<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material under Rule 14a-12.
FIRST NORTHERN CAPITAL CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Filed by Registrant
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than 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)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
FIRST NORTHERN CAPITAL CORP.
201 North Monroe Avenue
P.O. Box 23100
Green Bay, Wisconsin 54305-3100
(920) 437-7101
March 22, 2000
Dear Stockholder:
You are cordially invited to attend First Northern Capital Corp.'s 2000
Annual Meeting of Stockholders, which will be held at the Holiday Inn City
Centre, 200 Main Street, Green Bay, Wisconsin at 10:00 a.m. on Wednesday, April
26, 2000.
First Northern's Notice of Annual Meeting of Stockholders and Proxy
Statement describes the business to be conducted at the Annual Meeting. If you
plan to attend the Annual Meeting, please return the enclosed reply form.
A copy of First Northern's Summary Annual Report is enclosed and a copy
of the Annual Report on Form 10-K for the year ended December 31, 1999 is
attached to the Proxy Statement.
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the meeting
we urge you to MARK, SIGN, DATE AND RETURN YOUR PROXY FORM IN THE ENCLOSED
POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE. This will not prevent you from voting
in person at the meeting, but will ensure that your shares will be represented
if you are unable to attend.
As we previously announced, we have signed a merger agreement with
Mutual Savings Bank which provides for the acquisition of First Northern by
Mutual, upon the terms and subject to the conditions of the merger agreement,
for an acquisition price of $15 per First Northern share. Completion of the
merger will involve a number of steps and is subject to the satisfaction of
certain conditions set forth in the merger agreement, including approval by the
stockholders of First Northern and applicable regulatory approvals. We are very
excited about this transaction, which will be submitted for your approval at a
special meeting of stockholders in the future. You will be receiving further
information about the merger in a proxy statement/prospectus to be filed with
the SEC and, when finalized, mailed to First Northern stockholders. You are
urged to read it carefully when you receive it.
Sincerely,
FIRST NORTHERN CAPITAL CORP.
/s/ Michael D. Meeuwsen
Michael D. Meeuwsen
President and Chief Executive Officer
<PAGE> 3
FIRST NORTHERN CAPITAL CORP.
201 North Monroe Avenue
P.O. Box 23100
Green Bay, Wisconsin 54305-3100
(920) 437-7101
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 26, 2000
-----------------------------
To the Stockholders of First Northern Capital Corp.:
The 2000 Annual Meeting of Stockholders of First Northern Capital Corp.
("First Northern") will be held on Wednesday, April 26, 2000, at 10:00 a.m.,
Central Time, at the Holiday Inn City Centre, 200 Main Street, Green Bay,
Wisconsin (the "Annual Meeting") for the following purposes:
(1) To elect a class of two directors to serve for terms expiring in 2003;
and
(2) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on February 25, 2000
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting and any adjournment thereof. Only stockholders
of record at the close of business on that date will be entitled to vote at the
Annual Meeting.
Your attention is called to the Proxy Statement accompanying this Notice for
a more complete statement regarding the matters to be acted upon at the Annual
Meeting.
By Order of the Board of Directors
/s/ Marla J. Carr
Marla J. Carr
Vice President and Secretary
Green Bay, Wisconsin
March 22, 2000
YOUR VOTE IS IMPORTANT
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. WHETHER
OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE INDICATE YOUR VOTING
DIRECTIONS, SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY, WHICH IS
SOLICITED BY THE FIRST NORTHERN BOARD OF DIRECTORS, USING THE ENCLOSED
SELF-ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. IF FOR ANY REASON YOU SHOULD DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO
AT ANY TIME BEFORE IT IS VOTED AT THE ANNUAL MEETING.
<PAGE> 4
PROXY STATEMENT
FIRST NORTHERN CAPITAL CORP.
201 NORTH MONROE AVENUE
P.O. BOX 23100
GREEN BAY, WISCONSIN 54305-3100
(920) 437-7101
----------------------
SOLICITATION AND VOTING
This Proxy Statement and accompanying proxy are furnished to the
stockholders of First Northern Capital Corp. ("First Northern" or the
"Corporation") in connection with the solicitation of proxies by the Board of
Directors of First Northern for use at the annual meeting of First Northern
stockholders on Wednesday, April 26, 2000 (the "Annual Meeting"), and at any
adjournment thereof. The 1999 Annual Report on Form 10-K (the "10-K"), which
accompanies this Proxy Statement, contains financial statements and certain
other information concerning First Northern. The 10-K and such financial
statements are neither a part of this Proxy Statement nor are incorporated
herein by reference. The proxy material and 10-K are being mailed to
stockholders commencing on or about March 22, 2000.
On December 20, 1995, First Northern Savings Bank, S.A. (the "Savings
Bank") reorganized into a unitary savings and loan holding company structure
(the "Reorganization"), becoming a wholly owned subsidiary of First Northern. In
the Reorganization, the holders of all the outstanding stock of the Savings Bank
acquired the same proportionate ownership interest in First Northern as they had
held in the Savings Bank. The consolidated capital, assets, liabilities, income
and other financial data of First Northern immediately following the
Reorganization were substantially the same as those of the Savings Bank
immediately prior to consummation of the Reorganization. All references herein
to First Northern for any date or period prior to consummation of the
Reorganization refer to the Savings Bank.
The Board of Directors has fixed the close of business on February 25, 2000
as the record date (the "Record Date") for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. Only holders of record of Common Stock, $1.00 par value per share (the
"Common Stock"), the only class of voting stock of First Northern outstanding,
on the Record Date will be entitled to notice of and to vote at the Annual
Meeting. Each share of Common Stock is entitled to one vote. At the Record Date,
there were 8,586,308 shares of Common Stock outstanding. All share and per share
data in this Proxy Statement prior to August 18, 1997 have been adjusted to
reflect the two-for-one stock split effected August 18, 1997.
Any stockholder entitled to vote at the Annual Meeting may vote either in
person or by a properly executed proxy. Shares represented by properly executed
proxies received by First Northern will be voted at the Annual Meeting, or any
adjournment thereof, in accordance with the terms of such proxies, unless
revoked. If no voting instructions are given on a properly executed proxy, the
shares will be voted FOR the election of management's director nominees.
If a stockholder is a participant in First Northern's Dividend Reinvestment
Plan (the "DRIP") or owns shares through investments in the First Northern
Common Stock Fund (the "Stock Fund") of the Savings Bank's 401(k) Savings Plan
(the "Savings Plan"), the proxy will serve as voting instructions for the
participant's shares held in those plans. Shares of plan participants will be
voted by the administrator of the DRIP and the trustees of the Savings Plan in
accordance with such respective participants' voting instructions. If a
participant in the DRIP does not return a proxy, the administrator of the DRIP
will not vote such participant's shares held in the DRIP. If a participant in
the Stock Fund of the Savings Plan does not return a proxy, the trustees of the
Savings Plan will vote such participant's shares held in the Stock Fund in the
same proportion that all shares in the Stock Fund for which voting instructions
have been received are voted.
<PAGE> 5
A proxy may be revoked by a stockholder at any time prior to the voting
thereof by filing a written notice of revocation with the Secretary of First
Northern, by delivering a properly executed proxy bearing a later date or by
voting in person at the Annual Meeting. Attendance at the Annual Meeting will
not in itself constitute revocation of a proxy.
