<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 pursuant to 14a-11(c) or Rule 14a-12
Reliance Bancshares, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
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(4) Date filed:
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<PAGE> 2
RELIANCE BANCSHARES, INC.
3140 SOUTH 27TH STREET
MILWAUKEE, WISCONSIN 53215
(414) 671-2222
September 25, 1998
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 Monday, October 26, 1998, at 2:00 p.m., Milwaukee time, at the
Clarion Hotel & Conference Center, 5311 South Howell Avenue, Milwaukee,
Wisconsin.
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 on Form
10-KSB for the fiscal year ended June 30, 1998. Directors and officers of the
Company, as well as representatives of 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 26, 1998
- --------------------------------------------------------------------------------
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 Monday, October 26, 1998, at 2:00 p.m., Milwaukee time, at the Clarion Hotel
& Conference Center, 5311 South Howell Avenue, Milwaukee, Wisconsin.
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 two directors for three-year terms;
2. the ratification of the appointment of Schenck &
Associates, S.C. as independent auditors of the
Company for the fiscal year ending June 30, 1999; 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 9, 1998 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.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Carol A. Barnharst
Milwaukee, Wisconsin Carol A. Barnharst
September 25, 1998 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 26, 1998
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
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 Monday, October 26, 1998, at
2:00 p.m., Milwaukee time, at the Clarion Hotel & Conference Center, 5311 South
Howell Avenue, Milwaukee, Wisconsin, and at any adjournments or postponements
thereof.
The Company's 1998 Annual Report on Form 10-KSB, including the
consolidated financial statements of the Company for the fiscal year ended June
30, 1998, accompanies this Proxy Statement and appointment form of proxy (the
"Proxy"), which are first being mailed to shareholders on or about September 25,
1998.
Only shareholders of record as of the close of business on
September 9, 1998 (the "Voting Record Date") will be entitled to vote at the
Annual Meeting. On the Voting Record Date, there were 2,395,564 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 proposal to
elect two directors for a term expiring in the year 2001, the Proxy being
provided by the Board of Directors enables a shareholder to vote for the
election of the nominees proposed by the Board, or to withhold authority to vote
for one or both nominees 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 in person or by Proxy with a quorum
present. "Plurality" means that the two individuals with the largest number of
votes will be elected as directors. 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. as independent auditors for the fiscal year ending
June 30, 1999. 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. A "broker non-vote" will occur with respect to a
given proposal when a broker holding shares in street name (i.e., as nominee for
the beneficial owner) returns an executed Proxy (or voting directions)
indicating that the broker does not have discretionary authority to vote on a
proposal.
<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 NOMINEES 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, 1999. 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 (Attention: 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 and then doing so. 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 Company's wholly-owned subsidiary (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.
- --------------------------------------------------------------------------------
PENDING MERGER
- --------------------------------------------------------------------------------
On June 30, 1998, the Company signed a definitive Agreement
and Plan of Reorganization that provides for the acquisition of the Company and
thus the Bank by St. Francis Capital Corporation ("St. Francis"). Under the
terms of the definitive agreement, St. Francis will acquire all of the
outstanding shares of the Company through a merger transaction pursuant to which
the Company's shareholders will elect to receive either cash or shares of St.
Francis's common stock in exchange for their shares (the "Merger"). Consummation
of the transaction is subject to regulatory approval, approval of the Company's
shareholders and the satisfaction of certain other conditions.
2
<PAGE> 6
- --------------------------------------------------------------------------------
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
- --------------------------------------------------------------------------------
Shareholders of record as of the close of business on
September 9, 1998 are entitled to one vote for each share of Common Stock then
held. As of the Voting Record Date, the Company had 2,395,564 shares of Common
Stock issued and outstanding.
The following table sets forth the beneficial ownership of
shares of Common Stock as of the Voting Record Date by (i) each director of the
Company; (ii) the executive officer of the Company appearing in the Summary
Compensation Table below; and (iii) all directors and executive officers as a
group. Members of the Board of Directors of the Company also serve as directors
of the Bank. The Company does not know of any person who is the beneficial owner
of more than 5% of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES BENEFICIALLY
NAME OWNED(1) PERCENT OF CLASS
---- -------- ----------------
<S> <C> <C>
Directors:
Allan T. Bach(2)(3)(4).............................. 94,314 3.89%
Carol A. Barnharst(2)(3)(4)......................... 88,945 3.67%
O. William Held(2).................................. 53,690 2.22%
John T. Lynch (2)................................... 57,821 2.39%
Marjorie A. Spicuzza(2)(5).......................... 57,821 2.39%
All directors and executive officers
as a group (5 persons)............................ 352,591 14.56%
</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
- 26,571 shares; Ms. Barnharst - 26,571 shares; Mr. Held - 26,571
shares; Mr. Lynch - 26,571 shares; and Ms. Spicuzza - 26,571 shares.
