222 West Second Street
SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant: Yes.
Filed by a Party other than the Registrant: No.
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as Permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
HOME FEDERAL BANCORP
(Name Of Registrant As Specified In Its Charter)
HOME FEDERAL BANCORP
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
(1) Title of each class of securities to which transaction
applies: N/A
(2) Aggregate number of securities to which transaction
applies: N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing. N/A
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[HOME FEDERAL LOGO]
222 West Second Street
Seymour, Indiana 47274
(812) 522-1592
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------
To Be Held On October 27, 1998
Notice is hereby given that the Annual Meeting of Shareholders of Home
Federal Bancorp (the "Corporation") will be held at the Holiday Inn, 2025 East
Tipton Street, Seymour, Indiana, on Tuesday, October 27, 1998, at 3:00 P.M.,
Eastern Standard Time.
The Annual Meeting will be held for the following purposes:
1. Election of Directors. Election of three directors of the Corporation
for terms expiring in 2001.
2. Amendment of Articles 5 and 6 of the Corporation's Articles of
Incorporation. Adoption of amendments to the Corporation's Articles of
Incorporation increasing the number of authorized shares of Common
Stock to 15,000,000 shares.
3. Other Business. Such other matters as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on September 9, 1998, are
entitled to vote at the meeting or any adjournment thereof.
We urge you to read the enclosed Proxy Statement carefully so that you may
be informed about the business to come before the meeting, or any adjournment
thereof. At your earliest convenience, please sign and return the accompanying
proxy in the postage-paid envelope furnished for that purpose.
A copy of our Annual Report for the fiscal year ended June 30, 1998, is
enclosed. The Annual Report is not a part of the proxy soliciting material
enclosed with this letter.
By Order of the Board of Directors
/s/ John K. Keach, Sr.
John K. Keach, Sr.
Chairman of the Board
Seymour, Indiana
September 24, 1998
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>
HOME FEDERAL BANCORP
222 West Second Street
Seymour, Indiana 47274
(812) 522-1592
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 27, 1998
This Proxy Statement is being furnished to the holders of common stock,
without par value ( "Common Stock"), of Home Federal Bancorp ("the
Corporation"), an Indiana corporation, in connection with the solicitation of
proxies by the Board of Directors of the Corporation for use at the Annual
Meeting of Shareholders of the Corporation to be held at 3:00 p.m., Eastern
Standard Time, at the Holiday Inn, 2025 East Tipton Street, Seymour, Indiana, on
October 27, 1998, and at any and all adjournments of such meeting. The principal
asset of the Corporation consists of 100% of the issued and outstanding shares
of Common Stock, $.01 par value per share, of Home Federal Savings Bank (the
"Bank"), a federal savings bank based in Seymour, Indiana. This Proxy Statement
is expected to be mailed to Shareholders on or about September 24, 1998.
A Notice of Annual Meeting and form of proxy accompany this Proxy
Statement. Any Shareholder giving a proxy has the right to revoke it, by
delivering written notice to the Secretary of the Corporation, by filing a later
proxy, or in person at the meeting, at any time before such proxy is exercised.
All proxies will be voted in accordance with the directions of the Shareholder
and, to the extent no directions are given, will be voted "for" items 1 and 2.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only Shareholders of record at the close of business on September 9, 1998
(the "Voting Record Date"), will be eligible to vote at the Annual Meeting or at
any adjournment thereof. Such Shareholders are entitled to one vote for each
share then held. As of that date, the Corporation had 5,142,288 shares of the
Corporation's Common Stock issued and outstanding. As of November 10, 1997, the
Corporation declared a 3 for 2 stock split of shares of Common Stock. All share
and option price figures set forth in this Proxy Statement have been adjusted to
reflect that split. A majority of the votes entitled to be cast, in person or by
proxy, at the Annual Meeting is necessary for a quorum. In determining whether a
quorum is present, Shareholders who abstain, cast broker non-votes, or withhold
authority to vote on one or more director nominees will be deemed present at the
Annual Meeting.
Management knows of no person who held more than 5% of the outstanding
shares of the Corporation's Common Stock on September 9, 1998, other than the
following:
<TABLE>
<CAPTION>
Number of Shares
Name and Address of of Common Stock Percent of
Beneficial Owner Beneficially Owned Class
---------------- ------------------ -----
<S> <C> <C>
John Hancock Advisers, Inc. (1) 335,700(1) 6.5%
John Hancock Mutual Life Insurance Company
The Berkeley Financial Group
John Hancock Subsidiaries, Inc.
101 Huntington Avenue
Boston, Massachuetts 02199
Heartland Advisors, Inc. 290,250(2) 5.64%
790 North Milwaukee Street
Milwaukee, WI 53202
Lawrence E. Hiler 286,537(3) 5.57%
P.O. Box 148
Walkerton, IN 46574
- -------------
Footnotes on following page.
</TABLE>
<PAGE>
(1) In a Schedule 13G filed with the SEC, the entities listed above indicated
that they may be the beneficial owners of the foregoing shares, all of
which are held by the John Hancock Regional Bank Fund, a registered
investment company. John Hancock Advisers, Inc. ("Advisers") acts as
investment adviser to that fund. The other entities listed above are parent
company affiliates of Advisers. Advisers has the sole power to vote and
dispose of the shares.
(2) The information is based on an amendment to a Schedule 13G Report filed by
the Shareholder with the Securities and Exchange Commission and dated
January 27, 1998, but otherwise does not reflect any changes in those
shareholdings which may have occurred since the date of such filing.
Heartland Advisors, Inc. is a registered investment advisor and the shares
shown above are held in its investment advisory accounts, including
Heartland Value Fund, a series of Heartland Group, Inc., a registered
investment company relating to more than 5% of the Corporation's
outstanding shares.
