SCHEDULE 14A
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 ss.240.14a-11(c) or ss.240.14a-12
FIRST SECURITYFED FINANCIAL, 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.
/ / Checkbox 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>
[FIRST SECURITYFED FINANCIAL LETTERHEAD]
April 13, 1999
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of First SecurityFed
Financial, Inc., I cordially invite you to attend the 1999 Annual Meeting of
Stockholders of the Company (the "Meeting"). The Meeting will be held at 7:00
p.m., Chicago, Illinois time, on May 12, 1999, at the Suma Hall located at 2457
W. Chicago Avenue, Chicago, Illinois 60622.
The attached Notice of Annual Meeting of Stockholders and Proxy Statement
discusses the business to be conducted at the Meeting. We have also enclosed a
copy of the Company's Annual Report to Stockholders. At the meeting we will
report on the Company's operations and outlook for the year ahead.
I encourage you to attend the Meeting in person. Whether or not you plan
to attend, however, PLEASE READ THE ENCLOSED PROXY STATEMENT AND THEN COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING POSTPAID
RETURN ENVELOPE AS PROMPTLY AS POSSIBLE. This will save the Company additional
expense in soliciting proxies and will ensure that your shares are represented
at the Meeting.
Thank you for your attention to this important matter.
Very truly yours,
/s/ Julian E. Kulas
JULIAN E. KULAS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
FIRST SECURITYFED FINANCIAL, INC.
936 NORTH WESTERN AVENUE
CHICAGO, ILLINOIS 60622-4695
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 1999
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of First SecurityFed Financial, Inc. ("First SecurityFed" or the
"Company") will be held at the Suma Hall located at 2457 W. Chicago Avenue,
Chicago, Illinois 60622, on May 12, 1999 at 7:00 p.m., Chicago, Illinois time. A
Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of:
1. The election of three directors of the Company;
2. The ratification of the appointment of Crowe, Chizek and Company LLP
as auditors for the Company for the fiscal year ending December 31,
1999; and
such other matters as may properly come before the Meeting, or any adjournments
or postponements thereof. The Board of Directors is not aware of any other
business to come before the Meeting.
Any action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which the
Meeting may be adjourned or postponed.
Stockholders of record at the close of
business on April 8, 1999 will be entitled to vote the number of shares held of
record in their names on that date.
You are requested to fill in and sign the enclosed form of proxy which is
solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend and vote at the
Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Paul Nadzikewycz
PAUL NADZIKEWYCZ
CHAIRMAN OF THE BOARD
Chicago, Illinois
April 13, 1999
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A PRE-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
WITHIN THE UNITED STATES.
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<PAGE>
PROXY STATEMENT
FIRST SECURITYFED FINANCIAL, INC.
936 NORTH WESTERN AVENUE
CHICAGO, ILLINOIS 60622-4695
ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of First SecurityFed Financial, Inc.
("First SecurityFed" or the "Company") to be used at the 1999 Annual Meeting of
Stockholders of the Company (the "Meeting"), to be held at the Suma Hall located
at 2457 W. Chicago Avenue, Chicago, Illinois 60622, on May 12, 1999, at 7:00
p.m., Chicago, Illinois time, and at all adjournments or postponements of the
Meeting. The accompanying Notice of Meeting and this Proxy Statement are first
being mailed to stockholders on or about April 13, 1999. Certain of the
information provided herein relates to First Security Federal Savings Bank (the
"Bank"), a wholly owned subsidiary and the predecessor of the Company.
At the Meeting, the stockholders of the Company are being asked to
consider and vote upon (i) the election of three directors of the Company and
(ii) the ratification of the appointment of Crowe, Chizek and Company LLP as the
Company's auditors for the fiscal year ending December 31, 1999.
VOTING RIGHTS AND PROXY INFORMATION
All shares of common stock, par value $.01 per share, of the Company (the
"Common Stock") represented at the Meeting by properly executed proxies received
prior to or at the Meeting, and not revoked, will be voted at the Meeting in
accordance with the instructions thereon. Proxies solicited on behalf of the
Board of Directors of the Company will be voted in accordance with the
directions given therein. Where no instructions are indicated, proxies will be
voted "FOR" the proposals set forth in this Proxy Statement for consideration at
the Meeting. The Company does not know of any matters, other than as described
in the Notice of Meeting, that are to come before the Meeting. If any other
matters are properly presented at the Meeting for action, the persons named in
the enclosed proxy card and acting thereunder will have the discretion to vote
on such matters in accordance with their best judgment.
