<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:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to 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.:
----------------------------------------------------------------------
(3) Filing party:
----------------------------------------------------------------------
(4) Date filed:
----------------------------------------------------------------------
<PAGE> 2
[LOGO HALLMARK CAPITAL CORP.]
5555 N. PORT WASHINGTON ROAD
GLENDALE, WISCONSIN 53217
(414) 290-7900
[PRELIMINARY]
September 22, 2000
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 Wednesday,
October 25, 2000, at 7:00 p.m., Central Time, at the Pettit National Ice Center,
Hall of Fame Room, 500 South 84th Street, Milwaukee, Wisconsin 53214.
The attached Notice of Annual Meeting of Shareholders and Proxy Statement
describe the formal business to be conducted at the Annual Meeting. The
Company's Form 10-K Annual Report for the fiscal year ended June 30, 2000 also
is included in this 2000 Annual Report. Directors and officers of the Company,
as well as representatives of KPMG 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 vote by phone or
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 submitted your Proxy via mail or telephone.
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
[LOGO HALLMARK CAPITAL CORP.]
5555 N. PORT WASHINGTON ROAD
GLENDALE, WISCONSIN 53217
(414) 290-7900
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 25, 2000
----------------------------------------
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 Wednesday,
October 25, 2000, at 7:00 p.m., Central Time, at the Pettit National Ice Center,
Hall of Fame Room, 500 South 84th Street, Milwaukee, 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 ratification of the appointment of KPMG LLP as independent
auditors of the Company for the fiscal year ending June 30, 2001;
3. The approval of an amendment of the Company's Articles of
Incorporation, as amended, to change the name of the Company to Ledger
Capital Corp.; and
4. 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 11, 2000, 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
Glendale, Wisconsin Peter A. Gilbert
September 22, 2000 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. WE ARE ALSO PLEASED TO
ANNOUNCE THAT, AS AN ALTERNATIVE TO USING THE PAPER PROXY TO VOTE, SHAREHOLDERS
MAY VOTE BY TELEPHONE IF THEY CHOOSE. PLEASE SEE "TELEPHONE VOTING ALTERNATIVES"
IN THE PROXY STATEMENT FOR ADDITIONAL DETAILS.
================================================================================
<PAGE> 4
[LOGO HALLMARK CAPITAL CORP.]
5555 N. PORT WASHINGTON ROAD
GLENDALE, WISCONSIN 53217
(414) 290-7900
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 25, 2000
------------------------------
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 Wednesday, October 25, 2000,
at 7:00 p.m., Central Time, at the Pettit National Ice Center, 500 South 84th
Street, Hall of Fame Room, Milwaukee, Wisconsin 53214 and at any adjournments or
postponements thereof.
The Company's 2000 Annual Report to Shareholders which includes the
Company's Form 10-K Annual Report, including the Company's consolidated
financial statements for the fiscal year ended June 30, 2000, accompany this
Proxy Statement and appointment of proxy form (the "Proxy"), which are first
being mailed to shareholders on or about September 22, 2000.
RECORD DATE AND OUTSTANDING SHARES
Only shareholders of record at the close of business on September 11, 2000
(the "Voting Record Date") will be entitled to vote at the Annual Meeting. On
the Voting Record Date, there were 2,563,241 shares of Common Stock outstanding
and entitled to vote, and the Company had no other class of securities
outstanding.
QUORUM
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.
ABSTENTIONS AND BROKER NON-VOTES
Abstentions (i.e., shares for which authority is withheld to vote for a
matter) are included in the determination of shares present and voting for
purposes of whether a quorum exists. For the election of directors, abstentions
will have no effect on the outcome of the vote because directors are elected by
a plurality of the votes cast. For all other matters to be voted on at the
Annual Meeting, abstentions will be included in the number of shares voting on a
matter, and consequently, an abstention will have the same practical effect as a
vote against such matter.
