-bearing $ 118,671 $ 114,859
Noninterest-bearing 25,632 21,878
Time certificates 107,121 119,341
--------- ---------
Total deposits 251,424 256,078
Accrued expenses and other liabilities 2,300 2,311
Advances from FHLB 65,775 87,100
Net deferred tax liability 1,817 17
Advances from borrowers for taxes and insurance 32 37
--------- ---------
Total liabilities 321,348 345,543
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred Stock - $.01 par value; 1,000,000
shares authorized; no shares issued or
outstanding - -
Common stock, $.01 par value; 8,000,000 shares
authorized; December 31, 2002, 4,735,212
issued, 2,934,169 outstanding; March 31, 2002,
4,694,875 issued, 2,854,548 outstanding; 29 31
Additional paid-in capital 23,550 22,965
Retained earnings (substantially restricted) 35,061 32,042
Unearned shares issued to the Employee Stock
Ownership Plan ("ESOP") (939) (1,341)
Unearned shares issued to the Management
Recognition and Development Plan ("MRDP") (984) (1,253)
Accumulated other comprehensive income 2,109 379
--------- ---------
Total shareholders' equity 58,826 52,823
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 380,174 $ 398,366
========= =========
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
(2)
OREGON TRAIL FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2002 AND 2001
(UNAUDITED)
($ in thousands, except per share data)
3 MOS ENDED 3 MOS ENDED 9 MOS ENDED 9 MOS ENDED
31-Dec-02 31-Dec-01 31-Dec-02 31-Dec-01
--------- --------- --------- ---------
INTEREST INCOME:
Interest and fees on
loans receivable $4,717 $5,766 $14,631 $17,463
Securities:
Mortgage-backed and
related securities 1,146 708 3,503 2,615
U.S. government and
government agencies 244 278 748 1,047
Other interest and dividends 111 108 302 305
--------- --------- --------- ---------
Total interest income 6,218 6,860 19,184 21,430
INTEREST EXPENSE:
Deposits 1,247 1,906 4,222 6,639
FHLB advances 966 1,048 2,949 3,546
--------- --------- --------- ---------
Total interest expense 2,213 2,954 7,171 10,185
Net interest income 4,005 3,906 12,013 11,245
Provision for (credit from)
loan losses 36 (4) 284 337
--------- --------- --------- ---------
Net interest income after
provision for loan losses 3,969 3,910 11,729 10,908
NON-INTEREST INCOME:
Service charges on deposit
accounts 483 487 1,446 1,367
Loan servicing fees 194 188 531 465
Realized gain on securities - 5 - 314
Other Income 181 116 530 391
--------- --------- --------- ---------
Total non-interest income 858 796 2,507 2,537
NON-INTEREST EXPENSE:
Employee compensation and
benefits 1,705 1,623 5,018 4,636
Supplies, postage, and
telephone 216 215 660 646
Depreciation 198 206 601 644
Occupancy and equipment 167 182 534 527
FDIC insurance premium 11 15 33 36
Customer accounts 120 121 366 403
Advertising 41 38 123 81
Professional fees 126 363 428 1,119
Other 146 210 472 330
--------- --------- --------- ---------
Total non-interest expense 2,730 2,973 8,235 8,422
Income before income taxes 2,097 1,733 6,001 5,023
Provision for income taxes 767 513 2,069 1,396
--------- --------- --------- ---------
NET INCOME $1,330 $1,220 $ 3,932 $ 3,627
========= ========= ========= =========
Basic Earnings per share $ 0.45 $ 0.42 $ 1.36 $ 1.14
========= ========= ========= =========
Weighted average number of
shares outstanding 2,923,621 2,938,332 2,888,538 3,189,274
Diluted Earnings per share $ 0.42 $ 0.40 $ 1.28 $ 1.10
========= ========= ========= =========
Weighted average number of
dilutive shares 3,134,503 3,078,005 3,076,276 3,308,619
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
(3)
OREGON TRAIL FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED DECEMBER 31, 2002 AND THE YEAR ENDED MARCH 31, 2002
(UNAUDITED)
($ in thousands)
Unearned Unearned
Shares Shares
Issued Issued to
to Management Accumulated
Employee Recognition Other
Stock and Compre- Compre-
Additional Owner- Develop- hensive hensive
Common Stock Paid-in Retained ship ment Income Income
Shares Amount Capital Earnings Plan Plan (Loss) (Loss) Total
------ ------ ------- -------- ----- ----- ---- ------ -----
Balance, April 1,
2001 3,325,757 $36 $30,972 $28,374 ($1,878) ($515) $817 $57,806
Net income - - - 4,915 - - $4,915 - 4,915
Cash dividends paid - - - (1,247) - - - - (1,247)
Stock repurchased
and retired (574,587) (6) (9,672) - - - - - (9,678)
Earned ESOP shares 53,656 - 339 - 537 - - - 876
Earned MRDP shares 29,380 - - - - 318 - - 318
New MRDP shares
granted - - 1,056 - - (1,056) - - -
Exercise of stock
options 20,342 1 270 - - - - - 271
Net unrealized loss
on securities
available for sale
