[FIRST SECURITYFED FINANCIAL LETTERHEAD]
April 14, 2000
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of First SecurityFed
Financial, Inc. (the "Company"), I cordially invite you to attend the 2000
Annual Meeting of Stockholders of the Company (the "Meeting"). The Meeting will
be held at 7:00 p.m., Chicago, Illinois time, on May 10, 2000, 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. The Meeting is
for the purpose of the election of three directors of the Company, each for a
term of three years and the ratification of the appointment of Crowe, Chizek and
Company LLP as auditors for the Company for the fiscal year ending December 31,
2000. 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 10, 2000
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 10, 2000 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, each for a term of
three years;
2. The ratification of the appointment of Crowe, Chizek and Company
LLP as independent auditors for the Company for the fiscal year
ending December 31, 2000; 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 10, 2000 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 14, 2000
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
FIRST SECURITYFED FINANCIAL, INC.
936 NORTH WESTERN AVENUE
CHICAGO, ILLINOIS 60622-4695
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2000
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 2000 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 10,
2000, 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 14, 2000.
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 independent auditors for the fiscal year ending December 31, 2000.
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 10, 2000
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 5,254,435 shares of Common
Stock issued and outstanding.
The following table sets forth information as of April 10, 2000
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."
<TABLE>
<CAPTION>
Shares Percent
Beneficially of
NAME AND ADDRESS OF BENEFICIAL OWNER Owned Class
- ------------------------------------ ------------ -------
<S> <C> <C>
First SecurityFed Financial, Inc. Employee Stock Ownership Plan (1) 423,792 8.07%
936 North Western Avenue
Chicago, Illinois 60622-4695
Thomson Horstmann & Bryant, Inc.(2) 627,100 11.93%
Park 80 West, Plaza Two
Saddle Brook, New Jersey 07663
All directors and executive officers of the Corporation and the Bank 557,136 10.20%
as a group (13 persons)(3)
</TABLE>
- --------------------
(1) The amount reported represents shares held by the Employee Stock
Ownership Plan ("ESOP"), 88,848 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. For each issue voted
upon by the Company's stockholders, the unallocated shares held by the
ESOP are voted by the ESOP trustee in the same manner that the trustee
is directed to vote on the issue by a majority of the plan participants
who directed the trustee as to the manner of voting the shares
allocated to their plan accounts. Allocated shares as to which the ESOP
trustee receives no voting instructions are voted by the trustee in its
discretion.
(2) As reported in an amended Schedule 13G/A filed with the Securities and
Exchange Commission on or about January 12, 2000. Thomson Horstmann &
Bryant, Inc. reported sole voting power as to 331,000 shares; shared
voting power as to 27,000 shares; and sole and shared dispositive power
as to 627,100 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 divided into
three equal classes. 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 10,
2000, 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
2
<PAGE>
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. 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
DIRECTOR TERM BENEFICIALLY PERCENT
NAME AGE(1) POSITION(S) HELD WITH FIRST SECURITYFED SINCE EXPIRES OWNED(2) OF CLASS
- ----------------------------------------------------------------------------------------------------------------------------------
NOMINEES
<S> <C> <C> <C> <C> <C> <C>
Myron Dobrowolsky 65 Director 1985 2003 17,698 0.34%
Julian Kulas 65 Director, President and Chief Executive 1964 2003 152,347 2.86
Officer
Paul Nadzikewycz 61 Chairman of the Board 1973 2003 51,770 0.98
DIRECTORS CONTINUING IN OFFICE
Steve Babyk 53 Director 1993 2001 28,958 0.55
Lila Maria Bodnar 40 Director and Recording Secretary 1995 2001 19,109 0.36
George Kawka 56 Director 1986 2001 32,660 0.62
Terry Gawryk 46 Director and Secretary 1981 2002 11,952 0.23
Jaroslav H. Sydorenko 58 Director 1993 2002 12,752 0.24
Chrysta Wereszczak 43 Director 1993 2002 65,529 1.25
</TABLE>
- --------------------
(1) At December 31, 1999.
(2) Amount includes shares held directly, shares held jointly with family
members, shares held in the profit sharing plan and retirement
accounts, shares allocated to the ESOP accounts of Director Kulas 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.
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.
PAUL NADZIKEWYCZ. Mr. Nadzikewycz has been a self-employed investor
focusing primarily on real estate since 1987.
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.
3
<PAGE>
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.
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.
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,
1999. During fiscal 1999, 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 four times in fiscal 1999.
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 three times during
fiscal 1999.
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 three times during fiscal 1999,
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. While the Board of
Directors will consider nominees recommended by stockholders, it has not
actively solicited nominations.
Pursuant to the Company's bylaws, nominations for election as directors
by stockholders must be made in writing and delivered to the Secretary of the
Company at least 70 days prior to the annual meeting date. If, however, the date
of the meeting is first publicly disclosed less than 80 days prior to the date
of the meeting, nominations must be received by the Company not later than the
close of business on the tenth day following the earlier of the day on which
notice of the date of the meeting is mailed to stockholders or the day on which
public disclosure of the date of the meeting is first made. In addition to
meeting the applicable deadline, nominations must be accompanied by certain
information specified in the Company's bylaws.
