SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant: Yes.
Filed by a Party other than the Registrant: No.
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
MFB Corp.
(Name Of Registrant As Specified In Its Charter)
MFB Corp.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
(1) Title of each class of securities to which transaction
applies: N/A
(2) Aggregate number of securities to which transaction
applies: N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
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[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by
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offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of
its filing. N/A (1) Amount Previously Paid:
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(4) Date Filed:
<PAGE>
MFB CORP.
121 South Church Street
Mishawaka, Indiana 46544
(219) 255-3146
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------
To Be Held On January 16, 2001
Notice is hereby given that the Annual Meeting of Shareholders of MFB Corp.
(the "Holding Company") will be held at the McKinley Branch Office of MFB
Financial at 411 W. McKinley Avenue, Mishawaka, Indiana 46545, on Tuesday,
January 16, 2001, at 7:00 p.m., Eastern Standard Time.
The Annual Meeting will be held for the following purposes:
1. Election of Directors. Election of two directors of the Holding
Company to serve three-year terms expiring in 2004.
2. Ratification of Auditors. Ratification of the appointment of Crowe,
Chizek and Company LLP as auditors for MFB Corp. for the fiscal year
ending September 30, 2001.
3. Other Business. Such other matters as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on November 29, 2000, are
entitled to vote at the meeting or any adjournment thereof.
We urge you to read the enclosed Proxy Statement carefully so that you may
be informed about the business to come before the meeting, or any adjournment
thereof. At your earliest convenience, please sign and return the accompanying
proxy in the postage-paid envelope furnished for that purpose.
A copy of our Annual Report for the fiscal year ended September 30, 2000,
is enclosed. The Annual Report is not a part of the proxy soliciting material
enclosed with this letter.
By Order of the Board of Directors
/s/ Charles J. Viater
----------------------------------
Charles J. Viater, President and
Chief Executive Officer
Mishawaka, Indiana
December 12, 2000
IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
MFB CORP.
121 South Church Street
Mishawaka, Indiana 46544
(219) 255-3146
---------------
PROXY STATEMENT
---------------
FOR
ANNUAL MEETING OF SHAREHOLDERS
January 16, 2001
This Proxy Statement is being furnished to the holders of common stock,
without par value (the "Common Stock"), of MFB Corp. (the "Holding Company"), an
Indiana corporation, in connection with the solicitation of proxies by the Board
of Directors of the Holding Company to be voted at the Annual Meeting of
Shareholders to be held at 7:00 p.m., Eastern Standard Time, on January 16,
2001, at the McKinley Branch Office of MFB Financial at 411 W. McKinley Avenue,
Mishawaka, Indiana, and at any adjournment of such meeting. The principal asset
of the Holding Company consists of 100% of the issued and outstanding shares of
common stock, $.01 par value per share, of MFB Financial. This Proxy Statement
is expected to be mailed to the shareholders on or about December 12, 2000.
The proxy solicited hereby, if properly signed and returned to the Holding
Company and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted for each of the matters described below and, upon
the transaction of such other business as may properly come before the meeting,
in accordance with the best judgment of the persons appointed as proxies.
Any shareholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Secretary of the Holding Company
written notice thereof (M. Gilbert Eberhart, 121 South Church Street, Mishawaka,
Indiana 46544), (ii) submitting a duly executed proxy bearing a later date, or
(iii) by appearing at the Annual Meeting and giving the Secretary notice of his
or her intention to vote in person. Proxies solicited hereby may be exercised
only at the Annual Meeting and any adjournment thereof and will not be used for
any other meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only shareholders of record at the close of business on November 29, 2000
("Voting Record Date"), will be entitled to vote at the Annual Meeting. On the
Voting Record Date, there were 1,346,489 shares of the Common Stock issued and
outstanding, and the Holding Company had no other class of equity securities
outstanding. Each share of Common Stock is entitled to one vote at the Annual
Meeting on all matters properly presented at the Annual Meeting. The holders of
over 50% of the outstanding shares of Common Stock as of the Voting Record Date
must be present in person or by proxy at the Annual Meeting to constitute a
quorum. In determining whether a quorum is present, shareholders who abstain,
cast broker non-votes, or withhold authority to vote on one or more director
nominees will be deemed present at the Annual Meeting.
The following table sets forth certain information regarding the beneficial
ownership at the Common Stock as of November 29, 2000, by each person who is
known by the Holding Company to own beneficially 5% or more of the Common Stock.
Unless otherwise indicated, the named beneficial owner has sole voting and
dispositive power with respect to the shares.
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Name and Address of of Common Stock Percent of
Beneficial Owner (1) Beneficially Owned Class (2)
-------------------- ------------------ -----------
<S> <C> <C>
First Manhattan Co., General Partner 93,883 (3) 7.0%
First Save Associates, L.P. and
Second First Save Associates, L.P. (3)
437 Madison Avenue
New York, New York 10022
Home Federal Savings Bank, Trustee 125,720 (4) 9.3%
501 Washington Street
Columbus, Indiana 47201
</TABLE>
(1) The information in this chart is based on Schedule 13D and 13G reports
filed by the above-listed persons with the Securities and Exchange
Commission and subsequent communications from such persons. It does
not reflect any changes in those shareholdings which may have occurred
since the date of such filings or communications.