of $236 (net of tax
benefit of $148)
less reclassification
adjustment for net
gains included in
net income of $202
(net of tax expense
of $126) (438) (438) (438)
------
Comprehensive income - - - - - - $4,477 - -
--------- --- ------- ------- ----- ----- ====== ------ -------
Balance, March 31,
2002 2,854,548 31 22,965 32,042 (1,341) (1,253) 379 52,823
Net income - - - 3,932 - - 3,932 - 3,932
Cash dividends paid - - - (913) - - - - (913)
Stock repurchased
and retired (6,239) (2) (36) - - - - - (38)
Earned ESOP shares 40,242 - 406 - 402 - - - 808
Earned MRDP shares 31,215 - - - - 269 - - 269
Exercise of stock
options 14,403 - 215 - - - - - 215
Net unrealized gain
on securities
available for sale
of $2,806 (net of tax
expense of $1,076) - - - - - - 1,730 1,730 1,730
------
Comprehensive income - - - - - - $5,662 - -
--------- --- ------- ------- ----- ----- ====== ------ -------
Balance, December 31,
2002 2,934,169 $29 $23,550 $35,061 ($939) ($984) $2,109 $58,826
========= === ======= ======= ===== ===== ====== =======
The accompanying notes are an integral part of these unaudited consolidated financial statements.
(4)
OREGON TRAIL FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2002 AND 2001
(UNAUDITED)
($ in thousands)
31-Dec-02 31-Dec-01
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,932 $ 3,627
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 601 644
Compensation expense related to ESOP 808 700
Compensation expense related to MRDP 231 235
Amortization of deferred loan fees (180) (145)
Provision for loan losses 284 337
Amortization and accretion of premiums and
discounts on investments and loans purchased 299 279
FHLB dividends (302) (305)
Gain on sale of loans (200) -
Loss on sale of premises and equipment 10 1
Realized gain on securities available for sale - (314)
Changes in assets and liabilities:
Accrued interest receivable 370 190
Other assets (347) (438)
Accrued expenses and other liabilities 711 (1,047)
-------- --------
Net cash provided by operating activities 6,217 3,764
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Loan originations (86,680) (84,552)
Loan principal repayments 111,418 94,706
Loans purchased (12,466) (52,484)
Loans sold 12,762 7,567
Principal repayments of securities available
for sale 22,804 12,800
Maturity of securities available for sale 2,000 -
Proceeds from sale of securities available for
sale - 30,400
Purchase of securities available for sale (21,659) (18,895)
Purchases of stock in FHLB - (1,267)
Purchases of premises and equipment (37) (197)
Proceeds from sales of premises and equipment 1 39
-------- --------
Net cash provided by (used in) investing
activities 28,143 (11,883)
-------- --------
(5)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase(decrease) in deposits ($4,654) ($5,918)
Change in advances from borrowers for taxes
and insurance (5) 43
Proceeds from borrowings from FHLB 310,400 634,560
Payments of borrowings from FHLB (331,725) (611,085)
Payment of cash dividends (913) (1,024)
Stock options excercised 215 152
Stock repurchased and retired - (9,678)
--------- ---------
Net cash provided by (used in) financing
activities (26,682) 7,050
--------- ---------
Net increase(decrease) in cash 7,678 (1,069)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 7,795 10,581
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 15,473 $ 9,512
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest on deposits and other borrowings $ 6,942 $ 9,833
Income taxes 1,346 1,830
Noncash investing activities:
Unrealized gain(loss) on securities available
for sale, net of tax 1,730 (256)
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
(6)
OREGON TRAIL FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary for a fair presentation
of Oregon Trail Financial Corp.'s and its subsidiary's, Pioneer Bank, a
Federal Savings Bank (the "Bank") (together, the "Company"), financial
condition as of December 31, 2002 and March 31, 2002, the results of their
operations for the three and nine months ended December 31, 2002 and 2001 and
their cash flows for the nine months ended December 31, 2002 and 2001. All
adjustments are of a normal recurring nature. Certain information and note
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted pursuant to
the rules and regulations of the Securities and Exchange Commission. These
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended March 31, 2002. The results of
operations for the three and nine months ended December 31, 2002 are not
necessarily indicative of the results which may be expected for the entire
fiscal year.
