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
Definitive Proxy Statement x
Definitive Additional Materials
Soliciting Material Pursuant to ss.240.14a-11(C) or ss.240.14a-12
QCF BANCORP, INC.
(Name of Registrant as Specified in its Charter)
QCF BANCORP, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
$125 per Exchange Act Rules 0-11(c)(1)(iii), 14a-6(I)(1), or 14a-6(I)(2). x
$500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(I)(3
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:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
<PAGE>
September 13, 1996
Dear Stockholder:
We invite you to attend the first annual meeting of stockholders
of QCF Bancorp, Inc. to be held at the main office of Queen City Federal Savings
Bank, 501 Chestnut Street, Virginia, Minnesota on Wednesday, October 9, 1996 at
9:00 a.m.
The accompanying notice 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's subsidiary, Queen City Federal Savings
Bank. Directors and officers of the Company will be present to respond to any
questions the stockholders may have.
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN, DATE
AND RETURN THE ACCOMPANYING FORM OF PROXY AS SOON AS POSSIBLE EVEN IF YOU
CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING. Your vote is important,
regardless of the number of shares you own. This will not prevent you from
voting in person but will assure that your vote is counted if you are unable to
attend the meeting.
Sincerely,
Kevin E. Pietrini
President
<PAGE>
QCF BANCORP, INC.
501 Chestnut Street
Virginia, Minnesota 55792
(218) 741-2040
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on October 9, 1996
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders
(the "Annual Meeting") of QCF Bancorp, Inc. (the "Company") will be held at the
main office of Queen City Federal Savings Bank, 501 Chestnut Street, Virginia,
Minnesota on Wednesday, October 9, 1996 at 9:00 a.m.
A Proxy Statement and form of proxy for the Annual Meeting
accompany this notice.
The Annual Meeting is for the purpose of considering and acting
upon:
1. The election of two directors of the Company;
2. The transaction of such other matters as may properly come before the Annual
Meeting or any adjournments thereof.
The Board of Directors is not aware of any other business to come
before the Annual Meeting.
Any action may be taken on any one of the foregoing proposals at
the Annual Meeting on the date specified above or on any date or dates to which,
by original or later adjournment, the Annual Meeting may be adjourned.
Stockholders of record at the close of business on August 30, 1996 are the
stockholders entitled to vote at the Annual Meeting and any adjournments
thereof.
You are requested to fill in and sign the accompanying form of
proxy which is solicited by the Board of Directors and to mail it promptly in
the accompanying envelope. The proxy will not be used if you attend and vote at
the Annual Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
ROBERT L. MUHICH
SECRETARY
Virginia, Minnesota
September 13, 1996
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. THE ACCOMPANYING
FORM OF PROXY IS ACCOMPANIED BY A SELF-ADDRESSED ENVELOPE FOR YOUR CONVENIENCE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
OF
QCF BANCORP, INC.
501 Chestnut Street
Virginia, Minnesota 55792
ANNUAL MEETING OF STOCKHOLDERS
October 9, 1996
GENERAL
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of QCF Bancorp, Inc. (the
"Company") to be used at the annual meeting of stockholders (the "Annual
Meeting") which will be held at the main office of Queen City Federal Savings
Bank (the "Bank"), 501 Chestnut Street, Virginia, Minnesota on Wednesday,
October 9, 1996 at 9:00 a.m. This proxy statement and the accompanying notice
and form of proxy are being first mailed to stockholders on or about September
13, 1996.
VOTING AND REVOCABILITY OF PROXIES
Stockholders who execute proxies retain the right to revoke them
at any time. Unless so revoked, the shares represented by properly executed
proxies will be voted at the Annual Meeting and all adjournments thereof.
Proxies may be revoked by written notice to Robert L. Muhich, Secretary of the
Company, at the address shown above, by filing a later dated proxy prior to a
vote being taken on a particular proposal at the Annual Meeting or by attending
the Annual Meeting and voting in person. The presence of a stockholder at the
Annual Meeting will not revoke such stockholder's proxy.
Proxies solicited by the Board of Directors of the Company will
be voted in accordance with the directions given therein. Where no instructions
are indicated, proxies will be voted for the nominees for directors set forth
below and in favor of each of the other proposals set forth in this proxy
statement for consideration at the Annual Meeting. The proxy confers
discretionary authority on the persons named therein to vote with respect to the
election of any person as a director where the nominee is unable to serve or for
good cause will not serve, and matters incident to the conduct of the Annual
Meeting. If any other business is presented at the Annual Meeting, proxies will
be voted by those named therein in accordance with the determination of a
majority of the Board of Directors. Proxies marked as abstentions will not be
counted as votes cast. In addition, shares held in street name which have been
designated by brokers on proxies as not voted will not be counted as votes cast.
