UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
FIRST MIDWEST FINANCIAL, INC.
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(Name of Registrant as Specified In Its Charter)
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(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)(4) 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):
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4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
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[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
3) Filing Party:
________________________________________________________________________________
4) Date Filed:
________________________________________________________________________________
<PAGE>
[FIRST MIDWEST FINANCIAL, INC. LETTERHEAD]
December 18, 2000
Dear Fellow Shareholders:
On behalf of the Board of Directors and management of First Midwest
Financial, Inc., we cordially invite you to attend our annual meeting of
shareholders. The meeting will be held at 1:00 p.m. local time on Monday,
January 22, 2001, at our main office located at Fifth at Erie, Storm Lake, Iowa.
The attached Notice of Annual Meeting of Shareholders and Proxy
Statement discuss the business to be conducted at the meeting. We have also
enclosed a copy of our Annual Report to Shareholders. At the meeting, we will
report on First Midwest Financial's operations and outlook for the year ahead.
We 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 us
the additional expense of soliciting proxies and will ensure that your shares
are represented at the meeting. Regardless of the number of shares you own, your
vote is very important. Please act today.
Your Board of Directors and management are committed to the continued
success of First Midwest Financial and the enhancement of your investment. As
Chairman of the Board, President and Chief Executive Officer, I want to express
my appreciation for your confidence and support.
Very truly yours,
/s/ James S. Haahr
JAMES S. HAAHR
Chairman of the Board,
President and Chief Executive Officer
<PAGE>
FIRST MIDWEST FINANCIAL, INC.
Fifth at Erie
Storm Lake, Iowa 50588
(712) 732-4117
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on January 22, 2001
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Notice is hereby given that the annual meeting of shareholders of First
Midwest Financial, Inc. will be held at our main office located at Fifth at
Erie, Storm Lake, Iowa, on Monday, January 22, 2001, at 1:00 p.m. local time. At
the annual meeting, shareholders will be asked to consider and vote on the
following:
o Election of two directors, both for a term of three years.
Your Board of Directors recommends that you vote "FOR" the election of
both of the director nominees.
Shareholders also will transact any other business that may properly
come before the annual meeting, or any adjournments or postponements thereof. We
are not aware of any other business to come before the meeting.
The record date for the annual meeting is November 30, 2000. Only
shareholders of record at the close of business on that date are entitled to
notice of and to vote at the annual meeting or any adjournment or postponement
thereof.
A proxy card and proxy statement for the annual meeting are enclosed.
Whether or not you plan to attend the annual meeting, please take the time to
vote by signing, dating and mailing the enclosed proxy card which is solicited
on behalf of the Board of Directors. The proxy will not be used if you attend
and vote at the annual meeting in person. Regardless of the number of shares you
own, your vote is very important. Please act today.
Thank you for your continued interest and support.
By Order of the Board of Directors
/s/ James S. Haahr
JAMES S. HAAHR
Chairman of the Board, President and
Chief Executive Officer
Storm Lake, Iowa
December 18, 2000
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Important: The prompt return of proxies will save us the expense of further
requests for proxies to ensure a quorum at the annual meeting. A pre-addressed
envelope is enclosed for your convenience. No postage is required if mailed
within the United States.
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<PAGE>
FIRST MIDWEST FINANCIAL, INC.
Fifth at Erie
Storm Lake, Iowa 50588
(712) 732-4117
--------------------------
PROXY STATEMENT
--------------------------
ANNUAL MEETING OF SHAREHOLDERS
To be held January 22, 2001
INTRODUCTION
Our Board of Directors is using this proxy statement to solicit proxies
from the holders of First Midwest Financial, Inc. ("First Midwest") common stock
for use at First Midwest's annual meeting of shareholders. We are mailing this
proxy statement and the enclosed form of proxy to our shareholders on or about
December 18, 2000.
Certain information provided herein relates to First Federal Savings
Bank of the Midwest and Security State Bank, both of which are wholly owned
subsidiaries of First Midwest. First Federal Savings Bank of the Midwest and
Security State Bank are sometimes referred to in this proxy statement as "First
Federal" and "Security," respectively. First Federal and Security are
collectively referred to in this proxy statement as the "Banks."
INFORMATION ABOUT THE ANNUAL MEETING
Time and Place of the Annual Meeting; Matters to be Considered at the Annual
Meeting
Time and Place of the Annual Meeting. Our annual meeting will be held
as follows:
Date: January 22, 2001
Time: 1:00 p.m., local time
Place: First Federal Savings Bank of the Midwest
Fifth at Erie
Storm Lake, Iowa
Matters to be Considered at the Annual Meeting. At the annual meeting,
shareholders of First Midwest are being asked to consider and vote upon the
election of two directors, each for a three year term. The shareholders also
will transact any other business that may properly come before the annual
meeting. As of the date of this proxy statement, we are not aware of any other
business to be presented for consideration at the annual meeting other than the
matters described in this proxy statement.
Voting Rights; Vote Required
Voting Rights of Shareholders. November 30, 2000 is the record date for
the annual meeting. Only shareholders of record of First Midwest common stock on
that date as of the close of business are entitled to notice of and to vote at
the annual meeting. You are entitled to one vote for each share of First Midwest
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<PAGE>
common stock you own. On November 30, 2000, 2,429,727 shares of First Midwest
common stock were outstanding and entitled to vote at the annual meeting.
We maintain an Employee Stock Ownership Plan ("ESOP") which owns
approximately 8.22 percent of First Midwest common stock. Employees of First
Midwest and the Banks participate in the ESOP. Each ESOP participant is entitled
to instruct the trustee of the plan how to vote the shares of First Midwest
common stock allocated to his or her account under the ESOP. If an ESOP
participant properly executes the voting instruction card distributed by the
ESOP trustee, the ESOP trustee will vote such participant's shares in accordance
with the participant's instructions. Where properly executed voting instruction
cards are returned to the ESOP trustee with no specific instruction as how to
vote at the annual meeting, the trustee may vote the shares in its discretion.
In the event the ESOP participant fails to give timely voting instructions to
the trustee with respect to the voting of the common stock that is allocated to
his or her ESOP account, the ESOP trustee may vote such shares in its
discretion. The ESOP trustee will vote the shares of First Midwest common stock
held in the ESOP but not allocated to any participant's account in the manner
directed by the majority of the participants who directed the trustee as to the
manner of voting their allocated shares.
If you are the beneficial owner of shares held by a broker in "street
name," your broker, as the record holder of the shares, will vote the shares in
accordance with your instructions. If you do not give instructions to your
broker, your broker will nevertheless be entitled to vote the shares with
respect to "discretionary" items, but will not be permitted to vote your shares
with respect to "non-discretionary" items. In the case of non-discretionary
items, the shares will be treated as "broker non-votes." The election of
directors is expected to be considered a "discretionary" item, in which case
your broker may vote your shares without instructions from you.
