HALLMARK CAPITAL CORP, DEF 14A, 1997-09-19

HALLMARK CAPITAL CORP
DEF 14A, 1997-09-19
SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED

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<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant [X]

Filed by a party other than the registrant [ ]

Check the appropriate box:

[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement

[ ] Definitive additional materials

[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

Hallmark Capital Corp.
- -------------------------------------------------------------------------------
(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.:

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(3) Filing party:

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(4) Date filed:

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<PAGE> 2

[HALLMARK CAPITAL CORP. LETTERHEAD]

September 19, 1997

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders
(the "Annual Meeting") of Hallmark Capital Corp. (the "Company"), the holding
company for West Allis Savings Bank (the "Bank"), which will be held on
Thursday, October 30, 1997, at 7:00 p.m., Milwaukee, Wisconsin time, at the
Pettit National Ice Center, Hall of Fame Room, 500 South 84th Street, West
Allis, Wisconsin 53214.

The attached Notice of Annual Meeting of Shareholders and Proxy Statement
describe the formal business to be conducted at the Annual Meeting. We also
have enclosed a copy of the Company's Summary Annual Report and Annual Report
on Form 10-K for the fiscal year ended June 30, 1997. Directors and officers
of the Company, as well as representatives of KPMG Peat Marwick LLP, the
Company's independent auditors, will be present at the Annual Meeting to
respond to any questions that our shareholders may have.

The vote of every shareholder is important to us. Please sign and return
the enclosed appointment of proxy form ("Proxy") promptly in the postage-paid
envelope provided, regardless of whether you are able to attend the Annual
Meeting in person. If you attend the Annual Meeting, you may vote in person
even if you have already mailed your Proxy.

On behalf of the Board of Directors and all of the employees of the
Company and the Bank, I wish to thank you for your continued support.

Sincerely yours,

/S/ James D. Smessaert
-------------------------------------
James D. Smessaert
President and Chief Executive Officer

<PAGE> 3
HALLMARK CAPITAL CORP.
[LETTERHEAD]

----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 30, 1997
----------------------------------------

TO THE HOLDERS OF COMMON STOCK OF HALLMARK CAPITAL CORP.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of Hallmark Capital Corp. (the "Company") will be held on
Thursday, October 30, 1997, at 7:00 p.m., Milwaukee, Wisconsin time, at the
Pettit National Ice Center, Hall of Fame Room, 500 South 84th Street, West
Allis, Wisconsin 53214.

The Annual Meeting is for the purpose of considering and voting upon the
following matters, all of which are set forth more completely in the
accompanying Proxy Statement:

1. The election of one director for a three-year term, and until his
successor is elected and qualified;

2. The approval of an amendment to the Hallmark Capital Corp. 1993
Incentive Stock Option Plan;

3. The approval of an amendment to the Hallmark Capital Corp. 1993 Stock
Option Plan for Outside Directors;

4. The ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors of the Company for the fiscal year ending June
30, 1998; and

5. Such other matters as may properly come before the Annual Meeting or
any adjournments or postponements thereof. The Board of Directors is
not aware of any other such business.

The Board of Directors has established September 12, 1997, as the record
date for the determination of shareholders entitled to notice of and to vote at
the Annual Meeting and any adjournments or postponements thereof. Only
shareholders of record as of the close of business on that date will be
entitled to vote at the Annual Meeting or any adjournments or postponements
thereof. In the event there are not sufficient votes for a quorum or to
approve or ratify any of the foregoing proposals at the time of the Annual
Meeting, the Annual Meeting may be adjourned or postponed in order to permit
further solicitation of proxies by the Company.

BY ORDER OF THE BOARD OF DIRECTORS,

/S/ Peter A. Gilbert
-------------------------
West Allis, Wisconsin Peter A. Gilbert
September 19, 1997 Executive Vice President and Corporate Secretary

- --------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. WHETHER OR NOT YOU PLAN
TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY FORM PROMPTLY IN THE ENVELOPE PROVIDED.
- --------------------------------------------------------------------------------

<PAGE> 4
[HALLMARK CAPITAL CORP. LETTERHEAD]

-------------------------
PROXY STATEMENT
-------------------------

ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 30, 1997
---------------------------------------

This Proxy Statement is being furnished to holders of common stock, $1.00
par value per share (the "Common Stock") of Hallmark Capital Corp. (the
"Company") in connection with the solicitation on behalf of the Board of
Directors of the Company of proxies to be used at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held on Thursday, October 30, 1997,
at 7:00 p.m., Wisconsin time, at the Pettit National Ice Center, 500 South 84th
Street, West Allis, Wisconsin and at any adjournments or postponements thereof.

The 1997 Summary Annual Report to Shareholders and the Company's Annual
Report on Form 10-K, including the consolidated financial statements for the
fiscal year ended June 30, 1997, accompanies this Proxy Statement and
appointment of proxy form (the "Proxy"), which are first being mailed to
shareholders on or about September 19, 1997.

Only shareholders of record as of the close of business on September 12,
1997 (the "Voting Record Date") will be entitled to vote at the Annual Meeting.
On the Voting Record Date, there were 1,442,950 shares of Common Stock
outstanding and entitled to vote, and the Company had no other class of
securities outstanding.

The presence, in person or by Proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. As to the election of directors,
the Proxy being provided by the Board of Directors enables a director to vote
for the election of the nominees proposed by the Board, or to withhold
authority to vote for one or more of the nominees being proposed. Under the
Wisconsin Business Corporation Law, directors are elected by a plurality of the
votes cast with a quorum present and shareholders do not have the right to
cumulate their votes for the election of directors unless the articles of
incorporation provide otherwise. The Company's Articles of Incorporation do
not provide cumulative voting rights for the election of directors. The
affirmative vote of at least a majority of the shares of Common Stock
represented in person or by proxy at the Annual Meeting is necessary to approve
the amendment to the Hallmark Capital Corp. 1993 Incentive Stock Option Plan
(the "Incentive Stock Option Plan") and the amendment to the Hallmark Capital
Corp. 1993 Stock Option Plan for Outside Directors (the "Directors' Plan").
The affirmative vote of a majority of the total votes cast in person or by
proxy is necessary to ratify the appointment of KPMG Peat Marwick LLP as
independent auditors for the fiscal year ending June 30, 1998.

Abstentions are included in the determination of shares present and voting
for purposes of whether a quorum exists, while broker non-votes are not.
Because of the required votes, abstentions will have the same effect as a vote
against the proposal to approve the amendments to the option plans and to
ratify the appointment of the Company's independent auditors, but will not be
counted as votes cast for the election of directors and thus, will have no
effect on the voting for the election of directors. Under the rules of the New
York Stock Exchange,

<PAGE> 5

all of the proposals for consideration at the Annual Meeting are considered
"discretionary" items upon which brokerage firms may vote in their discretion
on behalf of their client if such clients have not furnished voting
instructions. Therefore, there are no proposals to be considered at the Annual
Meeting which are considered "non-discretionary" and for which there will be
"broker non-votes." In the event there are not sufficient votes for a quorum
or to approve or ratify any proposal at the time of the Annual Meeting, the
Annual Meeting may be adjourned or postponed in order to permit the further
solicitation of proxies.

As provided in the Company's Articles of Incorporation, record holders of
Common Stock who beneficially own in excess of 10% of the outstanding shares of
Common Stock (the "10% Limit") are not entitled to any vote in respect of the
shares held in excess of the 10% Limit. A person or entity is deemed to
beneficially own shares owned by an affiliate of, as well as such persons
acting in concert with, such person or entity. However, no director or officer
of the Company shall be deemed to beneficially own any Common Stock
beneficially owned by any other director or officer, solely by reason of any or
all of such directors or officers acting in their capacities as such. The
Company's Articles of Incorporation authorize the Board (i) to make all
determinations necessary to implement and apply the 10% Limit, including
determining whatever persons or entities are acting in concert, and (ii) to
demand that any person who is reasonably believed to beneficially own stock in
excess of the 10% Limit supply information to the Company to enable the Board
to implement and apply the 10% Limit. The provisions of the Company's Articles
of Incorporation relating to the 10% Limit do not apply to an acquisition of
more than 10% of the shares of Common Stock if such acquisition has been
approved by a majority of disinterested directors; provided such approval shall
be effective only if obtained at a meeting where a quorum of disinterested
directors is present.

Shareholders are requested to vote by completing the enclosed Proxy and
returning it signed and dated in the enclosed postage-paid envelope.
Shareholders are urged to indicate their votes in the spaces provided on the
Proxy. Proxies solicited by the Board of Directors of the Company will be
voted in accordance with the directions given therein. Where no instructions
are given, signed proxies will be voted FOR the election of each of the nominee
for director named in this Proxy Statement, FOR approval of the amendment to
the Incentive Stock Option Plan, FOR approval of the amendment to the
Directors' Plan and FOR the ratification of the appointment of KPMG Peat
Marwick LLP as independent auditors of the Company for the fiscal year ending
June 30, 1998. In the event other matters properly come before the Annual
Meeting or any adjournments or postponements thereof, including, without
limitation, a motion to adjourn the Annual Meeting in order to permit further
solicitation of proxies by the Company, the proxies will be entitled to vote as
they, in their discretion, deem appropriate. Returning your completed Proxy
will not prevent you from voting in person at the Annual Meeting should you be
present and wish to do so.

Any shareholder giving a Proxy has the power to revoke it any time before
it is exercised by (i) filing with the Secretary of the Company written notice
thereof (Peter A. Gilbert, Corporate Secretary, Hallmark Capital Corp., 7401
West Greenfield Avenue, West Allis, Wisconsin 53214); (ii) submitting a duly
executed Proxy bearing a later date; or (iii) appearing at the Annual Meeting
and giving the Secretary notice of his or her intention to vote in person. If
you are a shareholder whose shares are not registered in your own name, you
will need additional documentation from your record holder to vote personally
at the Annual Meeting. Proxies solicited hereby may be exercised only at the
Annual Meeting and any adjournment or postponement thereof and will not be used
for any other meeting.