<PAGE> 5
Proxies relating to "street name" shares (i.e., shares held of record by
brokers or other third party nominees) that are voted by brokers or other third
party nominees on certain matters will be treated as shares present and voting
for purposes of determining the presence or absence of a quorum. "Broker
non-votes" (i.e., proxies submitted by brokers or third party nominees
indicating that such persons have not received instructions from the beneficial
owners or other persons entitled to vote shares as to a matter with respect to
which the brokers or third party nominees do not have discretionary power to
vote under the rules of the New York Stock Exchange) will be considered present
for the purpose of establishing a quorum, but will not be treated as shares
entitled to vote on such matters.
ALL MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING ARE CONSIDERED
"DISCRETIONARY" PROPOSALS FOR WHICH BROKERS AND THIRD PARTY NOMINEES MAY VOTE
PROXIES NOTWITHSTANDING THE FACT THAT THEY HAVE NOT RECEIVED VOTING INSTRUCTIONS
FROM THE BENEFICIAL OWNERS OF SHARES; CONSEQUENTLY, SHARES HELD BY BROKERS OR
THIRD PARTY NOMINEES WILL BE COUNTED IF AND AS VOTED BY SUCH BROKERS AND THIRD
PARTY NOMINEES.
VOTING
Matter 1 (Election of Directors). The Proxy being provided by the Board of
Directors enables a shareholder to vote for the election of the nominee proposed
by the Board, or to withhold authority to vote for the nominee being proposed.
The Company's Articles of Incorporation, as amended ("Articles of
Incorporation") do not provide for cumulative voting by shareholders for the
election of the Company's directors. Under the Wisconsin Business Corporation
Law ("WBCL"), directors are elected by a plurality of the votes cast with a
quorum present.
Matter 2 (Appointment of KPMG LLP). The affirmative vote of a majority of
the shares of Common Stock represented in person or by Proxy at the Annual
Meeting is necessary to ratify the appointment of KPMG LLP as auditors for the
fiscal year ending June 30, 2001.
Matter 3 (Company Name Change). The affirmative vote of a majority of the
issued and outstanding shares of Common Stock is required for the approval of
the amendment to the Company's Articles of Incorporation to change the name of
the Company to Ledger Capital Corp.
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. 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.
SOLICITATION AND REVOCATION
Shareholders are requested to vote by completing the enclosed Proxy and
returning it signed and dated in the enclosed postage-paid envelope or by
telephone (see "Telephone Voting Alternatives"). Proxies solicited by the Board
of Directors of the Company will be voted in accordance with the directions
given therein. Where no instructions are indicated, signed proxies will be
voted:
-- FOR the election of the nominee for director named in this Proxy
Statement;
-- FOR the ratification of the appointment of KPMG LLP as independent
auditors of the Company for the fiscal year ending June 30, 2001;
-- FOR the approval of the amendment to the Company's Articles of
Incorporation to change the name of the Company to Ledger Capital
Corp.; and
-- In accordance with the best judgment of the persons appointed as
proxies upon the transaction of such other business as may properly
come before the Annual Meeting or any adjournments or postponements
thereof.
-2-
<PAGE> 6
Submitting your completed Proxy via mail or telephone 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., 5555
North Port Washington Road, Glendale, Wisconsin 53217); (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.
TELEPHONE VOTING INSTRUCTIONS
The Company is pleased to announce that shareholders are now able to vote
their shares by telephone. (Voting via the Internet is not available at this
time.) The submission of a Proxy via telephone will not affect your right to
vote in person should you decide to attend the Annual Meeting.
Shares Registered in the Name of the Shareholder. Shareholders with shares
registered directly with Firstar Corporate Trust may vote their Proxy
telephonically by calling Firstar at (877) 215-9164. Votes submitted by
telephone must be received by 12:00 p.m. Eastern Standard Time on October 24,
2000.
Shares Registered in the Name of a Brokerage Firm or Bank. A number of
brokerage firms and banks are participating in a program provided through ADP
Investor Communication Services that offers telephone voting alternatives. This
program is different from the program offered by Firstar for telephonic voting
of shares registered in the name of the stockholder. If your shares are held in
an account at a brokerage firm participating in the ADP program, you may vote
those shares telephonically by calling the telephone number referenced on your
voting form. Votes submitted telephonically through the ADP program must be
received by 12:00 p.m. Eastern Standard Time on October 24, 2000.
