<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant /X/
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
HF Financial Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
-----------------------
FINANCIAL CORP.
P.O. BOX 5000
SIOUX FALLS, SOUTH DAKOTA 57117-5000
PHONE (605) 333-7556 * FAX (605) 333-7621
October 17, 1997
Dear Fellow Stockholder:
On behalf of the Board of Directors of HF Financial Corp., I cordially
invite you to attend the Annual Meeting of Stockholders of the Corporation to be
held at 2:00 p.m., Sioux Falls, South Dakota time, on November 19, 1997, at the
Best Western Ramkota Inn located at 2400 North Louise Avenue, Sioux Falls, South
Dakota.
Stockholders are being asked to vote upon the election of three directors of
the Corporation and to ratify the appointment of McGladrey & Pullen, LLP as
auditors for the Corporation. Your Board of Directors unanimously recommends
that you vote FOR each of the nominees for director and FOR the ratification of
McGladrey & Pullen, LLP.
I encourage you to attend the Meeting in person. Whether or not you plan to
attend, however, PLEASE READ THE ENCLOSED PROXY STATEMENT AND THEN COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTPAID
RETURN ENVELOPE AS PROMPTLY AS POSSIBLE. This will save the Corporation
additional expense in soliciting proxies and will ensure that your shares are
represented at the Meeting.
Thank you for your attention to this important matter.
Very truly yours,
/s/ Curtis L. Hage
CURTIS L. HAGE
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
<PAGE>
HF FINANCIAL CORP.
225 SOUTH MAIN AVENUE
SIOUX FALLS, SOUTH DAKOTA 57102
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 19, 1997
------------------------
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of HF Financial Corp. (the "Corporation") will be held at 2:00 p.m.
Sioux Falls, South Dakota time, on November 19, 1997, at the Best Western
Ramkota Inn located at 2400 North Louise Avenue, Sioux Falls, South Dakota.
A proxy card and a Proxy Statement for the Meeting are enclosed along with
the 1997 Annual Report to Stockholders. The Meeting is for the purpose of
considering and acting upon:
1. The election of three directors of the Corporation;
2. The ratification of the appointment of McGladrey & Pullen, LLP as
auditors of the Corporation for the fiscal year ending June 30, 1998; and
such other matters as may properly come before the Meeting or any adjournments
or postponements thereof. The Board of Directors is not aware of any other
business to come before the Meeting.
Any action may be taken on any one of the foregoing proposals at the Meeting
on the date specified above, or on any date or dates to which the Meeting may be
adjourned or postponed. Stockholders of record at the close of business on
September 30, 1997, are the stockholders entitled to vote at the Meeting and any
adjournments or postponements thereof.
A complete list of stockholders entitled to vote at the Meeting is available
for examination by any Stockholder, for any purpose germane to the Meeting,
between 9:00 A.M. and 3:00 P.M. on days which the Corporation is open for
business, at the main office of the Corporation located at 225 South Main
Avenue, Sioux Falls, South Dakota for a period of twenty days prior to the
meeting.
You are requested to complete, sign and date the enclosed proxy card, which
is solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed postpaid return envelope. The proxy will not be used if you attend and
vote at the Meeting in person.
By Order of the Board of Directors,
/s/ Donald F. Bertsch
DONALD F. BERTSCH
SECRETARY
Sioux Falls, South Dakota
October 17, 1997
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXY CARDS WILL SAVE THE CORPORATION THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A
PRE-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
HF FINANCIAL CORP.
225 SOUTH MAIN AVENUE
SIOUX FALLS, SOUTH DAKOTA 57102
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 19, 1997
------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of HF Financial Corp. (the
"Corporation") to be used at the Annual Meeting of Stockholders of the
Corporation (the "Meeting"), to be held at the Best Western Ramkota Inn located
at 2400 North Louise Avenue, Sioux Falls, South Dakota, on November 19, 1997, at
2:00 p.m., Sioux Falls, South Dakota time, and at all adjournments or
postponements of the Meeting. The accompanying Notice of Meeting, proxy card and
this Proxy Statement are first being mailed to stockholders on or about October
17, 1997. Certain of the information provided herein relates to Home Federal
Savings Bank ("Home Federal" or the "Bank"), a wholly owned subsidiary and the
primary operating entity of the Corporation.
At the Meeting, the stockholders of the Corporation are being asked to
consider and vote upon the election of three directors of the Corporation and a
proposal to ratify the appointment of McGladrey & Pullen, LLP as the
Corporation's independent auditors for the fiscal year ending June 30, 1998.