A majority of the votes entitled to be cast by the shares entitled to vote,
represented in person or by proxy, will constitute a quorum of stockholders at
the Annual Meeting. Shares for which authority is withheld to vote for director
nominees and broker non-votes (i.e., proxies from brokers or nominees indicating
that such persons have not received instructions from the beneficial owners or
other persons entitled to vote shares as to a matter with respect to which the
brokers or nominees do not have discretionary power to vote) will be considered
present for purposes of establishing a quorum. A plurality of the votes cast at
the Annual Meeting by the holders of shares of Common Stock entitled to vote is
required for the election of directors (i.e., the individuals who receive the
largest number of votes are elected as directors up to the maximum number of
directors to be chosen at the Annual Meeting). With respect to the election of
directors, any shares not voted, whether by withheld authority, broker non-vote
or otherwise, will have no effect on the election of directors except to the
extent that the failure to vote for an individual results in another individual
receiving a larger number of votes. The Inspectors of Election appointed by the
Board of Directors will count the votes and ballots at the Annual Meeting.
Expenses in connection with the solicitation of proxies will be paid by
First Northern. Proxies will be solicited principally by mail, but may also be
solicited by the directors, officers and other employees of First Northern in
person or by telephone, facsimile or other means of communication. Such
directors, officers and employees will receive no compensation therefor in
addition to their regular compensation, but may be reimbursed for out-of-pocket
expenses in connection with such solicitation. Brokers, dealers, banks, or their
nominees, who hold Common Stock on behalf of another will be asked to send proxy
material and related documents to the beneficial owners of such stock, and First
Northern will reimburse such persons for their reasonable expenses.
The Board of Directors of First Northern knows of no matters to be acted
upon at the Annual Meeting other than as set forth in the Notice of such Annual
Meeting as attached to this Proxy Statement. The Bylaws set forth certain
requirements that must be followed should a stockholder wish to propose any
floor nominations for director or floor proposals at annual or special meetings
of stockholders. In the case of annual meetings, the Bylaws state that a notice
containing certain specified information must be delivered to the Secretary of
First Northern not less than 70 days or more than 100 days prior to the
scheduled date of such meeting. No such notices have been received by First
Northern. If any other matters properly come before the Annual Meeting, or any
adjournment thereof, it is the intention of the persons named in the proxy to
vote such proxies in accordance with their best judgment on such matters.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below sets forth information regarding the beneficial ownership
of First Northern Common Stock by each person known by the Corporation to
beneficially own more than 5% of the outstanding shares of Common Stock, by each
director and nominee for director, by each executive officer named in the
Summary Compensation Table below and by all directors and executive officers of
First Northern as a group. Amounts are as of the Record Date for nominees for
director, directors, and executive officers. Amounts for the 5% stockholder are
as of the date such stockholder reported such holdings in a filing under the
Securities Exchange Act of 1934 (the "Exchange Act").
<TABLE>
<CAPTION>
NUMBER OF SHARES AND
NAME OF NATURE OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP (1)(2) OF CLASS
---------------- -------------------- --------
<S> <C> <C>
Dimensional Fund Advisors Inc.....................499,000(3) 5.81%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
NUMBER OF SHARES AND
NAME OF NATURE OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP (1)(2) OF CLASS
---------------- -------------------- --------
<S> <C> <C>
Richard E. Aicher.................................106,128(4) 1.23
Rick B. Colberg...................................126,413(5) 1.46
Howard M. Frankenthal.............................286,781(6) 3.33
Thomas J. Lopina, Sr...............................58,598(7) 0.68
Michael D. Meeuwsen ..............................250,979(8) 2.88
Robert B. Olson....................................82,410(9) 0.96
Richard C. Smits.................................116,926(10) 1.36
John E. Steinbrecker.............................161,060(11) 1.87
J. Gus Swoboda....................................46,629(12) 0.54
Steven L. Wilmet.................................118,721(13) 1.38
All directors and executive officers
as a group (12 persons).......................1,750,918(14) 19.27
</TABLE>
- ----------------
(1) Unless otherwise noted, the specified persons have sole voting and
dispositive power as to the shares indicated.
(2) Includes unissued shares deemed to be beneficially owned by the named
persons pursuant to unexercised stock options which may be exercised
within 60 days of the Record Date. Each person holds the following
number of option shares which are deemed to be beneficially owned:
Mr. Aicher--57,133; Mr. Colberg--57,133; Mr. Frankenthal--28,800; Mr.
Lopina--21,600; Mr. Meeuwsen--124,666; Mr. Olson--7,200; Mr.
Smits--3,600; Mr. Steinbrecker-42,333; Mr. Swoboda--25,200; and Mr.
Wilmet--32,333. All directors and executive officers as a group hold
options for 498,564 shares which are deemed to be beneficially owned.
(3) Based upon Schedule 13G under the Exchange Act dated February 4, 2000.
Dimensional Fund Advisors Inc. has indicated that it has sole voting
and dispositive power with respect to 499,000 shares of First Northern
Common Stock.
(4) Includes 37,564 shares as to which voting and investment power is
shared.
(5) Includes 54,815 shares as to which voting and investment power is
shared.
(6) Includes 56,600 shares held by Frankenthal International, Ltd. Pension
and Profit Sharing Trust, under which Mr. Frankenthal serves is the
sole beneficiary. Includes 6,000 shares held by Mr. Frankenthal's wife,
as to which he disclaims beneficial ownership.
(7) Includes 4,450 shares held by Mr. Lopina's wife as custodian for a son
and 6,400 shares held by Mr. Lopina's wife directly, all as to which
voting and investment power is shared.
(8) Includes 83,958 shares as to which voting and investment power is
shared.
(9) Includes 75,210 shares as to which voting and investment power is
shared.
(10) Includes 85,424 shares as to which voting and investment power is
shared.
(11) Includes 700 shares held in a trust and 3,308 shares as to which voting
and investment power is shared.
(12) Includes 20,729 shares held by Mr. Swoboda's wife, as to which voting
and investment power is shared, and 700 additional shares as to which
Mr. Swoboda shares voting and investment power.
(13) Includes 57,680 shares as to which voting and investment power is
shared.
(14) Includes 448,307 shares as to which voting and investment power is
shared and 339,946 shares held by the Savings Plan wherein the voting
of such shares and their disposition in a tender offer is directed by
the participants but the trustees (who are Messrs. Meeuwsen and Colberg
and one other executive officer of First Northern) have the power of
disposition in all other circumstances.
The above beneficial ownership information is based on data furnished by the
specified persons and is determined in accordance with Rule 13d-3 under the
Exchange Act, as required for purposes of this Proxy Statement. It is not
necessarily to be construed as an admission of beneficial ownership for other
purposes.