-3-
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of shares of Common
Stock as of August 31, 2000 (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 PERCENT OF
NAME OWNED (1) CLASS
---- ---------------- ----------
<S> <C> <C>
Financial Institution Partners, L.P./Hovde
Capital, Inc. (5) .................................. 284,000 11.08%
West Allis Savings Bank Employee Stock
Ownership Trust (6) ................................ 83,309 3.25
James D. Smessaert (2)(3)(4) ........................ 238,257 8.86
Reginald M. Hislop, III (2) ......................... 3,900 *
Martin Hedrich, Jr .................................. 3,000 *
Charles E. Rickheim (2)(3) .......................... 66,315 2.56
Donald A. Zellmer (2) ............................... 8,500 *
Peter A. Gilbert (2)(3)(4) .......................... 102,215 3.93
All directors and executive officers
as a group (8 persons) (2)(3)(4) ................... 496,528 17.71%
</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 --
125,086 shares; Mr. Gilbert -- 39,600 shares; Mr. Hislop - 3,300 shares;
Mr. Rickheim -- 27,770 shares; Mr.Hedrich -- 1,000; and Mr. Zellmer --
2,500 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 under the ESOP, for which such
individuals possess shared voting power, of which approximately, 43,556
shares have been allocated to the accounts of the named executive officers
in the Summary Compensation Table as follows: Mr. Smessaert -- 15,712
shares; and Mr. Gilbert -- 9,111 shares.
(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) U.S. Bancorp (the "Trustee") is the trustee for the ESOP. The Trustee's
address is 601 2nd Avenue South, Minneapolis, Minnesota 55402-4302.
-4-
<PAGE> 8
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 nominee for director listed
below. If the 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 the nominee listed
below may not be able to serve as a director if elected.
The following tables present information concerning the nominee for
director and continuing directors. The proposed nominee currently serves as
director of the Bank. James D. Smessaert has served as a director of the Company
since the Company's formation in June 1993. Peter A. Gilbert and Reginald M.
Hislop, III have served as directors of the Company since August 1995. Charles
E. Rickheim has served as a director of the Company since the Company's
formation in June 1993. Martin Hedrich, Jr. has served as a director of the
Company since September 1998. Donald A. Zellmer has served as a director of the
Company since October 1996.
<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>
INFORMATION WITH RESPECT TO CONTINUING DIRECTORS
NOMINEE FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2003
James D. Smessaert 62 President, Chief Executive Officer 1984
and Chairman of the Board for the
Company and the Bank.
</TABLE>
-5-
<PAGE> 9
<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>
DIRECTORS WHOSE TERMS EXPIRES IN 2001
Peter A. Gilbert 52 Director of the Company and the 1995
Bank; Executive 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 40 Director of the Company and the 1995
Bank; President 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 59 Director of the Company and the 1980
Bank; Owner and manager of
residential real estate located in
the State of Wisconsin.
DIRECTORS WHOSE TERMS EXPIRES IN 2002
Martin Hedrich, Jr. 58 Director of the Company and the 1998
Bank; President and owner of
Monopanel Technologies, Inc.,
a manufacturer of switches used
in appliance, instrument, computer
and medical markets, located in
West Allis, Wisconsin.
Donald A. Zellmer 67 Director of the Company and the 1996
Bank; Chairman and Chief Executive
Officer of Fortress Bancshares, Inc.,
a Wisconsin-based multi-bank holding
company; President and owner of
Ridgeview Farms, Inc.; Retired
Partner of Ernst & Young LLP,
Milwaukee Office.
</TABLE>
THE AFFIRMATIVE VOTE OF A PLURALITY OF THE VOTES CAST IS REQUIRED FOR THE
ELECTION OF DIRECTORS. UNLESS MARKED TO THE CONTRARY, THE SHARES OF COMMON STOCK
REPRESENTED BY THE SUBMITTED PROXIES WILL BE VOTED FOR THE ELECTION OF THE
ABOVE-DESCRIBED NOMINEE. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
ELECTION OF THE NOMINEE FOR DIRECTOR.