The cost of solicitation of proxies by mail on behalf of the Board of
Directors will be borne by the Company. The Company has retained Morrow &
Company, Inc., a professional proxy solicitation firm, to assist in the
solicitation of proxies. Morrow & Company, Inc. will be paid a fee of $4,250,
plus reimbursement for out-of-pocket expenses. Proxies also may be solicited
by personal interview or by telephone, in addition to the use of the mails by
directors, officers and regular employees of the Company and West Allis Savings
Bank (the "Bank"), without additional compensation therefor. The Company also
has made arrangements with brokerage firms, banks, nominees and other
fiduciaries to forward proxy solicitation materials for shares of Common Stock
held of record by the beneficial owners of such shares. The Company will
reimburse such holders for their reasonable out-of-pocket expenses.

Proxies solicited hereby will be referred to the Board of Directors, and
will be tabulated by inspectors of election designated by the Board of
Directors, who will not be employed by, or a director of, the Company or any of
its affiliates.

-2-

<PAGE> 6

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth the beneficial ownership of shares of
Common Stock as of August 31, 1997 (except as noted otherwise below) by (i)
each shareholder known to the Company to beneficially own more than 5% of the
shares of Common Stock outstanding, as disclosed in certain reports regarding
such ownership filed with the Company and with the Securities and Exchange
Commission (the "SEC") in accordance with Sections 13(d) or 13(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (ii) each
director of the Company, (iii) each director nominee of the Company; (iv) the
executive officers of the Company appearing in the Summary Compensation Table
below, and (v) all directors and executive officers as a group. Members of the
Board of Directors of the Company also serve as directors of the Bank.

<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
NAME OWNED (1) PERCENT OF CLASS
---- ---------------- ----------------
<S> <C> <C>
Financial Institution Partners, L.P./ Hovde
Capital, Inc. (5) ........................ 142,000 9.84%
West Allis Savings Bank Employee Stock
Ownership Trust (6) ...................... 80,521 5.58
Heartland Advisors, Inc.(7) ............... 55,000 3.81
James D. Smessaert (2)(3)(4) .............. 103,436 6.92
Floyd D. Brink (2)(3) ..................... 34,241 2.35
Milton Dalin (2)(3) ....................... 27,991 1.92
Reginald M. Hislop, III ................... 100 *
Charles E. Rickheim (2)(3) ................ 41,470 2.85
Jerome A. Weitzer (2)(3) .................. 34,241 2.35
Donald A. Zellmer ......................... 1,500 *
Peter A. Gilbert (3) ...................... 34,564 2.38
All directors and executive officers
as a group (11 persons) (2)(3)(4) ........ 331,461 20.84%
</TABLE>

____________________

* Amount represents less than 1.0% of the total shares of Common Stock
outstanding.
(1) Unless otherwise indicated, includes shares of Common Stock held directly
by the individuals as well as by members of such individuals' immediate
family who share the same household, shares held in trust and other
indirect forms of ownership over which shares the individuals exercise
sole or shared voting power and/or investment power. Fractional shares of
Common Stock held by certain executive officers under the West Allis
Savings Bank Employee Stock Ownership Plan (the "ESOP") have been rounded
to the nearest whole share.
(2) Includes shares of Common Stock which the named individuals and certain
executive officers have the right to acquire within 60 days of the Voting
Record Date pursuant to the exercise of stock options: Mr. Smessaert -
51,800 shares and Mr. Gilbert - 7,200 shares.
(3) Includes shares of Common Stock awarded to certain executive officers and
directors under the West Allis Savings Bank Management Recognition and
Retention Plan (the "MRP"). Recipients of awards under the MRP may direct
voting prior to vesting.
(4) Includes shares of Common Stock allocated to certain executive officers
under the ESOP, of which approximately 4,582 shares were allocated to Mr.
Smessaert.
(5) Based upon Amendment No. 1 to a Schedule 13D, dated November 7, 1996,
filed with the Company pursuant to the Exchange Act by Financial
Institution Partners, L. P. and Hovde Capital, Inc., reporting the
beneficial ownership of shares are where they have shared voting and
dispositive power. Hovde Capital, Inc. is the general partner of
Financial Institution Partners, L.P. and their business office is located
at 1110 Lake Cook Road, Suite 165, Buffalo Grove, IL 60089.
(6) First Bank Milwaukee, N.A. (the "Trustee") is the trustee for the ESOP.
The Trustee's address is 201 West Wisconsin Avenue, Milwaukee, Wisconsin
53202.
(7) Based upon Amendment No. 1 to a Schedule 13G, dated February 12, 1997,
filed with the Company pursuant to the Exchange Act by Heartland Advisors,
Inc., an investment adviser registered under the Investment Advisers Act
of 1940, as amended, reporting the beneficial ownership of shares over
which they have the sole voting and dispositive power. The principal
business office of Heartland Advisors, Inc. is located at 790 North
Milwaukee Street, Milwaukee, Wisconsin 53202.

-3-

<PAGE> 7

MATTERS TO BE VOTED ON AT THE ANNUAL MEETING

MATTER 1.
ELECTION OF DIRECTORS

Pursuant to the Articles of Incorporation of the Company, at the first
annual meeting of shareholders of the Company held on October 28, 1994,
directors of the Company were divided into three classes as equal in number as
possible. Directors of the first class were elected to hold office for a term
expiring at the first succeeding annual meeting, directors of the second class
were elected to hold office for a term expiring at the second succeeding annual
meeting, and directors of the third class were elected to hold office for a
term expiring at the third succeeding annual meeting, and in each case until
their successors are elected and qualified. At each subsequent annual meeting
of shareholders, one class of directors, or approximately one-third of the
total number of directors, are to be elected for a term of three years. There
are no family relationships among the directors and/or executive officers of
the Company. No person being nominated as a director is being proposed for
election pursuant to any agreement or understanding between any person and the
Company.

Unless otherwise directed, each Proxy executed and returned by a
shareholder will be voted FOR the election of the nominees for director listed
below. If any person named as nominee should be unable or unwilling to stand
for election at the time of the Annual Meeting, the proxies will nominate and
vote for any replacement nominee or nominees recommended by the Board of
Directors. At this time, the Board of Directors knows of no reason why any of
the nominees listed below may not be able to serve as a director if elected.

The following tables present information concerning the nominees for
director and continuing directors. All of the proposed nominees currently
serve as directors of the Bank. James D. Smessaert has served as a director of
the Company since the Company's formation in June 1993. In July 1997, the
Board of Directors approved an amendment to the Company's By-laws to reduce the
number of directors from seven to six, effective upon the expiration of Mr.
Jerome A. Weitzer's current term at the Annual Meeting. Mr. Weitzer, age 75,
has been a director of the Bank since 1972, and is a retired Vice President and
a former director of Weitzer Bros., Inc., a plumbing and heating contract
company, located in West Allis, Wisconsin.

<TABLE>
<CAPTION>
POSITION WITH THE COMPANY DIRECTOR
AND PRINCIPAL OCCUPATION OF THE BANK
NAME AGE DURING THE PAST FIVE YEARS SINCE
- ---- --- -------------------------- -----------
<S> <C> <C> <C>

NOMINEE FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2000

James D. Smessaert 59 President, Chief Executive Officer and Chairman 1984
of the Board for the Company and the Bank.
</TABLE>

-4-

<PAGE> 8

POSITION WITH THE COMPANY DIRECTOR
AND PRINCIPAL OCCUPATION OF THE BANK
NAME AGE DURING THE PAST FIVE YEARS SINCE
- ---- --- -------------------------- -----
<S> <C> <C> <C>
INFORMATION WITH RESPECT TO CONTINUING DIRECTORS
DIRECTORS WHOSE TERMS EXPIRE IN 1998

Peter A. Gilbert 49 Director of the Company and the Bank; Executive 1995
Vice President, Chief Operating Officer and
Corporate Secretary of the Bank and Executive
Vice President and Corporate Secretary of
the Company. Prior to joining the Bank in
December 1995, Mr. Gilbert was President and
CEO of Valley Real Estate Services Corp., a
mortgage banking subsidiary of Valley
Bancorporation located in Sheboygan, Wisconsin,
from 1992 to 1994.

Reginald M. Hislop, III 37 Director of the Company and the Bank; President 1995
and Chief Executive Officer of The Village at
Manor Park, Inc., a diversified organization
which provides long-term care and specialized
health care services to senior adults, located in
West Allis, Wisconsin.

Charles E. Rickheim 56 Director of the Company and the Bank; Owner and 1982
manager of residential real estate located in
the State of Wisconsin.

DIRECTORS WHOSE TERMS EXPIRE IN 1999

Floyd D. Brink 71 Director of the Company and the Bank; Retired 1969
President and owner of West Allis Heating, Inc.,
West Allis, Wisconsin.

Donald A. Zellmer 64 Director of the Company and the Bank; Retired 1996
Partner of Ernst & Young LLP, Milwaukee Office;
Director of St. Luke's Hospital, Milwaukee,
Wisconsin, and Aurora Health Care Services, Inc.,
a health care provider, located in Milwaukee,
Wisconsin.
</TABLE>

THE AFFIRMATIVE VOTE OF A PLURALITY OF THE VOTES CAST IS REQUIRED FOR THE
ELECTION OF DIRECTORS. UNLESS OTHERWISE SPECIFIED, THE SHARES OF COMMON STOCK
REPRESENTED BY THE PROXIES SOLICITED HEREBY WILL BE VOTED IN FAVOR OF THE
ELECTION OF THE ABOVE-DESCRIBED NOMINEE. THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE FOR ELECTION OF THE NOMINEE FOR DIRECTOR.

