<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
<TABLE>
<CAPTION>
CHECK THE APPROPRIATE BOX:
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
RELIANCE BANCSHARES, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
ALLAN T. BACH, PRESIDENT OF REGISTRANT
------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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:
-----------------------------------------------------------------------
<PAGE> 2
RELIANCE BANCSHARES, INC.
3140 SOUTH 27TH STREET
MILWAUKEE, WISCONSIN 53215
(414) 671-2222
September 17, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
(the "Annual Meeting") of Reliance Bancshares, Inc. (the "Company"), the
holding company for Reliance Savings Bank (the "Bank"), which will be held on
October 21, 1997, at 2:00 p.m., Milwaukee time, at the Clarion Hotel &
Conference Center (formerly the Quality Inn Airport), 5311 South Howell Avenue,
Milwaukee, Wisconsin 53207.
The attached Notice of Annual Meeting of Shareholders and Proxy Statement
describe the formal business to be conducted at the Annual Meeting. We also
have enclosed a copy of the Company's Annual Report for the fiscal year ended
June 30, 1997. Directors and officers of the Company, as well as
representatives of Schenck & Associates, S.C. (the successor to Meier, Clancy,
George & Co. LLP following the merger of Meier, Clancy, George & Co. LLP with
and into Schenck & Associates, S.C.), the Company's independent auditors, will
be present at the Annual Meeting to respond to any questions that our
shareholders may have.
The vote of every shareholder is important to us. Please sign and return
the enclosed appointment of proxy form promptly in the postage-paid envelope
provided, regardless of whether you are able to attend the Annual Meeting in
person. If you attend the Annual Meeting, you may vote in person even if you
have already mailed your Proxy.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, I wish to thank you for your continued support.
Sincerely yours,
/s/ Allan T. Bach
Allan T. Bach
President and Chief Executive Officer
<PAGE> 3
RELIANCE BANCSHARES, INC.
3140 SOUTH 27TH STREET
MILWAUKEE, WISCONSIN 53215
(414) 671-2222
------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 21, 1997
------------------------------------------------
TO THE HOLDERS OF COMMON STOCK OF RELIANCE BANCSHARES, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of Reliance Bancshares, Inc. (the "Company") will be held on
Tuesday, October 21, 1997, at 2:00 p.m., Milwaukee time, at the Clarion Hotel &
Conference Center (formerly the Quality Inn Airport), 5311 South Howell Avenue,
Milwaukee, Wisconsin 53207.
The Annual Meeting is for the purpose of considering and voting upon the
following matters, all of which are set forth more completely in the
accompanying Proxy Statement:
1. The election of one director for a three-year term and until
his successor is elected;
2. The ratification of the appointment of Schenck & Associates,
S.C. (the successor to Meier, Clancy, George & Co. LLP following the
merger of Meier, Clancy, George & Co. LLP with and into Schenck &
Associates, S.C.) as independent auditors of the Company for the
fiscal year ending June 30, 1998; and
3. Such other matters as may properly come before the Annual Meeting
or any adjournments or postponements thereof. The Board of Directors
is not aware of any other such business.
The Board of Directors has established September 5, 1997 as the record
date for the determination of shareholders entitled to notice of and to vote at
the Annual Meeting and any adjournments or postponements thereof. Only
shareholders of record as of the close of business on that date will be
entitled to vote at the Annual Meeting or any adjournments or postponements
thereof. In the event there are not sufficient votes for a quorum or to
approve or ratify any of the foregoing proposals at the time of the Annual
Meeting, the Annual Meeting may be adjourned or postponed in order to permit
further solicitation of proxies by the Company.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Carol A. Barnharst
Milwaukee, Wisconsin Carol A. Barnharst
September 17, 1997 Vice President, Chief Financial Officer,
Secretary and Treasurer
================================================================================
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. YOUR VOTE IS IMPORTANT.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND RETURN THE ENCLOSED PROXY FORM PROMPTLY IN THE ENVELOPE PROVIDED.
================================================================================
<PAGE> 4
RELIANCE BANCSHARES, INC.
3140 SOUTH 27TH STREET
MILWAUKEE, WISCONSIN 53215
(414) 671-2222
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 21, 1997
------------------------------
This Proxy Statement is being furnished to holders of common stock, $1.00
par value per share (the "Common Stock") of Reliance Bancshares, Inc. (the
"Company") in connection with the solicitation on behalf of the Board of
Directors of the Company of proxies to be used at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held on Tuesday, October 21, 1997, at
2:00 p.m., Milwaukee time, at the Clarion Hotel & Conference Center (formerly
the Quality Inn Airport), 5311 South Howell Avenue, Milwaukee, Wisconsin 53207,
and at any adjournments or postponements thereof.
The 1997 Annual Report to Shareholders, including the consolidated
financial statements for the fiscal year ended June 30, 1997, accompanies this
Proxy Statement and appointment form of proxy (the "Proxy") which are first
being mailed to shareholders on or about September 17, 1997.
Only shareholders of record as of the close of business on September 5,
1997 (the "Voting Record Date") will be entitled to vote at the Annual Meeting.
On the Voting Record Date, there were 2,472,075 shares of Common Stock
outstanding, and the Company had no other class of securities outstanding.
The presence, in person or by Proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. As to the election of a director
for a term expiring in the year 2000, the Proxy being provided by the Board of
Directors enables a shareholder to vote for the election of the nominee
proposed by the Board, or to withhold authority to vote for the nominee
proposed by the Board. Article VI of the Company's Articles of Incorporation
provides that there will be no cumulative voting by shareholders for the
election of the Company's directors. Under the Wisconsin Business Corporation
Law, directors are elected by a plurality of the votes cast with a quorum
present. The affirmative vote of a majority of the total votes cast in person
or by proxy is necessary to ratify the appointment of Schenck & Associates,
S.C. (the successor to Meier, Clancy, George & Co. LLP following the merger of
Meier, Clancy, George & Co. LLP with and into Schenck & Associates, S.C.) as
independent auditors for the fiscal year ending June 30, 1998. Abstentions are
included in the determination of shares present and voting for purposes of
whether a quorum exists, while broker non-votes are not. Neither abstentions
nor broker non-votes are counted in determining whether a matter has been
approved. In the event there are not sufficient votes for a quorum or to
approve or ratify any proposal at the time of the Annual Meeting, the Annual
Meeting may be adjourned or postponed in order to permit the further
solicitation of proxies.
<PAGE> 5
As provided in the Company's Articles of Incorporation, record holders of
Common Stock who beneficially own in excess of 10% of the outstanding shares of
Common Stock (the "10% Limit") are not entitled to any vote in respect of the
shares held in excess of the 10% Limit. A person or entity is deemed to
beneficially own shares owned by an affiliate of, as well as such persons
acting in concert with, such person or entity. The Company's Articles of
Incorporation authorize the Board to make all determinations necessary to
implement and apply the 10% Limit, including determining whatever persons or
entities are acting in concert. The provisions of the Company's Articles of
Incorporation relating to the 10% Limit do not apply to an acquisition of more
than 10% of the shares of Common Stock if such acquisition has been approved by
a majority of disinterested directors; provided such approval shall be
effective only if obtained at a meeting where a quorum of disinterested
directors is present.