3
<PAGE> 7
MERGER AGREEMENT WITH MUTUAL SAVINGS BANK
As previously reported, on February 21, 2000, First Northern entered into a
merger agreement with Mutual Savings Bank, a Wisconsin-chartered mutual savings
bank. The merger agreement provides for the acquisition of First Northern by
Mutual through a merger of First Northern with and into a subsidiary of Mutual,
which will be the surviving corporation. Subject to the terms and conditions of
the merger agreement, at the time of the merger, each outstanding share of First
Northern Common Stock will be converted into the right to receive cash, shares
of common stock of the surviving corporation or a combination of cash and shares
of the surviving corporation, and the Savings Bank would become a subsidiary of
the surviving corporation. In connection with the merger agreement, First
Northern granted to Mutual an option to purchase up to 1,708,675 shares of First
Northern Common Stock, which equals 19.9% of the number of shares of First
Northern Common Stock outstanding on February 21, 2000, at an exercise price of
$9.0375 per share. The option would become exercisable under certain
circumstances if First Northern becomes the subject of a third-party proposal
for a competing transaction. As noted in the letter to stockholders accompanying
this Proxy Statement, stockholders will be receiving further information about
the proposed transaction at the appropriate time in connection with a special
meeting of stockholders to consider and vote upon the proposed transaction.
PROPOSAL 1
ELECTION OF DIRECTORS
The Bylaws provide that the number of directors of First Northern shall be
determined by the Board of Directors and that the directors shall be divided
into three classes as nearly equal in number as possible. Currently, the number
of directors is fixed at six, divided into three classes of two directors. At
each annual meeting the term of office of one class of directors expires and a
class of directors is elected to serve for a term of three years or until their
successors are elected and qualify.
Messrs. Thomas J. Lopina, Sr. and Robert B. Olson, the directors whose
present terms expire at the Annual Meeting, are being nominated for re-election
as directors for terms expiring in 2003. Shares represented by proxies received
from stockholders will be voted for the election of Messrs. Lopina and Olson
unless otherwise specified by such stockholders.
Information regarding the nominees and the directors whose terms continue is
set forth in the following table. If any of the nominees should decline or be
unable to act as a director, an eventuality which is not foreseen, proxies may
be voted with discretionary authority for a substitute nominee or nominees
designated by the Board of Directors.
4
<PAGE> 8
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE ELECTION OF THE DIRECTOR NOMINEES LISTED BELOW.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
AND BUSINESS DIRECTOR
NAME AND AGE EXPERIENCE (1) SINCE (2)
------------ ------------------- ---------
<S> <C> <C>
Nominees for Terms Expiring in 2003
Thomas J. Lopina, Sr................. Associate, Spectrum Solutions, Inc., Oshkosh, 1979
62 (3)(4) Wisconsin--a small business consulting firm.
Prior to October, 1997, President, Chief
Executive Officer and Director of Ingersoll
Equipment Co., Inc., Winneconne, Wisconsin--a
manufacturer of outdoor power equipment.
Robert B. Olson...................... Vice President of Manufacturing Operations, 1997
62 (3)(4)(5) Little Rapids Corporation, Green Bay,
Wisconsin -- a specialty paper producer.
From 1982 to 1994, Director of Prime Federal
Bank, FSB ("Prime Federal"), which was merged
into the Savings Bank in 1994.
Continuing Directors-Terms Expiring in 2002
Howard M. Frankenthal................ President and Director, Frankenthal 1988
46 (5)(6) International, Ltd., Mequon, Wisconsin--a
meat wholesaler.
Richard C. Smits..................... Retired; formerly Executive Vice President 1994
61 (5)(6)(7) and Chief Operating Officer of First Northern
and the Savings Bank from 1994 to 1997. From
1992 to 1994, President and Chief Executive
Officer of Prime Federal.
Continuing Directors-Terms Expiring in 2001
Michael D. Meeuwsen.................. President and Chief Executive Officer 1988
46 of First Northern and the Savings Bank.
J. Gus Swoboda....................... Retired; prior to July, 1997, Senior Vice 1987
65 (3)(4)(6)(8) President, Human and Corporate Development,
Wisconsin Public Service Corporation, Green
Bay, Wisconsin--an electric and gas
utility company.
</TABLE>
- -----------------
(1) Unless otherwise noted, all directors have been employed in their
respective principal occupations listed for at least the past five
years. Mr. Meeuwsen was elected an executive officer of First Northern
upon its formation in August 1995.
(2) Indicates date when director was first elected to the Board of the
Savings Bank. The directors of First Northern also comprise the Board
of Directors of the Savings Bank.
5
<PAGE> 9
(3) Member of the Compensation Committee, of which Mr. Lopina is
Chairman. The Compensation Committee held three meetings in 1999. The
Compensation Committee establishes and reviews: compensation policy;
salaries, bonuses and benefits for all employees, including
determinations with respect to stock options; and personnel policies
and procedures.
(4) Member of the Loan Committee of which Mr. Olson is Chairman. The Loan
Committee held eleven meetings in 1999. The Loan Committee reviews and
approves secured commercial loans in excess of $500,000 and unsecured
commercial loans in excess of $200,000, mortgage loans in excess of
$500,000, and consumer loans in excess of $250,000.
(5) Member of the Audit Committee, of which Mr. Frankenthal is Chairman.
The Audit Committee held three meetings in 1999. The Audit Committee's
functions include meeting with First Northern's independent auditors
and making recommendations to the Board of Directors regarding the
engagement or retention of independent public accountants, adequacy of
internal controls, adoption of accounting methods and procedures,
public disclosures required for compliance with securities laws and
other matters relating to First Northern's financial accounting and
reporting. Both the internal auditor and independent auditors meet
periodically with the Audit Committee and have access to the Audit
Committee.
(6) Member of the Executive Committee, of which Mr. Swoboda, who is
Chairman of the Board of First Northern, is Chairman. The Executive
Committee held five meetings in 1999. The Executive Committee is
authorized to exercise the power of the Board of Directors in the
management of the business and affairs of First Northern when the Board
is not in session, except for those powers which are non-delegable by
law or have been delegated to other committees. In addition, any Board
member can be an alternate member of the Executive Committee to
establish a quorum.
(7) Prior to joining First Northern's Board, Mr. Smits had been a director
of Prime Federal since 1986.
(8) Mr. Swoboda is a director of American Medical Security Group, Inc., a
health and life insurance company.
The Nominating Committee is comprised of the entire Board of Directors.
The Nominating Committee held one meeting in 1999. The Nominating Committee's
sole function is to propose nominees for the position of director. In carrying
out its responsibilities, the Nominating Committee will consider candidates
suggested by other directors, employees and stockholders. Suggestions for
candidates, accompanied by biographical material, may be sent to the Secretary
of First Northern at the Corporation's principal corporate office.
The Board of Directors held twelve meetings in 1999. During the period in
the last fiscal year in which they served, all members of the Board of Directors
attended at least 75% of the aggregate of the total number of meetings of the
Board and the total number of meetings held by all committees of the Board on
which they served.
DIRECTOR COMPENSATION
MEETING FEES
In 1999, the directors received $1,200 for each regular or special meeting
of First Northern or the Savings Bank attended. Directors who are not officers
of First Northern or the Savings Bank were also paid $125 per hour for each
committee meeting attended. Only one fee is paid to each director for meetings
held by both the First Northern and the Savings Bank Boards or committees on the
same day. Effective in 2000, the regular and special meeting fees were increased
to $1,250 per director except for the Chairman of the Board who now receives
$1,500 for each regular or special meeting.