2. COMPREHENSIVE INCOME
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income" requires all items that are required to be recognized
under accounting standards as components of comprehensive income to be
reported in a financial statement that is displayed in equal prominence with
the other financial statements and to disclose as a part of shareholders'
equity accumulated other comprehensive income. Comprehensive income is
defined as the change in equity during a period from transactions and other
events from nonowner sources. Comprehensive income is the total of net income
and other comprehensive income, which for the Company is comprised entirely of
unrealized gains and losses on securities available for sale, net of tax. The
following summarizes total comprehensive income (loss) for the noted periods:
Three Months Ended Nine Months Ended
December 31, December 31,
------------------ ------------------
2002 2001 2002 2001
------- ----- ------- -----
$ 1,139 $(503) $ 5,662 $ 561
======= ===== ======= =====
(7)
3. ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses is summarized as follows for
the year ended March 31, 2002 and for nine months ended December 31,
2002:
December 31, 2002 March 31, 2002
(in thousands) (in thousands)
----------------- --------------
Balance, beginning of period $ 2,280 $ 2,098
Charge-offs (285) (341)
Recoveries 38 42
Provision for loan losses 284 481
------- -------
Balance, end of period $ 2,317 $ 2,280
======= =======
4. ADVANCES FROM FEDERAL HOME LOAN BANK
Borrowings at December 31, 2002 consisted of 12 term advances and one
variable rate advance varying in length from 74 days to 332 months totaling
$65.8 million from the FHLB of Seattle. The advances are collateralized in
aggregate as provided for in the Advances Security and Deposit Agreement with
the FHLB by certain mortgages or deeds of trust, government agency securities
and cash on deposit with the FHLB. Scheduled maturities of advances from the
FHLB were as follows at December 31, 2002:
Due in less than one year:
- --------------------------
Amount Range of Interest Weighted Average
Rates Interest Rate
- ------------------------------------------------------
$33,775,000 1.35% - 7.22% 5.80%
Due within one to five years:
- -----------------------------
Amount Range of Interest Weighted Average
Rates Interest Rate
- ------------------------------------------------------
$22,000,000 2.22% - 7.03% 4.88%
Due in greater than five years:
- -------------------------------
Amount Range of Interest Weighted Average
Rates Interest Rate
- ------------------------------------------------------
$10,000,000 7.10% - 7.12% 7.11%
(8)
5. EARNINGS PER SHARE
Shares held by the Company's ESOP that are committed for release are
considered common stock equivalents and are included in weighted average
shares outstanding (denominator) for the calculation of basic and diluted
Earnings Per Share ("EPS"). Diluted EPS is computed using the treasury stock
method, giving effect to potential additional common shares that were
outstanding during the period. Potential dilutive common shares include
shares of restricted stock awarded but not released under the Company's MRDP
and stock options granted under the Stock Option Plan. Following is a summary
of the effect of dilutive securities in weighted average number of shares
(denominator) for the basic and diluted EPS calculations. There are no
resulting adjustments to net income.
For the Three Months Ended For the Nine Months Ended
December 31, December 31,
-------------------------- --------------------------
2002 2001 2002 2001
--------- --------- --------- ---------
Weighted average common
shares outstanding
basic 2,923,621 2,938,332 2,888,538 3,189,274
Effect of Dilutive
Securities on Number
of Shares:
MRDP shares 46,556 12,930 33,229 23,024
Stock Options 164,326 126,743 154,509 96,321
Total Dilutive
Securities 210,882 139,673 187,738 119,345
Weighted average
common shares
outstanding with
dilution 3,134,503 3,078,005 3,076,276 3,308,619
6. REGULATORY CAPITAL
The Company is not subject to separate regulatory capital requirements.
The following table illustrates the Bank's compliance with currently
applicable regulatory capital requirements at December 31, 2002 and March 31,
2002.
As of December 31, 2002:
Categorized as
"Well Capitalized"
For Capital Under Prompt
Adequacy Corrective Action
Actual Purposes Provision
(In Thousands) (In Thousands) (In Thousands)
-------------- -------------- ------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
As of Dec. 31, 2002:
Total Capital:
(To Risk Weighted
Assets) $ 46,879 18.7% $ 20,038 8.0% $ 25,048 10.0%
Tier I Capital:
(To Risk Weighted
Assets) 44,562 17.8 N/A N/A 15,014 6.0
Tier I Capital:
(To Tangible Assets) 44,562 11.9 15,125 4.0 18,734 5.0
Tangible Capital:
(To Tangible Assets) 44,562 11.9 5,620 1.5 N/A N/A
(9)
As of March 31, 2002:
Categorized as
"Well Capitalized"
For Capital Under Prompt
Adequacy Corrective Action
Actual Purposes Provision
(In Thousands) (In Thousands) (In Thousands)
-------------- -------------- ------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
As of March 31, 2002:
Total Capital:
(To Risk Weighted
Assets) $ 42,583 16.3% $ 20,939 8.0% $ 26,174 10.0%
Tier I Capital:
(To Risk Weighted
Assets) 40,303 15.4 N/A N/A 15,704 6.0
Tier I Capital:
(To Tangible Assets) 40,303 10.2 15,823 4.0 19,778 5.0
Tangible Capital:
(To Tangible Assets) 40,303 10.2 5,934 1.5 N/A N/A
7. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In July 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities." This Statement requires
companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or
disposal plan. Examples of costs covered by the standard include lease
termination costs and certain employee severance costs that are associated
with a restructuring, discontinued operation, plant closing, or other exit or
disposal activity. Management does not believe that the adoption of this
Statement will have a material effect on the Company's consolidated financial
statements.