The close of business on September 30, 1997, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting and any and
all adjournments thereof. Only stockholders of record at that time are entitled
to notice of and to vote at the Annual Meeting. The total number of shares of
Common Stock, par value $.01 per share, of the Corporation (the "Common Stock")
outstanding on the Record Date was 2,973,715 which are the only securities of
the Corporation entitled to vote at the Annual Meeting. Each stockholder is
entitled to one vote on all matters to be voted on at the Annual Meeting for
each share of Common Stock held in the stockholder's name as of the Record Date.
VOTING RIGHTS AND PROXY INFORMATION
All shares of Common Stock represented at the Meeting by properly executed
proxies received prior to or at the Meeting, and not revoked, will be voted at
the Meeting in accordance with the instructions thereon. Directors shall be
elected by a plurality of the votes present in person or represented by proxy at
the Meeting and entitled to vote on the election of directors. In all matters,
the affirmative vote of the majority of shares present in person or represented
by proxy at the Meeting and entitled to vote on the matter shall be the act of
the stockholders. The Corporation does not know of any matters, other than as
described in the Notice of Meeting, that are to come before the Meeting. If any
other matters are properly presented at the Meeting for action, the persons
named in the enclosed form of proxy will have the discretion to vote on such
matters in accordance with their best judgment.
If no instructions are indicated, properly executed proxies will be voted
FOR election of the nominees for director named herein and FOR the proposal to
ratify the appointment of McGladrey & Pullen, LLP. Proxies marked as abstaining
with respect to a proposal have the same effect as votes against the proposal.
If an executed proxy card is returned and the shareholder has abstained from
voting on any matter, the shares represented by such proxy will be considered
present at the meeting for purposes of determining a quorum and for purposes of
calculating the vote, but will not be considered to have been voted in favor of
such matter. If an executed proxy is returned by a broker holding shares in
street name which indicates that the broker does not have discretionary
authority as to certain shares to vote on one or more matters, such shares will
be considered present at the Meeting for purposes of determining a quorum, but
will not be considered to be represented at the meeting for purposes of
calculating the vote with respect to such
<PAGE>
matter. One-third of the shares of the Corporation's Common Stock, present in
person or represented by proxy, shall constitute a quorum for purposes of the
Meeting.
A proxy given pursuant to this solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Corporation at or before the Meeting a written notice of revocation bearing
a later date than the proxy; (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Corporation at or
before the Meeting; or (iii) attending the Meeting and voting in person
(although attendance at the Meeting will not in and of itself constitute
revocation of a proxy). Any written notice revoking a proxy should be delivered
to Donald F. Bertsch, Secretary, HF Financial Corp., 225 South Main Avenue,
Sioux Falls, South Dakota 57102.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information regarding ownership of
the Common Stock as of September 30, 1997, by (i) each person known to the
Corporation to own beneficially more than 5% of the Common Stock, (ii) each
director of the Corporation, (iii) each officer named in the executive
compensation table on page 6 of this Proxy Statement, and (iv) all directors and
officers as a group. Unless otherwise indicated, each person in the table has
sole voting and investment power as to the shares shown.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING STOCK
- ------------------------------------------------------------------------ -------------------- -------------------
<S> <C> <C>
John T. Vucurevich (1) ................................................. 298,700 10.04%
629 Quincy Street, PO Box 170
Rapid City, SD 57709
HF Financial Corp. (2) ................................................. 194,070 6.53%
Employee Stock Ownership Plan
225 South Main Avenue
Sioux Falls, South Dakota 57102
Jeffrey L. Gendell (3) ................................................. 213,000 7.16%
Tontine Partners, L.P.
31 West 52nd Street, 17th Floor
New York, New York 10019
Curtis L. Hage, Chairman, President and Chief Executive Officer and
Director (4).......................................................... 125,380 4.14%
Donald F. Bertsch, Senior Vice President and Chief Financial Officer
(5)................................................................... 51,636 1.73%
Mark S. Sivertson, Senior Vice President and Trust Officer (6).......... 2,532 *
Paul J. Hallem, Director (7)............................................ 42,224 1.42%
Robert L. Hanson, Director (7).......................................... 15,004 *
JoEllen G. Koerner, Director............................................ 710 *
Kevin T. Kirby, Director................................................ 3,110 *
Jeffrey G. Parker, Director (7)......................................... 11,004 *
Wm. G. Pederson, Director............................................... 1,610 *
Thomas L. Van Wyhe, Director............................................ 1,610 *
Directors and executive officers as a group (17 persons) (8)............ 300,459 9.82%
*Indicates individual owns less than one percent of outstanding shares of Common Stock.
</TABLE>
- ------------------------------
2
<PAGE>
(1) The above information regarding beneficial ownership by Mr. John T.
Vucurevich is as reported in a Schedule 13D dated August 4, 1995.