-5-

<PAGE> 9

MATTER 2.
AMENDMENT OF THE HALLMARK CAPITAL CORP.
1993 INCENTIVE STOCK OPTION PLAN

DESCRIPTION OF AMENDMENT

The Board of Directors of the Company proposes for consideration and
approval by the Company's shareholders an amendment (the "Incentive Plan
Amendment") to the Hallmark Capital Corp. 1993 Incentive Stock Option Plan (the
"Incentive Stock Option Plan") to increase the number of shares authorized for
issuance thereunder by 50,550 shares, or approximately 3.5% of the number of
shares of Common Stock outstanding on the Voting Record Date, to 184,960 shares
of Common Stock. Absent shareholder approval, the Incentive Plan Amendment
will not be effective. Shareholder approval of the Incentive Plan Amendment
will qualify the Incentive Stock Option Plan for granting Incentive Stock
Options under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code") with respect to the additional shares authorized for
grant, and is a non-quantitative listing requirement under the By-laws of the
National Association of Securities Dealers, Inc. ("NASD") which is applicable
to all issuers, including the Company, whose shares are traded on the NASDAQ
National Market System.

PURPOSE OF THE INCENTIVE PLAN AMENDMENT

In connection with the conversion of West Allis Savings Bank (the "Bank")
from mutual to stock form and the issuance of the Common Stock in connection
therewith in 1993 (the "Conversion"), the Board of Directors adopted the
Incentive Stock Option Plan, which authorized in the aggregate options to
purchase 134,410 shares of Common Stock. The Incentive Stock Option Plan was
approved by the Company's shareholders at a Special Meeting of Shareholders
held on March 31, 1994. In connection with the Conversion, options to purchase
102,779 shares of Common Stock were granted to officers of the Company under
the Incentive Stock Option Plan, and option to purchase 31,000 shares of Common
Stock have been granted to eligible participants under the Incentive Stock
Option Plan since the Conversion. Options to purchase 631 shares of Common
Stock remain available for future grant under the Incentive Stock Option Plan.

In August, 1997, at the direction of the Board of Directors of the
Company, the Compensation Committee of the Board of Directors of the Company
reviewed the scope and adequacy of Company's current stock-based compensation
plans with the long-term objective of increasing the stock-based components of
total compensation paid to directors, officers and employees of the Company and
its subsidiaries. The Board of Directors believes that increasing the
stock-based components of total compensation serves to further align the
interests of the Company's directors, officers and employees and its
shareholders. Based upon such review, the Compensation Committee recommended,
and the Board of Directors approved, the proposed Incentive Plan Amendment and
the amendment to the Hallmark Capital Corp. 1993 Stock Option Plan for Outside
Directors, described further under Matter 3., as a method of increasing the
stock-based components of total compensation and providing an adequate reserve
of options for additional corporate purposes such as retaining existing
directors, officers and employees, recruiting future directors and officers,
and for issuances in connection with potential strategic acquisitions. The
Incentive Plan Amendment is designed to provide such reserve for officers and
employees who are eligible participants in the Incentive Stock Option Plan.

-6-

<PAGE> 10

ELIGIBILITY, TYPE OF OPTION GRANTS AND SHARES SUBJECT TO PLAN

Under the Incentive Stock Option Plan, all officers and employees of the
Company and its subsidiaries are eligible to participate. As of August 1,
1997, the Company had 80 officers and employees eligible to participate in the
Incentive Stock Option Plan. The Incentive Stock Option Plan authorizes the
grant of (i) options to purchase shares of Common Stock intended to qualify as
incentive stock options under Section 422 of the Internal Revenue Code
("Incentive Stock Options"); (ii) options that do not so qualify
("Non-Statutory Options"); and (iii) options which are exercisable only upon a
change in control of the Company or the Bank ("Limited Rights"). If the
Incentive Plan Amendment is approved by shareholders, options for a total of
51,181 shares of Common Stock (including the 631 shares currently available for
grant under the Incentive Stock Option Plan) will be available for future
grants to eligible participants. The Company currently has no immediate plans
to grant options under the Incentive Stock Option Plan, as amended.

The shares of Common Stock to be issued by the Company upon the exercise
of options by optionees may be acquired either through open market purchases by
the Company, or issued from authorized but unissued shares of Common Stock. If
additional authorized but unissued shares of Common Stock are issued upon the
exercise of options, the interests of existing shareholders will be diluted.

ADMINISTRATION

The Incentive Stock Option Plan is administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee"). The
Committee consists solely of "non-employee directors" as that term is defined
under Rule 16b-3 promulgated by the SEC under the Exchange Act and "outside
directors" as that term is defined under applicable regulations issued by the
Internal Revenue Service under the Internal Revenue Code. Pursuant to the
terms of the Incentive Stock Option Plan, the Committee is authorized to make
the following determinations with respect to grants to eligible participants:
(i) the persons to whom options are granted; (ii) the terms at which options
are to be granted; (iii) the number of shares of Common Stock subject to an
individual grant; (iv) the vesting schedule applicable to individual grants;
and (v) the expiration date of the option (which shall not be later than ten
years from the date the option is granted). The exercise price may be paid in
cash or shares of Common Stock and shall be the fair market value (as defined
in the Incentive Stock Option Plan) of the Common Stock on the date of grant or
such greater amount as determined by the Committee.

TERMS AND CONDITIONS OF OPTION GRANTS

Options granted under the Incentive Stock Option Plan are subject to
certain terms and conditions as described herein. The aggregate fair market
value of shares of Common Stock with respect to which Incentive Stock Options
may be granted to an eligible participant which are exercisable for the first
time in any calendar year may not exceed $100,000. Any option granted in
excess of such amount shall be treated as a Non-Statutory Option. Incentive
Stock Options granted to any person who is the beneficial owner of more than
10% of the outstanding shares of Common Stock may be exercised only for a
period of five years following the date of grant and the exercise price at the
time of grant must be equal to at least 110% of the fair market value of the
Common Stock on the date of the grant.

No option granted under the Incentive Stock Option Plan will be
exercisable after three months after the date on which the optionee ceases to
perform services for the Company, except that in the event of death, retirement
or disability, all options, whether or not exercisable at such time, may be
exercisable for up to one year thereafter or such longer period as determined
by the Committee. Options held by employees terminated for cause will
terminate on the date of termination. Termination "for cause" includes
termination due to an intentional failure to perform stated duties, breach of
fiduciary duty involving personal dishonesty, willful violations of law or the
entry of a final cease and desist order which results in a material loss to the
Company or one of its affiliates.

-7-

<PAGE> 11

In the event of a Change of Control of the Company, all Incentive Stock
Options and Non-Statutory Options, whether or not exercisable at such time,
shall become immediately exercisable. If a participant is terminated due to
such Change of Control, all options shall be exercisable for a period of one
year following such Change of Control; provided that in no event shall the
period extend beyond the option term and in the case of Incentive Stock
Options, such options shall not be eligible for treatment as Incentive Stock
Options if exercised more than three months following the date of a
participant's cessation of employment. "Change of Control" is defined to mean
a change of control of a nature that: (i) would be required to be reported to
the SEC by the Company in a current report on Form 8-K; or (ii) results in a
change in control of the Bank or the Company within the meaning of the Home
Owners Loan Act of 1933 and the rules and regulations promulgated by the Office
of Thrift Supervision (or its predecessor agency) (the "OTS"). In addition,
under the Incentive Stock Option Plan, a Change of Control shall be deemed to
have occurred at such time as (i) any "person" (as the term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company or its subsidiaries representing 20% or more of such
entities' outstanding voting securities; (ii) individuals who constitute the
current Board of Directors of the Company (the "Incumbent Board"), cease for
any reason to constitute at least a majority thereof, provided that any person
becoming a director subsequent to the effective date of the Incentive Stock
Option Plan whose election was approved by a vote of at least three-quarters of
the directors comprising the Incumbent Board, or whose nomination for election
by the Company's shareholders was approved by the same Nominating Committee
serving under an Incumbent Board, shall be considered as a member of the
Incumbent Board; or (iii) a plan of reorganization, merger, consolidation, sale
of all or substantially all the assets of the Company or similar transaction in
which the Company is not the surviving institution; or (iv) any change of
control of the Company instituted by an entity or individual other than current
management of the Company.

In the event of a participant's termination of employment, the Company, if
requested by the participant, may elect to pay the participant, or beneficiary
in the event of death, in exchange for cancellation of the option, the amount
by which the fair market value of the Common Stock exceeds the exercise price
of the option on the date of the participant's termination of employment.

Incentive Stock Options may be transferred only by will or the laws of
descent and distribution. Non-Statutory Options may be transferred by
participants pursuant to the laws of descent and distribution, and during a
participant's lifetime by participants to members of their "immediate family"
(as defined in the Incentive Stock Option Plan), trusts for the benefit of
members of their immediate family and charitable institutions to the extent
permitted under Section 16 of the Exchange Act and subject to federal and state
securities laws.

FEDERAL INCOME TAX TREATMENT

An optionee will not be deemed to have received taxable income upon the
grant or exercise of an Incentive Stock Option, provided that such shares of
Common Stock are held for at least one year after the date of exercise and two
years after the date of grant. No gain or loss will be recognized by the
Company as a result of the grant or exercise of Incentive Stock Options. An
optionee will be deemed to receive ordinary income upon exercise of
Non-Statutory Options in an amount equal to the amount by which the fair market
value of the Common Stock on the exercise date exceeds the exercise price. The
amount of any ordinary income deemed to be received by an optionee due to a
premature disposition of the shares of Common Stock acquired upon the exercise
of an Incentive Stock Option or upon the exercise of a Non-Statutory Option
will be a deductible expense for tax purposes for the Company. At this time,
generally accepted accounting principles ("GAAP") do not require compensation
expense to be recorded for any options granted for which the exercise price
equals the market value on the date of grant. When options are exercised, the
net proceeds received by the Company will be recorded as an increase in Common
Stock and paid-in capital.

