SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
FSF FINANCIAL CORP.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[FSF LETTERHEAD]
December 11, 1998
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of FSF Financial
Corp., we cordially invite you to attend the Annual Meeting of Stockholders to
be held at the Victorian Inn 1000 Highway 7 West, Hutchinson, Minnesota 55350 on
January 19, 1999, at 8:30 a.m. The attached Notice of Annual Meeting and Proxy
Statement describe the formal business to be transacted at the Meeting. During
the Meeting, we will also report on the operations of the Company. Directors and
officers of the Company, as well as representatives of Bertram Cooper & Co.,
LLP, independent accountants, will be present to respond to any questions
stockholders may have.
Whether or not you plan to attend the Meeting, please sign and date the
enclosed form of proxy and return it in the accompanying postage-paid return
envelope as promptly as possible. This will not prevent you from voting in
person at the Meeting, but will assure that your vote is counted if you are
unable to attend the Meeting. YOUR VOTE IS VERY IMPORTANT.
Sincerely,
/s/George B. Loban
---------------------------------
George B. Loban
President
/s/Donald A. Glas
---------------------------------
Donald A. Glas
Chief Executive Officer
<PAGE>
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FSF FINANCIAL CORP.
201 MAIN STREET SOUTH
HUTCHINSON, MINNESOTA 55350
(320) 234-4500
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on January 19, 1999
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of FSF Financial Corp. (the "Company"), will be held at the Company's
office at the Victorian Inn, 1000 Highway 7 West, Hutchinson, Minnesota 55350 on
Tuesday, January 19, 1999, at 8:30 a.m. The Meeting is for the purpose of
considering and acting upon:
1. The election of three directors of the Company; and
2. The ratification of the appointment of Bertram Cooper & Co.,
LLP as independent auditors of FSF Financial Corp. for the
fiscal year ending September 30, 1999.
Execution of a proxy in the form enclosed also permits the proxy holder to vote,
in their discretion, upon such other matters that may come before the Meeting.
As of the date of mailing, the Board of directors is not aware of any other
matters that may come before the Meeting.
Action may be taken on any one of the foregoing proposals at the Meeting on the
date specified above or on any date or dates to which, by original or later
adjournment, the Meeting may be adjourned. Stockholders of record at the close
of business on November 30, 1998, are the stockholders entitled to vote at the
Meeting and any adjournments thereof.
You are requested to complete and to sign the enclosed form of proxy which is
solicited by the Board of Directors and to return it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the Meeting in
person.
EACH STOCKHOLDER, WHETHER OR NOT HE OR SHE PLANS TO ATTEND THE MEETING,
IS REQUESTED TO SIGN, DATE, AND RETURN THE ENCLOSED FORM OF PROXY WITHOUT DELAY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE
REVOKED BY FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A
DULY EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE MEETING
MAY REVOKE HIS OR HER PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT BEFORE THE
MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN
YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO
VOTE IN PERSON AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Richard H. Burgart
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Richard H. Burgart, Secretary
Hutchinson, Minnesota
December 11, 1998
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
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<PAGE>
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PROXY STATEMENT
OF
FSF FINANCIAL CORP.
201 MAIN STREET SOUTH
HUTCHINSON, MINNESOTA 55350
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ANNUAL MEETING OF STOCKHOLDERS
January 19, 1999
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GENERAL
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This Proxy Statement is furnished to holders of common stock, $0.10 par
value per share ("Common Stock"), of FSF Financial Corp. (the "Company").
Proxies are being solicited by the board of directors of the Company (the
"Board" or "Board of Directors") to be used at the Annual Meeting of
Stockholders of the Company (the "Meeting") which will be held at the Victorian
Inn, 1000 Highway 7 West, Hutchinson, Minnesota 55350 on January 19, 1999, 8:30
a.m. local time.
At the Meeting, stockholders will consider and vote upon (i) the
election of three directors; and (ii) the ratification of the appointment of
Bertram Cooper & Co., LLP as independent auditors of the Company for the fiscal
year ending September 30, 1999. The Board of Directors knows of no additional
matters that will be presented for consideration at the Meeting. Execution of a
proxy, however, confers on the designated proxy holder discretionary authority
to vote the shares represented by such proxy in accordance with their best
judgment on such other business, if any, that may properly come before the
Meeting or any adjournment thereof.
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VOTING AND REVOCABILITY OF PROXIES
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Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice delivered in person or mailed to the Secretary of the Company at the
address of the Company shown above or by the filing of a later dated proxy prior
to a vote being taken on a particular proposal at the Meeting. A proxy will not
be voted if a stockholder attends the Meeting and votes in person. Proxies
solicited by the Board of Directors will be voted in accordance with the
directions given therein. Where no instructions are indicated, signed proxies
will be voted "FOR" the proposals set forth in this Proxy Statement for
consideration at the Meeting or any adjournment thereof. The proxy confers
discretionary authority on the persons named therein to vote with respect to the
election of any person as a director should the nominee be unable to serve, or
for good cause, will not serve, and matters incident to the conduct of the
Meeting.
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<PAGE>
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on November 30, 1998
("Voting Record Date"), are entitled to one vote for each share of Common Stock
then held. As of the Voting Record Date, the Company had 2,972,513 shares of
Common Stock issued and outstanding.
The articles of incorporation of the Company (the "Articles") provide
that in no event shall any record owner of any outstanding Common Stock which is
beneficially owned, directly or indirectly, by a person who beneficially owns in
excess of 10% of the then outstanding shares of Common Stock (the "Limit") be
entitled or permitted to any vote with respect to the shares held in excess of
the Limit. Beneficial ownership is determined pursuant to the definition in the
Articles and includes shares beneficially owned by such person or any of his or
her affiliates or associates (as defined in the Articles), shares which such
person or his or her affiliates or associates have the right to acquire upon the
exercise of conversion rights or options, and shares as to which such person and
his or her affiliates or associates have or share investment or voting power,
but shall not include shares beneficially owned by any employee stock ownership
or similar plan of the issuer or any subsidiary.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) is necessary to constitute a quorum at the
Meeting.