Proxies marked as abstentions or as broker non-votes, however, will be treated
as shares present for purposes of determining whether a quorum is present.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The securities entitled to vote at the Annual Meeting consist of
the Company's common stock, $.01 par value per share (the "Common Stock").
Stockholders of record as of the close of business on August 30, 1996 (the
"Record Date") are entitled to one vote for each share of Common Stock then
held. At the Record Date, the Company had 1,426,200 shares of Common Stock
issued and outstanding. The presence, in person or by proxy, of at least a
majority of the total number of shares of Common Stock outstanding and entitled
to vote will be necessary to constitute a quorum at the Annual Meeting.
Persons and groups beneficially 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, as amended (the "Exchange
Act"). The following table sets forth, as of the Record Date, certain
information as to the Common Stock believed by management to be beneficially
owned by persons owning in excess of 5% of the Company's Common Stock and by all
directors and executive officers of the Company as a group.
-1-
<PAGE>
Amount and Percent of
Nature of Shares of
Name and Address Beneficial Common Stock
of Beneficial Owner Ownership (1) Outstanding
Bay Pond Partners, L.P. 116,000 8.13%
Wellington Management Company
75 State Street
Boston, Massachusetts 02109
First Save Associates, L.P. 153,453 10.76%
Second First Save Associates, L.P.
First Manhattan Co.
437 Madison Avenue
New York, New York 10022
QCF Bancorp, Inc.
Employee Stock Ownership Plan ("ESOP")
501 Chestnut Street
Virginia, Minnesota 21204 142,620 (2) 10.00%
All directors and
executive officers
as a group (10 persons) 258,835 (3) 16.31%
(1) In accordance with Rule 13d-3 under the Securities Exchange Act of
1934, a person is deemed to be the beneficial owner, for purposes of this table,
of any shares of Common Stock if he or she has or shares voting or investment
power with respect to such Common Stock or has a right to acquire beneficial
ownership at any time within 60 days from the Record Date. As used herein,
"voting power" is the power to vote or direct the voting of shares and
"investment power" is the power to dispose or direct the disposition of shares.
Except as otherwise noted, ownership is direct, and the named individuals and
group exercise sole voting and investment power over the shares of the Common
Stock.
(2) These shares are held in a suspense account for future allocation among
participating employees as the loan used to purchase the shares is repaid. The
ESOP trustees, currently Directors Pietrini, Trenti and Johnson vote all
allocated shares in accordance with instructions of the participants.
Unallocated shares and shares for which no instructions have been received are
voted by the ESOP trustees in the same ratio as participants direct the voting
of allocated shares or, in the absence of such direction, as directed by the
Company's Board of Directors. At the Record Date, 24,287 shares had been
allocated.
(3) Includes 55,102 shares held by the Queen City Federal Savings Bank
Grantor Trust (the "Grantor Trust"), the beneficiaries of which are certain
directors and executive officers. The beneficiaries have neither voting nor
dispositive power with respect to these shares.
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<PAGE>
PROPOSAL I -- ELECTION OF DIRECTORS
General
The Company's Board of Directors consists of seven members. The
Company's Articles of Incorporation require that directors be divided into three
classes, as nearly equal in number as possible, with approximately one-third of
the directors elected each year. At the Annual Meeting, two directors will be
elected for a term expiring at the 1999 Annual Meeting. The Board of Directors
has nominated Robert L. Muhich and Craig W. Nordling to serve as directors for a
three-year period. All nominees are currently members of the Board. Under
Minnesota law and the Company's Articles of Incorporation, directors are elected
by a majority of the votes cast at a meeting at which a quorum is present.
It is intended that the persons named in the proxies solicited by
the Board of Directors will vote for the election of the named nominees. If any
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, for each nominee for director and
continuing director of the Company, his age, the year he first became a director
of the Bank, which is the Company's principal operating subsidiary, and the
expiration of his term as a director. All such persons were appointed as
directors in 1994 in connection with the incorporation and organization of the
Company. Each director of the Company also is a member of the Board of Directors
of the Bank.