(2) Based upon 1,346,489 shares of Common Stock outstanding which does not
include options for 202,150 shares of Common Stock granted to certain
directors, officers and employees of the Holding Company and MFB
Financial.
(3) First Manhattan Co. is a securities broker and dealer and investment
advisor. First Manhattan Co. is the general partner of each of the
limited partnerships that own these shares. First Manhattan Co. has
sole voting and dispositive power with respect to the shares listed
above.
(4) These shares are held by the Trustee of the Holding Company's Employee
Stock Ownership Plan. The employees participating in that Plan are
entitled to instruct the Trustee how to vote shares held in their
accounts under the Plan. Unallocated shares held in a suspense account
under the Plan are required under the Plan terms to be voted by the
Trustee in the same proportion as allocated shares are voted.
PROPOSAL I -- ELECTION OF DIRECTORS
The Board of Directors currently consists of eight members, but will
consist of seven members at the conclusion of the Annual Meeting of
Shareholders. Marian K. Torian, currently a director of the Holding Company,
will retire from the Board at the conclusion of the meeting. The By-Laws provide
that the Board of Directors is to be divided into three classes as nearly equal
in number as possible. The members of each class are to be elected for a term of
three years and until their successors are elected and qualified. One class of
directors is to be elected annually. Directors must have their principal
domicile in St. Joseph County, Indiana, must have had a loan or deposit
relationship with MFB Financial for a continuous period of 12 months prior to
their nomination to the board, and non-employee directors must have served as a
member of a civic or community organization based in St. Joseph County, Indiana
for at least a continuous period of 12 months during the five years prior to
their nomination to the Board. The nominees for director this year are Christine
A. Lauber and Reginald H. Wagle, each of whom is a current director of the
Holding Company. If elected by the shareholders at the Annual Meeting, the terms
of Ms. Lauber and Mr. Wagle will expire in 2004.
Unless otherwise directed, each proxy executed and returned by a
shareholder will be voted for the election of the nominees listed below. If any
person named as a nominee should be unable or unwilling to stand for election at
the time of the Annual Meeting, the proxy holders will nominate and vote for a
replacement nominee recommended by the Board of Directors. At this time, the
Board of Directors knows of no reason why the nominees listed below may not be
able to serve as directors if elected.
The following table sets forth certain information regarding the nominees
for the position of director of the Holding Company, including the number and
percent of shares of Common Stock beneficially owned by such persons as of the
Voting Record Date. Unless otherwise indicated, each nominee has sole investment
and/or voting power with respect to the shares shown as beneficially owned by
him. No nominee for director is related to any other nominee for director or
executive officer of the Holding Company by blood, marriage, or adoption, and
there are no arrangements or understandings between any nominee and any other
person pursuant to which such nominee was selected. The table also sets forth
the number of shares of Holding Company Common Stock beneficially owned by all
directors and executive officers of the Holding Company as a group.
<PAGE>
<TABLE>
<CAPTION>
Director Common Stock
Director of of the Beneficially
Expiration of MFB Holding Owned as of
Term as Financial Company November 29, Percentage
Name Director Since Since 2000 (1) of Class
------------------------- ------------- ----------- -------- ------------ ----------
Director Nominees:
<S> <C> <C> <C> <C> <C>
Christine A. Lauber 2004 1998 1998 5,000(2) .4%
Reginald H. Wagle 2004 1982 1994 34,100(3) 2.5%
Directors:
----------
M. Gilbert Eberhart, DDS 2003 1979 1994 41,900(4) 3.1%
Thomas F. Hums 2002 1961 1994 30,748 2.3%
Jonathan E. Kintner, O.D. 2003 1977 1994 39,440(5) 2.9%
Michael J. Marien 2002 1987 1994 38,180(4) 2.8%
Marian K. Torian 2001 1975 1994 24,850(6) 1.8%
Charles J. Viater 2002 1995 1995 75,889(7) 5.4%
Executive Officers:
-------------------
Donald R. Kyle 3,559(8) .3%
All directors and executive officers
as a group 10) 317,540(9) 21.6%
</TABLE>
(1) Based upon information furnished by the respective director nominees. Under
applicable regulations, shares are deemed to be beneficially owned by a
person if he or she directly or indirectly has or shares the power to vote
or dispose of the shares, whether or not he or she has any economic power
with respect to the shares. Includes shares beneficially owned by members
of the immediate families of the director nominees residing in their homes.
(2) Includes 4,800 shares subject to a stock option granted under the MFB Corp.
1997 Stock Option Plan (the "1997 Option Plan"). Does not include 7,200
shares subject to a stock option granted under the 1997 Option Plan which
is not exercisable within 60 days of the Voting Record Date.
(3) Includes 19,200 shares held jointly by Mr. Wagle and his spouse and 12,000
shares subject to a stock option granted under the MFB Corp. Stock Option
Plan (the "Option Plan").
(4) Of these shares, 12,000 shares are subject to a stock option granted under
the Stock Option Plan.
(5) Of these shares, 11,400 shares are subject to a stock option granted under
the Stock Option Plan.