In October 2002, FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions." This Statement provides guidance on the accounting
for the acquisition of a financial institution, applies to all acquisitions
except those between two or more mutual enterprises. The provisions of this
statement provides that the excess of the fair value of liabilities assumed
over the fair value of tangible and identifiable intangible assets acquired in
a business combination represents goodwill that should be accounted for under
SFAS No. 142, "Goodwill and Other Intangible Assets." Financial institutions
meeting conditions outlined in SFAS No. 147 will be required to restate
previously issued financial statements. The Company currently has no goodwill
that will be impacted by SFAS No. 147.
In December 2002, FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure". This statement amends SFAS No. 123,
"Accounting for Stock-Based Compensation," to provide alternative methods of
transition for voluntary change to the fair value based method of accounting
for stock-based employee compensation. FASB has determined that retroactive
application of this statement would be excessively burdensome and compensation
to only new grants will be effected. As no stock options have been awarded in
the current period, this statement will have no effect on the Company's
consolidated financial statements.
(10)
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Safe Harbor Clause. This report contains certain "forward-looking
statements". The Company desires to take advantage of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995 and is
including this statement for the express purpose of availing itself of the
protection of such safe harbor with respect to all such forward-looking
statements. These forward-looking statements, which are included in
Management's Discussion and Analysis, describe future plans or strategies and
include the Company's expectations of future financial results. The words
"believe," "expect," "anticipate," "estimate," "project," and similar
expressions identify forward-looking statements. The Company's ability to
predict results or the effect of future plans or strategies is inherently
uncertain. Factors which could cause actual results to differ materially
include, but are not limited to, general and local economic conditions,
changes in interest rates, deposit flows, demand for mortgage and other loans,
real estate values, competition, loan delinquency rates, changes in accounting
practices, policies or guidelines, changes in legislation or regulation, and
other economic, competitive, governmental, regulatory and technological
factors effecting operations, pricing, products and services. These factors
should be considered in evaluating the forward-looking statements, and undue
reliance should not be placed on such statements.
Critical Accounting Policies
The Company has established various accounting policies that govern the
application of accounting principles generally accepted in the United States
of America in preparation of the Company's Consolidated Financial Statements.
The preparation of these financial statements requires management to use
assumptions, judgment and estimates. Management evaluates its use of these
assumptions, judgments and estimates on an ongoing basis. Estimates are based
on current economic and business conditions in our market area. Management
believes that the judgments, estimates and assumptions used in the preparation
of the Company's Consolidated Financial Statements are appropriate given the
factual circumstances at the time of preparation. The use of judgments,
estimates and assumptions, however, could result in material differences in
our results of operation and financial condition. The Company has determined
that its most critical accounting policy is the determination of its provision
for loan losses. See additional discussion under "Changes in Financial
Condition" in this section.
GENERAL
The Company, an Oregon corporation, was organized on June 9, 1997 for the
purpose of becoming the holding company for the Bank upon the Bank's
conversion from a federal mutual to a federal stock savings bank
("Conversion"). The Conversion was completed on October 3, 1997. At December
31, 2002, the Company had total assets of $380.2 million, total deposits of
$251.4 million and shareholders' equity of $58.8 million. The Company is not
currently engaged in any business activity other than holding the stock of the
Bank. Accordingly, the information set forth in this report, including the
consolidated financial statements and related data, relates primarily to the
Bank. All references to the Company herein include the Bank where applicable.
(11)
The Bank was organized in 1901. It is regulated by the OTS and its deposits
are insured up to applicable limits under the Savings Association Insurance
Fund (SAIF") of the Federal Deposit Insurance Corporation ("FDIC").
The Bank is a member of the FHLB of Seattle, conducting its business through
nine office facilities, with its headquarters located in Baker City, Oregon.
The primary market areas of the Bank are the counties of Wallowa, Union,
Baker, Malheur, Harney, Grant and Umatilla in Eastern Oregon.
The Bank is a community oriented financial institution whose principal
business is attracting retail deposits from the general public and using these
funds to originate one-to-four family residential mortgage loans, consumer and
commercial loans within its primary market area. At December 31, 2002,
one-to-four family residential mortgage loans totaled $103.3 million, or 42.5%
of total loans receivable. Beginning in 1996, the Bank began supplementing
its traditional lending activities with commercial business loans,
agricultural loans and the purchase of dealer-originated automobile contracts.
As a result of these activities, at December 31, 2002 the Company had
agricultural loans of $19.8 million, commercial business loans of $20.5
million, commercial real estate loans of $40.5 million, agricultural real
estate loans of $4.0 million, and automobile loans of $28.0 million (including
$24.7 million of purchased dealer-originated contracts).