Votes Required for Approval. Directors are elected by a plurality of
the votes cast, in person or by proxy, at the annual meeting by holders of First
Midwest common stock. This means that the two director nominees with the most
affirmative votes will be elected to fill the available seats. Shares that are
represented by proxy which are marked "vote withheld" for the election of one or
more director nominees and broker non-votes will have no effect on the vote on
the election of directors, although they will be counted for purposes of
determining whether there is a quorum. A quorum is necessary in order for us to
conduct the meeting, and if one third of all the shares entitled to vote are in
attendance at the meeting, either in person or by proxy, then the quorum
requirement is met.
If a director nominee is unable to stand for election, the Board of
Directors may either reduce the number of directors to be elected or select a
substitute nominee. If a substitute nominee is selected, the proxy holders will
vote your shares for the substitute nominee, unless you have withheld authority.
Your Board of Directors unanimously recommends that you vote "FOR" both
of the director nominees set forth in this proxy statement.
Voting of Proxies; Revocability of Proxies; Proxy Solicitation Costs
Voting of Proxies. You may vote in person at the annual meeting or by
proxy. To ensure your representation at the annual meeting, we recommend you
vote by proxy even if you plan to attend the annual meeting. You may change your
vote by attending and voting at the meeting. See "-Revocability of Proxies"
below.
Voting instructions are included on your proxy card. Shares of First
Midwest common stock represented by properly executed proxies will be voted by
the individuals named in such proxy in accordance
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with the shareholder's instructions. Where properly executed proxies are
returned to First Midwest with no specific instruction as how to vote at the
annual meeting, the persons named in the proxy will vote the shares "FOR" the
election of each of management's director nominees.
The persons named in the proxy will have the discretion to vote on any
other business properly presented for consideration at the annual meeting in
accordance with their best judgment. We are not aware of any other matters to be
presented at the shareholders' annual meeting other than those described in the
Notice of Annual Meeting of Shareholders accompanying this document.
You may receive more than one proxy card depending on how your shares
are held. For example, you may hold some of your shares individually, some
jointly with your spouse and some in trust for your children -- in which case
you will receive three separate proxy cards to vote.
Revocability of Proxies. You may revoke your proxy before it is voted
by:
o submitting a new proxy with a later date,
o notifying the Corporate Secretary of First Midwest in writing
before the annual meeting that you have revoked your proxy, or
o voting in person at the annual meeting.
If you plan to attend the annual meeting and wish to vote in person, we
will give you a ballot at the meeting. However, if your shares are held in the
name of your broker, bank or other nominee, you must bring a proper letter from
the nominee indicating that you were the beneficial owner of First Midwest
common stock on November 30, 2000, the record date for voting at the annual
meeting, if you wish to vote in person. Your broker can provide you with that
letter.
Proxy Solicitation Costs. We will pay our own costs of soliciting
proxies. In addition to this mailing, First Midwest's directors, officers and
employees may also solicit proxies personally, electronically or by telephone.
We will also reimburse brokers and other nominees for their expenses in sending
these materials to you and obtaining your voting instructions.
STOCK OWNERSHIP
The following table presents information regarding the beneficial
ownership of First Midwest common stock as of November 30, 2000, by:
o those persons or entities (or group of affiliated persons or
entities) known by management to beneficially own more than
five percent of our outstanding common stock;
o each director and director nominee of First Midwest;
o each executive officer of First Midwest named in the Summary
Compensation Table appearing under "Executive Compensation"
below; and
o all of the executive officers and directors of First Midwest
as a group.
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The persons named in this table have sole voting power for all shares
of common stock shown as beneficially owned by them, subject to community
property laws where applicable and except as indicated in the footnotes to this
table.
Beneficial ownership is determined in accordance with the rules of the
SEC. In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of common stock subject to
outstanding options held by that person that are currently exercisable or
exercisable within 60 days after November 30, 2000 are deemed outstanding. Such
shares, however, are not deemed outstanding for the purpose of computing the
percentage ownership of any other person.
<TABLE>
<CAPTION>
Shares Beneficially Percent
Beneficial Owners Owned(1) of Class
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
First Midwest Financial, Inc. Employee Stock Ownership Plan(2) 199,815 8.22%
E. Wayne Cooley, Director 86,117 3.50
E. Thurman Gaskill, Director(3) 51,914 2.12
James S. Haahr, Chairman of the Board, President and CEO(4) 310,753 12.29
J. Tyler Haahr, Director, Senior Vice President, Secretary and COO(4) 98,928 3.99
G. Mark Mickelson, Director 3,250 0.13
Rodney G. Muilenburg, Director 109,051 4.48
Jeanne Partlow, Director 3,979 0.16
Donald J. Winchell, Senior Vice President, Treasurer and CFO 146,304 5.95
Directors and executive officers of First Midwest
and the Banks as a group (8 persons)(5) 810,295 30.39
</TABLE>
---------------------
(1) Included in the shares beneficially owned by the named individuals are
options to purchase shares of First Midwest common stock, as follows: Mr.
Cooley - 28,764 shares; Mr. Gaskill - 24,264 shares; Mr. James S. Haahr -
99,020 shares; Mr. J. Tyler Haahr - 50,690 shares; Mr. Muilenburg - 6,264
shares; and Mr. Winchell - 27,239 shares.
(2) Represents shares held by the ESOP, 199,815 shares of which have been
allocated to accounts of participants. Pursuant to the terms of the ESOP,
each ESOP participant has the right to direct the voting of shares of
common stock allocated to his or her account under the ESOP. West Des
Moines State Bank, West Des Moines, Iowa, as the ESOP trustee, may be
deemed to beneficially own the shares held by the ESOP which have not been
allocated to the accounts of participants.
(3) Includes 26,750 shares as to which Mr. Gaskill has reported shared
ownership.
(4) James S. Haahr is the father of J. Tyler Haahr.
(5) Includes shares held directly, as well as, jointly with family members or
held by trusts, with respect to which shares the listed individuals or
group members may be deemed to have sole or shared voting and investment
power. Included in the shares reported as beneficially owned by all
directors and executive officers are options to purchase 236,241 shares of
First Midwest common stock.
ELECTION OF DIRECTORS
Our Board of Directors consists of seven members. Approximately
one-third of the directors are elected annually to serve for a three-year period
or until their respective successors are elected and qualified. All of our
nominees currently serve as First Midwest directors.
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The table below sets forth information regarding our Board of
Directors, including their age, position with First Midwest and term of office.
If any director nominee is unable to serve before the election, your proxy
authorizes us to vote for a replacement nominee if our Board of Directors names
one. At this time, we are not aware of any reason why a nominee might be unable
to serve if elected. Except as disclosed in this proxy statement, there are no
arrangements or understandings between any nominee and any other person pursuant
to which such nominee was selected. The Board of Directors recommends you vote
"FOR" each of the director nominees.