As to the election of directors as stated in "Information with Respect
to Nominees for Director, Directors continuing in Office, and Executive Officers
- - Election of Directors," the form of proxy being provided by the Board 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 being proposed.
Directors are elected by a plurality of votes cast, without respect to either
(i) broker non-votes or (ii) proxies as to which authority to vote for one or
more of the nominees being proposed is withheld.
As to all other matters that may properly come before the Meeting,
unless otherwise required by law, the Articles, or the bylaws of the Company
(the "Bylaws"), a majority of the votes cast by shareholders shall be sufficient
to pass on any other matter.
Persons and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934 Act, as amended (the "1934 Act"). Other than as
noted below, management knows of no person or entity, including any "group" as
that term is used in ss.13(d)(3) of the 1934 Act, who or which is the beneficial
owner of more than 5% of the outstanding shares of Common Stock on the Voting
Record Date. Information concerning the security ownership of management is
included under "Information with Respect to Nominees for Director, Directors
Continuing in Office, and Executive Officers."
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<PAGE>
<TABLE>
<CAPTION>
Percent of Shares of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
- ------------------------------------ -------------------- -----------
<S> <C> <C>
First Federal fsb 359,720 (1) 11.95%
Employee Stock Ownership Plan Trust ("ESOP")
201 Main Street South
Hutchinson, Minnesota
Brandes Investment Partners, Inc. 219,680 (2) 7.30%
12750 High Bluff Drive
San Diego, California
Security Bancshares Company 200,000 (3) 6.64%
P.O. Box 212
Glencoe, Minnesota
</TABLE>
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(1) The ESOP purchased such shares for the exclusive benefit of plan employee
participants with funds borrowed from the Company. These shares are held in
a suspense account and will be allocated among ESOP participants annually
on the basis of compensation as the ESOP debt is repaid. As of the Voting
Record Date, 157,378 shares have been allocated under the ESOP to
participant accounts. See "Director and Executive Officer Compensation -
Other Benefits - Employee Stock Ownership Plan."
(2) Based on an amended Schedule 13G filed by the dated February 10, 1998.
(3) Based on a Schedule 13G received by the Company on March 14, 1996.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the 1934 Act requires the Company's officers and
directors, and persons who own more than ten percent of the Common Stock, to
file reports of ownership and changes in ownership of the Common Stock, on Forms
3, 4 and 5, with the Securities and Exchange Commission ("SEC") and to provide
copies of those Forms 3, 4 and 5 to the Company. The Company is not aware of any
beneficial owner of more than ten percent of its Common Stock.
Based upon a review of the copies of the forms furnished to the
Company, or written representations from certain reporting persons that no Forms
5 were required, the Company believes that all Section 16(a) filing requirements
applicable to its officers and directors were complied with during the fiscal
year ended September 30, 1998.
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I - INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
DIRECTORS CONTINUING IN OFFICE, AND EXECUTIVE OFFICERS
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Election of Directors
The Articles require that directors be divided into three classes, as
nearly equal in number as possible, each class to serve for a three year period,
with approximately one-third of the directors elected
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<PAGE>
each year. The Board of Directors currently consists of seven members. Three
directors will be elected at the Meeting, to serve for three-year terms, as
noted below, or until their respective successors have been elected and
qualified.
Donald A. Glas, James J. Caturia, and Jerome R. Dempsey have been
nominated by the Board of Directors to serve as directors. Messrs. Glas, Caturia
and Dempsey are currently members of the Board. If a nominee is unable to serve,
the shares represented by all valid proxies will be voted for the election of
such substitute as the Board of Directors may recommend or the size of the Board
may be reduced to eliminate the vacancy. At this time, the Board knows of no
reason why any nominee might be unavailable to serve.
The following table sets forth the nominees and the directors
continuing in office, their name, age, the year they first became a director of
the Company, the Banks, or the Bank, the expiration date of their current term
as a director of the Company, and the number and percentage of shares of the
Common Stock beneficially owned. Each director of the Company, is also a member
of the Board of Directors of the Bank.
<TABLE>
<CAPTION>
Year First Current Shares of
Elected or Term to Common Stock Percent
Name Age(1) Appointed Expire Beneficially Owned(2) of Class
- ---- ------ --------- ------ --------------------- --------
<S> <C> <C> <C> <C> <C>
BOARD NOMINEES FOR TERM TO EXPIRE IN 2002
Donald A. Glas 48 1981 1999 163,248(3) 5.28%
James J. Caturia 60 1984 1999 19,842(4)(5) *
Jerome R. Dempsey 65 1984 1999 12,225(4)(6) *
THE BOARD OF DIRECTORS RECOMMENDS THAT THE ABOVE
NOMINEES BE ELECTED AS DIRECTORS
DIRECTORS CONTINUING IN OFFICE(7)
Sever B. Knutson 66 1984 2000 49,461(4)(7) 1.63%
George B. Loban 48 1979 2000 161,909(8) 5.24%
Roger R. Stearns 50 1990 2001 48,722(4)(9) 1.59%
Richard H. Burgart 51 1994 2001 108,975(10) 3.55%
All Directors and
Executive Officers as a
Group (7 persons) 564,382(11) 17.31%
</TABLE>
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* Less than 1%.
(1) At September 30, 1998.
(2) Excludes stock options to purchase shares of Common Stock pursuant to the
1994 Stock Option Plan and 1998 Stock Compensation Plan that are not
exercisable within 60 days of the Record Date. See "Director and Executive
Officer Compensation - Other Benefits -1994 Stock Option Plan" and "-1998
Stock Compensation Plan."
(3) Includes 2,266 shares owned by the spouse of Mr. Glas and 1,000 shares held
in trust for the benefit of the minor child of Mr. Glas, which Mr. Glas may
be deemed to beneficially own. Includes 17,986 shares of restricted Common
Stock
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<PAGE>
granted but not vested, pursuant to the Bank's Management Stock Plan
("MSP"), options to purchase 60,831 shares of Common Stock exercisable with
60 days of the Record Date, and 8,846 shares allocated under the ESOP.