6
<PAGE> 10
Director Stock Options
On January 14, 2000, each non-employee director received a nonqualified
stock option to purchase 3,600 shares of Common Stock under First Northern's
1999 Stock Plan, which was approved at the 1999 annual meeting of First Northern
stockholders and replaced the 1994 Executive Stock Plan and the 1994 Directors'
Stock Option Plan that expired in 1999. The options have an exercise price of
$10.00 per share, equal to the fair market value of the shares on the date the
options were granted. The options vest over a three-year period, one-third on
each anniversary of the grant date, and expire 10 years after the date of grant.
The exercise price of an option may be paid in cash, or, in the discretion of
the Committee, in shares of Common Stock which have been beneficially owned by
the optionee for at least six months prior to the time of exercise, valued at
their fair market value determined as of the date of exercise, or in a
combination thereof. In the event of death, disability or retirement, the
options vest immediately and may be exercised in the following one-year period,
but not later than the date on which the options would otherwise expire. In the
event of a "corporate sale or change," as defined in the 1999 Stock Plan, all
options then outstanding shall be immediately exerciseable in full and the
Compensation Committee of the Board, which administers the 1999 Stock Plan, will
take action as provided in the 1999 Stock Plan to preserve the benefits of the
options or to require the options to be exercised within a specific number of
days or be terminated. The previously announced pending acquisition of First
Northern by Mutual Savings Bank would constitute a corporate sale or change.
On the first business day in February of each year from 1995 to 1999, each
person then serving as a non-employee director received a similar option to
purchase 3,600 shares of Common Stock under the 1994 Directors' Stock Option
Plan.
DEFERRED RETIREMENT PLAN FOR DIRECTORS
In 1991, the Savings Bank adopted a Non-Qualified Deferred Retirement Plan
for Directors (the "Directors' Deferred Retirement Plan"). In 1998, the Savings
Bank modified the Directors' Deferred Retirement Plan's age plus full years of
service requirement from a total of 75 to 70. Eligible directors under the
Directors' Deferred Retirement Plan include persons serving as members of the
Savings Bank Board and any director of an advisory board established by the
Savings Bank if such person was a director of a predecessor institution and is
designated by the Savings Bank as an eligible participant. Eligible directors
who either terminate Board service for any reason after both attaining 62 years
of age and completing at least nine full years of service on the Savings Bank
Board or any such predecessor Board, or who terminate service before attaining
age 62, but whose age plus full years of service equals or exceeds 70, will be
entitled to a monthly retirement benefit of $1,000. The benefit will commence on
the first day of the month following the later of (i) the date the eligible
director attains age 62, (ii) the date such director terminates service on the
Savings Bank Board, or (iii) the date the director terminates employment with
the Savings Bank and its affiliates, and shall continue for 180 months or until
the director's death, if earlier. If the eligible director dies after benefits
have commenced, but prior to the receipt of 36 monthly payments, the benefit
will continue to the director's beneficiary for the duration of the 36-month
period.
Under the Directors' Deferred Retirement Plan, any eligible director
terminated for cause forfeits the right to receive any retirement benefit.
Furthermore, directors who accept employment with another financial institution
or holding company thereof will not be entitled to any retirement benefits
otherwise payable under the Directors' Deferred Retirement Plan. The directors
of the Savings Bank may amend or terminate the Directors' Deferred Retirement
Plan at any time, provided that no amendment or termination may impair the
rights of any individuals receiving benefits under the Directors' Deferred
Retirement Plan on the date of such amendment or termination.
7
<PAGE> 11
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Philosophy and Objectives. First Northern's strategic compensation policies
are determined by the Compensation Committee of the Board of Directors and are
structured to attract, motivate and retain high caliber executives to ensure the
future growth and profitability of First Northern. The Compensation Committee
was comprised of three outside directors during 1999. No member of the
Compensation Committee is a current or former officer or employee of First
Northern or any of its subsidiaries. The Compensation Committee determines the
components of total compensation for all personnel, establishes specific
compensation levels for the executive officers and administers First Northern's
bonus and executive stock plans.
The Compensation Committee's executive compensation objectives and
practices generally reflect First Northern's efforts to retain and motivate
executive officers by providing a total compensation package which is
competitive in the financial services industry and is based on corporate and
individual performance. The Compensation Committee believes that compensation
for First Northern's executive officers should exhibit a pay-for-performance
orientation. Compensation for First Northern's executive officers currently
consists of three components--base salary, bonus and stock options. The existing
compensation structure has been designed to emphasize variable compensation
through the use of incentive plans in order to encourage long-term growth in
stockholder value and discourage unreasonable risk-taking to achieve short-term
profits.
It is part of First Northern's corporate mission to attract and retain a
management and employee team with abilities recognized in the industry for a
high degree of professionalism while providing a fair return to stockholders by
maximizing profitability. Individual executive compensation is reviewed on an
annual basis with emphasis placed on recognizing and rewarding executives based
on performance, as measured by corporate and individual attainment of pre-set
goals. Historically, the success of First Northern's compensation practices has
been evidenced by lower-than-industry-average turnover, better-than-industry
average net income and return on assets, and a net worth position far exceeding
all regulatory requirements.
Base Salary. First Northern's policy is to establish a base salary range
for each executive officer position. Base salary range midpoints are established
consistent with median base salaries paid to individuals who hold comparable
positions at other financial and non-financial institutions as well as through
an internal evaluation of the responsibilities of each position. Base salary may
be adjusted from the median based on the degree of accomplishment of certain
predetermined projects related to each executive's area of responsibility. The
Compensation Committee utilizes comparative salary survey data from various
local, state and national consulting firms, as well as from independent
compensation consultants and other industry sources. In comparing other
financial institutions, consideration is given to institution size, geographic
location, organizational structure and financial performance. In addition, First
Northern considers economic conditions and business climate in its primary
market area so that it may successfully compete for a competent work force.
Although a great deal of qualitative and quantitative performance criteria is
reviewed, the Compensation Committee does exercise a certain amount of
subjective evaluation in making executive compensation decisions.
8
<PAGE> 12
Annual Incentive Compensation. In addition to base salary, First Northern
provides an incentive bonus program through the Savings Bank's Management
Incentive Plan ("MIP"). The MIP is designed to reward the efforts of senior and
middle-level management if certain levels of corporate and individual
performance are attained. Compensation under the MIP is based on actual fiscal
year operating results measured against predetermined financial performance
goals established for First Northern and individual performance goals
established for each participant. Generally, executive officer bonuses under the
MIP are weighted 75% corporate performance and 25% individual performance. In
recognition of his having primary responsibility for the financial success of
First Northern, the Chief Executive Officer's bonus is based solely on corporate
performance. Awards for corporate performance are made only if First Northern
attains a specified profit threshold. The extent of any bonus award is based
upon salary level and by the degree to which corporate and individual
performance goals are attained. Participants in the MIP, the formula for payment
of bonuses thereunder, and the corporate financial performance goals are
designated annually by the Compensation Committee. For 1999, First Northern's
targeted financial performance goal was based on its return on average assets
ratio. Individual awards for each covered employee could range from 3.5% to 50%
of base salary. Since First Northern's return on average assets ratio for 1999
exceeded the financial performance target and since earnings per share growth
exceeded budget expectations, the actual range of bonuses paid for 1999 was 4.9%
to 26.8% of covered employees' salaries.