<TABLE>
<CAPTION>
Director Term to
Name Age Position(s) Held in First Midwest Since(1) Expire
----------------------------------------------------------------------------------------------------------------------------
Nominees
--------
<S> <C> <C> <C> <C>
E. Wayne Cooley 78 Director 1985 2004
J. Tyler Haahr(2) 37 Director, Senior Vice President, Secretary and COO 1992 2004
Directors Remaining in Office
-----------------------------
E. Thurman Gaskill 65 Director 1982 2002
Rodney G. Muilenburg 56 Director 1989 2002
James S. Haahr(2) 61 Chairman of the Board, President and CEO 1962 2003
G. Mark Mickelson 34 Director 1997 2003
Jeanne Partlow 67 Director 1996 2003
</TABLE>
-------------------
(1) Includes service as a director of First Federal.
(2) James S. Haahr is the father of J. Tyler Haahr.
The principal occupation of each director of First Midwest and each of
the nominees for director is set forth below. All directors and nominees have
held their present position for at least five years unless otherwise indicated.
E. Wayne Cooley - Dr. Cooley has served as Executive Secretary of the
Iowa Girls' High School Athletic Union in Des Moines, Iowa since 1954. In
addition, Dr. Cooley serves as Executive Vice President of the Iowa High School
Speech Association. He is also a member of the Drake Relays Executive Committee,
and on the Board of Directors of the Women's College Basketball Association Hall
of Fame. Dr. Cooley is a member of the Buena Vista University (formerly Buena
Vista College) Board of Trustees. He has served as Chairman of the Iowa Heart
Association and as Vice Chairman of the Iowa Games. Dr. Cooley is a 1943
graduate of Buena Vista College in Storm Lake, Iowa, and holds honorary
doctorate degrees from Buena Vista University in Storm Lake, Iowa and
Morningside College in Sioux City, Iowa.
J. Tyler Haahr - Mr. Haahr is Senior Vice President, Secretary and
Chief Operating Officer of First Midwest; Executive Vice President, Secretary
and Chief Operating Officer of First Federal Savings Bank of the Midwest; Vice
President and Secretary of First Services Financial Limited and Brookings
Service Corporation; and Chief Executive Officer of Security State Bank. Mr.
Haahr has been employed by First Midwest and its affiliates since March 1997. He
was previously a partner with the law firm of Lewis and Roca LLP, Phoenix,
Arizona, and had been with the firm since 1989. Mr. Haahr is active in many
local charities and was Co-chair for Buena Vista University's 1998 Community
Campaign Fund-raising. Mr. Haahr received his B.S. degree with honors in 1986 at
the University of South Dakota in Vermillion, South Dakota. He graduated with
honors from the Georgetown University Law Center, Washington, D.C., in May 1989.
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E. Thurman Gaskill - Since 1958, Mr. Gaskill has owned and operated a
grain farming operation located near Corwith, Iowa. Mr. Gaskill has served as a
commissioner with the Iowa Department of Economic Development and also as a
commissioner with the Iowa Department of Natural Resources. He has served as
President of the National Corn Growers Association, Chairman of the United
States Feed Grains Council and in numerous other agricultural positions.
Recognized for his outstanding contributions to the industry, he has been named
to the Agricultural Hall of Fame at Iowa State University in Ames, Iowa. Mr.
Gaskill was re-elected to the Iowa State Senate in 2000 and represents Iowa
District 8.
Rodney G. Muilenburg - Mr. Muilenburg is employed as a dairy specialist
with Purina Mills, Inc., and supervises the sale of agricultural products in a
region that encompasses northwest Iowa, southeast South Dakota and southwest
Minnesota. Mr. Muilenburg has been a member of Purina Mills' General Sales
Advisory Board since 1986. In 1991 he was certified by Purina Mills in
Agri-business management. Mr. Muilenburg received a B.A. degree in Biological
Science from Northwestern College, Orange City, Iowa in 1966; an M.A. degree in
secondary school education from Mankato State University, Mankato, Minnesota in
1973; and a specialist degree in secondary school administration from Mankato
State University, Mankato, Minnesota in 1975.
James S. Haahr - Mr. Haahr is the Chairman of the Board, President and
Chief Executive Officer of First Midwest, a position he has held since June
1993. Mr. Haahr is also Chairman of the Board, President and Chief Executive
Officer of First Federal. Mr. Haahr serves as Chairman of the Board of Security
State Bank. He is a member of the Board of Trustees and Chairman of the
Investment Committee of the Board of Buena Vista University. Mr. Haahr has
served in various capacities with First Federal since beginning his career with
the bank in 1961. He is a member of the Savings Association Insurance Fund
Industry Advisory Committee and a member of the Legislative Committee of the
Iowa Bankers Association. Mr. Haahr is a former Vice Chairman of the Board of
Directors of the Federal Home Loan Bank of Des Moines, former Chairman of the
Iowa League of Savings Institutions, a former director of the U.S. League of
Savings Institutions and a former member of the Board of Directors of America's
Community Bankers. Mr. Haahr received his B.S. degree in 1962 from Buena Vista
College in Storm Lake, Iowa.
G. Mark Mickelson - Mr. Mickelson is a principal with Northwestern
Growth Corporation in Sioux Falls, South Dakota and has been with the company
since November 1996. Northwestern Growth Corporation is the corporate
development and investment function of Northwestern Corporation. Previously, Mr.
Mickelson was employed as an executive officer of Hegg Companies in Sioux Falls,
South Dakota. Mr. Mickelson received his undergraduate degree in Business
Administration from the University of South Dakota in Vermillion, South Dakota
in 1988. He graduated with high honors from Harvard Law School in 1993, is an
inactive member of the South Dakota Bar Association and a Certified Public
Accountant. Mr. Mickelson is involved in a number of local charities, including
serving on the board of the Sioux Falls Y.M.C.A.
Jeanne Partlow - Mrs. Partlow retired in June 1998 as President of the
Iowa Savings Bank Division of First Federal, located in Des Moines Iowa. She was
President, Chief Executive Officer and Chairman of the Board of Iowa Savings
Bank, F.S.B. from 1987 until it was acquired by and became a division of First
Federal in December 1995. Mrs. Partlow is a past member of the Board of
Directors of the Federal Home Loan Bank of Des Moines. She has over 30 years of
bank management experience.
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MEETINGS AND COMMITTEES
Meetings
Meetings of the Board of Directors are generally held on a monthly
basis. The Board of Directors conducted 12 regular meetings and did not conduct
any special meetings during fiscal 2000. Each director attended at least 75% of
the Board meetings and any committees on which he or she served.