(4) Excludes shares of Common Stock held under the Employee Stock Ownership
Plan ("ESOP") or MSP for which such individual serves as a member of the
ESOP or MSP Committee or Trustee Committee. Such individual disclaims
beneficial ownership with respect to such shares held in a fiduciary
capacity. See "Director and Executive Officer Compensation - Other Benefits
- Employee Stock Ownership Plan."
(5) Includes 1,679 shares in the individual retirement account of the spouse of
Mr. Caturia, which Mr. Caturia may be deemed to beneficially own. Includes
options to purchase 8,125 shares of Common Stock exercisable with 60 days
of the Record Date.
(6) Includes options to purchase 4,875 shares of Common Stock exercisable with
60 days of the Record Date. (7) Includes 30,000 shares owned by the spouse
of Mr. Knutson, which Mr. Knutson may be deemed to beneficially own.
(7) Includes options to purchase 17,961 shares of Common Stock exercisable with
60 days of the Record Date.
(8) Includes 674 shares held by the son of Mr. Loban, 2,000 shares held in
trust for the benefit of the minor child of Mr. Loban, and 14,171 shares
held in the individual retirement account of the spouse of Mr. Loban, which
Mr. Loban may be deemed to beneficially own. Includes 17,986 shares of
restricted Common Stock granted, but not vested, pursuant to the MSP,
options to purchase 60,680 shares of Common Stock exercisable with 60 days
of the Record Date, and 8,846 shares allocated under the ESOP.
(9) Includes 9,300 shares held by Stearns Foundation, Inc. and 700 shares held
by Stearnswood, Inc. of which Mr. Stearns is an officer and director, and
100 shares held in trust for each of Mr. Stearns' son and daughter, which
Mr. Stearns may be deemed to beneficially own. Includes options to purchase
11,017 shares of Common Stock exercisable within 60 days of the Record
Date.
(10) Includes 6,155 shares held in the individual retirement account of the
spouse of Mr. Burgart and 25 shares held in trust for the benefit of the
minor son of Mr. Burgart, which Mr. Burgart may be deemed to beneficially
own. Includes 8,993 shares of restricted Common Stock granted, but not
vested, pursuant to the MSP, options to purchase 46,081 shares of Common
Stock exercisable with 60 days of the Record Date, and 8,092 shares
allocated under the ESOP.
(11) Includes options to purchase 249,721 shares of Common Stock exercisable
within 60 days of the Record Date.
The following individuals hold the executive offices in the Company set
forth opposite their names.
Name Age (1) Position(s) Held With the Company
- ---- ------- ---------------------------------
Donald A. Glas 48 Co-Chair and Chief Executive Officer
George B. Loban 48 Co-Chair and President
Richard H. Burgart 51 Chief Financial Officer, Treasurer and Secretary
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(1) At September 30, 1998.
The executive officers of the Company are elected annually and hold
office until their respective successors have been elected and qualified or
until death, resignation, or removal by the Board of Directors.
Biographical Information
The principal occupation of each director, nominee for director, and
executive officer of the Company is set forth below. Unless otherwise noted, all
persons have held there present occupation for the last five years.
Richard H. Burgart has served as a director of the Company and Chief
Financial Officer and Treasurer of the Company and the Bank since 1994 and
Secretary of the Company and the Bank since January 1997. Mr. Burgart began his
employment with First State in 1985 and was the Chief Financial
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<PAGE>
Officer and Treasurer of First State from 1988 until the Merger. Mr. Burgart has
participated in the Hutchinson Dollars for Scholars, the Hutchinson Youth Hockey
Association, and the Hutchinson Community Development Corporation. Mr. Burgart
is a member of the First Congregational Church and he is a past national
Chairman of the Financial Managers Society.
James J. Caturia served as a director of Hastings from 1984 until the
Merger and has served as a director of the Company and the Bank since 1994. He
is the owner and manager of Caturia Interiors, Inc., Hastings, Minnesota, a
retail home furnishings company. Mr. Caturia is a member of the Hastings Chamber
of Commerce, a member of the Knights of Columbus Council 1600 and is involved
with Habitat for Humanity.
Jerome R. Dempsey served as a director of Hastings from 1984 until the
Merger and has served as a director of the Company and the Bank since 1994 and
1996. Mr. Dempsey taught and served as an administrator for the Hastings Public
Schools. In 1992, Mr. Dempsey was elected to a two-year term in the Minnesota
House of Representatives and was re-elected in 1994, 1996 and 1998. Mr. Dempsey
serves on the Bonding, Environment and Natural Resources, Economic Development,
and Housing Financing Committees. Mr. Dempsey is a member of the Council 1600
Knights of Columbus,the Hastings United Way, and the Hastings Chamber of
Commerce. In addition, Mr. Dempsey is involved with the Special Olympics,
Habitat for Humanity, and the American Cancer Society.
Donald A. Glas is Co-Chair and Chief Executive Officer of the Company
and the Bank. Mr. Glas started with First State in 1972 and served as President
and Chief Executive Officer from 1983 until the Merger. He is also a founding
director and a committee member of the Hutchinson Community Development
Corporation. In addition, Mr. Glas serves on the Legislative Affairs Committee
of the America's Community Bankers ("ACB"), a national trade group for the
industry. Mr. Glas also served as a member of the Board of Directors of the
Federal Home Loan Bank ("FHLB") of Des Moines, served on the Consumer Advisory
Council of the Federal Reserve Board, and was a member of the Hutchinson
Technical College Advisory Board, the Activity Advisory Committee of Hutchinson
Schools, the Chamber of Commerce, the Hutchinson Main Street Organization, the
United Way, and the Crow River Drumline Association.
Sever B. Knutson served as director of First State from 1984 until the
Merger and has served as a director of the Company and the Bank since 1994. He
is the former President and majority stockholder of Lynn Card Company, a mail
order business located in Hutchinson, Minnesota. Mr. Knutson chairs the
Transportation Committee of the Hutchinson Community Development Corporation.
