ST PAUL BANCORP INC, DEF 14A, 1996-04-03

ST PAUL BANCORP INC
DEF 14A, 1996-04-03
SAVINGS INSTITUTION, FEDERALLY CHARTERED

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<PAGE>
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 Section 240.14a-11(c) or Section 240.14a-12

St Paul Bancorp 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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.

[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(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):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[_] 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:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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Notes:
<PAGE>

LOGO
6700 West North Avenue
Chicago, Illinois 60635
(312) 622-5000

April 3, 1996

Dear Shareholder:

You are invited to attend the annual meeting of shareholders (the "Annual
Meeting") of St. Paul Bancorp, Inc. (the "Corporation") to be held on
Wednesday, May 15, 1996 at 10:00 a.m. at The Drury Lane Oakbrook, 100 Drury
Lane, Oakbrook Terrace, Illinois 60181.

The Annual Meeting has been called for the following purposes: (1) to elect
each of three directors for a three-year term; (2) to ratify the appointment
by the Board of Directors of the firm of Ernst & Young LLP as independent
auditors of the Corporation for the year ending December 31, 1996; and (3) to
transact such other business as may properly come before the Annual Meeting or
any adjournments thereof.

THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS THAT YOU VOTE "FOR"
ELECTION OF THE THREE NOMINEES OF THE BOARD OF DIRECTORS AS DIRECTORS; AND
"FOR" RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS OF THE CORPORATION FOR THE YEAR ENDING DECEMBER 31, 1996. The
accompanying proxy statement provides detailed information concerning the
matters to be voted on at the Annual Meeting. Also enclosed is our 1995 annual
report to shareholders, which reviews results for the 1995 fiscal year.

It is important that your shares be represented at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, you are requested to
complete, date, sign and return the enclosed proxy card in the enclosed
postage-paid envelope.

On behalf of the Board of Directors, thank you for returning your proxy and
for your continued interest and support.

Sincerely yours,
LOGO
Joseph C. Scully
Chairman of the Board and
Chief Executive Officer
<PAGE>

LOGO

6700 West North Avenue
Chicago, Illinois 60635
(312) 622-5000

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, MAY 15, 1996

----------------

NOTICE IS HEREBY GIVEN that the 1996 annual meeting of shareholders (the
"Annual Meeting") of St. Paul Bancorp, Inc. (the "Corporation") will be held
on Wednesday, May 15, 1996 at 10:00 a.m. at The Drury Lane Oakbrook, 100 Drury
Lane, Oakbrook Terrace, Illinois 60181 for the following purposes:

(1) To elect each of three directors for a three-year term (Proposal 1);

(2) To ratify the appointment by the Board of Directors of the firm of
Ernst & Young LLP as independent auditors of the Corporation for the
year ending December 31, 1996 (Proposal 2); and

(3) To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.

Pursuant to the Corporation's Bylaws, the Board of Directors has fixed the
close of business on March 27, 1996 as the record date for the determination
of shareholders entitled to notice of and to vote at the Annual Meeting. Only
holders of common stock of record at the close of business on that date will
be entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.

In the event that there are not sufficient votes to approve any one or more
of the foregoing proposals at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit further solicitation of proxies by
the Corporation.

By Order of the Board of Directors

LOGO
Joseph C. Scully
Chairman of the Board and
Chief Executive Officer

Chicago, Illinois
April 3, 1996

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>

LOGO
6700 West North Avenue
Chicago, Illinois 60635
(312) 622-5000

----------------

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

MAY 15, 1996

----------------

SOLICITATION, VOTING AND REVOCABILITY OF PROXIES

This proxy statement is furnished to shareholders of St. Paul Bancorp, Inc.
(the "Corporation") in connection with the solicitation by the Board of
Directors of the Corporation of proxies to be used at the 1996 annual meeting
of shareholders (the "Annual Meeting") to be held on Wednesday, May 15, 1996
at 10:00 a.m. at The Drury Lane Oakbrook, 100 Drury Lane, Oakbrook Terrace,
Illinois 60181, and at any adjournments thereof. This proxy statement and the
accompanying proxy are initially being mailed to shareholders on or about
April 3, 1996.

If the enclosed form of proxy is properly executed and returned to the
Corporation in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
EXECUTED BUT UNMARKED PROXIES WILL BE VOTED (1) FOR PROPOSAL 1 TO ELECT EACH
OF THE THREE NOMINEES TO THE BOARD OF DIRECTORS; AND (2) FOR PROPOSAL 2 TO
RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF THE
CORPORATION FOR THE YEAR ENDING DECEMBER 31, 1996. Except for procedural
matters incident to the conduct of the Annual Meeting, the Corporation does
not know of any matters other than those described in the Notice of Annual
Meeting that are to come before the Annual Meeting. If any other matters are
properly brought before the Annual Meeting, the persons named in the
accompanying proxy will vote the shares represented by the proxies on such
matters as determined by a majority of the Board of Directors.

The presence of a shareholder at the Annual Meeting will not automatically
revoke such shareholder's proxy. Shareholders may, however, revoke a proxy at
any time prior to its exercise by delivering to the Corporation a duly
executed proxy bearing a later date, by attending the Annual Meeting and
voting in person, or by filing a written notice of revocation with Clifford M.
Sladnick, Senior Vice President, General Counsel and Corporate Secretary, at
6700 West North Avenue, Chicago, Illinois 60635.

1
<PAGE>

The cost of soliciting proxies in the form enclosed herewith will be borne
by the Corporation. In addition to the solicitation of proxies by mail, the
Corporation and its wholly-owned subsidiary, St. Paul Federal Bank For Savings
(the "Bank" or "St. Paul Federal"), through their directors, officers and
employees, may also solicit proxies personally or by telephone or
telecommunication. The Corporation also will request persons, firms and
corporations holding shares in their names or in the name of their nominees,
which are beneficially owned by others, to send proxy material to and obtain
proxies from such beneficial owners and will reimburse such holders for their
reasonable expenses in doing so. The Corporation also has retained Morrow &
Co. to assist in the solicitation of proxies at a fee of $7,000, plus
reimbursement of certain out-of-pocket expenses.

The securities which can be voted at the Annual Meeting consist of shares of
common stock, par value $.01 per share (the "Common Stock") of the
Corporation, with each share entitling its owner to one vote on all matters.
There is no cumulative voting of shares. The close of business on March 27,
1996 has been fixed by the Board of Directors as the record date for
determination of shareholders entitled to vote at the Annual Meeting. The
number of shares of the Corporation's Common Stock outstanding on March 27,
1996 was 18,582,759. There were approximately 6,787 record holders of the
Corporation's Common Stock as of that date. The presence, in person or by
proxy, of at least one-third of the total number of issued and outstanding
shares of Common Stock of the Corporation is necessary to constitute a quorum
at the Annual Meeting.

Votes cast, either in person or by proxy, will be tabulated by The First
National Bank of Boston. Under Delaware corporate law and the Corporation's
Bylaws, directors are elected by plurality of votes of shares present (in
person or by proxy) and entitled to vote. Unless otherwise required by law or
the Corporation's Certificate of Incorporation or Bylaws, any other matter put
to a shareholder vote will be decided by the affirmative vote of a majority of
the votes cast on the matter. Abstentions and broker non-votes will be treated
as shares that are present, or represented, and entitled to vote for purposes
of determining the presence of a quorum. Broker non-votes will not be counted
as shares present and entitled to vote nor as a vote cast on any matter
presented at the Annual Meeting.

THE CORPORATION IS REQUIRED TO FILE AN ANNUAL REPORT/FORM 10-K FOR ITS
FISCAL YEAR ENDED DECEMBER 31, 1995 WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "SEC"). A COPY OF THE ANNUAL REPORT/FORM 10-K, EXCLUDING
EXHIBITS, ACCOMPANIES THIS PROXY STATEMENT. FOR A REASONABLE FEE, THE
CORPORATION WILL PROVIDE COPIES OF THE EXHIBITS TO THE ANNUAL REPORT/FORM 10-K
UPON WRITTEN REQUEST DIRECTED TO CLIFFORD M. SLADNICK, SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND CORPORATE SECRETARY, ST. PAUL BANCORP, INC., 6700 WEST
NORTH AVENUE, CHICAGO, ILLINOIS 60635.