A proxy given pursuant to this solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy; (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting; or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to Terry Gawryk,
Secretary, First SecurityFed Financial, Inc., 936 North Western Avenue, Chicago,
Illinois.
One-third of the shares of the Common Stock eligible to vote at the
meeting shall constitute a quorum for purposes of the Meeting. Abstentions and
broker non-votes are counted for purposes of determining a quorum.
VOTING REQUIRED FOR APPROVAL OF PROPOSALS
Directors shall be elected by a plurality of the shares present in person
or represented by proxy at the Meeting and entitled to be voted on the election
of directors. The appointment of Crowe, Chizek and Company LLP as independent
auditors requires the affirmative vote of a majority of shares present in person
or represented by proxy at the Meeting and entitled to vote on the matter.
Proxies marked to abstain with respect to any proposal have the same effect as
votes against the proposal. Broker non-votes have no effect on the vote. In all
other matters, the affirmative vote of the majority of shares present in person
or represented by proxy at the Meeting and entitled to vote on the matter shall
be the act of the stockholders.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stockholders of record as of the close of business on April 8, 1999 will be
entitled to one vote for each share then held on all matters brought before the
Meeting. As of that date, the Company had 5,622,098 shares of Common Stock
issued and outstanding.
The following table sets forth information as of April 8, 1999 regarding
the share ownership of (i) those persons or entities known by management to
beneficially own more than five percent of the Common Stock and (ii) all
directors and executive officers as a group. For information regarding the
beneficial ownership of Common Stock by directors and nominees of the Company,
see "Proposal I - Election of Directors."
Shares Percent
Beneficially of
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED CLASS
First SecurityFed Financial, Inc. Employee 458,151 8.15%
Stock Ownership Plan (1)
936 North Western Avenue
Chicago, Illinois 60622-4695
Thomson Horstmann & Bryant, Inc.(2) 739,500 13.15%
Park 80 West, Plaza Two
Saddle Brook, New Jersey 07663
All directors and executive officers of the 384,617 6.84%
Corporation and the Bank as a group
(13 persons)(3)
(1) The amount reported represents shares held by the Employee Stock
Ownership Plan ("ESOP"), 54,489 of which have been allocated to
accounts of participants. First Bankers Trust, the trustee of the
ESOP, may be deemed to beneficially own the shares held by the ESOP
which have not been allocated to accounts of participants.
Participants in the ESOP are entitled to instruct the trustee as to
the voting of shares allocated to their accounts under the ESOP.
Unallocated shares held in the ESOP's suspense account or allocated
shares for which no voting instructions are received are voted by
the trustee in its discretion.
(2) As reported in an amended Schedule 13G filed with the Securities and
Exchange Commission on or about January 28, 1999. Thomson Horstmann
& Bryant, Inc. reported sole voting power as to 413,000 shares;
shared voting power as to 27,000 shares; and sole and shared
dispositive power as to 739,500 shares.
(3) Amount includes shares held directly, as well as shares held jointly
with family members, retirement accounts, the Bank's profit sharing
plan, shares allocated to the ESOP accounts of the group members,
held in a fiduciary capacity or by certain family members, with
respect to which shares the group members may be deemed to have sole
voting and/or investment power. Also includes stock options
exercisable with 60 days but does not include any other unvested
stock options and does not include any unvested awards under the
Recognition and Retention Plan.
PROPOSAL I - ELECTION OF DIRECTORS
GENERAL
The Company's Board of Directors consists of nine members and is divided
into three classes, with each class consisting of one-third of the Board.
One-third of the directors are elected annually and are generally elected to
serve for a three-year period or until their respective successors are elected
and qualified.
The following table sets forth certain information, as of April 8, 1999,
regarding the composition of the Company's Board of Directors, including each
director's term of office. The Board of Directors acting as the nominating
committee has recommended and approved the nominees identified in the following
table. It is intended that the proxies solicited on behalf of the Board of
Directors (other than proxies in which the vote is withheld as to a nominee)
will be voted at the Meeting FOR the election of the nominees identified below.