(3) The information is based on a Schedule 13D Report filed by the Shareholder
with the Office of Thrift Supervision on July 26, 1991, but otherwise does
not reflect any changes in those shareholdings which may have occurred
since the date of such filing, except for changes resulting from the
Corporation's stock splits.
PROPOSAL I -- ELECTION OF DIRECTORS
The Corporation's Board of Directors currently consists of seven members.
The Corporation's By-laws provide that the directors shall be divided into three
classes as nearly equal in number as possible. Directors of the Corporation are
generally elected to serve for a three-year period or until their respective
successors are elected and qualified. The three nominees for election as a
director this year are John T. Beatty, Harold Force and John K. Keach, Sr., each
of whom currently serves as a director. Mssrs. Beatty, Force and Keach, Sr. each
have been nominated to serve for a three-year term ending in 2001.
The following table sets forth certain information regarding the nominees
for election as a director and each director continuing in office after the
Annual Meeting. It is intended that the proxies solicited on behalf of the Board
of Directors (other than proxies as to which authorization is withheld) will be
voted at the Annual Meeting for the election of the nominees identified below.
If any nominee is unable or declines to serve (an event which the Board of
Directors does not anticipate), the proxies will have discretionary authority to
vote for a substitute nominee named by the Board of Directors if the Board
elects to fill such nominee's position. The table also sets forth the number of
shares of the Corporation's Common Stock beneficially owned by certain executive
officers of the Corporation and by all directors and executive officers of the
Corporation as a group. Mr. Keach, Jr. is the son of the Corporation's Chairman
of the Board.
<TABLE>
<CAPTION>
Shares of
Common
Positions Director Director Stock
Held With of the of the Term Beneficially Percent
the Bank Corporation to Owned on of
Name Age Corporation Since Since Expire 9/9/98(1) Class
- ---- --- -------------------------- ----- ------ ---------- -----
Director Nominees
<S> <C> <C> <C> <C> <C>
John T. Beatty 48 Director 1991 1992 2001 23,947(2) *
Harold Force 47 Director 1991 1992 2001 24,171(3) *
John K. Keach, Sr. 71 Chairman of the Board 1954 1990 2001 131,784(4) 2.56%
Directors Continuing
In Office
Lewis W. Essex 66 Director 1972 1990 2000 128,225(5) 2.49%
John K. Keach, Jr. 46 President and 1990 1990 1999 150,401(6) 2.92%
Chief Executive Officer
David W. Laitinen, MD 46 Director 1990 1990 1999 60,554(7) 1.18%
Harvard W. Nolting, Jr. 59 Director 1988 1990 2000 65,934(8) 1.28%
Executive Officers
Gerald L. Armstrong 58 Executive Vice 91,199(9) 1.77%
President and Chief
Operating Officer
Lawrence E. Welker 51 Executive Vice 136,260(10) 2.65%
President, Chief Financial
Officer, Treasurer and Secretary
S. Elaine Pollert 38 Senior Vice President, 44,154(11) *
Retail Banking
All executive officers and
directors as a group (10 persons) 856,629(12) 16.66%
</TABLE>
Footnotes on following page
<PAGE>
*Less than 1%.
(1) Includes shares beneficially owned by members of the immediate families of
the directors or director nominees residing in their homes. Unless
otherwise indicated, each nominee or director has sole investment and/or
voting power with respect to the shares shown as beneficially owned by him
or her.
(2) Includes 5,961 shares held jointly by Mr. Beatty and his wife and 17,986
shares subject to stock options granted under the Home Federal Bancorp
Stock Option Plan (the "Option Plan"), the Home Federal Bancorp 1993 Stock
Option Plan ("1993 Option Plan") or by the Corporation.
(3) Includes 225 shares held jointly by Mr. Force and his wife, and 23,441
shares subject to stock options granted under the Option Plan, the 1993
Option Plan or by the Corporation.
(4) Includes 49,500 shares held jointly by Mr. Keach and his wife.
(5) Includes 33,745 shares held by a trust of which Mr. Essex is a trustee and
beneficiary, 10,786 shares subject to stock options granted under the 1993
Option Plan or by the Corporation, and 44,043 shares owned by Mr. Essex's
mother as to which Mr. Essex has a power of attorney.
(6) Includes 71,399 shares held jointly by Mr. Keach and his wife, 4,228 shares
held by his wife and children, 61,787 shares subject to stock options
granted under the Stock Option Plan, the 1993 Option Plan and the Home
Federal Bancorp 1995 Stock Option Plan (the "1995 Option Plan") and 12,987
whole shares allocated as of June 30, 1998, to Mr. Keach's account under
the Home Federal Bancorp Employees Salary Savings Plan (the "401(k) Plan").
Does not include stock options for 50,468 shares which are not exercisable
within a period of 60 days following the Voting Record Date.
(7) Includes 25,476 shares held jointly by Dr. Laitinen and his wife, 24,292
shares held by Mrs. Laitinen for their minor children, and 10,786 shares
subject to stock options granted under the Option Plan, 1993 Option Plan or
by the Corporation.
(8) Includes 9,099 shares subject to stock options granted under the 1993 Stock
Option Plan or by the Corporation.
(9) Includes 68,858 shares subject to stock options granted under the Stock
Option Plan, the 1993 Option Plan and the 1995 Option Plan, and 9,919 whole
shares allocated as of June 30, 1998, to Mr. Armstrong's account under the
401(k) Plan. Does not include stock options for 28,947 shares which are not
exercisable within a period of 60 days following the Voting Record Date.