Mr. Knutson also serves as the Operations Officer for the Hutchinson Squadron of
the Civil Air Patrol. Mr. Knutson served as an Officer in the United States Air
Force for 22 years, retiring in 1972.
George B. Loban is Co-Chair and President of the Company and the Bank.
Mr. Loban served as director and Chief Executive Officer of First Federal of
Hastings prior to the Merger in 1994. He has previously served as Vice Chairman
of the FHLB of Des Moines and is a member of the Governmental Affairs Committee
of the FHLB System. Mr. Loban serves on the Board of ACB as well as an active
member on several committees of the ACB. Mr. Loban is actively involved in his
local community through the Chamber of Commerce, United Way and other
educational and civic organizations.
Roger R. Stearns served as a director of First State from 1989 until
the Merger and has served as a director of the Company and the Bank since 1994.
Mr. Stearns is the President and part owner of Stearnswood, Inc. Hutchinson,
Minnesota, a closely-held family corporation that currently manufactures
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<PAGE>
transport packaging for regional and international customers. Mr. Stearns is a
past director and past Treasurer of Blue Cross Blue Shield of Minnesota. Mr
Stearns was Treasurer and director of the Hutchinson School District Board and
has served as the Chairman of Little Crow Telemedia Network. Mr. Stearns is past
director of the Hutchinson Area and Minnesota State Chambers of Commerce, a
founding director of the Central Prairie Railway Association, the Hutchinson
Community Video Network, and an active trustee and Secretary of the Stearns
Foundation.
Nominations for Directors
Nominations of candidates for election as directors at any annual
meeting of stockholders may be made (a) by, or at the direction of, a majority
of the Board of Directors or (b) by any stockholder entitled to vote at such
annual meeting. Only persons nominated in accordance with the procedures set
forth in the Articles may be eligible for election as directors at an annual
meeting.
Nominations, other than those made by or at the direction of the Board
of Directors, must be made pursuant to timely notice in writing to the Secretary
of the Company. To be timely, a stockholder's notice shall be delivered to, or
mailed and received at, the principal executive offices of the Company not less
than 60 days prior to the anniversary date of the immediately preceding annual
meeting of stockholders of the Company. Such stockholder's notice shall set
forth (a) as to each person whom the stockholder proposes to nominate for
election or re-election as a director and as to the stockholder giving the
notice (i) the name, age, business address and residence address of such person,
(ii) the principal occupation or employment of such person, (iii) the number of
shares of Common Stock that are beneficially owned (as defined in the Articles)
by such person on the date of such stockholder notice, and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies with respect to nominees for election as directors,
pursuant to the 1934 Act, including, but not limited to, information which would
be required to be filed with the SEC; and (b) as to the stockholder giving the
notice (i) the name and address, as they appear on the Company's books, of such
stockholder and any other stockholders known by such stockholder to be
supporting such nominees and (ii) the number of shares of Common Stock that are
beneficially owned by such stockholder on the date of such stockholder notice
and, to the extent known, by any other stockholders known by such stockholder to
be supporting such nominees on the date of such stockholder notice. At the
request of the board of directors, any person nominated by, or at the direction
of, the Board for election as a director at an annual meeting must furnish to
the Secretary of the Company that information required to be set forth in a
stockholder's notice of nomination that pertains to the nominee.
The Board or a committee of the Board may reject any nomination by a
stockholder not timely made in accordance with the requirements of the Articles.
A stockholder may be given the opportunity to correct a notice not meeting the
requirements of the Articles as provided in the Articles. Notwithstanding the
procedures set forth in the Articles, if neither the Board nor such committee
makes a determination as to the validity of any nominations by a stockholder,
the presiding officer of the annual meeting shall determine and declare at the
annual meeting whether the nomination was made in accordance with the terms of
the Articles. If the presiding officer determines that a nomination or proposal
was made in accordance with the terms of the Articles, such officer shall so
declare at the annual meeting and ballots shall be provided for use at the
meeting with respect to such nominee or proposal. If the presiding officer
determines that a nomination or proposal was not made in accordance with the
terms of this Article, such officer shall so declare at the annual meeting and
the defective nomination or proposal shall be disregarded.
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<PAGE>
Meetings and Committees of the Board of Directors
The Board of Directors conducts its business through meetings of the
Board and through activities of its committees. Each member of the Board of
Directors also currently serves as a member of the board of directors of the
Bank, which meets monthly and may have special meetings. All committees act for
both the Company and the Bank.
During the fiscal year ended September 30, 1998, the Board of Directors
of the Company and the Bank held 13 regular meetings and no special meetings. No
director attended fewer than 75% of the total meetings of the Board of Directors
of the Company and the Bank and the committees on which such director served
during the fiscal year ended September 30, 1998.
The Audit Committee of the Company is responsible for overseeing the
Company's internal audit procedures. Currently, the members of the Audit
Committee are Messrs. Knutson, Dempsey, Caturia and Stearns. The Audit Committee
met four times during the fiscal year ended September 30, 1998.
The Nominating Committee of the Company recommends nominees for
election as directors to the Board of Directors. The Nominating Committee, which
met one time during the fiscal year ended September 30, 1998, consists of the
entire Board of Directors. Although the Board of Directors will consider
nominees recommended by stockholders, it has not actively solicited
recommendations from stockholders.
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
- --------------------------------------------------------------------------------
Directors' Compensation
Through December 31, 1997, the Company compensated its directors by
means of a $4,000 annual retainer. Effective January 1, 1998, no fees or
retainers are paid by the Company. Each director of the Company is a director of
the Bank, and receives fees accordingly. Directors who are employees of the
Company or the Bank do not receive directors fees.
During the fiscal year ended September 30, 1998, each non-employee
member of the Board of Directors of the Bank received a fee of $550 per meeting
attended. In addition, committee fees consisted of $300 for each committee
meeting attended. For the year ended September 30, 1998, total director fees
(including expense associated with the award of restricted shares in lieu of
retainers) paid by the Bank to all directors as a group were $92,529.