If a nominee is unable to serve, the shares represented by all valid proxies
will be voted for the election of such substitute nominee as the Board of
Directors may recommend. At this time, the Board of Directors knows of no reason
why a nominee might be unable to serve if elected.
2
<PAGE>
Except as disclosed herein, there are no arrangements or understandings between
any nominee and any other person pursuant to which the nominee was selected.
<TABLE>
<CAPTION>
SHARES OF
COMMON
STOCK
POSITION(S) HELD WITH DIRECTOR TERM BENEFICIALLY PERCENT
NAME AGE(1) FIRST SECURITYHELD SINCE EXPIRES OWNED(2) OF CLASS
- -------------- ------- ------------------------ ---------- ------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
NOMINEES
--------
Terry Gawryk 45 Director and Secretary 1981 2002 7,094 0.13%
Jaroslav H. 57 Director 1993 2002 5,524 0.10
Sydorenko
Chrysta Wereszczak 42 Director 1993 2002 34,393 0.61
DIRECTORS CONTINUING IN OFFICE
------------------------------
Myron Dobrowolsky 64 Director 1985 2000 10,471 0.19
Julian Kulas 64 Director, President and Chief 1964 2000 85,040 1.51
Executive Officer
Paul Nadzikewycz 60 Chairman of the Board 1973 2000 42,799 0.76
Steve Babyk 52 Director 1993 2001 39,024 0.69
Lila Maria Bodnar 39 Director and Recording 1995 2001 5,473 0.10
Secretary
George Kawka 55 Director 1986 2001 19,024 0.34
</TABLE>
- --------------------
(1) At December 31, 1998.
(2) Amount includes shares held directly, shares held jointly with family
members, shares held in the profit sharing plan and retirement accounts,
and shares held in a fiduciary capacity or by certain family members with
respect to which shares the group members may be deemed to have sole
voting and/or investment power. Does not include any unvested stock
options which are not exercisable within 60 days and does not include any
unvested stock awards under the Recognition and Retention Plan.
The business experience of each director of First SecurityFed is set forth
below. All directors have held their present position for at least five years
unless otherwise indicated.
TERRY GAWRYK. Mr. Gawryk has practiced law in Chicago, Illinois since 1979.
JAROSLAV H. SYDORENKO. Mr. Sydorenko has been a credit manager at Kanematsu
USA, Inc., an import/export trading company located in Chicago, Illinois since
1985.
CHRYSTA WERESZCZAK. Ms. Wereszczak was employed by the Unisys Corporation
from 1982 to 1989 in a variety of positions, including Financial Manager and
Regional Financial Analyst. She is currently involved with B&B Formica, a
manufacturing business she owns with her spouse. Ms. Wereszczak is a member of
the St. Nicholas School Board.
MYRON DOBROWOLSKY. Mr. Dobrowolsky has been a construction project manager
with the engineering firm of Dames and Moore, Chicago, Illinois since 1991.
Previously, Mr. Dobrowolsky was an engineer with the Illinois Highway
Department.
JULIAN KULAS. Mr. Kulas has served as the President and Chief Executive
Officer of the Bank since 1964. Mr. Kulas has also been engaged in the private
practice of law since 1959. Mr. Kulas is extremely active in community affairs
and holds a variety of positions on not-for-profit organizations. Mr. Kulas has
been a Commissioner on the Chicago Commission on Human Relations since 1981.
3
<PAGE>
PAUL NADZIKEWYCZ. Mr. Nadzikewycz, a licensed podiatrist, has been a
self-employed investor focusing primarily on real estate since 1987. In
addition, since January 1997, Mr. Nadzikewycz has served as President and Chief
Executive Officer of Oakley Assoc. Ltd., a legal software developer.
STEVE BABYK. Mr. Babyk has worked at Union Tank Car Company since 1969 and
is currently the Director of Fleet Leasing. Mr. Babyk is primarily responsible
for the care and leasing of over 50,000 railroad cars in the United States,
Canada and Mexico.
LILA MARIA BODNAR. Ms. Bodnar was an accountant with the First National
Bank of Chicago from 1981 to 1985 and was a manager in the accounting department
of the Chicago branch of the Bank of Montreal from 1985 to 1991. Ms. Bodnar has
a Masters of Business Administration from Loyola University, Chicago, Illinois.