Committees
The Board of Directors of First Midwest has an
Audit-Compensation/Personnel ("ACP") Committee and a Stock Option Committee. Our
entire Board serves as the Nominating Committee.
ACP Committee Stock Option Committee
------------- ----------------------
E. Wayne Cooley E. Wayne Cooley
E. Thurman Gaskill G. Mark Mickelson
Rodney G. Muilenburg Rodney G. Muilenburg
Jeanne Partlow
The ACP Committee met three times during fiscal 2000. The functions of
the ACP Committee are as follows:
o review significant financial information for the purpose of
giving added assurance that the information is accurate and
timely and that it includes all appropriate financial
statement disclosures;
o ascertain the existence of effective accounting and internal
control systems;
o oversee the entire audit function both internal and
independent;
o provide an effective communication link between the auditors
(internal and independent) and the Board of Directors;
o make salary and bonus recommendations, administer our
restricted stock plan, and determine terms and conditions of
employment of the officers of First Midwest;
o oversee the administration of our employee benefit plans
covering employees generally; and
o make recommendations to the Board of Directors with respect to
our compensation policies.
The Stock Option Committee met once during fiscal 2000. The functions
of the Stock Option Committee are as follows:
o administer the our stock incentive plans; and
o make recommendations to the Board of Directors with respect to
our compensation policies.
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The entire Board of Directors acts as a nominating committee for
selecting nominees for election as directors. Nominations of persons for
election to the Board of Directors may be made only by or at the direction of
the Board of Directors or by any shareholder entitled to vote for the election
of directors who complies with the notice procedures set forth in the bylaws of
First Midwest. Pursuant to the bylaws, nominations by shareholders must be
delivered in writing to the Secretary of First Midwest at least 30 days prior to
the date of the annual meeting; provided, however, that in the event that less
than 40 days' notice or prior disclosure of the date of the annual meeting is
given or made to shareholders, to be timely, notice by the shareholder must be
received at the executive offices of First Midwest not 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 thereof was made.
Audit Committee Matters
Audit Committee Report. The Audit-Compensation/Personnel (the "ACP")
Committee performs the functions of an audit committee. The ACP Committee has
issued the following report with respect to the audited financial statements of
the Company for the fiscal year ended September 30, 2000:
o The ACP Committee has reviewed and discussed with the
Company's management the Company's fiscal 2000 audited
financial statements;
o The ACP Committee has discussed with the Company's independent
auditors (McGladrey & Pullen, LLP) the matters required to be
discussed by Statement on Auditing Standards No. 61;
o The ACP Committee has received the written disclosures and
letter from the independent auditors required by Independence
Standards Board No. 1 (which relates to the auditors'
independence from the Company and its related entities) and
has discussed with the auditors their independence from the
Company; and
o Based on the review and discussions referred to in the three
items above, the ACP Committee recommended to the Board of
Directors that the fiscal 2000 audited financial statements be
included in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 2000.
Submitted by the ACP Committee of the Company's Board of Directors:
E. Wayne Cooley
E. Thurman Gaskill
Rodney G. Muilenberg
Independence and Audit Committee Charter. Each member of the Audit
Committee is "independent" under the definition of independence contained in the
National Association of Securities Dealers' listing standards for the Nasdaq
Stock Market. The Company's Board of Directors has adopted a written audit
committee charter. A copy of the charter is attached as an appendix to this
proxy statement.
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COMPENSATION OF DIRECTORS
During the fiscal year ended September 30, 2000, all directors of First
Midwest received a retainer fee of $5,000 per year. No additional fees are paid
for attending board or committee meetings. Each of the directors of First
Midwest, except for Director Partlow, also serve as directors of both of the
Banks. Board members who are employees of the Banks do not receive a fee for
their service on the Banks' Boards, or their respective committees.
For fiscal 2000, non-employee (outside) directors of First Federal were
paid:
o an annual retainer of $6,000;
o $750 for each meeting of the board attended; and
o $200 for each board committee meeting attended.
For fiscal 2000, non-employee (outside) directors of Security State
were paid:
o $400 for each meeting of the board attended; and
o $100 for each board committee meeting attended.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth summary information concerning
compensation awarded to, earned by or paid to First Midwest's chief executive
officer and its other executive officers, whose total salary and bonus exceeded
$100,000, for services rendered in all capacities during the fiscal years ended
September 30, 2000, 1999 and 1998. Each of these officers received perquisites
and other personal benefits in addition to salary and bonus during the periods
stated. The aggregate amount of these perquisites and other personal benefits,
however, did not exceed the lesser of $50,000 or 10% of the total of their
annual salary and bonus and, therefore, has been omitted as permitted by the
rules of the SEC. We will use the term "named executive officers" from time to
time in this proxy statement to refer to the officers listed in the table below.
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<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
-------------------------- ----------------------
Restricted
Stock Options/ All Other
Salary Bonus Awards SARs Compensation
Name and Principal Position Year ($) ($) ($) (#) ($)
------------------------------------ --------- ------------ ------------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
James S. Haahr 2000 $207,000(1) $55,000 $ --- 4,500 $46,475(5)
Chairman of the Board, President 1999 180,000(1) 53,373 --- 4,987 39,242
and CEO 1998 180,000(1) --- --- --- 23,340
J. Tyler Haahr 2000 $205,000(2) $55,000 --- 4,500 $52,463(5)
Senior Vice President, Secretary 1999 168,750(2) 118,310(3) $67,756(4) 4,724 36,512
and COO 1998 153,000(2) 36,000 --- 4,050 15,100
Donald J. Winchell 2000 $137,500 $37,813 --- 3,094 $30,753(5)
Senior Vice President, Treasurer 1999 125,000 38,125 --- 3,562 24,610
and CFO 1998 113,000 27,120 --- 3,051 19,011
</TABLE>
--------------------
(1) Includes $2,000 of compensation deferred in fiscal 2000, 1999, and 1998
pursuant to the deferred compensation agreement entered into in 1980
between Mr. Haahr and First Federal and $5,000, $3,000 and $3,000 in fiscal
2000, 1999 and 1998, respectively for service as a director of First
Midwest.
(2) Includes $5,000, $3,000 and $3,000 paid to Mr. Haahr for service as a
director of First Midwest in fiscal 2000, 1999 and 1998, respectively.
(3) Includes a cash bonus of $50,554 and a stock bonus of 5,212 shares of
common stock with an aggregate dollar value of $67,756. The dollar value of
the common stock is based on the average of the closing bid and asked
prices of First Midwest's common stock as quoted on The Nasdaq Stock Market
on September 30, 2000, the date of the grant.
(4) Represents the aggregate dollar value of the award of 10,424 shares of
First Midwest's common stock. The dollar value of the award is based on the
average of the closing bid and asked prices of First Midwest's common stock
as quoted on The Nasdaq Stock Market on September 30, 1999, the date of the
grant. Fifty percent of the restricted stock award vested upon grant and
the remaining 50% vested on September 30, 2000.