(10) Includes 70,425 shares held jointly by Mr. Welker and his wife, 1,012
shares held by Mrs. Welker for their minor children, 55,808 shares subject
to stock options granted under the Stock Option Plan, the 1993 Option Plan
and the 1995 Option Plan, and 9,015 whole shares allocated as of June 30,
1998, to Mr. Welker's account under the 401(k) Plan. Does not include stock
options for 28,947 shares which are not exercisable within a period of 60
days following the Voting Record Date.
(11) Includes 36,745 shares subject to stock options granted under the Stock
Option Plan, the 1993 Option Plan and the 1995 Option Plan, and 2,430 whole
shares allocated as of June 30, 1998, to Ms. Pollert's account under the
401(k) Plan.
(12) Includes 295,296 shares subject to stock options granted under the Stock
Option Plan, the 1993 Option Plan and the 1995 Option Plan, and outside of
those plans, and 34,351 whole shares allocated as of June 30, 1998, to the
accounts of participants in the 401(k) Plan. Does not include stock options
for 128,556 shares which are not exercisable within a period of 60 days
following the Voting Record Date.
The business experience of each of the above directors and director
nominees for at least the past five years is as follows:
John T. Beatty is President and Treasurer of Beatty Insurance, Inc.
Lewis W. Essex retired from his position as Chief Executive Officer of
Essex Castings, Inc. on January 1, 1996.
Harold Force has been President of Force Construction Company, Inc. since
1976.
John K. Keach, Sr. has been employed by the Bank since 1950. He served in
various positions until 1974, at which time be became President and Chief
Executive Officer. He was elected as Chairman of the Board in 1986. He resigned
as President, remaining Chief Executive Officer, in 1988. He resigned as Chief
Executive Officer as of July 1, 1994.
John K. Keach, Jr. has been employed by the Bank since 1974. In 1985, he
was elected Senior Vice President - Financial Services, in 1987 he became
Executive Vice President, and in 1988 he became President and Chief Operating
Officer. In 1994, he became President and Chief Executive Officer.
David W. Laitinen, MD has been an orthopedic surgeon in Seymour, Indiana
since 1983.
Harvard W. Nolting, Jr. was a co-owner of Nolting Foods, Inc. (grocery
chain) for over 30 years before his retirement in 1994.
Directors will be elected upon receipt of a plurality of votes cast at the
Annual Meeting. Plurality means that individuals who receive the largest number
of votes cast are elected up to the maximum number of directors to be chosen at
the meeting. Abstentions, broker non-votes, and instructions on the accompanying
proxy to withhold authority to vote for one or more of the nominees will result
in the respective nominees receiving fewer votes. However, the number of votes
otherwise received by the nominee will not be reduced by such action.
Meetings and Committees of the Board of Directors of the Corporation
The Board of Directors meetings are generally held on a monthly basis. The
Board of Directors held a total of eleven meetings during the fiscal year ended
June 30, 1998. No incumbent director attended fewer than 75% of the sum of the
meetings of the Board of Directors held while he served as a director and the
meetings of committees on which he served.
The Audit Committee, comprised of Messrs. Essex (Chairman), Beatty, Force,
and Nolting, Jr., recommends the appointment of the Corporation's independent
accountants in connection with its annual audit, and meets with them to outline
the scope and review the results of such audit. That committee met three times
during the Corporation's fiscal year ended June 30, 1998.
The Board of Directors of the Corporation has a Compensation Committee, the
members of which are Messrs. Nolting, Jr. (Chairman), Keach, Sr., Laitinen and
Keach, Jr., which reviews payroll costs and salary recommendations and sets
salary guidelines. During the fiscal year ended June 30, 1998, the Compensation
Committee met one time.
The Corporation's Stock Option Committee administers the Stock Option Plan,
the 1993 Option Plan, and the 1995 Option Plan. It met one time during the
fiscal year ended June 30, 1998. Its members are all of the directors except
Messrs. Keach, Sr. and Keach, Jr.
The Corporation's Nominating Committee nominated the slate of directors set
forth in the Proxy Statement. The Nominating Committee held one meeting for the
fiscal year ended June 30, 1998. The members of the Nominating Committee for the
1998 Annual Meeting were Messrs. Laitinen (Chairman), Nolting and Essex. The
Nominating Committee will consider the nomination of any Shareholder of the
Corporation entitled to vote for the election of directors at the meeting who
has given timely notice in writing to the Secretary of the Corporation as
provided in the Corporation's By-laws. To be timely, a Shareholder's notice must
be delivered to or mailed and received by the Secretary of the Corporation not
less than 60 days prior to the meeting, unless less than 70 days' notice or
prior public disclosure of the date of the meeting is given or made to
Shareholders (which notice or public disclosure shall include the date of the
Annual Meeting specified in publicly-available By-laws, if the Annual Meeting is
held on such date), in which case the notice by a Shareholder must be received
no later than the close of business on the 10th day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made.
Management Remuneration and Related Transactions
Joint Report of the Compensation Committee and the Stock Option Committee
The Compensation Committee of the Board of Directors was comprised during
fiscal 1998 of Messrs. Nolting, Jr. (Chairman), Keach, Sr., Laitinen and Keach,
Jr. The Committee reviews payroll costs, establishes policies and objectives
relating to compensation, and approves the salaries of all employees, including
executive officers. All decisions by the Compensation Committee relating to
salaries of the Corporation's executive officers are approved by the full Board
of Directors. In fiscal 1998, there were no modifications to Compensation
Committee actions and recommendations made by the full Board of Directors. In
approving the salaries of executive officers, the Committee has access to and
reviews compensation data for comparable financial institutions in the Midwest.
Moreover, from time to time the Compensation Committee reviews information
provided to it by independent compensation consultants in making its decisions.