Does not include options to purchase shares of Common Stock that do not
vest within 60 days of the Voting Record Date that have been awarded to
executive officers and directors under the Reliance Bancshares, Inc.
1997 Stock Option Plan (the "Stock Option Plan").
(3) Includes 32,786 and 21,866 shares of Common Stock awarded to Mr. Bach
and Ms. Barnharst, respectively, that have vested under the Reliance
Savings Bank Recognition and Retention Plan (the "Retention Plan").
Does not include shares of Common Stock awarded to Mr. Bach and Ms.
Barnharst, respectively, under the Retention Plan that do not vest
within 60 days of the Voting Record Date.
(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 9,957 shares and 9,258 shares have been
allocated to the accounts of Mr. Bach and Ms. Barnharst, respectively.
(5) Of the 57,821 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
- --------------------------------------------------------------------------------
PROPOSAL 1 - ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
Directors of the Company are divided into three classes as
equal in number as possible. The Company currently has five directors. At each
annual meeting of shareholders, one class of directors, or approximately
one-third of the total number of directors, are elected for a term of three
years. The Board of Directors has nominated for reelection as directors at the
Annual Meeting Allan T. Bach and O. William Held, each for a term of three
years. There are no family relationships among the directors and/or executive
officers of the Company. The persons being nominated as directors are not being
proposed for election pursuant to any agreement or understanding between those
persons and the Company.
Unless otherwise directed, each Proxy executed and returned by
a shareholder will be voted FOR the election of the nominees for director listed
below. If the nominees 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 nominees listed below may not be
able to serve as directors if elected.
The following table presents information concerning the
nominees 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 AND DIRECTOR
PRINCIPAL OCCUPATION DURING THE OF THE BANK
NAME AGE PAST FIVE YEARS SINCE
---- --- --------------- -----
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2001
<S> <C> <C> <C>
Allan T. Bach 65 Chairman of the Board of Directors of 1991
the Company and President, Chief
Executive Officer and Director
of the Company and the Bank.
O. William Held 69 Chairman of the Board of Directors of 1988
the Bank and Director of the Company
and Bank; Prior to his retirement in
1991, Mr. Held served as the
President and Chief Executive
Officer of the Bank from 1985
to 1991.
INFORMATION WITH RESPECT TO CONTINUING DIRECTORS
DIRECTORS WHOSE TERMS EXPIRE IN 1999
Carol A. Barnharst 55 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 74 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>
4
<PAGE> 8
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND DIRECTOR
PRINCIPAL OCCUPATION DURING THE OF THE BANK
NAME AGE PAST FIVE YEARS SINCE
---- --- --------------- -----
DIRECTOR WHOSE TERM EXPIRES IN 2000
<S> <C> <C> <C>
John T. Lynch 65 Director of the Company and the Bank; 1988
From 1984 to 1995, partner in
the law firm of Duggan Lynch &
Fons in Milwaukee, Wisconsin;
currently a solo practitioner.
</TABLE>
THE TWO INDIVIDUALS RECEIVING THE HIGHEST NUMBER OF VOTES CAST
WILL BE ELECTED AS DIRECTORS OF THE COMPANY. UNLESS OTHERWISE SPECIFIED, THE
SHARES OF COMMON STOCK REPRESENTED BY THE PROXIES SOLICITED HEREBY WILL BE VOTED
IN FAVOR OF THE ELECTION OF THE NOMINEES FOR DIRECTOR. THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF MESSRS. BACH AND HELD.
- --------------------------------------------------------------------------------
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
- --------------------------------------------------------------------------------
Regular meetings of the Board of Directors of the Company
generally are held on a monthly basis. During the fiscal year ended June 30,
1998, the Board of Directors of the Company held 20 regular and special
meetings. No 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,
1998.
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 of 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, 1998.
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, 1998. During the fiscal year ended
June 30, 1998, all executive officer compensation was paid by the Bank and the
compensation policies were 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 nominees for director to stand for
election at the Annual Meeting. The Board, acting as the Nominating Committee,
met in August, 1998 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 1999 Annual Meeting."