(2) Includes 110,807 shares allocated to the individual accounts of employees,
officers and directors, with respect to which such individuals are deemed to
have sole voting and no investment power. Each participant may instruct the
Employee Stock Ownership Plan ("ESOP") trustee, Firstar Bank of Minnesota,
N.A., as to the voting of the shares allocated to such participant's account
under the ESOP. Unallocated shares and shares for which voting instructions
are not received shall be voted by the ESOP trustee in the same ratio as the
shares with respect to which instructions are received. The ESOP trustee may
be deemed under applicable regulations to "beneficially own" the 83,263
shares owned by the ESOP, which have not been allocated to participants.
(3) The above information regarding beneficial ownership by Mr. Jeffrey L.
Gendell is as reported in a Schedule 13D dated February 27, 1997.
(4) Includes 68,518 shares held directly or held by certain members of Mr.
Hage's family, with respect to which shares Mr. Hage may be deemed to have
sole or shared voting and/or investment power. Also includes awards of
51,745 shares subject to options granted to Mr. Hage under the Corporation's
1991 Stock Option and Incentive Plan (the "Stock Option Plan") and 5,117
shares allocated to Mr. Hage's account under the ESOP.
(5) Includes 42,791 shares held directly by Mr. Bertsch with sole voting and/or
investment power. Also includes awards of 6,075 shares subject to options
granted to Mr. Bertsch under the Stock Option Plan and 2,770 shares
allocated to Mr. Bertsch's account under the ESOP.
(6) Includes 1,451 shares held directly by Mr. Sivertson with sole voting and/or
investment power. Also includes 354 shares subject to options granted to Mr.
Sivertson under the Bank's Stock Option Plan. Also includes 727 shares
allocated to Mr. Sivertson's account under the ESOP.
(7) Includes options granted under the Stock Option Plan and the MRP,
respectively as follows: Hallem--10,192, 6,422; Hanson-- 6,974, 1,000; and
Parker--6,794, 1,000.
(8) Includes shares held directly, as well as 15,224 shares allocated under the
ESOP and 32,800 shares granted under the MRP and 86,887 shares subject to
options granted under the Stock Option Plan, which are currently exercisable
and are held in retirement accounts or held by certain members of the named
individuals' families, or held by trusts of which the named individual is a
trustee or substantial beneficiary, with respect to which shares the
respective directors and officers may be deemed to have sole or shared
voting and investment power.
3
<PAGE>
PROPOSAL I--ELECTION OF DIRECTORS
The Corporation's Board of Directors currently consists of eight members,
five of which were elected by the shareholders. The Board is divided into three
classes, one class of the directors is elected annually. Directors of the
Corporation are generally elected to serve for a three-year term or until their
respective successors are elected and qualified. All nominees have agreed to
stand for election at the annual meeting. If, prior to the annual meeting, the
Board of Directors learns that any nominee will be unable to serve by reason of
death, incapacity or other unexpected occurrence, the proxies which would have
otherwise been voted for such nominee will be voted for a substitute nominee, if
any, elected by the Board.
INFORMATION WITH RESPECT TO NOMINEES AND CONTINUING DIRECTORS
The principal occupation and business experience for the last five years and
certain other information with respect to each nominee for election as a
director and the other directors of the Corporation are set forth below. The
information concerning the nominees and the continuing directors has been
furnished by them to the Corporation.
INFORMATION ABOUT NOMINEES
PAUL J. HALLEM, age 71, a Class I Director, is currently retired. Prior to
his retirement in February 1991, Mr. Hallem was President and Chief Executive
Officer of Home Federal Savings Bank, a position he had held since 1986. Mr.
Hallem has over 39 years of experience in the savings institution industry.
JOELLEN G. KOERNER, Ph.D., age 51, a Class I Director, was elected on August
28, 1997, by the Corporation's Board of Directors to fill a vacancy created by
the death of former director Mark A. Jerstad, Ph.D. Ms. Koerner is the Senior
Vice President/Patient Services of Sioux Valley Hospitals and Health System,
Sioux Falls, South Dakota, a health care services provider. She has been
employed as the Vice President/Patient Services by that organization since 1984
and has held her present position since 1997.
WM. G. PEDERSON, age 41, a Class I Director, is Owner, Chairman and Chief
Executive Officer of PAM Oil, Inc., Sioux Falls, South Dakota, a wholesale
distributor of automotive products. He has held his current position since 1986
and has been with PAM Oil, Inc. since 1978.
INFORMATION ABOUT CONTINUING DIRECTORS
CURTIS L. HAGE, age 51, a Class III Director, is Chairman, President and
Chief Executive Officer of the Corporation. Mr. Hage was elected Chairman of the
Board of Directors of the Corporation in September 1996 and has held the
position of President and Chief Executive Officer of the Corporation since
February 1991. Mr. Hage joined the Bank in 1968 and served in various capacities
prior to being elected its Executive Vice President in 1986. He was elected to
the Board of Directors of the Bank in October 1986.