(5) Represents the value as of September 30, 2000 of allocations under the
ESOP, payments under the First Federal Benefit Equalization Plan,
contributions under the First Federal Profit Sharing Plan and term life
insurance premiums paid to or on behalf of the named executive officers, as
follows: Mr. James S. Haahr - $8,794, $17,221, $19,905 and $555; Mr. J.
Tyler Haahr - $8,794, $17,215, $19,905 and $550; and Mr. Winchell - $8,794,
$4,952, $16,620 and $387. The amount for Mr. J. Tyler Haahr also includes
reimbursed relocation expenses of $5,999.
Option Grants in Last Fiscal Year
The following table sets forth information regarding grants of stock
options under our stock option and incentive plans made during the fiscal year
ended September 30, 2000 to the named executive officers. The amounts shown for
each named executive officer as potential realizable values are based on
arbitrarily assumed annualized rates of stock price appreciation of five percent
and ten percent over the full ten-year term of the options, which would result
in stock prices of approximately $15.68 and $24.96, respectively, for options
with an exercise price of $9.625. No gain to the optionees is possible without
an increase in stock
10
<PAGE>
price, which benefits all stockholders proportionately. These potential
realizable values are based solely on arbitrarily assumed rates of appreciation
required by applicable SEC regulations. Actual gains, if any, on option exercise
and common stock holdings depend upon the future performance of First Midwest
common stock and overall stock market conditions. There can be no assurance that
the potential realizable values shown in this table will be achieved.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Appreciation
Individual Grants for Option Terms
------------------------------------------------------------------------------------------ -------------------------
Number of % of Total
Securities Options Exercise
Underlying Granted to or Base
Options Granted Employees in Price Expiration 5% 10%
Name (#) Fiscal Year ($/Sh) Date ($) ($)
---------------------- ------------------ ---------------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
James S. Haahr 4,500 15.3% $9.62 9-29-10 $27,239 $69,029
J. Tyler Haahr 4,500 15.3 9.62 9-29-10 27,239 69,029
Donald J. Winchell 3,094 10.5 9.62 9-29-10 18,728 47,461
</TABLE>
The option exercise price of the options granted to the named executive
officers shown above was the fair market value of First Midwest's common stock
at the date of grant. The options granted vested as of the date of grant. The
options may not be transferred in any manner other than by will or the laws of
descent and distribution and may be exercised during the lifetime of the
optionee only by the optionee or his legal representative upon the optionees
death.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
The following table summarizes for each of the named executive officers
certain information relating to stock options exercised by them during the
fiscal year ended September 30, 2000. Value realized upon exercise is the
difference between the fair market value of the underlying stock on the exercise
date and the exercise or base price of the option. The value of an unexercised,
in-the-money option at fiscal year-end is the difference between its exercise or
base price and the fair market value of the underlying stock on September 30,
2000, which was $9.625 per share. These values, unlike the amounts set forth in
the column "Value Realized," have not been, and may never be, realized. These
options have not been, and may not ever be, exercised. Actual gains, if any, on
exercise will depend on the value of First Midwest common stock on the date of
exercise. There can be no assurance that these values will be realized.
Unexercisable options are those which have not yet vested.
11
<PAGE>
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Options
Options at FY-End (#) at FY-End ($)(1)
---------------------------- ----------------------------
Shares
Acquired on Value
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
------------------------- -------------- ---------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James S. Haahr 40,000 $180,207 99,020 --- $175,895 $ ---
J. Tyler Haahr --- --- 50,690 9,375 $21,273 ---
Donald J. Winchell --- --- 27,239 --- $9,709 ---
</TABLE>
Employment Agreements
First Federal has an employment agreement with each of the named
executive officers. The employment agreements are designed to assist First
Midwest and the Banks in maintaining a stable and competent management team. The
continued success of First Midwest and the Banks depends, to a significant
degree, on the skills and competence of their officers. Each employment
agreement provides for annual base salary in an amount not less than the
employee's current salary and a term of three years. Each agreement provides for
extensions of one year, in addition to the then-remaining term under the
agreement, on each anniversary of the effective date of the agreement, subject
to a formal performance evaluation performed by disinterested members of the
Board of Directors of First Federal. The agreements terminate upon such named
executive officer's death, for cause, in certain events specified by Office of
Thrift Supervision regulations, or by such named executive officer upon 90 days
notice to First Federal. For the year ended September 30, 2000, the
disinterested members of First Federal's Board of Directors authorized one year
extensions of the named executive officers' employment agreements.
Each employment agreement provides for payment to the named executive
officer of the greater of his salary for the remainder of the term of the
agreement, or 299% of his base compensation, in the event there is a "change in
control" of First Federal where employment terminates involuntarily in
connection with such change in control or within 12 months thereafter. This
termination payment is subject to reduction by the amount of all other
compensation to the named executive officer deemed for purposes of the Internal
Revenue Code of 1986, as amended, to be contingent on a "change in control", and
may not exceed three times the named executive officer's average annual
compensation over the most recent five year period or be non-deductible by First
Federal for federal income tax purposes. For the purposes of the employment
agreements, a change in control is defined as any event which would require the
filing of an application for acquisition of control or notice of change in
control pursuant to 12 C.F.R. ss. 574.3 or ss. 574.4, respectively. These events
are generally triggered prior to the acquisition or control of 10% of First
Midwest's common stock. Each agreement also guarantees participation in an
equitable manner in employee benefits applicable to executive personnel.
Based on their current salaries, if employment of Messrs. James S.
Haahr, J. Tyler Haahr and Winchell had been terminated as of September 30, 2000,
under circumstances entitling them to benefits pay as described above, they
would have been entitled to receive lump sum cash payments of approximately
$787,000, $810,000 and $644,000, respectively.
12
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Compensation of the executive officers of First Midwest and the Banks
is currently determined by the ACP Committee of First Federal and the Stock
Option Committee of First Midwest. Directors Cooley, Mickelson, Muilenburg and
Partlow, each of whom are non-employee (outside) directors, are the current
members of these two committees. All decisions by the ACP Committee relating to
the cash compensation of executive officers are reviewed by the full Board,
except that Board members who are also executive officers do not participate in
deliberations regarding their own compensation. See "Compensation Committee
Report" below.
COMPENSATION COMMITTEE REPORT
First Midwest has not paid any cash compensation to its executive
officers since its formation. All executive officers of First Midwest also
currently hold positions with First Federal and receive cash compensation from
First Federal. The function of administering the executive compensation policies
of First Federal is currently performed by the ACP Committee of the Board of
Directors of First Federal, consisting of Directors Cooley, Mickelson and
Muilenburg. All decisions by the ACP Committee relating to the cash compensation
of First Federal's executive officers are reviewed by the full Board of First
Federal, except that Board members who are also executive officers do not
participate in deliberations regarding their respective compensation.
