<PAGE>
<PAGE>
December 28, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Fidelity Bancorp, Inc. (the "Company"), the holding company for Fidelity
Federal Savings Bank (the "Bank"), which will be held on January 27, 1999 at
10:00 a.m., local time at the corporate offices of the Company, located at 5455
West Belmont, Chicago, Illinois.
As described in the enclosed Proxy Statement, matters scheduled to be presented
for stockholder action at the Annual Meeting include the election of two Class
I directors and the ratification of KPMG Peat Marwick LLP as independent
auditors of the Company for the fiscal year ending September 30, 1999. There
will also be a report on the operations of the Company and the Bank, a wholly
owned subsidiary of the Company. The Company's directors, executive officers
and representatives of the Company's independent auditors will be present to
respond to appropriate questions.
The Board of Directors of the Company has determined that approval of the
matters to be considered at the meeting is in the best interest of the Company
and its stockholders. For the reasons set forth in the Proxy Statement, the
Board unanimously recommends a vote "FOR" each matter to be considered.
We hope you will be able to attend the Annual Meeting in person. Whether or
not you expect to attend, we urge you to sign, date and return the enclosed
proxy card so that your shares will be represented.
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 interest and support. I look forward to
seeing you at the Annual Meeting.
Sincerely yours,
Raymond S. Stolarczyk
Chairman of the Board and Chief Executive Officer
5455 West Belmont Avenue, Chicago, Illinois 60641
(773) 736-4414
<PAGE>
<PAGE>
FIDELITY BANCORP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on January 27, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Fidelity Bancorp, Inc. will be held on January 27, 1999, at 10:00
a.m. local time at the corporate offices of the Company, located at 5455 West
Belmont Avenue, Chicago, Illinois.
The Annual Meeting is for the purpose of considering and voting upon the
following matters:
1. The election of two Class I directors for terms of three years each;
2. The ratification of KPMG Peat Marwick LLP as independent auditors of the
Company for the fiscal year ending September 30, 1999; and
3. Such other matters as may properly come before the Annual Meeting or any
adjournments or postponements thereof.
The Board of Directors has fixed December 1, 1998 as the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting and at any adjournments or postponements thereof. Only holders of
record of the Company's Common Stock (the "Common Stock") 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
Judith K. Leaf
Corporate Secretary
Chicago, Illinois
December 28, 1998<PAGE>
<PAGE>
FIDELITY BANCORP, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
January 27, 1999
Solicitation and Voting of Proxy
This Proxy Statement is being furnished to stockholders of the Company in
connection with the solicitation by the Board of Directors of the Company of
proxies to be used at the Annual Meeting to be held on January 27, 1999 at the
corporate offices of the Company, 5455 West Belmont Avenue, Chicago, Illinois
at 10:00 a.m. local time and any adjournments or postponements thereof. The
1998 Annual Report to Stockholders on Form 10-K, including the consolidated
financial statements for the fiscal year ended September 30, 1998, accompanies
this Proxy Statement, which is first being mailed to stockholders on or about
December 28, 1998.
It is important that holders of a majority of the outstanding shares be
represented by proxy or be present in person at the Annual Meeting.
Stockholders are requested to vote by completing the enclosed proxy card and
returning it, signed and dated, in the enclosed postage-paid envelope.
Stockholders are urged to indicate their vote in the spaces provided on the
proxy card. All shares of Common Stock represented at the Annual Meeting by
properly executed proxies received prior to or at the Annual Meeting, and not
revoked, will be voted at the Annual Meeting in accordance with the
instructions thereon. If no instructions are indicated, properly executed
proxies will be voted for the nominees and for adoption of the proposal set
forth in this Proxy Statement.
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. Execution of a proxy, however, confers on
the designated proxyholders discretionary authority to vote the shares in
accordance with their best judgment on such other business, if any, that may
properly come before the Annual Meeting or any adjournments or postponements
thereof.
A proxy may be revoked at any time prior to its exercise by the filing of
written notice of revocation with the Secretary of the Company, by delivering
to the Company a duly executed proxy bearing a later date, or by attending the
Annual Meeting and voting in person.