Shareholders are requested to vote by completing the enclosed Proxy and
returning it signed and dated in the enclosed postage-paid envelope.
Shareholders are urged to indicate their votes in the spaces provided on the
Proxy. Proxies solicited by the Board of Directors of the Company will be
voted in accordance with the directions given therein. Where no instructions
are given, signed proxies will be voted FOR the election of the nominee for
director named in this Proxy Statement and FOR the ratification of the
appointment of Schenck & Associates, S.C. as independent auditors of the
Company for the fiscal year ending June 30, 1998. Returning your completed
Proxy will not prevent you from voting in person at the Annual Meeting should
you be present and wish to do so.
Any shareholder giving a Proxy has the power to revoke it any time before
it is exercised by: (i) filing with the Secretary of the Company written
notice thereof (Carol A. Barnharst, Secretary, Reliance Bancshares, Inc., 3140
South 27th Street, Milwaukee, Wisconsin 53215); (ii) submitting a duly
executed Proxy bearing a later date; or (iii) appearing at the Annual Meeting
and giving the Secretary notice of his or her intention to vote in person. If
you are a shareholder whose shares are not registered in your own name, you
will need additional documentation from your record holder to vote personally
at the Annual Meeting. Proxies solicited hereby may be exercised only at the
Annual Meeting and any adjournments or postponements thereof and will not be
used for any other meeting.
The cost of solicitation of proxies by mail on behalf of the Board of
Directors will be borne by the Company. Proxies also may be solicited by
personal interview or by telephone, in addition to the use of the mails by
directors, officers and regular employees of the Company and Reliance Savings
Bank (the "Bank"), without additional compensation therefor. The Company also
has made arrangements with brokerage firms, banks, nominees and other
fiduciaries to forward proxy solicitation materials for shares of Common Stock
held of record by the beneficial owners of such shares. The Company will
reimburse such holders for their reasonable out-of-pocket expenses.
Proxies solicited hereby will be returned to the Board of Directors and
will be tabulated by inspectors of election designated by the Board of
Directors who will not be employed by, or a director of, the Company or any of
its affiliates.
-2-
<PAGE> 6
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of shares of
Common Stock as of the Voting Record Date by: (i) each shareholder known to
the Company to beneficially own more than 5% of the shares of Common Stock
outstanding, as disclosed in certain reports regarding such ownership filed
with the Company and with the Securities and Exchange Commission (the "SEC") in
accordance with Sections 13(d) or 13(g) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"); (ii) each director of the Company; (iii) the
executive officer of the Company appearing in the Summary Compensation Table
below; and (iv) all directors and executive officers as a group. Members of
the Board of Directors of the Company also serve as directors of the Bank.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
NAME OWNED (1) PERCENT OF CLASS
------ ----------- ----------------
<S> <C> <C>
Reliance Savings Bank Employee Stock
Ownership Trust (5) ..................... 89,125 3.5%
Jerome H. Davis (6) ....................... 142,700 5.6
Allan T. Bach (2)(3)(4) ................... 61,720 2.5
Carol A. Barnharst (2)(3)(4) .............. 59,239 2.4
O. William Held (2) ....................... 40,404 1.6
John T. Lynch (2) ......................... 44,535 1.8
Marjorie A. Spicuzza (2)(7) ............... 44,535 1.8
All directors and executive officers
as a group (5 persons) .................. 250,433 9.9%
</TABLE>
- ---------------------
(1) Unless otherwise indicated, includes shares of Common Stock held directly
by the individuals as well as by members of such individuals' immediate
family who share the same household, shares held in trust and other
indirect forms of ownership over which shares the individuals exercise
sole or shared voting power and/or investment power. Fractional shares of
Common Stock held by certain executive officers under the Reliance Savings
Bank Employee Stock Ownership Plan (the "ESOP") have been rounded to the
nearest whole share.
(2) Includes shares of Common Stock which the named individuals and certain
executive officers have the right to acquire within 60 days of the Voting
Record Date pursuant to the exercise of stock options: Mr. Bach - 13,285
shares; Ms. Barnharst - 13,285 shares; Mr. Held - 13,285 shares; Mr. Lynch
- 13,285 shares; and Ms. Spicuzza - 13,285 shares. Does not include
options to purchase shares of Common Stock which do not vest within 60
days of the Voting Record Date which have been awarded to executive
officers and directors under the Reliance Bancshares, Inc. 1997 Stock
Option Plan (the "Stock Option Plan").
(3) Includes 16,393 and 10,933 shares of Common Stock awarded to Mr. Bach and
Ms. Barnharst, respectively, during the fiscal year ended June 30, 1997
under the Reliance Savings Bank Recognition and Retention Plan (the
"Retention Plan"). Does not include 32,787 and 21,867 shares of Common
Stock awarded to Mr. Bach and Ms. Barnharst, respectively, under the
Retention Plan which have not yet been acquired by the Retention Plan;
therefore, although, Mr. Bach and Ms. Barnharst have a contractual right
to such shares, they do not yet have voting or dispositive power with
respect to such shares.
(4) Includes shares of Common Stock allocated to certain executive officers
under the ESOP, for which such individuals possess shared voting power, of
which approximately 7,042 shares and 3,771 shares have been allocated to
the accounts of Mr. Bach and Ms. Barnharst, respectively.
(5) Emjay Corporation (the "Trustee") is the trustee for the Reliance Savings
Bank Employee Stock Ownership Trust. The Trustee's address is 725 West
Glendale Avenue, Glendale, Wisconsin 53209.
(6) Based upon a Schedule 13D, dated May 22, 1997, filed with the Company
pursuant to the Exchange Act by Mr. and Mrs. Jerome H. Davis. Mr. and
Mrs. Davis' residence is located at 11 Baldwin Farms North, Greenwich, CT
06831.
(7) Of the 31,250 shares indicated as beneficially owned by Ms. Spicuzza,
10,000 are owned by her sister who has sole voting and investment power
over such shares, and as to which Ms. Spicuzza disclaims beneficial
ownership.
-3-
<PAGE> 7
MATTERS TO BE VOTED ON AT THE ANNUAL MEETING
MATTER 1.
ELECTION OF DIRECTORS
Pursuant to the Articles of Incorporation of the Company, at the first
annual meeting of shareholders of the Company held on October 28, 1996,
directors of the Company were divided into three classes as equal in number as
possible. The director of the first class was elected to hold office for a
term expiring at the first succeeding annual meeting, directors of the second
class were elected to hold office for a term expiring at the second succeeding
annual meeting and directors of the third class were elected to hold office for
a term expiring at the third succeeding annual meeting, and in each case until
their successors are elected and qualified. At each subsequent annual meeting
of shareholders, one class of directors, or approximately one-third of the
total number of directors, will be elected for a term of three years. There
are no family relationships among the directors and/or executive officers of
the Company. The person being nominated as a director is not being proposed
for election pursuant to any agreement or understanding between any person and
the Company.