Awards granted under First Midwest's stock option and incentive plans
are made solely by the Stock Option Committee.
Overview and Philosophy
The ACP Committee has developed and implemented an executive
compensation program that is based on guiding principles designed to align
executive compensation with the values and objectives, business strategy,
management initiatives, and the business and financial performance of First
Midwest and the Banks. In applying these principals, the ACP Committee has
established a program to:
o Support a performance-oriented environment that rewards
performance not only with respect to our goals, but also our
performance as compared to that of industry performance levels;
o Attract and retain key executives critical to our long-term
success;
o Integrate compensation programs with both First Midwest's and the
Bank's annual and long- term strategic planning and measuring
processes; and
o Reward executives for long-term strategic management and the
enhancement of shareholder value.
Furthermore, in making compensation decisions, the ACP Committee
focuses on the individual contributions of our executive officers. The ACP
Committee uses its discretion to set executive compensation where, in its
judgement, external, internal or an individual's circumstances warrant it. The
ACP Committee also periodically reviews, both internally and through independent
consultants, the compensation policies of other similarly situated companies, as
set forth in various industry publications, to determine whether our
compensation decisions are competitive within our industry.
13
<PAGE>
Executive Officer Compensation Program
The executive officer compensation program is comprised of base salary,
annual incentive bonuses, long-term incentive compensation in the form of stock
options and restricted stock awards, and various benefits, including medical and
retirement plans generally available to employees of the Banks.
Base Salary. Base salary levels for executive officers are
competitively set relative to other publicly traded banking and thrift
companies. In determining base salaries, the ACP Committee also takes into
account individual experience and performance and specific issues particular to
First Midwest and the Banks.
Annual Incentive Bonuses. A program of annual incentive bonuses has
been established for executive officers of First Midwest and the Banks to reward
those officers who provide a level of performance warranting recognition in the
form of compensation above base salary. Incentive bonuses are awarded based on
achievement of individual performance goals and overall performance goals of
First Midwest and the Banks, which are established at the beginning of each
fiscal year. Awards are determined as a percentage of each executive officer's
base salary.
Stock Benefit Plans. The stock option and incentive plans are our
long-term incentive plans for directors, officers and employees. The objective
of the program is to align executive and shareholder long- term interests by
creating a strong and direct link between executive pay and First Midwest's
performance, and to enable executives to develop and maintain a significant,
long-term stock ownership position in First Midwest common stock. Awards are
made at a level calculated to be competitive with other publicly traded banking
and thrift companies.
Chief Executive Officer Compensation
Mr. James S. Haahr was appointed to the position of President and Chief
Executive Officer of First Federal in 1974 and Chairman in 1990, and has also
served in such capacities with First Midwest since its incorporation in 1993.
Mr. Haahr's fiscal 2000 base salary is $200,000 per year, subject to such
adjustments in future years as shall be determined by the ACP Committee. Mr.
Haahr's base salary for the fiscal year ended September 30, 1999 was $180,000.
The ACP Committee noted that Mr. Haahr's base salary had not been changed for
four years and that the median base salary paid to executive officers in
comparable positions is higher than that paid to Mr. Haahr. As such, the ACP
Committee determined it appropriate to increase Mr. Haahr's base salary for
fiscal 2000.
In reviewing the award of incentive-based compensation to Mr. Haahr for
fiscal 2000, the Committee noted that core earnings of First Midwest remained
stable for the year despite pressure from tightened net interest margins due to
the interest rate environment during the year. In addition, core earnings
remained stable while significantly reducing the interest rate sensitivity of
the Company's balance sheet and while incurring costs associated with the
start-up of a new office and company-wide technological enhancements. Loan and
deposit balances grew at levels above national averages and asset quality
continued to improve as evidenced by a reduction in the ratio of non-performing
assets to total assets at fiscal year end. As such, the ACP Committee and the
Stock Option Committee determined First Midwest's overall performance warranted
the payment of a cash bonus and an award of stock options to Mr. Haahr for
fiscal 2000.
In 1993, Section 162(m) was added to the Internal Revenue Code, the
effect of which is to eliminate the deductibility of compensation over $1
million, with certain exclusions, paid to each of certain highly compensated
executive officers of publicly held corporations. Section 162(m) applies to all
remuneration, both cash and non-cash, that would otherwise be deductible for tax
years beginning on or after January 1,
14
<PAGE>
1994, unless expressly excluded. Because the current compensation of each of our
named executive officers is well below the $1 million threshold, we have not yet
considered our policy regarding this provision.
The foregoing report is furnished by the members of the
Audit-Compensation\Personnel Committee of First Federal and Stock Option
Committee of the Board of Directors of First Midwest.
E. Wayne Cooley G. Mark Mickelson Rodney G. Muilenburg Jeanne Partlow
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The rules and regulations of the SEC require the presentation of a line
graph comparing, over a period of five years, the cumulative total shareholder
return to a performance indicator of a broad equity market index and either a
nationally recognized industry index or a peer group index constructed by us.
The following graph compares the performance of First Midwest's common stock
with the Media General Savings and Loan Index and the Nasdaq Stock Market Index
. The comparison assumes $100 was invested on September 29, 1995 in our common
stock and in each of the foregoing indices and assumes the reinvestment of all
dividends. Historical stock price performance is not necessarily indicative of
future stock price performance.
[PERFORMANCE GRAPH APPEARS HERE]
Comparison of Five-year Cumulative Total Return
(First Midwest, Media General Savings and Loan Index
and the Nasdaq Stock Market Index)
<TABLE>
<CAPTION>
9/29/95 9/29/96 9/30/97 9/30/98 9/30/99 9/30/00
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Midwest.................. $100.00 $123.62 $155.16 $137.73 $105.43 $ 82.57
MG Savings and Loan Index...... 100.00 120.11 203.81 179.84 172.96 211.33
Nasdaq Market Index............ 100.00 116.75 158.69 164.91 266.79 364.95
</TABLE>
15
<PAGE>
CERTAIN TRANSACTIONS
The Banks have followed a policy of granting loans to eligible
directors, officers, employees and members of their immediate families for the
financing of their personal residences and for consumer purposes. As of
September 30, 2000, all loans or extensions of credit to executive officers and
directors were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
the general public and do not involve more than the normal risk of repayment or
present other unfavorable features.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires First
Midwest's directors and executive officers, and persons who own more than 10% of
a registered class of First Midwest's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of First
Midwest common stock and other equity securities of First Midwest by the tenth
of the month following a change. Officers, directors and greater than 10%
shareholders are required by SEC regulations to furnish First Midwest with
copies of all Section 16(a) forms they file.