ROBERT L. HANSON, age 51, a Class II Director, is Chief Executive Officer of
Harold's Photo Centers located in Sioux Falls, South Dakota, a position he has
held since 1980.
KEVIN T. KIRBY, age 43, a Class II Director, was elected on August 28, 1997,
by the Corporation's Board of Directors to fill a vacancy created by the
resignation of former director Linda Laskowski. Mr. Kirby is President of Kirby
Investment Corp., Sioux Falls, South Dakota, a private investment firm. He has
held this position since 1993. Mr. Kirby has been employed as the Executive Vice
President and Chief Investment Officer for Western Surety Company from 1985-1993
and the President of Western Surety Life Insurance Company from 1979-1985.
4
<PAGE>
JEFFREY G. PARKER, age 50, a Class III Director, is President and Chief
Executive Officer of Parker Transfer and Storage, Inc., Sioux Falls, South
Dakota, a moving and storage company. He has held his current position since
1969.
THOMAS L. VAN WYHE, age 47, a Class III Director, is President of JSI Trane,
Sioux Falls, South Dakota, an air conditioning and heating sales and service
company. He has been employed in various capacities by that organization since
1973 and has held his present position since 1994.
The Board of Directors of the Bank is currently comprised of the same eight
members as the Board of Directors of the Corporation. Because the Corporation
owns all of the issued and outstanding shares of capital stock of the Bank, the
Corporation elects the directors of the Bank.
MEETINGS OF THE BOARD OF DIRECTORS, COMMITTEES AND COMPENSATION
MEETINGS AND COMPENSATION OF THE CORPORATION'S BOARD OF DIRECTORS. Meetings
of the Corporation's Board of Directors are generally held on a quarterly basis.
The Board of Directors met five times during fiscal 1997. During fiscal 1997, no
incumbent director of the Corporation attended fewer than 75% of the aggregate
of the total number of Board meetings and the total number of meetings held by
the committees of the Board of Directors on which they served. In fiscal 1997,
non-employee directors received fees of $1,000 per month and a $300 fee for
attendance at committee meetings of which they are a member. Employee directors
receive no fees for their services as a director.
COMMITTEES OF THE CORPORATION. The Board of Directors of the Corporation
has standing Audit and Personnel, Compensation and Benefits Committees.
The Audit Committee recommends independent auditors to the Board, reviews
the results of the auditors' services, reviews with management and the internal
auditors the systems of internal control and internal audit reports and assures
that the books and records of the Corporation are kept in accordance with
applicable accounting principles and standards. The members of the Audit
Committee are Directors Hallem (Chairman), Parker, Pederson and Van Wyhe. The
Audit Committee held three meetings in fiscal 1997.
The Personnel, Compensation and Benefits Committee is composed of Directors
Parker (Chairman), Hanson and Pederson. The Personnel, Compensation and Benefits
Committee is responsible for administering the Corporation's Stock Option Plan
and reviews compensation and benefit matters. The Personnel, Compensation and
Benefits Committee held six meetings during fiscal 1997.
The entire Board of Directors acts as a Nominating Committee for selecting
nominees for election as directors. While the Board of Directors of the
Corporation will consider nominees recommended by stockholders, the Board has
not actively solicited such nominations. Pursuant to the Corporation's Bylaws,
nominations by stockholders must be delivered in writing to the Secretary of the
Corporation at least 30 days before the date of the Meeting.
5
<PAGE>
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation paid
by Home Federal for services in all capacities rendered during the three fiscal
years ended June 30, 1995, 1996 and 1997 to the Corporation's Chief Executive
Officer, the Chief Financial Officer, and the Senior Vice President/Trust
Officer for fiscal year ended June 30, 1997. No other officer received
compensation in excess of $100,000 during fiscal 1997. The Corporation's
Officers do not receive any cash compensation from the Corporation for their
services performed in their capacities as officers of the Corporation.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION AWARDS
ANNUAL COMPENSATION
- ----------------------------------------------------------------------------- ------------------------------ ALL OTHER
SALARY RESTRICTED STOCK OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) BONUS ($) AWARD(S) ($) SARS (#) ($)
- ------------------------------------------- --------- ---------- --------- ----------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Curtis L. Hage, Chairman, 1997 $ 200,000 $ 52,912 -0- 7,317 $ 8,982(1)
President and Chief 1996 $ 180,000 $ 18,864 -0- -0- $ 9,445(1)
Executive Officer 1995 $ 172,500 $ 2,756 -0- 14,694 $ 9,257(1)
Donald F. Bertsch, Senior 1997 $ 108,000 $ 17,836 -0- 2,439 $ 13,499(2)
Vice President and Chief 1996 $ 100,000 $ 10,138 -0- -0- $ 13,171(2)
Financial Officer 1995 $ 95,800 $ 1,531 -0- 6,122 $ 11,346(2)
Mark S. Sivertson, Senior 1997 $ 87,250 $ 21,519 -0- 1,829 $ 4,004(3)
Vice President and Trust 1996 $ 75,000 $ 13,388 -0- 224 $ 1,946(3)
Officer 1995* $ 30,433 $ 73 -0- -0- -0-
</TABLE>
- ------------------------------
(1) Includes $6,405 and $2,577 for 1997, $5,850 and $3,595 for 1996, and $5,187
and $4,070 for 1995, which represents the Bank's contributions to the
Pension Plan and the ESOP, respectively, on behalf of Mr. Hage.