On January 17, 1995, the date of stockholder approval of the 1994
Option Plan, Directors Stearns and Knutson and Directors Caturia and Dempsey
each received stock options to purchase 16,861 and 7,026 shares, respectively,
of Common Stock at the then current fair market value ($9.50 per share). These
shares and options vest at a rate of 20% annually on and after January 17, 1996.
See "- Other Benefits - 1994 Stock Option Plan."
Pursuant to the 1998 Stock Compensation Plan, on January 21, 1998, each
non-employee director of the Company was awarded 1,500 shares of Common Stock
and options to purchase 1,500 shares of Common Stock at an exercise price equal
to the fair market price of said Common Stock as of the date of grant. The Stock
Awards (as defined later) were granted to non-employee directors in lieu of
annual
-8-
<PAGE>
Board retainers at the Bank and Company. Directors received such grants in lieu
of retainers for a five year period. See "- Other Benefits - 1998 Stock
Compensation Plan."
Executive Compensation
General. Executive officers received compensation from the Bank.
However, a portion of the executive officers' compensation is reimbursed to the
Bank by the Company in accordance with a cost sharing agreement between the two
entities.
Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by the Chief Executive Officer and
certain other executive officers of the Bank for the years ended September 30,
1998, 1997, and 1996. Except as set forth below, no executive officer of the
Company had a salary and bonus during such periods that exceeded $100,000 for
services rendered in all capacities to the Bank or the Company in the aggregate.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
--------------------------------------------- ------------------------------
Securities
Restricted Underlying
Name and Other Annual Stock Options/ All Other
Principal Position Year Salary Bonus(1) Compensation(2) Awards($)(3) SARs (#)(4) Compensation
- ------------------- ------ ------ -------- --------------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Donald A. Glas 1998 $169,750 $60,000 $ -- -- 33,973 $33,929 (5)
Director and Chief 1997 $149,500 $53,671 $16,200 -- -- $33,988 (5)
Executive Officer 1996 $135,000 $35,500 $13,400 -- -- $23,079 (5)
George B. Loban 1998 $169,750 $60,000 $ -- -- 33,973 $33,929 (5)
Director and President 1997 $149,500 $53,671 $14,450 -- -- $33,988 (5)
1996 $135,000 $35,500 $12,200 -- -- $23,079 (5)
Richard H. Burgart 1998 $119,500 $42,000 $ -- -- 23,178 $33,471 (5)
Chief Financial 1997 $102,000 $36,610 $15,000 -- -- $33,988 (5)
Officer and Treasurer 1996 $92,000 $26,600 $12,200 -- -- $20,496 (5)
Jay Trumbower(6) 1998 $79,000 $22,000 -- -- -- --
</TABLE>
- ------------------------
(1) Awarded pursuant to the Incentive Compensation Policy. See "- Other
Benefits - Incentive Compensation Policy."
(2) Includes director's fees. Beginning October 1, 1997, employee directors no
longer receive director fees. For Messrs. Glas, Loban, and Burgart for
fiscal 1998, 1997, and 1998, there were no (a) perquisites over the lesser
of $50,000 or 10% of any of such individual's total salary and bonus for
the year; (b) payments of above-market preferential earnings on deferred
compensation; (c) payments of earnings with respect to long-term incentive
plans prior to settlement or maturation; (d) tax payment reimbursements; or
(e) preferential discounts on stock.
(3) The total value of the restricted stock held for the benefit of Mr. Glas,
Mr. Loban, and Mr. Burgart by the MSP at September 30, 1998 was $283,279,
$283,279, and $141,640, respectively (calculated by multiplying $15.75, the
closing average bid and ask price of the Company's unrestricted Common
Stock at September 30, 1998, by 17,986, 17,986, and 8,993, the number of
awarded, but unvested, shares, respectively). Dividends paid on the
restricted Common Stock are accrued and held in arrears until the
restricted Common Stock for which dividends were paid becomes vested.
(4) The options, by their terms, are first exercisable at a rate of 33.3% on
date of grant (January 21, 1998) and 16.67% annually beginning October 1,
1998, but in no event shall any option be exercisable more then ten years
after the effective date of grant.
(5) Represents employer contribution to the ESOP.
(6) On October 13, 1998, Mr. Trumbower resigned as an employee of the Bank.
-9-
<PAGE>
Employment Agreements. The Bank entered into employment agreements with
Chief Executive Officer and Co-Chair Donald A. Glas, President and Co-Chair
George B. Loban, and Chief Financial Officer and Treasurer Richard H. Burgart
(the"Officers"). The employment agreements provide for a term of three years.
The agreements may be terminable by the Bank for "just cause" as defined in the
agreement. If the Bank terminates an Officer without just cause, the Officer
will be entitled to a continuation of his salary from the date of termination
through the remaining term of the agreement, but in no event for a period of
less than one year. The employment agreements contain a provision stating that
in the event of involuntary termination of employment in connection with, or
within one year after, any change in control of the Bank, each will be paid in a
lump sum an amount equal to 2.99 times his average taxable compensation paid
during the five prior calendar years. In the event of a change in control of the
Bank, at September 30, 1998, the Officers would currently be entitled to an
aggregate lump sum payment of approximately $1.4 million. The aggregate payments
that would be made would be an expense to the Bank, thereby reducing net income
and the Bank's capital by that amount. The agreements are reviewed annually by
the Board of Directors and may be extended for additional one-year periods upon
a determination of satisfactory performance within the Board's sole discretion.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Messrs. Stearns
(Chair), Caturia, Dempsey and Knutson, all present members of the Board of
Directors of the Bank and the Company. Executive Officers of the Company or the
Bank do not participate in matters involving their compensation.
Report of the Compensation Committee on Executive Compensation
The executive officers of the Company and the Bank consist of Messrs.
George B. Loban (Co- Chairman of the Board and President), Donald A. Glas
(Co-Chairman of the Board and Chief Executive Officer), and Richard H. Burgart
(Chief Financial Officer, Treasurer and Secretary).