GEORGE KAWKA. Mr. Kawka has been a senior architectural/engineering project
manager with PAL Telecom Group since 1994 and was previously a senior project
manager with AIC Security Systems, all in Chicago, Illinois.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES OF FIRST SECURITYFED. Meetings of First
SecurityFed's Board of Directors are generally held on a quarterly basis. The
Board of Directors met four times during the fiscal year ended December 31,
1998. During fiscal 1998, no incumbent director of First SecurityFed attended
fewer than 75% of the aggregate of the total number of Board meetings and the
total number of meetings held by the committees of the Board of Directors on
which he or she served. Directors of the Company currently do not receive a fee
for their service.
The Board of Directors of First SecurityFed has standing Executive, Audit,
Compensation and Nominating Committees.
The Executive Committee is comprised of Directors Kulas, Nadzikewycz and
Gawryk. The Executive Committee has and exercises all of the powers of the Board
of Directors when such powers are required between meetings of the Board of
Directors. The Executive Committee met two times in fiscal 1998.
The Audit Committee is comprised of Directors Bodnar, Sydorenko and
Wereszczak. The Audit Committee recommends independent auditors to the Board,
reviews the results of the auditors' reports and services, reviews with
management and the internal auditors the systems of internal control and
internal audit reports to ensure effective compliance with regulatory and
internal policies and procedures. The Audit Committee met two times during
fiscal 1998.
The Compensation Committee is comprised of Directors Babyk, Gawryk and
Kawka. The Compensation Committee is responsible for making recommendations for
the salary of the chief executive officer, and for approving the salaries of all
other executive officers. This committee met one time during fiscal 1998,
jointly with the Compensation Committee of the Bank.
The entire Board of Directors acts as a Nominating Committee for the annual
selection of nominees for election as directors. Pursuant to the Company's
Bylaws, nominations for directors by stockholders must be made in writing and
delivered to the Secretary of the Company at least 70 days prior to the meeting
and such written nomination must contain certain information as provided in the
Company's Bylaws. While the Board of Directors will consider nominees
recommended by stockholders, it has not actively solicited nominations.
MEETINGS AND COMMITTEES OF THE BANK. The Bank's Board of Directors meets
monthly and may have additional special meetings upon request of the managing
officer or of three directors. The Board of Directors met thirteen times during
the fiscal year ended December 31, 1998. During fiscal 1998, no incumbent
director of the Bank attended fewer than 75% of the aggregate of the total
number of Board meetings and the total number of meetings held by the committees
of the Board of Directors on which he or she served. Directors of the Bank
receive a fee of $850 for each Board meeting attended and $100 for each
committee meeting attended. Chairman Paul Nadzikewycz and Recording Secretary
Lila Maria Bodnar each receive an additional fee of $250 per month.
The Executive Committee provides oversight of Board-related matters
in-between regularly scheduled Board Meetings. The Executive Committee is
comprised of Chairman Nadziekewycz, Director Gawryk and President Kulas. This
committee met approximately five times during fiscal year 1998.
4
<PAGE>
The Audit Committee is comprised of Directors Bodnar, Sydorenko and
Wereszczak. This Committee oversees and reviews the Bank's financial and
internal control matters. The Audit Committee also reviews the Bank's audited
financial statements with the Bank's outside auditors and the Report of
Examination with the OTS examiners, either separately or with the full Board.
This committee met four times in 1998.
The Compensation Committee oversees and reviews the Bank's compensation
policies and sets the compensation levels for Executive Management. This
committee is comprised of Directors Gawryk, Kawka and Babyk and met four times
in 1998.
The Loan Committee is composed of Directors Dobrowolsky, Gawryk, and Babyk
and Vice-President Korb. The Loan Committee reviews loan applications weekly and
sets interest rates for all loan types. The Loan Committee met twenty-five times
in 1998.