(6) Of these shares, 11,000 shares are subject to a stock option granted under
the Stock Option Plan.
(7) Includes 5,995 whole shares allocated to Mr. Viater under the MFB Financial
Employee Stock Ownership Plan and Trust (the "ESOP") as of September 30,
1999, 1,512 whole shares allocated to his account under the MFB Financial
Employees' Savings & Profit Sharing Plan and Trust (the "401(k) Plan") as
of October 31, 2000, and 46,882 shares subject to stock options granted
under the Option Plan and the 1997 Option Plan. Does not include 25,118
shares subject to stock options granted under the Option Plan and the 1997
Option Plan which are not exercisable within 60 days of the Voting Record
Date.
(8) Includes 2,500 shares subject to stock options granted under the 1997
Option Plan and 59 shares allocated to Mr. Kyle under the 401(k) Plan.
(9) The total of such shares includes 122,582 shares subject to stock options
granted under the Option Plan and the 1997 Option Plan, 10,446 shares
allocated to such persons under the ESOP, and 2,173 shares allocated to
such persons under the 401(k) Plan.
Presented below is certain information concerning the directors and
director nominees of the Holding Company:
M. Gilbert Eberhart, DDS (age 66) has served as Secretary of MFB Financial
since 1987 and of the Holding Company since its inception. He is also a dentist
based in Mishawaka.
Thomas F. Hums (age 67) served as President and Chief Executive Officer of
MFB Financial from 1972 until September 1995 and as President and Chief
Executive Officer of the Holding Company from its inception until September,
1995. He is the current Chairman of the Holding Company and of MFB Financial.
Jonathan E. Kintner, O.D. (age 57) is an optometrist based in Mishawaka.
Christine A. Lauber (age 55) has served as a certified public accountant in
private practice in South Bend, Indiana for more than the last five years. She
also serves as President of Automated Information Management, Inc. (payroll
management services, South Bend, Indiana).
Michael J. Marien (age 52) has served as an Account Manager for ITW/Signode
Corp., a division of Illinois Tool Works (packaging of steel industry products
and services, Glenview, Illinois), for more than the past five years.
Marian K. Torian (age 79) is a past Chairman of the Holding Company and of
MFB Financial. She is a retired teacher from the School City of Mishawaka.
Charles J. Viater (age 46) has served as the President and Chief Executive
Officer of the Holding Company and of MFB Financial since September, 1995. He
previously served as Executive Vice President of Amity Federal Bank and Chief
Financial Officer of Amity Bancshares, Inc. (Tinley Park, Illinois) beginning in
December, 1990.
Reginald H. Wagle (age 58) has served as Vice President of Memorial Health
Foundation since 1992. Until 1992, he was a free-lance political consultant and
until 1991, he also served as District Director for the Office of United States
Representative John P. Hiler, Third Congressional District of Indiana.
THE DIRECTORS WILL BE ELECTED UPON RECEIPT OF A PLURALITY OF VOTES CAST AT
THE ANNUAL SHAREHOLDERS MEETING. PLURALITY MEANS THAT INDIVIDUALS WHO RECEIVE
THE LARGEST NUMBER OF VOTES CAST ARE ELECTED UP TO THE MAXIMUM NUMBER OF
DIRECTORS TO BE CHOSEN AT THE MEETING. ABSTENTIONS, BROKER NON-VOTES, AND
INSTRUCTIONS ON THE ACCOMPANYING PROXY TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR
MORE OF THE NOMINEES WILL RESULT IN THE RESPECTIVE NOMINEE RECEIVING FEWER
VOTES. HOWEVER, THE NUMBER OF VOTES OTHERWISE RECEIVED BY THE NOMINEE WILL NOT
BE REDUCED BY SUCH ACTION.
The Board of Directors and its Committees
During the fiscal year ended September 30, 2000, the Board of Directors of
the Holding Company met or acted by written consent twelve times. No director
attended fewer than 75% of the aggregate total number of meetings during the
last fiscal year of the Board of Directors of the Holding Company held while he
served as director and of meetings of committees which he served during that
fiscal year. The Board of Directors of the Holding Company has an Audit
Committee and a Stock Compensation Committee. All committee members are
appointed by the Board of Directors.
The Audit Committee recommends the appointment of the Holding Company's
independent accountants, and meets with them to outline the scope and review the
results of such audit. The members of the Audit Committee are Christine A.
Lauber, Thomas F. Hums and Reginald H. Wagle. The Audit Committee held three
meetings during the fiscal year ended September 30, 2000.
The Stock Compensation Committee administers the Option Plan and the RRPs.
The members of that Committee are Mrs. Torian and Messrs. Eberhart, Kintner,
Marien and Wagle. It held one meeting during the fiscal year ended September 30,
2000.