The Corporation's Stock Option Committee administers the Stock Option Plan,
the 1993 Option Plan, and the 1995 Option Plan. Its members are all of the
Corporation's outside directors.
The objectives of the Compensation Committee and the Stock Option Committee
with respect to executive compensation are the following:
(1) provide compensation opportunities comparable to those offered by other
similarly situated financial institutions in order to be able to
attract and retain talented executives who are critical to the
Corporation's long-term success;
(2) reward executive officers based upon their ability to achieve
short-term and long-term strategic goals and objectives and to enhance
shareholder value; and
(3) align the interests of the executive officers with the long-term
interests of Shareholders by granting stock options which will become
more valuable to the executives as the value of the Corporation's
shares increases.
At present, the Corporation's executive compensation program is comprised
of base salary, annual incentive bonuses and long-term incentive bonuses in the
form of stock options. Reasonable base salaries are awarded based on salaries
paid by comparable financial institutions, particularly in the Midwest, and
individual performance. The annual incentive bonuses are tied to the
Corporation's performance in the areas of growth, profit, quality, and
productivity as they relate to earnings per share and return on equity for the
current fiscal year, and stock options have a direct relation to the long-term
enhancement of Shareholder value. In years in which the performance goals of the
Corporation are met or exceeded, executive compensation tends to be higher than
in years in which performance is below expectations.
Base Salary. Base salary levels of the Corporation's executive officers are
intended to be comparable to those offered by similar financial institutions in
the Midwest. In determining base salaries, the Compensation Committee also takes
into account individual experience and performance.
Mr. Keach, Jr. was the Corporation's Chief Executive Officer throughout
fiscal 1998. Mr. Keach, Jr.'s salary was increased from $205,189 in fiscal 1997
to $225,629 in fiscal year 1998. In recommending this increase, the Compensation
Committee considered the Corporation's financial performance for the prior
fiscal year.
Annual Incentive Bonuses. Under the Corporation's Annual Incentive Plan,
all employees of the Corporation receive a cash bonus for any fiscal year in
which the Corporation achieves certain goals, as established by the Board of
Directors, in the areas of growth, profit, quality and productivity as they
relate to earnings per share and return on equity. Individual bonuses are equal
to a percentage of the employee's base salary, which percentage varies with the
extent to which the Corporation exceeds these goals for the fiscal year.
The Corporation believes that this program provides an excellent link
between the value created for Shareholders and the incentives paid to
executives, since executives receive no bonuses unless the above-mentioned goals
are achieved and since the level of those bonuses will increase with greater
achievement of those goals.
Mr. Keach, Jr.'s bonus for fiscal 1998 was $56,738 compared to $42,525 for
fiscal 1997.
Stock Options. The Stock Option Plan, the 1993 Option Plan, and the 1995
Option Plan are the Corporation's long-term incentive plans for executive
officers and other key employees. These plans align executive and Shareholder
long-term interests by creating a strong and direct link between executive pay
and Shareholder return, and enable executives to acquire a significant ownership
position in the Corporation's Common Stock. Stock options are granted at the
prevailing market price and will only have a value to the executives if the
stock price increases. The Stock Option Committee determines the number of
option grants to be made to executive officers based on the practices of
comparable financial institutions as well as the executive's level of
responsibility and contributions to the Corporation.
Mr. Keach, Jr. received a grant of stock options for 15,000 shares of
Common Stock during fiscal year 1998. See "Management Remuneration and Related
Transactions-- Stock Options."
Finally, the Committee notes that Section 162(m) of the Internal Revenue
Code, in certain circumstances, limits to $1 million the deductibility of
compensation, including stock-based compensation, paid to top executives by
public companies. None of the compensation paid to the executive officers named
in the compensation table on page 6 exceeded the threshold for deductibility
under section 162(m).
The Compensation Committee and the Stock Option Committee believe that
linking executive compensation to corporate performance results in a better
alignment of compensation with corporate goals and the interests of the
Corporation's Shareholders. As performance goals are met or exceeded, most
probably resulting in increased value to Shareholders, executives are rewarded
commensurately. The Committee believes that compensation levels during fiscal
1998 for executives and for the chief executive officer adequately reflect the
Corporation's compensation goals and policies.
Compensation Committee Members Stock Option Committee Members
------------------------------ ------------------------------
Harvard W. Nolting, Jr. John T. Beatty
John K. Keach, Sr. Lewis W. Essex
John K. Keach, Jr. Harold Force
David W. Laitinen David W. Laitinen
Harvard W. Nolting, Jr.
Remuneration of Named Executive Officers
During the last three fiscal years, no cash compensation was paid directly
by the Corporation to any of its executive officers. Each of such officers was
compensated by the Bank.
The following table sets forth information as to annual, long-term and
other compensation for services in all capabilities to the Corporation and its
subsidiaries for each of the Corporation's last three fiscal years of (i) the
individual who served as chief executive officer of the Corporation during the
fiscal year ended June 30, 1998, and (ii) each executive officer of the
Corporation serving as such during the 1998 fiscal year, who earned over
$100,000 in salary and bonuses during that year (the "Named Executive
Officers").