(2) Includes $11,469 and $2,030 for 1997, $10,641 and $2,530 for 1996, and
$8,905 and $2,441 for 1995, which represents the Bank's contributions to the
Pension Plan and the ESOP, respectively, on behalf of Mr. Bertsch.
(3) Includes $2,317 for the Pension Plan and $1,687 for the ESOP for 1997, and
$1,946 for the ESOP for 1996, which represents the Bank's contributions on
behalf of Mr. Sivertson.
* Represents a partial year of employment.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants for the year ended
June 30, 1997, to the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL OPTIONS ANNUAL RATES OF STOCK
GRANTED TO PRICE APPRECIATION
OPTIONS EMPLOYEES AND EXERCISE FOR OPTION TERM(3)
GRANTED DIRECTORS IN PRICE PER EXPIRATION ---------------------
NAME (#)(1) FISCAL YEAR(2) SHARE DATE 5% 10%
- ----------------------------------------- ----------- -------------- ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Curtis L. Hage........................... 7,317 20.05% $ 15.31 09/06/06 $ 67,817 $ 107,987
Donald F. Bertsch........................ 2,439 6.68% $ 15.31 09/06/06 $ 22,606 $ 35,996
Mark S. Sivertson........................ 1,829 5.01% $ 15.31 09/06/06 $ 16,952 $ 26,993
</TABLE>
- ------------------------------
(1) Such options are subject to a five-year vesting schedule with 20% of the
grants vesting each year with Hage, Bertsch and Sivertson beginning June 30,
1997.
(2) The Corporation granted options representing 36,485 shares to employees and
a director in fiscal 1997.
(3) These amounts are based on the assumed rates of appreciation as permitted by
the rules of the Securities and Exchange Commission. Actual gains, if any,
on stock option exercises are dependent upon the future performance of the
Common Stock.
6
<PAGE>
AGGREGATE JUNE 30, 1997, OPTION VALUES
The following table provides information regarding the number and value of
options granted to the Corporation's Chief Executive Officer, Chief Financial
Officer and Senior Vice President/Trust Officer at June 30, 1997.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/
FY-END (#) SARS AT FY-END(1)
SHARES ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Curtis L. Hage............. 5,000 $ 50,000 56,745 12,372 $ 813,674 $ 109,043
Donald F. Bertsch.......... N/A N/A 6,075 4,766 $ 56,843 $ 36,194
Mark S. Sivertson.......... N/A N/A 454 1,599 $ 2,455 $ 9,511
</TABLE>
- ------------------------------
(1) Represents the aggregate market value (market price of the Common Stock less
the exercise price) of the option granted based upon the average of the bid
and asked price of $21.00 per share of the Common Stock as reported on the
NASDAQ National Market System on June 30, 1997.
EMPLOYMENT AGREEMENTS
On April 23, 1992, the Bank entered into employment agreements with Messrs.
Hage and Bertsch. Amendments to those agreements were approved by the Board in
July of 1995. The employment agreements as amended provide for annual base
salaries as determined by the Board of Directors, which may be not less than the
employee's salary as of April 8, 1992, as increased since that date. Salary
increases are reviewed not less often than annually, and are subject to the sole
discretion of the Board of Directors. Each employment agreement provides for an
initial term of three years which, as of the end of each year, is extended for
one additional year upon authorization by the Board of Directors. Each agreement
addresses the employee's termination due to death, as well as termination for
cause or due to certain other events specified by regulations of the Office of
Thrift Supervision ("OTS"). The employment agreements as amended are terminable
by the employees upon 90 days' prior written notice to the Bank. Each amended
agreement provides for payment to the employee, in the event there is a change
in control as defined in the agreements, of the Corporation or Home Federal,
where employment terminates involuntarily in connection with such change in
control or within 24 months thereafter. In such an event, the employee is
entitled to payment of the remaining salary payable under the agreement, as well
as certain benefits, plus a termination payment equal to 299% of the employee's
compensation then in effect under the employment agreement, provided that
payments under the agreement may not exceed an amount that would cause certain
adverse tax consequences to the Bank and the employee under Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"). Such termination
payments are also provided on a similar basis in the event of a voluntary
termination of employment due to a loss of the employee's status in connection
with a change in control that was at any time opposed by the Bank's or the
Corporation's Board of Directors. Assuming a change in control were to take
place as of June 30, 1998, the aggregate amount payable to Mr. Hage and Mr.