Unless otherwise directed, each Proxy executed and returned by a
shareholder will be voted FOR the election of the nominee for director listed
below. If the person named as nominee should be unable or unwilling to stand
for election at the time of the Annual Meeting, the proxies will nominate and
vote for any replacement nominee recommended by the Board of Directors. At
this time, the Board of Directors knows of no reason why the nominee listed
below may not be able to serve as a director if elected.
The following tables present information concerning the nominee for
director and continuing directors, including tenure as a director of the Bank.
All of the directors have served as a director of the Company since the
Company's formation in November 1995.
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY DIRECTOR
AND PRINCIPAL OCCUPATION OF THE BANK
NAME AGE DURING THE PAST FIVE YEARS SINCE
---- --- -------------------------- --------
NOMINEE FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2000
<S> <C> <C> <C>
John T. Lynch 63 Director of the Company and the 1988
Bank; From 1984 to 1995, partner
in the law firm of Duggan Lynch &
Fons in Milwaukee, Wisconsin;
currently a solo practitioner.
INFORMATION WITH RESPECT TO CONTINUING DIRECTORS
DIRECTORS WHOSE TERMS EXPIRE IN 1998
Allan T. Bach 63 Chairman of the Board of Directors 1991
of the Company and President, Chief
Executive Officer and Director of the
Company and the Bank.
</TABLE>
-4-
<PAGE> 8
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY DIRECTOR
AND PRINCIPAL OCCUPATION OF THE BANK
NAME AGE DURING THE PAST FIVE YEARS SINCE
---- --- -------------------------- --------
<S> <C> <C> <C>
O. William Held 67 Chairman of the Board of Directors 1985
of the Bank and Director of the
Company and the Bank; Prior to his
retirement in 1991, Mr. Held served
as the President and Chief Executive
Officer of the Bank from 1985 to 1991.
DIRECTORS WHOSE TERMS EXPIRE IN 1999
Carol A. Barnharst 53 Vice President, Chief Financial Officer, 1993
Secretary, Treasurer and Director of
the Company; Vice President, Chief
Financial Officer and Director of the
Bank; Ms. Barnharst has served as
Vice President of the Bank since 1981
and as Chief Financial Officer of the
Bank since 1994.
Marjorie A. Spicuzza 72 Director of the Company and the Bank; 1980
Prior to her retirement in 1985, Ms.
Spicuzza served as the President and Chief
Executive Officer of the Bank from 1980
to 1985.
</TABLE>
THE AFFIRMATIVE VOTE OF A PLURALITY OF THE VOTES CAST IS REQUIRED FOR THE
ELECTION OF DIRECTORS. UNLESS OTHERWISE SPECIFIED, THE SHARES OF COMMON STOCK
REPRESENTED BY THE PROXIES SOLICITED HEREBY WILL BE VOTED IN FAVOR OF THE
ELECTION OF THE ABOVE-DESCRIBED NOMINEE. THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE FOR ELECTION OF THE NOMINEE FOR DIRECTOR.
MATTER 2.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Company's independent auditors for the fiscal year ended June 30, 1997
were Meier, Clancy, George & Co. LLP. The Board of Directors of the Company
has reappointed Schenck & Associates, S.C. (the successor to Meier, Clancy,
George & Co. LLP following the merger of Meier, Clancy, George & Co. LLP with
and into Schenck & Associates, S.C.) to perform the audit of the Company's
financial statements for the fiscal year ending June 30, 1998. Representatives
of Schenck & Associates, S.C. will be present at the Annual Meeting and will be
given the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from the Company's shareholders.
UNLESS MARKED TO THE CONTRARY, THE SHARES OF COMMON STOCK REPRESENTED BY
THE ENCLOSED PROXY WILL BE VOTED FOR RATIFICATION OF THE APPOINTMENT OF SCHENCK
& ASSOCIATES, S.C. AS THE INDEPENDENT AUDITORS OF THE COMPANY. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF SCHENCK &
ASSOCIATES, S.C. AS THE INDEPENDENT AUDITORS OF THE COMPANY.
-5-
<PAGE> 9
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Company was organized on November 10, 1995. Regular meetings of the
Board of Directors of the Company generally are held on a monthly basis.
During the fiscal year ended June 30, 1997, the Board of Directors of the
Company held twelve regular meetings. No incumbent director attended fewer
than 75% of the aggregate total number of meetings of the Board of Directors
held and the total number of committee meetings on which such director served
during the fiscal year ended June 30, 1997.
The Board of Directors of the Company has a standing Audit Committee and
Compensation Committee. The Audit Committee consists of Messrs. O. William
Held, John T. Lynch and Ms. Marjorie A. Spicuzza. The Audit Committee reviews
the scope and timing of the audit of the Company's financial statements by the
Company's independent public accountants and will review with the independent
public accountants the Company's management policies and procedures with
respect to auditing and accounting controls. The Audit Committee also will
review and evaluate the independence of the Company's accountants, and
recommend to the Board the engagement, continuation or discharge the Company's
accountants. In addition, the Audit Committee will direct the activities of
the Bank's internal audit. The Company's Audit Committee met once during the
fiscal year ended June 30, 1997.
The Board of Directors of the Bank has established a Compensation
Committee consisting of Messrs. O. William Held, John T. Lynch and Ms. Marjorie
A. Spicuzza who are neither officers nor employees of the Company or the Bank
("Outside Directors"). The Compensation Committee of the Bank met once during
the fiscal year ended June 30, 1997. During the fiscal year ended June 30,
1997, all executive officer compensation was paid by the Bank and the
compensation policies were determined by the Compensation Committee of the
Bank, and the Company did not pay separate compensation to its executive
officers. As the Company currently does not anticipate paying separate
compensation to its officers during the upcoming fiscal year, compensation
policies will continue to be determined by the Compensation Committee of the
Bank.
The entire Board of Directors of the Company acted as a Nominating
Committee for the selection of the nominee for director to stand for election
at the Annual Meeting. The Board, acting as the Nominating Committee, met in
August, 1997 to consider and recommend the nominee for director to stand for
election at the Annual Meeting. The Company's By-laws allow for shareholder
nominations of the directors and require such nominations be made pursuant to
timely notice in writing to the Secretary of the Company. See "Shareholder
Proposals for the 1998 Annual Meeting."
-6-
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
During the fiscal year ended June 30, 1997, the Company did not pay
separate compensation to its officers. Separate compensation will not be paid
to officers of the Company until such time as the officers of the Company
devote significant time to separate management of Company affairs, which is not
expected to occur until the Company becomes actively involved in additional
significant business beyond the Bank.