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards
------------------------------------- -----------------------
Name and Principal Other Annual Restricted Securities All Other
Position During Last Fiscal Compensation Stock Underlying Compensation
Fiscal Year Year Salary($)(1) Bonus($)(2) ($)(3) Awards($) Options(#) ($)(4)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John K. Keach, Jr. 1998 $225,629 $56,738 -- -- 15,000 $2,935
President and Chief 1997 $205,189 $42,525 -- -- 22,500 $2,714
Executive Officer 1996 $187,014 $46,620 -- -- -- $2,537
and Director
Gerald L. Armstrong 1998 $133,019 $27,515 -- -- 10,000 $2,842
Executive Vice 1997 $126,447 $21,525 -- -- 15,000 $2,745
President and Chief 1996 $120,473 $24,570 -- -- -- $2,590
Operating Officer
Lawrence E. Welker 1998 $124,620 $26,482 -- -- 10,000 $2,297
Executive Vice President 1997 $115,360 $20,188 -- -- 15,000 $2,122
Chief Financial Officer, 1996 $106,500 $22,365 -- -- -- $1,946
Treasurer and Secretary
S. Elaine Pollert 1998 $100,015 $21,250 -- -- -- $1,632
Senior Vice President, 1997 $ 82,366 $14,292 -- -- -- $1,349
Retail Banking 1996 $ 64,969 $13,230 -- -- -- $1,052
</TABLE>
(1) Includes amounts deferred by the Corporation's executive officers pursuant
to ss.401(k) of the Internal Revenue Code of 1986, as amended (the "Code"),
under the 401(k) Plan.
(2) The bonus amounts were paid under the Bank's Annual Incentive Plan.
(3) Each Named Executive Officer of the Corporation receives certain
perquisites, but the incremental cost of providing such perquisites does
not exceed the lesser of $50,000 or 10% of the officer's salary and bonus.
(4) Includes the Bank's contributions on behalf of the Named Executive Officers
to the 401(k) Plan.
Stock Options
The following table sets forth information related to options granted
during fiscal year 1998 to the Named Executive Officers.
<TABLE>
<CAPTION>
Option Grants - Last Fiscal Year
Individual Grants
% of Total
Options Granted Exercise or
Options to Employees Base Price Expiration
Name Granted(#)(1) In Fiscal Year ($/Share)(2) Date(3)
---- ------------- -------------- ------------ -------
<S> <C> <C> <C> <C>
John K. Keach, Jr. 15,000 14.32% $26.5625 12/22/07
Gerald L. Armstrong 10,000 9.55% $26.5625 12/22/07
Lawrence E. Welker 10,000 9.55% $26.5625 12/22/07
S. Elaine Pollert 10,000 9.55% $26.5625 12/22/07
</TABLE>
(1) Options to acquire shares of the Holding Company's Common Stock.
(2) The option exercise price may be paid in cash or with the approval of the
Stock Option Committee in shares of Holding Company Common Stock or a
combination thereof. The option exercise price equaled the market value of
a share of the Holding Company Common Stock on the date of grant.
(3) Mr. Keach's options became exercisable as to 4,090 shares on June 23, 1998,
and become exercisable as to 3,382 shares on Janury 1, 2005, and as to
3,764 shares on the first days of 2006 and 2007. Mr. Armstrong's and Mr.
Welker's options become exercisable as to 3,466 shares on January 1, 2002,
as to 3,764 shares on January 1, 2003, and as to 2,770 shares on January 1,
2004. Ms. Pollert's options become exercisable as to 1,292 shares on
January 1, 2000, as to 3,764 shares on January 1, 2001 and on January 1,
2003, and as to 1,180 shares on January 1, 2003.
The following table includes information relating to option exercises by
the Named Executive Officers during fiscal 1998 and the number of shares covered
by both exercisable and unexercisable stock options held by the Named Executive
Officers as of June 30, 1998. Also reported are the values for "in-the-money"
options (options whose exercisable price is lower than the market value of the
shares at fiscal year end) which represent the spread between the exercise price
of any such existing stock options and the fiscal year-end market price of the
stock.
Aggregate Option Exercises in Last Fiscal Year and
Outstanding Stock Option Grants And Value Realized As Of 6/30/98
<TABLE>
<CAPTION>
Value of
Number of In-the-Money
Securities Underlying Options
Unexercised Options at Fiscal Year
at Fiscal Year End(#) End($)(1)
--------------------- --------------
Shares
Acquired on Value
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John K. Keach, Jr. 2,812 $70,075 61,787 50,468 $1,205,291 $641,824
Gerald L. Armstrong --- $ --- 68,858 28,947 $1,494,554 $302,133
Lawrence E. Welker --- $ --- 55,808 28,947 $1,148,207 $302,133
S. Elaine Pollert 1,687 $42,403 36,745 20,194 $1,111,536 $610,869
</TABLE>
(1) Amounts reflecting gains on outstanding in-the-money options are based on
the June 30, 1998, average between the high and low prices for the stock,
which was $30.25.
Employment Agreements
The Bank has three-year employment contracts with the following executive
officers: Lawrence E. Welker, John K. Keach, Jr., Gerald Armstrong and S. Elaine
Pollert (collectively, the "Employees"). The Corporation has guaranteed the
Bank's obligations under these contracts. The contracts can be extended annually
for additional one-year terms to maintain a three-year term unless notice is
properly given by either party to the contract, and have been so extended. The
Employees receive their current salary, which salary is subject to increases
approved by the Board of Directors. The contract also provides, among other
things, for participation in other fringe benefits and benefit plans available
to Bank employees. The Employees may terminate their employment upon 30 days'
written notice to the Bank. The Bank may discharge the Employees for "cause"
(generally, dishonesty, incompetence, forms of misconduct, or certain legal
violations) at any time or in certain events specified by Office of Thrift
Supervision regulations. Upon termination of an Employee's employment by the
Bank for other than cause or in the event of termination by an Employee for
"cause" (generally, material changes in duties or authority or breaches by the
Bank of the contract), that Employee will receive his or her base compensation
under the contract (a) for an additional three years if the termination follows
a change of control not approved in advance by the Board of Directors
(generally, material changes in the owners of shares of the Bank or in the
composition of its Board of Directors), or (b) for the remaining term of the
contract, if the termination does not follow a change of control. In addition,
during such period, the Employee will continue to participate in the Bank's
group insurance plans or receive comparable benefits. Moreover, within a period
of three months after such termination following a change of control, the
Employee will have the right to cause the Bank to purchase any stock options he
or she holds for a price equal to the fair market value (as defined in the
contract) of the shares subject to such options minus their option price. If the
payments provided for in the employment agreement together with any other
payments made to an Employee by the Bank are deemed to be payments in violation
of the "golden parachute" rules of the Code, such payments will be reduced to
the largest amount which would not cause the Bank to lose a tax deduction for
such payments under those rules. The cash compensation which would be paid under
these contracts to the four Named Executive Officers if the contracts were
terminated as of the date hereof after a change of control for other than cause
by the Bank or for cause by the Employees, would be the following:
Named Executive Officer Cash Compensation
----------------------- -----------------
John K. Keach, Jr. $705,000
Gerald L. Armstrong $420,900
Lawrence E. Welker $391,560
S. Elaine Pollert $330,000
The employment contracts provide the Bank protection of its confidential
business information and protection from competition by the Employees should any
of them voluntarily terminate his or her employment without cause or be
terminated by the Bank for cause.