Year First
Age at Elected as Current
June 30, Director of Term
Name 1996 the Bank to Expire
- ---- ------------ --------- ---------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 1999
Robert L. Muhich 68 1960 1996
Craig W. Nordling 45 1989 1996
DIRECTORS CONTINUING IN OFFICE
Peter J. Johnson 59 1976 1997
John C. Pearsall 48 1994 1997
Philip K. Schumacher 70 1960 1997
Kevin E. Pietrini 46 1983 1998
John A. Trenti 68 1988 1998
Set forth below is information concerning the Company's
directors. Unless otherwise stated, all directors have held the positions
indicated for at least the past five years.
Robert L. Muhich is a certified general appraiser. Since 1981, he has been
employed by Missabe Appraisal Service, an appraisal firm based in Virginia,
Minnesota. He is a member of the American Legion, the Elks Club, the Knights of
Columbus and the Holy Spirit Catholic Church. Mr. Muhich has served as Secretary
of the Bank since its inception.
Craig W. Nordling is the General Manager of Northern Electric
Coop, an electric utility based in Virginia, Minnesota, since 1974. During 1993,
he became the Coop's General Manager. He is a member of the Chamber of Commerce
and the Zim Sportsman's Club.
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<PAGE>
Peter J. Johnson has been President and Chief Executive Officer of Hoover
Construction Co., a Virginia, Minnesota-based construction company since 1959.
He has served as President of the Associated General Contractors of Minnesota.
Mr. Johnson is also a member of the Board of directors of the Minnesota Power &
Light Company.
John C. Pearsall joined the Board of Directors on January 1,
1994. He has practiced dentistry since 1972 and has been a partner with the
Mesabi Dental Service in Virginia, Minnesota since 1983. Dr. Pearsall is an
Elder at Hope Presbyterian Church and is a member of the Virginia Kiwanis Club,
the Virginia Elks Club and the Virginia Chamber of Commerce.
Philip K. Schumacher has served as President of Arrowhead Health
Care Center since 1983. He is a member of the Care Providers of Minnesota, the
Chamber of Commerce, the Virginia Elks Club and the Knights of Columbus.
Mr. Schumacher has served as Chairman of the Bank since its inception.
Kevin E. Pietrini is the President and Chief Executive Officer of
the Company and the Bank. He joined the Bank in 1978 as Controller and has
served as President and Chief Executive Officer and Director since 1983. He is a
member of the American Institute of Certified Public Accountants and the
Minnesota Society of Certified Public Accountants. He also serves on the Board
of Directors of the Range Respite Board, the Virginia Foundation and Northeast
Ventures Development Fund, Inc. He is a member of the Kiwanis Club, the Virginia
Elks Club, the American Legion, the Knights of Columbus, the Sons of Italy, the
Chamber of Commerce and the Ironworld Task Force.
John A. Trenti is an attorney. He is counsel to the Trenti Law
Firm. He is a member of the American and State of Minnesota Bar Associations.
Executive Officers Who Are Not Directors
The following table sets forth information regarding the
executive officers of the Company who do not serve on the Board of Directors.
Age at
June 30,
Name 1996 Title
Daniel F. Schultz 37 Vice President and Treasurer
Gerald D. McKenna 39 Vice President
Linda M. Myklebust 44 Vice President
The principal occupation of each executive officer of the Bank is
set forth below. All executive officers have held their present positions for at
least five years unless otherwise stated.
Daniel F. Schultz has served as Vice President and Treasurer of the Bank
since 1985. He joined the Bank in 1983 as Controller. Mr. Schultz serves on the
Board of Directors of the Iron Range Rehabilitation Center and the Marquette
School. He is a member of the Financial Manager's Society and the Chamber of
Commerce Ambassador Club.
Gerald D. McKenna joined the Bank in 1984 as Vice President-Lending. He is
a member of the Virginia Elks Club and the Virginia Chamber of Commerce.
Linda M. Myklebust joined the Bank in 1974 and has served as Vice
President since 1980. She is President of the Camp Chicagami Organization. She
also serves on the Board of Directors of the United Way and the Mesabi Family
YMCA.
Meetings and Committees of the Board of Directors
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<PAGE>
The Boards of Directors of the Company and the Bank hold regular
monthly meetings and hold special meetings as needed. During the year ended June
30, 1996, the Board of Directors of the Company met ten times and the Board of
Directors of the Bank met 13 times. No director of the Company or the Bank
attended fewer than 75% in the aggregate of the total number of Board meetings
held while he was a member during the year ended June 30, 1996 and the total
number of meetings held by committees on which he served during such fiscal
year. The Board of Directors of the Bank has standing Executive, Audit and
Compensation Committees.