Net interest income, which is the difference between interest and dividend
income on interest-earning assets, primarily loans and investment securities,
and interest expense on interest-bearing deposits and borrowings, is the major
source of income for the Company. Because the Company depends primarily on
net interest income for its earnings, the focus of management is to create and
implement strategies that will provide stable, positive spreads between the
yield on interest-earning assets and the cost of interest-bearing liabilities.
Such strategies include increasing the origination of commercial and
agricultural loans with adjustable interest rates. To a lesser degree, the
net earnings of the Company rely on the level of its non-interest income. The
Company is focusing on growing its fee income and controlling its non-interest
expense.
CHANGES IN FINANCIAL CONDITION
COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2002 AND DECEMBER 31, 2002
Total assets decreased $18.2 million, or 4.6%, from $398.4 million at March
31, 2002, to $380.2 million at December 31, 2002. The reduction in assets was
primarily attributable to a $25.2 million, or 9.5%, decrease in net loans
receivable from $265.9 million at March 31, 2002, to $240.7 million at
December 31, 2002. The reduction in loans was a result of payoffs in a
commercial real estate loan pool the Company purchased in 2001 and the sale of
$12.8 million of newly originated residential real estate loans. The
commercial real estate pool loans decreased $7.9 million, or 28.7%, from $27.6
million at March 31, 2002 to $19.7 million at December 31, 2002. Residential
real estate loans decreased $18.6 million, or 15.3%, from $121.9 million at
March 31, 2002 to $103.3 million at December 31, 2002. Cash equivalents
increased $7.7 million, or 98.5%, from $7.8 million at March 31, 2002 to $15.5
million at December 31, 2002. The increase in cash equivalents reflects the
Company's decision to increase liquidity and reduce exposure to long-term
fixed rate investments and loans in this low interest rate environment.
Securities decreased $380,000, or 0.4%, from $92.4 million at March 31, 2002,
to $92.0 million at December 31, 2002.
(12)
Non-performing assets, consisting of non-accruing loans, real estate owned and
other repossessed assets, increased $61,000, or 15.5% from $394,000 at March
31, 2002, to $455,000 at December 31, 2002. Non-performing assets represented
..12% of total assets at December 31, 2002 and .10% of total assets at March
31, 2002. The allowance for loan losses was 965.4% of non-performing loans at
December 31, 2002, compared to 678.6% at March 31,2002.
For the nine months ended December 31, 2002, non-interest bearing checking
accounts increased $3.8 million, or 17.2%, from $21.9 million at March 31,
2002 to $25.6 million at December 31, 2002. Interest checking, statement
savings and money market accounts increased $3.8 million, or 3.3%, to $118.7
million at December 31, 2002 from $114.9 million at March 31, 2002.
Offsetting the increases in core deposit accounts, certificate of deposit
accounts decreased $12.2 million, or 10.2% to $107.1 million at December 31,
2002 from $119.3 million at March 31, 2002. Core deposits now represent 57.4%
of total deposits while certificates of deposit represent 42.6% of total
deposits. The growth in transaction accounts reflects the Company's strategy
to decrease its dependence on more expensive borrowings and certificates of
deposit. For the quarter ended December 31, 2002, the average cost of
transaction and savings accounts was 0.86% while the average cost of
certificates of deposit was 3.36%. Borrowings from the FHLB of Seattle
decreased 24.5%, or $21.3 million, to $65.8 million during the nine months
ended December 31, 2002 from $87.1 million at March 31, 2002. The Company
decreased borrowings as a result of the reductions in real estate loans due to
loan sales and payoffs.
For the nine months ended December 31, 2002, the Company's book value per
share increased 8.4% to $20.05 per share from $18.50 at March 31, 2002.
Shareholders' equity increased by 11.4%, or $6.0 million, from $52.8 million
to $58.8 million for the nine months ended December 31, 2002. The increase in
shareholders' equity was, primarily, the result of the Company earning net
income of $3.9 million during the nine months ended December 31, 2002, as well
as a $1.7 million increase in the unrealized gain on securities available for
sale, net of tax, during the same period.
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE AND NINE
MONTHS ENDED DECEMBER 31, 2002 AND 2001
GENERAL. For the quarter ended December 31, 2002, the Company had net income
of $1.3 million, or $.42 per share (diluted), compared to net income of $1.2
million, or $.40 per share (diluted), for the quarter ended December 31, 2001,
an increase of $100,000. Net income for the first nine months of the current
year was $3.9 million, or $1.28 per share (diluted), compared to net income of
$3.6 million, or $1.10 per share (diluted), for the nine months ended December
31, 2001, an increase of $305,000. For the nine months ended December 31,
2002, net interest income before provision for loan losses was $12.0 million,
and increase of 6.8%, or $768,000, the provision for loans losses was
$284,000, a decrease of 16.0%, or $54,000, non-interest income was relatively
unchanged at $2.5 million, while non-interest expense was $8.2 million, a
decrease of 2.2%, or $187,000.