Any cost of solicitation of proxies on behalf of management will be borne by
the Company. Proxies may be solicited personally or by telephone or telegraph
by directors, officers and regular employees of the Company, without additional
compensation therefor. The Company will also request persons, firms and
corporations holding shares in their names, or in the name of their nominees,
which are beneficially owned by others, to send proxy materials to and obtain
proxies from such beneficial owners, and will reimburse such holders for their
reasonable expenses in so doing.
Voting Securities
The securities which may be voted at the Annual Meeting consist of shares of
Common Stock, with each share entitling its owner to one vote on all matters to
<PAGE>
be voted on at the Annual Meeting, except as described below.
The close of business on December 1, 1998 has been fixed by the Board of
Directors as the record date for the determination of stockholders of record
entitled to notice of and to vote at the Annual Meeting and any adjournments or
postponements thereof. The total number of shares of Common Stock outstanding
on the record date was 2,406,784 shares.
As provided in the Company's Certificate of Incorporation, holders of Common
Stock who beneficially own in excess of 10% of the outstanding shares of Common
Stock (the "limit"), are not entitled to any vote in respect of the shares held
in excess of the limit. A person or entity is deemed to beneficially own
shares owned by an affiliate of, as well as persons acting in concert with,
such person or entity. The Company's Certificate of Incorporation authorizes
the Board of Directors to: (i) make all determinations necessary to implement
and apply the limit, including determining whether persons or entities are
acting in concert, and (ii) demand that any person who is reasonably believed
to beneficially own Common Stock in excess of the limit supply information to
the Company to enable the Board to implement and apply the limit.
The presence, in person or by proxy, of holders of at least a majority of the
total number of shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the limit pursuant to the Company's Certificate of
Incorporation) is necessary to constitute a quorum at the Annual Meeting.
As to the election of directors, the proxy card being provided by the Board of
Directors enables a stockholder 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. Under Delaware law and the Company's Certificate of Incorporation
and bylaws, directors are elected by a plurality of votes cast, without regard
to broker non-votes or proxies as to which authority to vote for one or more of
the nominees is withheld.
Under the Company's Certificate of Incorporation and bylaws, unless otherwise
required by law, all such other matters voted on by stockholders at the Annual
Meeting shall be determined by a majority of the votes cast, without regard to
either broker non-votes or proxies marked "ABSTAIN" as to that matter.
<PAGE>
<PAGE>
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information as to those persons believed
by the Company to be beneficial owners of more than 5% of the outstanding
shares of Common Stock on the record date based upon certain reports regarding
such ownership required to be 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"), by
such persons or group.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent of
Beneficial Ownership Beneficial Owner Class
<S> <C> <C>
Fidelity Federal Savings Bank 281,821 11.71%
Employee Stock Ownership
Plan and Trust ("ESOP")
5455 W. Belmont Avenue
Chicago, Illinois 60641 (1)
First Manhattan Co. 247,167 10.27%
437 Madison Avenue
New York, New York 10022
Raymond S. Stolarczyk 178,037 7.40%
Chairman of the Board and
Chief Executive Officer of
Fidelity Bancorp, Inc.
5455 W. Belmont Avenue
Chicago, Illinois 60641 (2)
Franklin Resources, Inc. 144,500 6.00%
777 Mariners Island Blvd.
San Mateo, CA 94403
</TABLE>
1) The Human Resource Policy Committee of the Board of Directors has been
appointed to administer the ESOP. An unrelated third party, Glenview State
Bank, has been appointed as the corporate trustee for the ESOP ("ESOP
Trustee"). The committee may instruct the ESOP Trustee regarding investment of
funds contributed to the ESOP. The ESOP Trustee must vote all allocated shares
held in the ESOP in accordance with the instructions of the participating
employees. As of the record date, 181,748 shares of Common Stock in the ESOP
had been allocated to participating employees. Of these, 9,129 shares had been
disbursed to retiring participants. Under the ESOP, unallocated shares will be
voted by the ESOP Trustee in a manner calculated to most accurately reflect the
instructions received from participants regarding the allocated shares so long
as such vote is in accordance with the provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
2) Excludes 26,996 shares held by Bonnie J. Stolarczyk.