The Executive Committee consists of Directors Schumacher,
Pietrini and Muhich, and meets when necessary to make business decisions that
need to be acted upon between regular meetings of the Board of Directors. The
Executive Committee met seven times during the year ended June 30, 1996.
The Audit Committee consists of Directors Nordling, Johnson and
Pearsall. The Audit Committee met once during the year ended June 30, 1996 to
examine and approve the independent audit report prepared by the independent
auditors, to review and recommend the independent auditors to be engaged by the
Bank and to review the internal audit function and internal audit controls.
The Compensation Committee consists of Directors Muhich, Nordling and
Pietrini. This Committee reviews and designates compensation levels for officers
of the Bank. The Compensation Committee met once during the year ended June 30,
1996. Mr. Pietrini does not participate in deliberations or voting regarding his
compensation.
The Company's full Board of Directors acts as a nominating
committee. The Company's full Board of Directors met once as a Nominating
Committee during the year ended June 30, 1996.
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<PAGE>
Executive Compensation
The following table sets forth cash and noncash compensation for
the fiscal years ended June 30, 1996, 1995 and 1994 awarded to or earned by the
Bank's Chief Executive Officer and Chief Financial Officer for services rendered
in all capacities to the Company, the Bank and its subsidiary during those
years. No other executive officer of the Company earned salary and bonus during
fiscal 1996 exceeding $100,000 for services rendered in all capacities to the
Company, the Bank and its subsidiary.
Summary Compensation Table
Annual Compensation Long Term Compensation Awards
<TABLE>
Securities
Restricted Underlying
Name and Fiscal Other Annual Stock Options
Principal Position Year Salary Bonus Compensation Awards ($)(1) SARS (#)(2)
- ------------------- ------ -------- ------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Kevin E. Pietrini 1996 $150,970 $21,965 $12,602 (3) $247,363 44,569
Director and 1995 146,432 21,450 9,621 -- --
Chief Executive Officer 1994 143,000 -- 28,114 -- --
Daniel F. Schultz 1996 96,929 9,220 7,735 (3) 247,363 35,655
Chief Financial Officer 1995 90,527 9,000 4,910 -- --
1994 90,100 -- 12,801 -- --
</TABLE>
(1) Represents 17,828 shares of common stock awarded to both Mr. Pietrini and
Mr. Schultz based upon a market price of $13,875 as of the date of the award.
Awards are earned at a rate of 20% per year beginning one year after the
effective date of the grant. The total restricted stock held and their aggregate
market value as of June 30, 1996 were 17,828 ($271,877) for both Messrs.
Pietrini and Schultz.
(2) Stock options, by their terms, shall be first exercisable at a rate of
20% one year following the effective date of the grant of the option and 20% per
year on the anniversary date of the effective date of the grant thereafter, but
in no event shall such options be exercisable more than ten years after the
effective date of grant.
(3) Represents employer contribution to the ESOP.
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<PAGE>
Director Compensation
The Bank's directors who are not employees currently receive fees
of $1,000 per month. No separate fees are paid for service on any committee of
the Board of Directors or for service on the Board of Directors of the Company.
Directors who are employees of the Company or the Bank do not receive fees for
their service as directors.
In addition, the Bank has entered into agreements with directors
Robert L. Muhich, John A. Trenti and Philip K. Schumacher, which provide for the
payment of $23,674 to such individuals after attaining age 68 and upon their
retirement from the Board of Directors. The expense of funding these awards has
been accrued previously. In connection with the Conversion, two of the three
directors elected to have the present value of their benefits invested in Common
Stock. Upon their retirement, those two directors will be entitled to receive a
cash benefit equal to the value of the Common Stock as of their respective
retirement dates. The Company and the Bank do not intend to enter into similar
agreements with other existing or future directors.
In addition, the Bank's Board of Directors has established a
deferred compensation plan (the "Deferred Compensation Plan") for the benefit of
members of the Bank's Board of Directors, the Bank's President, and such other
executive officers of the Bank which the Board of Directors elects into office.
Pursuant to the terms of the Deferred Compensation Plan, directors may elect to
defer the receipt of all or part of their future fees, and eligible officers may
elect to defer receipt of up to 25% of their future compensation. Participants
may determine the time and form of benefit payments, and may cease future
deferrals any time. Changes in participant elections generally become effective
only as of the following January 1st, except that (i) elections designating a
beneficiary, prospectively changing investment choices, or ceasing future
contributions will be given immediate effect, and (ii) participants may change
elections as to the timing or form of distributions only with respect to
subsequently deferred compensation. The right to receive future payments under
deferred compensation arrangements is an unsecured claim against the general
assets of the Company.