INTEREST INCOME. Interest income for the quarter ended December 31, 2002, was
$6.2 million compared to $6.9 million for the quarter ended December 31, 2001,
a decrease of $642,000, or 9.4%. The decrease in interest income occurred as
a result of a $2.1 million, or 0.6%, decrease in average balances of
interest-earning assets as well as a 67 basis point decrease in the average
yield on those assets. The yield on average interest-earning assets decreased
to 6.87% for the quarter ended December 31, 2002, compared to 7.54% for the
same period a year
(13)
earlier. Average loans receivable for the quarter ended December 31, 2002,
decreased by $43.9 million, or 15.2%, when compared to the quarter ended
December 31, 2001. Interest income on loans decreased by $1.0 million, or
18.2%, to $4.7 million in the quarter ended December 31, 2002 compared to $5.7
million for the same quarter in the prior year as a result of declining rates
and loan balances. The decrease in average loan yield reflects the
significant decline in the level of market interest rates compared to prior
year levels. Interest and dividend income on securities and other investments
increased by $407,000, or 37.2%, for the quarter ended December 31, 2002
compared to the quarter ended December 31, 2001 reflecting an increase in the
average security balances partially offset by a reduction in the yield on
securities.
Interest income for the nine months ended December 31, 2002 was $19.2 million
compared to $21.4 million for the quarter ended December 31, 2001, a decrease
of $2.2 million, or 10.5%. For the nine month period, interest income from
loans decreased $2.8 million, or 16.2%, to $14.6 million for the nine months
ended December 31, 2002 from $17.5 million for the comparable period in 2001.
The decrease in loan interest income reflected the effect of a $31.4 million
reduction in average loans receivable balances and a 70 basis point decrease
in the yield on the loan balances. Interest and dividend income from
securities and other investments increased $586,000, or 14.8%, from $4.0
million for the nine months ended December 31, 2001, to $4.6 million in the
current nine month period, reflecting a $23.9 million increase in average
balances along with a 80 basis point decrease in yield from 6.71% to 5.91%.
The yield on average earning assets decreased from 7.70% for the nine months
ended December 31, 2001, to 7.00% for the nine months ended December 31, 2002,
as a result of declines in the level of the market interest rates.
INTEREST EXPENSE. Interest expense for the quarter ended December 31, 2002,
was $2.2 million compared to $3.0 million for the comparable period in 2001, a
decrease of $741,000, or 25.1%. The decrease in interest expense was a result
of a decrease in the average cost of all interest-bearing liabilities from
3.47% to 2.65%. The decrease in the average cost of funds was generally a
result of a lower interest rate environment and increases in low cost
transaction account balances and decreases in higher costing certificate of
deposit account balances. Deposit interest expense decreased $659,000, or
34.6%, to $1.2 million for the quarter ended December 31, 2002, compared to
$1.9 million for the same quarter a year ago. Transaction and savings deposit
accounts had an average balance of $147.8 million and an average cost of 0.86%
for the quarter ended December 31, 2002, compared to $129.1 million and an
average cost of 1.42% for the comparable quarter a year ago. Certificate of
deposit accounts had an average balance of $110.4 million and an average cost
of 3.36% for the quarter ended December 31, 2002, compared to $122.8 million
and an average cost of 4.72% for the comparable quarter a year ago. Borrowings
had an average balance of $69.7 million and an average cost of 5.55% for the
quarter ended December 31, 2002, compared to $80.8 million and an average cost
of 5.19% for the comparable quarter a year ago.
Interest expense for the nine months ended December 31, 2002, was $7.2 million
compared to $10.2 million for the comparable period in 2001, a decrease of
$3.0 million, or 29.6%. The decrease in interest expense was a result of a
decrease in the average cost of all interest-bearing liabilities from 3.99% to
2.84%. The decrease in the average cost of funds was generally a result of a
lower interest rate environment and increases in low cost transaction account
balances offset by decreases in certificate of deposit account balances.
Deposit interest expense decreased $2.4 million, or 36.4%, to $4.2 million for
the nine months ended December 31, 2002, compared to $6.6 million for the same
period a year ago. Transaction and savings deposit accounts had an
(14)
average balance of $143.8 million and an average cost of 1.04% for the nine
months ended December 31, 2002, compared to $127.6 million and an average cost
of 1.90% for the comparable period a year ago. Certificate of deposit accounts
had an average balance of $114.5 million and an average cost of 3.61% for the
nine months ended December 31, 2002, compared to $123.4 million and an average
cost of 5.33% for the comparable period a year ago. Borrowings had an average
balance of $75.3 million and an average cost of 5.22% for the nine months
ended December 31, 2002, compared to $86.6 million and an average cost of
5.46% for the comparable period a year ago.