The Bank Compensation Committee meets annually to review compensation
paid to executive officers and to determine the compensation levels for all Bank
employees. The Committee reviews various published surveys of compensation paid
to employees performing similar duties for depository institutions and their
holding companies, with a particular focus on the level of compensation paid by
comparable institutions in and around the Bank's market area, including
institutions with total assets of between $250 million and $500 million.
Although the Committee does not specifically set compensation levels for
executive officers based on whether particular financial goals have been
achieved by the Bank the Committee does consider the overall profitability of
the Bank when making these decisions. With respect to each particular employee,
his or her particular contributions to the Bank over the past year are also
evaluated.
Effective January 1, 1998, Mr. Glas, Co-Chairman of the Board and Chief
Executive Officer, and Mr. Loban, Co-Chairman of the Board and President, each
received a salary increase from $151,000 to $176,000, and Mr. Burgart received a
salary increase from $103,000 to $125,000. Effective October 1, 1997, employee
directors of the Company (the executive officers) no longer receive board fees.
The Compensation Committee took this into consideration in determining the new
base salaries. The Committee will consider the annual compensation paid to
presidents, chief executive officers, and chief financial officers of financial
institutions in the State of Minnesota and surrounding states with assets of
between $250 million and $500 million and the individual job performance of such
individual in
-10-
<PAGE>
consideration of its specific salary increase decision with respect to
compensation to be paid to the President, Chief Executive Officer, and Chief
Financial Officer in the future.
Compensation Committee:
James J. Caturia
Roger R. Stearns
Sever B. Knutson
Jerome R. Dempsey
Other Benefits
Long Term Incentive Plans. The Company does not presently sponsor any
long-term incentive plans nor did it make any payouts to George B. Loban, Donald
A. Glas, or Richard H. Burgart under such plans during the fiscal year ended
September 30, 1998.
Incentive Compensation Policy. The Bank has an Incentive Compensation
Policy for selected management personnel (18 persons). Compensation awards under
this policy appear as a bonus in the year earned. Awards are based on
individuals attaining various financial and business plan objectives set by the
Board of Directors. Total bonuses earned by all participants covered by the
policy (including Mr. Glas, Mr. Loban, and Mr. Burgart) totalled $317,051 for
the fiscal year ended September 30, 1998.
Supplemental Executive Retirement Plans. The Bank maintains an insured
executive salary continuation plan ("ESCP") for the benefit of eligible
executive employees (eight persons, including two retired employees). The
purpose of the ESCP is to furnish executive employees with post-retirement and
death benefits in addition to those which will be provided under the Bank's SEP
and other retirement benefits. The ESCP is also designed to foster the retention
of executive employees. It is anticipated that benefits payable under the ESCPs
will equal approximately $5,159 per month in the case of Mr. Glas upon his
retirement at age 56 for a maximum of 180 months, $4,166 in the case of Mr.
Loban upon his retirement age 56 for a maximum of 120 months, and $3,810 per
month in the case of Mr. Burgart upon his retirement at age 60 for a maximum of
180 months. Payments under the ESCP are accrued for financial reporting purposes
during the period of employment. The Bank's policy is to fund the ESCP costs
accrued with insurance contracts. The accrued liability for all participants
(six persons) at September 30, 1998, in connection with the ESCP amounted to
$868,806 of which $231,052, $145,110, and $112,306 were attributable to Messrs.
Glas, Loban, and Burgart, respectively. There are no tax consequences to any
executive officer or the Bank related to the plans prior to the payment of
benefits. Upon receipt of payment of benefits, the executive employees will
recognize taxable ordinary income in the amount of such payments received and
the Bank will be entitled to recognize a tax-deductible compensation expense at
that time. At the time of the Merger, the Bank assumed the ESCP of Hastings.
Employee Stock Ownership Plan. The Bank maintains an employee stock
ownership plan, (the "ESOP"), for the exclusive benefit of participating
employees. Participating employees are employees who have completed one year of
service with the Bank or its subsidiary and attained age 21. The ESOP is to be
funded by contributions made by the Bank in cash or the Common Stock. Benefits
may be paid either in shares of the Common Stock or in cash. The ESOP borrowed
funds from the Company to acquire 359,720 shares of the Common Stock issued in
the Merger Conversion, representing 8.0% of the then outstanding shares, of
which 202,342 shares remained unallocated as of the Voting Record Date. This
loan is secured by the shares purchased and earnings of ESOP assets. Shares
purchased with loan proceeds are held in a suspense account for allocation among
participants as the loan is repaid. During the fiscal year ended September 30,
1998, the Bank contributed $475,816 to the ESOP.
-11-
<PAGE>
A committee consisting of Messrs. Knutson, Stearns, and Caturia (the
"ESOP Committee") administers the ESOP and also serves as the ESOP trustees (the
"ESOP Trustees"). The Board of Directors or the ESOP Committee may instruct the
ESOP Trustees regarding investments of funds contributed to the ESOP. The ESOP
Trustees must vote all allocated shares held in the ESOP in accordance with the
instructions of the participating employees. Unallocated shares and allocated
shares for which no timely direction is received will be voted by the ESOP
Trustees as directed by the Board of Directors or the ESOP Committee, subject to
the Trustees' fiduciary duties.
1994 Stock Option Plan. The Board of Directors adopted the 1994 Stock
Option Plan (the "Option Plan"). Pursuant to the Option Plan, additional
authorized shares were reserved for issuance by the Company upon exercise of
stock options to be granted to officers, directors, and employees of the Company
and the Bank from time to time under the Option Plan. The purpose of the Option
Plan is to provide additional incentive to certain officers, directors, and key
employees by facilitating their purchase of a stock interest in the Company. The
Option Plan, which became effective January 17, 1995, the date of stockholder
approval, provides for a term of ten years, after which no awards may be made,
unless earlier terminated by the Board of Directors pursuant to the Option Plan.