-6-
<PAGE> 10
MATTER 2.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Company's independent auditors for the fiscal year ended June 30, 2000
were KPMG LLP. The Board of Directors of the Company has reappointed KPMG LLP to
perform the audit of the Company's financial statements for the fiscal year
ending June 30, 2001. Representatives of KPMG 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 SUBMITTED PROXIES WILL BE VOTED FOR RATIFICATION OF THE APPOINTMENT OF KPMG
LLP, AS THE INDEPENDENT AUDITORS OF THE COMPANY. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY.
MATTER 3.
COMPANY NAME CHANGE
The Board of Directors has unanimously adopted a resolution approving and
recommending to the shareholders for their approval an amendment to Article I of
the Company's Articles of Incorporation in order to change the Company's name to
"Ledger Capital Corp." Accordingly, if the amendment to the Company's Articles
of Incorporation is approved, Article I of the Company's Articles of
Incorporation would read as follows:
"ARTICLE I
The name of the corporation is Ledger Capital Corp."
The Board of Directors has determined that it would be in the best interest
of the Company and its shareholders to change the name of Hallmark Capital Corp.
to Ledger Capital Corp. The primary reason for the name change is to align the
Company's name with the new name of the Bank, which reflects a refining of the
Bank's marketing strategy. During the second quarter of fiscal 2001, the Bank
intends to change its name from West Allis Savings Bank to Ledger Bank, S.S.B.
The new name was strategically selected to pay homage to the Bank's 81-year
heritage as a trustworthy, solid community bank. The Company believes the new
name will enable it to create a differentiated, customer-focused, financial
services brand in the market.
If the amendment to the Company's Articles of Incorporation is approved,
the corporate name change will become effective upon the filing of the Amendment
to the Articles of Incorporation with the Wisconsin Department of Financial
Institutions, which filing will be made promptly after the Annual Meeting.
If the amendment to the Company's Articles of Incorporation is approved,
the Common Stock of the Company will be traded under the symbol "LEDG" on the
Nasdaq National Market System.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE ISSUED AND OUTSTANDING SHARES OF
COMMON STOCK IS REQUIRED FOR THE APPROVAL OF THE PROPOSED AMENDMENT TO THE
COMPANY'S ARTICLES OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY TO LEDGER
CAPITAL CORP. UNLESS MARKED TO THE CONTRARY, THE SHARES OF COMMON STOCK
REPRESENTED BY THE SUBMITTED PROXIES WILL BE VOTED FOR THE AMENDMENT TO THE
COMPANY'S ARTICLES OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY TO LEDGER
CAPITAL CORP. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF
THE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO CHANGE THE NAME OF
THE COMPANY TO LEDGER CAPITAL CORP.
-7-
<PAGE> 11
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
Regular meetings of the Board of Directors of the Company generally are
held on a quarterly basis. During the fiscal year ended June 30, 2000, the Board
of Directors of the Company held four regular meetings. 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, 2000.
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), Charles E. Rickheim and Reginald M. Hislop, III. 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 three
times during the fiscal year ended June 30, 2000.
The Board of Directors of the Bank has established a Compensation Committee
consisting of three directors, Messrs. Charles E. Rickheim (Chairman), Reginald
M. Hislop, III and Martin Hedrich, Jr. who are neither officers nor employees of
the Company or the Bank ("Outside Directors"). During the fiscal year ended June
30, 2000, the Company did not pay separate compensation to its executive
officers. The Compensation Committee of the Company met in June and July of 2000
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. For a further discussion of the compensation
policies of the Company, see "Compensation Committee Report."
The entire Board of Directors, acting as a Nominating Committee, met on
July 25, 2000, to consider and select the 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 2001 Annual Meeting."