5
<PAGE> 9
- --------------------------------------------------------------------------------
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
During the fiscal year ended June 30, 1998, 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 if and 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, 1996, 1997 and 1998. 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, 1997 and 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL
COMPENSATION(1) LONG-TERM COMPENSATION
--------------- ----------------------
OTHER RESTRICTED SECURITIES
NAME AND ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY COMPENSATION(2) AWARDS OPTIONS(3) COMPENSATION(4)
------------------ ---- ------ --------------- -------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Allan T. Bach............ 1998 $115,156 $15,000 $ 94,877(5) 5,000(6) $24,840
President and Chief 1997 104,018 15,000 384,096(7) 39,857 50,764
Executive Officer of 1996 102,156 15,000 - -- 6,539
the 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, 1996, 1997 and 1998, and accordingly,
are not included.
(2) Directors fees.
(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, 1998.
(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 years ended June 30,
1997 and 1998 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.
(5) On April 8, 1998, Mr. Bach was awarded 10,257 shares of Common Stock
under the Retention Plan, subject to completion of the Merger.
Therefore, if the Merger is not completed, Mr. Bach will forfeit the
10,257 shares. The $94,877 is calculated by multiplying the fair market
value of the Common Stock on the date of grant ($9.25) by 10,257.
(6) On April 8, 1998, Mr. Bach was awarded 5,000 options to purchase shares
of Common Stock under the Stock Option Plan, subject to completion of
the Merger. Therefore, if the Merger is not completed, Mr. Bach will
forfeit the 5,000 options.
(7) The amount shown 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.
6
<PAGE> 10
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 Company and the
Bank entered into a three-year employment agreement with Mr. Allan T. Bach.
Effective May 8, 1998, Mr. Bach's employment agreement was amended to (i) extend
the term of the agreement until April 17, 2001, subject to annual renewal for a
one-year period with the approval of the Board of Directors of the Company and
the Bank and (ii) clarify certain provisions of the agreement. The employment
agreement is intended to ensure that the Company and the Bank maintain stable
and competent management.
Under the employment agreement, which became effective upon
consummation of the Conversion, the base salary for Mr. Bach is $115,156. The
base salary may be increased by the Company's and 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 Company and Bank bonus and other
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 Company and the
Bank. The agreement also provides for participation in any stock-based incentive
programs made available to executive officers of the Company and the Bank. The
agreement terminates upon Mr. Bach's death, disability or retirement. Mr. Bach's
employment may be terminated by the Company or the Bank for "cause" at any time
and the agreement terminates under certain circumstances specified by federal
banking law. If the Company or the Bank terminate the agreement other than for
Mr. Bach's death, disability, retirement or for cause or if Mr. Bach terminates
the agreement due to a failure by the Company or the Bank to comply with any
material provision of the agreement, Mr. Bach is entitled to severance pay in
the amount of two years' base salary (based on the highest latest compensation
in effect within the three years preceding the date of termination plus
one-twelfth of the bonus and incentive compensation paid to or vested in him for
his most recently completed calendar year of employment) together with other
compensation and benefits in which he was vested at the termination date. The
agreement also provides that Mr. Bach may voluntarily terminate his employment,
in which case he shall receive all compensation earned through his termination
date.
The agreement provides for severance payments if Mr. Bach's
employment terminates within twenty-four months 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 termination for "good reason" or if
the Company, the Bank or any successor company terminates Mr. Bach's employment
other than for cause, Mr. Bach will 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 his most recently completed calendar year of employment.
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 multiplied by the
7
<PAGE> 11
average annual compensation paid to Mr. Bach during the five calendar years
immediately preceding such Change in Control.
STOCK OPTIONS
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, 1998.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL OPTIONS
UNDERLYING GRANTED TO PER SHARE
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE
---- ------- ----------- ------ ----
<S> <C> <C> <C> <C>
Allan T. Bach........................ 5,000 21.5% $9.25 4/8/08
</TABLE>
- --------------------------------------------
(1) On April 8, 1998, Mr. Bach was granted 5,000 options to purchase Common
Stock of the Company, subject to completion of the Merger. If the
Merger is not completed, Mr. Bach will forfeit these 5,000 options. If
the Merger is completed, these 5,000 options will become immediately
exercisable on the date the Merger is completed.