Long-Term Incentive Compensation. Based primarily on the executive's
ability to influence First Northern's long-term growth and profitability, stock
options are granted annually to executive officers as a long-term incentive
benefit. In granting stock options, the Compensation Committee is guided by the
number of previous stock options granted and a formula that estimates the five
year compounded increase in the market price of First Northern Common Stock. The
dollar value the executive would receive under his or her assigned tier in the
MIP (assuming attainment of 100% of the target) is divided by the five year
compounded increase in the market price of First Northern Common Stock to arrive
at an approximate number of shares to be granted. The actual number of shares
granted is adjusted based on a number of internal and external factors relating
to corporate performance. All options are granted at the closing market price on
the day of grant and vest over a three-year period. Since the value of an option
bears a direct relationship to First Northern's performance as measured by stock
price, the Compensation Committee believes that stock options are an effective
incentive for executive officers to create value for stockholders. The
Compensation Committee views stock options as an important component of its
long-term performance based compensation strategy.
Chief Executive Officer Compensation. The factors that are used to
determine the Chief Executive Officer's annual base salary and incentive
compensation are the same as those described above for all executive officers.
In 1999, Mr. Meeuwsen had a base salary of $171,600, which the Compensation
Committee determined to be appropriate based upon industry pay practices for
chief executive officers. The bonus earned by Mr. Meeuwsen in 1999 under the MIP
was 26.8% of his base salary, determined in the manner described above. Mr.
Meeuwsen was also granted a stock option during the last fiscal year for 22,000
shares, in accordance with the formula described above.
Thomas J. Lopina, Sr. Robert B. Olson J. Gus Swoboda
Chairman
Compensation Committee
9
<PAGE> 13
Summary Compensation Table
The following table sets forth information concerning the total
compensation of the Chief Executive Officer and the other four most highly
compensated executive officers for services in all capacities to First Northern
and its subsidiaries for the last three fiscal years. All such compensation was
paid by the Savings Bank.
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Awards
------
Securities All
Annual Compensation(1) Underlying Other
---------------------- Options/SARs Compensation
Name and Principal Position Year Salary($)(2) Bonus($)(3) (#)(4) ($)(5)
--------------------------- ---- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Michael D. Meeuwsen........................ 1999 $186,000 $46,000 22,000 $18,475
President and CEO of Savings Bank 1998 $181,600 $49,000 20,000 $17,804
and First Northern 1997 $172,400 $45,000 20,000 $15,944
Steven L. Wilmet........................... 1999 $87,350 $18,500 10,000 $ 8,993
Senior Vice President - Operations 1998 $84,050 $19,500 9,000 $ 8,503
and Branch Development of Savings 1997 $80,975 $22,000 10,000 $ 8,008
Bank
Richard E. Aicher.......................... 1999 $86,200 $18,000 10,000 $ 8,755
Senior Vice President - Lending of 1998 $82,900 $19,500 9,000 $ 8,251
Savings Bank 1997 $79,600 $21,800 10,000 $ 7,768
Rick B. Colberg............................ 1999 $85,550 $18,000 10,000 $ 8,798
Senior Vice President, CFO and 1998 $82,250 $19,000 9,000 $ 8,335
Treasurer of Savings Bank; Vice 1997 $79,175 $21,800 10,000 $ 7,864
President, CFO and Treasurer of First
Northern
John E. Steinbrecker....................... 1999 $82,550 $17,800 10,000 $ 8,500
Senior Vice President-Retail Deposits 1998 $79,050 $18,500 9,000 $ 8,016
and Brokerage Services of Savings 1997 $75,575 $21,200 10,000 $ 7,520
Bank
</TABLE>
- -----------------
(1) While each of the named individuals received perquisites or other
personal benefits in the years shown, the value of these benefits is
not indicated, in accordance with Securities and Exchange Commission
("SEC") regulations, since they did not exceed, in the aggregate, the
lesser of $50,000 or 10% of the individual's salary and bonus in any
year.
(2) Includes any First Northern and/or subsidiaries Board of Directors'
fees paid to the individual while serving as an executive officer.
(3) Annual bonus amounts are earned and accrued during the years indicated
and paid at the beginning of the next calendar year.
(4) Consists of stock option grants. No stock appreciation rights ("SARs")
were awarded during any of the years indicated.
(5) The dollar amounts reflect First Northern's contributions to the
Savings Plan.
10
<PAGE> 14
Employment and Retirement Arrangements
Employment Agreements. The Savings Bank has employment agreements with the
executive officers named in the Summary Compensation Table. Messrs. Meeuwsen's,
Aicher's, Colberg's and Steinbrecker's agreements were entered into in 1990; Mr.
Wilmet's agreement was entered into in 1994. The initial terms of the employment
agreements are five years for Mr. Meeuwsen and three years for the other
executives. Messrs. Meeuwsen's, Aicher's, Colberg's and Steinbrecker's
employment agreements are automatically extended for an additional year on the
annual anniversary date unless contrary written notice is given by either the
Savings Bank or the executive. Mr. Wilmet's employment agreement can be extended
for an additional year on each annual anniversary date upon agreement of the
executive and affirmative action taken by the Savings Bank's Board of Directors.
Each agreement has been extended on every anniversary date.
Under the employment agreements, each executive officer is entitled to a
base salary which is reviewed annually based upon individual performance and the
financial results of the Savings Bank. The employment agreements also provide
that the executive officers shall be eligible for incentive compensation
pursuant to the MIP and be entitled to reimbursement of business expenses and
other benefits and perquisites, in accordance with the Savings Bank's policies.
The employment agreements can be terminated at the election of the executive
officer or the Savings Bank at the expiration of the term, at any time for
cause, upon the occurrence of certain events specified by federal statute or
regulation, or as a result of the executive officer's retirement, disability or
death. Each employment agreement can also be voluntarily terminated without
cause by the executive officer or the Savings Bank during the term of the
agreement. Each executive officer may also terminate his employment agreement
under certain circumstances following a change in control.
Upon termination of the executives' employment at their election at the
expiration of the terms of the employment agreements, such executive officers
are entitled to receive unpaid base salary and incentive compensation for the
period of employment and compensation for accrued but unused vacation time. Upon
termination of employment at the election of the Savings Bank at the expiration
of the terms of their respective agreements, the executives are entitled to
receive the same compensation as if they had voluntarily terminated at the end
of the term as well as an amount equal to 100% of their annual base salary at
the date of termination and certain benefits for a period of twelve months
thereafter.
Upon each executive officer's death or retirement, he or his personal
representative, as the case may be, shall receive his earned but unpaid base
salary and incentive compensation prorated to the end of the calendar month in
which such termination occurs and compensation for accrued but unused vacation
time. Each executive's employment agreement defines retirement to mean
retirement in accordance with and pursuant to any retirement plan of the Savings
Bank generally applicable to its executive officers or in accordance with any
arrangements established with the executive's consent.