-8-
<PAGE> 12
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Compensation
During the fiscal year ended June 30, 2000, the Company did not pay
separate compensation to its executive 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 and the next
highest paid executive officer of the Bank whose compensation (salary and
bonus) exceeded $100,000 during the Company's fiscal years ended June 30, 1998,
1999 and 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL NUMBER
COMPENSATION(1) OF SHARES
---------------------------- SUBJECT TO ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) OPTIONS(3) COMPENSATION(4)
--------------------------- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <S> <C>
James D. Smessaert ............... 2000 $171,147 $ -- -- $ 15,818
President and Chief Executive 1999 164,564 66,774 6,000 24,378
Officer and Director of the 1998 158,235 76,066 6,000 36,683
Company and the Bank
Peter A. Gilbert ................. 2000 $136,567 $ -- -- $ 15,818
Executive Vice President & 1999 131,263 46,622 4,000 24,378
Corporate Secretary of the 1998 126,263 53,109 4,000 36,683
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 1998 and 1999 were
based upon the terms set forth under the West Allis Savings Bank Annual
Incentive Plan (the "Incentive Plan"). See "Annual Incentive Plan."
(3) Amounts shown in this column represent the total number of shares of Common
Stock subject to options granted (both vested and unvested) under the
Hallmark Capital Corp. 1993 Incentive Stock Option Plan, as amended (the
"Incentive Stock Option Plan"). The options awarded are subject to a
vesting schedule over a five-year period from the date of grant.
(4) Amounts shown in this column represent the Bank's contributions on behalf
of Messrs. Smessaert and Gilbert under the ESOP for the fiscal years ended
June 30, 1998, 1999 and 2000.
-9-
<PAGE> 13
EMPLOYMENT AGREEMENTS
In connection with the conversion of the Bank from a state-chartered mutual
savings bank to a state-chartered stock savings bank (the "Conversion"), the
Bank entered into a three-year employment agreement with Mr. Smessaert,
President and Chief Executive Officer of the Bank. On December 31, 1994, the
Bank entered into a three-year employment agreement with Mr. Gilbert, Executive
Vice President/Chief Operating Officer and Corporate Secretary of the Bank. The
terms of each of their employment agreements may be renewed upon expiration for
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 Mr.
Smessaert and Mr. Gilbert are $171,147 and $136,567, 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, the executive officers 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 the executive
officers 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, the executive officers 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, the executive officers 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 the executive officers during the five years immediately preceding such
Change in Control.
In fiscal 2000, the Company and the Bank entered into employment agreements
with Messrs. Smessaert and Gilbert which are intended to supplement certain
provisions contained in their employment agreements with the Bank. Neither of
the employment agreements are intended to provide duplicate payments or benefits
which are provided under the agreements previously executed. The employment
agreements with the Bank provide that the Company may reimburse the Bank for any
compensation paid to each of Messrs. Smessaert and Gilbert pursuant to such
agreements as jointly determined by the Boards of the Company and the Bank to
reflect appropriately the allocation of the executive's time between Company and
Bank affairs. The employment agreements with the Company provide that the
Company shall pay the executive the entire amount of any unpaid severance which
is not paid to the executive as a result of the Change in Control restrictions
under their employment agreements with the Bank. In addition, as noted above,
under applicable law, a 20% excise tax would be triggered by change-in-control
related payments that equal or exceed three times the executives' annual
compensation over the five years preceding the Change in Control. The employment
agreements with the Company provide that to the extent payments related to a
Change in Control are subject to the excise tax, the Company will provide the
executives
- 10 -
<PAGE> 14
with an additional amount sufficient to enable the executives to retain the full
value of the change in control benefits as if the excise tax had not applied.
EXECUTIVE EMPLOYEE SUPPLEMENTAL COMPENSATION AGREEMENT
In December 1998, the Bank entered into a Supplemental Compensation
Agreement (the "SERP") with Mr. Smessaert and Mr. Gilbert. The SERP surpersedes
the Executive Salary Continuation Agreement of August 1992 between the Bank and
Mr. Smessaert. Pursuant to the SERP, the Bank agreed to pay Mr. Smessaert and
Mr. Gilbert an annual benefit of $115,000 and $100,000, respectively, upon their
retirement at age 65 or upon their attainment of age 65 following an involuntary
termination or a termination subsequent to a "change in control." In an effort
to provide "golden handcuffs," the SERP provides that in the event of a
voluntary termination of employment prior to age 65, the benefit commencement
date will extend significantly beyond 65. The SERP provides benefits to Mr.