The following table summarizes the total compensation paid by the Bank to
its Chief Executive Officer during the Bank's fiscal years ended June 30, 1995,
1996 and 1997. The Bank's next highest paid executive officers' compensation
(salary and bonus) did not exceed $100,000 for either of the Bank's fiscal
years ended June 30, 1996 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION(1) COMPENSATION AWARDS
--------------- ----------------------
VALUE OF NUMBER OF
RESTRICTED SHARES
NAME AND STOCK SUBJECT TO ALL OTHER
PRINCIPAL POSITION YEAR SALARY AWARDS(2) OPTIONS(3) COMPENSATION(4)
- ------------------------ -------- --------------- --------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Allan T. Bach........... 1997 $104,018 $384,096 39,857 $48,071
President and Chief 1996 102,156 -- -- 6,539
Executive Officer of the 1995 76,193 -- -- --
Company and the Bank
</TABLE>
- -----------------------
(1) Perquisites provided to Mr. Bach by the Bank did not exceed the lesser of
$50,000 or 10% of Mr. Bach's total annual salary and bonus during the
fiscal years ended June 30, 1995, 1996 and 1997, and accordingly, are not
included.
(2) The amount shown in this column represents the value of vested and
unvested shares of Common Stock awarded under the Retention Plan during
the fiscal year ended June 30, 1997, calculated by multiplying the value
of the Common Stock on the date of grant ($7.81) by the number of shares
of Common Stock awarded (49,180 shares). The number and vesting schedule
for the shares awarded to Mr. Bach are as follows: (i) 16,393 -
(5/15/97); (ii) 16,393 - (5/15/98); and (iii) 16,394 - (5/15/99).
Recipients of awards under the Retention Plan are entitled to payment of
any dividends on unvested shares. The value of the vested and unvested
Retention Plan Shares held by Mr. Bach at June 30, 1997 was $412,128 based
on 49,180 shares and the value of the Common Stock on that date ($8.38 per
share).
(3) The amount shown in this column represents the total number of shares of
Common Stock subject to options granted (both vested and unvested) under
the Stock Option Plan during the fiscal year ended June 30, 1997.
(4) The amount shown in this column for the fiscal year ended June 30, 1996
represents the Bank's contribution on behalf of the named executive
officer under the ESOP. The amount for the fiscal year ended June 30,
1997 represents the allocation to the named executive officer's ESOP
account as a result of a special distribution of $3.00 per share paid by
the Company to its shareholders in November 1996 (see "Benefits - Employee
Stock Ownership Plan and Trust").
-7-
<PAGE> 11
EMPLOYMENT AGREEMENTS
In connection with the conversion of the Bank from a state-chartered
mutual savings bank to a state-chartered stock savings bank which was
consummated on April 18, 1996 (the "Conversion"), the Bank entered into a
three-year employment agreement with Mr. Allan T. Bach. The employment
agreement is intended to ensure that the Bank maintains stable and competent
management.
Under the employment agreement, which became effective upon consummation
of the Conversion, the base salary for Mr. Bach is $108,656. The base salary
may be increased by the Bank's Board of Directors, but may not be reduced
except as part of a general pro rata reduction in compensation for all
executive officers. In addition to the base salary, the agreement provides for
payments from other Bank incentive compensation plans, and provides for other
benefits, including participation in any group health, life, disability or
similar insurance program and in any pension, profit-sharing, employee stock
ownership plan, deferred compensation, 401(k) or other retirement plans
maintained by the Bank. The agreement also provides for participation in any
stock-based incentive programs made available to executive officers of the
Bank. The agreement may be terminated by the Bank upon death, disability or
retirement; for cause at any time; or in certain events specified by the
regulations issued by the Wisconsin Department of Financial Institutions,
Division of Savings and Loan ("DFI-DSL"). If the Bank terminates the agreement
other than for death, disability, retirement or cause, Mr. Bach is entitled to
severance pay in the amount of two years' base salary (based on the highest
compensation in effect within the three years preceding the date of
termination) together with other compensation and benefits in which he was
vested at the termination date.
The agreement provides for severance payments if Mr. Bach's employment
terminates following a change in control. Under the agreement, a "Change in
Control" generally is defined to include any change in control required to be
reported under the federal securities laws as well as: (i) the acquisition by
any person of 25% or more of the Company's outstanding voting securities; or
(ii) a change in a majority of the directors of the Company during any
consecutive two-year period without the approval of at least two-thirds of the
persons who were directors at the beginning of such period. In the event of a
Change in Control, Mr. Bach may terminate employment for "good reason," which
includes: (i) a material change in his duties, responsibilities or titles; (ii)
a reduction in base salary; (iii) a geographic change in principal office
location; or (iv) a reduction in incentives or other benefits available to him.
In the event of such termination, Mr. Bach may receive severance pay for the
longer of the unexpired term of the agreement or 36 months, based upon his
highest base salary within the three years preceding termination plus bonus and
incentive compensation based on the last calendar year. In addition, Mr. Bach
is entitled to all qualified retirement and other benefits in which he was
vested, and additional retirement benefits under all qualified plans to which
he would have been entitled had he continued employment through the
then-remaining employment term. If the severance payments following a Change
in Control would constitute "parachute payments" within the meaning of Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended ("Internal Revenue
Code"), and the present value of such "parachute payments" equals or exceeds
three times Mr. Bach's average annualized includable income for the five
calendar years preceding the year in which a Change in Control occurred, the
severance payments shall be reduced to an amount equal to the present value of
2.99 times the average annual compensation paid to Mr. Bach during the five
calendar years immediately preceding such Change in Control.
-8-
<PAGE> 12
BENEFITS
INSURANCE PLANS
All full-time employees of the Bank are eligible for comprehensive health
insurance commencing upon the completion of three full months of employment
with the Bank. After three full months of employment, full-time employees also
are covered as a group for life insurance. The Bank pays 100% of the cost of
health insurance for single and family coverage for employees and executive
officers of the Bank. The Bank pays the entire cost of life insurance for all
employees.
DEFINED BENEFIT PLAN
The Bank participates in the Financial Institutions Retirement Fund
("FIRF"), a multiple employer, defined benefit plan qualified within the
meaning of Section 401(a) of the Internal Revenue Code. FIRF participation
generally is limited to employers who are engaged in the financial services
industry. FIRF is administered by a board of directors comprised of the
President of FIRF, the Presidents of the twelve Federal Home Loan Banks and
twelve other persons who are representatives of employers participating in
FIRF. Executive officers and directors of the Bank are not employed by FIRF.
In order to be eligible to participate in the FIRF, an employee must not be
compensated on an hourly basis, have attained the age of 21 and completed 1,000
hours of service in a twelve consecutive month period. Eligible employees
become vested after completion of five years of service. No participant
contributions are permitted.
Under the Bank's adoption agreement pursuant to which it participates in
FIRF, benefits for eligible employees are determined under the following
formula: 1.5% multiplied by the average annual compensation for the highest
five consecutive years of service multiplied by years of service. Benefits are
payable by FIRF: (i) upon separation from service with the Bank provided
applicable vesting and certain other conditions are met; and (ii) with respect
to a vested participant upon retirement, death, disability or other separation
from service. In the event separation from service is for reasons other than
retirement, death or disability, benefit commencement will be deferred.