The Board of Directors nominated the slate of directors set forth in the
Proxy Statement. Although the Board of Directors of the Holding Company will
consider nominees recommended by shareholders, it has not actively solicited
recommendations for nominees from shareholders nor has it established procedures
for this purpose. Article III, Section 12 of the Holding Company's By-Laws
provides that shareholders entitled to vote for the election of directors may
name nominees for election to the Board of Directors but there are certain
requirements that must be satisfied in order to do so. Among other things,
written notice of a proposed nomination must be received by the Secretary of the
Holding Company not less than 120 days prior to the Annual Meeting; provided,
however, that in the event that less than 130 days' notice or public disclosure
of the date of the meeting is given or made to shareholders (which notice or
public disclosure includes the date of the Annual Meeting specified in the
Holding Company's By-Laws if the Annual Meeting is held on such date), notice
must be received not later than the close of business on the 10th day following
the day on which such notice of the date of the meeting was mailed or such
public disclosure was made.
Audit Committee Report, Charter, and Independence
Audit Committee Report. The Audit Committee reports as follows with respect
to the audit of the Holding Company's financial statements for the fiscal year
ended September 30, 2000, included in the Holding Company's Shareholder Annual
Report accompanying this Proxy Statement ("2000 Audited Financial Statements"):
The Committee has reviewed and discussed the Holding Company's 2000 Audited
Financial Statements with the Company's management.
The Committee has discussed with its independent auditors (Crowe, Chizek
and Company LLP) the matters required to be discussed by Statement on Auditing
Standards 61, which include, among other items, matters related to the conduct
of the audit of the Holding Company's financial statements.
The Committee has received written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No. 1
(which relates to the auditor's independence from the Holding Company and its
related entities) and has discussed with the auditors the auditors' independence
from the Holding Company.
Based on review and discussions of the Holding Company's 2000 Audited
Financial Statements with management and discussions with the independent
auditors, the Audit Committee recommended to the Board of Directors that the
Holding Company's 2000 Audited Financial Statements be included in the Holding
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
2000.
This Report is respectfully submitted by the Audit Committee of the Holding
Company's Board of Directors.
Audit Committee Members
-----------------------
Christine A. Lauber
Thomas F. Hums
Reginald H. Wagle
Audit Committee Charter. The Board of Directors has adopted a written
charter for the Audit Committee, a copy of which is attached as Exhibit A. The
Board of Directors reviews and approves changes to the Audit Committee Charter
annually.
Independence of Audit Committee Members. The Holding Company's Audit
Committee is comprised of Messrs. Thomas F. Hums, Reginald H. Wagle and Ms.
Christine A. Lauber. Each of these members meets the requirements for
independence set forth in the Listing Standards of the National Association of
Securities Dealers.
Management Remuneration and Related Transactions
Joint Report of the Compensation Committee and the Stock Compensation
Committee
The Board of Directors of MFB Financial reviews payroll costs, establishes
policies and objectives relating to compensation, and is advised of aggregate
budgeted amounts for the salaries of all employees, including executive
officers, which (with the exception of the salary and bonus of the President and
Chief Executive Officer) are determined by the Holding Company's President and
Chief Executive Officer or by Departmental managers. All decisions relating to
salary of the Holding Company's Named Executive Officer are approved by the full
Board of Directors in an executive session at which the Named Executive Officer
is not present. In fiscal 2000, there were no modifications made by the full
Board of Directors to the President's actions and recommendations concerning
budgeted amounts for compensation. In approving the salaries of executive
officers other than his own, Mr. Viater has access to and reviews compensation
data for comparable financial institutions in the Midwest. Moreover, from time
to time Mr. Viater reviews information provided to him by independent
compensation consultants in making his decisions.
The Holding Company's Stock Compensation Committee administers the Holding
Company's stock option plans. Its members are Mrs. Torian and Messrs. Eberhart,
Kintner, Marien and Wagle.
The objectives of the Board of Directors and the Stock Compensation
Committee with respect to executive compensation are the following:
(1) provide compensation opportunities comparable to those offered by other
similarly situated financial institutions in order to be able to
attract and retain talented executives who are critical to the Holding
Company's long-term success;
(2) reward executive officers based upon their ability to achieve
short-term and long-term strategic goals and objectives and to enhance
shareholder value; and
(3) align the interests of the executive officers with the long-term
interests of shareholders by granting stock options which will become
more valuable to the executives as the value of the Holding Company's
shares increases.
At present, the Holding Company's executive compensation program is
comprised of base salary, annual incentive bonuses and long-term incentive
bonuses in the form of stock options. Reasonable base salaries are awarded based
on salaries paid by comparable financial institutions, particularly in the
Midwest, and individual performance.
Base Salary. Base salary levels of the Holding Company's executive officers
are intended to be comparable to those offered by similar financial institutions
in the Midwest. In determining base salaries, the Holding Company's President
and Chief Executive Officer also takes into account individual experience and
performance.
Mr. Charles J. Viater was the Holding Company's Chief Executive Officer
throughout fiscal 2000. Mr. Viater's salary was increased from $147,693 in
fiscal 1999 to $151,923 in fiscal 2000. In recommending this increase, the Board
of Directors of the Holding Company, excluding Mr. Viater, considered the
Holding Company's financial performance for the prior fiscal year.