-8-

<PAGE> 12

ADJUSTMENTS IN THE EVENT OF CAPITAL CHANGES

In the event the number of shares of Common Stock are increased or
decreased or changed into or exchanged for a different number or kind of shares
of stock or other securities of the Company by reason of any stock dividend or
split, recapitalization, merger, consolidation, spin-off, reorganization,
combination or exchange of shares, or other similar corporate change, or other
increase or decrease in such shares without receipt or payment of consideration
by the Company, the following appropriate adjustments may be made to prevent
dilution or enlargement of the rights of participants, including any or all of
the following: (i) adjustments in the aggregate number or kind of shares of
Common Stock which may be awarded; (ii) adjustments in the aggregate number or
kind of shares of Common Stock covered by outstanding option grants; and (iii)
adjustments in the purchase price of outstanding option grants. No such
adjustments may, however, materially change the value of benefits available to
participants under a previously granted award.

DURATION AND AMENDMENT OF INCENTIVE STOCK OPTION PLAN

No options will be awarded under the Incentive Stock Option Plan following
the tenth anniversary of approval of the Incentive Stock Option Plan by
shareholders of the Company.

The Board of Directors of the Company may amend the Incentive Stock Option
Plan in any respect; provided, however, that certain provisions governing the
terms of Incentive Stock Option and Non-Statutory Option grants shall not be
amended more than once every six months to comport with the Internal Revenue
Code or the Employee Retirement Income Security Act of 1974, as amended, if
applicable. In addition, the Board of Directors may determine that shareholder
approval of any amendment to the Incentive Stock Option Plan may be advisable
for any reason, including but not limited to, for the purpose of obtaining or
retaining any statutory or regulatory benefits under tax, securities or other
laws or satisfying applicable stock exchange listing requirements.

THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF COMMON STOCK
REPRESENTED IN PERSON OR BY PROXY AND VOTED AT THE ANNUAL MEETING IS REQUIRED
FOR APPROVAL OF THE INCENTIVE PLAN AMENDMENT. UNLESS MARKED TO THE CONTRARY,
THE SHARES OF COMMON STOCK REPRESENTED BY THE ENCLOSED PROXY WILL BE VOTED FOR
APPROVAL OF THE INCENTIVE PLAN AMENDMENT. THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE FOR APPROVAL OF THE INCENTIVE PLAN AMENDMENT.

-9-

<PAGE> 13

MATTER 3.
AMENDMENT OF THE HALLMARK CAPITAL CORP.
1993 STOCK OPTION PLAN
FOR OUTSIDE DIRECTORS

DESCRIPTION OF AMENDMENT

The Board of Directors of the Company proposes for consideration and
approval by the Company's shareholders an amendment (the "Directors' Plan
Amendment") to the Hallmark Capital Corp. 1993 Stock Option Plan (the
"Directors' Plan") for directors of the Company and the Bank who are not also
employees of the Company or the Bank ("Outside Directors") to increase the
number of shares authorized for issuance by 21,650 shares, or approximately
1.5% of the number of shares outstanding on the Voting Record Date, to 76,990
shares of Common Stock. Absent shareholder approval, the Directors' Plan
Amendment will not be effective. Shareholder approval of the Directors' Plan
Amendment is a non-quantitative listing requirement under the By-laws of the
NASD which is applicable to all issuers, including the Company, whose shares
are traded on the NASDAQ National Market System.

PURPOSE OF THE DIRECTORS' PLAN AMENDMENT

In connection with the Conversion, the Board of Directors of the Company
adopted the Directors' Plan for Outside Directors, which authorized the grant
of options to purchase 55,340 shares of Common Stock, all of which were granted
on the date of consummation of the Conversion (December 30, 1993) with an
exercise price of $8.00 per share. All options granted under the Directors'
Plan vested 100% upon consummation of the Conversion and will expire ten years
after the date the options were granted. As noted under Matter 2., in
considering whether to adopt the Incentive Plan Amendment, the Board of
Directors also evaluated the Company's need for an adequate reserve of options
to be granted in connection with retaining existing directors, recruiting
future directors and for issuance in connection with potential strategic
acquisitions. The Directors' Plan Amendment is designed to provide such
reserve for eligible participants in the Directors' Plan.

ELIGIBILITY, TYPE OF OPTION GRANTS AND SHARES SUBJECT TO THE DIRECTORS' PLAN

Under the Directors' Plan, all Outside Directors of the Company and its
subsidiaries are eligible to participate. As of August 1, 1997, the Company
had seven directors eligible to participate in the Directors' Plan. Only
Non-Statutory Options may be granted under the Directors' Plan. If the
Directors' Plan Amendment is approved by shareholders, options for a total of
21,650 shares of Common Stock will be available for future grants to eligible
participants. The Company currently has no immediate plans to grant options
under the Directors' Plan, as amended.

ADMINISTRATION

The Directors' Plan is administered by the Board of Directors of the
Company. Pursuant to the terms of the Directors' Plan, the Board is authorized
to make the following determinations with respect to grants to eligible
participants: (i) the persons to whom options are granted; (ii) the terms at
which options are to be granted; (iii) the number of shares of Common Stock
subject to an individual grant; (iv) the vesting schedule applicable to
individual grants; and (v) the expiration date of the option (which shall not
be later than ten years from the date the option is granted). The exercise
price may be paid in cash or shares of Common Stock and shall be the fair
market value (as defined in the Directors' Plan) of the Common Stock on the
date of grant or such greater amount as determined by the Board.

-10-

<PAGE> 14

TERMS AND CONDITIONS OF OPTION GRANTS

No option granted under the Director's Plan shall be exercisable after one
year after the date on which the optionee ceases to perform services for the
Company, except that in the event an optionee is removed for cause all options
awarded to the optionee shall expire immediately upon such removal. All
options, whether or not exercisable, shall become immediately exercisable in
the event of death or disability of an optionee, or in the event of a Change of
Control of the Company. The definition of "Change of Control" for purposes of
the Directors' Plan is the same as the definition of "Change of Control" for
purposes of the Incentive Stock Option Plan, as previously described under
Matter 2.

Options granted under the Directors' Plan may be transferred by
participants pursuant to the laws of descent and distribution, and during a
participant's lifetime by participants to members of their "immediate family"
(as defined in the Directors' Plan) trusts for the benefit of their immediate
family and charitable institutions to the extent permitted under Section 16 of
the Exchange Act and subject to federal and state securities laws.

FEDERAL INCOME TAX TREATMENT

An optionee will be deemed to receive ordinary income upon the exercise of
options granted under the Directors' Plan in an amount equal to the amount by
which the fair market value of the Common stock on the exercise date exceeds
the exercise price. The amount of any ordinary income upon the exercise of
such options will be a deductible expense for tax purposes by the Company.
When options are exercised, the net proceeds received by the Company will be
recorded as an increase in Common Stock and paid-in capital.

ADJUSTMENTS IN THE EVENT OF CAPITAL CHANGES

DURATION AND AMENDMENT OF DIRECTORS' PLAN

No options will be awarded under the Directors' Plan following the tenth
anniversary of approval of the Directors' Plan by shareholders of the Company.

The Board of Directors of the Company may amend the Directors' Plan in any
respect. In addition, the Board of Directors may determine that shareholder
approval of any amendment to the Directors' Plan may be advisable for any
reason, including but not limited to, for the purpose of obtaining or retaining
any statutory or regulatory benefits under tax, securities or other laws or
satisfying applicable stock exchange listing requirements.

THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF COMMON
STOCK REPRESENTED IN PERSON OR BY PROXY AND VOTED AT THE ANNUAL MEETING IS
REQUIRED FOR RATIFICATION OF THE DIRECTORS' PLAN AMENDMENT. UNLESS MARKED TO
THE CONTRARY, THE SHARES OF COMMON STOCK REPRESENTED BY THE ENCLOSED PROXY WILL
BE VOTED FOR APPROVAL OF THE DIRECTORS' PLAN AMENDMENT. THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE DIRECTORS' PLAN AMENDMENT.

-11-

<PAGE> 15

MATTER 4.
RATIFICATION OF APPOINTMENT OF AUDITORS

The Company's independent auditors for the fiscal year ended June 30, 1997
were KPMG Peat Marwick LLP. The Board of Directors of the Company has
reappointed KPMG Peat Marwick LLP to perform the audit of the Company's
financial statements for the fiscal year ending June 30, 1998. Representatives
of KPMG Peat Marwick LLP will be present at the Annual Meeting and will be
given the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from the Company's shareholders.

UNLESS MARKED TO THE CONTRARY, THE SHARES OF COMMON STOCK REPRESENTED BY
THE ENCLOSED PROXY WILL BE VOTED FOR RATIFICATION OF THE APPOINTMENT OF KPMG
PEAT MARWICK LLP, AS THE INDEPENDENT AUDITORS OF THE COMPANY. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG PEAT
MARWICK LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.

MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Company was organized on June 29, 1993. Regular meetings of the Board
of Directors of the Company generally are held on a quarterly basis. During
the fiscal year ended June 30, 1997, the Board of Directors of the Company held
four regular meetings and one special meeting. No incumbent director attended
fewer than 75% of the aggregate total number of meetings of the Board of
Directors held and the total number of committee meetings on which such
director served during the fiscal year ended June 30, 1997.

The Board of Directors of the Company has a standing Audit Committee and
Compensation Committee. The Audit Committee consists of Messrs. Donald A.
Zellmer (Chairman), Floyd D. Brink and Jerome A. Weitzer. The Audit Committee
reviews the scope and timing of the audit of the Company's financial statements
by the Company's independent public accountants and will review with the
independent public accountants the Company's management policies and procedures
with respect to auditing and accounting controls. The Audit Committee also
will review and evaluate the independence of the Company's accountants, and
recommend to the Board the engagement, continuation or discharge of the
Company's accountants. In addition, the Audit Committee will direct the
activities of the Bank's internal audit. The Company's Audit Committee met
once during the fiscal year ended June 30, 1997.