To First Midwest's knowledge, except as noted below, based solely on a
review of the copies of such reports furnished to First Midwest and written
representations that no other reports were required during the fiscal year ended
September 30, 2000, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10 percent beneficial owners were complied
with.
INDEPENDENT AUDITORS
On May 22, 2000, the Company engaged the firm of McGladrey & Pullen,
LLP as independent accountants for the fiscal year ending September 30, 2000.
Representatives of McGladrey & Pullen, LLP will be present at the meeting to
respond to appropriate questions and to make a statement if they desire.
On May 22, 2000, the Company dismissed Crowe, Chizek and Company LLP
("Crowe Chizek") as the Company's independent accountants. The decision to
change accountants was recommended by the Company's Audit Committee and
subsequently approved by the Company's Board of Directors.
On May 30, 2000, the Company filed a current report on Form 8-K with
the Securities and Exchange Commission ("SEC") stating that it had dismissed
Crowe Chizek. In the report the Company stated that in connection with its 1998
and 1999 audits and though May 22, 2000, there have been no disagreements with
Crowe Chizek on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of Crowe Chizek, would have caused them to make
reference thereto in their report on the financial statements for such years. By
letter addressed to the SEC dated June 9, 2000, Crowe Chizek stated that it
disagreed with the statement by the Company that there were no disagreements. In
this respect, Crowe Chizek stated that during the audit for the year ended
September 30, 1998, it advised Company management of the need to expand the
scope of the audit pertaining to the allowance for loan losses. Crowe Chizek
also stated that the Company management resisted this, and further attempted to
restrict Crowe Chizek from having discussions with regulatory examination
personnel. Crowe Chizek additionally stated that it had advised Company
management of its disagreements and discussed the matters with the Company's
management and Board of Directors until the matters were resolved to Crowe
Chizek's satisfaction. Crowe Chizek's letter to the SEC dated June 9, 2000, also
stated that in preparation of its audit of the Company's September 30, 1999
financial statements, it advised management of the need to expand the scope of
its audit pertaining to the allowance for loan losses, due to its concern that
the allowance appeared to be understated, and that it discussed this matter with
the Company's management and Board of Directors until this matter was resolved
to Crowe
16
<PAGE>
Chizek's satisfaction. Crowe Chizek further stated that in commenting on drafts
of the Form 8-K, it was discussing wording changes provided by management
referring to and regarding these disagreements when it was advised that the Form
8-K wording would be changed and filed indicating that there were no
disagreements. Crowe Chizek additionally stated that it had no basis to agree or
disagree regarding the date it had been dismissed by the Company or if the
change in independent accountants was recommended by the Audit Committee and
subsequently approved by the Board of Directors. Finally, Crowe Chizek stated
that it agreed with the Company's statement that the reports of Crowe Chizek on
the consolidated financial statements for the past two fiscal years did not
contain an adverse opinion or a disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope or accounting principles, and that the
Company requested that Crowe Chizek furnish a letter addressed to the SEC
stating whether it agreed with its statements, and if not, stating the respects
in which they did not agree.
In response to Crowe Chizek's letter to the SEC, the Company stated
that it acknowledges there were discussions with Crowe Chizek during the audit
for the year ended September 30, 1998 in regard to the expansion of the scope of
the audit pertaining to the allowance for loan losses and in regard to
communication with regulatory examination personnel. The Company stated that the
latter discussions were intended not to restrict communications, but rather were
intended to seek a means to reduce duplication of effort and to facilitate
communication between parties in a cost effective manner. The Company also
stated that it further acknowledges discussions during the audit for the year
ended September 30, 1999 in regard to the expansion of the scope of the audit
pertaining to the allowance for loan losses, and that it believes the
discussions referenced above did not constitute disagreements. The Company
further stated that this is supported, among other things, by written
communication to the Company from Crowe Chizek following both audits, stating
there were no material disagreements with management during either audit year
and further stating there were no serious difficulties encountered in dealing
with management related to the performance of the audit in either year. Finally,
the Company noted Crowe Chizek's statements that all matters categorized as
disagreements were resolved to Crowe Chizek's satisfaction.
The audit report of Crowe Chizek on the Company's consolidated
financial statements as of and for the years ended September 30, 1999 and 1998,
did not contain an adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope, or accounting principle.
The Company has authorized Crowe Chizek to respond fully to the inquiries of
McGladrey & Pullen, LLP concerning these matters.
SHAREHOLDER PROPOSALS FOR THE YEAR 2002 ANNUAL MEETING
Shareholder proposals intended to be presented at First Midwest's 2002
annual meeting must be received by its Secretary no later than August 20, 2001
to be eligible for inclusion in the First Midwest's proxy statement and form of
proxy related to the 2002 annual meeting. Any such proposal will be subject to
the requirements of the proxy rules adopted under the Securities Exchange Act of
1934, and as with any shareholder proposal (regardless of whether included in
First Midwest's proxy materials), First Midwest's certificate of incorporation
and bylaws and Delaware law.
To be considered for presentation at the next annual meeting, but not
for inclusion in the Company's proxy statement and form of proxy for that
meeting, proposals must be received by the Company by the Deadline. The
"Deadline" means the date that is 30 days prior to the date of the next annual
meeting; however, in the event that less than 40 days' notice of the date of
such meeting is given or made to stockholders, the "Deadline" means the close of
business on the tenth day following the day on which notice of the date of the
meeting was mailed. If a stockholder proposal that is received by the Company
after the Deadline is raised at the next annual meeting, the holders of the
proxies for that meeting will have the discretion to vote on the proposal in
accordance with their best judgment and discretion, without any discussion of
the proposal in the Company's proxy statement for the next annual meeting.
17
<PAGE>
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this proxy statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
18
<PAGE>
APPENDIX
CHARTER OF THE AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS OF FIRST MIDWEST FINANCIAL, INC.
<PAGE>
FIRST MIDWEST FINANCIAL, INC.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
I. Audit Committee Purpose
The Audit Committee is appointed by the Board of Directors to assist
the Board in fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:
o Monitor the integrity of the Company's financial reporting
process and systems of internal controls regarding finance,
accounting, and regulatory compliance.
o Monitor the independence and performance of the Company's
independent auditors and internal auditing department.
o Provide an avenue of communication among the independent
auditors, management, the internal auditing department, and
the Board of Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the
independent auditors as well as anyone in the organization. The Audit Committee
has the ability to retain, at the Company's expense, special legal, accounting,
or other consultants or experts it deems necessary in the performance of its
duties.
II. Audit Committee Composition and Meetings
Audit Committee members shall meet the requirements of the Securities
and Exchange Commission and Nasdaq Stock Exchange. The Audit Committee shall be
comprised of three or more directors as determined by the Board, each of whom
shall be independent nonexecutive directors, free from any relationship that
would interfere with the exercise of his or her independent judgment. All
members of the Committee shall have a basic understanding of finance and
accounting and be able to read and understand fundamental financial statements,
and at least one member of the Committee shall have accounting or related
financial management expertise.