Smessaert and Mr. Gilbert for life once the payments commence. In the event of
death while employed at the Bank, the Bank will pay their designated
beneficiaries approximately $2.3 million and $2.0 million, respectively, payable
in equal monthly installments over a 20-year period. In the event of death
within 20 years after retirement, the Bank will pay their designated
beneficiaries the remaining monthly payments.
The SERP agreements contain restrictive covenants which provide that Mr.
Smessaert or Mr. Gilbert would forfeit any further benefits under the SERP if
they commence employment with another competitive financial institution for a
period of 18 months following any voluntary termination of employment (excluding
termination caused by a "change in control"). "Change in control" is generally
defined to include any change in control required to be reported under the
federal securities laws, as well as the acquisition by any person of 25% or more
of the Company's or Bank's outstanding voting securities. The Bank has 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 SERP.
In addition, in September 1998, the Bank purchased split-dollar life insurance
policies on the lives of Mr. Smessaert and Mr. Gilbert to provide their
beneficiaries a death benefit of $1.0 million each and to additionally fund the
Bank's anticipated obligations under the SERP.
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, 2000. 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. 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 2000, if the
threshold level set for net income was 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.
- 11 -
<PAGE> 15
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, 2000, the Company and its subsidiaries had 78 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 369,920 shares of Common
Stock were made available for granting to eligible participants under the
Incentive Stock Option Plan, and options to purchase 72,862 shares of Common
Stock remained available for future grant at June 30, 2000. There were no
options granted under the Incentive Stock Option Plan during the fiscal year
ended June 30, 2000.
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, 2000, and the value of
their unexercised stock options at June 30, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
NUMBER OF OPTIONS IN-THE-MONEY
SHARES AT OPTIONS AT
ACQUIRED VALUE FISCAL YEAR END FISCAL YEAR END (1)
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James D. Smessaert........... 0 $0 125,086 9,600 $ 586,892 $ 2,094
Peter A. Gilbert............. 0 0 28,800 17,200 121,834 1,396
</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
($9.125) and the exercise price of the options at June 30, 2000.
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, 2000. For the fiscal year ended June 30, 2000, each member of the
Board of Directors of the Bank received a $1,350 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. For eligible directors who
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 did not attain
age 70 on or prior to July 1, 1996, the annual payments
- 12 -
<PAGE> 16
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 attained age 70 on or prior to July
1, 1996 receives health insurance (single and family coverage) under the health
plan maintained by the Bank until the eligible director's death. Eligible
directors who did not attain age 70 on or prior to July 1, 1996 are not 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.
STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
In connection with the Conversion, the Board of Directors of the Company
adopted the Hallmark Capital Corp. 1993 Stock Option Plan for Outside Directors
of the Company and the Bank (the "Directors' Plan"). Options to purchase 153,980
shares of Common Stock were made available for granting to Outside Directors
under the Directors' Plan, and options to purchase 23,300 shares of Common Stock
remained available for future grant at June 30, 2000. All options granted under
the Directors' Plan expire upon the earlier of ten years following the date the
option was granted or one year following the date the optionee ceases to be a
director. There were no options granted under the Stock Option Plan for Outside
Directors during the fiscal year ended June 30, 2000.
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 or 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 the Board of Directors of the Company and the
Bank consists of the Outside Directors, Messrs. Charles E. Rickheim (Chairman),
Reginald M. Hislop, III and Martin Hedrich, Jr. During the fiscal year ended
June 30, 2000, the Company did not pay separate compensation to its executive
officers. In June and July 2000, the Compensation Committee met to review and
ratify the compensation policies set by, and the decisions made by, the Board of
Directors of the Bank. 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
- 13 -
<PAGE> 17
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. Base salaries are subject to review and adjustment by the
Compensation Committee each year. In fiscal 2000, the average increase in base
salary for executive officers was 4.00%.
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, 2000. The Incentive Plan 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.
For fiscal 2000, the Company did not achieve a net income level that
exceeded the target level of net income established by the Board under the
Incentive Plan. Therefore, no incentive compensation was paid to executive
officers for fiscal 2000. For a further discussion of the Incentive Plan, see
"Compensation of Executive Officers and Directors - Annual Incentive Plan."