The Board of Directors of the Bank has established a Compensation
Committee consisting of three directors, Messrs. Charles E. Rickheim
(Chairman), Floyd D. Brink and Reginald M. Hislop, III who are neither officers
nor employees of the Company or the Bank ("Outside Directors"). During the
fiscal year ended June 30, 1997, the Company did not pay separate compensation
to its executive officers. The Compensation Committee of the Company met in
January of 1997 and in June of 1997 to review and approve the compensation
decisions made by the Compensation Committee of the Bank and to issue the Joint
Compensation Committee Report which appears in this Proxy Statement.

The Company's Nominating Committee, consisting of Jerome A. Weitzer
(Chairman), Reginald M. Hislop, III and Floyd D. Brink, met on July 22, 1997 to
consider and select a nominee for director to stand for election at the Annual
Meeting. The Company's By-laws allow for shareholder nominations of directors
and require such nominations be made pursuant to timely notice in writing to
the Secretary of the Company. See "Shareholder Proposals for the 1998 Annual
Meeting."

-12-

<PAGE> 16

COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

EXECUTIVE COMPENSATION

During the fiscal year ended June 30, 1997, the Company did not pay
separate compensation to its officers. Separate compensation will not be paid
to officers of the Company until such time as the officers of the Company
devote significant time to separate management of Company affairs, which is not
expected to occur until the Company becomes actively involved in additional
business beyond the Bank. The following table summarizes the total
compensation paid by the Bank to its Chief Executive Officer during the Bank's
fiscal years ended June 30, 1995, 1996 and 1997, and to the Bank's next highest
paid officer whose compensation, based on salary and bonus, exceeded $100,000
during the Company's fiscal years ended June 30, 1995, 1996 and 1997.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION AWARDS
----------------------- ---------------------
VALUE OF NUMBER
RESTRICTED OF SHARES
STOCK SUBJECT TO ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) AWARDS(3) OPTIONS(4) COMPENSATION(5)
- --------------------------- ---- ------ -------- ---------- ---------- ---------------

<S> <C> <C> <C> <C> <C> <C>
James D. Smessaert ............ 1997 $150,700 $35,704 -- 3,000 $28,600
President and Chief Executive 1996 116,000 25,984 -- 3,000 25,065
Officer and Director of the 1995 111,800 -- -- -- 21,060
Company and the Bank

Peter A. Gilbert(6) ........... 1997 $120,250 $24,981 -- 2,000 $27,403
Executive Vice President & 1996 93,000 18,228 -- 2,000 --
Corporate Secretary of the 1995 91,000 9,328 $43,000 15,000 --
Company, Executive Vice
President/Chief Operating
Officer and Corporate Secretary
of the Company and the Bank
</TABLE>

- ---------------------
(1) Perquisites provided to Messrs. Smessaert and Gilbert by the Company did
not exceed the lesser of $50,000 or 10% of total annual salary and bonus
during the fiscal years indicated and accordingly, are not included.

(2) Bonuses paid to Messrs. Smessaert and Gilbert in fiscal 1996 and 1997
were based upon the terms set forth under the West Allis Savings Bank
Annual Incentive Plan (the "Incentive Plan"). See "Annual Incentive
Plan." The bonus paid to Mr. Gilbert in fiscal 1995 was based upon an
interim bonus arrangement for the period from January 1, 1995 to June 30,
1995 established at the time he was hired.

(3) The amount shown in this column represents the value of vested and
unvested shares of Common Stock awarded under the West Allis Savings Bank
Management Recognition and Retention Plan (the "MRP"). The amount shown
for Mr. Gilbert was calculated by multiplying the value of the Common
Stock on the date of the grant ($10.75) by the number of shares of Common
Stock awarded. The number and the vesting schedule of the shares of
Common Stock awarded to Mr. Gilbert are as follows: (i) 800 (1/1/96);
(ii) 800 (1/1/97); (iii) 800 (1/1/98); (iv) 800 (1/1/99); and (v) 800
(1/1/00). Recipients of awards under the MRP are entitled to payment of
any dividends on unvested shares. The value of the unvested MRP shares
held by Messrs. Smessaert and Gilbert at June 30, 1997 was $270,436 and
$51,312, respectively, based on 12,649 shares and 2,400 shares
respectively, and the value of the Common Stock on that date ($21.38 per
share).

(4) Amounts shown in this column represent the total number of shares of
Common Stock subject to options granted (both vested and unvested) under
the Incentive Stock Option Plan. The options awarded are subject to a
vesting schedule under the Incentive Stock Option Plan and are exercisable
as follows: (i) Mr. Smessaert: 600 (8/1/96); 600 (7/12/97); 600 (8/1/97);
600 (7/12/98); 600 (8/1/98); 600 (7/12/99); 600 (8/1/99); 600 (7/12/00);
600 (8/1/00) and 600 (7/12/01); and (ii) Mr. Gilbert: 3,000 (12/31/95);
400 (8/1/96); 3,000 (12/31/96); 400 (7/12/97); 400 (8/1/97); 3,000
(12/31/97); 400 (7/12/98); 400 (8/1/98); 3,000 (12/31/98); 400 (7/12/99);
400 (8/1/99); 3,000 (12/31/99); 400 (7/12/00); 400 (8/1/00) and 400
(7/12/01).

(5) Amounts shown in this column represent the Bank's contributions on behalf
of Mr. Smessaert under the ESOP for the fiscal years ended June 30, 1995,
1996 and 1997; and on behalf of Mr. Gilbert for the fiscal year ended June
30, 1997.

(6) Mr. Gilbert was hired on December 31, 1994; the salary amount indicated for
fiscal 1995 has been annualized.

-13-

<PAGE> 17

EMPLOYMENT AGREEMENTS

In connection with Conversion, the Bank entered into a three-year
employment agreement with Mr. Smessaert, President and Chief Executive Officer
of the Bank, and on December 31, 1994, the Bank entered into a three-year
employment agreement with Mr. Peter A. Gilbert, Executive Vice President/Chief
Operating Officer and Corporate Secretary of the Bank. The terms of each of
their employment agreements may be restored to three years by action of the
Bank's Board of Directors, subject to the Board's annual performance
evaluation. The employment agreements are intended to ensure that the Bank
maintains stable and competent management.

Under the employment agreements, the current base salaries for Messrs.
Smessaert and Gilbert are $150,700 and $120,250, respectively. The base
salaries may be increased by the Bank's Board of Directors, but may not be
reduced except as part of a general pro rata reduction in compensation for all
executive officers. In addition to base salary, the employment agreements
provide for payments from other Bank incentive compensation plans, and provide
for other benefits, including participation in any group health, life,
disability, or similar insurance program and in any pension, profit-sharing,
employee stock ownership plan, deferred compensation, 401(k) or other
retirement plans maintained by the Bank. The employment agreements also
provide for participation in any stock-based incentive programs made available
to executive officers of the Bank. The employment agreements may be terminated
by the Bank upon death, disability, retirement, or for cause at any time, or in
certain events specified by the regulations of the Wisconsin Department of
Financial Institutions, Division of Savings and Loan. If the Bank terminates
the employment agreements for any reasons other than due to death, disability,
retirement or for cause, Messrs. Smessaert and Gilbert are entitled to a
severance payment equal to one year's base salary (based on the highest base
salary within the three years preceding the date of termination) together with
other compensation and benefits in which they were vested at the termination
date.

The employment agreements provide for severance payments if Mr.
Smessaert's or Mr. Gilbert's employment terminates following a change in
control. Under the employment agreements, a "Change in Control" is generally
defined to include any change in control required to be reported under the
federal securities laws as well as (i) the acquisition by any person of 25% or
more of the Company's outstanding voting securities, or (ii) a change in a
majority of the directors of the Company during any two-year period without
approval of at least two-thirds of the persons who were directors at the
beginning of such period. Within the greater of twelve months or the remaining
employment term at the effective date of any Change in Control, Messrs.
Smessaert and Gilbert have the option of receiving as severance: (i) the
amount payable if the Bank terminated employment for reasons other than death,
disability, retirement or for cause; or (ii) an amount equal to the salary
payments for the then-remaining employment term (which at the executive's
election may be payable in one lump sum). In either case, Messrs. Smessaert
and Gilbert are entitled to all qualified retirement and other benefits in
which they were vested. If the severance benefits payable following a Change
in Control would constitute "parachute payments" within the meaning of Section
280G(b)(2) of the Internal Revenue Code, and the present value of such
"parachute payments" equals or exceeds three times their average annualized
includable income for the five calendar years preceding the year in which a
Change in Control occurred, the severance benefits will be reduced to an amount
equal to the present value of 2.99 times the average annual compensation paid
to Messrs. Smessaert and Gilbert during the five years immediately preceding
such Change in Control.

EXECUTIVE EMPLOYEE SALARY CONTINUATION AGREEMENT

In August 1992, the Bank and Mr. Smessaert entered into an Executive
Employee Salary Continuation Agreement (the "Continuation Agreement").
Pursuant to the Continuation Agreement, the Bank agreed to pay Mr. Smessaert an
annual benefit of $50,000 upon his retirement at age 65. In the event Mr.
Smessaert retires between the ages of 60 and 65, the Continuation Agreement
provides for a reduced annual benefit until attainment of age 65. The
Continuation Agreement provides that in the event of Mr. Smessaert's death,
either while employed at the Bank or after his retirement, the Bank will pay
his designated beneficiary approximately $650,000 payable in equal monthly
installments over a 13-year period. The Continuation Agreement does not
provide for payments upon voluntary termination of employment, discharge for
cause or termination of employment upon disability (prior to age 60). However,
notwithstanding Mr. Smessaert's termination of employment due to disability,
the Continuation Agreement provides that if Mr. Smessaert's disability
continues to or occurs after attainment of age 60, Mr. Smessaert may elect to
receive reduced annual benefits until reaching the age of 65 with eligibility
for full benefits under the Continuation Agreement thereafter.