The Investment Committee is composed of President Kulas, Vice President
Hawryliw, Treasurer Kucewicz and Director Bodnar. This committee meets at least
once a month to handle the investments for the Bank and the implementation of
the Bank's strategy as it relates to interest rate risk and reinvestment
options. The Investment Committee met twelve times in 1998.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
accrued for services in all capacities to the Company and its affiliates for the
fiscal year ended December 31, 1998 for the Company's President and Chief
Executive Officer. No other executive officer's aggregate annual compensation
(salary plus bonus) exceeded $100,000 in fiscal 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
-------------------------------- -------------------------
OTHER ANNUAL RESTRICTED
NAME AND PRINCIPAL COMPENSATION STOCK OPTIONS ALL OTHER
POSITION YEAR SALARY($) BONUS($) ($) AWARD($)(1) SARS(#) COMPENSATION($)
- ---------------------- ---- --------- ------- ------------ ------------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Julian E. Kulas 1998 $137,880 $5,745 $10,200 $1,069,367 160,200 $29,774(2)
President, Chief 1997 132,206 5,745 9,000 --- --- 30,000
Executive Officer 1996 127,966 5,419 7,800 --- --- 22,240
and Director
</TABLE>
- -------------------------
(1) Represents the dollar value of the award of restricted stock based upon
the $16.688 closing price on May 6, 1998, the date of grant. The shares of
restricted stock will vest in five equal annual installments beginning one
year from the date of grant. Dividends are paid on the restricted shares
to the extent and on the same date as dividends that are paid on all other
outstanding shares of Common Stock. Based on the $13.00 closing price per
share of the Common Stock on December 31, 1998, the 64,080 restricted
shares held by Mr. Kulas had an aggregate market value of $833,040.
(2) Consists of ESOP allocations of $29,774.
5
<PAGE>
The following table sets forth certain information concerning stock options
granted to Mr. Kulas in 1998 pursuant to the 1998 Stock Option and Incentive
Plan. There were no stock appreciation rights granted in 1998.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- --------------------------------------------------------------------- -------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#)(1) YEAR ($/SH) DATE 5%($) 10%($)
- ----------------- ------------ ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Julian E. Kulas 160,200 30.87% $16.888 05/06/08 $1,681,298 $4,260,739
</TABLE>
- --------------------------
(1) Options granted on May 6, 1998, which options vest in five equal annual
installments beginning one year from the date of grant.
The following table sets forth certain information concerning the number
and value of unexercised stock options held by Mr. Kulas at December 31, 1998.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON REALIZED OPTIONS AT FY-END (#) AT FY-END ($)(1)
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------- ------------ --------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Julian E. Kulas --- --- --- 160,200 $--- $---
</TABLE>
- -------------------
(1) None of the options granted to Mr. Kulas are in-the-money options based
upon the fair market value of the underlying shares at December 31, 1998.
EMPLOYMENT AGREEMENT. The Bank has entered into an employment agreement
with President Kulas providing for an initial term of three years. Mr. Kulas'
employment agreement provides for an annual base salary in an amount not less
than his current salary and provides for an annual extension subject to the
performance of an annual formal evaluation by the Board of Directors of the
Bank. The agreement also provides for termination upon the employee's death, for
cause or in certain events specified by OTS regulations. The employment
agreement is terminable by the employee upon 90 days' notice to the Bank.
The employment agreement provides for payment to Mr. Kulas of an amount
equal to 299% of his five-year annual average base compensation, in the event
there is a "change in control" of the Bank where employment involuntarily
terminates in connection with such change in control, as defined, or within
twelve months thereafter. The agreement also provides for the continued health
coverage for the remainder of the term of his contract should he be
involuntarily terminated in the event of change in control. If the employment of
Mr. Kulas had been terminated as of December 31, 1998 under circumstances
entitling him to severance pay as described above, he would have been entitled
to receive a lump sum cash payment of approximately $368,751.
6
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
The Company's Compensation Committee has responsibility for reviewing the
compensation policies and plans for the Bank and its affiliates. The policies
and plans established are designed to enhance both short-term and long-term
operational performance of the Bank and to build stockholder value through
appreciation in the Company's Common Stock price.
One of the Committee's primary objectives in the compensation area is to
develop and maintain compensation plans which provide the Bank with the means of
attracting and retaining quality executives at competitive compensation levels
and to implement compensation plans which seek to motivate executives to perform
to the full extent of their abilities and which seek to enhance stockholder
value by aligning closely the financial interests of the Company's executives
with those of its stockholders. In determining compensation levels, plans and
adjustments, the Committee takes into account, among other things, compensation
reviews made by third parties each year. These studies are used to compare the
compensation levels of Bank personnel to those of personnel at other local
financial institutions.
With respect to Mr. Kulas's base salary in the fiscal year ended December
31, 1998, the Committee took into account a comparison of salaries of chief
executive officers of local financial institutions. Likewise, each executive
officer's base salary was determined utilizing financial institution
compensation surveys. Mr. Kulas's base salary for fiscal year 1998 was increased
from the level set by the Committee for fiscal year 1997 because it was the
judgment of the Committee that the competitive salary data indicated that Mr.