If the executive officer terminates employment voluntarily during a term
or he is terminated by the Savings Bank for cause, as defined in the employment
agreements, the executive officer shall not be entitled to any compensation or
benefits for any period after the date of termination. If during the term of any
employment agreement, the Savings Bank terminates the executive officer without
cause or the employment agreement is terminated by the executive officer for
cause, the executive would be entitled to receive 100% of base salary at the
11
<PAGE> 15
time of termination until a date twelve months after the expiration of the then
current term of employment, provided that such compensation may not exceed an
amount equal to 60 months for Mr. Meeuwsen and 36 months for the other
executives of base salary, respectively, along with unpaid base salary and
incentive compensation and accrued but unused vacation time. Each executive
officer would also continue to receive certain insurance and other benefits
until twelve months after the end of the term of employment. The Savings Bank
must also pay to each executive officer an additional lump sum cash payment if
it terminates the executive officer without cause in an amount equal to the
product of the Savings Bank's annual aggregate contributions for the benefit of
the executive officer to all qualified retirement plans in the year preceding
termination and the number of years in the initial term of their respective
employment agreements.
Under each employment agreement, the executive officer may also terminate
employment following a change in control of the Savings Bank or First Northern
under certain circumstances, including a reduction in compensation and benefits
or responsibilities and duties. A change in control is defined to include, among
other things, a change in the majority of directors of the Savings Bank or First
Northern or an acquisition of a certain percentage of stock of the Savings Bank
or First Northern or a successor in interest to the Savings Bank or First
Northern. Upon any such termination as a result of a change in control, each
executive officer has a right under their respective employment agreements to
receive payments and benefits as if a termination by the Savings Bank without
cause had occurred.
The employment agreements provide that under no circumstances may the
aggregate amount of all severance payments and termination benefits, computed on
a present value basis, exceed an amount which would cause the payments to be
characterized as parachute payments within the meaning of Section 280G(b)(2) of
the Internal Revenue Code. That section generally defines parachute payments to
include any severance payments and termination benefits which, on a present
value basis, equal or exceed three times the executive officer's average annual
total compensation over a five-year period immediately preceding the change in
control transaction.
Supplemental Retirement Agreements. In 1994, the Savings Bank entered into
supplemental retirement agreements with Mr. Meeuwsen and certain of its other
executive officers, including all of the executive officers named in the Summary
Compensation Table, except Mr. Wilmet. In 1998, the supplemental retirement
agreements were modified to reduce the vesting period. Previously, the sum of
the executive officer's age and years of service was required to total 80, but
now the sum of the executive officer's age and years of service must equal 70.
Under these agreements, a supplemental retirement benefit will vest if the
executive continues to be employed by the Savings Bank until the earlier of (i)
such time as the sum of the executive officer's age and years of service total
70; (ii) a change in control of the Savings Bank or First Northern (as defined
in the employment agreements); (iii) the executive officer's death; or (iv) the
executive officer's total and permanent disability. No benefit is payable under
the supplemental retirement agreements if such executive officers were to
terminate their employment with the Savings Bank prior to the occurrence of any
of the foregoing. When Messrs. Meeuwsen's, Aicher's, Colberg's and
Steinbrecker's supplemental retirement benefits vest, they or their beneficiary
will receive a total of 180 monthly payments of $7,472, $3,965, $2,646 and
$3,531 per month, respectively, commencing on the first day of the month
following the earlier of their respective attainment of age 65 or their death.
If the supplemental retirement benefits commence prior to the executive's
attainment of age 65 because of his death, or if the executive officer requests
acceleration of his benefit payments (and the Compensation Committee consents to
such acceleration), the amount of the monthly payment will be reduced to reflect
a 6% discount rate compounded monthly. These supplemental retirement agreements
are subject to the same parachute payment limitations that govern the employment
agreements.
12
<PAGE> 16
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The table below sets forth information regarding stock option grants
during the last fiscal year to the executive officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
Individual Grants (1)(2)
------------------------ Potential Realizable
Value at Assumed
Number of Percent of Total Annual Rates of Stock
Securities Options/SARs Price Appreciation
Underlying Granted to Exercise or for Option Term(3)
Options/SARs Employees in Base Expiration ---------------------
Name Granted(#) Fiscal Year Price ($/sh) Date 5%($) 10%($)
---- ---------- ----------- ------------ ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Michael D. Meeuwsen 22,000 25.0% $12.50 1/14/2009 $172,975 $438,350
Steven L. Wilmet 10,000 11.4% $12.50 1/14/2009 $ 78,625 $199,250
Richard E. Aicher 10,000 11.4% $12.50 1/14/2009 $ 78,625 $199,250
Rick B. Colberg 10,000 11.4% $12.50 1/14/2009 $ 78,625 $199,250
John E. Steinbrecker 10,000 11.4% $12.50 1/14/2009 $ 78,625 $199,250
</TABLE>
- -----------------
(1) No SARs were granted during 1999.
(2) The stock option/SAR plans are administered by the Compensation
Committee of the Board of Directors which designates the persons to be
granted options/SARs, the type of option and the date of grant. The
Compensation Committee also determines the number of shares subject to
such options, the option price and the time or times at which each
option will first become exercisable in whole or in part. The table
reflects grants of stock options on January 14, 1999 pursuant to the
1994 Executive Stock Plan. The options are intended to qualify as
incentive stock options under the Internal Revenue Code of 1986, as
amended (the "Code"), to the extent permitted by the Code; any options
not meeting such requirements will be treated as non-qualified stock
options. The per share option exercise prices are 100% of the fair
market value of First Northern Common Stock on the date of grant and
the term of each option is ten years. Options granted become
exercisable in one-third increments in each year, beginning one year
after the date of grant. Subject to the limitations of the 1994
Executive Stock Plan, the Compensation Committee, in its discretion,
may modify, extend or renew any option/SAR granted. Upon the death,
disability or retirement of the grantee or a change in control of
First Northern, these options will become immediately exercisable.
(3) The dollar amounts in these columns are the result of calculations at
the 5% and 10% stock appreciation rates set by the SEC and, therefore,
do not forecast possible future appreciation, if any, of First
Northern's Common Stock price.
13
<PAGE> 17
Option Exercises and Year-END VALUES
The table below sets forth information concerning stock option
exercises during the last fiscal year and the number and value of options
outstanding at the end of the last fiscal year for the executive officers named
in the Summary Compensation Table.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES(1)
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FISCAL YEAR-END(#) FISCAL YEAR-END ($)(2)
ACQUIRED ON VALUE ------------------ ----------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/ EXERCISABLE/
---- ------------ ------------ UNEXERCISABLE UNEXERCISABLE
------------------ ----------------------
<S> <C> <C> <C> <C>
Michael D. Meeuwsen 9,760 $ 82,374 118,000/42,000 $419,246/$8,300
Steven L. Wilmet 4,600 $ 49,358 27,217/19,333 $77,226/$4,150
Richard E. Aicher 1,512 $ 13,139 47,467/19,333 $154,361/$4,150
Rick B. Colberg 6,518 $ 49,534 50,967/19,333 $175,799/$4,150
John E. Steinbrecker -0- -0- 32,667/19,333 $65,215/$4,150
</TABLE>
- -----------------
(1) No SARs are outstanding.
(2) Based on the $9.625 market price of First Northern Common Stock on The
Nasdaq Stock Market, Inc.'s ("NASDAQ") National Market at the end of
the fiscal year.