Stock Options. The Holding Company's stock option plans serve as long-term
incentive plans for executive officers and other key employees. These plans
align executive and shareholder long-term interests by creating a strong and
direct link between executive pay and shareholder return, and enable executives
to acquire a significant ownership position in the Holding Company's Common
Stock. Stock options are granted at the prevailing market price and will only
have a value to the executives if the stock price increases. The Stock
Compensation Committee determines the number of option grants to be made to
executive officers based on the practices of comparable financial institutions
as well as the executive's level of responsibility and contributions to the
Holding Company.
Mr. Viater did not receive any grant of stock options during fiscal year
2000. See "Management Remuneration and Related Transactions--Stock Options."
Finally, the Board of Directors notes that Section 162(m) of the Internal
Revenue Code, in certain circumstances, limits to $1 million the deductibility
of compensation, including stock-based compensation, paid to top executives by
public companies. None of the compensation paid to the executive officers named
in the compensation table below exceeded the threshold for deductibility under
section 162(m).
The Board of Directors and the Stock Compensation Committee believe that
linking executive compensation to corporate performance results in a better
alignment of compensation with corporate goals and the interests of the Holding
Company's shareholders. As performance goals are met or exceeded, most probably
resulting in increased value to shareholders, executives are rewarded
commensurately. The Committee members believe that compensation levels during
fiscal 2000 for executives and for the chief executive officer adequately
reflect the Holding Company's compensation goals and policies.
Board Members Stock Compensation Committee Members
--------------------------- ------------------------------------
M. Gilbert Eberhart, DDS M. Gilbert Eberhart, DDS
Thomas F. Hums Jonathan E. Kintner, O.D.
Jonathan E. Kintner, O.D. Michael J. Marien
Christine A. Lauber Marian K. Torian
Michael J. Marien Reginald H. Wagle
Marian K. Torian
Charles J. Viater
Reginald H. Wagle
Management Remuneration and Related Transactions
Remuneration of Named Executive Officer
During the fiscal year ended September 30, 2000, no cash compensation was
paid directly by the Holding Company to any of its executive officers. Each of
such officers was compensated by MFB Financial.
The following table sets forth information as to annual, long-term and
other compensation for services in all capacities to the Holding Company and its
subsidiaries for the last three fiscal years of the person who served as chief
executive officer of the Holding Company during the fiscal year ended September
30, 2000 (the "Named Executive Officer"). There were no other executive officers
of the Holding Company who earned over $100,000 in salary and bonuses during
that fiscal year.
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
------------------- ----------------------
Other All
Annual Restricted Securities Other
Name and Fiscal Compen- Stock Underlying Compen-
Principal Position Year Salary ($)(1) Bonus ($) sation($)(2) Awards($) Options(#) sation($)(3)
---------------------------------- ------------- --------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles J. Viater, 2000 $165,673 50,000 --- --- --- $21,191
President and Director 1999 $161,443 42,000 --- --- 12,000(4) $26,062
1998 $151,042 32,500 --- --- 30,000(5) $25,193
Donald R. Kyle 2000 $125,000 --- --- --- 7,500(6) $ 865
Executive Vice President
and Chief Operating
Officer
</TABLE>
(1) Includes fees received for service on MFB Financial's Board of Directors.
(2) The Named Executive Officer of the Holding Company receive certain
perquisites, but the incremental cost of providing such perquisites does
not exceed the lesser of $50,000 or 10% of the officer's salary and bonus.
(3) Includes MFB Financial's contributions to the MFB Financial Employee Stock
Ownership Plan and Trust allocable to the Named Executive Officer and MFB
Financial's contributions on behalf of the Named Executive Officer to the
401(k) Plan.
(4) These options vest at the rate of 441 shares on November 13, 1999, 441
shares on November 13, 2000, 3,232 shares on November 13, 2001, 4,651
shares on November 13, 2002, and 3,235 shares on November 13, 2003.
(5) These options vest at the rate of 20% per year commencing January 20, 1999.
(6) These options vest at the rate of 33-1/3% per year commencing July 20, 2000.
Stock Options
The following table includes the number of shares covered by stock options
held by the Named Executive Officer as of September 30, 2000. Also reported are
the values for "in-the-money" options (options whose exercise price is lower
than the market value of the shares at fiscal year end) which represent the
spread between the exercise price of any such existing stock options and the
fiscal year-end market price of the stock. The Named Executive Officer did not
receive or exercise any stock options during the fiscal year.
<TABLE>
<CAPTION>
Outstanding Stock Option Grants and Value Realized As Of 9/30/00
----------------------------------------------------------------
Number of Unexercised Value of Unexercised In-the-Money
Options at Fiscal Year End Options at Fiscal Year End (1)
Name Exercisable Unexercisable(2) Exercisable Unexercisable(2)
---- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
Charles J. Viater 40,441 31,559 $68,000 $4,500
</TABLE>
(1) Amounts reflecting gains on outstanding options are based on the average
between the high and low prices for the shares on September 30, 2000, which
was $17.50 per share.
(2) The shares represented could not be acquired by the Named Executive Officer
as of September 30, 2000.
Employment Contracts
MFB Financial has entered into a three-year employment contract with Mr.
Viater, the Holding Company's President and Chief Executive Officer. The
contract extends monthly for an additional month to maintain its three-year term
if the Board of Directors of MFB Financial determines to so extend it, unless
notice not to extend is properly given by either party to the contract. Mr.