-14-

<PAGE> 18

The Continuation Agreement provides for payment of $50,000 per year for
three years in equal monthly installments upon Mr. Smessaert's involuntary
termination of employment or termination of his employment following a change
in control. "Involuntary termination of employment" is defined as Mr.
Smessaert's cessation of employment due to the Bank's significantly lessening
either his title, duties, responsibilities, compensation or altering his situs
of employment, without his consent. Mr. Smessaert's compensation shall be
deemed to be significantly lessened if any employment reduction is imposed
except as part of an overall employment reduction applied proportionately to
all of the Bank's management employees or if Mr. Smessaert fails to receive
periodic compensation increases substantially proportionate to and coincident
with the increases granted to other executive officers. "Change in control" is
defined as set forth in Section 280G(b)(2) of the Internal Revenue Code. In
October 1991, the Bank purchased two single-premium annuity policies on the
life of Mr. Smessaert designating the Bank as beneficiary to fund the Bank's
anticipated obligations under the Continuation Agreement.

ANNUAL INCENTIVE PLAN

In August 1995, the Board of Directors of the Bank adopted the West Allis
Savings Bank Annual Incentive Plan (the "Incentive Plan") which was effective
for the fiscal year ending June 30, 1997. The Incentive Plan is designed to
provide annual incentive opportunity targets that are consistent with the
Bank's executive compensation philosophy and current competitive median market
compensation practices. Under the Incentive Plan, the Chief Executive Officer,
Executive Vice President/Chief Operating Officer and Senior Vice Presidents of
the Bank earn incentive compensation if the Company achieves targets set by the
Compensation Committee on an annual basis for net income of the Company.
Previously, the Incentive Plan targets were based upon ROAE of the Company.
The Board of Directors of the Bank decided to modify the Incentive Plan to
provide for net income targets for fiscal 1997 rather than ROAE targets based
upon their determination that incentive compensation should be based upon
factors over which management has more direct influence and control. The
amount of incentive compensation earned will be a percentage of each officer's
base salary and will be dependent upon whether the Company achieves threshold,
target and maximum levels of net income. The threshold, target and maximum net
income levels and the corresponding percentages of base salary applicable to
computation of incentive compensation will be established at the beginning of
each fiscal year by the Compensation Committee of the Company. If the
financial performance of the Company is such that the threshold net income
level is not achieved, no incentive compensation will be earned. For fiscal
1998, if the threshold level set for net income is achieved, the Incentive Plan
provides for incentive payments as follows: (i) 20.0% of the Chief Executive
Officer's base salary; (ii) 17.50% of the Executive Vice President/Chief
Operating Officer's base salary; and (iii) 12.50% of the Senior Vice
Presidents' base salaries. If the target level set for net income is achieved,
the Incentive Plan provides for incentive payments as follows: (i) 40.0% of
the Chief Executive Officer's base salary; (ii) 35.0% of the Executive Vice
President/Chief Operating Officer's base salary; and (iii) 25.0% of the Senior
Vice Presidents' base salaries. If the maximum level set for net income is
achieved, the Incentive Plan provides for incentive payments as follows: (i)
60.0% of the Chief Executive Officer's base salary; (ii) 52.50% of the
Executive Vice President/Chief Operating Officer's base salary; and (iii)
37.50% of the Senior Vice Presidents' base salaries. Incentive payments for
achievement of net income at levels within the range set by the threshold,
target and maximum levels will be based upon interpolated percentages.
Incentive compensation will not exceed the percentages of base salary set for
the maximum net income level if the Company's net income exceeds the maximum
net income level. The Incentive Plan is administered by the Compensation
Committee of Board of Directors of the Bank. Prior to the payment of incentive
compensation, the Compensation Committee of the Board of Directors will certify
that the net income levels were achieved.

-15-

<PAGE> 19

INCENTIVE STOCK OPTION PLAN

In connection with the Conversion, the Board of Directors of the Company
adopted the Incentive Stock Option Plan. All officers and employees of the
Company and its subsidiaries are eligible to participate in the Incentive Stock
Option Plan. At June 30, 1997, the Company and its subsidiaries had 69
eligible officers and employees. The Incentive Stock Option Plan authorizes
the grant of (i) options to purchase shares of Common Stock intended to qualify
as incentive stock options under Section 422A of the Internal Revenue Code
("Incentive Stock Options"), (ii) options that do not so qualify
("Non-Statutory Options"), and (iii) options which are exercisable only upon a
change in control of the Company or the Bank ("Limited Rights"). Options for a
total of 134,410 shares of Common Stock were made available for granting to
eligible participants under the Incentive Stock Option Plan, and options to
purchase 631 shares of Common Stock remained available for future grant at June
30, 1997.

The following table sets forth certain information concerning individual
grants of stock options under the Incentive Stock Option Plan to the named
executive officers of the Company during the fiscal year ended June 30, 1997.

OPTION GRANTS IN LAST FISCAL YEAR

INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
% OF TOTAL
OPTIONS PER SHARE
GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR(1) ($/SH) DATE VALUE(2)
- ---- ---------- -------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
James D. Smessaert .. 3,000 37.5% $14.75 07/12/06 $6,990
Peter A. Gilbert .... 2,000 25.0% 14.75 07/12/06 4,660
</TABLE>

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

(1) The options granted are subject to a vesting schedule under the Option
Plan and are exercisable as follows: (i) James D. Smessaert: 600 -
(7/12/97); 600 - (7/12/98); 600 - (7/12/99); 600 - (7/12/00); 600 -
(7/12/01); (ii) Peter A. Gilbert: 400 - (7/12/97); 400 - (7/12/98); 400 -
(7/12/99); 400 - (7/12/00); 400 - (7/12/01). Options to purchase 8,000
shares of Common Stock were granted to eligible participants under the
Incentive Stock Option Plan during the fiscal year ended June 30, 1997.

(2) Based upon the Black-Scholes option pricing model, adopted for use in
valuing stock options, based upon the following variable assumptions: (i)
a ten year option term; (ii) a volatility statistic of 24.9%; (iii) a
dividend yield of 6.83% representing the current return on equity of the
Company; and (iv) a risk-free rate of return of 7.0% representing the
interest rate on a U.S. Treasury security with a ten year maturity on the
date of grant. The actual value, if any, an executive may realize will
depend upon the excess of the stock price over the exercise price on the
date the option is exercised. There is no assurance the value realized
will be at or near the value estimated by the Black-Scholes model.

-16-

<PAGE> 20

The following table sets forth certain information concerning the exercise
of stock options granted under the Incentive Stock Option Plan by the named
executive officers during the fiscal year ended June 30, 1997, and the value
of their unexercised stock options at June 30, 1997.

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

<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS IN-THE-MONEY
NUMBER OF AT OPTIONS AT
SHARES FISCAL YEAR END FISCAL YEAR END (1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James D. Smessaert ..... 0 $0 50,600 10,743 $672,875 $107,838

Peter A. Gilbert ....... 0 0 6,400 12,600 65,000 117,625
</TABLE>

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

(1) The value of Unexercised In-the-Money Options is based upon the
difference between the fair market value of the securities underlying the
options ($21.38) at June 30, 1997 and the exercise price of the options
(Mr. Smessaert - 55,343 shares at $8.00; 3,000 shares at $14.50; 3,000
shares at $14.75; and Mr. Gilbert - 15,000 shares at $11.00; 2,000 shares
at $14.50; 2,000 shares at $14.75).

DIRECTORS' COMPENSATION

BOARD FEES

The Board of Directors of the Company meets at least quarterly and
received $250 for each regular or special Board meeting attended during the
fiscal year ended June 30, 1997. For the fiscal year ended June 30, 1997, each
member of the Board of Directors of the Bank received a $1,200 monthly meeting
fee.

DIRECTORS' EMERITUS PROGRAM

On July 20, 1994, the Bank adopted a Directors' Emeritus Program (the
"Emeritus Program") which provides for an annual payment equal to 50% of the
annual retainer fee paid to eligible directors. Under the Emeritus Program, an
eligible director is defined as a director whose service as a director
terminates on or after the director has attained age 70. The mandatory
retirement age for directors of the Bank is 70 which will result in Messrs.
Brink and Weitzer no longer being eligible for re-election upon expiration of
their respective terms as directors of the Bank in fiscal years 1999 and 1997.
For eligible directors who have attained age 70 on or prior to July 1, 1996,
the annual payments shall continue until the eligible director's death. For
eligible directors who have not attained age 70 on or prior to July 1, 1996,
the annual payments shall continue until the earlier of: (i) the eligible
director's death; or (ii) five years from the date the eligible director's
board service shall have terminated.

In addition, each eligible director who attains age 70 on or prior to July
1, 1996 shall receive health insurance (single and family coverage) under the
health plan maintained by the Bank until the eligible director's death.
Eligible directors who do not attain age 70 on or prior to July 1, 1996 shall
not be entitled to health insurance benefits under the Emeritus Program.

In the event of a Change in Control (as defined in the Emeritus Program)
of the Bank, or a merger or other business combination involving the Bank in
which the Bank is not the resulting entity, the rights and obligations of the
Bank under the Emeritus Program shall become the rights and obligations of the
successor or acquiring entity.

-17-

<PAGE> 21

STOCK OPTION PLAN FOR OUTSIDE DIRECTORS

In connection with the Conversion, the Board of Directors of the Company
adopted the Directors' Plan. Options to purchase 55,340 shares of Common Stock
were made available for granting to Outside Directors under the Directors'
Plan, all of which were granted on the date of consummation of the Conversion
(December 30, 1993) with an exercise price of $8.00 per share. All options
granted under the Directors' Plan expire upon the earlier of ten years
following the date the option was granted (i.e., December 29, 2003) or one year
following the date the optionee ceases to be a director. All options granted
under the Directors' Plan vested 100% upon consummation of the Conversion.
During the fiscal year ended June 30, 1994, the Outside Directors, Messrs.
Floyd D. Brink, Milton Dalin, Charles E. Rickheim and Jerome A. Weitzer, each
were granted options to purchase, at $8.00 per share, 13,835 shares of Common
Stock.