14
<PAGE> 18
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
stockholder return on First Northern Common Stock, based on the market price of
the Common Stock and assuming reinvestment of cash dividends, with the
cumulative total return of U.S. companies on the NASDAQ Stock Market Index, the
NASDAQ Bank Stocks Index and the SNL Midwest Thrift Index. The graph assumes
$100 was invested on December 31, 1994 in First Northern Common Stock, the
NASDAQ Stock Market (U.S.) Index, the NASDAQ Bank Stocks Index and the SNL
Midwest Thrift Index. In the future, First Northern intends to delete the NASDAQ
Bank Stocks Index and replace it with the SNL Midwest Thrift Index as First
Northern believes that the SNL Midwest Thrift Index more accurately depicts
other financial institutions that are similar to First Northern.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[LINE GRAPH]
<TABLE>
<CAPTION>
Stock/Index 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
First Northern $100.00 $146.14 $149.35 $265.17 $226.53 $194.31
Common Stock
NASDAQ Stock 100.00 141.33 173.89 213.07 300.25 542.43
Market (U.S.)
NASDAQ Bank 100.00 149.00 196.73 329.39 327.10 314.60
Stocks
SNL Midwest Thrift 100.00 151.14 190.42 306.89 283.55 235.73
</TABLE>
15
<PAGE> 19
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Thomas J. Lopina, Sr., Robert B. Olson and J. Gus Swoboda,
members of the Compensation Committee, each have outstanding loans from the
Savings Bank in an aggregate amount exceeding $60,000. As of January 1, 1997,
Mr. Lopina's outstanding loans were converted to the Savings Bank's pre-FIRREA
policy. (See "Certain Transactions with First Northern.") Mr. Lopina has a
mortgage loan that originated on June 23, 1993 in the amount of $110,000, with a
balance of $94,218 at December 31, 1999, a current interest rate of 4.75% (also
4.75% during 1999) and a note rate of 6.25%. Mr. Olson's loans include a
mortgage loan that originated on July 31, 1997, in the amount of $160,000, with
a balance of $146,092 at December 31, 1999 with a current interest rate of 4.75%
(also 4.75% during 1999) and note rate of 7.375% and a mortgage loan that
originated on September 29, 1998, in the amount of $100,000 with a balance of
$92,328 at December 31, 1999 with a current interest rate and note rate of
6.875%. Mr. Swoboda has a mortgage loan that originated on April 13, 1998 in the
amount of $170,000, with a balance of $152,053 at December 31, 1999, with a
current interest rate of 4.75% (also 4.75% during 1999) and a note rate of
6.875%. Such loans were made in the ordinary course of business and do not
involve more than the normal risk of collectability or present other unfavorable
features. For a description of First Northern's policies with respect to loans
to officers, directors and employees, see "Certain Transactions with First
Northern."
CERTAIN TRANSACTIONS WITH FIRST NORTHERN
Through the Savings Bank, First Northern makes home mortgage and
consumer loans to its and its subsidiaries' officers, directors and employees in
the ordinary course of its business. Prior to the August 9, 1989 passage of the
Financial Institutions Reform, Recovery and Enforcement Act ("FIRREA"),
adjustable interest rate mortgage loans were originated at current market rates
but modified to a rate rounded up to the nearest 0.25% above the Savings Bank's
cost of money and the borrowers were not charged loan origination fees (other
than reimbursement of out-of-pocket costs). Under such loans, if the employment
of the borrower terminates, and the then-current employee interest rate is below
the note rate, the interest rate reverts to the rate provided for in the
mortgage note. Upon the passage of FIRREA, any executive officer or director
obtaining a loan from the Savings Bank was required to pay the current market
rate and associated originating fees. Other officers and employees were not
subject to FIRREA's restrictions. Effective November 8, 1996, regulations
affecting loans to directors and executive officers were changed to allow such
loans on the same terms and conditions offered to other employees as part of a
benefits and compensation package. Accordingly, on January 1, 1997, the Savings
Bank reinstated its pre-FIRREA policy for all employees and directors. Under its
present policy, all directors, officers and employees receive the
above-described modified loan rates and are not charged loan origination fees
(other than reimbursement of out-of-pocket costs). Management believes that the
loans made to directors, officers and employees do not involve more than the
normal risk of collectability or present other unfavorable features.
The following table sets forth certain data relating to existing loans
to directors and executive officers of First Northern where the aggregate amount
of such loans exceeded $60,000 at any time since January 1, 1998 and the
interest rate was below that offered to all other customers for comparable
transactions. (See "Compensation Committee Interlocks and Insider Participation"
with respect to loans to Messrs. Lopina, Olson and Swoboda).
<TABLE>
<CAPTION>
INTEREST
ORIGINAL BALANCE RATE DURING
NAME AND DATE OF AMOUNT OF AS OF LAST FISCAL NOTE
POSITION TYPE LOAN LOAN (1) 12/31/99 YEAR RATE
--------- ---- ------ -------- -------- ------------ ----
<S> <C> <C> <C> <C> <C> <C>
Richard E. Aicher Mortgage 03/31/88 $115,000 $ 78,956 4.75%(2) 8.75%
Senior Vice President- Second
Lending, Savings Bank Mortgage 01/06/98 45,000 36,721 5.75(3) 6.00
Second
Mortgage 09/03/99 86,000 43,137 8.50(3) (5)
</TABLE>
16
<PAGE> 20
<TABLE>
<CAPTION>
INTEREST
ORIGINAL BALANCE RATE DURING
NAME AND DATE OF AMOUNT OF AS OF LAST FISCAL NOTE
POSITION TYPE LOAN LOAN (1) 12/31/99 YEAR RATE
--------- ---- ------ -------- -------- ------------ ----
<S> <C> <C> <C> <C> <C> <C>
Marla J. Carr Mortgage 03/20/89 131,800 67,614 4.75(2) 9.75
Senior Vice President-
Human Resources and
Secretary of Savings Bank;
Vice President and Secretary
of First Northern
Rick B. Colberg Mortgage 07/20/98 110,000 100,999 6.25 6.875
Senior Vice President, CFO
and Treasurer of Savings
Bank; Vice President, CFO
and Treasurer of First Northern
Dale J. Darmody Mortgage 05/13/99 136,000 135,252 6.50 6.50
Senior Vice President of Second
Branch Development of Mortgage 04/01/99 17,000 -0- 8.50(3) (5)
Savings Bank
Michael D. Meeuwsen Mortgage 02/24/97 156,000 117,629 4.75(2) 7.25
President and CEO of Second
Savings Bank and First Northern Mortgage 07/11/91 100,000 39,397 8.50(3) (4)
Steven L. Wilmet Mortgage 06/16/97 130,000 124,777 4.75(2) 7.25
Senior Vice President- Second
Operations and Branch Mortgage 06/16/97 18,000 16,873 8.50(3) (4)
Development of Savings Bank
Howard M. Frankenthal Mortgage 03/18/88 300,000 193,878 4.75(2) 7.75
Director
Richard C. Smits Mortgage 09/16/77 40,000 -0- 4.78 8.25
Director Second
Mortgage 10/19/98 100,000 -0- 7.75(4) (4)
Mortgage 02/02/98 194,900 192,740 4.75(2) 6.25
</TABLE>
- ----------------
(1) The largest unpaid balance during 1999 was less than the original
amount of the respective loan.