ELECTION OF DIRECTORS
Pursuant to its bylaws, the number of directors of the Company is set at six
<PAGE>
unless otherwise designated by the Board of Directors. Each of the six members
of the Board of Directors also presently serves as a director of the Bank.
Directors are elected for staggered terms of three years each, with a term of
only one of the three classes of directors expiring each year. Directors serve
until their successors are elected and qualified.
The two nominees proposed for election as Class I Directors at the Annual
Meeting are Patrick J. Flynn and Raymond J. Horvat. Such nominations are not
being proposed pursuant to any agreement or understanding between any person
and the Company.
In the event that any nominee is unable to serve or declines to serve for any
reason, the proxies will be voted for the election of such other person as may
be designated by the present Board of Directors. The Board of Directors has no
reason to believe that either of the nominees will be unable or unwilling to
serve. Unless authority to vote for the nominees is withheld, the shares
represented by the enclosed proxy card, if executed and returned, will be voted
FOR the election of the nominees proposed by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
NOMINEES NAMED IN THIS PROXY STATEMENT
Information with Respect to the Nominees, Continuing Directors and Other
Executive Officers
The following table sets forth the names of the nominees, continuing directors
and executive officers, as well as their ages; a brief description of their
business experience for the past five years, including present occupation and
employment; the year in which each became a director and the year in which
their term (or in the case of the nominees, their proposed term) as director of
the Company expires. The table also sets forth the amount of Common Stock and
the percent thereof beneficially owned by each nominee, director and executive
officer and all directors and executive officers as a group as of November 16,
1998. No director is related to any other director or executive officer of the
Company by blood, marriage or adoption, except that Bonnie Stolarczyk is the
wife of Raymond Stolarczyk, the Company's Chairman and Chief Executive Officer.
<TABLE>
<CAPTION>
Amount and
Name, Age and Principal Expiration Nature of
Occupation at Present Director of Term Beneficial Percent
and for the Past Five Years Since (1) as Director Ownership (2) of Class
<S> <C> <C> <C> <C>
Nominees
Class I
Patrick J. Flynn (age 56) 1993 2002 10,229 *
Director of the Company
and the Bank. Executive Vice
President Strategic Planning
of McDonalds USA. Director,
Chipotle Mexican Grill.
Director of Link Unlimited
and Inroads/Chicago, Inc.,
both non-profit organizations.
Raymond J. Horvat (age 73) 1978 2002 30,343 1.23%
Director of the Company and
the Bank. Co-founder of
retail and wholesale
<PAGE>
merchandising business.
Retired.
Continuing Directors
Class II
Thomas E. Bentel (age 52)
President and Chief Operating 1988 2000 109,666 4.40%
Officer of the Company and
the Bank. Director of The
Company and the Bank.
President and Director of
Fidelity Corporation, a
wholly owned subsidiary of
the Bank.
Raymond S. Stolarczyk (age 60)
Chairman of the Board and 1981 2000 178,037(3) 7.05%
Chief Executive Officer of
the Company and the Bank.
Chairman of the Board of
Fidelity Corporation, a
wholly owned subsidiary of
the Bank. Director of the
Federal Home Loan Bank of
Chicago, past Chairman of
the Illinois League of
Financial Institutions, and
Vice Chairman and Trustee of
the Illinois League of Financial
Institutions Trust. Member
of American Institute of
Certified Public Accountants
and the Illinois Society of
Certified Public Accountants
Class III
Paul Bielat (age 59) 1992 2001 31,229 1.28%
Director of the Company and
the Bank. Principal in
Compliance Assistance Partners,
Inc., a firm engaged in the
business of advising banks
and thrift institutions
regarding regulatory compliance.
Senior Vice President and Treasurer
of the Federal Home Loan Bank of
Chicago from 1982 to 1991.
Bonnie Stolarczyk (age 52)
Director of the Company and 1978 2001 26,996(4) 1.10%
the Bank. Self-employed as a
certified public accountant.
Member of the National
Association of Tax Practitioners,
American Institute of Certified
Public Accountants and the
Illinois Society of Certified
Public Accountants.
James R. Kinney (age 52)
Senior Vice President Finance, 53,878 2.21%
Chief Financial Officer and
Treasurer of the Company and
the Bank. Treasurer of Fidelity
Corporation. Director of Mission
Aviation Fellowship, a non-profit
organization.