4
<PAGE>
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 12 times
during the fiscal year ended December 31, 1999. During fiscal 1999, 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 four times during fiscal year 1999.
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 three times in 1999.
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 three times
in 1999.
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 18
times in 1999.
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 13 times in 1999.
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, 1999 for the Company's President and Chief
Executive Officer. No other executive officer's aggregate annual compensation
(salary plus bonus) exceeded $100,000 in fiscal 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
OTHER ANNUAL RESTRICTED
COMPENSATION STOCK OPTIONS/ ALL OTHER
NAME AND PRINCIPAL YEAR SALARY($) BONUS($) ($) AWARD ($) SARS (#) COMPENSATION($)
POSITION
<S> <C> <C> <C> <C> <C> <C> <C>
Julian E. Kulas 1999 $142,710 $6,090 $11,050 $--- --- $32,439(2)
President, Chief Executive 1998 137,880 5,745 10,200 1,069,367 (1) 160,200 29,774
Officer and Director 1997 132,206 5,745 9,000 --- --- 30,000
================================ ======== ============ =========================================== ============ ===================
</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
$11.00 closing price per share of the Common Stock on December 31,
1999, the 51,264 restricted shares held by Mr. Kulas had an aggregate
market value of $563,904.
(2) Consists of ESOP allocations of $32,439.
5
<PAGE>
The following table sets forth certain information concerning the
number and value of unexercised stock options held by Mr. Kulas at December 31,
1999.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
NAME EXERCISE (#) REALIZED ($) OPTIONS AT FY-END (#) AT FY-END ($)(1)
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Julian E. Kulas --- --- 32,040 128,160 $--- $---
</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,
1999.
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, 1999 under circumstances
entitling him to severance pay as described above, he would have been entitled
to receive a lump sum cash payment of approximately $394,322.
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, 1999, 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 1999 was increased
from the level set by the Committee for fiscal year 1998 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 enhancing its lending operations, as well as the
continued progress in executing its 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 $6,090.
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 1999 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 generally compares the cumulative total
stockholder return on the Company's Common Stock with the cumulative total
returns of the Nasdaq Market Index and the SNL Securities Thrift Index for the
period October 31, 1997, through December 31, 1999. 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.
The table below sets forth the cumulative total return 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 total return of
a $100 investment in the indicated stock indices as of October 31, 1997.
<TABLE>
<CAPTION>
[GRAPHIC: PERFORMANCE GRAPH]
10/31/97 12/31/97 12/31/98 12/31/99
<S> <C> <C> <C> <C>
First SecurityFed:
At the closing price on October 31, 1997............. $100.00 $104.56 $ 86.76 $ 75.92
At the initial offering price on October 30, 1997.... 100.00 157.50 130.69 114.35
SNL Securities Thrift Index............................. 100.00 109.79 96.25 77.37
NASDAQ Market Index..................................... 100.00 98.77 139.30 245.69
</TABLE>
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 $2,308,000 at December 31, 1999. 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 and 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, 2000. 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 15, 2000.
Any such proposals shall be subject to the requirements of the proxy rules
adopted under the Securities Exchange Act of 1934, as amended, and as with any
stockholder proposal (regardless of whether included in the Company's proxy
materials), the Company's certificate of incorporation and bylaws and Delaware
law.
To be considered for presentation at the next annual meeting, but not
for inclusion in the Company's proxy statement and form of proxy for that
meeting, proposals must be received by the Company no later than March 1, 2001.
If, however, the date of the next annual meeting is before April 20, 2001 or
after July 9, 2001, proposals must instead be received by the Company by the
close of business on the later of the 70th day before the date of the next
annual meeting or the tenth day following the day on which public disclosure (by
press release, in a publicly available filing with the SEC, through a notice
mailed to stockholders, or otherwise) of the date of the next annual meeting is
first made. If a stockholder proposal that is received by the Company after the
applicable deadline for presentation at the next annual meeting is raised at the
next annual meeting, the holders of the proxies for that meeting will have the
discretion to vote on the proposal in accordance with their best judgment and
discretion, without any discussion of the proposal in the Company's proxy
statement for the next annual meeting.
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 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, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with. However, Mary H. Kolb
inadvertently failed to file a Form 4 to report one transaction on September 1,
1998 and reported the transaction on a Form 4 dated March 10, 2000.
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.
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REVOCABLE PROXY
FIRST SECURITYFED FINANCIAL, INC.
ANNUAL MEETING OF STOCKHOLDERS
to be Held on May 10, 2000
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 10, 2000 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.
MYRON DOBROWOLSKY JULIAN KULAS PAUL NADZIKEWYCZ
2 Ratification of the appointment of Crowe, Chizek and Company,
LLP as auditors for the fiscal year ending December 31, 2000:
/ / 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)
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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
14, 2000 and an Annual Report to Stockholders.
Dated: , 2000
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