Options awarded pursuant to the Option Plan vest at a rate of 20% per year
beginning on the anniversary date of the grant. An initial grant of options was
made on the date of stockholder approval. The options are immediately
exercisable in the event of a change in control. One thousand (1,000) options
were awarded under the Option Plan in fiscal 1998.
1998 Stock Compensation Plan. The Board of Directors adopted the 1998
Stock Compensation Plan (the "Stock Plan"), which was approved by stockholder at
the annual meeting of stockholders held on January 20, 1998. Pursuant to the
Stock Plan, 300,000 additional authorized shares of Common Stock were reserved
for issuance by the Company upon exercise of stock options to be granted to
officers, directors, key employees of the Company and the Bank from time to time
under the Stock Plan. The options are immediately exercisable in the event of a
change in control. The purpose of the Stock Plan is to attract and retain
qualified personnel for positions of substantial responsibility and to provide
additional incentive to such persons to promote the success of the Company's and
the Bank's business. The Stock Plan, which became effective upon stockholder
approval, provides for a term of ten years, after which no awards may be made,
unless earlier terminated by the Board of Directors pursuant to the Stock Plan.
During fiscal 1998, a total of 132,601 options were awarded to employees of the
Company and its subsidiaries.
Pursuant to the terms of the Stock Plan, as of January 21, 1998 ("Date
of Grant"), each non-employee Director of the Company has granted a Stock Award
consisting of 1,500 shares of Common Stock. Stock Awards were granted to
non-employee directors in lieu of the current $8,000 retainer fees currently
paid for service on the Company's and the Bank's Boards of Directors.
Additionally, as of such Date of Grant, each recipient of such Stock Award
received an option to purchase a number of shares of Common Stock represented by
the number of shares of Common Stock represented by the Stock Award ("Tandem
Stock Option"). The option exercise price for each share of Common Stock under
such Tandem Stock Option equals $19.25. Such Stock Award and Tandem Stock Option
shall be earned and non-forfeitable at the rate of 20% of each such Award as of
the Date of Grant and 20% annually thereafter. Such Tandem Stock Options shall
continue to be exercisable for a period of ten years following the Date of Grant
without regard to the continued services of such Director as a Director. Such
Awards shall be immediately 100% earned and non-forfeitable upon a Change in
Control of the Company or upon the death or Disability of such Director. In the
event of the Participant's death, such Tandem
-12-
<PAGE>
Stock Options may be exercised by the personal representative of his estate or
person or persons to whom his rights under such Option shall have passed by will
or by the laws of descent and distribution.
The following tables set forth additional information concerning
options granted under the Stock Plan during fiscal 1998.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS TABLE
Option/SAR Grants in Last Fiscal Year
-------------------------------------
Potential Realizable Value
at Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants Option Term(1)
------------------------------------------------------------------- -------------------------------
% of Total
# of Securities Options/SARs Exercise
Underlying Granted to or Base
Options/SARs Employees in Price Expiration
Name Granted(#)(2) Fiscal Year ($/Sh) Date 5% 10%
- --------- ------------- ----------- ------ ------ ---- ----
<S> <C> <C> <C> <C> <C> <C>
Donald A. Glas 33,973 25.62% $19.25 January 21, $411,413 $1,039,414
2008
George B. Loban 33,973 25.62% $19.25 January 21, $411,413 $1,039,414
2005
Richard H. Burgart 23,178 17.47% $19.25 January 21, $280,686 $709,479
2005
</TABLE>
- -----------------
(1) The amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises and Common Stock holdings are
dependent on the future performance of the Common Stock and overall stock
market conditions. There can be no assurance that the amount reflected in
the table will be achieved.
(2) No Stock Appreciation Rights (SARs) are authorized under the plan.
The following table set forth additional information concerning options
granted under the Option Plan and the Stock Plan.
<TABLE>
<CAPTION>
OPTION/SAR EXERCISES AND YEAR END VALUE TABLE
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End Option/SAR Value
--------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options/SARs
Options/SARs
at FY-End (#)(1)(2) at FY-End ($)(1)(3)(4)
Shares Acquired Value
Name on Exercise (#) Realized ($)(5) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- --------------- --------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Donald A. Glas Option Plan 51,748 564,519 38,181/22,481 $238,631/$140,506
Stock Plan -- -- 11,325/22,648 --/--
George B. Loban Option Plan 52,899 566,255 38,030/22,481 $237,687/$140,506
Stock Plan -- -- 11,325/22,648 --/--
Richard H.Burgart Option Plan 5,342 60,097 30,630/ 8,993 $191,437/$56,206
Stock Plan -- -- 7,725/15,453 --/--
</TABLE>
- --------------
(1) No Stock Appreciation Rights (SARs) have been awarded under the Option Plan
or the Stock Plan.
(2) Includes options that are exercisable within 60 days of the Voting Record
Date.
(3) Option Plan information based on exercise price of $9.50 and closing price
on September 30, 1998 of $15.75.
(4) Stock Plan information based on exercise price of $19.125 and closing price
on of $15.75.
(5) Based on the fair market value on the date of exercise, less the exercise
price.
-13-
<PAGE>
Management Stock Plan. The board of directors of the Bank has adopted
the Management Stock Plan (the "MSP") as a method of providing executive
officers and key employees of the Bank with a proprietary interest in the
Company in a manner designed to encourage such persons to remain in the
employment or service with the Bank. Awards under the MSP were made in
recognition of prior and expected future services to the Bank to those executive
officers and key employees of the Bank responsible for implementation of the
policies adopted by the board of directors of the Bank, the profitable operation
of the Bank, and as a means of providing a further retention incentive and
direct link between compensation and the profitability of the Bank. Awards under
the MSP vest at a rate of 20% per year beginning on the anniversary date of the
date of grant. An initial grant of restricted stock was made on January 17,
1995, the date of stockholder approval of the MSP. No additional awards of
restricted stock under the MSP have been made since that time.