The existence of these contracts may make a merger, other business
combination or change of control of the Bank more difficult or less likely. This
is because, unless the Employees are allowed to maintain their positions and
authority with the Bank, they will be entitled to payments which in the
aggregate may be deemed to be substantial. However, the employment contracts
provide security to the Employees, and the Board of Directors believes that it
will encourage their objective evaluation of opportunities for mergers, other
business combinations or other transactions involving a change of control of the
Corporation or the Bank since they will be in a position to evaluate such
transactions without significant concerns about the manner in which such
transactions will affect their financial security.
Compensation of Directors
Monthly Fee. Directors of the Corporation are not currently paid director's
fees. Each director of the Bank receives $600 per regular meeting attended, $300
per special meeting attended, and a $3,300 quarterly retainer. If a director
misses more than three consecutive meetings, he is removed from the Board.
Stock Options to Outside Directors. On October 28, 1997, the Corporation's
five outside directors received automatically under the 1993 Option Plan a
non-qualified stock option to purchase 1,431 shares of the Corporation's Common
Stock for $23.50 per share.
The options are exercisable in whole or in part at any time from and after
six months following their grant until ten years and one day following their
grant, except that such options will terminate, if not previously exercised, six
months after the optionholders cease to be directors of the Corporation for any
reason other than death. If the optionholder dies while a director of the
Corporation or within six months after he ceases to be a director, the option
may be exercised by his executor, administrator or estate beneficiaries within
one year following the date of his death but not later than the last day of the
option term.
The options are nontransferable other than by will or the laws of descent
and distribution and must be exercised by delivering a cash payment equal to the
exercise price to the Corporation.
Deferred Compensation for Outside Directors. The Bank entered into deferred
compensation agreements with the five outside directors. Under these agreements,
each outside director deferred all or part of his monthly fee during a period of
five years from June, 1992, to May, 1997, and will subsequently receive deferred
compensation after he reaches his normal retirement date (as outlined below) or
upon his death. The annual deferred compensation benefits payable to each of the
outside directors is as follows:
Amount of Annual
Name of Individual Deferred Compensation
------------------ ----------------------
David W. Laitinen $91,231
Harold Force $79,757
John T. Beatty $65,239
Harvard W. Nolting, Jr. $32,357
Lewis W. Essex $28,320
The normal retirement date for Messrs. Beatty, Force, and Laitinen is the
first day of the month following the date on which they reach 60, for Mr.
Nolting is the first day of the month following the date on which he reaches 65,
and for Mr. Essex is the first day of the month following the date on which he
reaches 70. The deferred compensation is payable to Messrs. Beatty, Force,
Laitinen and Nolting for a period of 15 years and is payable to Mr. Essex for a
period of 10 years.
Directors Emeritus Benefits
Effective April 1, 1992, in consideration of a director serving as Director
Emeritus, any Director Emeritus is paid an amount equal to 3/4 of the monthly
fee paid to directors at the time of his retirement from the Board.
Pension Plan
The Bank's employees are included in a pension plan administered by
Pentegra Group. Separate actuarial valuations are not made for individual
members of the plan. The Bank's employees are eligible to participate in the
plan once they have completed one year of service for the Bank and have attained
the age of 21 years.
The plan provides for monthly retirement benefits determined on the basis
of the employee's years of service and the employee's average base salary for
the five consecutive years of his or her employment producing the highest
average. Early retirement, disability, and death benefits are also payable under
the plan, depending upon the participant's age and years of service. During
fiscal 1998, the Bank did not make a contribution to the pension plan as the
pension plan was fully funded.
The following table indicates the annual retirement benefit that would be
payable under the plan upon retirement at age 65 to a participant electing to
receive his or her retirement benefit in the standard form of benefit, assuming
various specified levels of plan compensation and various specified years of
credited service.
<TABLE>
<CAPTION>
Highest Five-Year Years of Benefit Service
Average Annual -----------------------------------------------------------------------------
Compensation 10 20 30 40 50
- ----------------- ------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$100,000 $19,200 $ 38,400 $ 57,700 $ 77,300 $ 97,300
$120,000 $23,200 $ 46,400 $ 69,700 $ 93,300 $ 117,300
$140,000 $27,200 $ 54,400 $ 81,700 $ 109,300 $ 137,300
$160,000 $31,200 $ 62,400 $ 93,700 $ 125,300 $ 157,300
$180,000 $35,200 $ 70,400 $ 105,700 $ 141,300 $ 177,300
$200,000 $39,200 $ 78,400 $ 117,700 $ 157,300 $ 197,300
$220,000 $43,200 $ 86,400 $ 129,700 $ 173,300 $ 217,300
$240,000 $47,200 $ 94,400 $ 141,702 $ 189,300 $ 237,300
</TABLE>
Benefits are currently subject to maximum Code limitations of $130,000 per year.