Bertsch, pursuant to this change in control provision would be approximately
$506,805 and $280,840, respectively. The employment agreements provide for,
among other things, participation in an equitable manner in employee benefits
applicable to executive personnel. On December 11, 1996, the Board of Directors
extended Mr. Hage's and Mr. Bertsch's amended employment agreements by one year
to April 7, 2000.
PENSION PLAN
The Corporation sponsors a defined benefit pension plan for its employees
(the "Pension Plan"). An employee is eligible to participate in the Pension Plan
upon the completion of one year of service and upon reaching the age of 21. That
participation is retroactive to the previous July 1. A participant must complete
five years of service before such participant earns a vested interest in accrued
retirement benefits, at which time the participant is 100% vested. The Pension
Plan is funded solely through contributions made by the Corporation. It is
anticipated that this obligation will be funded through the Corporation's future
earnings.
7
<PAGE>
The following table sets forth, as of June 30, 1997, estimated annual
pension benefits for individuals at age 65 payable in the form of a life annuity
under the most advantageous Pension Plan provisions for various levels of
compensation and years of service. The figures in this table are based upon the
assumption that the individual is age 65 as of June 30, 1997, with a specified
number of years of service as calculated under the Pension Plan.
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------
REMUNERATION 10 20 30 40
- ------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
$ 50,000 $ 8,758 $ 18,909 $ 29,606 $ 32,577
75,000 14,070 30,221 46,372 51,639
100,000 16,136 33,754 51,373 56,770
125,000 16,879 34,497 52,116 57,220
150,000 17,621 35,239 52,858 57,670
175,000 17,621 35,239 52,858 57,670
</TABLE>
The benefit provided to a participant at normal retirement age (65 or if
later, the tenth anniversary of initial date of participation) is generally
based on the average of the participant's monthly compensation during which the
participant's compensation was highest ("average monthly compensation").
Compensation for this purpose includes all taxable compensation paid to the
participant, which includes salary, bonus and restricted stock awards, upon
vesting. Compensation for 1997 was limited to $150,000 as stated under Section
401(a)(17) of the Code. The monthly benefit provided to a participant who
retires at age 65 is equal to 1.00% of average monthly compensation for each
year of service up to a maximum of 30 years plus .65% of average monthly
compensation in excess of "covered compensation" (as defined in the Pension
Plan) also multiplied by the participant's number of years of service, up to a
maximum of 30, without offset of the participant's anticipated Social Security
benefits.
A participant is eligible for an early retirement benefit upon the
attainment of age 62, provided such participant has participated in the Pension
Plan for a minimum of seven years. The monthly benefit payable at early
retirement is the actuarial value of the participant's accrued benefit. If a
participant continues to work beyond age 65, the participant is entitled to the
greater of: (i) such participant's benefit taking into account all service and
salaries or (ii) the actuarial increase of the benefit that would have been
payable had the participant retired on the normal retirement date. In the event
of termination of employment for any reason other than death, disability or
early or normal retirement, a participant is still entitled to 100% of the
participant's accrued normal retirement benefit, provided that the participant
is vested.
The normal form of benefit is a monthly income payable for life. A
participant may elect, at the time of retirement, several optional forms of
benefits which are the actuarial equivalent of the normal form, such as the
joint and survivor benefits for married participants or an actuarially
equivalent lump sum payment.
At June 30, 1997, the estimated credited years of service of Mr. Hage was
26.6 years. Mr. Hage had $150,000 of compensation covered under the Pension Plan
during fiscal 1997; however, Mr. Hage's benefits payable under the Pension Plan
upon retirement would be limited because his salary level exceeds the maximum
covered compensation under the Pension Plan.
At June 30, 1997, the estimated credited years of service of Mr. Bertsch was
6.6 years. Mr. Bertsch had approximately $22,540 projected annual compensation
under the Pension Plan based on fiscal 1997.
8
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Personnel, Compensation and Benefits Committee has furnished the
following report on executive compensation:
Since its inception, the Personnel, Compensation and Benefits Committee of
the Board of Directors has been responsible for supervising and recommending for
full Board approval the compensation and benefits of the executive officers of
the Bank. The Committee has reviewed, at least annually, competitive salary
levels at other financial institutions and set salary ranges for executive
officer positions based on a philosophy of placing the average of the range in
relation to the competitive value of the position. From this reference point,
the base salaries of executive officers of the Bank have been set to be
commensurate with their experience, scope of duties and responsibilities and
overall level of performance.
At present, the executive compensation program is comprised of salary,
bonuses, incentive opportunities in the form of stock options, stock
appreciation rights and restricted stock, and miscellaneous benefits typically
offered to executives of similar corporations. Along with other eligible
employees, executive officers also participate in a defined benefit retirement
program and an Employee Stock Ownership Plan.