ELECTION OF DIRECTORS
(PROPOSAL 1)

Under the Corporation's Bylaws, the number of directors is set at ten. The
directors are divided into three classes. The term of office of only one class
of directors expires in each year, and their successors are elected for terms
of three years and until their successors are elected and qualified.

At the 1996 Annual Meeting, each of three directors will be elected for a
three-year term. Unless otherwise specified on the proxy, it is the intention
of the persons named in the proxy to vote the shares represented by each
properly executed proxy for the election as director of the persons named
below as nominees. The Board of Directors believes that each of the nominees
will stand for election and will serve if elected as directors. However, if
any of the persons nominated by the Board of Directors fails to stand for
election or will be unable to accept election, the proxies will be voted for
the election of such other person or persons as the Board of Directors may
nominate.

2
<PAGE>

INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS

The following table sets forth the names of the Board of Directors' three
nominees for election as directors and those directors who will continue to
serve as such after the 1996 Annual Meeting. Also set forth is certain other
information, some of which has been obtained from the Corporation's records
and some of which has been supplied by the nominees and continuing directors,
with respect to each such person's age at March 27, 1996, the periods during
which such person has served as a director of the Bank, and positions
currently held with the Corporation. Each person has been a director of the
Corporation since its formation in 1987, except for Patrick J. Agnew, who
joined the Board in 1989, and John W. Croghan and Jean C. Murray, O.P., who
joined the Board in 1993.

<TABLE>
<CAPTION>
DIRECTOR OF
THE BANK POSITIONS HELD WITH EXPIRATION
AGE SINCE THE CORPORATION OF TERM
--- ----------- -------------------------- ----------
<S> <C> <C> <C> <C>
NOMINEES FOR 3-YEAR TERM:
John W. Croghan (a)...... 65 1993 Director 1999
Kenneth J. James (b)(c).. 63 1987 Director 1999
Michael R. Notaro 77 1966 Director 1999
(d)(e)(f)(g)............
CONTINUING DIRECTORS:
Joseph C. Scully 55 1980 Chairman of the Board, 1997
(a)(b)(c)(d)(e)(h)...... Chief Executive Officer
and Director
John J. Viera 64 1978 Director 1997
(f)(g)(h)(i)............
James B. Wood 75 1982 Director 1997
(a)(b)(c)(d)(i).........
Patrick J. Agnew 53 1989 President, Chief Operating 1998
(a)(b)(c)(d)(e)(h)...... Officer and Director
William A. Anderson 70 1985 Director 1998
(a)(b)(i)...............
Alan J. Fredian 65 1977 Director 1998
(e)(f)(g)...............
Jean C. Murray, O.P.(h).. 68 1993 Director 1998
</TABLE>
- --------
(a) Member of the Investment Committee of the Bank.
(b) Member of the Loan Loss Reserve Committee of the Bank.
(c) Member of the Loan Committee of the Bank.
(d) Member of the Executive Committees of the Corporation and the Bank.
(e) Member of the Profit Sharing, Pension and ESOP Trust Committee of the
Bank.
(f) Member of the Organizational Planning Committees of the Corporation and
the Bank.
(g) Member of the Stock Option Committee of the Corporation.
(h) Member of the Corporate Responsibility Committee of the Bank.
(i) Member of the Audit and Accounting Committees of the Corporation and the
Bank.

The principal occupation of each nominee and continuing director of the
Corporation for the past five years is set forth below.

JOHN W. CROGHAN is Chairman of Lincoln Capital Management Company, a
Chicago-based investment counseling firm, of which he was a founder in 1967.
Mr. Croghan is a graduate of Loyola University and holds a Masters of Business
Administration degree from Harvard University. He is a director of Lindsay
Manufacturing Company and certain Morgan Stanley closed-end funds. Mr. Croghan
serves on several non-profit boards, including Northwestern University and
Evanston Hospital.

3
<PAGE>

KENNETH J. JAMES is Chairman of the Board of James Investment Company, real
estate developers, and J.S. James & Co., Inc., a real estate brokerage and
management company. He is a director of Illinois Masonic Medical Center, the
Robert R. McCormick unit of the Chicago Boys' and Girls' Clubs and the
Homebuilders Association of Greater Chicago. He holds an A.B. degree in
economics from Stanford University and a juris doctor degree from Northwestern
University. He is a member of the Illinois Bar.

MICHAEL R. NOTARO is retired from Computer Data Processing Corp., a
privately-held firm which offered computer data processing services. Until
1990, Mr. Notaro was president of Chicago-based Statistical Tabulating
Corporation, a privately-held firm founded by Mr. Notaro. Mr. Notaro is a
trustee of DePaul University and former chairman of its board. He holds an
honorary doctor of laws degree from DePaul University. He serves on the boards
of Catholic Charities of Chicago, the Chicago Boys' Club and the Hundred Club
of Cook County. He is a former trustee of the Illinois Institute of Technology
and currently serves as a member of the Citizens Board of Loyola Hospital. Mr.
Notaro is an emeritus member of the Finance Council for Cardinal Joseph
Bernardin of the Archdiocese of Chicago. He is a Knight of St. Gregory and a
Knight of Malta. He is co-trustee and co-executor of the estate of George S.
Halas, deceased owner of the Chicago Bears.

PATRICK J. AGNEW joined the Bank in 1979 as General Counsel. He was
appointed President, Chief Operating Officer and a Director in December 1989.
Prior to joining the Bank, he was a partner in the law firm of Righeimer,
Martin and Cinquino. Mr. Agnew holds a juris doctor degree from DePaul
University College of Law. He serves on the boards of directors of the Oak
Park Development Corporation and the Oak Park YMCA. Mr. Agnew is a trustee of
West Suburban Hospital and a board member of the Chicagoland Association of
Savings Institutions. He is also a member of the President's Council of Rosary
College.

WILLIAM A. ANDERSON is a Certified Public Accountant and a retired partner
of Ernst & Young LLP. While with that firm, he specialized in providing
professional accounting services to the savings and loan industry. Since his
retirement, he has provided consulting services to financial institutions and
other companies. He has served on various charitable and professional boards.
He is a member of the American Institute of Certified Public Accountants and
the Illinois Society of CPAs. Mr. Anderson holds a bachelor's degree in
accounting from the University of Illinois.

ALAN J. FREDIAN is an organizational psychologist and president of Alan J.
Fredian and Associates, management consultants. Dr. Fredian is a retired
Professor of the Institute of Human Resources and Industrial Relations at
Loyola University and has been affiliated with the University since 1967. He
has authored several books and publications. He is a member of the Academy of
Management and the American Psychological Association's Division of Industrial
and Organizational Psychology. He is a life member of the board of directors
of Building Owners and Managers Institute International. He holds a doctorate
degree in industrial psychology from the Illinois Institute of Technology.

JEAN C. MURRAY, O.P., is the retired President of Rosary College in River
Forest, Illinois. She has been affiliated with the College since 1961, serving
as a professor and an administrator in various capacities prior to her
appointment as President in 1981. She is currently an Associate Professor of
French and a senior advisor to the President of the College. Dr. Murray has
been a member of the Sinsinawa Dominicans since 1952. She holds an
undergraduate degree in French from Rosary College and a doctorate degree in
French from the University of Fribourg, Switzerland. She also holds a
certificate from the Institute of Educational Management at Harvard
University. Dr. Murray is a member of the American Association of Teachers of
French and served as the Chairperson of the Federation of Independent Illinois
Colleges and Universities. Dr. Murray is also a member of the Board of
Governors of the American Heart Association of Metropolitan Chicago and a
trustee of North Central College in Naperville.

4
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JOSEPH C. SCULLY joined the Bank in 1963 as a real estate appraiser. He was
appointed Assistant Vice President in 1965, Vice President in 1968, Corporate
Secretary in 1971 and Senior Vice President in 1974. He was elected President,
Chief Operating Officer and a Director in 1980. He was elected Chief Executive
Officer in 1982. Mr. Scully held the dual roles of President and Chief
Executive Officer from 1982 to 1989, when he relinquished the role of
President to become Chairman and Chief Executive Officer. He holds
undergraduate and graduate degrees from Loyola University. In 1981, Loyola
University named him alumnus of the year. He serves as a trustee of Loyola
University and chairs its investment committee. Mr. Scully serves on the board
of the Austin Career Education Center Corp., the advisory board of Goodwill
Industries, and the Leadership Committee of the Central Board of Neighborhood
Housing Services. For the 1994 United Way/Crusade of Mercy campaign, he was
chairman of the West Region's Major Employers Division. Mr. Scully presently
serves as a member of the Thrift Institutions Advisory Council, a panel
established by the Federal Reserve Board. He is also the past chairman of the
Community Investment Corporation of Chicago, the Institute of Financial
Education of the United States League, the Federal Savings and Loan Council
and the Chicago Association of Savings Institutions.