Viater receives salary under the contract equal to his current salary subject to
increases approved by the Board of Directors. The contract also provides, among
other things, for in other fringe benefits and benefit plans available to MFB
Financial's employees. Mr. Viater may terminate his employment upon sixty days'
written notice to MFB Financial. MFB Financial may discharge him for cause (as
defined in the contract) at any time or in certain events specified by OTS
regulations. If MFB Financial terminates Mr. Viater's employment for other than
cause or if Mr. Viater terminates his own employment for cause (as defined in
the contract), he will receive his base compensation under the contract for an
additional three years if the termination follows a change of control of the
Holding Company (as defined below). In addition, during such period, he will
continue to participate in MFB Financial's group insurance plans or receive
comparable benefits. Moreover, within a period of three months after such
termination following a change of control, Mr. Viater will have the right to
cause MFB Financial to purchase any stock options they hold for a price equal to
the fair market value (as defined in the contact) of the shares subject to such
options minus their option price. Mr. Viater's employment may not be terminated
by MFB Financial without cause. If the payments provided for in the contract,
together with any other payments made to Mr. Viater by MFB Financial, are deemed
to be payments in violation of the "golden parachute" rules of the Code, such
payments will be reduced to the largest amount which would not cause MFB
Financial to lose a tax deduction for such payments under those rules. As of the
date hereof, the cash compensation which would be paid under the contracts if
the three-year payment obligation were triggered under the contracts would be
$690,000 to Mr. Viater. For purposes of this employment contract, a change of
control of the Holding Company is generally an acquisition of control, as
defined in regulations issued under the Change in Bank Control Act and the
Savings and Loan Holding Company Act.
The employment contracts provide MFB Financial protection of its
confidential business information and protection from competition by Mr. Viater
should he voluntarily terminate his employment without cause or be terminated by
MFB Financial for cause. Similar contracts have been entered into with respect
to five other officers of the Holding Company, including Donald R. Kyle, MFB
Financial's Executive Vice President and Chief Operating Officer.
Compensation of Directors
All directors of MFB Financial receive an annual fee of $4,000, plus a fee
of $425 per Board meeting attended. Members of Board Committees, who are not
employees of MFB Financial, are paid a separate fee of $30 per meeting. As
Chairman of the Board of MFB Financial, Mr. Hums receives additional directors'
fees of $2,600 per year.
Directors of the Holding Company are not currently paid directors' fees.
The Holding Company may, if it believes it is necessary to attract qualified
directors or otherwise beneficial to the Holding Company, adopt a policy of
paying directors' fees.
Pension Plan
MFB Financial's full-time employees are included in the Holding Company's
pension plan, a noncontributory multiple employer comprehensive pension plan
(the "Pension Plan"). Separate actuarial valuations are not made for individual
employer members of the Pension Plan. MFB Financial's employees are eligible to
participate in the plan once they have completed one year of service for MFB
Financial and attained age 21, if they complete 1,000 hours of service in a
calendar year. An employee's pension benefits are 100% vested after five years
of service.
The Pension Plan provides for monthly or lump sum retirement benefits
determined as a percentage of the employee's average salary (for his highest
five consecutive years of salary) times his years of service. Salary covered
includes total taxable compensation as reported on IRS Form W-2, which includes
the salary and bonuses set forth in the table below. Early retirement,
disability, and death benefits are also payable under the Pension Plan,
depending upon the participant's age and years of service. MFB Financial
expensed $4,400 for the Pension Plan during the fiscal year ended September 30,
2000.
The estimated base annual retirement benefits presented on a straight-line
basis payable at normal retirement age (65) under the Pension Plan to persons in
specified salary and years of service classifications are as follows (benefits
noted in the table are not subject to any offset).
<PAGE>
<TABLE>
<CAPTION>
Years of Service
-------------------------------------------------------------------------------------------
Highest 5-Year
Compensation 15 20 25 30 35 40 50
-------------- -------- -------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000 $30,000 $40,000 $ 50,000 $ 60,000 $ 70,000 $ 80,000 $100,000
$120,000 $36,000 $48,000 $ 60,000 $ 72,000 $ 84,000 $ 96,000 $120,000
$140,000 $42,000 $56,000 $ 70,000 $ 84,000 $ 98,000 $112,000 $140,000
$160,000 $48,000 $64,000 $ 80,000 $ 96,000 $112,000 $128,000 $160,000
$180,000 $54,000 $72,000 $ 90,000 $108,000 $126,000 $144,000 $180,000
$200,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $200,000
$220,000 $66,000 $88,000 $110,000 $132,000 $154,000 $176,000 $220,000
</TABLE>
Benefits are currently subject to maximum Code limitations of $135,000 per
year. The years of service credited to Mr. Viater under the Pension Plan as of
September 30, 2000, were twelve.