-18-

<PAGE> 22

COMPENSATION COMMITTEE REPORT

The Report of the Compensation Committee on Executive Compensation shall not be
deemed incorporated by reference by any general statement into any filing under
the Securities Act of 1933, as amended (the "Securities Act") or the Exchange
Act, except to the extent the Company specifically incorporates such
information by reference, and shall not otherwise be deemed filed under the
Securities Act or Exchange Act.

COMPENSATION COMMITTEE

I. ROLE OF THE COMPENSATION COMMITTEE

The Compensation Committee of Board of Directors of the Company and the
Bank consists of the Outside Directors, Messrs. Charles E. Rickheim (Chairman),
Floyd D. Brink and Reginald M. Hislop, III. During the fiscal year ended June
30, 1997, the Company did not pay separate compensation to its executive
officers. In January and July 1997, the Compensation Committee of the Company
met to review and approve compensation decisions made by the Compensation
Committee of the Bank and to issue this Joint Compensation Committee Report.
All executive officer compensation was paid by the Bank and compensation
policies were determined by the Compensation Committee of the Bank. The term
"Compensation Committee" in this report refers to the Compensation Committee of
the Company and the Bank.

II. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee is composed entirely of independent Outside
Directors who are not former officers or employees of the Company or any of its
subsidiaries. There are no interlocks, as defined under the rules and
regulations of the SEC, between the Compensation Committee and corporate
affiliates of members of the Compensation Committee.

III. COMPENSATION COMMITTEE REPORT

Under rules established by the SEC, the Company is required to provide
certain data and information regarding the compensation and benefits provided
to the Company's Chief Executive Officer and certain other executive officers
of the Company. The rules require compensation disclosure in the form of
tables and a report of the Compensation Committee which explains the rationale
and considerations that led to fundamental compensation decisions affecting
such individuals. The Compensation Committee has prepared the following
report, at the direction and approval of the Board of Directors of the Company,
for inclusion in this Proxy Statement.

EXECUTIVE COMPENSATION PHILOSOPHY

The primary objective of the Company's executive compensation policy is to
attract and retain highly skilled and motivated executive officers who will
manage the Company and the Bank in a manner to promote growth and
profitability. In recommending and establishing levels of executive
compensation, it is the policy of the Compensation Committee to consider the
following factors: (i) the individual performance of the executive; (ii) the
executive's contribution to achievement of the strategic business plan of the
Company and the Bank; (iii) the executive's experience and responsibility level
during the present period and anticipated responsibilities during the following
fiscal year; and (iv) compensation levels for executives of comparable
financial institutions. The executive compensation program consists of three
elements: base salary and incentive compensation, long-term incentive
compensation and retirement and other benefits.

BASE SALARY AND INCENTIVE COMPENSATION

Base salary levels are designed to be competitive with cash compensation
levels paid to similar executives at financial institutions of similar size,
giving due consideration to the competitive market in which the Company and the
Bank operate. Prior to the Conversion, the Bank reviewed executive salary
studies and surveys prepared by an independent consultant to obtain
compensation data of comparable financial institutions and determined base
salary levels for executive officers to be effective upon consummation of the
Conversion. The peer group used in

-19-
<PAGE> 23

the compensation analysis consisted of a different set of institutions than
those which comprise the peer group index (SNL Thrift Index) utilized in the
Stock Performance Graph below. The salary levels were designed to reflect the
increased responsibilities associated with being executive officers of a public
company. Base salaries are subject to review and adjustment by the
Compensation Committee each year. In fiscal 1997, the average increase in base
salary for executive officers was 25.85%.

In connection with the Conversion, the Bank established the West Allis
Savings Bank Employee Stock Ownership Plan (the "ESOP") (discussed further
herein) in which all officers and employees of the Company and its subsidiaries
participate. In order to fund the ESOP, in fiscal 1994, the Bank eliminated a
Management Incentive Compensation Program which was in effect prior to the
Conversion pursuant to which executive officers of the Bank earned short-term
cash incentive compensation. In August 1995, the Board of Directors of the
Bank adopted the West Allis Savings Bank Annual Incentive Plan ("Incentive
Plan") which was effective for the fiscal year ending June 30, 1997. The
Incentive Plan is intended to replace the former Management Incentive
Corporation Program of the Bank and is intended to accomplish the following
objections: (i) reward key individuals for achieving pre-established financial
and non-financial goals that support the Company's and Bank's annual business
objectives; (ii) encourage and reinforce effective teamwork and individual
contributions toward Company and Bank goals; and (iii) provide an incentive
opportunity that will enable the Company and the Bank to attract, motivate and
retain outstanding executives.

Previously, the Incentive Plan targets were based upon ROAE of the
Company. The Board of Directors of the Bank decided to modify the Incentive
Plan to provide for net income targets for fiscal 1997 rather than ROAE targets
based upon their determination that incentive compensation should be based upon
factors over which management has more direct influence and control. In
administering the Incentive Plan for fiscal 1997, the net income effect of the
one-time industry wide FDIC SAIF assessment was not considered.

For fiscal 1997, the Company achieved a net income level in excess of the
threshold level of net income but less than the target level of net income
established by the Board under the Incentive Plan. Therefore, incentive
compensation paid to executive officers for fiscal 1997 was based upon
interpolated percentages of their base salaries established under the Incentive
Plan for achievement of net income in the range between the threshold and
target net income levels. For a further discussion of the Incentive Plan, see
"Annual Incentive Plan."

LONG-TERM INCENTIVE COMPENSATION

In fiscal 1994, executive officers of the Company and the Bank were
awarded restricted stock under the West Allis Savings Bank Management
Recognition and Retention Plan ("MRP") and stock options under the Incentive
Stock Option Plan in connection with the Conversion. The Bank established the
MRP and the Incentive Stock Option Plan as a method of providing officers and
employees of the Bank with a proprietary interest in the Company and to
encourage such persons to remain with the Bank. All officers and employees of
the Company are eligible to participate in the MRP and the Incentive Stock
Option Plan. The restricted stock and option awards are designed to align the
financial interests of the Company's executive officers more closely with the
Company's shareholders. During fiscal 1997, non-qualifying stock options to
purchase 8,000 shares of Common Stock were awarded to senior executive officers
of the Company and the Bank.

RETIREMENT AND OTHER BENEFITS

In August 1992, the Bank and Mr. Smessaert entered into an Executive
Employee Salary Continuation Agreement (the "Continuation Agreement") which
provides for certain cash payments upon Mr. Smessaert's retirement. For a
further description of the Continuation Agreement, see "Compensation of
Executive Officers and Directors - Executive Employee Salary Continuation
Agreement." Additional retirement and other benefits provided to executive
officers, are the same as those benefits provided to all employees of the Bank,
including participation in the ESOP, the West Allis Savings Bank 401(k) Plan
(in which Mr. Smessaert does not participate) and comprehensive health
insurance, life insurance and short-term and long-term disability insurance.

Under the ESOP, benefits may be payable upon death, retirement, early
retirement, disability or separation from service. Benefits may be paid either
in shares of Common Stock or in cash. In connection with

-20-
<PAGE> 24

the Conversion, the ESOP borrowed funds from the Company to purchase 126,500
shares of Common Stock, and collateral for the loan is the Common Stock
purchased by the ESOP. On March 15, 1997, the Bank contributed $168,920 to the
ESOP and allocations of shares of Common Stock were based upon compensation
paid to participants for the year ended December 31, 1996.

CHIEF EXECUTIVE OFFICER COMPENSATION

The compensation paid to the President and Chief Executive Officer of the
Company and the Bank, James D. Smessaert, during the fiscal year ended June 30,
1997 was consistent with the Company's overall executive compensation
philosophy. Based upon the compensation philosophy of the Bank, Mr.
Smessaert's base salary under his employment agreement was increased to
$150,700 effective January 1, 1997. Bonus compensation paid to Mr. Smessaert
for the fiscal year ended June 30, 1997 under the Incentive Plan totaled
$35,704. In addition, Mr. Smessaert was granted options to purchase 3,000
shares of Common Stock under the Incentive Stock Option Plan during fiscal
1997.

-21-

<PAGE> 25

PERFORMANCE GRAPH

The following graph shows semi-annual comparisons of the Company's
cumulative shareholder return on the Common Stock with (i) the cumulative total
return on stocks included in the National Association of Securities Dealers,
Inc. Automated Quotation ("NASDAQ") Stock Market Index (for United States
companies) and (ii) the cumulative total return on stocks included in the SNL
Thrift Index, published by SNL Securities, Charlottesville, Virginia,
commencing on December 30, 1993, the date the Common Stock was issued, through
June 30, 1997. The cumulative returns set forth below for each index assume
the reinvestment of dividends into additional shares of the same class of
equity securities at the frequency with which dividends were paid on such
securities during the applicable comparison period.

COMPARISON OF SEMI-ANNUAL CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, NASDAQ STOCK MARKET (U.S.) INDEX
AND SNL THRIFT INDEX(1)
[CHART]
<TABLE>
<CAPTION>
PERIOD ENDING
---------------------------------------------
INDEX 12/31/93 6/30/94 6/30/95 6/30/96 6/30/97
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
HALLMARK CAPITAL CORP. 100.00 151.56 168.75 187.50 267.19
NASDAQ - TOTAL US 100.00 91.32 121.89 156.50 190.32
SNL THRIFT INDEX 100.00 107.28 126.60 160.60 259.95
</TABLE>

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

(1) Assumes $100.00 invested on December 30, 1993, and all dividends
reinvested through the end of the Company's fiscal year on June 30, 1997.
The Company did not pay dividends during the period from December 30, 1993
to June 30, 1997. The performance chart is based upon closing prices on
the trading day specified, with the exception of the value of the
Company's Common Stock on December 30, 1993 which is based upon the
initial offering price of the Company's Common Stock of $8.00 per share.