Pursuant to FIRF regulations, normal retirement age is 65. However, a vested
participant may retire as early as age 45 but his or her benefit will be
reduced by 3% for each year his or her retirement age precedes age 65. If a
participant continues working after age 65, the benefit otherwise payable at
actual retirement is increased by 2% for each year of service after age 65.
The plan provides for pre-retirement survivor benefits as required by the
Internal Revenue Code. Further, in the event of death, the plan provides for
death benefits in an amount equal to the last annual salary plus 10% of such
salary for each year of service up to a maximum amount of three times such
salary, and in the event of death after retirement, the difference, if any,
between twelve times annual pension payments less the amount of pension
payments made prior to such death. In the event of disability, a vested
participant shall receive the greater of the then accrued benefit payable in
annuity form or 30% of the average annual compensation for the highest five
consecutive years of service. Benefits are payable in annuity form and there
is no lump sum settlement option. The forms of annuities available are the
joint and survivor annuity form required by the Internal Revenue Code and,
assuming appropriate spousal waivers, a single life annuity, a ten-year certain
annuity, with or without survivor option, and a survivor annuity with a
contingent annuitant other than a spouse.
-9-
<PAGE> 13
The following table sets forth the estimated annual benefits payable under
FIRF on retirement at normal retirement age for the compensation levels and
number of years of service noted:
<TABLE>
<CAPTION>
FINAL AVERAGE PAY 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ----------------- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 3,750 $ 7,500 $ 11,250 $ 15,000 $ 18,750 $ 22,500 $ 26,250
75,000 5,625 11,250 16,875 22,500 28,125 33,750 39,375
100,000 7,500 15,000 22,500 30,000 37,500 45,000 52,500
125,000 9,375 18,750 28,125 37,500 46,875 56,250 65,625
</TABLE>
Maximum annual pension benefits are limited under Section 415 of the Internal
Revenue Code to the lesser of: (i) $125,000 currently (subject to future
adjustment by the United States Secretary of the Treasury based on cost of
living factors); or (ii) 100% of the participant's average annual compensation
for the three most recent consecutive Plan Years (as defined in the FIRF), each
reduced by 10% per year for each year of service less than ten. These benefits
are not integrated with social security or other benefits.
FIRF assets are held in a single trust funded through the aggregate
contributions of all participating employers. All assets of FIRF are available
to pay the benefits of any retiree. Under funding rules established by FIRF,
the Bank has been credited with future employer contribution offsets ("FECO").
The Bank's obligation to make periodic contributions to fund benefits accrued
under FIRF for such period for its employees has been met for the last several
years by applying such FECO against the amounts otherwise due as a
contribution. It is anticipated that the Bank will continue to cause its
contribution obligations to be met, in whole or in part, through the use of
such FECO for as long as FECO credits are available to the Bank.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
The Bank has established the Reliance Savings Bank Employee Stock
Ownership Plan (the "ESOP") for eligible employees of the Bank. As part of the
Conversion, the ESOP borrowed funds from the Company to purchase approximately
3.5% of the Common Stock issued in the Conversion, or 89,125 shares of Common
Stock. Collateral for the loan is the Common Stock purchased by the ESOP. The
Bank will make scheduled discretionary cash contributions to the ESOP
sufficient to amortize the principal and pay interest on the loan. The loan
will be repaid principally from the Bank's contributions to the ESOP over a
period of 15 years. Shares purchased by the ESOP are held in a suspense
account for allocation among participants as the loan is repaid.
Contributions to the ESOP and shares released from the suspense account in
an amount proportionate to the repayment of principal and interest on the ESOP
loan will be allocated among participants on the basis of compensation in the
year of allocation. Shares awarded under the ESOP will not become vested until
the participants have completed five years of service (including past years of
service), which at such time, the shares will then become 100% vested.
Participants also become 100% vested on death, disability or attainment of age
65. Forfeitures will be reallocated among the remaining participating
employees in the same proportion as contributions. Benefits may be payable
upon death, retirement, early retirement, disability or separation from
service. Benefits may be paid either in shares of Common Stock or in cash.
-10-
<PAGE> 14
During the fiscal year ended June 30, 1997, the ESOP received $267,375 as
a result of a special distribution of $3.00 per share paid by the Company to its
shareholders in November 1996 ("Special Distribution"). The amount received
from the Special Distribution was used by the ESOP to pay principal and interest
on the ESOP loan. As a result, 38,891 shares of Common Stock were released from
the suspense account and were available for allocation to eligible participants'
accounts; however, due to Internal Revenue Code limitations, only 14,261 shares
of the Common Stock released from the suspense account were allocated to
eligible participants' accounts during fiscal 1997, and the remaining 24,630
shares of Common Stock are held in reserve. The shares of Common Stock held in
reserve will be allocated to eligible participants' accounts within the
limitations of the Internal Revenue Code over the next few years. In addition,
due to the increased payment on the ESOP loan during fiscal 1997 as a result of
the Special Distribution, payments on the ESOP loan will be temporarily reduced
as the ESOP will make interest-only payments until the year 2001.
Emjay Corporation is the trustee for the ESOP (the "Trustee"). The Bank's
Benefits Committee, consisting of Messrs. O. William Held, John T. Lynch and
Ms. Marjorie A. Spicuzza, will instruct the Trustee regarding investment of
funds contributed to the ESOP. The Trustee will vote all allocated shares held
in the ESOP in accordance with the instructions of participating employees.
The Trustee will vote unallocated shares as directed by the Bank's Board of
Directors.
RELIANCE SAVINGS BANK RECOGNITION AND RETENTION PLAN
In fiscal 1997, the Board of Directors of the Company and the Bank adopted
the Reliance Savings Bank Recognition and Retention Plan (the "Retention Plan")
as a method of providing officers of the Bank with a proprietary interest in
the Company and to encourage such persons to remain with the Company and the
Bank. Shareholder approval of the Retention Plan was required by the DFI-DSL,
and at a Special Meeting of Shareholders of the Company held on May 15, 1997
(the "Special Meeting"), the Retention Plan was approved by the affirmative
vote of a majority of the shares of Common Stock represented in person or by
proxy and voted at the Special Meeting.
Employee directors and management officers of the Bank are eligible to
participate in the Retention Plan. Under the Retention Plan, 102,494 shares of
Common Stock were authorized to be awarded to eligible participants. On May
15, 1997, 81,980 shares of Common Stock were awarded to the Bank's officers,
and as of June 30, 1997, 20,514 shares of Common Stock were available for
future awards under the Retention Plan.
The Retention Plan will either acquire the shares granted and to be
granted: (i) through open market purchases (which have been approved by the
DFI-DSL); (ii) from previously authorized but unissued shares from the Company
at the then-current per share price; or (iii) through a combination of (i) and
(ii) above. If additional authorized but unissued shares of Common Stock are
issued to the Retention Plan, the interests of existing shareholders will be
diluted.