Pursuant to the Company's 1995 Stock Option and Incentive Plan,
each nonemployee director of the Company received a one-time grant of an option
to purchase 8,914 shares of Common Stock. These options have a term of ten years
and become exercisable with respect to 20% of the underlying shares for each
year of the director's service after the date of the grant.
Pursuant to the Company's 1995 Management Recognition Plan, each
nonemployee director of the Company received a one-time award of 3,565 shares of
restricted stock, except that directors Nordling and Pearsall each received
2,674 and 891 shares respectively. These awards will become 20% vested on each
of the first anniversary dates of the award.
Employment Agreements
The Company and The Bank have entered into employment agreements
(the "Employment Agreements") under which Mr. Pietrini serves as President and
Chief Executive Officer of the Bank and of the Company. The Employment
Agreements provide for a term of three years. On each anniversary date from the
date of commencement of the Employment Agreements, the term of Mr. Pietrini's
employment under the Employment Agreements will be extended for an additional
one-year period beyond the then effective expiration date, upon a determination
by the Board of Directors that the performance of Mr. Pietrini has met the
required performance standards and that such Employment Agreements should be
extended. The Employment Agreements provide Mr. Pietrini with a salary review by
the Board of Directors not less often than annually, as well as with inclusion
in any discretionary bonus plans, retirement and medical plans, customary fringe
benefits and vacation and sick leave. The Employment Agreements will terminate
upon Mr. Pietrini's death or disability, and are terminable for "just cause" as
defined in the Employment Agreements. In the event of termination for just
cause, no severance benefits are available. If the Company or the Bank
terminates Mr. Pietrini without just cause, Mr. Pietrini will be entitled to a
continuation of his salary and benefits from the date of termination through the
remaining term of the Employment Agreements plus an additional 12-month period
(but not in excess of three times his five years' average compensation). If Mr.
Pietrini's employment terminates under the Employment Agreements, he is
prohibited from engaging in activities competitive with the Bank for a period of
two years. The restriction on competition
- -7-
<PAGE>
does not apply, however, if Mr. Pietrini's employment is terminated within 36
months after a change in control or if Mr. Pietrini resigns from employment.
The Employment Agreements contain provisions stating that in the
event of Mr. Pietrini's involuntary termination of employment in connection
with, or within 36 months after, any change in control of the Bank or the
Company, other than for "just cause," Mr. Pietrini will be paid in three
substantially equal installments, with the first payment due within 10 days of
such termination, an amount equal to the difference between (i) 2.99 times his
"base amount," as defined in Section 280G(b)(3) of the Internal Revenue Code,
and (ii) the sum of any other parachute payments, as defined under Section
280G(b)(2) of the Internal Revenue Code, that Mr. Pietrini receives on account
of the change in control. The Employment Agreement also provides for a similar
lump sum payment to be made in the event of Mr. Pietrini's voluntary termination
of employment within thirty-six months following a change in control, upon the
occurrence, or within 90 days thereafter, of certain specified events following
the change in control, which have not been consented to in writing by Mr.
Pietrini. Such events generally include a reduction in Mr. Pietrini's salary,
benefits or duties. The aggregate payments that would be made to Mr. Pietrini
assuming his termination of employment under the foregoing circumstances at June
30, 1996 would have been approximately $504,800. These provisions may have an
anti-takeover effect by making it more expensive for a potential acquiror to
obtain control of the Company.
Change of Control Severance Agreements
The Company and The Bank have entered into severance agreements
with Mr. Schultz. The Severance Agreements provide for a term of three years. On
each annual anniversary date from the date of commencement of the Severance
Agreements, the term of the Severance Agreements may be extended for additional
one year periods beyond the then effective expiration date, upon a determination
by the Board of Directors that the performance of these individuals has met the
required performance standards and that such Severance Agreements should be
extended.
Under the Severance Agreements, in the even of Mr. Schultz's
involuntary termination of employment in connection with, or within 36 months
after, any change in control of the Bank or the Company, other than for "just
cause," Mr. Schultz will be paid within 10 days of such termination an amount
equal to the difference between (I) 2.99 times his "base amount" (with the first
payment due within 10 days of such termination) as defined in Section 280G
(b)(3) of the Internal Revenue Code, and (ii) the sum of any other parachute
payments, as change in control. "Control" has the same meaning under the
Severance Agreements that it has under the Employment Agreements (see above).