The Performance Graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement with any
filing under the Securities Act or the Exchange Act, except to the extent the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under the Securities Act or the Exchange Act.

-22-

<PAGE> 26

INDEBTEDNESS OF MANAGEMENT AND CERTAIN TRANSACTIONS

Current federal law requires that all loans or extensions of credit to
executive officers and directors must be 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 must not involve more than
the normal risk of repayment or present other unfavorable features. In
addition, loans made to a director or executive officer in excess of the
greater of $25,000 or 5% of the Bank's capital and surplus (up to a maximum of
$500,000) must be approved in advance by a majority of the disinterested
members of the Board of Directors of the Bank.

The Bank's policy provides that all loans or extensions of credit to
executive officers and directors are to be made in the ordinary course of
business, on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and did not involve more than the normal risk of collectibility
or present other unfavorable features. All loans since the enactment of
current laws were made by the Bank in the ordinary course of business and were
not made with favorable terms nor involved more than the normal risk of
collectibility or presented unfavorable features.

The following table summarizes loans made by the Bank on preferential
terms to executive officers, directors and their associates, prior to the
enactment of current laws, whose aggregate indebtedness to the Bank exceeded
$60,000 at any time since July 1, 1996. All loans or extensions of credit to
executive officers, directors and their associates were current as of June 30,
1997.

<TABLE>
<CAPTION>
LARGEST AMOUNT
OUTSTANDING DURING
MATURITY THE YEAR ENDED BALANCE AT INTEREST
NAME DATE OF LOAN DATE JUNE 30, 1997 JUNE 30, 1997 RATE/TYPE
---- ------------ -------- ------------------ ------------- ---------
<S> <C> <C> <C> <C> <C>
Charles E. Rickheim . . 09/09/88 10/01/18 125,654 123,033 6.47%/Adj.
Director of the Mortgage
Company and
Bank
</TABLE>

The Company and the Bank intend that all transactions in the future
between the Company and the Bank and executive officers, directors, holders of
10% or more of the shares of any class of common stock of the Company and
affiliates thereof, will contain terms no less favorable to the Company or the
Bank than could have been obtained by them in arms' length negotiations with
unaffiliated persons and will be approved by a majority of independent outside
directors of the Company or the Bank, as applicable, not having any interest in
the transaction.

SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE

Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of the shares of Common
Stock outstanding, to file reports of ownership and changes in ownership with
the SEC and the National Association of Securities Dealers, Inc. Officers,
directors and greater than ten percent shareholders are required by regulation
to furnish the Company with copies of all Section 16(a) forms they file. Based
upon review of the information provided to the Company, the Company believes
that during the fiscal year ended June 30, 1997, officers, directors and
greater than ten percent shareholders complied with all Section 16(a) filing
requirements, with the exception of Ms. Nancy S. Hoelter who inadvertently
failed to timely file a Form 4 with respect to the sale of 1,581 shares of
Common Stock in February 1997, which subsequently was reported in May 1997.

-23-
<PAGE> 27

SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING

Any proposal which a shareholder wishes to have included in the proxy
materials of the Company relating to the fourth annual meeting of the
shareholders of the Company, which is scheduled to be held in October 1998,
must be received at the principal executive offices of the Company, 7401 West
Greenfield Avenue, West Allis, Wisconsin 53214, Attention: Peter A. Gilbert,
Corporate Secretary, no later than May 22, 1998. If such proposal is in
compliance with all of the requirements of Rule 14a-8 under the Exchange Act,
it will be included in the proxy statement and set forth on the form of proxy
issued for such annual meeting of shareholders. It is urged that any such
proposals be sent certified mail, return receipt requested.

Nothing in this section shall be deemed to require the Company to include
in its proxy statement and proxy relating to the 1997 Annual Meeting any
shareholder proposal which does not meet all of the requirements for inclusion
established by the SEC in effect at the time such proposal is received.

Shareholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the Exchange Act may be
brought before an annual meeting pursuant to Article VII of the Company's
Articles of Incorporation. For business to be properly brought before an
annual meeting by a shareholder, the shareholder must have given timely notice
thereof in writing to the Secretary of the Company. To be timely, a
shareholder's notice must be delivered to or mailed by first class United
States mail, postage prepaid, to the principal executive offices of the Company
not later than the close of business on the tenth day following the day on
which notice of such annual meeting is first given to shareholders. A
shareholder's notice must set forth certain information in accordance with
Article VII of the Company's Articles of Incorporation. The advance notice
must include the shareholder's name and address, as they appear on the
Company's record of shareholders, the class and number of shares of the
Company's Common Stock beneficially owned by such shareholder, a brief
description of the proposed business, the reason for considering such business
at the annual meeting and any material interest of the shareholder in the
proposed business. In the case of nominations for elections to the Board of
Directors, certain information regarding the nominee must be provided.

OTHER MATTERS WHICH MAY PROPERLY
COME BEFORE THE ANNUAL MEETING

The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as stated in the Notice of
Annual Meeting of Shareholders. If, however, other matters are properly
brought before the Annual Meeting or any adjournments or postponements thereof,
it is the intention of the persons named in the accompanying proxy to vote the
shares represented thereby on such matters in accordance with their best
judgment.

BY ORDER OF THE BOARD OF DIRECTORS,

/s/ Peter A. Gilbert
--------------------------

West Allis, Wisconsin Peter A. Gilbert
September 19, 1997 Executive Vice President and Corporate Secretary

- --------------------------------------------------------------------------------
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE
- --------------------------------------------------------------------------------

-24-

<PAGE> 28
REVOCABLE PROXY

HALLMARK CAPITAL CORP.
7401 West Greenfield Avenue
West Allis, Wisconsin 53214

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HALLMARK
CAPITAL CORP.
FOR USE ONLY AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
OCTOBER 30, 1997

The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders (the "Annual Meeting") and the Proxy Statement and,
revoking any proxy heretofore given, hereby constitutes and appoints Messrs.
James D. Smessaert and Floyd D. Brink, directors of Hallmark Capital Corp. (the
"Company"), to represent and to vote, as designated below, all the shares of
common stock, $1.00 par value per share ("Common Stock"), of the Company held of
record by the undersigned on September 12, 1997, at the Annual Meeting which
will be held on October 30, 1997, at 7:00 p.m., Milwaukee, Wisconsin time, at
the Pettit National Ice Center, 500 South 84th Street, West Allis, Wisconsin
53214, or any adjournments or postponements thereof.

This proxy is revocable and will be voted as directed, but if no
instructions are specified, this proxy will be voted FOR each of the matters
listed. If any other business is presented at the Annual Meeting, this proxy
will be voted by the Board of Directors of the Company in their best judgment.
At the present time, the Board of Directors of the Company knows of no other
business to be presented at the Annual Meeting.

Please mark your votes as in this example: /X/

- DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED -
- --------------------------------------------------------------------------------

HALLMARK CAPITAL CORP. 1997 ANNUAL MEETING

<TABLE>
<S><C>
1. ELECTION OF DIRECTOR: JAMES D. SMESSAERT / / FOR the / / WITHHOLD AUTHORITY
nominee listed to to vote for the nominee
the left. listed to the left.

2. Approval of an Amendment to the Hallmark Capital Corp. 1993 / / FOR / / AGAINST / / ABSTAIN
Incentive Stock Option Plan.

3. Approval of an Amendment to the Hallmark Capital Corp. 1993 / / FOR / / AGAINST / / ABSTAIN
Stock Option Plan for Outside Directors.

4. Ratification of the appointment of KPMG Peat Marwick LLP
as Independent Auditors of the Company for the fiscal year / / FOR / / AGAINST / / ABSTAIN
ending June 30, 1998.

5. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.

Address Change? Date ___________________________ NO. OF SHARES
MARK BOX / /
Indicate changes below:

_________________________________________
| |
|________________________________________|

SIGNATURE(S) IN BOX
IMPORTANT: Please sign your name exactly as it
appears hereon. When signing as an attorney,
administrator, agent, corporation, officer,
executor, trustee, guardian or similar position,
please add your full title to your signature.
If shares of common stock are held jointly, each
holder may sign but only one signature is
required.
</TABLE>
<PAGE> 29
HALLMARK CAPITAL CORP.
7401 WEST GREENFIELD AVENUE REVOCABLE PROXY
WEST ALLIS, WISCONSIN 53214

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF HALLMARK CAPITAL CORP.

FOR USE ONLY AT THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 30, 1997

Please mark your votes as in this example: [X]

- DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED -
- -------------------------------------------------------------------------------

ESOP

HALLMARK CAPITAL CORP. 1997 ANNUAL MEETING
<TABLE>
<S><C>
1. ELECTION OF DIRECTOR: JAMES D. SMESSAERT / / FOR the / / WITHHOLD AUTHORITY
nominee listed to to vote for the nominee
the left. listed to the left.

2. Approval of an Amendment to the Hallmark
Capital Corp. 1993 Incentive Stock Option Plan. / / FOR / / AGAINST / / ABSTAIN

3. Approval of an Amendment to the Hallmark
Capital Corp. 1993 Stock Option Plan for
Outside Directors. / / FOR / / AGAINST / / ABSTAIN

4. Ratification of the appointment of KPMG Peat
Marwick LLP as Independent Auditors of the
Company for the fiscal year ending
June 30, 1998. / / FOR / / AGAINST / / ABSTAIN

5. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.

Address Change? Date______________________ NO. OF SHARES
MARK BOX / /
Indicate changes below:

___________________________________________
| |
|_________________________________________|

SIGNATURE(S) IN BOX
IMPORTANT: Please sign your name exactly as it
appears hereon. When signing as an attorney,
administrator, agent, corporation, officer,
executor, trustee, guardian or similar position, please
add your full title to your signature. If shares of
common stock are held jointly, each holder may sign but
only one signature is required.

</TABLE>