The Retention Plan is administered by a committee of the Board of
Directors (the "Committee") consisting of two or more "non-employee" directors
as that term is defined under Rule 16b-3 promulgated by the SEC under the
Exchange Act. The members of the Committee consist of Messrs. Held and Lynch,
and Ms. Spicuzza. In May 1997, officers of the Bank were granted 81,980 shares
of Common Stock which vest at the rate of approximately 33 1/3% on the date of
grant (May 15, 1997) and 33 1/3% per year on the first and second anniversaries
-11-
<PAGE> 15
of the date of grant. The vesting schedule for any future awards under the
Retention Plan will be determined by the Committee at the time of the award.
All Retention Plan awards, whether or not vested at such time, shall
become immediately 100% vested upon termination of employment due to death,
disability or "retirement." Retirement includes any termination of employment
which constitutes normal retirement or early retirement under the ESOP or upon
reaching age 65, or such later retirement as may be agreed upon between the
Bank and such officer. If an officer terminates employment with the Bank or
the Company for reasons other than due to death, disability, retirement or a
Change in Control of the Bank or the Company, unvested Retention Plan awards
will be forfeited.
In the event a recipient of Retention Plan awards is terminated following
a Change of Control of the Company, all Retention Plan awards, whether or not
vested at such time, shall become immediately 100% vested. "Change of Control"
is defined to mean a change of control of a nature that: (i) would be required
to be reported to the SEC by the Company in a current report on Form 8-K; or
(ii) results in a change in control of the Bank or the Company within the
meaning of the Home Owners Loan Act of 1933 and the rules and regulations
promulgated by the Office of Thrift Supervision (or its predecessor agency)
(the "OTS"). In addition, under the Retention Plan and Stock Option Plan, a
Change of Control shall be deemed to have occurred at such time as: (i) any
"person" (as the term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company or its
subsidiaries representing 25% or more of such entities' outstanding voting
securities; (ii) individuals who constitute the current Board of Directors of
the Company (the "Incumbent Board") cease for any reason to constitute at least
a majority thereof, provided that any person becoming a director subsequent to
the effective date of the Retention Plan and Stock Option Plan whose election
was approved by a vote of at least three-quarters of the directors comprising
the Incumbent Board, or whose nomination for election by the Company's
shareholders was approved by the same Nominating Committee serving under an
Incumbent Board, shall be considered a member of the Incumbent Board; or (iii)
a plan of reorganization, merger, consolidation, sale of all or substantially
all the assets of the Company or similar transaction in which the Company is
not the surviving institution; or (iv) any change of control of the Company
instituted by an entity or individual other than current management of the
Company.
Recipients of awards will receive dividends paid on, and may direct the
voting with respect to, shares of Common Stock awarded to them prior to
vesting. Unallocated shares will be voted by the Committee in the same
proportion as unvested awarded plan shares are voted. Vested shares of Common
Stock are distributed to recipients as soon as practicable.
In the event the number of shares of Common Stock are increased or
decreased or changed into or exchanged for a different number or kind of shares
of stock or other securities of the Company by reason of any stock dividend or
split, recapitalization, merger, consolidation, spin-off, reorganization,
combination or exchange of shares, or other similar corporate change, or other
increase or decrease in such shares without receipt or payment of any
consideration by the Company, the number of shares of Common Stock awarded and
the number of shares of Common Stock available for future awards under the
Retention Plan will be adjusted to prevent dilution or enlargement of the
rights granted under the Retention Plan.
-12-
<PAGE> 16
STOCK OPTION PLAN
In fiscal 1997, the Board of Directors of the Company adopted the Reliance
Bancshares, Inc. 1997 Stock Option Plan ("Stock Option Plan"). The purpose of
the Stock Option Plan is to provide directors, officers and employees of the
Company and the Bank with a proprietary interest in the Company, to recognize
management, employees and the Board of Directors for their contributions to the
success of the Bank and the Company, and to incite their future performance,
and to encourage such individuals to remain with the Bank. Shareholder
approval of the Stock Option Plan was required by the DFI-DSL, and at the
Special Meeting, the Stock Option Plan was approved by the affirmative vote of
a majority of the shares of Common Stock represented in person or by proxy and
voted at the Special Meeting.
Under the Stock Option Plan, all directors, officers and employees of the
Company and its subsidiaries are eligible to participate. The Stock Option
Plan authorizes the grant of: (i) options to purchase shares of Common Stock
intended to qualify as incentive stock options under Section 422 of the
Internal Revenue Code ("Incentive Stock Options"); (ii) options that do not so
qualify ("Non-Statutory Options"); and (iii) options which are exercisable only
upon a change in control of the Bank or the Company ("Limited Rights"). Under
the Stock Option Plan, options to purchase 256,234 shares of Common Stock, or
10% of the number of shares of Common Stock issued in connection with the
Conversion, were made available for granting to eligible participants. As of
June 30, 1997, options to purchase 221,066 shares of Common Stock had been
granted under the Stock Option Plan and options to purchase 35,168 shares of
Common Stock were available for future grants.
The following table sets forth certain information concerning the grant of
stock options to Mr. Bach under the Stock Option Plan during the fiscal year
ended June 30, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS
GRANTED TO PER SHARE
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME GRANTED(1) FISCAL YEAR(2) ($/SH) DATE
---- ---------- -------------- ------ ----
<S> <C> <C> <C> <C>
Allan T. Bach ..... 39,857 39.3% $7.81 5/15/07
</TABLE>
- -------------
(1) The options granted are subject to a vesting schedule under the Stock
Option Plan and are exercisable as follows: (i) 13,285 - (5/15/97); (ii)
13,286 - (5/15/98); and (iii) 13,286 - (5/15/99).
(2) Options to purchase 221,066 shares of Common Stock were granted to
eligible participants under the Stock Option Plan during the fiscal year
ended June 30, 1997, of which options to purchase 101,490 shares were
granted to officers and employees.
-13-
<PAGE> 17
The following table sets forth certain information concerning the exercise
of stock options granted under the Stock Option Plan by Mr. Bach during the
fiscal year ended June 30, 1997 and the number and value of his unexercised
stock options at June 30, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
NUMBER OF OPTIONS OPTIONS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Allan T. Bach 0 $ 0 13,285 26,572 $7,572 $15,146
</TABLE>
- ------------------
(1) The value of Unexercised In-the-Money Options is based upon the
difference between the fair market value of the stock options ($8.38) and
the exercise price of the options ($7.81) at June 30, 1997.
In the event of a stock split, reverse stock split or stock dividend, the
number of shares of Common Stock subject to the options awarded under the Stock
Option Plan and the exercise price per share under the option shall be adjusted
to reflect such increase or decrease in the total number of shares of Common
Stock outstanding.
The shares of Common Stock to be issued by the Company upon the exercise
of options by optionees may be acquired either: (i) through open market
purchases by the Company (subject to prior approval by the DFI-DSL); (ii) from
previously authorized but unissued shares of Common Stock; or (iii) through a
combination of (i) and (ii) above. If additional authorized but unissued
shares of Common Stock are issued upon the exercise of options, the interests
of existing shareholders will be diluted.