The Severance Agreement also provides for a similar lump sum payment to be made
in the event of Mr. Schultz's voluntary termination of employment within
thirty-six months following a change in control, upon the occurrence, or within
90 days thereafter, of certain specified events following the change in control,
which have not been consented to in writing by Mr. Schultz.
The aggregate payments that would be made to Mr. Schultz assuming
his termination of employment under the foregoing circumstances at June 30, 1996
would have been approximately $304,000. These provisions may have an
anti-takeover effect by making it more expensive for a potential acquiror to
obtain control of the Company.
Supplemental Executive Retirement Agreement
In order to secure the continuing services of Mr. Pietrini,
President and Chief Executive Officer of the Bank and the Company and Mr.
Schultz, Chief Financial Officer of the Bank and Company, the Bank has entered
into a separate supplemental executive retirement agreement (the "SERA") with
Mr. Pietrini and Mr. Schultz. Pursuant to the terms of the SERA, upon his
termination of employment with the Bank for reasons other than death or removal
for "just cause," Mr. Pietrini will be entitled to receive annual payments from
the Bank in an amount equal to the product of (i) his "Vested Percentage" and
70% of his "Average Annual Compensation," less (ii) his "Annual Offset Amount."
Under the SERA, "Vested Percentage" means 9.1% per full year of Mr. Pietrini's
service with the Bank following the Conversion (up to a maximum Vested
Percentage of 100%, and with this percentage accelerating to 100% if either
there is a change in control of the Bank or the Company, or his employment
terminates due to disability or death), "Average Annual Compensation" means the
average of Mr. Pietrini's highest annual compensation for three of the five
calendar years preceding his termination of employment, and "Annual Offset
Amount" means the sum of the benefits which Mr. Pietrini would receive, annually
over a ten-year period, from the Bank's Money Purchase Pension Plan, and ESOP
upon his termination of employment, provided that contributions to such plans
will for this purpose be deemed to appreciate at a rate of 7% per annum from the
date of Conversion forward. Annual payments under the SERA shall be made for Mr.
Pietrini's life time,
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<PAGE>
with a 100% survivorship benefit being provided for his surviving spouse, if
any. The Bank has established an irrevocable grantor trust to hold assets in
order to provide itself with a source of funds to assist the Bank in the meeting
of its liabilities under the SERA. The assets of such trust will remain general
assets of the Bank and be subject to the claims of its general creditors.
Pursuant to the terms of Mr. Schutlz's SERA, the Bank will, for
seven years, credit to a bookkeeping account maintained for the benefit of Mr.
Schultz an amount equal to (I) 20% of Mr. Schultz's W-2 compensation, plus (ii)
the difference between 25% of Mr. Schultz's W-2 compensation and the "annual
addition" (as defined under applicable tax laws) which is allocated to Mr.
Schultz under the Bank's ESOP. Upon Mr. Schultz's termination of employment with
the Company or the Bank, for reasons other than death or removal for "just
cause," he will receive the balance of his account in ten equal annual
installments. In the event that Mr. Schultz dies before he has received all
benefit payments to which he is entitled, the balance of his account under the
SERA will be payable to his named beneficiary, or, if none, his estate.
Termination for "just cause" (as determined under Mr. Pietrini's
Employment Agreement and Mr. Schultz's SERA) would result in forfeiture of all
retirement benefits under the SERAs. In the event the Bank terminates Mr.
Pietrini's or Mr. Schultz's employment in the event of a change in control, the
present value of the benefits payable from the SERA would be paid in ten
substantially equal annual installments, with the first payment due within 10
days following a change in control. In the event of a change in control as of
June 30, 1996, Mr. Pietrini would not have received any payment pursuant to the
SERA, which provides for the elimination of payments upon a change in control
attributable to acceleration of vesting to the extent such payments would exceed
an amount equal to the difference between (i) 2.99 times his "base amount," as
defined in Section 280G(b)(3) of the Internal Revenue Code, and (ii) the sum of
any other parachute payments, as defined under Section 280G(b)(2) of the
Internal Revenue Code, that Mr. Pietrini receives on account of the change in
control. As a result, in the event of a change in control on June 30, 1996, Mr.
Pietrini would receive only the payment provided under the Employment
Agreements. See " -- Employment Agreements."
The following tables set forth additional information concerning
options granted under the Option Plan.