LONG-TERM INCENTIVE COMPENSATION
The Bank established the Incentive Stock Option Plan in fiscal 1994 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
Incentive Stock Option Plan. The option awards are designed to align the
financial interests of the Company's executive officers more closely with the
Company's shareholders. During fiscal 2000, no non-qualifying stock options to
purchase shares of Common Stock were awarded to senior executive officers of the
Company and the Bank.
RETIREMENT AND OTHER BENEFITS
In December 1998, the Bank and Messrs. Smessaert and Gilbert entered into
Supplemental Compensation Agreements ("SERP") to ensure that such executives
continue to provide services to the Bank and to provide an incentive for such
executives to refrain from providing services to a competitor of the Bank.
Pursuant to the SERP, the Bank will pay Messrs. Smessaert and Gilbert annually
$115,000 and $100,000, respectively, upon the attainment of certain events. The
benefits under the SERP are forfeited in the event such executive commences
employment for a competitor of the Bank. For a further description of the SERPs,
see "Compensation of Executive Officers and Directors - Executive Employee
Supplemental Compensation Agreement." Additional retirement and other benefits
provided to executive officers are the same as those benefits provided to all
employees of the Bank, including participating 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.
- 14 -
<PAGE> 18
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. On March 15, 2000, the Bank contributed
$143,265 to the ESOP and allocations of shares of Common Stock were based upon
compensation paid to participants for the year ended December 31, 1999.
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,
2000 was consistent with the Company's overall executive compensation
philosophy. Based upon the compensation philosophy of the Bank, Mr. Smessaert's
competitively determined base salary under his employment agreement was
increased 4% from fiscal 1999 to $171,147 effective January 1, 2000. Mr.
Smessaert receives no additional payment for serving as a member of the Board of
Directors of the Company or the Bank.
There was no cash bonus paid to Mr. Smessaert for the fiscal year ended
June 30, 2000 pursuant to the Incentive Plan. The cash bonus reflected the
Company's financial performance relative to net income levels of the Company
established by the Compensation Committee. During fiscal 2000, the Company did
not achieve a net income level that exceeded the target level of net income
established by the Board under the Incentive Plan. For a further description of
the Incentive Plan, see "Compensation of Executive Officers and Directors -
Annual Incentive Plan." There were no options granted to Mr. Smessaert to
purchase shares of Common Stock under the Incentive Stock Option Plan during
fiscal 2000.
COMPENSATION COMMITTEE
CHARLES E. RICKHEIM
REGINALD M. HISLOP, III
MARTIN HEDRICH, JR.
- 15 -
<PAGE> 19
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 June 30, 1995 through June 30, 2000. 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)
[HALLMARK CAPITAL CORP. PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
PERIOD ENDING
--------------------------------------------------------------
INDEX 6/30/95 6/30/96 6/30/97 6/30/98 6/30/99 6/30/00
----- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Hallmark Capital Corp. 100.00 111.11 158.34 207.41 172.22 137.33
Nasdaq -- Total US* 100.00 128.39 156.15 205.59 296.02 437.30
SNL Thrift Index 100.00 126.86 205.34 278.06 235.87 198.36
</TABLE>
------------
(1) Assumes $100.00 invested on June 30, 1995, and all dividends reinvested
through the end of the Company's fiscal year on June 30, 2000. The Company
did not pay dividends during the period from June 30, 1995 to June 30,
2000. The performance chart is based upon closing prices on the trading day
specified (as adjusted to reflect the Company's 2-for-1 stock split in
November 1997).
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.
- 16 -
<PAGE> 20
INDEBTEDNESS OF MANAGEMENT AND CERTAIN TRANSACTIONS
Current federal law requires that loans or extensions of credit to
executive officers and directors must be made only (i) 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, or (ii)
pursuant to benefit or compensation programs which are widely available to
employees of the Bank and which do not give such executive officers and
directors preference over other Bank employees. 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 loans or extensions of credit to executive
officers and directors will be made only in the ordinary course of business
(i.e., 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), or in accordance with the terms of nonpreferential
benefit or compensation plans generally available to Bank employees. All loans
since the enactment of current laws were made by the Bank in the ordinary course
of business or pursuant to non-preferential benefit or compensation plans
generally available to Bank employees.