PROVISION FOR LOAN LOSSES. For the quarter ended December 31, 2002, the
provision for loan losses was $36,000 compared to a $4,000 credit for the same
period in 2001. The increase in the provision for the quarter ended December
31, 2002 is the result of an increase in classified assets partially offset by
a decline in loans outstanding. For the nine months ended December 31, 2002,
the provision for loan losses was $284,000 compared to $337,000 for the nine
months ended December 31, 2001, a decrease of $53,000. The reduction in the
provision for loan losses reflects the decrease in loans, partially offset by
the increase in classified assets that occurred during the nine months ended
December 31, 2002.
NON-INTEREST INCOME. Non-interest income was $858,000 for the quarter ended
December 31, 2002, an increase of $62,000, or 7.8%, from $796,000 for the
quarter ended December 31, 2001. The increase in non-interest income for the
quarter ended December 31, 2002 is a result of increased fee income from the
sale of newly originated residential real estate loans, as well as a reduction
in losses on repossessed property.
For the nine months ended December 31, 2002 non-interest income declined
$30,000 to $2.5 million compared to the same period a year ago. The decrease
in interest income was caused by a $314,000 gain of the sale of securities
that occurred in the period a year ago versus no gain in the current nine
month period. Offsetting the reduction in gain on securities was a $79,000
increase in service charges on deposit accounts, a $66,000 increase in loan
fee income and a $139,000 increase in other income for the nine months ended
December 31, 2002. Generally the increases in deposit product fee income are
related to growth in deposit accounts while the increase in loan fees income
is related to increased loan originations and sales.
NON-INTEREST EXPENSE. Non-interest expense decreased $243,000, or 8.2%, for
the quarter ended December 31, 2002 to $2.7 million from $3.0 million for the
same quarter a year ago. The reduction in non-interest expense was a result
of a $237,000, or 65.3%, decrease in professional fees, partially offset by an
$82,000, or 5.1%, increase in compensation and benefit expenses. The
reduction in professional fees was a result of the Company having incurred
significant legal fees in 2001, in connection with its contested proxy for
that year, which the Company did not incur in 2002. The increase in employee
compensation and benefit expenses is attributable to normal increases in
employee compensation that occur each year.
Non-interest expense for the nine months ended December 31, 2002 was $8.2
million, a decrease of $187,000, or 2.2%, compared to the $8.4 million
expensed in the same period a year ago. The decrease in non-interest expense
for the nine months ended December 31, 2002 was partially attributable to a
$691,000 reduction in professional fees, partially offset by a $382,000
increase in compensation and benefit expenses. The reduction in professional
fees was a result of the
(15)
Company having incurred significant legal fees in 2001, in connection with its
contested proxy for that year, which the Company did not incur in 2002. The
increase in employee compensation and benefit expenses is due to normal
increases in employee compensation that occur each year.
INCOME TAXES. The provision for income taxes was $767,000 for the quarter
ended December 31, 2002 compared to $513,000 for the same quarter a year ago.
The effective tax rate for the quarter ended December 31, 2002 was 36.6%
compared to 29.6% for the same quarter a year ago. Generally, the lower
effective tax rate in 2001 was a result of an income tax benefit related to
the Company's ESOP in 2001 and by the Company having higher levels of earnings
taxed at a higher marginal tax rate in 2002. The provision for income taxes
was $2.1 million for the nine months ended December 31, 2002 compared to $1.4
million for the comparable period in 2001. For the nine months ended December
31, 2002 the effective tax rate was 34.5% compared to 27.8% for the same
period a year ago. Generally, the lower effective tax rate was a result an
income tax benefit related to the Company's ESOP in 2001 and by the Company
having higher levels of earnings taxed at a higher marginal tax rate in 2002.
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
The mismatch between maturities and interest rate sensitivities of balance
sheet items results in interest rate risk. The extent of interest rate risk
to which the Bank is subject is monitored by management by modeling the change
in net portfolio value ("NPV") over a variety of interest rate scenarios. NPV
is the present value of expected cash flows from assets, liabilities and
off-balance sheet contracts. The calculation is intended to illustrate the
change in NPV that will occur in the event of an immediate change in interest
rates of at least 200 basis points with no effect given to any steps which
management might take to counter the effect of that interest rate movement.
The Bank has taken steps to decrease its interest rate risk by better matching
maturities of its balance sheet items. During the nine months ended December
31, 2002, there was a significant reduction in the balance of interest rate
sensitive assets as well as a reduction in the average life of remaining
interest rate sensitive assets. The table below illustrates market risk as of
September 30, 2002, the most current information available.
Estimated Change in Net Portfolio Value
Basis Points ("bp") (in Thousands)
Change in Interest -----------------------------------------
Rates September 30, 2002 March 31, 2002
------------------- ------------------ ------------------
300(bp) -$14,177 -25.8% -$21,412 -37.7%
200 -8,144 -14.8% -14,430 -25.4%
100 -2,688 -4.9% -7,156 -12.6%
0 0 0.0% 0 0.0%
-100 -808 -1.5% 4,202 7.4%
-200 0 0.0% 0 0.0%
-300 0 0.0% 0 0.0%
(16)
Item 4.
Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures: An evaluation of
the Company's disclosure controls and procedures (as defined in
Section 13(a)- 14(c) of the Securities and Exchange Act of 1934(the
"Act")) was carried out under the supervision and with the
participation of the Company's Chief Executive Officer, Chief
Financial Officer and several other members of the Company's senior
management within the 90-day period preceding the filing date of
this quarterly report. The Company's Chief Executive Officer and
Chief Financial Officer concluded that the Company's disclosure
controls and procedures as currently in effect are effective in
ensuring that the information required to be disclosed by the
Company in the reports it files or submits under the Act is (i)
accumulated and communicated to the Company's management (including
the Chief Executive Officer and Chief Financial Officer) in a timely
manner, and (ii) recorded, processed, summarized and reported within
the time periods specified in the SEC's rules and forms.
(b) Changes in Internal Controls: In the quarter ended December 31,
2002, the Company did not make any significant changes in, nor take
any corrective actions regarding, its internal controls or other
factors that could significantly affect these controls.
(17)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Periodically, there have been various claims and lawsuits
involving the Bank, mainly as a defendant, such as claims to
enforce liens, condemnation proceedings on properties in which the
Bank holds security interests, claims involving the making and
servicing of real property loans and other issues incident to the
Bank's business. The Bank is not a party to any pending legal
proceedings that it believes would have a material adverse effect
on the financial condition or operations of the Bank.
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
Not applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
No matters were submitted to a vote of security holders during the
third quarter of the fiscal year ended March 31, 2003.
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
3(a) Articles of Incorporation of the Registrant (1)
3(b) Bylaws of the Registrant (1)
3(c) Amendment to Bylaws of the Registrant (2)
10(a) Amended Employment Agreement with Berniel Maughan (3)
10(b) Amended Employment Agreement with Zane F. Lockwood (3)
10(c) Employment Agreement with Jonathan P. McCreary (7)
10(d) Amended Employee Severance Compensation Plan (4)
10(e) Pioneer Bank, a Federal Savings Bank 401(k) Plan (1)
10(f) Pioneer Bank Director Emeritus Plan (1)
10(g) 1998 Stock Option Plan (5)
10(h) August 21, 2001 Amendment to 1998 Stock Option Plan (6)
10(i) January 30, 2002 Amendment to 1998 Stock Option Plan (7)
10(j) 1998 Management Recognition and Development Plan (5)
10(k) August 21, 2001 Amendment to 1998 Management Recognition and
Development Plan (6)
99.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
- ----------
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (333-30051), as amended.
(2) Incorporated by reference to the Registrant's Form 10-Q for the quarter
ended December 31, 2000.
(3) Incorporated by reference to the Registrant's Form 10-Q/A for the quarter
ended December 31, 2000.
(4) Incorporated by reference to the Registrant's Form 10-Q for the quarter
ended June 30, 2000.
(5) Incorporated by reference to the Registrant's Definitive Proxy Statement
for the 1998 Annual Meeting of Shareholders.
(6) Incorporated by reference to the Registrant's Form 10-Q for the quarter
ended September 30, 2001.
(7) Incorporated by reference to the Registrant's Form 10-K for the year
ended March 31, 2002.
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during the quarter ended December
31, 2002.
(18)
SIGNATURES
Pursuant to requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
OREGON TRAIL FINANCIAL CORP.
Date: February 12, 2003 By:/s/ Berniel L. Maughan
--------------------------------
Berniel L. Maughan, President and
Chief Executive Officer
Date: February 12, 2003 By:/s/ Jonathan P. McCreary
---------------------------------
Jonathan P. McCreary, Chief Financial
Officer
(19)
CERTIFICATIONS
Certification Required
By Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934
I, Berniel L. Maughan, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Oregon Trail
Financial Corp.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date:
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors and material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: February 12, 2003
/s/ Berniel L. Maughan
------------------------------
Berniel L. Maughan
President and Chief Executive Officer
(20)
Certification Required
By Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934
I, Jonathan P. McCreary, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Oregon Trail
Financial Corp.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date:
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors and material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: February 12, 2003
/s/ Jonathan P. McCreary
------------------------------
Jonathan P. McCreary
Chief Financial Officer
(21)
Exhibit 99.1
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
OF OREGON TRAIL FINANCIAL CORP.
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned hereby certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and in connection with this Quarterly Report on
Form 10-Q, that:
1. the report fully complies with the requirements of Sections 13(a) and
15(d) of the Securities and Exchange Act of 1934, as amended, and
2. the information contained in the report fairly presents, in all
material respects, the Company's financial condition and results of
operations.
/s/ Berniel L. Maughan /s/ Jonathan P. McCreary
- ----------------------------- -----------------------------
Berniel L. Maughan Jonathan P. McCreary
President and Chief Executive Officer Chief Financial
Officer
Date: February 12, 2003
(22)