OPTION/SAR GRANTS TABLE
Option/SAR Grants in Last Fiscal Year
Individual Grants
<TABLE>
% of Total
# of Securities Options/SARs Exercise
Underlying Granted to or Base
Options/SARs Employees in Price Expiration
Name Granted (#)(1) Fiscal Year ($/Sh) Date
- ----------------- -------------- ---------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Kevin E. Pietrini 44,569 27.78% $13.875 October 11, 2005
Daniel F. Schultz 35,655 22.22 13.875 October 11, 2005
</TABLE>
-9-
<PAGE>
(1) The amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises and Common Stock holdings are dependent
on the future performance of the Common Stock and overall stock market
conditions. There can be no assurance that the amount reflected in the table
will be achieved.
OPTION/SAR EXERCISES AND YEAR END VALUE TABLE
Aggregated Option/SAR Exercises in Last fiscal Year, and FY-End Option/SAR Value
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#)(1) at FY-End ($)(1)(2)
Name Exercisable/Unexercisable Exercisable/Unexercisable
Kevin E. Pietrini 8,914/35,655 $12,257/49,026
Daniel F. Schultz 7,131/28,524 9,805/39,221
(1) Includes options that are exercisable within 60 days of the Voting Record
Date as of June 30, 1996.
(2) Based upon an exercise price of $13.875 per share and the closing price of
$15.25
Transactions with Management
The Bank offers loans to its directors and officers. These loans
currently 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 to not involve more than the normal risk of
collectibility or present other unfavorable features. Under current law, the
Bank's loans to directors and executive officers are required to be made on
substantially the same terms, including interest rates, as those prevailing for
comparable transactions and must not involve more than the normal risk of
repayment or present other unfavorable features. Furthermore, loans above the
greater of $25,000 or 5% of the Bank's capital and surplus (i.e., up to
$500,000) to such persons must be approved in advance by a disinterested
majority of the Board of Directors. At June 30, 1996, the Bank's loans to
directors and executive officers totaled $46,000, or .2% of the Company's
stockholder equity, at that date.
-10-
<PAGE>
Security Ownership of Management
The following table sets forth, as of the Record Date, the
beneficial ownership of the Company's Common Stock by each of the Company's
directors and nominees, the two executive officers named in the Summary
Compensation Table and by all directors and executive officers as a group.
Amount and Percent of
Nature of Shares of
Beneficial Common Stock
Name Ownership (1) Outstanding
Kevin E. Pietrini 63,914 (2) 4.03%
Daniel F. Schultz 57,931 (3) 3.65
John A. Trenti 20,348 (4) (5) 1.28
Robert L. Muhich 15,154 (4) (5) .96
Craig W. Nordling 12,179 (4) (5) .77
Peter J. Johnson 20,352 (4) (5) 1.28
John C. Pearsall 11,150 (5) (6) .70
Philip K. Schumacher 15,022 (4) (5) .95
All Executive Officers and Directors 258,835 (7) 16.31
as a Group (10 persons)
(1) For the definition of beneficial ownership, see footnote 1 to the table in
"Voting Securities and Principal Holders Thereof." Unless otherwise indicated,
ownership is direct and the named individual exercises sole voting and
investment power over the shares listed as beneficially owned by such person.
(2) Includes 22,819 shares owned by the Queen City Federal Savings Bank 401(k)
Plan (the "401(k) Plan"), 315 shares owned by Mr. Pietrini's wife, 17,828 shares
awarded under the Company's Management Recognition Plan (MRP) (of which 3,566
have vested), 7,182 shares owned by the Grantor Trust (Mr. Pietrini does not
have voting or dispositive power with respect to the shares owned by the Grantor
Trust) and 8,914 options to purchase shares.
(3) Includes 8,006 shares owned by the 401K plan, 17,828 shares awarded under
the Bank's MRP (of which 3,566 have vested), 6,237 shares owned by Mr. Schultz's
wife, 5,948 shares owned by the Grantor Trust (Mr. Schultz does not have voting
or dispositive power with respect to the shares owned by the Grantor Trust) and
7,131 options to purchase shares.
(4) Includes 13,605, 9,806, 222, 10,244, and 5,842 shares owned by the Grantor
Trust with respect to Messrs. Trenti, Muhich, Johnson and Schumacher,
respectively. These individuals do not have voting or dispositive power with
respect to these shares.
(5) Includes 3,565, 3,565, 2,674, 3,565, 891 and 3,565 shares awarded under the
MRP with respect to Messrs. Trenti, Muhich, Nordling, Johnson, Pearsall and
Schumacher, respectively (20% of each directors shares have vested). Also
includes 1,783 stock options for each director pursuant to the Company's Stock
Option Plan that are exercisable within 60 days of the record date.
(6) Includes 2,145 shares owned by Mr. Pearsall's wife and 160 shares owned by
Mr. Pearsall as custodian for his daughter.
(7) Includes 44,890 shares of Common Stock owned by all executive officers as a
group through the Bank's 401(k) plan, 55,102 shares of Common Stock owned by all
directors and executive officers as a group through the Grantor Trust and 78,441
shares of Common Stock awarded to all directors and executive officers as a
group through the MRP.
-11-
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP was the Company's independent certified
public accounting firm for the 1996 fiscal year. The Board of Directors has not
yet retained an auditor for the 1997 fiscal year. A representative of KPMG Peat
Marwick LLP is expected to be present at the Annual Meeting and will have the
opportunity to make a statement if he or she so desires.
OTHER MATTERS
The Board of Directors is not aware of any business to come
before the Annual Meeting other than those matters described above in this proxy
statement and matters incident to the conduct of the Annual Meeting. However, if
any other matters should properly come before the Annual Meeting, it is intended
that proxies in the accompanying form will be voted in respect thereof in
accordance with the determination of a majority of the Board of Directors.
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.
The Company's 1996 Annual Report to Stockholders, including
financial statements, is being mailed to all stockholders of record as of the
close of business on the Record Date. Any stockholder who has not received a
copy of such Annual Report may obtain a copy by writing to the Secretary of the
Company. Such Annual Report is not to be treated as a part of the proxy
solicitation material or as having been incorporated herein by reference.
-12-
<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 main
office at 501 Chestnut Street, Virginia, Minnesota 55792, no later than May 16,
1997. Any such proposal shall be subject to the requirements of the proxy rules
adopted under the Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
ROBERT L. MUHICH
SECRETARY
Virginia, Minnesota
September 13, 1996
ANNUAL REPORT ON FORM 10-KSB
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL
YEAR ENDED JUNE 30, 1996 AS FILED WITH THE SEC WILL BE FURNISHED WITHOUT CHARGE
TO EACH STOCKHOLDER AS OF THE RECORD DATE UPON WRITTEN REQUEST TO CORPORATE
SECRETARY, QCF BANCORP, INC., 501 CHESTNUT STREET, VIRGINIA, MINNESOTA 55792.
-13-
<PAGE>
REVOCABLE PROXY
QCF BANCORP, INC., Virginia, Minnesota
ANNUAL MEETING OF STOCKHOLDERS, October 9, 1996
The undersigned hereby appoints Kevin E. Pietrini, John Trenti and
John Pearsall, with full powers of substitution, to act as proxies for the
undersigned, to vote all shares of Common Stock of QCF Bancorp, Inc. (the
"Company") which the undersigned is entitled to vote at the Annual Meeting of
Stockholders, to be held at the main office of Queen City Federal Savings Bank,
501 Chestnut Street, Virginia, Minnesota on Wednesday, October 7, 1996 at 9:00
a.m., and at any and all adjournments thereof, as follows:
VOTE
FOR WITHHELD
1. The election as directors of all
nominees listed below (except as
marked to the contrary below).
Robert L. Muhich
Craig Nordling
The Board of Directors recommends a vote "FOR" listed propositions.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE NOMINEES NAMED. IF ANY OTHER BUSINESS IS PRESENTED
AT THE ANNUAL MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN
ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS. AT
THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE
PRESENTED AT THE ANNUAL MEETING. THIS PROXY CONFERS DISCRETIONARY AUTHORITY ON
THE HOLDERS THEREOF TO VOTE WITH RESPECT TO THE ELECTION OF ANY PERSON AS
DIRECTOR WHERE THE NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE
AND MATTERS INCIDENT TO THE CONDUCT OF THE ANNUAL MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Annual
Meeting or at any adjournment thereof and after notification to the Secretary of
the Company at the Annual Meeting of the stockholder's decision to terminate
this proxy, then the power of said attorneys and proxies shall be deemed
terminated and of no further force and effect.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of notice of the annual meeting, a Proxy Statement dated
September 13, 1996 and an Annual Report to Stockholders.
Dated: , 1996
- -------------------------------------- -----------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- --------------------------------------- -----------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in which
this form of proxy was mailed. 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
ACCOMPANYING POSTAGE-PREPAID ENVELOPE.
<PAGE>