The following table sets forth certain information concerning
the exercise by Mr. Bach of stock options granted under the Stock Option Plan
during the fiscal year ended June 30, 1998 and the number and value of his
unexercised stock options at June 30, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
--------------------------------------------- -------------------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Allan T. Bach 26,571 18,286 $16,607 $3,304
</TABLE>
- --------------------------------------------
(1) The value of Unexercised In-the-Money Options is based upon the
difference between the fair market value of the Common Stock underlying
the options at June 30, 1998 ($8.25) and the exercise price of the
options ($7.625 with respect to the exercisable options, $7.625 with
respect to 13,286 unexercisable options and $9.25 with respect to the
remaining 5,000 unexercisable options).
- --------------------------------------------------------------------------------
DIRECTOR'S COMPENSATION
- --------------------------------------------------------------------------------
DIRECTORS' FEES AND OTHER COMPENSATION
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, 1998. For the fiscal year ended June 30, 1998,
8
<PAGE> 12
each member of the Board of Directors of the Bank received a $1,250 fee per
Board meeting attended. The Chairman of the Board, Mr. O. William Held, received
an additional $200 for each Board meeting attended. In addition, directors who
are not also employees of the Bank received $2,000 for attending eight special
meetings 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). Upon their termination
of service on the Board of Directors in the case of Mr. Lynch and as an employee
in the case of Ms. Barnharst, the Bank will pay the cost of their health
insurance.
On April 8, 1998, each director of the Company was granted
5,000 options to purchase Common Stock of the Company at an exercise price of
$9.25 per share, which was the fair market value of the Common Stock on the date
of grant. The grant of the 5,000 options, however, is subject to completion of
the Merger. If the Merger is completed, these options will become immediately
exercisable on the date the Merger is completed. If the Merger is not completed,
the directors will forfeit these options.
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
four years of service under the Deferred Retirement Plan. Director Spicuzza does
not participate in the Deferred Retirement Plan. Interest is credited to the
account of each director under the Plan for each calendar year at the rate paid
by Reliance Savings Bank on 12 month certificates of deposit in effect as of
January 1 of that year.
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 demonstrated by the
director requesting the acceleration.
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 $216,104 at June 30, 1998.
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
9
<PAGE> 13
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, 1998.
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 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.
- --------------------------------------------------------------------------------
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
The Company's independent auditors for the fiscal year ended
June 30, 1998 were Schenck & Associates, S.C. The Board of Directors of the
Company has reappointed Schenck & Associates, S.C. to perform the audit of the
Company's financial statements for the fiscal year ending June 30, 1999.
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.
- --------------------------------------------------------------------------------
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, 1998, officers, directors
and greater than ten percent shareholders complied with all Section 16(a) filing
requirements.
10
<PAGE> 14
- --------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
- --------------------------------------------------------------------------------
Any proposal which a shareholder wishes to have included in
the proxy materials of the Company relating to the 1999 annual meeting of the
shareholders of the Company, which is scheduled to be held in October 1999, 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 20, 1999. 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 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 that 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.
11
<PAGE> 15
A COPY OF THE FORM 10-KSB FOR THE FISCAL YEAR ENDED JUNE 30,
1998 HAS BEEN FILED WITH THE SEC AND ACCOMPANIES THIS PROXY STATEMENT.
ADDITIONAL COPIES OF THE FORM 10-KSB MAY BE OBTAINED 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 25, 1998 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.
12
<PAGE> 16
RELIANCE BANCSHARES, INC.
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 26, 1998
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 Mr. John T.
Lynch and Ms. Carol A. Barnharst, 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 9, 1998, at the
Annual Meeting which will be held on October 26, 1998, at 2:00 p.m., Milwaukee
time, at the Clarion Hotel & Conference Center, 5311 South Howell Avenue,
Milwaukee, Wisconsin, or any adjournments 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 your votes as in this example: [X]
- DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED -
RELIANCE BANCSHARES, INC. 1998 ANNUAL MEETING OF SHAREHOLDERS
<TABLE>
<CAPTION>
<S><C>
1. ELECTION OF DIRECTORS 1 - Allan T. Bach 2 - O. William Held [_] FOR all nominees [_] WITHHOLD AUTHORITY
listed to the left to vote for all
(except as specified nominees listed.
below.
(Instruction: 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. RATIFICATION OF THE APPOINTMENT OF SCHENCK & [_] FOR [_] AGAINST [_] ABSTAIN
ASSOCIATES, S.C. AS INDEPENDENT AUDITORS OF THE
COMPANY FOR THE FISCAL YEAR ENDING JUNE 30, 1999.
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.
Check appropriate box Date No. of Shares
Indicate changes below: -------------------------
Address Change? [_] Name Change? [_]
[ ]
SIGNATURE(S) IN BOX
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.
</TABLE>