- --------------------------------------------------------------------------------
PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
The following graph compares the cumulative total shareholder return of
the Common Stock of the Company with that of (a) the total return index for
domestic companies listed on the Nasdaq Stock Market and (b) the total return
index for banks listed on the Nasdaq Stock Market. These total return indices of
the Nasdaq Stock Market are computed by the Center for Research in Securities
Prices ("CRSP") at the University of Chicago. All three investment comparisons
assume the investment of $100 at the market close on October 7, 1994 (the date
the Common Stock was first traded) and the reinvestment of dividends as paid.
The graph provides comparisons as of September 30, 1998.
There can be no assurance that the Company's stock performance will
continue with the same or similar trends depicted in the graph below. The
Company will not make or endorse any predictions as to future stock performance.
-14-
<PAGE>
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
====================================================================================================================================
10/7/94 9/29/95 9/30/96 9/30/97 9/30/98
- ------------------------------------------------------------------------------------------------------------------------------------
Nasdaq US 100.00 140.72 166.95 229.16 234.19
- ------------------------------------------------------------------------------------------------------------------------------------
Nasdaq Bank 100.00 128.56 164.07 273.34 271.26
- ------------------------------------------------------------------------------------------------------------------------------------
FSF Financial Corp. 100.00 135.65 137.19 217.82 179.46
====================================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
The Bank had no "interlocking" relationships existing on or after
October 1, 1997 in which (i) any executive officer is a member of the Board of
Directors/Trustees of another entity, one of whose executive officers is a
member of the board of directors of the Bank, or where (ii) any executive
officer is a member of the compensation committee of another entity, one of
whose executive officers is a member of board of directors of the Bank.
The Bank, like many financial institutions, has followed a policy of
granting various types of loans to executive officers, directors, employees, or
immediate family members or affiliates thereof. The loans have been made in the
ordinary course of business and on substantially the same terms and conditions
(including interest rates and collateral) that apply to the Bank's other
customers, and do not
-15-
<PAGE>
involve more than the normal risk of collectibility, nor present other
unfavorable features. All loans by the Bank to its directors and executive
officers are subject to OTS regulations restricting loans and other transactions
with affiliated persons of the Bank. The Bank's affiliates must qualify for any
loans on the same terms and conditions that apply to other customers.
- --------------------------------------------------------------------------------
RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
Bertram Cooper & Co., LLP was the Company's independent public
accountant for the fiscal year ended September 30, 19988. The Board of Directors
has approved the selection of Bertram Cooper & Co., LLP as its auditors for the
fiscal year ending September 30, 1999, subject to ratification by the Company's
stockholders. A representative of Bertram Cooper & Co., LLP is expected to be
present at the Meeting to respond to stockholders' questions and will have the
opportunity to make a statement if he or she so desires.
Ratification of the appointment of the auditors requires the
affirmative vote of a majority of the votes cast by the stockholders of the
Company at the Meeting. The Board of Directors recommends that stockholders vote
"FOR" the ratification of the appointment of Bertram Cooper & Co., LLP as the
Company's auditors for the fiscal year ending September 30, 1999.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting such proxies.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of soliciting proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
- --------------------------------------------------------------------------------
ANNUAL REPORTS
- --------------------------------------------------------------------------------
The Company's Annual Report to Stockholders for the fiscal year ended
September 30, 1998, including financial statements, and the Company's Annual
Report on Form 10-K will be mailed to all stockholders of record as of the close
of business on November 30, 1998. Any stockholder who has not received a copy of
the Annual Report by December 31, 1998 may obtain a copy by writing to the
Secretary of the Company. The Annual Report to Stockholders and Form 10-K are
not to be treated as a part of the proxy solicitation material or as having been
incorporated herein by reference.
-16-
<PAGE>
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's executive offices at
201 Main Street South, Hutchinson, Minnesota 55350, no later than August 13,
1999. Any such proposals shall be subject to the requirements of the proxy rules
adopted under the 1934 Act.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Richard H. Burgart
----------------------------------
Richard H. Burgart, Secretary
Hutchinson, Minnesota
December 11, 1998
-17-
<PAGE>
- --------------------------------------------------------------------------------
FSF FINANCIAL CORP.
201 MAIN STREET SOUTH
HUTCHINSON, MINNESOTA 55350
(320) 234-4500
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 21, 1998
- --------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors of FSF Financial
Corp. (the "Company"), or its designee, with full powers of substitution, to act
as attorneys and proxies for the undersigned, to vote all shares of common stock
of the Company which the undersigned is entitled to vote at the Annual Meeting
of Stockholders (the "Meeting"), to be held at the Victorian Inn, 1000 Highway 7
West, Hutchinson, Minnesota 55350 on Tuesday, January 19, 1999, at 8:30 a.m. and
at any and all adjournments thereof, as follows:
FOR WITHHELD
--- --------
1. The election as director of all nominees
listed below each for a 3 year term:
Donald A. Glas, James J. Caturia,
and Jerome R. Dempsey |_| |_|
INSTRUCTIONS: To withhold your vote for any individual nominee, insert the
nominee's name on the line provided below.
FOR AGAINST ABSTAIN
--- ------- -------
2. Proposal to ratify the appointment
of Bertram Cooper & Co., LLP as
independent auditors of FSF Financial Corp. for
the fiscal year ending September 30, 1999. |_| |_| |_|
The Board of Directors recommends a vote "FOR" all of the above listed
propositions.
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
SIGNED 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.
- --------------------------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elects to vote at the Meeting,
or at any adjournments thereof, and after notification to the Secretary of the
Company at the Meeting of the stockholder's decision to terminate this proxy,
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned may also revoke this proxy by filing a
subsequently dated proxy or by notifying the Secretary of the Company of his or
her decision to terminate this proxy.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of an Annual Report to Stockholders, a Notice of the
Meeting and a Proxy Statement dated December 11, 1998.
Please check here if you
Dated: , 199 |_| plan to attend the Meeting.
--------------- --
- ---------------------------------- --------------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
- ----------------------------------- --------------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
Please sign exactly as your name appears on this form of proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
- --------------------------------------------------------------------------------
