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 240.14a-11 or 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):
No fee required. x
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. Unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
_______________________________________________________________
Fee paid previously with preliminary materials:
Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
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September 12, 1997
Dear Stockholder:
We invite you to attend the 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 8, 1997 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
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QCF BANCORP, INC.
501 Chestnut Street
Virginia, Minnesota 55792
(218) 741-2040
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on October 8, 1997
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 8, 1997 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 three 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 29, 1997 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 12, 1997
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.
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PROXY STATEMENT
OF
QCF BANCORP, INC.
501 Chestnut Street
Virginia, Minnesota 55792
ANNUAL MEETING OF STOCKHOLDERS
October 8, 1997
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 8, 1997 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 12, 1997.
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.
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 29, 1997 (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.
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Amount and Percent of
Nature of Shares of
Name and Address Beneficial Common Stock
of Beneficial Owner Ownership (1) Outstanding
First Financial Fund, Inc. 121,000 8.49%
Wellington Management Company
75 State Street
Boston, Massachusetts 02109
First Save Associates, L.P. 117,453 8.23%
Second First Save Associates, L.P.
First Manhattan Co.
437 Madison Avenue
New York, New York 10022
Soben International Fund, Inc. 85,000 5.96%
Societe Generale Asset Management Corp
1221 Avenue of the Americas
New York, New York 10020
QCF Bancorp, Inc. 142,620 (2) 10.00%
Employee Stock Ownership Plan ("ESOP")
501 Chestnut Street
Virginia, Minnesota 55792
QCF Bancorp, Inc. 135,024 (3) 9.47%
1995 Stock Option and Incentive Plan
501 Chestnut Street
Virginia, Minnesota 55792
Queen City Federal Savings Bank 401K 78,935 5.53%
Profit Sharing Plan
501 Chestnut Street
Virginia, Minnesota 55792
All directors and 313,472 (4) 21.98%
executive officers
as a group (10 persons)
(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, 34,549
shares had been allocated.
(3) These shares are held in a suspense account for future allocation among
participating directors and employees as stock options are exercised. The
stock option trustees, currently directors Johnson, Pearsall and Trenti
vote these shares in accordance with the terms and conditions for voting of
unallocated shares under the Company's ESOP.
(4) Includes 44,890 shares of Common Stock owned by all executive officers as a
group through the Bank's 401 (k) plan, 67,672 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.
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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, three directors will be
elected for a term expiring at the 2000 Annual Meeting. The Board of Directors
has nominated Peter J. Johnson, John C. Pearsall and Philip K. Schumacher 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 1997 the Bank to Expire
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2000
Peter J. Johnson 60 1976 1997
John C. Pearsall 49 1994 1997
Philip K. Schumacher 71 1960 1997
DIRECTORS CONTINUING IN OFFICE
Kevin E. Pietrini 47 1983 1998
John A. Trenti 69 1988 1998
Robert L. Muhich 69 1960 1999
Craig W. Nordling 46 1989 1999
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.
Peter J. Johnson has been President and Chief Executive Officer of Hoover
Construction Co., a Virginia, Minnesota-based construction company since 1959.
He has also been the Chairman of the Board of Michigan Limestone Operations
since 1990. 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, the Virginia Chamber of Commerce and also the Minnesota and American
Dental Association.
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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.
Robert L. Muhich is a computer consultant. He is employed by Culbert Realty
& Appraisal Service, a firm based in Virginia, Minnesota. Mr. Muhich has served
as Secretary for the Bank since its inception.
Craig W. Nordling is the Line Manager of Lake Country Power, an electric
utility based in Virginia, Minnesota. He is a member of the Chamber of Commerce
and the Zim Sportsman's Club.
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 1997 Title
Daniel F. Schultz 38 Vice President and Treasurer
Gerald D. McKenna 40 Vice President
Linda M. Myklebust 45 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 Virginia
Chamber of Commerce Ambassador Club.
Gerald D. McKenna joined the Bank in 1984 as Vice President-Lending. Mr.
McKenna serves on the Board of Directors of the Virginia Chamber of Commerce and
the Habitat for Humanity. He is also a member of the Virginia Elks Club.
Linda M. Myklebust joined the Bank in 1974 and has served as Vice President
since 1980. She is President of the Mesabi Family YMCA. She also serves on the
Board of Directors of the United Way and the Camp Chicagami Association.
Meetings and Committees of the Board of Directors
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,
1997, the Board of Directors of the Company met 13 times and the Board of
Directors of the Bank met 12 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, 1997 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 twice during the year ended June 30, 1997.
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The Audit Committee consists of Directors Nordling, Johnson and Pearsall.
The Audit Committee met once during the year ended June 30, 1997 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,
1997. 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, 1997.
Executive Compensation
The following table sets forth cash and noncash compensation for the fiscal
years ended June 30, 1997, 1996 and 1995 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
1997 exceeding $100,000 for services rendered in all capacities to the Company,
the Bank and its subsidiary.
Summary Compensation Table
Annual CompensationLong Term Compensation Awards
Securities
Restricted Underlying
Name and Fiscal Other Annual Stock Options
Principal Position Year Salary Bonus Compensation Awards($)(2) SARS (#)
Kevin E. Pietrini 1997 $155,370 $47,645 $8,150 (1) --- ---
Director and CEO 1996 150,970 $21,965 2,602 247,363 44,569
1995 146,432 $21,450 9,261 --- ---
Daniel F. Schultz 1997 97,900 34,510 5,316 (1) --- ---
CFO 1996 96,929 9,220 7,735 247,363 35,655
1995 90,527 9,000 4,910 --- ---
(1) Represents employer contribution to the ESOP.
(2) The total restricted stock held and their aggregate market value as of June
30, 1997 were 14,262 ($303,067) for both Messrs. Pietrini and Schultz.
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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
non-employee 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 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
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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, 1997 would have been approximately $544,000. 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 event 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, 1997
would have been approximately $338,000. 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, 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. Schultz'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
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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, 1997, 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, 1997, Mr.Pietrini would
receive only the payment provided under the Employment Agreements. See
"Employment Agreements."
The following table sets forth the fiscal year end value of options held by
those executive officers named on the Summary Compensation Table. No options
were exercised during the period.
OPTION YEAR END VALUE TABLE
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 17,828/26,741 $ 131,481/197,215
Daniel F. Schultz 14,262/21,393 105,182/157,773
(1)Includes options that are exercisable within 60 days of the Voting
Record Date
(2)Based upon an exercise price of $13.875 per share and the closing price
of $21.25 as of June 30, 1997.
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 collectability 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, 1997, the Bank's loans to directors and executive
officers totaled $50,000, or 0.18% of the Company's stockholder equity, at that
date.
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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 83,188 (2) 5.83%
Daniel F. Schultz 69,673 (3) 4.87
Peter J. Johnson 22,132 (4) (5) 1.55
John A. Trenti 22,131 (4) (5) 1.55
Robert L. Muhich 18,051 (4) (5) 1.27
Philip K. Schumacher 17,367 (4) (5) 1.22
Craig W. Nordling 14,305 (4) (5) 1.00
John C. Pearsall 13,824 (5) (6) .97
All Executive Officers 313,472 (7) 21.98
and Directors
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 7,131 have vested), 15,769 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 17,828 options to purchase shares.
(3) Includes 8,006 shares owned by the 401(k) plan, 17,828 shares awarded under
the Bank's MRP (of which 7,131 have vested), 6,237 shares owned by Mr.
Schultz's wife, 9,567 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 14,262 options to purchase shares.
(4) Includes 13,605, 9,806, 565, 10,244, and 7,001 shares owned by the Grantor
Trust with respect to Messrs. Trenti, Muhich, Nordling, 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 (40% of each directors shares have vested). Also
includes 5,566 stock options for each director pursuant to the Compan'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, 67,672 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.
9
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RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
McGladrey & Pullen, LLP which was the Company's independent certified
public accounting firm for the fiscal year has been retained by the Board of
Directors to be the Company's auditors for the 1997 fiscal year. A
representative of McGladney & Pullen, LLP is not expected to be present at the
Annual Meeting.
KPMG Peat Marwick LLP was the Company's independent certified public
accountants for the 1996 fiscal year. On November 7, 1996 the Company's Board of
Directors decided to terminate KPMG Peat Marwick LLP and engaged McGladrey &
Pullen LLP. KPMG Peat Marwick LLP's reports on the Company's financial
statements for the two years preceding its termination did not contain any
adverse opinion or disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principles and there had not been any
disagreements between the Company and KPMG Peat Marwick LLP on any matter of
accounting principles or practices, financial statement disclosures or auditing
scope or procedure which, if not resolved to the satisfaction of KPMG Peat
Marwick LLP, would have caused it to make reference to the subject matter of
such disagreement in connection with its report.
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 1997 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.
10
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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 15, 1998. 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 12, 1997
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, 1997 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.
11
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REVOCABLE PROXY
QCF BANCORP, INC., VIRGINIA, MINNESOTA
ANNUAL MEETING OF STOCKHOLDERS, OCTOBER 8, 1997
The undersigned hereby appoints Kevin E. Pietrini, John Trenti and Craig w
Nordling, 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 8, 1997 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).
Peter J Johnson
John C. Pearsall
Philip K Schumacher
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 12, 1997 and an Annual Report to Stockholders.
Dated:__________________________, 1997
______________________________________ ______________________________________
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.