All directors and executive officers as a group
(7 persons) 440,378 16.76%
</TABLE>
<PAGE>
*Does not exceed 1.0% of the Company's voting securities.
(1) Includes years of service as a director of the Bank.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family member) voting and dispositive power as to shares reported.
Includes 4,982, 4,982, 16,602 and 11,400 presently exercisable options granted
to Messrs. Bielat, Flynn, and Horvat and Ms. Stolarczyk, respectively, under
the Fidelity Bancorp, Inc. 1993 Stock Option Plan for Outside Directors (the
"Directors' Option Plan"). Includes 8,293, 4,947 and 2,836 shares awarded to
Messrs. Stolarczyk, Bentel, and Kinney, respectively, under the Fidelity
Federal Savings Bank Recognition and Retention Plan for Officers and Employees
("RRP"), which are not yet vested but as to which voting may be directed.
Awards for Messrs. Stolarczyk, Bentel, and Kinney vest in five equal annual
installments which began on December 15, 1994. Includes 92,604, 53,072 and
9,088 presently exercisable options granted to Messrs. Stolarczyk, Bentel, and
Kinney, respectively, under the Company's 1993 Incentive Stock Option Plan (the
"Incentive Option Plan"). Includes 12,812, 12,925 and 9,991 shares awarded to
Messrs. Stolarczyk, Bentel, and Kinney respectively under the ESOP as of
December 31, 1997.
(3) Excludes 26,996 shares held by Bonnie J. Stolarczyk.
(4) Excludes 178,037 shares held by Raymond S. Stolarczyk.
Section 16(a) of the Exchange Act requires the Company's directors, executive
officers and 10% stockholders to file reports of ownership and changes in
ownership with the SEC and with the exchange on which the shares of Common
Stock are traded. Such persons are also required to furnish the Company with
copies of all Section 16(a) forms they file. Based solely upon the Company's
review of such forms, and if appropriate, representations to the Company by
such persons regarding whether a Form 5 was required to be filed for the past
fiscal year, the Company is not aware that any of its directors or executive
officers failed to comply with the requirements of Section 16(a) during the
period from October 1, 1997 through September 30, 1998.
Meetings of the Board and Committees of the Board
The Board of Directors of the Company conducts its business through meetings of
the Board and through activities of its committees. During fiscal 1998, the
Board of Directors held 11 meetings. Each of the directors of the Company
attended at least 75% of the total number of the Company's Board meetings held
and committee meetings on which such director served during fiscal 1998. The
Board of Directors of the Company and the Bank maintain a number of committees,
such of which are described below:
Audit Committee. The Audit Committee consists of Messrs. Bielat (Chair) and
Flynn and Ms. Stolarczyk. The committee recommends independent auditors to the
Board, reviews the results of the auditors' services and reviews with
management the systems of internal control and internal audit reports. The
Audit committee met four times in fiscal 1998.
Human Resource Policy Committee. The Human Resource Policy Committee consists
of Messrs. Flynn (Chair), Bielat and Horvat. The purpose of the committee is
to recommend the compensation, pension, benefit and other human resource
policies and programs for key executive management personnel to the full Board,
and to monitor compliance with the Bank's policies and applicable laws and
regulations. This committee met three times in fiscal 1998.
Nominating Committee. The Company's Nominating Committee for the 1999 Annual
Meeting consisted of Messrs. Bentel and Bielat and Ms. Stolarczyk. The
<PAGE>
committee considers and recommends the nominees for director to stand for
election at the Company's Annual Meeting. The Company's Certificate of
Incorporation and bylaws also provide for stockholder nominations of directors.
Such nominations must be in writing and must otherwise comply with the
provisions of Section 6 of the Company's bylaws. See "Additional Information -
Notice of Business to Be Conducted at an Annual Meeting." The Nominating
Committee met once in fiscal 1998.
Directors' Compensation
Directors' Fees. The Company pays no fees for service on the Board of
Directors. For calendar year 1998, each outside director of the Bank was paid
a monthly retainer of $625 plus a fee of $625 for each Board meeting attended.