Performance Graph
The following graph shows the performance of the Corporation's Common Stock
since September 30, 1995, in comparison to the NASDAQ Stock market - U.S. Index
and the NASDAQ Bank Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG MFB. CORP., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ BANK INDEX
[Graph Omitted]
9/95 9/96 9/97 9/98 9/99 9/00
------ ------ ------ ------ ------ ------
MFB Corp. 100.00 118.68 149.70 133.76 130.97 117.69
NASDAQ Stock Market (U.S.) 100.00 118.68 162.92 165.50 271.00 358.96
NASDAQ Bank 100.00 127.65 212.64 210.94 224.58 240.95
*$100 INVESTED ON 9/30/95 IN STOCK OR INDEX - INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING SEPTEMBER 30.
Transactions With Certain Related Persons
MFB Financial has followed a policy of offering to its directors and
executive officers real estate mortgage loans secured by their principal
residence and other loans. These loans are made in the ordinary course of
business with the same collateral, interest rates and underwriting criteria as
those of comparable transactions prevailing at the time and do not involve more
than the normal risk of collectibility or present other unfavorable features.
Compensation Committee Interlocks and Insider Participation
All directors of MFB Financial supervise budget decisions concerning the
compensation of all employees, including executive officers. The Holding
Company's President and Chief Executive Officer sets salaries and bonuses of
executive officers other than his own, subject to the review of the Board of
Directors. Departmental managers set the compensation of non-officer employees.
The Board of Directors of MFB Financial sets the salary and bonus of Charles J.
Viater, the President and Chief Executive Officer of the Holding Company, in an
executive session at which Mr. Viater is not present. Mr. Viater is an officer
of the Holding Company. Mr. Hums is a former officer of the Holding Company. All
other directors of MFB Financial are outside directors of the Holding Company.
All members of the Stock Compensation Committee are outside directors of the
Holding Company.
PROPOSAL II -- RATIFICATION OF AUDITORS
The Board of Directors proposes for the ratification of the shareholders at
the Annual Meeting the appointment of Crowe, Chizek and Company LLP, certified
public accountants, as independent auditors for the fiscal year ended September
30, 2001. Crowe, Chizek and Company LLP has served as auditors for MFB Financial
since 1977. A representative of Crowe, Chizek and Company LLP will be present at
the Annual Meeting with the opportunity to make a statement if he so desires. He
will also be available to respond to any appropriate questions shareholders may
have.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended (the
"1934 Act"), requires that the Holding Company's officers and directors and
persons who own more than 10% of the Holding Company's Common Stock file reports
of ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC"). Officers, directors and greater than 10% shareholders
are required by SEC regulations to furnish the Holding Company with copies of
all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by it,
and/or written representations from certain reporting persons that no Forms 5
were required for those persons, the Holding Company believes that for the
fiscal year ended September 30, 2000, all filing requirements applicable to its
officers, directors and greater than 10% beneficial owners with respect to
Section 16(a) of the 1934 Act were satisfied in a timely manner.
SHAREHOLDER PROPOSALS
Any proposal which a shareholder wishes to have presented at the next
Annual Meeting of the Holding Company and included in the Holding Company's
proxy statement, must be received at the main office of the Holding Company no
later than 120 days in advance of December 12, 2001. Any such proposal should be
sent to the attention of the Secretary of the Holding Company at 121 South
Church Street, Mishawaka, Indiana, 46544.
OTHER MATTERS
Management is not aware of any business to come before the Annual Meeting
other than those matters described in the Proxy Statement. However, if any other
matters should properly come before the Annual Meeting, it is intended that the
proxies solicited hereby will be voted with respect to those other matters in
accordance with the judgment of the persons voting the proxies.
The cost of solicitation of proxies will be borne by the Holding Company.
The Holding Company will reimburse brokerage firms and other custodians,
nominees and fiduciaries for reasonable expenses incurred by them in sending
proxy material to the beneficial owners of the Common Stock. In addition to
solicitation by mail, directors, officers, and employees of the Holding Company
may solicit proxies personally or by telephone without additional compensation.
Each shareholder is urged to complete, date and sign the proxy and return
it promptly in the enclosed envelope.
By Order of the Board of Directors
/s/ Charles J. Viater
----------------------------------
Charles J. Viater, President
December 12, 2000
<PAGE>
Exhibit A
AUDIT COMMITTEE CHARTER
Organization
There shall be a committee of the board of directors to be known as the
audit committee. The audit committee shall be composed of directors who are
independent of the management of the corporation and are free of any
relationship that, in the opinion of the board of directors, would interfere
with their exercise of independent judgment as a committee member. Each member
shall be generally knowledgeable in finance and auditing matters and at least
one member shall have accounting or related financial management expertise.
Statement of Policy
The audit committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the corporation, and the quality and integrity of the financial reports of the
corporation. In so doing, it is the responsibility of the audit committee to
maintain free and open means of communication between the directors, the
independent auditors, the internal audit function, and the financial management
of the corporation.
Responsibilities
In carrying out its responsibilities, the audit committee believes its
policies and procedures should remain flexible in order to best react to
changing conditions and to ensure to the directors and shareholders that the
corporate accounting and reporting practices are in accordance with all
requirements and are of the highest quality. This charter will be reviewed
annually and updated as necessary.