The compensation and bonuses for all executive officers, including the Chief
Executive Officer, have been based on the performance of the organization.
Specific areas that the Personnel, Compensation and Benefits Committee has
reviewed to determine the salary increases are return on assets, interest rate
risk measurements, capital ratios, delinquency ratios and regulatory ratings. In
addition, during fiscal 1997, in setting the compensation for the Chief
Executive Officer, the Personnel, Compensation and Benefits Committee also took
into consideration peer group comparisons of compensation for chief executive
officers and the contribution of the Chief Executive Officer to the overall
performance of the Bank.
Annual incentive plans for executive officers and the entire staff of the
Bank were developed and implemented in fiscal year 1997. Specific goals for the
organization were established along with specific goals for individual
departments. This program was developed to enhance shareholder value and enable
the organization to attract and retain competent management and employees.
The foregoing report is furnished by Messrs. Parker (Chairman), Hanson and
Pederson.
9
<PAGE>
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The following line graph compares the cumulative total stockholder return on
the Corporation's Common Stock to the cumulative total return of the NASDAQ U.S.
and Foreign Total Return Index and the NASDAQ Bank Stock Index for the period
March 31, 1992, through June 30, 1997. The graph assumes that $100 was invested
on March 31, 1992, and that all dividends were reinvested. The Corporation's
Common Stock began trading on the NASDAQ National Market System on April 8,
1992.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL RETURN TO
SHAREHOLDERS
<S> <C> <C> <C>
March 1992 and June 1997
NASDAQ US &
FOREIGN NASDAQ BANK HF FINANCIAL
RETURN INDEX STOCK INDEX CORP.
3/31/92 $100 $100 $100
6/30/92 $93 $109 $145
9/30/92 $97 $112 $154
12/31/92 $112 $130 $177
3/31/93 $115 $144 $218
6/30/93 $118 $139 $223
9/30/93 $127 $152 $257
12/31/93 $130 $148 $233
3/31/94 $125 $146 $229
6/30/94 $118 $158 $264
9/30/94 $128 $160 $299
12/31/94 $126 $147 $259
3/31/95 $136 $162 $263
6/30/95 $155 $178 $334
9/30/95 $179 $201 $331
12/31/95 $180 $220 $330
3/31/96 $189 $228 $304
6/30/96 $204 $232 $328
9/30/96 $211 $257 $346
12/31/96 $221 $290 $383
3/31/97 $209 $312 $435
6/30/97 $248 $363 $469
</TABLE>
CERTAIN TRANSACTIONS
The Bank, like many financial institutions, has followed a policy of
granting to officers, directors and employees loans secured by the borrower's
residence and consumer loans. Consumer loans to non-officer employees are
originated at one percent below Home Federal's quoted interest rate. In
addition, in connection with single-family mortgage loans made to non-officer
employees, all in-house closing costs, expenses and points are waived. If the
employee relationship ceases, the terms of the loan revert back to the terms
that would have applied but for the employee-employer relationship. All loans to
the Bank's officers and directors are made in the ordinary course of business
and on the same terms and conditions as those of comparable transactions
prevailing at the time, and do not involve more than the normal risk of
collectibility or present other unfavorable features. All loans by the Bank to
its directors and executive officers are subject to OTS regulations restricting
loans and other transactions with affiliated persons of the Bank. Federal law
requires that all such loans be made on terms and conditions comparable to those
for similar transactions with non-affiliates. All loans from the Bank to its
officers, directors, key employees or their affiliates are approved by the
Bank's Loan Committee and ratified by the Bank's Board of Directors.
The Corporation intends that all transactions between the Corporation or the
Bank and its officers, directors, holders of 10% or more of the shares of any
class of its Common Stock and affiliates thereof, will contain terms no less
favorable to the Corporation than could have been obtained by it in arm's-length
negotiations with unaffiliated persons and will be approved by a majority of
disinterested directors of the Corporation, if any.
10
<PAGE>
The following table sets forth certain information as to loans made by Home
Federal to each of its directors and executive officers whose aggregate
indebtedness to Home Federal exceeded $60,000 at any time since June 30, 1997.
Unless otherwise indicated, all of the loans are secured loans and all loans
designated as residential loans are first mortgage loans secured by the
borrower's principal place of residence.