The Stock Option Plan is administered jointly by the Board of Directors of
the Company and a committee of the Board of Directors (the "Committee")
consisting of two or more "non-employee" directors as that term is defined
under Rule 16b-3 promulgated by the SEC under the Exchange Act. The Board of
Directors will make the following determinations with respect to grants to
non-employee directors and the Committee will make the following determinations
with respect to grants to eligible participants other than non-employee
directors: (i) the persons to whom options are granted; (ii) the terms at
which options are to be granted; (iii) the number of shares of Common Stock
subject to an individual grant; (iv) the vesting schedule applicable to
individual grants; and (v) the expiration date of the option (which shall not
be later than ten years from the date the option is granted). The exercise
price may be paid in cash or shares of Common Stock on the date of grant or
such greater amount as determined by the Committee with respect to grants to
eligible participants other than non-employee directors, and by the Board of
Directors with respect to grants to non-employee directors.
The options granted to directors, officers and employees under the Stock
Option Plan in fiscal 1997 vest at the rate of 33 1/3% per year commencing on
May 15, 1997, the date of shareholder approval of the Stock Option Plan.
-14-
<PAGE> 18
The aggregate fair market value of shares of Common Stock with respect to
which Incentive Stock Options may be granted to an eligible participant which
are exercisable for the first time in any calendar year may not exceed
$100,000. Any option granted in excess of such amount shall be treated as a
Non-Statutory Option. Incentive Stock Options granted to any person who is the
beneficial owner of more than 10% of the outstanding shares of Common Stock may
be exercised only for a period of five years following the date of grant and
the exercise price at the time of grant must be equal to at least 110% of the
fair market value of the Common Stock on the date of the grant.
No option granted in connection with the Stock Option Plan will be
exercisable after three months after the date on which the optionee ceases to
perform services for the Bank or the Company, except that in the event of
death, retirement or disability, all options, whether or not exercisable at
such time, may be exercisable for up to one year thereafter or such longer
period as determined by the Committee with respect to options held by eligible
participants other than non-employee directors and by the Board of Directors
with respect to options held by non-employee directors. Options held by
employees terminated for cause will terminate on the date of termination.
Termination "for cause" includes termination due to personal dishonesty,
incompetence, willful misconduct, the intentional failure to perform stated
duties, breach of fiduciary duty involving personal dishonesty, willful
violations of law, the entry of a final cease and desist order or the material
breach of any provisions of an employee's employment contract.
In the event of a Change of Control of the Company, all Incentive Stock
Options and Non-Statutory Options, whether or not exercisable at such time,
shall become immediately exercisable. If a participant is terminated due to
such Change of Control, all options shall be exercisable for a period of one
year following such Change of Control, or such longer period as determined by
the Committee; provided that in no event shall the period extend beyond the
option term and in the case of Incentive Stock Options, such options shall not
be eligible for treatment as Incentive Stock Options if exercised more than
three months following the date of a participant's cessation of employment.
In the event of a participant's termination of employment, the Company, if
requested by the participant, may elect to pay the participant, or beneficiary
in the event of death, in exchange for cancellation of the option, the amount
by which the fair market value of the Common Stock exceeds the exercise price
of the option on the date of the participant's termination of employment.
Incentive Stock Options may be transferred only by will or the laws of
descent and distribution. Non-Statutory Options may be transferred by
participants pursuant to the laws of descent and distribution and during a
participant's lifetime, by participants to members of their "immediate family"
(as defined in the Stock Option Plan), trusts for the benefit of members of
their immediate family and charitable institutions to the extent permitted
under Section 16 of the Exchange Act and subject to federal and state
securities laws.
DIRECTORS' COMPENSATION
DIRECTORS' FEES
The Board of Directors of the Company meets monthly and did not receive
directors' fees for meetings attended during the fiscal year ended June 30,
1997. For the fiscal year ended June 30, 1997, each member of the Board of
Directors of the Bank received a $1,250 directors' meeting fee per meeting
attended. The Chairman of the Board, Mr. O. William Held, received an
additional $200 for each Board of Directors meeting attended. In addition,
directors who are not also employees of the Bank received $250 for attending a
special meeting of the Board of Directors.
For certain non-employee directors who formerly were employees of the
Bank, the Bank pays the cost of their health insurance as follows: (i) Mr.
Held - 100% of the cost for single coverage ($2,628); and (ii) Ms. Spicuzza -
100% of the cost of her Medicare supplement ($3,138). The Bank does not pay
for health insurance coverage for Mr. Lynch.
-15-
<PAGE> 19
NON-QUALIFIED DEFERRED RETIREMENT PLAN FOR DIRECTORS
The Bank maintains the Reliance Savings Bank Non-qualified Deferred
Retirement Plan for Directors (the "Deferred Retirement Plan"), which became
effective June 30, 1994, whereby directors of the Bank can elect to defer
receipt of all or any portion of their directors' fees payable in each calendar
year (the "Deferred Benefit"). In addition, each director also is eligible to
receive a "Service Credit Benefit" upon retirement from active service on the
Board of Directors. Each director receives one service credit for each full
year of service on the Board of Directors, with a maximum of five service
credits. The "Service Credit Benefit" for each director equals $10,000 for each
service credit received. Directors Bach, Held, Lynch and Barnharst each have
accumulated three years of service under the Deferred Retirement Plan.
Director Spicuzza does not participate in the Deferred Retirement Plan.
The Deferred Benefit and Service Credit Benefit are payable upon the
director's termination of service with the Bank. Distributions of the Deferred
Benefit and Service Credit Benefit under the Deferred Retirement Plan are made
in equal monthly installments over a five-year period commencing the first
month after such termination of service; provided, however, that if a director
is terminated for cause, all rights such director may have to the Service
Credit Benefit will be forfeited. Distributions pursuant to the Deferred
Retirement Plan will be made in a lump sum upon termination of service due to
death or if such director dies prior to receipt of the entire Deferred Benefit
and/or Service Credit Benefit. The distributions also may be accelerated in
cases of medical emergency or a showing of good cause.
The Deferred Retirement Plan is administered by Northwestern Mutual Life
Insurance Company. The Bank has acquired permanent life insurance policies on
the lives of participants in the Deferred Retirement Plan to fund such plan.
The cash value of the policies totalled $202,891 at June 30, 1997. The
directors have no rights, title or interest in the insurance policies.
INDEBTEDNESS OF MANAGEMENT AND CERTAIN TRANSACTIONS
Current federal law requires that all loans or extensions of credit to
executive officers and directors must be made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with the general public and must not involve more than
the normal risk of repayment or present other unfavorable features. In
addition, loans made to a director or executive officer in excess of the
greater of $25,000 or 5% of the Bank's capital and surplus (up to a maximum of
$500,000) must be approved in advance by a majority of the disinterested
members of the Board of Directors.