JOHN J. VIERA is a retired Corporate Vice President of Commonwealth Edison
Company. He holds an undergraduate degree in electrical engineering from
Marquette University and a graduate degree in business administration from the
Illinois Institute of Technology. Since joining Commonwealth Edison Company in
1957, he held several engineering and administrative positions. Mr. Viera is a
member of the Economic and Serra Clubs of Chicago, a Northwestern Associate
and a member of the advisory board for Marquette University and the Local
Initiatives Support Corporation. He is a member of the Illinois Housing
Development Authority and a trustee of Roosevelt University and the Chicago
Architecture Foundation. He is on the boards of Children's Memorial Hospital,
Urban Gateways, Neighborhood Housing Services and Catholic Charities.

JAMES B. WOOD is President of Equity Builders of Illinois, Inc., with which
he has been affiliated since 1954. Equity Builders of Illinois, Inc. is a
construction firm engaged in the development of apartments and single-family
homes. Mr. Wood is past president of Northern Illinois Home Builders and a
former director of Standard Alliance Industries, Inc. He is past president of
the Oak Park-River Forest High School Board of Education and a life trustee of
West Suburban Hospital. Mr. Wood holds an undergraduate degree from Indiana
University and a Masters of Business Administration degree from Harvard
University.

DIRECTOR COMPENSATION

Directors of the Corporation are not paid for attending meetings of the
Board of Directors of the Corporation. Each director of the Corporation is
also a director of the Bank. Non-employee directors of the Bank are paid an
annual director's fee of $24,000, except that Mr. Notaro, as Chairman of the
Executive Committee, receives an annual director's fee of $36,000. In addition
to the annual fee, non-employee directors receive board and committee meeting
fees of $500 per meeting ($600 for committee chairpersons), based upon
attendance. Non-employee directors also receive monthly meeting fees of $500
per month from St. Paul Financial Development Corporation and $200 per month
from Annuity Network, Inc., which are both wholly-owned subsidiaries of the
Corporation, as well as $300 per month from St. Paul Service, Inc., a wholly-
owned subsidiary of the Bank. Directors who are employees of the Bank do not
receive any such fees.

Under the terms of the Corporation's 1995 Incentive Plan, each non-employee
director is automatically granted, on the date of each annual meeting of
shareholders beginning with the 1995 Annual Meeting, a non-qualified option to
purchase 1,200 shares of the Corporation's Common Stock at an option price per
share equal to the fair market value of a share of Common Stock on the date of
grant.

5
<PAGE>

The Corporation and the Bank have adopted a nonqualified retirement plan, as
amended (the "Retirement Plan") for non-employee directors of the Corporation
and the Bank. Under the Retirement Plan, eligible directors receive annual
benefits consisting of a minimum of 60% (increasing to 70% for eleven or more
years of service and increasing by an additional 1% for each year of service
in excess of 20 years) of the regular annual compensation paid for services as
a director of the Corporation, the Bank or any of their subsidiaries during
the 12-month period immediately preceding a termination of service (or, if
greater, during any 12 consecutive month period occurring during the three-
year period immediately preceding a termination of service). The Retirement
Plan provides that benefits are paid once a director reaches age 70; after the
director's permanent and total disability; after a director nominated by the
Corporation is not reelected; or after termination following a change in
control. For the definition of "change in control", see "Executive
Compensation--Employment Agreements". Benefits are not paid if the director is
removed from the board for "cause", as defined.

Monthly payments are made under the Retirement Plan for the number of months
equal to the number of full months the eligible director has served as a
director. Directors have the right to elect to receive a lump-sum payment, as
calculated based upon an actuarial determination of the present value of the
plan's benefits. The Retirement Plan provides for a spouse's benefit if the
director is married at the time of death. Eligible directors must agree not to
become an employee of any financial institution located within 50 miles of the
Bank's headquarters for a one-year period after termination of service as a
director in order to receive benefits. The Retirement Plan provides that the
obligation of the Corporation and the Bank to each eligible director will be
funded as each such director becomes entitled to receive payment of benefits.
The Retirement Plan may be amended or terminated at any time, but without
affecting the vested rights of directors to receive benefits.

CORPORATE GOVERNANCE AND OTHER MATTERS

The Board of Directors of the Corporation acts as a nominating committee for
selecting nominees for election as directors and has made its nominations for
the 1996 Annual Meeting. The Corporation's Bylaws also permit shareholders
eligible to vote at the Annual Meeting to make nominations for directors, but
only if such nominations are made pursuant to timely notice in writing to the
Secretary of the Corporation. To be timely, notice must be delivered to, or
mailed to and received at, the principal executive offices of the Corporation
not less than 30 days nor more than 90 days prior to the date of the meeting,
provided that at least 45 days' notice or prior public disclosure of the date
of the meeting is given or made to shareholders. Public disclosure of the date
of the 1996 Annual Meeting was made on March 26, 1996 by the issuance of a
press release followed by a filing of a Current Report on Form 8-K under the
Securities Exchange Act of 1934 (the "1934 Act") with the SEC. A shareholder's
notice of nomination must also set forth certain information specified in
Article III, Section 13 of the Corporation's Bylaws concerning each person the
shareholder proposes to nominate for election and the nominating shareholder.
Prior to printing this proxy statement, the Corporation had received no such
nominations.

The Boards of Directors of the Corporation and the Bank have each appointed
a standing audit committee. During the year ended December 31, 1995, the audit
committees each conducted four meetings. The current members of the audit
committees are Messrs. Anderson, Viera and Wood. The duties of the committees
include reviewing with management and the Corporation's independent auditors
the annual financial statements, significant accounting policies, audit
conclusions regarding significant accounting estimates and the independent
auditors' letter to management concerning the effectiveness of financial and
accounting controls. In addition, the committees review the scope of the
annual independent auditors' audit and recommend to the Board of Directors the
firm to be engaged as the independent auditor. The committees also oversee the
Bank's internal audit function and review with the Director of Internal Audit
his conclusions regarding the adequacy of the organization's internal
controls. The committees may also examine and consider other matters relating
to the financial affairs of the Corporation and the Bank as they determine
appropriate.

6
<PAGE>

The Boards of Directors of the Corporation and the Bank have each appointed
a standing organizational planning committee. During the year ended December
31, 1995, the organizational planning committees each conducted six meetings.
The current members of the organizational planning committees are Dr. Fredian
and Messrs. Notaro and Viera. The organizational planning committees function
as compensation committees. The duties of such committees include making
recommendations to the Boards of Directors concerning compensation of
executive officers and employee benefit plans. See "Executive Compensation--
Report of the Organizational Planning and Stock Option Committees on Executive
Compensation".

The Boards of Directors of the Corporation and the Bank have each appointed
a standing executive committee. The Bylaws of the Corporation and the Bank
give the executive committees certain powers and authority in the management
of the business and affairs of the Corporation and the Bank when the Boards of
Directors are not in session. The executive committees also review and make
recommendations to the Boards of Directors concerning the Corporation's and
the Bank's annual budgets. During the year ended December 31, 1995, the
executive committees each conducted one meeting. The current members of the
executive committees are Messrs. Agnew, Notaro, Scully and Wood.

The Board of Directors of the Corporation has appointed a standing stock
option committee. The duties of the committee include making recommendations
to the Board of Directors concerning eligible persons to whom options will be
granted under the Corporation's stock option plan. During the year ended
December 31, 1995, the stock option committee conducted four meetings. The
current members of the stock option committee are Dr. Fredian and Messrs.
Notaro and Viera. See "Executive Compensation--Report of the Organizational
Planning and Stock Option Committees on Executive Compensation".

During 1995, the Corporation's Board of Directors held twelve meetings. No
incumbent director attended fewer than 75% of the aggregate of the total
number of meetings of the Corporation's Board of Directors and the total
number of meetings held by all committees of such board on which the director
served.