The years of service credited under the pension plan as of June 30, 1998, to the
Named Executive Officers are as follows:
Name of Executive Officer Years of Service
------------------------- ----------------
John K. Keach, Jr. 24
Gerald L. Armstrong 5
Lawrence E. Welker 19
S. Elaine Pollert 11
The compensation covered by the pension plan for purposes of computing
their benefits is the equivalent of the compensation set forth in the salary
column in the chart on page 6.
Supplemental Retirement Income and Deferred Compensation Program
The Bank has entered into either supplemental retirement agreements or
deferred compensation agreements with its executive officers and with eight
other current or former employees deemed by the management of the Bank to be key
employees. These agreements provide the key employees of the Bank with
supplemental retirement benefits after the employee reaches his or her normal
retirement date, upon earlier termination of his or her employment, unless such
termination is for cause, or upon his or her death. The normal retirement date
for John Keach, Jr. and Lawrence E. Welker is the first day of the month
coincident with or next following his attainment of age 60, for Gerald Armstrong
is the first day of the month coincident with or next following his attainment
of age 65, and for Elaine Pollert is the first day of the month coincident with
or next following her attainment of age 65. The annual benefits are payable to
those persons for a period of 15 years.
The annual benefits for the Named Executive Officers are equal to the
amounts specified below:
Name of Executive Officer Amount of Annual Benefit
------------------------- ------------------------
John K. Keach, Jr. $82,664
Gerald L. Armstrong $67,343
Lawrence E. Welker $58,649
S. Elaine Pollert $44,664
The agreements provide reduced annual benefits for the executive officers
electing early retirement. If the executive officer leaves before early
retirement, the annual benefits are further reduced, and such reduction is
dependent on his or her years of service with the Bank, completed after the date
the agreements were executed. In the event of a change of control of the Bank,
the reductions described above are somewhat decreased. While the benefits are
paid from the general assets of the Bank, the Bank has secured key person life
insurance in order to provide the Bank with the funds necessary to provide the
benefits described above. Under the supplemental retirement agreements, if an
executive officer or employee is terminated for cause, all benefits under his or
her agreement are forfeited.
Performance Graph
The following graph shows the performance of the Corporation's Common Stock
since June 30, 1993, in comparison to the NASDAQ Stock Market - U.S. Index and
the NASDAQ Bank Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG HOME FEDERAL BANCORP, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ BANK INDEX
[GRAPH OMITTED]
6/93 6/94 6/95 6/96 6/97 6/98
------ ------ ------ ------ ------ ------
Home Federal Bancorp 100.00 100.61 123.26 138.81 232.20 374.79
NASDAQ Stock Market (U.S.) 100.00 100.96 134.77 173.03 210.38 277.69
NASDAQ Bank 100.00 113.73 128.45 167.18 261.36 362.74
* $100 INVESTED ON 6/30/93 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
Transactions With Certain Related Persons
The Bank has followed the policy of offering to its directors, officers and
employees and their associates, real estate mortgage loans for the financing of
their principal residences; consumer loans; and, in certain cases, commercial
loans. These loans are made in the ordinary course of business on substantially
the same terms and collateral as those of comparable transactions prevailing at
the time and do not involve more than the normal risk of collectibility or
present other unfavorable features.
Compensation Committee Interlocks and Insider Participation
The members of the Corporation's Compensation Committee are Messrs.
Nolting, Jr. (Chairman), Keach, Sr., Laitinen and Keach, Jr. Messrs. Keach, Sr.
and Keach, Jr. are each officers of the Corporation. All of the outside
directors of the Corporation are members of the Stock Option Committee.
PROPOSAL II -- AMENDMENT OF CORPORATION'S
ARTICLES OF INCORPORATION TO INCREASE
AUTHORIZED SHARES OF COMMON STOCK
On September 9, 1998, the number of the Corporation's outstanding shares of
Common Stock was 5,142,288; the number of shares of Common Stock reserved for
the exercise of rights under the Shareholder Rights Plan was 5,142,288, and the
number of shares reserved for issuance under the Corporation's stock option
plans was 207,487, leaving 2,150,225 remaining authorized and unreserved shares
of Common Stock.
Proposal II is being proposed to make available additional shares of Common
Stock for general corporate purposes, including acquisitions, financings, stock
dividends, and stock splits. In addition, the Board has concluded that it would
be in the best interest of the Corporation to be in a position to continue to
expand its banking operations by means of bank acquisitions involving the
issuance of its capital stock. In the judgment of management, the additional
shares authorized by Proposal II should be available to provide flexibility in
corporate decisions in the event shares should be needed for any such desirable
corporate purpose. At this time, the Corporation has no specific plans,
understandings, or arrangements for issuing any of the shares of capital stock
to be authorized by Proposal II. If additional shares are issued, the percentage
ownership interests of existing Shareholders would be reduced and, depending on
the terms pursuant to which new shares are issued, the book value and earnings
per share of outstanding stock might be diluted. Moreover, such additional share
issuance could be construed as having an anti-takeover effect because the
percentage ownership of a potential acquiror would be reduced upon the issuance
of additional shares. No consideration was given by the Board of Directors to
the use of any such additional shares as an "anti-takeover" measure.
If Proposal II is adopted by the Shareholders, the Board of Directors could
authorize the issuance of any authorized but unissued shares, including those
authorized by Proposal II, on terms determined by it without further action by
the Shareholders, unless issued in a transaction, such as a merger or
consolidation, requiring Shareholder approval. All attributes of additional
Common Stock to be authorized would be the same as those of the existing shares
of Common Stock. There are no preemptive rights with respect to the
Corporation's shares of Common Stock.