(2) On January 1, 2000, in accordance with First Northern's mortgage loan
policy for directors, officers and employees, the interest rate on
mortgage loans for officers and directors is 4.75%.
(3) First Northern has a consumer loan policy for directors, officers and
employees in which interest rates (varies with the type of loan) are
indexed to First Northern's cost of funds or prime interest rate.
(4) The note interest rate is prime interest rate plus 2.00%.
(5) The note interest rate is prime interest rate plus an index which
varies with the dollar amount used.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, First Northern's directors, its executive
officers and any person holding more than 10% of the Common Stock are required
to report their initial ownership of the Common Stock and any subsequent change
in that ownership to the SEC. Specific due dates for these reports have been
established and First Northern is required to disclose in this Proxy Statement
any failure to file such reports by these dates during the last year. We believe
all of these filing requirements were satisfied during the year ended December
31, 1999, except that Marla J. Carr, an executive officer of First Northern
filed one report that incorrectly reported one transaction which was
subsequently amended to accurately report the transaction. In 1998, James L.
Elbe, the Controller of First Northern, filed an initial ownership report which
inadvertently omitted his beneficial ownership of shares of First Northern
Common Stock in his Savings Plan account. In making these disclosures, First
Northern
17
<PAGE> 21
has relied solely on written representations of its directors and executive
officers and copies of the reports that they have filed with the Commission.
There are no known 10% beneficial owners.
AUDITORS
On September 9, 1999, the Audit Committee of the Board of Directors
recommended to the Board of Directors the replacement of Ernst & Young LLP with
Wipfli Ullrich Bertelson LLP as First Northern's independent certified public
accountants for the year ended December 31, 1999. On September 16, 1999, the
Board of Directors accepted and approved the Audit Committee's recommendation.
Ernst & Young LLP was notified of its dismissal, and Wipfli Ullrich Bertelson
LLP of its engagement, on September 22, 1999. During 1997 and 1998 and through
September 22, 1999, (a) there were no disagreements with Ernst & Young LLP on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Ernst & Young LLP, would have caused that firm to make
reference to the subject matter of the disagreement in connection with its
report and (b) there were no "reportable events" (as defined in SEC Regulation
S-K Item 304(a)(1)(v)). Ernst & Young LLP's report on First Northern's financial
statements for 1997 and 1998 contained no adverse opinion or disclaimer of
opinion and was not qualified or modified as to uncertainty, audit scope, or
accounting principles.
The Board of Directors, acting on the recommendation of the Audit
Committee, has appointed the firm of Wipfli Ullrich Bertelson LLP as independent
auditors to audit the books and accounts of First Northern for 2000.
Representatives of Wipfli Ullrich Bertelson LLP are expected to be present at
the Annual Meeting to respond to appropriate questions and to make a statement
if they so desire.
STOCKHOLDER PROPOSALS
Stockholder proposals must be received by the Secretary of First
Northern, Ms. Marla J. Carr, no later than November 22, 2000 in order to be
considered for inclusion in next year's annual meeting proxy materials pursuant
to SEC Rule 14a-8. Stockholders wishing to propose any floor nominations for
director or floor proposals at the 2001 annual meeting without inclusion of such
proposals in First Northern's proxy materials must provide notice thereof
containing certain specified information as required by the Bylaws to First
Northern's Secretary so as to be received at least 70 days and not more than 100
days prior to the scheduled date of such annual meeting in order for such notice
to be considered timely under the Bylaws and the SEC's proxy rules.
By Order of the Board of Directors
/s/ Marla J. Carr
----------------------------------
Marla J. Carr
Vice President and Secretary
Green Bay, Wisconsin
March 22, 2000
A COPY (WITHOUT EXHIBITS) OF FIRST NORTHERN'S ANNUAL REPORT ON FORM 10-K
FILED WITH THE SEC FOR THE YEAR ENDED DECEMBER 31, 1999 IS ATTACHED TO THIS
PROXY STATEMENT. FIRST NORTHERN WILL PROVIDE AN ADDITIONAL COPY OF THE 10-K
WITHOUT CHARGE TO ANY RECORD OR BENEFICIAL OWNER OF FIRST NORTHERN COMMON STOCK
ON THE WRITTEN REQUEST OF SUCH PERSON DIRECTED TO: MARLA J. CARR, VICE PRESIDENT
AND SECRETARY, FIRST NORTHERN CAPITAL CORP., 201 NORTH MONROE AVENUE, P.O. BOX
23100, GREEN BAY, WISCONSIN 54305-3100.
18
<PAGE> 22
FIRST NORTHERN CAPITAL CORP.
PROXY/VOTING INSTRUCTIONS FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 26, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J. Gus Swoboda and Michael D. Meeuwsen, and
each of them, as proxies, with full power of substitution, and hereby authorizes
them to represent and to vote all shares of common stock which the undersigned
is entitled to vote, with all powers the undersigned would possess if personally
present, at the Annual Meeting of Stockholders of First Northern Capital Corp.
("First Northern") to be held at the Holiday Inn City Centre, 200 Main Street,
Green Bay, Wisconsin, at 10:00 a.m., Central Time, on Wednesday, April 26, 2000,
or at any adjournment thereof, as follows, hereby revoking any proxy previously
given:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER SPECIFIED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO CHOICE IS SPECIFIED, THIS PROXY
WILL BE VOTED "FOR" PROPOSAL 1.
(SEE REVERSE SIDE TO VOTE)
<PAGE> 23
FIRST NORTHERN CAPITAL CORP.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
<TABLE>
<S><C>
(SEE REVERSE SIDE)
\/ DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED \/
- ------------------------------------------------------------------------------------------------------------------------------------
FIRST NORTHERN CAPITAL CORP. 2000 ANNUAL MEETING
1. ELECTION OF DIRECTORS: 1. THOMAS J. LOPINA, SR. 2. ROBERT B. OLSON |_| FOR all nominees |_| WITHHOLD AUTHORITY
listed to the left to vote for all nominees
(except as specified listed to the left.
below).
(Instructions: To withhold authority to vote for any individual nominee, write the number(s) -------------------
of the nominee(s) in the box provided to the right). -> -> -> | |
| |
-------------------
2. In their discretion, the proxy holders are authorized to vote on such other matters as may properly come before the Annual
Meeting or any adjournment thereof, all as described and set forth in the Notice and Proxy Statement relating to the Annual
Meeting, receipt of which are hereby acknowledged.
If you hold shares of First Northern common stock in First Northern's Dividend Reinvestment Plan or First Northern Savings Bank,
S.A.'s 401(k) Savings Plan, this proxy constitutes voting instructions for any shares so held by the undersigned.
Check box to Date NO. OF SHARES
Indicate Address Change. |_| ------------------------------
Indicate changes below: ------------------------------------------------
| |
| |
| |
| |
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SIGNATURE(S) IN BOX
Please sign exactly as your name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please sign
in full corporate name by President or other
authorized officer. If a partnership, please sign
in partnership name by an authorized person.
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