In carrying out these responsibilities, the audit committee will:
o Oversee all aspects of the corporation's relationship with the
independent auditors of the corporation's financial statements.
o Select the independent auditors and determine the scope of work
performed and procedures utilized.
o Review with auditors and management of the corporation the conclusion
of any audit including any comments or recommendations of the
independent auditors.
o Review financial statements contained in the annual report to
shareholders with management and independent auditors prior to their
release.
o Review the quarterly release of financial information with independent
auditors and management. o Oversee the adequacy and effectiveness of
the accounting and financial controls of the corporation. o Review
accounting and financial human resources as necessary.
o Elicit recommendations for improvement from independent auditors,
internal auditors, financial management and regulators. o Investigate
any matter brought to its attention within the scope of its duties,
with the power to retain outside counsel for this purpose if, in its
judgement, that is appropriate. o Oversee the adequacy and
effectiveness of the internal audit function. o Review the
independence and authority of its reporting obligations.
o Review audit plans for the coming year and the coordination of such
plans with the independent auditors. o Receive and review progress
reports and a summary of findings from completed internal audit
activities. o Meet with internal auditors to discuss comments and
recommendations.
o Submit the minutes of all meetings of the audit committee to the board
of directors.
o Perform such other functions as assigned by law, the company's charter
or bylaws, or the board of directors.
<PAGE>
The committee shall meet at least four times per year or more frequently as
circumstances require. The committee may ask members of management or others to
attend the meeting and provide pertinent information as necessary. The
membership of the audit committee shall consist of at least three independent
members of the board of directors who shall serve at the pleasure of the board
of directors. Audit committee members and the committee chairman shall be
designated by the full board of directors. The duties and responsibilities of a
member of the audit committee are in addition to those duties set out for a
member of the board of directors.
Authority Respecting Independent Auditors
The committee has the following specific authority respecting the
independent auditors:
o In consultation with management, to direct the engagement or dismissal
of the independent auditors or to refer the engagement or dismissal of
the independent auditors for action by the board of directors, with or
without an affirmative or negative recommendation. The corporation
shall not engage or dismiss its independent auditors without the action
of the audit committee or the board of directors.
o To direct the independent auditors to meet with the audit committee or
the board of directors from time to time, separately or in the presence
of management or others, to discuss the committee's responsibilities or
to prepare and submit reports to the committee with respect to the
committee's responsibilities.
o To require the independent auditors to report to the audit committee on
matters that may be deemed to affect the independence of the
independent auditors, including any management consulting services
provided, or proposed to be provided, by the independent auditors for
the corporation or any of its affiliates and the fees paid or proposed
to be paid for such services; to assess any effect of any of the
forgoing on the independence of the independent auditors and the
appearance of propriety of any of the forgoing and to direct management
to take, or recommend that the board of directors of the corporation
take, action in respect of such matters.
o To require the independent auditors to provide the audit committee a
formal written statement delineating all relationships between the
auditor and the corporation, consistent with Independence Standards
Board Standard 1.
o To recommend or decline to recommend that the board of directors
nominate the independent auditors for shareholder approval in any proxy
statement for the corporation's annual meeting of shareholders.
o To take action to resolve any disagreement respecting accounting
principles, the implementation or application of such principles or
other committee responsibilities between management and the independent
auditors, or to refer such matter to the board of directors.
Limitation
Nothing in this charter is intended to alter in any way the standard of
conduct that applies to any of the directors of the corporation under the
Indiana Business Corporation Law (the "Act"), as amended, and this charter does
not impose, nor shall it be interpreted to impose any duty on any director
greater than, or in addition to, the duties or standard established by the Act.
<PAGE>
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE MFB CORP.
ANNUAL MEETING OF SHAREHOLDERS
JANUARY 16, 2001
The undersigned hereby appoints Michael J. Portolese and Timothy C. Boenne,
with full powers of substitution, to act as attorneys and proxies for the
undersigned to vote all shares of capital stock of MFB Corp. which the
undersigned is entitled to vote at the Annual Meeting of Shareholders to be held
at the McKinley Branch Office, 411 W. McKinley Avenue, Mishawaka, Indiana, on
Tuesday, January 16, 2001, at 7:00 P.M., and at any and all adjournments
thereof, as follows:
For With- For All
hold Except
1. The election as directors of [ ] [ ] [ ]
Christine A. Lauber and
Reginald H. Wagle
(except as marked to the contrary below).
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
-------------------------------------------------------------------------------
For Against Abstain
2. Ratification of the appointment of [ ] [ ] [ ]
Crowe Chizek & Co. as audi-
tors for the fiscal year ending
September 30, 2001.
The Board of Directors recommends a vote "FOR" each of the listed
propositions.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
This proxy may be revoked at any time prior to the voting thereof.
The undersigned acknowledges receipt from MFB Corp., prior to the execution
of this proxy, of a Notice of the Meeting, a Proxy Statement and an Annual
Report to Shareholders.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED
IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
-------------------------------------------------------------------------------
Please be sure to sign and Date date this Proxy in the box below.
-------------------------------------------------------------------------------
Shareholder sign above Co-holder (if any) sign
above
-------------------------------------------------------------------------------
<PAGE>
^ Detach above card, sign, date and mail in postage paid envelope provided. ^
MFB CORP.
--------------------------------------------------------------------------------
Please sign as your name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
shares are held jointly, each holder should sign.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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