Kulas's base salary was lower than his peers. The Committee also determined,
based on the Bank's success in strengthening its lending volume as well as
continued progress in executing the Bank's business plan, the implementation of
cost reduction measures and recognition of the improvement in performance by the
Bank, to award Mr. Kulas a cash bonus of $5,745.
In connection with the mutual to stock conversion, the Bank and the Company
have an Employee Stock Ownership Plan; additionally, the Company has a stock
option and incentive plan and a recognition and retention plan. Equity-based
compensation provides a long-term alignment of interests and results achieved
for stockholders with the compensation rewards provided to executive officers by
providing those executives and others on whom the continued success of the
Company most depends with a proprietary interest in the Company.
Through the compensation programs described above, a significant portion of
the Bank's executive compensation is linked directly to individual and corporate
performance. The Committee will continue to review all elements of compensation
to assure that the compensation objectives and plans meet the Company's business
objectives and philosophy of linking executive compensation to stockholder
interests of corporate performance as discussed above.
In 1993, Congress amended the Internal Revenue Code to add Section 162(m)
to limit the corporate deduction for compensation paid to a corporation's five
most highly compensated officers to $1.0 million per executive per year, with
certain exemptions. The Committee carefully reviewed the impact of this
legislation on the cost of the Bank's current executive compensation plans.
Under the legislation and regulations adopted thereunder, it is not expected
that any portion of the Company's (or Bank's) deduction for employee
remuneration will be non-deductible in fiscal 1998 or in future years by reason
of compensation awards granted. The Committee intends to review the Company's
(and Bank's) executive compensation policies on an ongoing basis, and propose
appropriate modifications, if the Committee deems them necessary, with a view
toward avoiding or minimizing any disallowance of tax deductions under Section
162(m).
The foregoing report is furnished by the Compensation Committee of the
Board of Directors:
Steve Babyk Terry Gawryk George Kawka
7
<PAGE>
STOCK PERFORMANCE PRESENTATION
The line graph below compares the cumulative total stockholder return on
the Company's Common Stock to the cumulative total return of the Nasdaq Market
Index and the SNL Thrift Index for the period October 31, 1997, through December
31, 1998. In accordance with applicable rules of the Securities and Exchange
Commission (the "SEC"), one bar of the graph assumes that $100 was invested in
the Company's Common Stock at $15.063 per share, the closing price on October
31, 1997, the initial day of trading. Another bar in the graph assumes that
$100.00 was invested in the Company's Common Stock at the initial offering price
of $10.00 per share. The Company completed its initial public offering of the
Common Stock on October 30, 1997.
[BAR GRAPH OMITTED]
The table below sets forth the cumulative value of a $100 investment in the
Company's Common Stock at the initial offering price and at the closing price on
the first day of trading and the cumulative value of a $100 investment in
the indicated stock indices as of October 31, 1997.
10/31/1997 12/31/1997 12/31/1998
---------- ---------- ----------
First SecurityFed:
At the closing price on
October 31, 1997........ $100.00 $104.56 $ 86.76
At the initial
offering price on
October 30, 1997........ 100.00 157.50 130.70
SNL Securities Thrift
Index................... 100.00 109.79 96.25
NASDAQ Market Index..... 100.00 98.77 139.30
CERTAIN TRANSACTIONS
The Bank follows a policy of granting loans to the Bank's directors,
officers and employees. The loans to executive officers and directors are made
in the ordinary course of business and on the same terms and conditions as those
of comparable transactions prevailing at the time (except that the underwriting
fee is waived), in accordance with the Bank's underwriting guidelines and do not
involve more than the normal risk of collectibility or present other unfavorable
features. All loans to directors and executive officers cannot exceed 5% of the
Bank's capital and unimpaired surplus, whichever is greater, unless a majority
of the Board of Directors approves the credit in advance and the individual
requesting the credit abstains from voting. Loans to all directors and executive
officers and their associates, including outstanding balances and commitments
totaled $181,000 at December 31, 1998. There were no loans to any single
director, executive officer or their affiliates made at preferential rates or
terms which in the aggregate exceeded $60,000 during the three most recent
fiscal years.