The Chairperson of each committee of the Board of the Bank received $275 for
each committee meeting attended; committee members received a fee of $225 for
each meeting attended. Directors who are officers or executives of the Bank
received no fees for meetings attended.
Executive Compensation
Human Resource Policy Committee Report of Executive Compensation.
The following report of the Human Resource Policy committee and stock
performance graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act of 1933 (the "Securities Act") or the Exchange Act, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
Under rules established by the SEC, the Company is required to provide certain
data and information in regard to the compensation and benefits provided to the
Company s Chief Executive Officer (CEO) and other executive officers. The
disclosure requirements for the CEO and executive officers include the use of
tables and a report explaining the rationale and considerations that led to
fundamental compensation decisions affecting those individuals. In fulfillment
of this requirement, the Human Resource Policy Committee, at the direction of
the Board of Directors, has prepared the following report for inclusion in this
Proxy Statement.
Compensation Report. The Human Resource Policy Committee is responsible for
establishing the compensation levels and benefits for executive officers of the
Bank who also serve as executive officers of the Company.
In 1993, the committee determined that in order to align the interests and
performance of its executives with the long-term interests of its stockholders,
the Bank and the Company should adopt stock benefit programs which would
provide incentives to the Company s executives for delivering long-term value
to the Company. In this regard, the Company established an Employee Stock
Ownership Plan, an Incentive Stock Option Plan and a Recognition and Retention
Plan. When these plans were adopted, the committee assumed the responsibility
for supervising their administration.
Executive Compensation Policy. For the past fiscal year, the goals established
by the committee for executive officer compensation were:
To encourage a consistent and competitive return to stockholders;
To provide financial rewards for performance of those having a significant
<PAGE>
impact on corporate profitability;
To reward Bank and individual performance; and
To provide competitive compensation in order to attract and retain key
personnel.
When determining the appropriate levels of executive compensation, the
committee took into consideration several factors, including the internal value
of the executive s function to the Company, the executive s performance for
fiscal year ended September 30, 1997 and compensation ranges and levels for
executive positions in comparable companies. To evaluate the accomplishments
achieved by the executives for fiscal year 1997, the committee took into
consideration both financial and non-financial goals from customer and business
development perspectives. The committee evaluated performance measures as they
related to quality of assets, loan origination, deposit growth, stockholder
return and earnings per share. Written evaluations for each executive, listing
fiscal year accomplishments, were prepared and discussed by the committee to
determine each executive s respective contribution to the performance measures.
Chief Executive Officer. In determining the Chief Executive Officer s
compensation for 1998, the committee took into consideration the CEO s
performance in relation to the accomplishment of the targeted measurements
outlined above. The committee determined that the CEOs salary be increased by
3.5%, which became effective January 1, 1998. The committee determined that
this increase would maintain the CEO s direct compensation just above the mid
point of the established salary range.
Other Executive Officers. All factors used by the committee to determine the
direct compensation of the CEO were also used to determine the direct
compensation of the other executive officers of the Company. These executives
were evaluated on the specific contributions they made in accomplishing the
goals listed above and those established in the Company s 1997 Fiscal Financial
Plan. The average salary increase awarded to the Company s executive officers
for fiscal year 1998 was 3.45%, which became effective January 1, 1998. The
increase placed its executive officer compensation slightly over the mid point
of the established salary range.
Human Resource Policy Committee:
Patrick J. Flynn (Chair)
Paul J. Bielat
Raymond J. Horvat
<PAGE>
<PAGE>
Stock Performance Graph
The following table shows a comparison of the Company's cumulative return since
its initial public offering with the cumulative total returns of both a broad
market and a peer group index. The broad market index chosen was the Nasdaq
Market Index and the peer group index chosen was the Media General Industry
Group, which is comprised of savings and loan holding companies. The data was
supplied by Media General Financial Services.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG FIDELITY BANCORP, INC., PEER GROUP INDEX
AND BROAD MARKET INDEX
FIDELITY PEER BROAD
BANCORP, GROUP GROUP
MEASUREMENT PERIOD INC. INDEX INDEX
<S> <C> <C> <C>
12/15/93 $100.00 $100.00 $100.00
9/30/94 122.50 109.62 106.12
9/30/95 143.94 140.90 128.85
9/30/96 166.74 169.23 150.43
9/30/97 264.58 294.29 206.21
9/30/98 224.06 259.67 214.30
</TABLE>
<PAGE>
<PAGE>
Summary Compensation Table
The following table sets forth the compensation paid by the Company, including
any of its subsidiaries, for services during the past three fiscal years, to
the CEO and the two other officers of the Company who received total annual
salary and bonus in excess of $100,000 for fiscal year ended September 30,
1998.