The Bank's policy provides that all loans or extensions of credit to
executive officers and directors are to be made in the ordinary course of
business, on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and do not involve more than the normal risk of collectability
or present other unfavorable features. All loans to executive officers and
directors have been made by the Bank in the ordinary course of business and
were not made with favorable terms nor involved more than the normal risk of
collectability or presented unfavorable features. All loans or extensions of
credit to executive officers and directors were current as of June 30, 1997.
The Company and the Bank intend that all transactions in the future
between the Company and the Bank and executive officers, directors, holders of
10% or more of the shares of any class of common stock of the Company and
-16-
<PAGE> 20
affiliates thereof, will contain terms no less favorable to the Company or the
Bank than could have been obtained by them in arms' length negotiations with
unaffiliated persons and will be approved by a majority of independent outside
directors of the Company or the Bank, as applicable, not having any interest in
the transaction.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of the shares of Common
Stock outstanding, to file reports of ownership and changes in ownership with
the SEC and the National Association of Securities Dealers, Inc. Officers,
directors and greater than ten percent shareholders are required by regulation
to furnish the Company with copies of all Section 16(a) forms they file. Based
upon review of the information provided to the Company, the Company believes
that during the fiscal year ended June 30, 1997, officers, directors and
greater than ten percent shareholders complied with all Section 16(a) filing
requirements.
SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Any proposal which a shareholder wishes to have included in the proxy
materials of the Company relating to the 1998 annual meeting of the
shareholders of the Company, which is scheduled to be held in October 1998,
must be received at the principal executive offices of the Company, 3140 South
27th Street, Milwaukee, Wisconsin 53215, Attention: Carol A. Barnharst,
Secretary, no later than May 21, 1998. If such proposal is timely submitted
and is in compliance with all of the requirements of Rule 14a-8 under the
Exchange Act, it will be included in the proxy statement and set forth on the
form of proxy issued for such annual meeting of shareholders. It is urged that
any such proposals be sent certified mail, return receipt requested.
Shareholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the Exchange Act may be
brought before an annual meeting pursuant to Article VII of the Company's
Articles of Incorporation, which provides that: (i) with respect to proposals
to be brought before an annual meeting, such proposal must be received by the
Company not less than 60 days nor more than 90 days prior to the date of the
previous year's annual meeting of shareholders, or in the event no annual
meeting was held in the previous year, no later than ten days following the
date notice of the annual meeting is mailed to shareholders; and (ii) with
respect to proposals to be brought before a special meeting, not later than the
close of business on the tenth day following the date notice of such special
meeting is mailed to shareholders.
In accordance with Article VII of the Company's Articles of Incorporation,
the advance notice of a proposal described above must set forth certain
information, including the shareholder's name and address, as they appear on
the Company's record of shareholders, the class and number of shares of the
Company Common Stock beneficially owned by such shareholder, a brief
description of the proposed business, the reason for considering the business
at the shareholder meeting and any material interest of the shareholder in the
proposed business. In addition, with respect to nominations for election to
the Board of Directors made by a shareholder, in accordance with Article VII of
the Company's Articles of Incorporation and Article III of the Company's
By-laws, the following information must be provided: (i) the name and address
of the shareholder who intends to make the nomination and of the person(s) to
be nominated; (ii) a representation that the shareholder is a holder of record
of the stock of the Company entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting and to nominate the person(s)
specified in the notice; (iii) a description of all arrangements or
understandings between the shareholder and each nominee and any other person(s)
(naming such person(s)) pursuant to which the nomination(s) are to be made by
the
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<PAGE> 21
shareholder; (iv) such other information regarding each nominee proposed by
such shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the SEC; and (v) written consent of each nominee
to serve as a director of the Company if so elected.
OTHER MATTERS WHICH MAY PROPERLY
COME BEFORE THE ANNUAL MEETING
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as stated in the Notice of
Annual Meeting of Shareholders. If, however, other matters are properly
brought before the Annual Meeting or any adjournments or postponements thereof,
it is the intention of the persons named in the accompanying Proxy to vote the
shares represented thereby on such matters in accordance with their best
judgment.
A COPY OF THE FORM 10-KSB (WITHOUT EXHIBITS) FOR THE FISCAL YEAR ENDED
JUNE 30, 1997 IS FILED WITH THE SEC AND WILL BE FURNISHED WITHOUT CHARGE TO
SHAREHOLDERS OF RECORD UPON WRITTEN REQUEST TO RELIANCE BANCSHARES, INC., CAROL
A. BARNHARST, SECRETARY, 3140 SOUTH 27TH STREET, MILWAUKEE, WISCONSIN 53215.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Carol A. Barnharst
Milwaukee, Wisconsin Carol A. Barnharst
September 17, 1997 Vice President, Chief Financial Officer,
Secretary and Treasurer
================================================================================
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
================================================================================
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<PAGE> 22
RELIANCE BANCSHARES, INC.
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 21, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders (the "Annual Meeting") and the Proxy Statement and,
revoking any proxy heretofore given, hereby constitutes and appoints Messrs.
Allan T. Bach and O. William Held, and any of the other directors of Reliance
Bancshares, Inc. (the "Company"), to represent and to vote, as designated
below, all the shares of common stock, $1.00 par value per share ("Common
Stock"), of the Company held of record by the undersigned on September 5, 1997,
at the Annual Meeting which will be held on October 21, 1997, at 2:00 p.m.,
Milwaukee time, at the Clarion Hotel & Conference Center (formerly the Quality
Inn Airport), 5311 South Howell Avenue, Milwaukee, Wisconsin 53207, or any
adjustments or postponements thereof.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED BELOW, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE MATTERS
LISTED BELOW. If any other business is presented at the Annual Meeting or any
adjournments or postponements thereof, this proxy will be voted by the Board of
Directors of the Company in their best judgment. At the present time, the
Board of Directors of the Company knows of no other business to be presented at
the Annual Meeting.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE
RELIANCE BANCSHARES, INC. ANNUAL MEETING OF SHAREHOLDERS
Please mark your votes as in this example: [X]
1. ELECTION OF DIRECTOR
John T. Lynch
<TABLE>
<S> <C>
[ ] FOR nominee listed above [ ] WITHHOLD AUTHORITY
(except as noted to the contrary below) to vote for nominee listed above
</TABLE>
[INSTRUCTION: To withhold authority to vote for the nominee, write the
nominee's name in the space provided below].
----------------------------------------------------------
2. RATIFICATION OF THE APPOINTMENT OF SCHENCK & ASSOCIATES, S.C. (THE
SUCCESSOR TO MEIER, CLANCY, GEORGE & CO. LLP FOLLOWING THE MERGER OF
MEIER, CLANCY, GEORGE & CO. LLP WITH AND INTO SCHENCK & ASSOCIATES, S.C.)
AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING JUNE 30,
1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY
ADJOURNMENTS OR POSTPONEMENTS THEREOF.
Dated: ,1997
--------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
Signatures
IMPORTANT: Please sign your name exactly as it
appears hereon. When signing as an attorney,
administrator, agent, corporation, officer, executor,
trustee, guardian or similar position, please add
your full title to your signature. If shares of
common stock are held jointly, each holder may sign
but only one signature is required.