Audit Committee members shall be appointed by the Board on
recommendation of the Nominating Committee. If an audit committee Chair is not
designated or present, the members of the Committee may designate a Chair by
majority vote of the Committee membership.
The Committee shall meet at least three times annually, or more
frequently as circumstances dictate. The Audit Committee Chair shall prepare or
approve an agenda in advance of each meeting.
The Committee shall provide opportunity for the internal and
independent auditors to meet with the members of the audit committee without
members of management present. Among the items to be discussed in these meetings
are the independent auditor's evaluation of the Company's financial, accounting,
and auditing personnel, and the cooperation that the independent auditors
received during the course of the audit.
In addition, the Committee, or at least its Chair, shall communicate
with management and the independent auditors quarterly to review the Company's
financial statements and significant findings based upon the auditors' limited
review procedures.
<PAGE>
III. Audit Committee Responsibilities and Duties
Review Procedures
1) Review and reassess the adequacy of this Charter at least
annually. Submit the charter to the Board of Directors for
approval and have the document published at least every three
years in accordance with SEC regulations.
2) Review the Company's annual audited financial statements prior
to filing and recommend to the Board of Directors that such
financial statements be included in the Company's annual
report on Form 10-K. Review should include discussion with
management and independent auditors of significant issues
regarding accounting principles, practices, and judgments.
3) In consultation with the management, the independent auditors,
and the internal auditor, consider the integrity and adequacy
of the Company's financial reporting processes and controls.
Discuss significant financial risk exposures and the steps
management has taken to monitor, control, and report such
exposures. Review significant findings as prepared by the
independent auditors and the internal auditing department
together with management's responses.
4) Review the Company's quarterly financial statements with
management. Review and discuss with the independent auditors
any significant changes to the Company's accounting principles
and any items required to be communicated in accordance with
SAS 61. The Chair of the Committee may represent the entire
Audit Committee for purpose of this review.
Independent Auditors
5) The independent auditors are ultimately accountable to the
Audit Committee and the Board of Directors. The Audit
Committee shall review the independence and performance of the
auditors and annually recommend to the Board of Directors the
appointment of the independent auditors or approve any
discharge of auditors when circumstances warrant.
6) Approve the fees and other significant compensation to be paid
to the independent auditors.
7) On an annual basis, the Committee should review and discuss
with the independent auditors all significant relationships
they have with the Company that could impair the auditor's
independence. The Committee should review the disclosures from
the independent auditors required by Standard No. 1 of the
Independence Standards Board.
8) Review the independent auditor's proposed audit scope for the
current year and the audit procedures to be utilized.
9) Review the financial statements contained in the annual report
to the shareholders with management and the independent
auditors to determine that the independent auditors are
satisfied with the disclosure and content of the financial
statements to be presented to the shareholders.
10) Discuss certain matters required to be communicated to audit
committees in accordance with SAS 61.
11) Consider the independent auditor's judgments about the quality
and appropriateness of the Company's accounting principles as
applied in its financial reporting.
<PAGE>
Internal Audit Department
12) Review the internal audit function of the Company including
the independence and authority of its reporting obligations,
the proposed audit plans and staffing for the coming year, and
the coordination of such plans with the independent auditors.
13) Review the appointment, performance, and replacement of the
senior internal auditor.
14) Review significant reports prepared by the internal audit
department together with management's response and follow-up
to these reports.
Other Audit Committee Responsibilities
15) Annually, prepare a report to shareholders as required by the
SEC. The report should be included in the Company's annual
proxy statement.
16) Review accounting, financial, and internal audit human
resources and succession planning within the Company.
17) Maintain minutes of meetings and periodically report to the
Board of Directors on significant results of the foregoing
activities.
18) Perform any other activities consistent with this Charter, the
Company's bylaws, and governing law, as the Committee or the
Board deems necessary or appropriate.
<PAGE>
REVOCABLE PROXY
FIRST MIDWEST FINANCIAL, INC.
X PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF SHAREHOLDERS o JANUARY 22, 2001
This proxy is being solicited on behalf of the Board of Directors of First
Midwest Financial, Inc. The undersigned hereby appoints the members of the Board
of Directors of First Midwest Financial, Inc., and its survivors, with full
power of substitution, and authorizes them to represent and vote, as designated
below and in accordance with their judgment upon any other matters properly
presented at the annual meeting, all the shares of First Midwest Financial
common stock held of record by the undersigned at the close of business on
November 30, 2000, at the annual meeting of shareholders, and at any and all
adjournments or postponements thereof.
----------------------------------------
Please be sure to sign and date Date
this Proxy in the box below.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shareholder sign above Co-holder (if any) sign above
1. The election of E. Wayne Cooley and J. Tyler Haahr as directors for terms
of three years.
FOR ALL
FOR WITHHOLD EXCEPT
--- -------- ------
|_| |_| |_|
INSTRUCTIONS: To vote for all nominees mark the box "FOR" with an "X". To
withhold your vote for all nominees mark the box "WITHHOLD" with an "X". To
withhold your vote for an individual nominee mark the box "FOR ALL EXCEPT" with
an "X" and write the name of the nominee on the line provided below for whom you
wish to withhold your vote.
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The Board of Directors recommends a vote"FOR" the election of the above
directors. This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder(s). If no direction is made, this
proxy will be voted FOR the election of the directors set forth herein. Should a
director nominee be unable to serve as a director, an event that First Midwest
Financial does not currently anticipate, the persons named in this proxy reserve
the right, in their discretion, to vote for a substitute nominee designated by
the Board of Directors.
The shareholder(s) acknowledge(s) receipt from First Midwest Financial, prior to
the execution of this proxy, of the Notice of Annual Meeting scheduled to be
held on January 22, 2001, an Annual Report to Shareholders for the year ended
September 30, 2000, and a proxy statement relating to the business to be
addressed at the meeting.
Please sign exactly as your name appears above on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
=> Detach above card, date, sign and mail in postage-paid envelope provided. =>
FIRST MIDWEST FINANCIAL, INC.
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This proxy may be revoked at any time before it is voted by delivering to the
Secretary of First Midwest Financial, on or before the taking of the vote at the
annual meeting, a written notice of revocation bearing a later date than the
proxy or a later dated proxy relating to the same shares of First Midwest
Financial common stock, or by attending the annual meeting and voting in person.
Attendance at the annual meeting will not in itself constitute the revocation of
a proxy. If this proxy is properly revoked as described above, then the power of
such attorneys and proxies shall be deemed terminated and of no further force
and effect.
PLEASE PROMPTLY COMPLETE, DATE, SIGN, AND MAIL THE ATTACHED
PROXY IN THE ENCLOSED, PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
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