<TABLE>
<CAPTION>
Annual Compensation Awards Payouts
Securities
Restricted Underlying All Other
Other Annual Stock Options/ LTIP Compen-
Name and Principal Fiscal Compensation Awards SARs Payouts Sation
Position Year Salary Bonus ($) ($) ($) ($) ($)(1)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Raymond S. Stolarczyk 1998 $214,251 $-- -- -- -- -- $323,528
Chairman of the 1997 206,785 -- -- -- -- -- 149,651
Board and Chief 1996 199,142 -- -- -- -- -- 91,875
Executive Officer
Thomas E. Bentel 1998 $167,112 -- -- -- -- -- $326,382
President and Chief 1997 161,556 -- -- -- -- -- 151,572
Operating Officer 1996 155,546 -- -- -- -- -- 93,590
James R. Kinney 1998 $124,237 -- -- -- -- -- $252,298
Senior Vice 1997 119,893 -- -- -- -- -- 117,215
President Finance, 1996 115,654 -- -- -- -- -- 72,137
Chief Financial
Officer and Treasurer
</TABLE>
(1) Represents the fair market value of shares granted under the ESOP on the
respective allocation date.
Employment Agreements
The Bank and the Company have employment agreements with Messrs. Stolarczyk,
Bentel and Kinney. The employment agreements are intended to ensure that the
Bank and the Company will be able to maintain a stable and competent management
team.
The employment agreements with Messrs. Stolarczyk and Bentel provide for three
year terms and the employment agreement with Mr. Kinney provides for a two year
term. Commencing on the first anniversary date and continuing each anniversary
date thereafter, the term of each agreement is automatically extended for an
additional year unless written notice of non-renewal is given by the Board of
Directors after conducting a performance evaluation of the respective
executive. In addition to specifying base salary, which is subject to annual
review by the Board of Directors, the employment agreements provide for, among
other things, disability pay, participation in stock benefit plans and other
fringe benefits applicable to executive personnel. The employment agreements
provide for termination by the Bank or the Company for cause at any time. In
the event the Bank or the Company chooses to terminate the executive's
employment for reasons other than for cause or disability, or in the event of
the executive's resignation from the Bank and the Company upon: (i) failure to
re-elect the executive to his current office; (ii) a material change in the
executive's functions, duties or responsibilities, or relocation of his
principal place of employment or material reduction in benefits or perquisites;
(iii) liquidation or dissolution of the Bank or the Company; or (iv) a breach
of the agreement by the Bank or the Company, the executive or, in the event of
<PAGE>
death, his beneficiary, would be entitled to receive an amount equal to the
remaining payments, including base salary, bonuses and other payments and
health benefits due under the remaining term of the agreement.
If termination of employment follows a change in control of the Bank or the
Company, as defined in the agreements, the executive or, in the event of death,
his beneficiary, would be entitled to a payment equal to the greater of: (i)
payments due for the remaining term of the agreement or (ii) three times his
average annual compensation over the three years preceding his termination of
employment, as to Messrs. Stolarczyk and Bentel, and two times his average
annual compensation over the previous two years for Mr. Kinney. The Bank and
the Company would also continue the executive's life, health and disability
coverage for the remaining unexpired term of the agreement to the extent
allowed by the plans or policies maintained by the Company from time to time.
In the event of a change in control, based upon the past fiscal year's salary
and bonus, Messrs. Stolarczyk, Bentel, and Kinney would receive approximately
$620,178, $484,214 and $244,129, respectively, in severance payments, in
addition to other cash and noncash benefits, under the agreements. Payments to
the executive under the Bank's agreements are guaranteed by the Company in the
event that payments or benefits are not paid by the Bank.
Defined Benefit Plan
The Bank maintains a non-contributory defined benefit plan ("Retirement Plan").