<TABLE>
<CAPTION>
LARGEST AMOUNT BALANCE INTEREST
OUTSTANDING AS OF RATE AS OF MARKET RATE
DATE OF SINCE JULY 1, JUNE 30, DATE OF AT
NAME AND POSITION LOAN TYPE OF LOAN 1996 1997 ORIGINATION ORIGINATION
- ---------------------------- --------- ---------------- --------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Michael H. Zimmerman........ 08/14/96 Home Equity $ 260,075 $ -0- 9.75% 9.75%
Senior Vice President 09/23/96 Residence $ 185,000 $ 183,762 7.00% 7.00%
and Senior Retail 03/05/97 Home Equity $ 75,075 $ 61,073 9.75% 9.75%
Lending Officer 09/09/96 Line of Credit $ 738 $ 697 18.00% 18.00%
09/09/96 Line of Credit $ 100 $ 60 18.00% 18.00%
Thomas L. Van Wyhe.......... 11/27/78 Commercial $ 148,000 $ -0- 10.00% 10.00%
Board of Director Multi-Family
</TABLE>
At June 30, 1997, Home Federal had approximately $245,592 (or 0.5% of the
Corporation's stockholders' equity) of loans to directors, executive officers
and affiliates of such persons.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and persons who own more than
10% 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 10% stockholders 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 on a review of the copies of such reports
furnished to the Corporation and written representations that no other reports
were required, during the fiscal year ended June 30, 1997, all Section 16(a)
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.
PROPOSAL II--RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has renewed the Corporation's agreement for McGladrey
& Pullen, LLP to be its auditors for the fiscal year ending June 30, 1998,
subject to the ratification of the appointment by the Corporation's
stockholders. A representative of McGladrey & Pullen, LLP is expected to attend
the Annual Meeting to respond to appropriate questions and will have an
opportunity to make a statement.
The Board of Directors recommends that stockholders vote "FOR" the
ratification of the appointment of McGladrey & Pullen, LLP as the Corporation's
auditors for the fiscal year ending June 30, 1998.
11
<PAGE>
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Corporation's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Corporation's executive offices,
225 South Main Avenue, Sioux Falls, South Dakota 57102, no later than May 22,
1998. Any such proposals shall be subject to the requirements of the proxy rules
adopted under the Securities Exchange Act of 1934.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in this Proxy Statement. However,
if any other matters should properly come before the Meeting, it is intended
that holders of the proxies will act in accordance with their best judgment.
The cost of solicitation of proxies will be borne by the Corporation. The
Corporation will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors and officers of the Corporation and regular employees of the Bank may
solicit proxies personally or by telegraph or telephone, without additional
compensation.
By Order of the Board of Directors,
/s/ Donald F. Bertsch
DONALD F. BERTSCH
SECRETARY
Sioux Falls, South Dakota
October 17, 1996
12
<PAGE>
REVOCABLE PROXY CARD
HF FINANCIAL CORP.
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 19, 1997
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, Curtis L. Hage, Robert L. Hanson, Kevin
T. Kirby, Jeffrey G. Parker and Thomas L. Van Wyhe each with the power to act
alone and with full power of substitution, to act as attorneys and proxies
for the undersigned to vote all shares of common stock of the Corporation
which the undersigned is entitled to vote at the Annual Meeting of
Stockholders (the ""Meeting''), to be held on November 19, 1997, at the Best
Western Ramkota Inn located at 2400 North Louise Avenue, Sioux Falls, South
Dakota at 2:00 p.m., Sioux Falls, South Dakota time, and at any and all
adjournments thereof, as specified on the reverse side of this proxy.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED HEREON AND THE
APPOINTMENT OF MCGLADREY & PULLEN, LLP. IF ANY OTHER BUSINESS IS PRESENTED AT
SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR
BEST JUDGEMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE MEETING.
(Continued on reverse side)
<PAGE>
Please mark
your votes as / X /
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE ""FOR'' THE ELECTION OF THE NOMINEES
LISTED BELOW, AND THE APPOINTMENT OF MCGLADREY & PULLEN, LLP.
For all
For all nominees, except
nominees as marked below
I. To elect as directors / / / /
of all nominees listed.
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
Paul J. Hallem Wm. G. Pederson
JoEllen G. Koerner, Ph.D
FOR AGAINST ABSTAIN
II. To ratify the appointment of McGladrey & Pullen, / / / / / /
LLP as auditors of the Corporation for the
fiscal year ending June 30, 1998.
In their discretion, the proxies are
__ __ __ authorized to vote on any other business
| that may properly come before the Meeting
| or any adjournment thereof.
|
Should the undersigned be present and elect
to vote at the Meeting or at any adjournment
thereof, and after notification to the
Secretary of the Corporation at the Meeting
of the stockholder's decision to terminate
this Proxy, then the power of such attorneys
and proxies shall be deemed terminated and
of no further force and effect.
The undersigned acknowledges receipt from
the Corporation, prior to the execution of
this Proxy, Notice of the Annual Meeting,
a Proxy Statement dated October 17, 1997,
and the Corporation's Annual Report to
Stockholders for the fiscal year ended
June 30, 1997.
Signatures(s)________________________________________ Date ___________________