7
<PAGE>

EXECUTIVE COMPENSATION

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The following table sets forth certain summary information concerning the
compensation paid by the Corporation and its subsidiaries for services
rendered during each of the fiscal years ended December 31, 1993, 1994 and
1995 to the Corporation's chief executive officer and to each of the four
other most highly compensated executive officers of the Corporation determined
as of December 31, 1995 (the "named executive officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
(B) COMPENSATION
-------------------- ------------
AWARDS
------------
SECURITIES
UNDERLYING ALL OTHER
SALARY OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) BONUS $ (A) # (C) ($) (D)
- --------------------------- ---- -------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Joseph C. Scully........... 1995 $372,036 $153,753 40,000 $144,019
Chairman of the Board 1994 366,618 278,246 -0- 132,373
and Chief Executive 1993 323,699 318,535 37,500 146,041
Officer
Patrick J. Agnew........... 1995 263,713 150,511 40,000 90,689
President, Chief 1994 259,992 275,048 -0- 82,606
Operating Officer and 1993 231,028 315,755 37,500 96,285
Director
Robert N. Parke............ 1995 146,700 63,632 20,000 2,765
Senior Vice President, 1994 141,726 115,262 -0- 2,378
Finance 1993 136,299 132,370 -0- 5,730
and Chief Financial
Officer
Thomas J. Rinella.......... 1995 154,595 61,675 20,000 2,765
Senior Vice President, 1994 149,351 111,380 -0- 2,512
Community Lending 1993 143,642 127,839 -0- 6,038
Donald G. Ross ............ 1995 144,661 59,482 20,000 2,765
Senior Vice President, 1994 134,221 105,211 -0- 2,330
Retail Banking 1993 123,609 117,735 -0- 5,196
</TABLE>
- --------
(a) Includes incentive compensation paid in July of 1993, 1994 and 1995 to the
Bank's officers based on a percentage of earnings, as well as annual
holiday bonuses (3% of base compensation) paid in December of each year.
Incentive compensation, if any, is paid in July of each year based upon
the Corporation's earnings during the preceding twelve month period, and
is included in the table based on the amount earned with respect to each
year presented. The amount of incentive compensation earned by the named
executive officers for the last six months of 1995 is not yet calculable.
(b) Certain executive officers of St. Paul Federal receive indirect
compensation in the form of personal benefits; including insurance
premiums, personal tax, financial and estate planning services, club
memberships and the use of automobiles. The amount of such indirect
compensation in 1995 did not exceed, with respect to any named executive
officer, the lesser of $50,000 or 10% of the total amount of annual salary
and bonus paid to such officer.
(c) Represents stock options granted on June 3, 1993 and June 26, 1995 under
the Corporation's Stock Option Plan and 1995 Incentive Plan to purchase
the stated number of shares of the Corporation's Common Stock at exercise
prices of $14.1667 and $22.50 per share, respectively. The number of
shares subject to the stock

8
<PAGE>

options and the per share exercise prices have been adjusted to reflect the
Corporation's three-for-two stock split on January 4, 1994. Although the
Corporation's Stock Option Plan and 1995 Incentive Plan permit the grant of
stock appreciation rights ("SARs"), no grants of SARs have been made.
(d) Consists of contributions to the Corporation's Employee Stock Ownership
Plan (the "ESOP") with respect to Mr. Parke, Mr. Rinella and Mr. Ross.
With respect to Messrs. Scully and Agnew, 1995 data consists of ESOP
contributions of $2,765 each, as well as deferred compensation of $141,254
and $87,924, respectively, earned under their respective employment
agreements.

STOCK OPTION GRANTS

The following table sets forth certain information concerning the grant of
stock options under the Corporation's Stock Option Plan and the 1995 Incentive
Plan during the fiscal year ended December 31, 1995 to each of the named
executive officers.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES BASE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED (#) (A) IN FISCAL YEAR ($/SHARE) DATE ($) (B)
- ---- --------------- -------------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Joseph C. Scully........ 40,000 8.02% $22.50 7/26/05 $393,800
Patrick J. Agnew........ 40,000 8.02% 22.50 7/26/05 393,800
Robert N. Parke......... 20,000 4.01% 22.50 7/26/05 196,900
Thomas J. Rinella....... 20,000 4.01% 22.50 7/26/05 196,900
Donald G. Ross.......... 20,000 4.01% 22.50 7/26/05 196,900
</TABLE>
- --------
(a) All options were granted with an exercise price equal to the fair market
value of the Corporation's Common Stock on the date of grant. Options
granted under the Stock Option Plan and the 1995 Incentive Plan are
exercisable in respect of 50% of the number of shares on the first
anniversary of the date of grant and are exercisable in respect of an
additional 12.5% on each of the second, third, fourth and fifth
anniversaries of the grant, provided that options are 100% exercisable for
any employee who has completed five years of employment with the
Corporation. The options also become exercisable upon any merger or
consolidation in which the Corporation is not the surviving entity.
(b) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The actual value, if any, an employee may realize
will depend on the excess of the stock price over the exercise price on
the date the option is exercised, so that there is no assurance the value
realized by an employee will be at or near the value estimated by the
Black-Scholes model. The estimated values under that model are based on
assumptions as to variables such as interest rates (based on the ten-year
U.S. Treasury rate of 6.10% on date of grant), stock price volatility
(based on the Corporation's 250-day stock price history from date of
grant), future dividend yield (based on the Corporation's quarterly
dividend rate and 250-day stock price history from date of grant), and
ten-year period of exercisability. No adjustments were made for non-
transferability and risk of forfeiture.

9
<PAGE>

STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUES

The following table sets forth certain information, with respect to the
named executive officers, concerning the exercise of options during the fiscal
year ended December 31, 1995 and the value of unexercised options held as of
December 31, 1995.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/SARS AT OPTIONS/SARS AT FISCAL
ON VALUE FISCAL YEAR-END (#) YEAR-END ($) (A)
EXERCISE REALIZED ------------------------- -------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph C. Scully........ 40,000 $716,820 345,000 -- $5,382,908 --
Patrick J. Agnew........ -- -- 212,500 -- 3,452,495 --
Robert N. Parke......... 10,000 180,830 83,000 -- 1,150,499 --
Thomas J. Rinella....... -- -- 90,500 -- 1,291,748 --
Donald G. Ross.......... -- -- 73,000 -- 962,165 --
</TABLE>
- --------
(a) Market value of underlying securities at year-end, minus the exercise
price.

REPORT OF THE ORGANIZATIONAL PLANNING AND STOCK OPTION COMMITTEES ON EXECUTIVE
COMPENSATION

Overview and Philosophy

The Organizational Planning Committee (the "Planning Committee") and the
Stock Option Committee (together with the Planning Committee herein referred
to as the "Committee") of the Corporation's Board of Directors are both
composed of three outside directors, Dr. Fredian and Messrs. Notaro and Viera.
The Planning Committee is responsible for developing and making
recommendations to the Board with respect to the Corporation's executive
compensation policies. In addition, the Planning Committee determines annually
the compensation that is paid to the Chief Executive Officer and the other
executive officers of the Corporation, subject to Board approval. The Stock
Option Committee selects, subject to Board approval, the eligible persons to
whom options will be granted based on each individual's performance and
responsibilities. The Stock Option Committee prescribes the terms and
provisions (which need not be identical) of each option granted under the
Option Plan and the 1995 Incentive Plan.

The Committee has access to outside compensation consultants and independent
national, regional and industry compensation survey information.

The objectives of the Corporation's executive compensation program are to:

. Directly tie individual executive pay to corporate performance;

. Support the achievements of the long- and short-term strategic goals and
performance objectives of the Corporation;

. Provide a competitive compensation program that will attract and retain
talented and qualified executives while rewarding individual achievement
and contribution; and

. Align the executives' interests with corporate success by making a
substantial portion of compensation subject to profitability.

10
<PAGE>

The Corporation's executive compensation program provides an overall level
of compensation opportunity that is competitive within the thrift and banking
industry. The Committee will use its discretion to set executive compensation
where, in its judgment, external, internal or individual circumstances warrant
it.

The 1993 Tax Act

The Omnibus Budget Reconciliation Act of 1993 added a provision to the
Internal Revenue Code of 1986, as amended (the "Code"), which generally limits
to $1.0 million the Corporation's allowable deduction for federal income tax
purposes of certain compensation paid to executive officers, except for
certain "performance-based" compensation and certain compensation related to
employee benefit plans.

The Committee has considered the implications of this new law and has
concluded that, since the cash compensation paid to the Corporation's
executive officers is significantly below the $1.0 million limitation, no
general policy with respect to this matter is necessary at this time. The
Corporation, however, could be impacted by this law to the extent that option
exercises by executive officers cause an individual's compensation in a
particular year to exceed $1.0 million. Accordingly, the Committee has
attempted to conform the terms of the Option Plan and the 1995 Incentive Plan
to the new law such that compensation attributable to awards thereunder will
not be subject to the deduction limitation.

Executive Officer Compensation Program

The Corporation's executive officer compensation program consists of base
salary, annual cash incentive compensation, long-term incentive compensation
in the form of stock options, deferred compensation, personal benefits such as
tax services, club memberships, financial planning and the use of automobiles,
and various benefits including medical and retirement plans generally
available to employees of the Corporation. The executive officer compensation
program is reviewed, with the assistance of an independent compensation
consultant, relative to other well-managed large thrift institutions, regional
thrifts and local bank competitors (the "Compensation Peer Group"). The
Compensation Peer Group (which consists of 28 large national thrifts, 14
regional and local thrifts and seven local banks) is used to compare the
Corporation's compensation packages to that of other companies that compete
with the Bank for executives. The Committee believes that this peer group,
which differs from the published NASDAQ indices utilized in the Comparative
Performance Graph set forth below, is appropriate for executive compensation
purposes.

Base Salary. Executive officer base salaries are set relative to market data
and surveys of the Compensation Peer Group. Base salaries are reviewed
position by position and are generally set at levels lower than the market due
to the large emphasis on incentive compensation determined by annual corporate
and individual performance. Overall base salaries for the named executive
officers average 26% below the combined base salaries of the Compensation Peer
Group. In determining base salaries, the Committee also takes into
consideration individual experience and contributions, as well as level of
responsibility.

Annual Incentive Compensation. The officer incentive compensation program is
the Corporation's annual incentive program for corporate officers. The purpose
of the incentive compensation program is to provide a direct link between
executive officer compensation and corporate earnings. The Planning Committee
believes that compensation tied to corporate performance strengthens
management's incentive to increase the Corporation's profitability.
Accordingly, annual incentive compensation is a significant component of the
executive officers' total cash compensation. For the named executive officers,
the portion of compensation attributable to the incentive program in 1995
ranged from 37% to 54% of total compensation.

11
<PAGE>

Incentive compensation for all corporate officers has averaged 5% of the
Corporation's earnings for the preceding twelve-month period, without
deducting for net additions to general loss reserves and taxes (but reduced by
specific loan loss reserves and loan charge-offs) and has been distributed to
officers based on individual performance and corporate level. In the absence
of earnings, no bonus is paid.

For the period from July 1, 1994 to June 30, 1995, the Corporation's pre-tax
earnings increased by 12.7%, or $6.4 million, over the same period in 1994. In
conjunction with this increase, bonus payments made in July 1995 to all
officers of the Corporation were increased by approximately 13% over the prior
year. The Planning Committee believes that the annual incentive program
provides an excellent link between the level of the Corporation's earnings and
the incentives paid to executive officers.

Individual incentive bonus awards to the executive officers are determined,
at the discretion of the Planning Committee, based on individual performance
and achievement. The annual incentive bonus, when combined with base salary,
resulted in average compensation payments during 1995 to the named executive
officers at 14% below the average of the Compensation Peer Group. The Planning
Committee believes that the level of compensation paid to the named executive
officers during 1995 was appropriate based upon the Corporation's financial
performance and the significant portion of compensation tied to corporate
performance.

Stock Options. The Board of Directors of the Corporation believes that stock
options are important to increase the incentive and to attract and encourage
the continued employment and service of executive officers and other key
officers and employees by facilitating their purchase of a stock interest in
the Corporation. The Stock Option Committee believes that the grant of stock
options aligns management with the interests of the Corporation's
shareholders, while creating another form of performance-based compensation.

The Stock Option Plan and the 1995 Incentive Plan authorize the Stock Option
Committee to administer the plans and make recommendations to award stock
options to key officers, directors and employees. Stock options are granted at
the discretion of the Stock Option Committee, with grants generally made based
on individual contributions and upon promotion. Stock options are granted at
an option price equal to the fair market value of the Corporation's Common
Stock on the date of grant, have ten year terms and have exercise restrictions
based on length of service. The amount of stock option grants increases
according to salary and position within the Corporation.

In fiscal 1995, the named executive officers received stock option grants
for an aggregate of 140,000 shares of Common Stock, at an exercise price of
$22.50 per share. These grants represent 28% of all stock options granted in
fiscal 1995 and, based on option prices, result in an average multiple of 1.72
times 1995 total annual cash compensation for this group. These grants were
made by the Committee to reward outstanding corporate and individual
performance.

Deferred Compensation Plan. A deferred compensation plan is provided to
Messrs. Scully and Agnew as part of their long-term incentive compensation
program. This plan, as specified in their employment agreements, requires that
a specified sum be credited annually to their account. In fiscal 1995, the
amounts credited (without earnings) for Messrs. Scully and Agnew were $141,254
and $87,924, respectively, representing 20% of Mr. Scully's and 15% of Mr.
Agnew's annual compensation.

Benefits. The Corporation provides medical, life insurance and retirement
benefits to the executive officers that are generally available on the same
terms to other employees of the Corporation. Certain executive officers
receive indirect compensation in the form of personal benefits; including
insurance premiums, personal tax services, financial planning, club
memberships and the use of automobiles. As to each executive officer, the

12
<PAGE>

amount of these perquisites, as determined in accordance with the rules of the
SEC relating to executive compensation, did not exceed the lesser of either
$50,000 or 10% of annual compensation for fiscal 1995.

Chief Executive Officer Compensation

At the beginning of fiscal 1995, Mr. Scully's base salary was $372,036.
During the year, Mr. Scully received a base salary increase of $14,881,
representing an increase of 4% effective July 1, 1995. His base salary at the
end of the fiscal year was $386,928. Mr. Scully's base salary is reviewed
annually by the Committee. The Committee consults with an independent
compensation consultant who conducts a customized survey of the Compensation
Peer Group. The survey data is used to develop trend line analysis which shows
the relationship between CEO total compensation and return on assets, as well
as CEO total compensation and institution asset size. As discussed above, the
Corporation's base salaries are set at the low end of the market data range,
allowing for an effective incentive compensation program. For 1995, Mr.
Scully's base salary was 26% below the peer group.

Mr. Scully received a bonus in fiscal 1995 of $286,000 for the period from
July 1, 1994 through June 30, 1995. The bonus was the result of corporate
performance for the above period and was paid from a pool which averaged 5% of
the Corporation's earnings for such period, without deducting for net
additions to general loss reserves and taxes (but reduced by specific loan
loss reserves and loan charge-offs).

The Corporation's incentive program is designed to reward officers according
to annual earnings. The increase in corporate pre-tax earnings for the period
from July 1, 1994 to June 30, 1995 resulted in a 10% increase in Mr. Scully's
1995 incentive bonus payment. The Committee believes that Mr. Scully's
leadership and management abilities have allowed the Corporation to
successfully compete within a challenging business environment, while
achieving financial results generally equivalent to the Compensation Peer
Group. Mr. Scully's total cash compensation paid in 1995 was 24% below the
average of the Compensation Peer Group.

The stock options for 40,000 shares granted to Mr. Scully in fiscal 1995
brought his cumulative option grants to 385,000 since the Corporation's
formation in 1987. The 1995 grant was made by the Committee to reward Mr.
Scully for his outstanding leadership of the Corporation's senior management
group.

Submitted by the Members of the
Organizational Planning Committee
and the Stock Option Committee

Michael R. Notaro, Chairman Alan J. Fredian
John J. Viera

13
<PAGE>

COMPARATIVE PERFORMANCE GRAPH

The following graph sets forth comparative information regarding the
Corporation's cumulative shareholder return on its Common Stock over the last
five fiscal years. The shareholder return is measured by dividing total
dividends (assuming dividend reinvestment) plus share price change for a
period by the share price at the beginning of the measurement period. The
Corporation's cumulative shareholder return, based on an investment of $100 at
the beginning of the five-year period beginning January 1, 1991, is compared
to the cumulative total return of the NASDAQ Stock Market Index and the NASDAQ
Bank Stock Index.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS

<TABLE>
<CAPTION>
PLOTTING POINTS:

12/31/90 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95*
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
St. Paul Bancorp 100 165.99 294.80 366.08 346.78 511.89

NASDAQ 100 160.56 186.87 214.51 209.69 296.30

NASDAQ Bank 100 164.09 238.85 272.39 271.41 404.35
</TABLE>

*Note: Not all dates are 12/31, because the stock market was not necessarily
open that day. Per last year's chart, use the following symbols to mark plotting
points for:

St. Paul Bancorp: circles
NASDAQ: squares
NASDAQ bank: diamonds (dots vs. black)

Employment Agreements. The Corporation and the Bank have entered into
employment agreements with Joseph C. Scully, Chairman of the Board and Chief
Executive Officer, and Patrick J. Agnew, President and Chief Operating
Officer.

The salaries for Messrs. Scully and Agnew for the twelve-month period ending
June 30, 1996 are $386,928 and $274,272, respectively. Each officer receives
annual salary increases as determined by the Bank's Board of Directors. Both
Mr. Scully and Mr. Agnew are entitled to participate in any discretionary
bonuses and retirement or other benefit plans applicable to the Corporation's
or the Bank's executive officers. The employment agreements for Messrs. Scully
and Agnew, as amended, are each for terms of three years, with each expiring
on December 19, 1998. The Corporation and the Bank may, upon the majority
affirmative vote of each of their respective Boards, by written notice to the
officer, renew the employment agreements for one additional year on each
anniversary date, commencing with the December 19, 1996 anniversary date,
unless the officer gives

14
<PAGE>

contrary written notice to the other parties prior to such anniversary date.
The employment agreements provide that the terms thereof are automatically
terminated upon the officer attaining the age of 65.

The employment of Messrs. Scully and Agnew may be terminated by the Boards
of Directors of the Corporation and the Bank at any time; provided, however,
that if the termination is not for cause, as defined in the agreements, each
is entitled: (a) to receive a lump sum payment in an amount equal to his then-
current compensation (including any bonuses paid during the then-current
fiscal year and deferred compensation credited for the preceding year)
calculated for a period equal to the remaining term of the agreement (provided
that the aggregate amount of such payment shall not exceed three times the
officer's then-current compensation) and (b) subject to certain limitations,
to continue to participate in retirement and other benefit plans for the
remaining term of the agreement, to be funded by an irrevocable trust
established by the Corporation and the Bank. Such lump sum payments for
termination without cause would be $2,476,029 and $1,968,345 for Messrs.
Scully and Agnew, respectively, based upon current salary and deferred
compensation plus the most recent incentive compensation paid to such
officers, assuming a remaining term of three years. However, if the
termination of employment is in connection with a "change in control", the
lump sum severance payment would instead be calculated in accordance with the
provisions described below.

If any such officer terminates his employment without the consent of both
Boards, then the agreements restrict the terminating officer for one year or
the remaining term of the agreement plus six months, whichever is less, from
being employed by a competing bank, savings bank, savings and loan association
or mortgage banking company, or a holding company affiliate of any of the
foregoing, having an office in Illinois within 50 miles of the Bank's home
office, out of which the terminating officer would be primarily based.

If, during the term of the employment agreements, there is a "change in
control" of the Corporation or of the Bank, and the employment of Messrs.
Scully or Agnew is terminated, voluntarily or involuntarily, within two years
thereafter (except by reason of normal retirement, disability, death or for
cause), each will be entitled to receive, as liquidated damages for services
previously rendered, a lump sum cash payment. Such payment will be in the
amount of one year's then-current compensation, including deferred
compensation and any bonuses paid during the past twelve months, if employment
is voluntarily terminated without "good reason", defined in the agreements as,
among other things, a material reduction in the officer's salary or deferred
compensation, a material reduction in the officer's bonus below a certain
amount, the officer's relocation of more than 50 miles or a material reduction
in his position, authority, duties or responsibilities. If the officer's
employment is terminated by him voluntarily with good reason or involuntarily
by the Corporation or the Bank, such payment will be equal to the sum of (X)
the amount of the officer's then-current compensation which, but for such
termination, would be payable for the remaining term of the agreement, plus
(Y) one year's then-current compensation; provided that the aggregate amount
of such payment shall not exceed three times the officer's then-current
compensation. Based upon current salary and deferred compensation plus the
most recent incentive compensation paid to such officers, such payments would
be $825,343 and $656,115 for Messrs. Scully and Agnew, respectively, if
employment were terminated as described in the second sentence of this
paragraph, and, $2,476,029 and $1,968,345, respectively, if employment were
terminated as described in the third sentence of this paragraph. This payment
will be in lieu of the lump sum amount payable for termination without cause.
The agreements also permit Messrs. Scully and Agnew to receive a lump sum
amount equal to, but in lieu of, the above payment if they elect to terminate
their employment agreements while continuing to work for the Corporation and
the Bank following a change in control. In addition, such officers would be
entitled, subject to certain limitations, to continue to participate in
retirement and other benefit plans to be funded by an irrevocable trust
created by the Corporation and the Bank. The employment agreements provide
that the officers shall not have the right to receive any payment or benefits
under the agreement to the extent that such payment or benefit would cause any
payment to be considered a "parachute payment" under Section 280G of the Code.

15
<PAGE>

A "change in control" of the Corporation will be deemed to have occurred if
(i) any person becomes the beneficial owner of 25% or more of the
Corporation's voting shares; (ii) any person receives certain regulatory
approvals to acquire control of the Corporation; (iii) any person enters into
a binding agreement to acquire (by means of stock purchase, tender offer or
merger) beneficial ownership of 25% or more of the Corporation's voting
shares, provided that a change in control would not be deemed to occur unless
the Board of Directors makes a determination that such action constitutes a
change in control, and further provided that a change in control shall no
longer be deemed to have occurred upon any termination of such an agreement;
(iv) any person becomes the beneficial owner of 10% to 25% of the
Corporation's voting shares, provided that the OTS has made a determination
that such ownership constitutes a change in control of the Corporation; (v)
any person (other than persons named as proxies solicited on behalf of the
Corporation) holds irrevocable proxies for 25% or more of the Corporation's
voting shares, provided that the Board of Directors has made a determination
that such action constitutes a change in control; (vi) as the result of any
tender offer, business combination or contested proxy solicitation, the
persons who were directors prior to such transaction cease to constitute at
least two-thirds of the Board of Directors of the Corporation; (vii) the
Corporation enters into an agreement with respect to any merger other than (a)
a merger which would result in the voting shares of the Corporation
outstanding immediately prior thereto continuing to represent more than 80% of
the combined voting power of the voting shares outstanding immediately after
such merger or (b) a merger effected to implement a recapitalization of the
Corporation; or (viii) the Corporation enters into an agreement with respect
to any merger with any other person having total consolidated assets in an
amount that is at least 60% of the Corporation's total consolidated assets;
provided that a change in control will not be deemed to have occurred under
clauses (vii) or (viii) if the Board of Directors of the Corporation has made
a determination that such action will not constitute a change in control. The
Board of Directors may de-trigger any transaction or event (pursuant to which
any person became the beneficial owner of up to 50% of the Corporation's
voting shares) which terminates or ceases to exist. A "change in control" of
the Bank will be deemed to have taken place if the Corporation's beneficial
ownership of the total number of outstanding voting shares of the Bank is
reduced to less than 50%.

The employment agreements with Messrs. Scully and Agnew each provide for
deferred compensation. In general, the employment agreements require St. Paul
Federal to credit a specified sum annually as deferred compensation for each
of these officers. The accrued payments will be paid to a named beneficiary if
the officer dies prior to retirement. In case of involuntary termination
before the end of the term of the agreement, the officer will receive the
entire accrued amount in annual payments over a period of ten years or a
lesser period at the option of the Bank. If the officer voluntarily terminates
his employment, 75% of the accrued amount will be payable to the officer in
five annual payments. If the officer remains in the employment of St. Paul
Federal until he retires due to age, early retirement or disability and
refrains from engaging in any competitive business, as described above, the
accrued payments will be paid to the officer in ten annual installments or a
lesser period at the option of the Bank. Each officer may elect, one year
prior to the officer's retirement, to extend the period within which he or his
beneficiaries will receive distribution of the accrued payments to a period
not in excess of 15 years, except that at the option of the Bank it may be
paid over a lesser period. Also, at the option of the Bank, distribution of
the accrued payments may begin at age 70 and such payments may be made over a
15-year period. The employment agreements permit Messrs. Scully and Agnew to
direct that deferred compensation contributions be invested in government
securities, the Common Stock of the Corporation or such other types of
investments as directed by the officer.

Severance Agreements. The Corporation and the Bank have entered into
severance agreements with the Senior Vice Presidents and First Vice Presidents
of the Corporation and the Bank, including Robert N. Parke, Thomas J. Rinella
and Donald G. Ross, Senior Vice Presidents of the Corporation and the Bank.
Under these agreements, each officer is entitled to receive a severance
payment in the event his employment with the

16
<PAGE>

Corporation and the Bank is terminated, voluntarily or involuntarily (except
by reason of normal retirement, disability, death or for cause), within two
years of a change in control of the Corporation or of the Bank.

The severance agreements provide that each officer will receive one year's
then-current compensation, including any bonuses paid and any deferred
compensation credited to his account during the past twelve months, if he
voluntarily terminates his employment without "good reason" (defined in the
agreements to include, among other things, a reduction in the officer's
salary, a reduction in the officer's bonus below a certain amount, the
officer's relocation of more than 50 miles, or a material reduction in the
position, authority, duties or responsibilities which existed prior to the
change in control). In the event the employment of any such officer is
terminated by him voluntarily with good reason or involuntarily by the
Corporation or the Bank, he will receive three times his average annual
compensation for the five-year period before termination. Based upon current
salaries and the most recent incentive compensation payments received, the
aggregate amount of such payments under the severance agreements would be
$272,793, $276,670 and $262,444 for Messrs. Parke, Rinella and Ross,
respectively, if employment were terminated as described in the first sentence
of this paragraph, and would be $788,435, $800,657 and $698,046 for Messrs.
Parke, Rinella and Ross, respectively, if employment were terminated as
described in the second sentence hereof. In addition, such employees will be
entitled, subject to certain limitations, to continue to participate in
retirement and other benefit plans to be funded by an irrevocable trust
created by the Corporation and the Bank. The severance agreements provide that
the officers shall not have the right to receive any payment or benefits under
the agreement to the extent that such payment or benefit would cause any
payment to be considered a "parachute payment" under Section 280G of the
Internal Revenue Code.

The severance agreements are each for terms of three years, with each
expiring on December 20, 1998. The Corporation and the Bank may, upon the
majority affirmative vote of each of their respective Boards, by written
notice to the officer renew the severance agreements for one additional year
on each anniversary date, commencing with the December 20, 1996 anniversary
date, unless the officer gives contrary written notice to the other parties
prior to such anniversary date.

Pension Plans. The Bank maintains a qualified noncontributory pension plan
administered by trustees appointed by the Board of Directors of the Bank for
its employees and the employees of its subsidiaries. All of the current
trustees are members of the Bank's Board of Directors. The plan covers those
employees who have reached the age of 21 and who have completed at least 1,000
hours of employment in a 12-month period. Contributions are determined in
accordance with actuarial principles, subject to the approval of the Board of
Directors. Accrued benefits of eligible employees become vested after five
years of service.

The Board of Directors has adopted an excess benefit plan entitled the "St.
Paul Federal Supplemental Retirement Plan and Excess Benefit Plan". The
purpose of this plan is to provide employees who are participants in the
pension plan with benefits which are not currently available because such
benefits would be in excess of the limitations on contributions and benefits
imposed by the Code.

17
<PAGE>

The following table shows estimated aggregate annual pension benefits at age
65 payable to employees under the pension plan and the supplemental benefit
plan in the form of a single life annuity for various levels of compensation
and years of credited service, without any limitations on benefits imposed by
the Code:

PENSION PLAN TABLE

<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------
COMPENSATION (A) 15 20 25 30 35
- ---------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$150,000.......................... $ 47,736 $ 64,621 $ 81,507 $ 98,392 $111,523
200,000.......................... 64,536 87,421 110,307 133,192 150,923
250,000.......................... 81,336 110,221 139,107 167,992 190,323
300,000.......................... 98,136 133,021 167,907 202,792 229,723
350,000.......................... 114,936 155,821 196,707 237,592 269,123
400,000.......................... 131,736 178,621 225,507 272,392 308,523
450,000.......................... 148,536 201,421 254,307 307,192 347,923
500,000.......................... 165,336 224,221 283,107 341,992 387,323
550,000.......................... 182,136 247,021 311,907 376,792 426,723
600,000.......................... 198,936 269,821 340,707 411,592 466,123
650,000.......................... 215,736 292,621 369,507 446,392 505,523
700,000.......................... 232,536 315,421 398,307 481,192 544,923
750,000.......................... 249,336 338,221 427,107 515,992 584,323
</TABLE>
- --------
(a) Compensation is assumed to be the average of the final 60 months of
compensation, which includes base salary plus incentive compensation (as
set forth under "Annual Compensation" in the Summary Compensation Table
with respect to the named executive officers), multiplied by 12. Benefits
shown reflect the Social Security offset allowance as defined in the
pension plan.

The amount of any lump sum payment under the plans is calculated based upon
an actuarial determination of the present value, as of the date of retirement,
of the annual pension benefits.

Messrs. Scully, Agnew, Parke, Rinella and Ross had 32, 16, 18, 27 and 23
years of credited service, respectively, under the plans as of December 31,
1995.

Certain Transactions. Certain directors and executive officers of the
Corporation and the Bank, as well as certain members of their families and
certain business entities with which they or their families are affiliated,
are borrowers from the Bank. All such loans were made in the ordinary course
of business, did not involve more than the normal risk of collection or
present other unfavorable features, and were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the
same time for comparable transactions with unaffiliated persons. All loans to
directors and officers must be approved by the Board of Directors.

18
<PAGE>

STOCK OWNED BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS

The following table sets forth information as of March 27, 1996 with respect
to the shares of the Corporation's Common Stock beneficially owned by each
director of the Corporation, each of the named executive officers and by all
directors and executive officers of the Corporation as a group. Such
individuals and certain of the Corporation's employee benefit plans
beneficially own a total of 3,195,987 shares of the Corporation's Common
Stock, or 16.2% of the Common Stock outstanding, including shares subject to
options that will become exercisable within 60 days.

<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF COMMON
BENEFICIAL STOCK
NAME AND POSITION WITH THE CORPORATION OWNERSHIP (A) OUTSTANDING
- -------------------------------------- ------------- -----------
<S> <C> <C>
Joseph C. Scully
Chairman of the Board, Chief Executive Officer
and Director.................................... 434,957(b) 2.3%
Patrick J. Agnew
President, Chief Operating Officer and Director. 307,431(b) 1.6%
William A. Anderson
Director........................................ 7,911 *
John W. Croghan
Director........................................ 61,200 *
Alan J. Fredian
Director........................................ 25,276(b)(c) *
Kenneth J. James
Director........................................ 74,042 *
Jean C. Murray, O.P.
Director........................................ 8,700 *
Michael R. Notaro
Director........................................ 19,566(b)(c) *
John J. Viera
Director........................................ 23,893 *
James B. Wood
Director........................................ 37,251 *
Robert N. Parke
Senior Vice President........................... 135,792 *
Thomas J. Rinella
Senior Vice President........................... 129,130 *
Donald G. Ross
Senior Vice President........................... 109,938 *
All directors and executive officers as a group
(17 persons).................................... 1,694,771(b)(c) 8.6%
</TABLE>
- --------
* Less than 1%
(a) In accordance with Rule 13d-3 under the 1934 Act, a person is deemed to be
the beneficial owner, for purposes of this table, of any shares of
Corporation Common Stock if he has or shares voting power or investment
power with respect to such security, or has the right to acquire
beneficial ownership at any time within 60 days from March 27, 1996. As
used herein, "voting power" is the power to vote or direct the voting of
shares and "investment power" is the power to dispose or direct the
disposition of shares. The table includes shares owned by spouses or other
immediate family members or that are held in trust, as to

19
<PAGE>

which the persons named in the table possess shared voting and/or
investment power as follows: Mr. Scully, 17,970 shares; Mr. Agnew, 37,431
shares; Dr. Fredian, 9,074 shares; Mr. James, 65,341 shares; Mr. Notaro,
18,365 shares; Mr. Viera, 7,693 shares; Mr. Wood, 15,425 shares; Mr. Parke,
20,830 shares; Mr. Rinella, 7,599 shares; Mr. Ross, 11,381 shares; and all
directors and executive officers as a group, 213,091 shares. The table
includes 7,005 shares and 23,304 shares as of March 27, 1996 held for the
benefit of Mr. Scully and Mr. Agnew, respectively, under the St. Paul
Federal Bank For Savings Deferred Compensation Trust. All other shares
included in the table are held by persons who have sole voting and
investment power over such shares. The table includes 1,135,100 shares of
Common Stock subject to outstanding options which are exercisable within 60
days from March 27, 1996. The table also includes 237,965 shares as of
March 27, 1996 allocated to executive officers' accounts under the Bank's
ESOP and 401(k) Profit Sharing Plan.
(b) Does not include 178,218 shares as of March 27, 1996 with respect to which
the St. Paul Federal Bank For Savings Employees Pension Plan has sole
voting and dispositive power. Also does not include 230,054 unallocated
shares with respect to which the ESOP has shared voting and dispositive
power. Dr. Fredian, and Messrs. Scully, Agnew and Notaro are the trustees
of the Employees Pension Plan and the ESOP.
(c) Except as allotted to Messrs. Scully and Agnew as indicated above, does
not include 49,689 shares as of March 27, 1996 with respect to which the
St. Paul Federal Bank For Savings Deferred Compensation Trust has shared
voting and dispositive power. Dr. Fredian and Mr. Notaro are the trustees
of the Deferred Compensation Trust.

As of March 27, 1996, no persons are known by the Corporation to have filed
a beneficial ownership report with the SEC with regard to 5% or more of the
Corporation's outstanding Common Stock.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the 1934 Act requires the Corporation's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Corporation's equity securities, to file with the SEC initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Corporation. Officers, directors and greater
than ten-percent shareholders are required by SEC regulation to furnish the
Corporation with copies of all Section 16(a) forms they file.

To the Corporation's knowledge, based solely upon review of the copies of
such reports furnished to the Corporation and written representations that no
other reports were required, all Section 16(a) filing requirements applicable
to its officers, directors and greater than ten-percent beneficial owners were
complied with.

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 2)

The Board of Directors has appointed the firm of Ernst & Young LLP to
continue as independent auditors for the Corporation for the year ending
December 31, 1996, subject to ratification of such appointment by the
shareholders. Ernst & Young LLP was appointed as the independent auditors of
St. Paul Federal in 1981 and has performed audits for the Bank for the years
since then. Ernst & Young LLP has also served as the independent auditors of
the Corporation since its organization as the holding company of St. Paul
Federal. Unless otherwise indicated, properly executed proxies will be voted
in favor of ratifying the appointment of Ernst & Young LLP, independent
certified public accountants, to audit the books and accounts of the
Corporation for the year ending December 31, 1996. No determination has been
made as to what action the Board of Directors would take if the shareholders
do not ratify the appointment.

20
<PAGE>

Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting. They will be given an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.

DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
TO BE PRESENTED AT 1997 ANNUAL MEETING OF SHAREHOLDERS

Any proposal intended to be presented by any shareholder for action at the
1997 annual meeting of shareholders of the Corporation must be received by the
Secretary of the Corporation at 6700 West North Avenue, Chicago, Illinois
60635 not later than December 4, 1996 in order for the proposal to be
considered for inclusion in the proxy statement and proxy relating to the 1997
annual meeting. In addition, the Corporation's bylaws require that notice of
shareholder proposals and nominations for director be delivered to, or mailed
to and received at, the principal executive offices of the Corporation not
less than 30 days nor more than 90 days prior to the date of an annual
meeting, unless notice or public disclosure of the date of the meeting occurs
less than 45 days prior to the date of such meeting, in which event,
shareholders may deliver such notice not later than the 15th day following the
day on which notice of the date of the meeting was mailed or public disclosure
thereof was made. Nothing in this paragraph shall be deemed to require the
Corporation to include in its proxy statement and proxy relating to the 1997
annual meeting any shareholder proposal which does not meet all of the
requirements for inclusion established by the SEC in effect at the time such
proposal is received.

OTHER MATTERS

As of the date of this proxy statement, the Board of Directors of the
Corporation does not know of any other matters to be presented for action by
the shareholders at the Annual Meeting. If, however, any other matters not now
known are properly brought before the meeting, the persons named in the
accompanying proxy will vote such proxy in accordance with the determination
of a majority of the Board of Directors.

By Order of the Board of Directors

LOGO

Joseph C. Scully
Chairman of the Board and
Chief Executive Officer

Chicago, Illinois
April 3, 1996

21
<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
ITEM PAGE
---- ----
<S> <C>
Solicitation, Voting and Revocability of Proxies.......................... 1
Election of Directors..................................................... 2
Executive Compensation.................................................... 8
Stock Owned by Management and Principal Shareholders...................... 19
Ratification of Appointment of Independent Auditors....................... 20
Deadline for Submission of Shareholder Proposals to be Presented at 1997
Annual Meeting of Shareholders........................................... 21
Other Matters............................................................. 21
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

LOGO

--------------------------

PROXY STATEMENT

--------------------------

APRIL 3, 1996

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PROXY

REVOCABLE PROXY ST. PAUL BANCORP, INC. REVOCABLE PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned shareholder of St. Paul Bancorp, Inc. (the "Corporation")
hereby appoints Joseph C. Scully and Patrick J. Agnew, or either of them, with
full power of substitution in each, as proxies to cast all votes which the
undersigned shareholder is entitled to cast at the annual meeting of
shareholders to be held at 10:00 a.m. on May 15, 1996, at the Drury Lane
Oakbrook, 100 Drury Lane, Oakbrook Terrace, Illinois 60181, and at any
adjournments thereof, upon the following matters. The undersigned shareholder
hereby revokes any proxy or proxies heretofore given.

THIS PROXY WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED SHAREHOLDER. UNLESS
CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2 TO RATIFY THE APPOINTMENT OF
ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF THE CORPORATION FOR THE YEAR ENDING
DECEMBER 31, 1996 AND IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE
BOARD OF DIRECTORS AS TO OTHER MATTERS. THE UNDERSIGNED SHAREHOLDER MAY REVOKE
THIS PROXY AT ANY TIME BEFORE IT IS VOTED BY DELIVERING TO THE SECRETARY OF THE
CORPORATION EITHER A WRITTEN REVOCATION OF THE PROXY OR A DULY EXECUTED PROXY
BEARING A LATER DATE, OR BY APPEARING AT THE ANNUAL MEETING AND VOTING IN
PERSON. THE UNDERSIGNED SHAREHOLDER HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF
ANNUAL MEETING AND PROXY STATEMENT.
SEE REVERSE
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE) SIDE
<PAGE>

[X] Please mark votes as in this example.

IF YOU RECEIVE MORE THAN ONE PROXY CARD, PLEASE SIGN AND RETURN ALL CARDS IN THE
ACCOMPANYING ENVELOPE.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.

1. Election of each of three directors for a three-year term.
NOMINEES:
John W. Croghan, Kenneth J. James and Michael R. Notaro

FOR WITHHELD
[ ] [ ]

For, except vote withheld from the following nominee

[ ] ___________________________________________________

2. To ratify the appointment by the board of directors of the firm of Ernst &
Young LLP as independent auditors of the Corporation for the year ending
December 31, 1996.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]

THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING, OR ANY ADJOURNMENTS THEREOF, IN ACCORDANCE WITH THE
DETERMINATION OF A MAJORITY OF THE CORPORATION'S BOARD OF DIRECTORS.

MARK HERE MARK HERE
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT [ ] THE MEETING [ ]

Please date and sign exactly as name appears hereon. Each executor,
administrator, trustee, guardian, attorney-in-fact and other fiduciary should
sign and indicate his or her full title. When stock has been issued in the name
of two or more persons, all should sign.

Signature: ______________ Date: _______ Signature: ______________ Date: _______