All employees credited with 1,000 or more hours of employment during a twelve
month period with the Bank and have attained age 21 are eligible to participate
in the Retirement Plan.
At the normal retirement age of 65 years old, the Retirement Plan is designed
to provide a life annuity guaranteed for 10 years. The retirement benefit
provided is based on the highest consecutive five-year average salary and years
of benefit service, as shown in the following table. Retirement Plan benefits
are also payable upon termination due to late retirement and death. Upon
termination of employment other than as specified above, a participant who was
employed by the Bank for a minimum of five years is eligible to receive his or
her accrued benefit, reduced for early retirement, or a deferred retirement
benefit commencing on the participant's normal retirement date. Benefits are
payable in various annuity forms, as well as in the form of a single lump sum
payment. Contributions of $123,630 were made to the plan for the fiscal year
ended September 30, 1998 Under applicable accounting rules, the Bank accrued
$111,521 with respect to the Retirement Plan for the twelve month period ended
September 30, 1998.
The following table indicates the annual retirement benefit that would be
payable under the plan upon retirement at age 65 to a participant electing to
receive his or her retirement benefit in the standard form, assuming various
specified levels of plan compensation and various specified years of credited
service.
<TABLE>
<CAPTION>
15 Years 20 Years 25 Years 30 Years 35 Years
Average Credited Credited Credited Credited Credited
Compensation Service Service Service Service Service
<S> <C> <C> <C> <C> <C>
$25,000 $3,750 $5,000 $6,250 $7,000 $8,750
50,000 7,500 10,000 12,500 15,000 17,500
75,000 11,250 15,000 18,750 22,500 26,250
<PAGE>
100,000 15,000 20,000 25,000 30,000 35,000
150,000 22,500 30,000 37,500 45,000 52,500
</TABLE>
The following table sets forth the years of credit service (i.e., benefit
service) as of the fiscal year ended September 30, 1998, for each of the
executive officers.
<TABLE>
<CAPTION>
Credited Service
Years Months
<S> <C> <C>
Raymond S. Stolarczyk 22 0
Thomas E. Bentel 16 0
James R. Kinney 11 0
</TABLE>
Supplemental Executive Retirement Plan
The Bank also maintains a Supplemental Executive Retirement Plan ("SERP"), a
nonqualified, unfunded retirement program within the meaning of ERISA. The
SERP is intended to provide retirement benefits and preretirement death and
disability benefits to those employees named in the Summary Compensation Table.
The Bank accrued $121,100 with respect to the SERP for the fiscal year ended
September 30, 1998.
At the normal retirement age of 65 years old, the SERP is designed to provide a
20 year fixed annuity payable monthly. This amount shall represent 55% of the
average compensation of the participant as of his normal retirement date,
reduced by the actuarial equivalent of the benefit actually payable to the
participant under the Retirement Plan.
A participant who separates from service prior to the normal retirement date
shall be entitled to a benefit equal to the actuarial equivalent of the
participant's accrued benefit, determined at the time of separation. Accrued
benefit means the supplemental benefit of a participant, payable in the normal
form, multiplied by a fraction the numerator of which is the number of
completed years of participation on the date of determination and the
denominator of which is the number of his or her expected completed years of
participation projected to his or her normal retirement date. A participant
shall, at all times, be 100 percent vested in his or her accrued benefit.
If a participant dies prior to the time benefits under the SERP commence, the
amount of his preretirement death benefit shall be equal to the value of the
supplemental benefit calculated as if the participant had terminated his
employment on his or her normal retirement date. If a participant becomes
disabled prior to the normal retirement date, he or she shall be entitled to a
benefit equal to the actuarial equivalent of the participant's accrued benefit,
calculated as if such participant had terminated employment on that date.
Incentive Stock Option Plan
The Company maintains the Incentive Stock Option Plan, which provides
<PAGE>
discretionary awards to certain officers and key employees as determined by the
Human Resource Policy Committee, which administers the plan. No grants were
made under the Incentive Stock Option Plan in the fiscal year ended September
30, 1998.