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 be made only in the ordinary course of business or pursuant to
nonpreferential benefit or compensation programs generally available to Bank
employees.
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, 2000, officers, directors and greater
than ten percent shareholders complied with all Section 16(a) filing
requirements, except for one inadvertent failure by Ms. Borst to timely report
on a Form 4 two sales of shares of Common Stock of the Company in February 2000,
which sales were subsequently reported on a Form 5, and one incomplete report
previously filed by Mr. Smessaert, which inadvertently omitted one purchase of
shares of Common Stock of the Company in October 1998, which report was
subsequently amended.
- 17 -
<PAGE> 21
SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS FOR INCLUSION IN 2001 PROXY
MATERIALS
Any proposal which a shareholder wishes to have included in the proxy
materials of the Company relating to the 2001 annual meeting of the shareholders
of the Company, which is scheduled to be held in October 2001, must be received
at the principal executive offices of the Company, 5555 North Port Washington
Road, Glendale, Wisconsin 53217, Attention: Peter A. Gilbert, Corporate
Secretary, no later than May 25, 2001. 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 2001 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.
ADVANCE NOTICE REQUIREMENT FOR ANY PROPOSAL OR NOMINATION TO BE RAISED BY A
SHAREHOLDER
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.
DISCRETIONARY VOTING OF 2001 PROXIES
Pursuant to Rule 14a-4(c) under the Exchange and Article VII of the
Company's Articles of Incorporation, if a shareholder who intends to present a
proposal at the 2001 annual meeting timely and properly notifies the Company of
such proposal at least ten days after mailing of the 2001 proxy statement, as
described above, management proxies may not use their discretionary voting power
for such proposal unless the Company sends to shareholders information on the
matter to be presented at the meeting and how the management proxies intend to
exercise their discretionary vote of such matter.
- 18 -
<PAGE> 22
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,
[Peter A. Gilbert Signature]
Glendale, Wisconsin Peter A. Gilbert
September 22, 2000 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 OR
SUBMIT YOUR PROXY TELEPHONICALLY.
================================================================================
- 19 -
<PAGE> 23
HALLMARK CAPITAL CORP. REVOCABLE PROXY
5555 North Port Washington Road
Glendale, Wisconsin 53217
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 25, 2000
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 Peter A. Gilbert, 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 11, 2000, at the Annual Meeting which
will be held on October 25, 2000, at 7.00 p.m., Milwaukee, Central time, at the
Pettit National Ice Center, 500 South 84th Street, Milwaukee, Wisconsin 59214,
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.
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 judgement. At the
present time, the Board of Directors of the Company knows of no other business
to be presented at the Annual Meeting.
If you return this proxy card. Please mark
your votes as in this example: [X]
<PAGE> 24
[COMPANY NAME] [CONTROL NUMBER]
VOTE BY PHONE -- TOLL FREE -- XXX-XXX-XXX -- QUICK *** EASY *** IMMEDIATE
-- Your telephone vote authorizes the named proxies to vote your shares in
the same manner as if you marked, signed and returned your proxy card.
-- Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until (12:00 p.m. Eastern Standard Time) on October 24, 2000.
-- You will be prompted to enter your (3) digit Company Number and your (7)
digit control number which are located above.
-- Follow the simple instructions given over the telephone.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we've provided.
-- DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED --
HALLMARK CAPITAL CORP. 2000 ANNUAL MEETING
<TABLE>
<S> <C> <C> <C> <C>
1. ELECTION OF DIRECTOR: JAMES D. SMESSAERT [ ] FOR the nominee [ ] WITHHOLD AUTHORITY
listed to the left. to vote for the nominee
listed to the left.
2. Ratification of the appointment of KPMG LLP as
independent auditors of the Company for the
fiscal year ending June 30, 2001. [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of an amendment to the company's
articles of incorporation to change the name
of the Company to Ledger Capital Corp. [ ] FOR [ ] AGAINST [ ] ABSTAIN
4. 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.
Date _______________________ NO OF SHARES
Indicate changes below:
Address Change? [ ] [ ]
[ ]
_________________________________________________
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>