If the proposed amendments are adopted, Article 5 and Section 6.01 and
Article 6 would read as follows:
ARTICLE 5
Number of Shares
The total number of shares which the Corporation shall have
authority to issue is Seventeen Million (17,000,000) shares, all of
which are without par value.
ARTICLE 6
Terms of Shares
Section 6.01. Designation of Classes, Number and Par Value of
Shares. The shares of authorized capital shall be divided into Two
Million (2,000,000) shares of Preferred Stock, without par value, as
hereinafter provided ("Preferred Stock"), and Fifteen Million
(15,000,000) shares of Common Stock, without par value ("Common
Stock"), as hereinafter provided.
Provided that a quorum of shares of Common Stock is represented at the
Annual Meeting in person or by proxy (a "quorum" constituting a majority of the
outstanding shares of Common Stock), the affirmative vote of a greater number of
shares than the number of shares voted in opposition will be required for
approval of Proposal II. Proposal II, if approved and adopted, will become
effective upon filing of Articles of Amendment in the Office of the Secretary of
State of Indiana. If the Shareholders approve Proposal II, the Corporation
intends to accomplish this filing as soon as practicable. The Board of Directors
recommends a vote FOR Proposal II and, unless directed otherwise, the proxies
named in the proxy will vote the shares represented by each proxy received by
them FOR Proposal II.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 ("1934 Act") requires
that the Corporation's officers and directors and persons who own more than 10%
of the Corporation's Common Stock file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC"). Officers,
directors and greater than 10% Shareholders are required by SEC regulations to
furnish the Corporation with copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by it,
and/or written representations from certain reporting persons that no Forms 5
were required for those persons, the Corporation believes that during the fiscal
year ended June 30, 1998, all filing requirements applicable to its officers,
directors and greater than 10% beneficial owners with respect to Section 16(a)
of the 1934 Act were complied with.
ACCOUNTANTS
The firm of Deloitte & Touche has been selected as the Corporation's
principal independent accountant for the current fiscal year. Deloitte & Touche
has served as auditors for the Corporation since 1984. It is expected that
representatives of the firm will be present at the Annual Meeting to make any
statements they desire to make and to answer questions directed to them.
SHAREHOLDER PROPOSALS
Any proposal which a Shareholder wishes to have presented at the next
Annual Meeting to be held in October, 1999, and included in the Proxy Statement
and form of proxy relating to that meeting must be received by the Corporation
at its principal executive offices no later than 120 days in advance of
September 24, 1999. Any such proposals should be sent to the attention of the
Secretary of the Corporation, 222 West Second Street, P.O. Box 648, Seymour,
Indiana 47274-0648. A Shareholder proposal being submitted outside the processes
of Rule 14a-8 promulgated under the 1934 Act will be considered untimely if it
is received by the Holding Company later than 45 days in advance of September
24, 1999.
GENERAL
The Board of Directors knows of no matters which are to be presented at the
Annual Meeting other than those stated in the Notice of Annual Meeting and
referred to in this Proxy Statement. If any other matters should properly come
before the meeting, it is intended that the proxies will be voted, with respect
to them, in accordance with the recommendations of the Board of Directors.
The cost of soliciting proxies in the accompanying form will be borne by
the Corporation. In addition to solicitations by mail, some of the officers and
regular employees of the Corporation, who will receive no special compensation
therefor, may solicit proxies by telephone, telegraph or personal visits, and
the cost of such additional solicitation, if any, will be borne by the
Corporation.
Each Shareholder is urged to complete, date and sign the proxy and return
it promptly in the enclosed return envelope.
Insofar as any of the information in this Proxy Statement may rest
peculiarly within the knowledge of persons other than the Corporation, the
Corporation relies upon information furnished by others for the accuracy and
completeness thereof.
By Order of the Board of Directors
/s/ John K. Keach, Sr.
John K. Keach, Sr.
Chairman of the Board
September 24, 1998
<PAGE>
REVOCABLE PROXY
HOME FEDERAL BANCORP
Annual Meeting of Shareholders
October 27, 1998
The undersigned hereby appoints Gerald L. Armstrong and Lawrence E. Welker,
with full powers of substitution, to act as attorneys and proxies for the
undersigned to vote all shares of capital stock of Home Federal Bancorp which
the undersigned is entitled to vote at the Annual Meeting of Shareholders to be
held at the Holiday Inn, Seymour, Indiana, on Tuesday, October 27, 1998, at 3:00
P.M., and at any and all adjournments thereof, as follows:
1. The election as directors of all nominees listed below for three year
terms, except as marked to the contrary.
[ ] FOR [ ] VOTE WITHHELD
INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below:
John T. Beatty Harold Force John K. Keach, Sr.
(each for a three year term)
2. To amend the Articles of Incorporation to increase the authorized shares of
common stock from 7,500,000 shares to 15,000,000 shares.
[ ] 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 thereof.
The Board of Directors recommends a vote "FOR" each of the listed propositions.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
This proxy may be revoked at any time prior to the voting thereof.
The undersigned acknowledges receipt from Home Federal, prior to the
execution of this proxy, of a notice of the Meeting, a proxy statement and an
Annual Report to shareholders.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH 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.
Date _______________________, 1998
----------------------------------------------------
Print Name of Shareholder
----------------------------------------------------
Signature of Shareholder
----------------------------------------------------
Print Name of Shareholder
----------------------------------------------------
Signature of Shareholder
Please sign as your name appears on the envelope
in which this card was mailed. 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
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