The following table provides certain information with respect to the number of
shares of Common Stock represented by outstanding stock options held by the
named executive officers as of September 30, 1998. Also reported are the
values for "in-the-money" options, which amounts represent the positive spread
between the exercise price of any such existing stock options and the fiscal
year-end price of Common Stock. During fiscal year ended September 30, 1998,
Messrs. Stolarczyk, Bentel and Kinney exercised 500, 18,938 and 17,461 options
respectively.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES IN FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-The-Money Options
Acquired Options at Fiscal at Fiscal Year End
on Value Year End (#)(1) ($)(2)
Exercise Realized
Name (3) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Raymond S. Stolarczyk 500 $ 7,063 73,980 18,624 $846,146 $213,012
Thomas E. Bentel 18,938 287,024 38,670 14,402 442,288 164,723
James R. Kinney 17,461 252,093 3,779 5,309 43,222 60,722
</TABLE>
(1) Options become exercisable in five equal annual portions commencing
December 15, 1994. All options will expire ten years from the date of grant.
(2) Represents the per share market value of the Common Stock at fiscal year
end ($21.4375) minus the exercise price ($10.00) per share.
Transactions With Certain Related Persons
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA"), requires that all loans or extensions of credit to executive
officers and directors 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.
Any loans made by the Bank to its directors and officers would 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 do not involve more than the normal risk of
collectibility or present other unfavorable features. As of September 30,
1998, there were no loans outstanding to directors or executive officers.
<PAGE>
<PAGE>
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended September 30, 1998
were KPMG Peat Marwick LLP. The Company's Board of Directors has reappointed
KPMG Peat Marwick LLP to continue as independent auditors for the Company for
the fiscal year ending September 30, 1999. If the appointment is not ratified
by the Company's stockholders, the Board of Directors will reevaluate the
appointment.
Representatives of KPMG Peat Marwick LLP will be present at the Annual Meeting,
will be given an opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions from stockholders present
at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
THE INDEPENDENT AUDITORS
ADDITIONAL INFORMATION
Other Matters Which May Properly Come before the Annual Meeting
The Board of Directors knows of no business that will be presented for
consideration at the Annual Meeting other than as stated in this Proxy
Statement and the attached Notice of Annual Meeting of Stockholders. If,
however, other matters are properly brought before the Annual Meeting, it is
the intention of the proxy holders to vote the shares represented thereby on
such matters in accordance with their best judgment.
Stockholder Proposals
To be considered for inclusion in the Proxy Statement and proxy relating to the
Annual Meeting to be held in 2000, stockholder proposals must be received by
the Secretary of the Company at the address set forth on the first page of this
Proxy Statement, not later than August 28, 1999. Any such proposal will be
subject to the provisions of the Company's bylaws and 17 C.F.R.
Section 240.14a-8 of the Rules and Regulations under the Exchange Act.
<PAGE>
<PAGE>
Notice of Business to be Conducted at an Annual Meeting
Section 6 of the bylaws of the Company provides an advance notice procedure for
a stockholder to properly nominate directors or bring other business before an
annual meeting. The stockholder must give advance written notice to the
Secretary of the Company not less than 90 days before the date originally fixed
for such meeting; provided, however, that in the event that less than 100 days
notice or prior public disclosure of the date of the meeting is given or made
to stockholders, notice by the stockholder to be timely must be received not
later than the close of business on the tenth day following the date on which
the Company's notice to stockholders of the annual meeting date was mailed or
such public disclosure was made. The advance notice by stockholders must
include the stockholder's name and address, as they appear on the Company's
record of stockholders, a brief description of the proposed business, the
reason for conducting such business at the Annual Meeting, the class and number
of shares of the Company's capital stock that are beneficially owned by such
stockholder and any material interest of such stockholder in the proposed
business. In the case of nominations to the Board, certain additional
information regarding the nominee must also be provided, as set forth in
Section 6 of the bylaws. Additionally, the Company is not required to include
in its Proxy Statement and proxy relating to an annual meeting any stockholder
proposal which does not meet all of the requirements for inclusion established
under applicable state laws and the rules and regulations of the SEC in effect
at the time such proposal is received.
By Order of the Board of Directors
Judith K. Leaf
Secretary
Chicago, Illinois
December 28, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING
IN PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, YOU ARE REQUESTED TO SIGN AND PROMPTLY RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE>