8
<PAGE>
PROPOSAL II - RATIFICATION OF APPOINTMENT OF AUDITORS
The Company's independent auditors are Crowe, Chizek & Company, LLP,
independent certified public accountants. At the Meeting, the stockholders will
consider and vote on the ratification of the appointment of independent auditors
for the Company's fiscal year ending December 31, 1999. The Board of Directors
has appointed Crowe, Chizek & Company, LLP to be its auditors, subject to
ratification by the Company's stockholders.
Representatives of Crowe, Chizek & Company, LLP are expected to attend the
Meeting to respond to appropriate questions and to make a statement if they so
desire.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for
next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's executive offices, 936
North Western Avenue, Chicago, Illinois 60622, no later than December 14, 1999.
Any such proposals shall be subject to the requirements of the proxy rules
adopted under the Securities Exchange Act of 1934, as amended. Otherwise, any
shareholder proposal to take action at such meeting must be received at the
Company's executive office at 936 North Western Avenue, Chicago, Illinois 60622
by March 13, 2000; provided, however, that in the event that the date of the
annual meeting is held before April 21, 2000, or after July 21, 2000, the
shareholder proposal must be received not later than the close of business on
the later of the 60th day prior to such annual meeting or the tenth day
following the day on which notice of the date of the annual meeting was mailed
or public announcement of the date of such meeting was first made. All
shareholder proposals must also comply with the Company's bylaws and Delaware
law.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of the
Company's Common Stock (or any other equity securities, of which there is none),
to file with the Securities and Exchange Commission (the "SEC") initial reports
of ownership and reports of changes in ownership of the Company's Common Stock.
Officers, directors and greater than 10% shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 31, 1998, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with except that Myron
Dobrowolsky inadvertently failed to file a Form 4 to report one transaction. Mr.
Dobrowolsky reported the transaction on a Form 5 dated February 12, 1999.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in this Proxy Statement. However,
if any other matters should properly come before the Meeting, it is intended
that holders of the proxies will act in accordance with their best judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Company Common Stock. In addition to solicitation by
mail, directors and officers of the Company and regular employees of the Bank
may solicit proxies personally or by telegraph or telephone, without additional
compensation.
9
<PAGE>
REVOCABLE PROXY
FIRST SECURITYFED FINANCIAL, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 1999
The undersigned hereby appoints the Board of Directors of First SecurityFed
Financial, Inc. (the "Company"), with full powers of substitution, to act as
attorneys and proxies for the undersigned to vote all shares of capital stock of
the Company which the undersigned is entitled to vote at the Annual Meeting of
Stockholders (the "Meeting") to be held at the Suma Hall located at 2457 W.
Chicago Avenue, Chicago, Illinois on May 12, 1999 at 7:00 p.m., and at any and
all adjournments and postponements thereof.
1. The election as directors of all nominees listed below:
/ / FOR / / VOTE WITHHELD
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE IN THAT NOMINEE'S NAME IN THE LIST BELOW.
TERRY GAWRYK JAROSLAV H. SYDORENKO CHRYSTA WERESZCZAK
2. Ratification of the appointment of Crowe, Chizek and Company, LLP as
auditors for the fiscal year ending December 31, 1999
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment or
postponement thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE BOARD NOMINEES AND THE
RATIFICATION OF THE OTHER PROPOSALS. IF ANY OTHER BUSINESS IS PRESENTED AT THE
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST
JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS
TO BE PRESENTED AT THE MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" EACH OF THE LISTED PROPOSITIONS.
(Continued and to be SIGNED on Reverse Side)
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting or at
any adjournments or postponements thereof, and after notification to the
Secretary of the Company at the Meeting of the stockholder's decision to
terminate this proxy, then the power of such attorneys or proxies shall be
deemed terminated and of no further force and effect. This proxy may also be
revoked by filing a written notice of revocation with the Secretary of the
Company or by duly executing a proxy bearing a later date.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of notice of the Meeting, a Proxy Statement dated April
13, 1999 and an Annual Report to Stockholders.
Dated: , 1999
--------------
-------------------------------
Signature of Stockholder
-------------------------------
Signature of Stockholder
Please sign exactly as your name(s)
appear(s) to the left. When signing as
attorney, executor, administrator, trustee
or guardian, please give your full title.
If shares are held jointly, each holder
should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE
